Document:

<PAGE>

                                                              Exhibit No. 10.240
                                                              ------------------

Loan No. 95-227

                              FIRST AMENDMENT OF
                              ------------------
                             AMENDED AND RESTATED
                             --------------------
                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

     THIS FIRST AMENDMENT OF AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
dated as of this 20 day of December____, 2001 (this "Amendment") is made by and
among HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), and PREFERRED
EQUITIES CORP., a Nevada corporation ("Borrower").

                                   RECITALS
                                   --------

          Borrower and Lender are parties to that certain Amended and Restated
Loan and Security Agreement dated April 5, 2001 (the "Loan Agreement"),
providing to Borrower a secured interval receivables credit facility in the
amount of $30,000,000.

          Borrower and Lender desire to amend the terms and conditions of the
Loan Agreement to provide for, among other things, an increase in the amount of
the credit facility and the modification of the Interest Rate and certain other
terms, covenants, conditions, representations and warranties as more
particularly set forth herein or in the other Loan Documents executed or amended
in connection herewith.

          Mego Financial Corp., a New York corporation ("Guarantor") shall
guaranty all of the obligations of Borrower to Lender under the Loan Documents
as amended hereby.

          All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement, including the Appendix attached
thereto.

     NOW, THEREFORE, in consideration of the foregoing premises and the
agreements, provisions and covenants herein contained, Borrower and Lender
hereby agree as follows:

               The Recitals set forth above are true and correct and
incorporated herein by reference.

               The current outstanding principal balance of the Note is
$26,329,566.21.

               In Section 1.5(b)(i) regarding Excess Outstandings, each
reference to "$30,000,000.00" in the second sentence is hereby deleted and
replaced with "Forty Million Dollars and No/100 ($40,000,000.00)."

               Section 1.6, Commitment Fee, is hereby deleted in its entirety
and replaced with the following:

          Commitment Fee. The Commitment Fee has been fully earned by Lender.
          --------------
          Borrower has agreed to pay Lender, in addition to amounts previously
          paid to Lender, an additional Commitment Fee in the amount of
          $125,000.00, $30,000.00 of which was paid on August 29, 2001, and the
          remainder of which shall be due and payable in the amount of
          $20,000.00 upon the date hereof, with the balance of $75,000.00 due
          and payable no later than forty-five (45) days after the date of this

                                       1
<PAGE>

          Amendment. Borrower hereby authorizes Lender to advance $25,000.00 to
          itself at the time of each Advance hereunder until the Commitment Fee
          is fully paid and to advance to itself the full amount of any unpaid
          balance of the Commitment Fee which may be due and payable at the time
          of any Advance on or after the forty-fifth (45/th/) day after the date
          hereof.

               Section 4.12 is hereby inserted as follows:

          Pledge of Interest in Management Company. AB Preferred Holdings, Inc.,
          ----------------------------------------
          is an Affiliate of Borrower engaged in the management of the Resort
          and will enjoy a material economic benefit due to the making of the
          Loan, and Borrower's pledge of its equity ownership interests in AB
          Preferred Holdings, Inc. to Lender shall be deemed additional
          consideration for the making of the Loan to Borrower.

               Section 5.5(h) is hereby deleted in its entirety and replaced
with the following:

          (h)  Accounting for Defaulted Notes.  All financial reporting for
               ------------------------------
          Borrower shall incorporate either current charge-offs in the amount of
          the principal balance of Defaulted Notes (as defined below) or
          allowances equal to or greater than the principal balance of Defaulted
          Notes, in accordance with GAAP, where "Defaulted Notes" for purposes
          of this provision shall mean the principal balance, with respect to
          all of Borrower's operations, of all of Borrower's notes receivable
          given by purchasers of timeshare intervals and all notes receivable
          given by purchasers of parcels of land including, but not limited to,
          recreational vehicle lots, which are either ninety (90) days or more
          contractually delinquent or are properly deemed uncollectible by
          Borrower or Guarantor on the basis of the maker's bankruptcy,
          foreclosure on such note or other similar criteria.

               Section 5.7, Management, is hereby deleted in its entirety and
replaced with the following:

          Management. The manager and the management contracts for the Resort
          ----------
          shall at all times be satisfactory to Lender.  Borrower has further
          pledged and created in favor of Lender a perfected security interest
          in a majority of all of the equity ownership of AB Preferred Holdings,
          Inc., a Florida corporation as the management entity by way of that
          certain Pledge Agreement of even date herewith.  Borrower covenants to
          maintain the effectiveness of the Pledge Agreement at all times
          indebtedness is outstanding under the Loan or Lender is obligated to
          make Advances.  For so long as Borrower controls the Timeshare
          Association for the Resort, and unless required by law, Borrower shall
          not change the Resort manager or amend, modify or waive any provision
          of or terminate the management contract for the Resort without the
          prior written consent of Lender, which consent shall not be
          unreasonably withheld.  At least two of the following individuals,
          unless replaced in a timely manner with others who are reasonably

                                       2
<PAGE>

          acceptable to Lender who shall approve or reject a proposed
          replacement within thirty (30) days of written request, shall remain
          the principal officers of Borrower and the Resort manager and shall
          have authority to make all material business decisions: Jerome Cohen,
          Jon Joseph, Gregg McMurtie and Carol Sullivan.

                Sections 5.12 and 5.13 are hereby deleted in their entirety and
replaced with the following, and Section 5.25 is inserted as follows:

          5.12  Orlando Delinquency Rate. At all times Indebtedness is
                ------------------------
     outstanding or Lender is obligated to make Advances, Borrower agrees to
     maintain the ratio of (i) the principal balance of all Notes Receivable,
     the principal balances of which are sixty (60) to eighty-nine (89) days
     delinquent to (ii) the principal balance of all Notes Receivable,
     determined in accordance with GAAP on a three (3) month rolling basis
     ("Orlando Delinquency Rate"), and calculated monthly pursuant to Section
     5.5(a), in an amount not greater than 0.035:1 (3.5 percent). As of the date
     hereof, Borrower's Delinquency Rate is in the amount set forth on Schedule
     5.8-13 attached hereto.

          5.13  Overall Delinquency Rate. At all times Indebtedness is
                ------------------------
     outstanding or Lender is obligated to make Advances, Borrower shall, with
     respect to all of its operations, maintain the ratio of (i) the aggregate
     principal balance of all notes receivable given by purchasers of timeshare
     intervals and all notes receivable given by purchasers of parcels of land
     including, but not limited to, recreational vehicle lots, the principal
     balances of which are sixty (60) to eighty-nine (89) days or more
     delinquent to (ii) the principal balance of all such foregoing notes
     receivable, determined in accordance with GAAP on a three (3) month rolling
     basis ("Overall Delinquency Rate"), and calculated monthly pursuant to
     Section 5.5(a), in an amount not greater than 0.035:1 (3.5 percent). As of
     the date hereof, the Overall Delinquency Rate is in the amount set forth on
     Schedule 5.8-.13 attached hereto.

          5.25  Conveyance of Resort; Preparation of Cost Analysis. No later
                --------------------------------------------------
     than July 1, 2002, Borrower shall transfer all of its right, title and
     interest in the Resort, the Units, the land described in Exhibit "B", the
     improvements thereon, all development rights, entitlements, permits,
     contracts, and any and all other property or collateral related thereto or
     securing this Loan to a special purpose, bankruptcy remote entity, directly
     or indirectly wholly owned by Borrower and pursuant to such documentation
     as Lender in its sole and absolute discretion may require, and in
     connection therewith Borrower shall cause the Guaranty and all other
     documents, instruments and agreements related to the Loan to be modified as
     required by Lender in its sole and absolute discretion to reflect the
     foregoing transfer and conveyance and the contractual rights and perfected
     interest of Lender in all collateral. In addition, no later than July 1,
     2002, Borrower shall deliver to Lender a quantitative analysis in form and
     substance meeting Lender's approval in its sole and absolute discretion of
     the overall cost, without regard to which party may properly bear such
     expense, of installing all water, sewer and other utility services to every
     lot within each entire project in which any prospective plaintiff or class
     member under the matter styled as Henry et al. v. Preferred Equities
     Corporation, Case No. A414827, Nevada District Court, County of Clark, owns
     property.

                Section 9.9, Lender's Right to Provide Financing, is hereby
deleted in its entirety.

                Section 9.11 is hereby inserted as follows:

                                       3
<PAGE>

     9.11  UCC Financing Statements. To the extent permitted by law, Borrower
     hereby authorizes Lender to complete, file and record, without the
     requirement that Borrower join in the execution thereof, such UCC financing
     statements as may be required in Lender's judgment to perfect Lender's lien
     in any Collateral or other property in which a security interest is or has
     been granted hereunder or in any of the other Loan Documents.

               The definition of Availability in the Appendix is hereby deleted
in its entirety and replaced with the following:

     Availability. At all times during the Revolving Period, the lesser of :

     $40,000,000.00 minus the sum of (i) Advances then outstanding, plus (ii)
     the then outstanding principal balance of the Acquisition Loan, plus (iii)
     the then outstanding principal balance of the Construction Loan; or

     an amount equal to 80% of the principal balance of Eligible Notes
     Receivable to be assigned to Lender in connection with any then current
     Advance; provided, however, that the percentage of the principal balance of
     Eligible Notes Receivable for which a Purchaser has made a cash down
     payment of at least twenty-five (25) percent of the actual purchase price
     of the Interval, and for which no part of such payment was made or loaned
     to Purchaser by Borrower or an Affiliate, and to be assigned to Lender in
     connection with any then current Advance shall be 85%.

After expiration of the Revolving Period, Availability shall be zero ($0).

               The definition of Commitment Fee in the Appendix is hereby
deleted in its entirety and replaced with the following:

     Commitment Fee.  A loan commitment fee with respect to the Loan equal to
     $125,000.00, which is payable in accordance with Section 1.6.

               Effective on the date hereof, Subsection (u) of the definition of
Eligible Note Receivable in the Appendix shall be deleted in its entirety and
replaced with the following:

          (u)  In addition to the foregoing eligibility criteria applicable to
     each Note Receivable, a sample shall be drawn by Lender from all the
     accounts submitted with each Request for Advance and in the event that
     either (i) the minimum score based on FICO guidelines falls below five
     hundred (500) (the "Minimum Credit Score"), (ii) more than five (5) percent
     of the accounts have a score based on FICO guidelines below five hundred
     fifty (550) or (iii) more than twenty (20) percent of the accounts have a
     score based on FICO guidelines below six hundred (600), Borrower shall
     submit the FICO score for each account which is the subject of the Request
     for Advance and Lender shall have the right to reject any and all accounts
     whose FICO score falls below the Minimum Credit Score and, in addition, to
     reject any and such other accounts as Lender may elect until all the
     foregoing FICO score criteria are satisfied.

               In the definition of Interest Rate in the Appendix, the reference
to "four percent

                                       4
<PAGE>

(4.0%)" is hereby deleted and replaced with "four and one-half percent (4.50%)."

               In the definition of Loan in the Appendix, each reference to
"Thirty Million and No/100 Dollars ($30,000,000.00)" is hereby deleted and
replaced with "Forty Million and No/100 Dollars ($40,000,000.00)."

               The definition of Maximum Exposure in the Appendix is hereby
deleted in its entirety and replaced with the following:

     Maximum Exposure.  The positive remaining amount, if any, calculated by
deducting the aggregate outstanding principal balance of the Acquisition and
Construction Loan from the lesser of (a) $40,000,000.00 and (b) that percentage
set forth below of the outstanding principal balance of all Financed Notes
Receivable:

          as of the date of this Amendment: 84.5%,
          from the date of this Amendment until thirty (30) days thereafter:
     83.5%,
          from the thirty-first (31/st/) day after the date of this Amendment
     until thirty (30) days thereafter: 82%,
          from the sixty-first (61/st/) day after the date of this Amendment
     until thirty (30) days thereafter: 81%, and
          beginning on the ninety-first (91/st/) day after the date of this
     Amendment and at all times thereafter: 80%;

provided, however, that applicable percentage of the outstanding principal
balance of Financed Notes Receivable shall at all times be eighty-five (85)
percent for each Financed Note Receivable which originated as an Eligible Note
Receivable for which a Purchaser made a cash down payment of at least twenty-
five (25) percent of the actual purchase price of the Interval and for which no
part of such payment was made or loaned to Purchaser by Borrower or an
Affiliate.

               The definition of Timeshare Association in the Appendix is hereby
deleted in its entirety and replaced with the following:

     Timeshare Association. The not-for-profit Florida corporations which are
responsible for operating and maintaining the Resort pursuant to the terms of
the Declaration.

               Section 3 of Schedule 3.2, Deliveries for all Advances, is hereby
deleted in its entirety and replaced with the following:

     3. The score based on FICO guidelines calculated on each account in a
     sample drawn by Lender from all the accounts submitted with each Request
     for Advance and, in the event that either (i) the minimum score based on
     FICO guidelines falls below five hundred (500) (the "Minimum Credit
     Score"), (ii) more than five (5) percent of the accounts have a score based
     on FICO guidelines below five hundred fifty (550) or (iii) more than twenty
     (20) percent of the accounts have a score based on FICO guidelines below
     six hundred (600), Borrower shall submit the FICO score for each account
     which is the subject of the Request for Advance and Lender shall have the
     right to reject any

                                       5
<PAGE>

     and all accounts whose FICO score falls below the Minimum Credit Score and,
     in addition, to reject any and such other accounts as Lender may elect
     until all the foregoing FICO score criteria are satisfied.

               Schedule 4.5, List of Litigation Matters, is hereby deleted in
its entirety and replaced with Schedule 4.5 attached hereto.

               Schedule 5.8-.13 is hereby deleted in its entirety and replaced
with Schedule 5.8-.13 attached hereto.

               Exhibit "F", Permitted Exceptions, is hereby deleted in its
entirety and replaced with Exhibit "F" attached hereto.

               Exhibit "H", Borrower's Debt, Liabilities and Obligations to any
Affiliates of Borrower, is hereby supplemented with Exhibit "H" attached hereto.

               In connection with this Amendment, Borrower hereby certifies to
Lender that (a) all of Borrower's representations, warranties, covenants and
agreements contained in the Loan Agreement are true and correct and in full
force and effect as of the date hereof, (b) as of the date hereof there are no
Events of Default under the Loan Agreement and all other Loan Documents and
there are no facts or conditions which but for the passing of time or the giving
of notice would constitute an Event of Default, and (c) all of the Loan
Documents as defined herein are in full force and effect.

                                       6
<PAGE>

               Except as modified by this Amendment, all other terms and
conditions of the Loan Agreement and other Loan Documents as amended, modified,
restated or supplemented shall remain in full force and effect. Should Borrower
currently be in default under the Loan Agreement, which default would not have
existed if this Amendment were effective, such default is hereby waived.

               As consideration for, and as a mutual inducement to Lender
entering into this Amendment, Borrower and Guarantor each hereby waive and
release any and all claims, setoffs, counterclaims and defenses either has as of
the date hereof with respect to this credit facility and performance by Lender
under the Loan Documents, and each hereby acknowledge that Lender has fully
performed all obligations and is not in default under the Loan Documents.
Execution of this Amendment shall not be deemed to constitute a waiver or
release by Lender of any its rights or remedies under the Loan Documents.

               This Amendment 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 Lender's receipt of one or more counterparts hereof signed by Borrower and
Lender.

          IN WITNESS whereof the parties have executed this Amendment as of the
date above.

BORROWER:                               LENDER:

PREFERRED EQUITIES CORPORATION,         HELLER FINANCIAL, INC., a
a Nevada corporation                    a Delaware corporation

BY: /s/ Carol W. Sullivan               BY: /s/ Dennis K. Holland
    ------------------------                ----------------------

        Carol Sullivan                          Dennis K. Holland
    ------------------------                ----------------------
Print Name                              Print Name

Its:    Sr. V.P                         Its:    Sr. V.P.
    ------------------------                ----------------------

APPROVED BY:

GUARANTOR:

MEGO FINANCIAL CORP.,
a New York corporation

BY:   /s/ Charles G. Baltuskonis
      ---------------------------

          Charles G. Baltuskonis
      ---------------------------
Print Name

Its:      Sr. V.P
      ---------------------------

                                       7
<PAGE>

                                 Schedule 4.5

                             Litigation Disclosure

                                       8
<PAGE>

                               Schedule 5.8-.13

Tangible Net Worth:  $  33,6854,000
------------------

Debt to Tangible Net Worth Ratio:  4.7:1
--------------------------------- ------

EBITDA Ratio:   17.8
-------------  -----

Total Interest Coverage Ratio:   1.52:1
------------------------------  -------

Orlando Delinquency Rate: _____ :1 ( 10.05%)
--------------------------      ------------

Overall Delinquency Rate: _____ :1 ( 8.57%)
--------------------------      -----------

                                       9
<PAGE>

                                  Exhibit "F"

                             Permitted Exceptions

                                       10
<PAGE>

                                  Exhibit "H"

   Borrower's Debt, Liabilities and Obligations to any Affiliates of Borrower

None.

                                       11
<PAGE>

                      ASSIGNMENT AND ASSUMPTION AGREEMENT
                      -----------------------------------

     THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into this 20th
day of December, 2001, by and between PREFERRED EQUITIES CORPORATION, a Nevada
corporation (hereinafter referred to as "Assignor"); and AB PREFERRED HOLDINGS,
INC., a Florida corporation ("Assignee").

                             W I T N E S S E T H:
                             -------------------

     WHEREAS, Assignor entered into that certain Management Agreement dated July
7, 1997 with RVS-Orlando Condominium Association, Inc., a Florida not-for-profit
corporation, attached hereto as Exhibit "A" (the "Management Agreement"); and
                                -----------

     WHEREAS, Assignor has agreed to transfer and assign to Assignee all of
Assignor's rights, title and interests in and to the Management Agreement; and

     WHEREAS, Assignee has agreed to assume all of Assignor's liabilities and
obligations relating to or arising out of the Management Agreement following the
Effective Date (as described in Paragraph 3 hereinbelow); and

     WHEREAS, the parties hereto desire to provide for the assignment of such
rights, title and interests and the assumption of such liabilities and
obligations in accordance with the terms contained herein.

     NOW, THEREFORE, in consideration of the foregoing premises and satisfaction
of their respective obligations contained herein, the parties hereto hereby
agree as follows:

     1.  Assignment.  Assignor does hereby convey, sell, transfer, assign and
         ----------
deliver unto Assignee, its successors and assigns forever, all of its benefits,
rights, title and interests in and to the Management Agreement.

     2.  Assumption of Obligations and Liabilities. Assignee hereby assumes and
         -----------------------------------------
agrees to satisfy and perform all of the liabilities and obligations of Assignor
contained under the Management Agreement being assigned hereunder following the
Effective Date hereof. Assignee shall indemnify and hold Assignor harmless from
and against any losses, damages, expenses, liabilities, claims and suits which
arise out of or relate to Assignee's failure to perform such obligations or
satisfy such liabilities assumed by Assignee herein.

     3.  Effective Date. The effective date of the assignment and assumption of
         --------------
the Management Agreement set forth in Paragraphs 1 and 2 hereinabove is December
20, 2001 (the "Effective Date").

     4.  Third Party Consents and Waivers.  The Assignor agrees and undertakes
         --------------------------------
to secure any and all consents and waivers required by the Management Agreement,
including

                                       12
<PAGE>

without limitation, the Consent to Assignment attached hereto as Exhibit "B",
                                                                 ----------
and the Assignor and Assignee agree to cooperate in obtaining any and all
consents or waivers of third parties necessary to transfer to Assignee all
duties, obligations, rights and benefits in and under the Management Agreement.

     5.  Further Assurances.  Each party hereto shall from and after the date
         ------------------
hereof, upon the reasonable request of any other party hereto, execute and
deliver such other documents as such other party may reasonably request to
obtain the full benefit of this Assignment and Assumption Agreement.

     6.  Governing Law. This Assignment and Assumption Agreement shall be
         -------------
subject to, and construed and enforced in accordance with, the laws of the State
of Florida without regard to principles of conflicts of law.

  IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and
Assumption Agreement as of the date first written above.

                                        ASSIGNOR:

                                        PREFERRED EQUITIES CORPORATION, a
                                        Nevada corporation

                                        By: s/s/  Carol W. Sullivan
                                            -----------------------

                                        Name:    Carol W. Sullivan
                                                 -----------------

                                        Title:   Sr. V.P.
                                                 --------

                                        ASSIGNEE:

                                        AB PREFERRED HOLDINGS, INC., a Florida
                                        corporation

                                        By:  s/s/ Victor McElroy
                                             -------------------

                                        Name:   Victor McElroy
                                                --------------

                                        Title:  President
                                                ---------

                                       13
<PAGE>

                                  EXHIBIT "A"
                                  -----------

                              Management Agreement

                                       14
<PAGE>

                                  EXHIBIT "B"
                                  -----------

                             Consent to Assignment

15
<PAGE>

                             CONSENT TO ASSIGNMENT
                             ---------------------

     RVS-Orlando Condominium Association, Inc. ("RVS-Orlando"), a Florida not-
for-profit corporation, consents to the assignment by Preferred Equities
Corporation, a Nevada corporation ("PEC"), to AB Preferred Holdings, Inc., a
Florida corporation ("AB Preferred"), of the Management Agreement dated July 7,
1997 between PEC and RVS-Orlando.

     EXECUTED:  _____12/20_______, 2001

WITNESSES:                                   RVS-ORLANDO CONDOMINIUM
                                             ASSOCIATION, INC., a Florida
                                             not-for-profit corporation
              s/s/ Mark Prasse
              ----------------

Print Name:     Mark  Prasse                 By:     s/s/ Gregg A. McMurtrie
                ----  ------                         -----------------------

                                             Name:     Gregg A. McMurtrie
                                                       ------------------
      S/s/  Syonja Gustafson
----------  ----------------
                                             Title:   President
                                                      ---------
Print Name:     Syonja Gustafson
                ----------------

16
<PAGE>

                               PLEDGE AGREEMENT
                               ----------------

     THIS PLEDGE AGREEMENT (the "Pledge Agreement") is made and entered into
this 20 day December of 2001, by and between PREFERRED EQUITIES CORPORATION, a
Nevada corporation located at 4310 Paradise Road, Las Vegas, Nevada 89109
(hereinafter referred to as the "Pledgor"); and HELLER FINANCIAL, INC., a
Delaware corporation, located at 500 West Monroe Street, 30th Floor, Chicago,
Illinois 60661 (hereinafter referred to as the "Secured Creditor").

                             W I T N E S S E T H:
                             -------------------

     WHEREAS, the Pledgor and the Secured Creditor entered into that certain
Interval Receivables Loan and Security Agreement dated as of March 28, 1996, as
amended by that certain Interval Receivables Loan and Security Agreement dated
December 23, 1997, that certain Second Amendment to Interval Receivables Loan
and Security Agreement dated July 7, 1998, that certain Amendment No. 2 to
Interval Receivables Loan and Security Agreement dated March 1, 1999, that
certain Fourth Amendment to Interval Receivables Loan and Security Agreement
dated December 22, 1999 and that certain Amended and Restated Loan and Security
Agreement dated April 5, 2001 (the "Receivables Loan Agreement"), and that
certain Acquisition and Construction Loan Agreement dated March 27, 1996, as
amended by that certain Amendment to Acquisition and Construction Loan Agreement
dated December 23, 1997, that certain Second Amendment to Acquisition and
Construction Loan Agreement dated July 7, 1998, that certain Third Amendment to
Acquisition and Construction Loan Agreement dated December 22, 1999, that
certain Fourth Amendment to Acquisition and Construction Loan Agreement dated
September 7, 2000 and that certain Amended and Restated Acquisition and
Construction Loan Agreement dated April 5, 2001 (the "Construction Loan
Agreement", which together with the Receivables Loan Agreement are collectively
referred to as the "Loan and Security Documents") (as amended, modified,
supplemented or restated from time to time, the Loan and Security Documents, the
notes as provided in and relating to the Loan and Security Agreements, and all
other documents relating to the Loans collectively referred to herein as the
"Loan Agreements"), providing for the availability of credit (the "Loans") to
the Pledgor upon the terms and conditions set forth therein; and

     WHEREAS, the Secured Creditor and the Pledgor desire to further amend and
modify the terms of the Loan Agreements, as set forth under that certain First
Amendment of Amended and Restated Loan and Security Agreement and that certain
First Amendment of Amended and Restated Acquisition and Construction Loan
Agreement, all of which are dated of even date herewith (the "First
Amendments"); and

     WHEREAS, the Pledgor is a sole shareholder of AB Preferred Holdings, Inc.,
a Florida corporation (the "Company"), and the Pledgor and the Company will
derive financial and other benefits from the ongoing lending relationship
between the Secured Creditor and the Pledgor; and

17
<PAGE>

     WHEREAS, the Pledgor is and shall be at all times during the term of this
Pledge Agreement the sole legal and beneficial owner of all of the outstanding
shares of capital stock (constituting all equity interest and voting rights) of
the Company; and

     WHEREAS, pursuant to that certain Assignment and Assumption Agreement
dated December 20, 2001 (the "Assignment Agreement"), the Company assumes all
of the Pledgor's rights, benefits, interests and obligations under that certain
Management Agreement dated July 7, 1997 between the Pledgor and RVS-Orlando
Condominium Association, Inc., a Florida not-for-profit corporation (the "RVS-
Orlando I Management Agreement"); and

     WHEREAS, the Company entered into that certain Management Agreement between
the Company and RVS-Orlando II Condominium Association, Inc., a Florida not-for-
profit corporation, effective November 5, 2001 (the "RVS-Orlando II Management
Agreement", which together with the RVS-Orlando I Management Agreement are
collectively referred to as the "Management Agreements"); and

     WHEREAS, pursuant to the Management Agreements and the Assignment Agreement
the Company is the Manager of the Resort (as defined in the Amended and Restated
Loan and Security Agreement dated April 5, 2001) which is being developed by the
Pledgor; and

     WHEREAS, it is in the best interest of the Pledgor to enter into this
Pledge Agreement; and

     WHEREAS, it is in the best interest of the Company to execute the Joinder
by Company hereto; and

     WHEREAS, as a condition, among other things, to the amendment and
modification of Loans under the Loan Agreements, the Secured Creditor required
and the Pledgor has agreed, by executing and delivering this Pledge Agreement,
to secure the payment in full of the Pledgor's obligations under the Loan
Agreements.

     NOW, THEREFORE, in consideration of the mutual premises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

     1.  DEFINITIONS. As used in this Pledge Agreement, the following terms and
         -----------
conditions shall have the meanings set forth below:

     "1933 Act" shall mean the Securities Act of 1933, as amended.
      --------

     "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
      --------

     "Blank Stock Power" shall mean a blank stock power in form and substance
      -----------------
acceptable to the Secured Creditor executed by the Pledgor and delivered to the
Secured Creditor for each Stock Certificate.

     "Collateral" shall mean One Thousand (1,000) shares of Common Stock and all
      ----------

18
<PAGE>

additional Shares issued in regard thereto as a result of any stock dividend,
stock split, etc., and all other Shares owned at any time by the Pledgor,
whether acquired from the Company or by gift, purchase or otherwise from any
other person whatsoever.

     "Common Stock" shall mean all of the issued and outstanding common stock of
      ------------
the Company, par value of $0.01 per share.

     "Distributions" shall mean any and all present and future payments by the
      -------------
Company to the Pledgor whether in the form of dividends, liquidation payments,
profit-sharing payments or any other distribution related to the Shares, any
interest of the Pledgor in the Company, or the sale, transfer or conveyance of
any real or personal property owned by the Company.

     "Event of Default" shall mean the occurrence of a default under paragraph
      ----------------
4.

     "Liability" or "Liabilities" shall mean each and all of the following:
      ---------      -----------

          (a) Principal and interest and all other monies due or to become due
under any of the Loan Agreements, as the same may be amended, changed, modified
or renewed from time to time.

          (b) All other monies (in addition to principal and interest) due or to
become due to the Secured Creditor from the Pledgor including, but not limited
to, all indemnities, costs and expenses including attorney's fees which the
Secured Creditor is entitled or permitted for any reason whatsoever to recover
under any statute or promissory note or agreement by the Pledgor in favor of the
Secured Creditor in connection with the Loans, including, but not limited to,
the Loan Agreements.  As used herein and elsewhere in this Pledge Agreement,
costs and expenses, including attorney's fees, shall include costs and expenses
incurred by the Secured Creditor in proceeding against the Collateral or against
the Pledgor and shall include costs and expenses, including attorney's fees,
which the Secured Creditor may incur or become liable for as a result of
enforcing any of its rights and privileges under this Pledge Agreement or of any
of the Loan Agreements, whether in any initial suit or an appeal therefrom.

          (c) All future advances, if any, made by the Secured Creditor to the
Pledgor; provided, however, the Secured Creditor shall not by virtue of this
Pledge Agreement be obligated to make any such future advances to the Pledgor.
However, if, after the date of this Pledge Agreement, the Secured Creditor does
advance monies to the Pledgor, said advances shall be presumed to be future
advances under the provisions of this paragraph such that such future advances
shall be secured by the Collateral under this Pledge Agreement.

     "Rule 144" shall mean Rule 144 as promulgated by the SEC under the 1933
      --------
Act, as amended from time to time.

     "SEC" shall mean the Securities and Exchange Commission.
      ---

     "Shares" shall mean the shares of Common Stock.
      ------

     "Stock Certificate(s)" shall mean the stock certificate(s) representing
      --------------------
Shares in which the

19
<PAGE>

Secured Creditor has been granted a security interest under this Pledge
Agreement which constitute Collateral.

     "UCC" shall mean the applicable Uniform Commercial Codes of the State of
      ---
Florida and the State of Nevada, as the same may now exist or may hereafter be
amended from time to time.

     2.   GRANT OF SECURITY INTEREST.  To secure the payment of all Liabilities
          --------------------------
to the Secured Creditor, the Pledgor does hereby pledge, assign and grant to the
Secured Creditor a security interest in all of the Collateral.  By executing and
delivering this Pledge Agreement, the Pledgor hereby consents to the transfer by
Secured Creditor of ownership of the Shares upon the foreclosure sale thereof
effected in accordance with the terms and conditions of this Pledge Agreement.

     3.   REPRESENTATIONS, WARRANTIES AND COVENANTS.  The Pledgor does hereby
          -----------------------------------------
represent and warrant to and covenant with the Secured Creditor as follows:

          (a) That the Pledgor is the absolute and sole legal, record and
beneficial owner of, or at the time pledged hereunder will have, good and
marketable title to, the Collateral pledged hereunder by the Pledgor, free and
clear of all liens and security interests whatsoever except the security
interest granted the Secured Creditor by this Pledge Agreement, and no person or
person other than the Secured Creditor has any type of interest, claim or lien
whatsoever upon the Collateral and during the term of this Pledge Agreement the
Pledgor shall not grant to any person other than the Secured Creditor any claim,
interest or lien whatsoever in the Collateral.

          (b) That the Pledgor will defend the Collateral against the claims and
demands of all persons at any time claiming the same or any interest therein.

          (c) That by virtue of this Pledge Agreement and delivery of the Stock
Certificate(s) and Blank Stock Power(s) to the Secured Creditor, the Secured
Creditor has a valid, enforceable, perfected and first security interest in the
Collateral.

          (d) That there is not now and will not be filed in the future any
financing statement listing any person other than the Secured Creditor as a
secured party covering any or all of the Collateral.

          (e) That the Pledgor will not permit any liens or security interests
other than the Secured Creditor's security interest to attach to any of the
Collateral, permit any of the Collateral to be levied upon under legal process,
sell, transfer, convey, or otherwise dispose of any of the Collateral or any
interest therein or offer to do so, without the prior written consent of the
Secured Creditor, or permit anything to be done that may impair the value of any
of the Collateral (except any loss of value attributable to fluctuation in the
market price thereof) or the security intended to be afforded by this Pledge
Agreement.

          (f) That the Pledgor will pay promptly when due all taxes and
assessments upon the Collateral.

20
<PAGE>

          (g) That at its option, the Secured Creditor may discharge taxes,
liens or security interests or encumbrances at any time levied upon or placed on
the Collateral and to the extent the Secured Creditor elects to do so, the
Pledgor agrees to immediately reimburse the Secured Creditor on demand for any
such payments made or any expenses incurred by the Secured Creditor together
with interest hereon at the highest rate permitted by law.

          (h) That the Pledgor will immediately notify the Secured Creditor if
the Company suffers or permits any substantial or material changes in control or
management or the Management Agreements, or ceases to be the Manager of the
Resort or suffers or experiences any material adverse financial change;
provided, however, this shall not apply to any adverse financial changes
resulting from changes in market value of the Collateral.

          (i) That the Collateral was acquired by the Pledgor on August 14,
2001,  and, as of and by said date, the full purchase price for the Collateral
was paid by the Pledgor, and the "holding period" for the Collateral within the
meaning of Rule 144 commenced on said date.

          (j) That in the event the Pledgor subsequently acquires any additional
Shares of the Company whether than by way of stock dividend, stock split, etc.,
or by gift, purchase or otherwise from any third party, that it will immediately
deliver the Stock Certificate(s) for said additional Shares along with Blank
Stock Power(s) therefor to the Secured Creditor and said Shares shall be deemed
to be within the term "Collateral" and subject to the terms and conditions of
this Pledge Agreement; provided, however, this clause shall not, of itself,
authorize the issuance by the Company of any additional Shares.

          (k) That in the event the Secured Creditor is entitled to dispose of
the Collateral under this Pledge Agreement, the Pledgor shall, at the request of
the Secured Creditor, execute and file all forms required to be filed under Rule
144 with the SEC and, upon the failure of any Pledgor to do so, such Pledgor
does hereby designate and appoint the Secured Creditor as its attorney-in-fact
to execute in the name of the Pledgor all appropriate forms to be filed under
Rule 144.

          (l) That the Pledgor owns the Collateral and the Collateral
constitutes one hundred percent (100%) of all the outstanding Common Stock of
the Company and shall at all times during the term of the Pledge Agreement
represent one hundred percent (100%) equity and ownership interest and one
hundred percent (100%) voting interest of the Company.

          (m) That the Pledgor owns One Thousand (1,000) Shares, and all such
Shares owned by the Pledgor and delivered to the Secured Creditor as Collateral
constitute one hundred percent (100%) of the total outstanding capital stock of
the Pledgor and, throughout the term of this Pledge Agreement, the Shares which
have been delivered to the Secured Creditor as Collateral under this Pledge
Agreement shall not constitute less than one hundred percent (100%) of the
issued and outstanding capital stock of the Company.

          (n) That the Pledgor shall not enter into any stock restriction or
similar agreement with respect to the Collateral or any voting trust agreement
which applies to the Collateral without the prior written consent of the Secured
Creditor.

21
<PAGE>

          (o) That the "Whereas" recitals above are true and correct and are
made a part hereof.

All of the foregoing representations, warranties and covenants shall be true and
correct throughout the term of this Pledge Agreement and shall be fulfilled and
maintained by the Pledgor throughout the term hereof.

     4.   DEFAULT.  The occurrence and continuance of one or more of the
          -------
following events shall constitute an Event of Default in this Pledge Agreement:

          (a) The failure or omission of Pledgor to pay within five (5) days of
the date when due any Liability, including but not limited to, the failure to
pay when due any payment of interest and/or principal of the Loan Agreements.

          (b) Pledgor or the Company shall fail to perform or observe any
covenant, agreement or obligation contained in this Pledge Agreement or in any
of the Loan Agreements (other than any covenant or agreement obligating Pledgor
to pay the Liabilities), and such failure shall continue for thirty (30) days
after Secured Creditor deliver written notice thereof to Pledgor, provided,
however, if the failure is incapable of cure within such thirty (30) day period
and Pledgor shall be diligently pursuing a cure, such thirty (30) day cure
period shall be extended by an additional period not to exceed sixty (60) days.

          (c) The making or furnishing by Pledgor to the Secured Creditor of any
representation, warranty or covenant in connection with this Pledge Agreement
which is false or misleading in any material respect as of the date hereof.

          (d) A petition under any Chapter of Title 11 of the United States Code
or any similar law or regulation is filed by or against Pledgor, the Company or
Guarantor (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for any of the Resorts then owned by Pledgor is
appointed, or Pledgor, the Company or Guarantor makes an assignment for the
benefit of creditors, or any of them are adjudged insolvent by any state or
federal court of competent jurisdiction, or any of them admit their insolvency
or inability to pay their debts as they become due or an attachment or execution
is levied against any of the Resorts then owned by Pledgor.

          (e) The issuance, filing or levy against Pledgor, the Company or
Guarantor of one or more attachments, injunctions, executions, tax liens or
judgments for the payment of money cumulatively in excess of fifty thousand
dollars ($50,000.00) which is not discharged in full or stayed within thirty
(30) days after issuance or filing.

          (f) An Event of Default under the terms and conditions of any
document, instrument or agreement executed by Pledgor in favor of the Secured
Creditor in connection with the Loans including, but not limited to, the Loan
Agreements and any other loan agreement or security agreement relating thereto.

          (g) The dissolution, merger or consolidation, or transfer of a
substantial part

22
<PAGE>

of the property of Pledgor (other than the sale of inventory in the ordinary
course of business).

          (h) Pledgor becomes unable to pay debts as they mature.

          (i) Either of the Management Agreements is terminated or modified in
any material respect without the Secured Creditor's written consent or the
Pledgor is in material default (after the expiration of applicable cure periods)
under any of the Management Agreements.

     5.   RIGHTS UPON DEFAULT.  Upon the occurrence and continuance of any Event
          -------------------
of Default, the Secured Creditor shall have and may exercise any or all of the
following rights (all of which rights shall be cumulative); provided, however,
the Secured Creditor shall be under no duty or obligation to do so:

          (a) to receive all Distributions and any other amounts payable in
respect of the Collateral otherwise payable under paragraph 8 below to the
Pledgor;

          (b) To exercise from time to time any and all rights and remedies of a
secured party under the UCC and any and all rights and remedies available to it
under any other applicable law.

          (c) To dispose of the Collateral under the UCC and, in such case, if
any notice is required under the UCC, the giving of five (5) days written notice
to the Pledgor as set forth in paragraph 11 hereof shall constitute reasonable
notice to the Pledgor provided, however, that this Pledge Agreement and this
subparagraph (c) shall not, of itself, require the giving of any such written
notice.

          (d) To declare the Liabilities secured hereby, or any of them
(notwithstanding any provision thereof), immediately due and payable without
demand or notice of any kind and the same thereupon shall immediately become due
and payable without demand or notice, and from and after the date of default the
amount due on the Liabilities shall from and thereafter bear interest at the
Default Rate as defined in the Receivables Loan Agreement.

          (e) To immediately offset against the Liabilities all other monies due
or to become due Pledgor from the Secured Creditor.

          (f) To exercise any other remedies available to the Secured Creditor
under applicable law or any other agreement.

          (g) All proceeds resulting from the disposition of any of the
Collateral shall be applied without marshalling of assets (i) first to the
expenses of retaking and preparing the Collateral for sale including expenses of
sale, (ii) next to other costs and attorneys' fees incurred by the Secured
Creditor in exercising its rights under this Pledge Agreement, (iii) next to the
payment of interest and/or principal due on the Liabilities, as the Secured
Creditor may determine, and (iv) finally to any other moneys due the Secured
Creditor from Pledgor .

          (h) To make demand upon the Company to make directly to the Secured

23
<PAGE>

Creditor all payments with respect to the Shares such as, for example,
dividends, liquidation payments, etc.  Further, the Secured Creditor shall have
the right, but not the duty, to thereafter exercise all rights with respect to
voting privileges for the Shares and upon notice from the Secured Creditor, the
Pledgor shall no longer exercise any voting rights with respect to the Shares,
or if so directed by the Secured Creditor, shall vote the Shares as directed by
the Secured Creditor.  The exercise by the Secured Creditor of any of its rights
hereunder with respect to the voting of the Shares shall not constitute in any
way an election by the Secured Creditor to become owner of the Shares and until
such time as the Secured Creditor has so exercised its rights hereunder, the
Pledgor shall be entitled to exercise all voting privileges with respect to the
Shares.

     6.  PURCHASE OF COLLATERAL.  Upon any sale of any Collateral by the Secured
         ----------------------
Creditor hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Secured Creditor
or the officer making the sale shall be a sufficient discharge to the purchaser
or purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Secured Creditor or such officer or be answerable in any way
for the misapplication or nonapplication thereof.

     7.  INDEMNIFICATION.  To the extent permitted by law, in no event shall the
         ---------------
Secured Creditor be liable for any matter or thing in connection with this
Pledge Agreement other than to account for moneys actually received by it in
accordance with the terms hereof and except for fraud, gross negligence, willful
misconduct or violation of law.

     8.  DIVIDENDS AND OTHER DISTRIBUTIONS.  Unless an Event of Default shall
         ---------------------------------
have occurred and be continuing, all Distributions payable in respect of the
Collateral may be paid to the Pledgor.

         Nothing contained in this paragraph 8 shall limit or restrict in any
way the Secured Creditor's right to a security interest in proceeds of the
Collateral in any form in accordance with paragraph 2. All Distributions or
other payments that are received by the Pledgor in violation of the provisions
of this paragraph 8 and paragraph 5 herein shall be received in trust for the
benefit of the Secured Creditor, shall be segregated from other property or
funds of the Pledgor and shall be forthwith paid over to the Secured Creditor as
Collateral in the same form as so received.

     9.  PERFECTION.  In order to perfect the security interest in the
         ----------
Collateral granted to the Secured Creditor by the Pledgor hereunder, the Pledgor
shall simultaneously with the execution of the Pledge Agreement deliver
possession of the Stock Certificate(s) for the Collateral and Blank Stock
Power(s) therefor to the Secured Creditor.  The Pledgor further agrees from time
to time to execute and deliver to the Secured Creditor any and all documents
which are, in the opinion of the Secured Creditor or its counsel, necessary to
perfect said security interest.  To the extent any Pledgor subsequently acquires
any additional Shares which are not already pledged to the Secured Creditor,
such Pledgor shall promptly deliver to the Secured Creditor the Stock
Certificate(s) and Blank Stock Power(s) for said Shares and the Shares

24
<PAGE>

shall be deemed to be within the definition of the term "Collateral".

     10.  POSSESSION OF COLLATERAL.  The Secured Creditor shall have no duties
          ------------------------
or obligations whatsoever to exercise or preserve rights in regard to the
Collateral as against any third parties and the sole duty of the Secured
Creditor shall be the reasonable preservation of the physical Collateral itself.
By way of illustration and not limitation, the Secured Creditor shall have no
duty or obligation whatsoever to maintain any market value for the Collateral.
Upon the termination of this Pledge Agreement, the Secured Creditor shall return
the Collateral (including the Stock Certificate(s) and the Blank Stock Power(s))
to the Pledgor along with such endorsements as may be necessary to transfer
title to the Collateral to the Pledgor; provided, however, the transfer shall be
without recourse and the Secured Creditor shall make no representations or
warranties whatsoever in regard to said transfer.

     11.  NOTICE.  All notices shall be in writing and delivered to the person
          ------
to whom the notice is directed, either (i) in person, (ii) by U.S. Mail, as
registered or certified item with return receipt requested, (iii) delivered by
delivery service, or (iv) sent by facsimile, telex or telecopy.  Notices
delivered by mail shall be deemed to be given when deposited in a post office or
other depository under the care or custody of the United States Postal Service,
enclosed in a wrapper, addressed properly with proper postage affixed.  All
notices shall be addressed as follows:

          To Secured Creditor:  HELLER FINANCIAL, INC.
                                Vacation Ownership Finance
                                500 West Monroe Street, 30/th/ Floor
                                Chicago, Illinois  60661
                                Attn:  Portfolio Manager,
                                Loan No. 95-227
                                Fax: (312) 441-7924

                  And copy to:  Heller Financial, Inc.
                                Real Estate Financial Services
                                Attn: Group General Counsel
                                500 West Monroe Street, 15/th/ Floor
                                Chicago, Illinois  60661
                                Loan No. 95-227
                                Fax: (312) 441-7872

                  And copy to:  Baker & Hostetler LLP
                                P.O. Box 112
                                Orlando, Florida  32802-0112
                                Attn: Rosemary O'Shea, Esq.
                                Fax: 407-841-0168

                   To Pledgor:  Preferred Equities Corporation
                                4310 Paradise Road
                                Las Vegas, Nevada 89109
                                Attn:  s/s/  Jon Joseph
                                     -------------------

25
<PAGE>

                              Fax:   702-369-3194
                                     ------------

    12.   FURTHER ASSURANCES; SECURED CREDITOR AS ATTORNEY-IN-FACT, SECURED
          -----------------------------------------------------------------
CREDITOR MAY PERFORM.
--------------------

          (a)  Pledgor agrees that it will join with the Secured Creditor to
execute and, at its own expense, file and refile under any applicable Uniform
Commercial Code such financing statements, continuation statements, Blank Stock
Powers, all necessary forms for filing with the SEC under Rule 144 (if
applicable), and other documents and instruments in such offices as the Secured
Creditor may reasonably deem necessary or appropriate, or wherever required or
permitted by law in order to perfect and preserve the Secured Creditor's
security interest in the Collateral, and hereby authorizes the Secured Creditor
to file financing statements and amendments thereto relating to all or any part
of the Collateral without the signature of the Pledgor, as applicable, where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Secured Creditor such additional assignments, agreements and
other instruments as the Secured Creditor may reasonably require or deem
advisable to carry out the purposes of this Pledge Agreement or to further
assure and confirm unto the Secured Creditor its rights, powers and remedies
hereunder.

          (b)  Pledgor hereby irrevocably appoints the Secured Creditor its
lawful attorney-in-fact, with full authority in the place of the Pledgor and in
the name of the Pledgor, the Secured Creditor or otherwise, to endorse in the
Pledgor's name all checks, drafts and other instruments representing or
constituting payments made on the Collateral, and upon the occurrence and during
the continuance of an Event of Default, with full power of substitution from
time to time in the Secured Creditor's reasonable discretion to take any action
and to execute any instrument that the Secured Creditor may reasonably deem
necessary or advisable to accomplish the purpose of this Pledge Agreement,
including, without limitation:

               (i)   to ask, demand, collect, sue for, recover, compound,
     receive and give acquittance and receipts for moneys due and to become due
     under or in respect of any of the Collateral;

               (ii)  to receive, endorse and collect any drafts or other
     instruments, documents and chattel paper in connection with clause (i)
     above; and

               (iii) to file any claims or take any action or institute any
     proceedings that the Secured Creditor may deem necessary or desirable for
     the collection of any of the Collateral or otherwise to enforce the rights
     of the Secured Creditor with respect to any of the Collateral;

and, in the case of each of clauses (i), (ii), and (iii) above, the Secured
Creditor shall use its best efforts to give the Pledgor notice of any action
taken by it in accordance with this paragraph as soon as practicable before such
action is taken; provided, however, that the failure to give any such notice
                 --------  -------
shall not in any way impair the authority of the Secured Creditor pursuant to
this paragraph or the validity of any action taken by the Secured Creditor
pursuant hereto, or result in any liability on the part of the Secured Creditor
to the Pledgor.  The exercise by the Secured

26
<PAGE>

Creditor of any of its rights pursuant to this paragraph shall not create any
further obligation on the part of the Secured Creditor to exercise any other
rights hereunder or to take any other or further action in respect thereof. The
power of attorney granted under this paragraph, being coupled with an interest,
is irrevocable for so long as this Pledge Agreement shall be in effect.

          (c) If Pledgor fails to perform any agreement contained herein after
written request to do so by the Secured Creditor, the Secured Creditor may
itself perform, or cause performance of, such agreement, and the reasonable
expenses so incurred in connection therewith shall be payable by the Pledgor.

     13.  TERM.  This Pledge Agreement and the rights and privileges granted
          ----
hereunder to the Secured Creditor shall continue and remain in full force and
effect until all Liabilities have been paid in full to the Secured Creditor and
this Pledge Agreement has been marked "Canceled" by the Secured Creditor and
returned to the Pledgor.  Upon the full payment of all Liabilities and the
performance of all obligations under the Loan Agreements and the Pledge
Agreement by Pledgor and, if an Event of Default has not occurred and is
continuing, the Secured Creditor shall execute and deliver UCC-3 termination
statement(s) (to the extent necessary) at the expense of the Pledgor and mark
this Pledge Agreement "Canceled" and return same along with the Collateral to
the Pledgor.

     14.  TIME.  Time is of the essence of this Pledge Agreement.
          ----

     15.  WAIVER.  No waiver by the Secured Creditor of any default shall
          ------
operate as a waiver of any other default or of the same default on a future
occasion.  No delay or omission on the part of the Secured Creditor in
exercising any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Secured Creditor of any right or remedy shall include
any other or further exercise thereof or the exercise of any other right or
remedy.  Except as provided herein or in any loan document to the contrary, the
Pledgor further waives all notices whatsoever that the Pledgor may be entitled
to under any contract or statute including presentment, notice of dishonor,
protest or notice of protest.

     16.  MISCELLANEOUS.  The provisions of this Pledge Agreement are cumulative
          -------------
and are in addition to the provisions of the Loan Agreements secured by this
Pledge Agreement and the Secured Creditor shall have all the benefits, rights
and remedies under the Loan Agreements secured hereby.  All rights of the
Secured Creditor hereunder shall inure to the benefits of its successors and
assigns and all duties or obligations of the Pledgor hereunder shall bind the
heirs, executors, administrators, successors and assigns of the Pledgor.

     17.  GOVERNING LAW.  This Pledge Agreement has been delivered in the State
          -------------
of Florida and shall be construed and interpreted in accordance with and
governed by the laws of Florida (without regard to the conflict of laws
provisions thereof).

     18.  SEVERABILITY.  Whenever possible, each provision of this Pledge
          ------------
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating

27
<PAGE>

the remainder of such provision or the remaining provisions of this Pledge
Agreement.

     19.  NO THIRD PARTY BENEFICIARIES.  This Pledge Agreement is solely between
          ----------------------------
the Pledgor and the Secured Creditor, as joined by the Company in respect to the
obligations of the Company as set out in the Joinder By Company, and no persons
other than the Pledgor and the Secured Creditor shall have any rights hereunder,
either as third party beneficiaries or otherwise.

     20.  COSTS AND ATTORNEYS FEES.  The Pledgor agrees (a) to pay or reimburse
          ------------------------
the Secured Creditor for any and all reasonable and customary out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation,
execution, and delivery of, and amendment, supplement, or modification to, or
waiver or consent under, this Pledge Agreement, and the consummation of the
transactions contemplated hereby; (b) to pay or reimburse the Secured Creditor
for all of its costs and expenses incurred in connection with administration,
collection, enforcement or preservation of any rights under either of the Loan
Agreements and this Pledge Agreement including, without limitation, the fees and
disbursements of counsel for the Secured Creditor, including attorneys' fees,
out of court, in trial, on appeal, in bankruptcy proceedings, or otherwise; and
(c) to pay, indemnify, and hold the Secured Creditor harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance,
and administration of the Loan Agreements and this Pledge Agreement other than
those resulting solely from its own willful misconduct or gross negligence.
This paragraph shall survive the execution of this Pledge Agreement and will
continue to remain in force and effect even after all obligations of the Pledgor
under the Loan Agreements and this Pledge Agreement are satisfied.

     21.  COMPLETE AGREEMENT. This Pledge Agreement constitutes the complete
          ------------------
agreement between the parties and incorporates and sets forth all prior
discussions, agreements and representations between the parties in regard to the
matters set forth herein and this Pledge Agreement may not be altered, amended
or otherwise modified except by a writing signed by the person to be charged by
said alteration, amendment or modification.  This requirement that this Pledge
Agreement may not be altered, amended or modified except by a writing, may not
itself be waived except by a writing.

     22.  COUNTERPARTS. This Pledge Agreement may be executed in any number of
          ------------
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
shall together constitute one and the same instrument.

     23.  EFFECTIVE DATE.  This Pledge Agreement shall be effective as of
          --------------
December 20, 2001.
-----------------

                        [SIGNATURES ON FOLLOWING PAGE]

28
<PAGE>

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

WITNESSES:                              PLEDGOR:

    /s/ Mark Prasse                     PREFERRED EQUITIES CORPORATION, a
    --------------------------          Nevada corporation

        Mark Prasse
    --------------------------
    Print Name

                                        By:  /s/ Carol W. Sullivan
                                             --------------------------
    /s/ Syonja Gustafson                Name:    Carol W. Sullivan
    --------------------------               --------------------------
    Print Name                          Its:     Sr. V.P
                                             --------------------------
                                        Interest in Pledgor: 100% Capital Stock
                                        Ownership

                                        SECURED CREDITOR:

    /s/ Angela M. Fabus                 HELLER FINANCIAL, INC., a Delaware
    --------------------------          corporation

        Angela M. Fabus
    --------------------------
    Print Name
                                        By:  /s/ Dennis K. Hollard
                                             --------------------------
    /s/ Adrienne Stephens               Name:    Dennis K. Hollard
    --------------------------               --------------------------
    Print Name                          Title:   Sr. V.P.
                                             --------------------------
29
<PAGE>

                              JOINDER BY COMPANY
                              ------------------

     AB PREFERRED HOLDINGS, INC., a Florida corporation whose principal address
is 4310 Paradise Road, Las Vegas, Nevada 89109 ("the Company"), being the issuer
of the Collateral as defined in paragraph 1 of this Pledge Agreement does hereby
state to and agree with the Secured Creditor as follows:

     1.  That the Collateral is shown on the books of the Company as being owned
by the Pledgor.

     2.  That to the best knowledge of the Company, there are no restrictions on
the granting to the Secured Creditor by the Pledgor of a security interest in
the Collateral as set forth in this Pledge Agreement.

     3.  That the percentages and number of Shares set forth in subparagraphs
3(l) and 3(m) of the Pledge Agreement regarding the total number of shares of
Common Stock owned by the Pledgor pledged hereunder and the percentage ownership
of the total issued and outstanding Common Stock of the Company represented by
the Collateral are, as of the date hereof, true and correct.

     4.   That during the term of this Pledge Agreement, the Company shall not,
without the prior written consent of the Secured Creditor, issue any additional
shares of capital stock of any form whatsoever by way of stock dividend, stock
split, outright sale or for any other reason whatsoever.

     5.  That during the term of the Pledge Agreement, the Company agrees, if
applicable, to promptly and completely file all reports required to be filed
under the 1934 Act such that all current public information as defined in Rule
144 is available.

     6.  That the Company will use its best efforts to cooperate in good faith
with the Secured Creditor to release any restrictions on the Stock Certificates
for the Collateral as and when permitted under the 1933 Act.  The Pledgor agrees
at its expense to file whatever forms, statements or documents which are
necessary with the SEC and other regulatory agencies so that any legend and/or
other restrictions associated with the Collateral may be cleared or released as
soon as possible.  It is understood all applicable laws must be complied with by
the Pledgor.  The Pledgor will furnish to the Secured Creditor such documents
and information as required by Secured Creditor to determine the necessary
holding period under Rule 144 for each and every share of the Collateral.

                         [SIGNATURE ON FOLLOWING PAGE]

30
<PAGE>

     IN WITNESS WHEREOF, the Company has executed this Joinder to this Pledge
Agreement this 20 day of December, 2001.

Signed, sealed and delivered
in the presence of:

    /s/ Mark Prasse                          AB PREFERRED HOLDINGS, INC., a
    ---------------------                    Florida corporation

        Mark Prasse
    ---------------------
    Print Name
                                             By:   /s/ Victor McELroy
                                                  -----------------------
    /s/ Syonja Gustafson                     Name:     Victor McElroy
    ---------------------                         -----------------------
                                             Title:    President
                                                  -----------------------
        Syonja Gustafso
    ---------------------
    Print Name

                                                          (CORPORATE SEAL)

31
<PAGE>

                                                                Loan No.  95-227

THIS AMENDED, RESTATED AND INCREASED RECEIVABLES PROMISSORY NOTE NO. 2 AMENDS
AND RESTATES IN ITS ENTIRETY AND INCREASES THE PRINCIPAL AMOUNT OF THAT CERTAIN
FIRST AMENDMENT AND RESTATEMENT OF AMENDED, RESTATED AND INCREASED RECEIVABLES
PROMISSORY NOTE NO. 1 DATED APRIL 5, 2001, IN THE ORIGINAL PRINCIPAL AMOUNT OF
$30,000,000.00, THE ORIGINAL OF WHICH IS ATTACHED HERETO.

                        AMENDED, RESTATED AND INCREASED
                       RECEIVABLES PROMISSORY NOTE NO. 2

$40,000,000.00                                             12/20, 2001

     THIS AMENDED, RESTATED AND INCREASED RECEIVABLES PROMISSORY NOTE NO. 2
amends and restates in its entirety and increases the principal amount of the
following described promissory note as described in that certain Amended and
Restated Loan and Security Agreement dated April 5, 2001 as amended by that
certain First Amendment of Amended and Restated Loan and Security Agreement of
even date herewith (the "Receivables Loan Agreement"), made by Preferred
Equities Corporation, a Nevada corporation, to Heller Financial, Inc.: that
certain First Amendment and Restatement of Amended, Restated and Increased
Receivables Promissory Note No. 1 dated April 5, 2001, in the principal amount
of $30,000,000.00; (the "Original Note").  Pursuant to that certain First
Amendment of Amended and Restated Loan and Security Agreement between Holder and
Maker of even date herewith, Maker hereby executes and delivers to Holder this
Amended, Restated and Increased Receivables Promissory Note No. 2 which amends,
restates and increases the principal amount of the Original Note, as follows:

1.   Promise to Pay.
     --------------

     FOR VALUE RECEIVED, PREFERRED EQUITIES CORPORATION, a Nevada corporation
("Maker") whose address is 4310 Paradise Road, Las Vegas, Nevada 89109, promises
to pay to the order of HELLER FINANCIAL, INC., a Delaware corporation, and its
successors and assigns ("Holder"), in lawful money of the United States of
America and in immediately available funds, the aggregate unpaid principal
amount of all Advances made by Holder to Maker (the "Loan") pursuant to the
Receivables Loan Agreement. This is a revolving Note, the principal amount of
which may increase or decrease from time to time during the term hereof. This
Note shall evidence Advances made under the Receivables Loan Agreement,
notwithstanding that the total aggregate of principal advances and repayments
exceed the original maximum principal amount hereof, and notwithstanding that
the principal balance may be zero at any time. Payments shall be made to Holder
at 500 West Monroe Street, 15th Floor, Chicago, Illinois 60661 (or such other
address as Holder may hereafter designate in writing to Maker).

     The repayment of the Loan evidenced by this Note is secured by the
Receivables Loan

32
<PAGE>

Agreement pursuant to which Maker has assigned, pledged and granted a security
interest to Lender in certain receivables related to the sale of Intervals and
other collateral described therein. This Note, the Receivables Loan Agreement
and any other documents evidencing or securing the Loan or executed in
connection therewith, and any modification, renewal or extension of any of the
foregoing are collectively called the "Receivables Loan Documents".
                                       --------------------------

     This Note has been issued pursuant to the Receivables Loan Agreement, and
all of the terms, covenants and conditions of the Receivables Loan Agreement
(including all Exhibits thereto) and all other instruments evidencing or
securing the indebtedness hereunder are hereby made a part of this Note and are
deemed incorporated herein in full.  Defined terms used herein and not otherwise
defined shall have the meanings set forth in the Receivables Loan Agreement.

2.   Principal and Interest
     ----------------------

     So long as no Event of Default exists, interest shall accrue on the
principal balance hereof from time to time outstanding and Maker shall pay
interest thereon at a rate equal to a floating rate per annum equal to four and
one-half percent (4.50%) plus the Base Rate (the aggregate rate referred to as
the "Interest Rate").  "Base Rate" shall mean the rate published each Business
Day in the Wall Street Journal for deposits maturing ninety (90) days after
           -------------------
issuance under the caption "Money Rates, London Interbank Offered Rates
(Libor)."  The Interest Rate for each calendar month shall be fixed based upon
the Base Rate published prior to and in effect on the first (1st) Business Day
of such month.  Interest shall be calculated on a 360 day year and charged for
the actual number of days elapsed.

3.   Payment.
     -------

          This Note is subject to mandatory payments as provided in Section 1.4
of the Receivables Loan Agreement.

          Maker shall pay interest to Lender monthly, in arrears, on the first
day of each calendar month, commencing October 1, 2001, on the unpaid principal
amount of this Note outstanding during the previous calendar month at a
fluctuating interest rate per annum (computed daily on the basis of a year of
360 days and charged for the actual number of days elapsed) equal to the
Interest Rate; provided, however, that after the occurrence of an Event of
               --------  -------
Default under the Receivables Loan Agreement this Note shall bear interest at
the Default Rate set forth below.

     The Loan shall be due and payable on or before March 30, 2006, or any
earlier date on which the Loan shall be required to be paid in full, whether by
acceleration or otherwise (the "Maturity Date").

4.   Prepayment.
     ----------

          This Note is (i) subject to mandatory prepayments in whole or in part
as provided in Section 1.5(b) of the Receivables Loan Agreement; and (ii)
permitted optional prepayments in accordance with Section 1.5(a) of the
Receivables Loan Agreement, subject to applicable

33
<PAGE>

Prepayment Premiums.

          Not in limitation of any other mandatory prepayment requirements under
the Receivables Loan Agreement, if at any time the outstanding aggregate
principal balance under (i) this Note; (ii) that certain First Amendment and
Restatement of Amended, Restated and Consolidated Acquisition Promissory Note
No. 4 of even date herewith, between Holder and Maker in the principal amount of
$_________________ (the "Acquisition Note"); and (iii) that certain Third
Amendment and Restatement of Amended, Restated and Consolidated Revolving
Renovation Promissory Note of even date herewith, between Holder and Maker in
the maximum principal amount of $2,500,000.00 (the "Renovation Note") exceeds
$40,000,000.00 or such lesser amount as set forth in the Receivables Loan
Agreement, such excess amount shall be due and payable by Maker to Holder within
five (5) Business Days after notice from Holder without premium or penalty and
such amount shall be applied by Holder to reduce the outstanding principal
balance of any of the above-referenced notes in any manner or amount that Holder
determines.

5.   Default.
     -------

     A.   Events of Default.
          -----------------

     An "Event of Default" under this Note shall mean the occurrence of any
         ----------------
Event of Default under any of the Receivables Loan Documents, after giving
effect to any applicable grace or cure period.

     B.   Remedies.
          --------

     So long as an Event of Default remains outstanding:  (a) interest shall
accrue at a rate equal to the Interest Rate plus four percent (4%) per annum
(the "Default Rate"); (b) Holder may, at its option and without notice (such
notice being expressly waived), declare the Loan immediately due and payable;
and (c) Holder may pursue all rights and remedies available under the
Receivables Loan Agreement or any other Receivables Loan Documents.  Holder's
rights, remedies and powers, as provided in this Note and the other Receivables
Loan Documents, are cumulative and concurrent, and may be pursued singly,
successively or together against Maker, any guarantor of the Loan, the security
described in the Receivables Loan Documents, and any other security given at any
time to secure the payment hereof, all at the sole discretion of Holder.
Additionally, Holder may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies contained herein,
all in Holder's sole discretion.  Failure of Holder, for any period of time or
on more than one occasion, to exercise its option to accelerate the Maturity
Date shall not constitute a waiver of the right to exercise the same at any time
during the continued existence of any Event of Default or any subsequent Event
of Default.

     If any attorney is engaged: (i) to collect the Loan or any sums due under
the Receivables Loan Documents, whether or not legal proceedings are thereafter
instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens and security
interests of the Receivables Loan Agreement or any of the Receivables Loan
Documents; (iv) to foreclose on the Collateral; (v) to represent Holder in any
other proceedings whatsoever in

34
<PAGE>

connection with the Receivables Loan Agreement or any of the Receivables Loan
Documents including post judgment proceedings to enforce any judgment related to
the Receivables Loan Documents; or (vi) in connection with seeking an out-of-
court workout or settlement of any of the foregoing, then Maker shall pay to
Holder all reasonable costs, attorneys' fees and expenses in connection
therewith, in addition to all other amounts due hereunder.

6.   Late Charge.
     -----------

     If payments of principal and/or interest, or any other amounts under the
other Receivables Loan Documents are not timely made or remain overdue for a
period of ten (10) days, Maker, without notice or demand by Holder, promptly
shall pay an amount ("Late Charge") equal to four percent (4%) of each
                      -----------
delinquent payment.

7.   Governing Law; Severability.
     ---------------------------

     This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois.  The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.

8.   Waiver.
     ------

     Maker, for itself and all endorsers, guarantors and sureties of this Note,
and their heirs, successors, assigns and legal representatives, hereby waives
presentment for payment, demand, notice of nonpayment, notice of dishonor,
protest of any dishonor, notice of protest and protest of this Note, and all
other notices in connection with the delivery, acceptance, performance, default
or enforcement of the payment of this Note except as provided in the Receivables
Loan Agreement, and agrees that their respective liability shall be
unconditional and without regard to the liability of any other party and shall
not be in any manner affected by any indulgence, extension of time, renewal,
waiver or modification granted or consented to by Holder.  Maker, for itself and
all endorsers, guarantors and sureties of this Note, and their heirs, legal
representatives, successors and assigns, hereby consents to every extension of
time, renewal, waiver or modification that may be granted by Holder with respect
to the payment or other provisions of this Note, and to the release of any
makers, endorsers, guarantors or sureties, and of any collateral given to secure
the payment hereof, or any part hereof, with or without substitution, and agrees
that additional makers, endorsers, guarantors or sureties may become parties
hereto without notice to Maker or to any endorser, guarantor or surety and
without affecting the liability of any of them.

9.   Security, Application of Payments.
     ---------------------------------

     This Note is secured by the liens, encumbrances and obligations created
hereby and by the other Receivables Loan Documents.  Payments will be applied to
any fees, expenses or other costs Maker is obligated to pay under this Note or
the other Receivables Loan Documents, to interest due on the Loan and to the
outstanding principal balance of the Loan, in any order that Holder, at its sole
option, may deem appropriate.

                                       35
<PAGE>

10.  Miscellaneous.
     -------------

     A.  Amendments.
         ----------

     This Note may not be terminated or amended orally, but only by a
termination or amendment in writing signed by Holder and Maker.

     B.  Lawful Rate of Interest.
         -----------------------

     In no event whatsoever shall the amount of interest paid or agreed to be
paid to Holder pursuant to this Note or any of the Receivables Loan Documents
exceed the highest lawful rate of interest permissible under applicable law.
If, from any circumstances whatsoever, fulfillment of any provision of this Note
and the other Receivables Loan Documents shall involve exceeding the lawful rate
of interest which a court of competent jurisdiction may deem applicable hereto
("Excess Interest"), then ipso facto, the obligation to be fulfilled shall be
  ---------------         ----------
reduced to the highest lawful rate of interest permissible under such law and
if, for any reason whatsoever, Holder shall receive, as interest, an amount
which would be deemed unlawful under such applicable law, such interest shall be
applied to the principal of the Loan (whether or not due and payable), and not
to the payment of interest, or refunded to Maker if the Loan has been paid in
full.  Neither Maker nor any guarantor or endorser shall have any action against
Holder for any damages whatsoever arising out of the payment or collection of
any such Excess Interest.

     C.  Captions.
         --------

     The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.

     D.  Notices.
         -------

     Notices shall be given under this Note in conformity with the terms and
conditions of the Receivables Loan Agreement.

     E.  Joint and Several.
         -----------------

     The obligations of Maker under this Note shall be joint and several
obligations of Maker and of each Maker, if more than one, and of each Maker's
heirs, personal representatives, successors and assigns.

     F.  Time of Essence.
         ---------------

     Time is of the essence of this Note and the performance of each of the
covenants and agreements contained herein.

11.  Venue.
     -----

     MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY, INDIRECTLY
OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR

                                       36
<PAGE>

FROM THIS NOTE SHALL BE LITIGATED, AT HOLDER'S SOLE DISCRETION AND ELECTION,
ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS.
MAKER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. MAKER HEREBY IRREVOCABLY
APPOINTS AND DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS MAKER, C/O C T
CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY
AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH
PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON MAKER
PROVIDED A COPY OF SUCH SERVICE OF PROCESS IS ALSO SENT WITHIN THREE (3) DAYS
THEREAFTER TO MAKER EXCEPT IN THE CASE OF SERVICE OF PROCESS FOR ACTIONS WHEREIN
THE MAKER'S RESPONSE IS DUE IN LESS THAN TWENTY (20) DAYS, A COPY OF SUCH
PROCESS WILL BE SENT TO MAKER ON THE SAME DAY AS SERVICE ON C T CORPORATION
SYSTEM. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES
TO DO BUSINESS IN CHICAGO, ILLINOIS, MAKER SHALL, WITHIN TEN (10) DAYS AFTER
HOLDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS
BEHALF AND WITHIN SUCH PERIOD NOTIFY HOLDER OF SUCH APPOINTMENT. IF SUCH
SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, HOLDER SHALL, IN ITS SOLE DISCRETION,
HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO
MAKER. MAKER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE
OF ANY LITIGATION BROUGHT AGAINST IT BY HOLDER ON THE RECEIVABLES LOAN DOCUMENTS
IN ACCORDANCE WITH THIS PARAGRAPH.

12.  Sale of Loan.
     ------------

     Holder, at any time and without the consent of Maker, may grant
participations in or sell, transfer, assign and convey all or any portion of its
right, title and interest in and to the Loan, this Note, the Receivables Loan
Agreement and the other Receivables Loan Documents, any guaranties given in
connection with the Loan and any collateral given to secure the Loan.  In the
event Holder sells, transfers, conveys or assigns all of Holder's right, title
and interest in this Note or the Loan, Holder shall give notice thereof to Maker
and Holder shall thereupon be released from liability and obligations of the
Lender hereunder and under all other transferred Loan Documents from and after
the date of such transfer provided such transferee agrees to be bound by the
obligations of Lender thereunder and provided such transferee is of equal or
greater financial capacity than Holder.  Notice to Maker shall not be required
for any partial sale, transfer, assignment or conveyance of this Note.

13.  Jury Trial Waiver.
     -----------------

     MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY  WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS RELATIONSHIP THAT
IS BEING ESTABLISHED.  THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY MAKER

                                       37
<PAGE>

AND BY HOLDER, AND MAKER ACKNOWLEDGES THAT NEITHER HOLDER NOR ANY PERSON ACTING
ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER
OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT MAKER AND HOLDER HAVE ALREADY RELIED
ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THAT EACH OF THEM WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. MAKER AND HOLDER FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.

     IN WITNESS WHEREOF, Maker has executed this Note or has caused the same to
be executed by its duly authorized representatives as of the date first set
forth above.

                                             MAKER:

                                             Preferred Equities Corporation,
                                             a Nevada corporation

                                             By:  /s/ Carol W. Sullivan
                                                 ----------------------------

                                             Print Name: Carol W. Sullivan
                                                         --------------------

                                             As Its:     Sr. V.P.
                                                     ------------------------

                                       38<PAGE>

                        PURCHASE MONEY PROMISSORY NOTE
                                   ("Note")

$5,927,164.65
                                                                Orlando, Florida
                                                                 August 15, 2001

     THE UNDERSIGNED, ("Maker"), promises to pay to the order of M & J WILKOW,
LTD., as agent for THE VILLAS AT MONTEREY LIMITED PARTNERSHIP, a Florida limited
partnership, and TANGO BAY OF ORLANDO, LC, a Florida limited liability
corporation (collectively the "Payee"), whose mailing address is c/o M & J
Wilkow, Ltd., 180 North Michigan Avenue, Chicago, Illinois 60601, Attention:
Marc Wilkow, the principal sum of FIVE MILLION NINE HUNDRED TWENTY SEVEN
THOUSAND ONE HUNDRED SIXTY FOUR and 65/100 DOLLARS ($5,927,164.65), or so much
thereof as may be outstanding from time to time, together with interest thereon
at the rate of eight percent (8%) per annum from the date hereof to, until and
including the date that the indebtedness owing by the Maker to the Payee
hereunder shall have been paid in full.

     1.    Payments.
           --------

           (a) Accrued Interest hereunder shall be paid on a quarterly basis
with the first such interest payment to be made on September 30, 2001, and
thereafter on the same date in each succeeding third month until "Maturity" (as
hereinafter defined). Principal shall be paid in the following amounts on the
following dates:

     Date:                             Amount:
     ----                              ------
     January 2, 2002                   $1,223,000.00
     July 1, 2002                      $  814,000.00
     January 2, 2003                   $1,223,000.00
     July 1, 2003                      $  681,000.00
     January 2, 2004                   $1,022,000.00
     July 1, 2004 ("Maturity")         The balance of any unpaid principal.

          (b) So long as no Event of Default under this Note or the "Mortgage"
(as defined hereinbelow) shall then exist, the Maker shall have the option to
extend the time for making the first principal payment hereunder to no later
than June 30, 2002, by providing written notice of the exercise of such option
to extend such payment date, which written notice must be provided by Maker to
the Payee no later than December 1, 2001. In the event such option is not
properly exercised by the delivery of such written notice by Maker to Payee on
or before December 1, 2001, then such option shall terminate and be of no
further force or effect. If such option is timely and properly exercised each
subsequent principal payment date shall be extended by an amount of time equal
to the time after January 2, 2002, to and until the date on which the first
principal payment was actually made by Maker to Payee.

     Buildings, as defined in the "Mortgage" (as defined hereinbelow), shall be
released from the lien of the Mortgage upon the payment of the principal
amount(s) as described in Section 29 of the Mortgage.
<PAGE>

     2. Default Rate. After the Maturity Date or upon and after any default (not
        ------------
cured within the applicable cure period, if any) hereunder or under the
Mortgage, whichever shall first occur, this Note shall bear interest at a rate
which is equal to the maximum allowable rate permitted by law from the date of
such default or Maturity until paid in full.

     3. Prepayment. The Maker shall have the privilege of prepaying this Note in
        ----------
part or in full, without premium or penalty, at any time or times.

     4. Application of Payment. All payments made on the indebtedness evidenced
        ----------------------
by this Note shall be applied first, to the payment or reimbursement of any and
all costs, expenses or other amounts which may have been paid or incurred by the
Payee under the Mortgage or this Note, then to payment of accrued interest, and
last to payment of principal.

     5. Place and Manner of Payment. All payments of interest and principal are
        ---------------------------
payable at the office of Payee, or at such other place as the holder may
designate in writing, in immediately available funds, in lawful money of the
United States of America.

     6. Event of Default. Maker shall be in default under this Note upon Maker's
        ----------------
failure to make any scheduled payment of principal or interest due hereunder or
under the Mortgage within ten (10) days following the due date thereof without
notice or demand. With respect to any other sums due hereunder or under the
Mortgage, Maker shall be in default under this Note upon Maker's failure to make
any such payment within any applicable curative period provided hereunder or
under the Mortgage (or if no such curative period is expressly provided, within
ten (10) days after written notice thereof). Maker shall also be in default
under this Note upon the occurrence of any other uncured Event of Default under
the Mortgage (the foregoing, collectively, an "Event of Default").

     7. Remedies after Default. At the option of Payee, all or any part of the
        ----------------------
principal and accured interest on the Note, and all other obligations of the
Maker to the Payee shall become immediately due and payable in full without
additional notice or demand, upon the occurrence of an uncured Event of Default
or at any time thereafter. Payee may exercise all rights and remedies provided
by law, equity, in this Note, in the Mortgage, or any other Loan Document or any
other obligation of the Maker to the Payee. All rights and remedies as set forth
in the Loan Documents are cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Payee, and may be exercised
as often as occasion therefore shall arise. Such remedies are not exclusive, and
Payee is entitled to all remedies provided at law or equity, whether or not
expressly set forth herein. No act, or omission or commission or waiver of
Payee, including specifically any failure to exercise any right, remedy or
recourse, shall be effective unless set forth in a written document executed by
Payee and then only to the extent specifically recited therein. A waiver or
release with reference to one event shall not be construed as continuing, as a
bar to, or as a waiver or release of, any subsequent right, remedy or recourse
as to any subsequent event.

     8. Collection Expenses. All parties liable for the payment of the Note
        -------------------
agree to pay the Payee all costs and expenses incurred by the Payee, whether or
not an action be brought, in collecting the sums due under the Note, enforcing
the performance and/or protecting its rights

                                      -2-
<PAGE>

under the Mortgage or the other Loan Documents and in realizing on any of the
security for the Note. Such costs and expenses shall include, but are not
limited to, filing fees, costs of publication, deposition fees, stenographer
fees, witness fees and other court and related costs.

     9.  Attorneys' Fees. All parties liable for the payment of the Note agree
         ---------------
to pay the Payee reasonable attorneys' fees incurred by the Payee, whether or
not an action be brought, in collecting the sums due under the Note, enforcing
the performance and/or protecting its rights under the Mortgage or the other
Loan Documents and in realizing on any of the security for the Note. Such
reasonable attorneys' fees shall include, but not be limited to, fees for
attorneys, paralegals, legal assistants, and expenses incurred in mediation, any
and all judicial, bankruptcy, reorganization, administrative, receivership, or
other proceedings affecting creditor's rights and involving a claim under the
Note, the Mortgage, or any Loan Document, which such proceedings may arise
before or after entry of a final judgment. Such fees shall be paid regardless
whether suit is brought and shall include all fees incurred by Payee before,
during or after trial and upon any appellate levels and including bankruptcy
court.

     10. Waiver and Consent. By the making or guaranty, if any, of this Note,
         ------------------
and each guarantor, if any, waive protest, presentment for payment, notice of
dishonor, notice of intent to accelerate and notice of acceleration.

     11. Usury Limitation. Notwithstanding any provision of this Note and/or the
         ----------------
Mortgage, or any other Loan Documents, or any other instrument securing payment
of this Note to the contrary, it is the intent of the undersigned Maker and
Payee that the Payee shall never be entitled to receive, collect or apply as
interest on principal of the indebtedness any amount in excess of the maximum
rate of interest permitted to be charged by applicable law; and in the event
Payee ever receives, collects, or applies as interest any such excess, such
amount which should be excessive interest shall be deemed a partial prepayment
of principal and treated hereunder as such; and, if the principal of the
indebtedness secured hereby is paid in full, any remaining excess funds shall
forthwith be paid to Maker. In determining whether or not the interest paid or
payable under any specific contingency exceeds the highest lawful rate, Maker
and Payee shall, to the maximum extent permitted under applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of the indebtedness so that the
interest rate is uniform throughout the entire term of the indebtedness;
provided that if the indebtedness is paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the maximum lawful rate, Payee shall
refund to Maker the amount of such excess or credit the amount of such excess
against the principal portion of the indebtedness, and in such event, Payee
shall not be subject to any penalties provided by any laws for contracting for,
charging, or receiving interest in excess of the maximum lawful rate. In no
contingency or event whatsoever shall the amount paid or agreed to be paid to
Payee for the use, forbearance or detention of the indebtedness collateralized
hereby exceed the maximum amount permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof or any provision
of any instrument securing the primary obligation at the time performance of

                                      -3-
<PAGE>

such provision shall be due shall involve transcending the limit of validity
prescribed by applicable law, then, ipso facto, the obligation to be fulfilled
                                    ----------
shall be reduced to the limit of such validity. This provision shall control
every other provision of this Note, the Mortgage or any other Loan Document.

     12. Mortgage and other Loan Documents. This Note is secured by a Purchase
         ---------------------------------
Money Mortgage and Security Agreement of even date herewith (the "Mortgage")
upon real and personal property located in Orange County, Florida. Any Event of
Default occurring under the Mortgage or any other document, instrument or
agreement evidencing or securing the loan (collectively the "Loan Documents")
shall constitute an Event of Default hereunder.

     13. Choice of Law and Venue. This Note shall be governed by the Laws of the
         -----------------------
State of Florida, and the United States of America, whichever the context may
require or permit. The Maker and all guarantor, if any, to this obligation
expressly agree that proper venue permitted by law shall be Orange County,
Florida. Should Payee institute any action under this Note, the Maker and all
guarantors, if any, hereby submit themselves to the jurisdiction of any court
sitting in Florida.

     14. Severability. If any provision of this Note shall be held unenforceable
         ------------
or void, then such provision shall be deemed severable from the remaining
provisions and shall in no way affect the enforceability of the remaining
provisions nor the validity of this Note.

     15. Maker and Payee Defined. The term "Maker" includes each and every
         -----------------------
person or entity signing this Note and any co-signers, guarantors, their
successors and assigns. The term "Payee" shall include the Payee and any
transferee and assignee of Payee or other holder of this Note.

     16. Captions and Pronouns. The captions and headings of the various
         ---------------------
sections of this Note are for convenience only, and are not to be construed as
confining or limiting in any way the scope or intent of the provisions hereof.
Wherever the context requires or permits, the singular shall include the plural,
the plural shall include the singular, and the masculine, feminine and neuter
shall be freely interchangeable.

     17. Receipt of Copy. By signing this Note, Maker acknowledges that it was
         ---------------
read by Maker prior to execution and a copy was received by Maker.

     18. Time of the Essence. Time is of the essence with respect to each
         -------------------
provision in this Note where a time or date for performance is stated. All time
periods or dates for performance stated in this Note are material provisions of
this Note.

     19. Waiver of Trial By Jury. The Maker and the Payee knowingly, voluntarily
         -----------------------
and intentionally waive the right either may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under or in connection with
this Note or any agreement contemplated to be executed in conjunction herewith,
or any course of conduct, course of dealing, statements (whether verbal or
written) or actions of either party. This provision is a material inducement for
the Payee to make the loan to Maker evidenced by this Note.

                                      -4-
<PAGE>

     20. Limitation of Liability.
         -----------------------

         (a) Except as set forth in subparagraphs (b) and (c) of this Section
20, notwithstanding anything to the contrary in this Note, the Payee, by its
acceptance of this Note, expressly agrees that the liability of Maker shall be
strictly and absolutely limited to the property encumbered by the Mortgage
(including, but not limited to, the leases, rents, profits and issues thereof)
and any other collateral now or hereafter securing the indebtedness evidenced
hereby or as provided by the Mortgage, except as provided below. If an Event of
Default shall occur, the Mortgagee shall not and may not seek any judgment for a
deficiency or for the payment of the principal amount of the indebtedness
evidenced hereby, in any action to foreclose, to exercise a power of sale, to
confirm any foreclosure or sale under power of sale, or to exercise any other
rights of power under or by reason of the Mortgage evidencing or securing the
obligations of the Maker with respect to the indebtedness evidenced hereby or as
provided by the Mortgage except to the extent required in order to proceed with
judicial proceedings to foreclose the Mortgage. In the event any suit is brought
on this Note, or concerning any amount secured by the Mortgage as part of
judicial proceedings to foreclose the Mortgage and/or any other security
interest granted to the Payee, or to confirm any foreclosure or sale pursuant to
power of sale thereunder, except as provided in subparagraphs (b) and (c)
hereinbelow, any judgment obtained in such suit shall constitute a lien on and
will be and can be enforced only against, the property encumbered by the
Mortgage, and the leases, rents, profits and issues thereof, and not against
Maker personally or against any other asset of the Maker, and the terms of such
judgment shall expressly so provide.

         (b) Notwithstanding anything herein to the contrary in subparagraph (a)
of this Section 20, the Maker shall be personally liable for, and the Payee
shall have the right to seek a judgment for money damages (including a
deficiency judgment) to enforce or collect any or all of the following:

             (i)   Interest accrued under the terms of this Note or the
     Mortgage, or both;

             (ii)  Any taxes or other items specified in Section 2 of the
     Mortgage which are not paid by Borrower as and when required pursuant to
     said Section 2;

             (iii) An amount equal to a prorata share of all unpaid taxes and
     other matters specified in Section 2 of the Mortgage for the year in which
     a foreclosure or deed in lieu thereof occurs for the period from January 1
     of such year to and including the date of an issuance of a certificate of
     sale or recordation of a deed in lieu of foreclosure;

             (iv)  Any losses resulting from the failure of the Borrower to keep
     the Mortgaged Property insured as required pursuant to Section 8 of the
     Mortgage, including, without limitation, the amount of any unpaid premiums
     for insurance which Borrower was required to maintain pursuant to the
     provisions of said Section 8 of the Mortgage;

             (v)   Any and all costs and expenses, including reasonable
     attorneys' and paralegals' fees and disbursements (whether incurred before,
     during or after trial or upon any appellate level, or in any proceeding in
     bankruptcy or insolvency) incurred by

                                      -5-
<PAGE>

     Payee in the enforcement of the Maker's obligations hereunder or under the
     Mortgage, in the foreclosure of the Mortgage, or in the collection and
     enforcement of any judgment obtained against the Maker, provided, however,
     in the event that Borrower tenders to Lender a properly executed Special
     Warranty Deed reconveying the Mortgaged Property to Lender in lieu of
     foreclosure, together with a fully executed owner's affidavit, Form DR-219,
     non-foreign certification, and a "marked-up" title commitment insuring
     title to the Mortgaged Property in Lender without exception for any matter
     other than those matters to which the Mortgaged Property was subject upon
     conveyance by Lender to Borrower, and Borrower has paid or tenders payment
     for the documentary stamp tax and cost of recording the deed and the title
     insurance premium for the title policy to be issued to Lender pursuant to
     the aforesaid title commitment, Borrower shall not be liable for any costs
     of foreclosure after the date after such tender;

           (vi)   Indemnification provisions in favor of the Payee set forth in
     the Mortgage (but excluding any indemnity provisions which would result in
     the payment of principal under the indebtedness evidenced hereby);

           (vii)  The leases, rents, profits and issues of the property
     encumbered by the Mortgage following any default under this Note or the
     Mortgage (without regard to the expiration of any cure period, if any) to
     the extent not applied toward costs and expenses of operating and
     maintaining the subject Property or being paid under or pursuant to the
     terms of this Note or the Mortgage;

           (viii) Liability for intentional waste, destruction or damage to
     the Mortgaged Property or any part thereof;

           (ix)   Liability and indemnification under Section 17 of the
     Mortgage, including, but not limited to, liability and indemnification
     obligations for removal or cleanup of Hazardous Substances;

           (x)    All condemnation awards and payments in lieu thereof and/or
     insurance proceeds received by Maker which are not applied to the
     reasonable costs of the restoration of the property or to the obligations
     of Maker under this Note or the Mortgage;

           (xi)   The cost to restore the property as a result of a casualty if
     the net available insurance proceeds, if any, are allowed to be applied to
     restoration, to the extent that the costs of such restoration is not
     reimbursed by insurance; and

           (xii)  Any liability, damage, cost or expense incurred by Payee as a
     result of any fraud, material misrepresentation or bad faith by Mortgagor.

     Upon the occurrence of an Event of Default hereunder or under the Mortgage,
Maker expressly agrees that the Payee shall have the right to obtain a judgment
against Maker for the amounts or matters set forth in subparagraphs (i) through
(ix), inclusive, of this Section 20(b) proven or stipulated to be due and owing
for which Maker shall be personally liable

                                      -6-
<PAGE>

notwithstanding the provisions of Section 20(a) above. Further, in the event of
a foreclosure of the Mortgage, Maker hereby further agrees that the Payee shall
be entitled to obtain a deficiency judgment against Maker for the amounts or
matters set forth in said subparagraphs (i) through (ix), inclusive of this
Section 20(b), regardless of the fair market value of the property foreclosed,
unless and to the extent the successful bid at the foreclosure sale is made and
paid by a third party unrelated to the Payee and is in an amount in excess of
the full amount of the Maker's judgment in foreclosure, together with interest
thereon. Maker hereby unrevocably and absolutely waives and relinquishes its
right to contest such deficiency judgment except as set forth hereinabove.

     (c) If, and at such time as the Maker actually pays to the Payee the first
principal installment to be made hereunder, subparagraphs (a) and (b) above of
this Section 20 shall thereupon automatically terminate and as of the date of
such first payment of principal hereunder such subparagraphs (a) and (b) of this
Section 20 shall be null, void and of no further force and effect whatsoever.
From and after said first payment of principal hereunder, the Maker shall be
fully personally liable  hereunder and under the Mortgage as if this Section 20
had never existed.

     IN WITNESS WHEREOF, Maker has executed and delivered this instrument the
day and year first above written.

                                    MEGO FINANCIAL CORP., a New York
                                    corporation

                                    By:        /s/ Jerome J. Cohen
                                       ---------------------------
                                       Name:  Jerome J. Cohen
                                              --------------------
                                       Title: President
                                              --------------------

                                                   (Corporate Seal)

                                      -7-
<PAGE>

                          PURCHASE AND SALE AGREEMENT
                          ---------------------------

     THIS AGREEMENT is made and entered into as of this 1st day of August,
                                                        ---
2001, by and between THE VILLAS AT MONTEREY LIMITED PARTNERSHIP, a Florida
limited partnership and TANGO BAY OF ORLANDO, LC, a Florida limited liability
company (collectively, "Seller"), and MEGO FINANCIAL CORP., a New York
corporation (the "Purchaser").  In consideration of the mutual covenants and
promises herein set forth, the parties agree as follows:

     1.   Purchase and Sale.  Seller agrees to sell to Purchaser and Purchaser
          -----------------
agrees to purchase from Seller those certain parcels of real property (the
"Land") located in Orange County, Florida, as more particularly described on
Exhibit "A" attached hereto, together with the following property and rights:

     (a)  All improvements located on the Land, including buildings, structures
          and other facilities (the "Improvements").  The Land and the
          Improvements are hereinafter collectively referred to as the "Realty;"

     (b)  All fixtures, equipment, furniture and items of personal property used
          exclusively in the operation of the Realty, and situated on the Realty
          (the "Personalty");

     (c)  All licenses, permits, authorizations and approvals pertaining to
          ownership and/or operation of the Realty which are separable and
          transferable;

     (d)  All strips and gores of land lying adjacent to the Realty (but which
          are not otherwise part of the Project), together with all easements,
          privileges, rights-of-way, riparian and other water rights, lands
          underlying any adjacent streets or roads, and appurtenances pertaining
          to or accruing to the benefit of the Realty that are owned by Seller,
          if any; and

     (e)  All of Seller's interest in and to the Assumed Contracts (hereinafter
          defined).

The Realty and all of the other property and rights described in this Section 1
are hereinafter collectively called the "Property".

                                      -8-
<PAGE>

     The Land is a portion of the overall Ramada Inn All Suites at International
Drive South project (the "Project"), which Project consists of, among other
things, a Reception Building and separate buildings lettered A (a/k/a 1) through
S (a/k/a 19), inclusive (the Land and buildings to be conveyed hereunder are all
of the remaining Land and buildings at the Project owned by Seller).  Seller
understands and agrees that, after Closing (as hereinafter defined in Section
15), Purchaser intends to operate the Property under the name "Ramada Vacation
Suites at Orlando", or such other name as Purchaser may determine.   Because
this transaction represents the conveyance by Seller of all of its remaining
interests in the Project, Seller agrees that, to the extent that Seller has any
interest in the name "Ramada Inn All Suites at International Drive South",
"Ramada at Tango Bay," "Ramada" and/or "Ramada Suites", and/or any other
variation thereof relating to the Project, or any logos, trademarks and/or other
rights in connection therewith, Seller shall transfer all of said interests to
Purchaser at Closing, without representation or warranty by Seller, and said
interests shall be deemed part of the Property for purposes of this Agreement.

     2. Purchase Price. The purchase price to be paid by Purchaser to Seller for
        --------------
the Property is Five Million Nine Hundred Eighty-Five Thousand and No/100
($5,985,000.00) Dollars (the "Purchase Price").

     3. Deposit. To secure the performance by Purchaser of its obligations under
        -------
this Agreement, within two (2) business days following receipt of written notice
of execution of this Agreement by Seller, Purchaser shall deliver to Broad and
Cassel, as escrow agent (the "Escrow Agent"), the sum of Ten Thousand and No/100
($10,000.00) Dollars (the "Deposit"). The Escrow Agent shall invest the Deposit
in an interest-bearing account, certificate of deposit or repurchase agreement
maintained with or issued by a commercial bank or savings and loan

                                      -9-
<PAGE>

association doing business in Orange County, Florida. All interest accrued or
earned on the Deposit shall be paid or credited to Purchaser except in the event
of a default by Purchaser, without any default of Seller, in which event the
interest shall be disbursed to Seller, together with the Deposit, as liquidated
damages in accordance with Section 11 below.

     4. Terms of Payment. The Purchase Price shall be paid to Seller by
        ----------------
Purchaser's execution and delivery of a purchase money note and mortgage in
favor of Seller in the full amount of the Purchase Price, as more particularly
provided in Section 5 of this Agreement. The Deposit, together with the interest
accrued thereon, shall be returned to Purchaser at Closing.

     5. Purchase Money Note and Mortgage. At Closing, Purchaser shall execute in
        --------------------------------
favor of Seller a Purchase Money Note (the "Purchase Money Note") in the
principal amount of $5,985,000, bearing interest on the unpaid principal balance
at the rate of eight percent (8%) per annum simple interest, and payable on a
quarterly basis commencing on the last day of the first calendar quarter
following Closing. The Purchase Money Note shall be in the form attached to this
Agreement as Exhibit "B", and the principal thereof shall be paid as provided
therein. The Purchase Money Note shall be secured by a Purchase Money Mortgage
(the "Purchase Money Mortgage") encumbering the Property. Upon (i) each payment
by Purchaser of the principal of the Purchase Money Note in the amount of the
Release Price set forth below and any then accrued but unpaid interest, and (ii)
compliance with and subject to the terms and conditions as set forth in the
Purchase Money Mortgage pertaining to the granting of partial releases, Seller
shall release from the lien and effect of the Purchase Money Mortgage each
Building, together with the portion of the Land relating thereto (each such
Building and Land relating thereto are hereinafter referred to as a "Release
Parcel"), identified across from such Release Price in the below table:

                                      -10-
<PAGE>

--------------------------------------------------------------------------------
                   Building                               Release Price
--------------------------------------------------------------------------------
                   Building H                              $1,223,000
--------------------------------------------------------------------------------
                   Building I                              $  814,000
--------------------------------------------------------------------------------
                   Building K                              $1,223,000
--------------------------------------------------------------------------------
                   Building J                              $  681,000
--------------------------------------------------------------------------------
                   Building D                              $1,022,000
--------------------------------------------------------------------------------
              Buildings A, B and C                         $1,022,000
--------------------------------------------------------------------------------
                     Total:                                $5,985,000
--------------------------------------------------------------------------------

Seller and Purchaser agree to use the legal description for each Release Parcel
established by the surveyor under Section 6 hereof as the legal description
attached to the partial release for such Release Parcel under Section 29 of the
Purchase Money Mortgage, and further agree that said legal description shall
meet and satisfy the conditions of Section 29(a) of the Purchase Money Mortgage.
In the event that Seller and Purchaser are unable to confirm by the Closing date
that the individual legal description for each Release Parcel is adequate to
insure that, upon the release of such Release Parcel under the Purchase Money
Mortgage, such Release Parcel and the unreleased portion of the Property will
have access to a publicly dedicated road and all necessary utilities, and will
not be in violation of any applicable governmental requirement as a result of
the splitting of the Property, the parties shall nevertheless proceed to Closing
(subject to the other terms of this Agreement); however, Seller and Purchaser
shall cooperate and work in good faith with the surveyor to achieve legal
descriptions which meet the foregoing standard within thirty (30) days following
Closing.  This provision shall survive Closing.   The Purchase Money Mortgage
shall be drawn in the form attached to this Agreement as Exhibit "C".

     6.   Title.  Within five (5) days following the date of this Agreement,
          -----
Seller, at Seller's expense, shall deliver to Purchaser's attorneys, Greenberg
Traurig, P.A., 1221 Brickell Avenue, Miami, Florida 33131, Attention: Nancy B.
Lash, Esq., a commitment (the "Commitment") for an owner's ALTA Form B
Marketability title insurance policy with respect

                                      -11-
<PAGE>

to the Project from First American Title Insurance Corporation (or other
national title company reasonably acceptable to Purchaser) in favor of Purchaser
in the amount of the Purchase Price. The Commitment shall be endorsed and
updated at Seller's expense: (i) within five (5) days following the delivery of
the Survey (as hereinafter defined) to delete those matters reflected on the
Commitment which are not applicable to the Realty, and (ii) within five (5) days
before Closing. The Commitment and any endorsement or update thereof shall show
Seller to be vested with good, marketable and insurable fee simple title to the
Realty, free and clear of all liens, encumbrances and other matters, except only
for those liens and encumbrances to be released and satisfied at Closing and the
following (the "Permitted Exceptions"):

     (a)  Ad valorem real estate taxes for the year of Closing, provided same
          are not then due and payable, and subsequent years.

     (b)  All applicable zoning ordinances and regulations, none of which shall
          prohibit or otherwise interfere with all uses presently being made of
          the Property.

     (c)  The Assumed Contracts (as hereinafter defined).

     (d)  The matters described on Exhibit "D" attached hereto.

     Additionally, at Closing, Purchaser and Seller shall execute such documents
as are necessary to: (i) amend that certain Declaration of Restrictions and
Protective Covenants for Tango Bay (as heretofore amended, the "Declaration"),
recorded April 9, 1996 in Official Records Book 5038, Page 3760 of the Public
Records of Orange County, Florida, to allow for the transfer of each Release
Parcel from Village A to Village B (as defined in the Declaration) at the time
such Release Parcel is released from the Purchase Money Mortgage (the
"Declaration Amendment"), (ii) terminate that certain Declaration of
Restrictions (6 Year Covenant) recorded April 9, 1996 in Official Records Book
5038, Page 3850 of the Public Records of Orange County, Florida, and (iii)
terminate that certain Declaration of Restrictions (30 Month Covenant)

                                      -12-
<PAGE>

recorded April 9, 1996 in Official Records Book 5038, Page 3844 of the Public
Records of Orange County, Florida.

     No later than August 10, 2001, Seller shall also deliver to Purchaser, a
survey (the "Survey") of the Realty showing and certifying the exact location
and legal description of the Realty and meeting the minimum technical standards
of the Florida Board of Land Surveyors and the State of Florida Department of
Professional Regulation, certified to Purchaser, Purchaser's title insurer,
Seller and Broad and Cassel and prepared as of a date subsequent to the date of
this Agreement.  The Survey shall also show and certify: (i) the location of all
improvements and easements and rights-of-way affecting the Realty, (ii) the
location of all roadways adjacent to the Realty, (iii) the acreage of the Realty
calculated to the second decimal place, (iv) the perimeter boundaries of the
Project, including, without limitation, the location of all streets, roads,
accessways, entrance features and fountains located therein, and (v) separate
legal descriptions for each Release Parcel, together with the information set
forth in clauses (i) through (iv) for such Release Parcel.  The legal
description and perimeter boundaries for each Release Parcel shall be drawn in
such a manner so that the Release Parcel in question and the remaining portion
of the Realty not yet released from the Purchase Money Mortgage each have
ingress and egress to a publicly dedicated road or a private access easement,
and comply with applicable parking, setback and other governmental requirements.
Notwithstanding the fact that Seller shall be obligated to obtain and deliver
the Survey to Purchaser, responsibility for the cost of the Survey shall be
determined as follows: (1) in the event that Purchaser closes on title to the
Property as contemplated hereunder, Purchaser shall be solely obligated for the
cost of the Survey; (2) in the event that Purchaser elects to cancel this
Agreement during the Inspection Period as provided in Section 8 below, Purchaser
shall be solely obligated for the cost of the

                                      -13-
<PAGE>

Survey; (3) in the event that the Agreement is cancelled as a result of the
failure of any of Purchaser's Conditions Precedents (other than breach of a
representation or warranty by Seller), then Purchaser and Seller shall equally
share the cost of the Survey; (4) in the event that the Agreement is cancelled
as a result of a default by Seller or any breach of a representation or warranty
by Seller, then Seller shall be solely obligated for the cost of the Survey; or
(5) in the event that the Agreement is cancelled as a result of a default by
Purchaser, then Purchaser shall be solely obligated for the cost of the Survey.
The provisions of this Section shall survive Closing and any cancellation or
termination of this Agreement.

     Title shall be deemed good, marketable and insurable only if the Commitment
allows for issuance of an Owner's ALTA Form B Marketability Policy effective as
                                            -
of Closing at minimum promulgated risk rate premiums, without any guarantees and
without any exceptions, standard or otherwise, other than the Permitted
Exceptions.  Purchaser shall have fifteen (15) days from receipt of the
Commitment and hard copies of all items noted as exceptions therein (the "Title
Review Period"), within which to examine same.  If Purchaser finds title to be
defective or cannot determine the effect of the matter until located on the
Survey, Purchaser shall, no later than the expiration of the Title Review
Period, notify Seller in writing specifying the defect(s) (which defect(s) shall
also include any UCC-1 Financing Statements filed with the Florida Secretary of
State) or reserving the right to comment on same after receipt of the Survey;
provided that if Purchaser fails to give Seller written notice before the
expiration of the Title Review Period of defect(s) in title or of the need for
the Survey to review the effect of the exception, then the defects shown in the
Commitment (other than those to be evaluated upon receipt of the Survey) shall
be deemed to be waived as title objections to closing this transaction.
Purchaser may raise as additional objections, however, any matters first shown
by the Survey,

                                      -14-
<PAGE>

any endorsement of the Commitment and/or recertifications of Survey, provided
that notice of objection to same must be given to Seller within fifteen (15)
days from receipt of the Survey, endorsement or recertification, as applicable,
but in no event later than the Closing date. If Purchaser has given Seller
timely written notice of defect(s) and the defect(s) render the title other than
as represented in this Agreement, Seller shall use its best efforts to cause
such defects to be cured by the date of Closing, provided, however, that Seller
shall not be obligated to file suit or otherwise expend any monies with regard
to curing title defects other than with regard to the payment of any liens or
encumbrances which have voluntarily and intentionally been created by Seller. At
Purchaser's option, the date of Closing may be extended for a reasonable period
(not to exceed ninety (90) days) for purposes of eliminating any title defects.
In the event that Seller does not eliminate any defects as of the date of
Closing as the same may be extended under the preceding sentence, Purchaser
shall have the option of either: (i) Closing and accepting the title "as is",
without reduction in the Purchase Price, or (ii) canceling this Agreement, in
which event the Escrow Agent shall return the Deposit and all interest earned
thereon to Purchaser, whereupon both parties shall be released from all further
obligations under this Agreement, except only for those obligations which are
intended to survive Closing and/or any earlier termination of this Agreement,
unless such defects were caused by Seller's willful act or willful omission, in
which event, Seller shall remain liable to Purchaser for damages caused thereby.
Seller shall execute appropriate documents as required for "gap coverage" by the
title insurer and the Closing shall be held in escrow in accordance with
customary escrow closings for Orange County, Florida.

                                      -15-
<PAGE>

     7.   Deliveries.  Within seven (7) business days following the date hereof
          ----------
(and thereafter, as applicable), Seller shall deliver to Purchaser true, correct
and complete copies of all of the following, to the extent in the possession of
the Seller:

     (a)  All permits, licenses, authorizations or approvals (other than those
          which are no longer in effect) issued by any governmental body or
          agency having jurisdiction over the Property, related to the ownership
          and/or operation of the Property (the "Licenses");

     (b)  A true, correct and complete copy of the franchise agreement (the
          "Franchise Agreement") between Seller and Ramada with respect to the
          operation of the Project (or the remaining portions thereof);

     (c)  The bill or bills issued for the year 2000 for real estate and
          personal property taxes and any subsequently issued notices pertaining
          to real estate or personal property taxes or assessments applicable to
          the Property; and

     (d)  All engineering and architectural plans and as built plans,
          specifications, drawings and surveys relating to the Property (the
          "Plans"), and all engineering and environmental studies or audits
          relating to the Property ("Studies"), which are within the control or
          possession of Seller, if any.

     8.   Purchaser's Conditions Precedent.  Purchaser's obligation to close the
          --------------------------------
transaction provided for in this Agreement shall be subject to the following
conditions precedent to Closing:

     (a)  Purchaser shall have until August 15, 2001 (the "Inspection Period")
          to examine the Licenses, the Plans and the Studies and to decide
          whether they are satisfactory to Purchaser and to make such physical,
          zoning, land use, environmental, and other examinations, inspections
          and investigations of the Property or the use or operation thereof
          which Purchaser, in Purchaser's sole discretion, may determine to
          make, subject, however, to the provisions of Section 18 below.  In the
          event Purchaser is not satisfied with any of the foregoing, in
          Purchaser's sole and absolute discretion, Purchaser may cancel this
          transaction on or before August 15, 2001 as hereinafter provided.

     (b)  Purchaser shall also have until August 15, 2001 to obtain all
          appropriate final, non-appealable land use, zoning, environmental, and
          other governmental and utility approvals (collectively, the
          "Approvals"), whether by ordinance, variance, amendment, special use
          and/or otherwise, including, without limitation, any necessary
          amendments to the P.U.D. and the applicable

                                      -16-
<PAGE>

          comprehensive plan necessary to permit the operation and marketing of
          the Property as a timeshare, interval ownership or vacation club and a
          building permit for any and all improvements and/or renovations
          intended to be undertaken by Purchaser with respect to the Property.
          Purchaser agrees that it shall not seek to rezone the Property or
          change the land use designations or approvals in a manner which would
          prohibit the Property from being used and operated as currently used
          and operated by Seller; however, the foregoing is not intended to
          restrict Purchaser's ability to convert the Property to timeshare or
          interval ownership, but merely to provide that the Purchaser's
          Approvals shall not prohibit the current uses being made of the
          Property. The immediately preceding sentence shall apply to each
          Building comprising the Property until such Building is released from
          the Purchase Money Mortgage. Purchaser agrees to proceed diligently to
          obtain the Approvals, at Purchaser's expense, and Seller agrees to
          reasonably cooperate in that regard, including, without limitation,
          executing applications or other governmental submissions as the owner
          of the Property and/or obtaining and pulling any permits in Seller's
          name if required by the applicable governmental authorities, provided,
          however, that said cooperation shall not require Seller to post any
          bonds and/or other financial assurances with any governmental
          authorities or incur any liability, cost or expense with regard to
          such cooperation. In the event that Purchaser has not timely obtained
          the Approvals, Purchaser may cancel this transaction as hereinafter
          provided. In order for Seller to keep abreast of the status of the
          application for the Approvals, Purchaser hereby authorizes Seller to
          make direct inquiries of Purchaser's local counsel from time to time,
          and Purchaser shall authorize Purchaser's local counsel to communicate
          directly with Seller and/or Seller's counsel in this regard.

     (c)  At all times during the term of this Agreement and as of Closing, all
          of the representations and warranties by Seller contained in this
          Agreement shall be true and correct in all material respects.

     (d)  Ramada shall have consented to the assignment of the Seller's interest
          in and to the Franchise Agreement to Purchaser, without imposing
          payment of any transfer, assignment or termination fees, charges,
          premiums or penalties.

     In the event any of the foregoing conditions precedent are not fulfilled as
of Closing (or earlier date if specified otherwise), then Purchaser shall have
the option of either: (i) waiving the condition and Closing "as is", without
reduction in the Purchase Price or claim against Seller therefor, or (ii)
canceling this Agreement by written notice to Seller given by Closing (or
earlier date if specified otherwise), in which event the Escrow Agent shall
return the Deposit and all

                                      -17-
<PAGE>

interest thereon to Purchaser, whereupon both parties shall be released from all
further obligations under this Agreement, except those obligations which are
specifically stated to survive termination or Closing.

     In the event Purchaser timely elects to cancel this Agreement, and as
consideration for Seller granting Purchaser the investigation and inspection
condition precedent therein, Purchaser shall deliver to Seller within ten (10)
days following any notice of cancellation, a copy of all written studies or
reports obtained by or prepared for Purchaser by third parties in connection
with the Inspection Period, without warranty or representation of any kind
whatsoever on the part of Purchaser as to the content, accuracy or completeness
thereof, and, in addition, Purchaser shall return any materials delivered to
Purchaser by Seller under Section 7 above.

     In the event that the condition set forth in Section 8(d) is not fulfilled
as of Closing (or earlier date if specified otherwise), then Seller shall have
the right to cancel this Agreement by written notice to Purchaser given by
Closing (or earlier date if specified otherwise), in which event the Escrow
Agent shall return the Deposit and all interest thereon to Purchaser, whereupon
both parties shall be released from all further obligations under this
Agreement, except those obligations which are specifically stated to survive
termination or Closing.

     9.   Seller's Representations.  Seller represents and warrants to Purchaser
          ------------------------
and agrees with Purchaser as follows:

     (a)  There are no service contracts, license agreements, management
          agreements or other contracts or agreements affecting the Property,
          other than those identified on Exhibit "E" hereto (collectively, the
          "Contracts"). Seller has delivered to Purchaser true, correct and
          complete copies of the Contracts. At Closing, there shall be no
          contracts, insurance policies, leases, tenancies, arrangements,
          licenses, concessions, easements, service arrangements, employment
          contracts or agreements, brokerage agreements, and any and all other
          contracts or agreements, either recorded or unrecorded, written or
          oral, affecting the Property or any portion thereof, or the use
          thereof, other than the Permitted Exceptions, the

                                      -18-
<PAGE>

          Assumed Contracts, and the 30-Day Cancellation Contracts. With respect
          to the Contracts, Seller agrees as follows:

          (i)    Seller shall, at Seller's sole cost and expense (including
                 without limitation the payment of any termination fees
                 associated therewith), terminate the Contracts with Pagenet,
                 Nextel, Job Finders and Copytronics, each of which is
                 designated as a "Terminated Contract" in Exhibit "E", with such
                 termination to be effective at or prior to Closing. Purchaser
                 shall have no liability or responsibility whatsoever with
                 regard to the Terminated Contracts.

          (ii)   On the Closing date, Seller shall, at Seller's sole cost and
                 expense (including without limitation the payment of any
                 termination fees associated therewith), terminate the Contracts
                 with Dunbar Armored, Inc., The Steritech Group, Inc., Crystal
                 Springs and Poolworks, each of which is designated as a "30-Day
                 Cancellation Contract" in Exhibit "E", with such termination to
                 be effective on the thirtieth (30/th/) day following Closing.
                 Purchaser shall be responsible for only the regular scheduled
                 payments due under the 30-Day Cancellation Contracts for the
                 30-day period following Closing only. Seller shall be
                 responsible for all other costs associated with the 30-Day
                 Cancellation Contracts.

          (iii)  At Closing, Seller shall assign and Purchaser shall assume all
                 of Seller's interest in and to the Contracts listed in Exhibit
                 "E" as the "Assumed Contracts" (collectively, the "Assumed
                 Contracts"), provided that, with respect to the Ramada
                 Franchise Agreement, neither Seller nor Purchaser shall have
                 elected to terminate this Agreement under Section 8(d) above.

     (b)  Seller shall not permit any lease rights to extend beyond Closing and
          shall deliver exclusive possession of the Property to Purchaser at
          Closing, free of all tenancies, occupancy or possessory agreements or
          contracts (other than the Permitted Exceptions, including, without
          limitation, the Contracts) or arrangements, whether oral or written,
          including, without limitation, any transient hotel guests affecting
          the Property or any unfulfilled hotel or guest reservations affecting
          the Property, provided, however, that Purchaser agrees to honor any
          unfulfilled hotel or guest reservations affecting the Property which
          are made prior to the date of Closing at room rates consistent with
          Seller's current rates and where the reservation shall be entirely
          fulfilled by no later than October 15, 2003 (the "Permitted
          Outstanding Reservations").  With respect to any Permitted Outstanding
          Reservations, Purchaser shall be responsible for providing services to
          such guest and the costs of administering the reservation.  Purchaser
          shall retain any revenue generated from the guests staying pursuant to
          Permitted Outstanding Reservations.  Seller agrees to indemnify,
          defend and hold harmless the Purchaser (and its officers, directors,
          trustees, employees, agents, successors and assigns) from and against
          all liabilities, damages, claims, costs, fees and expenses whatsoever
          (including

                                      -19-
<PAGE>

          reasonable attorney's fees and court costs at trial and all appellate
          levels) arising out of or resulting from Seller's accepting guest
          reservations either (i) at room rates which are inconsistent with
          Seller's current rates, or (ii) which extend beyond or are not
          fulfilled on or prior to October 15, 2003, including without
          limitation those arising out of Purchaser's refusal to honor such
          unpermitted guest reservations.

          Notwithstanding anything to the contrary, the provisions contained in
          Sections 9(a) and 9(b) shall survive indefinitely after Closing.

     (c)  Except as otherwise disclosed herein to Purchaser, Seller has not
          received any notice of: (i) any pending improvement liens to be made
          by any governmental authority with respect to the Property; (ii) any
          violations of building codes and/or zoning ordinances or other
          governmental regulations with respect to the Property; (iii) any
          pending or threatened lawsuits with respect to the Property; (iv) any
          pending or threatened condemnation proceedings with respect to the
          Property; or (v) any defects or inadequacies in the Property which
          would adversely affect the insurability of the Property or increase
          the cost thereof.  Seller has advised Purchaser of a "slip and fall"
          lawsuit pending against Seller in the Circuit Court for the Ninth
          Judicial Circuit in Orange County, Florida, Case No. B15OL 99-763909-
          001, filed by Virginia Geiser and Terry Geiser.  Seller is solely
          liable with regard to said lawsuit and agrees to indemnify, defend and
          hold harmless the Purchaser (and its officers, directors, trustees,
          employees, agents, successors and assigns) from and against all
          liabilities, damages, claims, costs, fees and expenses whatsoever
          (including reasonable attorneys' fees and court costs at trial and all
          appellate levels) arising out of or resulting from the foregoing
          lawsuit.  The provisions contained in this Section shall survive
          indefinitely after Closing.

     (d)  To the best of the actual knowledge of Seller, no fact or condition
          exists which would result in the termination or impairment of access
          to the Property or the discontinuation of necessary sewer, water,
          electric, gas, telephone or other utilities or services to the
          Property.

     (e)  Seller has not received written notice from any applicable
          governmental entity or any insurance carrier of any material defect,
          latent or otherwise, in the Improvements on the Land, structural
          elements thereof, the mechanical systems (including, without
          limitation, all heating, ventilating, air conditioning, plumbing,
          electrical, utility and sprinkler systems) therein, the utility system
          servicing the Property and the roofs, which have not been disclosed to
          Purchaser in writing prior to the date of this Agreement.

     (f)  To the best of Seller's actual knowledge, all Improvements on the Land
          were permitted conforming structures under applicable zoning and
          building laws and ordinances in effect when the Improvements were
          constructed and the present uses thereof are permitted uses under
          current and proposed applicable zoning and building laws and
          ordinances.

                                      -20-
<PAGE>

    (g)   During the period between the date of this Agreement and Closing,
          Seller shall continue to operate and manage the Property in a prudent,
          businesslike and responsible manner consistent with its operation and
          management prior to the date of this Agreement and keep same clear of
          accumulations of trash, debris or overgrowth of vegetation.  Seller
          shall: (i) continue to maintain all of the present services to the
          Property, (ii) make all repairs and replacements in the ordinary
          course of business to the Property (excluding capital expenditures in
          excess of $100.00 per unit), and (iii) not remove any of the personal
          property from the Property except in replacement of same.  In
          addition, Seller shall make all payments due prior to Closing in
          connection with the Property, including all utility payments and
          payments on any other obligations affecting the Property.
          Notwithstanding the foregoing, subject only to Permitted Outstanding
          Reservations, exclusive possession of the Property shall be conveyed
          to Purchaser at Closing, and, accordingly, Seller shall not accept any
          reservations for hotel or transient guests at the Property which would
          affect the Property after October 15, 2003 or at rates which are
          inconsistent with rates presently charged by Seller.

    (h)   To the best of Seller's knowledge, Seller is vested with good,
          marketable and insurable fee simple title to the Realty subject only
          to the Permitted Exceptions as provided herein; and Seller is vested
          with good and marketable title, subject only to the Permitted
          Exceptions, to all fixtures, equipment, furnishings and items of
          personal property referred to in Section 1(b) above free of all
          financing and other liens or encumbrances (except only for mortgage
          and security interests to the extent that the same are applicable to
          the Property while owned by Seller, all of which are to be satisfied
          and released at Closing).

    (i)   Seller shall comply prior to Closing with all applicable provisions of
          all laws, rules, regulations, and ordinances of all governmental
          authorities having jurisdiction over the Property, provided, only,
          however, that Seller shall have no obligation to adapt any units
          within the Property to comply with the requirements of the Americans
          with Disabilities Act.  Seller shall be responsible for and shall
          promptly pay all amounts owed for labor, materials supplied, services
          rendered and/or any other bills or amounts related to Seller and
          Seller's ownership and/or operation of the Property prior to Closing.

    (j)   Prior to Closing, no portion of the Property or any interest therein,
          beneficial or otherwise, shall be alienated, further encumbered,
          conveyed or otherwise transferred.  In addition, Seller shall not
          discuss or negotiate any potential sale of the Property with any third
          party during the term hereof.

    (k)   The execution, delivery and performance of this Agreement by Seller
          have been duly authorized and no consent of any other person or entity
          to such execution, delivery and performance is required to render this
          document a valid and binding instrument enforceable against Seller in
          accordance with its terms.  Neither the execution of this Agreement or
          the consummation of the transactions

                                      -21-
<PAGE>

          contemplated hereby will: (i) result in a breach of, or default under,
          any agreement to which Seller (or any of the entities or persons
          comprising Seller) is a party or by which the Property is bound, or
          (ii) violate any restrictions to which Seller is subject.

    (l)   Seller is not a "foreign person" within the meaning of the United
          States tax laws and to which reference is made in Internal Revenue
          Code Section 1445(b)(2).  At Closing, Seller shall deliver to
          Purchaser an affidavit to such effect, and also stating Seller's
          employer identification number and the state within the United States
          under which Seller was organized and exists.  Seller acknowledges and
          agrees that Purchaser shall be entitled to fully comply with Internal
          Revenue Code Section 1445 and all related sections and regulations, as
          same may be modified and amended from time to time, and Seller shall
          act in accordance with all reasonable requirements of Purchaser to
          effect such full compliance by Purchaser.

    (m)   To the best of Seller's actual knowledge, without any independent
          investigation or inquiry, there has not been and there is not now: (i)
          any Hazardous Substance (as hereinafter defined) present on the
          Realty, except for such materials as are normally and customarily used
          for household purposes or in the operation or maintenance or apartment
          complexes, and which are not in violation of any environmental law,
          (ii) any present or past generation, recycling, reuse, sale, storage,
          handling, transport and/or disposal of any Hazardous Substance on the
          Realty, except for such materials as are normally and customarily used
          for household purposes or in the operation or maintenance or apartment
          complexes, and which are not in violation of any environmental law,,
          or (iii) any failure to comply with any applicable local, state or
          federal environmental laws, regulations, ordinances or administrative
          or judicial orders relating to the generation, recycling, reuse, sale,
          storage, handling, transport and/or disposal of any Hazardous
          Substance.  Seller has not received any notice from any governmental
          authority regarding the presence of any Hazardous Substance, any
          present or past generation, recycling, reuse, sale, storage, handling,
          transport and/or disposal of any Hazardous Substance or any failure to
          comply with any applicable local, state or federal environmental laws,
          regulations, ordinances or administrative or judicial orders relating
          to the generation, recycling, reuse, sale, storage, handling,
          transport and/or disposal of any Hazardous Substance.  Seller shall at
          all times prior to Closing comply with all applicable local, state or
          federal environmental laws, regulations, ordinances or administrative
          or judicial orders relating to the generation, recycling, reuse, sale,
          storage, handling, transport and/or disposal of any Hazardous
          Substance and Seller shall not generate, recycle, reuse, sell, store,
          handle, transport and/or dispose of any Hazardous Substance on the
          Property without the prior written consent of Purchaser, except for
          such materials as are normally and customarily used for household
          purposes or in the operation or maintenance or apartment complexes,
          and which are not in violation of any environmental law.  As used
          herein, the term "Hazardous Substance" means any substance or material
          defined or designated as a hazardous or toxic

                                      -22-
<PAGE>

          waste material or substance, or other similar term by any federal,
          state or local environmental statute, regulation or ordinance
          presently or hereinafter in effect, as such statute, regulation or
          ordinance may be amended from time to time.

    (n)   As of the Closing, except only for the Permitted Outstanding
          Reservations, there shall be no leases or other occupancy or
          possessory agreements or contracts affecting the Property, whether
          oral or written, including, without limitation, any hotel or transient
          guests on the Property or any unfulfilled hotel or guest reservations
          affecting the Property.

The provisions of this Section shall survive the Closing for a period of one (1)
year.

    10.   Purchaser's Representations.  Purchaser represents to Seller as
          ---------------------------
follows:
    (a)   Purchaser has previously reviewed and considered the nature of this
          transaction and the Inspection Period will enable Purchaser to
          investigate the Property and all aspects of the transaction.  In
          electing to proceed with this transaction, Purchaser shall have
          determined that the Property is satisfactory to Purchaser in all
          respects, and is purchasing the Property in "as is" physical
          condition, subject only to any representations of Seller expressly set
          forth in this Agreement.  Purchaser has and will rely solely on
          Purchaser's own independent investigations and inspections, and
          Purchaser has not relied and will not rely on any representation of
          Seller other than as expressly set forth in this Agreement.  It is
          expressly covenanted and agreed that, except as expressly provided in
          this Agreement, neither the Seller, nor any employee, agent,
          representative or any other person acting on behalf of the Seller has
          made or will make any representation or warranty of any kind or nature
          whatsoever, express or implied, concerning the physical condition of
          the Property, or any part or portion thereof, or its state of repair,
          or the presence or the absence of any latent or patent defects, or its
          income potential, expenses or uses, or its merchantability, or fitness
          for any use or purpose.  Purchaser acknowledges and agrees that its
          agreement to accept the Property in "AS IS" condition, without
          representation or warranty, except as expressly provided in this
          Agreement, is a material part of the consideration being bargained for
          by Seller, without which consideration, Seller will not agree to sell
          the Property on the price and terms set forth herein.

    (b)   The execution, delivery and performance of this Agreement by Purchaser
          have been duly authorized, and this Agreement is binding on Purchaser
          and enforceable against Purchaser in accordance with its terms.  No
          consent of any other person or entity to such execution, delivery and
          performance is required.

    11.   Default Provisions.  In the event of the failure or refusal of the
          ------------------
Purchaser to close this transaction, without fault on Seller's part and without
failure of title or any conditions

                                      -23-
<PAGE>

precedent to Purchaser's obligations hereunder, Seller shall receive the Deposit
together with all interest earned thereon as agreed and liquidated damages for
said breach, and as Seller's sole and exclusive remedy for default of Purchaser,
whereupon the parties shall be relieved of all further obligations hereunder,
except those obligations which are specifically stated herein to survive the
termination or Closing of this transaction.

     In the event of a default by Seller under this Agreement, Purchaser at its
option shall have the right to: (i) receive the return of the Deposit together
with interest earned thereon, whereupon the parties shall be released from all
further obligations under this Agreement, except those obligations which are
specifically stated herein to survive the termination or Closing, unless the
default was caused by the willful act, omission, or intentional material
misrepresentation of Seller in which event Seller shall continue to be liable
for damages caused thereby, anything to the contrary notwithstanding, or,
alternatively, (ii) seek specific performance of the Seller's obligations
hereunder and/or any other equitable remedies, thereby waiving damages.

     Notwithstanding the foregoing, in the event of a default by either party of
any obligations which specifically survive Closing, then the non-defaulting
party shall be entitled to seek any legal redress permitted by law or equity.
The provisions hereof shall survive Closing.

     12.  Prorations.  Real estate and personal property taxes, utilities and
          ----------
all other proratable items (including without limitation room rentals paid or to
be paid by guests of the Property covering periods of time both before and after
Closing), shall be prorated as of the date of Closing.  Purchaser shall receive
a credit against the Purchase Price at Closing for all pre-paid room rentals.
Seller shall be entitled to all room rentals with respect to periods on or
before Closing, which are paid after Closing as to guests occupying any portion
of the Property as of the Closing date. Seller and Purchaser shall adjust for
such room rentals within sixty (60) days

                                      -24-
<PAGE>

following the Closing date. Seller shall pay all sales and/or use tax due on
revenues received and purchases made prior to the Closing date and shall comply
with all statutory provisions necessary for Purchaser to avoid transferee
liability for same. In the event the taxes for the year of Closing are unknown,
the tax proration will be based upon the taxes for the prior year, and at the
request of either party, the taxes for the year of Closing shall be reprorated
and adjusted when the tax bill for such year is received and the actual amount
of taxes is known. If the net prorations under this Section result in a credit
to Seller, Purchaser shall pay such credit in cash at Closing. If, however, the
net prorations hereunder result in a credit to Purchaser, such credit shall be
applied as a reduction in the Purchase Price and, correspondingly, the principal
amount of the Purchase Money Note. The provisions of this Section shall survive
the Closing.

     13.  Improvement Liens.  Certified, confirmed or ratified liens for
          -----------------
governmental improvements as of the date of Closing, if any, shall be paid in
full by Seller, and pending liens for governmental improvements as of the date
of Closing shall be assumed by the Purchaser, provided that where the
improvement has been substantially completed as of the date of Closing, such
pending lien shall be considered certified.

     14.  Closing Costs.  The parties shall bear the following costs:
          -------------
    (a)   The Purchaser shall be responsible for payment of the following: (i)
          the cost of examining the Commitment and Survey, (ii) the cost of the
          Survey, but only to the extent of its obligation for same pursuant to
          Section 6 above, (iii) any and all costs and expenses of
          architectural, engineering and other inspection and feasibility
          studies and reports incident to Purchaser's inspections, (iv) clerk's
          recordation fees for recording the warranty deed and the Purchase
          Money Mortgage, (v) the documentary stamps and intangible taxes due on
          the Purchase Money Note and Purchase Money Mortgage, and (vi) the
          costs of the simultaneous issue of a loan policy of title insurance in
          favor of Seller insuring the Purchase Money Mortgage, provided that
          the cost thereof shall not exceed $250.00.

    (b)   The Seller shall be responsible for payment of the following: (i) any
          costs associated with issuance of the Commitment (including the
          premium for the

                                      -25-
<PAGE>

          owner's policy issued pursuant thereto), (ii) the cost of the Survey,
          but only to the extent of its obligation for same pursuant to Section
          6 above, (iii) any transfer taxes in connection with the delivery of
          the deed and bill of sale including documentary stamp tax and surtax,
          and (iv) recording costs on the Declaration Amendment, the termination
          of any other restrictive covenants and on any documents necessary to
          clear title.

    (c)   Each party shall pay its own legal fees.

    15.   Closing.  Subject to other provisions of this Agreement for extension,
          -------
the closing (the "Closing") shall be held on August 15, 2001 or such earlier
date as Purchaser may request on not less than fourteen (14) days prior written
notice to Seller. Closing shall be held at the office of Seller's counsel.

    At Closing, Seller shall execute and/or deliver to Purchaser the following
documents:

    (a)   a good and sufficient special warranty deed subject only to the
          Permitted Exceptions,

    (b)   an appropriate mechanic's lien affidavit, sufficient in form and
          content for any title insurance company to delete the standard
          exceptions for mechanic's liens, and, to the extent of work performed
          in the ninety (90) days prior to Closing, appropriate releases and
          indemnities to allow Purchaser to obtain title insurance coverage over
          any unfiled liens,

    (c)   an affidavit of exclusive possession, subject only to the Permitted
          Outstanding Reservations,

    (d)   an appropriate bill of sale with warranty of title for claims by,
          through or under Seller for all tangible  personal property included
          in this transaction,

    (e)   a non-foreign affidavit and/or certificate pursuant to Section 9(l)
          above,

    (f)   appropriate assignments of all licenses, easements, rights-of-way,
          contract rights, guarantees and warranties, and other property and
          rights included in this transaction, to the extent separable and
          transferable,

    (g)   a consent and estoppel statement from Ramada confirming that, (i)
          Ramada consents to the transfer of Seller's interest in the Franchise
          Agreement to Purchaser, (ii) to the best of Ramada's knowledge, the
          Franchise Agreement is in full force and effect and free of any
          default by Seller, and (ii) to the best of Ramada's knowledge, Seller
          has paid all amounts due, and has complied with all of its
          obligations, under the Franchise Agreement up to the date of transfer,

                                      -26-
<PAGE>

    (h)   appropriate evidence of Seller's formation, existence and authority to
          sell and convey the Property,

    (i)   an appropriate "gap" affidavit and/or indemnity as required by the
          title insurer,

    (j)   assignment of all Licenses, to the extent separable and transferable,

    (k)   with respect to the Contracts, (i) an appropriate assignment and
          assumption of the Assumed Contracts, (ii) satisfactory evidence that
          the Terminated Contracts have been terminated with all penalties and
          termination fees paid, and (iii) a copy of Seller's cancellation of
          the 30-Day Cancellation Contracts, and

    (l)   a marked-up title insurance Commitment issued by a national title
          insurance company acceptable to Purchaser pursuant to Section 6 above.

    At Closing, Seller and Purchaser shall each execute counterpart closing
statements, an appropriate assignment and assumption of the Assumed Contracts
and such other documents as are reasonably necessary to consummate this
transaction.  Additionally, Purchaser and Seller shall execute the Declaration
Amendment and releases of the other restrictive covenants referred to in Section
6 above.  Finally, Escrow Agent shall deliver to Seller a loan policy of title
insurance in the amount of the Purchase Money Note insuring the Purchase Money
Mortgage.

    16.   Brokers.  The parties each represent and warrant to the other that
          -------
there are no real estate brokers, salesmen or finders involved in this
transaction.  If a claim for brokerage in connection with the transaction is
made by any broker, salesman or finder, claiming to have dealt through or on
behalf of one of the parties hereto ("Indemnitor"), Indemnitor shall indemnify,
defend and hold harmless the other party hereunder ("Indemnitee"), and
Indemnitee's officers, directors, agents and representatives, from all
liabilities, damages, claims, costs, fees and expenses whatsoever (including
reasonable attorney's fees and court costs at trial and all appellate levels)
with respect to said claim for brokerage.  The provisions of this Section shall
survive the Closing and any cancellation or termination of this Agreement.

                                      -27-
<PAGE>

     17.  Assignability.  Purchaser shall be entitled to assign its rights
          -------------
hereunder to any subsidiary or any other entity controlled by Purchaser.  No
other assignment of this Agreement shall be permitted without the prior written
consent of Seller, which may be withheld or denied by Seller in its sole and
absolute discretion.  Notwithstanding the foregoing, no assignment shall be
binding upon or effective against Seller unless such assignment is in writing,
is executed by the assignor and assignee, with the assignor expressly
acknowledging that the assignment in no way releases the assignor from any
duties, liabilities or obligations under the Agreement, and with the assignee
expressly assuming and agreeing to pay and perform all of the assignor's duties,
liabilities or obligations under the Agreement, and a fully executed counterpart
of the assignment delivered to Seller.  In the event that Purchaser assigns its
rights under this Agreement, Purchaser shall not be released from its
obligations and liabilities hereunder, shall remain liable under the terms
hereof, and shall be required to unconditionally and irrevocably guarantee
payment and performance of the Purchase Money Note and Purchase Money Mortgage.

     18.  Inspections.  Purchaser, and Purchaser's agents and contractors, shall
          -----------
have the right during the term of this Agreement to enter upon the Property at
reasonable times and upon 24 hour advance notice by telephone or facsimile
notice to Holly Caracciolo, Telephone No. (407) 396-9700 and Fax No. (407) 396-
9800, for purposes of inspection and making tests and studies thereon.  Seller
shall have the right to require Purchaser, and Purchaser's agents and
contractors, to enter upon the Property only when accompanied by Seller or a
representative of Seller.  Throughout the term of this Agreement, Seller, its
agents and employees shall at all times cooperate with Purchaser, its agents and
contractors in connection with their performance of the inspections provided
herein.  All such inspections, tests and studies shall be undertaken by

                                      -28-
<PAGE>

Purchaser in a manner and at such times and places so as to not unreasonably
disturb or interfere with the quiet enjoyment of the Property by Seller's guests
and/or tenants.  Purchaser agrees to indemnify, defend and hold harmless Seller
from and against all liabilities, damages, claims, costs, fees and expenses
whatsoever (including reasonable attorney's fees and court costs at trial and
all appellate levels) arising out of or resulting from any physical damage to
the Property caused by Purchaser, or Purchaser's agents, contractors or
employees, in connection with such inspection or investigation.

     19.  Escrow Agent.  The Escrow Agent shall not be liable for any actions
          --------------
taken in good faith, but only for its gross or willful negligence.  The parties
hereby indemnify and hold the Escrow Agent harmless from and against any loss,
liability, claim or damage whatsoever (including reasonable attorney's fees and
court costs at trial and all appellate levels) the Escrow Agent may incur or be
exposed to in its capacity as escrow agent hereunder except for gross negligence
or willful misconduct.  If there be any dispute as to the disposition of the
Deposit held by the Escrow Agent pursuant to the terms of this Agreement, the
Escrow Agent is hereby authorized to interplead said amount with any court of
competent jurisdiction and thereby be released from all obligations hereunder.
The Escrow Agent shall not be liable for any failure of the depository.
Purchaser acknowledges and agrees that Escrow Agent is acting as counsel to
Seller in this transaction, and that this conflict of interest does not
disqualify Escrow Agent from acting in such dual capacity.  Purchaser further
acknowledges and agrees that in the event of any dispute regarding this
transaction or the Agreement (including, without limitation, a dispute regarding
disbursement of amounts being held by Escrow Agent), Escrow Agent shall not be
disqualified from representing Seller with regard to such dispute,
notwithstanding its status as Escrow Agent.

                                      -29-
<PAGE>

     20.  Notices.  Any notices required or permitted to be given under this
          -------
Agreement shall be in writing and shall be deemed to have been given if
delivered by hand, sent by recognized overnight courier (such as Federal
Express), sent by facsimile transmission or mailed by certified or registered
mail, return receipt requested, in a postage prepaid envelope, and addressed as
follows:

     If to the Purchaser at:        Mego Financial Corp.
                                    4310 Paradise Road
                                    Las Vegas, NV 89109
                                    Attn: Jerome J. Cohen,
                                              President
                                    Fax No. (702) 369-4398

     With a copy to:                Mego Financial Corp.
                                    4310 Paradise Road
                                    Las Vegas, NV 89109
                                    Attn: Jon A. Joseph,
                                              General Counsel
                                    Fax No. (702) 369-4398

     and to:                        Greenberg Traurig, P.A.
                                    1221 Brickell Avenue
                                    Miami, Florida 33131
                                    Attn: Gary A. Saul, Esq.
                                    Fax No. (305) 579-0717

     If to the Seller at:           Marc Wilkow, President
                                    M&J Wilkow, Ltd.
                                    180 North Michigan Avenue
                                    Chicago, Illinois 60601
                                    Fax No. (312) 658-2467

     With a copy to:                James E. Slater, Esq.
                                    Broad and Cassel
                                    Suite 1100
                                    390 North Orange Avenue
                                    Orlando, Florida 32801
                                    Fax No. (407) 650-0941

                                      -30-
<PAGE>

Notices personally delivered or sent by overnight courier shall be deemed given
on the date of delivery, notices transmitted by facsimile shall be deemed given
on the date sent provided that the transmitting machine confirms transmission in
writing (or otherwise, upon actual receipt by the other party) and notices
mailed in accordance with the foregoing shall be deemed given three (3) days
after deposit in the U.S. mails.

     21.  Risk of Loss.  The Property shall be conveyed to Purchaser in the same
          ------------
condition as on the date of this Agreement, ordinary wear and tear excepted,
free of all tenancies or occupancies (other than the Permitted Outstanding
Reservations), and Seller shall not remove any Personalty from the Property
between now and Closing.  In the event that the Property or any material portion
thereof is taken by eminent domain prior to Closing, Purchaser shall have the
option of either: (i) canceling this Agreement, and receiving a refund of the
Deposit and all interest earned thereon, whereupon both parties shall be
relieved of all further obligations under this Agreement, except those
obligations which are specifically stated herein to survive the termination or
Closing, or (ii) Purchaser may proceed with Closing in which case Purchaser
shall be entitled to all condemnation awards and settlements.  In the event that
the Improvements are damaged or destroyed by fire or other casualty prior to
Closing, Seller shall have the option to repair and restore the Property to the
same condition as before the fire or casualty and Closing shall be deferred for
up to sixty (60) days to permit such repair and restoration.  If Seller elects
not to repair and restore or if Seller is unable to repair and restore within
such sixty (60) day period, then Purchaser shall have the option of either: (i)
canceling this Agreement and receiving a refund of the Deposit and all interest
earned thereon, whereupon both parties shall be released from all further
obligations under this Agreement, except those obligations which are
specifically stated herein to survive the termination or Closing, or (ii)
proceeding with Closing without

                                      -31-
<PAGE>

reduction in the Purchase Price in which case Purchaser shall be entitled to all
insurance proceeds allocable to the Property.

     22.  Indemnity.  Seller shall indemnify and hold Purchaser harmless from
          ---------
any and all liability, including costs and reasonable attorneys' fees (at trial
and all appellate levels) for:

     (a)  Any sales tax due on any rentals or sales prior to the Closing to the
          State of Florida under Florida Statutes Section 212.10.

     (b)  Any contracts for services to the property existing now or at any time
          prior to Closing (other than obligations arising from the Permitted
          Exceptions or the Assumed Contracts, or the limited obligation to pay
          only the regular scheduled payments under the 30-Day Cancellation
          Contract for the 30-day period following Closing), and any obligation
          or matter arising or accruing, or resulting from or growing out of any
          of the Contracts which relates to an event or period of time prior to
          the Closing date.

     (c)  Any security deposits of tenants received by Seller prior to Closing.

     (d)  Any personal property taxes remaining unpaid for calendar years prior
          to the year of Closing.

     Purchaser shall indemnify and hold Seller harmless from any liability,
including costs and reasonable attorneys' fees (at trial and all appellate
levels) for (i) any matter occurring after the Closing under the Assumed
Contracts, and (ii) any liability that may arise as a result of Purchaser's
failure to meet its obligation under Section 9(a) to make the scheduled payments
under the 30-Day Cancellation Contracts until the 30/th/ day following Closing.

     The provisions of this Section 22 shall survive the Closing.

     23.  Disclosures.  Pursuant to the laws of the State of Florida, Seller is
          -----------
required to provide the following notice to Purchaser:

     (a)  RADON GAS: Radon is a naturally occurring radioactive gas that, when
          it has accumulated in a building in sufficient quantities, may present
          health risks to persons who are exposed to it over time.  Levels of
          radon that exceed federal and state guidelines have been found in
          buildings in Florida.  Additional information regarding radon and
          radon testing may be obtained from your county public health unit.

                                      -32-
<PAGE>

     (b)  The prospective purchaser of real property with a building for
          occupancy located thereon is notified that the purchaser may have the
          building's energy efficiency rating determined.

     (c)  Seller hereby represents and warrants that the Property is located in
          coastal areas partially or totally seaward of the coastal construction
          control line as defined in Chapters 161.053 of the Florida Statutes.
          Pursuant to Chapter 161.57 of the Florida Statutes, the Survey shall
          delineate the location of the coastal construction control line on the
          Property.

     24.  Miscellaneous.
          -------------

     (a)  This Agreement shall be construed and governed in accordance with the
          laws of the State of Florida.  All of the parties to this Agreement
          have participated fully in the negotiation and preparation hereof;
          and, accordingly, this Agreement shall not be more strictly construed
          against any one of the parties hereto.

     (b)  In the event any term or provision of this Agreement be determined by
          appropriate judicial authority to be illegal or otherwise invalid,
          such provision shall be given its nearest legal meaning or be
          construed as deleted as such authority determines, and the remainder
          of this Agreement shall be construed to be in full force and effect.

     (c)  In the event of any litigation between the parties under this
          Agreement, the prevailing party shall be entitled to reasonable
          attorney's fees and court costs at all trial and appellate levels.
          The provisions of this subparagraph shall survive the closing
          coextensively with other surviving provisions of this Agreement.

     (d)  If any date upon which, or by which, action required under this
          Agreement is a Saturday, Sunday or legal holiday recognized by the
          Federal government, then the date for such action shall be extended to
          the first day that is after such date and is not a Saturday, Sunday or
          legal holiday recognized by the Federal government.

     (e)  In construing this Agreement, the singular shall be held to include
          the plural, the plural shall include the singular, the use of any
          gender shall include every other and all genders, and captions and
          paragraph headings shall be disregarded.

     (f)  Time shall be of the essence for each and every provision of this
          Agreement.

     (g)  All of the exhibits attached to this Agreement are incorporated in,
          and made a part of, this Agreement.

     25.  Entire Agreement.  This Agreement constitutes the entire agreement
          ----------------
between the parties and there are no other agreements, representations or
warranties other than as set forth

                                      -33-
<PAGE>

herein. This Agreement may not be changed, altered or modified except by an
instrument in writing signed by the party against whom enforcement of such
change would be sought. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns.

     26.  Assets of Riviera Management Corporation. Riviera Management
          ----------------------------------------
Corporation, an Illinois corporation ("Riviera") operates a gift
shop/convenience store within one of the Buildings comprising the Property.
Seller confirms that Riviera desires to sell to Purchaser, and Purchaser desires
to purchase from Riviera, the following assets of Riviera: (a) that certain Beer
and Wine Liquor License No. BEV-5307520, Series 2COP (the "Liquor License"),
granted to Riviera by the Department of Business and Professional Regulation,
Division of Alcoholic Beverages and Tobacco (the "Division"); and (b) the
inventory of Riviera, if any, including all consumables, packaging materials,
products, supplies, merchandise and other stock-in-trade inventory which, as of
the date of Closing (as hereinafter defined), is located at the Property and/or
used in connection with the shop (the "Inventory"). The following provisions
shall govern the transfer of the Liquor License and Inventory from Riviera to
Purchaser:

     (a)  The purchase price to be paid by Purchaser for the Inventory shall be
          an amount equal to the amount paid by Riviera for the Inventory at
          cost (the "Inventory Cost"), evidenced by paid invoices, paid receipts
          and/or other satisfactory evidence of payment.  The Inventory Cost
          shall be determined by Purchaser and Riviera at a mutually convenient
          time on the day prior to the date of Closing, and shall be adjusted,
          to the extent feasible, for sales made on the date of Closing.  The
          parties agree to cooperate with each other and to act in good faith in
          determining the Inventory Cost.  The Inventory Cost shall be paid by
          Purchaser to Riviera at Closing by cashier's check, attorney's trust
          account check or wire transfer of funds.

     (b)  Seller shall cause Riviera to transfer the Inventory to Purchaser at
          closing by bill of sale.

     (c)  Seller shall cause Riviera to cooperate with Purchaser, at no cost to
          Riviera, in effecting the transfer of the Liquor License to Purchaser
          (or its designee), and shall join in any applications that are
          required for that purpose. Purchaser (or its designee) shall be solely
          responsible for and shall pay all fees required to be paid by the
          Division in connection with the transfer contemplated hereunder. There
          shall be no separate charge for the transfer of the Liquor License to
          Purchaser (or its designee). The Closing shall not be conditioned upon
          the

                                      -34-
<PAGE>

          transfer of the Liquor License; however, the terms hereof shall
          survive Closing until the Liquor License is transferred to Purchaser
          (or its designee) or such transfer is denied by the Division.

     (d)  In the event that the Liquor License is not transferred by the Closing
          date, the Inventory shall exclude any beer and wine. In such event,
          the beer and wine shall be stored in a cool and secure location and
          transferred at the time the Liquor License is transferred to
          Purchaser, or removed from the Property by Riviera in the event the
          Division denies consent to the transfer. The provisions hereof shall
          survive Closing.

     EXECUTED as of the date first above written in several counterparts, each
of which shall be deemed an original, but all constituting only one agreement.

Witnessed by:                       SELLER:

                                    THE VILLAS AT MONTEREY LIMITED PARTNERSHIP,
                                    a Florida limited partnership

                                    By: M & J Wilkow of Florida, Inc.,
                                        General Partner

                                        By:  /s/ Marc Wilkow
                                             ----------------------------------
                                             Marc Wilkow,
                                             President

     /s/ Jennifer L. Harshbarger
----------------------------------------
                                    Tax ID No. 36-4065854
                                               --------------------------------

     TANGO BAY OF ORLANDO, LC, a Florida limited liability company

                                      -35-
<PAGE>

                                    By: Arlington Annex Corporation, a
                                        Florida corporation, its Manager

                                        By: /s/ Marc Wilkow
                                            -------------------------------
                                            Marc Wilkow,
                                            President

_____________________________
                                    Tax ID No. _____________________________

                                    PURCHASER:

                                    MEGO FINANCIAL CORP., a New York
                                    corporation

                                    By:  /s/ Jerome J. Cohen
                                         -----------------------------------
                                         Jerome J. Cohen, President

       S/s Jon A. Joseph
------------------------

                                    Tax ID No. 13-5629885
                                               ----------

                                      -36-
<PAGE>

                                    RECEIPT
                                    -------

     The undersigned Escrow Agent hereby acknowledges receipt of a check,
subject to clearance, in the amount of Ten Thousand and No/100 Dollars
($10,000.00) from Purchaser to be held as the Deposit pursuant to the foregoing
Agreement.

                                    ESCROW AGENT

                                    BROAD and CASSEL

                                    By: /s/ James E. Statler, P.A.
                                        ----------------------------------

                                      -37-
<PAGE>

                                  EXHIBIT "A"
                                  -----------

                          LEGAL DESCRIPTION OF REALTY
                          ---------------------------

            [Precise legal to be determined pursuant to the survey
               to be delivered per Section 6 of this Agreement]

                                  Building H
                                  ----------

                                  Building I
                                  ----------

                                  Building K
                                  ----------

                                  Building J
                                  ----------

                                  Building D
                                  ----------

                             Buildings A, B and C
                             --------------------

<PAGE>

                                  EXHIBIT "D"
                                  -----------

                              PERMITTED EXCEPTIONS
                              --------------------

1.   Decree Incorporating Drainage District recorded May 27, 1970 in Official
     Records Book 1948, Page 639 of the Public Records of Orange County,
     Florida, and Notice of Lien recorded October 26, 1993 in Official Records
     Book 4640, Page 4288 of the Public Records of Orange County, Florida.

2.   Notice of Restrictions on Real Estate recorded June 30, 1972 in Official
     Records Book 2244, Page 736 of the Public Records of Orange County,
     Florida, as partially terminated by Termination of Restrictions recorded
     August 14, 1985 in Official Records Book 3676, Page 1019 of the Public
     Records of Orange County, Florida.

3.   Declaration of Covenants, Conditions and Restrictions for "Westwood Lakes
     Subdivision" recorded May 28, 1986 in Official Records Book 3790, Page
     2732, as amended by Amendment to Declaration of Covenants, Conditions and
     Restrictions for "Westwood Lakes Subdivision" recorded in Official Records
     Book 3827, Page 1018, and Second Amendment recorded in Official Records
     Book 4115, Page 4648, all of the Public Records of Orange County, Florida.

4.   Grant of Easement recorded September 10, 1986 in Official Records Book
     3819, Page 0439 of the Public Records of Orange County, Florida.

5.   The following matters set forth on the Plat of Orangewood Neighborhood-2
     recorded in Plat Book 17, Page 81 of the Public Records of Orange County,
     Florida:

     (a)  10.00 foot Utility and Lake Maintenance Easement reserved along side
          parcel lines;

     (b)  10.00 foot Utility Easement reserved along rear parcel lines;

6.   Distribution Easement in favor of Florida Power Corporation recorded June
     26, 1987 in Official Records Book 3898, Page 3699 of the Public Records of
     Orange County, Florida.

7.   Declaration of Restrictions and Protective Covenants for Tango Bay recorded
     April 9, 1996 in Official Records Book 5038, Page 3760 of the Public
     Records of Orange County, Florida

8.   Perpetual Non-Exclusive Easement recorded April 9, 1996 in Official Records
     Book 5038, Page 3819 of the Public Records of Orange County, Florida

9.   Non-Exclusive Easement recorded April 9, 1996 in Official Records Book
     5038, Page 3833 of the Public Records of Orange County, Florida

                                      -39-
<PAGE>

10.  Notice of Easement to Time Warner Entertainment-Advance/Newhouse
     Partnership, through its Florida Division d/b/a Time Warner Cable recorded
     June 10, 1999 in Official Records Book 5770, Page 2062 of the Public
     Records of Orange County, Florida.

                                      -40-
<PAGE>

                                  EXHIBIT "E"
                                  -----------

                               LIST OF CONTRACTS
                               -----------------

Assumed Contracts
-----------------

1.   Lease dated March 29, 1996 by and between Seller and Preferred Equities
     Corporation, as amended by Amendment to Lease dated September 10, 1997.

2.   Cable Television Installation and Service Agreement for Hotel dated
     _____________, 1998 with Time Warner Entertainment-Advance/Newhouse
     Partnership, Central Florida Division.

3.   Laundry Space Lease dated March 1, 1993 with Amerivend Corporation.

4.   Lease Agreement dated June 22, 2000 with Pitney Bowes Credit Corporation.

5.   Property Management System Equipment Sales, Software License and Services
     Agreement dated July 10, 1997 with Multi-Systems Inc.

6.   Customer Service Agreement dated November 7, 2000 with US LEC of Florida,
     Inc.

7.   Contract dated June 6, 1992 with John P. MacManus/Safeguard Services
     Southeast, Inc.

8.   Dispenser Bailment Agreement dated February 16, 1999 with SYSCO Food
     Services of Central Florida.

9.   Maintenance Service Agreement dated January 1, 2001 with Pavarini Business
     Communications, a division of Property Technologies, Ltd.

10.  Music Service Agreement dated November 11, 1997 with Muzak LLC.

11.  Air conditioning/HVAC service agreement dated May 5, 2001 with Ferran
     Services & Contracting, Inc.

12.  Landscaping Contract with Central Landscape Management, Inc.

13.  Residential Installation and Monitoring Agreement dated September 22, 1999
     with Security Link/Ameritech.

14.  Advertising Contract with Cendant.

15.  Wholesale Travel Agreements with Red Seal Tours, Americanada, T Pro
     Florida, New World Travel, North American Leisure Group (d/b/a Airtours
     Vacations, Inc. and The

                                       41
<PAGE>

     Holiday Network), First Choice, Thomson Holidays Limited, PGA Merchandise
     Show 2002, Cellular Telecommunications Industry Association and World of
     Vacations.

16.  Wood Destroying Organism Treatment Agreement dated June 11, 1999 with Truly
     Nolen.

17.  The Ramada Franchise Agreement.

Terminated Contracts
--------------------

18.  Service/Lease Agreement with PageNet.

19.  Promotional Subscriber Agreement dated January 27, 2000 with Nextel.

20.  Display Advertising Contract dated October 14, 1999 with Job Finder.

21.  Equipment Agreement dated June 30, 1997 with Copytronics.

22.  Travelers Discount Guide Advertising Agreement dated June 6, 2001.

23.  Master License Agreement dated as of November 25, 1997, with Pizza Hut,
     Inc., as amended by letter dated December 2, 1997.

30-Day Cancellation Contracts
-----------------------------

24.  Service Contract No. 52000067 dated April 3, 2000 with Dunbar Armored, Inc.

25.  Pest Prevention Service Agreement dated May 18, 2001 with The Steritech
     Group, Inc.

26.  Equipment Rental and Service Agreement with Crystal Springs.

27.  Pool Maintenance Contract dated March 30, 1998 with Poolworks.

                                       42
<PAGE>

                            ASSIGNMENT OF CONTRACTS
                           AND ASSUMPTION AGREEMENT

     THIS ASSIGNMENT OF CONTRACTS AND ASSUMPTION  AGREEMENT ("Assignment") is
made and entered into as of the 15/th/ day of August, 2001, by and between THE
VILLAS AT MONTEREY LIMITED PARTNERSHIP, a Florida limited partnership and TANGO
BAY OF ORLANDO, LC, a Florida limited liability company (collectively, the
"Assignor") and MEGO FINANCIAL CORP., a New York corporation ("Assignee").

                              W I T N E S S E T H:

     WHEREAS, Assignee is this day purchasing from Assignor and Assignor is
conveying to Assignee or its designees the real property described on Exhibit
                                                                      -------
"A" attached hereto and by this reference made a part hereof, together with all
---
improvements and appurtenances thereto (the "Property"); and

     WHEREAS, as a part of such sale and purchase, Assignor has agreed to assign
to Assignee, and Assignee has agreed to accept and assume those certain
contracts listed on Exhibit "B", attached hereto and by this reference made a
                    -----------
part hereof (the "Contracts"); and

     WHEREAS, Assignor desires to assign to Assignee all of its right, title and
interest in and to the Service Contracts, and Assignee desires to accept such
assignment and to assume all of Assignor's obligations to Assignee under the
Contracts.

     NOW, THEREFORE, in consideration of the sum of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

     1. Assignor hereby assigns, transfers, conveys and delegates to Assignee,
     and Assignee hereby accepts from Assignor, all of Assignor's right, title,
     interest, duties and obligations in, to and under the Contracts and all
     claims, rights, benefits and privileges, if any, that Assignor may have or
     to which Assignor may be entitled under or by virtue of the Contracts. It
     is the intention of the parties hereto that Assignee shall have and be
     vested with all of the same rights, benefits, risks and obligations
     conferred upon and undertaken by Assignor in the Contracts as though, and
     to the same extent as if, Assignee had been named as the original party in
     the Contracts rather than the Assignor.

     2. Assignee hereby assumes and agrees to perform and observe all
     agreements, covenants and obligations to be performed and observed by
     Assignor only under those Contracts designated as "Assumed Contracts" on
     Exhibit "B". Assignee hereby agrees to indemnify and hold Assignor harmless
     from any and all obligations, liabilities, claims and causes of action,
     arising under the Assumed Contracts and the transactions contemplated
     therein arising from and after the date hereof. Assignee has not assumed
     and does not assume any of those Contracts designated on Exhibit "B" as "30
     Day Termination Contracts", all of which have been terminated by Assignor
     as of the date

                                       43
<PAGE>

     hereof, but which termination will not become effective until thirty (30)
     days hereafter. Assignee hereby agrees to indemnify and hold Assignor
     harmless from and against any regularly scheduled payments due under the 30
     Day Termination Contracts which are payable within the 30 day period from
     and after the date hereof.

     3. Assignor hereby agrees to indemnify and hold Assignee harmless from any
     and all obligations, liabilities, claims and causes of action, arising
     under the Assumed Contracts and the transactions contemplated therein prior
     to the date hereof. Assignor hereby agrees to indemnify and hold Assignee
     harmless from any and all obligations, liabilities, claims and causes of
     action arising under to 30 Day Termination Contracts and the transactions
     contemplated therein, whether accruing or occurring prior to or after the
     date hereof, other than regularly scheduled payments thereunder which
     become payable within 30 days from and after the date hereof.

     IN WITNESS WHEREOF, the parties hereto have executed this Assignment and
Assumption of Contracts as of the date first above written.

Signed, sealed and delivered            ASSIGNOR:
in the presence of:                     THE VILLAS AT MONTEREY LIMITED
                                        PARTNERSHIP, a Florida limited
                                        partnership
                                        By:  M & J WILKOW OF FLORIDA, INC., a
                                        Florida corporation, its General Partner

     /s/ Danyelle M. Guna               By: /s/ Marc R. WIlkow
--------------------------------------      ----------------------
Print Name: Danyelle M. Guna                R. WILKOW
            ----------------
                                            President
/s/  Jennifer L . Harshbarger
--------------------------------------
Print Name: Jennifer L. Harshbarter     {Corporate Seal
            -----------------------

                                        AND

                                        TANGO BAY OF ORLANDO, L.C., a Florida
                                        limited liability company
                                        By:   ARLINGTON ANNEX CORPORATION, an
                                        Illinois corporation, its Manager

/s/ Danyelle M. Guna                    By: /s/ Marc R. Wilkow
--------------------------------------     ----------------------
Print Name:  Danyelle M. Guna              MARC R. WILKOW
           ---------------------------     President

/s/ Jennifer L. Harshbarger
--------------------------------------
Print Name: Jennifer L. Harshbarter     Corporate Seal
           ---------------------------

                                       44
<PAGE>

                                        ASSIGNEE:
                                        MEGO FINANCIAL CORP., a New York
                                        corporation

____________________________________    By:________________________________
Print Name:_________________________    Print Name:________________________
                                        Title:_____________________________
____________________________________
Print Name:_________________________                     {Corporate Seal}

                                       45
<PAGE>

                                  EXHIBIT "A"

                               Legal Description
                               -----------------

That part of Parcel 13, ORANGEWOOD NEIGHBORHOOD 2, according to the plat
thereof, as recorded in Plat Book 17, Pages 81 through 87, of the Public Records
of Orange County, Florida, described as follows:

Commence at the Southwest corner of said Parcel 13; thence run N 00
(degrees)29'59" E along the West line of said Parcel 13 for a distance of 328.96
feet; thence run the following four (4) courses along the Northerly line of said
Parcel 13: N 88 (degrees)44'43" E for a distance of 201.50 feet; thence run N
72(degrees)42'17" E for a distance of 236.31 feet to the POINT OF BEGINNING;
thence continue N 72(degrees)42'17" E for a distance of 566.56 feet; thence run
N 18(degrees)7'47" E for a distance of 738.22 feet to the Westerly right-of-way
line of Villa De Costa Drive, as recorded in Official Records Book 5038, Page
3857, of said Public Records; thence run the following seventeen (17) courses
along said Westerly right-of-way line: S 40(degrees)05'26" E for a distance of
96.77 feet; thence run S 49(degrees)54'33" W for a distance of 52.10 feet to the
point of curvature of a curve concave Easterly having a radius of 69.50 feet;
thence run Southerly along the arc of said curve through a central angle of
126(degrees)27'29" for a distance of 153.39 feet to a non-tangent line; thence
run N 78(degrees)04'19" E for a distance of 17.79 feet; thence run S
11(degrees)55'41" E for a distance of 234.64 feet to the point of curvature of a
curve concave Westerly having a radius of 151.33 feet; thence run Southerly
along the arc of said curve through a central angle of 51(degrees)03'18" for a
distance of 134.85 feet to a point of compound curvature of a curve concave
Northwesterly having a radius of 88.30 feet; thence run Southwesterly along the
arc of said curve through a central angle of 45(degrees)53'36" for a distance of
70.73 feet to the point of tangency; thence run S 85(degrees)01'14" W for a
distance of 60.22 feet to the point of curvature of a curve concave
Southeasterly having a radius of 237.64 feet; thence run Southwesterly along the
arc of said curve through a central angle of 38(degrees)35'29" for a distance of
160.06 feet to a point of compound curvature of a curve concave Southeasterly
having a radius of 203.93 feet; thence run Southwesterly along the arc of said
curve through a central angle of 33(degrees)07'15" for a distance of 117.89 feet
to the point of tangency; thence run S 13(degrees)18'30" W for a distance of
124.90 feet to the point of curvature of a curve concave Northwesterly having a
radius of 170.57 feet; thence run Southwesterly along the arc of said curve
through a central angle of 25(degrees)28'05" for a distance of 75.82 feet to a
point of compound curvature of a curve concave Northwesterly having a radius of
83.01 feet; thence run Southwesterly along the arc of said curve through a
central angle of 32(degrees)50'30" for a distance of 47.58 feet to the point of
tangency; thence run S 71(degrees)37'05" W for a distance of 26.80 feet to the
point of curvature of a curve concave Northwesterly having a radius of 386.54
feet; thence run Southwesterly along the arc of said curve through a central
angle of 11(degrees)27'46" for a distance of 77.33 feet to the point of
tangency; thence run S 83(degrees)04'51" W for a distance of 131.29 feet to the
point of curvature of a curve concave Northerly having a radius of 20.00 feet;
thence run Westerly along the arc of said curve through a central angle of
58(degrees)43'19" for a distance of 20.50 feet to a point of reverse curvature
of a curve concave Southwesterly having a radius of 270.01 feet; thence run
Northwesterly along the arc of said curve through a central angle of
19(degrees)10'48" for a distance of 90.39 feet to the point of tangency; thence
run N 57(degrees)22'39" W for a distance of 88.16 feet to the point of curvature
of a curve concave Southwesterly having a radius of 112.98 feet; thence run
Northwesterly along the arc of said curve through a central angle of
21(degrees)39'29" for a distance of 42.71 feet to a radial line; thence run N
10(degrees)57'52" E along said radial line for a

                                       46
<PAGE>

distance of 14.40 feet; thence run N 17(degrees)17'43" W for a distance of 26.78
feet to the POINT OF BEGINNING.

AND:
That part of Parcel 13, ORANGEWOOD NEIGHBORHOOD 2, according to the plat
thereof, as recorded in Plat Book 17, Pages 81 through 87, of the Public Records
of Orange County, Florida, described as follows:

Begin at the Northeast corner of said Parcel 13; thence run S 55(degrees)49'17"
W along the Easterly line a said Parcel 13 for a distance of 52.86 feet; thence
run S 19(degrees)30'50" W along said Easterly line for a distance of 96.73 feet;
thence run S 05(degrees)12'49" E along said Easterly line for a distance of
184.17 feet; thence run S 20(degrees)45'59" W along said Easterly line for a
distance of 129.97 feet; thence run N 79(degrees)01'17" W for a distance of
35.40 feet to the Easterly right-of-way line of Villa De Costa Drive as recorded
in Official Records Book 5038, Page 3857, of said Public Records and a point on
a non-tangent curve concave Westerly having a radius of 175.33 feet and a chord
bearing of N 00(degrees)28'29" W; thence run Northerly along the arc of said
curve through a central angle of 22(degrees)54'23" for a distance of 70.10 feet
to the point of tangency; thence run N 11(degrees)55'41" W for a distance of
237.21 feet to the point of curvature of a curve concave Easterly having a
radius of 15.00 feet; thence run Northeasterly along the arc of said curve
through a central angle of 65(degrees)51'08" for a distance of 17.24 feet to a
point of reverse curvature of a curve concave Northwesterly having a radius of
51.00 feet; thence run Northerly along the arc of said curve through a central
angle of 47(degrees)24'58" for a distance of 42.21 feet a point of reverse
curvature of a curve concave Southeasterly having a radius of 35.00 feet; thence
run Northeasterly along the arc of said curve through a central angle of
48(degrees)07'13" for a distance of 29.40 feet to a point of compound curvature
of a curve concave Southerly having a radius of 44.07 feet; thence run
Northeasterly along the arc of said curve through a central angle of
36(degrees)24'18" for a distance of 28.00 feet to a point of reverse curvature
of a curve concave Northerly having a radius of 150.00 feet; thence run Easterly
along the arc of said curve through a central angle of 23(degrees)59'30" for a
distance of 62.81 feet to a point of compound curvature of a curve concave
Northwesterly having a radius of 160.60 feet; thence run Northeasterly along the
arc of said curve through a central angle of 09(degrees)44'16" for a distance of
27.29 feet to the point of tangency; thence run N 57(degrees)18'15" E for a
distance of 15.43 feet to the point of curvature of a curve concave Southerly
having a radius of 35.00 feet; thence run Easterly along the arc of said curve
through a central angle of 35(degrees)16'13" for a distance of 21.55 feet to a
point on a non-tangent curve concave Southwesterly having a radius of 1387.40
feet and a chord bearing of S 39(degrees)24'28" E; thence run Southeasterly
along the arc of said curve through a central angle of 00(degrees)14'16" for a
distance of 5.76 feet to the POINT OF BEGINNING.

                                       47
<PAGE>

                                  EXHIBIT "B"
                                  -----------

                               List of Contracts
                               -----------------

Assumed Contracts
-----------------

1.  Lease dated March 29, 1996 by and between Seller and Preferred Equities
    Corporation, as amended by Amendment to Lease dated September 10, 1997.

2.  Cable Television Installation and Service Agreement for Hotel with Time
    Warner Entertainment-Advance/Newhouse Partnership, Central Florida Division.

3.  Laundry Space Lease dated March 1, 1993 with Amerivend Corporation.

4.  Lease Agreement dated June 22, 2000 with Pitney Bowes Credit Corporation.

5.  Property Management System Equipment Sales, Software License and Services
    Agreement dated July 10, 1997 with Multi-Systems Inc.

6.  Customer Service Agreement dated November 7, 2000 with US LEC of Florida,
    Inc.

7.  Contract dated June 6, 1992 with John P. MacManus/Safeguard Services
    Southeast, Inc.

8.  Dispenser Bailment Agreement dated February 16, 1999 with SYSCO Food
    Services of Central Florida.

9.  Maintenance Service Agreement dated January 1, 2001 with Pavarini Business
    Communications, a division of Property Technologies, Ltd.

10. Music Service Agreement dated November 11, 1997 with Muzak LLC.

11. Air conditioning/HVAC service agreement dated May 5, 2001 with Ferran
    Services & Contracting, Inc.

12. Landscaping Contract with Central Landscape Management, Inc.

13. Residential Installation and Monitoring Agreement dated September 22, 1999
    with Security Link/Ameritech.

14. Advertising Contract with Cendant.

15. Wholesale Travel Agreements with Red Seal Tours, Americanada, T Pro Florida,
    New World Travel, North American Leisure Group (d/b/a Airtours Vacations,
    Inc. and The Holiday Network), First Choice, Thomson Holidays Limited, PGA
    Merchandise Show 2002, Cellular Telecommunications Industry Association and
    World of Vacations.

                                       48
<PAGE>

16. Wood Destroying Organism Treatment Agreement dated June 11, 1999 with Truly
    Nolen.

17. The Ramada Franchise Agreement.

30-Day Cancellation Contracts
-----------------------------

18. Service Contract No. 52000067 dated April 3, 2000 with Dunbar Armored, Inc.

19. Pest Prevention Service Agreement dated May 18, 2001 with The Steritech
    Group, Inc.

20. Equipment Rental and Service Agreement with Crystal Springs.

21. Pool Maintenance Contract dated March 30, 1998 with Poolworks.

                                       49

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