<PAGE>

                                                                  EXECUTION COPY

                                                                    Exhibit 10.1

                          DEVELOPER TRANSFER AGREEMENT

                         Dated as of December 19, 2003,

                                     between

                            SILVERLEAF RESORTS, INC.

                                       and

                           SILVERLEAF FINANCE II, INC.

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                                TABLE OF CONTENTS

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                                                         SECTION 1
                                                        DEFINITIONS

1.1      Definitions and Conventions............................................................................       1

1.2      Other Terms and Interpretation.........................................................................       1

                                                         SECTION 2
                                                 TRANSFERS OF RECEIVABLES

2.1      Agreement to Transfer..................................................................................       1

2.2      Grant of Security Interest.............................................................................       3

2.3      Delivery of Timeshare Documents........................................................................       3

2.4      Payments and Interest..................................................................................       3

2.5      Enforcement of Rights under and against the Conveyed Assets............................................       3

                                                         SECTION 3
                                                        CONDITIONS

3.1      Conditions Precedent to the Initial Conveyance.........................................................       3

3.2      Conditions Precedent to All Conveyances................................................................       6

3.3      Effect of Failure to Satisfy Conditions................................................................       7

                                                         SECTION 4
                                              REPRESENTATIONS And WARRANTIES

4.1      Eligible Receivable....................................................................................       8

4.2      Organization, Standing, Qualification..................................................................       8

4.3      Authorization, Enforceability, No Conflict, Etc........................................................       8

4.4      Financial Statements and Business Condition; Solvency..................................................      10

4.5      Taxes..................................................................................................      11

4.6      Title to Properties; Prior Liens; Permitted Liens......................................................      11

4.7      Subsidiaries, Affiliates and Capital Structure.........................................................      12

4.8      Litigation, Proceedings, Etc...........................................................................      12

4.9      Environmental Matters..................................................................................      12

4.10     True and Complete Disclosure...........................................................................      12

4.11     Margin Stock...........................................................................................      13

4.12     No Defaults............................................................................................      13

4.13     Compliance with Law; Licenses, Etc.....................................................................      13

4.14     Restrictions of the Company or the Subject Persons.....................................................      15
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4.15     Broker's Fees..........................................................................................      15

4.16     Deferred Compensation Plans............................................................................      16

4.17     Labor Relations........................................................................................      16

4.18     The Resorts............................................................................................      16

4.19     Reservation System.....................................................................................      18

4.20     Timeshare Documents and Reports........................................................................      18

4.21     Operating Contracts....................................................................................      19

4.22     Architectural and Environmental Control................................................................      19

4.23     Tax Identification Numbers.............................................................................      19

4.24     True Sales.............................................................................................      19

4.25     Account Information....................................................................................      19

4.26     Interest in Real Property..............................................................................      19

4.27     Perfection Representations and Warranties..............................................................      19

4.28     Investment Company Act.................................................................................      21

4.29     Continuation and Investigation.........................................................................      21

4.30     Subsidiaries, Affiliates and Capital Structure.........................................................      21

4.31     Use of Proceeds........................................................................................      21

4.32     Seismic Exposure.......................................................................................      21

4.33     Condemnation...........................................................................................      21

4.34     Flood Zone.............................................................................................      22

4.35     Heller and Sovereign Facilities........................................................................      22

                                                         SECTION 5
                                                 Covenants of the Company

5.1      Payment and Performance of Obligations.................................................................      22

5.2      Maintenance of Existence, Qualification and Assets.....................................................      22

5.3      Consolidation and Merger...............................................................................      22

5.4      Maintenance of Insurance...............................................................................      23

5.5      Payment of Liabilities, Taxes and Claims...............................................................      26

5.6      Inspections............................................................................................      26

5.7      Reporting Requirements.................................................................................      27

5.8      Records................................................................................................      32
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5.9      Marketing and Management...............................................................................      32

5.10     FICA...................................................................................................      32

5.11     Operating Contracts....................................................................................      32

5.12     Change of Control......................................................................................      32

5.13     Maintenance............................................................................................      33

5.14     Claims.................................................................................................      33

5.15     Registration and Regulations...........................................................................      33

5.16     Other Documents........................................................................................      34

5.17     Further Assurances; Financing Statements...............................................................      35

5.18     Utilities..............................................................................................      35

5.19     Amenities..............................................................................................      35

5.20     Expenses and Closing Fees..............................................................................      35

5.21     Indemnification........................................................................................      37

5.22     No Amounts Due.........................................................................................      39

5.23     Servicing..............................................................................................      39

5.24     Use of Name............................................................................................      39

5.25     Limitation on Debt/Further Encumbrances................................................................      39

5.26     Restrictions on Transfers..............................................................................      40

5.27     Transactions with Affiliates...........................................................................      40

5.28     Restrictive Covenants..................................................................................      41

5.29     Subordinated Obligations...............................................................................      41

5.30     Timeshare Plans........................................................................................      41

5.31     Conveyed Assets; No Modifications......................................................................      41

5.32     Marketing/Sales........................................................................................      42

5.33     Use of Facilities......................................................................................      42

5.34     Prohibition of Fundamental Changes.....................................................................      43

5.35     Limitations on Modifications, Waivers and Extensions of Loan Documents.................................      43

5.36     Servicing..............................................................................................      43

5.37     True and Complete Disclosure...........................................................................      43

5.38     Restrictions on Income and Accounts....................................................................      43
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5.39     Payment Instructions to Purchasers.....................................................................      43

5.40     True Sales.............................................................................................      43

5.41     Restrictions on Actions Affecting Rights...............................................................      44

5.42     Offices and Records....................................................................................      44

5.43     Collection of Conveyed Assets..........................................................................      44

5.44     Maintenance of Licenses................................................................................      44

5.45     Separate Corporate Existence...........................................................................      45

5.46     Recordation and Endorsements...........................................................................      46

5.47     Oak N' Spruce Resort Trust.............................................................................      46

                                                         SECTION 6
                                                repurchases; substitutions

6.1      Repurchase of Defective Receivables....................................................................      47

6.2      Substitutions..........................................................................................      47

                                                         SECTION 7
                                                       MISCELLANEOUS

7.1      Notices, Etc...........................................................................................      48

7.2      Notice to Purchasers...................................................................................      49

7.3      No Waiver; Remedies....................................................................................      49

7.4      Successors and Assigns.................................................................................      49

7.5      No Proceedings.........................................................................................      50

7.6      Amendment..............................................................................................      50

7.7      Total Agreement........................................................................................      50

7.8      GOVERNING LAW; WAIVER OF JURY TRIAL....................................................................      50

7.9      Execution in Counterparts; Severability................................................................      51

7.10     Descriptive Headings...................................................................................      51

7.11     No Set-off.............................................................................................      51

7.12     Further Assurances.....................................................................................      51

7.13     Confidentiality........................................................................................      52

7.14     Right of SPV or TFC to Extend Time of Payment, Substitute, Release Security, Etc.......................      52

7.15     Assignment of SPV's Interest...........................................................................      52
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7.16     Survival...............................................................................................      53

7.17     Accounting Principles..................................................................................      53

7.18     Incorporation of Exhibits..............................................................................      53

7.19     Directly or Indirectly.................................................................................      54

7.20     Gender.................................................................................................      54

7.21     No Duty................................................................................................      54

7.22     Reimbursement for Taxes; Expenses......................................................................      54

7.23     Submissions............................................................................................      54

7.24     Investigations and Inquiries...........................................................................      55

7.25     Consent to Advertising and Publicity of Timeshare Documents............................................      55
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EXHIBIT A   Form of Sale Assignment
EXHIBIT B   Form of Substitution Certificate
EXHIBIT C   Form of Request Notice
EXHIBIT D   Form of Subordinated Note

SCHEDULE 4.30  Subsidiaries, Affiliates and Capital Structure
SCHEDULE 4.31  Specified Indebtedness

                                        v
<PAGE>

         DEVELOPER TRANSFER AGREEMENT, dated as of December 19, 2003, (this
"Agreement"), between SILVERLEAF RESORTS, INC., a Texas corporation (the
"Company") and SILVERLEAF FINANCE II, INC., a Delaware corporation (the "SPV").

                              W I T N E S S E T H:


         WHEREAS, SPV is a wholly-owned Subsidiary of the Company; and

         WHEREAS, the Company intends to sell, or otherwise contribute, and SPV
intends to purchase, or otherwise have contributed to it, certain Receivables
originated by the Company, from time to time, as described herein;

         NOW, THEREFORE, the parties agree as follows:

                                    SECTION 1

                                   DEFINITIONS

         1.1      Definitions and Conventions. Unless otherwise defined herein,
all capitalized terms shall have the meanings set forth in Schedule I to the
Loan and Security Agreement dated as of the date hereof among SPV and Textron
Financial Corporation, as amended or modified from time to time.

         1.2      Other Terms and Interpretation. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
terms used in Article 9 of the Code of the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9. All
hourly references herein shall refer to New York time. Except as otherwise
indicated, all agreements defined in this Agreement refer to the same as from
time to time amended or supplemented or as the terms of such agreements are
waived or modified in accordance with their terms.

                                    SECTION 2

                            TRANSFERS OF RECEIVABLES

         2.1      Agreement to Transfer. (a) Pursuant to the terms and
conditions of this Agreement, as of the date hereof the Company has contributed
as capital the Demand Note to SPV, and, on and after the date of this Agreement,
at the initiation of the Company (in its discretion), the Company shall sell or
contribute as capital to SPV (such sale or contribution, a "Conveyance"), and
SPV shall purchase or acquire from the Company, Receivables that are identified
in a Request Notice delivered pursuant to Section 2.1(b) on such date, which
Receivables shall be certified by the Company in such Request Notice as Eligible
Receivables, together with all other Conveyed Assets related to such
Receivables; provided that (x) SPV shall not be required to purchase any
Conveyed Assets if it does not have sufficient funds to pay for such assets nor
shall SPV be permitted to incur indebtedness to purchase the Receivables, except

<PAGE>

that SPV may incur indebtedness to Developer evidenced by the Subordinated Note
for such purpose to the extent that, after giving effect to such indebtedness,
the Overcollateralization Amount equals or exceeds the Required
Overcollateralization Amount and (y) the Company shall not be required to sell
or contribute any Conveyed Assets unless, in the case of a sale, it shall have
received the purchase price therefore in accordance with the terms of this
Agreement or, in the case of a contribution, it has agreed to make such
contribution (as evidenced by its execution of a Sale Assignment). To effect the
conveyance of a Receivable and the other Conveyed Assets with respect thereto,
on or before the related Conveyance Date, the Company and SPV shall execute and
deliver an assignment in the form attached hereto as Exhibit A (hereafter a
"Sale Assignment") with each Receivable being properly endorsed to SPV by an
authorized representative of the Company.

                  (b) The Company shall, on the Closing Date and on a date
         occurring no more frequently than once in each calendar month (each a
         "Request Notice Date"), deliver to SPV a notice (a "Request Notice") in
         the form of Exhibit C identifying Eligible Receivables that are to be
         conveyed on a given Conveyance Date as described in Section 2.1(a)
         hereof. Such Request Notice shall indicate whether the applicable
         Conveyance is to be a sale or a contribution. Receivables so sold by
         the Company are "Sold Receivables" and Receivables so contributed by
         the Company are "Contributed Receivables."

                  (c) The price paid to the Company with respect to each of its
         Sold Receivables shall be the SPV Purchase Price. Such SPV Purchase
         Price shall be paid by means of a cash payment for such Sold Receivable
         to the Company by SPV on the related Conveyance Date.

                  (d) On and after each Conveyance Date hereunder, SPV shall own
         the Sold Receivables and the Contributed Receivables which have been
         (assuming compliance with the terms hereof) identified as being sold to
         SPV or contributed under this Section 2.1. The Company shall not take
         any action inconsistent with such ownership and shall not claim any
         ownership interest or other interest in any Conveyed Asset. The Company
         shall not be responsible for payments on the Conveyed Assets, including
         but not limited to the Receivables, and any other credit risk
         associated therewith shall not be borne by the Company except as
         specifically provided within this Agreement, the Demand Note and the
         other Loan Documents.

                  (e) Until the occurrence of a Subservicer Event of Default or
         a resignation by the Company pursuant to the Subservicing Agreement,
         the Company, as Subservicer, shall conduct the servicing,
         administration and collection of such Receivables and shall take, or
         cause to be taken, all such actions on behalf of SPV and its assigns as
         may be necessary or advisable to service, administer and collect such
         Receivables from time to time, all in accordance with (i) the terms of
         the Subservicing Agreement, (ii) customary and prudent servicing
         procedures for receivables of a similar type and (iii) all applicable
         laws, rules and regulations. Documents relating to the Conveyed Assets
         shall be held by the Custodian. The Company, as Subservicer, may, to
         the extent specified in the Custodial Agreement, take possession of
         documents evidencing Conveyed Assets from the Custodian in order to
         service, administer and collect such Conveyed Assets. Such

                                        2
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         documents shall be held in trust by the Company, as Subservicer, for
         the benefit of SPV and its assignees as the owners thereof, together
         with its assignees, and possession of any document relating to the
         Conveyed Assets is for the sole purpose of facilitating the servicing
         of the Receivables. Such retention and possession thereof is at the
         will of SPV and its assignees and is governed by the terms of the
         Custodial Agreement.

         2.2      Grant of Security Interest. It is the intention of the parties
hereto that each transfer of the Conveyed Assets (including the Receivables) to
be made hereunder shall constitute a purchase and sale or capital contribution
and not a loan. In the event, however, that a court of competent jurisdiction is
to hold that any transaction provided for hereby constitutes a loan and not a
purchase and sale or capital contribution, it is the intention of the parties
hereto that this Agreement shall constitute a security agreement under
applicable law and that the Company shall be deemed to have granted, and,
subject to Permitted Liens, the Company does hereby grant, to SPV a first
priority security interest in all of the Company's right, title and interest in,
to and under the Receivables purported to be sold or contributed under this
Agreement or any Sale Assignment and other Conveyed Assets, and all Collections,
and other proceeds of the foregoing, whether now existing or hereafter acquired,
that are subject hereto.

         2.3      Delivery of Timeshare Documents. On or before each Conveyance
Date, the Company shall deliver to the Custodian on behalf of SPV, pursuant to
the SPV Loan Agreement, the Related Documents and Timeshare Documents specified
in the SPV Loan Agreement relating to the Receivables on such Conveyance Date.

         2.4      Payments and Interest. Any amount not paid when due hereunder
shall accrue interest at a rate equal to the then effective Applicable Default
Rate until such time as such amount is paid. Such interest shall be payable upon
demand by the party to whom such amount is owed or such party's assignee.

         2.5      Enforcement of Rights under and against the Conveyed Assets.
The Company hereby acknowledges and agrees that SPV and its assigns may enforce
any and all of its rights and remedies under the Conveyed Assets, including,
without limitation, this Agreement. TFC and the Administrative Agent, as SPV's
assignees, may enforce SPV's rights and remedies hereunder or in connection
herewith so long as such enforcement does not contravene the terms and
conditions of the SPV Loan Agreement.

                                    SECTION 3

                                   CONDITIONS

         3.1      Conditions Precedent to the Initial Conveyance. The initial
Conveyance hereunder is subject to the following conditions precedent:

                  (a) SPV shall have received on or before the date of the
         initial Conveyance under this Agreement, each dated such date (unless
         otherwise indicated), in form and substance satisfactory to SPV, TFC
         and the Administrative Agent:

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<PAGE>

                           (i)      a Sale Assignment, properly completed,
         executed by SPV and the Company;

                           (ii)     each of the documents and opinions
         (including local counsel opinions) required to be delivered by SPV and
         relating to the Company, the Conveyed Assets or the Resorts pursuant to
         Section 4.1 of the SPV Loan Agreement;

                           (iii)    a certificate of the Chief Financial Officer
         of the Company certifying the names and true signatures of the officers
         authorized on its behalf to sign this Agreement, the Sale Assignment,
         the Loan Documents and the other documents to be delivered by it
         hereunder or thereunder (on which certificate SPV, TFC and the
         Administrative Agent may conclusively rely until such time as SPV, TFC
         and the Administrative Agent shall receive from the Company a revised
         certificate meeting the requirements of this subsection (iii)) and
         certifying that (A) none of the constituting documents of the Company,
         the by-laws of the Company or the Company's jurisdiction of
         organization has changed since the date of the delivery of the last
         certified constituting documents and by-laws delivered, (B) that the
         Company is qualified as a foreign corporation in all such jurisdictions
         and still in good standing in all jurisdictions in which the nature of
         its business requires it to be so qualified, (C) all representations
         and warranties made by the Company in the Loan Documents are true and
         correct in every particular; (D) no financing statements or other
         similar instruments and documents relating to the Receivables or any of
         the other Conveyed Assets (other than those related to Permitted Liens)
         have been filed in any Lien Filing Office or in any other jurisdiction,
         other than those financing statements, other similar instruments and
         documents shown on the certified copies of the requests for information
         or copies (or a search report certified by a party acceptable to TFC
         and the Administrative Agent) provided pursuant to clause (vi) below,
         which financing statements or other similar instruments and documents
         must be terminated pursuant to clause (iv) below; (E) the aggregate
         Outstanding Balance of DAT Receivables determined as of the Cut-off
         Date does not exceed 40% of the aggregate Outstanding Balance of the
         Sold Receivables and the Contributed Receivables determined as of the
         Cut-off Date, (F) the aggregate Outstanding Balance of ONS Receivables
         determined as of the Cut-off Date does not exceed 21.84% of the
         aggregate Outstanding Balance of the Sold Receivables and the
         Contributed Receivables determined as of the Cut-off Date, and (G) the
         aggregate Outstanding Balance of PPM Receivables determined as of the
         Cut-off Date does not exceed 5% of the aggregate Outstanding Balance of
         the Sold Receivables and the Contributed Receivables determined as of
         the Cut-off Date;

                           (iv)     copies of properly executed termination
         statements or statements of release (Form UCC-3) or other similar
         instruments or documents, if any, in form and substance satisfactory
         for filing under the Code or any comparable law of any and all
         jurisdictions as may be necessary or, in the opinion of TFC and the
         Administrative Agent, desirable to release all security interests and
         similar rights of any Person in the Receivables or any of the other
         Conveyed Assets, which rights were previously granted by the Company,
         except for Permitted Liens;

                                        4
<PAGE>

                           (v)      executed financing statements (Form UCC-1),
         in respect of the Conveyed Assets naming the Company as debtor, SPV as
         secured party, TFC as assignee and the Conveyed Assets relating to the
         Receivables originated by the Company as collateral, in the Lien Filing
         Offices and such other locations as TFC and the Administrative Agent
         shall require (collectively, the "UCC-1 Financing Statements");

                           (vi)     certified copies of requests for information
         or copies (or a similar search report certified by a party acceptable
         to the TFC and the Administrative Agent), dated a date reasonably near
         and prior to the date of the initial Conveyance, listing all effective
         financing statements and other similar instruments and documents
         including those referred to above in subsections (iv) and (v) which
         name the Company (under its present name and all previous names
         thereof) as debtor and which are filed in all Lien Filing Offices and
         in all other jurisdictions requested by TFC and the Administrative
         Agent, together with copies of such financing statements, none of
         which, except those filed pursuant to subsections (iv) and (v) above,
         shall cover any Receivables or any other Conveyed Assets, except for
         Permitted Liens;

                           (vii)    arrangements regarding the Permitted Liens
         shall have been agreed upon by the Company, SPV, TFC and the
         Administrative Agent;

                           (viii)   any necessary third party consents to the
         closing of the transactions contemplated hereby, in form and substance
         satisfactory to TFC and the Administrative Agent; and

                           (ix)     the Demand Note, properly completed,
         executed by the Company, delivered to SPV and endorsed by SPV to TFC.

                  (b) The Company shall provide TFC and the Administrative Agent
         with evidence satisfactory to such Persons that all indebtedness of the
         Company to any Subject Person or any Affiliate is subordinate to the
         obligations of the Company under the Loan Documents.

                  (c) All actions taken in connection with the execution or
         delivery of the Loan Documents, and all documents and papers relating
         thereto, shall be reasonably satisfactory to TFC, the Administrative
         Agent and their counsel. TFC, the Administrative Agent and their
         counsel shall have received copies of such documents and papers as TFC,
         the Administrative Agent or such counsel may reasonably request in
         connection therewith, all in form and substance satisfactory to such
         Persons.

                  (d) The Company shall have paid all fees, expenses and other
         amounts required to be paid prior to or on the Closing Date, pursuant
         to this Agreement or the other Loan Documents.

                  (e) The Company's servicing systems, reporting and general
         consumer loan servicing capability must be deemed acceptable to TFC,
         the Administrative Agent and their auditors. The reasonable cost of any
         pre-funding servicing audit will be borne by the Company.

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<PAGE>

         3.2      Conditions Precedent to All Conveyances. The obligation of SPV
to pay for each Sold Receivable, or to accept the contributions of each
Contributed Receivable, as applicable, on each Conveyance Date (including the
initial Conveyance Date and the date of any substitution under Section 6) shall
be subject to the further conditions precedent that on such Conveyance Date:

                  (a) The following statements shall be true (and delivery by
         the Company of a Request Notice, and the acceptance by the Company of
         the SPV Purchase Price for any Receivables on any Conveyance Date, if
         applicable, shall constitute a representation and warranty by the
         Company that on such Conveyance Date such statements are true):

                           (i)      the representations and warranties of the
         Company contained in the Loan Documents shall be correct on and as of
         such Conveyance Date, before and after giving effect to such Conveyance
         and to the application of proceeds therefrom, as though made on and as
         of such date;

                           (ii)     no event has occurred, or would result from
         such Conveyance or from the application of the proceeds therefrom,
         which constitutes an Event of Default, a Default or a Developer Event
         of Termination (except as described in clause (f) of the definition
         thereof);

                           (iii)    no event has occurred which constitutes a
         Subservicer Event of Default or would constitute a Potential
         Subservicer Event of Default; and

                           (iv)     each Receivable designated as an Eligible
         Receivable is an Eligible Receivable;

                  (b) SPV shall have received a Sale Assignment in the form
         attached as Exhibit A hereto, dated the related Conveyance Date,
         executed by SPV and the Company;

                  (c) Certified copies of requests for information or copies (or
         a similar search report certified by a party acceptable to TFC and the
         Administrative Agent), dated a date reasonably near and prior to the
         date of the initial Conveyance, listing all effective financing
         statements and other similar instruments and documents including those
         referred to above in Section 3.1(a) which name each of the Company or
         SPV, as the case may be, as debtor, and which are filed in the Lien
         Filing Offices, together with copies of such financing statements, none
         of which, except those filed pursuant to Section 3.1(a) above and those
         relating to Permitted Liens, shall cover any Conveyed Assets.

                  (d) The representations and warranties of the Company
         contained in the Sale Assignment shall be correct on and as of such
         Conveyance Date, before and after giving effect to such Conveyance and
         to the application of proceeds therefrom, as though made on and as of
         such date;

                  (e) The Company shall have taken such other action, including
         delivery of approvals, consents, opinions, documents and instruments to
         TFC and the Administrative Agent, as TFC and the Administrative Agent
         may reasonably request;

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<PAGE>

                  (f) No Material Adverse Effect shall have occurred with
         respect to the Company since the preceding Conveyance Date and there
         shall have been no material adverse change in the financial markets or
         in the ability of TFC to securitize its interests in the Loan and
         related assets, since the preceding Conveyance;

                  (g) With respect to all Sold Receivables and Contributed
         Receivables existing on the Closing Date (other than Specified
         Receivables and the ONS Receivables), at least three days (3) days
         prior to the Closing Date and, with respect to each Substitute
         Receivable, at least three (3) days prior to the related Substitution
         Date the Company shall deliver or cause to be delivered to TFC title
         insurance commitments (endorsed to TFC) to issue a mortgagee's title
         insurance policy, in A.L.T.A. form, underwritten by a company
         acceptable to TFC and the Administrative Agent in all respects, which
         commitments will insure the lien of each Timeshare pledged to TFC in an
         amount not less than the Outstanding Balance of the applicable
         Receivables and containing such affirmative coverage as TFC and the
         Administrative Agent deem reasonably necessary;

                  (h) The Company shall furnish or cause to be furnished to TFC
         and the Administrative Agent, a policy or policies of fire and all risk
         property insurance, including extended coverage for the full
         replacement value of the related Units and/or Resort in amounts
         sufficient to avoid co-insurance liability, naming TFC and its assigns
         as mortgagee, loss payee, or additional insured as TFC and the
         Administrative Agent shall so specify. Resort insurance amounts,
         deductible and coverages shall be subject to TFC's and the
         Administrative Agent's approval, with thirty (30) days prior notice of
         cancellation or modification; provided however, it is agreed that the
         insurance policies delivered by the Company to TFC and the
         Administrative Agent prior to the Closing Date are acceptable to TFC
         and the Administrative Agent;

                  (i) Evidence that all insurance policies (including casualty,
         liability and title insurance) required to be maintained with respect
         to the Resorts hereunder are in full force and effect and all premiums
         with respect thereto have been paid in full; and

                  (j) The Receivables listed in the Sale Assignment or any
         written report to TFC and the Administrative Agent as having been
         transferred to SPV are subject to a first priority, perfected security
         or ownership interest in favor of SPV, except to the extent of
         Permitted Liens.

         3.3      Effect of Failure to Satisfy Conditions. The failure to
satisfy any condition specified in Section 3.1 or 3.2 shall not invalidate any
transfer of Receivables or other Conveyed Assets, but shall constitute a breach
of this Agreement for which damages may be claimed unless SPV, TFC and the
Administrative Agent shall have agreed otherwise in writing.

                                        7
<PAGE>

                                    SECTION 4

                         REPRESENTATIONS AND WARRANTIES

         The Company, for the benefit of SPV and its assigns (including the
Secured Parties), makes the representations and warranties in this Section 4 as
of the date hereof and each Conveyance Date.

         4.1      Eligible Receivable. With respect to the Conveyed Assets, that
(i) each Receivable described herein as a Sold Receivable or Contributed
Receivable is an Eligible Receivable as of the applicable Conveyance Date and
the aggregate Outstanding Balance of DAT Receivables determined as of the
Cut-off Date does not exceed 40% of the aggregate Outstanding Balance of the
Sold Receivables and the Contributed Receivables determined as of the Cut-off
Date; (ii) as of the Substitution Date for each Substitute Receivable, such
Substitute Receivable is an Eligible Receivable and is not a DAT Receivable;
(iii) each Receivable is an Eligible Receivable on each date as of which the
related Receivable is described as an Eligible Receivable in any report or other
writing or information delivered to TFC, SPV or the other Secured Parties, (iv)
the aggregate Outstanding Balance of ONS Receivables determined as of the
Cut-off Date does not exceed 21.84% of the aggregate Outstanding Balance of the
Sold Receivables and the Contributed Receivables determined as of the Cut-off
Date; (v) as of each Substitution Date, the aggregate Outstanding Balance of
Exchange Receivables and Replacement Receivables for that Substitution Date that
constitute ONS Receivables does not exceed the aggregate Outstanding Balance of
the Deleted Receivables and Upgrade Receivables for that Substitution Date that
constitute ONS Receivables, (vi) the aggregate Outstanding Balance of PPM
Receivables determined as of the Cut-off Date does not exceed 5% of the
aggregate Outstanding Balance of the Sold Receivables and the Contributed
Receivables determined as of the Cut-off Date; and (vii) as of each Substitution
Date, the aggregate Outstanding Balance of Exchange Receivables and Replacement
Receivables for that Substitution Date that constitute PPM Receivables does not
exceed the aggregate Outstanding Balance of the Deleted Receivables and Upgrade
Receivables for that Substitution Date that constitute PPM Receivables.

         4.2      Organization, Standing, Qualification. The Company is a Texas
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and as a foreign corporation under the laws of each
jurisdiction in which the character or location of the properties owned by it or
the business transacted by it requires licensing and qualifications; has all
requisite power to conduct its business and to execute and deliver, and to
perform its obligations under, the Loan Documents; has its principal place of
business and chief executive office located at, and for purposes of the Code is
located at the Developer Address; has the exact legal name set forth in the
preamble of this Agreement and the Company has not changed its name in the last
six (6) years; has no trade names, fictitious names, assumed names or "doing
business as" names; and has the organizational identification number of the
Company Organizational Number.

         4.3      Authorization, Enforceability, No Conflict, Etc.

                  (a) The execution, delivery and performance by the Company of
         the Loan Documents has been duly authorized by all necessary corporate
         actions by the Company

                                        8
<PAGE>

         and does not and will not, and the transactions contemplated thereby do
         not and will not, (i) conflict with or otherwise violate any provision
         of the Company's certificate or articles of incorporation, bylaws, or
         any agreement, law, rule, regulation, order, writ, judgment,
         injunction, decree, determination or award presently in effect to which
         the Company is a party or is subject; (ii) result in, or require the
         creation or imposition of, any Lien upon or with respect to any asset
         of the Company other than Liens in favor of SPV; or (iii) result in a
         breach of, or constitute a default by the Company under, any indenture,
         loan or credit agreement or any other agreement, document, instrument
         or certificate to which the Company is a party or by which it or any of
         their assets are bound or affected.

                  (b) No approval, authorization, order, license, permit,
         franchise or consent of, or registration, qualification or filing with,
         any governmental authority or other Person, including without
         limitation, any applicable regulatory authorities of each Applicable
         Timeshare Owners' Association, is required in connection with the
         execution, delivery and performance by the Company of any of the Loan
         Documents.

                  (c) The Loan Documents have been duly executed and delivered
         on behalf of the Company and constitute legal, valid and binding
         obligations of the Company, enforceable against the Company in
         accordance with their respective terms.

                  (d) It is the intention of the parties hereto that the
         transfer and conveyance of assets made or to be made hereunder shall
         constitute a sale or capital contribution to SPV, and not a pledge to
         SPV, of such assets. The execution and delivery of the Loan Documents,
         the delivery and endorsement to SPV of the Sold Receivables and/or
         Contributed Receivables, as applicable, the filing of the UCC-1
         Financing Statements as provided in Section 3 and the recordation of
         the Assignment of Receivables and Timeshare Mortgages in the public
         records of all Lien Filing Offices create in favor of SPV and its
         assigns a valid and perfected ownership interest or (if,
         notwithstanding the intent of the parties, the transfers and
         conveyances hereunder are found to constitute a pledge) continuing
         first priority Lien in and to all of the Conveyed Assets.

                  (e) None of the Sold Receivables or Contributed Receivables
         are forged or has affixed thereto any unauthorized signatures or has
         been entered into by any Person without the required legal capacity;
         and during the term of this Agreement, none will be forged, or will
         have affixed thereto, any unauthorized signatures.

                  (f) There have been no modifications or amendments whatsoever
         to the Sold Receivables, Contributed Receivables or the related
         Timeshare Mortgages other than Permitted Modifications.

                  (g) The Purchasers obligated under the Eligible Receivables
         have no defenses, offsets, counterclaims or claims relating to the
         Eligible Receivables or the Timeshare Mortgages.

                                        9
<PAGE>

                  (h) The Sold Receivables, Contributed Receivables and the
         related Timeshare Mortgages were executed and delivered by Purchasers
         in favor of the Company in connection with the purchase of the related
         Encumbered Timeshares.

                  (i) The Timeshare Mortgages constitute and will constitute
         valid and enforceable first priority Liens on the Encumbered Timeshares
         and all appurtenances, easements, rights, interests, and goods related
         thereto.

                  (j) The Sold Receivables, Contributed Receivables and the
         related Timeshare Mortgages are and shall remain in full force and
         effect, are and will be valid and binding obligations of the respective
         Purchasers in favor of TFC, as holders; and the Company further
         warrants and guarantees the value, quantity, sound condition, grade and
         quality of the Encumbered Timeshares and all rights, properties,
         easements and interests appurtenant or related thereto.

                  (k) The grant of the security interests as provided herein or
         in the Securitization Facility has not affected and will not affect the
         validity or enforceability of the obligations of the respective
         Purchasers of the Sold Receivables or Contributed Receivables under
         such Receivables or the related Timeshare Mortgages.

                  (l) The information regarding insurance maintained by the
         Company, SPV, each Resort and each Applicable Timeshare Owners'
         Associations is true, correct and complete in all respects, and all
         such insurance is in full force and effect.

                  (m) SPV is not required to take, and shall not be required to
         take, any steps required to protect SPV's ownership of and (pursuant to
         Section 2.2 above) security interests in the Conveyed Assets, and the
         Company has taken any and all steps required to protect SPV's ownership
         of and (pursuant to Section 2.2 above) security interests in the
         Conveyed Assets; and SPV is not and shall not be required to collect or
         realize upon the Conveyed Assets or any distribution of interest or
         principal, nor shall loss of, or damage to, the Conveyed Assets release
         Company from any of its obligations hereunder or under the Loan
         Documents.

         4.4      Financial Statements and Business Condition; Solvency. (a) The
Financial Statements fairly present the respective financial conditions and
results of operations of the Company as of the date or dates thereof and for the
periods covered thereby. There are no material liabilities, direct or indirect,
fixed or contingent, of the Company as of the dates of such Financial Statements
which are not reflected therein or in the notes thereto, which have not
otherwise been disclosed to SPV in writing. Except for any such changes
heretofore expressly disclosed in writing to SPV, there has been no material
adverse change in the respective financial conditions of the Company or from the
financial conditions shown in its Financial Statements, nor has the Company
incurred any material liabilities, direct or indirect, fixed or contingent,
which are not shown in its Financial Statements.

                  (b) The Company is able to pay all of its debts as they become
         due, and the Company shall maintain such solvent financial condition,
         as long as the Company has any obligations hereunder or under the Loan
         Documents to SPV or TFC, or in any other

                                       10
<PAGE>

         manner whatsoever. The Company's obligations under the Loan Documents
         will not render the Company unable to pay its debts as they become due.
         The present fair market value of the Company's assets are greater than
         the amount required to pay its total liabilities. As of the date hereof
         and immediately after giving effect to the transactions contemplated
         hereby, the Company is solvent and will be able to pay its debts as
         they mature and will not be rendered insolvent by the transactions
         contemplated by the Loan Documents and, after giving effect to such
         transactions, the Company will not be left with an unreasonably small
         amount of capital with which to engage in the business in which it is
         engaged or proposes to engage and the Company has not intended to
         incur, or believe that it has incurred, debts beyond its ability to pay
         such debts as they mature, and the Company does not contemplate the
         commencement of insolvency, bankruptcy, liquidation or consolidation
         proceedings or other proceedings for the appointment of a receiver,
         liquidator, conservator, trustee or similar official in respect of the
         Company or any of its respective assets. The Company is not
         transferring any Conveyed Assets with any intent to hinder, delay or
         defraud any of its creditors.

         4.5      Taxes. In accordance with the requirements set forth in the
Applicable Underlying Declarations, the Company represents and warrants that the
Company or each Applicable Timeshare Owner's Association, as required, has paid
in full all ad valorem taxes and other taxes and Assessments to be levied
against the Conveyed Assets, and the Company knows of no basis for any
additional taxes or Assessments against any Resort or the Conveyed Assets. The
Company or each Applicable Timeshare Owners' Association, as the case may be,
has filed all tax returns required to have been filed by it or them and have
paid or will pay, prior to delinquency, all taxes shown to be due and payable on
such returns, including interest and penalties, and all other taxes which are
payable by it or them, to the extent the same have become due and payable. The
Company shall pay or use its best efforts to cause each Applicable Timeshare
Owners' Association to collect and pay all applicable sales, rental, occupancy
and other taxes with regard to the sale or rental of any Timeshares related to
the Conveyed Assets hereunder. To the best of the Company's knowledge, no tax
audit is pending or is threatened with respect to the Company, SPV or any
Applicable Timeshare Owners' Association.

         4.6      Title to Properties; Prior Liens; Permitted Liens. Prior to
the transfer thereof to SPV, the Company had, subject to the Permitted Liens,
good and marketable title to all of the Conveyed Assets and all rights,
properties and benefits appurtenant or related thereto. The real estate assets
of the Company consist of the Resorts and certain other improved and unimproved
property. The Company's sole business involves the marketing, sale and financing
of Timeshares at the Resorts. The Company is not in default under any of the
documents evidencing or securing any indebtedness which is secured, wholly or in
part, by all or any portion of the Conveyed Assets, and no event has occurred
which with the giving of notice, the passage of time or both, would constitute a
default under any of the documents evidencing or securing any such indebtedness.
Other than the Permitted Liens, there are no Liens, security interests, charges
or encumbrances against all or any portion of the Conveyed Assets. Other than
with respect to Permitted Liens, no financing statement or other instrument
similar in effect covering all or any part of the Conveyed Assets is on file in
any Lien Filing Office or any other recording office, except such as may have
been filed in favor of SPV or its assignees.

                                       11
<PAGE>

         4.7      Subsidiaries, Affiliates and Capital Structure. The Company
has no Subsidiaries or Affiliates which have any involvement or interest in any
Resort in any way except as set forth on Exhibit J to the SPV Loan Agreement or
as otherwise contemplated by the Loan Documents. For so long as the Company has
any obligations to SPV or TFC under any of the Loan Documents, there shall not,
without TFC's and the Administrative Agent's prior written consent, which may be
granted or withheld in TFC's or Administrative Agent's sole discretion, be any
Change of Control or change of ownership of SPV that would result in the Company
owning less than 100% of the equity of SPV. The Company is not a party to any
proxies, voting trusts, agreements or similar arrangements pursuant to which
voting authority, rights or discretion with respect to the Company or SPV is
vested in any other Person.

         4.8      Litigation, Proceedings, Etc. Except as disclosed to SPV, TFC
and the Administrative Agent in writing prior to the Closing Date, there are no
actions, suits, proceedings, orders or injunctions pending or, to the best of
the Company's knowledge, threatened against or affecting the Company, any
Affiliate of the Company, any Resort or any Applicable Timeshare Owners'
Association, at law or in equity, or before or by any governmental authority or
other tribunal, which (a) could have a material adverse effect on the Company,
any Affiliate of the Company or any Resort; (b) asserts the invalidity of the
Loan Documents, (c) seeks to prevent the transfer, sale, contribution, or pledge
of any Receivable or Conveyed Asset or the consummation of any of the
transactions contemplated hereby or thereby, or (d) seeks a determination or
ruling that might materially and adversely effect (1) the performance by the
Company or SPV of its obligations under the Loan Documents, (2) the validity or
enforceability of the Loan Documents, or (3) the Conveyed Assets, or the
interests of SPV therein, (4) or any Resort. Exhibit H to the SPV Loan Agreement
describes all currently pending litigation against the Company, SPV and each
Subject Person. Except as disclosed in Exhibit H to the SPV Loan Agreement, the
Company has not received any notice from any court, governmental authority or
other tribunal alleging that any such Person or any Resort has violated the
Timeshare Act, any other applicable statute, ordinance, rule or regulation
governing the marketing and sale of Timeshares, any Applicable Underlying
Declaration or any other applicable laws, agreements or arrangements that could
have any material effect on the transactions contemplated hereby and by the Loan
Documents, the Conveyed Assets or any Resort. The Company shall provide to SPV
prompt written notice of any action commenced against any of the foregoing
Persons.

         4.9      Environmental Matters. No Resort contains any Hazardous
Materials, and no Hazardous Materials are used or stored at or transported to or
from any Resort, except in accordance with applicable laws. Neither the Company
nor any Applicable Timeshare Owners' Association, Resort or any manager thereof
has received notice from any Governmental Authority, entity or other Person with
regard to Hazardous Materials on, under or affecting the Conveyed Assets, and
neither the Company, the Conveyed Assets, nor any portion thereof, nor to the
Company's knowledge after diligent inquiry, any Resort, any Applicable Timeshare
Owners' Association or any manager thereof, is in violation of any Environmental
Laws.

         4.10     True and Complete Disclosure. (a) The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Company, any Subject Person, if any, or SPV and their Affiliates
to SPV, TFC or the other Secured Parties in connection with the transactions
contemplated by the Loan Documents, the Resorts or the Conveyed Assets or in

                                       12
<PAGE>

connection with the negotiation, preparation or delivery of the Loan Documents
or included herein or therein or delivered pursuant hereto or thereto, do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein not misleading or (in the
case of projections) are based on reasonable estimates, on the date as of which
such information is stated or certified.

                  (b) The information set forth in the Contract Schedule is true
         and correct with respect to each Contract File described therein.

                  (c) The Company knows of no fact or condition which could
         prevent or delay the sale of Timeshares to Purchasers or prevent or
         impede the operation of any Resort in accordance with the Applicable
         Underlying Declaration and related public offering statements or other
         disclosure documents, and in accordance with applicable law, or prevent
         the Company's performance of its obligations pursuant to the Loan
         Documents.

                  (d) There is no fact known to the Company that, after due
         inquiry, should reasonably be expected to have material adverse effect
         on the ability of the Company or SPV or their Affiliates to perform
         their obligations under the Loan Documents or on the value of the
         Conveyed Assets that has not been disclosed herein, in the other Loan
         Documents or in a report, financial statement, exhibit, schedule,
         disclosure letter or other writing furnished to SPV, TFC and the other
         Secured Parties for use in connection with the transactions
         contemplated hereby or thereby.

         4.11     Margin Stock. No part of the proceeds received by the Company
or any Affiliate in respect of the SPV Purchase Price will be used directly or
indirectly for the purpose of purchasing or carrying, or for payment in full or
in part of, debt that was incurred for the purposes of purchasing or carrying,
any "margin stock," as such term is defined in Section  221.3 of Regulation U of
the Board of Governors of the Federal Reserve System.

         4.12     No Defaults. No Default, Event of Default or Developer Event
of Termination (with respect to the Company or SPV) exists, and there is no
violation in any material respect of any term of any agreement, constituting
document, bylaw or other instrument to which the Company or any Affiliate
thereof is a party or by which it may be bound.

         4.13     Compliance with Law; Licenses, Etc.

                  (a) The Company is not in violation, nor is any Resort, the
         business operations in respect of any Resort or, to the best of the
         Company's knowledge after due inquiry, any Applicable Timeshare Owners'
         Association, in violation of the Timeshare Act or any other statue,
         ordinance, rule or regulation of the State of Texas or any Resort State
         or any other jurisdiction to which the Company, any Encumbered
         Timeshare, the business operations conducted in respect of any Resort,
         or any Applicable Timeshare Owners' Association, are subject.

                  (b) The Company has not failed, nor has SPV, any Resort, any
         Applicable Timeshare Owners' Association controlled by the Company
         pursuant to the Timeshare Act or, to the best of the Company's
         knowledge, any Applicable Timeshare Owners' Association which the
         Company no longer controls pursuant to the Timeshare Act, failed

                                       13
<PAGE>

         to obtain any consents or joinders, or any approvals, licenses,
         permits, franchises or other governmental authorizations, or to make or
         cause to be made any filings, submissions, registrations or Applicable
         Underlying Declaration with any government or agency or department
         thereof, necessary to the establishment, ownership or operation of
         Encumbered Timeshares or any of the Company's or SPV's properties, or
         to the conduct of the Company's or SPV's business, including, without
         limitation, the previous offer and sale of Timeshares or the sale, or
         offering for sale, of Encumbered Timeshares at any Resort, which
         violation or failure to obtain or register materially adversely affects
         the Company, SPV, the Encumbered Timeshares or the business, prospects,
         profits, properties or condition (financial or otherwise) of the
         Company, SPV, the Company's Affiliates or any Resort. The Company, SPV,
         each Resort, each Applicable Timeshare Owners' Association, the
         Company's Affiliates involved in the management or operation of any
         Resort and all other Persons involved in the management or operations
         of any Resort, possess and will at all times continue to possess all
         requisite franchises, certificates of convenience and necessity,
         operating rights, approvals, licenses, permits, consents,
         authorizations, exemptions and orders as are necessary to carry on its
         or their business as now being conducted, without any known conflict
         with the rights of others and, with respect to the Company, SPV and the
         Conveyed Assets in each case subject to no mortgage, pledge, Lien,
         lease, encumbrance, charge, security interest, title retention
         agreement or option other than as provided for by this Agreement or
         otherwise contemplated in the Loan Documents to be executed by SPV to
         the benefit of the Secured Parties. All such licenses and permits are
         presently in full force and effect, and there is no action currently
         pending or, to the best of the Company's knowledge after diligent
         inquiry, threatened to revoke or modify any such license or permit.

                           (i)      The Company has, in all material respects,
         complied with and will continue to comply with all laws and regulations
         of the United States, the State of Texas, each state in which a Resort
         or any portion of the Conveyed Assets is located, any political
         subdivision or any such state and any other governmental,
         quasi-governmental or administrative jurisdiction in which Timeshares
         have been sold or offered for sale, or in which sales, offers of sale
         or solicitations with respect to any Resort have been or will be
         conducted, including to the extent applicable, but not limited to: (A)
         the Timeshare Act; (B) the Consumer Credit Protection Act and any other
         applicable consumer protection law; (C) Regulation Z of the Federal
         Reserve Board; (D) the Equal Credit Opportunity Act; (E) Regulation B
         of the Federal Reserve Board; (F) the Federal Trade Commission's 3-day
         cooling-off Rule for Door-to-Door Sales; (G) Section 5 of the Federal
         Trade Commission Act; (H) Interstate Land Sales Full Disclosure Act
         ("ILSA"); (I) federal postal laws; (J) applicable state and federal
         securities laws; (K) applicable usury laws; (L) applicable trade
         practices, home and telephone solicitation, sweepstakes, anti-lottery
         and consumer credit and protection laws; (M) applicable real estate
         sales licensing, disclosure, reporting and escrow laws; (N) the
         Americans With Disabilities Act and related accessibility guidelines
         ("ADA"); (O) Real Estate Settlement Procedures Act ("RESPA"); (P) all
         amendments to and rules and regulations promulgated under the foregoing
         acts or laws; (Q) the Federal Trade Commission's Privacy of Consumer
         Financial Information Rule; (R) other applicable federal statutes and
         the rules and regulations promulgated thereunder; and (S) any state law
         or law of any jurisdiction (and the rules and regulations promulgated
         thereunder) relating to ownership, establishment or

                                       14
<PAGE>

         operation of the Resort and the Conveyed Assets, or the sale, offering
         for sale, marketing or financing of Timeshares. The Company's marketing
         and sales practices are in compliance with applicable State and federal
         laws, including without limitation, its lead generation techniques.
         Neither the Company nor any Subject Person has been contacted or
         notified of any Federal Trade Commission or state trade commission
         inquiry or investigation or any Department of Justice or state Attorney
         General inquiry or investigation in connection with marketing and sale
         of Timeshares, except as disclosed in writing by the Company to SPV,
         TFC and the Administrative Agent prior to the Closing Date.

                           (ii)     The marketing, sale, offering for sale,
         rental, solicitation of Purchasers and financing of Timeshares by the
         Company at the Resorts (A) do not constitute the sale, or the offering
         for sale, of securities subject to the registration or other
         requirements of the Securities Act of 1933, as amended, or any state
         securities law; (B) do not violate the Timeshare Act or any other
         statute, ordinance, rule or regulation of any state in which such
         Resort is located or any other state or jurisdiction in which a
         Purchaser resides or in which sales or solicitation activities occur;
         and (C) do not violate any consumer credit or usury statute of Texas,
         any Resort State or any other state or jurisdiction in which a
         Purchaser resides or in which sales or solicitation activities occur.
         All Timeshare marketing and sales activities are performed by the
         Company or other independent contractors of the Company, all of whom
         are and shall remain properly licensed in accordance with applicable
         laws. The Company has registered each Resort to permit Timeshare sales
         and pre-sales pursuant to applicable registration laws, and the Company
         has complied with all laws governing its conduct. Before the Company
         markets, offers for sale or sells Timeshares in any other jurisdiction,
         the Company will promptly notify SPV and TFC and provide SPV and TFC
         with evidence satisfactory to SPV and TFC that the Company has complied
         with all laws of such jurisdiction governing its proposed conduct.

         4.14     Restrictions of the Company or the Subject Persons. None of
the Company, the Subject Persons, any Resort, the Encumbered Timeshares, or any
Applicable Timeshare Owners' Association, is a party to any contract or
agreement, or subject to any Lien, charge or organizational restriction, which
materially and adversely affects its or their business, provided that the
parties hereto acknowledge the existence of the Liens arising under the Existing
Agreements. The Company will not be, on or after the Closing Date, a party to
any contract or agreement which (i) restricts its right or ability to incur
indebtedness, except for the Existing Agreements, as to which all necessary
consents with respect to the Loan Documents have been obtained or (ii) prohibits
the Company's execution of, or compliance with the terms of, this Agreement or
the other Loan Documents. The Company has not agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
the Conveyed Assets, whether now owned or hereafter acquired, to be subject to a
Lien except for Permitted Liens.

         4.15     Broker's Fees. SPV and the Company represent to each other
that neither of them has made any commitment or taken any action which could
result in a claim for any broker's, finder's or other similar fees or
commissions with respect to any of the transactions contemplated by this
Agreement. The Company agrees to indemnify SPV and save and hold the other

                                       15
<PAGE>

harmless from and against all claims of any Person for any broker's or finder's
fee, commission or similar amount, and this indemnity shall include reasonable
attorneys' fees and legal expenses.

         4.16     Deferred Compensation Plans. Company has no pension, profit
sharing or other compensatory or similar plan providing for a program of
deferred compensation for any employee or officer except as set forth in Exhibit
M to the SPV Loan Agreement. No fact or situation, including but not limited to
any Reportable Event, exists or will exist in connection with any Plan of the
Company which might constitute grounds for termination of any Plan by the
Pension Benefit Guaranty Corporation or cause the appointment by the appropriate
United States District Court of a Trustee to administer any such Plan. No
Prohibited Transaction exists or will exist upon the execution and delivery of
the Agreement or the performance by the parties hereto of their respective
duties and obligations hereunder. The Company will (A) at all times make prompt
payment of contributions required to meet the minimum funding standards set
forth in Sections 302 through 305 of the Pension Reform Act with respect to each
of its Plans; (B) promptly, after the filing thereof, furnish to SPV copies of
each annual report required to be filed pursuant to Section 103 of the Pension
Reform Act in connection with each Plan for each Plan Year, including any
certified financial statements or actuarial statements required pursuant to said
Section 103; (C) notify SPV and TFC immediately of any fact, including, but not
limited to, any Reportable Event arising in connection with any Plan which might
constitute grounds for termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States District
Court of a Trustee to administer the Plan; and (D) notify SPV and TFC of any
Prohibited Transaction. The Company will not, and will not permit its Affiliate
to, (A) engage in any Prohibited Transaction; or (B) terminate any such Plan in
a manner which could result in the imposition of a Lien on any asset of the
Company pursuant to Section 4068 of the Pension Reform Act.

         4.17     Labor Relations. The employees of the Company are not parties
to any collective bargaining agreement with the Company and, to the best of the
Company's knowledge, there are no material grievances, disputes or controversies
with any union or any other organization of the Company's employees, or threats
of strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.

         4.18     The Resorts.

                  (a) Timeshare Plan. Each Resort has been established and
         dedicated and is and, to the Company's knowledge, will remain, a
         timeshare plan and project in full compliance with all applicable laws
         and regulations, including without limitation, the Timeshare Act.
         Related real property, all Units, all Improvements constructed or to be
         constructed thereon, the Common Amenities, the Common Furnishings, the
         Facilities and all related real and personal property have been and
         will continue to be duly submitted to the provisions of the Applicable
         Underlying Declaration and the Timeshare Documents, where applicable.
         The Company will not vote to amend and will ensure that each Applicable
         Timeshare Owners' Association does not vote to terminate or amend any
         Applicable Underlying Declaration in any material respect without the
         prior written approval of TFC and the Administrative Agent. SPV is
         under no obligation to accept as Conveyed Assets any Receivables from
         any Resort not listed on Exhibit F to the SPV

                                       16
<PAGE>

         Loan Agreement unless and until TFC and the Administrative Agent
         consent in writing to the addition of a new Resort from which the
         Company may sell, contribute or assign Receivables to SPV as Conveyed
         Assets and such Exhibit F is amended to include such new Resort.

                  (b) Access. Each Resort and all Units and Common Amenities
         have direct access to publicly dedicated roads, and all roadways inside
         each Resort are subject to an access and use easement or other
         dedication or provision that benefits and will continue to benefit all
         Purchasers.

                  (c) Utilities. Electric, gas, sanitary and stormwater sewer,
         telephone, water facilities and other necessary utilities are available
         and there is sufficient capacity to service each Resort and all Units,
         Common Amenities and Facilities. Any easements necessary to the
         furnishing of such utility services have been obtained, duly recorded
         and inure to the benefit of the applicable Resort, the Applicable
         Timeshare Owners' Association and all Purchasers.

                  (d) Amenities and Use Rights. Each Purchaser of a Timeshare
         has and will forever continue to have the guaranteed, permanent,
         non-exclusive right to use and right of ingress and egress to the all
         of the Facilities and public utilities of the applicable Resort,
         pursuant to the terms of the Applicable Cross Easement Agreement and
         the Timeshare Documents. There shall be non-disturbance agreements or
         similar arrangements in place to provide absolute assurances to
         Purchasers in good standing of Timeshares and users and occupants of
         Units that their right to use any Facilities (pursuant to the Timeshare
         Documents) which are owned by the Company, a Subject Person, their
         respective Affiliates, or the Applicable Timeshare Owners' Association
         which may be encumbered by a third party lender (including the
         Facilities) is forever protected and assured and cannot be interfered
         with by the Company, such Subject Person, such Affiliate, the
         Applicable Timeshare Owners' Association or any lender.

                  (e) Construction. All costs arising from the Company's
         construction or acquisition of the Resorts, including all buildings and
         Units and any other Improvements and the purchase of any furniture,
         fixtures, equipment, inventory, furnishings or other personalty related
         to the Conveyed Assets hereunder have been paid or will be paid when
         due.

                  (f) Tangible Property. Except for specific items which may be
         owned by independent contractors, the machinery, equipment, fixtures,
         tools and supplies used in connection with each Resort, including
         without limitation, with respect to the operations and maintenance of
         the Units, Common Amenities, Common Furnishings and Facilities, are
         owned by the Applicable Timeshare Owners' Association, the Company or
         an Affiliate of the Company. In connection therewith, the Company will
         obtain such non-disturbance and estoppel agreements as SPV or TFC may
         require.

                  (g) Units at the Resorts. Each Unit is fully furnished and
         ready for use and occupancy by Purchasers. All Common Furnishings
         (including appliances) within Units in which the Company has sold
         Timeshares have been fully paid for and are free and

                                       17
<PAGE>

         clear of any Liens or other interests of any third party (except for
         Permitted Liens), including any lessor or other lender.

                  (h) Assessments. Each Purchaser is automatically a member of
         the Applicable Timeshare Owners' Association, a non-profit corporation
         organized under a state of the United States, which has the authority
         to levy annual assessments to cover the costs of maintaining and
         operating the related Resort. Each Applicable Timeshare Owners'
         Association is solvent, and currently levied assessments upon
         Purchasers will be adequate to cover the costs of maintaining and
         operating the applicable Resort. Silverleaf Club on behalf of each
         Applicable Timeshare Owners' Association maintains adequate funds to
         make capital improvements in accordance with the Reserve Plan. The
         Company is current with respect to the payment of all assessments and
         other amounts owed to the Applicable Timeshare Owners' Association in
         connection with any Timeshares of which the Company is deemed the
         owner. There are no events which currently exist or could reasonably be
         foreseen by the Company which could give rise to a material increase in
         such costs. The Company will or will use its best efforts to cause
         Silverleaf Club on behalf of the Applicable Timeshare Owners'
         Association to maintain the adequate funds to make capital improvements
         in accordance with the Reserve Plan. Except as otherwise provided by
         law, any lien for delinquent assessments due with respect to any
         Encumbered Timeshare will be subordinate to the lien of the Timeshare
         Mortgage assigned to SPV for such Encumbered Timeshare.

         4.19     Reservation System. The Reservation System for each Resort is
fully operational for its intended purpose. The Reservation System includes the
computer software owned by the Silverleaf Club and licensed by the Silverleaf
Club to SPV and its successors and assigns, in each case so as to allow
Purchasers reasonable access thereto. The Company hereby acknowledges and agrees
that the license provided to SPV is irrevocable and will remain in effect
notwithstanding the terms of any such prior pledges and licenses so long as any
Conveyed Assets remain outstanding. The Company acknowledges the significance of
the Reservation System to the ability of the Resorts to operate properly and
allow Purchasers to reserve assigned Units and exercise use rights. The Company
agrees to prepare, or to cause to be prepared, reports and provide information
on the Reservation System promptly upon request from SPV.

         Nothing contained herein shall abrogate or otherwise interfere with any
proprietary rights in the Reservation System that have been reserved by
Silverleaf Club, so long as such proprietary rights are not asserted in a manner
that would prevent the continued operation of the Reservation System as
contemplated herein.

         4.20     Timeshare Documents and Reports. The Company has furnished to
SPV true and correct copies of the Timeshare Documents listed on Exhibit G to
the SPV Loan Agreement which consist of all those placed on file by the Company
with the Regulators or any other appropriate federal, state or local regulatory
or recording agencies, offices or departments, if required. All such filings
and/or recordations, and all joinders and consents, necessary in order to
establish the plan in respect to the Encumbered Timeshares, including without
limitation, each Resort, the Units, Timeshares, and all Common Amenities, Common
Furnishings, and all related use and access rights have been done or obtained,
and all statutes, ordinances, rules and

                                       18
<PAGE>

regulations, and all agreements or arrangements, in connection therewith have
been complied with.

         4.21     Operating Contracts. The contracts, agreements and
arrangements listed and described on Exhibit K to the SPV Loan Agreement
comprise all of the Operating Contracts. All of the Operating Contracts are and
shall (unless SPV and TFC shall otherwise consent in advance in writing) remain
unmodified, free and clear of any Lien except Liens disclosed in writing to TFC
and the Administrative Agent prior to the date hereof, and are in full force and
effect.

         4.22     Architectural and Environmental Control. All Units, Common
Amenities, Common Furnishings and other real or personal property at, upon or
appurtenant to each Resort are and will continue to be in compliance with the
design, use, architectural and environmental control provisions, if any, set
forth in the Applicable Underlying Declaration, and other Timeshare Documents.

         4.23     Tax Identification Numbers. The Company's federal taxpayer's
identification number is the Developer Tax ID Number.

         4.24     True Sales. Each Receivable has been conveyed to SPV pursuant
to a "true" sale or contribution (and not merely a pledge) and SPV shall not be
consolidated with the Company, any Subject Person or their respective Affiliates
for the purposes of any Debtor Relief Laws.

         4.25     Account Information. The Lock-Box Accounts and the Collection
Account are the only accounts to which Purchasers are directed to remit
Collections. Within 30 calendar days of the Closing Date, the Company shall
establish one or more merchant accounts in the name of SPV (the "Merchant
Accounts") in order to facilitate the processing of credit card payments for the
Pledged Receivables. Such Merchant Accounts shall be dedicated solely to the
Pledged Receivables. The Company shall instruct SPV to cause amounts credited to
such Merchant Accounts to be deposited into a Collection Account. Neither the
Company nor SPV shall change such instructions given to SPV without the written
consent of TFC and the Administrative Agent.

         4.26     Interest in Real Property. The Timeshare underlying each Sold
Receivable and each Contributed Receivable is an interest in real property
consisting of an undivided interest in fee simple in a lodging unit or group of
lodging units at each Resort for a fixed or floating period of time; provided
that, subject to the criteria set forth in the definition of Eligible
Receivable, Timeshares underlying the Sold Receivables and the Contributed
Receivables may be beneficial interests in the Oak N' Spruce Resort Trust and
are therefore not fee interests in real property.

         4.27     Perfection Representations and Warranties. The Company, for
the benefit of SPV and the Secured Parties, makes the following representations
and warranties (the "Perfection Representations and Warranties").

                  (a) General. It is the intention of the parties hereto that
         the transfer and conveyance of assets made or to be made hereunder
         shall constitute a sale and capital contribution to SPV, and not a
         pledge to SPV, of such assets. This Agreement creates an ownership
         interest or (if, notwithstanding the intent of the parties, the
         transfers and

                                       19
<PAGE>

         conveyances hereunder are found to constitute a pledge) a valid and
         continuing Lien on the Conveyed Assets and the proceeds thereof in
         favor of SPV, which (a) in the case of existing Conveyed Assets and the
         proceeds thereof, is enforceable upon execution of this Agreement
         against creditors of and purchasers from the Company (or with respect
         to Substitute Receivables, as of the Substitution Date) and which will
         be enforceable with respect to the applicable Conveyed Assets hereafter
         and thereafter created and the proceeds thereof upon such creation, and
         (b) upon filing of the financing statements described in clause (d)
         below and, in the case of Substitute Receivables hereafter created,
         upon the creation thereof, will be prior to all other interests or
         Liens (other than Permitted Liens).

                  (b) Characterization. The Receivables constitute
         "instruments," "general intangibles" or "tangible chattel paper" within
         the meaning of Code Section 9-102.

                  (c) Creation. Immediately prior to the conveyance of the
         applicable Conveyed Assets pursuant to this Agreement, except for
         Permitted Liens the Company owns and has good and marketable title to,
         or has a Lien on, the Conveyed Assets free and clear of any Lien, claim
         or encumbrance of any Person; provided, however, that nothing in this
         Section shall prevent or be deemed to prohibit the Company from
         suffering to exist upon any of the Conveyed Assets any Liens for any
         taxes if such taxes shall not at the time be due and payable. The
         Company has received all consents and approvals, if any, to the sale or
         contribution of the Conveyed Assets to SPV required by the terms of the
         Conveyed Assets that constitute "instruments."

                  (d) Perfection. The Company has caused or will have caused,
         within ten days of the Closing Date, the filing of all appropriate
         financing statements in the proper filing office in the appropriate
         jurisdictions under applicable law in order to perfect the ownership or
         security interest granted to SPV under this Agreement in the applicable
         Conveyed Assets and, with respect to any Substitute Receivables (if any
         additional filing is so necessary) within 10 days of the Substitution
         Date. With respect to the Conveyed Assets that constitute an instrument
         or tangible chattel paper, either:

                           (i)      All original executed copies of each such
         instrument or tangible chattel paper have been delivered to the Master
         Servicer; or

                           (ii)     Such instruments or tangible chattel paper
         are in the possession of the Master Servicer, that it is holding such
         instruments or tangible chattel paper solely on behalf and for the
         benefit of SPV, TFC and the other Secured Parties.

                  (e) Priority. Other than Permitted Liens, the Company has not
         pledged, assigned, sold, granted a Lien on, or otherwise conveyed, any
         of the Conveyed Assets. Except for Permitted Liens, the Company has not
         authorized the filing of and is not aware of any financing statements,
         mortgage assignment or similar document against the Company that
         include a description of collateral covering the Conveyed Assets. None
         of the instruments or tangible chattel paper that constitute or
         evidence the Conveyed Assets has any marks or notations indicating that
         they are pledged, assigned or otherwise conveyed to any Person other
         than SPV, TFC or the other Secured Parties.

                                       20
<PAGE>

         4.28     Investment Company Act. Neither SPV nor the Company is an
"investment company" or an "affiliated" person of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.

         4.29     Continuation and Investigation. The representations and
warranties contained herein shall be and remain true and correct in all material
respects so long as any of the Company's obligations or Parallel Claims
hereunder or under the Loan Documents have not been fully satisfied, and each
request by the Company for a sale or contribution to occur on a Conveyance Date
shall constitute an affirmation that all of the foregoing representations and
warranties remain true and correct in all material respects as of the date
thereof. All representations, warranties, covenants and agreements made herein
or in any certificate or other document delivered to SPV or TFC, or other
Secured Parties by or on behalf of the Company, pursuant to or in connection
with the Loan Documents, shall be deemed to have been relied upon by SPV or TFC,
as applicable, notwithstanding any investigation heretofore or hereafter
conducted by or on behalf of SPV or TFC, and shall survive the making of any or
all payments contemplated hereby.

         4.30     Subsidiaries, Affiliates and Capital Structure. Neither the
Company nor any Subject Person has any Subsidiaries or Affiliates which have any
interest or involvement in the Resorts except as shown on Schedule 4.30. No
other Person has any legal or beneficial ownership interest in the Company. As
used in this Section, Affiliates is not intended to include any Applicable
Timeshare Owners Association.

         It is understood and agreed that the representations and warranties
described in this Section 4, which are made on the Closing Date and on each
Conveyance Date, shall survive the sale or contribution of the Conveyed Assets
by the Company to SPV and any subsequent assignment of the Conveyed Assets by
SPV (including its grant of a first priority perfected security interest in, to
and under the Conveyed Assets, pursuant to the SPV Loan Agreement, in order to
secure the due payment and performance by SPV of Obligations), and the
termination of this Agreement and the Securitization Facility Documents and
shall continue so long as any Conveyed Assets shall remain outstanding.

         4.31     Use of Proceeds. The Company will use all amounts received in
respect of the SPV Purchase Price solely to (i) pay expenses incurred in
connection with this Agreement and the transactions contemplated hereby and (ii)
to make payments of interest and principal with respect to the indebtedness
incurred and outstanding pursuant to the agreements set forth on Schedule 4.31
attached hereto.

         4.32     Seismic Exposure. No portion of the Conveyed Assets
constituting real property is located in a zone 3 or zone 4 of the "Seismic Zone
Map of the U.S."

         4.33     Condemnation. No portion of the Conveyed Assets constituting
real property has been taken in condemnation or other like proceedings nor is
any proceeding pending, threatened or known to be contemplated for the partial
or total condemnation or taking of any portion of the Conveyed Assets.

                                       21
<PAGE>

         4.34     Flood Zone. Except as disclosed in the surveys delivered
pursuant hereto, no portion of the Conveyed Assets constituting real property is
located in a flood hazard area as defined by the Federal Insurance
Administration.

         4.35     Heller and Sovereign Facilities. Each of SPV and TFC have been
provided with true and correct copies of the Heller Documents and the Sovereign
Documents (as each such term is defined in the TFC Tranche A Loan Agreement).
There is no event of default or event which, with the passage of time, notice or
both, would constitute an event of default under either the Heller Documents or
the Sovereign Documents and the Company is in good standing under both the
Heller Documents and the Sovereign Documents.

                                    SECTION 5

                            COVENANTS OF THE COMPANY

         So long as any portion of the Obligations or the Parallel Claims
remains unsatisfied, the Company hereby covenants and agrees with SPV to comply
with all covenants set forth in this Section 5.

         5.1      Payment and Performance of Obligations. The Company shall pay
all of its obligations and liabilities when and as the same become due and
payable, and the Company shall strictly observe and perform all of its
obligations under the Loan Documents, including without limitation, all
covenants, agreements, terms, conditions and limitations contained in the Loan
Documents, and will do all things necessary which are not prohibited by law to
prevent the occurrence of any Event of Default under the Loan Documents; and the
Company will maintain an office or agency in the State of Texas where notices,
presentations and demands in respect of the Loan Documents may be made upon the
Company. Such office or agency and the books and records of the Company shall be
maintained at the Company's corporate headquarters, which is located at the
Developer Address, until such time as the Company shall notify SPV and TFC, in
writing, of any change of location of such office or agency.

         5.2      Maintenance of Existence, Qualification and Assets. The
Company shall at all times maintain its legal existence, maintain its
qualification, where required, to transact business and good standing in the
State of Texas and each Resort State and in any other jurisdiction where it
conducts business in connection with the Resorts, and comply or cause compliance
with all governmental laws, rules, regulations and ordinances applicable to the
Resorts or the Encumbered Timeshares, the Company or its business, including,
without limitation, the Timeshare Act and all other applicable timeshare and
consumer protection acts and regulations.

         5.3      Consolidation and Merger. The Company will not consolidate
with or merge into any other Person or permit any other Person to consolidate
with or merge into it, unless (i) the Company is the continuing or surviving
corporation in any such consolidation or merger and (ii) prior to and
immediately after such consolidation or merger, no Default or Event of Default
shall exist. In addition, the Company shall not, without the prior written
consent of SPV, TFC and the Administrative Agent, which consent may be given,
withheld or conditioned by such Person in its sole discretion, convey, transfer,
lease or otherwise dispose of all or substantially all of its

                                       22
<PAGE>

assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock or other ownership interest of,
any Person (whether in one transaction or in a series of transactions).

         5.4      Maintenance of Insurance. The Company or, if required pursuant
to the Applicable Underlying Declaration, the Applicable Timeshare Owners'
Association, shall maintain (or the Company shall cause to be maintained), at
all times during the term of this Agreement, policies of insurance with premiums
therefor being paid when due, and shall deliver to SPV originals of insurance
policies issued by insurance companies (together with paid premium invoices in
respect thereof), in amounts, in form and in substance, and with expiration
dates, all acceptable to SPV and TFC and containing waivers of subrogation
rights by the insuring company, non-contributory standard mortgagee benefit
clauses or their equivalents and mortgagee loss payable endorsements in favor of
and satisfactory to SPV and TFC and breach of warranty coverage, providing the
following types of insurance on and with respect to the Company (or, as
appropriate, the Applicable Timeshare Owners' Association) and each Resort:

                  (a) As to all Improvements that are completed as of the date
         hereof, All Risk Special Form ("All Risk Special Form") insurance
         coverage (including fire, lightning, hurricane, tornado, wind and water
         damage, earthquake, vandalism and malicious mischief coverage) covering
         all real and personal property which comprise such Resort, in an amount
         not less than the full replacement value of such improvements and
         personal property, and said policy of insurance shall provide for a
         deductible acceptable to SPV and TFC, breach of warranty coverage,
         replacement cost endorsements satisfactory to SPV and TFC, and shall
         not permit co-insurance. As to Improvements under construction,
         builder's risk insurance with extended coverage (with standard
         mortgagee clause in favor of SPV and TFC), in an amount and with a
         company satisfactory to SPV and TFC, and containing a provision
         allowing the insured to complete the work provided for hereunder and
         covering the building materials on real property during construction.
         Upon completion of all construction activities, such insurance shall
         convert to, or shall be replaced with, the above-described fire and
         extended coverage insurance covering the Improvements, all other
         property of any nature used for the construction of the Improvements
         and any personal property located in or on such Resort, in an amount
         not less than the full replacement value of such Improvements and
         personal property, and said policy of insurance shall provide for a
         deductible acceptable to SPV and TFC, breach of warranty coverage,
         replacement cost endorsements satisfactory to SPV and TFC, shall not
         permit co-insurance, and with an endorsement which includes as a loss
         payable any additional interest expense caused by a peril insured
         against under the policy. Such coverage for interest expense is limited
         to the period of time from the date of physical damage until such time
         as will reasonably elapse, in the exercise of due diligence, to the
         repair of the damage to its prior state. All insurance shall
         specifically cover architect and engineering fees necessary to repair
         or replace any insured portion of such Resort and shall cover debris
         removal;

                  (b) Public liability and property damage insurance covering
         such Resort in amounts and on terms satisfactory to SPV and TFC; and

                                       23
<PAGE>

                  (c) Such other insurance on such Resort or any replacements or
         substitutions therefor, including, without limitation, rent loss,
         business interruption, flood insurance (if such Resort is or becomes
         located in an area which is considered a flood risk by the U.S.
         Emergency Management Agency or pursuant to the National Flood Insurance
         program), in such amounts and upon such terms as may from time to time
         be reasonably required by SPV and TFC.

                  SPV and TFC shall expressly be named as additional insureds
         and loss payees in each insurance policy described in this Section. To
         the extent any "institutional mortgagee," "institutional lender" or
         "mortgagee" (as defined or used in the Applicable Underlying
         Declaration) other than SPV or TFC has any rights to approve the form
         of insurance policies with respect to any Resort, the amounts of
         coverage thereunder, the insurers under such policies or the
         designation of an attorney-in-fact for purposes of dealing with damage
         to any part of such Resort or insurance claims or matters related
         thereto or any successor to such attorney-in-fact or any changes with
         respect to any of the foregoing, the Company shall take all steps as
         may be necessary to (and, after turnover, if any, of control of such
         Resort to the Applicable Timeshare Owners' Association, the Company
         shall use its best efforts to) ensure that SPV and TFC shall at all
         times have a co-equal right with such other "preferred mortgagee,"
         "institutional lender" or other "mortgagee" (including, without
         limitation, the Company or any third-party lender), to approve all such
         matters and any proposed changes in respect thereof; and the Company
         shall not cause and shall use its best efforts to prohibit any changes
         with respect to any insurance policies, insurers, coverage,
         attorney-in-fact or insurance trustee, if any, without SPV's and TFC's
         prior written approval.

                  In the event of any insured loss or claim in respect of all or
         any portion of any Resort or the Encumbered Timeshares, or any real
         property comprising a portion of the Collateral, the Company shall
         apply (or cause to be applied), and the Company covenants that the
         Applicable Timeshare Owners' Association shall apply (or cause to be
         applied), all proceeds of such insurance policies in a manner
         consistent with the Timeshare Documents, the Timeshare Act, and all
         other applicable statutes, ordinances, rules and regulations and the
         Loan Documents.

                  All insurance policies required pursuant to this Agreement (or
         the Timeshare Documents or the Timeshare Act) shall provide that the
         coverage afforded thereby shall not expire or be amended, canceled,
         modified or terminated without at least thirty (30) days prior written
         notice to SPV and TFC. At least thirty (30) days prior to the
         expiration date of each policy maintained pursuant to this Section, a
         renewal or replacement thereof satisfactory to SPV and TFC shall be
         delivered to SPV and TFC. The Company shall deliver or cause the
         Applicable Timeshare Owners' Association to deliver to SPV and TFC
         receipts evidencing the payment of all premiums for all such insurance
         policies and renewals or replacements. The delivery of any insurance
         policies hereunder shall constitute an assignment of all unearned
         premiums. In the event that the Applicable Timeshare Owners'
         Association shall fail to make all required premium payments for all
         such insurance policies at least thirty (30) days prior to the
         expiration date of each policy maintained pursuant to this Section, the
         Company shall immediately upon receiving notice thereof notify SPV and
         TFC in writing of such failure to timely pay the required

                                       24
<PAGE>

         insurance premiums. The Company shall make a good faith inquiry on a
         regular basis to the Applicable Timeshare Owners' Association to
         determine if the required insurance premiums covering the Conveyed
         Assets have been paid. If the Company determines upon such inquiry or
         otherwise that the required insurance premiums have not been paid, the
         Company shall immediately notify SPV and TFC of such failure to timely
         pay the required insurance premium and the Company shall have thirty
         (30) days from receipt of a written request from SPV or TFC to cause
         the required insurance premiums to be paid. If the required insurance
         premiums are not paid within such thirty (30) day period, SPV or TFC
         may, in its sole discretion, without any obligation to do so, choose to
         pay such required insurance premiums on behalf of the Company or the
         Applicable Timeshare Owners' Association, in which case the Company
         shall pay SPV or TFC, as applicable, such amounts upon demand. SPV or
         TFC may also, in its sole discretion, in the event the required
         insurance premiums are not paid when due, establish an insurance escrow
         account from which SPV or TFC, as applicable, may make insurance
         payments on behalf of the Company or the Applicable Timeshare Owners'
         Association when insurance premiums shall become due. If the required
         insurance premiums are not paid as required and SPV or TFC elects not
         to pay such insurance premiums or establish an escrow account for
         payment thereof, such failure shall constitute an Event of Default
         under the SPV Loan Agreement.

                  SPV acknowledges that the insurance policies delivered by the
         Company to SPV prior to the Closing Date are acceptable to SPV.

                  In the event of any fire or other casualty to or with respect
         to improvements on or at any Resort or any other real property
         comprising a portion of the Collateral, the Company covenants that it
         or the Applicable Timeshare Owners' Association, as the case may be,
         will promptly restore, repair or replace (or cause to be restored,
         repaired or replaced) the damaged improvements and repair or replace
         any other personal property to the same condition as immediately prior
         to such fire or other casualty and, with respect to the improvements
         and personal property on such Resort and any real property comprising a
         portion of the Collateral, in accordance with the terms of the
         Timeshare Documents, the Timeshare Act and all other applicable
         statutes, ordinances, rules and regulations. The insufficiency of any
         net insurance proceeds shall in no way relieve the Company or, as
         applicable, the Company and the Applicable Timeshare Owners'
         Association of their respective obligations to restore, repair or
         replace such improvements and personal property in accordance with the
         terms hereof, of the Applicable Underlying Declaration or other
         Timeshare Documents or of the Timeshare Act, and the Company covenants
         that the Company or, as the case may be, the Applicable Timeshare
         Owners' Association, shall promptly comply and cause compliance with
         the provisions of the Applicable Underlying Declaration and other
         Timeshare Documents, and of the Timeshare Act and all other applicable
         statutes, ordinances, rules and regulations relating to such
         restoration, repair or replacement.

                  The Company shall in good faith cooperate with SPV and TFC in
         obtaining for SPV and TFC the benefits of any insurance or other
         proceeds lawfully or equitably payable to the Company, SPV or TFC in
         connection with the transactions contemplated hereby or by the Loan
         Documents (including the payment by the Company of the

                                       25
<PAGE>

         expense of an independent appraisal on behalf of SPV or TFC in case of
         a fire or other casualty affecting any Resort).

         5.5      Payment of Liabilities, Taxes and Claims. The Company will pay
and, as applicable pursuant to the Applicable Underlying Declaration, the
Company covenants that the Applicable Timeshare Owners' Association will pay,
when due, all of its obligations and liabilities, including all taxes imposed on
or with respect to the transaction contemplated hereby or by any of the Loan
Documents, the Conveyed Assets, the Encumbered Timeshares or on or with respect
to the Company or any income, property or profits of the Company and shall pay
all other charges and assessments against the Company, the Conveyed Assets and
the Encumbered Timeshares before any claim (including, without limitation,
claims for labor, services, materials and supplies) arises for sums which have
become due and payable. The Company will pay and, as applicable pursuant to the
Applicable Underlying Declaration, the Company covenants that the Applicable
Timeshare Owners' Association will pay when due, all taxes imposed upon each
Resort, the Collateral, the Company, the Applicable Timeshare Owners'
Association, or any of their respective assets or with respect to any of their
franchises, businesses, income or profits. The Company shall make good faith
inquiry on a regular basis to determine if the required taxes have been paid.
The Company shall immediately notify SPV and TFC in writing of any failure to
timely pay all taxes due. In the event that SPV or TFC determines (through
notice from Company or otherwise) that such taxes have not been paid when due,
the Company shall have thirty (30) days from receipt of a written request for
payment from SPV or TFC to cause the required taxes with respect to each Resort
to be paid. If such required taxes (and any applicable late charges, etc.) are
not paid within such thirty (30) day period, SPV or TFC may, in its sole
discretion, without any obligation to do so, choose to pay such taxes on behalf
of the Company or the Applicable Timeshare Owners' Association in which case the
Company shall pay SPV or TFC, as applicable, such amounts upon demand; SPV or
TFC may also, in its discretion, in the event the required taxes with respect to
any Resort are not paid when due, establish a tax escrow account from which SPV
or TFC may, make tax payments on behalf of the Company or the Applicable
Timeshare Owners' Association when taxes shall become due. In the event SPV or
TFC elects not to pay the required taxes or establish a tax escrow account, and
the required taxes for any Resort are not paid as set forth above, such failure
shall constitute an Event of Default under the SPV Loan Agreement. The Company
shall pay, and the Company covenants that the Applicable Timeshare Owners'
Association shall pay, all other charges and assessments levied against the
Company, the Conveyed Assets or any Resort before any claim (including, without
limitation, claims for labor, services, materials and supplies) arises for
amounts which have become due and payable. Except for the Liens in favor of SPV
granted pursuant to the Loan Documents, and except for Permitted Liens, the
Company covenants that no statutory or other Liens whatsoever (including,
without limitation, mechanics', materialmen's, judgment or tax liens) shall
attach to any of the Conveyed Assets or the Resorts. In the event any such Lien
attaches to any portion of the Collateral or any Resort, the Company shall,
within thirty (30) days after any such Lien attaches, either cause such Lien to
be released of record; or provide SPV and TFC with a bond in accordance with the
applicable laws, issued by a corporate surety acceptable to SPV and TFC, in an
amount and form acceptable to SPV and TFC.

         5.6      Inspections. The Company shall (and shall cause its Affiliates
to), at reasonable times and from time to time, upon reasonable notice and at
the expense of the Company, including but not limited to the travel expenses of
SPV, TFC, Administrative Agent or their

                                       26
<PAGE>

agents and representatives, permit SPV, TFC, the Administrative Agent or their
agents or representatives to inspect the Resort, the Conveyed Assets and any of
the Company's or any Subject Person's assets, including but not limited to all
documents, bank statements, and other records within the Company's possession,
custody or control, and to examine and make copies of and abstracts from its
and, to the extent it has access thereto or possession thereof and the
Applicable Timeshare Owners' Association's books, accounts, records, original
correspondence, computer tapes, disks, software, and other papers as it may
desire; and to discuss its affairs, finances and accounts with any of its
officers, employees, Affiliates, contractors or independent certified public
accountants (and by this provision, the Company authorizes said accountants to
discuss with SPV, TFC, the Administrative Agent or their agents or
representatives, the affairs, finances and accounts of the Company). SPV and TFC
agree to use reasonable efforts not to unreasonably interfere with the Company's
business operations in connection with any such inspections. Without limiting
the foregoing, SPV and TFC shall have the right to make such credit
investigations as SPV or TFC may deem appropriate in connection with its review
of Receivables, and the Company shall make available to SPV and TFC all credit
information in the Company's possession or under its control or to which it may
have access, with respect to Purchasers or other obligors under Receivables as
SPV, TFC or the Administrative Agent may request.

         5.7      Reporting Requirements. So long as any of the Obligations
remain outstanding, the Company shall furnish (or cause to be furnished, as the
case may be) to SPV and TFC, in each case certified in writing by the Company as
true and correct, the following:

                  (a) Monthly Reports. As soon as available and in any event
         within nine (9) calendar days after the end of each calendar month, a
         report showing the trial balance of the Sold Receivables and
         Contributed Receivables; a current aging and delinquency report on the
         Sold Receivables and Contributed Receivables; a report detailing the
         collections on each of the Sold Receivables and Contributed
         Receivables; monthly reports from the Account Agents required pursuant
         to the Blocked Account Agreements; and any other monthly reports from
         the Subservicing Agent required pursuant to the Subservicing Agreement;

                  (b) Quarterly Financial Reports. As soon as available and in
         any event within forty-five (45) days following the end of each
         calendar quarter, unaudited statements of income and expense of the
         Company for the quarterly period in question and balance sheets of the
         Company as of the last day of such calendar quarter, all in such detail
         and scope as may be reasonably required by SPV or TFC, prepared in
         accordance with GAAP and on a basis consistent with prior accounting
         periods and certified as true and correct by the Company's chief
         financial officer, as appropriate;

                  (c) Annual Financial Reports. As soon as available and in any
         event within one hundred twenty (120) days after the end of each
         calendar year or other Fiscal Year, statements of income and expense of
         the Company for the annual period ended as of the end of such Fiscal
         Year, and balance sheets of the Company as of the end of such Fiscal
         Year, all in such detail and scope as may be reasonably required by SPV
         and TFC and prepared and audited by an independent certified public
         accounting firm acceptable to SPV and TFC in accordance with GAAP and
         on a basis consistent with prior accounting

                                       27
<PAGE>

         periods. Each annual financial statement of the Company shall be
         certified by the Company to be true, correct and complete, and shall
         otherwise be in form acceptable to SPV and TFC;

                  (d) Officer's Certificate. Each set of annual Financial
         Statements or reports delivered to SPV or TFC pursuant to clauses (a),
         (b) and (c) above shall be accompanied by a certificate of the chief
         operating officer or the chief financial officer of Company, setting
         forth that the signers have reviewed the relevant terms of this
         Agreement (and all other agreements and exhibits between the relevant
         parties), have made, or caused to be made, under their supervision, a
         review of the transactions and conditions of the Company from the
         beginning of the period covered by the Financial Statements or reports
         being delivered therewith to the date of the certificate and that such
         review has not disclosed the existence during such period of any
         condition or event which constitutes a Default, Event of Default or
         Subservicer Event of Default or, if any such condition or event existed
         or exists or will exist, specifying the nature and period of existence
         thereof and what action the Company has taken or proposes to take with
         respect thereto;

                  (e) Sales Reports. Within nine (9) calendar days after the end
         of each month and within nine (9) calendar days after the end of each
         Fiscal Year, the Company shall deliver to SPV and TFC, monthly and
         annually, as appropriate, a monthly or annual sales report, detailing
         the sales of all Timeshares (whether or not included in the Conveyed
         Assets) for the period covered thereby, together with all Timeshare
         sales made by the Company which have been canceled during such period.
         Such monthly reports shall be certified by the Company, and such annual
         reports shall be certified by the Company to be true, correct and
         complete and otherwise in a form approved by SPV and TFC;

                  (f) Delinquency Report. By the first Business Day of each
         month (or, if TFC shall so request, by the first Business Day of any
         week), the Company shall deliver to SPV and TFC a report detailing the
         Receivables included in the Conveyed Assets as to which (as of the last
         day of the preceding month or, as applicable, week) more than the
         Specified Amount of any payment then due and payable has remained
         unpaid for more than sixty days from the due date for such payment;

                  (g) HOA Statements. Promptly following their becoming
         available, the Company shall provide to SPV and TFC, or shall cause to
         be provided to SPV and TFC, annual budgets and financial statements for
         the Silverleaf Club and a consolidated annual budget and consolidated
         financial statements for the Applicable Timeshare Owners' Associations;

                  (h) Audit Reports. Promptly upon receipt thereof, one (1) copy
         of each report submitted to the Company by independent public
         accountants or other Persons in connection with any annual, interim or
         special audit made by them of the books of the Company;

                  (i) Notice of Default, Event of Default, etc. Immediately upon
         becoming aware of the existence of any condition or event which
         constitutes a Default, an Event of Default or a Developer Event of
         Termination, a written notice specifying the nature and

                                       28
<PAGE>

         period of existence thereof and what action the Company is taking or
         proposes to take with respect thereto;

                  (j) Notice of Claimed Default. Immediately upon becoming aware
         that the holder of any material obligation or of any evidence of
         material indebtedness of the Company has given notice or taken any
         other action with respect to a claimed default or event of default
         thereunder, a written notice specifying the notice given or action
         taken by such holder and the nature of the claimed default or event of
         default and what action the Company is taking or propose to take with
         respect thereto;

                  (k) Material Adverse Developments. Immediately upon becoming
         aware of any claim, action, proceeding, development or other
         information which may have a Material Adverse Effect, the Company shall
         provide SPV and TFC with telephonic or telegraphic notice followed by
         telecopied and mailed written confirmation, specifying the nature of
         such development or information and the anticipated effect thereof; it
         being understood that such events include, but are not limited to, the
         following:

                                    (A)      any material action, suit,
         proceeding, dispute, offset, deduction, defense or counterclaim that is
         or is reasonably likely to have, individually or in the aggregate, a
         Material Adverse Effect;

                                    (B)      the commencement or threat of any
         rule making or disciplinary proceedings or any proceedings instituted
         by or against SPV or the Company in any federal, state or local court
         or before any governmental body or agency, or before any arbitration
         board, or the promulgation of any proceeding or any proposed or final
         rule which, if adversely determined, would have a Material Adverse
         Effect;

                                    (C)      the commencement of any proceedings
         by or against SPV or the Company under any applicable bankruptcy,
         reorganization, liquidation, rehabilitation, insolvency or other
         similar law now or hereafter in effect or of any proceeding in which a
         receiver, liquidator, conservator, trustee or similar official shall
         have been, or may be, appointed or requested for SPV or the Company or
         any of its assets;

                                    (D)      the receipt of notice that (1) SPV
         or the Company is being placed under regulatory supervision, (2) any
         license, permit, charter, registration or approval necessary for the
         conduct of SPV's or the Company's business is to be, or may be,
         suspended or revoked, or (3) SPV or the Company is to cease and desist
         any practice, procedure or policy employed by the Company in the
         conduct of its business, and such cessation may have a Material Adverse
         Effect;

                                    (E)      any Lien known to it made or
         asserted against any Conveyed Assets; any determination that a Conveyed
         Asset, designated as an Eligible Receivable in a Request Notice or
         otherwise, was not an Eligible Receivable at such time; and the
         occurrence of any event which would have a Material Adverse Effect;

                                       29
<PAGE>

                                    (F)      any events that would cause the
         Company's representation and warranty in Section 4.16 hereof to be
         materially incorrect if such representation and warranty were made
         after the occurrence of such event.

                  (l) Hazardous Materials. The Company shall promptly notify SPV
         and TFC of any change in the nature or extent of any Hazardous
         Materials maintained on or under any Resort or used in connection
         therewith, and will deliver to SPV and TFC copies of any citation,
         orders, notices or other material governmental or other communication
         received with respect to any other Hazardous Materials, or other
         environmentally regulated substances affecting any Resort. SPV and TFC
         shall have the right to require the Company to periodically perform (at
         the Company's expense) an environmental audit and, if deemed reasonably
         necessary by SPV or TFC, an environmental risk assessment, each of
         which must be satisfactory to SPV or TFC, as applicable, in their sole
         discretion, of the land. Such audit and/or risk assessment must be
         conducted by a licensed environmental consultant. All costs and
         expenses incurred by SPV or TFC in the exercise of such rights shall
         bear interest at the Applicable Default Rate and shall be payable by
         the Company upon demand;

                  (m) Title Update. Upon SPV's or TFC's written request, updated
         Title searches with respect to the property subject to the Timeshare
         Mortgages and any related affidavit, in form and content sufficient to
         permit the Title Insurance Company to delete any exception for parties
         in possession, matters of survey, mechanics' or materialmen's liens,
         the gap and taxes and assessments which are due and payable;

                  (n) Survey. Upon SPV's or TFC's written request, three (3)
         original copies of an as built survey for each Resort, dated within
         sixty (60) days of such written request, satisfactory to SPV and TFC
         and prepared by a licensed surveyor satisfactory to SPV and TFC and the
         Title Insurance Company in accordance with the requirements of SPV and
         TFC, showing the location and dimensions of all buildings, Units,
         Common Amenities and other improvements thereon and indicating the
         routes of ingress and egress for public access to each Resort, all
         utility lines, walks, drives, recorded or visible easements and rights
         of way on the real property, and showing that there are no
         encroachments, improvements, projections or easements (recorded or
         unrecorded) on the property lines. Each survey with respect to any
         Resort shall certify the acreage of the real property which makes up
         such Resort and shall indicate whether such Resort is located within
         any flood hazard area. Each survey must be prepared in accordance with
         the standards set forth by ALTA/ACSM and those of any and all
         applicable state surveyors' bureaus or Applicable Timeshare Owners'
         Association as well as any and all regulations or applicable local,
         state and federal law and must be certified to SPV and TFC and the
         Title Insurance Company. The surveyor's certificate placed on each
         survey shall include a statement that said survey locates any and all
         times set forth as exceptions in the Title Policy as SPV or TFC may
         require, shall include a legal description of the surveyed Resort and
         otherwise satisfy all of the survey requirements SPV or TFC shall
         reasonably specify, and shall include any other information required by
         SPV or TFC and the Title Insurance Company. TFC shall pay the cost of
         each such survey if it does not make a similar survey request in
         connection with its additional credit facilities with Developer;

                                       30
<PAGE>

                  (o) Environmental Report. Upon SPV's or TFC's written request,
         an environmental report or reports covering each Resort, which shall be
         provided to TFC prior to the Closing Date, including all real property
         and personal property intended to be subject to the Timeshare
         Documents, confirming:

                           (i)      that soil conditions are sufficient to
         support existing improvements and any contemplated Improvements, and
         confirming the absence of sinkholes;

                           (ii)     the absence of Hazardous Materials on, under
         or affecting any real property or personal property comprising the
         Resorts;

                           (iii)    that the engineering or environmental
         consulting firm has obtained, reviewed and included within its report a
         CERCLIS printout from the Environmental Protection Agency (the "EPA"),
         statements from the EPA and other applicable state and local
         authorities and such other information as TFC may reasonably require,
         including, without limitation, a Phase I Environmental Inspection, all
         of which information shall confirm that there are no known or suspected
         Hazardous Materials located at or used or stored on or transported to
         or from, any Resort or in such proximity thereto as to create a
         material risk of contamination of the Collateral;

                           (iv)     the absence of radon gas at the Resorts,
         including all of the Units, or, if radon gas is found to be present in
         any part of any Resort or the Units, that such presence is of a nature
         or magnitude so as to be fully in compliance with applicable standards
         under the Environmental Laws and all other applicable laws or
         standards;

                           (v)      the absence of asbestos within the Units,
         Common Amenities or elsewhere at the Resorts, or, if asbestos is found
         to be present in any part of any Resort, that such presence is of a
         nature or magnitude which is able to be removed by a licensed removal
         contractor for a guaranteed maximum sum satisfactory to TFC; and

                           (vi)     the structural and mechanical integrity of
         the improvements on the Resorts; and

                  (p) Title Report. On each Title Report Date, a report listing
         all Substitute Receivables conveyed to SPV in each of the six
         Settlement Periods after the previous Title Report Date, or in the case
         of the first Title Report Date, the six Settlement Periods after the
         Closing Date, and evidence that Developer has delivered to TFC, in the
         case of each Sold Receivable and Contributed Receivable existing on the
         Closing Date (other than ONS Receivables) and each Substitute
         Receivable as to which more than ninety (90) days have elapsed since
         the related Substitution Date (other than ONS Receivables), a
         mortgagee's title policy of the type described in Section 3.2(g) with
         respect to such Receivable.

                  (q) Other Information. The Company will promptly deliver to
         SPV and TFC any other information related to the transactions
         contemplated hereby and by the Loan Documents, the Conveyed Assets, the
         Resorts, the Company or any Subject Person as SPV or TFC may in good
         faith request including, without limitation, annually, federal call
         reports relating to Account Agent, if any.

                                       31
<PAGE>

         5.8      Records. (a) The Company shall, and shall use its best efforts
to cause each Applicable Timeshare Owners' Association to, keep adequate records
and books of account in accordance with GAAP reflecting all financial
transactions of the Company or SPV with respect to each Resort. In addition, the
Company shall keep, and shall promptly deliver to SPV and TFC upon SPV's or
TFC's request therefor, complete, timely and accurate records of all sales of
Timeshares and all payments made in respect of Sold Receivables and Contributed
Receivables.

                  (b) The Company as Subservicer shall, at its own cost and
         expense, maintain satisfactory and complete records of the Conveyed
         Assets, including a record of all payments received and all credits
         granted with respect to the Conveyed Assets and all other dealings with
         the Conveyed Assets. The Company as Subservicer will mark conspicuously
         with a legend, in form and substance satisfactory to TFC, its master
         computer records pertaining to the Conveyed Assets, to evidence this
         Agreement, the Lien on the Conveyed Assets held by SPV, TFC and the
         other Secured Parties or their assignee. The Company as Subservicer
         shall (i) provide to TFC or its representatives with access to, at any
         time on demand of TFC, all of the Company's facilities, personnel,
         books and records pertaining to the Conveyed Assets, and (ii) allow TFC
         to occupy the premises of the Company where such books and records are
         maintained, and utilize such premises, the equipment thereon and any
         personnel of the Company that either such party may wish to employ to
         administer, service and collect the Conveyed Assets.

         5.9      Marketing and Management. The Company is engaged in the active
management of the Resorts and the sale of Timeshares at the Resorts. The Company
shall (i) remain engaged in the active management of the Resorts and the sale of
Timeshares therein, (ii) unless the Company notifies TFC in writing at least
thirty (30) days in advance of its new location, retain its executive offices at
Developer Address and (iii) continue to perform duties substantially similar to
those presently performed as provided in the management agreement relating to
each Resort. Other than the assignment of certain Resort Management Agreements
made prior to the Closing Date pursuant to the Existing Agreements, no Resort
Management Agreement shall be modified, assigned, extended, terminated or
entered into, nor shall the current method of operation and management of the
Resorts be changed in any material manner, without the prior written approval of
TFC, except as expressly contemplated hereby.

         5.10     FICA. The Company shall furnish to SPV and TFC within thirty
(30) days after the expiration of each calendar quarter, proof reasonably
satisfactory to SPV and TFC that SPV's and the Company's obligations to make all
required deposits for F.I.C.A., social security and withholding taxes have been
satisfied.

         5.11     Operating Contracts. Subject to the rights of the Applicable
Timeshare Owners' Association as set forth in the Timeshare Documents, no
Operating Contract shall be modified, extended, terminated or entered into,
without the prior written approval of SPV and TFC if any such modification,
extension, termination or new agreement could have a material adverse impact on
the operation of any Resort or a Material Adverse Effect.

         5.12     Change of Control. Absent the prior written consent of SPV and
TFC, which may be granted or withheld in SPV's or TFC's sole discretion, none of
Developer or any Subject

                                       32
<PAGE>

Person shall take any action or permit to exist any condition that would cause a
Change of Control, and the Company shall at all times own 100% of the equity of
SPV.

         5.13     Maintenance. The Company shall maintain, or shall cause to be
maintained each Resort and each other portion of the Conveyed Assets that
constitutes real property or, to the extent provided for pursuant to the
Applicable Underlying Declaration, shall use its best efforts to cause the
Applicable Timeshare Owners' Association to maintain the related Resort and each
other portion of the related Conveyed Assets that constitutes real property, in
good repair, working order and condition and shall make all necessary
replacements and improvements to the Resorts and such other real property so
that the value and operating efficiency of the Resorts and such real property
will be maintained at all times and so that the Resorts and such real property
remains in compliance in all respects with the Timeshare Act, the Timeshare
Documents, and all other applicable statutes, ordinances, rules and regulations.

         5.14     Claims. The Company shall promptly notify SPV and TFC of any
claim, action or proceeding affecting any Resort or the Conveyed Assets, or any
part thereof, or SPV or TFC or any of the ownership or security interests or
rights granted in favor of SPV or TFC hereunder or under any of the other Loan
Documents. At the request of SPV or TFC, the Company shall appear in and defend
in favor of SPV or TFC, as applicable, at the Company's sole expense, any such
claim, action or proceeding.

         5.15     Registration and Regulations.

                  (a) Local Legal Compliance. The Company will comply, and will
         cause each Resort and each other portion of the Conveyed Assets that
         constitutes real property to comply, with all applicable servitudes,
         restrictive covenants, all applicable planning, zoning and land use
         ordinances and building codes, all applicable health and Environmental
         Laws and regulations, and all other applicable laws, rules,
         regulations, agreements or arrangements. All inspections, licenses and
         permits required to be made or issued in respect of the buildings and
         other Improvements in the Units at each Resort which are related to the
         Encumbered Timeshares have been made or issued by the appropriate
         governmental authorities, and the use and occupancy of such buildings
         for their intended purposes is lawful under all applicable statutes,
         ordinances, rules and regulations. The timeshare use and occupancy of
         the Encumbered Timeshares will not violate or constitute a
         non-conforming use under any private covenant or restriction or any
         zoning, use or similar statutes, ordinances, rules or regulations
         affecting the use or occupancy of such Timeshares. All inspections,
         licenses and certificates required to be made or issued with respect to
         any buildings, improvements or amenities which are related to the
         Encumbered Timeshares and with respect to the use or occupancy thereof,
         including but not limited to certificates of occupancy, have been made
         or issued by the appropriate authorities and the use or occupancy of
         all such buildings, improvements and amenities for their respective
         intended purposes are lawful under all applicable statutes, ordinances,
         rules, and regulations;

                  (b) Registration Compliance. The Company shall at all times
         maintain or cause to be maintained all necessary registrations, current
         filings, consents, franchises, approvals and exemption certificates,
         and the Company will make or pay, or cause to be

                                       33
<PAGE>

         made or paid, all registrations, declarations or fees with any
         applicable regulatory authorities and any other governmental agencies
         or departments thereof, whether in a Resort State or any another
         jurisdiction, required in connection with the Resorts and the
         occupancy, use and operation thereof, the incorporation of Units into
         the timeshare plan established pursuant to each Applicable Underlying
         Declaration and the other Timeshare Documents and the sale,
         advertising, marketing, and offering for sale of Encumbered Timeshares.
         All such registrations, filings and reports will be truthfully
         completed, and true and complete copies of such registrations,
         applications, consents, licenses, permits, franchises, approvals,
         exemption certificates, filings and reports will be delivered to SPV
         and TFC. The Company shall advise SPV and TFC of any changes with
         respect to its marketing or sales programs in any jurisdiction
         (including jurisdictions other than the Resort States), and at SPV's or
         TFC's request from time to time, the Company shall deliver to SPV or
         TFC, as applicable: (i) written statements by the applicable state
         authorities, in form acceptable to SPV or TFC, as applicable, stating
         that no registration is necessary for the sale of Timeshares in the
         particular state; (ii) an opinion of counsel in form acceptable to SPV
         or TFC, as applicable, and rendered by counsel acceptable to SPV or
         TFC, as applicable, stating that no such registration is necessary; and
         (iii) such other evidence of compliance with applicable laws as SPV or
         TFC, as applicable, may require; and

                  (c) Other Compliance. The Company has, in all material
         respects, complied with and will continue to comply with all laws and
         regulations of the United States, the State of Texas, each state in
         which a Resort or any portion of the Conveyed Assets is located, any
         political subdivision or any such state and any other governmental,
         quasi-governmental or administrative jurisdiction in which Timeshares
         have been sold or offered for sale, or in which sales, offers of sale
         or solicitations with respect to any Resort have been or will be
         conducted, including to the extent applicable, but not limited to: (i)
         the Timeshare Act; (ii) the Consumer Credit Protection Act and any
         other applicable consumer protection law; (iii) Regulation Z of the
         Federal Reserve Board; (iv) the Equal Credit Opportunity Act; (v)
         Regulation B of the Federal Reserve Board; (vi) the Federal Trade
         Commission's 3-day cooling-off Rule for Door-to-Door Sales; (vii)
         Section 5 of the Federal Trade Commission Act; (viii) ILSA; (ix)
         federal postal laws; (x) applicable state and federal securities laws;
         (xi) applicable usury laws; (xii) applicable trade practices, home and
         telephone solicitation, sweepstakes, anti-lottery and consumer credit
         and protection laws; (xiii) applicable real estate sales licensing,
         disclosure, reporting and escrow laws; (xiv) the ADA; (xv) RESPA; (xvi)
         all amendments to and rules and regulations promulgated under the
         foregoing acts or laws; (xvii) the Federal Trade Commission's Privacy
         of Consumer Financial Information Rule; (xviii) other applicable
         federal statutes and the rules and regulations promulgated thereunder;
         and (xix) any state law or law of any jurisdiction (and the rules and
         regulations promulgated thereunder) relating to ownership,
         establishment or operation of the Resort and the Conveyed Assets, or
         the sale, offering for sale, marketing or financing of Timeshares.

         5.16     Other Documents. The Company will maintain to the satisfaction
of SPV and TFC, and make available to SPV and TFC, accurate and complete files
relating to the Encumbered Timeshares, each Sold Receivable and Contributed
Receivable, each Resort and all of the other Conveyed Assets, and such files
will contain true copies of each Sold Receivable

                                       34
<PAGE>

and Contributed Receivable, as amended from time to time, copies of all relevant
credit memoranda relating to such Receivables and all collection information and
correspondence relating thereto. Without limiting the foregoing, the Company
shall maintain evidence of its compliance with the requirements of Section 4.1.

         5.17     Further Assurances; Financing Statements. (a) The Company will
execute and deliver, or cause to be executed and delivered, such other and
further agreements, documents, instruments, certificates and assurances as, in
the judgment of SPV or TFC exercised in good faith, may be necessary or
appropriate to more effectively evidence or secure, and to ensure the
performance of, the obligations of the Company hereunder and under the Loan
Documents. In addition, the Company shall deliver to SPV and TFC from time to
time, upon request by SPV or TFC, such documents, instruments and other matters
or items as SPV or TFC may reasonably require to evidence the Company's
compliance with the covenants set forth in the Loan Documents or to enable TFC
to comply with its obligations under the Securitization Facility Documents.
Without limiting the generality of the foregoing, the Company shall execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices as may be necessary or desirable or that SPV or TFC
may request to protect and preserve and perfect the transfers and security
interests granted by the Loan Documents, free and clear of all Liens, other than
Permitted Liens.

                  (b) The Company hereby authorizes SPV and TFC to file one or
         more financing or continuation statements, and amendments thereto,
         relating to all or any part of the Conveyed Assets without the
         signature of the Company or any other Person where permitted by law.

         5.18     Utilities. The Company will cause, or to the extent provided
for in the Applicable Underlying Declarations, will use its best efforts to
ensure that the Applicable Timeshare Owners' Association or the manager of each
Resort, as applicable, will cause, electric, gas, sanitary and stormwater sewer,
water facilities, drainage facilities, solid waste disposal, telephone and other
necessary utilities to be available to each such Resort in sufficient capacity
to service each such Resort

         5.19     Amenities. The Company will cause, or to the extent provided
for in the Applicable Underlying Declarations, will use its best efforts to
ensure that the Applicable Timeshare Owners' Association or the manager of each
Resort, as applicable, will cause each Resort to be maintained in good condition
and repair, and in accordance with the provisions of the applicable Timeshare
Documents. The Company further assures that each Purchaser of an Encumbered
Timeshare at each such Resort will have continuing access to, and the use of
during the period of any occupancy of the Units, all of the Common Amenities,
Common Furnishings, Facilities and related or appurtenant services, rights and
benefits, all as provided in the Applicable Underlying Declaration, the other
Timeshare Documents.

         5.20     Expenses and Closing Fees. Whether or not the transactions
contemplated hereunder are consummated, the Company shall pay all expenses of
SPV, TFC and the Administrative Agent relating to negotiating, preparing,
documenting, closing, administering and enforcing the Loan Documents, including,
but not limited to:

                                       35
<PAGE>

                  (a) the cost of preparing, reproducing and binding the Loan
         Agreement, the other Loan Documents and all exhibits and schedules
         thereto;

                  (b) the fees and disbursements of counsel for SPV and TFC and
         the Administrative Agent; provided, that the aggregate amount paid in
         respect of such fees and disbursements incurred in connection with the
         Loan Documents and the Loan shall not exceed $600,000, and the parties
         hereto hereby acknowledge and agree that funds in an amount equal to
         $250,000 have previously been paid by the Company to SPV and such funds
         shall reduce the amount owing to SPV, TFC and the Administrative Agent
         pursuant to this clause (b) (and shall be included in the amounts paid
         by the Company for purposes of the cap set forth in this proviso);

                  (c) out-of-pocket expenses of SPV, TFC and the Administrative
         Agent, including, without limitation, expenses related to back-up or
         replacement servicing or subservicing arrangements;

                  (d) all fees and expenses (including fees and expenses of
         counsel for SPV and TFC and the Administrative Agent) relating to any
         amendments, waivers, consents or subsequent closings or other
         transactions pursuant to the provisions hereof;

                  (e) all costs, outlays, legal fees and expenses of every kind
         and character had or incurred in: (i) the interpretation or enforcement
         of any of the provisions of, or the creation, preservation or exercise
         of rights and remedies under, any of the Loan Documents including the
         costs of appeal; (ii) the preparation for, negotiations regarding,
         consultations concerning, or the defense or prosecution of legal
         proceedings involving any claim or claims made or threatened against
         SPV or TFC (or the other Secured Parties) arising out of this
         transaction or the protection of the Conveyed Assets or the Collateral
         securing the Loan, expressly including, without limitation, the defense
         by SPV or TFC of any legal proceedings instituted or threatened by any
         Person to seek to recover or set aside any payment or set off
         theretofore received or applied by SPV or TFC or the other Secured
         Parties with respect to the Obligations or the Parallel Claims, and any
         and all appeals thereof; and (iii) the advancement of any expenses
         provided for under any of the Loan Documents;

                  (f) all expenses relating to the maintenance and
         administration of the Lockboxes, Lockbox Accounts and the Collection
         Account and all fees and expenses of the Master Servicer and any escrow
         by the Title Insurance Company or any other escrow agent;

                  (g) any custodial fees payable to the Custodian with respect
         to the original Sold Receivables and Contributed Receivables and
         related Conveyed Assets as provided herein or in any of the Loan
         Documents; and

                  (h) all real and personal property taxes and assessments,
         documentary stamp and intangible taxes, sales taxes, recording fees,
         title insurance premiums and other title charges, document copying,
         transmittal and binding costs, appraisal fees, lien and judgment search
         costs, fees of architects, engineers, environmental consultants,
         surveyors and any special consultants, construction inspection fees,
         brokers fees, escrow fees, wire

                                       36
<PAGE>

         transfer fees, and all travel and out-of-pocket expenses of SPV and TFC
         to conduct inspections or audits. Without limiting any of the
         foregoing, the Company shall pay the costs of UCC and other searches,
         UCC and other Loan Document recording and filing fees and applicable
         taxes and premiums on each mortgagee policy of title insurance
         delivered to SPV, TFC and the other Secured Parties pursuant to the
         Loan Agreement.

         5.21     Indemnification. In addition to (and not in lieu of) any other
provisions of any Loan Document providing for indemnification in favor of SPV or
TFC, the Company shall defend, indemnify and hold harmless SPV, TFC, the other
Secured Parties and their respective subsidiaries, Affiliates, officers,
directors, agents, employees, representatives, consultants, contractors,
servants and attorneys, as well as the respective heirs, personal
representatives, successors and assigns of any or all of them (hereinafter
collectively the "Indemnified Parties"), from and against, and agrees promptly
to pay on demand or reimburse each of them with respect to, any and all
liabilities, claims, demands, losses, damages, costs and expenses (including
without limitation, reasonable attorneys' and paralegals' fees and costs),
actions or causes of action of any and every kind or nature whatsoever
(hereafter collectively "Losses") asserted against or incurred by any of them by
reason of or arising out of or in any way related or attributable to:

                  (a) any failure or alleged failure of the Company or its
         Affiliate to perform any of its covenants or obligations with respect
         to a Resort or the Timeshare Documents or to any Purchasers, or the
         debtor-creditor relationships between the Company or its Affiliate on
         the one hand, and the Purchasers, on the other;

                  (b) the violation of any federal or state laws, or local
         statutes, ordinances, rules or regulations, including the Timeshare
         Act, in connection with the transactions contemplated by the Timeshare
         Documents or the Loan Documents;

                  (c) any breach of any covenant or agreement or the
         incorrectness or inaccuracy of any representation, warranty or
         certification of the Company contained in this Agreement or any of the
         Loan Documents (including without limitation any certification of the
         Company delivered to SPV or TFC);

                  (d) any and all taxes, including real estate, personal
         property, sales, mortgage, excise, intangible or transfer taxes, and
         any and all fees or charges, including, without limitation under the
         Timeshare Act in connection with the Collateral or the transactions
         contemplated by the Loan Documents, which may at any time arise or
         become due prior to the payment, performance and discharge in full of
         the obligations of the Company hereunder and under the Loan Documents
         but excluding taxes imposed on the overall net income or gross receipts
         of the SPV and franchise taxes imposed on the SPV by any jurisdiction
         in which the SPV is organized or qualified to do business;

                  (e) the breach of any representation or warranty as set forth
         herein regarding any Environmental Laws;

                  (f) the failure of the Company to perform any obligation or
         covenant herein required to be performed pursuant to any Environmental
         Laws;

                                       37
<PAGE>

                  (g) the use, generation, storage, release, threatened release,
         discharge, disposal or presence on, under or about any Resort of any
         Hazardous Materials;

                  (h) the removal or remediation of any Hazardous Materials from
         any Resort required to be performed pursuant to any Environmental Laws
         or as a result of recommendations of any environmental consultant or as
         required by SPV or TFC;

                  (i) claims asserted by any Person (including without
         limitation any Governmental Authority), in connection with or any in
         any way arising out of the presence, use, storage, disposal,
         generation, transportation, release, or treatment of any Hazardous
         Materials on, in, under or affecting any Resort;

                  (j) the violation or claimed violation of any Environmental
         Laws in regard to any Resort;

                  (k) the preparation of an environmental audit or report on any
         Resort, whether conducted by SPV, TFC or a third-party, or the
         implementation of environmental audit recommendations;

                  (l) the commingling of any collections or the proceeds of the
         Conveyed Assets by any Person other than the Secured Parties, the
         Master Servicer or a Subservicer that is not the Company or its
         Affiliate;

                  (m) subject only to Permitted Liens, the failure to vest in
         SPV a valid perfected first priority ownership interest in the Conveyed
         Assets, or to vest in TFC a first priority, perfected security interest
         in the Conveyed Assets;

                  (n) any defense, setoff, counterclaim, recoupment or reduction
         of liability asserted by a Purchaser or other obligor on the
         Receivable; and

                  (o) any litigation, claim or proceeding of any type whatsoever
         in connection with the transactions contemplated by the Loan Documents
         or the Collateral.

                  Notwithstanding the foregoing, the Company shall not be
         required to indemnify the Indemnified Parties against, or reimburse the
         Indemnified Parties for, Losses resulting from credit problems of the
         Purchasers or other obligors on the Conveyed Assets. This paragraph
         shall not be interpreted to limit the Company's obligations under the
         Demand Note.

                  Such indemnification shall not give the Company any right to
         participate in the selection of counsel for SPV or TFC, as applicable,
         or the conduct or settlement of any dispute or proceeding for which
         indemnification may be claimed. SPV and TFC agree to give the Company
         written notice of the assertion of any claim or the commencement of any
         action or lawsuit covered by this Section. It is the express intention
         of the parties hereto that the indemnity provided for in this Section,
         as well as the disclaimers of liability referred to in this Agreement,
         are intended to and shall protect and indemnify each Indemnified Party
         from the consequences of such Person's own negligence, whether or not
         that negligence is the sole or concurring cause of any liability,
         obligation, loss,

                                       38
<PAGE>

         damage, penalty, action, judgment, suit, claim, cost, expense or
         disbursement; provided, however, that the Company shall not be required
         to protect and indemnify any Person from the consequences of such
         Person's gross negligence, where such gross negligence is the sole
         cause of the liability, obligation, loss, damage, penalty, action,
         judgment, suit, claim, cost, expense or disbursement for which
         indemnification or protection would otherwise be required. The
         provisions of this Section shall survive the complete performance of
         the obligations of the Company hereunder and under the Loan Documents
         and the termination of this Agreement and shall survive the full
         payment, performance and discharge of the Obligations and the Parallel
         Claims and the termination of the Loan Agreement, and shall continue
         thereafter in full force and effect.

         5.22     No Amounts Due. The Company shall use its best efforts to
cause the Applicable Timeshare Owners' Association to deliver a statement to SPV
and TFC at the end of each calendar year, commencing in the present calendar
year and continuing throughout the term of the transactions contemplated
hereunder, indicating that no amounts are due and payable to the Applicable
Timeshare Owners' Association from the Company, the Subject Persons or any
Affiliate of the Company and that all taxes and insurance premiums payable by
the Applicable Timeshare Owners' Association (or Silverleaf Club on behalf of
the Applicable Timeshare Owners' Association) have been paid when due. The
Company hereby represents and warrants that as of the Closing Date, no amounts
are due and payable to the Applicable Timeshare Owners' Association from the
Company, the Subject Persons, or any Affiliate of the Company. The Company
agrees to submit annually to SPV and TFC, within thirty (30) days after it is
available, the proposed annual maintenance and operating budget of the
Silverleaf Club (and, if any Applicable Timeshare Owners' Association
establishes an annual maintenance and operating budget, such Applicable
Timeshare Owners' Association) certified by such Person's manager.

         5.23     Servicing. The Subservicer and the form and content of the
Subservicing Agreement shall be satisfactory to SPV and TFC, in their sole
discretion. The Company may not terminate the Subservicing Agreement without
SPV's and TFC's prior written approval. Upon request of the Master Servicer, the
Company shall use all reasonable efforts to assist the Master Servicer and the
Subservicer in the performance of their servicing duties, including in
connection with the remarketing of Timeshares related to Defaulted Receivables.
The Subservicing Agreement shall be cancelable by TFC in TFC's sole discretion
pursuant to its terms. If the Subservicer is the Company or an Affiliate of the
Company, no servicing fees shall be paid during or with respect to any period of
time in which an uncured Event of Default exists.

         5.24     Use of Name. The Company shall at all times during the term of
the Loan under the SPV Loan Agreement permit TFC to use the name of the Company,
any of its Affiliates and each Resort in any press release, advertisement or
other promotional materials issued regarding the Conveyed Assets or the Loan;
provided, however, that if no Event of Default has occurred the Company shall
have the prior right to review and approve such use.

         5.25     Limitation on Debt/Further Encumbrances. Without the prior
written consent of SPV and TFC, which may be granted, withheld or conditioned,
in SPV's and TFC's sole discretion and with the exception of the Permitted
Liens, the Company will not obtain financing or grant Liens with respect to the
Conveyed Assets or Encumbered Timeshares, (whether now existing or created
hereafter). In the event the Company obtains additional financing or grants

                                       39
<PAGE>

any Liens with respect to Units, the Company will provide SPV and TFC with
notice of and information about any such additional indebtedness or financing.

         5.26     Restrictions on Transfers. The Company shall not, without
obtaining the prior written consent of SPV, TFC and the Administrative Agent
(which consent may be given, withheld or conditioned by such Person in its sole
discretion), whether voluntarily or involuntarily, by operation of law or
otherwise:

                  (a) transfer, sell, pledge, convey, hypothecate, factor or
         assign all or any portion of the Conveyed Assets, or contract to do any
         of the foregoing, including, without limitation, pursuant to options to
         purchase and so-called "installment sales contracts," "land contracts,"
         or "contracts for deed" (except that the Company shall have the right
         to sell Timeshares to Purchasers in arms-length transactions in the
         ordinary course of the Company's activities as Subservicer);

                  (b) lease or license any portion of the Conveyed Assets, or
         change the legal or actual possession or use thereof (except rental or
         promotional entry use of Timeshares in the ordinary course of the
         Company's activities as Subservicer);

                  (c) permit the assignment, transfer, delegation, change,
         modification or diminution of the duties or responsibilities of the
         Company or of any manager of any Resort approved by SPV as manager of
         such Resort (except for an assignment of such duties to a professional
         management company or companies reasonably acceptable to SPV and TFC);

                  (d) permit the dilution, transfer, pledge, hypothecation or
         encumbrance of any of the ownership interests of the Company or SPV
         which would result in a Change in Control or of the Company owning less
         than 100% of the equity of SPV; or

                  (e) other than the assignment of certain Operating Contracts
         and all or any portion of the Company's right, title or interest in
         certain Applicable Underlying Declarations made prior to the Closing
         Date pursuant to the Existing Agreements, to the extent within the
         control of the Company, cause or permit the assignment, pledge or other
         encumbrance of any of the Operating Contracts or all or any portion of
         the Company's right, title or interest in any Applicable Underlying
         Declaration.

                  In the event that SPV, TFC or the Administrative Agent, in
         such Person's sole discretion, is willing to consent to a transfer
         which would otherwise be prohibited by this Section, such Person may
         condition its consent on such terms as it desires, including, without
         limitation, the requirement that the Company pay a transfer fee,
         together with any expenses incurred by TFC in connection with the
         granting of such consent (including without limitation, attorney's fees
         and expenses).

         5.27     Transactions with Affiliates. Without the prior written
consent of SPV and TFC, which consent shall not be unreasonably withheld, the
Company shall not enter into any transaction with any Affiliate in connection
with the Conveyed Assets or the Resorts, including, without limitation, relating
to the purchase, sale or exchange of any assets or properties or the rendering
of any service, except in the ordinary course of, and pursuant to the reasonable

                                       40
<PAGE>

requirements of, the operations of the Resorts and upon fair and reasonable
terms and pursuant to the terms hereof.

         5.28     Restrictive Covenants. The Company will not, and will not
permit its Affiliate to, without SPV's and TFC's prior written consent, seek,
consent to, or otherwise acquiesce in, any change in any private restrictive
covenant, planning or zoning law or other public or private restriction, which
would materially or adversely limit or alter the use of any Resort, Units or the
Encumbered Timeshares.

         5.29     Subordinated Obligations. The Company will not, directly or
indirectly: (i) permit any payment to be made by the Company in respect of any
indebtedness, liabilities or obligations, direct or contingent, including
without limitation, the Subordinated Indebtedness, to any of its shareholders or
their affiliates, the SPV Owners, the Subject Persons or their Affiliates which
are subordinated by the terms thereof or by separate instrument to the payment
of principal of, and interest on, the Company's obligations under the Loan
Documents; (ii) permit the amendment, rescission or other modification of any
such subordination provisions of any of the Company's subordinated obligations
in such a manner as to affect adversely TFC's Lien in and to the Conveyed Assets
or TFC's senior priority position and entitlement as to payment and rights with
respect to SPV Note and the Obligations and the Parallel Claims; or (iii) permit
the prepayment or redemption, except for mandatory prepayments, of all or any
part of the Company's obligations to its shareholders or their affiliates, the
SPV Owners, the Subject Persons or their Affiliates, or of any subordinated
obligations of SPV except in accordance with the terms of such subordination.

         5.30     Timeshare Plans. Without SPV's and TFC's prior written
consent, the Company shall not, and shall not permit any of its Affiliates to,
amend, modify or terminate any Applicable Underlying Declaration, any other
Timeshare Document or any other restrictive covenants, agreements or easements
regarding the Conveyed Assets (except for routine non-substantive modifications
which have no impact on the Conveyed Assets). Other than any such assignments or
filings made prior to the Closing Date pursuant to the Existing Agreements and
as otherwise provided herein, the Company shall not assign its rights as
"developer," if any, under any Applicable Underlying Declaration, or file or
permit to be filed any additional covenants, conditions, easements or
restrictions against or affecting any Resort (or any portion thereof) without
SPV's and TFC's prior written consent, which consent shall not be unreasonably
withheld.

         5.31     Conveyed Assets; No Modifications. (a) Neither the Company nor
any of its Affiliates shall take any action (or permit or consent to the taking
of any action) which might impair the value of all or any portion of the
Conveyed Assets or any of the rights of SPV or TFC with respect to the Conveyed
Assets, nor shall any such Person cause or permit any amendment to or
modification of the form or terms of any of the Sold Receivables, Contributed
Receivables, Timeshare Mortgages or any Timeshare Documents, other than
Permitted Modifications.

                  (b) The Company shall comply in all material respect with the
         Developer Credit and Collection Policy with regard to each Sold
         Receivable and Contributed Receivable, and with the terms of each such
         Receivable, and without the prior written consent of TFC and the
         Administrative Agent, which may be given, withheld or conditioned by
         such

                                       41
<PAGE>

         Person in its sole discretion, the Company shall not amend or otherwise
         modify the Developer Credit and Collection Policy.

                  (c) The Company shall not change its name, its chief executive
         office, the locations at which it does business or its corporate
         structure without first (i) providing prior notice to SPV and TFC, (ii)
         amending any recorded or filed documents which require amendment as a
         result thereof and (iii) providing SPV, TFC and the Administrative
         Agent an opinion of independent counsel, in form and substance
         satisfactory to them, as to the continuation of the first priority Lien
         of TFC and its assigns in the Conveyed Assets (subject only to
         Permitted Liens), each at the Company's expense.

                  (d) The Company shall execute and deliver (or cause to be
         executed and delivered) to TFC and SPV all security agreements,
         financing statements, assignments and such other agreements, documents,
         instruments and certificates, and all supplements and amendments
         thereto, and take such other actions, as are (or TFC or SPV deems to
         be) necessary or appropriate in order to maintain (i) as valid,
         enforceable and perfected ownership interests, all interests of SPV and
         TFC in the Sold Receivables and Contributed Receivables and other
         Conveyed Assets transferred by the Company to SPV, and (ii) as valid,
         enforceable and perfected first priority liens and security interests,
         all Liens in the Conveyed Assets (subject only to Permitted Liens)
         granted to TFC to secure the Obligations and the Parallel Claims.

                  (e) The Company shall not grant extensions of time for the
         payment of, or compromise for less than the full face value or release
         in whole or in part, any Purchaser or other Person liable for the
         payment of, or allow any credit whatsoever except for the amount of
         cash to be paid upon, any Conveyed Assets or any instrument, chattel
         paper or document representing the Conveyed Assets.

                  (f) The Company will defend the Conveyed Assets against, and
         will take such other action as is necessary to remove, any Lien or
         claim on or to the Conveyed Assets, other than Permitted Liens, and the
         Company will defend the right, title and interest of SPV, TFC and the
         other Secured Parties in and to all of the Conveyed Assets against
         claims and demands of all Persons whomsoever.

                  (g) Except for Permitted Modifications, the Company shall not
         extend, amend, forgive, discharge, compromise, cancel or otherwise
         modify or waive the terms of any Conveyed Asset.

         5.32     Marketing/Sales. The Company shall not market, attempt to sell
or sell or permit or justify any sales or attempted sales of any Timeshares
except in compliance with the Timeshare Act and applicable laws, rules and
regulations in states and other jurisdictions where marketing, sales or
solicitation activities occur.

         5.33     Use of Facilities. The Company shall not change the nature,
configuration, location or other features of the Facilities, in any manner that
is materially inconsistent with any

                                       42
<PAGE>

representation or promise made to a Purchaser of a Timeshare related to a Sold
Receivable or Contributed Receivable hereunder.

         5.34     Prohibition of Fundamental Changes. The Company shall not (a)
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets, or (b) amend or
modify its organizational documents without the prior written consent of SPV and
TFC.

         5.35     Limitations on Modifications, Waivers and Extensions of Loan
Documents. Without the prior written consent of SPV and TFC, the Company will
not, nor will it permit or allow any Person to, amend, modify, terminate or
waive any provision of any Loan Document to which the Company is a party.

         5.36     Servicing. The Company shall not permit any Person other than
the Master Servicer, the Back-Up Servicer and the Subservicer to service the
Conveyed Assets without the prior written consent of SPV and TFC.

         5.37     True and Complete Disclosure. All written information
furnished, including but not limited to any schedule or servicing report, by or
on behalf of the Company or its Affiliates to SPV, TFC or the Master Servicer in
connection with the SPV Loan Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby will be true, correct and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.

         5.38     Restrictions on Income and Accounts. The Company shall not,
without the written consent of SPV, TFC and the Administrative Agent, which may
be given, withheld or conditioned by such Person in its sole discretion, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Lien upon or with respect to, or assign any right to receive
income in respect of any Conveyed Asset with respect thereto, or upon or with
respect to the account in which any Collections or other proceeds of any
Conveyed Assets are deposited.

         5.39     Payment Instructions to Purchasers. The Company shall not,
without the written consent of SPV, TFC and the Administrative Agent, which may
be given, withheld or conditioned by such Person in its sole discretion, make
any change in its instructions to Purchasers regarding payments to be made to
the Account Agent or payments to be deposited to the Collection Account (other
than instructions to mail or deposit such payments to the Account Agent or in
the Collection Account) as set forth in Section 5.43 hereof.

         5.40     True Sales. The Company shall not, without the written consent
of SPV, TFC and the Administrative Agent, which may be given, withheld or
conditioned by such Person in its sole discretion, make statements or
disclosures or prepare any financial statements which shall account for the
transactions contemplated by this Agreement in any manner other than as a sale
or contribution of the Conveyed Assets to SPV, or in any other respect account
for or treat the transactions contemplated hereby (including but not limited to,
for accounting, tax and reporting purposes) in any manner other than as a sale
or absolute assignment or contribution of the Conveyed Assets.

                                       43
<PAGE>

         5.41     Restrictions on Actions Affecting Rights. The Company shall
not, without the written consent of SPV, TFC and the Administrative Agent, which
may be given, withheld or conditioned by such Person in its sole discretion,
take any action, or fail to take any action, if such action or failure to take
action may interfere with the enforcement of any rights under this Agreement or
the Loan Documents that are material to the rights, benefits or obligations of
SPV or TFC or its assigns; take any action, or fail to take any action, if such
action or failure to take action may interfere with the enforcement of any
rights with respect to the Conveyed Assets; or fail to pay any tax, assessment,
charge, fee or other obligation of the Company with respect to the Conveyed
Assets, unless and to the extent only that such taxes, fees, assessment or other
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and adequate book
reserves relating thereto are established by the Company and then only to the
extent that a bond is filed in cases where the filing of a bond is necessary to
avoid the creation of a Lien against any of its properties, no tax lien or
similar Lien has been filed, and no claim is being asserted with respect to any
such tax, fees, assessment or other governmental charge, or fail to defend any
action, if such failure to pay or defend may adversely affect the priority or
enforceability of the first priority perfected ownership or security interest of
SPV and its assigns in the Conveyed Assets or the right, title or interest of
such Persons in the Conveyed Assets.

         5.42     Offices and Records. The Company shall keep its chief place of
business and chief executive offices at the Developer Address or, upon thirty
(30) days prior written notice to SPV and TFC, at such other location in a
jurisdiction where all action required by Section 5.17 shall have been taken
with respect to the Conveyed Assets. In connection therewith, SPV and TFC may
institute procedures to permit it to confirm the Purchaser outstanding balances
in respect of any Conveyed Assets. The Company agrees to render to SPV and TFC,
at the Company's own cost and expense, such clerical and other assistance as may
be reasonably requested with regard to the foregoing. If an Event of Default or
Default under the SPV Loan Agreement shall have occurred and be continuing,
promptly upon request therefor, the Company shall assist SPV in delivering to
TFC records reflecting activity through the close of business on the immediately
preceding Business Day.

         5.43     Collection of Conveyed Assets. The Company shall direct or
otherwise cause the Purchasers obligated on the Sold Receivables and Contributed
Receivables (other than Purchasers paying by means of credit cards) to mail or
deposit by electronic means to pay all Collections due thereunder to a Lockbox
Account, or as otherwise required by the Administrative Agent. If,
notwithstanding such instructions, the Company receives any such Collections,
the Company shall receive all such Collections in trust for the sole and
exclusive benefit of the Secured Parties; and the Company shall deliver such
Collections to the Account Agent (in the form so received) within one Business
Day following receipt thereof, unless the Administrative Agent shall have
notified the Company to deliver such payments elsewhere in which event the
Company shall so deliver such Collections (in the form so received) within one
Business Day following receipt thereof.

         5.44     Maintenance of Licenses. The Company shall maintain all
licenses, permits, charters and registrations which are material to the conduct
of its business.

                                       44
<PAGE>

         5.45     Separate Corporate Existence. The Company hereby acknowledges
that SPV and TFC are entering into the transactions contemplated by the Loan
Documents in reliance upon the Company's and SPV's identities as legal entities
separate from each other and separate from their Affiliates. Therefore, from and
after the date hereof, the Company shall take all reasonable steps to continue
the Company's and SPV's identity as a separate legal entity and to make it
apparent to third Persons that each of the Company and SPV are entities with
assets and liabilities distinct from those of each other and any of their other
Affiliates and any other Person, and that SPV is not a division of the Company
or any such Affiliate or any other Person. Without limiting the generality of
the foregoing, the Company shall not take any action, or omit to take any
action, within the control of the Company that would cause SPV to violate
Section 7.33 of the SPV Loan Agreement, and the Company shall take such actions,
as shall be required in order that:

                  (a) SPV will be a Delaware corporation whose activities are
         restricted by its organizational documents to entering into the Loan
         Agreement and the other Loan Documents, and conducting such other
         activities as it deems necessary or appropriate to carry out the
         activities referred to in this Section.

                  (b) Any employee, consultant or agent of the Company or SPV
         will be compensated from funds of the Company or SPV, as applicable,
         for services provided to the Company or SPV, as applicable. SPV will
         engage no agents other than (i) a Master Servicer pursuant to the
         Section 5 of the SPV Loan Agreement, which Master Servicer will be
         fully compensated for its services to Trust, and (ii) an administrator
         or manager pursuant to an administrative services agreement, whose
         ongoing fees, if any, will be paid from funds of SPV.

                  (c) To the extent, if any, that SPV and the Company (or any
         other Affiliate thereof) share items of expenses such as legal,
         auditing and other professional services, such expenses will be
         allocated to the extent practical on the basis of actual use or the
         value of services rendered, and otherwise on a basis reasonably related
         to the actual use or the value of services rendered, it being
         understood that the Company shall pay all expenses relating to the
         preparation, negotiation, execution and delivery of the Loan Documents,
         including, without limitation, legal and other up-front fees.

                  (d) Each of the Company's and SPV's operating expenses will
         not be the responsibility of the other or any other Affiliate thereof.

                  (e) Each of the Company and SPV will have their own separate
         stationery.

                  (f) SPV's books and records will be maintained separately from
         those of the Company and any other Affiliate thereof.

                  (g) All audited financial statements of the Company or any
         Affiliate thereof that are consolidated to include SPV will contain, to
         the extent required by GAAP, detailed notes clearly stating that all of
         SPV's assets are owned by SPV, and SPV is a separate legal entity with
         creditors who have received ownership and/or security interests in
         SPV's assets.

                                       45
<PAGE>

                  (h) SPV's assets will be maintained in a manner that
         facilitates their identification and segregation from those of the
         Company or any Affiliate thereof.

                  (i) SPV will strictly observe its independent business
         formalities in its dealings with the Company or any Affiliate thereof,
         including, without limitation, separate books and records, separate
         officers and separate meetings of the Board of Directors, and funds or
         other assets of SPV will not be commingled with those of the Company or
         any Affiliate thereof. SPV shall not maintain joint bank accounts or
         other depository accounts to which the Company or any Affiliate thereof
         has independent access. None of SPV's funds will at any time be pooled
         with any funds of the Company or any Affiliate thereof.

                  (j) SPV will maintain arm's-length relationships with the
         Company and any Affiliate thereof. Any Person that renders or otherwise
         furnishes services to SPV will be compensated by SPV at market rates
         for such services it renders or otherwise furnishes to SPV except as
         otherwise provided in these Loan Documents. Except as contemplated in
         the Loan Documents, SPV will not be and will not hold itself out to be
         responsible for the debts of the Company or any Affiliate thereof or
         the decisions or actions respecting the daily business and affairs of
         the Company or any Affiliate thereof; and none of the Company or any
         Affiliate thereof will hold itself out to be responsible for the debts
         of SPV or the decisions or actions respecting the daily business and
         affairs of SPV.

         5.46     Recordation and Endorsements. The Company shall take all
action necessary to enable SPV, and shall use its best efforts to assist SPV in
complying with, Section 7.35 of the SPV Loan Agreement. Developer shall endorse
each Receivable in favor of SPV, and shall properly assign and record each
Timeshare Mortgage with each Lien Filing Office within twenty-one days of the
date on which such related Receivable initially becomes part of the Collateral
hereunder.

         5.47     Oak N' Spruce Resort Trust. The Company shall at all times
comply and, as applicable, cause compliance by its Affiliates with each Oak N'
Spruce Document. Without SPV's and TFC's prior written consent, the Company
shall not, and shall not permit any of its Affiliates to, amend, modify or
terminate any Oak N' Spruce Document or any other restrictive covenants,
agreements or easements regarding the Oak N' Spruce Trust. Other than any such
assignments or filings made prior to the Closing Date pursuant to the Existing
Agreements and as otherwise provided herein, the Company shall not assign its
rights under any Oak N' Spruce Document, including without limitation, its
rights as "Declarant" under the Oak N' Spruce Declaration of Trust, or permit
the trustee thereunder to assign its rights or obligations thereunder, or file
or permit to be filed any additional covenants, conditions, easements or
restrictions against or affecting the Oak N' Spruce Trust without SPV's and
TFC's prior written consent. Developer shall maintain, or cause to be
maintained, UCC filings, including amendments and continuations thereof, with
regard to the Oak N' Spruce Trust necessary to maintain a first priority,
perfected security or ownership interest therein in favor of SPV.

                                       46
<PAGE>

                                    SECTION 6

                           REPURCHASES; SUBSTITUTIONS

         6.1      Repurchase of Defective Receivables. Upon discovery by the
Company, SPV, TFC or any direct or indirect assignee of the rights of TFC
hereunder, that a Receivable included in the Conveyed Asset meets the criteria
for being a Defective Receivable (other than the passage of the cure periods
specified therein) the party discovering such breach shall give prompt written
notice thereof to the other aforementioned parties (such notice, a "Defect
Notice"). As a result of such breach, the Company shall be required, subject to
the following, to repurchase from SPV (but subject to the payment obligation as
provided in the last sentence of this Section 6.1) any Defective Receivable. The
Company shall not be required to repurchase a Defective Receivable until the
cure periods described in the definitions thereof have lapsed. Upon the later of
the lapse thereof or the fifth day after the date on which the Company has
actual knowledge of the existence of such Defective Receivable and the related
breach, the Company shall repurchase the Defective Receivable for a purchase
price equal to the then applicable Defective Receivable Purchase Price. Any
payment in respect of a Defective Receivable shall be remitted directly to TFC
for application as provided in the SPV Loan Agreement.

         6.2      Substitutions.

                  (a) The Company may (but shall not be required to), with the
         written consent of the Master Servicer, convey Substitute Receivables
         to SPV, provided that the requirements of Section 3.2 of the SPV Loan
         Agreement are satisfied. The Company shall deliver to the Master
         Servicer, on the tenth Business Day prior to the proposed date of
         substitution, which proposed date shall be a Payment Date (the
         "Substitution Date"), a "Substitution Certificate" in the form of
         Exhibit B identifying (i) all of the Exchange Receivables, and the
         Delinquent Receivables for which they will be exchanged, and (ii) all
         Replacement Receivables and the related Upgrade Receivables. The
         exchange or replacement of such Receivables shall not become effective
         until TFC has approved such Substitution Certificate and Sale
         Assignment on or prior to the Substitution Date. To the extent that the
         aggregate outstanding balance of all Substitute Receivables transferred
         to the SPV in exchange for Delinquent Receivables on any day exceeds
         the aggregate outstanding balance of such Delinquent Receivables, the
         SPV will be required to make a payment to the Company for the amount of
         such excess, in cash to the extent that the SPV has cash available, or,
         to the extent it does not have cash available, by increasing the
         balance of the Subordinated Note (unless, after giving effect to such
         increase, the Overcollateralization Amount would be less than the
         Required Overcollateralization Amount, in which case the amount of such
         excess will be deemed to be a capital contribution by the Company to
         the SPV). To the extent that the aggregate outstanding balance of all
         Substitute Receivables transferred to the SPV as a replacement for
         Upgrade Receivables on any day exceeds the aggregate outstanding
         balance of such Upgrade Receivables, the SPV will be required to make a
         payment to the Company for the amount of such excess, in cash to the
         extent that the SPV has cash available, or, to the extent it does not
         have cash available, by increasing the balance of the Subordinated Note
         (unless such increase would cause the Overcollateralization Amount to
         be less than the Required

                                       47
<PAGE>

         Overcollateralization Amount, in which case the amount of such excess
         will be deemed to be a capital contribution by the Company to the SPV).

                  (b) In its capacity as Subservicer, the Company may (but shall
         not be required to) repurchase a Defaulted Receivable for a purchase
         price equal to 25% of the aggregate amount owed to SPV in respect
         thereof (whether for principal, interest or otherwise), in lieu of
         attempting to remarket the related Timeshare for the benefit of SPV and
         its assigns; provided that such repurchase must be made within thirty
         (30) days of the Company having actual knowledge of the existence of
         such Defaulted Receivable. If such Defaulted Receivable shall not have
         been so repurchased within such 30 day period, the Company shall be
         required to remarket the related Timeshare, and otherwise attempt to
         recover on such Defaulted Receivable, in accordance with the
         Subservicing Agreement. Such purchase price shall be paid to the
         Collection Account.

                  (c) Upon the addition of the Exchange Receivables to the
         Collateral pursuant to Section 3.2(a) of the SPV Loan Agreement or the
         repurchase of Receivables pursuant to Section 3.2(b) of the SPV Loan
         Agreement or Section 6.2(b) hereof, the related Deleted Receivables
         and/or repurchased Receivables shall be released from the Collateral,
         and shall be reconveyed by SPV to the Company at the Company's expense.

                                    SECTION 7

                                  MISCELLANEOUS

         7.1      Notices, Etc. All notices, requests and other communications
to a party hereunder, or to TFC as required hereunder, shall be in writing and
shall be given to such party at its address set forth below or at such other
address as such party may hereafter specify for the purpose of notice to the
Company, SPV or TFC. Each such notice, request or other communication shall be
effective (a) if given by mail, when such notice is deposited in the United
States Mail with first class postage prepaid, and addressed as aforesaid,
provided that such mailing is by registered or certified mail, return receipt
requested; (b) if given by overnight delivery, when deposited with a nationally
recognized overnight delivery service such as Federal Express or Airborne, with
all fees and charges prepaid, addressed as provided below; or (c) if given by
any other means, when delivered at the address specified in this Section 7.1:

                  If to the Company:         to Developer Address

                  With a Copy to:            Meadow Owens Collier Reed
                                             Cousins & Blau, LLP
                                             901 Main Street, Suite 3700
                                             Dallas, Texas 75202
                                             Attention: George Bedell

                  If to SPV:                 to SPV Address

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<PAGE>

                  If to TFC:                 Textron Financial Corporation
                                             333 East River Drive
                                             Suite 104
                                             East Hartford, CT 06108
                                             Attention: Conduit Manager

                  With a Copy to:            Textron Financial Corporation
                                             P.O. Box 6687
                                             Providence, RI 02940-6687
                                             Attention: Vice President - TFD
                                             Division Counsel

                  And to:                    Textron Financial Corporation
                                             333 East River Drive
                                             Suite 104
                                             East Hartford, CT 06108
                                             Attention: Division President -
                                             Timeshare Finance Division

                  If to Administrative       Citicorp North America, Inc.
                  Agent:                     450 Mamaroneck Ave.
                                             Harrison, New York 10528
                                             Attn: Global Securitization

         Notwithstanding the foregoing, copies of the requests or notices from
the Company to TFC which are specified in Sections 2.3 and 3.1(a)(iv) of this
Agreement shall not be delivered to TFC's Providence, Rhode Island address. In
addition, all documents, instruments and other items to be delivered to TFC from
time to time pursuant to this Agreement shall be delivered to TFC's office in
East Hartford, Connecticut.

         7.2      Notice to Purchasers. The Company may notify any or all
Purchasers of the sale or contribution of the Conveyed Assets to SPV.

         7.3      No Waiver; Remedies. No failure on the part of the Company,
SPV, TFC, the Administrative Agent, the Trust, TRC IV or TFIC or any assignee
thereof to exercise, and no delay in exercising, any right hereunder or under
any Sale Assignment shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any other remedies provided by law.

         7.4      Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the Company, SPV and
TFC and their respective successors and assigns; provided that neither the
Company nor SPV, except as set forth herein in Section 7.15 hereof, may transfer
or assign any of its rights or obligations under this Agreement or the other
Loan Documents without the prior written consent of TFC and the Administrative
Agent. This Agreement and the transactions provided for or contemplated
hereunder or under any of the Loan Documents are intended solely for the benefit
of the parties hereto. No other Person shall have any rights or derive any
benefits under or with respect to this Agreement or the

                                       49
<PAGE>

other Loan Documents except as specifically set forth herein or otherwise
provided in a written document signed by the Company, SPV, TFC and the
Administrative Agent. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until its termination; provided, that the rights and
remedies pursuant to Section 6.1 with respect to any breach of any
representation, warranty or covenant made by the Company pursuant to Sections 4
or 5 and the indemnification and payment provisions of Section 5.21 shall be
continuing and shall survive any termination of this Agreement.

         7.5      No Proceedings. The Company hereby agrees that it will not,
directly or indirectly, institute, or cause to be instituted, against SPV, TFIC,
TRC IV, the Conduit Lender or the Trust any proceeding of the type referred to
in the definition of Insolvency Event until one year and one day shall have
elapsed since the last day on which any CP Note issued by the Conduit Lender
under the Securitization Facility Documents remains outstanding.

         7.6      Amendment. This Agreement (including all exhibits and
schedules hereto) may not be amended or modified, and no term or provision
hereof may be waived, except by a written instrument signed by all of the
parties hereto and the Administrative Agent.

         7.7      Total Agreement. This Agreement and the other Loan Documents,
including the exhibits and schedules to them, comprises the entire agreement
between the parties relating to the subject matter hereof and supersedes all
prior agreements and understandings, both oral and written, between the parties
hereto relating to the subject matter hereof, cannot be changed or terminated
orally or by course of conduct, and shall be deemed effective as of the date it
is accepted by TFC at the offices set forth above.

         7.8      GOVERNING LAW; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS (EXCEPT AS MAY BE EXPRESSLY PROVIDED THEREIN TO THE
CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, EXCLUSIVE OF ITS CHOICE OF LAWS PRINCIPLES. THE COMPANY AND
SPV HEREBY AGREE TO ACCEPT THE STATE COURTS LOCATED IN NEW YORK, NEW YORK AS
HAVING PROPER JURISDICTION AND BEING THE PROPER VENUE FOR ANY LEGAL PROCEEDINGS
ARISING OUT OF THE LOAN DOCUMENTS.

                  (b) TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW
         WHICH CANNOT BE WAIVED, EACH OF THE COMPANY AND SPV HEREBY KNOWINGLY,
         VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
         A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR
         CLARIFY ANY RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED
         TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
         CONTEMPLATED HEREIN OR THEREIN, WHETHER SOUNDING IN TORT OR CONTRACT OR
         OTHERWISE, OR WITH RESPECT TO ANY COURSE OF CONDUCT, COURSE OF DEALING,
         STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY; AND EACH
         AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE
         AND NOT BEFORE A JURY.

                                       50
<PAGE>

         EACH OF THE COMPANY AND SPV FURTHER WAIVES ANY RIGHT TO SEEK TO
         CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED
         WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN
         WAIVED. FURTHER, THE COMPANY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR
         AGENT OF SPV OR TFC, INCLUDING SPV'S OR TFC'S COUNSEL, HAS REPRESENTED,
         EXPRESSLY OR OTHERWISE, THAT SPV OR TFC WOULD NOT, IN THE EVENT OF SUCH
         LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
         PROVISION. THE COMPANY ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION
         ARE A MATERIAL INDUCEMENT TO SPV'S AND TFC'S ACCEPTANCE OF THIS
         AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE.

         The waiver and stipulations of the Company and SPV in this Section 7.8
shall survive the final payment or performance of all of the Obligations and
Parallel Claims and the termination of this Agreement and the other Loan
Documents.

         7.9      Execution in Counterparts; Severability. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signature thereto and hereto were on the same
instrument. This Agreement shall become effective upon SPV's receipt of one or
more counterparts hereof signed by the Company and SPV. If any provision of this
Agreement or any of the other Loan Documents is held to be illegal, invalid or
unenforceable under present or future laws effective during the term thereof,
such provision shall be fully severable, this Agreement and the other Loan
Documents shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof or thereof, and the
remaining provisions hereof or thereof shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance therefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement and/or the other Loan Documents (as the case may be) a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.

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

         7.11     No Set-off. SPV and TFC shall have the right to set-off
against any or all of the Conveyed Assets any obligations of the Company then
due and unpaid by the Company. The Company shall not exercise any rights of
set-off against SPV or TFC in order to reduce or satisfy the obligations of the
Company under the Loan Documents or any other amounts owing to SPV or TFC. The
Company shall satisfy its obligations under the Loan Documents when due in good
funds denominated in U.S. Dollars.

         7.12     Further Assurances. The Company agrees to do such further acts
and things and to execute and deliver to SPV, TFC, the Administrative Agent, or
any assignee such additional assignments, agreements, powers and instruments as
such Person or any assignee may require or

                                       51
<PAGE>

deem advisable to carry into effect the purposes of this Agreement or to better
assure and confirm unto any such party its respective rights, powers and
remedies hereunder.

         7.13     Confidentiality. Except to the extent otherwise required by
applicable law or as required to be filed publicly with the Securities and
Exchange Commission or unless the Secured Parties shall otherwise consent in
writing, the Company and SPV agree to maintain the confidentiality of this
Agreement (and all drafts of this agreement and documents ancillary to this
Agreement) in its communications with third parties other than any Secured Party
or any Indemnified Party and otherwise and not to disclose, deliver or otherwise
make available to any third party (other than its directors, officers,
employees, accountants or counsel) the original or any copy of all or any part
of this Agreement (or any draft of this Agreement and documents ancillary to
this Agreement) except to a Secured Party or an Indemnified Party; provided,
however, the Company and SPV hereby consent that TFC may issue and disseminate
to the public information describing the credit accommodation entered into
pursuant to the SPV Loan Agreement, consisting of the name and address of the
Company and SPV, the Loan's amount, and the Collateral therefor. To the extent
not inconsistent with applicable securities laws, the Company and SPV (and each
of the employees, representatives or other agents of the Company and SPV) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated under the Loan
Documents (as defined in Section 1.6011-4 of the Treasury Regulations) and all
materials of any kind (including opinions or other tax analyses) that are
provided to such party relating to such treatment and tax structure.

         7.14     Right of SPV or TFC to Extend Time of Payment, Substitute,
Release Security, Etc. Any of the following actions by SPV or TFC or their
assigns, with or without notice, shall not impair or otherwise affect the
liability of any Person or entity, including, without limitation, SPV or the
Company, for the payment or performance of any of their obligations under the
Loan Documents and shall not affect or impair SPV's interest in the Conveyed
Assets, TFC's lien on the collateral described in the Developer Pledge Agreement
or the Demand Note: (a) release of any Person liable for the payment of the
Loan; (b) extension of the time or otherwise alter the terms of payment of the
Loan; (c) acceptance of additional security for the obligations of the Company
under the Loan Documents, the Obligations or the Parallel Claims of any kind,
including deeds of trust or mortgages and security agreements; (d) alteration,
substitution or release of any property securing the obligations of the Company
under the Loan Documents, the Obligations or the Parallel Claims; (e)
realization upon any Conveyed Assets for the payment of all or any portion of
the obligations of the Company under the Loan Documents, the Obligations or the
Parallel Claims in such order and manner as it may deem fit; or (f) entering
into, modifying or terminating any subordination, guaranty or other agreement
affecting the Loan Documents or the lien or charge thereof.

         7.15     Assignment of SPV's Interest. The Company acknowledges that
SPV's right, title and interest in, to and under the Loan Documents constitutes
part of the Collateral, including, without limitation, all amounts due
thereunder. The Company hereby agrees that any obligation under the SPV Loan
Agreement, or any payment thereunder, may be extended from time to time, and
hereby consents to the acceptance of any Collateral of and the release of any
Collateral under the SPV Loan Agreement and the release of any party primarily
or secondarily liable under the SPV Loan Agreement. No extension of time for the
payment of amounts under the SPV Loan Agreement, or any installment thereof,
made by agreement by SPV, TFC or its

                                       52
<PAGE>

Affiliates shall affect the liability of the Company under the Loan Documents,
even if the Company is not a party to such agreement. SPV may assign, without
the Company's consent, its interest in this Agreement and the other Loan
Documents to any other Person, including, without limitation, TFC or any of its
Affiliates and TFC and any of its Affiliates shall be entitled to exercise all
rights of the SPV thereunder. The Company hereby agrees that it will not be
necessary for the holder or pledgee of the Demand Note, in order to enforce
payment under the Demand Note, to first institute or exhaust the holder's or
pledgee's other remedies against the Company or SPV under the SPV Loan Agreement
or against any collateral for the Demand Note or the SPV Loan Agreement. Any
amount demanded from the Company, pursuant to the Demand Note, by the holder or
the pledgee of the Demand Note shall be remitted directly to such holder or
pledgee, as applicable. Such holder or pledgee shall not be required to obtain,
and the Company shall not be required to receive, SPV's consent prior to making
any demand or payment, as applicable, under the Demand Note. The Administrative
Agent, pursuant to the terms of the Securitization Facility Documents, has a
security interest in this Agreement and the other Loan Documents and may from
time to time enforce SPV's or TFC's rights and remedies hereunder. The
Administrative Agent, as SPV's assignee has the right, at any time, to give or
withhold any consent, request, notice, direction, approval, demand, extension or
waiver requested from SPV or TFC in its capacity as lender (but not as Master
Servicer) under the Loan Documents. In the event of a conflict between any such
consent, request, notice, direction, approval, demand, extension or waiver given
by SPV or TFC and any such item given by the Administrative Agent, the request,
notice, direction or demand of the Administrative Agent shall control; provided
that this Section shall not constitute a waiver by SPV, TFC or its Affiliates of
any of their rights under, or any provision of the Securitization Facility
Documents concerning TFC's or the Administrative Agent's exercise of the rights
described in this Section. TFC and the Administrative Agent shall not be
obligated to perform any of SPV's duties or obligations under or in connection
with this Agreement or the other Loan Documents. TFC and the Administrative
Agent, as SPV's collateral assignees, shall have the benefit of all
representations and warranties made to SPV in this Agreement.

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

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

         7.18     Incorporation of Exhibits. This Agreement, together with all
exhibits and schedules hereto, constitute one document and agreement which is
referred to herein by the use of the defined term "Agreement." Such exhibits and
schedules are incorporated herein as though

                                       53
<PAGE>

fully set out in this Agreement. The definitions contained in any part of this
Agreement shall apply to all parts of this Agreement.

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

         7.20     Gender. Words of any gender in this Agreement shall include
each other gender where appropriate.

         7.21     No Duty. All attorneys, accountants, appraisers, consultants,
custodians and other professionals retained by TFC shall have the right to act
exclusively in the interest of TFC and shall have no duty of disclosure, duty of
loyalty, duty of care or other duty or obligation of any type or nature
whatsoever to the Company, SPV or any other Person.

         7.22     Reimbursement for Taxes; Expenses. The Company will promptly,
upon written demand of SPV or TFC, reimburse SPV, TFC and the other Secured
Parties for any taxes assessed against SPV, TFC or such Secured Party by any
state or any subdivision thereof (with the exception of income taxes payable by
such Person in a jurisdiction where it has an office) which is on account of or
measured by the interest income received by SPV or TFC under the Receivables or
Pledged Receivables, respectively, or the Timeshare Mortgages assigned to SPV or
TFC pursuant to the Loan Documents or in any way imposed upon such Person in
connection with the transactions contemplated under the Loan Documents,
including, without limitation, any and all real and personal property taxes and
assessments, documentary stamp and intangible taxes, sales taxes, recording
fees, title insurance premiums and other title charges, document copying,
transmittal and binding costs, appraisal fees, lien and judgment search costs,
fees of architects, engineers, environmental consultants, surveyors and any
special consultants, construction inspection fees, brokers fees, escrow fees,
wire transfer fees, and all travel and out-of-pocket expenses of SPV, TFC and
the other Secured Parties to conduct inspections or audits. Without limiting any
of the foregoing, the Company shall pay the costs of UCC and other searches, UCC
and other Loan Document recording and filing fees and applicable taxes and
premiums on each mortgagee policy of title insurance delivered to TFC and the
other Secured Parties pursuant to the SPV Loan Agreement.

         7.23     Submissions.

                  (a) All documents, agreements, reports, surveys, appraisals,
         insurance policies, references, financial information and other
         submissions required to be furnished by the Company to SPV or TFC
         hereunder or pursuant to any of the other Loan Documents (collectively
         "Company Submissions") shall be in form and content satisfactory to
         SPV, TFC and/or the Administrative Agent, as applicable, in their sole
         discretion, and prepared at the Company's expense.

                  (b) TFC shall have the prior right of approval of any Person
         responsible for preparing a Company Submission (a "Company Preparer")
         and may reject any Submission if TFC, in its sole discretion, believes
         that the experience, skill or reputation of the applicable Company
         Preparer is unsatisfactory in any respect whatsoever.

                                       54
<PAGE>

                  (c) The Company will use its best efforts to provide that all
         reports and appraisals required to be furnished by the Company to SPV
         or TFC hereunder or pursuant to any of the other Loan Documents shall
         specifically be addressed to SPV or TFC, as applicable, and include the
         following statement:

                  THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL
                  CORPORATION IS RELYING ON THE WITHIN INFORMATION IN CONNECTION
                  WITH ITS LOAN TO SILVERLEAF FINANCE II, INC. ON THE SUBJECT
                  RESORT.

         7.24     Investigations and Inquiries. The Company hereby authorizes
SPV, TFC and the Administrative Agent to conduct all such investigations and
inquiries as to the credit and/or operations of the Company, any Affiliate of
the Company, each Subject Person, each Resort and the Conveyed Assets as shall
be necessary or desirable, in the sole discretion of SPV, TFC or the
Administrative Agent, as applicable, in connection with its monitoring of the
Loan Documents. The Company hereby agrees to cause any creditor of the Company
to provide TFC or the Administrative Agent with credit information and
references relating to the Company upon TFC's or the Administrative Agent's
request and, by the above authorization, individuals of whom SPV or TFC may make
any such inquiry are empowered to cooperate with and supply all requested
information and documentation to SPV, TFC or the Administrative Agent, as
applicable.

         7.25     Consent to Advertising and Publicity of Timeshare Documents.
Each of the Company and SPV hereby consents to TFC's issuance and dissemination
to the public of information describing the credit accommodation entered into
pursuant to this Agreement, consisting of the name and address of SPV and the
Company, the Loan amount, and the Collateral therefor.

                                       55
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Developer Transfer
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                      SILVERLEAF RESORTS, INC.

                                      By:   /S/ HARRY J. WHITE, JR.
                                          ----------------------------------
                                             Name:  Harry J. White, Jr.
                                             Title: CFO

                                      See Developer Address, as defined in SPV
                                      Loan Agreement.

                                      SILVERLEAF FINANCE II, INC.

                                      By:   /S/ HARRY J. WHITE, JR.
                                          -----------------------
                                             Name: Harry J. White, Jr.
                                             Title: CFO

                                      See SPV Address, as defined in SPV
                                      Loan Agreement.

List of Exhibits and Schedules to Agreement:

EXHIBIT A      Form of Sale Assignment
EXHIBIT B      Form of Substitution Certificate
EXHIBIT C      Form of Request Notice
EXHIBIT D      Form of Subordinated Note
SCHEDULE 4.30  Subsidiaries, Affiliates and Capital Structure
SCHEDULE 4.31  Specified Indebtedness

                                  Schedule 4.31