Document:

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                                                                        Ex. 10.1

                      INVENTORY LOAN AND SECURITY AGREEMENT

                                     BETWEEN

                            SILVERLEAF RESORTS, INC.

                                       AND

                            CAPITALSOURCE FINANCE LLC

                           DATED AS OF APRIL 29, 2005

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                               TABLE OF CONTENTS

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1.  INTERPRETATION OF THIS AGREEMENT........................................   1

    1.1      Terms Defined..................................................   1
    1.2      Directly or Indirectly.........................................  12
    1.3      Headings.......................................................  12
    1.4      Accounting Principles..........................................  13

2.  ADVANCES AND NOTE.......................................................  13

    2.1      Terms of the Advances..........................................  13
    2.2      The Loan; Rate of Interest; Receipt of Payments................  14
    2.3      Mandatory Prepayments of Loan; Voluntary Prepayments of Loan...  17
    2.4      Participating Lender...........................................  20
    2.5      Fees...........................................................  20
    2.6      Computation of Fees; Lawful Limits.............................  21
    2.7      Late Fee.......................................................  21
    2.8      Taxes and Other Charges........................................  21

3.  COLLATERAL..............................................................  22

    3.1      Security.......................................................  22
    3.2      Undertakings Regarding Collateral..............................  23
    3.3      Financing Statements...........................................  24
    3.4      Location of Collateral; Books and Records......................  24
    3.5      Insurance of Collateral........................................  25
    3.6      Condemnation...................................................  28
    3.7      Taxes Affecting Collateral.....................................  29
    3.8      Discharge of Liens Affecting Collateral........................  32
    3.9      Use of the Resorts; Voting Rights of Borrower..................  34
    3.10     Other Timeshare Covenants......................................  35
    3.11     Protection of Collateral; Assessments; Reimbursement...........  37
    3.12     Interest on Lender Paid Expenses...............................  37
    3.13     Lender Responsibility..........................................  37
    3.14     Verification of Contracts......................................  37
    3.15     Release of Lien on Timeshare Interests.........................  37
    3.16     Cross-Collateralization and Default............................  39
    3.17     Substitution of Collateral and Mortgages.......................  39

4.  REPRESENTATIONS AND WARRANTIES AND COVENANTS............................  40

    4.1      Subsidiaries and Capital Structure.............................  40
    4.2      Corporate Borrower.............................................  40
    4.3      Financial Statements...........................................  40
    4.4      Full Disclosure................................................  40
    4.5      Pending Litigation.............................................  40
    4.6      Title to Properties............................................  41
    4.7      Trademarks, Licenses and Permits...............................  41
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    4.8      Transaction Is Legal and Authorized...............................  41
    4.9      No Defaults.......................................................  41
    4.10     Governmental Consent..............................................  41
    4.11     Taxes.............................................................  41
    4.12     Use of Proceeds...................................................  42
    4.13     Compliance with Law...............................................  42
    4.14     Restrictions of Borrower..........................................  43
    4.15     Brokers' Fees.....................................................  43
    4.16     Deferred Compensation Plans.......................................  43
    4.17     Labor Relations...................................................  43
    4.18     Validity of Liens Granted to Lender...............................  43
    4.19     Solvency..........................................................  43
    4.20     Timeshare Interest Regime Reports.................................  44
    4.21     Sale of Timeshare Interests.......................................  44
    4.22     Indebtedness......................................................  44
    4.23     Affiliate Transactions............................................  45
    4.24     Applicable Laws...................................................  45
    4.25     Leases............................................................  45

5.  CONDITIONS PRECEDENT TO INITIAL ADVANCE....................................  45

    5.1      Opinions of Counsel...............................................  45
    5.2      Warranties and Representations True as of Initial Advance Date....  45
    5.3      Compliance with this Agreement....................................  45
    5.4      Borrower's Secretary's Certificates; Good-Standing Certificates...  45
    5.5      Uniform Commercial Code Financing Statements......................  46
    5.6      Hazardous Substance Indemnity Agreement...........................  46
    5.7      Expenses..........................................................  46
    5.8      Mortgage..........................................................  46
    5.9      Title Insurance; Casualty Insurance...............................  46
    5.10     Environmental Site Assessment Report..............................  47
    5.11     Taxes.............................................................  47
    5.12     Inspection........................................................  47
    5.13     Delivery of:......................................................  47
    5.14     Proceedings Satisfactory..........................................  47
    5.15     Minimum Amount....................................................  48

6.  SUBSEQUENT ADVANCES CLOSING CONDITIONS.....................................  48

    6.1      Special Submissions...............................................  48
    6.2      Requests for Subsequent Advance...................................  50
    6.3      Defaults; Expenses; Miscellaneous.................................  51
    6.4      Disbursements.....................................................  51
    6.5      Proceedings Satisfactory..........................................  51

7.  COVENANTS..................................................................  52

    7.1      Payment of Taxes and Claims.......................................  52
    7.2      Maintenance of Properties; Borrower Existence; Indebtedness;
             Liens; Business...................................................  52
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    7.3      Payment of Notes and Maintenance of Office..............  54
    7.4      Sale of Properties......................................  54
    7.5      Consolidation and Merger................................  54
    7.6      Intentionally Deleted...................................  54
    7.7      Intentionally Omitted...................................  54
    7.8      Compliance with Environmental Laws......................  54
    7.9      Transactions with Affiliates; Principal Properties......  56
    7.10     Use of Lender Name......................................  56
    7.11     Intentionally Deleted...................................  56
    7.12     Notice of Legal Proceedings.............................  56
    7.13     Further Assurances......................................  56
    7.14     Financial Statements....................................  57
    7.15     Officer's Certificate...................................  59
    7.16     Inspection..............................................  60
    7.17     Sales...................................................  60
    7.18     Minimum Tangible Net Worth..............................  60
    7.19     Leverage Ratio..........................................  60
    7.20     Minimum Net Income......................................  60
    7.21     Consolidated Net Income.................................  60
    7.22     Maximum Delinquency.....................................  60
    7.23     Marketing and Sales Expenses............................  60
    7.24     Debt Service Coverage Ratio.............................  61
    7.25     Textron Facility, Sovereign Facility, and DZ Facility...  61
    7.26     Maintaining Affiliation with Exchange Companies.........  61
    7.27     Sales...................................................  61

8.  EVENTS OF DEFAULT................................................  61

    8.1      Default.................................................  61
    8.2      Default Remedies........................................  63

9.  REVIVAL OF OBLIGATIONS AND LIENS.................................  66

10. MISCELLANEOUS....................................................  66

    10.1     Governing Law...........................................  66
    10.2     Expenses and Closing Fees...............................  66
    10.3     Parties, Successors and Assign..........................  67
    10.4     Notices.................................................  67
    10.5     Total Agreement.........................................  68
    10.6     Survival................................................  68
    10.7     Litigation..............................................  68
    10.8     Power of Attorney; Substitution.........................  69
    10.9     Survival of Indemnities.................................  70
    10.10    Conflicting Obligations; Rights and Remedies............  70
    10.11    Duplicate Originals, Execution in Counterpart...........  70
    10.12    No Joint Venture........................................  70
    10.13    Indemnity...............................................  70
    10.14    Release.................................................  71
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      10.15    Custodian...................................................  71
      10.16    Certain Waivers.............................................  71
      10.17    Confidentiality and Publicity...............................  71
</TABLE>

Schedule 1  -- Indebtedness
Schedule 2  -- Permitted Exceptions
Schedule 3  -- Intentionally Omitted
Schedule 4  -- Retail Value
Schedule 5  -- Resorts
Schedule 6  -- Affiliate Transactions
Schedule 7  -- Use Agreements and Management Agreements
Schedule 8  -- Subsidiaries
Schedule 9  -- Resort Facilities
Schedule 10 -- Litigation
Schedule 11 -- Compensation Payable to Brokers
Schedule 12 -- Payment Instructions
Schedule 13 -- Address of Borrower for Notices
Schedule 14 -- Address of Lender for Notices
Schedule 15 -- Deferred Corporate Plans and Collective Bargaining Agreements
Schedule 16 -- Description of Blue and Vintage Timeshare Interests
Exhibit A   -- Intentionally Omitted
Exhibit B   -- Form of Request for Release
Exhibit C   -- Intentionally Omitted
Exhibit D   -- Intentionally Omitted
Exhibit E   -- Form of Initial Advance Request
Exhibit F   -- Form of Subsequent Advance Request
Exhibit G   -- Form of Borrowing Base Certificate
Exhibit H   -- Form of Promissory Note

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<PAGE>

                      INVENTORY LOAN AND SECURITY AGREEMENT

      THIS INVENTORY LOAN AND SECURITY AGREEMENT (as amended from time to time,
this "AGREEMENT"), made and executed as of the 29th day of April, 2005, by and
between CAPITALSOURCE FINANCE LLC, a Delaware limited liability company, as
secured party (herein referred to as the "LENDER") and SILVERLEAF RESORTS, INC.,
a Texas corporation, as debtor (herein referred to as the "BORROWER").

1.    INTERPRETATION OF THIS AGREEMENT

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

          ADVANCE -- as defined in Section 2.1 of this Agreement.

          AFFILIATE -- means any Person:

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

            (b) which beneficially owns or holds 5% or more of any class of the
      Voting Equity of such Person; or

            (c) 5% or more of the Voting Equity of which is beneficially owned
      or held by such Person.

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

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

      AMORTIZATION TRIGGERING EVENT -- means the occurrence of any of the
following:

            (a) commencing June 30, 2005 and tested at the end of each calendar
      quarter thereafter, if Borrower's Consolidated Net Income less any
      extraordinary gains falls below $5,000,000 for the immediately preceding
      twelve (12) calendar month period, or

            (b) if after thirty (30) days following the end of each calendar
      month after the Closing Date, greater than twenty percent (20.00%) of all
      Pledged Intervals constitute Blue-Season Timeshare Interests, or

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            (c) if after thirty (30) days following the end of each calendar
      month following the Closing Date, greater than thirty percent (30.00%) of
      all Pledged Intervals constitute Vintage-type Timeshare Interests, or

            (d) if after thirty (30) days following the end of each calendar
      month following the Closing Date, greater than ten percent (10.00%) of all
      Pledged Intervals are located at the Resort known as Holly Lake Resort and
      the Resort known as Lake O' the Woods Resort, or

            (e) commencing December 31, 2005, and at the end of each calendar
      quarter thereafter, if Borrower shall have sold less than thirty percent
      (30%) of the total amount of Pledged Intervals securing the Loan pledged
      as Collateral to Lender pursuant to the terms of this Agreement and the
      Loan Documents for the immediate twelve (12) calendar months prior to the
      applicable test date, or

            (f) a Change in Management shall have occurred, or

            (g) the occurrence and continuance of any Default or Event of
      Default.

            APPLICABLE LAW -- means any and all federal, state, and local
statutes, ordinances, rules, regulations, court orders and decrees,
administrative orders and decrees, and other legal requirements of any and every
conceivable type applicable to the Loan, this Agreement, the Loan Documents and
other Security Documents, Borrower, any Resort or any portion thereof including,
without limitation, those regarding access and facilities for handicapped or
disabled persons and any required by any Applicable State or any of their
administrative agencies.

            APPLICABLE STATES -- means (i) Texas, (ii) Missouri, (iii) Georgia,
(iv) Illinois, (v) Florida and (v) any other state in which Borrower is or
becomes qualified to sell Timeshare Interests located at a Resort, provided,
that acceptable proof of such qualification (including all applicable licenses
and permits) or an exemption therefrom has been delivered to Lender.

            BANKRUPTCY CODE -- means the Bankruptcy Reform Act of 1978, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be amended from time to time.

            BI-ANNUAL TIMESHARE INTEREST -- has the meaning given to such term
in the definition of Timeshare Interest.

            BLUE-SEASON TIMESHARE INTERESTS -- means the off-season Timeshare
Interest at each Resort more particularly described in Schedule 16 attached
hereto.

            BOND HOLDER EXCHANGE TRANSACTION -- means those certain senior
subordinate note holder exchange transactions consummated pursuant to (a) that
certain Indenture dated as of May 2, 2002 between Silverleaf Resorts, Inc. and
Wells Fargo Bank Minnesota, NA., and all documents related thereto, and (b) that
certain Indenture dated as of July 7, 2004 between Silverleaf Resorts, Inc. and
Wells Fargo Bank, NA., and all documents related thereto, as amended,
supplemented and modified from time to time.

LOAN AND SECURITY AGREEMENT

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            BOOKS AND RECORDS -- means all books, records, computer tapes,
disks, software and micro-fiche records of Borrower solely related to the
Pledged Intervals and other Collateral.

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

            BORROWING BASE -- means, at any date, a maximum outstanding Loan
amount equal to the lesser of (i) $15,000,000 or (ii) fifteen percent (15%) of
the Retail Value of all Pledged Intervals located in any Resort.

            BORROWING BASE CERTIFICATE -- means a certificate duly executed by
an officer of Borrower appropriately completed and in substantially the form of
Exhibit G hereto.

            BROKER -- as defined in Section 10.14 of this Agreement.

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

            CAPITAL LEASE -- means, as to any Person, a lease of any interest in
any kind of property or asset by that Person as lessee that is, should be or
should have been recorded as a "capital lease" in accordance with GAAP.

            CHANGE IN MANAGEMENT -- means a change of more than fifty percent
(50%), in the aggregate, of the following members of the executive management
team of Borrower: Robert Mead, Sharon Brayfield, David O'Connor, Harry White,
Edward Lahart and Joe Conner (each an "EXECUTIVE MANAGEMENT MEMBER").

            CLOSING DATE -- means April 29, 2005.

            COLLATERAL -- as defined in Section 3.1 of this Agreement.

            COMMITMENT PERIOD -- means the period commencing on the Closing Date
and ending on the earliest to occur of:

                  (a) the date on which Lender's obligations hereunder to make
      Advances are terminated pursuant to this Agreement,

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

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

                  (d) the date on which any Amortization Triggering Event
      occurs, and

                  (e) April 29, 2008.

            COMMON ELEMENTS -- has the meaning set forth in each Declaration,
and includes all recreational and service facilities as well as the land
(excluding real property constituting all

LOAN AND SECURITY AGREEMENT

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or a part a Timeshare Unit), which are included within each Resort and owned by
Borrower, for the common use and enjoyment of a Purchaser of Timeshare
Interests.

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

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

            CONSOLIDATED NET INCOME -- means, with respect to any period, the
aggregate stated income statement amount of net income of Borrower and its
subsidiaries, after deduction of all expenses, taxes and other proper charges
paid during such period, excluding extraordinary profits, gains or losses,
determined on a consolidated basis in accordance with GAAP.

            CONSTRUCTION COSTS -- means any costs and expenses required to be
paid by Borrower under any construction contract or otherwise identified as
construction costs (including, without limitation, contractor fees, architect
fees, engineering fees, site work and landscaping, interest expenses and
professional fees) together with any insurance or bonding costs, related to any
construction, remodeling, improvement or renovation work in any way related to
any Pledged Interval.

            CONTRACT -- means any purchase contract between one or more
unaffiliated natural persons, as purchaser (the "PURCHASER"), and Borrower, as
seller, which agreement provides for the sale by Borrower to such Purchaser of
one or more Pledged Intervals.

            DEBT SERVICE COVERAGE RATIO -- means, at any time of determination,
the ratio of (a) EBITDA of Borrower and its subsidiaries on a consolidated
basis, less capital expenditures for the immediately preceding twelve (12)
calendar months to (b) the cash Interest Expenses (including all capitalized
interest related to the Bond Holder Exchange Transaction which has been expensed
but not yet paid by Borrower in full) of Borrower and its subsidiaries on a
consolidated basis for the immediately preceding twelve (12) calendar months.

            DECLARANT -- means the status of Borrower as the declarant under the
applicable Declaration and the Articles of Incorporation and By-Laws of the
related Owner's Association, as amended.

            DECLARATION -- means, collectively, all declarations, covenants,
conditions and restrictions, or other restrictive covenants encumbering all or
any portion of the real property where a Resort or building in which a Pledged
Interval is located, filed in the appropriate official records of the county
where such Resort or building is located, and delivered to Lender prior to any
Advance being made by Lender to be secured by such Pledged Interval.

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

            DEFAULT RATE -- means, at any time, the per annum rate of interest
equal to the Interest Rate, then in effect, plus 4% per annum; provided,
however, that the Default Rate shall in no event exceed the Maximum Rate.

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            DISBURSEMENT AGENT -- means Lender, an affiliate or employee of
Lender or any Person as Lender may in its sole discretion select to function as
the disbursement agent for the Loan, if any. Any third-party "Disbursement
Agent" shall be the exclusive agent of Lender and Borrower shall be required to
pay the fees and costs incurred by Lender for Disbursement Agent's
administration of the Loan proceeds.

            DZ FACILITY -- means that certain note purchase facility provided by
DZ Bank AG Deutsche Zentral-Genossenschaftsbank ("DZ"), as agent for Autobahn
Funding Company, LLC, to Borrower pursuant to that certain Amended and Restated
Receivables Loan and Security Agreement dated April 30, 2002, as amended, and
all documents and other instruments executed in connection therewith, as
amended, supplemented and modified from time to time.

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

            ESCROW AGENT -- as defined in Section 2.8(i) hereof.

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

            EXECUTIVE MANAGEMENT MEMBER -- as defined in the definition of
Change in Management.

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

            FURNISHINGS -- means the furnishings, furniture, equipment,
appliances and fixtures provided by the Silverleaf Club or Borrower at each
Resort for use within the Timeshare Units and the Common Elements.

            GAAP -- means generally accepted accounting principals in the United
States of America in effect from time to time as applied by nationally
recognized accounting firms.

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

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

            IMPROVEMENTS -- means all Timeshare Interests, Timeshare Units,
Common Elements and other buildings, structures, recreational facilities and
appurtenances now located on the Resort.

            INDEMNIFIED PERSONS -- as defined in Section 10.14(a) of this
Agreement.

            INDEMNITY AGREEMENT -- means that certain Hazardous Materials
Indemnity Agreement of even date herewith executed by Borrower for the benefit
of Lender.

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

            INTERCREDITOR AGREEMENT -- means, the intercreditor agreements
entered into between Borrower, Lender, and each of Textron Financial
Corporation, Sovereign Bank, and any other lenders or financial institutions
from time to time providing financing to Borrower and its Affiliates.

            INTEREST EXPENSE -- means total interest expense generated during
the period in question (including attributable to conditional sales contracts,
capital leases and other title retention agreements in accordance with GAAP) of
Borrower and its subsidiaries with respect to all outstanding Indebtedness
including accrued interest and interest paid in kind and capitalized interest
but excluding commissions, discounts and other fees owed with respect to letters
of credit and bankers' acceptance financing.

            INTEREST RATE -- means, with respect to any calendar month, a per
annum rate of interest equal to the sum of (i) 3.00%, plus (ii) the Prime Rate
then in effect.

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

            LEVERAGE RATIO -- means, as of any date of determination, the ratio
of (i) the sum of amounts outstanding under this Agreement plus any other Debt
of Borrower and its subsidiaries on a consolidated basis (other than off balance
sheet debt that is non-recourse to Borrower and approved by Lender in its
Permitted Discretion) to (ii) Borrower's and its subsidiaries' Tangible Net
Worth, on a consolidated basis.

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

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

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

            LOAN DOCUMENTS -- means, collectively, this Agreement, each Note,
all Security Documents and all other agreements, instruments and documents
executed in connection herewith.

            MATERIAL ADVERSE EFFECT -- means a material adverse effect on (a)
the condition, operations, assets, business or prospects of the applicable
Person or Persons, (b) Borrower's ability to pay the Obligations in accordance
with the terms thereof, (c) the value of the Collateral, or Lender's Liens on
the Collateral or the priority of any such Lien or (d) the practical realization
of the benefits of Lender's rights and remedies under this Agreement and the
Security Documents.

            MATURITY DATE -- means April 29, 2008.

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

            MONTHLY AVERAGE WEIGHTED LOAN BALANCE -- means, for any calendar
month, the quotient of

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

                  (b) the number of days in such month.

      For purposes of this definition, "DAILY LOAN BALANCE" shall mean, for any
      day, the amount of the Loan outstanding as of the close of business of
      Lender for such day after giving effect to all payments received made
      during such day.

            MORTGAGE -- means, collectively, (a) each of those certain deeds of
trust, mortgages, deeds to secure debt and other security agreements delivered
to Lender on the Closing Date, and (b) each and every mortgage, deed of trust,
deed to secure debt or other security agreement, each executed by Borrower in
favor of Lender, granting a security interest and Lien in and to all Pledged
Intervals from time to time, in form and substance satisfactory to Lender, as
all of the same may hereafter be amended, restated or modified from time to
time.

            NEGATIVE PLEDGE -- means those certain negative pledge agreements
executed by Borrower in favor of Lender related to Borrower's agreement not to
grant any Lien on any Resort Facilities, any rights of Borrower as Declarant, or
any contracts or management agreements between Borrower and Silverleaf Club, or
any other Property-Related Contracts.

            NET INCOME -- means the net income (or loss) determined in
conformity with GAAP.

LOAN AND SECURITY AGREEMENT

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            NET WORTH -- means, for any Person, such Person's assets minus
liabilities, as determined in accordance with GAAP.

            NOTE -- means, individually and collectively, one or more Promissory
Notes, substantially in the form attached hereto as Exhibit H, executed by
Borrower from time to time as requested by Lender evidencing the Loan and all
Advances under this Agreement, as the same may be amended, modified, divided,
split, supplemented and/or restated from time to time.

            OBLIGATIONS -- means all indebtedness, liabilities, obligations, and
responsibilities, both financial and otherwise, to which Borrower is subject
under any of the Loan Documents, including but not limited to all amounts due or
becoming due to Lender in respect of the Loan or any of the Loan Documents,
including principal, interest, prepayment premiums, contributions, taxes,
insurance premiums, loan charges, custodial fees, reasonable attorneys' and
paralegals' fees and expenses and other fees or expenses which are incurred by
Lender or advanced to or on behalf of Borrowers by Lender, pursuant to any of
the Loan Documents or in connection with Lender's enforcement of the prompt and
complete payment and performance by Borrowers of all indebtedness, liabilities
and obligations pursuant to this Agreement, any of the other Loan Documents, or
otherwise, including, without limitation, obligations of payment and interest
that accrue after the commencement of any proceeding under the Bankruptcy Code
by or against any such Person.

            ORLANDO BREEZE RESORT CLUB -- means a Texas non-profit corporation
established to manage the Resort known as Orlando Breeze Resort in Davenport,
Polk County, Florida.

            OWNER'S ASSOCIATION -- means, collectively, each non-profit
established homeowner's or similar owner's association established pursuant to a
Declaration related to a Resort where a Pledged Interval is located.

            PARTICIPATING LENDER -- means any Person which (a) is the holder of
one or more (but not all) of the Notes, or (b) shall have been granted the right
by Lender to participate in any Note and the Collateral and shall have entered
into a participation agreement in form and substance satisfactory to Lender.

            PERMITTED DISCRETION -- means a determination or judgment made in
good faith in the exercise of reasonable (from the perspective of a secured
lender) credit or business judgment.

            PERMITTED EXCEPTIONS -- means those title exceptions, liens and
encumbrances affecting all or any portion of the Collateral to which Lender
consents, as set forth on Schedule 2 of this Agreement.

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

            PLEDGED INTERVAL -- means, individually and collectively, all of
Borrower's fee simple ownership interest in and to all real property
constituting a completed Timeshare Interest located in a Resort, all to be sold
by Borrower to Purchasers and for which a Mortgage has been or will be filed in
favor of Lender.

LOAN AND SECURITY AGREEMENT

                                       8
<PAGE>

            PRIME RATE -- means the rate announced from time to time as the
"prime rate" by Citibank, N.A., New York, New York; provided, that should Lender
be unable to determine such rate, such other indication of the prevailing prime
rate of interest as Lender shall reasonably select.

            PROPERTY-RELATED CONTRACT -- means all franchises, permits, trade
names, trademarks (and goodwill associated therewith), approvals, leasehold
interests (whether as lessor or lessee or sublessor or sublessee), management
contracts, marketing contracts, maintenance contracts, utility contracts,
security contracts, other servicing contracts, licensing contracts or other
similar contracts, and all guaranties of any of the foregoing, whether existing
as of the Closing Date or arising after the date hereof, relating, in each case,
to each Resort (and the Timeshare Interests and/or the Timeshare Units related
thereto).

            PURCHASER -- as defined in the definition of "Contract" in this
Section 1.1.

            RECEIVABLES LOAN -- means that certain receivables loan in the
aggregate principal amount of $50,000,000 extended to Borrower and certain of
its Affiliates by Lender pursuant to the Receivables Loan Documentation.

            RECEIVABLES LOAN AGREEMENT -- means that certain Receivables Loan
and Security Agreement dated as of the date hereof, by and among Borrower,
certain of its Affiliates signatory thereto and Lender, as amended, modified or
supplemented from time to time.

            RECEIVABLES LOAN DOCUMENTATION -- means any and all certificates,
agreements and documents executed in favor of Lender in connection or pursuant
to the Receivables Loan Agreement.

            RECEIVABLES LOAN OBLIGATIONS -- means all indebtedness, liabilities,
obligations, and responsibilities, both financial and otherwise, to which
Borrower and certain of its Affiliates party to the Receivables Loan Agreement
is subject under any of the Receivables Loan Documentation, including but not
limited to all amounts due or becoming due to Lender in respect of the Loan or
any of the Receivables Loan Documentation, including principal, interest,
prepayment premiums, contributions, taxes, insurance premiums, loan charges,
custodial fees, reasonable attorneys' and paralegals' fees and expenses and
other fees or expenses which are incurred by Lender or advanced to or on behalf
of Borrower (or its Affiliates party thereto) by Lender, pursuant to any of the
Receivables Loan Documentation or in connection with Lender's enforcement of the
prompt and complete payment and performance by Borrower (or such Affiliates) and
any guarantor thereunder of all indebtedness, liabilities and obligations
pursuant to the Receivables Loan Agreement, any of the other Receivables Loan
Documentation, or otherwise, including, without limitation, obligations of
payment and interest that accrue after the commencement of any proceeding under
the Bankruptcy Code by or against any such Person.

            RELEASE FEE-as defined in Section 2.3(f) hereof.

            RELEASE PRICE -- means, with respect to any Pledged Interval
constituting a Timeshare Interest to be sold pursuant to a Contract, an amount
in cash equal to the greater of (a) twenty-five percent (25%) of the Retail
Value of the Timeshare Interest to be sold or (b) an amount sufficient to fully
repay to Lender the Loan and all other Obligations under this

LOAN AND SECURITY AGREEMENT

                                       9
<PAGE>

Agreement and the other Loan Documents, based upon Borrower's completion of
sales of seventy-five percent (75%) of all Pledged Intervals constituting
Collateral for the Loan.

            RELEASED PARTIES -- as defined in Section 10.15 of this Agreement.

            RELEASING PARTIES -- as defined in Section 10.15 of this Agreement.

            RESORTS -- means, collectively, each of the resorts listed in
Schedule 5 attached hereto, each located in an Applicable State, and each where
a Pledged Interval owned by Borrower is located, and is for sale by Borrower to
Purchasers, together with all improvements now or hereafter located thereon
including, as applicable, all roadways, easements, Common Elements, Furnishings,
Resort Facilities, equipment, fixtures, licenses and all other appurtenances
thereunto belonging.

            RESORT FACILITIES -- means those facilities and amenities at a
Resort that are available for use by Purchasers of Pledged Intervals in such
Resort and that are more particularly described in Schedule 9 attached hereto;
in certain cases such facilities and amenities are not located within the
boundaries of the timeshare regime at the applicable Resort as established
pursuant to the applicable Declaration, but in such cases are subject to a Use
Agreement.

            RESORT MAP -- means the site plan for each Resort recorded as part
of the applicable Declaration in the applicable public records.

            RETAIL VALUE -- means the retail sales price of each type of
Timeshare Interest (including Weekly Timeshare Interests and Bi-annual Timeshare
Interests) constituting a Pledged Interval, identified by Resort, location, type
of Timeshare Interest and season, as set forth on Schedule 4 attached hereto, as
the same may be hereafter amended and modified from time to time in a manner
acceptable to Lender in writing in its Permitted Discretion; provided, however,
that in the event that the sum of all actual sales prices for Pledged Intervals
sold by Borrower and released by Lender during any calendar quarter (as
disclosed to Lender in the inventory report delivered pursuant to Section
7.14(j) hereof) is less than ninety percent (90%) of the aggregate Retail Value
of such Pledged Intervals sold by Borrower and released by Lender during such
calendar quarter as set forth on Schedule 4, Lender reserves the right in its
Permitted Discretion to reduce the Retail Value for such Timeshare Interests set
forth on Schedule 4 in an amount equal to the difference between the actual
sales price for the Timeshare Interest(s) sold during such calendar quarter and
the then applicable Retail Value.

            SALES AND MARKETING PROGRAM -- means the existing policies, terms
and procedures followed by Borrower in conducting sales and marketing of
Timeshare Interests.

            SALES & MARKETING COSTS -- means all promotion, lead generation,
sales commissions and other marketing expenses and costs incurred by Borrower in
connection with selling and marketing of the Timeshare Interests (including all
Pledged Intervals) in each Resort.

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

LOAN AND SECURITY AGREEMENT

                                       10
<PAGE>

            SECURITY DOCUMENTS -- means this Agreement, the Note, each Mortgage,
each Negative Pledge, each Intercreditor Agreement, and all assignments,
instruments, certificates, notices, requests for advances and other documents
now or hereafter executed and delivered in connection with the transactions
contemplated herein.

            SILVERLEAF CLUB -- means the Texas non-profit corporation, which
manages all of the Resorts, other than Orlando Breeze Resort.

            SOVEREIGN FACILITY -- means, individually and collectively, each of
those certain credit facilities provided by Sovereign Bank to Borrower pursuant
to (a) that certain Second Amended and Restated Revolving Credit Agreement dated
as of July 30, 2004, and (b) that certain Inventory and Receivables Revolving
Credit Agreement dated as of July 30, 2004, including all other documents and
instruments executed in connection therewith, as all of the same have been and
may hereafter be amended, supplemented and modified from time to time.

            SUBSEQUENT ADVANCE -- as defined in Section 6 of this Agreement.

            SUBSEQUENT ADVANCE DATE -- as defined in Section 6 of this
Agreement.

            SUSPENSION OF SALES ORDER OR SANCTION -- the issuance of any stay
order, cease and desist order or similar judicial or nonjudicial sanction
prohibiting the sale or marketing of Timeshare Interests.

            TANGIBLE NET WORTH -- means, for any Person, such Person's tangible
assets minus liabilities, plus subordinated debt as approved by Lender, as
determined in accordance with GAAP.

            TAXES -- as defined in Section 2.8 of this Agreement.

            TEXTRON FACILITY -- means, individually and collectively, those
certain credit facilities provided by Textron Financial Corporation to Borrower
pursuant to (a) that certain Amended and Restated Loan, Security and Agency
Agreement (Tranche A) dated as of April 30, 2002, (b) that certain Amended and
Restated Loan, Security and Agency Agreement (Tranche B) dated as of April 30,
2002, (c) that certain Loan and Security Agreement (Tranche C) dated as of April
17, 2001, and (d) that certain Amended and Restated Loan and Security Agreement
dated as of March 5, 2004, and all documents and other instruments executed in
connection therewith, as all of the same have been and may hereafter be amended,
supplemented and modified from time to time.

            THIRD-PARTY OFFER -- as defined in Section 2.6 of this Agreement.

            TIMESHARE INTEREST -- means a fee simple ownership interest in a
Timeshare Unit located at a Resort to be sold by Borrower to Purchasers
comprised of either: (i) a Timeshare Interest which provides a Purchaser with a
seven (7) consecutive day right of occupancy in a Timeshare Unit located in a
Resort every year ("Weekly Timeshare Interest"); or (ii) any combination of a
Timeshare Interest which provides a Purchaser with a seven (7) consecutive day
right of occupancy in a Timeshare Unit located in a Resort every other year
("Bi-annual Timeshare Interest"), as set forth in the applicable Declaration,
with such interest being entitled

LOAN AND SECURITY AGREEMENT

                                       11
<PAGE>

to the right to the possession, use and occupancy of a Timeshare Unit located in
a Resort during the applicable time periods sold for such Weekly Timeshare
Interest or Bi-annual Timeshare Interest, as applicable, and the use of all
Resort Facilities.

            TIMESHARE MORTGAGE -- means, with respect to any Timeshare Note, a
mortgage in and to the Timeshare Interest whose purchase is being financed, in
whole or part, by such Timeshare Note.

            TIMESHARE NOTE -- means any promissory note made payable to the
order of Borrower (or its Affiliate) or other third party which provides for
payment of the deferred purchase price of one or more Timeshare Interests
purchased by the Purchaser thereof.

            TIMESHARE UNIT -- means a residential unit at a Resort.

            TITLE INSURANCE POLICY -- as defined in Section 5.11 hereof.

            UNIFORM COMMERCIAL CODE -- means the applicable Uniform Commercial
Code as adopted and in force from time to time.

            UNUSED LINE FEE -- means a fee payable to Lender in an amount
calculated as of the last day of each calendar month equal to one quarter of one
percent (0.250%) per annum of the difference between (a) $15,000,000 and (b) the
average outstanding principal balance of the Loan during such month.

            USE AGREEMENT -- means each of those certain Recreation and Use
Agreements whereby Purchasers have been granted the right to use and enjoy the
Resort Facilities as described on Schedule 7 attached hereto.

            VINTAGE-TYPE TIMESHARE INTERESTS -- means the Timeshare Interests
more particularly described in Schedule 16 attached hereto.

            VOTING EQUITY -- means Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions) of such corporation or, in the case of a
Person which is not a corporation, Securities or similar equity or partnership
interests which entitle the holder thereof to elect, select or control the
management or policies of such Person.

            WEEKLY TIMESHARE INTEREST -- has the meaning given such term in the
definition of Timeshare Interest.

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

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

LOAN AND SECURITY AGREEMENT

                                       12
<PAGE>

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

2.    ADVANCES AND NOTE

      2.1 TERMS OF THE ADVANCES. Lender agrees, pursuant to the terms of this
Agreement and subject to the satisfaction of the conditions precedent in Article
5 or Article 6 of this Agreement (as the case may be), to make one or more
advances (individually, an "ADVANCE" and collectively, the "ADVANCES") to
Borrower from time to time during the Commitment Period, subject at all times to
the Borrowing Base, provided that

            (a) no Advance shall be made

                  (i) following the occurrence of any Amortization Triggering
      Event, unless otherwise agreed to by Lender in its sole discretion;

                  (ii) unless the conditions precedent, as applicable for such
      Advance, set forth in Sections 5 and 6 hereof, have been satisfied or
      waived in writing; or

                  (iii) if a Default or Event of Default shall then exist;

                  (iv) unless Lender has approved in its Permitted Discretion
      the Collateral (including all Pledged Intervals) proposed to secure such
      Advance;

                  (v) unless, after making such Advance, the aggregate amount of
      all Blue-season Timeshare Interests which constitute Pledged Intervals
      securing the Loan is less than twenty percent (20%) of all Pledged
      Intervals;

                  (vi) unless, after making such Advance, the aggregate amount
      of all Vintage-type Timeshare Interests which constitute Pledged Intervals
      securing the Loan is less than thirty percent (30%) of all Pledged
      Intervals;

                  (vii) unless, after making such Advance, the aggregate amount
      of all Pledged Intervals securing the Loan located at the Resorts known as
      Lake O' the Woods and Holly Lake Resort, collectively, is less than ten
      percent (10%) of all Pledged Intervals;

                  (viii) if the Pledged Interval is located at a Resort where
      Borrower has received a Suspension of Sales Order or Sanction; and

                  (ix) following delivery by Lender of a notice of the
      occurrence of a Default or otherwise as set forth in Sections 8.1(a) or
      8.1(c) hereof, until such time as the applicable failure to comply or
      violation subject of such notice is satisfied or cured by Borrower;

LOAN AND SECURITY AGREEMENT

                                       13
<PAGE>

            (b) on the date of the making of any Advance the aggregate original
      principal amount of all such Advances made hereunder shall not exceed the
      Borrowing Base, determined as of such date;

            (c) Lender shall have received a written request for the Advance in
      the form attached hereto as Exhibit E or Exhibit F, as applicable,
      together with a completed and executed Borrowing Base Certificate in the
      form of Exhibit G;

            (d) unless otherwise agreed to by Lender in its sole discretion,
      each Advance shall be in a principal amount of not less than $250,000
      (provided, if less than $250,000 remains available under the Borrowing
      Base, the amount of the Advance may equal the balance of the amount under
      the Borrowing Base then remaining); and

            (e) no more than one (1) Advance shall be made in any calendar
      month.

      Other than as provided in Section 2.3, Section 3.5 and Section 3.6 hereof,
Borrower may not prepay the Loan.

      The Loan shall be payable in the manner set forth in Section 2.3 of this
Agreement. The Loan shall be due and payable on the Maturity Date, subject to
earlier prepayment as herein provided or as otherwise provided in any other Loan
Document, together with any accrued interest thereon then remaining unpaid and
any other unpaid amounts outstanding under the Note or under any of the other
Loan Documents. The initial Advance shall be disbursed on terms and conditions
set forth in Article 5 of this Agreement and otherwise satisfactory to Lender,
and each Subsequent Advance hereunder shall be disbursed by Lender in the manner
set forth in Article 6 of this Agreement.

      The Loan is a revolving credit facility, and Borrower shall be permitted,
subject to the terms of this Agreement, to reborrow amounts repaid and applied
to reduce the Loan.

      2.2 THE LOAN; RATE OF INTEREST; RECEIPT OF PAYMENTS.

            (a) THE LOAN. The aggregate outstanding amounts of all Advances, all
other amounts outstanding pursuant to this Agreement, and all other Obligations
pursuant to this Agreement shall be due and payable in full, if not earlier in
accordance with this Agreement, on the Maturity Date.

            (b) EVIDENCE OF LOANS. Lender shall maintain true, correct and
complete electronic or written records in which it will record (i) the amount of
each Advance made hereunder, (ii) the amount of any principal and/or interest
due and payable and/or to become due and payable from Borrower and payable to
Lender hereunder and (iii) all amounts received by Lender hereunder from
Borrower.

            (c) EVIDENCE OF INDEBTEDNESS. The entries made in the electronic or
written records maintained pursuant to subsection (b) of this Section 2.2 (the
"REGISTER") shall be prima facie evidence of the existence and amounts of the
obligations and indebtedness therein recorded; provided, however, that the
failure of the Lender to maintain such records or any error therein shall not in
any manner affect the obligations of Borrower to repay the correct amounts

LOAN AND SECURITY AGREEMENT

                                       14
<PAGE>

owed pursuant to the Loan, including all Advances made by Lender, and all other
Obligations in accordance with the terms of this Agreement and all other Loan
Documents.

            (d) MONTHLY STATEMENTS. Lender will account to Borrower monthly with
a written statement of Advances under the Loan, and any charges and payments
made pursuant to this Agreement, provided, however, that the failure of Lender
to provide such written statement shall not constitute a default or breach by
Agent of this Agreement or any other Loan Document and in the absence of
manifest error, such accounting rendered by Lender shall be deemed final,
binding and conclusive unless Lender is notified by Borrower in writing to the
contrary within fifteen (15) calendar days of receipt of each accounting, which
notice shall be deemed an objection only to items specifically objected to
therein.

            (e) NOTES. Borrower agrees that:

                  (i) upon written notice by Lender to Borrower that a
      promissory note or other evidence of indebtedness is requested by Lender
      to evidence the Loan and other Obligations owing or payable to, or to be
      made by, Lender, Borrower shall promptly (and in any event within ten (10)
      Business Days of any such request) execute and deliver to Lender an
      appropriate promissory note or notes in form and substance acceptable to
      Lender and Borrower and substantially in the form of Exhibit H attached
      hereto payable to the order of Lender in a principal amount equal to the
      amount of the Loan owing or payable to Lender;

                  (ii) all references to Notes in the Loan Documents shall mean
      Notes, if any, to the extent issued (and not returned to the Borrower for
      cancellation) hereunder, as the same may be amended, modified, divided,
      supplemented and/or restated from time to time; and

                  (iii) upon Lender's written request, and in any event within
      ten (10) Business Days of any such request, Borrower shall execute and
      deliver to Lender new Notes (on substantially the same terms and in
      substantially the same form) and/or divide the Notes in exchange for then
      existing Notes in such smaller amounts or denominations as Lender shall
      specify in its sole and absolute discretion; provided that the aggregate
      principal amount of such new Notes shall not exceed the aggregate
      principal amount of the Notes outstanding at the time such request is
      made; and provided, further, that such Notes that are to be replaced shall
      then be deemed no longer outstanding hereunder and replaced by such new
      Notes and returned to Borrower within a reasonable period of time after
      Lender's receipt of the replacement Notes.

            (f) RATE OF INTEREST.

                  (i) Interest shall accrue on the Loan, as more particularly
      provided for in this clause (b), and shall be due monthly in arrears on
      the first day of the month following the month in respect of which such
      interest accrued, provided that all accrued and unpaid interest on the
      Maturity Date shall be due on the Maturity Date, subject to earlier
      prepayment as provided herein or in any other Loan Document. Interest
      shall be applied as provided in Section 2.3(a)(ii) of this Agreement.
      Subject to the accrual of

LOAN AND SECURITY AGREEMENT

                                       15
<PAGE>
      interest on the Loan after the occurrence of a Default or Event of
      Default, as more particularly provided in this clause (b), the Monthly
      Average Weighted Loan Balance in respect of the Loan for each calendar
      month shall bear interest at a rate per annum equal to the Interest Rate.

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

                  (iii) Each Advance shall bear interest as of the date of
      Lender's wiring of funds thereof through the date of the receipt by Lender
      of the repayment of such Advance (if the repayment of all or any portion
      of any Advance is received by Lender later than 1:00 pm, Eastern time,
      then interest accrual thereon shall be through the next Business Day
      following such receipt). After the occurrence of any Default or Event of
      Default or after the Maturity Date (if the aggregate principal balance of
      the Advances and any other sums due under any Security Document or Loan
      Document is not paid in full on the Maturity Date), the Loan will bear
      interest at the Default Rate.

                  (iv) Whenever, subsequent to the date of this Agreement, the
      Prime Rate is increased or decreased, the Interest Rate shall be similarly
      changed without notice or demand of any kind by an amount equal to the
      amount of such change in the Prime Rate on and after the day of such
      change (subject to the Maximum Rate).

                  (v) Borrower and Lender intend to comply at all times with
      applicable usury laws. All agreements between Borrower and Lender, whether
      now existing or hereafter arising and whether written or oral, are hereby
      limited so that in no contingency, whether by reason of demand or
      acceleration of the maturity of the Note or otherwise, shall the interest
      contracted for, charged, received, paid or agreed to be paid to Lender
      exceed the maximum amount permissible under Applicable Law (the "MAXIMUM
      RATE"). Lender may, in determining the Maximum Rate in effect from time to
      time, take advantage of any law, rule or regulation in effect from time to
      time available to Lender which exempts Lender from any limit upon the rate
      of interest it may charge or grants to Lender the right to charge a higher
      rate of interest than that otherwise permitted by Applicable Law. If, from
      any circumstance whatsoever, interest would otherwise be payable to Lender
      in excess of the Maximum Rate, the interest payable to Lender shall be
      reduced to the Maximum Rate; and if from any circumstance Lender shall
      ever receive anything of value deemed interest by Applicable Law in excess
      of the Maximum Rate, an amount equal to any excessive interest shall be
      applied to the reduction of the principal of the Loan and not to the
      payment of interest, or if such excessive interest exceeds the unpaid
      balance of principal of the Loan, such excess shall be refunded to
      Borrower. All interest paid or agreed to be paid to Lender shall, to the
      extent permitted by Applicable Law, be amortized, prorated, allocated and
      spread throughout the full period until payment in full of the principal
      so that the interest on the Loan for such full period shall not exceed the
      Maximum Rate. Borrower agrees that in determining whether or not any
      interest payment under the Security Documents or other Loan Documents
      exceeds the Maximum Rate, any non-principal payment (except payments
      specifically described in the Security Documents as "interest") including
      without limitation, late charges, shall to the maximum extent not
      prohibited by law, be an expense, fee or premium rather than

LOAN AND SECURITY AGREEMENT

                                       16
<PAGE>

      interest. Lender hereby expressly disclaims any intent to contract for,
      charge or receive interest in an amount which exceeds the Maximum Rate.
      The provisions of this Agreement, the Note, all other Security Documents
      and Loan Documents are hereby modified to the extent necessary to conform
      with the limitations and provisions of this paragraph, and this paragraph
      shall govern over all other provisions in any document or agreement now or
      hereafter existing. This paragraph shall never be superseded or waived
      unless there is a written document executed by Lender and Borrower,
      expressly declaring the usury limitation set forth in this paragraph to be
      null and void, and no other method or language shall be effective to
      supersede or waive this paragraph.

            (g) INTEREST AND OTHER PAYMENTS DUE ON HOLIDAYS. If any payment due
on, or with respect to, this Agreement, any Note or any other Security Document
or Loan Document shall fall due on a day other than a Business Day, then such
payment shall be made on the 1st Business Day following the day on which such
payment shall have so fallen due; provided that if all or any portion of such
payment shall consist of a payment of interest, for purposes of calculating such
interest, such payment shall be deemed to have been originally due on such first
following Business Day, and such interest shall accrue and be payable to (but
not including, subject to clause (d) below) the actual date of payment.

            (h) APPLICATION OF PAYMENTS RECEIVED AFTER 1:00 PM. Any payment
actually received by Lender at or before 1:00 pm, Eastern time, by federal funds
wire transfer on any Business Day, shall be deemed to have been received by
Lender on such day. Any payment actually received by Lender after 1:00 pm,
Eastern time, by federal funds wire transfer on any Business Day, shall be
deemed to have been received on the next following Business Day. All payments
received by Lender on a day other than a Business Day, or in a manner other than
by federal funds wire transfer, shall be deemed to have been received by Lender
on the Business Day such amounts actually become available to Lender prior to
1:00 pm, Eastern time in immediately available funds.

      2.3 MANDATORY PREPAYMENTS OF LOAN; VOLUNTARY PREPAYMENTS OF LOAN.

            (a) MANDATORY PREPAYMENTS.

                  (i) SALES.

                        (A) Following the occurrence of any Amortization
            Triggering Event, if elected by Lender in its sole discretion,
            Borrower agrees to retain one or more nationally recognized title
            insurance company or other escrow agent (the "Escrow Agent")
            acceptable to Lender and to use its best efforts to have each Escrow
            Agent execute and deliver to Lender an escrow account acknowledgment
            in form and substance satisfactory to Lender. The escrow procedures
            utilized by the Escrow Agent, following the occurrence of any
            Amortization Triggering Event, shall be satisfactory to Lender.

                        (B) With respect to each sale of a Pledged Interval,
            Borrower shall deliver, or cause to be delivered, to Lender the
            Release Fee required hereunder for such Pledged Interval, and
            following the occurrence of any

LOAN AND SECURITY AGREEMENT

                                       17
<PAGE>

            Amortization Triggering Event, the Release Price required hereunder
            for such Pledged Interval. Following the occurrence of any
            Amortization Triggering Event, upon receipt of payment of the
            Release Price, Lender shall credit the Release Price payment as
            provided in Section 2.3(a)(ii) hereof.

                        (C) Lender reserves the right to adjust and re-calculate
            the Release Price (i) in the event of a reduction in the number of
            Pledged Intervals then remaining, (ii) if the purchase price under
            any Contract is less than ninety percent (90%) of the Retail Value
            set forth in Schedule 4 for such Timeshare Interest constituting a
            Pledged Interval, or (iii) if Lender determines in its sole
            discretion that sales of the remaining Pledged Intervals are
            insufficient to enable all Obligations arising under this Agreement
            and the other Loan Documents to be repaid in full on or before
            Borrower's sale of seventy-five percent (75%) of the aggregate
            number of all Pledged Intervals.

                        (D) Following the occurrence of any Amortization
            Triggering Event, Borrower shall, or if applicable, shall instruct
            the Escrow Agent, to deliver the applicable Release Price in respect
            of each Pledged Interval sold, to be sold or otherwise requested by
            Borrower to be released from the Liens created by this Agreement and
            the other Security Documents, received by the Escrow Agent on or
            before the proposed date by Borrower for releasing the Lien
            encumbering such Pledged Interval, directly to Lender upon receipt
            by Borrower or the Escrow Agent, as applicable. Borrower
            acknowledges, and, as applicable, shall instruct the Escrow Agent
            that Lender shall not authorize the recording of any partial release
            of its Lien related to a sold Pledged Interval prior to Lender's
            receipt of the Release Fee and, following the occurrence of an
            Amortization Triggering Event, the Release Price.

                        (E) Following the occurrence and during the continuance
            of an Event of Default, unless otherwise agreed to by Lender, Lender
            shall not be obligated to release its Lien on any Collateral.

                  (ii) APPLICATION OF PROCEEDS. Following the occurrence of any
      Amortization Triggering Event, all payments delivered to Lender under this
      Section 2.3 in good, collected funds in legal tender of the United States
      of America shall be applied to the Obligations by Lender as follows:

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

                        second, towards the payment of accrued and unpaid
                  interest under this Agreement in respect of the Loan,

                        third, to the payment of the Loan, and

                        fourth, towards the payment of all other Obligations.

LOAN AND SECURITY AGREEMENT

                                       18
<PAGE>

            Interest which accrues on the Loan in respect of any month shall be
      due and payable on, and shall be paid by Borrower no later than, the first
      day of the following calendar month. To the extent that any interest due
      and payable as of the first day of any month shall not have been
      previously paid in full by the application of the proceeds of the cash
      down payments, cash payments, loan proceeds and sales proceeds, as set
      forth above or by the application of any Release Prices or excess
      Borrowing Base payments made during such month, as set forth in Section
      2.3(d) and (e) hereof, respectively, Borrower shall immediately pay such
      shortfall.

            (iii) SUSPENSION OF SALES. If Borrower receives any Suspension of
      Sales Order or Sanction related to Pledged Intervals located at any Resort
      which remains outstanding for more than thirty (30) days from the date of
      its entry, Borrower shall either (a) provided no Event of Default or
      Amortization Triggering Event has occurred, pledge to Lender unencumbered
      and unsold Timeshare Interests which shall constitute Pledged Intervals
      (which comply with all requirements set forth in Section 2.1 and Article
      VI hereof) sufficient to maintain the Borrowing Base, or (b) promptly pay
      to Lender an amount equal to all Advances made to Borrower secured by the
      Pledged Intervals located at such Resort, unless such Suspension of Sales
      Order or Sanction has been discharged in full or stayed by appeal, bond or
      otherwise.

            (b) PREPAYMENTS UNCONDITIONAL. Notwithstanding any other term or
provision contained in this Agreement, Borrower's payment obligations are
absolute and unconditional without any right of rescission, setoff, counterclaim
or defense for any reason.

            (c) LIMITED VOLUNTARY PREPAYMENTS. Borrower may prepay the Loan in
whole and terminate this Agreement prior to the Maturity Date; provided,
however, that any such prepayment in full other than through the payments of
Release Prices, or any termination of this Agreement, (a) made prior to April
29, 2007, shall be subject to a prepayment premium in an amount equal to
$450,000, and (b) made thereafter shall be subject to no prepayment premium. Any
prepayments in full other than through the payments of Release Prices or any
termination of this Agreement hereunder shall be made only after forty-five (45)
days prior written notice from Borrower to Lender.

            (d) RELEASE PAYMENTS. Payments of Release Prices shall be applied by
Lender when received in good, collected funds as set forth in Section 2.3(a)(ii)
hereof. To the extent that Borrower delivers, or causes to be delivered, all
cash down payments, deposits, cash payments, loan proceeds and sales proceeds in
respect of the sale of any Pledged Interval, as provided for under this Section
2.3, and such funds are at least equal to any applicable Release Price for such
Pledged Interval, such payments and proceeds shall be deemed to have satisfied
the Release Price in respect of such Pledged Interval in an amount of, and to
the extent that, such moneys are actually applied under Section 2.3(a)(ii). No
Release Price shall be payable prior to the occurrence of an Amortization
Triggering Event.

            (e) BORROWING BASE. If on any date the aggregate original principal
amount of all Advances shall exceed the Borrowing Base, determined as of such
date, Borrower shall either (i) immediately pay the amount of such excess to
Lender together with interest accrued thereon to (but not including) the date of
such payment and such amounts shall be applied by

LOAN AND SECURITY AGREEMENT

                                       19
<PAGE>

Lender when received in good, collected funds as set forth in clauses second and
third of Section 2.3(a)(ii) hereof or (ii) provided no Event of Default or
Amortization Triggering Event has occurred, pledge to Lender unencumbered and
unsold Timeshare Interests which shall constitute Pledged Intervals (which
comply with all requirements set forth in Section 2.1 and Article VI hereof)
sufficient to cure such Borrowing Base deficiency within fifteen (15) Business
Days; provided, however that, unless otherwise agreed to by Lender, Borrower
shall not be permitted to pledge additional unsold Timeshare Interests to cure
such Borrowing Base deficiency more than once each calendar quarter. If the
outstanding principal amount hereunder shall exceed $15,000,000, Borrower shall
immediately pay the amount of such excess to Lender together with interest
accrued thereon to (but not including) the date of such payment and such amounts
shall be applied by Lender when received in good, collected funds as set forth
in clauses second and third of Section 2.3(a)(ii) hereof.

            (f) MANDATORY CONDEMNATION PAYMENTS. Upon the delivery of any
Condemnation Compensation to Borrower, any Owner's Association and/or any
Purchaser, if such Condemnation Compensation is not required to be used to
repair, replace or improve the Pledged Intervals or the Resort in accordance
with the terms of this Agreement, the applicable Declaration or Applicable Law,
Borrower shall immediately repay the Loan in an amount equal to the amount of
such Condemnation Compensation delivered to Borrower, any Owner's Association
and/or such Purchaser(s). Such repayments shall be applied in the manner set
forth in Section 2.3(a)(ii) hereof.

      2.4 PARTICIPATING LENDER. Lender shall have the right, without prior
notice to Borrower or the approval of Borrower, to designate one or more
Participating Lenders and to grant to such Participating Lenders participations
in the Loan, on terms and conditions satisfactory to Lender. Such Participating
Lenders shall communicate and deal only with Lender in respect to such
Participating Lenders' interests in the Loan, the Collateral and enforcement of
remedies with respect to the Collateral and Borrower shall communicate and deal
hereunder only with Lender and not with any Participating Lender. Borrower shall
not be liable hereunder to make any payment to any Participating Lender; all of
Borrower's Obligations hereunder shall run directly to Lender. Nothing in this
Agreement shall restrict or limit any Participating Lender from assigning all or
any part of the participations acquired by it in the Loan from Lender or from
Lender replacing or causing the replacement of one or more Participating
Lenders. Unless Lender provides thirty (30) days prior written notice to
Borrower to the contrary, no Participating Lender shall have the right to
consent to any request of Borrower made pursuant to this Agreement or any Loan
Document, and Borrower shall be entitled to make any such consent requests
solely to Lender.

      2.5 FEES.

            (a) COMMITMENT FEE. Borrower agrees to pay to Lender a
      non-refundable commitment fee of $150,000 at the time the initial Advance
      is made by Lender.

            (b) UNUSED LINE FEE. Monthly in arrears on the first Business Day of
      each calendar month until the Maturity Date, Borrower agrees to pay to
      Lender the Unused Line Fee; provided, however, that the Unused Line Fee
      shall be waived during the first six (6) months following the Closing Date
      and, at any time thereafter, in the event the

LOAN AND SECURITY AGREEMENT

                                       20
<PAGE>

      average outstanding principal balance of the Loan is in excess of
      $10,000,000 during such period of determination.

            (c) RELEASE FEE. Borrower shall pay to Lender an administrative
      release fee equal to $10 (the "RELEASE FEE") for each Pledged Interval
      sold or otherwise released. Such Release Fee shall be due and payable to
      Lender whether or not a Release Price is due and payable to Lender and
      whether or not all Obligations have been paid in full.

      2.6 COMPUTATION OF FEES; LAWFUL LIMITS. All fees hereunder shall be
computed on the basis of a year of 360 days and for the actual number of days
elapsed in each calculation period, as applicable. In no contingency or event
whatsoever, whether by reason of acceleration or otherwise, shall the interest
and other charges paid or agreed to be paid to Lender for the use, forbearance
or detention of money hereunder exceed the maximum rate permissible under
Applicable Law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Lender shall have
received interest or any other charges of any kind which might be deemed to be
interest under Applicable Law in excess of the maximum lawful rate, then such
excess shall be applied first to any unpaid fees and charges hereunder, then to
unpaid principal balance owed by Borrower hereunder, and if the then remaining
excess interest is greater than the previously unpaid principal balance, Lender
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate. The terms and
provisions of this Section 2.6 shall control to the extent any other provision
of any Loan Document is inconsistent herewith.

      2.7 LATE FEE. Notwithstanding any other provision of any Loan Document, if
any payment, interest, Obligation, fee, charge or other amount due under any
Loan Document is not received by Lender within one (1) Business Day of its due
date (other than a final payment due at maturity or upon acceleration of the
Obligations), then Borrower shall pay to Lender a late charge equal to 5.0% of
the amount not timely made or paid.

      2.8 TAXES AND OTHER CHARGES. All payments and reimbursements to Lender
made under this Agreement or any Loan Document shall be free and clear of and
without deduction for all taxes, levies, imposts, deductions, assessments,
charges or withholdings, and all liabilities with respect thereto of any nature
whatsoever ("TAXES"), excluding taxes to the extent imposed on Lender's net
income. If Borrower shall be required by law to deduct any such amounts from or
in respect of any sum payable under this Agreement or any Loan Document to
Lender, then the sum payable to Lender shall be increased as may be necessary so
that, after making all required deductions, Lender receives an amount equal to
the sum it would have received had no such deductions been made. Notwithstanding
any other provision of this Agreement or any Loan Document, if at any time after
the Closing or the making of any Advance (a) any change in any existing law,
regulation, treaty or directive or in the interpretation or application thereof,
(b) any new law, regulation, treaty or directive enacted or any interpretation
or application thereof, or (c) compliance by Lender with any Applicable Law: (i)
subjects Lender to any tax, levy, impost, deduction, assessment, charge or
withholding of any kind whatsoever with respect to this Agreement or any Loan
Document, or changes the basis of taxation of payments to Lender of

LOAN AND SECURITY AGREEMENT

                                       21
<PAGE>

any amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of Lender), or (ii) imposes on Lender any other condition or increased cost in
connection with the transactions contemplated thereby or participations therein;
and the result of any of the foregoing is to increase the cost to Lender of
making or continuing or maintaining any Loan hereunder or to reduce any amount
receivable hereunder, then, in any such case, Borrower shall promptly pay to
Lender any additional amounts necessary to compensate Lender, on an after-tax
basis, for such additional cost or reduced amount as determined by Lender. If
Lender becomes entitled to claim any additional amounts pursuant to this Section
2.8 it shall promptly notify, in reasonable detail, Borrower of the event by
reason of which Lender has become so entitled, and each such notice of
additional amounts payable pursuant to this Section 2.8 submitted by Lender to
Borrower shall, absent manifest error, be final, conclusive and binding for all
purposes. Notwithstanding the foregoing, in the event Lender requests Borrower
pay the amounts required pursuant to this Section 2.8, Borrower shall have the
right following ninety (90) Business Days of Borrower's receipt of such request,
to prepay the Loan in whole, but not in part, and terminate this Agreement
without paying any prepayment premium described in Section 2.3(c) hereof;
provided Borrower shall pay to Lender within thirty (30) Business Days of
Borrower's receipt of such request all such amounts required pursuant to this
Section 2.8 for the period of time prior to Borrower prepaying the Loan in full
and terminating this Agreement.

3. COLLATERAL

      3.1 SECURITY. For the purpose of securing the prompt and complete payment
and performance by Borrower of all of the Obligations, Borrower does
unconditionally and irrevocably hereby grant to Lender a first priority security
interest in, and a Lien upon the following assets of Borrower, whether now owned
or hereafter acquired (such assets being herein referred to as the
"COLLATERAL"):

            (a) all other accounts, contract rights, general intangibles,
documents, instruments, chattel paper and proceeds of Borrower related solely to
the Pledged Intervals and not other Timeshare Interests or Timeshare Units;

            (b) all Books and Records;

            (c) all of Borrower's right, title and interest of whatever
character (whether as owner, vendor, mortgagee, chattel lessee, Declarant,
Timeshare Unit owner, Timeshare Interest owner or otherwise, whether vested or
contingent and whether now owned or hereafter acquired) in and to the Pledged
Intervals;

            (d) all of Borrower's right, title and interest of whatever
character (whether as owner, chattel lessee, Declarant, Timeshare Unit owner,
Timeshare Interest owner, or otherwise, whether vested or contingent and whether
now owned or hereafter acquired) in and to any and all judgments, settlements,
claims, awards, insurance proceeds and other proceeds and compensation, and any
interest thereon (collectively, "COMPENSATION"), now or hereafter made or
payable in connection with (i) any casualty or other damage to all or any part
of any Pledged Interval, (ii) any condemnation proceedings affecting any Pledged
Interval or any rights thereto

LOAN AND SECURITY AGREEMENT

                                       22
<PAGE>

or any interest therein, (iii) any damage to or taking of any Pledged Interval
or any rights thereto or any interest therein arising from or otherwise relating
to any exercise of the power of eminent domain (including, without limitation,
any and all Compensation for change of grade of streets or any other injury to
or decrease in the value of any Pledged Interval), or any conveyance in lieu of
or under threat of any such taking, (iv) any and all proceeds of any sale,
assignment or other disposition of any Pledged Interval or any rights thereto or
any interest therein, (v) any and all proceeds of any other conversion (whether
voluntary or involuntary) of any Pledged Interval or any rights thereto or any
interest therein or to cash or any liquidated claim, and (vi) any and all
refunds and rebates of or with respect to any Insurance Premium, any Imposition
or any other charge for utilities relating to any Pledged Interval (including,
without limitation, any and all refunds and rebates of or with respect to any
deposit or prepayment relating to any such Insurance Premium, Imposition or
charge), and any and all interest thereon, whether now or hereafter payable or
accruing;

            (e) all other "Mortgaged Property," as such term is defined in each
Mortgage and all options that Borrower may obtain; and

            (f) all proceeds arising from the rent or sale of unsold Pledged
Intervals;

whether such Collateral shall be presently in existence or whether it shall be
acquired or created by Borrower at any time hereafter, wherever located,
together with the products and proceeds thereof, and any replacements, additions
and/or accessions thereto and substitutions thereof and after-acquired property.

      Borrower consents and agrees that Lender shall be under no obligation to
marshal any assets (including, without limitation, any pledged membership
interests or any life insurance proceeds) in favor of Borrower, or against or in
payment of any or all of the Obligations.

      3.2 UNDERTAKINGS REGARDING COLLATERAL.

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

            (b) NO ASSUMPTION OF OBLIGATIONS. The execution and delivery of this
Agreement, and the granting of the Liens in and to the Collateral, shall not
subject Lender to, or transfer or pass to Lender or in any way affect or modify,
the liability of Borrower under any or all of the Contracts, the
Property-Related Contracts or in connection with any Resort, any Declaration or
any Owner's Association's Articles of Incorporation or By-Laws, it being
understood and agreed that notwithstanding this Agreement, and the granting of
the Liens in and to the Collateral, all of the obligations of Borrower (whether
as owner, chattel lessee, vendor, mortgagee, Declarant, Timeshare Unit owner,
Timeshare Interest owner or otherwise) to each and every other party under each
and every one of the Contracts and the Property-Related Contracts and/or in
connection with any Resort or any Declaration, the Articles of Incorporation and
By-Laws of any Owner's Association shall be and remain enforceable by such other
party, its successors and assigns, only against Borrower or Persons other than
Lender, and Lender has not assumed any of the obligations or duties of Borrower
under or with respect to any of the

LOAN AND SECURITY AGREEMENT

                                       23
<PAGE>

Contracts, or the Property-Related Contracts or otherwise in connection with any
Declaration or the Articles of Incorporation and By-Laws of any Owner's
Association.

            (c) NO OBLIGATION TO TAKE ACTION. Borrower hereby agrees and
acknowledges that neither the acceptance of this Agreement or any other Security
Document by Lender nor the exercise of, or failure to exercise, any right, power
or remedy in this Agreement or in any other Security Document conferred upon
Lender shall be deemed or construed to obligate Lender to pay any sum of money,
take any other action or incur any liability in connection with, or collect or
realize upon, any of the Contracts or any other Collateral. It is further agreed
and understood by Borrower that Lender shall not be liable in any way for any
cost, expense or liability connected with, or any charge or liability arising
from, any of the Contracts, any of the contracts of purchase in respect of the
Timeshare Units, any of the Property-Related Contracts or any other Collateral.

            (d) INDEMNIFICATION. Borrower hereby agrees to indemnify Lender, and
hold it harmless, from any and all liability, loss or damage which it may or
might incur by reason of any and all claims and demands whatsoever which may be
asserted against Lender arising out of, as a result of, or otherwise connected
with, the Liens hereby granted to Lender by Borrower under or in respect of any
of the Contracts or any other Collateral by reason of (i) the failure by
Borrower to perform any obligations or undertakings required to be performed by
Borrower under or in connection with any of such Contracts, the Property-Related
Contracts or any other Collateral, (ii) any failure by Borrower, in connection
with any of such Contracts, the Property-Related Contracts or any other
Collateral, to comply with any applicable federal, state or local consumer
credit, sale rescission or usury statute, including, without limitation, any
such statute of any state in which a Purchaser may reside, the Consumer Credit
Protection Act, as amended, the Federal Trade Commission Act, as amended, the
consumer credit laws and subdivision laws of each Applicable State, as amended,
and all rules and regulations promulgated under the foregoing statutes, acts and
codes, the Interstate Land Sales Full Disclosure Act, and the rules and
regulations promulgated thereunder, and (iii) failure by Borrower to comply with
any applicable federal, state or local statutes, ordinances or declarations and
the restrictions, rules and regulations promulgated thereunder or contained
therein pertaining to the use or operation of any Pledged Interval or any Resort
(including, without limitation, the statutes, ordinances, declarations,
restrictions, rules and regulations of any Applicable State or its agencies or
municipalities), or to otherwise discharge its duties and obligations under
Applicable Law, under each Declaration or any Owner's Association's Articles of
Incorporation or By-Laws as Declarant, unless such claims or demands were
directly a result of Lender's gross negligence or willful misconduct.

      3.3 FINANCING STATEMENTS. Borrower hereby authorizes Lender to file any
financing statements on Borrower's behalf required by the Uniform Commercial
Code together with any and all other instruments or documents and take such
other action, as may be necessary to perfect, and to continue the perfection of,
Lender's security interest and Liens in the Collateral. The parties agree that a
legible carbon, photographic or other reproduction of this Agreement or of a
financing statement shall be sufficient as a financing statement.

      3.4 LOCATION OF COLLATERAL; BOOKS AND RECORDS. All Books and Records are
to remain, at all times, on the premises of Borrower either at 1221 River Bend
Drive, Dallas, Texas

LOAN AND SECURITY AGREEMENT

                                       24
<PAGE>

75247 or at any Resort, and Borrower represents and warrants to Lender that all
of the currently existing Books and Records is now located there, and Borrower
will not transfer the Books and Records from such premises to other locations
without the prior written approval of Lender. Borrower shall, upon receipt of a
written request therefor from Lender after the occurrence of an Event of
Default, deliver to Lender then current copies of all computer tapes, disks,
software and micro-fiche records constituting, in whole or in part, the Books
and Records.

      3.5 INSURANCE OF COLLATERAL.

            (a) MAINTENANCE OF INSURANCE.

                (i) Borrower agrees to maintain or cause to be maintained or, as
      provided under the applicable Declaration, cause the applicable Owner's
      Association to maintain, insurance (with financially sound and reputable
      insurers) with respect to

                        (1) all Pledged Intervals and each Resort,

                        (2) the personal property located at each Resort
            (including, without limitation, the Resort Facilities and other
            furniture, fixtures and furnishings thereof),

                        (3) all other equipment and other personal property of
            every nature whatsoever now or hereafter located in or on, or
            attached to, and used or intended to be used in connection with each
            Resort, and

                        (4) the Books and Records and other valuable papers,

            against casualties, contingencies, hazards and such other risks
            (including, without limitation, (A) fire, hurricane, tornado, wind
            damage, and such other risks insured against by a standard all-risk
            property and fire insurance policy and endorsement for extended
            coverage, and (B) earthquake and flood insurance, if applicable and
            required by Lender); provided, however, that such casualty insurance
            shall (aa) in no case be in an amount less than an amount sufficient
            to rebuild the applicable Resort or the portions thereof which shall
            have suffered the loss and replace any of the personal property
            located therein, (bb) be sufficient to avoid any co-insurance
            requirements in respect of Borrower and/or any Owner's Association,
            and (cc) be sufficient to provide funds to fully compensate Borrower
            or owners of Timeshare Interests for any inability to utilize any
            units during any period following a loss (e.g., [rent loss or]
            business interruption insurance). With respect to such insurance,
            Borrower shall deliver or cause to be delivered, or cause the
            applicable Owner's Association to deliver (to the extent permitted
            by Applicable Law and the applicable Declaration), certificates of
            insurance to Lender, with satisfactory lender's loss payable
            endorsements naming Lender as loss payee to the extent of its
            interest and as such interest may appear on the date of the initial
            advance hereunder. Each policy of such insurance or endorsement with
            respect thereto shall contain a clause requiring the insurer to give
            not less than 30 days' prior written notice to Lender in the event
            of cancellation of the policy for any reason whatsoever and a clause
            that the interest of Lender shall not be impaired or

LOAN AND SECURITY AGREEMENT

                                       25
<PAGE>

            invalidated by any act or neglect of Borrower or other owner of the
            Collateral nor by the occupation of the premises for purposes more
            hazardous than are permitted by said policy. If Borrower shall fail
            to provide and pay for such insurance, or have the same provided and
            paid for, Lender may, at Borrower's expense, procure the same, but
            shall not be required to do so.

                  (ii) Borrower shall maintain or cause to be maintained
      insurance with financially sound and reputable insurers with respect to
      each Resort and its business (including, without limitation, the
      Collateral) covering any public liability of Borrower, its officers,
      agents or employees (including, without limitation, damage by Borrower or
      its officers, agents or employees to the Resort of other Persons, any
      bodily injury caused by Borrower or its officers, agents or employees to
      any other Person, or any negligent act or other similar liability of
      Borrower or its officers, agents or employees) and in such amounts as are
      satisfactory to Lender and to which Borrower has agreed; Lender shall be
      named as an additional insured thereon. Borrower shall, as provided in
      each Declaration, cause the applicable Owner's Association to maintain
      insurance with financially sound and reputable insurers with respect to
      each Resort covering any public liability of such Owner's Association or
      its officers, agents or employees to each Resort of other Persons, any
      bodily injury caused by such Owner's Association or its officers, agents
      or employees to any other Person, or any negligent act or other similar
      liability of each Owner's Association or its officers, agents or employees
      and in such amounts as are provided for in each Declaration.

                  (iii) Borrower shall, prior to renewal, submit, or so long as
      Borrower is in control of an Owner's Association, cause such Owner's
      Association to submit, and thereafter shall use its best efforts to cause
      each Owner's Association to submit, to Lender insurance certificates
      showing the type and amounts of insurance coverage maintained in respect
      of each Resort. Borrower shall, to the extent permitted by Applicable Law
      and the applicable Declaration, cause all casualty policies of insurance
      provided under the each applicable Declaration to have mortgagee
      endorsements in respect of Lender's interests in and to the Pledged
      Intervals that are the subject of any Mortgage or any Timeshare Mortgage
      in which Lender may have a security interest and Lien hereunder or under
      the Receivables Loan Documentation.

                  (iv) Borrower shall pay, or cause each of the Silverleaf Club
      and the Orlando Breeze Resort Club to pay, all premiums on the aforesaid
      insurance policies and all other fees and charges payable in connection
      with such insurance policies (such premiums, fees and charges being
      collectively referred to herein as "INSURANCE PREMIUMS") not later than
      the due date thereof. If Borrower shall fail to pay, or cause each of
      Silverleaf Club and the Orlando Breeze Resort Club to pay, any such
      Insurance Premiums, Lender may (but shall not be obligated to), at
      Borrower's expense, pay the same. Any such payment shall be subject to
      Section 3.11 and Section 3.12 hereof.

                  (v) If the Mortgaged Property (as defined in each Mortgage) is
      sold at a foreclosure sale or if Lender shall acquire title to said
      Mortgaged Property, Lender shall have all of the right, title and interest
      of Borrower in and to all insurance policies required under this Section
      3.5(a) and the unearned premiums thereon, related to the Mortgaged

LOAN AND SECURITY AGREEMENT

                                       26
<PAGE>

      Property, and in and to the proceeds resulting from any damage to said
      Mortgaged Property prior to such sale or acquisition.

                  (vi) Anything contained in this Section 3.5(a) to the contrary
      notwithstanding, any of the undertakings of Borrower in this Section
      3.5(a) in respect of insuring each Resort or in respect of causing each
      Owner's Association to perform any undertaking under this Section 3.5(a)
      shall be subject to any Applicable Laws and the applicable Declaration.

            (b) INSURANCE PROCEEDS.

                  (i) Subject to Applicable Law and the provisions of each
      Declaration, as applicable, and any limitations thereunder, any proceeds
      of insurance in respect of the Pledged Intervals received by any Owner's
      Association or any manager retained by it and then further paid by the
      applicable Owner's Association or such manager to Borrower (whether as
      Declarant or otherwise), as provided for in the applicable Declaration,
      shall be promptly paid and/or turned over by Borrower to Lender as
      proceeds of the Collateral and, subject to Section 3.5(c) hereof, applied
      to the prepayment of the Loan as provided in Section 2.3(a)(ii) hereof.

                  (ii) Without limiting the immediately preceding paragraph, any
      proceeds of insurance in respect of any Pledged Interval received by
      Borrower at a time during which the insurance provisions of the applicable
      Declaration shall not be in effect as to any Pledged Interval shall be
      treated as provided in Section 3.5(c) of this Agreement.

            (c) MISCELLANEOUS APPLICATION OF INSURANCE PROCEEDS. In connection
with, and pursuant to, Section 3.5(b)(ii) hereof, Lender and Borrower agree to
the following:

                  (i) Following the occurrence of any Default or Event of
      Default (provided that if such Default or Event of Default is cured by
      Borrower, then clause (ii) below and not this clause (i) shall thereafter
      apply), and subject to Applicable Law and the provisions of each
      Declaration, Lender may direct the proceeds from any such policies to be
      received and collected by Lender, Borrower, the Silverleaf Club or Orlando
      Breeze Resort Club, as applicable, or another third party acceptable to
      Lender. Following the occurrence of any Default or Event of Default, each
      insurance company is hereby authorized and directed to make payment for
      all such losses directly to Lender, Borrower, the Silverleaf Club or
      Orlando Breeze Resort Club, as applicable, or such other third party as
      directed by Lender. Following the occurrence of any Default or Event of
      Default (provided that if such Default or Event of Default is cured by
      Borrower, then clause (ii) below and not this clause (i) shall thereafter
      apply), and subject to Applicable Law and the provisions of each
      Declaration and any limitations thereunder, and provided Lender is
      entitled to receive such insurance proceeds pursuant to the applicable
      Declaration, after deducting from said insurance proceeds all of its
      expenses incurred in the collection and administration of such sums,
      including attorneys' fees, Lender may apply the net proceeds or any part
      thereof, at its option (i) to payment of the Obligations, whether or not
      due, as provided in Section 2.3(a)(ii) hereof, (ii) to the repair and/or
      restoration of the

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<PAGE>

      Pledged Intervals, or (iii) for any other purposes or objects for which
      Lender is entitled to advance funds under this Agreement or any of the
      other Security Documents; all without affecting the Liens and security
      interests of this Agreement and the other Security Documents. Lender shall
      not be held responsible for any failure to collect any insurance proceeds
      due under the terms of any policy regardless of the cause of such failure.

                  (ii) Subject to each Declaration and Applicable Law, prior to
      the occurrence of any Default or Event of Default and if Borrower gives
      Lender notice of any casualty as provided in clause (d) below, Borrower or
      the Silverleaf Club or Orlando Breeze Resort Club, as applicable, shall
      have the right to adjust and compromise losses under insurance policies
      and to collect and receive insurance proceeds and shall apply such
      insurance proceeds with respect to such losses solely and exclusively to
      the repair and restoration of the Pledged Intervals (and the affected
      Resort, as applicable) or, if consented to by Lender, to the payment of
      the Obligations as Borrower deems appropriate in its reasonable
      discretion. With respect to any such casualty loss, Borrower shall have
      the right to use any insurance proceeds received on account of such loss
      to the repair and restoration of the Pledged Intervals (and the affected
      Resort, as applicable).

            (d) BORROWER UNDERTAKINGS. In the event of any casualty or loss in
respect of any Pledged Intervals or any Resort (including, without limitation,
any of the Collateral) that exceeds $250,000 in damages, Borrower shall
immediately notify Lender of the same.

            (e) OTHER LENDERS. To the extent any other timeshare receivable or
timeshare inventory lender of Borrower and its Affiliates has any rights to
approve the form of insurance policies with respect to any Resort, the amounts
of coverage thereunder, the insurers under such policies, or the designation of
an attorney in fact for purposes of dealing with damage to any part of any
Resort or insurance claims or matters related thereto, or any successor to such
attorney in fact, or any changes with respect to any of the foregoing, Borrower
shall take all steps as may be necessary (and, after turnover, if any, of
control of a Resort to any Owner's Association, Borrower shall use its best
efforts) to ensure that Lender shall at all times have a co-equal right, with
such other lender (including, without limitation, Borrower or any third-party
lender), to approve all such matters and any proposed changes in respect
thereof; and Borrower shall not cause or permit any changes with respect to any
insurance policies, insurers, coverage, attorney in fact, or insurance trustee,
if any, without Lender's prior written approval.

      3.6 CONDEMNATION.

            (a) CONDEMNATION COMPENSATION.

                  (i) Subject to Applicable Law and to the provisions of each
      Declaration, any compensation, awards, damages, claims, rights of action,
      proceeds, payment and other relief (collectively, "CONDEMNATION
      COMPENSATION") of, or on account of, any damage or taking of all or any
      part of any Pledged Intervals in connection with any condemnation
      proceedings or any exercise of the power of eminent domain (or any
      conveyance in lieu of or under threat of any such taking), including,
      without limitation, any such Condemnation Compensation for change of grade
      of streets or any other injury to or decrease in the value of all or any
      part of any Pledged Intervals, payable

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                                       28
<PAGE>

      to any Owner's Association or any manager retained by it and paid further
      by any Owner's Association or such manager to Borrower (whether as
      Declarant or otherwise), unless otherwise provided for in the applicable
      Declaration, shall be promptly paid and/or turned over to Lender as
      proceeds of the Collateral or otherwise and, applied to the prepayment of
      the Loan, as provided in Section 2.3(a)(ii) hereof.

                  (ii) Subject to Applicable Law and to the provisions of the
      applicable Declaration, Lender shall be entitled to receive all
      Condemnation Compensation in respect of the affected Pledged Intervals
      payable with respect to any condemnation or taking. The application of
      such Condemnation Compensation shall be as set forth below in clause (iii)
      below. Lender is hereby authorized, at its option, to commence, appear in
      and prosecute, in its own or in Borrower's name, any action or proceeding
      relating to any condemnation or taking, and to settle or compromise any
      claim in connection therewith. All Condemnation Compensation in respect of
      any Pledged Interval and the rights thereto are hereby assigned by
      Borrower to Lender.

                  (iii) Subject to Applicable Law and to the provisions of the
      applicable Declaration, after deducting from any Condemnation Compensation
      in respect of the applicable Pledged Interval, all of its expenses
      incurred in the collection and administration thereof, including
      attorney's fees, Lender shall, if no Default or Event of Default shall
      then exist, or may, in its sole and absolute discretion if a Default or
      Event of Default shall then exist, make the net Condemnation Compensation
      available to Borrower, the Silverleaf Club or the Orlando Breeze Resort
      Club, as applicable, to repair and/or restore the Pledged Intervals and,
      as applicable, the affected Resort.

      If Borrower fails to comply with any of the requirements set forth in the
      immediately preceding sentence or if a Default or Event of Default exists
      and Lender shall have decided not to make such net Condemnation
      Compensation available to Borrower, Lender may apply such net Condemnation
      Compensation or any part thereof, at its option, (A) to the payment of the
      Obligations, whether or not due, as provided in Section 2.3(a)(ii) hereof,
      or (B) for any other purposes or objects for which Lender is entitled to
      advance funds under this Agreement, all without affecting the security
      interests or Liens of this Agreement or any of the other Security
      Documents. All net Condemnation Compensation to be disbursed by Lender
      pursuant to this clause (iii) shall be disbursed in a manner acceptable to
      Lender as the repair and/or replacement work proceeds. Lender shall not be
      held responsible for any failure to collect any condemnation regardless of
      the reason for such failure. Borrower agrees to execute such further
      assignment of any compensation, awards, damages, claims, rights of action
      and proceeds as Lender may require. All repair and/or replacement work
      shall be diligently prosecuted to completion by Borrower and shall be
      completed prior to the Maturity Date.

            (b) BORROWER UNDERTAKINGS. In the event of any condemnation or
taking in respect of any Pledged Interval or any Resort (including, without
limitation, any of the Collateral), Borrower shall immediately notify Lender of
the same.

      3.7 TAXES AFFECTING COLLATERAL. Borrower shall pay or, as provided in the
applicable Declaration, cause the applicable Owner's Association to pay, on or
before the last day when

LOAN AND SECURITY AGREEMENT

                                       29
<PAGE>

they may be paid without interest or penalty, all taxes, assessments, rates,
dues, charges, fees, levies, excises, duties, fines, impositions, liabilities,
obligations and encumbrances (including, without limitation, water and sewer
rents and charges, charges for setting or repairing meters and charges for other
utilities or services), general or special, ordinary or extraordinary, foreseen
or unforeseen, of every kind whatsoever, now or hereafter imposed, levied or
assessed by any public or quasi-public authority or instrumentality (including,
without limitation, each Applicable State and its agencies, counties and
municipalities), upon or against any of the Collateral or the use, occupancy or
possession of any Resort, or upon or against this Agreement, the Note or the
other Security Documents, the Obligations or the interest of Lender in the
Contracts, any of the contracts of purchase in respect of the Timeshare Units or
any Mortgage or any other item of Collateral (provided that this Section 3.7
shall not be construed to require Borrower to pay any income tax imposed upon
the general income of Lender), as well as all assessments and other governmental
or quasi-governmental charges imposed, levied or assessed in respect of any
Collateral, and any and all interest, costs and penalties on or with respect to
any of the foregoing (collectively, the "IMPOSITIONS"). Upon request by Lender,
Borrower shall deliver, or cause the applicable Owner's Association to deliver,
to Lender receipts or other satisfactory proof of payment of any Impositions.

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

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

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

      Borrower shall have the right, at its sole expense, to contest the
validity of any such Impositions (other than ad valorum taxes addressed below)
by appropriate proceedings diligently

LOAN AND SECURITY AGREEMENT

                                       30
<PAGE>

and continuously conducted in good faith to final determination, in which event
Borrower shall not be required to pay or, as provided in the applicable
Declaration, cause the applicable Owner's Association to pay, any such
Impositions (other than ad valorum taxes addressed below) in accordance with
this section if, and only so long as:

            (a) no final judicial determination in respect of any foreclosure or
other enforcement proceeding in respect of such Impositions (other than ad
valorum taxes addressed below) shall have been rendered and no nonjudicial
foreclosure proceeding or sale in respect of such Impositions (other than ad
valorum taxes addressed below) shall have been commenced;

            (b) no claim for liability of any kind shall have been asserted
against the Lender in connection with such Impositions (other than ad valorum
taxes addressed below); and

            (c) if such Impositions (other than ad valorum taxes addressed
below) are in an amount greater than $100,000, Borrower shall have established
an escrow with the Lender, or shall have delivered to the Lender a satisfactory
bond issued by a surety acceptable to the Lender or a satisfactory letter of
credit for the benefit of the Lender issued by a bank acceptable to the Lender,
in each case in an amount estimated by the Lender to be adequate to cover (i)
the unpaid amount of such required payment, (ii) all interest, penalties and
similar charges which reasonably can be expected to accrue by reason of such
contest or by reason of such nonpayment, and (iii) all costs, fees and expenses
(including, without limitation, attorneys' fees and disbursements) which
reasonably can be expected to be incurred in connection therewith by the Lender,
which escrow, bond or letter of credit shall be maintained in effect throughout
such contest and the amount of which shall be increased from time to time if
reasonably required by the Lender to cover the foregoing amounts in subclause
(i), subclause (ii) and subclause (iii).

      Borrower shall inform the Lender, in advance and in writing, of its
intention to contest any Impositions (other than ad valorum taxes addressed
below) under this Section 3.7 if such required payment shall exceed $100,000.

      Upon termination of any such contest (whether by final determination or
otherwise), or at any time during the course of any such contest that the
conditions relieving Borrower of its obligation to make such payment shall no
longer be satisfied or shall be discovered not to have been satisfied, Borrower
shall make such payment. Following the occurrence and continuance of a Default
or Event of Default, at Lender's option, the escrow established or bond or
letter of credit, as the case may be, delivered pursuant to this Section 3.7 may
be, in the case of the escrow, liquidated, or, in the case of the bond or the
letter of credit, drawn upon, at such time and the proceeds thereof may be
applied to payment of all or any part of such required payment and the interest,
penalties, charges, costs, fees and expenses (including, without limitation,
attorneys' fees and disbursements) referred to in subclause (ii) and subclause
(iii) of the immediately preceding paragraph. Promptly after such payment has
been made, Borrower shall deliver to the Lender evidence reasonably satisfactory
to the Lender that such payment has been made. Thereafter, the amount then
remaining in the escrow established pursuant to this Section 3.7 or such bond or
letter of credit, as the case may be, shall be returned to Borrower free and
clear of the Lien of this Agreement or any other Security Document so long as no
Event of Default shall have occurred and be continuing or, if an Event of
Default shall have occurred and be continuing, shall be retained by the Lender
as part of the Collateral.

LOAN AND SECURITY AGREEMENT

                                       31
<PAGE>

      The Borrower or the applicable Owner's Association, as the case may be,
shall have the right at their respective sole expense to contest the validity of
any ad valorem tax assessment related to any property owned by the Borrower and
not subject to the timeshare regime established at each Resort, and in the case
of each Owner's Association, to property covered by the applicable Declaration.
In connection with any ad valorem tax challenge filed by either the Borrower or
any Owner's Association, the Borrower or such Owner's Association, as the case
may be, shall be required to deliver written notice of such intention to contest
and shall make a "good faith deposit", which shall be in an amount determined in
good faith either by the Borrower or such Owner's Association equal to the tax
amount owed based upon the admitted fair market value by the party challenging
such assessment. Such proceedings may continue if, and only so long as no final
judicial determination in respect of any foreclosure or other enforcement
proceedings in respect to such ad valorem taxes shall have been rendered, and no
claim for liability of any kind shall have been asserted against the Lender in
connection with such ad valorem taxes.

      In the event the amount of the "good faith deposit" made by either the
Borrower or any Owner's Association is less than the amount claimed by the
Lender, the Tax Collector, the Borrower or any Owner's Association, as the case
may be, Borrower or any Owner's Association shall establish an escrow
arrangement reasonably satisfactory to Lender equal to the amount of any such
deficiency, together with an additional amount sufficient to cover any interest
which may accrue during the pendency of such proceeding. Upon the termination of
any such proceeding, whether by final determination or otherwise, the Borrower
or any Owner's Association, as the case may be, shall make full and final
payment of the final amount of ad valorem taxes determined to be owed, together
with any additional levies, charges, interest, cost or expenses which may be
due. Promptly after such payment has been made, Borrower or any Owner's
Association shall deliver to Lender evidence reasonably satisfactory to Lender
that any such payment has been made.

      3.8 DISCHARGE OF LIENS AFFECTING COLLATERAL. If any mechanic's, laborer's,
materialman's, statutory or other Lien shall be filed or otherwise imposed upon
or against any item of the Collateral or any Pledged Interval, then Borrower
shall, within 30 days after being given notice of the filing of such Lien or
otherwise becoming aware of the imposition of such Lien, cause such Lien to be
vacated or discharged of record by payment, deposit, bond, final order of a
court of competent jurisdiction or otherwise.

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

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

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                                       32
<PAGE>

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

            (c) if such Lien shall secure a claim of more than $100,000,
Borrower shall have established an escrow with Lender, or shall have delivered
to Lender a satisfactory bond issued by a surety acceptable to Lender or a
satisfactory letter of credit for the benefit of Lender issued by a bank
acceptable to Lender, in each case in an amount estimated by Lender to be
adequate to cover (i) the unpaid amount of such claim, (ii) all interest,
penalties and similar charges which reasonably can be expected to accrue by
reason of such contest or by reason of such nonpayment, and (iii) all costs,
fees and expenses (including, without limitation, attorneys' fees and
disbursements) which reasonably can be expected to be incurred in connection
therewith by Lender, which escrow, bond or letter of credit shall be maintained
in effect throughout such contest and the amount of which shall be increased
from time to time if reasonably required by Lender to cover the foregoing
amounts in subclause (i), subclause (ii) and subclause (iii).

Borrower shall inform Lender, in advance and in writing, of its intention to
contest any Lien securing a claim, or such claim itself, under this Section 3.8
if such claim shall exceed $100,000.

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

      If any Lien shall not be vacated or discharged as required by this
Section, then, in addition to any other right or remedy of Lender, Lender may,
but shall not be obligated to, discharge such Lien in such manner as Lender may
select, and Lender shall be entitled, if Lender shall so elect, to compel the
prosecution of an action for the foreclosure of such Lien by the lienor and, if
Lender shall so elect, to pay the amount of any judgment in favor of such lienor
with interest, costs and allowances. Upon request by Lender, Borrower shall pay
to Lender, or to any other Person designated by Lender, the amount of all
payments made by Lender as provided above and all costs, expenses and
liabilities (including, without limitation, attorneys' fees and disbursements)
incurred by Lender in connection therewith, together with interest thereon at
the

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                                       33
<PAGE>

Default Rate from the date paid or incurred by Lender until the date so paid to,
or as directed by, Lender. To the extent permitted by law, Lender shall
thereupon be subrogated to the rights of such lienor and any such payments made
by Lender pursuant to this Section 3.8 shall be secured by the Collateral.

      3.9 USE OF THE RESORTS; VOTING RIGHTS OF BORROWER.

            (a) CERTAIN RESTRICTIONS. Borrower shall not, as Declarant,
Timeshare Interest owner or Timeshare Unit owner, without the prior written
consent of Lender, such consent not to be unreasonably withheld,

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

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

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

                  (iv) except as permitted in the applicable Declaration, permit
      the Timeshare Interests or the Timeshare Units to be used other than for
      nonpermanent residential purposes, or

                  (v) consent to any material amendment, modification,
      alteration or other change to any Declaration without the prior written
      consent of Lender, or otherwise sell Timeshare Interests not correctly set
      forth in the applicable Declaration.

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

            (c) VOTING RIGHTS. Except with the prior written consent of Lender,
Borrower shall not propose or vote for or consent to any modification of, or
amendment to, any Declaration or any Owner's Association's Articles of
Incorporation or By-Laws which could have (in the reasonable sole opinion of
Lender) a material adverse effect on the Collateral or the operation or
prospects of any Resort. In each case under the applicable Declaration and/or
the applicable Owner's Association's Articles of Incorporation or By-Laws in
which the consent or the vote of

LOAN AND SECURITY AGREEMENT

                                       34
<PAGE>

a holder of a mortgage or "security interest" in respect of the Timeshare
Interests and/or the Timeshare Units (including any such case in which Borrower
would be considered to be a holder of a mortgage or "security interest" by
virtue of any Timeshare Mortgage) is provided for or is required, or in which
Borrower's consent is required (as Declarant or as an owner of a Timeshare
Interest or Timeshare Unit or as a vendor or mortgagee or otherwise) for any
proposed action, Borrower shall not vote or give such consent without obtaining
the prior written consent of Lender if such action (in the reasonable opinion of
Lender) could have an material adverse effect on the Collateral or the operation
or prospects of any Resort.

      3.10 OTHER TIMESHARE COVENANTS.

            (a) ACCESS. With respect to the consummation of each sale of a
Pledged Interval to a Purchaser under a Contract, Borrower shall cause the owner
of such Pledged Interval to have access to a publicly dedicated road and shall
cause all private roadways, parking lots and rights of way within the applicable
Resort or other private areas in such Resort to be Common Elements or Resort
Facilities in respect of such Pledged Interval.

            (b) UTILITIES. With respect to the consummation of each sale of a
Pledged Interval to a Purchaser under a Contract, Borrower shall cause electric,
gas, sewer, and water service and other necessary utilities to be available to
the Timeshare Units in sufficient capacity to service the same and shall pay, or
cause to be paid, all tap fees or other connection charges in respect thereof).

            (c) USE OF AMENITIES. With respect to the consummation of each sale
of a Pledged Interval to a Purchaser under a Contract, Borrower shall cause the
owner of such Pledged Interval to have access to, and the use of, all of the
amenities and public utilities relating to the applicable Resort and such
Pledged Interval (consistent with the contractual provisions and rules and
regulations existing with respect to such amenities and public utilities),
including, without limitation, the Resort Facilities and rights of way.

            (d) TIMESHARE REGIME. The Borrower shall do all things necessary in
order to preserve the timeshare regimes in respect of all Pledged Intervals.

            (e) LOCAL LEGAL COMPLIANCE. Borrower shall comply, and shall cause
each Resort, each Pledged Interval, the other Timeshare Interests and Timeshare
Units to comply, with all applicable restrictive covenants, zoning, design and
land use ordinances and building codes, all applicable health and environmental
laws and regulations and all other Applicable Laws, rules and regulations and
all approvals, consents and licenses (including, without limitation, the
applicable Declaration). Borrower shall cause all Timeshare Interests (including
the Pledged Intervals) and the sales thereof to comply with all Applicable Laws,
rules and regulations, and all approvals, consents and licenses (including
without limitation, each Declaration).

            (f) REGISTRATION COMPLIANCE. Borrower shall diligently pursue the
obtaining of, and, after the obtainment thereof, shall maintain, or cause to be
maintained, all necessary consents, franchises, approvals, and exemption
certificates in connection with, and Borrower will make, or cause to be made,
all registrations or declarations with any government or any agency

LOAN AND SECURITY AGREEMENT

                                       35
<PAGE>

or department thereof required in connection with, the occupancy, use and
operation of each resort and the marketing and sale of the Timeshare Interests
(including all Pledged Intervals).

            (g) RECORDS. Borrower shall maintain accurate and complete files
relating to the Contracts and the other Collateral to the reasonable
satisfaction of Lender, and such files will contain copies of each Contract, the
Timeshare Note, Timeshare Mortgage, all relevant credit memoranda, and all
collection information and correspondence in respect thereof, as the case may
be.

            (h) FORMS OF TIMESHARE DOCUMENTS. Instruments in substantially the
form of the Contract, the form of statement of rescission rights required by
Applicable Laws, and the form of other instruments and documents related
thereto, including, if applicable, any Timeshare Note and/or Timeshare Mortgage,
in each case in form and substance reasonably acceptable to Lender, shall be
used by Borrower for all purchase and sale transactions of Pledged Intervals.
Borrower shall not materially modify, amend or otherwise alter any of the terms
of such forms without Lender's prior written consent, except as may be required
by any regulatory agency or Applicable Law. Notwithstanding Lender's review and
determination of acceptability, if any, of such forms, Borrower shall remain
solely liable for all aspects of such forms and their use; any determination of
acceptability, if any, by Lender relating to such forms shall only be for
Lender's benefit and no other Person shall be entitled to rely thereon in any
manner.

      Instruments in substantially the form of the Timeshare Note, the form of
the Timeshare Mortgage, the form of the grant deed, the form of the
Truth-in-Lending Statement and the form of the other instruments and documents
related thereto set forth, in each case, in form and substance reasonably
acceptable to Lender, shall be used by Borrower for all sales of Timeshare
Interests which are financed by Borrower or Lender after the Closing Date and
for so long as any Obligation remains outstanding. Borrower shall not materially
modify, amend or otherwise alter such forms or any of the terms of such forms
without Lender's prior written consent, such consent not to be unreasonably
withheld, except as may be required by any regulatory agency or Applicable Law.
Notwithstanding Lender's review and determination of acceptability, if any, of
such forms, Borrower shall remain solely liable for all aspects of such forms
and their use; any determination of acceptability, if any, by Lender relating to
such forms shall only be for Lender's benefit and no other Person shall be
entitled to rely thereon in any manner.

            (i) PROPERTY-RELATED CONTRACTS. Except as required by Applicable
Law, or if otherwise waived by Lender, and if such amendment to, modification or
new Property-Related Contract described below will have, or could reasonably be
expected to have a material adverse effect on Borrower's ability to pay the Loan
or the value of the Collateral, or Lender's Liens on the Collateral or the
priority of any such Lien, Borrower shall not modify, amend, or enter into, or
(subject to the rights and obligations of any Owner's Association and its
members under any Declaration or any Owner's Association's Articles of
Incorporation or By-Laws) permit to be modified, amended, or enter into, any
Property-Related Contract without the prior written consent of Lender, which
consent shall not be unreasonably withheld. Borrower shall perform all of its
obligations in a timely fashion under each Property-Related Contract. For
purposes of this Section 3.10(i), and for no other purpose, section or reference
in this Agreement or any other Loan Document, the term, "Property-Related
Contracts" shall not include sales and marketing agreements or contracts related
to the sales of Timeshare Interests, or any employment related

LOAN AND SECURITY AGREEMENT

                                       36
<PAGE>

agreements or contracts between Borrower and either (i) any Executive Management
Member and (ii) any member of senior management of Borrower.

            (j) UNDERTAKING. Borrower shall perform each and every covenant,
agreement, and undertaking applicable to Borrower (whether as Declarant, owner
of a Timeshare Interest or Timeshare Unit or otherwise) under each Declaration
and each Owner's Association's Articles of Incorporation or By-Laws.

      3.11 PROTECTION OF COLLATERAL; ASSESSMENTS; REIMBURSEMENT. All Insurance
Premiums and all expenses of protecting, storing, warehousing, insuring,
handling, maintaining and shipping the Collateral, any and all Impositions on
any of the Collateral or in respect of the sale or other disposal thereof shall
be borne and paid by Borrower.

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

      3.12 INTEREST ON LENDER PAID EXPENSES. All sums paid or incurred by Lender
under this Section 3, and any and all other sums for which Borrower may become
liable hereunder, and all costs and expenses (including payments to other Lien
holders and attorneys' fees, legal expenses and court costs) which Lender may
incur in enforcing or protecting its Lien on, or rights and interest in, the
Collateral or any of its rights or remedies under this Agreement or any other
Security Document or in respect of any of the transactions contemplated herein
or therein (a) shall be considered as additional indebtedness owing by Borrower
to Lender hereunder and, as such, shall be secured by all of the Collateral, and
(b) shall accrue interest at the Default Rate from the date paid by Lender until
paid in full by Borrower, provided that any sums paid or incurred by Lender
under this Section 3 when no Event of Default shall then exist in respect of the
payment of such sums and no other Event of Default shall exist hereunder shall
accrue interest at the Interest Rate and not the Default Rate and provided
further that such sums paid or incurred by Lender shall accrue interest at the
Default Rate when the Default Rate shall otherwise be applicable hereunder.

      3.13 LENDER RESPONSIBILITY. Lender shall not be (a) obligated or
responsible for, the payment of any of the amounts or sums referred to in this
Section 3, or (b) liable or responsible in any way for the safekeeping of any of
the Collateral or for any loss or damage thereto.

      3.14 VERIFICATION OF CONTRACTS. Upon prior notification to Borrower
following the continuance of an Event of Default, Lender may contact any
Purchaser solely for the purpose of verifying the Contract to which such
Purchaser is a party and Borrower shall render such assistance to Lender in
connection therewith as Lender may reasonably request.

      3.15 RELEASE OF LIEN ON TIMESHARE INTERESTS.

            (a) RELEASE FOR TIMESHARE INTERESTS. Provided no Event of Default
has occurred which is continuing, Lender agrees to execute and deliver to
Borrower or its escrowee the documents referred to below pursuant to which the
security interest and Lien in and to any

LOAN AND SECURITY AGREEMENT

                                       37
<PAGE>

Pledged Interval constituting a Timeshare Interest created by this Agreement,
any Mortgage or any other Security Document will be released if, but only if,
all of the following conditions shall have been fully satisfied:

                  (i) the full Release Fee and, as applicable following any
      Amortization Triggering Event or in the event there is a Borrowing Base
      deficiency, the full Release Price, in respect of such Pledged Interval
      shall have been paid to and received by Lender or its agent in good,
      collected funds;

                  (ii) a request, substantially in the form of Exhibit B
      attached hereto, shall have been completed and executed by Borrower and
      submitted to Lender not less than 2 Business Days in advance of the date
      on which Borrower desires to consummate such release; and

                  (iii) a partial release of mortgage, in form and substance
      satisfactory to Lender, and a partial release of security interest, in
      form and substance satisfactory to Lender, shall have been completed by
      Borrower and submitted to Lender with the aforesaid request.

      Borrower shall bear the responsibility of recording any and all documents
      executed by Lender under this Section 3.15(a). Borrower shall pay all
      escrow costs and recording and transfer costs in respect of such
      documents. Following the occurrence of an Amortization Triggering Event,
      if requested by Lender, Borrower shall establish an escrow in respect of
      any release under this Section 3.15(a). If Lender requests an Escrow Agent
      be established following the occurrence of an Amortization Trigger Event,
      Lender shall deposit the documents to be executed by it pursuant to clause
      (iv) above in such escrow if, but only if,

                        (1) the documentation establishing such escrow is in
            form and substance satisfactory to Lender and such documentation
            shall have been submitted to Lender together with the written
            request referred to in clause (ii) above,

                        (2) the escrowee under such escrow documentation is
            satisfactory to Lender,

                        (3) such escrow documentation provides that
            simultaneously with the release from such escrow of the documents
            referred to in clause (iii) above, the Release Fee, and if
            applicable, the Release Price, in respect of such Timeshare Interest
            to be so released shall have been wired via Federal Reserve Bank
            wire (in immediately available funds) or otherwise credited in
            immediately available funds to Lender and prior to Lender's
            authorization to file such partial releases, a confirmation of such
            wire shall have been obtained,

                        (4) such escrow documentation provides that such escrow
            will be consummated within 5 Business Days of Lender's depositing of
            such release documents therein or such release documents shall be
            returned to Lender by the escrowee of such escrow, and

LOAN AND SECURITY AGREEMENT

                                       38
<PAGE>

                        (5) at the time of the depositing of such documentation
            into such escrow, all of the conditions in clauses (ii) through (iv)
            above shall have been fully satisfied.

            (b) FULL RELEASE OF COLLATERAL AND DEEDS OF TRUST. Upon the full,
final and indefeasible payment of all Obligations and termination of this
Agreement and the Receivables Loan Agreement, Lender shall release its security
interests and Liens in and to the Collateral, shall execute in favor of Borrower
any UCC release or termination statement in respect thereof, shall release each
Mortgage and any other recorded Security Document and shall reassign and deliver
to Borrower all Contracts and the other Collateral then in the physical
possession of Lender or its agent (without recourse and without representations
or warranties of any kind). Borrower shall bear all out-of-pocket expenses
(including, without limitation, legal fees and disbursements of Lender) in
connection with such release, reassignment and delivery. All such release and/or
termination documentation shall be reasonably satisfactory to Lender and its
counsel.

      3.16 CROSS-COLLATERALIZATION AND DEFAULT. The Collateral shall secure all
of the Obligations and the Receivables Loan Obligations. All Liens, pledges,
assignments, mortgages, security interests, and other collateral granted to or
for the benefit of Lender pursuant hereto or any other documents or instruments
(including, but not limited to, the Receivables Loan Documentation) shall secure
the Obligations as well as the "Obligations" as defined in the Receivables Loan
Agreement, and vice versa. In addition, the Loan and the Receivables Loan shall
be further secured by the Liens and security interests in favor of Lender in the
properties and interests which serve as collateral security for any other loans
or obligations now or hereafter made by Lender to Borrower or any Affiliate of
the foregoing ("Additional Collateral"). Borrower agrees to deliver financing
statements and other documents, instruments and agreements as may be required by
Lender to further evidence and perfect the Liens and cross-collateralization in
favor of Lender provided for in this Agreement. In addition, the Loan, the
Receivables Loan and all other loans made by Lender to Borrower or any Affiliate
of Borrower shall be cross-defaulted such that any event of default with respect
to any such loan shall constitute an Event of Default hereunder, and vice versa.
Notwithstanding the foregoing, a release of Lender's Lien on Collateral pursuant
to the Receivables Loan Documentation shall be deemed to also be a release of
Lender's Lien on such Collateral pursuant to the Loan Documents.

      3.17 SUBSTITUTION OF COLLATERAL AND MORTGAGES. In addition to the releases
pursuant to Sections 2.3 and 3.14 above and as otherwise provided in this
Agreement, and subject to the compliance with the Borrowing Base, Borrower may
notify Lender that it has determined, in its sole discretion, that, it wishes to
substitute (a "Property Substitution") one or more Timeshare Interests for a
Pledged Interval currently included in the Collateral (the "Substituted
Property"). Borrowers shall identify the new Timeshare Interest to constitute a
new Pledged Interval for such Property Substitution, which Timeshare Interest
shall be approved by Lender in its sole discretion. Upon Lender's approval of
such Pledged Interval, and Borrower's satisfaction (or Lender's waiver) all of
the conditions precedent required to be satisfied pursuant to Article 6 of this
Agreement with respect to such new Pledged Interval, Lender shall release its
security interests and Liens in and to the Substituted Property, shall execute
in favor of Borrowers any UCC release or termination statement in respect
thereof, shall release the Mortgage and any other recorded Security Document and
shall reassign and deliver to Borrower all other Collateral

LOAN AND SECURITY AGREEMENT

                                       39
<PAGE>

then in the physical possession of Lender or its agent (without recourse and
without representations or warranties of any kind) directly related to such
Substituted Property. Borrower shall bear all out-of-pocket expenses (including,
without limitation, reasonable legal fees and disbursements of Lender and its
counsel) in connection with such release, reassignment and delivery.

4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.

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

      4.1 SUBSIDIARIES AND CAPITAL STRUCTURE. Except as set forth in Schedule 8,
Borrower owns no Voting Equities in any Person.

      4.2 CORPORATE BORROWER. Borrower

            (a) is a corporation duly organized and validly existing under the
laws of the State of Texas,

            (b) has all requisite company power and authority and necessary
licenses and permits to own, construct and operate and to carry on its business
as now conducted and contemplated to be conducted in the future;

            (c) has duly qualified and is authorized to do business as a foreign
company in each jurisdiction where the character of its Properties or the nature
of its activities makes such qualification necessary or desirable; and.

            (d) has a Tangible Net Worth of not less than $100,000,000.

      4.3 FINANCIAL STATEMENTS. Borrower's consolidated financial statements
dated as of December 31, 2004, and delivered to Lender are true, correct and
accurate.

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

      4.5 PENDING LITIGATION. Except as set forth in Schedule 10 to this
Agreement, there are no proceedings pending, or to the knowledge of Borrower
threatened, against or affecting Borrower, any Affiliate or any Resort in any
court or before any governmental authority or arbitration board or tribunal (a)
which either involve the possibility of materially and adversely affecting any
Pledged Interval or any Resort, business, prospects, profits or condition
(financial or otherwise) of Borrower, or the ability of Borrower to perform its
obligations under this

LOAN AND SECURITY AGREEMENT

                                       40
<PAGE>

Agreement, the Note or the other Security Documents, as applicable, or (b) in
respect of which more than $100,000 is sought in damages. Neither Borrower nor
any Affiliate of either nor any resort is in default with respect to any order
of any court, governmental authority, quasi-governmental authority or
arbitration board or tribunal.

      4.6 TITLE TO PROPERTIES. Except as set forth on Schedule 2 to this
Agreement, Borrower has good and marketable title in fee simple (or its
equivalent under Applicable Law) to all Pledged Intervals which it purports to
own free from Liens.

      4.7 TRADEMARKS, LICENSES AND PERMITS. Borrower owns or possesses all of
the trademarks, service marks, trade names, copyrights, franchises and licenses,
and rights with respect thereto necessary for the conduct of its business as now
conducted and as proposed to be conducted, without any known conflict with the
rights of others. Borrower does not own any Furnishings or other tangible
personal property in any Timeshare Unit located at any Resort.

      4.8 TRANSACTION IS LEGAL AND AUTHORIZED. The execution and delivery of
this Agreement, any Note and the other Security Documents by Borrower, and the
grant of the Liens to Lender with respect to the Collateral by Borrower and
compliance by Borrower with all of the provisions of this Agreement, any Note
and the other Security Documents are:

            (a) within the company powers of Borrower; and

            (b) valid and legal acts and will not conflict with, or result in
any breach in any of the provisions of, or constitute a default under, or result
in the creation of any Lien (except Liens contemplated under this Agreement or
any other Security Document) upon any Collateral under the provisions of, any
agreement, articles of incorporation, by-laws or other instrument to which
Borrower is a party or by which such Collateral may be bound.

      4.9 NO DEFAULTS. No Default or Event of Default exists, and there is no
violation of any term of any agreement, charter instrument, bylaw or other
instrument to which Borrower is a party or by which it may be bound that would
have a Material Adverse Effect.

      4.10 GOVERNMENTAL CONSENT. Neither the nature of Borrower nor its business
or Properties, nor any relationship between Borrower and any other Person, or
any circumstance in connection with the execution or delivery of this Agreement,
the Note or the other Security Documents, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
governmental authority on the part of Borrower, as a condition of the execution,
delivery or performance of this Agreement, the Note or any other Security
Document.

      4.11 TAXES. Borrower is not in default with respect to the payment of any
taxes levied or assessed against it or any of its assets. Borrower represents
and warrants that (a) all ad valorem taxes and other taxes and assessments
levied against the Collateral which are due and payable have been paid in full,
and Borrower knows of no basis for any additional taxes or assessments against
the Resort or Collateral; and (b) it has filed all tax returns required to have
been filed by it and has paid or will pay, prior to delinquency, all taxes shown
to be due and payable on such returns, including interest and penalties, and all
other taxes that are payable by it. No tax audit is pending or threatened with
respect to Borrower.

LOAN AND SECURITY AGREEMENT

                                       41
<PAGE>

      4.12 USE OF PROCEEDS. The proceeds of the initial Advance hereunder will
be used first to pay for any Loan Costs due on the Closing Date.

      The proceeds of Subsequent Advances will be used

                  (i) first, to pay any Loan Costs then due at the time of the
      making of such Subsequent Advances, and

                  (ii) second, for general working capital needs of Borrower.

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

      4.13 COMPLIANCE WITH LAW.

            (a) Borrower is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject (including laws,
ordinances, governmental rules or regulations relating to the operation of each
Resort as a hotel) which violation would materially adversely affect the
business, prospects, profits, or condition (financial or otherwise) of Borrower
or any Collateral.

            (b) Borrower shall, in all material respects, comply fully with all
Applicable Laws in connection with the Resort, the Collateral and the sale of
Timeshare Interests, including but not limited to (i) the Interstate Land Sales
Full Disclosure Act; (ii) any applicable condominium and timeshare statutes,
rules, and regulations, including but not limited to those governing the
administration and operation of each Owner's Association and those requiring
registration of the Timeshare Interests as a legal prerequisite to the marketing
and sale thereof, (iii) Regulation Z of the Federal Reserve Board; (iv) the
Equal Credit Opportunity Act; (v) Regulation B of the Federal Reserve Board;
(vi) Section 5 of the Federal Trade Commission Act; (vii) all applicable state
and federal securities laws; (viii) all applicable usury laws; (ix) all
applicable trade practices, home and telephone solicitation, sweepstakes,
lottery, and other consumer credit and protection laws; (x) all applicable real
estate sales licensing, disclosure, reporting, and escrow laws; (xi) the
Americans with Disabilities Act of 1990 and all other accessibility
requirements; (xii) the federal postal laws; (xiii) the Real Estate Settlement
Procedures Act; (xiv) the Fair Housing Act of 1968; (xv) the FTC Privacy Act and
(xvi) all amendments to and rules and regulations promulgated under the
foregoing, all if and as applicable. Borrower has registered or is exempt from
registration in each Applicable State. Borrower's marketing and sales practices
are in compliance with all Applicable Laws including, without limitation, its
lead generation techniques. Borrower has not been contacted or notified of any
Federal Trade Commission or similar agency inquiry or investigation or any
Department of Justice inquiry or investigation in connection with the marketing
and sale of Timeshare Interests.

LOAN AND SECURITY AGREEMENT

                                       42
<PAGE>

            (c) Borrower possesses or will possess, as applicable, and will at
all times continue to possess all requisite franchises, certificates of
convenience and necessity, operating rights, approvals, licenses, permits,
consents, authorizations, exemptions, and orders as are reasonably necessary or
appropriate to carry on its business as it is now being conducted, without any
known conflict with the rights of others and, with respect to Borrower and the
Collateral, in each case subject to no mortgage, pledge, Lien, lease,
encumbrance, charge, security interest, title retention agreement, or option
other than the Permitted Exceptions. All such franchises, certificates of
convenience and necessity, operating rights, approvals, licenses, permits,
consents, authorizations, exemptions, and orders are presently or will be, as
applicable, in full force and effect, and there is no action currently pending
or threatened effort to revoke or modify any of them.

      4.14 RESTRICTIONS OF BORROWER. Other than the Sovereign Facility, Borrower
is not a party to any contract or agreement which restricts its right or ability
to incur indebtedness, or prohibits the execution of, or compliance with, this
Agreement or any of the other Security Documents or Loan Documents by Borrower.
Borrower has not agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any Collateral, whether now owned or
hereafter acquired, to be subject to a Lien other than the Liens provided for
herein, in the other Security Documents and in each Declaration.

      4.15 BROKERS' FEES. Except as set forth on Schedule 11 hereto, there are
no brokers or finders which are entitled to receive compensation for their
services rendered to Borrower with respect to the transactions described in this
Agreement and with which Borrower has had dealings.

      4.16 DEFERRED COMPENSATION PLANS. Except as disclosed on Schedule 15
attached hereto, Borrower does not have a pension, profit sharing or other
compensatory or similar plan providing for a program of deferred compensation
for any employee or officer which is subject to any requirement of the Employee
Retirement Income Security Act of 1974, as amended.

      4.17 LABOR RELATIONS. Except as disclosed on Schedule 15 attached hereto,
Borrower is not a party to any collective bargaining agreement, there are no
material grievances, disputes or controversies with any union or any other
organization of Borrower's employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any union or
organization.

      4.18 VALIDITY OF LIENS GRANTED TO LENDER. Except with respect to the
Permitted Exceptions and as provided for in Sections 3.15 and Section 3.16
hereof, all Liens granted to Lender in respect of the Collateral are, and shall
continue to be, prior in right and superior to all other Liens granted to, or
held by, any other Person.

      4.19 SOLVENCY. Borrower is not entering into this Agreement and the
transactions contemplated hereby, and does not intend to incur any obligations
hereunder or otherwise make any transfers in connection herewith, with the
actual intent to hinder, delay or defraud either present or future creditors.
After giving effect to the consummation of the transactions contemplated by this
Agreement and the making of the advances hereunder, (a) the assets of Borrower
at a fair valuation thereof on a going concern basis will not be less than its
debts, (b)

LOAN AND SECURITY AGREEMENT

                                       43
<PAGE>

Borrower is not currently engaged in or about to engage in a business or
transaction for which their remaining assets are unreasonably small in relation
to such business or transaction, and (c) Borrower will be able to pay its
respective debts as they become due. "Debt" for purposes of this Section 4.20
means any liability on a claim, and "claim" means (i) any right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or (ii) any right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured.

      4.20 TIMESHARE INTEREST REGIME REPORTS. Borrower has furnished, or will
furnish, to Lender true and correct copies of all formation and enabling
documents for each resort and each Owner's Association and all filings and/or
recordations in order to establish the condominium and the timeshare ownership
regime in respect of each Resort have been or will be done and all Applicable
Laws and statutes in connection therewith have been or will be complied with in
all material respects.

      4.21 SALE OF TIMESHARE INTERESTS. The sale and offering of sale of
Timeshare Interests (a) do not and will not constitute the sale, or the offering
of sale, of Securities subject to the registration requirements of the
Securities Act of 1933, as amended, or the blue-sky securities laws of any
Applicable State, (b) are done and will only be done in the Applicable States
(and no solicitation and no advertising in respect of the sale of Timeshare
Interests that would, in either case, be in violation of Applicable Law is done
or will be done in any other States), (c) do not violate and will not violate
any applicable federal, state or local consumer credit or sale rescission
statute, including, without limitation, any such statute of any State in which a
Purchaser may reside, and (d) do not violate and will not violate any other
applicable federal, state or local law, statute or regulation (including,
without limitation, any timeshare or subdivision law applicable to any Resort or
to the sale of Timeshare Interests and in effect in any Applicable State or in
any other State in which a Purchaser may reside or in which the sale of any such
Timeshare Interest may be closed).

      Without limiting the generality of the immediately preceding paragraph,
Borrower has, to the extent required by its activities and businesses, fully
complied with and will continue to fully comply with (1) (A) the Federal Trade
Commission Act, as amended, (B) the Interstate Land Sales Full Disclosure Act,
as amended, (C) all other applicable federal statutes and laws pertaining to the
Resort and (D) the rules and regulations promulgated under such applicable Acts,
statutes and laws and (2) all of the applicable provisions of any law of any
State (and the rules and regulations promulgated thereunder) or municipality or
other governmental or quasi-governmental authority relating to the operation of
each Resort. The sale and offering of sale of Timeshare Interests are not
effected and will not be effected by any home solicitations.

      4.22 INDEBTEDNESS. Except for described or Schedule 1 attached hereto,
indebtedness owing by Borrower to Lender arising pursuant to this Agreement and
the other Loan Documents, or trade payables incurred in the ordinary course of
the operation and maintenance of each Resort, as of the Closing Date Borrower
has no other indebtedness.

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                                       44
<PAGE>

      4.23 AFFILIATE TRANSACTIONS. Schedule 6 attached hereto contains a true,
correct and complete list of all contracts, instruments and other agreements
between (a) Borrower and any Affiliate of Borrower and (b) Borrower and any
Executive Management Member. A true, complete and current copy of each of such
agreements has been previously delivered to Lender.

      4.24 APPLICABLE LAWS. All existing Improvements at each Resort are and
will be in compliance with all applicable zoning, building, and other Applicable
Laws in connection with the establishment of each Resort, the operation of each
Resort, the sale, use and marketing, of Timeshare Interests, and the occupancy
of Timeshare Units at each Resort.

      4.25 LEASES. There are no real property leases encumbering or otherwise
affecting any Resort or encumbering any Pledged Interval.

5. CONDITIONS PRECEDENT TO INITIAL ADVANCE

      The obligation of Lender to make the initial Advance shall be subject to
the following conditions precedent (which shall have been satisfied not less
than five (5) Business Days prior to the date on which the initial Advance is to
be made):

      5.1 OPINIONS OF COUNSEL. Lender shall have received from each of (a)
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P., regulatory and Texas
counsel for Borrower, (b) Stinson Morrison Hackler, LLP, Missouri counsel for
Borrower, (c) Weinstock & Scavo, P.C., Georgia counsel for Borrower, and (d)
Mayer, Brown, Rowe & Maw, Illinois counsel for Borrower, a closing and/or
enforceability opinion, as applicable, in form and content satisfactory to
Lender and its counsel dated the date of the initial Advance.

      5.2 WARRANTIES AND REPRESENTATIONS TRUE AS OF INITIAL ADVANCE DATE. The
warranties and representations contained in this Agreement shall be true in all
material respects on the date of the making of the Advance hereunder.

      5.3 COMPLIANCE WITH THIS AGREEMENT. Borrower shall have performed and
complied with all covenants, agreements and conditions contained herein which
are required to be performed or complied with by it before or on the date of the
making of the Advance hereunder and no Default or Event of Default shall exist
hereunder on such date. Borrower shall have delivered to Lender executed copies
of this Agreement, all Security Documents (except for any Notes) and other Loan
Documents (except for any Notes), each in form and substance acceptable to
Lender.

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

            (a) Lender shall have received a certificate, dated as of the date
of the initial Advance and signed by an authorized officer of Borrower,
certifying that the conditions specified in Section 5.2 and Section 5.3 of this
Agreement have been fulfilled.

            (b) Borrower shall have delivered to Lender its certified Articles
of Incorporation and By-laws, certified by Borrower to be true and correct.

LOAN AND SECURITY AGREEMENT

                                       45
<PAGE>

            (c) Borrower shall have delivered to Lender, in form satisfactory to
Lender, a recent good standing certificate from the Secretary of State of Texas
certifying Borrower's due existence in the State of Texas, and a recent
certificate from each of the Secretary of State of Texas, the Secretary of State
of Georgia, the Secretary of State of Indiana and the Secretary of State of
Missouri certifying Borrower's qualification to do business in such States.

            (d) Borrower shall have delivered to Lender a certificate of an
officer of Borrower, dated as of the date of the making of the Advance,
certifying (i) the due authorization of Borrower to enter into this Agreement
and the other Loan Documents to which it is a party and the transactions and
instruments contemplated thereby, and (ii) the authorization, incumbency and
specimen signature of the authorized officer of Borrower, to execute and deliver
this Agreement and the other Loan Documents to which it is a party.

      5.5   UNIFORM COMMERCIAL CODE FINANCING STATEMENTS. All filings of Uniform
Commercial Code financing statements and all other filings and actions necessary
to perfect Lender's security interests in and to the Collateral shall have been
filed and confirmation thereof received. Uniform Commercial Code, judgment and
tax lien searches shall have been performed in respect of Borrower and the
results thereof shall be satisfactory to Lender.

      5.6   HAZARDOUS SUBSTANCE INDEMNITY AGREEMENT. Borrower shall have
executed and delivered to Lender the Indemnity Agreement.

      5.7   EXPENSES. Borrower shall have paid all fees and expenses required to
be paid by it pursuant to Section 10.2 of this Agreement and shall have paid the
commitment fee provided for in Section 2.5 hereof.

      5.8   MORTGAGE. Borrower shall have executed and delivered each Mortgage
for all Pledged Intervals securing the Loan as of the Closing Date to Lender.
Each Mortgage shall have been recorded or delivered to the title company for
recordation, on the date of the making of the initial Advance hereunder, in the
applicable public real property office, and all taxes, recording fees and other
fees and charges required by Applicable Law to be paid in connection therewith
shall have been duly paid in full. Each Mortgage shall have created a valid
first priority Lien in and to each Pledged Interval in respect of the
Obligations subject to no other Liens except for Permitted Exceptions.

      5.9   TITLE INSURANCE; CASUALTY INSURANCE.

            (a)   TITLE INSURANCE POLICY. Borrower shall have delivered to
Lender a mortgagee's title insurance policy (issued to Agent and in full force
and effect) in respect of each Mortgage (each policy being a "TITLE INSURANCE
POLICY") together with such endorsements thereto as Lender may require. Each
Title Insurance Policy (a) shall have been issued by a title insurance company
which is satisfactory to Lender, (b) shall be in form and substance satisfactory
to Lender and its special counsel, (c) shall be in such amounts as Lender may
require in its sole discretion, (d) shall insure that the applicable Mortgage
creates a valid first Lien in and to the applicable Pledged Interval free and
clear of all defects, encumbrances and other Liens unacceptable to Lender except
for Permitted Exceptions and (e) shall contain such further endorsements and
affirmative coverage as Lender may request. All premiums in respect of such

LOAN AND SECURITY AGREEMENT

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Title Insurance Policy shall have been paid in full and evidence thereof shall
have been delivered to Lender.

            (b) INSURANCE. Borrower shall have delivered to Lender certificates
of insurance evidencing the insurance policies and endorsements required to be
delivered pursuant to Section 3.5 hereof, together with copies of such insurance
policies certified by Borrower to be true and correct. All premiums in respect
of such insurance policies shall have been paid in full and evidence thereof
shall have been delivered to Lender.

      5.10  ENVIRONMENTAL SITE ASSESSMENT REPORT. Borrower (at its own expense)
shall have delivered to Lender not less than 15 Business Days prior to the date
of the making of the Advance the most recent "Phase I" environmental survey in
Borrower's possession of each Resort in form and substance acceptable to Lender.

      5.11  TAXES. Borrower shall have delivered to Lender copies of the most
recent tax receipts for each Resort (or certificates in respect thereof)
evidencing no delinquency in the payment thereof.

      5.12  INSPECTION. Borrower shall have permitted Lender to make an
inspection/audit of its books, accounts and records and such other papers as it
may desire and of its premises and each resort, as Lender may in its sole
discretion determine. Such inspection/audit shall be satisfactory to Lender (in
its sole determination).

      5.13  DELIVERY OF:

            (a) LICENSES. Borrower shall have delivered to Lender copies of all
licenses, approvals, consents and permits required for Borrower to comply with
all Applicable Laws in the operation of the Resort.

            (b) FINANCIAL STATEMENTS. Borrower shall have delivered financial
statements of Borrower showing a Tangible Net Worth of not less than
$100,000,000, in form and substance acceptable to Lender. Additionally, Borrower
shall have delivered to Lender a projected balance sheet, income statement,
statements of cash flow projections and other financial projection reports and
statements requested by Lender for the calendar years 2005, 2006 and 2007.

            (c) REQUEST. Borrower shall have submitted a written request for the
Advance which shall be substantially in the form of Exhibit E hereto.

            (d) INTERCREDITOR AGREEMENT. Borrower shall have delivered the
Intercreditor Agreement executed by Borrower and each financial institution
party thereto.

            (e) NEGATIVE PLEDGE. Borrower shall have delivered each Negative
Pledge Agreement executed by Borrower in favor of Lender.

      5.14  PROCEEDINGS SATISFACTORY. All actions taken in connection with the
execution of this Agreement, the Note, any other Security Document and all
documents and papers relating thereto and the with the making of the initial
advance shall be satisfactory to Lender and its counsel.

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<PAGE>

      5.15  MINIMUM AMOUNT. An amount equal to at least $10,000,000 shall have
been advanced by Lender to Borrower under this Agreement and the Receivables
Loan Agreement unless otherwise agreed to or waived by Lender.

6.    SUBSEQUENT ADVANCES CLOSING CONDITIONS

      After the making of the initial Advance, the obligation of Lender to make
additional Advances (individually a "SUBSEQUENT ADVANCE") on a Business Day of
any month (herein referred to as a "SUBSEQUENT ADVANCE DATE") or permit a
Property Substitution shall be subject to the satisfaction of all of the
following conditions precedent (except that, to the extent (i) a Subsequent
Advance represents a re-borrowing under this Agreement, (ii) Borrower has
previously delivered the items set forth in this Article 6 in connection with a
prior Advance and (iii) such items have not been amended and no material adverse
change has occurred with respect to such items, Borrowers need not re-deliver
such items):

      6.1   SPECIAL SUBMISSIONS.

      (a)   AMENDMENTS TO SILVERLEAF CLUB. Borrower shall have submitted to
            Lender any material amendments and/or modifications to the
            Management Agreement between Borrower and Silverleaf Club and
            Orlando Breeze Resort Club described on Schedule 7 attached hereto,
            which amendments and modifications shall be acceptable to Lender in
            its reasonable discretion and not in any manner adverse to Lender or
            the Collateral. Borrower shall have submitted to Lender any material
            amendments and/or modifications to each of those certain Master Club
            Agreements or Silverleaf Club Agreements between Silverleaf Club and
            each Owners Association or between Orlando Breeze Resort Club and
            the Owners Association related to the Orlando Breeze Resort located
            in Orlando, Florida.

      (b)   MORTGAGE(S). Borrower shall have executed and delivered a Mortgage
            to Lender. Each Mortgage shall be recorded or delivered to a title
            company acceptable to Lender for recordation in the applicable
            public real property office, and all taxes, recording fees and other
            fees and charges required by Applicable Law to be paid in connection
            therewith shall have been duly paid in full in accordance with
            Lender's instructions to the title company responsible for such
            filing. Each Mortgage shall have created a valid Lien in and to the
            Pledged Interval in respect of the Obligations subject to no other
            Liens except for Permitted Exceptions.

      (c)   TITLE COMMITMENT(S). Lender shall have received not less than ten
            (10) Business Days prior to the making of a Subsequent Advance or
            consummation of the Property Substitution, unless otherwise agreed
            to by Lender, a commitment for a Title Insurance Policy (to be
            issued to Lender and in full force and effect) in respect of each
            Mortgage covering Pledged Intervals constituting Collateral to
            secure the Obligations, together with such endorsements thereto as
            Lender may require, which shall (a) have been issued by a title
            insurance company which is satisfactory to Lender, (b) be in form
            and substance satisfactory to Lender and its special counsel, (c) be
            in such amounts as Lender may require in its sole discretion, (d)
            insure that the new Mortgage to be filed creates a valid first Lien
            in

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<PAGE>

            and to the applicable Pledged Intervals free and clear of all
            defects, encumbrances and other Liens unacceptable to Lender and (e)
            contain such further endorsements and affirmative coverage as Lender
            may request. All premiums in respect of such Title Insurance Policy
            shall have been paid in full and evidence thereof shall have been
            delivered to Lender.

      (d)   INSPECTION. Borrower shall have permitted Lender to make an
            inspection/audit of the additional Pledged Intervals, and such
            Pledged Intervals and other proposed Colalteral related thereto
            shall be acceptable to Lender in its Permitted Discretion.

      (e)   OPINIONS OF COUNSEL. Lender shall have received from Meadows, Owens,
            Collier, Reed, Cousins & Blau, L.L.P., related to the due
            authorization, execution and delivery of the Loan Documents executed
            in connection with Subsequent Advance and, with respect to Loan
            Documents governed by Maryland law, the enforceability of such Loan
            Documents, and from local counsel licensed in the State or foreign
            jurisdiction where the additional Pledged Intervals are located, a
            legal opinion in form and content satisfactory to Lender and its
            counsel dated the date of the Subsequent Advance.

      (f)   REPRESENTATIONS AND WARRANTIES. Each of the representations and
            warranties made by Borrower in or pursuant to this Agreement and any
            other Loan Documents to which it is a party, and each of the
            representations and warranties contained in any certificate,
            document or financial or other statement furnished at any time under
            or in connection with this Agreement or any related agreement shall
            be true and correct in all material respects on and as of such date
            as if made on and as of such date.

      (g)   EVENTS OF DEFAULT. No Event of Default or Default shall have
            occurred and be continuing on such date, or would exist after giving
            effect to the Subsequent Advance or Property Substitution requested
            to be made, as applicable, on such date; provided, however, that
            Lender, in its sole discretion, may continue to make Subsequent
            Advances or allow Property Substitutions notwithstanding the
            existence of an Event of Default or Default and that any Subsequent
            Advances so made or Property Substitutions so allowed shall not be
            deemed a waiver of any such Event of Default or Default.

      (h)   FINANCING STATEMENTS. All filings of Uniform Commercial Code
            financing statements and all other filings and actions necessary to
            perfect Lender's security interests in and to the additional
            Collateral shall have been filed. If determined necessary by Lender
            in its Permitted Discretion, Uniform Commercial Code, judgment and
            tax lien searches shall have been performed in respect of Borrower
            and the results thereof shall be satisfactory to Lender.

      (i)   INSURANCE. To the extent not already delivered to Lender, Borrower
            shall have delivered to Lender certificates of insurance evidencing
            the insurance policies and endorsements required to be delivered
            pursuant to Section 3.5 hereof, together

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                                       49
<PAGE>

            with copies of such insurance policies certified by Borrower to be
            true and correct.

      (j)   CERTIFICATE OF OCCUPANCY. Borrower shall have delivered to Lender a
            certificate of occupancy or other evidence of the completion of any
            construction of each Pledged Interval acceptable to Lender.

      (k)   INDEMNITY. Borrower shall have executed and delivered to Lender a
            Hazardous Substance Indemnity Agreement substantially in the form
            executed as of the Closing Date, acceptable to Lender.

      (l)   TIMESHARE REGIME. Borrower shall have delivered to Lender evidence
            that the Pledged Intervals are included in the applicable timeshare
            regime at each Resort and are subject to the applicable Declaration
            encumbering such Resort, and if requested by Lender, the Recorded
            Map related to such Pledged Intervals.

      (m)   SECTION 2.1 CONDITIONS. All of the conditions to lending set forth
            in Section 2.1 shall have been satisfied.

      6.2   REQUESTS FOR SUBSEQUENT ADVANCE. A request for such Subsequent
            Advance

            (a) shall be in writing and shall state (i) that all conditions set
forth in Section 6.1 hereof have been satisfied and (ii) that all construction
is competed with respect to each Pledged Interval related to each Subsequent
Advance.

            (b) after giving effect to the Subsequent Advance to be made, the
aggregate Advances shall not exceed the maximum amount of Advances permitted
under this Agreement, including Section 2.1 hereof,

            (c) shall have been delivered to the office of Lender at least 10
Business Days in advance of the Subsequent Advance Date,

            (d) shall be accompanied with an executed Borrowing Base
Certificate,

            (e) shall otherwise be substantially in the form of Exhibit F
attached to this Agreement,

            (f) each of the representations and warranties made by Borrower in
or pursuant to this Agreement and any other Loan Documents to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any related agreement shall be
true and correct in all material respects on and as of such date as if made on
and as of such date,

            (g) no Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Subsequent
Advances requested to be made, on such date; provided, however, that Lender, in
its sole discretion, may continue to make Subsequent Advances notwithstanding
the existence of an Event of Default or Default and that

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                                       50
<PAGE>

any Subsequent Advances so made shall not be deemed a waiver of any such Event
of Default or Default, and

            (h) in the case of any Subsequent Advances requested to be made,
after giving effect thereto, the aggregate Advances shall not exceed the maximum
amount of Advances permitted under Section 2.1 hereof.

      All of the requirements in clause (a) through clause (f) and clause (h)
shall be satisfactory to Lender. Borrower acknowledges that Lender shall not
make Advances in respect of costs which have not been approved by it.

      6.3   DEFAULTS; EXPENSES; MISCELLANEOUS.

            (a) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall exist immediately prior to the making of the Subsequent Advance or, after
giving effect thereto, immediately after the making of such Subsequent Advance.

            (b) FEES AND EXPENSES. Borrower shall have paid all fees and
expenses required to be paid by Section 10.2 of this Agreement in connection
with such requested Subsequent Advance.

            (c) PRIOR ADVANCES. No other Advance shall been made during the
calendar month in which such Subsequent Advance Date falls.

      6.4   DISBURSEMENTS. Upon the occurrence of an Event of Default, Lender
shall have the right, but not the obligation, to disburse and directly apply the
proceeds of any Subsequent Advance to the satisfaction of any of Borrower's
obligations hereunder, and any Subsequent Advance by Lender for such purpose
shall be considered part of the Loan and shall be secured by the Security
Documents. Borrower hereby authorizes Lender to hold, use, disburse and apply
the Loan for payment of costs and expenses incident to the Loan, any Pledged
Intervals or any Resort, and the payment or performance of any obligation of
Borrower hereunder. Borrower hereby assigns, pledges and grants a security
interest in the proceeds of the Loan to Lender for such purposes. Upon the
occurrence of an Event of Default, (a) Lender may advance and incur such
reasonable expenses as Lender deems necessary to preserve the Pledged Interval
or any Resort, and any other security for the Loan, and such expenses, even
though in excess of the amount of the Loan, shall be secured by the Security
Documents, and shall be payable to Lender on demand, and (b) Lender may disburse
any portion of any Subsequent Advance at any time, and from time to time, to
persons other than Borrower for the purposes specified in this Section 6.5
irrespective of the provisions of Section 2.1 hereof, and the amount of
Subsequent Advances to which Borrower would thereafter otherwise be entitled
shall be correspondingly reduced. In addition to the foregoing, and whether or
not an Event of Default has occurred hereunder, Lender, whether or not requested
to do so by Borrower shall have the right, but not the obligation, to disburse
and directly apply the proceeds of any Subsequent Advance to the payment of (a)
the costs and fees of the Escrow Agent (if applicable); and (b) all reasonable
fees and expenses of internal and external counsel to Lender.

      6.5   PROCEEDINGS SATISFACTORY. All actions taken in connection with the
Subsequent Advance shall be reasonably satisfactory to Lender and its counsel.
Lender and its counsel shall

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<PAGE>

receive copies of such documents and papers as Lender or such counsel may
reasonably request in connection with any such Subsequent Advance, all in form
and substance satisfactory to Lender and its counsel.

7.    COVENANTS

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

      7.1   PAYMENT OF TAXES AND CLAIMS. Except as otherwise provided for in
Section 3.7 and Section 3.8 hereof, Borrower shall pay, or cause to be paid,
before they become delinquent:

            (a) all taxes, assessments and governmental charges or levies
imposed upon it, any Pledged Interval, any Resort or other real and personal
property of Borrower, including, without limitation, the Collateral; and

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

      7.2   MAINTENANCE OF PROPERTIES; BORROWER EXISTENCE; INDEBTEDNESS; LIENS;
BUSINESS. Borrower shall:

            (a) PROPERTY--maintain each Resort in good repair, working order and
condition and make all necessary renewals, repairs, replacements, additions,
betterments and improvements thereto and maintain, or cause to be maintained,
each resort and each Pledged Interval in good repair, working order and
condition and make, or cause to be made, all necessary repairs, replacements,
additions, betterments and improvements to each pledged Unit and Resort;

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

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

            (d) BORROWER EXISTENCE AND RIGHTS--do or cause to be done all things
necessary or required to preserve and keep in full force and effect its company
existence, rights, powers and franchises, including, without limitation, its
authorization to do business in each Applicable State;

            (e) COMPLIANCE WITH LAW--not be in violation of (i) any laws,
ordinances, governmental rules and regulations to which it is subject, and to
that end, Borrower shall not fail to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the

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                                       52
<PAGE>

ownership of its Properties or to the conduct of its business, which violation
or failure to obtain might materially and adversely affect the business,
prospects, profits, property or condition (financial or otherwise) of Borrower,
including, without limitation, any zoning laws, land use, design controls,
subdivision controls or Environmental Protection Laws applicable to its real
property (including, without limitation, each Resort), (ii) any statutes, rules
and regulations, whether now or hereafter in force, in any jurisdiction in which
Borrower may make offers to sell or sales of Timeshare Interests relating to the
right to do business in such jurisdiction in any material respect and (iii) any
applicable federal, state or municipal statutes, rules and regulations relating
to sales of Timeshare Interests and the manner of evidencing and financing the
same to the end that all of the Contracts shall be valid, binding and legally
enforceable in accordance with their respective terms subsequent to the
assignment thereof to Lender in any material respect;

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

            (g) INDEBTEDNESS--not incur any Indebtedness for borrowed money
secured by all or any Collateral, without Lenders' prior written consent;
provided, however, that in the event Borrower enters into a credit facility for
borrowed money from any other senior lender providing indebtedness to Borrower,
Borrower shall use its best efforts to provide to Lender an Intercreditor
Agreement related to such credit facility and the collateral granted to such
other senior lender related thereto.

            (h) LIENS--(i) not allow any Liens or encumbrances whatsoever to
attach to the Collateral other than the Liens and security interests of Lender
created by the Security Documents, any Liens in favor of any Owner's Association
under a Declaration and the Permitted Exceptions set forth on Schedule 2 hereto
and (ii) cause the Liens and security interests of Lender created by the
Security Documents in and to the Collateral to continue to be valid,
enforceable, first priority perfected Liens and security interests subject to no
other Liens except as set forth in this Agreement or in any other Security
Document or in Schedule 2 hereto;

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

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

            (k) ASSIGNMENT--not assign its interest in any Pledged Interval
(other than sales of Timeshare Interests the ordinary course of Borrower's
business) or this Agreement or any interest herein or therein, or all of any
part of any disbursements to be made hereunder, voluntarily, by operation of law
or otherwise;

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<PAGE>

            (l) SALES--Borrower shall not intentionally or knowingly fail to
offer for sale, or discourage the sale of, or not selling any of the Timeshare
Interests at any Resort constituting Pledged Intervals; and

      7.3   PAYMENT OF NOTES AND MAINTENANCE OF OFFICE. Borrower shall
punctually pay or cause to be paid the principal, interest and all other amounts
to become due in respect of the Note or hereunder according to the terms thereof
and hereof (all of the terms of the Note are hereby incorporated herein by
reference). All payments hereunder or under the Note shall be made in accordance
with the payment instructions set forth in Schedule 12 to this Agreement.
Borrower shall maintain an office at 1221 River Bend Drive, Dallas, Texas 75247,
where notices, presentations and demands in respect of this Agreement, the Note
or any other Security Document or Loan Document may be made upon Borrower. Such
offices shall be maintained at said address of Borrower until such time as
Borrower shall so notify Lender, in writing, of any change of location of such
offices. The Books and Records of Borrower shall be maintained at said address.
Borrower shall not change its name without 30-day prior written notice to
Lender.

      7.4   SALE OF PROPERTIES. Without the prior written consent of Lender,
Borrower shall not sell, lease, transfer or otherwise dispose of any of the
Collateral, provided that Borrower

            (a) may sell the unsold Timeshare Interests in the ordinary course
of its business to unaffiliated consumers, and

            (b) may sell and dispose of (and receive the proceeds thereof) in
the ordinary course of its business, free from any Lien created or contemplated
by this Agreement, items of Collateral consisting of inventory;

and provided further that Borrower may sell Timeshare Notes, subject to the
terms of this Agreement on the condition that all cash proceeds thereof not
withheld or reserved be delivered to Lender and applied to the payment of the
Loan.

      7.5   CONSOLIDATION AND MERGER. Without the prior written consent of
Lender, which consent shall not be unreasonably withheld, Borrower shall not
consolidate with or merge into any other Person or permit any other Person to
consolidate with or merge into it unless Borrower is the surviving entity;
provided, however, that in the event Lender does not consent to such merger or
consolidation and Borrower elects to close such transaction, Borrower shall have
the right to refinance Lender and pay to Lender in cash in full all outstanding
Obligations hereunder (including accrued and unpaid interest thereon), other
than the prepayment fee described in Section 2.3(c) hereof.

      7.6   INTENTIONALLY DELETED.

      7.7   INTENTIONALLY OMITTED.

      7.8   COMPLIANCE WITH ENVIRONMENTAL LAWS. Borrower shall comply, and shall
cause each Resort and all Pledged Intervals to be in compliance, with

            (a) all Environmental Protection Laws (including, without
limitation, all federal, state and local environmental or pollution-control
laws, regulations, orders and decrees

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                                       54
<PAGE>

governing the emission of waste water effluent, the treatment, transportation,
disposal, generation and storage of solid and hazardous waste, hazardous and
toxic substances and air pollution, and/or setting forth general environmental
conditions),

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

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

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

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

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

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

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                                       55
<PAGE>

or more transfers of Pledged Intervals or any Resort (or any portion thereof) by
deed or otherwise, by whosoever made.

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

      7.9   TRANSACTIONS WITH AFFILIATES; PRINCIPAL PROPERTIES. Borrower shall
not enter into any transaction including, without limitation, the purchase, sale
or exchange of real or personal property of the Borrower or the rendering of any
service with any Affiliate of Borrower or any Executive Management Member (i)
except in the ordinary course of, and pursuant to the reasonable requirements
of, Borrower's business and upon fair and reasonable terms no less favorable to
Borrower than would be obtained in a comparable arm's-length transaction with a
Person not an Affiliate, and (ii) provided such transaction will not constitute,
or will not reasonably be expected to constitute, a Material Adverse Effect.

      7.10  USE OF LENDER NAME. Borrower shall not, nor shall it permit any
Affiliate to, without the prior written consent of Lender, use the name of
Lender or the name of any affiliate of Lender in connection with any of its
respective businesses or activities, except in connection with internal business
matters and as required in dealings with governmental agencies or as may be
required by law.

      7.11  INTENTIONALLY DELETED.

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

      7.13  FURTHER ASSURANCES. Borrower shall from time to time execute and
deliver to Lender such other instruments, certificates and documents and shall
take such other action and do all other things as may from time to time be
reasonably requested by Lender in order to implement or effectuate the
provisions of, or more fully perfect the rights granted or intended to be
granted by Borrower to Lender pursuant to the terms of, this Agreement, the Note
or any other Security Document. Borrower agrees, in its capacity as Declarant
(to the extent permitted

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by Applicable Law, any Declaration, and any Owner's Association's By-Laws), to
cause the applicable Owner's Association to take such action and to do all other
things as may from time to time be reasonably requested by Lender in order to
implement or effectuate the provisions of this Agreement and the other Security
Documents.

      7.14  FINANCIAL STATEMENTS. Borrower shall submit to Lender the following:

            (a) ANNUAL STATEMENTS--As soon as practicable after the end of each
fiscal year of Borrower, and in any event no later than 90 days thereafter,
duplicate copies of:

                  (i) a consolidated balance sheet of Borrower and its
      subsidiaries and affiliates as at the end of such fiscal year, and

                  (ii) a consolidated statement of income of Borrower and its
      subsidiaries and affiliates for such fiscal year and an annual sales
      report for all Pledged Intervals, and

                  (iii) a consolidated statement of changes in cash flows of
      Borrower and its subsidiaries and affiliates during such fiscal year,

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

                  (v) notes to such financial statements.

      Each of the above shall have been audited and prepared in accordance with
GAAP by an independent certified public accounting firm, selected by Borrower
and acceptable to Lender, in reasonable detail and shall set forth, in each
case, in comparative form the figures for the previous fiscal year, and shall be
certified as complete and correct by an officer or member of Borrower. The above
financial statements shall be accompanied by a certificate of an officer or
member of Borrower, which certificate shall be acceptable to Lender and shall,
without qualification, state that such financial statements fairly present the
financial condition of Borrower and have been prepared consistently with past
practices. In addition, Borrower shall, within one hundred twenty (120) days of
the end of the fiscal year deliver to Lender similar annual financial statements
for the Silverleaf Club and the Orlando Breeze Resort Club.

      In the event that the aforesaid annual financial statements are not in
form and content satisfactory to Lender, in its sole determination, Borrower
shall, within 90 days of the receipt of Lender's written request therefor,
deliver to Lender duplicate copies of the aforesaid financial statements
together with an unqualified opinion thereon of an independent certified public
accounting firm, selected by Borrower and satisfactory to Lender, which opinion
shall state that such financial statements present fairly the financial
condition of Borrower have been prepared in accordance with generally accepted
accounting principles, procedures and practices consistently applied (except for
changes in application in which such accountants concur) and that the
examination of such financial statements by such accountants has been made in
accordance with generally accepted auditing standards, and accordingly included
such tests of the accounting records and such other auditing procedures as were
considered necessary in the

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circumstances. The aforesaid audited financial statements shall be in form and
content satisfactory to Lender.

            (b) MONTHLY STATEMENTS--As soon as practicable after the end of each
calendar month of Borrower, and in any event no later than 30 days thereafter,
duplicate copies of:

                  (i) a consolidated balance sheet of Borrower as at the end of
      such calendar month,

                  (ii) a consolidated statement of income of Borrower for such
      calendar month,

                  (iii) a consolidated statement of changes in cash flows of
      Borrower during such calendar month,

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

                  (v) a Borrowing Base Certificate, and

                  (vi) such other requests, statements, operation audits or
      other information as Lender may request from time to time.

      Each of the above shall have been internally prepared in reasonable detail
and in accordance with GAAP and shall be in form and substance acceptable to
Lender, subject to changes resulting from year-end adjustments, and shall set
forth in each case in comparative form the figures for the corresponding periods
in the immediately preceding fiscal year, and shall be certified as complete and
correct by an officer or member of Borrower.

            (c)   NOTICE OF PENDING LITIGATION--Within thirty (30) days after
the end of each calendar quarter, a statement of any litigation or legal action
pending or threatened against Borrower, Silverleaf Club, Orlando Beach Resort
Club or any Owner's Association, in which the disputed amount or potential
damages are greater that $50,000 individually, or $100,000 in the aggregate.

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

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

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

            (g)   FINANCIAL INFORMATION--As promptly as possible after the
receipt thereof, all financial statements, budgets and other information
distributed by the Silverleaf Club and Orlando Breeze Resort Club. Borrower, as
Declarant or otherwise, shall cause (or use its best efforts to cause, if not
Declarant) the Silverleaf Club and Orlando Breeze Resort Club to prepare annual
financial statements and an annual budget, and shall thereafter immediately
deliver the same to Lender.

            (h)   SALES INFORMATION--On or before the 15th day of each
month, a report in a form and substance satisfactory to Lender showing the
previous month's reservations and sales of, and cancellations of reservations
and sales of Timeshare Interests at each Resort.

            (i)   REVIEW MEETING--If requested by Lender, Borrower shall be
available in person or via teleconference on a quarterly basis for a review
meeting regarding the status of sales of Timeshare Interests.

            (j)   INVENTORY REPORT--On or before the thirtieth (30th) day
following the end of each calendar quarter, an inventory report acceptable to
Lender which sets forth the Borrower's cost basis for all Pledged Intervals, and
the actual sales price for Pledged Intervals released by Lender and sold by
Borrower during such calendar quarter, identified by Resort, location, type of
Timeshare Interest and season.

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

      7.15 OFFICER'S CERTIFICATE. The financial statements delivered to Lender
pursuant to Section 7.14(a) and Section 7.14(b) of this Agreement shall be
accompanied by a certificate of Borrower setting forth:

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

            (b)   EVENT OF DEFAULT--a statement that the signer has reviewed
the relevant terms of this Agreement (and all other agreements and exhibits
between the parties) and has made, or caused to be made, under his supervision,
a review of the transactions and conditions of Borrower from the beginning of
the period covered by the financial statements or reports being delivered
therewith to the date of the certificate and that such review has not disclosed
the existence during such period of any condition or event which constitutes a
Default or Event of Default or, if any such condition or event existed or exists
or will exist, specifying the nature and

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period of existence thereof and what action Borrower has taken or proposes to
take with respect thereto.

      7.16 INSPECTION(n) . Borrower shall permit Lender or its
representatives to make such inspections/audits or appraisals of its books,
accounts, records, orders, original correspondence and such other papers as it
may desire and of its premises, each Resort, any Pledged Interval and the other
Collateral, from time to time, as Lender may in its sole discretion determine.
Borrower shall supply copies of such records and papers as Lender may reasonably
request, and shall permit Lender to discuss Borrower's affairs, finances and
accounts with Borrower's officers, employees and independent public accountants
(and by this provision Borrower hereby authorizes said accountants to discuss
with Lender the finances and affairs of Borrower), all at reasonable times and
as often as may be desired by Lender. Borrower further agrees to supply Lender
with such other reasonable information relating to Borrower and the Collateral
as Lender may request. With respect to any inspections, audits and/or appraisals
referred to in this Section 7.16, Borrower shall pay for all out-of-pocket costs
and expenses incurred by Lender (including, without limitation, travel expenses,
but excluding salaries of employees of Lender) and shall promptly reimburse
Lender therefor upon receipt by Borrower of a written demand therefor from
Lender.

      7.17 SALES. The Sales and Marketing Program shall at all times be
acceptable to Lender in its Permitted Discretion.

      7.18 MINIMUM TANGIBLE NET WORTH. Borrower shall at all times maintain a
minimum Tangible Net Worth in an amount not less than (i) $100,000,000 as of
December 31, 2004, and (ii) $100,000,000, plus fifty percent (50%) of Borrower's
quarterly Consolidated Net Income for each calendar quarter thereafter.

      7.19 LEVERAGE RATIO. Borrower shall maintain a Leverage Ratio of not
greater than 6.0 to 1.0 at all times during the term of the Loan.

      7.20 MINIMUM NET INCOME. Commencing March 31, 2005, and as of the last day
of each calendar quarter thereafter, for the four (4) calendar quarter period
ending on such date, Borrower and its subsidiaries shall have, on a consolidated
basis, a Net Income of not less than $1.00.

      7.21 CONSOLIDATED NET INCOME. Borrower and its subsidiaries shall not have
a Consolidated Net Income, of less than $0.00 for any two (2) consecutive fiscal
quarters.

      7.22 MAXIMUM DELINQUENCY. Borrower will not permit as of the last day of
each calendar month, for the immediately preceding twelve (12) calendar months,
on a rolling twelve (12) month basis, its over 30-day delinquency rate on its
entire Notes Receivable (as defined in the Receivables Loan Agreement) portfolio
serviced by Borrower (including, without limitation, all Pledged Notes
Receivable pledged to Lender thereunder, under and all Notes Receivable pledged
pursuant to the Textron Facility, the DZ Facility and the Sovereign Facility) to
be greater than ten percent (10%).

      7.23 MARKETING AND SALES EXPENSES. As of the last day of each fiscal
quarter, commencing with the fiscal quarter ending March 31, 2005, Borrower will
not permit the four

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quarter cumulative ratio of Sales and Marketing Costs to the Borrower's net
proceeds from the sale of Timeshare Interests as recorded on the Borrower's
financial statements for the immediately preceding four (4) consecutive fiscal
quarters of the Borrower to equal or exceed a ratio of .550 to 1; provided,
however, that notwithstanding the foregoing, in the event that Borrower delivers
written evidence satisfactory to Lender that the ratio in this Section 7.23 is
no longer required to be tested under each of the Textron Facility and the
Sovereign Facility the covenant contained in this Section 7.23 shall no longer
be required.

      7.24 DEBT SERVICE COVERAGE RATIO. Borrower shall maintain as of the last
day of any fiscal quarter a Debt Service Coverage Ratio of not less than 1.25 to
1.00 for the period of four consecutive fiscal quarters then ended on such day.

      7.25 TEXTRON FACILITY, SOVEREIGN FACILITY, AND DZ FACILITY. Borrower will
comply with each of the terms and conditions of the Textron Facility, the
Sovereign Facility, and the DZ Facility and will promptly deliver to Lender,
upon receipt by Borrower, copies of any notices received by Borrower in
connection with any of the foregoing credit facilities.

      7.26 MAINTAINING AFFILIATION WITH EXCHANGE COMPANIES. Following the date
hereof and thereafter until Borrower has paid to Lender all sums due under this
Agreement and all documents delivered pursuant hereto, Borrower shall cause each
Resort and the Silverleaf Club to maintain in good standing its membership with
RCI or other major internationally recognized timeshare exchange company
acceptable to Lender with its corporate headquarters in the United States.

      7.27 SALES. Borrower shall not sell more than fifty-two (52) Timeshare
Interests in any Timeshare Unit.

8.    EVENTS OF DEFAULT

      8.1 DEFAULT. Borrower hereby covenants, agrees and acknowledges that an
Event of Default shall exist under this Agreement if any of the following events
or conditions (each, an "EVENT OF DEFAULT") shall occur and be continuing:

            (a) PAYMENTS--(i) failure to make any payment of interest on the
Note on or before the due date thereof; (ii) failure to make any payment of
principal of the Note on or before the due date thereof; or (iii) failure to
make any other payment required pursuant to the terms of this Agreement, the
Note or any other Loan Document on or before the due date thereof and any such
failure remains uncured for three (3) calendar days after Lender has provided
Borrower with written or verbal notice thereof; or

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

            (c) OTHER COVENANTS--(i) the failure by Borrower to comply with any
covenant or agreement relating to such Person contained in this Agreement or any
other Loan Document (other than with respect to the failure to make timely
payments in respect of the Loan

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as provided in Section 8.1(a) hereof or a violation of the covenants and
agreements set forth in Sections 7.2(g), (h), or (k), or Sections 7.4, 7.5, 7.9,
7.16, 7.18, 7.19, 7.20, 7.21, 7.22, 7.23 and 7.24 hereof, for which there shall
be no cure period) and, such failure shall continue for fifteen (15) days after
notice of such failure is provided by Lender, or (ii) the failure by Borrower to
comply with any covenant, or agreement, or violation of any of the covenants set
forth in Sections 7.2(g), (h) or (k), or Sections 7.4, 7.5, 7.9, 7.16, 7.18,
7.19, 7.20, 7.21, 7.22, 7.23 and 7.24; or

            (d) MATERIAL ADVERSE CHANGE--any material adverse change in or in
respect of any Collateral (including, without limitation, the termination of any
applicable timeshare or condominium regime whether by consent of the Timeshare
Unit owners or Timeshare Interest owners or otherwise, any modification or
amendment to any Declaration which shall, in the reasonable opinion of Lender,
adversely affect any Collateral or the operations or prospects of any Resort, or
the substantial destruction of any Pledged Interval) or in the financial
condition of Borrower; or

            (e) INSOLVENCY--(i) a receiver, liquidator, custodian or trustee of
Borrower, or of all or any of its assets, shall be appointed by court order and
such order remains in effect for more than 60 days; or an order for relief shall
be entered with respect to Borrower, or Borrower shall be adjudicated a bankrupt
or insolvent; or any of the assets of Borrower shall be sequestered by court
order and such order remains in effect for more than 60 days; or a petition
shall be filed against Borrower, under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, and shall not be dismissed
within 60 days after such filing; or (ii) the Borrower shall file a petition in
voluntary bankruptcy or seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
shall consent to the filing of any petition against it under any such law; or
(iii) Borrower shall make an assignment for the benefit of its creditors, or
shall admit in writing its inability, or shall fail, to pay its debts generally
as they become due, or shall consent to the appointment of a receiver,
liquidator or trustee of Borrower, or of all or any part of its assets; or

            (f) JUDGMENT--final judgment or judgments for the payment of money,
the aggregate of which exceeds $50,000, shall be outstanding against Borrower
and any of such judgments shall have been outstanding for more than 30 days from
the date of its entry and shall not have been discharged in full, bonded against
or stayed; or

            (g) DEFAULT IN LENDER AGREEMENTS--any default (after giving effect
to the expiration of any applicable grace periods) under, and as defined in, any
other agreement, now existing or hereafter entered into, between Borrower and
Lender or any affiliate of Lender; or

            (h) DEFAULT BY BORROWER IN OTHER AGREEMENTS--any default by Borrower
in the payment of material indebtedness for borrowed money (including any
indebtedness pursuant to the Textron Facility, the DZ Facility, the Sovereign
Facility or the Bond Holder-Exchange Transaction); or any other default under
such indebtedness which accelerates or permits the acceleration (after the
giving of notice or passage of time, or both) of the maturity of such
indebtedness, whether or not such default has been waived by the holder of such
indebtedness;

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provided, however that Borrower shall not be in default pursuant to this
paragraph 8.1(h) with respect to any securitization transaction in which
Borrower serves as a "servicer" rather than as a "borrower" or "issuer", and an
event of default in such securitization transaction does not result in any
recourse against or direct financial liability to Borrower.

            (i) SUSPENSION OF SALES--Borrower has received a Suspension of Sales
Order or Sanction with respect to all of its Resorts and such Suspension of
Sales Order or Sanction shall have been outstanding for more than 60 days from
the date of its entry and shall not have been discharged in full or stayed by
appeal, bond or otherwise; or

            (j) ABANDONMENT--Borrower abandons any Resort or any of the Pledged
Intervals;

            (k) LIQUIDATION, ETC.--the liquidation, termination, dissolution,
merger, consolidation or failure to maintain good standing in any Applicable
State or the state of its formation (or in the case of an individual, the death
or legal incapacity) of Borrower or any Person obligated to pay any part of the
Obligations; or

            (l) OTHER DEFAULTS--any material default shall occur in any of the
covenants or Obligations set forth in any of the Loan Documents, or any other
default or event of default occurs in connection with any other loans or
financing arrangements that Borrower, or any of their Affiliates may have with
Lender, including but not limited to the Receivables Loan.

      8.2   DEFAULT REMEDIES.

            (a)   ACCELERATION OF OBLIGATIONS; RIGHT TO DISPOSE OF COLLATERAL.
If an Event of Default under Section 8.1(e) of this Agreement shall occur, then
the Obligations shall, automatically and without notice or demand by Lender,
become at once due and payable, and Borrower will forthwith pay to Lender, in
addition to any and all sums and charges otherwise due in respect of the
Obligations and the entire principal of and interest accrued on the Note
(calculated as of the date of such acceleration). If any other Event of Default
shall occur, all of the Obligations shall, at the option of Lender, and without
notice or demand by Lender, become at once due and payable, and Borrower will
forthwith pay all sums and charges otherwise due in respect of the Obligations
and the entire principal of and interest accrued on the Note (calculated as of
the date of such acceleration). Lender shall have all the rights and remedies of
a secured party under the Maryland or the Applicable State Uniform Commercial
Code, all the rights and remedies under each Mortgage and all other legal and
equitable rights to which it may be entitled, including, without limitation and
without further notice to Borrower, the right to collect and/or continue to
collect all payments being made or to be made on the Contracts and to apply such
payments to the Obligations and to sue in its own name (or the name of Borrower)
the Purchaser or purchaser under any Contract. Lender shall also have the right
to require Borrower to assemble the Collateral, at Borrower's expense, and make
it available to Lender at a place to be designated by Lender, which is
reasonably convenient to both parties, and Lender shall have the right to take
immediate possession of the Collateral and may enter any of the premises of
Borrower or wherever the Collateral shall be located, in accordance with
Applicable Law, and to keep and store the same on said premises until sold (and
if said premises be the property of Borrower, Borrower agrees not to charge
Lender for storage thereof for a period of at least 90

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days after sale or disposition of such Collateral). Borrower and Lender agree
that 10 days' notice to Borrower of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof and such sale shall
be at such location(s) as Lender shall designate in said notice. Lender shall
have the right to bid at any such sale on its own behalf.

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

            (b)   APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS. Upon the
occurrence of any Event of Default, Lender may, at any time, appropriate and
apply (as provided below) to any Obligations any and all Collateral in its
possession and any and all balances, credits, deposits, accounts, reserves,
indebtedness or other monies due or owing to Borrower held by Lender hereunder
or under any other financing agreement or otherwise, whether accrued or not.

            (c)   APPLICATION OF PROCEEDS. The proceeds of any exercise of
rights with respect to Collateral or any part thereof shall be paid to and
applied as follows:

                  First, to the payment of

                  (i)   all costs and charges in connection therewith,
      including, without limitation, (1) attorneys' fees for advice, counsel or
      other legal services, (2) costs and expenses incurred as a result of
      pursuing, reclaiming, seeking to reclaim, taking, keeping, removing,
      storing, advertising for sale, selling and foreclosing on the Collateral
      and any and all other charges and expenses in connection therewith, and
      (3) any costs and expenses (including, without limitation, costs and
      expenses in the management and operation of any Resort) provided for in
      any Mortgage or any other Security Document,

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

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

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

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

                  Fourth, to the payment of the principal amount of the Loan,
            and

                  Fifth, to all other Obligations, and

                  Sixth, to the payment of the surplus, if any, to Borrower, its
            successors and assigns, or to whomsoever may be lawfully entitled to
            receive the same, provided that if any Obligations shall not have
            been paid in full, any such surplus shall continue to be held as
            Collateral hereunder and shall continue to be subject to the terms
            and conditions hereof until such Obligations shall have been paid in
            full and such surplus may be used by Lender to pay any such
            Obligations which from time to time become due and payable.

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

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

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

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

LOAN AND SECURITY AGREEMENT

                                       65
<PAGE>

9.    REVIVAL OF OBLIGATIONS AND LIENS

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

10.   MISCELLANEOUS

      10.1  GOVERNING LAW. This Agreement and all transactions, assignments and
transfers hereunder, and all the rights of the parties hereto shall be governed
as to the validity, construction, enforcement and in all other respects by the
internal laws of the State of Maryland; provided, however, that the perfection
and enforcement of any security interest granted to Lender hereunder shall be
governed by the laws of the State where the Collateral is located. To the extent
any provision of this Agreement is not enforceable under Applicable Law, such
provision shall be deemed null and void and shall have no effect on the
remaining portions of this Agreement.

      10.2  EXPENSES AND CLOSING FEES. Whether or not the transactions
contemplated hereunder are completed, Borrower shall pay all expenses of Lender
relating to negotiating, preparing, documenting, closing, servicing and
enforcing this Agreement and relating to the making by Lender of any advances
hereunder to Borrower (the "LOAN COSTS"), including, but not limited to:

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

            (b)   the fees and disbursements of Lender's internal and external
counsel;

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

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

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

LOAN AND SECURITY AGREEMENT

                                       66
<PAGE>

any Person to seek to recover or set aside any payment or setoff theretofore
received or applied by Lender with respect to the Obligations; and

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

      10.3  PARTIES, SUCCESSORS AND ASSIGN

      This Agreement and the Loan Documents shall inure to the benefit of
Lender, Transferees and all future holders of any Note, the Obligations and/or
any of the Collateral, and each of their respective successors and assigns. This
Agreement and each Loan Document shall be binding upon the Persons other than
Lender that are parties thereto and their respective successors and assigns, and
no such Person may assign, delegate or transfer any Loan Document or any of its
rights or obligations thereunder without the prior written consent of Lender. No
rights are intended to be created under this Agreement or any Loan Document for
the benefit of any third party donee, creditor or incidental beneficiary of
Borrower. Nothing contained in this Agreement or any Loan Document shall be
construed as a delegation to Lender of any other Person's duty of performance.
BORROWER ACKNOWLEDGES AND AGREES THAT LENDER AT ANY TIME AFTER THE CLOSING DATE
MAY (I) DIVIDE AND RESTATE ANY NOTE, AND/OR (II) SELL, ASSIGN OR GRANT
PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF ITS RIGHTS OR
OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THE OBLIGATIONS AND/OR THE COLLATERAL
TO OTHER PERSONS (EACH SUCH TRANSFEREE, ASSIGNEE OR PURCHASER, A "TRANSFEREE").
Each Transferee shall have all of the rights and benefits with respect to the
Obligations, Note, Collateral, this Agreement and/or Loan Documents held by it
as fully as if the original holder thereof, and either Lender or any Transferee
may be designated as the sole agent to manage the transactions and obligations
contemplated therein; provided that, notwithstanding anything to the contrary in
this Agreement or any Loan Document, Borrower shall not be obligated to pay
under this Agreement to any Transferee any sum in excess of the sum which
Borrower would have been obligated to pay to Lender had such participation,
sale, assignment or transfer not been effected. Notwithstanding any other
provision of this Agreement or any Loan Document, Lender may disclose to any
Transferee all information, reports, financial statements, certificates and
documents obtained under any provision of this Agreement or any Loan Document.

      10.4  NOTICES. All notices or demands by either party to the other
relating to this Agreement shall, except as otherwise provided herein
(including, without limitation, Section 8.1(a)), be in writing and (i) sent by
certified or registered United States mail, first class postage prepaid and
return receipt requested, or (ii) by a nationally recognized overnight courier
service with all delivery fees prepaid, or (iii) by facsimile or other
electronic transmission (including e-mail). Notices shall be deemed received (a)
on the 4th succeeding Business Day following deposit in the United States mail,
certified or registered and first class postage prepaid and return receipt
requested, or (b) upon delivery if sent by nationally recognized overnight
courier with all delivery fees prepaid, or (c) if transmitted by facsimile, when
properly transmitted, upon receipt of confirmation of transmission by the
tramsmitter (except that, if such

LOAN AND SECURITY AGREEMENT

                                       67
<PAGE>

notice or other communication is not given during normal business hours for the
recipient, such notice or other communication shall be deemed received at the
opening of business the next Business Day of the recipient), or (d) if
transmitted by other electronic transmission, when properly transmitted, upon
the sender's receipt of an acknowledgement from the intended recipient (such as
by the "return receipt requested" function, return e-mail or other written
acknowledgement), provided that, if such notice or other communication is not
given during normal business hours for the recipient, such notice or other
communication shall be deemed to have been received at the opening of business
on the next Business Day for the recipient. Notices and demands shall be
addressed, if to Borrower, at the mailing address or facsimile or other
electronic address set forth on Schedule 13 to this Agreement or to such other
address as Borrower may from time to time specify in writing or, if to Lender,
at the mailing address or facsimile or other electronic address of Lender set
forth on Schedule 14 hereto or to such other address as Lender may from time to
time specify in writing to Borrower.

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

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

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

      BORROWER AND LENDER HEREBY AGREE THAT THE FOLLOWING COURTS:

            STATE COURT: DISTRICT COURT FOR THE DISTRICT SITTING IN MONTGOMERY
      COUNTY, MARYLAND;

            FEDERAL COURT: UNITED STATES DISTRICT COURT FOR THE DISTRICT SITTING
      IN MONTGOMERY COUNTY, MARYLAND,

LOAN AND SECURITY AGREEMENT

                                       68
<PAGE>

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

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

      10.8  POWER OF ATTORNEY; SUBSTITUTION. Borrower hereby makes,
constitutes and appoints Lender the true and lawful agent and attorney-in-fact
of Borrower, with full power of substitution, (a) during the existence of any
Event of Default, to receive, open and dispose of all mail addressed to Borrower
relating to the Collateral; (b) during the existence of any Event of Default, to
open all such mail and remove therefrom any notes, checks, acceptances, drafts,
money orders or other instruments constituting Collateral, with full power to
endorse the name of Borrower upon any such notes, checks, acceptances, drafts,
money orders, instruments or other documents, and to effect the deposit and
collection thereof, and Lender shall have the further right and power to endorse
the name of Borrower on any documents relating to the Collateral; (c) to execute
on behalf of Borrower assignments, notices of assignment, financing statements
and other public records and notices in respect of the Collateral; (d) during
the existence of any Event of Default, to notify Purchasers to make all payments
thereunder directly to Lender at an address to be designated by Lender and to
execute and send other notices to such Purchasers and obligors as Lender may
deem necessary in order to protect and/or collect the same; and (e) to do any
and all things necessary or take action in the name and on behalf of Borrower to
carry out the intent of this Agreement, including, without limitation, the grant
of the security interest provided herein and to perfect and protect the security
interest granted to Lender with respect to the Collateral and Lender's rights
created under this Agreement, to act on behalf of Borrower in connection with
obtaining funds from any Escrow Account, if applicable, and to endorse any
checks or other instruments of payment in respect of any payment, performance or
other surety bond made payable to Borrower or to Borrower and Lender jointly.

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

LOAN AND SECURITY AGREEMENT

                                       69
<PAGE>

      10.9  SURVIVAL OF INDEMNITIES. All indemnities set forth in this
Agreement shall survive the execution and delivery of this Agreement and the
execution and delivery of the Note as well as the payment in full of the Note
and the otherwise full performance of this Agreement.

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

      10.11 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART. Two or more
duplicate originals of this Agreement may be signed by the parties hereto, each
of which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may be executed in one or more counterparts
and shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which, collectively, show
execution by each party hereto shall constitute one duplicate original.

      10.12 NO JOINT VENTURE. The relationship of Borrower and Lender in this
Agreement is one of a debtor and a creditor. It is the intention of the parties
hereto that this Agreement not be construed to establish or create a partnership
or joint venture between Borrower and Lender.

      10.13 INDEMNITY.

            (a) Notwithstanding and without limiting any other provisions of
this Agreement or the other Loan Documents, Borrower shall indemnify Lender and
its affiliates and their respective managers, members, officers, employees,
affiliates, agents, representatives, successors, assigns, accountants and
attorneys (collectively, the "INDEMNIFIED PERSONS") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, reasonable fees and disbursements of counsel and in-house
documentation and diligence fees and legal expenses) which may be imposed on,
incurred by or asserted against any Indemnified Person with respect to or
arising out of any willful misrepresentation made hereunder, any acts of fraud
by Borrower, any Affiliate of Borrower or any party acting on their behalf,
misappropriation of funds by Borrower, any Affiliate of Borrower or any party
acting on their behalf, theft by Borrower, any Affiliate of Borrower or any
party acting on their behalf, disposition of the Collateral by Borrower, any
Affiliate of Borrower or any party acting on their behalf, any unauthorized
Change in Management, or in any litigation, proceeding or investigation
instituted or conducted by any Person with respect to any aspect of, or any
transaction contemplated by or referred to in, or any matter related to, any
Security Document or any agreement, document or transaction contemplated
thereby, whether or not such Indemnified Person is a party thereto, except to
the extent that any of the foregoing arises out of the gross negligence or
willful misconduct of such Indemnified Person. Lender agrees to give Borrower
reasonable notice of any event of which Lender becomes aware for which
indemnification may be required under this Section 10.14, and Lender may elect
(but is not obligated) to direct the defense thereof; provided, that the
selection of counsel shall be subject to Borrower's consent, which consent shall
not be unreasonably withheld or delayed. Any Indemnified Person may, in its
reasonable discretion, take such actions as it deems necessary and appropriate
to investigate,

LOAN AND SECURITY AGREEMENT

                                       70
<PAGE>

defend or settle any event or take other remedial or corrective actions with
respect thereto as may be necessary for the protection of such Indemnified
Person or the Collateral.

            (b) Borrower agrees to indemnify, defend and hold Lender free and
harmless from and against any and all losses, damages, costs and expenses that
Lender may suffer as a result of claims made or suits brought by any broker,
finder, agent, sales person or similar individual or entity (a "BROKER") who
shall claim to have introduced Borrower to this transaction or who shall claim
that he or it negotiated or had discussions with Lender with Borrower's
authority with respect to this transaction. Lender is not obligated to pay and
has not entered into any agreement to pay any brokerage fee to any Broker with
respect to the transactions contemplated by this Agreement. Lender represents
and warrants to Borrower that Lender has not engaged any real estate broker,
finder, agent, sales person, employee or any other individual and/or entity
related to this transaction who is entitled to a commission, finder's fee or
remuneration of any kind.

      10.14 RELEASE. Notwithstanding any other provision of this Agreement or
any Security Document, Borrower voluntarily, knowingly, unconditionally and
irrevocably, with specific and express intent, for and on behalf of itself and
its Affiliates and its and their respective heirs, managers, members, directors,
officers, employees, shareholders, Affiliates, agents, representatives,
accountants, attorneys, successors and assigns and their respective Affiliates
(collectively, the "RELEASING PARTIES"), hereby does fully and completely
release and forever discharge the Indemnified Parties and any other Person,
business or insurer which may be responsible or liable for the acts or omissions
of any of the Indemnified Parties, or who may be liable for the injury or damage
resulting therefrom (collectively, with the Indemnified Parties, the "RELEASED
PARTIES"), of and from any and all actions, causes of action, damages, claims,
obligations, liabilities, costs, expenses and demands of any kind whatsoever, at
law or in equity or otherwise, whether matured or unmatured, vested or
contingent, whether or not resulting from acts or conduct of any or all of them,
that the Releasing Parties or any of them have against the Released Parties or
any of them (whether directly or indirectly) as of the date of the Closing.
Borrower acknowledges that the foregoing release is a material inducement to
Lender's decision to extend to Borrower the financial accommodations hereunder
and under the Loan Documents and has been relied upon by Lender in agreeing to
make the Loan and in making each Advance and/or Subsequent Advance.

      10.15 CUSTODIAN. Lender shall have the right, at its option and at
Borrower's expense, to engage the services of a custodian acceptable to Lender
for storage of the originals of this Agreement and all other Loan Documents, and
all other documents, instruments, due diligence materials and other information
in Lender's possession related to the transactions contemplated in this
Agreement.

      10.16 CERTAIN WAIVERS. Except as expressly provided for herein,
Borrower hereby waives (a) demand, presentment, protest, all defenses and (b)
any rights of rescission, setoff, counterclaim or defense to payment with
respect to any and all instruments and all notices and demands of any
description, and the pleading of any statute of limitations as a defense to any
demand under any Loan Document.

LOAN AND SECURITY AGREEMENT

                                       71
<PAGE>

      10.17 CONFIDENTIALITY AND PUBLICITY. Borrower agrees, and agrees to
cause each of its Affiliates, (i) not to transmit or disclose provision of any
Loan Document to any Person (other than to Borrower's advisors and officers on a
need-to-know basis) without Lender's prior written consent, (ii) to inform all
Persons of the confidential nature of the Loan Documents and to direct them not
to disclose the same to any other Person and to require each of them to be bound
by these provisions. Lender reserves the right to review and approve all
materials that Borrower or any of its Affiliates prepares that contain Lender's
name or describe or refer to any Loan Document, any of the terms thereof or any
of the transactions contemplated thereby. Borrower shall not, and shall not
permit any of its Affiliates to, use Lender's name (or the name of any of
Lender's Affiliates) in connection with any of its business operations. Nothing
contained in any Loan Document is intended to permit or authorize Borrower or
any of its Affiliates to contract on behalf of Lender. Further, Borrower hereby
agrees that Lender or any Affiliate of Lender may (i) disclose a general
description of transactions arising under the Loan Documents for advertising,
marketing or other similar purposes and (ii) use Borrower's name, logo or other
indicia germane to such party in connection with such advertising, marketing or
other similar purposes.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
                          NEXT PAGE IS SIGNATURE PAGE.]

LOAN AND SECURITY AGREEMENT

                                       72
<PAGE>

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

                                     Lender:

                                     CAPITALSOURCE FINANCE LLC,
                                     a Delaware limited liability company

                                     By: /s/ PIERRETTE N. BRADSHAW
                                         -------------------------
                                     Name: Pierrette N. Bradshaw
                                     Title: General Counsel

                                     Borrower:

                                     SILVERLEAF RESORTS, INC.,
                                     a Texas corporation

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

Schedules and Exhibits not filed herewith:

Schedule  1:    Indebtedness
Schedule  2:    Permitted Exceptions
Schedule  3:    Intentionally Omitted
Schedule  4:    Retail Value
Schedule  5:    List of Resorts
Schedule  6:    Affiliate Transactions
Schedule  7:    Recreation and Use Easements
Schedule  8:    Subsidiaries
Schedule  9:    Resort Facilities
Schedule 10:    Litigation
Schedule 11:    Compensation Payable to Brokers
Schedule 12:    Payment Instructions
Schedule 13:    Address of Borrower for Notices
Schedule 14:    Address of Lender for Notices
Schedule 15:    Deferred Corporate Plans and Collective Bargaining Agreements
Schedule 16:    Description of Blue-Season and Vintage-Type Timeshare Interests
Exhibit   A:    Intentionally Omitted
Exhibit   B:    Form of Request for Release
Exhibit   C:    Intentionally Omitted

LOAN AND SECURITY AGREEMENT
<PAGE>

Exhibit   D:    Intentionally Omitted
Exhibit   E:    Form of Initial Advance Request
Exhibit   F:    Form of Subsequent Advance Request

LOAN AND SECURITY AGREEMENT<PAGE>

                                                                        Ex. 10.2

                     RECEIVABLES LOAN AND SECURITY AGREEMENT

                  $50,000,000 Revolving Senior Credit Facility

                      provided by CAPITALSOURCE FINANCE LLC

                                       to

                            SILVERLEAF RESORTS, INC.

                              As of April 29, 2005

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  PAGE
<S>                                                                                               <C>
SECTION 1. DEFINITION OF TERMS................................................................     1

    1.1      Advance..........................................................................     1
    1.2      Affiliate........................................................................     1
    1.3      Agreement........................................................................     2
    1.4      Applicable Laws..................................................................     2
    1.5      Approved Escrow Account..........................................................     2
    1.6      Backup Servicer..................................................................     2
    1.7      Backup Servicing Agreement.......................................................     2
    1.8      Bond Holder Exchange Transaction.................................................     2
    1.9      Borrower.........................................................................     2
    1.10     Borrowing Base...................................................................     2
    1.11     Business Day.....................................................................     2
    1.12     Capital Lease....................................................................     2
    1.13     Cash Flow........................................................................     2
    1.14     Change in Management.............................................................     3
    1.15     Closing Date.....................................................................     3
    1.16     Code.............................................................................     3
    1.17     Collateral.......................................................................     3
    1.18     Commitment Fee...................................................................     4
    1.19     Common Elements..................................................................     4
    1.20     Consolidated Net Income..........................................................     4
    1.21     Consumer Loan....................................................................     4
    1.22     Credit Files.....................................................................     4
    1.23     Custodial Agreement..............................................................     4
    1.24     Custodian........................................................................     4
    1.25     Debt.............................................................................     4
    1.26     Debt Service Coverage Ratio......................................................     5
    1.27     Debtor Relief Laws...............................................................     5
    1.28     Declaration......................................................................     5
    1.29     Default..........................................................................     5
    1.30     Default Rate.....................................................................     5
    1.31     Delinquent Note Receivable.......................................................     5
    1.32     DZ Facility......................................................................     5
    1.33     EBITDA...........................................................................     5
    1.34     Eligible Deferred Note Receivable................................................     6
    1.35     Eligible Note Receivable.........................................................     6
    1.36     Encumbered Timeshare Interest....................................................     8
    1.37     Environmental Laws...............................................................     8
    1.38     Event of Default.................................................................     9
    1.39     Exchange Company.................................................................     9
    1.40     Executive Management Member......................................................     9
</TABLE>

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       i
<PAGE>

<TABLE>
<S>                                                                                               <C>
    1.41     FICO.............................................................................     9
    1.42     Financial Statements.............................................................     9
    1.43     Furnishings......................................................................     9
    1.44     GAAP.............................................................................     9
    1.45     Hazardous Materials..............................................................     9
    1.46     Hazardous Materials Indemnity Agreement..........................................     9
    1.47     Improvements.....................................................................    10
    1.48     Initial Advance..................................................................    10
    1.49     Interest Expense.................................................................    10
    1.50     Interest Rate....................................................................    10
    1.51     Inventory Loan...................................................................    10
    1.52     Inventory Loan Agreement.........................................................    10
    1.53     Inventory Loan Documents.........................................................    10
    1.54     Leverage Ratio...................................................................    10
    1.55     LIBOR Rate.......................................................................    10
    1.56     Lien.............................................................................    11
    1.57     Loan.............................................................................    11
    1.58     Loan Documents...................................................................    11
    1.59     Lockbox Agent....................................................................    11
    1.60     Lockbox Agreement................................................................    12
    1.61     Loss of License..................................................................    12
    1.62     Mandatory Prepayment.............................................................    12
    1.63     Maturity Date....................................................................    12
    1.64     Maximum Loan Amount..............................................................    12
    1.65     Negative Pledge..................................................................    12
    1.66     Net Income.......................................................................    12
    1.67     Net Sales........................................................................    12
    1.68     Note Receivable..................................................................    12
    1.69     Oak N' Spruce Resort.............................................................    12
    1.70     Obligations......................................................................    12
    1.71     Orlando Breeze Resort Club.......................................................    13
    1.72     Payment Authorization Agreement..................................................    13
    1.73     Permitted Discretion.............................................................    13
    1.74     Permitted Liens and Encumbrances.................................................    13
    1.75     Person...........................................................................    13
    1.76     Pledged Note Receivable..........................................................    13
    1.77     Property.........................................................................    13
    1.78     PropertyRelated Contracts........................................................    13
    1.79     Purchase Agreement...............................................................    13
    1.80     Purchase Price...................................................................    13
    1.81     Purchaser........................................................................    13
    1.82     Receivables Loan Approved Resorts................................................    13
    1.83     Resort Facilities................................................................    14
    1.84     Revolving Credit Period..........................................................    14
    1.85     Sales and Marketing Costs........................................................    14
    1.86     Servicing Agreement..............................................................    14
</TABLE>

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       ii
<PAGE>

<TABLE>
<S>                                                                                               <C>
    1.87     Silverleaf Club..................................................................    14
    1.88     Sovereign Facility...............................................................    14
    1.89     Suspension of Sales Order or Sanction............................................    14
    1.90     Tangible Net Worth...............................................................    14
    1.91     Textron Facility.................................................................    14
    1.92     Timeshare Act....................................................................    15
    1.93     Timeshare Association............................................................    15
    1.94     Timeshare Documents..............................................................    15
    1.95     Timeshare Interest...............................................................    15
    1.96     Timeshare Interest Mortgage......................................................    15
    1.97     Title Insurance Company..........................................................    15
    1.98     Title Policy.....................................................................    15
    1.99     Unit.............................................................................    15
    1.100    Unused Line Fee..................................................................    15
    1.101    Upgraded Note Receivable.........................................................    16
    1.102    Use Agreement....................................................................    16
    1.103    Voting Equity....................................................................    16

SECTION 2. THE LOAN...........................................................................    16

    2.1      Purposes.........................................................................    16
    2.2      Advances.........................................................................    16
    2.3      Interest Rate....................................................................    16
    2.4      Payments.........................................................................    17
    2.5      Prepayments......................................................................    18
    2.6      Reassignment by Lender...........................................................    19
    2.7      Breakage Costs...................................................................    19
    2.8      Additional Increased Costs.......................................................    19
    2.9      Basis For Determining Interest Rate Inadequate or Unfair.........................    20
    2.10     Notes.  Borrower agrees that:....................................................    20

SECTION 3. COLLATERAL.........................................................................    21

    3.1      Grant of Security Interest.......................................................    21
    3.2      Security Interest in All Pledged Notes Receivable................................    21
    3.3      Financing Statements.............................................................    21
    3.4      Location of Collateral...........................................................    21
    3.5      Protection of Collateral; Reimbursement..........................................    21
    3.6      Cross-Collateralization and Default..............................................    22
    3.7      Liability........................................................................    22

SECTION 4. CONDITIONS PRECEDENT TO CLOSING AND FUNDING PROCEDURES.............................    23

    4.1      Conditions Precedent.............................................................    23
    4.2      Funding Procedures...............................................................    26

SECTION 5. GENERAL REPRESENTATIONS AND WARRANTIES.............................................    30

    5.1      Organization, Standing, Qualification............................................    30
    5.2      Authorization, Enforceability, Etc...............................................    30
</TABLE>

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                      iii
<PAGE>

<TABLE>
<S>                                                                                               <C>
    5.3      Financial Statements and Business Condition......................................    32
    5.4      Taxes............................................................................    32
    5.5      Title to Collateral and Other Properties; Prior Liens............................    32
    5.6      Litigation, Proceedings, Etc.....................................................    32
    5.7      Licenses, Permits, Etc...........................................................    33
    5.8      Environmental Matters............................................................    33
    5.9      Full Disclosure..................................................................    33
    5.10     Use of Proceeds/Margin Stock.....................................................    33
    5.11     No Defaults......................................................................    34
    5.12     Restrictions on Borrower.........................................................    34
    5.13     Broker's Fees....................................................................    34
    5.14     Tax Identification Number........................................................    34
    5.15     Legal Compliance.................................................................    34
    5.16     Deferred Compensation Plans......................................................    35
    5.17     Labor Relations..................................................................    35
    5.18     Receivables Loan Approved Resorts................................................    36
    5.19     Timeshare Documents and Reports..................................................    36
    5.20     Reliance by Lender...............................................................    37
    5.21     Vacation Club....................................................................    37

SECTION 6. COVENANTS..........................................................................    37

    6.1      Affirmative Covenants............................................................    37
    6.2      Negative Covenants...............................................................    49

SECTION 7. EVENTS OF DEFAULT..................................................................    51

    7.1      Payment Default..................................................................    51
    7.2      Covenant Defaults................................................................    51
    7.3      Warranties or Representations....................................................    51
    7.4      Enforceability...................................................................    52
    7.5      Insolvency.......................................................................    52
    7.6      Involuntary Proceedings..........................................................    52
    7.7      Voluntary Proceedings............................................................    52
    7.8      Attachment; Judgment; Tax Liens..................................................    52
    7.9      Failure to Deposit Proceeds......................................................    52
    7.10     Timeshare Documents..............................................................    52
    7.11     Removal of Collateral............................................................    52
    7.12     Other Defaults...................................................................    53
    7.13     Material Adverse Change..........................................................    53
    7.14     Default by Borrower in Other Agreements..........................................    53
    7.15     Violation of Negative Covenants..................................................    53
    7.16     Declaration......................................................................    53
    7.17     Transfer of Property.............................................................    53
    7.18     Lien Against Collateral..........................................................    53
    7.19     Title............................................................................    53
    7.20     Loss of License..................................................................    53
    7.21     Suspension of Sales..............................................................    53
</TABLE>

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       iv
<PAGE>

<TABLE>
<S>                                                                                               <C>
SECTION 8. REMEDIES...........................................................................    54

    8.1      Remedies Upon Default............................................................    54
    8.2      Notice of Sale...................................................................    55
    8.3      Application of Collateral; Termination of Agreements.............................    56
    8.4      Rights of Lender Regarding Collateral............................................    56
    8.5      Delegation of Duties and Rights..................................................    57
    8.6      Waivers..........................................................................    57
    8.7      Cumulative Rights................................................................    57
    8.8      Expenditures by Lender...........................................................    57
    8.9      Diminution in Value of Collateral................................................    58

SECTION 9. CERTAIN RIGHTS OF LENDER...........................................................    58

    9.1      Protection of Collateral.........................................................    58
    9.2      Performance by Lender............................................................    58
    9.3      No Liability of Lender...........................................................    58
    9.4      Right to Defend Action Affecting Security........................................    59
    9.5      Expenses.........................................................................    59
    9.6      Lender's Right of SetOff.........................................................    60
    9.7      Right of Lender to Extend Time of Payment, Substitute, Release Security, Etc.....    60
    9.8      Assignment of Lender's Interest..................................................    60
    9.9      Notice to Purchaser..............................................................    60
    9.10     Collection of Pledged Notes Receivable...........................................    60
    9.11     Power of Attorney................................................................    61
    9.12     Relief from Automatic Stay, Etc..................................................    61
    9.13     Investigations and Inquiries.....................................................    61
    9.14     Verification of Use..............................................................    62

SECTION 10. TERM OF AGREEMENT.................................................................    62

SECTION 11. MISCELLANEOUS.....................................................................    62

    11.1     Notices..........................................................................    62
    11.2     Survival.........................................................................    63
    11.3     Governing Law....................................................................    63
    11.4     Limitation on Interest...........................................................    64
    11.5     Invalid Provisions...............................................................    64
    11.6     Successors and Assigns...........................................................    65
    11.7     Amendment........................................................................    66
    11.8     Counterparts; Effectiveness......................................................    66
    11.9     Lender Not a Fiduciary...........................................................    66
    11.10    Release and Return of Notes Receivable...........................................    66
    11.11    Accounting Principles............................................................    67
    11.12    Entire Agreement.................................................................    67
    11.13    Litigation.......................................................................    67
    11.14    Incorporation of Exhibits and Schedules..........................................    67
    11.15    Consent to Advertising and Publicity.............................................    68
</TABLE>

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                        v
<PAGE>

<TABLE>
<S>                                                                                               <C>
    11.16    Directly or Indirectly...........................................................    68
    11.17    Captions.........................................................................    68
    11.18    Gender...........................................................................    68
    11.19    No Duty..........................................................................    68
    11.20    Submissions......................................................................    68
    11.21    Confidentiality..................................................................    69
    11.22    Borrower's Acknowledgment........................................................    69
    11.23    No Offset........................................................................    69
</TABLE>

                                LIST OF EXHIBITS

EXHIBIT "A"   -   Form of Custodial Agreement

EXHIBIT "B"   -   Form of Master Pledge and Assignment of Notes Receivable and
                  Timeshare Interest Mortgages

EXHIBIT "C"   -   Form of Lockbox Agreement

EXHIBIT "D"   -   Resort Facilities

EXHIBIT "E"   -   Permitted Liens and Encumbrances

EXHIBIT "F"   -   Receivables Loan Approved Resorts

EXHIBIT "G"   -   Form of Reassignment

EXHIBIT "H"   -   Description of Pending Litigation

EXHIBIT "I"   -   Form of Advance Request

EXHIBIT "J"   -   Form of Supplemental Pledge and Assignment of Notes Receivable
                  and Timeshare Interest Mortgages

EXHIBIT "K"   -   List of States in which Borrower is Registered or Exempt

EXHIBIT "L"   -   List of Timeshare Documents

EXHIBIT "M"   -   Borrowing Base Certificate

EXHIBIT "N"   -   Listing of amounts owed to Timeshare Association

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       vi
<PAGE>

                     RECEIVABLES LOAN AND SECURITY AGREEMENT

      THIS RECEIVABLES LOAN AND SECURITY AGREEMENT (the "Agreement") is made and
entered into as of April 29, 2005, by and between SILVERLEAF RESORTS INC., a
Texas corporation ("Borrower"), and CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company ("Lender").

                                    RECITALS

      WHEREAS, Borrower is the fee owner of the Property, subject to the sale of
Timeshare Interests to Purchasers;

      WHEREAS, Purchasers who finance the acquisition of their Timeshare
Interests execute a Note Receivable and a related Timeshare Interest Mortgage in
favor of Borrower;

      WHEREAS, Lender desires to make a Loan to Borrower in an amount not to
exceed Fifty Million Dollars ($50,000,000) which is to be secured by certain
Pledged Notes Receivable and Timeshare Interest Mortgages pledged and assigned
by Borrower to Lender;

      NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement,
intending to be legally bound, hereby agree as follows:

      SECTION 1. DEFINITION OF TERMS

      The capitalized terms used in this Agreement are defined in this Section
1. The definitions include the singular and plural forms of the terms defined.

      1.1   Advance. A portion of the proceeds of the Loan advanced from time to
time by Lender to Borrower in accordance with the terms of this Agreement.

      1.2   Affiliate. Any Person:

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

            (b)   which beneficially owns or holds 5% or more of any class of
the Voting Equity of such Person; or

            (c)   5% or more of the Voting Equity of which is beneficially owned
or held by such Person.

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

RECEIVABLES LOAN AND SECURITY AGREEMENT

<PAGE>

      1.3   Agreement. This Receivables Loan and Security Agreement by and
between Borrower and Lender (including the exhibits and schedules hereto), as it
may be amended and/or restated from time to time.

      1.4   Applicable Laws. Any and all federal, state, and local statutes,
ordinances, rules, regulations, court orders and decrees, administrative orders
and decrees, and other legal requirements of any and every conceivable type to
which Borrower or any portion thereof, or all or any portion of the Collateral
is or becomes subject from time to time, including but not limited to those
governing the marketing and sale of Timeshare Interests at or with respect to
the Receivables Loan Approved Resorts, as the same have been or may in the
future be amended from time to time.

      1.5   Approved Escrow Account. As defined in the Inventory Loan Agreement.

      1.6   Backup Servicer. Concord Servicing Corporation, or such other
servicer acceptable to Lender in its Permitted Discretion.

      1.7   Backup Servicing Agreement. The agreement pursuant to which the
Backup Servicer shall provide servicing functions with respect to the Pledged
Notes Receivable.

      1.8   Bond Holder Exchange Transaction. Those certain senior subordinate
note holder exchange transactions consummated pursuant to (a) that certain
Indenture dated as of May 2, 2002 between Silverleaf Resorts, Inc. and Wells
Fargo Bank Minnesota, NA., and all documents related thereto, and (b) that
certain Indenture dated as of July 7, 2004 between Silverleaf Resorts, Inc. and
Wells Fargo Bank, NA., and all documents related thereto, as amended,
supplemented and modified from time to time.

      1.9   Borrower. Silverleaf Resorts Inc., a Texas corporation, together
with its successors and assigns.

      1.10  Borrowing Base. As applicable, during the Revolving Credit Period,
the lesser of (i) the Maximum Loan Amount and (ii) seventyfive percent (75%) of
the aggregate outstanding principal balance of all Eligible Notes Receivable
pledged to Lender as partial security for the Loan as of the date in question.

      1.11  Business Day. Each day that is not a Saturday, Sunday, or a legal
holiday under the laws of the State of Maryland, State of Texas or the United
States, and if the applicable Business Day relates to the Loan, such day must
also be a day on which dealings are carried on in the London interbank market.

      1.12  Capital Lease. As to any Person, a lease of any interest in any kind
of property or asset by that Person as lessee that is, should be or should have
been recorded as a "capital lease" in accordance with GAAP.

      1.13  Cash Flow. In respect of any period, the sum of (a) Net Income of
Borrower for such period and (b) the amount of all depreciation and amortization
allowances and other noncash expenses of Borrower, but only to the extent
deducted in the determination of Net Income of Borrower for such period.

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       2
<PAGE>

      1.14  Change in Management. A change of more than fifty percent (50%), in
the aggregate, of the following members of the executive management team of
Borrower: Robert Mead, Sharon Brayfield, David O'Connor, Harry White, Edward
Lahart and Joe Conner.

      1.15  Closing Date. The date of this Agreement.

      1.16  Code. The version of the Uniform Commercial Code in effect from time
to time in the State of Maryland, as amended from time to time.

      1.17  Collateral.

            (a)   A first priority security interest in and to the Pledged Notes
Receivable and related Credit Files generated from the sale of Timeshare
Interests at the Receivables Loan Approved Resorts, together with all accounts,
chattel paper and general intangibles related thereto and the cash and noncash
proceeds thereof;

            (b)   A first and unconditional collateral assignment of the
Timeshare Interest Mortgages encumbering the Timeshare Interests financed by the
Pledged Notes Receivable and, to the extent of Borrower's interest as mortgagee
with respect to each Timeshare Interest Mortgage assigned to Lender, the
Encumbered Timeshare Interests, together with all appurtenant rights and
interests, including, without limitation, appurtenant rights and interests in
and to the Common Elements, and easement, license and use rights in and to all
facilities, all as described, defined and set forth in the Declaration;

            (c)   A first priority security interest in and to all documents,
instruments, accounts, chattel paper, and general intangibles relating to the
Pledged Notes Receivable, and related Timeshare Interest Mortgages and the other
Collateral (including the cash and noncash proceeds thereof);

            (d)   All rights in, to and under all Payment Authorization
Agreements signed and delivered by or on behalf of each Purchaser of an
Encumbered Timeshare Interest and all accounts and proceeds relating thereto or
deriving therefrom;

            (e)   Any rights inuring to Borrower as a "preferred mortgagee" or a
"mortgagee" in connection with any Encumbered Timeshare Interest as provided in
the Declaration;

            (f)   Extensions, additions, improvements, betterments, renewals,
substitutions and replacements of, for or to any of the Collateral, wherever
located, together with the products, proceeds, issues, rents and profits
thereof, and any replacements, additions or accessions thereto or substitutions
thereof, and all rights in or under insurance policies and to the proceeds of
any insurance policies covering any of the other Collateral, all rights to
unearned or refunded insurance premiums, and the proceeds of any condemnation
awards or any claims regarding any of the other Collateral; and

            (g)   A first priority security interest in and to all books,
records, reports, computer tapes, computer disks and software relating to all or
any portion of the Collateral;

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       3
<PAGE>

            (h)   All rights of Borrower or its successors or assigns under any
Timeshare Documents, relating to any Encumbered Timeshare Interest; and

            (i)   First priority Liens and security interests in and to all
documents, instruments, accounts, chattel paper, and general intangibles
relating to the Pledged Notes Receivable and the other Collateral, including the
cash and noncash proceeds thereof.

      1.18  Commitment Fee. An amount equal to $500,000 which was earned upon
execution of this Agreement.

      1.19  Common Elements. Common Elements (as such term is defined in the
Declaration), including, without limitation, the recreational and service
facilities as well as the land (excluding land comprising part of a Unit) which
are included within each Receivables Loan Approved Resort all owned by Borrower
for the common use and enjoyment of Purchasers of Timeshare Interests.

      1.20  Consolidated Net Income. With respect to any period, the aggregate
stated income statement amount of net income of Borrower and its subsidiaries,
after deduction of all expenses, taxes and other proper charges paid during such
period, excluding extraordinary profits, gains or losses, determined on a
consolidated basis in accordance with GAAP.

      1.21  Consumer Loan. Any purchase money loan that is evidenced by a
Pledged Note Receivable, the proceeds of which are applied by the maker of such
Pledged Note Receivable toward the Purchase Price of a Timeshare Interest.

      1.22  Credit Files. All Notes Receivable, the related mortgages, the
related federal truth-in-lending disclosure statements, the Purchase Agreement,
all RESPA and related notices.

      1.23  Custodial Agreement. That certain Custodial Agreement by and among
Borrower, Lender and Custodian in substantially the form of Exhibit "A,"
attached hereto and incorporated herein by this reference, pursuant to which
Custodian will maintain custody of all original Pledged Notes Receivable and
Purchase Agreements and certain original and duplicate documents and instruments
related thereto and take certain actions in connection therewith.

      1.24  Custodian. Wells Fargo Bank, National Association or such other
Person as Lender, in its sole discretion, engages from time to time, at
Borrower's sole cost and expense pursuant to the terms of the Custodial
Agreement, to maintain custody of all original Pledged Notes Receivable and
certain original and duplicate documents and instruments related thereto and
take certain actions in connection therewith.

      1.25  Debt. Of any Person means, without duplication, (a) all obligations
of such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services, (e) all Debt of others secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Debt secured thereby has been

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       4
<PAGE>

assumed, (f) all guarantees by such Person of Debt of others, (g) all Capital
Leases of such Person, (h) all obligations, contingent or otherwise, of such
Person as an account party in respect of letters of credit and letters of
guaranty and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Debt of any Person shall include the Debt
of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefore.

      1.26  Debt Service Coverage Ratio. At any time of determination, the ratio
of (a) EBITDA of Borrower and its subsidiaries on a consolidated basis, less
capital expenditures for the immediately preceding twelve (12) calendar months
to (b) the cash Interest Expenses (including all capitalized interest related to
the Bond Holder Exchange Transaction which has been expensed but not yet paid by
Borrower in full) of Borrower and its subsidiaries on a consolidated basis for
the immediately preceding twelve (12) calendar months.

      1.27  Debtor Relief Laws. Any applicable liquidation, conservatorship,
receivership, bankruptcy, moratorium, rearrangement, insolvency, reorganization,
or similar law, proceeding, or device providing for the relief of debtors from
time to time in effect and generally affecting the rights of creditors.

      1.28  Declaration. Collectively, each of the declarations, covenants,
conditions and restrictions, or other restrictive covenants encumbering all or
any portion of a Receivables Loan Approved Resort where Timeshare Interests
owned by Borrower are located, filed in the appropriate official records of the
county where such Receivables Loan Approved Resort is located, and delivered to
Lender prior to any Advance being made by Lender to finance a Note Receivable
related to such Timeshare Interest.

      1.29  Default. An event or condition, the occurrence of which immediately
is or, with the lapse of time or the giving or notice or both, would become, an
Event of Default hereunder.

      1.30  Default Rate. As to the Loan, the Interest Rate plus four percent
(4%) per annum; provided, however, that the Default Rate shall in no event
exceed the highest interest rate permitted to be charged under any applicable
usury laws.

      1.31  Delinquent Note Receivable. A Note Receivable that is greater than
thirty (30) days past due.

      1.32  DZ Facility. That certain note purchase facility provided by DZ Bank
AG Deutsche ZentralGenossenschaftsbank ("DZ"), as agent for Autobahn Funding
Company, LLC, to Borrower pursuant to that certain Amended and Restated
Receivables Loan and Security Agreement dated April 30, 2002, as amended, and
all documents and other instruments executed in connection therewith, as
amended, supplemented and modified from time to time.

      1.33  EBITDA. For any date of determination, the sum, without duplication,
of the following for Borrower and its subsidiaries on a consolidated basis: Net
Income determined in accordance with GAAP, plus, (a) Interest Expense, (b) taxes
on income, whether paid, payable or accrued, (c) depreciation expense, (d)
amortization expense, and (e) loss from any sale of assets,

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       5
<PAGE>

other than sales in the ordinary course of business, minus (a) gains from any
sale of assets, other than sales in the ordinary course of business and (b)
other extraordinary or nonrecurring gains, all of the foregoing determined in
accordance with GAAP.

      1.34  Eligible Deferred Note Receivable. An Eligible Note Receivable for
which Borrower has allowed a Purchaser to defer payment; provided, however, (i)
payment on such Eligible Note Receivable shall not have been deferred more than
(a) once in any twelve (12) month period or (b) twice since origination, (ii) no
more than six payments shall have been deferred in the aggregate on such
Eligible Note Receivable and (iii) the Purchaser shall have made at least two
(2) timely payments on such Eligible Note Receivable prior to Borrower accepting
any deferment.

      1.35  Eligible Note Receivable. A Pledged Note Receivable that satisfies
each of the following conditions:

            (a)   The Pledged Note Receivable arises from a bona fide sale by
Borrower of one (1) or more Timeshare Interests to a Purchaser;

            (b)   The Timeshare Interest sale from which it arises has not been
canceled by the Purchaser or Borrower, any statutory or other applicable
cancellation or rescission period has expired, the Timeshare Interest purchased
by the Purchaser has not been surrendered in accordance with any applicable
terms of the relevant Purchase Agreement, and the related Timeshare Interest
sale complies fully with the terms, provisions, and conditions of this
Agreement, the other Loan Documents, the Timeshare Documents, and all Applicable
Laws;

            (c)   The Pledged Note Receivable is secured by a first priority
Timeshare Interest Mortgage on the purchased Timeshare Interest;

            (d)   The Pledged Note Receivable evidences the personal obligation
of the applicable Purchaser to pay the balance due on the Purchase Price of the
Timeshare Interest being acquired by such Purchaser, all as described and set
forth in the Purchase Agreement to which such Pledged Note Receivable pertains;

            (e)   Principal and interest payments on the Pledged Note Receivable
are payable to Borrower in legal tender of the United States and are made by the
applicable Purchaser and not by Borrower or Affiliate thereof;

            (f)   Scheduled payments of principal and interest on the Pledged
Note Receivable are due in equal monthly installments;

            (g)   The Pledged Note Receivable has an original term of no greater
than one hundred twenty (120) months;

            (h)   A cash down payment and/or other cash payments have been
received from the Purchaser or the maker of the Pledged Note Receivable in an
amount equal to at least ten percent (10%) of the original purchase price of the
relevant Timeshare Interest, no portion of such down payment has been paid or
loaned to the Purchaser by Borrower, and the Purchaser has received no cash or
other rebates of any kind; provided, however, if such Purchaser has a FICO

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       6
<PAGE>

score below 550, then a cash down payment and/or other cash payments shall have
been received from such Purchaser or the maker of such Pledged Note Receivable
in an amount equal to at least fifteen percent (15%) of the original purchase
price of such relevant Timeshare Interest;

            (i)   No monthly installment due with respect to a Pledged Note
Receivable is more than thirty (30) days' contractually past due as of the date
of the initial Advance on such Pledged Note Receivable and subsequent to the
initial Advance on a Pledged Note Receivable, no monthly installment due with
respect to such Pledged Note Receivable is more than sixty (60) days
contractually past due;

            (j)   The first monthly installment due with respect to the Pledged
Note Receivable is no more than forty-five (45) days after the date of such
Pledged Note Receivable.

            (k)   The Purchaser of the relevant Timeshare Interest has, subject
to the terms of the Declaration and the other Timeshare Documents, access to a
Unit within the Property developed in accordance with the specifications
provided in the Purchase Agreement, and a certificate of occupancy has been
issued for such Unit;

            (l)   Neither the Purchaser of the relevant Timeshare Interest nor
any other maker of the Pledged Note Receivable is an Affiliate of, related to,
or employed by Borrower;

            (m)   The Purchaser or other obligor has no bona fide claim against
Borrower or any Affiliate of Borrower and no defense, setoff, or counterclaim
exists with respect to the Pledged Note Receivable;

            (n)   The maximum outstanding principal balance of any Pledged Note
Receivable hereunder does not exceed $30,000 and the maximum aggregate exposure
by any one obligor shall not exceed two (2) Pledged Notes Receivable, without
the prior written consent of Lender;

            (o)   The Pledged Note Receivable is made by a U.S. resident unless
otherwise approved by Lender; provided, however, up to ten percent (10%) of the
Loan as measured by aggregate outstanding principal balance may be used to
finance Notes Receivable made by an underlying obligor who is not a U.S.
resident so long as Lender approves the collection methodology in its sole
discretion.

            (p)   The original of the Pledged Note Receivable and all related
documents and instruments have been endorsed in the manner prescribed by Lender
and delivered to Lender or Custodian as provided herein, and all such related
documents and instruments otherwise comply in all respects with all Applicable
Laws;

            (q)   The form of promissory note, Timeshare Interest Mortgage,
federal truth-in-lending disclosure statement, Purchase Agreement, loan
application and all other documents and instruments corresponding to the
Timeshare Interest purchase transaction giving rise to such Note Receivable
shall be in form and content acceptable to Lender and approved in advance by
Lender in writing;

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       7
<PAGE>

            (r)   The Unit corresponding to such Pledged Note Receivable is
subject to property insurance acceptable to Lender in its sole discretion;

            (s)   The Unit, and the Lien evidenced by the Timeshare Mortgage,
corresponding to such Pledged Note Receivable is subject to title insurance
acceptable to Lender in its sole discretion; provided, however, any Pledged Note
Receivable relating to Oak N' Spruce Resort shall not be required to be subject
to title insurance;

            (t)   If the Timeshare Interest securing such Pledged Note
Receivable relates to Oak N' Spruce Resort, then Lender shall have received an
Assignment of Certificate of Beneficial Interest securing such Pledged Note
Receivable acceptable to Lender in its sole discretion and Borrower shall have
filed a UCC1 financing statement in the state where the Purchaser is located
naming Borrower as the secured party and Lender as Borrower's assignee; and

            (u)   The portfolio of all Pledged Notes Receivable hereunder shall
at all times satisfy the following additional requirements:

                  (i)   The average unpaid principal balance shall not exceed
      $20,000, without Lender's prior written consent;

                  (ii)  The minimum weighted average annual interest rate of all
      Pledged Notes Receivable shall be greater than fourteen percent (14%);

                  (iii) No more than twenty percent (20%) of all Pledged Notes
      Receivable shall have an interest rate of less than fourteen and onehalf
      percent (14.5%) per annum;

                  (iv)  The weighted average obligor FICO credit score shall be
      greater than 610, unless otherwise agreed to by Lender in its sole
      discretion;

                  (v)   The weighted average original term until maturity for
      all Pledged Notes Receivable shall not exceed ninetysix (96) months;

                  (vi)  No more than five percent (5%) of the unpaid principal
      balance of all Pledged Note Receivables shall be related to downgraded
      Timeshare Interests; and

                  (vii) No more than ten percent (10%) of all Pledged Notes
      Receivable shall be Eligible Deferred Notes Receivable.

      1.36  Encumbered Timeshare Interest. The Timeshare Interest that is
encumbered by the Liens of the Timeshare Interest Mortgages which are pledged
and assigned to Lender.

      1.37  Environmental Laws. The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time ("CERCLA"),
the Resource Conservation and Recovery Act of 1976, as amended from time to time
("RCRA"), the Superfund Amendments and Reauthorization Act of 1986, as amended,
the federal Clean Air Act, the federal Clean Water Act, the federal Safe
Drinking Water Act, the federal Toxic

RECEIVABLES LOAN AND SECURITY AGREEMENT

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<PAGE>

Substances Control Act, the federal Hazardous Materials Transportation Act, the
federal Emergency Planning and Community Right to Know Act of 1986, the federal
Endangered Species Act, the federal Occupational Safety and Health Act of 1970,
the federal Water Pollution Control Act, and any and all comparable statutes or
ordinances enacted in the State of Texas or any other state where a Receivables
Loan Approved Resort is located, as all of the foregoing laws may be amended
from time to time, and any rules or regulations promulgated pursuant to the
foregoing; together with any similar local, state or federal statutes,
ordinances, rules, or regulations, either in existence as of the date hereof or
enacted or promulgated after the date of this Agreement, that concern the
management, control, storage, discharge, treatment, containment, removal, and/or
transport of Hazardous Materials or other substances that are or may become a
threat to public health or the environment; together with any common law theory
involving Hazardous Materials or substances which are (or alleged to be)
hazardous to human health or the environment, based on nuisance, trespass,
negligence, strict liability, or other tortious conduct, or any other federal,
state, or local statute, ordinance, regulation, rule, policy, or determination
pertaining to health, hygiene, the environment, or environmental conditions.

      1.38 Event of Default. Defined in Section 7 of this Agreement.

      1.39 Exchange Company. Resort Condominiums International, Inc., Interval
International, Inc. or another internationally recognized timeshare exchange
company acceptable to Lender.

      1.40 Executive Management Member. Each of Robert Mead, Sharon Brayfield,
David O'Connor, Harry White, Edward Lahart and Joe Conner.

      1.41 FICO. The credit scoring system used by Fair Isaac and Company.

      1.42 Financial Statements. The tax returns, balance sheets, and statements
of income and expense of Borrower and the related notes and schedules delivered
by Borrower prior to the Closing Date; and the monthly, quarterly, and annual
financial statements and reports required to be provided to Lender pursuant to
Section 6.1(g) hereof.

      1.43 Furnishings. The furnishings, furniture, equipment, appliances and
fixtures provided by the Silverleaf Club for use within the Units.

      1.44 GAAP. Generally accepted accounting principles, applied on a
consistent basis, as described in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board which are applicable under the
circumstances as of the date in question.

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

      1.46 Hazardous Materials Indemnity Agreement. That certain Hazardous
Materials Indemnity Agreement of even date herewith executed by Borrower in
favor of Lender.

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<PAGE>

      1.47 Improvements. All Units, Common Areas and other buildings,
structures, recreational facilities, and appurtenances now located on the
Property.

      1.48 Initial Advance. The first Advance under the Loan which shall occur
or be deemed to have occurred on or promptly following the Closing Date.

      1.49 Interest Expense. For any date of determination, total interest
expense (including attributable to Capital Leases in accordance with GAAP) with
respect to all outstanding Debt of Borrower including capitalized interest but
excluding commissions, discounts and other fees owed with respect to letters of
credit and bankers' acceptance financing and net costs under any interest rate
SWAP agreements.

      1.50 Interest Rate. On any date, for all Advances and Obligations, unless
otherwise set forth in this Agreement, the fluctuating rate of interest per
annum equal to the sum of the LIBOR Rate in effect on such day, plus four and
one-quarter percent (4.25%) per annum. The Interest Rate shall be calculated
based on a three hundred sixty (360) day year and charged for the actual number
of days elapsed.

      1.51 Inventory Loan. That certain senior mortgage loan provided by Lender
to Borrower pursuant to the Inventory Loan Agreement in the maximum principal
amount of $15,000,000.

      1.52 Inventory Loan Agreement. That certain Inventory Loan and Security
Agreement, dated as of the date hereof, by and between Borrower and Lender.

      1.53 Inventory Loan Documents. All documents, instruments, agreements and
other contracts executed or delivered in connection with the Inventory Loan
Agreement.

      1.54 Leverage Ratio. As of any date of determination, the ratio of (i) the
sum of amounts outstanding under this Agreement plus any other Debt of Borrower
and its subsidiaries on a consolidated basis (other than off balance sheet debt
that is non-recourse to Borrower and approved by Lender in its Permitted
Discretion) to (ii) Borrower's and its subsidiaries' Tangible Net Worth, on a
consolidated basis.

      1.55 LIBOR Rate. At the time of determination thereof, a variable rate of
interest equal to (a) at Lender's election (i) the rate described as the "London
Interbank Offered Rate" for three months in the Money Rates section of The Wall
Street Journal, or (ii) the rate of interest determined by Lender in accordance
with its usual procedures (which determination shall be conclusive absent
manifest error) to be the London interbank offered rate for U.S. Dollars for a
three month period based upon the information presented on Telerate Systems at
page 3750 as of 11:00 a.m. (London time) on the day of determination of such
LIBOR Rate, divided by (b) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal) of reserve requirements
applicable to Lender in effect on the day of determination of such LIBOR Rate
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum). If the Telerate Systems (or its successor) or The Wall Street
Journal ceases to provide such quotes, a comparable replacement, as determined
by Lender, may be used by Lender. If on any date of determination (a) more than
one "London Interbank Offered Rate" for a three month period is published in The
Wall Street Journal, or (b) more than one London

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<PAGE>

interbank offered rate for a three month period appears on the Telerate System
at Page 3750, the highest of such rates will be the rate used for such day.

      1.56 Lien. Any interest in property securing an obligation owed to, or
valid claim by, a Person other than the owner of such property, whether such
interest arises in equity or is based on common law, statute, or contract.

      1.57 Loan. The maximum $50,000,000 credit facility as described in this
Agreement and evidenced and secured by the Loan Documents.

      1.58 Loan Documents. Collectively, the following documents and
instruments, as each may be amended, renewed, extended, restated, or
supplemented from time to time:

            (a)   This Agreement;

            (b)   The Note (if any);

            (c)   The Negative Pledge;

            (d)   Each intercreditor agreement entered into pursuant to Section
                  4.1(p);

            (e) The Master Pledge and Assignment of Notes Receivable and
Timeshare Interest Mortgages (in the form of Exhibit "B," attached hereto and
incorporated herein by this reference);

            (f) The Custodial Agreement;

            (g) The Lockbox Agreement;

            (h) The Servicing Agreement;

            (i) The Backup Servicing Agreement;

            (j) The Hazardous Materials Indemnity Agreement;

            (k) UCC-1 financing statements covering the Collateral, to be filed
with the Texas Secretary of State and in any other jurisdiction deemed
appropriate by Lender, in its sole discretion;

            (l) The Inventory Loan Agreement and the Inventory Loan Documents;

            (m) All such other assignments, agreements, documents, instruments,
certificates, and materials as Lender may require in order to evidence or secure
the Obligations, to evidence and perfect the rights, Liens, and security
interests of Lender contemplated by the Loan Documents, and otherwise to
effectuate the transactions contemplated hereby.

      1.59 Lockbox Agent. JPMorgan Chase Bank, N.A., or such other Person as may
be approved by Lender in writing from time to time, as Lender's exclusive agent
for the collection of all payments made on the Pledged Notes Receivable.

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<PAGE>

      1.60 Lockbox Agreement. That certain agreement by and among Lender,
Borrower, and Lockbox Agent in substantially the form of Exhibit "C," attached
hereto and incorporated herein by this reference, pursuant to which Lockbox
Agent is engaged, at Borrower's sole cost and expense, as Lender's exclusive
agent to receive, deposit, and disburse all amounts paid by each Purchaser or
other obligor pursuant to any Pledged Note Receivable to which such Purchaser or
other obligor is a party, as well as certain financial reporting services.

      1.61 Loss of License. The suspension, loss, revocation, or failure to
renew or file for renewal of any legally required registration, approval,
license, permit, or franchise now held or hereafter acquired by Borrower with
respect to the Receivables Loan Approved Resorts or the marketing or sale of
Timeshare Interests thereat or with respect thereto, or the failure to pay any
amount which is necessary for the continued operation of the Receivables Loan
Approved Resorts in compliance with all Applicable Laws.

      1.62 Mandatory Prepayment. Any prepayment of the Loan required by Section
2.5 of this Agreement.

      1.63 Maturity Date. April 29, 2008.

      1.64 Maximum Loan Amount. The maximum principal balance of the Loan which
can be outstanding at any time is Fifty Million Dollars ($50,000,000).

      1.65 Negative Pledge. Collectively, those certain negative pledge
agreements executed by Borrower in favor of Lender related to Borrower's
agreement not to grant any Lien on any Resort Facilities, any rights of Borrower
as Declarant, or any contracts or management agreements between Borrower and
Silverleaf Club, or any other Property-Related Contracts.

      1.66 Net Income. Net income (or loss) determined in conformity with GAAP.

      1.67 Net Sales. The contractual purchase price of a Timeshare Interest
sale where the recession period has expired.

      1.68 Note Receivable. A promissory note made and executed by a Purchaser
in favor of Borrower in connection with such Purchaser's acquisition of a
Timeshare Interest.

      1.69 Oak N' Spruce Resort. That certain Receivables Loan Approved Resort
located at Lee, Berkshire County, Massachusetts and part of the Silverleaf Club.

      1.70 Obligations. All indebtedness, liabilities, obligations, and
responsibilities, both financial and otherwise, to which Borrower is subject
under any of the Loan Documents, including but not limited to all amounts due or
becoming due to Lender in respect of the Loan or any of the Loan Documents,
including principal, interest, prepayment premiums, contributions, taxes,
insurance premiums, loan charges, custodial fees, reasonable attorneys' and
paralegals' fees and expenses and other fees or expenses which are incurred by
Lender or advanced to or on behalf of Borrower by Lender, pursuant to any of the
Loan Documents or in connection with Lender's enforcement of the prompt and
complete payment and performance by Borrower of all indebtedness, liabilities
and obligations pursuant to this Agreement, any of the other Loan Documents, or
otherwise.

RECEIVABLES LOAN AND SECURITY AGREEMENT

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<PAGE>

      1.71 Orlando Breeze Resort Club. Orlando Breeze Resort Club, a Texas
non-profit corporation.

      1.72 Payment Authorization Agreement. The pre-authorized debit agreement
executed by a Purchaser which provides for the payment of a Note Receivable.

      1.73 Permitted Discretion. A determination or judgment made on good faith
in the exercise of reasonable (from the perspective of a secured lender) credit
or business judgment.

      1.74 Permitted Liens and Encumbrances. Those Liens and encumbrances
affecting all or any portion of the Collateral to which Lender consents, as set
forth on Exhibit "E," attached hereto and incorporated herein by this reference.

      1.75 Person. An individual, corporation, partnership, limited liability
company, association, trust, government or political subdivision or agency
thereof, or other legal entity.

      1.76 Pledged Note Receivable. A Note Receivable that has been and remains
pledged to Lender by Borrower, pursuant to this Agreement or any of the other
Loan Documents.

      1.77 Property. Collectively, all of Borrower's right, title and interest
in and to all Timeshare Interests, all Receivables Loan Approved Resorts, all
voting rights with respect to all Declarations, and all other personal property
related thereto.

      1.78 Property-Related Contracts. All franchises, permits, trade names,
trademarks (and goodwill associated therewith), approvals, leasehold interests
(whether as lessor or lessee or sublessor or sublessee), management contracts,
marketing contracts, maintenance contracts, utility contracts, security
contracts, other servicing contracts, licensing contracts or other similar
contracts, and all guaranties of any of the foregoing, whether existing as of
the Closing Date or arising after the date hereof, relating, in each case, to
each Receivables Loan Approved Resort (and the Timeshare Interests and/or the
Units related thereto).

      1.79 Purchase Agreement. The Contract for Purchase and Sale executed by a
Purchaser and Borrower for the Purchaser's acquisition of a Timeshare Interest
at the Property.

      1.80 Purchase Price. The total purchase price of a Timeshare Interest, as
set forth in the Timeshare Documents relating to the purchase of such Timeshare
Interest.

      1.81 Purchaser. Any individual(s) who acquires one (1) or more Timeshare
Interests.

      1.82 Receivables Loan Approved Resorts. Collectively, Oak N' Spruce, each
of the resorts owned by Borrower or an Affiliate of Borrower located in
Habersham County, Georgia, Lake County, Illinois, Comal County, Texas, Taney
County, Missouri, Wood County, Texas, Smith County, Texas, Stone County,
Missouri, Montgomery County, Texas, Galveston County, Texas and Jefferson
County, Missouri, each included in the Silverleaf Club, and Orlando Breeze
Resort located in Polk County Florida, all as more particularly described on
Exhibit "F" attached hereto, and all additional timeshare resorts or similar
real property developments approved from time to time by Lender in its sole
discretion where a Timeshare Interest owned by Borrower is located, together
with all improvements now or hereafter located thereon including, as

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       13

<PAGE>

applicable, all roadways, easements, Common Elements, Furnishings, Resort
Facilities, equipment, fixtures, licenses and all other appurtenances thereunto
belonging.

      1.83 Resort Facilities. Those facilities and amenities at the Receivables
Loan Approved Resorts that are available for use by Purchasers of Timeshare
Interests in such Receivables Loan Approved Resort and that are more
particularly described in Exhibit "D" attached hereto. In certain cases such
facilities and amenities are not located within the boundaries of the timeshare
regime at the applicable Receivables Loan Approved Resort as established
pursuant to the applicable Declaration, but in such cases are subject to a Use
Agreement.

      1.84 Revolving Credit Period. The period of time commencing on the Closing
Date and expiring on the Maturity Date.

      1.85 Sales and Marketing Costs. All promotion, lead generation, sales
commissions and other marketing expenses and costs incurred by Borrower in
connection with selling and marketing of Timeshare Interests in each Receivables
Loan Approved Resort.

      1.86 Servicing Agreement. That certain servicing agreement dated as of the
date hereof, in form and substance satisfactory to Lender in its sole
discretion, between Lender and Borrower, as servicer.

      1.87 Silverleaf Club. Silverleaf Club, a Texas non-profit corporation.

      1.88 Sovereign Facility. Individually and collectively, each of those
certain credit facility provided by Sovereign Bank to Borrower pursuant to (a)
that certain Second Amended and Restated Revolving Credit Agreement dated as of
July 30, 2004, and (b) that certain Inventory and Receivables Revolving Credit
Agreement dated as of July 30, 2004, including all other documents and
instruments executed in connection therewith, as all of the same have been and
may hereafter be amended, supplemented and modified from time to time.

      1.89 Suspension of Sales Order or Sanction. The issuance of any stay
order, cease and desist order or similar judicial or nonjudicial sanction
prohibiting the sale or marketing of Timeshare Interests.

      1.90 Tangible Net Worth. For any Person, at a particular date, (a) the
aggregate amount of all assets of such Person as may be properly classified as
such in accordance with GAAP consistently applied excluding such other assets as
are properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of such Person, plus subordinated debt (excluding
accrued interest on such subordinated debt) of such Person as approved by
Lender.

      1.91 Textron Facility. Individually and collectively, those certain credit
facilities provided by Textron Financial Corporation to Borrower pursuant to (a)
that certain Amended and Restated Loan, Security and Agency Agreement (Tranche
A) dated as of April 30, 2002, (b) that certain Amended and Restated Loan,
Security and Agency Agreement (Tranche B) dated as of April 30, 2002, (c) that
certain Loan and Security Agreement (Tranche C) dated as of April 17, 2001, and
(d) that certain Amended and Restated Loan and Security Agreement dated as of

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       14

<PAGE>

March 5, 2004, and all documents and other instruments executed in connection
therewith, as all of the same have been and may hereafter be amended,
supplemented and modified from time to time.

      1.92 Timeshare Act. Any statute, act, regulation, ordinance, rule or law
applicable to the establishment and operation of the Receivables Loan Approved
Resorts and the sale of Timeshare Interests.

      1.93 Timeshare Association. Individually and collectively, those certain
non-profit corporations, or any successor associations thereto, created in the
Declaration.

      1.94 Timeshare Documents. The Declaration, the bylaws and rules and
regulations of the Timeshare Association, and all other documents and
instruments relating to the Property, the Timeshare Association, and/or the
Units, Common Areas, or Timeshare Interests thereat, including but not limited
to public offering statements, Purchase Agreements, promissory notes, federal
truth-in-lending disclosures, advertising and promotional materials of any and
every type, contracts and agreements to which the Timeshare Association is
subject, and any and all other documents, instruments, and other materials used,
directly or indirectly, in connection with the marketing, sale, and financing of
such Timeshare Interests. Each Timeshare Document shall be reviewed by Lender
and accepted by Lender as a condition precedent to the Initial Advance.

      1.95 Timeshare Interest. A fee simple ownership interest in a Unit located
at a Receivables Loan Approved Resort to be sold by Borrower to Purchasers
comprised of either: (i) a Timeshare Interest which provides a Purchaser with a
seven (7) consecutive day right of occupancy in a Unit located in a Receivables
Loan Approved Resort every year ("Weekly Timeshare Interest"); or (ii) any
combination of a Timeshare Interest which provides a Purchaser with a seven (7)
consecutive day right of occupancy in a Timeshare Unit located in a Receivables
Loan Approved Resort every other year ("Bi-annual Timeshare Interest"), as set
forth in the applicable Declaration, with such interest being entitled to the
right to the possession, use and occupancy of a Unit located in a Receivables
Loan Approved Resort during the applicable time periods sold for such Weekly
Timeshare Interest or Bi-annual Timeshare Interest, as applicable, and the use
of all Common Elements and Resort Facilities.

      1.96 Timeshare Interest Mortgage. A recorded, first priority mortgage
executed and delivered by each Purchaser to Borrower, securing a Pledged Note
Receivable and encumbering all of the right, title and interest of each
Purchaser in the related Timeshare Interest. With respect to Oak N' Spruce
Resort only, an Assignment of Certificate of Beneficial Interest executed by
each Purchaser and delivered to Borrower.

      1.97 Title Insurance Company. Chicago Title Insurance Company, or such
other title insurance company as is acceptable to Lender, in its sole
discretion.

      1.98 Title Policy. Defined in Section 4.1(h) of this Agreement.

      1.99 Unit. A part of the Property which is designated for occupancy.

      1.100 Unused Line Fee. An amount calculated as of the last day of each
month equal to one-quarter of one percent (0.25%) per annum of the difference
between (i) the Maximum Loan

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                                       15

<PAGE>

Amount and (ii) the average outstanding principal balance of the Loan during
such month commencing on the first day of the seventh (7th) month following the
Closing Date, payable monthly in arrears by the first Business Day of the
following month during the term of the Loan. Notwithstanding the foregoing, the
Unused Line Fee shall be waived in the event the average outstanding principal
balance of the Loan is in excess of $20,000,000 during such period.

      1.101 Upgraded Note Receivable. An Eligible Note Receivable made by the
maker of an existing Pledged Note Receivable which is assigned to Lender in
replacement of such Pledged Note Receivable and which satisfies the criteria
established in this Agreement (other than clause (h) of the definition of
Eligible Note Receivable; provided, that the sum of such maker's (i) down
payment on such existing Pledged Note Receivable plus (ii) existing equity in
such existing Pledged Note Receivable shall be equal to at least ten percent
(10%) of the original purchase price of the relevant Timeshare Interest).

      1.102 Use Agreement. Each of those certain Recreation and Use Agreements
whereby Purchasers have been granted the right to use and enjoy the Resort
Facilities.

      1.103 Voting Equity. Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing similar
functions) of such corporation or, in the case of a Person which is not a
corporation, securities or similar equity or partnership interests which entitle
the holder thereof to elect, select or control the management or policies of
such Person.

      SECTION 2. THE LOAN

      Lender hereby agrees to make the Loan in accordance with all of the terms,
provisions, and conditions hereof and of the other Loan Documents.

      2.1 Purposes. The proceeds of the Loan shall be used to pay all
indebtedness secured by any liens (other than liens in favor of Lender)
encumbering the Timeshare Interests related to the Pledged Notes Receivable and
for working capital purposes. In addition, proceeds of the Loan shall be used to
pay Borrower's costs associated with the closing of the Loan.

      2.2 Advances. So long as (i) no Event of Default exists and is continuing
or (ii) Lender has not delivered notice of the occurrence of a Default as set
forth in Sections 7.1 or 7.2 hereof and the failure to comply or violation
subject of such notice has not been satisfied or cured by Borrower, Lender shall
advance to Borrower, and Borrower may borrow, repay and re-borrow principal
under the Loan, to be disbursed to Borrower in a series of Advances during the
Revolving Credit Period, not to exceed at the time of any Advance an outstanding
balance greater than the Borrowing Base. Advances shall be made in amounts of at
least $50,000 but not more often than weekly.

      2.3 Interest Rate. The aggregate principal amount of all Advances of the
Loan that are outstanding from time to time shall bear interest at a rate equal
to the Interest Rate. Interest shall be due and payable monthly in arrears on
the first Business Day of each month. The average monthly outstanding principal
balance of the Loan shall bear interest in arrears as of Lender's wiring of
funds through its receipt of repayment of the Loan (if received by Lender later
than 1:00 p.m. eastern time, then interest accrual shall be through the next
Business Day

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                                       16

<PAGE>

following such receipt). If any statement furnished by Lender for the amount of
a monthly payment due exceeded the actual amount that should have been paid
because the LIBOR Rate decreased and such decrease was not reflected in the
monthly statement, Borrower shall make the payment specified in the monthly
statement from Lender and Borrower shall receive a credit for the overpayment,
which credit shall be applied towards the next subsequent monthly payment due
hereunder. If any statement furnished by Lender for the amount of a monthly
payment due was less than the actual amount that should have been paid because
the LIBOR Rate increased and such increase was not reflected in the monthly
statement, Borrower shall make the payment specified in the monthly statement
from Lender and Borrower shall be required to pay any resulting underpayment
with the next subsequent monthly payment due hereunder. Immediately upon the
occurrence of a Default or Event of Default and after the Maturity Date (if the
Loan is not paid in full on the Maturity Date), at Lender's election, in its
sole discretion, the Loan shall bear interest at the Default Rate. Lender may
assess a late charge equal to five percent (5%) of each delinquent payment due
hereunder if such payment is not paid by the time and in the manner required.

      2.4 Payments. Borrower agrees punctually to pay or cause to be paid to
Lender, via wire transfer, or through application of funds from the Lockbox
Account all principal and interest due under the Loan and other payments due
hereunder as follows:

            (a) Weekly Payments From Lockbox Account.

                  (i) Lockbox Account. Borrower shall direct or otherwise cause
      the makers of each Pledged Note Receivable, in writing, to pay directly to
      Lockbox Agent all interest, principal, prepayments (both voluntary and
      mandatory), and other amounts of any and every description payable to
      Borrower by or on behalf of such maker pursuant to the applicable Pledged
      Note Receivable, the related Timeshare Interest Mortgage, or any other
      related documents or instruments. Such amounts shall be deposited by
      Lockbox Agent into the lockbox account established and maintained by
      Lockbox Agent in accordance with the provisions of the Lockbox Agreement
      (the "Lockbox Account") by 5:00 p.m. eastern time on each and every
      Business Day, prior to the Maturity Date. Lockbox Agent shall be
      responsible pursuant to the terms of the Lockbox Agreement for remitting
      to Lender, via wire transfer, 100% of cleared funds collected from the
      Pledged Notes Receivable in the Lockbox Account.

                  (ii) Application of Funds. All amounts received by Lender
      shall be applied by Lender on a weekly basis beginning on the last
      Business Day of each week in the following order of priority (A) first, to
      reimburse Lender for all costs, expenses, and other amounts due Lender
      hereunder or pursuant to the other Loan Documents other than principal and
      interest, including, without limitation, the costs, expenses and other
      amounts due Custodian; (B) second, to pay Lender all accrued but unpaid
      interest due under the Note; (C) third, to reduce the outstanding
      principal balance of the Loan as sufficient to maintain the Borrowing
      Base; (D) fourth, to reduce the outstanding principal balance of the Loan;
      and (E) fifth, to the payment of any other Obligations outstanding under
      this Agreement. If the amount of funds received by Lender from the Lockbox
      Agent with respect to any week is insufficient to pay in full the amounts
      provided for in clauses (A), (B) and (C) of the preceding sentence for
      such week, without notice or

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       17

<PAGE>

      demand, Borrower shall pay the difference to Lender within the first seven
      (7) days of the next succeeding week.

                  (iii) Borrower's Receipt of Payments. In the event Borrower
      receives any payments on any of the Pledged Notes Receivable directly from
      or on behalf of the maker or makers thereof, Borrower shall receive all
      such payments in trust for the sole and exclusive benefit of Lender, and
      Borrower shall deliver to the Lockbox Agent all such payments (in the form
      so received from Borrower) as and when received by Borrower unless Lender
      shall have notified Borrower to deliver directly to Lender all payments in
      respect of the Pledged Notes Receivable which may be received by Borrower,
      in which event all such payments (in the form received) shall be endorsed
      by Borrower to Lender and delivered to Lender promptly upon Borrower's
      receipt thereof.

            (b) Final Payment. Notwithstanding any term, provision, or condition
hereof to the contrary, the entire outstanding principal balance of the Loan,
together with any and all accrued but unpaid interest thereon and all other
Obligations, shall be paid in full via wire transfer by Borrower to Lender on or
before the Maturity Date, as such may be extended pursuant to the terms of this
Agreement.

            (c) Payment of Fees. Borrower agrees to pay Lender each of the
following fees:

                  (i) Commitment Fee -- $500,000 is non-refundable and deemed
      earned at Closing and payable on the Closing Date; and

                  (ii) Unused Line Fee -- which is due commencing on the first
      day of the seventh (7th) month following the Closing Date and is payable
      monthly in arrears by the first Business Day of the following month during
      the term of the Loan; and which at such time shall automatically be paid
      from the proceeds of the Lockbox Account; provided, that the Unused Line
      Fee shall cease to accrue during any time the outstanding principal amount
      of the Loan exceeds $20,000,000.

      2.5 Prepayments.

            (a) Voluntary Prepayments. The Loan may not be prepaid in whole
during the Revolving Credit Period; provided, however, subject to the terms of
this Agreement, Borrower may prepay the Loan, in whole or in part, upon any
whole loan sale, off balance sheet conduit sale or securitization, upon thirty
(30) days' prior written notice to Lender, so long as the Loan or this Agreement
shall not be terminated. Any such prepayment must include all outstanding
principal, accrued but unpaid interest, and all other Obligations.

            (b) Mandatory Prepayments. If at any time and for any reason, the
outstanding unpaid principal balance of the Loan exceeds the aggregate amount of
the Borrowing Base, Borrower shall either (A) prepay the principal balance of
the Loan in an amount equal to the difference between the then aggregate
outstanding principal balance of the Loan and the amount of the Borrowing Base,
or (B) increase the aggregate principal amount of Eligible Notes Receivable,
pledged to Lender so that the Borrowing Base exceeds the then outstanding
principal balance of the Loan. The pledge and delivery to Lender of additional

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<PAGE>

Eligible Notes Receivable shall comply with the document delivery and
recordation requirements set forth in Section 4.2(b) of this Agreement and shall
be accompanied by a written certification of Borrower to the effect that such
additional Pledged Notes Receivable are Eligible Notes Receivable and that,
giving effect to the pledge to Lender of such Eligible Note Receivable, the
outstanding unpaid principal balance of the Loan is equal to or less than the
Borrowing Base. Notwithstanding the foregoing, Borrower shall prepay the entire
outstanding principal balance of the Inventory Loan upon repayment in full of
the Loan and termination of this Agreement prior to the Maturity Date.

      2.6 Reassignment by Lender. In the event (a) the obligation under a
Pledged Note Receivable and the related Timeshare Interest Mortgage has been
satisfied in full by its maker or makers and all amounts paid thereunder
actually received in good funds by Lender, (b) Borrower replaces a Pledged Note
Receivable with an Eligible Note Receivable in accordance with the terms of this
Agreement, or (c) another event occurs pursuant to which Lender in its
reasonable discretion agrees with Borrower that a Pledged Note Receivable shall
be returned to Borrower and Lender's lien with respect to the related Timeshare
Interest Mortgage shall be released, Lender, upon receipt of a written request
from Borrower, shall promptly reassign any Timeshare Interest Mortgage and
endorse the related Pledged Note Receivable to Borrower, without recourse, in
the form attached hereto as Exhibit "G" Lender shall cause all original
collateral files related thereto to be returned to Borrower.

      2.7 Breakage Costs. Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender for any losses or costs sustained by Lender if
the Loan, or any portion thereof, is prepaid for any reason whatsoever on any
date other than the Maturity Date or as the consequence of the breaking of any
LIBOR contract.

      2.8 Additional Increased Costs. In the event that after the date of this
Agreement, any applicable law, treaty or governmental regulation, or any change
therein or in the interpretation or application thereof, or compliance by Lender
(for purposes of this Section 2.9, the term "Lender" shall include Lender and
any corporation or bank controlling Lender) and the office or branch where
Lender (as so defined) makes or maintains the Loan with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:

            (a) subject Lender to any tax of any kind whatsoever with respect to
this Agreement or any other Loan Document or change the basis of taxation of
payments to Lender of principal, fees, interest or any other amount payable
hereunder or under any other Loan Documents (except for changes in the rate of
tax on the overall net income of Lender by the jurisdiction in which it
maintains its principal office);

            (b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Lender, including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or

            (c) impose on Lender or the London interbank Eurodollar market any
other condition with respect to this Agreement or any Loan Document;

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<PAGE>

      and the result of any of the foregoing is to increase the cost to Lender
of making, renewing or maintaining the Loan hereunder by an amount that Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of the Loan by an amount that
Lender deems to be material, then, in any case Borrower shall promptly pay
Lender, upon its demand, such additional amount as will compensate Lender for
such additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the LIBOR
Rate. Lender shall certify the amount of such additional cost or reduced amount
to Borrower, and such certification shall be conclusive absent manifest error.

      2.9 Basis For Determining Interest Rate Inadequate or Unfair. In the event
that Lender shall have determined that:

            (a) reasonable means do not exist for ascertaining the LIBOR Rate
for the Loan;

            (b) dollar deposits for three months are not available in the London
interbank Eurodollar market; or

            (c) any applicable law, treaty, regulation or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for Lender (for purposes of this subsection the term "Lender" shall
include the office or branch where Lender or any corporation or bank controlling
such Lender makes or maintains the Loans) to make or maintain the Loan;

then Lender shall give Borrower prompt written, telephonic or telegraphic notice
of such determination.

      2.10 Notes. Borrower agrees that:

            (a) upon written notice by Lender to Borrower that a promissory note
or other evidence of indebtedness is requested by Lender to evidence the Loan
and other obligations owing or payable to, or to be made by, Lender, Borrower
promptly shall (and in any event within three (3) Business Days of any such
request) execute and deliver to Lender an appropriate promissory note or notes
in form and substance reasonably satisfactory to Lender and Borrower, payable to
the order of Lender in a principal amount equal to the amount of the Loan owing
or payable to Lender;

            (b) all references to "Note" or "Notes" in the Loan Documents shall
mean Notes, if any, to the extent issued (and not returned to Borrower for
cancellation) hereunder, as the same may be amended, supplemented, modified,
divided and/or restated and in effect from time to time; and

            (c) upon Lender's written request, and in any event within three (3)
Business Days of any such request, Borrower shall execute and deliver to Lender
new Notes and/or split or divide the Notes, or any of them, in exchange for the
then existing subject Notes, in such smaller amounts or denominations as Lender
shall specify; provided, that the aggregate principal amount of such new, split
or divided Notes shall not exceed the aggregate principal amount of the Notes
outstanding at the time such request is made; and provided, further, that such
Notes

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<PAGE>

that are replaced shall then be deemed no longer outstanding hereunder and
replaced by such new Notes and returned to Borrower within a reasonable period
of time after Lender's receipt of the replacement Notes.

            (d) Upon receipt of evidence reasonably satisfactory to Borrower of
the mutilation, destruction, loss or theft of any Notes and the ownership
thereof, Borrower shall, upon the written request of the holder of such Notes,
execute and deliver in replacement thereof new Notes in the same form, in the
same original principal amount and dated the same date as the Notes so
mutilated, destroyed, lost or stolen; and such Notes so mutilated, destroyed,
lost or stolen shall then be deemed no longer outstanding hereunder. If the
Notes being replaced have been mutilated, they shall be surrendered to Borrower;
and if such replaced Notes have been destroyed, lost or stolen, such holder
shall furnish Borrower with an indemnity in writing to indemnify, defend and
save it harmless in respect of such replaced Notes.

      SECTION 3. COLLATERAL

      3.1 Grant of Security Interest. To secure the payment and performance when
due of the Obligations, for value received, Borrower hereby unconditionally and
irrevocably assigns, pledges, and grants to Lender a continuing first priority
security interest in and to the Collateral.

      3.2 Security Interest in All Pledged Notes Receivable. Notwithstanding
that Lender is obligated, subject to the terms and conditions set forth herein
and in the other Loan Documents, to make an Advance only in respect of Eligible
Notes Receivable, Lender shall have a continuing security interest in and to all
of the Pledged Notes Receivable and may collect and shall receive all payments
made under or in respect of all Pledged Notes Receivable, including Eligible
Notes Receivable that may become ineligible, until any of the same are released
by Lender, if at all, pursuant to Section 11.10 below.

      3.3 Financing Statements. Borrower agrees, at its own expense, to execute
the financing statements provided for by the Code, together with any and all
other appropriate instruments and documents, and to take such other action as
may be required, in Lender's reasonable judgment, in order to perfect and to
continue the perfection of Lender's security interests in the Collateral and
unless prohibited by law, Borrower hereby authorizes Lender to execute and file
any such financing statements on Borrower's behalf.

      3.4 Location of Collateral. All tangible Collateral (other than Collateral
delivered to Lender or Custodian) shall remain, at all times, within the
Property or at the offices of Borrower, and Borrower may not transfer or cause
the transfer of any such Collateral from such premises without the prior written
approval of Lender.

      3.5 Protection of Collateral; Reimbursement.

            (a) Pledged Notes Receivable and Related Documents. The portion of
the Collateral consisting of (i) the original Pledged Notes Receivable; (ii) the
original Purchase Agreements (including any addenda thereto) related to such
Pledged Notes Receivable; and (iii) originals or true copies of the related
Timeshare Interest Mortgages, truth-in-lending disclosure statements and, if
required by Lender, loan applications, any related Purchaser's or owner's
acknowledgments and understandings, certificates of title, public offering
statement and other

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                                       21

<PAGE>

receipts, Payment Authorization Agreements and Exchange Company applications and
disclosures shall be delivered, at Borrower's expense, to Lender at its address
as set forth in Section 11.1 hereof and, except as otherwise expressly provided
herein to the contrary, held in Lender's possession, custody, and control until
all of the Obligations have been fully satisfied or Lender expressly agrees to
release such documents. Alternatively, Lender, in its sole discretion, may elect
for Custodian to accept delivery of and maintain possession, custody, and
control of all such documents and instruments on behalf of Lender during such
period of time. Each original Pledged Note Receivable in favor of Borrower and
delivered by Borrower to Lender shall be duly endorsed by Borrower with the
words: "Pay to the order of CAPITALSOURCE FINANCE LLC, together with its
successors and assigns, with recourse."

            (b) Storage; Liability. The portion of the Collateral delivered to
Lender or Custodian as described above shall be segregated by Lender or
Custodian, as the case may be, and stored in a secure, fire-resistant filing
cabinet, access to which is limited in a commercially reasonable manner.
Borrower agrees that such storage is and shall be deemed to constitute
reasonable care by Lender with respect to such Collateral. Except to the extent
expressly included in the Custodian's fee as set forth in the Custodial
Agreement, all insurance and other expenses of protecting the Collateral,
including, without limitation, storing, warehousing, insuring, handling,
maintaining, and shipping the Collateral, and any and all excise, property,
intangible, sales, and use taxes imposed by any state, federal, or local
governmental authority on any of the Collateral or in respect of the sale
thereof shall be paid by Borrower. Provided that Lender or Custodian retains the
original Pledged Notes Receivable and related Timeshare Interest Mortgages and
originals or copies of the related Timeshare Documents, delivered to it and
stores it in a secure, fire-resistant filing cabinet as provided above, Lender
shall not be liable or responsible in any way for the safekeeping of the
Collateral or for any loss or damage thereto or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency, Lockbox Agent, Custodian, or any other Person whomsoever, excluding
damages or losses that occur as a result of Lender's gross negligence or willful
misconduct.

      3.6 Cross-Collateralization and Default. The Collateral shall secure all
of the Obligations. All Liens, pledges, assignments, mortgages, security
interests, and other collateral granted to or for the benefit of Lender pursuant
hereto or any other related documents or instruments shall also secure the
Obligations as well as the "Obligations" as defined in the Inventory Loan
Agreement. In addition, the Loan and all other loans made by Lender to Borrower
or any Affiliate of Borrower (including, but not limited to, the Inventory Loan)
shall be cross-defaulted such that any event of default with respect to any such
loan shall constitute an Event of Default hereunder, and vice versa.

      3.7 Liability. Any and all amounts for which Borrower may become liable
hereunder and all costs and expenses (including reasonable attorneys' and
paralegals' fees, legal expenses, and court costs) that Lender actually incurs
in enforcing or protecting its Lien on, or rights and interest in, the
Collateral or any of its rights or remedies under this Agreement or any other
Loan Document or in respect to any of the transactions to be had hereunder or
thereunder, until paid by Borrower to Lender with interest at the Default Rate,
shall be included among the Obligations and, as such, shall be secured by all of
the Collateral.

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       22

<PAGE>

      SECTION 4. CONDITIONS PRECEDENT TO CLOSING AND FUNDING PROCEDURES

      The obligation of Lender to enter into this Agreement and to fund the Loan
shall be subject to the complete satisfaction of each of the conditions
precedent set forth below and elsewhere in the Loan Documents:

      4.1 Conditions Precedent. On or prior to the Closing Date:

            (a) Execution and Delivery. Borrower shall execute and cause to be
notarized, witnessed, and attested, as appropriate, and delivered to Lender the
Loan Documents, together with such additional documents and certifications as
Lender and its counsel may reasonably require in order to ensure that all
conditions precedent to the closing of the Loan and the making of Advances
hereunder have been satisfied in all respects.

            (b) Opinion of Borrower's Counsel. Lender shall have received from
duly licensed outside counsel for Borrower acceptable to Lender such legal
opinions, in form and substance satisfactory to Lender, covering such items as
may be required by Lender, in its sole discretion, including, without
limitation, that the Loan Documents are valid, binding, and legally enforceable
in accordance with their terms and that they do not violate any applicable usury
or other Applicable Laws and the delivery and endorsement by Borrower of such
Pledged Notes Receivable in the manner prescribed herein, the execution and
delivery to Lender of a Master Pledge and Assignment of Note Receivables and
Timeshare Interest Mortgages, and, with respect to Receivables Loan Approved
Resorts other than Oak N' Spruce Resort, the recordation of such Master Pledge
and Assignment of Notes Receivable and Timeshare Interest Mortgages and a
corresponding UCC Financing Statement with the Texas Secretary of State will
create in favor of Lender a valid and perfected continuing first priority Lien
and security interest in and to such Pledged Notes Receivable.

            (c) Representations, Warranties, Covenants, and Agreements. The
representations and warranties contained in the Loan Documents and in any
certificates delivered to Lender in connection with the closing shall be true
and correct in all material respects, and all covenants and agreements required
to have been complied with and performed by Borrower shall have been fully
complied with and performed to the satisfaction of Lender.

            (d) Borrower's Background Documents. Borrower shall have delivered
to Lender and Lender shall have approved each of the following:

                  (i) Borrower's Organizational Documents. Copies of Borrower's
      organizational documents, including but not limited to its certificate of
      incorporation and bylaws, together with any amendments thereto, certified
      to be true and complete by the Secretary of Borrower.

                  (ii) Good Standing Certificate. Current good standing
      certificate for Borrower issued by the Texas Secretary of State.

                  (iii) Authorizations; Resolutions; Incumbency Certificates. A
      certified resolution of Borrower authorizing the execution of all Loan
      Documents and the

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                                       23

<PAGE>

      performance of all Obligations thereunder. Such resolution shall be
      accompanied by a certificate from Borrower, signed by a duly authorized
      officer of Borrower and dated as of the Closing Date, indicating the
      incumbency, authority, and signatures of the members or officers of such
      entity authorized to sign, on behalf of such entity, this Agreement and
      the other Loan Documents to which such entity is a party.

            (e) Financial Statements. Lender shall have received and approved
the Financial Statements required pursuant hereto, or otherwise required by
Lender, for Borrower, all in form and substance satisfactory to Lender.

            (f) Proceedings Satisfactory. All actions taken in connection with
the execution and delivery of the Loan Documents, and all documents and papers
related thereto, shall be completely satisfactory to Lender and its counsel.
Lender and its counsel shall have received copies of all such documents,
instruments, and other items as Lender or its counsel may reasonably request in
connection therewith, all in form and substance satisfactory to Lender and its
counsel.

            (g) Expenses. Borrower shall have paid all fees, expenses, and other
amounts required to be paid prior to or on the Closing Date, pursuant to this
Agreement.

            (h) Title Insurance. Borrower shall deliver or cause to be delivered
to Lender a mortgagee's title insurance commitment at the time of each Advance
covering Timeshare Interest Mortgages which are included as part of such Advance
(other than Timeshare Interest Mortgages covering Timeshare Interests in Oak N'
Spruce Resort), underwritten by a company acceptable to Lender in all respects,
to insure the lien of each Timeshare Interest pledged to Lender in an amount not
less than the applicable Pledged Notes Receivable balance and containing such
affirmative coverage as Lender deems reasonably necessary. A mortgagee title
insurance policy consistent with the subject title insurance commitment and
naming Borrower, its successors and assigns as insured mortgagee shall be
delivered with respect to the Timeshare Interest Mortgages which make up each
Advance (other than Timeshare Interest Mortgages covering Timeshare Interests in
Oak N' Spruce Resort) within sixty (60) days of the date of the Advance on such
Pledged Notes Receivable and must insure that the applicable Timeshare Interest
Mortgage creates a first priority lien in and to the financed Timeshare Interest
in favor or Lender, as assignee of Borrower, with such exceptions and conditions
to title as Lender shall approve in writing.

            (i) Purchase Agreement. Borrower shall deliver to Lender or, at the
option of Lender in its sole discretion, Custodian, each Pledged Note Receivable
endorsed to the order of Lender and an original Purchase Agreement, disclosure
statement, copy of the Timeshare Interest Mortgage and the Master Pledge and
Assignment of Notes Receivable and Timeshare Interest Mortgages in respect of
each of the Eligible Notes Receivable which Borrower proposes to assign to
Lender and upon which Borrower is basing the requested Advance, together with
copies of the settlement statement and other documents as further described in
the Custodial Agreement.

            (j) Evidence of Insurance. Lender has received certified copies of
all insurance policies and endorsements thereto or other evidence satisfactory
to Lender, in its sole

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       24

<PAGE>

discretion. In addition, Lender has written evidence that Borrower has obtained
and maintained all policies of insurance required by and in accordance with
Section 6.1(c) hereof, including but not limited to copies of the most current
paid insurance premium invoices for such policies.

            (k) Applicable Laws. Lender has received evidence satisfactory to
Lender that all existing Improvements at the Property are and will be in
compliance with all applicable zoning, building, and other Applicable Laws in
connection with the establishment of the Property, the operation of the
Property, the sale, use and marketing of Timeshare Interests, and the occupancy
of Units at the Property.

            (l) Litigation. Other than those certain matters described in
Exhibit "H" hereto, there is no pending or threatened bankruptcy, foreclosure,
or other material litigation or judgments outstanding against or with respect to
the Property, all or any portion of the Collateral or Borrower (each a "Material
Party"). The term "other material litigation" as used herein shall not include
matters in which (i) a Material Party is a plaintiff and no counterclaim is
pending; or (ii) Lender determines, in its sole discretion, that such litigation
is immaterial due to settlement, insurance coverage, frivolity, or amount or
nature of claim. Lender shall have obtained an independent search, at Borrower's
expense, confirming that no such bankruptcy, foreclosure action, or other
material litigation or judgment exists.

            (m) Code/Other Searches. Lender has obtained such searches of the
applicable public records as it deems necessary under all Applicable Laws to
verify that it has a first and prior perfected Lien and security interest
covering all of the Collateral.

            (n) Taxes and Assessments. Lender has received copies of the most
current tax bills related to the Property, including the real property, and
Timeshare Interests, together with evidence satisfactory to it that all taxes
and assessments owed by or for which Borrower is responsible for collection have
been paid prior to becoming delinquent, which taxes and assessments include,
without limitation, sales taxes, room occupancy taxes, payroll taxes, personal
property taxes, excise taxes, intangible taxes, real property taxes, income
taxes, and any assessments related to the Property and/or the real property, or
Timeshare Interests. Lender shall also have received information satisfactory to
Lender disclosing the tax identification numbers, tax rates, estimated tax
values, assessment ratios, and estimated assessment values or amounts with
respect to its interest in the Property and the real property and the identities
of the taxing authorities having jurisdiction over the real property and the
Property as well as the instrumentalities and entities having the power and
jurisdiction to impose assessments against the real property or the Property.

            (o) Intercreditor Agreements. Lender shall have entered into
intercreditor agreements, in form and substance satisfactory to Lender, with
each of Textron Finance Corporation, Sovereign Bank and any other lenders or
financial institutions from time to time providing financing to Borrower and its
Affiliates as requested by Lender from time to time.

            (p) Physical Inspection. Lender may, in its sole discretion, cause
to be made its own physical inspection of the Property or its Collateral. If
Lender's physical inspection indicates that any structural or mechanical defect
exists with respect to all or any portion of the Property or its Collateral
(including Units which include Timeshare Interests which are related to

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       25

<PAGE>
any Pledged Note Receivable), Lender shall have the right to engage an
independent engineering firm to prepare a structural and mechanical engineering
report covering the Property confirming that the Property and the improvements
thereat are in all material respects mechanically and structurally sound. If the
structure is found to be defective, the cost of any requisite remedial work with
respect to the mechanical and structural condition of the Property which is
required as a result of the findings of such report which raise questions about
the structural soundness of the Property shall be borne entirely by Borrower.

            (q) Permits and Approvals. Lender has received copies of
satisfactory evidence that the real property, the Units, and other improvements
thereto, and the use of the Property are in compliance with all Applicable Laws,
including, without limitation: (i) Environmental Laws; (ii) erosion control
ordinances; (iii) doing-business and licensing laws, including those governing
alcohol and beverages; (iv) the Americans with Disabilities Act of 1990 and any
other laws protecting disabled or handicapped persons; and (v) zoning laws. All
such permits and approvals granted to Borrower shall continue to be legally
valid and shall remain in full force and effect for so long as any Obligations
remain outstanding.

            (r) Timeshare Interest Sales. Lender has received written evidence
to the effect that Borrower has complied in all respects with all Applicable
Laws relating to the marketing and sale of Timeshare Interests, including but
not limited to any Encumbered Timeshare Interests, at or with respect to the
Property, including but not limited to timeshare registration statutes, rules,
and regulations.

            (s) Compliance with Applicable Laws. Lender has received written
evidence satisfactory to it, in its Permitted Discretion, that all Units in
which Borrower is selling Timeshare Interests have been properly submitted to
the Declaration in full compliance with all Applicable Laws.

            (t) Inventory Loan Conditions. Each of the conditions to the initial
advance under the Inventory Loan Agreement shall have been satisfied.

            (u) Miscellaneous. Such other matters as Lender shall reasonably
require.

      True copies or to the extent required hereby, originals of all of the
above referenced documents, instruments, forms, opinions, and other materials
shall be delivered to Lender or its Counsel prior to the Closing Date.

      4.2 Funding Procedures.

            (a) Initial Advance. Subject to all of the terms, provisions, and
conditions hereof and of the other Loan Documents, Lender shall make an Initial
Advance to Borrower exclusively for the purposes set forth in Section 2 above
promptly following Lender's perfection of its Liens and security interests in
all other Collateral, and Borrower's complete satisfaction of all other
conditions precedent to such Initial Advance set forth herein and in the other
Loan Documents.

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       26

<PAGE>

            (b) Requests for Advances. Each request for an Advance under the
Loan shall be completed on the appropriate form attached hereto as Exhibit "I"
attached hereto and incorporated herein by this reference (the "Advance
Request") and shall:

                  (i) Be in writing (in the form of Exhibit "I");

                  (ii) Specify the principal amount of the Advance requested;

                  (iii) Confirm the amount of the then current Borrowing Base
      (and provide back up as requested by Lender);

                  (iv) Confirm that all representations and warranties of
      Borrower contained in this Agreement are true and correct as of the date
      of the Advance Request and, after giving effect to the making of the
      requested Advance, will be true and correct as of the date on which the
      Advance is to be made;

                  (v) State that no Default or Event of Default exists as of the
      date of the Advance Request and, after giving effect to the making of such
      Advance, no Default or Event of Default would exist as of the date on
      which the Advance is to be made;

                  (vi) Be delivered to the office of Lender as set forth in
      Section 11.1 hereof at least five (5) Business Days prior to the date of
      the requested Advance;

                  (vii) Be signed by a duly authorized officer of Borrower;

                  (viii) Be accompanied by Borrower's sworn written certificate
      to the effect that, to the best knowledge of Borrower and to the extent
      applicable, Borrower:

                        (A) Has received no notice of any asserted or threatened
            defense, offset, counterclaim, discount, or allowance in respect of
            each Eligible Note Receivable to be pledged to Lender through a
            collateral assignment of all of Borrower's right, title, and
            interest therein in connection with such Advance; and

                        (B) Has received no notice of any asserted or threatened
            defense, offset, counterclaim, discount, or allowance in respect of
            any Eligible Note Receivable or Pledged Note Receivable.

                  (ix) Be accompanied by such additional items as Lender shall
      reasonably require, including, without limitation:

                        (A) An aging report, in form and substance satisfactory
            to Lender in its sole discretion, on the applicable Pledged Notes
            Receivable; and

                        (B) A delinquency report, in form and substance
            satisfactory to Lender in its sole discretion, showing which Notes
            Receivable in connection with the Advance are contractually past due
            and the duration of each such delinquency.

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       27

<PAGE>

                    (x) Provided that no Default or Event of Default hereunder
      has occurred and is continuing, each Advance shall be made within three
      (3) Business Days following the last to occur of (a) Lender's receipt of
      the Advance Request (as hereinafter defined) and all items required to be
      submitted to Lender hereunder, including but not limited to those items
      referenced in this Section 4.2 (to the extent applicable) and (b) Lender's
      receipt of a written certification from Custodian that confirms that
      Custodian has in its possession each of the documents, instruments, and
      other items required to be delivered to Custodian pursuant to the
      Custodial Agreement (unless Lender, in its sole discretion, has elected to
      take possession of such documents, instruments, and other items itself).

            (c) Loan Documents/Collateral. Not less than five (5) days prior to
the date of any Advance (unless Lender, in its sole discretion, elects to
shorten such time frame), Borrower shall have:

                  (i) Delivered to Lender and Custodian a list of all Eligible
      Notes Receivable, that are intended to be the subject of such requested
      Advance, indicating the unpaid principal balance owing on each of the
      Pledged Notes Receivable deemed to be an Eligible Note Receivable,
      together with such additional information as Lender may request;

                  (ii) Delivered to Lender and Custodian (or, if Lender shall so
      instruct, a designee appointed by Lender in writing) all documents,
      instruments, and other items described in Section 4.1 above and in the
      Custodial Agreement;

                  (iii) Delivered to Lender (or if Lender shall so instruct, a
      designee appointed by Lender in writing) for the Initial Advance only an
      original Master Pledge and Assignment of Notes Receivable and Timeshare
      Interest Mortgages, duly executed and in proper form for recording,
      assigning to Lender all of Borrower's right, title and interest in and to
      each Pledged Note Receivable identified in the exhibit or schedule
      thereto, together with all accounts, chattel paper and general intangibles
      related thereto and the cash and non-cash proceeds thereof ("Master
      Collateral Assignment"). Such Master Collateral Assignment shall be
      recorded in connection with the Initial Advance. In addition, if
      applicable, Borrower shall have delivered to Lender (or if Lender shall so
      instruct to Custodian) for each Advance subsequent to the Initial Advance
      a Supplemental Pledge and Assignment of Notes Receivable and Timeshare
      Interest Mortgages in the form of Exhibit "J" hereto, duly executed and in
      proper form for recording, assigning to Lender all of Borrower's right,
      title, and interest in and to each such Pledged Note Receivable and
      Timeshare Interest Mortgages identified in the exhibit or schedule
      thereto, together with all accounts, chattel paper, and general
      intangibles related thereto and the cash and non-cash proceeds thereof
      ("Supplemental Collateral Assignment"). Such Master Collateral Assignment
      (for the Initial Advance only) and such Supplemental Collateral Assignment
      (for each Advance subsequent to the Initial Advance) shall be recorded in
      the Public Records of Habersham County, Georgia; Lake County, Illinois;
      Comal County, Texas; Taney County, Missouri; Wood County, Texas; Smith
      County, Texas; Stone County, Missouri; Montgomery County, Texas; Galveston
      County, Texas; Jefferson County, Missouri; and Polk County, Florida, as
      applicable.

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       28

<PAGE>

                  (iv) With respect to any Advance in connection with Pledged
      Notes Receivable generated at Oak N' Spruce Resort, delivered to Lender an
      Assignment of Certificate of Beneficial Interest securing such Pledged
      Note Receivable acceptable to Lender in its sole discretion and evidence
      that Borrower has filed a UCC-1 financing statement in the state where the
      Purchaser is located naming Borrower as the secured party and Lender as
      Borrower's assignee.

                  (v) Lender and Borrower agree that in accordance with the
      terms herewith, that Lender shall make Advances to Borrower upon receipt
      of an Advance Request without the requirement that the Borrower submit
      additional Notes Receivable for funding so long as there is availability
      under the Borrowing Base at the time of such Advance Request.

                  (vi) For the Initial Advance only, delivered to Lender (or if
      Lender shall so instruct, a designee appointed by Lender in writing)
      original UCC-1 financing statements covering the Collateral in general, to
      be recorded with the Secretary of State of the State of Texas.

      The Timeshare Interest Mortgages relating to each Pledged Note Receivable
collaterally assigned to Lender must have evidence thereon of payment of all
required documentary stamps and intangible taxes, if any.

            (d) Other Conditions. In addition to the other conditions set forth
in this Agreement, the making of any Advance shall be subject to the complete
satisfaction of all of the following conditions:

                  (i) No Default or Event of Default exists immediately prior to
      the making of such requested Advance or, after giving effect thereto,
      immediately after the making of such requested Advance;

                  (ii) The Pledged Note Receivable as to which such Advance is
      sought is not located at a Receivables Loan Approved Resort where a Loss
      of License has occurred;

                  (iii) The Pledged Note Receivable as to which such Advance is
      sought is not located at a Receivables Loan Approved Resort where Borrower
      has received a Suspension of Sales Order or Sanction;

                  (iv) The date on which any Advance is to be made is a Business
      Day;

                  (v) Lender has determined that each Pledged Note Receivable as
      to which such Advance is sought is an Eligible Note Receivable and that
      such requested Advance will not be in an amount greater than the Borrowing
      Base;

                  (vi) Lender has determined that the weighted average FICO
      score for the aggregate Pledged Note Receivables as to which such Advance
      is sought is greater than 640;

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       29

<PAGE>

                  (vii) Lender has determined that no more than twenty-five
      percent (25%) of the unpaid principal balance of the aggregate Pledged
      Note Receivables as to which such Advance is sought shall have makers with
      FICO scores below 600 (including makers who have no FICO score at all);

                  (viii) Lender has determined that no more than five percent
      (5%) of the unpaid principal balance for the aggregate Pledged Note
      Receivables as to which such Advance is sought shall have makers who have
      no FICO score at all;

                  (ix) Lender has determined that no more than five percent (5%)
      of the unpaid principal balance of the aggregate Pledged Note Receivables
      as to which such Advance is sought shall be related to downgraded
      Timeshare Interests;

                  (x) All representations and warranties contained herein, in
      the other Loan Documents, and in any certificates delivered to Lender in
      connection with the Loan are true and correct in all material respects;

                  (xi) Lender has received evidence satisfactory to Lender, in
      its reasonable discretion, that the Receivables Loan Approved Resorts and
      the Silverleaf Club are affiliated with the Exchange Company; and

                  (xii) Lender has received evidence satisfactory to Lender, in
      its Permitted Discretion, that all of Borrower's interest in the
      Receivables Loan Approved Resort (including the marketing and sale of
      Timeshare Interests thereat or with respect thereto) and the Collateral is
      in full compliance with all Applicable Laws.

      SECTION 5. GENERAL REPRESENTATIONS AND WARRANTIES

      Borrower hereby represents and warrants to Lender as follows:

      5.1 Organization, Standing, Qualification. Borrower is a Texas corporation
organized, validly existing, and in good standing under the laws of the State of
Texas and as a foreign corporation under the laws of each jurisdiction in which
the character or location of the properties owned by it or the business
transacted by it requires licensing and qualification. Borrower has all
requisite power to conduct its business and to execute, deliver, and perform its
obligations under the Loan Documents.

      5.2 Authorization, Enforceability, Etc.

            (a) The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party has been duly authorized by all necessary
corporate action by Borrower and does not and will not (i) violate any provision
of Borrower's certificate of incorporation or bylaws or other agreement,
statute, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award presently in effect to which Borrower is a party or is
subject; (ii) result in, or require the creation or imposition of, any Lien upon
or with respect to any asset of Borrower other than Liens in favor of Lender and
the Permitted Liens and Encumbrances; or (iii) result in a breach of, or
constitute a default by Borrower under, any indenture, loan, or credit agreement
or any other agreement, document, instrument, or certificate

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       30
<PAGE>

to which Borrower is a party or by which it or any of its assets are bound or
affected, including but not limited to any loan from or agreement of any type
with a third party lender.

            (b) No approval, authorization, order, license, permit, franchise,
or consent of, or registration, declaration, qualification, or filing with, any
governmental authority or other Person is required in connection with the
execution, delivery, and performance by Borrower of any of the Loan Documents to
which it is a party in addition to those that have already been obtained.

            (c) The Loan Documents constitute legal, valid, and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms.

            (d) The execution and delivery of the Loan Documents, the delivery
and endorsement to Lender of the Pledged Notes Receivable, the filing of a UCC-1
financing statement with the Secretary of State of the State of Texas, and the
recordation (as appropriate) of the Master Collateral Assignment (with respect
to the Initial Advance) and the Supplemental Collateral Assignment (with respect
to all subsequent Advances) and the other Loan Documents create in favor of
Lender valid and perfected first priority Liens and security interests in and to
all of the Collateral other than Collateral related to Oak N' Spruce Resort.
With respect to Oak N' Spruce Resort, the execution and delivery of the Loan
Documents, the delivery and endorsement to Lender of the Pledged Notes
Receivable, the filing of a UCC-1 financing statement with the Secretary of
State of the State of Texas, the delivery of an Assignment of Certificate of
Beneficial Interest securing such Pledged Note Receivable and the filing of a
UCC-1 financing statement in the state where the Purchaser is located naming
Borrower as the secured party and Lender as Borrower's assignee and the other
Loan Documents create in favor of Lender valid and perfected first priority
Liens and security interests in and to all of the Collateral related to Oak N'
Spruce Resort. The Collateral secures the full payment and performance of the
Obligations.

            (e) To the best of Borrower's knowledge, none of the Pledged Notes
Receivable is forged or has affixed thereto any unauthorized signatures or has
been entered into by any Person without the required legal capacity.

            (f) There have been no material modifications or amendments
whatsoever to the Pledged Notes Receivable, other than those expressly approved
by Lender in writing, the originals of which have been delivered to Custodian.

            (g) To the best of Borrower's knowledge, the makers of the Eligible
Notes Receivable have no defenses, offsets, claims, or counterclaims, relating
thereto or to the related Timeshare Interest Mortgages or any other related
documents or instruments.

            (h) The Pledged Notes Receivable are and shall remain in full force
and effect as valid and binding obligations of the respective makers thereof in
favor of Lender, as the collateral assignee of Borrower's right, title, and
interest therein.

            (i) The grant of the security interests described herein by Borrower
in favor of Lender has not adversely affected and will not adversely affect the
validity or enforceability

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       31
<PAGE>

of the obligations of the respective makers of the Pledged Notes Receivable
thereunder or pursuant to their respective Timeshare Interest Mortgages or any
related documents or instruments.

            (j) Lender is not and shall not be required to take, and Borrower
has taken, any and all required steps to perfect and maintain Lender's security
interests in the Collateral (other than maintaining or causing Custodian to
maintain possession, custody, and control of the portion of the Collateral
constituting instruments and timely filing continuation statements for UCC
financing statements); and Lender is not and shall not be required to collect or
realize upon the Collateral or any distribution of interest or principal, nor
shall loss of, or damage to, any Collateral release Borrower from any of the
Obligations.

      5.3 Financial Statements and Business Condition. The Financial Statements
fairly present the respective financial conditions and results of operations of
Borrower as of the date or dates thereof and for the periods covered thereby.
There are no material liabilities, direct or indirect, fixed or contingent, of
Borrower as of the dates of such Financial Statements that are not reflected
therein or in the notes thereto that have not otherwise been disclosed to Lender
in writing. There has been no material adverse change in the financial condition
of Borrower from the financial condition shown in its Financial Statements, nor
has Borrower incurred any material liabilities, direct or indirect, fixed or
contingent, that are not shown in its Financial Statements. Borrower is able to
pay all of its debts as they become due, and Borrower will maintain such solvent
financial condition, giving effect to the Obligations, as long as Borrower is
obligated to Lender under this Agreement or any of the other Loan Documents.
Borrower's Obligations under this Agreement and the other Loan Documents will
not render Borrower unable to pay its debts as they become due.

      5.4 Taxes. Borrower represents and warrants that (a) it has paid in full
all ad valorem taxes and other taxes and assessments levied against the Property
which are due and payable, and Borrower knows of no basis for any additional
taxes or assessments against the Property or Collateral; and (b) it has filed
all tax returns required to have been filed by it and has paid or will pay,
prior to delinquency, all taxes shown to be due and payable on such returns,
including interest and penalties, and all other taxes that are payable by it. No
tax audit is pending or threatened with respect to Borrower.

      5.5 Title to Collateral and Other Properties; Prior Liens. Borrower has
good and marketable title to all of the Collateral, including but not limited to
all interest of Borrower, as mortgagee under the Encumbered Timeshare Interests,
and Pledged Notes Receivable, together with all rights, properties, and benefits
appurtenant or related thereto. Other than those granted in favor of Lender,
there are no Liens, security interests, charges, or other encumbrances against
all or any portion of the Collateral, except for the Permitted Liens and
Encumbrances set forth in Exhibit "E," hereto. No financing statement or other
instrument similar in effect covering all or any portion of the Collateral, is
on file in any filing or recording office, except such as may have been filed or
recorded in favor of Lender. Borrower does not own any Furnishings or other
tangible personal property in any Unit located at any Receivables Loan Approved
Resort.

      5.6 Litigation, Proceedings, Etc. There are no actions, suits,
proceedings, orders, or injunctions pending or threatened against or affecting
Borrower, its Affiliates, or the Property, at law or in equity, or before or by
any governmental authority or other tribunal, which (a) could

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       32
<PAGE>

have a material adverse effect on Borrower, any Affiliate of Borrower, or the
Property that have not been fully disclosed to Lender in writing; or (b) could
have a material adverse effect on all or any portion of the Collateral. Exhibit
"H," attached hereto and incorporated herein by this reference, describes all
currently pending litigation against Borrower or any Affiliate of Borrower.

      5.7 Licenses, Permits, Etc. Borrower possesses and will at all times
continue to possess all requisite franchises, certificates of convenience and
necessity, operating rights, approvals, licenses, permits, consents,
authorizations, exemptions, and orders as are reasonably necessary or
appropriate to carry on its business as it is now being conducted, without any
known conflict with the rights of others and, with respect to Borrower and the
Collateral, in each case subject to no mortgage, pledge, Lien, lease,
encumbrance, charge, security interest, title retention agreement, or option
other than the Permitted Liens and Encumbrances. All such franchises,
certificates of convenience and necessity, operating rights, approvals,
licenses, permits, consents, authorizations, exemptions, and orders are
presently in full force and effect, and there is no action currently pending or
threatened effort to revoke or modify any of them.

      5.8 Environmental Matters. The Property contains no Hazardous Materials,
and no Hazardous Materials are used or stored at or transported to or from the
Property. Neither Borrower nor any representative of Borrower has received
notice from any governmental agency or other Person with regard to Hazardous
Materials on, under, or affecting all or any portion of the Collateral, and
neither Borrower nor any Collateral are in violation of any Environmental Laws.

      5.9 Full Disclosure. NO INFORMATION, EXHIBIT, OR WRITTEN REPORT OR THE
CONTENT OF ANY SCHEDULE FURNISHED BY OR ON BEHALF OF BORROWER TO LENDER IN
CONNECTION WITH THE LOAN, OR THE COLLATERAL, AND NO REPRESENTATION OR STATEMENT
MADE BY BORROWER IN ANY LOAN DOCUMENT, CONTAINS ANY MATERIAL MISSTATEMENT OF
FACT OR OMITS THE STATEMENT OF A MATERIAL FACT NECESSARY TO MAKE THE STATEMENT
CONTAINED HEREIN OR THEREIN NOT MISLEADING. TO THE BEST OF ITS KNOWLEDGE,
BORROWER KNOWS OF NO FACT OR CONDITION THAT COULD ADVERSELY AFFECT THE OPERATION
OF, AND/OR SALES OF TIMESHARE INTERESTS WITH RESPECT TO, THE PROPERTY IN
ACCORDANCE WITH ALL APPLICABLE LAWS OR IMPEDE OR PRECLUDE BORROWER'S PERFORMANCE
OF ITS OBLIGATIONS PURSUANT TO THE LOAN DOCUMENTS.

                                                Borrower's Initials: /S/ HJW

      5.10 Use of Proceeds/Margin Stock. None of the proceeds of the Loan will
be used to purchase or carry any "margin stock" (as defined under Regulation U
of the Board of Governors of the Federal Reserve System, as in effect from time
to time), and no portion of the proceeds of the Loan will be extended to others
for the purpose of purchasing or carrying margin stock. None of the transactions
contemplated in this Agreement (including, without limitation, the use of the
proceeds from the Loan) will violate or result in the violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations T, U and X of the
Board of Governors of the Federal Reserve

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       33
<PAGE>

System, 12 C.F.R. Part 11. The proceeds of the Loan will be disbursed for the
purposes set forth in Section 2.1 hereof.

      5.11 No Defaults. No Default or Event of Default exists, and there is no
breach or violation in any material respect of any term of any document,
contract, agreement, charter instrument, bylaws, or other instrument to which
Borrower is a party or by which it may be bound.

      5.12 Restrictions on Borrower. Borrower is not a party to any contract or
agreement, or subject to any Lien, charge, or restriction, that materially and
adversely affects its business. Borrower will not be, on or after the Closing
Date, a party to any contract or agreement that restricts its right or ability
to incur indebtedness (other than the agreements executed in connection with the
Sovereign Facility) and Borrower shall not be party to a contract or agreement
that prohibits Borrower's execution and delivery of, or compliance with the
terms of, this Agreement or the other Loan Documents. Borrower has not agreed or
consented to cause or permit in the future (upon the happening of any
contingency or otherwise) any of the Collateral, whether now owned or hereafter
acquired, to be subject to a Lien except in favor of Lender as provided
hereunder and the Permitted Liens and Encumbrances.

      5.13 Broker's Fees. Lender and Borrower each represent to each other that
neither of them has made any commitment or taken any action that could result in
a claim for any broker's, finder's, or other similar fees or commissions with
respect to the Loan as contemplated by this Agreement. Borrower agrees to
indemnify Lender and save and hold Lender harmless from and against all claims
of any Person for any broker's or finder's fee, commission, or similar amount,
unless such claim arises as the result of any commitment or action of Lender,
and this indemnity shall include reasonable attorneys' fees and legal expenses.
Lender agrees to indemnify Borrower and save and hold it harmless from and
against all claims of any Person for any broker's or finder's fee, commission,
or similar amount, unless such claim arises as the result of any commitment or
action of Borrower, and this indemnity shall include reasonable attorneys' fees
and legal expenses.

      5.14 Tax Identification Number. Borrower's federal taxpayer identification
number is 75-2259890.

      5.15 Legal Compliance. Borrower has, in all material respects, complied
fully with all Applicable Laws in connection with the Property and the
Collateral, including but not limited to (i) the Interstate Land Sales Full
Disclosure Act; (ii) any applicable condominium and timeshare statutes, rules,
and regulations, including but not limited to, those governing the
administration and operation of the Timeshare Association and those requiring
registration of the Timeshare Interests as a legal prerequisite to the marketing
and sale thereof, including, without limitation, the Timeshare Act. (iii)
Regulation Z of the Federal Reserve Board; (iv) the Equal Credit Opportunity
Act; (v) Regulation B of the Federal Reserve Board; (vi) Section 5 of the
Federal Trade Commission Act; (vii) all applicable state and federal securities
laws; (viii) all applicable usury laws; (ix) all applicable trade practices,
home and telephone solicitation, sweepstakes, lottery, and other consumer credit
and protection laws; (x) all applicable real estate sales licensing, disclosure,
reporting, and escrow laws; (xi) the Americans with Disabilities Act of 1990 and
all other accessibility requirements; (xii) the federal postal laws; (xiii) the
Real Estate

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       34
<PAGE>

Settlement Procedures Act; (xiv) the Fair Housing Act of 1968;(xv) the FTC
Privacy Act and (xvi) all amendments to and rules and regulations promulgated
under the foregoing, all if and as applicable. Furthermore, the Property and the
improvements (including the Improvements) thereat have been constructed and are
and will continue to be operated in compliance with all applicable zoning
requirements, building codes, subdivision ordinances, licensing requirements,
all covenants, conditions, and restrictions of record, and all other Applicable
Laws. Borrower has registered or is exempt from registration in each of the
states set forth on Exhibit "K" attached hereto. Borrower's marketing and sales
practices are in compliance with all Applicable Laws including, without
limitation, its lead generation techniques. Borrower has not been contacted or
notified of any Federal Trade Commission or Texas trade commission inquiry or
investigation or any Department of Justice or Texas Attorney General inquiry or
investigation in connection with the marketing and sale of Timeshare Interests.

      5.16 Deferred Compensation Plans. Borrower has no pension, profit sharing,
or other compensatory or similar plan (herein called a "Plan") providing for a
program of deferred compensation for any employee or officer. No fact or
situation, including but not limited to any "Reportable Event," as that term is
defined in Section 4043 of the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time (the "Pension Reform Act"), exists
or will exist in connection with any Plan of Borrower that might constitute
grounds for termination of any Plan by the Pension Benefit Guaranty Corporation
or cause the appointment by the appropriate United States District Court of a
Trustee to administer any such Plan. No "Prohibited Transaction" within the
meaning of Section 406 of the Pension Reform Act exists or will exist upon the
execution and delivery of this Agreement or the performance by the parties
hereto of their respective duties and obligations hereunder. Borrower will (a)
at all times make prompt payment of contributions required to meet the minimum
funding standards set forth in Sections 302 through 305 of the Pension Reform
Act with respect to each of their Plans; (b) promptly, after the filing thereof,
furnish to Lender copies of each annual report required to be filed pursuant to
Section 103 of the Pension Reform Act in connection with each Plan for each Plan
Year, including any certified financial statements or actuarial statements
required pursuant to said Section 103; (c) notify Lender immediately of any
fact, including but not limited to any Reportable Event arising in connection
with any Plan that might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a Trustee to administer the Plan; and (d) notify
Lender of any "Prohibited Transaction," as that term is defined in Section 406
of the Pension Reform Act. Borrower will not (a) engage in any Prohibited
Transaction; or (b) terminate any such Plan in a manner that could result in the
imposition of a Lien on any asset of Borrower, pursuant to Section 4068 of the
Pension Reform Act.

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

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       35
<PAGE>

      5.18 Receivables Loan Approved Resorts.

            (a) Timeshare Plan. Each Receivables Loan Approved Resort shall be
subjected to the Declaration. Each Receivables Loan Approved Resort will remain
a timeshare plan and project in full compliance with all Applicable Laws. All
Units and Common Elements are subject to the provisions of the Declaration. All
Resort Facilities are subject to a Use Agreement. Upon filing of the
Declaration, Borrower will not vote and will use its best efforts to ensure that
the Timeshare Association does not vote to terminate or amend the Declaration in
any material respect without the prior written approval of Lender.

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

            (c) Utilities. Electricity, sanitary and stormwater sewer,
telephone, water, and other reasonably necessary utilities are available, and
there is sufficient capacity to service the Encumbered Timeshare Interests,
including, without limitation, all real property and Units not submitted to the
Declaration as of the Closing Date. Any easements necessary to the furnishing of
such utility services have been obtained, duly recorded, and inure to the
benefit of all Purchasers.

            (d) Amenities. Each Purchaser of a Timeshare Interest has and will
continue to have access to and the full use and enjoyment of all of the Common
Areas and public utilities of each Receivables Loan Approved Resort, all in
accordance with the Declaration and the other Timeshare Documents, as
applicable. Any recreational or other commonly used facilities which are
available for use by Purchasers or which may be made available in the future
shall also be available for use by short-term renters, transient guests or users
of accommodations which may be part of such Receivables Loan Approved Resort and
such rights shall continue for the benefit of Lender and any such users in the
event Lender or a successor or assign were to obtain title to all or a part of
the Property.

            (e) Assessments. Each Purchaser will automatically be a member of
the Timeshare Association, which shall be a non-profit corporation that has the
authority to levy annual assessments to cover the costs of maintaining and
operating each Receivables Loan Approved Resort. There are no events which
currently exist or could reasonably be foreseen by Borrower that could give rise
to a material increase in such costs.

            (f) Construction. All costs arising from the construction or
acquisition of any Units and any other improvements and the purchase of any
fixtures or equipment, inventory, furnishings or other personalty located in, at
or on the Receivables Loan Approved Resorts have been paid or will be paid when
due.

      5.19 Timeshare Documents and Reports. Borrower has furnished Lender with
true and correct copies of the Timeshare Documents listed on Exhibit "L" hereto,
the form and content of which have been submitted to all applicable governmental
authorities, to the extent required,

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       36
<PAGE>

prior to the Closing Date. All such filings and/or recordations, and all
joinders and consents, necessary in order to establish the plan in respect of
the Receivables Loan Approved Resorts, including, without limitation, the Units,
the Timeshare Interests, and all appurtenant Common Areas, and all related use
and access rights, have been done or obtained and all laws, regulations and
statutes, and all agreements and arrangements, in connection therewith have been
complied with.

      5.20 Reliance by Lender. All representations, warranties, covenants, and
agreements made herein or in any certificate or other document delivered to
Lender by or on behalf of Borrower, pursuant to or in connection with this
Agreement, shall be deemed to have been relied upon by Lender, notwithstanding
any investigation heretofore or hereafter conducted by or on behalf of Lender,
and shall survive the making of any Advances and payments contemplated hereby.

      5.21 Vacation Club. Borrower represents and warrants that the Property is
not a part of any vacation club. Prior to converting any Purchasers of a
Timeshare Interest which is related to a Pledged Note Receivable to membership
in a vacation club, Borrower acknowledges it is required to notify in writing
and obtain the written consent of Lender to conversion to such vacation club.

      SECTION 6. COVENANTS

      6.1 Affirmative Covenants. For so long as any of Borrower's Obligations
remain unsatisfied, Borrower hereby covenants and agrees with Lender as follows:

            (a) Payment and Performance of Obligations. Borrower shall repay all
of the Loan and all related amounts when and as the same become due and payable,
and Borrower shall strictly observe and perform all of the Obligations,
including, without limitation, all covenants, agreements, terms, conditions, and
limitations contained in the Loan Documents, and will do all things necessary
that are not prohibited by law to prevent the occurrence of any Default or Event
of Default hereunder; and Borrower will maintain an office or agency in the
State of Texas where notices, presentations, and demands in respect of the Loan
Documents may be made upon Borrower.

            (b) Maintenance of Existence, Qualification and Assets. Borrower
shall at all times (i) maintain its legal existence; (ii) maintain its
qualification, where required, to transact business and good standing in the
State of Texas and in any other jurisdiction in which it conducts business; and
(iii) comply or cause its compliance with all Applicable Laws.

            (c) Maintenance of Insurance. Borrower shall ensure that policies of
insurance with premiums therefor being paid when due, are maintained and shall
deliver to Lender originals of insurance policies (together with paid premium
invoices in respect thereof) issued by such insurance companies, in such
amounts, in such form, in such substance, and with such expiration dates, as are
acceptable to Lender, in its sole discretion, and containing waivers of
subrogation rights by the insuring company, non-contributory standard mortgagee
benefit clauses or their equivalents, and mortgagee loss payable endorsements in
favor of and

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       37
<PAGE>

satisfactory to Lender and breach of warranty coverage, providing the following
types of insurance on and with respect to Borrower and the Property:

                  (i) As to all Improvements that have already been completed as
      of the date hereof, "All Risk Special Form" insurance coverage (including
      fire, lightning, wind damage (inclusive of hurricane and tornado), water
      damage, vandalism, and malicious mischief coverage) covering all real and
      personal property that comprises the Property, in an amount not less than
      the full replacement value of such improvements and personal property, and
      said policy of insurance shall provide for a deductible acceptable to
      Lender, breach of warranty coverage, and replacement cost endorsements
      satisfactory to Lender, and shall not permit co-insurance. All insurance
      shall specifically cover architectural and engineering fees necessary to
      repair or replace any insured portion of the Property and shall cover
      debris removal;

                  (ii) Public liability and property damage insurance covering
      the Property (including coverage for liquor-related liability) in amounts
      and on terms satisfactory to Lender, in its sole discretion; and

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

            Lender shall expressly be named a mortgagee and loss payee in each
insurance policy described in this Section 6.1(c). To the extent that any
"institutional mortgagee," "institutional lender," "mortgagee, or "secured
party" (as defined or used in the Declaration) other than Lender has any rights
to approve the form of insurance policies with respect to the Property, the
amounts of coverage thereunder, the insurers under such policies, or the
designation of an attorney-in-fact for purposes of dealing with damage to any
part of the Property or insurance claims or matters related thereto or any
successor to such attorney-in-fact or any changes with respect to any of the
foregoing, Borrower shall take all steps as may be necessary or appropriate, in
Lender's sole discretion, to ensure that Lender shall at all times have a
co-equal right with such other "institutional mortgagee," "institutional
lender," or other "mortgagee" (including, without limitation, any third-party
lender), to approve all such matters and any proposed changes in respect
thereof; and Borrower shall not cause and shall use its best efforts to prohibit
any material changes with respect to any insurance policies, insurers, coverage,
attorney-in-fact or insurance trustee, if any, without Lender's prior written
approval which shall not be unreasonably withheld or delayed.

            In the event of any insured loss or claim in respect of all or any
portion of the Property, Borrower shall cause all proceeds of such insurance
policies to be applied in a manner consistent with the Timeshare Documents
and/or all Applicable Laws.

            All insurance policies required pursuant to this Agreement (or the
Timeshare Documents) shall provide that the coverage afforded thereby shall not
expire or be amended,

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       38
<PAGE>

canceled, modified, or terminated without at least thirty (30) days' prior
written notice to Lender and contain a provision affirming Lender's rights and
benefits thereunder, despite any violation of the applicable policy terms by
Borrower or other Person. At least thirty (30) days prior to the expiration date
of each policy maintained pursuant to this Section 6.1(c), a certified copy of a
renewal or replacement thereof satisfactory to Lender shall be delivered to
Lender, along with evidence satisfactory to Lender that the premium therefor has
been paid in full. The delivery of any insurance policies hereunder shall
constitute an assignment of all unearned premiums as further security for the
Obligations. In the event that all required premium payments for all such
insurance policies are not paid at least thirty (30) days prior to the
expiration date of each policy maintained pursuant to this Section 6.1(c),
Borrower shall, immediately upon receiving notice thereof, notify Lender in
writing of such failure to timely pay the required insurance premiums. Borrower
shall make a good faith inquiry on a regular basis to the Silverleaf Club to
determine whether all insurance premiums for which it is responsible with
respect to insurance on all or any portion of the Collateral have been timely
paid. If Borrower determines upon such inquiry or otherwise that any required
insurance premiums have not been paid, Borrower shall immediately notify Lender
of such failure to timely pay the required insurance premium, and Borrower shall
have thirty (30) days from receipt of a written request from Lender to cause the
required insurance premiums to be paid. If the required insurance premiums are
not paid within such thirty (30) day period, Lender may, in its sole discretion,
without any obligation to do so, choose to pay such required insurance premiums,
in which case Borrower shall pay Lender interest at the Default Rate on any
amounts so advanced. Lender may also, in its sole discretion, in the event any
required insurance premiums are not paid when due, establish an insurance escrow
account from which Lender may make insurance payments when insurance premiums
shall become due. If any required insurance premiums are not paid as required
and Lender elects not to pay such insurance premiums or establish an escrow
account for payment thereof, such failure shall constitute an Event of Default
hereunder.

            In the event of any fire or other casualty to or with respect to all
or any portion of the Property, Borrower covenants that it shall use
commercially reasonable best efforts to cause the prompt restoration, repair, or
replacement of the damaged portion(s) or the Property and the repair or
replacement of any other personal property to the same condition as immediately
prior to such fire or other casualty and, with respect to the real and personal
property comprising the Property, in accordance with the terms of the Timeshare
Documents and/or all Applicable Laws. The insufficiency of any net insurance
proceeds shall in no way relieve Borrower from its obligations as set forth
herein. In Lender's sole discretion, any and all insurance proceeds payable to
or received by Lender pursuant to the Declaration or the applicable insurance
policies may be applied to the payment of the Obligations, whether or not due
and in whatever order Lender elects, consistent with the terms of the applicable
insurance policy and the Declaration.

            Borrower shall in good faith cooperate with Lender (to the extent
Lender's rights are not adverse to the rights of any other lender) in obtaining
for Lender the benefits of any insurance or other proceeds lawfully or equitably
payable to Borrower in connection with the transactions contemplated hereby and
in paying any Obligation (including the payment by Borrower of the expense of an
independent appraisal on behalf of Lender in case of a fire or other casualty
affecting the Property).

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       39
<PAGE>

            (d) Maintenance of Collateral. Borrower shall execute and deliver
(or cause to be executed and delivered) to Lender all security agreements,
financing statements, assignments, and such other agreements, documents,
instruments, and certificates, and all supplements and amendments thereto, and
take all such other actions, as Lender deems necessary or appropriate in order
to maintain as valid, enforceable, and perfected first priority Liens and
security interests, all Liens and security interests in the Collateral granted
to Lender to secure the Obligations. Except as described in Section 1.34,
Borrower shall not grant extensions of time for the payment of, or compromise
for less than the full face value or release in whole or in part, any Purchaser
or other Person liable for the payment of, or allow any credit whatsoever except
for the amount of cash to be paid upon, any Pledged Note Receivable, or any
other instrument, chattel paper, or document that constitutes the Collateral.

            (e) Payment of Taxes and Claims. Borrower agrees to pay or cause to
be paid, prior to becoming delinquent, all taxes, charges, and assessments of
any kind imposed on or with respect to the Loan or any of the Loan Documents,
the Property or any other Collateral, including but not limited to the
Encumbered Timeshare Interests, together with any revenue, income, or profits
derived therefrom. To the extent that any such taxes, charges, or assessments
are payable by the Silverleaf Club or Orlando Breeze Resort Club, Borrower shall
make good faith inquiry on a regular basis to determine whether all such taxes,
charges, and assessments have been paid. Borrower shall immediately notify
Lender in writing of any failure to timely pay any such taxes, charges, or
assessments. In the event that Lender determines (through notice or otherwise)
that any such taxes, charges, or assessments have not been paid when due,
Borrower shall have thirty (30) days from receipt of a written request for
payment from Lender to cause the required taxes, charges, or assessments to be
paid. If such required taxes, charges, and assessments (and any applicable late
charges and interest) are not paid within such thirty (30) day period, Lender
may, in its sole discretion, without any obligation to do so, choose to pay such
taxes, charges, or assessments on behalf of Borrower, in which case Borrower
shall pay Lender interest at the Default Rate on any amounts so advanced. In the
event Lender elects not to pay the required taxes, charges, or assessments and
the same are not paid as set forth above, such failure shall constitute an Event
of Default hereunder. Borrower shall pay, where applicable, on a timely basis
all other charges and assessments levied against Borrower, the Property (to the
extent charges and assessments are due from Borrower) or any other Collateral,
including but not limited to the Encumbered Timeshare Interests, together with
any revenue, income, or profits derived therefrom (including, without
limitation, claims for labor, services, materials, or supplies). Except for the
Liens in favor of Lender granted pursuant to the Loan Documents, and except as
otherwise specifically provided for herein, Borrower covenants and agrees that
in the event that any statutory or other Lien (including, without limitation,
any mechanics', materialmen's, judgment, or tax liens) attaches to any of the
Collateral (except for the Permitted Liens and Encumbrances), Borrower shall,
within thirty (30) days after any such Lien attaches, either (i) cause such Lien
to be released of record; or (ii) provide Lender with a bond in accordance with
the applicable laws of the State of Texas issued by a corporate surety
acceptable to Lender, in its sole discretion, in an amount and form acceptable
to Lender.

            (f) Inspections. Borrower shall, at any time and from time to time,
upon reasonable notice and at the expense of Borrower, including but not limited
to the travel expenses of Lender's agents, permit Lender and its agents and
representatives to inspect the Property, any Collateral, or any of Borrower's
assets, including but not limited to all documents,

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       40
<PAGE>

bank statements, and other records within Borrower's possession, custody, or
control, and to examine and make copies and abstracts thereof; and to discuss
its affairs, finances, and accounts with any of their officers, employees,
Affiliates, contractors, or independent certified public accountants (and by
this provision, Borrower authorizes said accountants to discuss with Lender, its
agents or representatives, the affairs, finances, and accounts of Borrower).
Without limiting the foregoing, Lender shall have the right to make such credit
investigations as Lender may deem appropriate, in its sole discretion, in
connection with its review of any Notes Receivable. Borrower shall make
available to Lender all such credit and other information in its custody,
possession, or control or to which it may have access with respect to any
Purchasers or other obligors with respect to any Notes Receivable as Lender may
request. Unless not required by Lender, Borrower agrees to meet with Lender on a
quarterly basis in person or by teleconference.

            (g) Reporting Requirements. For so long as any of the Obligations
remain unsatisfied, Borrower shall furnish (or cause to be furnished, as the
case may be) to Lender, in each case certified in writing by Borrower as true
and correct, the following items in form and substance acceptable to Lender, as
appropriate:

                  (i) Monthly Collateral Reports. As soon as available and in
      any event within fifteen (15) days after the end of each calendar month:
      (i) a report showing the trial balance of the Pledged Notes Receivable;
      (ii) a current aging report on the Pledged Notes Receivable; (iii) a
      report detailing all amounts of every possible description received by or
      on behalf of Borrower with respect to each Pledged Note Receivable during
      the preceding calendar month and how such amounts were allocated between
      principal, interest, and other categories; (iv) a delinquency report on
      all Pledged Notes Receivable; (v) monthly reports from Lockbox Agent as
      required pursuant to the Lockbox Agreement; and (vi) such other monthly
      reports and other information as shall reasonably be requested by Lender;

                  (ii) Monthly Financial Reports. As soon as available and in
      any event within thirty (30) days following the end of each calendar
      month, unaudited statements of income and expense of Borrower and the
      Timeshare Association for the monthly period in question, balance sheets
      of Borrower and the Timeshare Association as of the last day of such
      calendar month and a statement of cash flows of Borrower and the Timeshare
      Association during such calendar month, all in such detail and scope as
      may be reasonably required by Lender, prepared in accordance with GAAP and
      on a basis consistent with prior accounting periods and certified as true
      and correct by Borrower's chief financial officers. In the event that the
      aforesaid monthly financial statements are not in form and content
      satisfactory to Lender, in its sole determination, Borrower shall, within
      30 days of the receipt of Lender's written request therefor, deliver to
      Lender revised financial statements addressing any issues identified by
      Lender. The aforesaid audited financial statements shall be in form and
      content satisfactory to Lender;

                  (iii) Annual Audited Financial Reports. As soon as available
      and in any event within ninety (90) days (one hundred twenty (120) days in
      the case of Silverleaf Club and Orlando Breeze Resort Club) after the end
      of each of calendar year or other fiscal year as may be applicable with
      respect to Borrower, Silverleaf Club and Orlando Breeze Resort Club (as
      applicable, a "Fiscal Year"), statements of income and

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       41
<PAGE>

      expense of each such entity (including Borrower and the Timeshare
      Association) for the annual period ended as of the end of such Fiscal
      Year, balance sheets of each such entity as of the end of such Fiscal Year
      and a statement of cash flows of such entity during such Fiscal Year, all
      in such detail and scope as may be reasonably required by Lender and
      prepared and audited by an independent certified public accounting firm
      acceptable to Lender in accordance with GAAP and on a basis consistent
      with prior accounting periods. The annual financial statements of Borrower
      shall be certified by the chief financial officer of Borrower to be true,
      correct, and complete, and shall otherwise be in form acceptable to
      Lender;

                  (iv) Borrowing Base Certificate. Within fifteen (15) days
      after the end of each month, Borrower shall deliver to Lender a Borrowing
      Base Certificate in substantially the form of Exhibit "M" attached hereto.

                  (v) Officer's Certificate. The Financial Statements or reports
      delivered to the Lender pursuant to Sections 6.1(g)(i), (ii), and (iii)
      hereof shall be accompanied by a certificate of Borrower setting forth
      that the signer has reviewed the relevant terms of this Agreement (and all
      other agreements and exhibits between the relevant parties), has made, or
      caused to be made, under its supervision, a review of the transactions and
      conditions of Borrower from the beginning of the period covered by the
      Financial Statements or reports being delivered therewith to the date of
      the certificate, and that such review has not disclosed the existence
      during such period of any condition or event that constitutes a Default or
      Event of Default or, if any such condition or event existed or exists or
      will exist, specifying the nature and period of existence thereof and what
      action Borrower has taken or proposes to take with respect thereto;

                  (vi) Audit Reports. Promptly upon receipt thereof, two (2)
      copies of each other report submitted to Borrower by independent public
      accountants or other Persons in connection with any annual, interim, or
      special audit made by them of the books of Borrower;

                  (vii) Notice of Default or Event of Default. Promptly upon
      becoming aware of the existence of any condition or event that constitutes
      a Default or an Event of Default hereunder or pursuant to any of the other
      Loan Documents, a written notice specifying the nature and period of
      existence thereof and what action Borrower is taking or proposes to take
      with respect thereto;

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

                  (ix) Hazardous Materials. Borrower shall promptly notify
      Lender of any change in the nature or extent of any Hazardous Materials
      maintained on or under any of the real property or used in connection
      therewith, and will deliver to Lender copies

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       42
<PAGE>

      of any citation, order, notice, or other governmental or other
      communication received with respect to any Hazardous Materials or other
      environmentally regulated substances affecting the Property. In the event
      Lender has some reason to believe there are Hazardous Materials or other
      environmentally regulated substances affecting the Property, then Lender
      shall have the right to require Borrower to perform on an annual basis (at
      Borrower's expense) an environmental audit of the Property and, if deemed
      reasonably necessary by Lender, an environmental risk assessment, each of
      which must be satisfactory to Lender, in its sole discretion. Each such
      audit and/or risk assessment shall be conducted by a licensed
      environmental consultant;

                  (x) Material Adverse Developments. Within fifteen (15) days
      after the end of each fiscal quarter, Borrower shall provide to Lender a
      report of any pending or threatened claim, action, proceeding, litigation,
      development, or any other information, whether of the type referenced in
      Section 5.7 hereof or otherwise, that could materially and adversely
      affect Borrower, the Receivables Loan Approved Resorts, or all or any
      portion of the Collateral, including but not limited to the ability of
      Borrower to perform its Obligations hereunder;

                  (xi) Financial Information. As promptly as possible after the
      receipt thereof, all financial statements, reserve studies and reports,
      budgets and other information distributed by Silverleaf Club and Orlando
      Breeze Resort Club; Borrower, as declarant or otherwise, shall cause
      Silverleaf Club and Orlando Breeze Resort Club to prepare annual financial
      statements and an annual budget as provided in the Declaration, as the
      case may be, and shall thereafter immediately deliver the same to Lender;
      and

                  (xii) Other Information. Borrower shall promptly deliver to
      Lender any other available information related to the Loan, the
      Collateral, Borrower, or the Property as Lender may in good faith request.

            (h) Records. Borrower shall keep detailed accurate books and records
of account in accordance with GAAP and all Applicable Laws reflecting all
financial transactions of Borrower with respect to the Property, including but
not limited to the marketing and sale of Timeshare Interests thereat and with
respect thereto and the rental of Units on a transient basis to members of the
general public.

            (i) Notices. Borrower shall notify Lender within ten (10) Business
Days of the occurrence of any event (i) as a result of which any representation
or warranty of Borrower contained in any Loan Document would be incorrect or
materially misleading if made at that time; (ii) as a result of which Borrower
is not in full compliance with all of its covenants and agreements contained in
this Agreement or any other Loan Document; or (iii) which constitutes or, with
the passage of time, notice, or a determination by Lender would constitute an
Event of Default.

            (j) Maintenance. Borrower shall use its best efforts to cause
Silverleaf Club to maintain the Property in good repair, working order, and
condition and to make all necessary replacements and improvements to the
Property so that the value and operating efficiency of the

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       43
<PAGE>

Property will be maintained at all times and so that the Property remains in
full compliance with all Applicable Laws.

            (k) Claims. Borrower shall promptly notify Lender of any material
claim, action, or proceeding affecting the Property or all or any portion of the
Collateral, or any of the Liens, security interests, or rights granted in favor
of Lender hereunder or pursuant to any of the other Loan Documents. At the
request of Lender, Borrower shall appear in and defend in favor of Lender, at
Borrower's sole expense, with regard to any such claim, action, or proceeding
which might adversely affect the value of all or any portion of the Collateral
or any rights and remedies of Lender under this Agreement or pursuant to any of
the other Loan Documents.

            (l) Registration and Regulations.

                  (i) Local Legal Compliance. Borrower will comply with all
      applicable servitudes, restrictive covenants, and Applicable Laws,
      including but not limited to, those specified in Section 5.16 hereof. All
      inspections, licenses, approvals, and permits required to be made or
      issued in respect of all or any portion of the Property have been made or
      issued by the appropriate governmental authorities, and the use and
      occupancy of the Receivables Loan Approved Resorts, including, but not
      limited, to Timeshare Interests deemed to be owned by Borrower, for their
      intended purposes is lawful under all Applicable Laws. The use and
      occupancy of the buildings and Units on a timeshared basis will not
      violate or constitute a non-conforming use under any private covenant or
      restriction or any zoning, land use, or similar statute, ordinance, rule,
      or regulation; and

                  (ii) Registration Compliance. Borrower shall at all times
      maintain or cause to be maintained all necessary registrations, filings,
      consents, franchises, approvals, and exemption certificates, and Borrower
      will make or pay, or cause to be made or paid, all registrations,
      declaration, or fees with all applicable regulatory authorities and any
      other governmental agencies or departments thereof, whether in the State
      of Texas or any other jurisdiction, required in connection with the
      marketing and sale of Timeshare Interests at or with respect to the
      Receivables Loan Approved Resorts and the occupancy, use, and operation
      thereof. All such registrations, filings, and reports will be truthfully
      completed, and true and complete copies of such registrations,
      applications, consents, licenses, permits, franchises, approvals,
      exemption certificates, filings, and reports will be delivered to Lender
      upon request. Borrower shall promptly advise Lender of any material
      changes with respect to its marketing or sales programs in any
      jurisdiction, including jurisdictions other than the State of Texas, and
      at Lender's request from time to time, Borrower shall deliver to Lender
      (A) written statements by any applicable governmental authorities, in form
      acceptable to Lender, stating that no registration is necessary for the
      sale of Timeshare Interests in the particular state; (B) an opinion of
      counsel in form acceptable to Lender and rendered by counsel acceptable to
      Lender, stating that no such registration is necessary; or (C) such other
      evidence of compliance with all Applicable Laws as Lender may require.

            (m) Other Documents. Borrower shall maintain to the satisfaction of
Lender, and make available to Lender for inspection, accurate and complete files
relating to the Pledged

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       44
<PAGE>

Notes Receivable, and all of the other Collateral, and such files shall contain
true copies of each Pledged Note Receivable, as amended from time to time (but
only with Lender's prior written consent or as provided in Section 1.34), copies
of all relevant credit memoranda relating to such Pledged Notes Receivable, and
all collection information and correspondence relating thereto.

            (n) Further Assurances. Borrower shall execute and deliver, or cause
to be executed and delivered, such other and further agreements, documents,
instruments, certificates, and assurances as, in the judgment of Lender
exercised in good faith, may be necessary or appropriate in order more
effectively to evidence or secure, and to ensure the performance of, the
Obligations. In addition, Borrower shall deliver to Lender from time to time,
upon request by Lender, such documents, instruments, and other materials or
items as Lender may reasonably require to evidence Borrower's compliance with
the covenants set forth in this Section 6.1.

            (o) Expenses and Closing Fees. Whether or not the transactions
contemplated hereunder are consummated, Borrower shall pay all expenses of
Lender relating to negotiating, preparing, documenting, closing, and enforcing
this Agreement and the other Loan Documents, including, but not limited to:

                  (i) The actual cost of preparing, reproducing, and binding
      this Agreement, the other Loan Documents, and all exhibits and schedules
      thereto;

                  (ii) The reasonable fees and disbursements of Lender's and
      Borrower's counsel (both internal and external);

                  (iii) Lender's expenses (including audits, credit
      investigations, inspections and internal legal and accounting);

                  (iv) All fees and expenses (including reasonable fees and
      expenses of Lender's internal and external counsel) relating to any
      amendments, waivers, consents, or subsequent closings or other
      transactions pursuant to the provisions hereof;

                  (v) All costs, outlays, legal fees, and expenses of every kind
      and character had or incurred by Lender in: (A) the interpretation or
      enforcement of any of the provisions of, or the creation, preservation, or
      exercise by Lender of its rights and remedies under, any of the Loan
      Documents, including the costs of appeal; (B) the preparation for,
      negotiations regarding, consultations concerning, or the defense or
      prosecution of legal proceedings involving any claim or claims made or
      threatened against Lender arising out of this transaction or the
      preservation or protection of the Collateral securing the Loan or Advances
      made hereunder, expressly including, without limitation, the defense by
      Lender of any legal proceedings instituted or threatened by any Person to
      seek to recover or set aside any payment or set off theretofore received
      or applied by Lender with respect to the Obligations, and any and all
      appeals thereof; and (C) the advancement of any expenses provided for
      under any of the Loan Documents;

                  (vi) All fees and expenses of the Title Insurance Company,
      Lockbox Agent and Custodian;

RECEIVABLES LOAN AND SECURITY AGREEMENT

                                       45
<PAGE>

                  (vii) All costs and expenses incurred by Lender under the
      Note, and all late charges payable thereunder; and

                  (viii) To the extent the same are not paid by the Timeshare
      Association, Purchasers or third parties, all real and personal property
      taxes and assessments attributable to Timeshare Interests owned by
      Borrower or an Affiliate of Borrower, documentary stamp and intangible
      taxes, sales taxes, recording fees, title insurance premiums and other
      title charges, document copying, transmittal and binding costs, appraisal
      fees, lien and judgment search costs, fees of architects, engineers,
      environmental consultants, surveyors and any special consultants,
      construction inspection fees, brokers' fees, escrow fees, wire transfer
      fees, and all travel and out-of-pocket expenses of Lender to conduct
      inspections or audits. Without limiting any of the foregoing, Borrower
      shall pay the costs of Code and other searches, Code and other Loan
      Document recording and filing fees, and applicable taxes and premiums on
      each mortgagee policy of title insurance delivered to Lender pursuant to
      this Agreement.

            (p) Indemnification of Lender. In addition to (and not in lieu of)
any other provisions hereof or of any other Loan Document providing for
indemnification in favor of Lender, Borrower hereby defends, indemnifies, and
holds harmless Lender, its subsidiaries, Affiliates, officers, directors,
agents, employees, representatives, consultants, contractors, servants, and
attorneys, as well as the respective heirs, personal representatives,
successors, and assigns of any or all of them (hereinafter collectively referred
to as the "Indemnified Lender Parties"), from and against, and agree promptly to
pay on demand or reimburse each of them with respect to, any and all
liabilities, claims, demands, losses, damages, costs, and expenses (including,
without limitation, reasonable attorneys' and paralegals' fees and costs),
actions or causes of action of any and every kind or nature whatsoever asserted
against or incurred by any of them by reason of or arising out of or in any way,
directly or indirectly, related or attributable to: (i) this Agreement, the
other Loan Documents or the Collateral; (ii) the transactions contemplated under
any of the Loan Documents, including, without limitation, those in any way
relating to or arising out of the violation of any Applicable Laws; (iii) any
breach of any covenant or agreement or the incorrectness or inaccuracy of any
representation or warranty of Borrower contained in this Agreement or any of the
other Loan Documents (including, without limitation, any certification of
Borrower delivered to Lender), including, but not limited to, the failure of any
Pledged Note Receivable to be legally enforceable by Lender in the event that it
succeeds to all right, title, and interest of Borrower therein in accordance
with the provisions hereof or any of the other Loan Documents; (iv) any and all
taxes, including real estate, personal property, sales, mortgage, excise,
intangible, or transfer taxes (but excluding all franchise taxes, taxes on
capital and net worth, gross receipts taxes, and taxes imposed on gross or net
income), and any and all fees or charges that may at any time arise or become
due prior to the payment, performance, and discharge in full of the Obligations;
(v) the breach of any representation or warranty set forth herein regarding any
Environmental Laws; (vi) the failure of Borrower to perform any obligation or
covenant herein required to be performed pursuant to any Environmental Laws;
(vii) the use, generation, storage, release, threatened release, discharge,
disposal, or presence on, under, or about the Property of any Hazardous
Materials (except to the extent that liability of the Indemnified Lender Party
with respect to such matter would not exist but for the acts or omissions of
such Indemnified Lender Party); (viii) the removal or remediation of any
Hazardous Materials from the Property required to be performed pursuant to

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any Environmental Laws or as a result of recommendations of any environmental
consultant or as required by Lender; (ix) claims asserted by any Person
(including, without limitation, any governmental or quasi-governmental agency,
commission, department, instrumentality or body, court, arbitrator, or
administrative board in connection with or any in any way arising out of the
presence, use, storage, disposal, generation, transportation, release, or
treatment of any Hazardous Materials on, in, under, or affecting the Property;
(x) the violation or claimed violation of any Environmental Laws in regard to
the Property; (xi) the preparation of an environmental audit or report on the
Property not to exceed one (1) per calendar year and premised upon the Lender's
reasonable belief of the existence of a violation of Environmental Laws, whether
conducted by Lender, Borrower, or another Person; (xii) the exercise by Borrower
of any rights or remedies under any Timeshare Documents; (xiii) the exercise by
Lender of any rights or remedies under this Agreement or any of the other Loan
Documents; (xiv) any misappropriation of funds by Borrower, any Affiliate of
Borrower or any party acting on their behalf; (xv) any theft by Borrower, any
Affiliate of Borrower or any party acting on their behalf; (xvi) any disposition
of the Collateral by Borrower, any Affiliate of Borrower or any party acting on
their behalf; or (xvii) any unauthorized Change in Management. Such
indemnification shall not give Borrower any right to participate in the
selection of counsel for Lender or the conduct or settlement of any dispute or
proceeding for which indemnification may be claimed. The provisions of this
Section shall survive the full payment, performance, and discharge of the
Obligations and the termination of this Agreement, and shall continue thereafter
in full force and effect. Notwithstanding the foregoing provisions of this
Section 6.1(q) to the contrary, Borrower shall not indemnify or hold Lender
harmless from and against any liabilities, claims, demands, losses, damages,
costs, or expenses incurred by Lender solely as a result of Lender's own gross
negligence or willful misconduct.

            (q) Use of Borrower's Name. Borrower shall at all times during the
term of the Loan permit Lender to use the name of Borrower in any press release,
advertisement, or other promotional material disseminated regarding the Loan;
provided, however, Borrower shall have the prior right to receive and approve
such use in writing.

            (r) No Amounts Due. Borrower shall use its best efforts to cause the
Silverleaf Club to deliver a statement to Borrower, which Borrower shall provide
to Lender at the end of each calendar year, commencing in the present calendar
year and continuing throughout the term of the Loan, indicating that no amounts
due and payable to the Silverleaf Club from Borrower, or any Affiliate of
Borrower, are delinquent and that all taxes and insurance premiums payable by
the Silverleaf Club have been paid prior to becoming delinquent. In the event
that any such amount due and owing to the Silverleaf Club by Borrower is
delinquent such amount may be paid directly to the Silverleaf Club by Lender as
an Advance hereunder. Borrower hereby covenants that as of the date of this
Agreement, neither Borrower nor an Affiliate of Borrower owes any amount to the
Silverleaf Club except as otherwise disclosed on Exhibit "N" attached hereto.
Borrower agrees to use its best efforts to obtain for Lender on an annual basis,
within one hundred and twenty (120) days after the end of the fiscal year of the
Silverleaf Club, the proposed annual operating and capital budget of the
Silverleaf Club for the next fiscal year and the Financial Statements of the
Silverleaf Club for such fiscal year, in a format acceptable to Lender in its
sole discretion.

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            (s) Textron Facility, Sovereign Facility and DZ Facility. Borrower
will comply with each of the terms and conditions of any subordinated
indebtedness, the Textron Facility, the Sovereign Facility and the DZ Facility
and will promptly deliver to Lender, upon receipt by Borrower, copies of any
notices received by Borrower in connection with any of the foregoing credit
facilities.

            (t) Minimum Tangible Net Worth. Borrower shall at all times maintain
a minimum Tangible Net Worth in an amount not less than (i) $100,000,000 as of
December 31, 2004, and (ii) $100,000,000, plus fifty percent (50%) of Borrower's
quarterly Consolidated Net Income for each calendar quarter thereafter.

            (u) Minimum Net Income. Commencing March 31, 2005, and as of the
last day of each calendar quarter thereafter, for the four (4) calendar quarter
period ending on such date, Borrower and its subsidiaries shall have, on a
consolidated basis, a Net Income of not less than $1.00.

            (v) Minimum Debt Service Coverage Ratio. Borrower shall maintain as
of the last day of any calendar quarter a Debt Service Coverage Ratio of not
less than 1.25 to 1.00 for the period of four consecutive calendar quarters then
ended on such day.

            (w) Maximum Leverage Ratio. Borrower shall maintain a Leverage Ratio
of not greater than 6.0 to 1.0 at all times during the term of the Loan.

            (x) Proceeds. Immediately upon Borrower's receipt of proceeds from
the sale of any of the Collateral, Borrower shall deliver such proceeds to
Lender in their original form and, pending delivery to Lender, Borrower will
hold such proceeds as agent for Lender and in trust for Lender.

            (y) Loan Servicing. Upon an Event of Default, at Lender's sole
option, Borrower shall hire a servicing agent acceptable to Lender in its sole
discretion who shall then receive compensation from Borrower at a market rate
for a servicing agent, and Borrower shall enter into a servicing agreement, in
form and substance satisfactory to Lender in its sole discretion, with such
servicing agent. All servicing fees, and the costs and expenses of such
servicing agent shall be paid by Borrower.

            (z) Custodian. Lender shall have the right at any time to utilize
Custodian to maintain custody of the Collateral. Borrower agrees not to
interfere with Custodian's performance of its duties under the Custodial
Agreement or to take any action that would be inconsistent in any way with the
terms of the Custodial Agreement. All custodial fees, and the costs and expenses
of the Custodian, shall be paid by Borrower.

            (aa) Re-assignment of Delinquent Financed Note Receivables(bb) . As
long as Borrower is in compliance with its obligations under this Agreement and
the other Loan Documents, including the Borrowing Base, Lender shall release its
security interest in the Delinquent Pledged Notes Receivable (as defined below).
For purposes of this Section 6.1(aa), the term "Delinquent Pledged Note
Receivable" shall mean a Note Receivable for which a payment installment is more
than one hundred twenty (120) days past due on a contractual basis.

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            (cc) Maintaining Affiliation with Exchange Company. Following the
date hereof and thereafter until Borrower has paid to Lender all sums due under
this Agreement and all documents delivered pursuant hereto, Borrower shall cause
each Receivables Loan Approved Resort and the Silverleaf Club to maintain in
good standing its membership with the Exchange Company or other major
internationally recognized timeshare exchange company acceptable to Lender with
its corporate headquarters in the United States.

            (dd) Property-Related Contracts. Except as required by Applicable
Laws, or if otherwise waived by Lender, and if such amendment to, modification
or new Property-Related Contract described below will have, or could reasonably
be expected to have a material adverse effect on Borrower's ability to pay the
Loan or the value of the Collateral, or Lender's Liens on the Collateral or the
priority of any such Lien, Borrower shall not modify, amend, or enter into, or
(subject to the rights and obligations of any Timeshare Association and its
members under any Declaration or any Timeshare Association's Articles of
Incorporation or By-Laws) permit to be modified, amended, or enter into, any
Property-Related Contract without the prior written consent of Lender, which
consent shall not be unreasonably withheld. Borrower shall perform all of its
obligations in a timely fashion under each Property-Related Contract. For
purposes of this Section 6.1(dd), and for no other purpose, section or reference
in this Agreement or any other Loan Document, the term, "Property-Related
Contracts" shall not include sales and marketing agreements or contracts related
to the sales of Timeshare Interests, or any employment related agreements or
contracts between Borrower and either (i) any Executive Management Member or
(ii) any member of senior management of Borrower.

      6.2 Negative Covenants. For so long as any portion of the Obligations
remains unsatisfied, Borrower hereby covenants and agrees with Lender as
follows:

            (a) Limitation on Other Liens/Further Encumbrances of Collateral and
Other Property. Without the prior written consent of Lender, which may be
granted, withheld, or conditioned, in Lender's sole and absolute discretion,
Borrower shall not obtain financing or grant Liens with respect to all or any
portion of the Collateral (whether now existing or created hereafter) other than
those in favor of Lender and the Permitted Liens and Encumbrances.

            (b) No Other Indebtedness. Borrower shall not incur any Indebtedness
for borrowed money secured by all or any Collateral without Lenders' prior
written consent; provided, however, that in the event Borrower enters into a
credit facility for borrowed money from any other senior lender providing
indebtedness to Borrower, Borrower shall use its best efforts to provide to
Lender an Intercreditor Agreement related to such credit facility and the
collateral granted to such other senior lender related thereto.

            (c) Restrictions on Transfers, Consolidations, and Mergers. Except
for the Permitted Liens and Encumbrances, Borrower shall not, without obtaining
the prior written consent of Lender (which consent may be given, withheld, or
conditioned by Lender, in Lender's sole discretion), whether voluntarily or
involuntarily, by operation of law or otherwise: (i) transfer, sell, pledge,
convey, hypothecate, factor, or assign all or any portion of the Collateral,
other than the sale of Timeshare Interests in the ordinary course of Borrower's
business; or (ii) lease or license any portion of the Collateral, or change the
legal or actual possession or use thereof. Without limiting the generality of
the preceding sentence, and subject to the terms of

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this Agreement, the prior written consent of Lender shall be required for (A)
any transfer of the Collateral or any part thereof to a subsidiary or other
Affiliate of Borrower or otherwise; or (B) any merger or consolidation,
disposition, or other reorganization of Borrower other than any such merger or
consolidation, disposition, or other reorganization of Borrower after the
consummation of which Borrower is the surviving entity and for which Lender has
given its consent, such consent not to be unreasonably withheld; provided,
however, that in the event Lender does not consent to such merger or
consolidation and Borrower elects to close such transaction, Borrower shall have
the right to refinance Lender and pay to Lender in cash in full all outstanding
Obligations hereunder (including accrued and unpaid interest thereon). In the
event that Lender, in its reasonable discretion, is willing to consent to a
transfer that would otherwise be prohibited by this Section 6.2(c), Lender may
condition its consent on such terms and conditions as it desires, including,
without limitation, an increase in the Interest Rate and the requirement that
Borrower pay a transfer fee, together with any expenses incurred by Lender in
connection with the granting of such consent (including, without limitation,
attorneys' fees and expenses). If Borrower violates the terms of this Section
6.2(c), in addition to any other rights or remedies that Lender may have
hereunder, pursuant to any other Loan Document, or at law or in equity, Lender
may, upon written notice to Borrower, increase, effective immediately as of the
date of such violation, the Interest Rate to the Default Rate.

            (d) Transactions with Affiliates. Without the prior written consent
of Lender, Borrower shall not enter into any transaction with any Affiliate
thereof in connection with all or any portion of the Collateral, except in the
ordinary course of Borrower's business with terms equivalent to an otherwise
"arms-length" transaction.

            (e) Name Change. Borrower shall not change its name, its chief
executive office, or the locations at which it does business without providing
Lender at least thirty (30) days' prior written notice thereof and executing, at
Borrower's sole expense, such UCC-3 amendments and all other documents and
instruments as Lender, in its sole discretion, deems reasonably necessary or
appropriate in order to continue the perfection of its Lien in and to all of the
Collateral.

            (f) Collateral. Borrower shall not take any action (or permit or
consent to the taking of any action) that might materially impair the value of
all or any portion of the Collateral of the rights of Lender with respect to the
Collateral, nor shall Borrower cause or permit any material amendment to or
modification of the form or terms of any of the Pledged Notes Receivable (except
as provided for in Section 1.34), or Timeshare Documents, including but not
limited to the Declaration, without Lender's prior written consent.

            (g) Timeshare Documents. Without Lender's prior written consent,
Borrower shall not in any material respect amend or modify or terminate the
Declaration or other Timeshare Documents.

            (h) Marketing/Sales. Borrower shall not market, attempt to sell or
sell or permit or justify any sales or attempted sales of any Timeshare
Interests except in compliance with the Timeshare Act and Applicable Laws in the
states and other jurisdictions where marketing, sales or solicitation activities
occur. Borrower shall not sell more than fifty-two (52) Timeshare Interests in
any Unit in the Receivables Loan Approved Resorts.

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<PAGE>

            (i) Collateral. Borrower shall not take any action (nor permit or
consent to the taking of any action) which might reasonably be anticipated to
impair the value of the Collateral or any rights of Lender in the Collateral.

            (j) Distributions. After the occurrence and during the continuation
of any Default or Event of Default, Borrower shall not make or pay any
distribution (in cash or property) for so long as any Obligations or other
amounts are outstanding under this Agreement or any other Loan Document.

            (k) Maximum Delinquency. Borrower will not permit as of the last day
of each calendar month, for the immediately preceding twelve (12) calendar
months, on a rolling twelve (12) month basis, its over 30-day delinquency rate
on its entire Notes Receivable portfolio serviced by Borrower (including,
without limitation, all Pledged Notes Receivable and all Notes Receivable
pledged pursuant to the Textron Facility, the DZ Facility and the Sovereign
Facility) to be greater than ten percent (10%).

            (l) Net Income. Borrower shall not have a Consolidated Net Income of
less than $0.00 for any two (2) consecutive calendar quarters.

            (m) Maximum Sales Costs. As of the last day of each calendar
quarter, commencing with the calendar quarter ending June 30, 2005, Borrower
will not permit the four quarter cumulative ratio of Marketing and Sales Costs
to the Borrower's net proceeds from the sale of Timeshare Interests as recorded
on the Borrower's financial statements for the immediately preceding four (4)
consecutive fiscal quarters of the Borrower to equal or exceed a ratio of .550
to 1. Notwithstanding the foregoing, in the event that Borrower delivers written
evidence satisfactory to Lender that the above-referenced ratio is no longer
required to be tested under each of the Textron Facility and the Sovereign
Facility, such ratio shall not be tested under this Agreement.

      SECTION 7. EVENTS OF DEFAULT

      An "Event of Default" shall exist if any of the following occurs:

      7.1 Payment Default. If Borrower fails to make, as and when due, whether
by acceleration or otherwise, any payment or mandatory prepayment of principal,
interest, or other fees or amounts of any and every kind due hereunder or
pursuant to any of the other Loan Documents, and any such failure remains
uncured for three (3) calendar days after Lender has provided Borrower with
written or verbal notice thereof.

      7.2 Covenant Defaults. If Borrower fails fully and timely to perform or
observe any non-monetary covenant, agreement, or warranty contained in this
Agreement (other than defaults relating to Sections 6.1(f), 6.1(t), 6.1(u),
6.1(v), 6.1(w) and Section 6.2 hereof, for which there shall be no cure period)
or in any of the other Loan Documents and such failure shall continue for
fifteen (15) days after notice of such failure is provided by Lender to
Borrower.

      7.3 Warranties or Representations. If any statement or representation made
by or on behalf of Borrower in this Agreement, in any of the other Loan
Documents, or in any document,

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instrument, certificate, opinion, or other item furnished pursuant to the Loan
Documents, is false, misleading, or incorrect in any material respect as of the
date made or reaffirmed.

      7.4 Enforceability. If (a) any Lien granted by Borrower to Lender in
connection with the Loan is or becomes invalid or unenforceable or is not, or
ceases to be, a perfected first priority Lien in favor of Lender encumbering the
asset which it is intended to encumber, and Borrower fails to cause such Lien to
become a valid, enforceable, first and prior Lien in a manner satisfactory to
Lender, in its sole discretion, within five (5) days after Lender delivers
written notice thereof to Borrower; or (b) if any material term, provision, or
condition of any Loan Document becomes invalid or unenforceable by Lender and
its successors and assigns.

      7.5 Insolvency. If Borrower becomes insolvent or otherwise generally
unable to pay its debts as and when they become due or payable.

      7.6 Involuntary Proceedings. If a case is commenced or a petition is filed
against Borrower under any Debtor Relief Law, a receiver, conservator,
liquidator, or trustee of Borrower or of any material asset of Borrower is
appointed by court order and such order remains in effect for more than
forty-five (45) days, or if any material asset of Borrower is sequestered by
court order and such order remains in effect for more than sixty (60) days.

      7.7 Voluntary Proceedings. If Borrower voluntarily seeks, consents to, or
acquiesces in the benefit of any provision of any Debtor Relief Law, whether now
or hereafter in effect, consents to the filing of any petition against it under
such law, makes an assignment for the benefit of its creditors, admits in
writing its inability to pay its debts generally as they become due, or consents
to or suffers the appointment of a receiver, trustee, liquidator, or conservator
for it or any part of its assets.

      7.8 Attachment; Judgment; Tax Liens. The issuance, filing, levy, on all or
any portion of the Collateral of Borrower, of one (1) or more attachments,
injunctions, executions, tax liens, or judgments for the payment of money
cumulatively in excess of $50,000, that is not discharged in full or stayed
within thirty (30) days after such issuance, filing, levy, or seizure.

      7.9 Failure to Deposit Proceeds. If Borrower fails to deliver any payments
received under any Pledged Note Receivable directly to Lender or Lockbox Agent
as required by Section 2.4 hereof, or if Borrower takes any other action which
Lender shall deem to be a conversion of all or any portion of the Collateral or
fraudulent with respect to Lender.

      7.10 Timeshare Documents. If the Declaration, any of the other documents
creating or governing any Receivables Loan Approved Resort, its timeshare regime
or the Timeshare Association, or the restrictive covenants with respect to such
Receivables Loan Approved Resort, shall be terminated, amended or modified
without Lender's prior written consent (except for routine non-substantive
modifications which have no impact on the Collateral).

      7.11 Removal of Collateral. If Borrower conceals, removes, transfers,
conveys, assigns, or permits to be concealed, removed, transferred, conveyed, or
assigned, any of the Collateral, other than in the ordinary course of Borrower's
business, in violation of the terms of any of the Loan Documents or with the
intent to hinder, delay, or defraud their creditors or any of them, including,
without limitation, Lender.

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      7.12 Other Defaults. If any default or event of default occurs in
connection with any other loans or financing arrangements that Borrower, or any
of Borrower's Affiliates may have with Lender, including, but not limited to,
the Inventory Loan.

      7.13 Material Adverse Change. If there occurs any material adverse change
in the financial condition of Borrower which is not otherwise reflected in the
Financial Statements.

      7.14 Default by Borrower in Other Agreements. Any default by Borrower (a)
in the payment of any indebtedness to Lender; (b) in the payment or performance
of other indebtedness for borrowed money or obligations in excess of $100,000
secured by all or any portion of the Collateral; or (c) in the payment or
performance of any other material indebtedness or obligations (including any
indebtedness owed pursuant to the Textron Facility, the DZ Facility, the
Sovereign Facility of the Bond Holder-Exchange Transaction).

      7.15 Violation of Negative Covenants. If Borrower violates any negative
covenant set forth in Section 6.2 hereof.

      7.16 Declaration. If the Declaration or the timeshare regime created
thereby at any Receivables Loan Approved Resort is in any material respect
amended or modified or restated, terminated or assigned without Lender's prior
written consent.

      7.17 Transfer of Property. Except for the sale of Timeshare Interests in
the ordinary course of Borrower's business in accordance with the terms hereof
and of the other Loan Documents, and except for transfers due to involuntary
condemnation that do not render its interest in the Property useless for its
intended purpose, if Borrower, without Lender's prior written consent, sells,
conveys, or further encumbers all or any part of its interest in the Collateral.

      7.18 Lien Against Collateral. Except for the Permitted Liens and
Encumbrances or as otherwise specifically provided herein to the contrary, if
Borrower grants any Lien, security interest, or other encumbrance upon or all or
any portion of the Collateral other than in favor of Lender, unless approved by
Lender in writing, in its sole and absolute discretion.

      7.19 Title. If any violation or breach shall occur in any agreement,
covenant, or restriction affecting title to any Encumbered Timeshare Interests,
including but not limited to any Permitted Liens and Encumbrances, and such
violation or breach is not cured within any time frame allowed hereunder or
thereunder.

      7.20 Loss of License. A Loss of License shall have occurred with respect
to all of the Receivables Loan Approved Resorts and such Loss of License shall
have been outstanding for more than 90 days following such occurrence.

      7.21 Suspension of Sales. Borrower has received a Suspension of Sales
Order or Sanction with respect to all of the Receivables Loan Approved Resorts
and such Suspension of Sales Order or Sanction shall have been outstanding for
more than 90 days from the date of its entry and shall not have been discharged
in full or stayed by appeal, bond or otherwise.

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      SECTION 8. REMEDIES

      8.1 Remedies Upon Default. Should a Default or an Event of Default occur,
Lender may immediately take any one (1) or more of the actions described in this
Section 8, all without notice to Borrower:

            (a) Acceleration. Declare the unpaid balance of the Loan, or any
part thereof, immediately due and payable, whereupon the same shall be due and
payable to Lender.

            (b) Termination of Obligation to Advance. Terminate any commitment
or obligation of Lender hereunder to make Advances of the Loan in its entirety,
or any portion of any such commitment, and/or terminate Lender's further
performance under this Agreement and/or any other document or instrument to
which Lender and Borrower (or any Affiliate of Borrower) are parties, without
further liability or obligation to Borrower, to the extent Lender shall deem
appropriate.

            (c) Judgment. Reduce Lender's claim to judgment, foreclose, and/or
otherwise enforce each Lien and security interest of Lender in and to all or any
part of the Collateral by any judicial or other procedure available to Lender.

            (d) Sale of Collateral. Exercise all the rights and remedies of a
secured party under the Code (whether or not the Code applies to the affected
Collateral), including (i) require Borrower to, and Borrower hereby agrees that
it will, at its expense and upon request of Lender forthwith, assemble all or
part of the Collateral as directed by Lender and make it available to Lender at
a place to be designated by Lender that is reasonably convenient to both
parties; (ii) enter upon any premises of Borrower and take possession of the
Collateral; and (iii) sell the Collateral or any part thereof in one (1) or more
parcels at public or private sale, at any of Lender's offices or elsewhere, at
such time or times, for cash, on credit, or for future delivery, and at such
price or prices and upon such other terms as Lender may deem commercially
reasonable. Borrower agrees that, to the extent notice of sale shall be required
by law, ten (10) days' notice of the time and place of any sale shall constitute
reasonable notification. At any sale of the Collateral, if permitted by law,
Lender may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase of the Collateral or any portion
thereof for the account of Lender. Borrower shall remain liable for any
deficiency. Lender shall not be required to proceed against any Collateral but
may proceed against any or Borrower directly. To the extent permitted by law,
Borrower hereby specifically waives all rights of redemption, stay, or appraisal
that it has or may have under any law now existing or hereafter enacted.

            (e) Retention of Collateral. At its discretion, retain such portion
of the Collateral as shall aggregate in value to an amount equal to the total
amount owed by Borrower pursuant to the Loan Documents, in satisfaction of the
Obligations, whenever the circumstances are such that Lender is entitled and
elects to do so under applicable law.

            (f) Receiver. Apply by appropriate procedures for the appointment of
a receiver who shall have the authority to enter upon and take possession of any
or all of the Collateral, collect the rents and profits generated therefrom, and
apply the same as the court may

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direct. Borrower hereby consents to any such appointment. The receiver shall
have all of the rights and powers permitted under the laws of the State of
Texas.

            (g) Purchase of Collateral. Buy all or any part of the Collateral at
any public or private sale.

            (h) Exercise of Other Rights. Lender shall have all the rights and
remedies of a secured party under the Code and other legal and equitable rights
to which it may be entitled, including, without limitation, and without notice
to Borrower, the right to continue to collect all payments made on the Pledged
Notes Receivable and to apply such payments to the Obligations, and to sue in
its own name the other maker of any defaulted Pledged Note Receivable. Lender
may also exercise any and all other rights or remedies afforded by any other
Applicable Laws or by the Loan Documents, as Lender shall deem appropriate, at
law, in equity, or otherwise, including but not limited to the right to bring
suit or other proceeding, either for specific performance of any covenant or
condition contained in the Loan Documents or in aid of the exercise of any right
or remedy granted to Lender in the Loan Documents. Lender shall also have the
right to require Borrower to assemble any of the Collateral not in Lender's
possession, at Borrower's expense, and make it available to Lender at a place to
be determined by Lender that is reasonably convenient to both parties, and
Lender shall have the right to take immediate possession of all or any portion
of the Collateral and may enter the Receivables Loan Approved Resorts or any of
the premises of Borrower or wherever the Collateral shall be located, with or
without process of law wherever the Collateral may be, and, to the extent such
premises are not the property of Lender, to keep and store the same on said
premises until sold (and if said premises be the property of Borrower, Borrower
agrees not to charge Lender for use and occupancy, rent, or storage of the
Collateral, for a period of at least sixty (60) days after sale or disposition
of the Collateral).

      8.2 Notice of Sale. Reasonable notification of the time and place of any
public sale of the Collateral or reasonable notification of the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be sent to Borrower and to any other Person entitled under the Code to
notice; provided, however, that if the Collateral threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Lender may
sell or otherwise dispose of the Collateral without advertisement or other
notice of any kind. It is agreed that notice sent not less than ten (10)
calendar days prior to the taking of the action to which such notice relates is
reasonable notification and notice for the purposes of this Section 8.2. Lender
shall have the right to bid at any public or private sale on its own behalf. Out
of money arising from any such sale, Lender shall retain an amount equal to all
costs and charges, including attorneys' fees, that it has incurred or may incur
for advice, counsel, or other legal services or for pursuing, reclaiming,
seeking to reclaim, taking, keeping, removing, storing, and advertising such
Collateral for sale, selling same, and any and all other charges and expenses in
connection therewith and in satisfying any prior Liens thereon. Any balance
shall be applied against the Obligations, and in the event of deficiency,
Borrower shall remain liable to Lender. In the event of any surplus, such
surplus shall be paid to Borrower or to such other Persons as may be legally
entitled to such surplus. If, by reason of any suit or proceeding of any kind,
nature, or description against Borrower, or by Borrower or any other party
against Lender, which in Lender's sole discretion makes it advisable for Lender
to seek counsel for the protection and preservation of its Liens and security
interests, or to defend its own interest, such expenses and

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counsel fees shall be allowed to Lender, and the same shall be made a further
charge and Lien upon the Collateral.

      In view of the fact that federal, state, and other securities laws may
impose certain restrictions on the methods by which a sale of certain Collateral
may be effected after an Event of Default, Borrower agrees that upon the
occurrence or existence of a Default or Event of Default, Lender may, from time
to time, attempt to sell all or any part of such Collateral by means of a
private placement restricting the bidding and prospective purchasers to those
who will represent and agree that they are purchasing for investment only and
not for, or with a view to, distribution. In so doing, Lender may solicit offers
to buy such Collateral, or any part of it for cash, from a limited number of
investors deemed by Lender, in its reasonable judgment, to be responsible
parties who might be interested in purchasing the Collateral, and if Lender
solicits such offers from not less than two (2) such investors, then the
acceptance by Lender of the highest offer obtained therefrom shall be deemed to
be a commercially reasonable method of disposition of such Collateral.

      8.3 Application of Collateral; Termination of Agreements. Upon the
occurrence of any Default or Event of Default, Lender may, with or without
proceeding with such sale or foreclosure or demanding payment or performance of
the Obligations, without notice, terminate Lender's further performance under
this Agreement or any other agreement or agreements between Lender and Borrower
or any Affiliate thereof, without further liability or obligation by Lender, and
may also, at any time, appropriate and apply on any Obligations any and all
Collateral in its, Custodian's or Lockbox Agent's possession, custodian, or
control any and all balances, credits, deposits, accounts, reserves,
indebtedness, or other monies due or owing to Borrower held by Lender hereunder
or under any other financing agreement or otherwise, whether accrued or not.
Neither such termination, nor the termination of this Agreement by lapse of
time, the giving of notice, or otherwise, shall absolve, release, or otherwise
affect the liability of Borrower in respect of transactions prior to such
termination, or affect any of the Liens, security interests, rights, powers, and
remedies of Lender, but they shall, in all events, continue until all of the
Obligations have been satisfied in full.

      8.4 Rights of Lender Regarding Collateral. In addition to all other rights
possessed by Lender, Lender, at its option, may from time to time after there
shall have occurred a Default or an Event of Default, and for so long as such
Default or Event of Default remains uncured, in its sole discretion, take the
following actions:

            (a) Transfer all or any part of the Collateral into the name of
Lender or its nominee;

            (b) Take control of the proceeds of any of the Collateral;

            (c) Extend or renew the Loan and grant releases, compromises, or
indulgences with respect to the Obligations, any portion thereof, any extension,
or renewal thereof, or any security therefor, to any obligor hereunder or
thereunder; and

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            (d) Exchange certificates or instruments representing or evidencing
the Collateral for certificates or instruments of smaller or larger
denominations for any purpose consistent with the terms of this Agreement.

      8.5 Delegation of Duties and Rights. Lender may perform any of its duties
and/or exercise any of its rights or remedies under the Loan Documents by or
through its officers, directors, employees, attorneys, agents, or other
representatives. To the maximum extent practicable in light of all relevant
facts and circumstances, Lender will attempt to avoid any duplication of effort
and cost to Borrower in connection with any such delegation on Lender's part.

      8.6 Waivers. THE ACCEPTANCE BY LENDER AT ANY TIME AND FROM TIME TO TIME OF
PARTIAL PAYMENTS OF THE LOAN OR PERFORMANCE OF THE OBLIGATIONS SHALL NOT BE
DEEMED TO BE A WAIVER OF ANY DEFAULT OR EVENT OF DEFAULT THEN EXISTING. NO
WAIVER BY LENDER OF ANY DEFAULT OR EVENT OF DEFAULT SHALL BE DEEMED TO BE A
WAIVER OF ANY OTHER OR SUBSEQUENT DEFAULT OR EVENT OF DEFAULT. NO DELAY OR
OMISSION BY LENDER IN EXERCISING ANY RIGHT OR REMEDY UNDER THE LOAN DOCUMENTS
SHALL IMPAIR SUCH RIGHT OR REMEDY OR BE CONSTRUED AS A WAIVER THEREOF OR AN
ACQUIESCENCE THEREIN, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT
OR REMEDY PRECLUDE OTHER OR FURTHER EXERCISES THEREOF, OR THE EXERCISE OF ANY
OTHER RIGHT OR REMEDY UNDER THE LOAN DOCUMENTS OR OTHERWISE. FURTHER, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR BY APPLICABLE LAW, BORROWER
AND EACH AND EVERY SURETY, ENDORSER, GUARANTOR, AND OTHER PERSON LIABLE FOR THE
PAYMENT OR PERFORMANCE OF ALL OR ANY PORTION OF THE OBLIGATIONS, SEVERALLY WAIVE
NOTICE OF THE OCCURRENCE OF ANY DEFAULT, EVENT OF DEFAULT, PRESENTMENT, AND
DEMAND FOR PAYMENT, PROTEST, AND NOTICE OF PROTEST, NOTICE OF INTENTION TO
ACCELERATE, ACCELERATION, AND NONPAYMENT, AND AGREE THAT THEIR LIABILITY SHALL
NOT BE AFFECTED BY ANY RENEWAL OR EXTENSION IN THE TIME OF PAYMENT OF THE LOAN,
OR BY ANY RELEASE OR CHANGE IN ANY SECURITY FOR THE PAYMENT OR PERFORMANCE OF
THE LOAN, REGARDLESS OF THE NUMBER OF SUCH RENEWALS, EXTENSIONS, RELEASES, OR
CHANGES.

                                                Borrower's Initials: /S/ HJW

      8.7 Cumulative Rights. All rights and remedies available to Lender under
the Loan Documents shall be cumulative of and in addition to all other rights
and remedies granted to Lender under any of the Loan Documents, at law, or in
equity, whether or not the Loan is due and payable and whether or not Lender
shall have instituted any suit for collection or other action in connection with
or pursuant to the Loan Documents.

      8.8 Expenditures by Lender. Any amounts expended by or on behalf of Lender
pursuant to the exercise of any right or remedy provided herein or available at
law or in equity

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shall be deemed an Advance hereunder, become part of the Obligations, and shall
bear interest at the Default Rate from the date of such expenditure until the
date repaid.

      8.9 Diminution in Value of Collateral. Lender shall not have any liability
or responsibility whatsoever for any diminution or loss in value of any of the
Collateral.

      SECTION 9. CERTAIN RIGHTS OF LENDER

      9.1 Protection of Collateral. Lender may, at any time and from time to
time, take such actions as Lender deems necessary or appropriate to protect
Lender's Liens and security interests in and to preserve the Collateral, and to
establish, maintain, and protect the enforceability of Lender's rights with
respect thereto, all at the expense of Borrower. Borrower agrees to cooperate
fully with all of Lender's efforts to preserve the Collateral and Lender's
Liens, security interests, and rights and will take such actions to preserve the
Collateral and Lender's Liens, security interests, and rights as Lender may
direct, including, without limitation, by promptly paying, upon Lender's demand
therefor, all documentary stamp taxes or other taxes that may be or may become
due in respect of any of the Collateral. All of Lender's reasonable expenses of
preserving the Collateral and its Liens and security interests and rights
therein shall be added to the principal amount of the Loan and secured by the
Collateral.

      9.2 Performance by Lender. If Borrower fails to perform any agreement
contained herein, subject to any notice or cure periods, Lender may itself
perform, or cause the performance of, such agreement, and the expenses of Lender
incurred in connection therewith shall be payable by Borrower under Section 9.5
below. In no event, however, shall Lender have any obligation or duty whatsoever
to perform any covenant or agreement of Borrower contained herein, in any of the
other Loan Documents, or in any Timeshare Documents, and any such performance by
Lender shall be wholly discretionary with Lender. The performance by Lender of
any agreement or covenant of Borrower on any occasion shall not give rise to any
duty on the part of Lender to perform any such agreements or covenants on any
other occasion or at any time. In addition, Borrower acknowledges that Lender
shall not at any time or under any circumstances whatsoever have any duty to
Borrower or to any other Person to exercise any of Lender's rights or remedies
hereunder.

      9.3 No Liability of Lender. Lender is obligated to perform all covenants
and obligations of Lender hereunder, including but not limited to making
Advances to Borrower, subject to all of the terms, provisions, and conditions
hereof and of the other Loan Documents. However, neither the execution of this
Agreement or any of the other Loan Documents by Lender nor the exercise of any
rights hereunder or thereunder by Lender shall be construed in any way as an
assumption by Lender of any obligations, responsibilities, or duties of Borrower
arising in connection with the Property, all or any portion of the Collateral,
under any Timeshare Documents, under any Applicable Laws, or in connection with
any other business of Borrower or the Collateral, nor shall it otherwise bind
Lender to the performance of any obligations with respect to the Property, or
the Collateral, it being expressly understood that Lender shall not be obligated
to perform, observe, or discharge any obligation, responsibility, duty, or
liability of Borrower with respect to the Property, any of the Collateral, under
any of the Timeshare Documents, or under any Applicable Laws, including, but not
limited to, appearing in or defending any action, expending any money, or
incurring any expense in connection therewith.

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Without limiting the foregoing, neither this Agreement, any action or actions on
the part of Lender taken hereunder nor the acquisition of the Pledged Notes
Receivable, and/or the other Collateral by Lender prior to or following the
occurrence of a Default or an Event of Default shall constitute an assumption by
Lender of any obligations of Borrower with respect to the Property or such
Collateral, or any documents or instruments executed in connection therewith,
and Borrower shall continue to be liable for all of its obligations thereunder
or with respect thereto. Borrower hereby agrees to indemnify, protect, defend,
and hold Lender harmless from and against any and all claims, demands, causes of
action, losses, damages, liabilities, suits, costs, and expenses, including,
without limitation, reasonable attorneys' fees and court costs, asserted against
or incurred by Lender by reason of, arising out of, or connected in any way with
(a) any failure or alleged failure of Borrower to perform any of its covenants
or obligations with respect to the Property or all or any portion of the
Collateral; (b) a breach of any certification, representation, warranty, or
covenant of Borrower set forth in any of the Loan Documents; (c) the ownership
of the Pledged Notes Receivable, the other Collateral, and the rights, titles,
and interests assigned hereby, or intended so to be; (d) the debtor-creditor
relationships between Borrower, on the one hand, and the Purchasers or Lender,
as the case may be, on the other; or (e) the Pledged Notes Receivable, or the
management or operation of the Property. The obligations of Borrower to
indemnify, protect, defend, and hold Lender harmless as provided in this
Agreement are absolute, unconditional, present, and continuing, and shall not be
dependent upon or affected by the genuineness, validity, regularity, or
enforceability of any claim, demand, or suit from which Lender is indemnified.
The indemnity provisions in this Section 9.3 shall survive the complete
satisfaction of the Obligations and the termination of this Agreement and remain
binding and enforceable against Borrower, together with any of its successors
and assigns. Borrower hereby waives all notices with respect to any losses,
damages, liabilities, suits, costs, and expenses, and all other demands
whatsoever hereby indemnified, and agrees that its obligations under this
Agreement shall not be affected by any circumstances, whether or not referred to
above, that might otherwise constitute legal or equitable discharges of its
obligations hereunder. If a court of competent jurisdiction should determine
that Borrower is entitled to recover damages from Lender for any reason or upon
any cause, claim, or counterclaim, in connection with the Loan or the
transactions provided for or contemplated pursuant to this Agreement or the
other Loan Documents, Borrower stipulates and agrees that any such damages or
awards shall be limited to compensatory damages only, and that under no
circumstances whatsoever shall Lender be liable to Borrower, or any Affiliate
thereof for exemplary or punitive damages, all of which are hereby waived by
Borrower.

      9.4 Right to Defend Action Affecting Security. Lender may, at Borrower's
expense, appear in and defend any action or proceeding, at law or in equity,
that Lender in good faith believes may affect the Liens or security interests
granted under this Agreement, including, without limitation, with respect to the
Pledged Notes Receivable, the Collateral, or Lender's rights under any of the
Loan Documents.

      9.5 Expenses. All expenses payable by Borrower under any provision of this
Agreement shall be Obligations of Borrower, and if paid by Lender, shall be
repaid by Borrower to Lender, upon demand, and shall bear interest at the
Default Rate from the date of payment of such expense(s) by Lender until repaid
by Borrower.

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<PAGE>

      9.6 Lender's Right of Set-Off. Lender shall have the right to set-off
against any or all of the Collateral any Obligations then due and unpaid by
Borrower.

      9.7 Right of Lender to Extend Time of Payment, Substitute, Release
Security, Etc. Without affecting the liability of any Person for the payment of
any of the Obligations and without affecting or impairing Lender's Lien and
other rights in and to the Collateral, or the remainder thereof, as security for
the full amount of the Loan unpaid and the Obligations, Lender may from time to
time, without notice: (a) release any Person liable for the payment of the Loan;
(b) extend the time or otherwise alter the terms of payment of the Loan; (c)
accept additional security for the Obligations of any kind, including deeds of
trust or mortgages and security agreements; (d) alter, substitute, or release
any property securing the Obligations; (e) realize upon any Collateral for the
payment of all or any portion of the Loan as provided herein in such order and
manner as it may deem fit; and/or (f) join in any subordination or other
agreement affecting this Agreement or the lien or charge thereof.

      9.8 Assignment of Lender's Interest. Lender shall have the right to assign
the Loan and all or any portion of its rights in or pursuant to this Agreement
or any of the other Loan Documents to any subsequent holder or holders of the
Note.

      9.9 Notice to Purchaser. Borrower hereby authorizes Lender and Lockbox
Agent (but neither Lender nor Lockbox Agent shall be obligated) to communicate
at any time and from time to time with any Purchaser or any other Person
primarily or secondarily liable under a Pledged Note Receivable with regard to
the Lien of the Lender thereon and any other matter relating thereto, and by no
later than the Closing Date, Borrower shall deliver to Lender notifications to
the Purchasers executed in blank by Borrower and in form acceptable to Lender,
pursuant to which such Purchasers (or other obligors) are directed to remit all
payments in respect of the Collateral to Lockbox Agent or as Lender may
otherwise require.

      9.10 Collection of Pledged Notes Receivable. Borrower hereby directs and
authorizes each Purchaser and any other Person liable for the payment of any
Pledged Note Receivable, and promptly after the Closing Date, shall direct in
writing each such Person, to pay each installment due thereon directly to
Lockbox Agent, pursuant to the Lockbox Agreement, unless and until directed
otherwise by written notice from Lender or, at Lender's direction, from
Borrower, after which such parties are and shall be directed to make all further
payments on the Pledged Notes Receivable in accordance with the directions of
Lender. Following the occurrence of a Default or Event of Default, Lender shall
have the right to require that all payments becoming due under the Pledged Notes
Receivable be paid directly to Lender, and Lender is hereby authorized to
receive, collect, hold, and apply the same in accordance with the provisions of
this Agreement but shall provide Borrower with accountings of all such activity
on at least as frequent a basis as Lockbox Agent was obligated to provide
accountings to Lender and Borrower, pursuant to the Lockbox Agreement. In the
event that following the occurrence of a Default or an Event of Default, Lender
or Lockbox Agent does not receive any installment of principal or interest due
and payable under any of the Pledged Notes Receivable on or prior to the date
upon which such installment becomes due, Lender may, at its election (but
without any obligation to do so), give or cause Lockbox Agent to give notice of
such event of default to the defaulting party or parties, and Lender shall have
the right (but not the obligation), subject to the terms of such instruments, to
accelerate payment of the unpaid balance of any of the Pledged Notes Receivable
in default to

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foreclose each of the Timeshare Interest Mortgages securing the payment thereof
and to enforce any other remedies available to the holder of such Pledged Notes
Receivable, with respect to such event of default. Borrower hereby further
authorizes, directs, and empowers Lender (and Lockbox Agent or any other Person
as may be designated by Lender in writing) to collect and receive all checks and
drafts evidencing such payments and to endorse such checks or drafts in the name
of Borrower and, upon such endorsements, to collect and receive the money
therefor. The right to endorse checks and drafts granted pursuant to the
preceding sentence is irrevocable by Borrower, and the banks or banks paying
such checks or drafts upon such endorsements, as well as the signers of the
same, shall be as fully protected as though the checks or drafts had been
endorsed by Borrower.

      9.11 Power of Attorney. Borrower does hereby irrevocably constitute and
appoint Lender as Borrower's true and lawful agent and attorney-in-fact, with
full power of substitution, for Borrower, and in Borrower's name, place, and
stead, or otherwise, to (a) endorse any checks or drafts payable to Borrower in
the name of Borrower and in favor of Lender as provided in Section 9.10 above;
(b) to demand and receive from time to time any and all property, rights,
titles, interests, and Liens (which are related to Lender's Collateral) hereby
sold, assigned, and transferred, or intended so to be, and to give receipts for
same; (c) upon a Default or an Event of Default, to collect all rent, revenues,
and income, pursuant to the terms of any Pledged Note Receivable and relocated
Timeshare Interest Mortgage; (d) from time to time, to institute and prosecute,
in Lender's own name, any and all proceedings at law, in equity, or otherwise,
that Lender may deem proper in order to collect, assert, or enforce any claim,
right, or title, of any kind, in and to the property, rights, titles, interests,
and Liens hereby sold, assigned, or transferred, or intended so to be, and to
defend and compromise any and all actions, suits, or proceedings in respect of
any of the said property, rights, titles, interests, and Liens; (e) upon a
Default or an Event of Default, to change Borrower's post office mailing
addresses in connection with the Collateral; and (f) generally to do all and any
such acts and things in relation to the Collateral as Lender shall in good faith
deem advisable, subject to the terms, provisions, and conditions hereof.
Borrower hereby declares that the appointment made and the powers granted
pursuant to this Section 9.11 are coupled with an interest and are and shall be
irrevocable by Borrower in any manner, or for any reason.

      9.12 Relief from Automatic Stay, Etc. To the fullest extent permitted by
law, in the event that Borrower shall make application for or seek relief or
protection under the federal bankruptcy code (the "Bankruptcy Code") or any
other Debtor Relief Laws, or in the event that any involuntary petition is filed
against Borrower under such Code or other Debtor Relief Laws and not dismissed
with prejudice within forty-five (45) days, the automatic stay provisions of
Section 362 of the Bankruptcy Code are hereby modified as to Lender to the
extent necessary to implement the provisions hereof permitting set-off and the
filing of financing statements or other instruments or documents; and Lender
shall automatically and without demand or notice (each of which is hereby waived
by Borrower) be entitled to immediate relief from any automatic stay imposed by
Section 362 of the Bankruptcy Code or otherwise, on or against the exercise of
the rights and remedies otherwise available to Lender as provided in the Loan
Documents.

      9.13 Investigations and Inquiries. Borrower hereby authorizes Lender to
conduct such investigations and inquiries concerning Borrower, the Property, the
Purchasers, and the Collateral, as Lender, in its sole discretion, deems
necessary or desirable in connection with its

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monitoring of the Loan and the Collateral therefor, and all such Persons of whom
Lender may make such inquiry are empowered to cooperate with, and to provide all
requested information to, Lender.

      9.14 Verification of Use. Lender shall be under no duty or obligation to
ascertain the manner in which Borrower has used or will use the proceeds of the
Loan. Lender's sole obligation shall be to advance the proceeds of the Loan
subject to, and in strict accordance with, the terms, provisions, and conditions
of this Agreement and the other Loan Documents. Lender's obligation to fund the
Loan is limited to the principal amount set forth herein and in the Note.
Borrower is solely responsible for obtaining any other financing that may be
necessary in order to enable it to repay the Loan on or prior to the Maturity
Date. It is expressly understood that Lender has no responsibility or obligation
whatsoever to provide to Borrower any further financing, whether in connection
with the Property or otherwise.

      SECTION 10. TERM OF AGREEMENT

      This Agreement shall continue in full force and effect, and the Liens and
security interests granted hereby and the duties, covenants, and liabilities of
Borrower hereunder, and all the terms, conditions, and provisions hereof
relating thereto shall continue to be fully operative until all of the
Obligations have been satisfied in full. Borrower expressly agrees that if
Borrower makes a payment to Lender, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise required to be repaid to a trustee, receiver, or any other party under
any Debtor Relief Laws, state or federal law, common law, or equitable cause,
then to the extent of such repayment, the Obligations or any part thereof
intended to be satisfied and the Liens and security interests provided for
hereunder securing the same shall be revived and continued in full force and
effect as if said payment had not been made.

      SECTION 11. MISCELLANEOUS

      11.1 Notices. All notices or demands by either party to the other relating
to this Agreement shall, except as otherwise provided herein (including, without
limitation, Section 7.1), be in writing and (i) sent by certified or registered
United States mail, first class postage prepaid and return receipt requested, or
(ii) by a nationally recognized overnight courier service with all delivery fees
prepaid, or (iii) by facsimile or other electronic transmission (including
e-mail). Notices shall be deemed received (a) on the 4th succeeding Business Day
following deposit in the United States mail, certified or registered and first
class postage prepaid and return receipt requested, or (b) upon delivery if sent
by nationally recognized overnight courier with all delivery fees prepaid, or
(c) if transmitted by facsimile, when properly transmitted, upon receipt of
confirmation of transmission by the tramsmitter (except that, if such notice or
other communication is not given during normal business hours for the recipient,
such notice or other communication shall be deemed received at the opening of
business the next Business Day of the recipient), or (d) if transmitted by other
electronic transmission, when properly transmitted, upon the sender's receipt of
an acknowledgement from the intended recipient (such as by the "return receipt
requested" function, return e-mail or other written acknowledgement), provided
that, if such notice or other communication is not given during normal business
hours for the recipient, such notice or other communication shall be deemed to

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have been received at the opening of business on the next Business Day for the
recipient. Notices and demands shall be addressed, if to Borrower, at the
mailing address or facsimile or other electronic address set forth in this
Section 11.1 or to such other address as Borrower may from time to time specify
in writing or, if to Lender, at the mailing address or facsimile or other
electronic address of Lender set forth in this Section 11.1 or to such other
address as Lender may from time to time specify in writing to Borrower.

            If to Borrower:   Silverleaf Resorts Inc.
                              1221 River Bend Drive
                              Dallas, Texas 75247
                              Attention: Chief Financial Officer
                              Facsimile: (214) 631-4981
                              E-mail: rmead@silverleafresorts.com

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

            If to Lender:     CapitalSource Finance LLC
                              4445 Willard Avenue, Twelfth Floor
                              Chevy Chase, Maryland 20815
                              Attention: SFG - Portfolio Manager
                              Facsimile: (301) 841-2370
                              Email: brainero@capitalsource.com

            With a copy to:   Patton Boggs LLP
                              2001 Ross Avenue, Suite 3000
                              Dallas, Texas 75201
                              Attention: Scott Wallace

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

      11.3 Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS
EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, EXCLUSIVE OF ANY CHOICE OF
LAW PRINCIPLES THAT WOULD RESULT IN A CHOICE OF LAW OTHER THAN THE LAWS OF SUCH
STATE. LENDER AND BORROWER HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN MONTGOMERY COUNTY, MARYLAND OR THE SOUTHERN
DIVISION OF THE DISTRICT OF MARYLAND, AND IRREVOCABLY AGREE THAT, SUBJECT TO
LENDER'S ELECTION, ALL ACTIONS OR

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PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. LENDER AND BORROWER EXPRESSLY
SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY
DEFENSE OF FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE ON IT BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO IT AT THE
ADDRESS SET FORTH HEREIN, AND SERVICE SO MADE SHALL BE DEEMED COMPLETE TEN (10)
DAYS AFTER THE SAME HAS BEEN POSTED.

                                                Borrower's Initials: /S/ HJW

      11.4 Limitation on Interest. Lender and Borrower intend to comply at all
times with all applicable usury laws. All agreements between Lender and
Borrower, whether now existing or hereafter arising and whether written or oral,
are hereby limited so that in no contingency, whether by reason of demand or
acceleration of the maturity of the Note, or otherwise, shall the interest
contracted for, charged, received, paid, or agreed to be paid to Lender exceed
the highest lawful rate permissible under applicable usury laws. If, from any
circumstance whatsoever, fulfillment of any provision hereof, of the Note, or of
any other Loan Document shall involve transcending the limit of such validity
prescribed by any law which a court of competent jurisdiction may deem
applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if from any circumstance Lender shall
ever receive anything of value deemed interest by applicable law that would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the outstanding principal balance of the
Loan and not to the payment of interest, or if such excessive interest exceeds
the unpaid principal balance of the Loan, such excess shall be refunded to
Borrower. All interest paid or agreed to be paid to Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period until payment in full of the principal so that the
interest on the Loan for such full period shall not exceed the highest lawful
rate. Borrower agrees that in determining whether or not any interest payment
under the Loan Documents exceeds the highest lawful rate, any non-principal
payment (except payments specifically described in the Loan Documents as
"interest"), including without limitation, prepayment fees and late charges,
shall, to the maximum extent not prohibited by law, be deemed an expense, fee,
premium, or penalty rather than interest. Lender hereby expressly disclaims any
intent to contract for, charge, or receive interest in an amount that exceeds
the highest lawful rate. The provisions of the Note, this Agreement, and all
other Loan Documents are hereby modified to the extent necessary to conform with
the limitations and provisions of this Section, and this Section shall govern
over all other provisions in any document or agreement now or hereafter
existing. This Section shall never be superseded or waived unless there is a
written document executed by Lender and Borrower expressly declaring the usury
limitation of this Agreement to be null and void, and no other method or
language shall be effective to supersede or waive this paragraph.

      11.5 Invalid Provisions. If any provision of this Agreement or any of the
other Loan Documents is held to be illegal, invalid, or unenforceable under
present or future laws effective during the term thereof, such provision shall
be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid, or unenforceable

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provision had never comprised a part hereof or thereof, and the remaining
provisions hereof or thereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Any provision of this Agreement or any other Loan Document
that is held to be illegal, invalid, or unenforceable in a particular
jurisdiction shall remain valid and enforceable in all other jurisdictions.
Furthermore, in lieu of any such illegal, invalid, or unenforceable provision,
there shall be added automatically as a part of this Agreement and/or the other
Loan Documents (as the case may be) a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and be legal,
valid, and enforceable.

      11.6 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns; provided, however, that Borrower may not
transfer or assign any of its rights or obligations under this Agreement or the
other Loan Documents without the prior written consent of Lender, which consent
may be granted or withheld in Lender's sole and absolute discretion. This
Agreement and the transactions provided for or contemplated hereunder or under
any of the other Loan Documents are intended solely for the benefit of the
parties hereto. No third party shall have any rights or derive any benefits
under or with respect to this Agreement or the other Loan Documents except as
specifically set forth herein or otherwise provided in a written document signed
by Borrower and Lender. No Person other than Borrower shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make Advances in the absence of
strict compliance with any or all thereof, and no other Person, other than
Borrower, under any circumstances whatsoever, shall be deemed to be a
beneficiary of such conditions, any or all of which Lender freely may waive, in
whole or in part, at any time if, in its sole discretion, it deems it desirable
to do so. In particular, Lender makes no representation and assumes no
obligation as to third parties concerning the quality of construction of the
Improvements or the absence therefrom of defects. In this connection, Borrower
agrees to and shall indemnify Lender from any liability, claim, or loss,
together with attorneys' fees and costs, resulting from the disbursement of Loan
proceeds or from the condition of the Improvements, whether related to the
quality of construction or otherwise, and whether arising during or after the
term of the Loan. This provision shall survive the repayment of the Loan and
continue in full force and effect so long as the possibility of such liability
or claim exists.

      Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell or otherwise transfer or assign to one (1) or
more financial institutions or other entities ("Assignees") all or any portion
of its rights hereunder or pursuant to the Note, or any or all of the other Loan
Documents. Any such assignment shall be effected by Lender's execution of an
assignment in such form as may be agreed to by the parties thereto and may be
accompanied by a release by Lender of its right, title, and interest hereunder
and pursuant to any of the other Loan Documents in and to all or any portion of
the Collateral. Although the consent of Borrower shall not be required prior to
any such assignment's becoming effective, Lender agrees to provide Borrower with
prompt written notice of any such assignment. In the event of any such
assignment by Lender to an Assignee, Lender's obligations under the Loan
Documents shall remain unchanged, and Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations. The foregoing
notwithstanding, Borrower shall be directly obligated to each Assignee with
respect to the Obligations assigned to such Assignee and

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<PAGE>

shall have no rights of setoff or other remedies against the Assignee as a
consequence of Lender's acts or omissions under this Agreement subsequent to
such assignment.

      Upon the consummation of any assignment to an Assignee pursuant to this
Section, Lender and Borrower shall, if Lender or Assignee desires that the
assignment be evidenced in part by one (1) or more new promissory notes, make
appropriate arrangements for such new promissory note(s) or, as appropriate, one
(1) or more replacement promissory notes to be issued to Lender and for the new
promissory note(s) or, as appropriate, replacement promissory note(s), to be
issued to Assignee, in each case in principal amounts reflecting their
respective rights to payment.

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

      11.8 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signature thereto and hereto were on the same instrument. This
Agreement shall become effective upon Lender's receipt of one (1) or more
counterparts hereof signed by Borrower and Lender.

      11.9 Lender Not a Fiduciary. The relationship between Borrower and Lender
is solely that of debtor and creditor, and Lender has no fiduciary or other
special relationship with Borrower, and no term or provision of any of the Loan
Documents shall be construed so as to deem the relationship between Borrower,
and Lender to be other than that of debtor and creditor.

      11.10 Release and Return of Notes Receivable.

            (a) In the event that Borrower complies fully with its Obligations
under Section 2.5(b) of this Agreement with respect to any Pledged Note
Receivable that ceases to be an Eligible Note Receivable, and Borrower
thereafter desires to enforce such ineligible Note Receivable against the maker
thereof, then provided that no Default or Event of Default then exists and no
event has occurred which with notice, the passage of time, or both, would
constitute a Default or an Event of Default, within sixty (60) days after its
receipt of a written request from Borrower, Lender shall endorse the ineligible
Note Receivable using the words "Pay to the order of Silverleaf Resorts Inc.,
without recourse," and deliver such ineligible Note Receivable to Borrower.

            (b) In the event that all Obligations hereunder are fully satisfied,
then within a reasonable time thereafter, Lender shall endorse the Pledged Notes
Receivable using the words "Pay to the order of Silverleaf Resorts Inc., without
recourse," and deliver such Pledged Notes Receivable, together with any other
nonrecourse Collateral reassignment documents requested and prepared by
Borrower, at Borrower's sole cost and expense, free and clear of any Liens or
encumbrances by any Person claiming by, through, or under Lender.

            (c) With respect to any Pledged Note Receivable that is not an
Eligible Note Receivable, upon Borrower's request, Lender shall direct Custodian
to return the Credit File relating to such Pledged Note Receivable to Borrower
at its earliest convenience.

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<PAGE>

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

      11.12 Entire Agreement. This Agreement and the other Loan Documents,
including the exhibits and schedules to them, comprise the entire agreement
between the parties relating to the subject matter hereof and supersede all
prior agreements and understandings, both oral and written, between the parties
hereto relating to the subject matter hereof, may not be changed or terminated
orally or by course of conduct, and shall be deemed effective as of the Closing
Date.

      11.13 Litigation. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY ANY RIGHT, POWER, REMEDY,
OR DEFENSE ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, WHETHER SOUNDING
IN TORT OR CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY
PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A JUDGE AND NOT BEFORE A JURY. BORROWER AND LENDER FURTHER WAIVE ANY RIGHT TO
SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED.
FURTHER, BORROWER HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER,
INCLUDING LENDER'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER
WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT
TO JURY TRIAL PROVISION. BORROWER ACKNOWLEDGES THAT THE PROVISIONS OF THIS
SECTION ARE A MATERIAL INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                                               Borrower's Initials: /S/ HJW

      The waiver and stipulations of Borrower and Lender in this Section 11.13
shall survive the final payment or performance of all of the Obligations and the
resulting termination of this Agreement.

      11.14 Incorporation of Exhibits and Schedules. This Agreement, together
with all exhibits and schedules hereto, constitute one (1) document and
agreement that is referred to herein by the use of the defined term "Agreement."
Such exhibits and schedules are incorporated herein as though fully set out in
this Agreement. The definitions contained in any part of this Agreement shall
apply to all parts of this Agreement.

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      11.15 Consent to Advertising and Publicity. Borrower hereby consents to
Lender's issuance and dissemination to the public of information describing the
credit accommodation entered into pursuant to this Agreement, consisting of the
name and address of Borrower, the Loan's principal amount, and the Collateral
therefor.

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

      11.17 Captions. Section captions have been included in this Agreement for
convenience of reference only and should not be relied upon or used in
interpreting the meaning or intent of any provision hereof.

      11.18 Gender. Words of any gender in this Agreement shall include both
genders, where appropriate.

      11.19 No Duty. All attorneys, accountants, appraisers, consultants,
custodians, and other professionals retained by Lender in connection with the
Loan shall have the right to act exclusively in the interest of Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any kind or nature whatsoever to Borrower, or any other Person.

      11.20 Submissions.

            (a) All documents, agreements, reports, surveys, appraisals,
insurance policies, references, financial information, and other submissions
required to be furnished by Borrower to Lender hereunder or pursuant to any of
the other Loan Documents (collectively "Submissions") shall be in form and
content satisfactory to Lender, in its sole discretion, and prepared at
Borrower's sole expense.

            (b) Lender shall have the prior right of approval of any Person
responsible for preparing a Submission (a "Preparer") which approval shall not
be unreasonably withheld or delayed.

            (c) Borrower shall exercise its commercially reasonable best efforts
to ensure that all reports and appraisals required to be furnished by Borrower
to Lender hereunder or pursuant to any of the other Loan Documents are
specifically addressed to Lender and include the following statement:

                  THE UNDERSIGNED ACKNOWLEDGES THAT CAPITALSOURCE FINANCE LLC IS
      RELYING ON THE WITHIN INFORMATION IN CONNECTION WITH ITS ADVANCES TO
      BORROWER ON THE SUBJECT PROPERTY.

            (d) Whether or not expressly stated herein, all consents and
approvals granted by Lender hereunder shall be valid and effective only if
contained in a written document or instrument that has been signed by a duly
authorized representative of Lender.

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<PAGE>

      11.21 Confidentiality. Each party hereto acknowledges and agrees that the
material terms hereof and of the other Loan Documents are and shall remain
strictly confidential. No party hereto shall ever disclose the material terms
and provisions hereof without the express prior written consent of the other
parties; provided, however, material terms and provisions of this Agreement
which appear in recorded or filed documents or which are disclosed to a party's
shareholders, officers, directors, principals, Affiliates, attorneys,
accountants, or lenders, or if required by law or subpoena, shall not constitute
a breach of this Section 11.21. The parties hereto shall take all appropriate
measures to prevent the inadvertent or unintentional disclosure of the material
terms and provisions hereof.

      11.22 Borrower's Acknowledgment. Borrower acknowledges and agrees that
Lender is under no obligation to enter into any other agreement or perform any
other services for Borrower except as expressly set forth in this Agreement and
the other Loan Documents. Any other transaction or relationship between Borrower
and Lender shall be evidenced by other documentation, shall be separate and
independent from the Loan, and shall have no effect on Borrower's obligations to
Lender with respect to the Loan or Lender's remedies under the Loan Documents.
Borrower acknowledges and agrees that no discussions or oral agreements
heretofore or hereafter occurring between Borrower and Lender shall have any
legal effect unless embodied in a written agreement executed by all relevant
parties. Furthermore, no other written agreement between the parties and their
Affiliates and the performance of the parties thereunder shall have any legal
effect whatsoever on Borrower's obligations or Lender's remedies under this
Agreement and the other Loan Documents.

                                                Borrower's Initials: /S/ HJW

      11.23 No Offset. Borrower understands and agrees that Borrower's payment
obligations hereunder and under the other Loan Documents are absolute and
unconditional without any right of rescission, setoff, counterclaim or defense
for any reason against Lender notwithstanding any damage to, defects in or
destruction of any Collateral or any other event, including obsolescence of any
property or improvements. Except as expressly provided for herein, Borrower
hereby waives setoff, counterclaim, demand, presentment, protest, all defenses
with respect to any and all instruments and all notices and demands of any
description, and the pleading of any statute of limitations as a defense to any
demand under this Agreement and any other Loan Document. Borrower hereby waives
any and all defenses and counterclaims it may have or could interpose in any
action or procedure brought by Lender to obtain an order of court recognizing
the assignment of, or lien of Lender in and to, any Collateral.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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      IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed and delivered effective as of the date first above written.

                                         BORROWER:

                                         SILVERLEAF RESORTS, INC.,
                                         a Texas corporation

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

                                         LENDER:

                                         CAPITALSOURCE FINANCE LLC,
                                         a Delaware limited liability company

                                         By:   /S/ PIERRETTE N. BRADSHAW
                                               --------------------------------
                                         Name: Pierrette N. Bradshaw
                                         Title: General Counsel

List of Exhibits to Agreement not filed herewith:

Exhibit "A":  Form of Custodial Agreement
Exhibit "B":  Form of Master Pledge and Assignment of Notes Receivable and
              Timeshare Interest Mortgages
Exhibit "C":  Form of Lockbox Agreement
Exhibit "D":  Resort Facilities
Exhibit "E":  Permitted Liens and Encumbrances
Exhibit "F":  Receivables Loan Approved Resorts
Exhibit "G":  Form of Reassignment
Exhibit "H":  Description Of Pending Litigation
Exhibit "I":  Form of Advance Request

RECEIVABLES LOAN AND SECURITY AGREEMENT

<PAGE>

Exhibit "J":  Form of Supplemental Pledge and Assignment of Notes Receivable and
              Timeshare Interest Mortgages
Exhibit "K":  List of States in which Borrower is Registered or Exempt
Exhibit "L":  List of Timeshare Documents
Exhibit "M":  Borrowing Base Certificate
Exhibit "N":  Listing of amounts owed to Timeshare Association

RECEIVABLES LOAN AND SECURITY AGREEMENT

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