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Construction Loan Agreement - BLUEGREEN CORP - 6-25-1996

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Construction Loan Agreement - BLUEGREEN CORP - 6-25-1996 Powered By Docstoc
					CONSTRUCTION LOAN AGREEMENT THIS AGREEMENT, made this 28th day of February, 1996, between THE NATIONAL BANK OF SOUTH CAROLINA, whose address is Post Office Box 1457, Columbia, South Carolina 29202, Attention: Real Estate Administration (hereinafter referred to as the "Lender"), and PATTEN RESORTS, INC., a Delaware corporation, whose address 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486, Attention: Patrick E. Rondeau (hereinafter referred to as the "Borrower"); ~W I ~T ~N ~E ~S ~S ~E ~T ~H:

ARTICLE-I LOAN 1.1 In accordance with the terms and conditions of the loan commitment from Lender to Borrower (the "Commitment"), Lender does hereby agree to lend to Borrower, and Borrower does hereby agree to borrow from Lender, the sum of up to THIRTEEN MILLION FIVE HUNDRED THOUSAND ($13,500,000.00) DOLLARS (the "Loan"), said sum to be advanced from time to time and repaid together with interest thereon and with certain costs and charges as may be incurred by Borrower, all as hereinafter more particularly set forth. The Loan shall be evidenced by a promissory note of Borrower, in form and content satisfactory to Lender, to be dated the date hereof and drawn to the order of Lender in the principal amount of the Loan (the "Note"), the terms of which are incorporated herein by reference, and the Note shall be secured by: A. A mortgage and security agreement (the Mortgage), in form and content satisfactory to Lender, granting to Lender a first lien on a parcel or parcels of land described in Exhibit A attached hereto and made a part hereof (the "Property") , together with all improvements constructed and to be constructed thereon and a security interest in all personal property located, or to be located, on the Property, together with sufficient financing statements (the "Financing Statements"), in form and content satisfactory to Lender, to perfect such security interest in accordance with South Carolina laws and the laws of Borrower's principal place of business. B. An assignment of leases, rents and profits (the "Assignment of Leases"), in form and content satisfactory to Lender. C. An assignment of the construction contract between Borrower and the general contractor (the "General Contractor") for the Project (the "Construction Contract"), the plans and specifications for the Project previously delivered to Lender (the "Plans") , the contract between Borrower and the architect for the Project (the "Architect") , and other developer`s rights (all of such assignments being referred to as the "Assigrment of Developer's Rights") , such assignments to be in form and content satisfactory to Lender. D. A guaranty agreement (the "Guaranty") executed by Patten Corporation (the "Guarantor"), in form and content satisfactory to Lender. E. An assignment of contract receivables, whereby all contract receivables on sales of Intervals (as hereinafter defined)-shall be assigned on a second lien basis to Lender (the "Receivables Assignment"), in form and content satisfactory to Lender. F. The Tri Party Agreement (as hereinafter defined). Said Note, Mortgage, Guaranty, Assignment of Leases, Assignment of Developer's Rights, Financing Statements, Receivables Assignment, Tri-Party Agreement and all other documents and instruments which may be reasonably required by Lender, are hereinafter sometimes referred to collectively as the "Loan Documents." 1.2 In the event of any conflict between the terms and provisions contained in the Commitment and in any of the Loan Documents, the terms and provisions of the Loan Documents shall control. 1.3 Lender agrees to allow Borrower to engage in the limited sale of interval ownership time share interests in the

Project ("Intervals") prior to completion of the Project and repayment of the Loan, subject to the following terms and conditions: A. Sales of Intervals must be limited to unit numbers 1101,1102, 1103, 1104, 1105, 1106, 1308, 1309, 1310, 1311, 1312, 1314, 1501, 1502, 1503, 1504, 1505, 1506, 1708, 1709, 1710, 1711, 1712, 1714, 1901, 1903, 1904 and 1905. Borrower shall not engage in the sale of Intervals in more than 5 units at any one time; provided, however, that once Seller has sold at least 75% of the Intervals in a unit, such unit shall not be counted with respect to the foregoing limitation and therefore Borrower, may begin selling Intervals in another unit. B. The rights of Borrower under all contracts for the sale of Intervals must be assigned to Lender as security for the Loan pursuant to the Receivables Assignment. The Receivable Assignment shall be subordinate in priority only to a first lien assignment of such receivables to be granted to Heller Financial, Inc. ("Heller") in accordance with the provisions of Section 5.1 0 hereof (the "Heller Receivables Assignment"). Borrower shall take such further action as Lender may request in order to create and perfect Lender's security interest (other than giving Lender possession of the original receivables contracts, which shall be held by Heller). C. The sales contracts shall not bind the remainder of the Project to time share use. D. Heller must approve the terms and conditions upon which sales of Intervals may occur. E. No event shall exist which with the passage of time or the giving of Notice or both would constitute an Event of Default hereunder. F. Before marketing of Intervals commences, Lender must receive an opinion of Borrower's counsel, in form and content satisfactory to Lender, as to the compliance by Borrower with laws and regulations applicable to the sale of the Intervals. G. The Loan shall be paid in full on or before the date of recording of any declaration creating the Intervals, and therefore Lender shall not be required to release any Intervals from the lien of the Mortgage and other Loan Documents. 1. 4 Lender agrees upon the request of Borrower to issue up to ten letters of credits under the Loan to secure payment to suppliers of furnishings for the Project. The terms of the contracts with the suppliers and the terms of the letters of credit must be acceptable to Lender. The amounts payable to suppliers must conform to the approved construction budget for the Project. Borrower shall pay Lender a fee of one-half of one (0.5~%) percent of the letter of credit amount prior to issuance of a letter of credit. The amounts of all outstanding letter of credits shall be reserved by Lender under the Loan and shall not be available for advance. Any amounts funded under a letter of credit shall be deemed advanced under the Note as part of the Loan and shall be secured by the Mortgage and other Loan Documents. In the event Borrower pays a supplier and a letter of credit is returned to Lender and cancelled, the amount reserved to fund the letter of credit shall thereafter be available for draw for Project expenses in accordance with this Agreement. ARTICLE II CONSTRUCTION AND CERTAIN COVENANTS RELATED THERETO 2.1 Borrower shall cause to be constructed upon the Property a 114 unit condominium project and related amenities (the "Project") as described in the Plans. The Project shall be constructed and completed no later than March 1, 1997 (the "Construction Completion Date") and shall be fully furnished and available for occupancy no later than May 1, 1997 (the "Occupancy Date"). 2.2 The Project shall be constructed in good and workmanlike manner pursuant to the Construction Contract and shall be constructed substantially in accordance with the Plans. The Construction Contract and the General Contractor shall be subject to Lender's approval. Borrower will not cause, suffer or permit any modification or amendment of, or deviation from, the terms and provisions of the Construction Contract without the prior written consent of Lender. Borrower will not cause, suffer or permit any change or amendment to, or construction of the Project other than in substantial conformity with the Plans without the prior written consent- of Lender and any other persons as may be required by the terms of any bond, lease or agreement, except that Borrower may make change orders to the extent permitted in Section 7.1. L hereof.

2.3 As a condition precedent to the advance of any funds under the Loan, Borrower shall furnish Lender with a proposed completion and draw schedule and a satisfactory cost breakdown of construction clearly identifying development, construction, financing and all other direct and indirect costs which shall be subject to the approval of Lender and Lender's project inspector (the "Project Inspector"). If at any time, in the judgment of Lender, there is not enough money available under the Loan to complete the Project, Borrower will be required to contribute the additional equity at that time. Borrower will not cause, suffer or permit the proceeds of the Loan to be expended or allocated other than as shown on the said cost breakdown without the prior written consent of Lender. 2.4 The Project shall be constructed and operated in accordance with all applicable ordinances and statutes and the requirements of all regulatory authorities having jurisdiction and in compliance with the requirements of any lessee, and of any rating or inspection office having jurisdiction; the Project shall be constructed entirely on the Property and will not unlawfully encroach upon any easement, right-of-way or land of others; and the Project when completed will not violate any setback lines, applicable use restrictions or other restrictions or regulations. 2.5 In the event Lender shall have given Borrower written notification of a structural defect in the Project or departure from the Plans, not approved by Lender, Borrower shall, within thirty (30) days of receipt of such notice, take all necessary steps to cure such structural defect or departure from the Plans, and Lender may, at its option, withhold subsequent advances until such time as such structural defect or departure from the Plans has been cured to the satisfaction of Lender and Project Inspector (as hereinafter defined). 2.6 The Project Inspector's review of the Plans, construction cost breakdown and other matters and periodic review of progress of construction of the Project shall be solely for the benefit of Lender. It shall be Borrower's obligation to insure that the Project is properly designed and is completed in accordance with the Plans. Borrower acknowledges that it is not relying on the Project Inspector or the Lender in connection with the adequacy of the Plans, the proper construction of the Project or any other aspects of the Project.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF BORROWER 3.1 In order to induce Lender to enter into and execute this Agreement and to make the Loan to Borrower, Borrower represents and warrants to Lender as follows: A. Borrower has full power to enter into and execute this Agreement and the Loan Documents and to consummate the transaction contemplated thereby. B. Borrower has heretofore delivered to Lender a true, accurate and complete copy of the articles of incorporation or partnership agreement and/or certificate, as applicable, of Borrower. C. Borrower has heretofore delivered to Lender the financial statements of Borrower and Guarantor (collectively the "Borrower's Financial Statements"). Borrower's Financial Statements have been prepared in accordance with generally accepted accounting principles and are true, accurate and complete. Borrower and Guarantor do not have any obligations or liabilities (whether accrued, absolute, contingent or otherwise) other than as set forth in Borrower's Financial Statements. D. Borrower has heretofore delivered to Lender true, complete and accurate copies of all leases of the Property or any portion thereof, if any, executed by Borrower to date. Each such lease is the valid and continuing obligation of the parties thereto and is enforceable in accordance with its terms. Borrower is not in default under the terms of any such lease, and no event has occurred which by notice, the passage of time or otherwise would constitute a default by Borrower under any such lease. E. There are no actions, suits or proceedings pending, or to the knowledge of Borrower, threatened: (i) involving the validity or enforceability of this Agreement or any of the Loan Documents; or (ii) involving the priority of any lien created by, or granted pursuant to, any of the Loan Documents; or (iii) against or affecting the Property or against and materially affecting Borrower or Guarantor.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF BORROWER 3.1 In order to induce Lender to enter into and execute this Agreement and to make the Loan to Borrower, Borrower represents and warrants to Lender as follows: A. Borrower has full power to enter into and execute this Agreement and the Loan Documents and to consummate the transaction contemplated thereby. B. Borrower has heretofore delivered to Lender a true, accurate and complete copy of the articles of incorporation or partnership agreement and/or certificate, as applicable, of Borrower. C. Borrower has heretofore delivered to Lender the financial statements of Borrower and Guarantor (collectively the "Borrower's Financial Statements"). Borrower's Financial Statements have been prepared in accordance with generally accepted accounting principles and are true, accurate and complete. Borrower and Guarantor do not have any obligations or liabilities (whether accrued, absolute, contingent or otherwise) other than as set forth in Borrower's Financial Statements. D. Borrower has heretofore delivered to Lender true, complete and accurate copies of all leases of the Property or any portion thereof, if any, executed by Borrower to date. Each such lease is the valid and continuing obligation of the parties thereto and is enforceable in accordance with its terms. Borrower is not in default under the terms of any such lease, and no event has occurred which by notice, the passage of time or otherwise would constitute a default by Borrower under any such lease. E. There are no actions, suits or proceedings pending, or to the knowledge of Borrower, threatened: (i) involving the validity or enforceability of this Agreement or any of the Loan Documents; or (ii) involving the priority of any lien created by, or granted pursuant to, any of the Loan Documents; or (iii) against or affecting the Property or against and materially affecting Borrower or Guarantor. F. Borrower has obtained all licenses, permits, authorizations, consents or approvals ~f from all appropriate public or private boards and bodies necessary for the construction of the Project, and all such licenses, permits, authorizations, consents or approvals are in full force and effect. G. Borrower is not in default under any of the Loan Documents, and no event has occurred which by notice, the passage of time or otherwise would constitute an event of default under any of the Loan Documents. H. The Property has adequate rights of access to public ways and all water, sanitary sewer and storm drain facilities. All public utilities necessary or convenient to the full use and enjoyment of the Project are available to the Property, and if not now installed the same shall be constructed and installed to service the Project prior to the Construction Completion Date. I. Borrower and Guarantor are not in default in the payment of any indebtedness or borrowed money for repayment of which they are personally liable or under the terms and provisions of any agreement or instrument evidencing any such indebtedness or under any guarantee of indebtedness of others. J. The Plans are in compliance with the South Carolina Beachfront Management Act. K. No representation or. warranty of Borrower or Guarantor contained in this Agreement or in any of the Loan Documents, and no statement contained in any certificate, schedule, list, financial statement or other instrument furnished to Lender by or on behalf of Borrower or Guarantor contains, or will contain, any untrue statement of a material fact, or omits, or will omit, to state a material fact necessary to make the statements contained herein or therein not misleading. 3.2 All warranties and representations of Borrower contained herein shall survive the execution of this Agreement and anyadvances made in accordance with this Agreement. All such representations and warranties shall be deemed to be remade as of the date of each request ~f or an advance under the Loan and shall be true and correct as of such date.

ARTICLE IV COVENANTS OF Borrower 4.1 Borrower covenants with Lender as follows: A. It shall maintain, preserve and keep the Project and the grounds and structure, improvements and equipment appurtenant thereto or used therewith, and each and every part and parcel thereof, in good repair and working order and in safe condition at all times. B. It shall permit Lender and its duly authorized agents free access to the Project and shall make available for audit and inspection, at any reasonable time by Lender or its duly authorized agents, all property, equipment, books, contracts, records and other papers relating to the Project. It shall keep the books and accounts of all operations relating to the Project in accordance with generally accepted accounting procedures acceptable to Lender. Such books and accounts shall be maintained at the site of the Project or the office of Borrower. C. It shall promptly respond to any inquiry from Lender for information with respect to the Project which information may be verified by Lender; provided, however, that Lender shall at all times be entitled to rely upon any statements or representations made by Borrower or any employee or agent of Borrower. D. It shall indemnify Lender from claims or process arising by reason of the execution hereof or the consummation of the transactions contemplated hereby and caused by the acts or omissions of Borrower. E. It shall pay, when due, all costs, fees and expenses as required by the Loan Documents and all fees, costs and expenses concerning the consummation of the transaction contemplated hereby. Such fees and expenses shall include, without being limited to, all fees and expenses of Lender's counsel in connection with the closing of the Loan and for such further advice and counsel as Lender may require during the term of the Loan with respect to the Loan. If Borrower fails to pay all such fees and expenses, Lender may at its option advance funds under the Note to pay such fees and expenses. F. Within thirty (30) days of written notification by Lender to Borrower, Borrower shall contribute to the Project such funds which when added to the remaining portion of the Loan to be disbursed hereunder shall, in the reasonable judgment of Lender, be sufficient to pay in full the remaining total Project costs. G. It shall pay promptly at maturity the principal of the Loan, together with interest thereon, and all other charges and amounts due Lender, the said payment to be made without any deduction for taxes, assessments or governmental charges in the nature thereof upon said Loan, or the interest evidenced thereby, or any part thereof, which Borrower may be required or permitted to deduct, retain or pay therefrom or thereon, under or by reason of' any present or future law of the United States or of any state, municipality or taxing authority thereof. H. It shall purchase and continually maintain-and keep in full force and effect, at its sole expense, those policies of insurance and endorsements thereto described in Sections 5.1 and 5.3 herein. Borrower shall deliver the original policies of insurance to Lender and shall deliver to Lender all renewals thereof not less than thirty (30) days in advance of the expiration date of the existing policy or policies. I. It shall notify Lender of any loss insured against under any policy of insurance required hereby within ten (10) days of the occurrence of said loss. J. It shall faithfully pay and discharge promptly when due all taxes, assessments, forced contributions, local assessments and governmental charges of every description which shall from time to time be imposed or assessed or levied upon the Project, or any part thereof, and/or upon or against any personal property situated therein, including all state and municipal taxes affecting the Property and the Project and/or personal property located therein. K. It shall keep valid and unimpaired the Mortgage and the other Loan Documents described hereinabove, and to that end shall execute at any future time and As often as may be deemed necessary, on demand of Lender, all further instruments, assignments and other acts in due form and effect as may be deemed proper by Lender to the better carrying out of the true intent and meaning of this Agreement, and especially at Borrower's sole cost, shall do all other things that may be required by Lender to make and keep valid the liens on, and security interest in,

do all other things that may be required by Lender to make and keep valid the liens on, and security interest in, the property described in the various Loan Documents and to maintain the priority of the said liens and security interests. L. It shall notify Lender in writing within ten (10~) days thereof in the event of any default by Borrower of any obligation undertaken by it herein and/or any of the Loan Documents. M. It shall notify Lender in writing within ten (10) days thereof should any mortgage or lien or any other security instrument whatsoever be filed against the Property described in the Mortgage. N. It shall bond off under the provisions of applicable law any lien or claim of lien filed for record, within thirty (30) days of date of notice to Borrower of filing of said claim. 0. It shall keep and maintain at all times complete, true and accurate books of accounts and records reflecting the results of the operation of the Project. Borrower shall permit Lender to inspect said books and records upon request. In addition, Borrower will deliver or cause to be delivered to Lender: (i) As soon as practicable, and in any event within ninety (90) days after the end of each ~f fiscal year of Borrower, a balance sheet of Borrower, and a statement of income and expense of Borrower related to the Project, in each case setting forth, in comparative form, the figures for the previous fiscal year, all in reasonable detail, prepared by an independent certified public accountant of recognized standing; (ii) Together with each financial statement of Borrower delivered under (i) above, a certificate signed by the Chief Financial Officer of Borrower, dated the date of such financial statement stating that (i) he has reviewed the activities of Borrower with a view to determining whether all obligations of Borrower under the Note and this Agreement have been duly performed and complied with and (ii) stating that, to the best of his knowledge, there did not exist as of the date of such certificate any condition or event which would constitute a breach of any covenant or condition hereunder, or under the Note, this Agreement or any other document securing the Note or relevant to the Project or which, after notice or lapse of time, or both, would constitute such a breach, or specifying the nature or extent of each breach and the action Borrower has taken or proposes to take with respect thereto; and (iii) within ninety (90) days after the end of each fiscal year and within thirty (30) days after demand by Lender, a signed financial statements of Guarantor, together with copies of the most recent tax returns of Guarantor. P. It shall maintain with Lender the construction account for the Project until the Loan is paid in full. Borrower acknowledges that the maintenance of such account with Lender is for the dual purposes of further securing the Loan and enabling Lender to monitor activity concerning the Project. Q. It shall comply with all laws and regulations applicable to the sale of time share units in the Project, including all registration requirements. R. It shall comply with terms of the Heller Loan (as hereinafter defined) such that the Heller Loan will fund and pay the Loan in full upon completion of the Project. 4.2 Borrower shall not do any of the following without the prior written approval of Lender: A. Except for (i) limited sales of Intervals provided herein, (ii) the Heller Receivables Assignment and (iii) the Subordinate Mortgage (as hereinafter defined), convey, transfer, lease or further- encumber any of the properties described in the Mortgage and/or the other Loan Documents, or any right to manage or receive any of the rents and profits and insurance thereof. B. Convey, assign, transfer, dispose of or encumber any personal property of Borrower used or useful in the operation of the Project. C. Remodel, add to, reconstruct, improve or demolish any part of the properties described in the Mortgage, except as required so to do by the foregoing provisions of this Agreement. D. Permit the use of the Project for any purpose except the use which was originally intended.

E. Purchase or acquire any materials, fixtures or equipment of or the Project upon leases, conditional sale or other type of title retention or security agreement. F. Incur any additional debts with respect to the Project or secured by the Property not provided for in this Agreement or in the Loan Documents. G. Undertake or suffer any work to be done upon the Property, other than the construction of the Project provided for herein. ARTICLE V REQUIREMENTS FOR ADVANCES 5.1 The obligation of Lender to make the first advance of the Loan to Borrower is subject to the receipt of Lender, on or prior to the date of execution of this Agreement, of the following, all in form and content satisfactory to Lender: A. Executed originals of all Loan Documents. B. Copies of the Plans, together with written approval thereof by Borrower, Project Inspector and all municipal and governmental agencies that so require. C. Evidence of compliance with all laws, zoning and other ordinances, rules, regulations and restrictions affecting the construction and use of the Project (including without limitation the Beachfront Management Act and South Carolina Coastal Council laws and regulations), and evidence of approval of the Project by all local environmental and ecology boards, zoning and planning commissions and any other land use regulatory bodies. D. All required building permits and all other authorizations, if any, which are required for the construction and use of the Project. E. A current survey, certified to Lender and to the title insurer, showing all easements (existing and proposed labeled accordingly) , rights of way, utilities, means of ingress and egress, setback lines and encroachments, if any. In addition, Lender shall be furnished a copy of soil tests, acceptable to the Project Inspector, indicating the subsoil and geological conditions of the Property. F. A paid policy of mortgage title insurance on an American Land Title Association Loan Policy form, without exceptions which are unacceptable to Lender, in the full amount of the Loan, issued by a title company approved by Lender and insuring title to the Property, free and clear of all other liens, claims and encumbrances except such as Lender and its counsel shall approve. Such title insurance shall contain a pending mortgage disbursement clause insuring the priority of the Mortgage as provided therein for the full amount of the Loan advanced by Lender over any and all mechanics', materialmen's and laborers' liens, whether recorded or unrecorded and regardless of the priority of such liens under applicable law. Such policy must also contain such other terms as may be required by Lender as specified in the Commitment. G. original Paid policies Of workers'. compensation insurance, public liability insurance with limits of not less than $1,000,000.00, insurance against flood, fire, lightning, windstorm, earthquake, and such other hazards (including builders' all-risk extended coverage on a completed value nonreporting form during the construction phase of the Loan) as Lender may require, with limits of not less than the full replacement value of the improvements, including (if the Loan is not immediately paid in full 'upon completion of the Project) insurance against loss of rental income or business interruption coverages, as applicable, and containing provisions therein to prevent the occupancy of any part of the buildings constructed on the Property from terminating said coverage. All of the above described hazard insurance policies shall each contain a replacement cost endorsement and a standard mortgage endorsement (if available on that particular type policy) providing for loss proceeds being payable to Lender or its assigns as mortgagee. All insurance policies and all endorsements thereto hereinabove and hereinafter required must be issued by insurers authorized to do business in South Carolina on an approved South Carolina form and through insuring companies -rated by the Best Insurance Guide as A+, or otherwise approved in writing by Lender. Borrower shall furnish Lender with certificates of such insurance policies containing a provision agreeing to give Lender thirty (30) days notice prior to cancellation.

H. A detailed cost breakdown, as described in paragraph 2.3 herein, together with invoices for costs other than for in-place improvements. I. The written undertaking of the General Contractor to continue performance on Lender's behalf without additional cost in the event of a default by Borrower under any of the Loan Documents. J. Evidence that all utilities, including water, sanitary sewer, storm sewer and drainage, gas, electricity and telephone, are or will be available in sufficient size and quantity and at the proper time for the successful operation of the Project, and that requirements, if any, of the Federal Flood Insurance Program have been satisfied. K. An opinion of Borrower's counsel, dated as of the date of execution of this Agreement. L. Payment and performance bonds on the General Contractor and such major subcontractors as Lender may require, for the benefit of Lender. M. A full written narrative appraisal from an MAI appraiser acceptable to Lender indicating a Project value of at least $17,780,000. N. An environmental audit of the Property conducted by a qualified environmental inspection company acceptable to Lender. 0. Copies of a Loan and Security Agreement (the "Heller Loan Agreement"), promissory notes and other documents evidencing loan(s) from Heller to Borrower in the aggregate amount of $23,500, 000 (collectively, the "Heller Loan"). The Heller Loan Agreement must provide for funding sufficient to repay the Loan in full upon completion of the Project in accordance with the plans. Such funding shall not be contingent upon financial feasibility, the status of pre-sales of time shares, the filing of a time share declaration or any other condition except completion of the Project in accordance with the Plans. During construction of the Project, Borrower shall be entitled to borrow from Heller under the Heller Loan Agreement advances up to sixty percent (60~%) of the value of outstanding receivables from the pre-sale of Intervals, which receivables may be assigned to Heller on a first lien basis. Lender shall hold a second lien 'Security interest in such receivables pursuant to the Receivables Assignment. Borrower may also grant a second mortgage on the Property to Heller (the "Subordinate Mortgage") , provided that the same is expressly subordinated to the Mortgage and all of Lender's other security documents by subordination agreement in form and content satisfactory to Lender. Borrower shall not grant to Heller any other lien against the assets of Borrower, excepting only the Heller Receivables Assignment, until the Loan has been paid in full. Borrower must provide a tri-party agreement between Lender, Borrower and Heller (the "Tri-Party Agreement") containing such terms as shall be required by Lender. Borrower acknowledges that it shall be liable for payment of the Loan in full regardless of whether Heller funds the Heller Loan. P. Evidence that Borrower has invested at least $4,046,614 in cash equity for Project costs approved by Lender. 5.2 The obligation of Lender to make any advance of the Loan to Borrower is subject to the satisfaction of the following conditions at the time of making such advance, all in form and content satisfactory to Lender: A. All representations and warranties of Borrower contained in this Agreement shall be true and correct as of the date of the advance. B. Borrower shall not be in default under the terms of this Agreement or of any of the Loan Documents. C. Borrower shall have complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such advance. D. The Project shall not have been materially injured or damaged by f ire or other casualty; or if so damaged, provisions satisfactory to Lender have been made to effect necessary restoration or repair in accordance with this Agreement. If requested by Lender, Borrower shall furnish to Lender a certificate, dated the date of such advance and executed by Borrower and in such detail as Lender may require, as to the satisfaction of any one or more of conditions of Sections 5.2 A - D above. E. Lender shall have received evidence that all work and improvements requiring inspection by governmental authorities having jurisdiction have been inspected and approved by such authorities, by the rating or inspection

offices having jurisdiction and by any other persons or entities (including any lessees of the Project) having the right to inspect and approve construction; that such governmental authorities have accepted dedication of roads, sewers and other facilities where necessary and all required certificates and other approvals have been duly issued; and that the requirements of all environmental agencies have been satisfied. F. Once the foundations and footings for the Project are in place, Lender shall have received and approved an updated survey showing the location of such foundations and footings, along with certification by the surveyor that such foundations and footings -are located wholly within the boundaries of the Property and do not interfere with or violate any easement, right-of-way, building and use restriction or setback lines. G. Borrower shall obtain. and deliver to Lender, concurrently with any advance made hereunder, including the final advance, an endorsement to the title insurance policy issued to Lender insuring the priority of the Mortgage, bringing forward the date of the policy to the date of the advance, increasing the coverage of said policy to an amount equal to all advances made under the Loan and affirmatively insuring against any mechanics' or materialmen's liens, recorded or unrecorded. H. Lender shall have received a request for advance, in form and content acceptable to Lender, certified by Borrower and the General Contractor and approved by the Project Inspector, stating that the Project is being completed in substantial accordance with the approved plans and specifications and in compliance with all applicable building codes, zoning ordinances, and other applicable regulations of any governmental entity or agency exercising jurisdiction over the Property. Upon completion of the Project, a Certificate of Completion issued by the General Contractor and approved by the Project Inspector will be required. All. fees of the Project Inspector shall be paid by Borrower. I. Heller shall have approved all draw requests to the extent required in the Heller Loan Agreement. 5.3 In addition to the requirements set forth in Sections 5.1 and 5.2 above, the obligation of Lender to make the final advance of the Loan is subject to the receipt by Lender of the following, all in form and content satisfactory to Lender: A. Evidence of the issuance of a certificate of use and occupancy for all portions of the Project issued by all appropriate governmental authorities. B. A final survey in the form required under Sections 5.1 and 5.2 above showing the completed Project, together with at least three photographs of different views of the completed Project. C. Evidence that the Project has been completed lien free in accordance with the Plans. Such evidence shall include, but not be limited to, final approval by the Project Inspector and a final certificate from the General Contractor and Architect that the Project has been completed in accordance with the Plans, that the completed Project is in compliance with all applicable laws and regulations applicable thereto, and that all bills and expenses in connection with construction of the Project have been paid or provided for by arrangements satisfactory to Lender. D. A fully-paid policy of permanent all-risk hazard insurance for the full insurable value of the Project, with replacement cost endorsement and providing limits of liability sufficient to avoid the application of any coinsurance clause contained in such policy or required by law. Such policy or policies must be issued through an insuring company or companies qualified to do business in the State of South Carolina and rated by the Best Insurance Guide as A+; and such policy or policies shall contain a standard mortgage endorsement providing for loss proceeds being payable to Lender,, and an endorsement providing that the insurance carrier will give Lender thirty (30) days written notice of cancellation of such policy or policies. Such policy shall also include earthquake insurance and rental value insurance for a period of at least twelve (12) months in amounts acceptable to Lender. E. All provisions of Sections 5.1 and 5.2 shall have been satisfied. F. All provisions of the Commitment, as may have been amended, shall have been satisfied. 5.4 In the event during the term of the Loan Lender determines in its reasonable discretion that Lender is required under any applicable banking law or regulation to obtain new or additional documentation to support the Loan

such as, for example, a new appraisal or a new environmental report, Borrower shall pay all costs of obtaining such new or additional documentation. 5.5 Lender shall advance funds only for Borrower's approved actual costs. Lender shall not be required to fund up to the full amount of the Loan if Borrower's actual approved costs for the Project do not require such funding. ARTICLE VI PROCEDURE FOR ADVANCES 6.1 Provided all applicable requirements for advances set forth in Article ~V hereof have been satisfied, and subject to the provisions of this Article VI set forth below, Borrower shall be entitled to not more than one advance of the Loan each month as provided in the request for advance meeting the requirements of this Agreement delivered to Lender not later than the tenth (10th) .day of the month and not less than five (5) working days prior to the date of the requested advance. Borrower shall be entitled to receive 90% of the actual costs of in-place improvements as certified by Borrower and the General Contractor and approved by -the Project Inspector, less amounts previously advanced. After draws for 50% of construction have been funded (less the 10% retainage), draws on the remaining 50% of construction shall be funded at 95% with 5% retainage. Additionally, Borrower shall be entitled to receive one hundred (100%) percent of other construction related costs based upon invoices delivered to Lender and approved by Lender, in its sole discretion. Notwithstanding anything herein to the contrary, Lender shall at all times retain sufficient funds which it reasonably determines are adequate to complete construction of the Project. Lender shall make no advances for materials stored on site unless such materials are fully insured against loss by theft and other perils. 6.2 Upon completion of all the work to be performed on the Project in accordance with the Plans, so certified by the General Contractor (and by the Project Inspector to Lender if Lender so requires), and upon inspection and approval by the Project Inspector and by others who have reserved the right to approve construction and upon satisfaction of all the conditions set forth in Section 5.3 of this Agreement the retainage held back by Lender pursuant to Section 6.1 of this Agreement shall be advanced to Borrower. The foregoing notwithstanding, Lender may withhold advances for the payment of retainage to any subcontractor if in Lender's opinion a dispute exists as to the proper completion by such subcontractor of his work on the Project or as to the amount due him. 6.3 Anything contained in this Agreement to the contrary notwithstanding: A. Lender shall, be authorized and empowered to establish reserves from the undisbursed portion of the Loan of such sums which, in the opinion of Lender, are sufficient to pay or satisfy, in whole or in part, any lien or claim prejudicial to the liens or security interests of Lender and/or any expenditure or allocation of funds shown on the cost breakdown described in Section 2.3 of this Agreement. The aggregate amount of any such reserves shall be deducted from the proceeds of the Loan otherwise available for advance in accordance with this Agreement, and any such reserved funds, when advanced by Lender, shall be deemed to be proceeds of the Loan advanced under this Agreement,- whether or not advanced to Borrower. B. Lender shall not be under any obligation to make any advance of the Loan if Lender shall determine that the remaining total Project costs are in excess of the remaining undisbursed portion of the Loan, unless a cash deposit in the amount of such excess is made by Borrower to Lender. ARTICLE VII EVENTS OF DEFAULT; REMEDIES 7.1 The following shall constitute Events of Default hereunder: A. If Borrower shall fail to pay the Note in full on its maturity date. B. If Borrower shall fail to pay any other payment of principal or interest on the Loan when due, and such failure is not cured within ten (10) days after written notice from Lender. C. If at any time any representation or warranty made by Borrower herein or in any other Loan Document or by Guarantor in the Guaranty shall be or become materially incorrect, and such is not cured, if subject to cure, within thirty

(30) days after written notice from Lender. D. If Borrower shall breach or fail to comply with any other covenant, term or condition of, or any of its obligations under, this Agreement, the Mortgage or any other Loan Document, all of which are cumulative to this Agreement and to each other, and such breach is not cured, if subject to cure, within thirty (30) days after written notice from Lender. E. If the construction of the Project, except for strikes and other delays beyond the reasonable control of Borrower, be not commenced within fifteen (15) days after the date hereof and carried on with reasonable dispatch or if construction at any time be discontinued for a period of five (5) business days and such failure shall continue for a period of ten (10) business days after written notice from Lender. F. If the Project, in the exclusive judgment of Lender, will not be completed on or before the Construction Completion Date or fully furnished and ready for occupancy on or before the Occupancy Date, and such breach is not cured, if subject to cure, within thirty (30) days after written notice from Lender. G. If a lien for the performance of architectural or engineering services, or other work, or labor, or the supply of materials, be filed against the Property and remain unpaid or unbounded at the time of any request for advance, or for a period of thirty (30) days after the date of filing thereof. H. If Borrower shall agree to, or execute, any assignment of this Agreement or any advance hereunder without Lender's prior written consent. I. If either (A) Borrower or Guarantor (i) files a voluntary petition in bankruptcy, or (ii) is adjudicated as a bankrupt or insolvent, or (iii) files any petition or answer seeking or acquiescing in any reorganization, management, composition, readjustment, liquidation, dissolution or similar relief for itself under any law relating to bankruptcy, insolvency or other relief of or debtors, or (iv) seeks or consents to or acquiesces in the appointment of any trustee, receiver, master or liquidator of itself or of all or any substantial part of the Project or of any or all of the rents, revenues, issues, earnings, profits or income thereof, or (v) makes any general assignment for the benefit of creditors, or (vi) makes an admission in writing of its inability to pay its debts generally as they become due; or (B) a court of competent jurisdiction enters an order, judgment or decree approving a petition filed against Borrower or Guarantor seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal, state, or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, which order, judgment or decree remains unvacated and unstayed for an aggregate of thirty (30) days (whether or not consecutive) from the date of entry thereof; or (C) any trustee, receiver or liquidator of Borrower or of all or any substantial part of the Project or of any or all of the rents, revenues, issues, earnings, profits or income thereof, is appointed without the prior written consent of Lender, which appointment shall remain unvacated and unstayed for an aggregate of thirty (30) days-(.whether or not consecutive). J. If default be made in the repayment by Borrower to Lender, together with interest, of any amount Lender may pay as insurance premiums, taxes, assessments, forced contributions, local assessments and governmental charges of every description, or other charges as herein provided, and such default is not cured within ten (10) days after written notice from Lender. K. If the property described in the Mortgage, or any part or parcel thereof, be seized in the execution of a writ of seizure and sale, attachment, sequestration, fieri facias or any other legal process or an order for the sale of such property, or any part or parcel thereof, be issued in any judicial proceeding, and such writ, or other legal process or order, be not released, revoked, stayed or set aside within ten (10) days from issuance thereof, or if any sale be' made pursuant to any of the above. L. If Borrower should, without previously obtaining written consent of Lender or its assigns, make any repairs, additions or alterations. to the buildings or improvements located on the property described in the Mortgage not contemplated by the Plans and such default is not cured, if subject to cure, within thirty (30) days after written notice from Lender; provided, however, Borrower may without obtaining such written consent of Lender, make repairs, additions or alterations which increase the cost of construction of the Project, which do not materially change the design of the Project, and which, in the aggregate, do not exceed Twenty Five Thousand ($25,000.00) Dollars.

M. If Borrower should ever be required or permitted to deduct from the payments to be made on the Loan, or any part thereof, any amount whatsoever -as taxes, assessments or governmental charges in the nature thereof by reason of any present or future law of the United States or of any state, municipality or taxing authority thereof, and Borrower fails to pay to Lender, within ten (10) days after written notice from Lender, an amount sufficient so that all payments due Lender pursuant to the terms hereof or any Loan Document shall be absolutely net of such tax, assessment or governmental charge. N. If there should be passed after the date hereof any law of the State of South Carolina providing or changing in any way the laws now enforced with respect to the taxation of deeds of trust or debts secured thereby, or the manner of the collection of any such taxes,-so as to affect the interest of Lender adversely, and Borrower fails to pay to Lender within ten (10) days notice from Lender any costs to be borne by Lender attributable to the composition of, and/or change in, such law or laws. 0. If Guarantor suffers a material adverse change in financial position or there shall occur some other default under the Guaranty, and-such default is not cured, if subject to cure, within thirty (30) days after written notice from Lender. P. If Borrower suffers a material adverse change in financial position. Q. If Borrower or Guarantor defaults on any other obligation to Lender under any promissory note, guaranty or other agreement executed by Borrower or Guarantor in favor of Lender, and such default is not cured within the time (if any) provided in such note, guaranty or other agreement. R. If Borrower defaults under the Heller Loan or if for any reason it appears that Heller will not fund the Heller Loan sufficiently to pay off the Loan upon completion of the Project. 7.2. If an Event of Default shall occur, Lender may at its option without further notice: A. Enter onto the Property and perform any and all work and labor necessary to complete the Project substantially according to the Plans and take all appropriate steps to secure and protect the project. All sums expended by Lender for such purpose shall be deemed to have been paid to or on behalf of Borrower and shall be secured by the security devices set forth in the various Loan Documents and other agreements. Borrower consents to have Lender complete the Project in the name of Borrower, and hereby empowers Lender to use any funds of Borrower, including any funds which may remain unadvanced under the Loan, for the purpose of completing the Project in the manner called for by the Plans, and to employ the existing contractors, subcontractors, and agents, architects and inspectors so long as the same are not in default, and execute all applications and certificates on behalf of Borrower which may be required by any contract documents relating to the Project, and to do any and every act which Borrower could be required by Lender to do in its own behalf. Lender shall also have power to prosecute and defend all actions or proceedings in connection with the construction and security of the Project or in any other respect relating to the property described in the Mortgage, and to take such action and require such performance as it deems necessary under any bonds. Borrower hereby assigns to Lender all sums unadvanced under the Loan, conditioned upon the use of said sums in the completion of improvements upon said land and payment of all costs directly related to such completion and security thereof, such assignment to become effective only in case of Borrower's default. In the event of such default and Lender entering upon said Property for the purpose of completing said construction, all materials purchased by Borrower shall be used in the construction if appropriate, and if inappropriate, Lender shall be free to dispose of the balance of such materials as it deems fit, and no liability shall accrue in favor of Borrower against Lender as a result thereof except to credit any consideration received by Lender therefor as a payment as set forth above. In addition, Borrower agrees at the request of Lender to assign, transfer and set over to Lender, by appropriate instrument in writing, all of Borrower's right, title and interest in and to any construction contract, bond or other contract relating to the construction and operation of the Project; Provided, however, that Borrower shall assign any license, permit or authorization issued by the federal, state or local government or any agency thereof only to the extent permitted by law. B. Terminate any obligation to make any advances of the Loan and/or declare the entire outstanding principal balance of the Loan, together with all interest thereon, to be due and payable immediately, anything contained in this Agreement, the Note or any other Loan Document to the contrary notwithstanding. C. With or without accelerating the Loan, advance funds under the Note directly to third parties to cure any

default by Borrower, including without limitation payments to the General Contractor, payments for property taxes, insurance premiums, maintenance and repair, and management fees, payment of other expenses concerning the Project, and payment of Lender's attorney's fees and other fees and expenses. All of said advances shall be deemed made under the Note and shall be payable immediately with interest at the Default Rate (as such term is defined in the Note). 1 D. Enforce any and/or all of the Loan Documents, and, by way of illustration but not by way of limitation, cause all and singular the property described in the Mortgage and/or any of the other Loan Documents to be seized and sold under executory process without appraisement, appraisement being hereby expressly waived, as an entirety or in parcels, as Lender may determine, in accordance with law. 7.3 All powers and remedies given by this Article VII to Lender shall be cumulative and not exclusive of any other right or remedy or of any other powers and remedies available to Lender under the Loan Documents, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements of Borrower contained in this Agreement, and no delay or omission of Lender to exercise any right or power accruing upon any default occurring shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein. Every power and remedy given by this Article VII or by law to Lender may be exercised from time to time, and as often as may be deemed expedient, by Lender. No waiver of. any default hereunder shall extend to or affect any other or subsequent default or impair any rights or remedies consequent thereon. 7.4 Should Lender, at its sole option, elect to employ the services of any attorney at law to represent it in the enforcement of any obligation undertaken by Borrower in favor of Lender, or undertaken by any third person in favor of Borrower in connection herewith, or to participate in any legal proceedings in any way connected herewith, as plaintiff or intervenor, Borrower does hereby agree to pay to Lender the reasonable fees and expenses of said attorneys. 7.5 Borrower does hereby expressly waive in favor of Lender and its assigns, to the fullest extent allowed by law, any and all exemptions from seizure provided by any law, rule or regulation of the State of South Carolina, the United States, or any other state. 7.6 Except as otherwise expressly provided herein, Borrower does hereby expressly waive any notice by Lender of-any Event of Default or any notice or demand by Lender of any breach of any obligation undertaken by Borrower in favor of Lender. ARTICLE VIII MISCELLANEOUS 8.1 No waiver at any time of the provisions or conditions of this Loan Agreement or of any of the other Loan Documents shall be construed as a waiver of any of the other provisions or conditions hereof or thereof nor shall a waiver of any provision or condition be construed as a right to subsequent waiver of the same provision or condition. 8.2 Unenforceability for any reason of any provision of this Agreement, or of any of the Loan Documents or other agreements between Borrower and Lender, shall not limit or impair the operation or validity of any other provisions of this Agreement, any of the Loan Documents or any other such agreement. 8.3 In the event of any loss or damage to the Project resulting in a right accruing in favor of any party or the parties hereto ~f or any payment of insurance proceeds occasioned by such loss or damage, all such payments of insurance proceeds shall be made payable and paid to Lender only, and all policies of insurance shall be appropriately endorsed to require payment in such a manner. Regardless of whether such endorsements are issued or not, Borrower hereby names, designates and appoints Lender as its agent and attorney in ~f act to make claim for all such insurance proceeds, to execute any instrument reasonable or necessary thereto in the name of Borrower, to receive and endorse in the name of Borrower any check, draft or other such instrument issued in payment and collect the proceeds thereof , and grant release and discharge therefor unto the paying company. After an Event of Default occurs and continues uncured, said agency shall likewise extend to Lender to negotiate with the insurance company or companies in the event of any contest or dispute, to file any suit for collection of a disputed claim, intervene in any suit brought by Borrower for the collection of same, and to compromise without Borrower's approval any such disputed claims. Should Borrower receive any cash, draft,

check or other such instrument in payment of any insurance proceeds which should have been paid to Lender as set forth above, Borrower shall immediately, and without need for notice or demand, forward any such payment to Lender, endorsed by Borrower to Lender's order. Lender shall be authorized to endorse same in the name of Borrower as set forth above in the absence of such endorsement. The application of insurance proceeds and the effect of casualty on the Loan shall be as set forth in the Mortgage. 8.4 In the event that by, or pursuant to, proper authority there is taken or condemned the entire Property, or any part thereof, under power of eminent domain exercised by any actual or quasi governmental authority or public utility, Borrower hereby assigns to Lender any and all awards that may be given, made or due Borrower in any proceedings in connection therewith, and the amounts of such awards shall be applied by Lender to the reduction of any indebtedness owed to it by Borrower, and Borrower agrees to execute any and all such further instruments of assignment of any and all such condemnation awards as may be required by Lender to carry out the purposes of this Section 8.4. Borrower shall give ,written notice of such condemnation proceeding within ten (10) days of receipt of any service or process in connection therewith. In any condemnation proceedings against the Property, Lender hereby reserves, and Borrower hereby acknowledges, Lender's right to institute or intervene in any such condemnation proceedings to assert said interest. The application of condemnation proceeds and the effect of the condemnation on the Loan shall be as set forth in the Mortgage. 8.5 Any notice, demand, request or other instrument which may be or is required to be given under this Agreement shall be given to the parties at their addresses respectively set forth on page one (1) of this Agreement, by certified mail, - return receipt requested, and shall be deemed to be received upon the date of execution of the return receipt or the date upon which the postal authorities first attempted delivery of such notice and same is undelivered or refused. 8.6 The Loan is made and accepted, and all instruments related thereto are executed and delivered, at Columbia, 'South Carolina, and this Agreement and all the Loan Documents shall be governed by, and construed in accordance with, the laws of the State of South Carolina, regardless of whether South Carolina choice-of-law rules might otherwise apply the laws of another jurisdiction. 8.7 The Loan shall be made without cost whatsoever to Lender. All brokerage and real estate commissions shall be payable solely by Borrower, and all other costs, including but not limited to attorneys' fees of Lender and Borrower, or other interested party, other professional fees, intangible taxes and all expenses of all kinds incurred in connection with the Loan, shall be borne by Borrower, and Borrower agrees to indemnify Lender and save it harmless from the payment, defense and/or expense of any claim or demand for such commissions, fees, costs, taxes and expenses, -whether valid or not. 8.8 The parties hereto agree that time is of the essence to this Agreement. 8.9 Borrower hereby specifically grants unto Lender the right and privilege, at Lender's option, to transfer and assign to any third person all or any part of Lender's rights to receive funds or payments hereunder. 8.10 In the event that Borrower should, for any reason whatsoever, fail to provide, keep and maintain the insurance coverages and the policies described in Sections 5.1 and 5.3 hereinabove, in the manner indicated therein, then Lender, if it so elects, may itself have such insurance coverage and policies effected in such an amount and in such companies as it may deem proper and may pay the premiums therefor, and any premiums so paid shall be added to the principal sum due and owed by Borrower to Lender, and Borrower covenants and agrees that, any clause to the contrary contained herein notwithstanding, in the event of such payment by Lender, Borrower shall, within ten ~(10) days after payment and demand therefor by Lender, repay Lender the amount so paid as premiums, together with interest thereon at the rate provided for in the Note, calculated from date of such payment until said amount is repaid, but in no case shall Lender be required to purchase, maintain and/or keep any such policies or coverages. 8.11 Lender shall not be responsible for the solvency of any company issuing any policy of insurance in connection with this Agreement, whether or not approved by it, or for the collection,of any amount due under any such policy, and shall be responsible and accountable only for such money as may be actually received by it, and then only in accordance with the terms hereof. Nothing herein contained shall be construed as making Lender liable in any way for any loss, damage, or injury resulting from the non-insurance of any buildings, improvements

and/or personal property located on the Property. 8.12 In the event that Borrower should, for any reason, fail to pay and discharge properly any taxes, assessments, forced contributions, local assessments or governmental charges when due, or any other charges or expenses payable by Borrower, then Lender shall be authorized to pay the same with full subrogation to all rights of the taxing authority or other recipient by reason of such payment, and the amount so paid shall be added to the principal of the Loan and, any clause to the contrary herein notwithstanding, in the event of payment by Lender, Borrower covenants and agrees that within ten (10) days after payment and demand therefor by Lender, Borrower shall repay the amount so paid by Lender, together with interest thereon at the rate provided for in the Note, calculated from date of such payment until said amount is repaid. Nothing .herein shall be construed, however, as making the payment of said taxes, assessments, forced contributions, local assessments, governmental charges or other expenses obligatory upon Lender or its assigns, and none and neither of them shall be liable for any loss, damage or injury resulting from the nonpayment of such taxes, assessments, forced contributions, local assessments, governmental charges or other expenses. 8.13 It is expressly agreed that any and all terms of this Agreement, the Loan Documents and all other agreements made or executed by Borrower or others in favor of Lender, and all rights, powers, privileges, options and remedies conferred to Lender herein, shall inure to and be for the benefit of and may be exercised by Lender, its successors and assigns; and the word "Lender," unless the context otherwise requires, shall also mean and include the successor or successors and the assign or assigns of the said Lender. 8.14 All obligations contained in this Agreement, the Loan Documents and all other agreements to be observed, complied with or performed by Borrower shall be binding upon Borrower, and upon its successors and assigns, as well as upon any person, firm or corporation hereinafter acquiring title to the Property, or any part thereof, or any personal property located thereon, by, through or under Borrower, and the word "Borrower," unless the context clearly requires otherwise, shall also mean and include the successors and assigns of Borrower, and any other person, firm or corporation, acquiring title to any of the Property, or any part thereof, or personal property located thereon, by, through, or under Borrower. 8.15 WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER AND LENDER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY HEREBY AGREE, THAT: (A) NEITHER BORROWER NOR LENDER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF BORROWER OR LENDER, SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE ARISING FROM OR BASED UPON THIS AGREEMENT, THE NOTE, THE MORTGAGE OR ANY OF THE LOAN DOCUMENTS EVIDENCING, SECURING, OR RELATING TO THE LOAN, OR TO THE DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES THERETO; (B) NEITHER BORROWER NOR LENDER WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED; (C) THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS; (D) NEITHER BORROWER NOR LENDER HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES; AND (E) THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN. IN WITNESS WHEREOF, the parties hereto have executed this Construction/Term Loan Agreement as of the date first above written. THE NATIONAL BANK OF SOUTH CAROLINA Anna Marie D'Angelo Senior Vice President

PATTEN RESORTS, INC. Alan L. Murray Treasurer (CORPORATE SEAL)

EXHIBIT"A" LEGAL DESCRIPTION ALL AND SINGULAR, that certain piece, parcel or tract of land located in Little River Township, Horry County, South Carolina being shown and designated as PARCEL "A" on that certain map or plat entitled "SHORE CREST MOTEL PATTEN RESORTS, INC. A DELAWARE CORPORATION, OWNER" prepared by Powell Associates of NMB, Inc. dated August 14, 1995 and recorded in Plat Book 137 at Page 54, records of Horry County, South Carolina. Said property is also more particularly described by metes and bounds as follows: Commencing from a point marked by S.C. Coastal Council Control Mon. No. 5700 1987 N. 720,259.10' E. 2,688,786.55' then proceeding from said point South 54*02'40" West a distance of a 167.95' to a point marked by a wood fence post located at the southeastern edge of the right-of-way of South Ocean Boulevard, which point also marks the northern most corner of the within described PARCEL "All and which point marks the POINT OF BEGINNING; thence proceeding from said POINT OF BEGINNING South 32*45'40" East a distance of 150.04 feet to a one half inch rebar pin; thence turning and running South 57*14'29" West a distance of 239.94' to a one-half inch rebar pin; thence turning and running North 32*45'40" West a distance of 150.03' to a one-half inch rebar pin; thence turning and running North 57*14'20" East a distance of 239.94' to a point which point marks the POINT OF BEGINNING all as more particularly shown on the above-referenced Plat which is incorporated herein by this reference. ALL AND SINGULAR, that certain piece, parcel or tract of land located in Little River Township, Horry County, South Carolina being shown and designated as PARCEL ~"B" on that certain map or plat entitled "SHORE CREST MOTEL PATTEN RESORTS, INC. A DELAWARE CORPORATION,, OWNER" prepared by Powell Associates of NMB, Inc. dated August 14, 1995 and recorded in Plat Book 137 at Page 54, records of Horry County, South Carolina. Said property is also more particularly described by metes and bounds as follows: Commencing from a point which is marked by S.C. Coastal Council Control Mon. No. 5700 1987 N. 720,259.10' E. 2,688,786.55' and proceeding from said point South 81*00'16" West a distance of 150.39' to a one-half inch rebar pin located at the northwestern edge of the rightof-way of South Ocean Boulevard and the southeastern corner of Lot 10 Block B; thence turning and running South 57*14'20" West a distance of 60.14' to a one-half inch rebar pin located at the northwestern edge of the right-of-way of South Ocean Boulevard and the eastern corner of the within described PARCEL "B" , which iron marks the POINT OF BEGINNING; thence proceeding from said POINT OF BEGINNING South 57'141'20" West a distance 360.26' to a one-half inch rebar pin; thence turning and running North 32*45'40" West a distance of 130.00' to a one-half inch iron pipe; thence turning and running North 57*14'20" East a distance of 360.26' to a one-half inch iron pipe; thence turning and running South 32*45'40" East a distance of 130.00' to a one-half inch rebar pin which pin marks the POINT OF BEGINNING all of which is more particularly shown on the above-referenced Plat which is incorporated herein by this reference. AND ALL AND SINGULAR, that certain piece, parcel or tract of land located in Little River Township, Horry County, South Carolina being shown and designated as LOT 11 OF BLOCK "B" on that certain map or plat entitled "SHORE CREST MOTEL PATTEN RESORTS, INC. A DELAWARE CORPORATION, OWNER" prepared by Powell Associates of NMB, Inc. dated August 14, 1995 and recorded in Plat Book 137 at Page 54, records of Horry County, South Carolina. Said property is also more particularly described by metes and bounds as follows:

EXHIBIT"A" LEGAL DESCRIPTION ALL AND SINGULAR, that certain piece, parcel or tract of land located in Little River Township, Horry County, South Carolina being shown and designated as PARCEL "A" on that certain map or plat entitled "SHORE CREST MOTEL PATTEN RESORTS, INC. A DELAWARE CORPORATION, OWNER" prepared by Powell Associates of NMB, Inc. dated August 14, 1995 and recorded in Plat Book 137 at Page 54, records of Horry County, South Carolina. Said property is also more particularly described by metes and bounds as follows: Commencing from a point marked by S.C. Coastal Council Control Mon. No. 5700 1987 N. 720,259.10' E. 2,688,786.55' then proceeding from said point South 54*02'40" West a distance of a 167.95' to a point marked by a wood fence post located at the southeastern edge of the right-of-way of South Ocean Boulevard, which point also marks the northern most corner of the within described PARCEL "All and which point marks the POINT OF BEGINNING; thence proceeding from said POINT OF BEGINNING South 32*45'40" East a distance of 150.04 feet to a one half inch rebar pin; thence turning and running South 57*14'29" West a distance of 239.94' to a one-half inch rebar pin; thence turning and running North 32*45'40" West a distance of 150.03' to a one-half inch rebar pin; thence turning and running North 57*14'20" East a distance of 239.94' to a point which point marks the POINT OF BEGINNING all as more particularly shown on the above-referenced Plat which is incorporated herein by this reference. ALL AND SINGULAR, that certain piece, parcel or tract of land located in Little River Township, Horry County, South Carolina being shown and designated as PARCEL ~"B" on that certain map or plat entitled "SHORE CREST MOTEL PATTEN RESORTS, INC. A DELAWARE CORPORATION,, OWNER" prepared by Powell Associates of NMB, Inc. dated August 14, 1995 and recorded in Plat Book 137 at Page 54, records of Horry County, South Carolina. Said property is also more particularly described by metes and bounds as follows: Commencing from a point which is marked by S.C. Coastal Council Control Mon. No. 5700 1987 N. 720,259.10' E. 2,688,786.55' and proceeding from said point South 81*00'16" West a distance of 150.39' to a one-half inch rebar pin located at the northwestern edge of the rightof-way of South Ocean Boulevard and the southeastern corner of Lot 10 Block B; thence turning and running South 57*14'20" West a distance of 60.14' to a one-half inch rebar pin located at the northwestern edge of the right-of-way of South Ocean Boulevard and the eastern corner of the within described PARCEL "B" , which iron marks the POINT OF BEGINNING; thence proceeding from said POINT OF BEGINNING South 57'141'20" West a distance 360.26' to a one-half inch rebar pin; thence turning and running North 32*45'40" West a distance of 130.00' to a one-half inch iron pipe; thence turning and running North 57*14'20" East a distance of 360.26' to a one-half inch iron pipe; thence turning and running South 32*45'40" East a distance of 130.00' to a one-half inch rebar pin which pin marks the POINT OF BEGINNING all of which is more particularly shown on the above-referenced Plat which is incorporated herein by this reference. AND ALL AND SINGULAR, that certain piece, parcel or tract of land located in Little River Township, Horry County, South Carolina being shown and designated as LOT 11 OF BLOCK "B" on that certain map or plat entitled "SHORE CREST MOTEL PATTEN RESORTS, INC. A DELAWARE CORPORATION, OWNER" prepared by Powell Associates of NMB, Inc. dated August 14, 1995 and recorded in Plat Book 137 at Page 54, records of Horry County, South Carolina. Said property is also more particularly described by metes and bounds as follows: Commencing from a point which is marked by S.C. Coastal Council Control Mon. No. 5700 1987 N. 720,259.10' E. 2,688,786.55' and proceeding from said point South 81*00'16" West a distance of 150.39' to a one-half inch rebar pin located at the Northwestern edge of the right-of-way of South ocean Boulevard and the Southern corner of the within described LOT 11 BLOCK ~"B", which pin marks the POINT OF BEGINNING; thence proceeding from said POINT OF BEGIMING North 32*45'40" West a distance of 130.00' to a one-half inch rebar pin; thence turning and running North 57*14'20" East a distance of 60.00' to a one-half inch rebar pin; turning and running South 32*45'40" East a distance of 130.00' to a point marked by a fence post; thence turning and running South 57*14'20" West a distance of 60.00' to a one-half rebar pin which

pin marks the POINT OF BEGINNING all of which is more particularly shown on the above-referenced Plat which is incorporated herein by this reference. This being the identical property conveyed unto the Mortgagor by deed of JHJ Enterprises, Inc., dated September 25, 1995 and recorded September 25, 1995 in Deed Book 1822 at Page 1410, records of Horry County, South Carolina. TMS No. 156-06-35-004 and TMS No. 156-06-34-002

LOAN AND SECURITY AGREEMENT THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated February 28, 1996, is made by and between Patten Resorts, Inc., a Delaware corporation ("Borrower"), whose address is 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486, and Heller Financial, Inc., a Delaware corporation ("Lender"), whose address is 500 West Monroe Street, 15th Floor, Chicago, Illinois 60661. RECITALS A. Borrower desires Lender to extend a secured credit facility to Borrower in accordance with the terms of this Agreement. B. Borrower's obligations under the Loan Documents will be secured by, a first mortgage on the Resort and a security interest in certain Contracts Receivable. C. Patten Corporation a Massachusetts corporation ("Guarantor") shall guaranty all of the obligations of Borrower to Lender under the Loan Documents. D. All capitalized terms used herein shall have the meanings ascribed thereto in the appendix attached hereto and made a part hereof by this reference. NOW, THEREFORE, in consideration of the foregoing premises and the agreements, provisions and covenants herein contained, Borrower and Lender agree as follows: SECTION 1. THE LOAN 1.1 Loan. The Loan shall consist of an inventory component and a contract receivable component as described below: (a) Inventory Component. An inventory loan in the original principal amount equal to the lesser of (i) 80% of the cost to construct the Resort or (ii) $13,500,000, but in no event more than the outstanding principal balance of the construction loan at the Funding Date. The inventory component of the Loan shall be secured by a Mortgage on the Resort delivered by Borrower to Lender on or before the Closing Date which Mortgage shall be recorded by Lender as of the Closing Date. (b) Contract Receivable Component. Upon the terms and subject to the conditions set forth in this Agreement, Lender shall advance to Borrower and Borrower may borrow, repay and reborrow, principal under the contract receivable component of the Loan an amount not to exceed Availability. 1

1.2 Term. (a) Inventory Component. The entire outstanding principal amount of the inventory component of the Loan together with all interest and other Indebtedness of Borrower shall be paid in full on the Inventory Note Maturity Date. (b) Contract Receivable Component. The entire outstanding principal balance of the contract receivable component of the Loan, together with all Borrower's Indebtedness, shall be paid in full by not later than the Receivable Note Maturity Date. 1.3 Interest Rate. The outstanding principal balance of the Loan together with all other Indebtedness shall bear interest at the Interest Rate; provided, however, that after the occurrence of an Event of Default the Loan will bear interest at the Default Rate. 1.4 Payments. (a) Inventory Component. (i) The Borrower agrees to pay or cause to be paid to the Lender on a monthly basis in arrears all interest due under the inventory component of the Loan at the Interest Rate. (ii) On the Funding Date, Borrower shall pay or cause to be paid to Lender an amount equal to $2,905 for each Interval sold during the Pre-Sale Credit Period (the Interval Sale Fee") accompanied by a listing of all Intervals sold during the Pre-Sale Credit Period as well as the sale price of each Interval. The Interval Sale Fee shall be paid until the inventory component of the Loan, including all principal, interest and other amounts due with respect thereto, has been paid in full. (iii) During the Revolving Period and thereafter, within twenty-five (25) days after the end of each calendar month, Borrower

LOAN AND SECURITY AGREEMENT THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated February 28, 1996, is made by and between Patten Resorts, Inc., a Delaware corporation ("Borrower"), whose address is 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486, and Heller Financial, Inc., a Delaware corporation ("Lender"), whose address is 500 West Monroe Street, 15th Floor, Chicago, Illinois 60661. RECITALS A. Borrower desires Lender to extend a secured credit facility to Borrower in accordance with the terms of this Agreement. B. Borrower's obligations under the Loan Documents will be secured by, a first mortgage on the Resort and a security interest in certain Contracts Receivable. C. Patten Corporation a Massachusetts corporation ("Guarantor") shall guaranty all of the obligations of Borrower to Lender under the Loan Documents. D. All capitalized terms used herein shall have the meanings ascribed thereto in the appendix attached hereto and made a part hereof by this reference. NOW, THEREFORE, in consideration of the foregoing premises and the agreements, provisions and covenants herein contained, Borrower and Lender agree as follows: SECTION 1. THE LOAN 1.1 Loan. The Loan shall consist of an inventory component and a contract receivable component as described below: (a) Inventory Component. An inventory loan in the original principal amount equal to the lesser of (i) 80% of the cost to construct the Resort or (ii) $13,500,000, but in no event more than the outstanding principal balance of the construction loan at the Funding Date. The inventory component of the Loan shall be secured by a Mortgage on the Resort delivered by Borrower to Lender on or before the Closing Date which Mortgage shall be recorded by Lender as of the Closing Date. (b) Contract Receivable Component. Upon the terms and subject to the conditions set forth in this Agreement, Lender shall advance to Borrower and Borrower may borrow, repay and reborrow, principal under the contract receivable component of the Loan an amount not to exceed Availability. 1

1.2 Term. (a) Inventory Component. The entire outstanding principal amount of the inventory component of the Loan together with all interest and other Indebtedness of Borrower shall be paid in full on the Inventory Note Maturity Date. (b) Contract Receivable Component. The entire outstanding principal balance of the contract receivable component of the Loan, together with all Borrower's Indebtedness, shall be paid in full by not later than the Receivable Note Maturity Date. 1.3 Interest Rate. The outstanding principal balance of the Loan together with all other Indebtedness shall bear interest at the Interest Rate; provided, however, that after the occurrence of an Event of Default the Loan will bear interest at the Default Rate. 1.4 Payments. (a) Inventory Component. (i) The Borrower agrees to pay or cause to be paid to the Lender on a monthly basis in arrears all interest due under the inventory component of the Loan at the Interest Rate. (ii) On the Funding Date, Borrower shall pay or cause to be paid to Lender an amount equal to $2,905 for each Interval sold during the Pre-Sale Credit Period (the Interval Sale Fee") accompanied by a listing of all Intervals sold during the Pre-Sale Credit Period as well as the sale price of each Interval. The Interval Sale Fee shall be paid until the inventory component of the Loan, including all principal, interest and other amounts due with respect thereto, has been paid in full. (iii) During the Revolving Period and thereafter, within twenty-five (25) days after the end of each calendar month, Borrower shall pay or cause to be paid to Lender the Interval Sale Fee for each Interval sold during such calendar month. Lender agrees at Borrower's request to pay the aggregate Interval Sale Fee for the preceding calendar month from the proceeds of the first Advance payable to Borrower in the next succeeding calendar month. The payment of such aggregate Interval Sale Fee shall be accompanied by a list of Intervals sold in the calendar month as well as the sale price of each Interval. The Interval Sale Fee shall be paid until the inventory component of the Loan, including all principal, interest, and other amounts due with respect thereto, has been paid in full. Notwithstanding the Interval Sale Fee payable per Interval sale, Borrower must satisfy the minimum Interval Sale Fee requirements as set forth in Schedule 1 .4(a)(ii) hereto. The Interval Sale Fee proceeds shall be applied to reduce the outstanding principal balance of the inventory component of the Loan. Upon receipt of the Interval Sale Fee, Lender shall retain the lien of the Mortgage on the subject Interval. In the event of the cash sale of an Interval or when the Financed Pre-Sale Contract

1.2 Term. (a) Inventory Component. The entire outstanding principal amount of the inventory component of the Loan together with all interest and other Indebtedness of Borrower shall be paid in full on the Inventory Note Maturity Date. (b) Contract Receivable Component. The entire outstanding principal balance of the contract receivable component of the Loan, together with all Borrower's Indebtedness, shall be paid in full by not later than the Receivable Note Maturity Date. 1.3 Interest Rate. The outstanding principal balance of the Loan together with all other Indebtedness shall bear interest at the Interest Rate; provided, however, that after the occurrence of an Event of Default the Loan will bear interest at the Default Rate. 1.4 Payments. (a) Inventory Component. (i) The Borrower agrees to pay or cause to be paid to the Lender on a monthly basis in arrears all interest due under the inventory component of the Loan at the Interest Rate. (ii) On the Funding Date, Borrower shall pay or cause to be paid to Lender an amount equal to $2,905 for each Interval sold during the Pre-Sale Credit Period (the Interval Sale Fee") accompanied by a listing of all Intervals sold during the Pre-Sale Credit Period as well as the sale price of each Interval. The Interval Sale Fee shall be paid until the inventory component of the Loan, including all principal, interest and other amounts due with respect thereto, has been paid in full. (iii) During the Revolving Period and thereafter, within twenty-five (25) days after the end of each calendar month, Borrower shall pay or cause to be paid to Lender the Interval Sale Fee for each Interval sold during such calendar month. Lender agrees at Borrower's request to pay the aggregate Interval Sale Fee for the preceding calendar month from the proceeds of the first Advance payable to Borrower in the next succeeding calendar month. The payment of such aggregate Interval Sale Fee shall be accompanied by a list of Intervals sold in the calendar month as well as the sale price of each Interval. The Interval Sale Fee shall be paid until the inventory component of the Loan, including all principal, interest, and other amounts due with respect thereto, has been paid in full. Notwithstanding the Interval Sale Fee payable per Interval sale, Borrower must satisfy the minimum Interval Sale Fee requirements as set forth in Schedule 1 .4(a)(ii) hereto. The Interval Sale Fee proceeds shall be applied to reduce the outstanding principal balance of the inventory component of the Loan. Upon receipt of the Interval Sale Fee, Lender shall retain the lien of the Mortgage on the subject Interval. In the event of the cash sale of an Interval or when the Financed Pre-Sale Contract 2

Receivable or the Financed Contract Receivable related to the subject Interval is paid in full, Borrower shall promptly request in writing and Lender shall authorize the release of the subject Interval from the lien of the Mortgage. At such time Lender shall execute and Borrower shall cause to be recorded a partial release of such Mortgage with respect to the subject Interval. All partial releases from the lien of the Mortgage executed by Lender shall be in form and substance and upon terms and conditions satisfactory to Lender. (b) Contract Receivable Component. (i) Monthly Payments. All funds collected by the Lockbox Agent from the Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable shall be paid to Lender at least weekly pursuant to the Lockbox Agreement, and applied in the following order: first to the payment of costs or expenses incurred by Lender in collecting any amounts due in connection with the Loan; second, to the payment of accrued and unpaid interest; and thereafter to the reduction of the principal balance of the Loan. If the funds received by Lender from the Lockbox Agent with respect to any month are insufficient to pay interest in full, Borrower shall pay the difference to Lender within five (5) Business Days of written notice from Lender. Payments received by Borrower directly from any Purchaser shall be delivered to the Lockbox Agent within two (2) Business Days. 1.5 Prepayments (a) Voluntary Prepayments. The inventory component of the Loan may be prepaid at any time without any Prepayment Premium. Prepayments of the contract receivable component of the Loan (i) shall not be permitted during the Pre-Sale Credit Period or the Revolving Period, and (ii) may be made in whole, but not in part, upon five (5) days prior written notice to Lender at any time after the end of the Revolving Period upon payment of the applicable Prepayment Premium (whether such prepayment results from voluntary payments by Borrower, acceleration, or otherwise); provided, however, that payments or prepayments of Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable made by Purchasers shall not violate this Section 1.5(a), and no Prepayment Premium shall be payable as a result of any such payment. Notwithstanding the above, Borrower shall be permitted to prepay the contract receivable component of the Loan without a Prepayment Premium in the event the Borrower sells or pledges the Financed Pre-Sale Contracts Receivable and/or the Financed Contracts Receivable as part of an asset-backed securitization thereof. In such event, the full amount of the Loan outstanding at that time including the contract receivable component and inventory component thereof must be

Receivable or the Financed Contract Receivable related to the subject Interval is paid in full, Borrower shall promptly request in writing and Lender shall authorize the release of the subject Interval from the lien of the Mortgage. At such time Lender shall execute and Borrower shall cause to be recorded a partial release of such Mortgage with respect to the subject Interval. All partial releases from the lien of the Mortgage executed by Lender shall be in form and substance and upon terms and conditions satisfactory to Lender. (b) Contract Receivable Component. (i) Monthly Payments. All funds collected by the Lockbox Agent from the Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable shall be paid to Lender at least weekly pursuant to the Lockbox Agreement, and applied in the following order: first to the payment of costs or expenses incurred by Lender in collecting any amounts due in connection with the Loan; second, to the payment of accrued and unpaid interest; and thereafter to the reduction of the principal balance of the Loan. If the funds received by Lender from the Lockbox Agent with respect to any month are insufficient to pay interest in full, Borrower shall pay the difference to Lender within five (5) Business Days of written notice from Lender. Payments received by Borrower directly from any Purchaser shall be delivered to the Lockbox Agent within two (2) Business Days. 1.5 Prepayments (a) Voluntary Prepayments. The inventory component of the Loan may be prepaid at any time without any Prepayment Premium. Prepayments of the contract receivable component of the Loan (i) shall not be permitted during the Pre-Sale Credit Period or the Revolving Period, and (ii) may be made in whole, but not in part, upon five (5) days prior written notice to Lender at any time after the end of the Revolving Period upon payment of the applicable Prepayment Premium (whether such prepayment results from voluntary payments by Borrower, acceleration, or otherwise); provided, however, that payments or prepayments of Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable made by Purchasers shall not violate this Section 1.5(a), and no Prepayment Premium shall be payable as a result of any such payment. Notwithstanding the above, Borrower shall be permitted to prepay the contract receivable component of the Loan without a Prepayment Premium in the event the Borrower sells or pledges the Financed Pre-Sale Contracts Receivable and/or the Financed Contracts Receivable as part of an asset-backed securitization thereof. In such event, the full amount of the Loan outstanding at that time including the contract receivable component and inventory component thereof must be paid off in full by Borrower. (b) Mandatory Prepayments (i) Excess Outstandings. If at any time the outstanding principal balance of the Loan exceeds the Maximum Exposure, Borrower shall, within five (5)

Business Days after notice, either (A) prepay the Loan in an amount necessary to reduce the principal balance of the Loan, or (B) deliver to Lender (i) during the Pre-Sale Credit Period such additional or replacement Eligible Pre-Sale Contracts Receivable or (ii) during or after the Revolving Period such additional or replacement Eligible Contracts Receivable, so that pursuant to (A) or (B) hereunder the remaining outstanding principal balance of the Loan is equal to or less than the Maximum Exposure. (ii) Ineligible Financed Contract Receivable. If at any time after the expiration of the Revolving Period, a Financed Contract Receivable ceases to be an Eligible Contract Receivable, Borrower shall, within five (5) Business Days after notice, either (A) prepay the Loan in an amount equal to the balance due under such Financed Contract Receivable, or (B) deliver to Lender one (1) or more Eligible Contracts Receivable having an outstanding aggregate principal balance equal to, or no more than $1,000 in excess of, the outstanding principal balance of such ineligible Financed Contract Receivable. Thereafter, Lender shall return such ineligible Financed Contract Receivable to Borrower and, within five (5) days of Lender's receipt from Borrower of a completed Assignment of Contract relating to such Contract Receivable, in forms acceptable to Lender, Lender shall execute such instruments and return them to Borrower. (iii) Deficit Amount. On the Funding Date, if the amount of the aggregate Interval Sale Fees payable by Borrower to Lender for Intervals sold during the Pre-Sale Credit Period is less than the amount of the Excess Availability payable to Borrower as a result of the increase in Availability which occurs at the time the Revolving Period commences ("Deficit Amount"), Borrower shall concurrently therewith, either (A) prepay the Loan in an amount equal to the Deficit Amount or (B) deliver to Lender one (1) or more Eligible Contracts Receivable, so that pursuant to (A) or (B) hereunder, the Deficit Amount is eliminated. (iv) No Prepayment Premium. No Prepayment Premium shall be due in connection with any mandatory prepayment made in accordance with Sections 1.5(b)(i), (ii) or (iii) above, in connection with the inventory component of the Loan generally or in connection with the payment of any Interval Sales Fee described in Section 1.4(a)(ii) above. 1.6 Commitment Fee. The entire Commitment Fee shall be deemed to have been fully earned by Lender as of the date hereof, and Borrower shall pay the unpaid portion of the Commitment Fee to

Business Days after notice, either (A) prepay the Loan in an amount necessary to reduce the principal balance of the Loan, or (B) deliver to Lender (i) during the Pre-Sale Credit Period such additional or replacement Eligible Pre-Sale Contracts Receivable or (ii) during or after the Revolving Period such additional or replacement Eligible Contracts Receivable, so that pursuant to (A) or (B) hereunder the remaining outstanding principal balance of the Loan is equal to or less than the Maximum Exposure. (ii) Ineligible Financed Contract Receivable. If at any time after the expiration of the Revolving Period, a Financed Contract Receivable ceases to be an Eligible Contract Receivable, Borrower shall, within five (5) Business Days after notice, either (A) prepay the Loan in an amount equal to the balance due under such Financed Contract Receivable, or (B) deliver to Lender one (1) or more Eligible Contracts Receivable having an outstanding aggregate principal balance equal to, or no more than $1,000 in excess of, the outstanding principal balance of such ineligible Financed Contract Receivable. Thereafter, Lender shall return such ineligible Financed Contract Receivable to Borrower and, within five (5) days of Lender's receipt from Borrower of a completed Assignment of Contract relating to such Contract Receivable, in forms acceptable to Lender, Lender shall execute such instruments and return them to Borrower. (iii) Deficit Amount. On the Funding Date, if the amount of the aggregate Interval Sale Fees payable by Borrower to Lender for Intervals sold during the Pre-Sale Credit Period is less than the amount of the Excess Availability payable to Borrower as a result of the increase in Availability which occurs at the time the Revolving Period commences ("Deficit Amount"), Borrower shall concurrently therewith, either (A) prepay the Loan in an amount equal to the Deficit Amount or (B) deliver to Lender one (1) or more Eligible Contracts Receivable, so that pursuant to (A) or (B) hereunder, the Deficit Amount is eliminated. (iv) No Prepayment Premium. No Prepayment Premium shall be due in connection with any mandatory prepayment made in accordance with Sections 1.5(b)(i), (ii) or (iii) above, in connection with the inventory component of the Loan generally or in connection with the payment of any Interval Sales Fee described in Section 1.4(a)(ii) above. 1.6 Commitment Fee. The entire Commitment Fee shall be deemed to have been fully earned by Lender as of the date hereof, and Borrower shall pay the unpaid portion of the Commitment Fee to Lender by the earlier to occur of the Closing Date or February 29, 1996.

1.7 Funding Requirements. (a) Inventory component. (i) The Funding Date shall occur no later than twelve (12) months from the Closing Date. Lender shall not be obligated to fund the inventory component of the Loan until all of the following occur: a. A final certificate of occupancy for the entire Resort has been issued by the appropriate governmental authorities and all inspections, licenses and certificates required to be made or issued with respect to any buildings, improvements or amenities at the Resort and with respect to the use and occupancy thereof or utilities necessary to service have been made or issued by the appropriate authorities and the use or occupancy of all such buildings, improvements and amenities for their respective intended purposes are lawful under all applicable statutes, ordinances, rules and regulations. b. The Resort has been completed by Borrower in accordance with the plans and specifications approved by Lender, Lender's consultant, the Resort architect and general contractor and all Units are fully furnished. c. The completion of the Resort has been certified to in writing by Lender's consultant who shall initially be the same consultant as the construction lender has engaged. The consultant shall verify the status of completion on a monthly basis during the construction period in connection with draw requests under the Construction Loan. The consultant shall provide the same reports to Lender as it provides to the construction lender. d. A Timeshare Registration has been approved by the appropriate South Carolina governmental authorities authorizing the sale of all Intervals at the Resort and continues to remain in effect during the term of the Loan. e. The Declaration has been recorded, as approved by Lender, in compliance with the Timeshare Act and Interval sales at the Resort have commenced. f. All Loan Documents required by Lender in the Closing Checklist and herein have been fully executed and all supporting documents set forth in the Closing Checklist, including without limitation an as-built survey certified to Lender showing the as-built improvements located entirely within the real property of the Resort and an ALTA title insurance policy, have been provided to Lender and are satisfactory to Lender in its reasonable discretion. The Closing Checklist is attached hereto as Schedule 1.7(a)(i)f. 5

9. Recordation of a notice of completion which shall cause the expiration upon a date certain of any statutory

1.7 Funding Requirements. (a) Inventory component. (i) The Funding Date shall occur no later than twelve (12) months from the Closing Date. Lender shall not be obligated to fund the inventory component of the Loan until all of the following occur: a. A final certificate of occupancy for the entire Resort has been issued by the appropriate governmental authorities and all inspections, licenses and certificates required to be made or issued with respect to any buildings, improvements or amenities at the Resort and with respect to the use and occupancy thereof or utilities necessary to service have been made or issued by the appropriate authorities and the use or occupancy of all such buildings, improvements and amenities for their respective intended purposes are lawful under all applicable statutes, ordinances, rules and regulations. b. The Resort has been completed by Borrower in accordance with the plans and specifications approved by Lender, Lender's consultant, the Resort architect and general contractor and all Units are fully furnished. c. The completion of the Resort has been certified to in writing by Lender's consultant who shall initially be the same consultant as the construction lender has engaged. The consultant shall verify the status of completion on a monthly basis during the construction period in connection with draw requests under the Construction Loan. The consultant shall provide the same reports to Lender as it provides to the construction lender. d. A Timeshare Registration has been approved by the appropriate South Carolina governmental authorities authorizing the sale of all Intervals at the Resort and continues to remain in effect during the term of the Loan. e. The Declaration has been recorded, as approved by Lender, in compliance with the Timeshare Act and Interval sales at the Resort have commenced. f. All Loan Documents required by Lender in the Closing Checklist and herein have been fully executed and all supporting documents set forth in the Closing Checklist, including without limitation an as-built survey certified to Lender showing the as-built improvements located entirely within the real property of the Resort and an ALTA title insurance policy, have been provided to Lender and are satisfactory to Lender in its reasonable discretion. The Closing Checklist is attached hereto as Schedule 1.7(a)(i)f. 5

9. Recordation of a notice of completion which shall cause the expiration upon a date certain of any statutory period within which mechanics' and similar liens may be filed. i. Receipt by Lender of all required documents and information needed by Construction Lender under the Construction Loan Documents to make the final advance of the Construction Loan. Final Lien-Waivers shall have been delivered to Lender. (ii) In the event all of these conditions are not satisfied in full by twelve (12) months from the Closing Date, Borrower shall have the option of extending the Funding Date for an additional four (4) month period by paying Lender an extension fee in the amount of $67,500 and executing extension documents reasonably required by Lender. (b) Contract Receivable Component. During the Pre-Sale Credit Period and the Revolving Period, Lender shall make Advances to Borrower not in excess of Availability provided that Borrower satisfies all conditions set forth in Section 3 hereof. Advances shall be (a) in minimum amounts of $100,000 each, and (b) made no more frequently than three (3) times each month nor more than one (1) time each week. Except in connection with a prepayment mandated under Section 1.5(b)(i) above, any amounts repaid during the Revolving Period may be reborrowed during the Revolving Period. (c) Excess Availability. During the Revolving Period, Lender shall make Advances of Excess Availability to Borrower not more often than once per month and within fifteen (15) days of Borrower's delivery to Lender of written request therefor accompanied by Monthly Reports evidencing such Excess Availability to Lender's satisfaction. SECTION 2. COLLATERAL 2.1 Grant of Security Interest. To secure the payment and performance of the Indebtedness, Borrower does hereby unconditionally and irrevocably assign, pledge and grant to Lender a first priority continuing security interest and lien in and to all right, title and interest of Borrower in the following property of Borrower, whether now owned or existing or hereafter acquired regardless of where located (collectively, the "Collateral"); provided, however, that the Collateral-lnventory Component set forth in Section 2.1(a) below consists of a second lien subordinate to the Construction Loan from the Closing Date until the Funding Date, after which date such Collateral-lnventory Component shall be a first priority lien and security interest as set forth above; the CollateralContract Receivable Component consists of a first priority lien and security interest in all items set forth in Section 2.1 (b) below as of the Closing Date.

9. Recordation of a notice of completion which shall cause the expiration upon a date certain of any statutory period within which mechanics' and similar liens may be filed. i. Receipt by Lender of all required documents and information needed by Construction Lender under the Construction Loan Documents to make the final advance of the Construction Loan. Final Lien-Waivers shall have been delivered to Lender. (ii) In the event all of these conditions are not satisfied in full by twelve (12) months from the Closing Date, Borrower shall have the option of extending the Funding Date for an additional four (4) month period by paying Lender an extension fee in the amount of $67,500 and executing extension documents reasonably required by Lender. (b) Contract Receivable Component. During the Pre-Sale Credit Period and the Revolving Period, Lender shall make Advances to Borrower not in excess of Availability provided that Borrower satisfies all conditions set forth in Section 3 hereof. Advances shall be (a) in minimum amounts of $100,000 each, and (b) made no more frequently than three (3) times each month nor more than one (1) time each week. Except in connection with a prepayment mandated under Section 1.5(b)(i) above, any amounts repaid during the Revolving Period may be reborrowed during the Revolving Period. (c) Excess Availability. During the Revolving Period, Lender shall make Advances of Excess Availability to Borrower not more often than once per month and within fifteen (15) days of Borrower's delivery to Lender of written request therefor accompanied by Monthly Reports evidencing such Excess Availability to Lender's satisfaction. SECTION 2. COLLATERAL 2.1 Grant of Security Interest. To secure the payment and performance of the Indebtedness, Borrower does hereby unconditionally and irrevocably assign, pledge and grant to Lender a first priority continuing security interest and lien in and to all right, title and interest of Borrower in the following property of Borrower, whether now owned or existing or hereafter acquired regardless of where located (collectively, the "Collateral"); provided, however, that the Collateral-lnventory Component set forth in Section 2.1(a) below consists of a second lien subordinate to the Construction Loan from the Closing Date until the Funding Date, after which date such Collateral-lnventory Component shall be a first priority lien and security interest as set forth above; the CollateralContract Receivable Component consists of a first priority lien and security interest in all items set forth in Section 2.1 (b) below as of the Closing Date. 6

(a) Collateral - Inventory Component. (i) (ii) A lien in and to all equipment, furnishings inventory, supplies, accounts, chattel paper and general intangibles at any time located at, arising out of the use of, and/or used in connection with the operation of the Resort; A Mortgage on the Resort. (iii) An absolute and unconditional assignment of any and all leases, subleases, licenses, concessions, entry fees, or other agreements which grant an interest in and to, or the right to use the unsold Intervals, or any portion of the Resort (collectively, the "Tenant Leases"); (iv) An absolute and unconditional assignment of all of the rents, revenues, income, proceeds, royalties, profits and other benefits payable for using, leasing, licensing, possessing, operating from or in, or otherwise enjoying the unsold Intervals or any portion of the Resort pursuant to the Tenant Leases, including, without limitation, damages received upon the occurrence of a default under any of the Tenant Leases and all proceeds payable under any policy of insurance which covers the unsold Intervals or any portion of the Resort; (v) An absolute and unconditional assignment of all other agreements to which Borrower is or becomes a party or holds any interest therein and which in any way relate to the use, occupancy, maintenance or enjoyment of the Resort, including, but not limited to, payment and performance bonds for completion of the Resort, utility contracts, maintenance agreements, management agreements, equipment leases, service or operating contracts, licenses and permits necessary or desirable for the operation of the Resort and any agreement guaranteeing the performance of the obligations contained in any of the foregoing agreements; (vi) An assignment of the construction contract between Borrower and the general contractor for the Resort, the plans and specifications for the Resort previously delivered to Lender, the contract between Borrower and the architect for the Resort, and other developer's rights, such assignments to be in form and content satisfactory to Lender; and (vi) The Collateral for the receivable component of the Loan as set forth in Section 2.1(b)(i) - (ix) of the Agreement. (b) Collateral - Contract Receivable Component. (i) The Financed Pre-Sale Contract Receivable (Lender's collateral during the Pre-Sale Credit Period only);

(a) Collateral - Inventory Component. (i) (ii) A lien in and to all equipment, furnishings inventory, supplies, accounts, chattel paper and general intangibles at any time located at, arising out of the use of, and/or used in connection with the operation of the Resort; A Mortgage on the Resort. (iii) An absolute and unconditional assignment of any and all leases, subleases, licenses, concessions, entry fees, or other agreements which grant an interest in and to, or the right to use the unsold Intervals, or any portion of the Resort (collectively, the "Tenant Leases"); (iv) An absolute and unconditional assignment of all of the rents, revenues, income, proceeds, royalties, profits and other benefits payable for using, leasing, licensing, possessing, operating from or in, or otherwise enjoying the unsold Intervals or any portion of the Resort pursuant to the Tenant Leases, including, without limitation, damages received upon the occurrence of a default under any of the Tenant Leases and all proceeds payable under any policy of insurance which covers the unsold Intervals or any portion of the Resort; (v) An absolute and unconditional assignment of all other agreements to which Borrower is or becomes a party or holds any interest therein and which in any way relate to the use, occupancy, maintenance or enjoyment of the Resort, including, but not limited to, payment and performance bonds for completion of the Resort, utility contracts, maintenance agreements, management agreements, equipment leases, service or operating contracts, licenses and permits necessary or desirable for the operation of the Resort and any agreement guaranteeing the performance of the obligations contained in any of the foregoing agreements; (vi) An assignment of the construction contract between Borrower and the general contractor for the Resort, the plans and specifications for the Resort previously delivered to Lender, the contract between Borrower and the architect for the Resort, and other developer's rights, such assignments to be in form and content satisfactory to Lender; and (vi) The Collateral for the receivable component of the Loan as set forth in Section 2.1(b)(i) - (ix) of the Agreement. (b) Collateral - Contract Receivable Component. (i) The Financed Pre-Sale Contract Receivable (Lender's collateral during the Pre-Sale Credit Period only); 7

SECTION 3. CONDITIONS PRECEDENT TO ADVANCES The obligation of Lender to make Advances is subject to satisfaction of all of-the conditions set forth below. 3.1 Closing Deliveries. Lender shall have received, in form and substance satisfactory to Lender, all documents, instruments and information identified on the Closing Checklist heretofore delivered by Lender to Borrower. 3.2 Deliveries Prior to Each Advance. Prior to each Advance, Lender shall have received all documents, instruments and information identified on Schedule 3.2. Requests for Advance shall be made at least five (5) Business Days prior to the requested date of disbursement and shall be in the form of Exhibit C hereto. 3.3 Security Interests. Lender shall have received satisfactory evidence that all security interests and liens granted to Lender pursuant to this Agreement or the other Loan Documents have been duly perfected and constitute liens on the Collateral with the priority as set forth in Section 2.1 above. 3.4 Representations and Warranties. The representations and warranties contained herein and in the Loan Documents shall be true, correct and complete in all material respects on and as of the date of funding of the Advance except for any representation or warranty limited by its terms to a specific date and taking into account any amendments to the Schedules or Exhibits as a result of any disclosures made by Borrower to Lender after the date hereof and approved by Lender. 3.5 No Default. No Event of Default shall have occurred and be uncured at the time of the Advance. 3.6 Performance of Agreements. Borrower shall have performed in all material respects all agreements and satisfied all conditions which any Loan Document provides shall be performed by it. SECTION 4. GENERAL REPRESENTATIONS AND WARRANTIES Borrower hereby represents and warrants to Lender as follows, which representations and warranties shall remain true throughout the term of the Loan: 4.1 Existence. Borrower is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware with its principal place of business at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486. Borrower is in good standing under the laws of the State of South Carolina and is authorized to transact business in the State of South Carolina.

SECTION 3. CONDITIONS PRECEDENT TO ADVANCES The obligation of Lender to make Advances is subject to satisfaction of all of-the conditions set forth below. 3.1 Closing Deliveries. Lender shall have received, in form and substance satisfactory to Lender, all documents, instruments and information identified on the Closing Checklist heretofore delivered by Lender to Borrower. 3.2 Deliveries Prior to Each Advance. Prior to each Advance, Lender shall have received all documents, instruments and information identified on Schedule 3.2. Requests for Advance shall be made at least five (5) Business Days prior to the requested date of disbursement and shall be in the form of Exhibit C hereto. 3.3 Security Interests. Lender shall have received satisfactory evidence that all security interests and liens granted to Lender pursuant to this Agreement or the other Loan Documents have been duly perfected and constitute liens on the Collateral with the priority as set forth in Section 2.1 above. 3.4 Representations and Warranties. The representations and warranties contained herein and in the Loan Documents shall be true, correct and complete in all material respects on and as of the date of funding of the Advance except for any representation or warranty limited by its terms to a specific date and taking into account any amendments to the Schedules or Exhibits as a result of any disclosures made by Borrower to Lender after the date hereof and approved by Lender. 3.5 No Default. No Event of Default shall have occurred and be uncured at the time of the Advance. 3.6 Performance of Agreements. Borrower shall have performed in all material respects all agreements and satisfied all conditions which any Loan Document provides shall be performed by it. SECTION 4. GENERAL REPRESENTATIONS AND WARRANTIES Borrower hereby represents and warrants to Lender as follows, which representations and warranties shall remain true throughout the term of the Loan: 4.1 Existence. Borrower is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware with its principal place of business at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486. Borrower is in good standing under the laws of the State of South Carolina and is authorized to transact business in the State of South Carolina. 9

4.2 Authorization and Enforceability. (a) Execution. The Loan Documents have been duly authorized, executed and delivered and constitute the duly authorized, valid and legally binding obligations of Borrower, enforceable against Borrower and the other parties signatory thereto (other than Lender) in accordance with their respective terms. (b) Other Agreements. The execution, delivery and compliance with the terms and provisions of the Loan Documents will not (i) to the best of Borrower's knowledge, violate any provisions of law or any applicable regulation, order or other decree of any court or governmental entity, or (ii) conflict or be inconsistent with, or result in any default under, any contract, agreement or commitment to which Borrower is bound. 4.3 Financial Statements and Business Condition. Borrower and Guarantor's financial statements fairly present the respective financial conditions and (if applicable) results of operations of Borrower, and Guarantor as of the date or dates thereof and for the periods covered thereby. All such financial statements, other than those prepared on behalf of a natural person, if any, were prepared in accordance with GAAP. Except for any such changes heretofore expressly disclosed in writing to Lender, there has been no material adverse change in the respective financial conditions of Borrower or Guarantor from the financial conditions shown in their respective financial statements. Borrower is able to pay all of its debts as they become due, and Borrower shall maintain such solvent financial condition, giving effect to all obligations, absolute and contingent, of Borrower. Borrower's obligations under this Agreement and under the Loan Documents will not render Borrower unable to pay its debts as they become due. The present fair market value of Borrower's assets is greater than the amount required to pay its total liabilities. 4.4 Taxes. All ad valorem taxes and other taxes and assessments against the Resort and the Collateral have been paid and Borrower knows of no basis for any additional taxes or assessments against the Resort or the Collateral. Borrower has filed all required tax returns and has paid all taxes shown to be due and payable on such returns, including interest and penalties, and all other taxes which are payable by it, to the extent the same have become due and payable. Borrower shall or shall cause the Timeshare Association to collect and pay any applicable sales or rental tax respecting the sale or rental of any Intervals. 4.5 Litigation and Proceedings. There are no actions, suits, proceedings, orders or injunctions pending or, to the best of Borrower's knowledge,

4.2 Authorization and Enforceability. (a) Execution. The Loan Documents have been duly authorized, executed and delivered and constitute the duly authorized, valid and legally binding obligations of Borrower, enforceable against Borrower and the other parties signatory thereto (other than Lender) in accordance with their respective terms. (b) Other Agreements. The execution, delivery and compliance with the terms and provisions of the Loan Documents will not (i) to the best of Borrower's knowledge, violate any provisions of law or any applicable regulation, order or other decree of any court or governmental entity, or (ii) conflict or be inconsistent with, or result in any default under, any contract, agreement or commitment to which Borrower is bound. 4.3 Financial Statements and Business Condition. Borrower and Guarantor's financial statements fairly present the respective financial conditions and (if applicable) results of operations of Borrower, and Guarantor as of the date or dates thereof and for the periods covered thereby. All such financial statements, other than those prepared on behalf of a natural person, if any, were prepared in accordance with GAAP. Except for any such changes heretofore expressly disclosed in writing to Lender, there has been no material adverse change in the respective financial conditions of Borrower or Guarantor from the financial conditions shown in their respective financial statements. Borrower is able to pay all of its debts as they become due, and Borrower shall maintain such solvent financial condition, giving effect to all obligations, absolute and contingent, of Borrower. Borrower's obligations under this Agreement and under the Loan Documents will not render Borrower unable to pay its debts as they become due. The present fair market value of Borrower's assets is greater than the amount required to pay its total liabilities. 4.4 Taxes. All ad valorem taxes and other taxes and assessments against the Resort and the Collateral have been paid and Borrower knows of no basis for any additional taxes or assessments against the Resort or the Collateral. Borrower has filed all required tax returns and has paid all taxes shown to be due and payable on such returns, including interest and penalties, and all other taxes which are payable by it, to the extent the same have become due and payable. Borrower shall or shall cause the Timeshare Association to collect and pay any applicable sales or rental tax respecting the sale or rental of any Intervals. 4.5 Litigation and Proceedings. There are no actions, suits, proceedings, orders or injunctions pending or, to the best of Borrower's knowledge, threatened against or affecting Borrower, Guarantor, or the Timeshare Association, at law or in equity, or before or by any governmental authority, which could have a material adverse effect on Borrower or Guarantor or relate to the Loan or the Resort. Borrower has received no notice from any court or governmental authority alleging that Borrower has violated the Timeshare Act, any of the rules or regulations thereunder, or any other applicable laws. Borrower 10

shall provide Lender prompt written notice of any such action or proceeding commenced against Borrower, Guarantor, the Resort or the Timeshare Association. 4.6 Licenses and Permits. Borrower possesses all requisite franchises, certificates of convenience and necessity, operating rights, licenses, permits, consents, authorizations, exemptions and orders as are necessary to carry on its business as now being conducted. All such licenses and permits shall be in full force and effect as of the Funding Date and no action shall be pending or threatened to revoke or modify any such license or permit. 4.7 Full Disclosure. No information, exhibit or written report furnished by or on behalf of Borrower to Lender in connection with the Loan contains any material misstatement of fact or omits any material fact necessary to make the statement contained herein or therein not misleading. Borrower knows of no legal or contractual restriction which will prevent it from offering or selling Intervals to Purchasers in any state where it is selling Intervals. 4.8 Employee Benefit Plans. Borrower is in compliance in all material respects with all applicable provisions of ERISA, the IRC and all other applicable laws and the regulations and interpretations thereof with respect to all Employee Benefit Plans. No material liability has been incurred by Borrower which remains unsatisfied for any funding obligation, taxes or penalties with respect to any Employee Benefit Plan. 4.9 Representations as to the Resort. (a) Title: Prior Liens. Borrower has good and marketable title to the Resort and all Intervals unless and until a Purchaser has paid off his or her Contract Receivable in full at which time a deed to the Interval is conveyed to the Purchaser, pursuant to the terms of the Contract Receivable. Borrower is not in default under any of the documents evidencing or securing any indebtedness which is secured, wholly or in part, by the Resort, and no event has occurred which with the giving of notice, the passage of time or both, would constitute a default under any of the documents evidencing or securing any such indebtedness. There are no liens or encumbrances against the Collateral or the Resort other than the Permitted Exceptions and Borrower may not further encumber the Resort without the prior written consent of Lender. (b) Access. Prior to the Funding Date, and at all times

shall provide Lender prompt written notice of any such action or proceeding commenced against Borrower, Guarantor, the Resort or the Timeshare Association. 4.6 Licenses and Permits. Borrower possesses all requisite franchises, certificates of convenience and necessity, operating rights, licenses, permits, consents, authorizations, exemptions and orders as are necessary to carry on its business as now being conducted. All such licenses and permits shall be in full force and effect as of the Funding Date and no action shall be pending or threatened to revoke or modify any such license or permit. 4.7 Full Disclosure. No information, exhibit or written report furnished by or on behalf of Borrower to Lender in connection with the Loan contains any material misstatement of fact or omits any material fact necessary to make the statement contained herein or therein not misleading. Borrower knows of no legal or contractual restriction which will prevent it from offering or selling Intervals to Purchasers in any state where it is selling Intervals. 4.8 Employee Benefit Plans. Borrower is in compliance in all material respects with all applicable provisions of ERISA, the IRC and all other applicable laws and the regulations and interpretations thereof with respect to all Employee Benefit Plans. No material liability has been incurred by Borrower which remains unsatisfied for any funding obligation, taxes or penalties with respect to any Employee Benefit Plan. 4.9 Representations as to the Resort. (a) Title: Prior Liens. Borrower has good and marketable title to the Resort and all Intervals unless and until a Purchaser has paid off his or her Contract Receivable in full at which time a deed to the Interval is conveyed to the Purchaser, pursuant to the terms of the Contract Receivable. Borrower is not in default under any of the documents evidencing or securing any indebtedness which is secured, wholly or in part, by the Resort, and no event has occurred which with the giving of notice, the passage of time or both, would constitute a default under any of the documents evidencing or securing any such indebtedness. There are no liens or encumbrances against the Collateral or the Resort other than the Permitted Exceptions and Borrower may not further encumber the Resort without the prior written consent of Lender. (b) Access. Prior to the Funding Date, and at all times thereafter, the Resort will have direct access to a publicly dedicated road over a recorded easement and all roadways, if any, inside the Resort are common areas under the Declaration. (c) Utilities. Prior to the Funding Date and at all times thereafter, electric, gas, sewer, water facilities and other necessary utilities will be lawfully available in sufficient capacity to service the Resort and any easements necessary to the furnishing of such utility service will have been obtained and duly recorded. o 11

(b) No Modification. There have been no modifications or amendments to the Pledged Documents. Borrower shall not grant extensions of time for the payment of, compromise for less than the full face value, release in whole or in part any Purchaser liable for the payment of, or allow any credit whatsoever except for the amount of cash to be paid upon, any Collateral or any instrument or document representing the Collateral. (c) Binding Obligations. On the date of the assignment and delivery to Lender, each Financed Pre-Sale Contract Receivable constitutes an Eligible Pre-Sale Contract Receivable, each Financed Contract Receivable and Upgraded Contract Receivable constitutes an Eligible Contract Receivable and Borrower is not aware of any facts or information which would cause such Financed Pre-Sale Contract Receivable or Financed Contract Receivable to be ineligible hereunder. (d) Community Property The Pledged Documents were executed by Purchasers in connection with the purchase of Intervals and, as to individuals, bind the marital community of married individual partners, to the extent community property statutes are applicable. SECTION 5. AFFIRMATIVE COVENANTS So long as any portion of the Indebtedness remains unpaid, Borrower covenants as follows: 5.1 Payment and Performance of Indebtedness. Borrower shall pay and promptly perform all of the obligations hereunder and under the Loan Documents. 5.2 Maintenance of Insurance. (a) Policies. The Resort shall at all times and for so long as any Indebtedness remains outstanding be kept insured with such general liability coverage and such other coverages acceptable to Lender, by carrier(s), in amounts and in form at all times satisfactory to Lender, which carrier(s), amounts and form shall not be changed without the prior written consent of Lender. All required insurance may be maintained by the Timeshare Association as required by the Declaration, provided that in the event such Timeshare Association fails to maintain any insurance required under this Section 5.2(a), then Borrower shall be required to obtain and maintain such insurance. (b) Proofs of Claim. In case of loss or damage or other casualty, Borrower shall give immediate written notice thereof to the insurance

(b) No Modification. There have been no modifications or amendments to the Pledged Documents. Borrower shall not grant extensions of time for the payment of, compromise for less than the full face value, release in whole or in part any Purchaser liable for the payment of, or allow any credit whatsoever except for the amount of cash to be paid upon, any Collateral or any instrument or document representing the Collateral. (c) Binding Obligations. On the date of the assignment and delivery to Lender, each Financed Pre-Sale Contract Receivable constitutes an Eligible Pre-Sale Contract Receivable, each Financed Contract Receivable and Upgraded Contract Receivable constitutes an Eligible Contract Receivable and Borrower is not aware of any facts or information which would cause such Financed Pre-Sale Contract Receivable or Financed Contract Receivable to be ineligible hereunder. (d) Community Property The Pledged Documents were executed by Purchasers in connection with the purchase of Intervals and, as to individuals, bind the marital community of married individual partners, to the extent community property statutes are applicable. SECTION 5. AFFIRMATIVE COVENANTS So long as any portion of the Indebtedness remains unpaid, Borrower covenants as follows: 5.1 Payment and Performance of Indebtedness. Borrower shall pay and promptly perform all of the obligations hereunder and under the Loan Documents. 5.2 Maintenance of Insurance. (a) Policies. The Resort shall at all times and for so long as any Indebtedness remains outstanding be kept insured with such general liability coverage and such other coverages acceptable to Lender, by carrier(s), in amounts and in form at all times satisfactory to Lender, which carrier(s), amounts and form shall not be changed without the prior written consent of Lender. All required insurance may be maintained by the Timeshare Association as required by the Declaration, provided that in the event such Timeshare Association fails to maintain any insurance required under this Section 5.2(a), then Borrower shall be required to obtain and maintain such insurance. (b) Proofs of Claim. In case of loss or damage or other casualty, Borrower shall give immediate written notice thereof to the insurance carrier(s) and to Lender. Lender is authorized and empowered, and Borrower hereby irrevocably appoints Lender as its attorney-in-fact (such appointment is coupled with an interest), at Lender's option, to make or file proofs of loss or damage and to settle and adjust any claim under insurance policies which insure against such risks, or to direct

Borrower, in writing, to agree with the insurance carrier(s) on the amount to be paid in regard to such loss. (c) Loss or Casualty. Provided no Event of Default then exists and Borrower certifies as to same, the net insurance proceeds shall be made available for the restoration or repair of the Resort if (i) in Lender's reasonable judgment: (A) restoration or repair and the continued operation of the Resort is economically feasible; (B) the value of Lender's security is not reduced; and (C) the casualty loss is $100,000 or less; and (ii) the loss does not occur in the six (6) month period preceding the Inventory Note Maturity Date or the Receivable Note Maturity Date and Lender's independent consultant certifies that the restoration of the Property can be completed at least ninety (90) days prior to the Inventory Note Maturity Date or the Receivable Note Maturity Date. Borrower shall pay all amounts, in addition to the net insurance proceeds, necessary to pay in full the cost of the restoration or repair. Notwithstanding the foregoing, it shall be a condition precedent to any disbursement of insurance proceeds held by Lender hereunder that Lender shall have approved (x) all plans and specifications for any proposed repair or restoration; (y) the construction schedule; and (z) the architect's and general contractors contracts for restoration exceeding $100,000. Lender may establish other conditions it deems reasonably necessary to assure the work is fully completed in a good and workmanlike manner free of all liens or claims by reason thereof, and in compliance with all applicable laws, rules and regulations. At Lender's option, the net insurance proceeds shall be disbursed pursuant to a construction escrow acceptable to Lender. If an Event of Default then exists, or any of the conditions set forth in this subsection have not been met or satisfied, the net insurance proceeds shall be applied to the Loan in such order and manner as Lender may elect, whether or not due and payable, with any excess paid to Borrower. 5.3 Condemnation. The proceeds of any award, payment or claim for damages, direct or consequential, in connection with any condemnation or other taking of any Unit or Interval which is the subject of a Financed Pre-Sale Contract Receivable, Financed Contract Receivable or part thereof, or for conveyances in lieu of condemnation, are hereby assigned to and shall be paid to Lender. Lender is authorized (but is under no obligation) to collect any such proceeds. Lender may, in its sole discretion, elect to apply the net proceeds of any

Borrower, in writing, to agree with the insurance carrier(s) on the amount to be paid in regard to such loss. (c) Loss or Casualty. Provided no Event of Default then exists and Borrower certifies as to same, the net insurance proceeds shall be made available for the restoration or repair of the Resort if (i) in Lender's reasonable judgment: (A) restoration or repair and the continued operation of the Resort is economically feasible; (B) the value of Lender's security is not reduced; and (C) the casualty loss is $100,000 or less; and (ii) the loss does not occur in the six (6) month period preceding the Inventory Note Maturity Date or the Receivable Note Maturity Date and Lender's independent consultant certifies that the restoration of the Property can be completed at least ninety (90) days prior to the Inventory Note Maturity Date or the Receivable Note Maturity Date. Borrower shall pay all amounts, in addition to the net insurance proceeds, necessary to pay in full the cost of the restoration or repair. Notwithstanding the foregoing, it shall be a condition precedent to any disbursement of insurance proceeds held by Lender hereunder that Lender shall have approved (x) all plans and specifications for any proposed repair or restoration; (y) the construction schedule; and (z) the architect's and general contractors contracts for restoration exceeding $100,000. Lender may establish other conditions it deems reasonably necessary to assure the work is fully completed in a good and workmanlike manner free of all liens or claims by reason thereof, and in compliance with all applicable laws, rules and regulations. At Lender's option, the net insurance proceeds shall be disbursed pursuant to a construction escrow acceptable to Lender. If an Event of Default then exists, or any of the conditions set forth in this subsection have not been met or satisfied, the net insurance proceeds shall be applied to the Loan in such order and manner as Lender may elect, whether or not due and payable, with any excess paid to Borrower. 5.3 Condemnation. The proceeds of any award, payment or claim for damages, direct or consequential, in connection with any condemnation or other taking of any Unit or Interval which is the subject of a Financed Pre-Sale Contract Receivable, Financed Contract Receivable or part thereof, or for conveyances in lieu of condemnation, are hereby assigned to and shall be paid to Lender. Lender is authorized (but is under no obligation) to collect any such proceeds. Lender may, in its sole discretion, elect to apply the net proceeds of any such condemnation award (after deduction of Lender's reasonable costs and expenses, if any, in collecting the same) in reduction of the Indebtedness in such order and manner as Lender may elect, whether due or not. 5.4 Inspections and Audits. Borrower shall, at such reasonable times during normal business hours and as often as may be reasonably requested, permit any agents or representatives of Lender to inspect the Resort and any of Borrower's assets (including financial and accounting books and records), to examine and make copies of and abstracts from the records and books of account of Borrower or the Timeshare Association or servicer under the Servicing Agreement and to discuss its affairs, finances 14

(ii) The Financed Contract Receivable; (iii) The Collateral for the inventory component of the Loan as set forth in Section 2.1(a)(i)-(v) of the Agreement; (iv) To the extent permitted by state law, all deposits, accounts, accounts receivable, general intangibles and other receivables arising under or in connection with the Pledged Documents, together with all payments, privileges and benefits arising out of the enforcement thereof, and all funds held in any deposit accounts related to any of the Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable; (v) All documents, instruments, pledged assets and chattel paper relating to the Pledged Documents and the other properties and rights described as Collateral herein; (vi) All cash and other monies and property of Borrower in the possession or under the control of Lender; (vii) All books, records, ledger cards, files, correspondence, computer tapes, disks and software relating to the Pledged Documents or any other Collateral described herein; (viii) All management, marketing, servicing, maintenance or other similar contracts for the Resort; and (ix) All proceeds, extensions, amendments, additions, improvements, betterments, renewals, substitutions and replacements of the foregoing. 2.2 Upgraded Contracts Receivable. Notwithstanding anything to the contrary set forth in this Agreement, Borrower may supplement or replace Financed Contracts Receivable with Upgraded Contracts Receivable without Lender's prior consent so long as no Event of Default exists and is continuing. 2.3 Security Agreement. This Agreement shall be deemed a security agreement as defined in the Code, and the remedies for any violation of the covenants, terms and conditions of the agreements herein contained shall be cumulative and be as prescribed (a) herein, or (b) by general law, or (c) as to such part of the Collateral which is also reflected in any filed financing statement, by the specific provisions of the Code now or hereafter enacted, all at Lender's sole election.

(ii) The Financed Contract Receivable; (iii) The Collateral for the inventory component of the Loan as set forth in Section 2.1(a)(i)-(v) of the Agreement; (iv) To the extent permitted by state law, all deposits, accounts, accounts receivable, general intangibles and other receivables arising under or in connection with the Pledged Documents, together with all payments, privileges and benefits arising out of the enforcement thereof, and all funds held in any deposit accounts related to any of the Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable; (v) All documents, instruments, pledged assets and chattel paper relating to the Pledged Documents and the other properties and rights described as Collateral herein; (vi) All cash and other monies and property of Borrower in the possession or under the control of Lender; (vii) All books, records, ledger cards, files, correspondence, computer tapes, disks and software relating to the Pledged Documents or any other Collateral described herein; (viii) All management, marketing, servicing, maintenance or other similar contracts for the Resort; and (ix) All proceeds, extensions, amendments, additions, improvements, betterments, renewals, substitutions and replacements of the foregoing. 2.2 Upgraded Contracts Receivable. Notwithstanding anything to the contrary set forth in this Agreement, Borrower may supplement or replace Financed Contracts Receivable with Upgraded Contracts Receivable without Lender's prior consent so long as no Event of Default exists and is continuing. 2.3 Security Agreement. This Agreement shall be deemed a security agreement as defined in the Code, and the remedies for any violation of the covenants, terms and conditions of the agreements herein contained shall be cumulative and be as prescribed (a) herein, or (b) by general law, or (c) as to such part of the Collateral which is also reflected in any filed financing statement, by the specific provisions of the Code now or hereafter enacted, all at Lender's sole election. 8

(d) Amenities. Prior to the Funding Date and at all times thereafter, all amenities for Phase 1 of the Resort as described in the sales prospectus and the Public Reports for the Resort will be completed, or a bond insuring their completion will have been posted. Such amenities include those listed in Exhibit D attached hereto. Prior to the Funding Date, each Purchaser of an Interval will have access to and the use of all of the amenities and public utilities of the Resort as and to the extent provided in the Declaration and the Public Reports. (e) Construction. Prior to the Funding Date and at all times thereafter, all costs arising from the construction of any improvements and the purchase of any equipment, inventory, or furnishings located in or on the Resort will have been paid. (f) Assessments. Prior to the Funding Date and at all times thereafter, each Purchaser will be a member of the Timeshare Association which has authority to levy annual assessments to cover the costs of maintaining and operating the Resort. The Timeshare Association is solvent. Borrower acknowledges that in the first several years of sales of Intervals that Borrower shall subsidize the Timeshare Association by paying amounts of common expenses not collected from owners of Intervals to meet the expenses of the Resort as such expenses are incurred on an annual basis. Thereafter, it is anticipated assessments upon Purchasers will be adequate to cover the costs of maintaining and operating the Resort and to establish and maintain a reasonable reserve for capital improvements and furniture fixtures and equipment. Borrower will use its best efforts to cause the Timeshare Association to maintain the reserves described above. 4.10 Timeshare Interval Exchange Network. Borrower is a member of the Interval International exchange network pursuant to a validly executed and enforceable written affiliation agreement with internal international and Purchasers who are members of Interval international are entitled to exchange privileges within the Interval international exchange network. Borrower has paid all fees and other amounts due and owing under such agreement and is not otherwise in default thereunder. 4.11 Collateral. (a) Title. Borrower has good and marketable title to the Collateral, free and clear of any lien, security interest, charge or encumbrance except for (I) the security interest created by this Agreement or otherwise created in favor of Lender, and (11) the Permitted Exceptions. No financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of Lender. Borrower shall defend Lender against and save it harmless from all claims of any Persons other than Lender with respect to the Collateral, and this indemnity shall include all attorney's fees and legal expenses.

and accounts with any of its officers, employees or independent public accountants. Borrower acknowledges that

(d) Amenities. Prior to the Funding Date and at all times thereafter, all amenities for Phase 1 of the Resort as described in the sales prospectus and the Public Reports for the Resort will be completed, or a bond insuring their completion will have been posted. Such amenities include those listed in Exhibit D attached hereto. Prior to the Funding Date, each Purchaser of an Interval will have access to and the use of all of the amenities and public utilities of the Resort as and to the extent provided in the Declaration and the Public Reports. (e) Construction. Prior to the Funding Date and at all times thereafter, all costs arising from the construction of any improvements and the purchase of any equipment, inventory, or furnishings located in or on the Resort will have been paid. (f) Assessments. Prior to the Funding Date and at all times thereafter, each Purchaser will be a member of the Timeshare Association which has authority to levy annual assessments to cover the costs of maintaining and operating the Resort. The Timeshare Association is solvent. Borrower acknowledges that in the first several years of sales of Intervals that Borrower shall subsidize the Timeshare Association by paying amounts of common expenses not collected from owners of Intervals to meet the expenses of the Resort as such expenses are incurred on an annual basis. Thereafter, it is anticipated assessments upon Purchasers will be adequate to cover the costs of maintaining and operating the Resort and to establish and maintain a reasonable reserve for capital improvements and furniture fixtures and equipment. Borrower will use its best efforts to cause the Timeshare Association to maintain the reserves described above. 4.10 Timeshare Interval Exchange Network. Borrower is a member of the Interval International exchange network pursuant to a validly executed and enforceable written affiliation agreement with internal international and Purchasers who are members of Interval international are entitled to exchange privileges within the Interval international exchange network. Borrower has paid all fees and other amounts due and owing under such agreement and is not otherwise in default thereunder. 4.11 Collateral. (a) Title. Borrower has good and marketable title to the Collateral, free and clear of any lien, security interest, charge or encumbrance except for (I) the security interest created by this Agreement or otherwise created in favor of Lender, and (11) the Permitted Exceptions. No financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of Lender. Borrower shall defend Lender against and save it harmless from all claims of any Persons other than Lender with respect to the Collateral, and this indemnity shall include all attorney's fees and legal expenses.

and accounts with any of its officers, employees or independent public accountants. Borrower acknowledges that Lender intends to conduct such audits and inspections on at least an annual basis. Borrower shall make available to Lender all credit information in Borrower's possession or under Borrower's control with respect to Purchasers as Lender may request. Property inspections shall be at Lender's expense, but all audits and credit investigations shall be at Borrower's expense; provided, however, that except with respect to any audits conducted after an Event of Default hereunder, Borrower shall not be required to pay in excess of $3,000 in any calendar year for audits performed during such year. 5.5 Reporting Requirements. So long as the Indebtedness remains unpaid, Borrower shall furnish the following to Lender (a) Monthly Reports. Within ten (10) days after the end of each calendar month, reports showing through the end of the preceding month, (I) the following information with respect to each Financed Pre-Sale Contract Receivable and each Financed Contract Receivable: (A) the opening and closing balances, (B) all payments received allocated to interest, principal, late charges, taxes or the like, (C) the rate of interest, (D) an itemization of delinquencies, extensions, refinances, prepayments, upgrades, payoffs, cancellations and other adjustments, (E) the remaining term, and (i ) the nature and status of any claims asserted or legal action pending with respect thereto; and (II) the weighted average interest rate and the average remaining term of all Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable. (b) Sales and Inventory Reports. Within ten (10) days after the end of each quarter, a quarterly report showing all sales and cancellations of sales of Intervals (including Pre-Sale Contracts Receivable during the Pre-Sale Credit Period), in form and content satisfactory to Lender; and within thirty (30) days after the end of each Fiscal Year, an annual sales and inventory report for the Resort detailing the sales of all intervals during such Fiscal Year and the available inventory of Units and Intervals, certified by Borrower to be true, correct and complete and otherwise in the form approved by Lender. (c) Quarterly Financial Reports. Within forty-five (45) days after the end of each fiscal quarterly period, unaudited financial statements of Borrower, Guarantor and the Timeshare Association, certified by the chief financial officer of the subject thereof. (d) Year-End Financial Reports. As soon as available and in any event within one hundred and twenty (120) days after the end of each Fiscal Year: (I) the balance sheet of Borrower and Guarantor as of

and accounts with any of its officers, employees or independent public accountants. Borrower acknowledges that Lender intends to conduct such audits and inspections on at least an annual basis. Borrower shall make available to Lender all credit information in Borrower's possession or under Borrower's control with respect to Purchasers as Lender may request. Property inspections shall be at Lender's expense, but all audits and credit investigations shall be at Borrower's expense; provided, however, that except with respect to any audits conducted after an Event of Default hereunder, Borrower shall not be required to pay in excess of $3,000 in any calendar year for audits performed during such year. 5.5 Reporting Requirements. So long as the Indebtedness remains unpaid, Borrower shall furnish the following to Lender (a) Monthly Reports. Within ten (10) days after the end of each calendar month, reports showing through the end of the preceding month, (I) the following information with respect to each Financed Pre-Sale Contract Receivable and each Financed Contract Receivable: (A) the opening and closing balances, (B) all payments received allocated to interest, principal, late charges, taxes or the like, (C) the rate of interest, (D) an itemization of delinquencies, extensions, refinances, prepayments, upgrades, payoffs, cancellations and other adjustments, (E) the remaining term, and (i ) the nature and status of any claims asserted or legal action pending with respect thereto; and (II) the weighted average interest rate and the average remaining term of all Financed Pre-Sale Contracts Receivable and Financed Contracts Receivable. (b) Sales and Inventory Reports. Within ten (10) days after the end of each quarter, a quarterly report showing all sales and cancellations of sales of Intervals (including Pre-Sale Contracts Receivable during the Pre-Sale Credit Period), in form and content satisfactory to Lender; and within thirty (30) days after the end of each Fiscal Year, an annual sales and inventory report for the Resort detailing the sales of all intervals during such Fiscal Year and the available inventory of Units and Intervals, certified by Borrower to be true, correct and complete and otherwise in the form approved by Lender. (c) Quarterly Financial Reports. Within forty-five (45) days after the end of each fiscal quarterly period, unaudited financial statements of Borrower, Guarantor and the Timeshare Association, certified by the chief financial officer of the subject thereof. (d) Year-End Financial Reports. As soon as available and in any event within one hundred and twenty (120) days after the end of each Fiscal Year: (I) the balance sheet of Borrower and Guarantor as of the end of such year and the related statements of income and cash flow for such Fiscal Year; (II) a schedule of all outstanding indebtedness of Borrower and Guarantor describing in reasonable detail each such debt or loan outstanding and the principal amount and amount of accrued and unpaid interest with respect to each such debt or loan; (iii) Borrower's annual financial 15

statement may be unaudited and certified by Borrower's chief financial officer as of the dates indicated and the results of its operations and cash flow for the periods indicated in conformity with GAAP; and (iv) Guarantor's annual financial statements must be audited and include a copy of a report from a firm of independent certified public accountants selected by Guarantor, which report shall be unqualified as to going concern and scope of audit and shall state that such financial statements present fairly the financial position of Guarantor as of the dates indicated and the results of its operations and cash flow for the periods indicated in conformity with GAAP. (e) Audit Reports. Promptly upon receipt thereof, one (1 ) copy of each other report submitted to Borrower or Guarantor by independent public accountants in connection with any annual, interim or special audit made by them of the books of Borrower or Guarantor; (f) Other Reports. Such other reports, statements, notices or written communications relating to the Borrower, Guarantor or the Resort as Lender may require, in its reasonably discretion. (g) SEC Reports. Promptly upon their becoming available one (1 ) copy of each financial statement, report, notice or proxy statement sent by Borrower or Guarantor to security holders generally, and of each regular or periodic report and any registration statement, prospectus or written communication (other than transmittal letters) in respect thereof filed by Borrower or Guarantor with, or received by Borrower or Guarantor in connection therewith from, any securities exchange or the Securities and Exchange Commission or any successor agency. 5.6 Records. Borrower shall keep adequate records and books of account reflecting all financial transactions of Borrower, including sales of Intervals, in which complete entries will be made in accordance with GAAP. 5.7 Management. The manager and the management contracts for the Resort shall at all times be satisfactory to Lender. For so long as Borrower controls the Timeshare Association for the Resort, Borrower shall not change the Resort manager or amend, modify or waive any provision of or terminate the management contract for the Resort without the prior written consent of Lender, which consent shall not be unreasonably withheld. Alan Murray and Patrick Rondeau shall remain the principal officers of Borrower and Alan Murray shall have authority to make all material business decisions during the term of the Loan. 5.8 Net

statement may be unaudited and certified by Borrower's chief financial officer as of the dates indicated and the results of its operations and cash flow for the periods indicated in conformity with GAAP; and (iv) Guarantor's annual financial statements must be audited and include a copy of a report from a firm of independent certified public accountants selected by Guarantor, which report shall be unqualified as to going concern and scope of audit and shall state that such financial statements present fairly the financial position of Guarantor as of the dates indicated and the results of its operations and cash flow for the periods indicated in conformity with GAAP. (e) Audit Reports. Promptly upon receipt thereof, one (1 ) copy of each other report submitted to Borrower or Guarantor by independent public accountants in connection with any annual, interim or special audit made by them of the books of Borrower or Guarantor; (f) Other Reports. Such other reports, statements, notices or written communications relating to the Borrower, Guarantor or the Resort as Lender may require, in its reasonably discretion. (g) SEC Reports. Promptly upon their becoming available one (1 ) copy of each financial statement, report, notice or proxy statement sent by Borrower or Guarantor to security holders generally, and of each regular or periodic report and any registration statement, prospectus or written communication (other than transmittal letters) in respect thereof filed by Borrower or Guarantor with, or received by Borrower or Guarantor in connection therewith from, any securities exchange or the Securities and Exchange Commission or any successor agency. 5.6 Records. Borrower shall keep adequate records and books of account reflecting all financial transactions of Borrower, including sales of Intervals, in which complete entries will be made in accordance with GAAP. 5.7 Management. The manager and the management contracts for the Resort shall at all times be satisfactory to Lender. For so long as Borrower controls the Timeshare Association for the Resort, Borrower shall not change the Resort manager or amend, modify or waive any provision of or terminate the management contract for the Resort without the prior written consent of Lender, which consent shall not be unreasonably withheld. Alan Murray and Patrick Rondeau shall remain the principal officers of Borrower and Alan Murray shall have authority to make all material business decisions during the term of the Loan. 5.8 Net Worth. Guarantor agrees to maintain a minimum net worth, determined in accordance with GAAP, of Forty Two Million Dollars ($42,000,000) at all times. 16

5.9 Maintenance. Borrower shall maintain the Resort in good repair, working order and condition and shall make or cause to be made all necessary replacements to the Resort. 5.10 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. 5.11 Release and Bonding of Liens. In the event any lien (other than a Permitted Exception) attaches to any Collateral, Borrower shall, within ten (10) days after such attachment, either (a) cause such lien to be released of record or (b) provide Lender with a bond in accordance with the applicable laws of the state in which the Resort is located, issued by a corporate surety acceptable to Lender, in an amount acceptable to Lender and in form acceptable to Lender. 5.12 Claims. Borrower shall promptly notify Lender of any claim, action or proceeding affecting 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. 5.13 Use of Lender Name. Borrower will not, and will not permit any Affiliate to, without the prior written consent of Lender, use the name of Lender or the name of any affiliates of Lender in connection with any of their respective businesses or activities, except in connection with internal business matters, administration of the Loan and as required in dealings with governmental agencies. 5.14 Other Documents. Borrower will maintain accurate and complete files relating to the Financed Pre-Sale Contracts Receivable, Financed Contracts Receivable and other Collateral to the satisfaction of Lender, and such files will contain copies of each Financed Pre-Sale Contract Receivable and Financed Contract Receivable together with the purchase contracts, truth-in-lending statements, all relevant credit memoranda and all collection information and correspondence relating to such Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable. 5.15 Subordinated Obligations. Borrower will not, directly or indirectly, (a) permit any payment to be made in respect of any indebtedness, liabilities or obligations, direct or contingent, to any Affiliates (excluding trade payables incurred in the ordinary course of business), which payments shall be and are hereby made subordinate to the payment of principal of, and interest on, the Inventory Note and Receivable Note, or (b) permit the

5.9 Maintenance. Borrower shall maintain the Resort in good repair, working order and condition and shall make or cause to be made all necessary replacements to the Resort. 5.10 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. 5.11 Release and Bonding of Liens. In the event any lien (other than a Permitted Exception) attaches to any Collateral, Borrower shall, within ten (10) days after such attachment, either (a) cause such lien to be released of record or (b) provide Lender with a bond in accordance with the applicable laws of the state in which the Resort is located, issued by a corporate surety acceptable to Lender, in an amount acceptable to Lender and in form acceptable to Lender. 5.12 Claims. Borrower shall promptly notify Lender of any claim, action or proceeding affecting 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. 5.13 Use of Lender Name. Borrower will not, and will not permit any Affiliate to, without the prior written consent of Lender, use the name of Lender or the name of any affiliates of Lender in connection with any of their respective businesses or activities, except in connection with internal business matters, administration of the Loan and as required in dealings with governmental agencies. 5.14 Other Documents. Borrower will maintain accurate and complete files relating to the Financed Pre-Sale Contracts Receivable, Financed Contracts Receivable and other Collateral to the satisfaction of Lender, and such files will contain copies of each Financed Pre-Sale Contract Receivable and Financed Contract Receivable together with the purchase contracts, truth-in-lending statements, all relevant credit memoranda and all collection information and correspondence relating to such Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable. 5.15 Subordinated Obligations. Borrower will not, directly or indirectly, (a) permit any payment to be made in respect of any indebtedness, liabilities or obligations, direct or contingent, to any Affiliates (excluding trade payables incurred in the ordinary course of business), which payments shall be and are hereby made subordinate to the payment of principal of, and interest on, the Inventory Note and Receivable Note, or (b) permit the amendment, rescission or other modification of any of Borrower's subordinated obligations in such a manner as to affect adversely the lien priority of the Collateral. 17

5.16 Loan Servicing. The servicing company and Servicing Agreement, if any, shall be satisfactory to Lender in its sole discretion. Borrower may not amend or terminate the Servicing Agreement without Lender's prior approval, and Borrower agrees not to interfere with the servicing agent's performance of its duties under the Servicing Agreement or to take any action that would be inconsistent in any way with the terms of the Servicing Agreement. The Servicing Agreement shall be cancelable by Lender upon the occurrence of any default under the Loan Documents. If the Servicer is an Affiliate, no servicing fees shall be paid if a default under any Loan Document has occurred and is continuing. All servicing fees, and the costs and expenses of the servicing agent, shall be paid by Borrower. 5.17 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. 5.18 Surety Bond. Borrower shall provide Lender with a copy of a $4,000,000 surety bond in accordance with the applicable laws of the state of South Carolina, issued by National Union Fire Insurance Co. of Pittsburgh, a corporate surety acceptable to Lender, in an amount and in a form acceptable to Lender with respect to consumer down payments and monthly payments made during the Pre-Sale Credit Period by Purchasers of PreSale Contracts Receivable in the event proper and timely completion of the Resort does not occur and one or more of such Purchasers seeks a refund from Borrower of monies paid pursuant to the terms of Pre-Sale Contracts Receivable. 5.19 Commencement and Completion of Construction. Borrower will commence construction of the Resort on or before March 1, 1996 and construction of the Resort shall be completed by Borrower by February 28, 1997; provided, however, if Borrower exercises its extension rights pursuant to Section 1 .7(a)(ii) of this Agreement, construction of the Resort shall be fully completed by Borrower by June 30, 1997.

5.16 Loan Servicing. The servicing company and Servicing Agreement, if any, shall be satisfactory to Lender in its sole discretion. Borrower may not amend or terminate the Servicing Agreement without Lender's prior approval, and Borrower agrees not to interfere with the servicing agent's performance of its duties under the Servicing Agreement or to take any action that would be inconsistent in any way with the terms of the Servicing Agreement. The Servicing Agreement shall be cancelable by Lender upon the occurrence of any default under the Loan Documents. If the Servicer is an Affiliate, no servicing fees shall be paid if a default under any Loan Document has occurred and is continuing. All servicing fees, and the costs and expenses of the servicing agent, shall be paid by Borrower. 5.17 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. 5.18 Surety Bond. Borrower shall provide Lender with a copy of a $4,000,000 surety bond in accordance with the applicable laws of the state of South Carolina, issued by National Union Fire Insurance Co. of Pittsburgh, a corporate surety acceptable to Lender, in an amount and in a form acceptable to Lender with respect to consumer down payments and monthly payments made during the Pre-Sale Credit Period by Purchasers of PreSale Contracts Receivable in the event proper and timely completion of the Resort does not occur and one or more of such Purchasers seeks a refund from Borrower of monies paid pursuant to the terms of Pre-Sale Contracts Receivable. 5.19 Commencement and Completion of Construction. Borrower will commence construction of the Resort on or before March 1, 1996 and construction of the Resort shall be completed by Borrower by February 28, 1997; provided, however, if Borrower exercises its extension rights pursuant to Section 1 .7(a)(ii) of this Agreement, construction of the Resort shall be fully completed by Borrower by June 30, 1997. SECTION 6. NEGATIVE COVENANTS So long as any portion of the Indebtedness remains unpaid or Lender is committed to lend hereunder, unless Lender otherwise consents in writing, Borrower hereby covenants and agrees with Lender as follows: 6.1 Consolidation and Merger. Borrower will not consolidate with or merge into any other Person or permit any other Person to consolidate with or merge into it. 6.2 Restrictions on Transfers. Borrower shall not, without obtaining the prior written consent of Lender, which may be granted or withheld in Lender's sole discretion, (a) transfer, sell, pledge, convey, assign or encumber all or any portion of the Resort or 18

the Collateral (or contract to do any of the foregoing, including options to purchase and so called "installment sales contracts") except sales of Intervals to Purchasers in arms-length transactions; (b) permit any sale, assignment, encumbrance, dilution or other disposition of any ownership interests in Borrower (including any right to receive profits, losses or cash flow related to the Resort) now held by the Guarantor that would cause Guarantor to either (i) own less than less than a one hundred percent (100%) interest in Borrower or (ii) cease to have a controlling interest in Borrower; or (d) permit the creation of any new ownership interests in Borrower. 6.3 Timeshare Regime. Prior to the Funding Date, Borrower, without Lender's prior written consent, shall not amend, modify or terminate the Declaration or the covenants, conditions, easements or restrictions against the Resort (or any portion thereof) in any material respects, except that if any amendment or modification is required either (a) to cause additional Units and Intervals to be annexed into the timeshare regime of the Resort, or (b) by law, Borrower shall implement the same and give prompt written notice thereof to Lender. Subsequent to the Funding Date, Borrower, without Lender's prior written consent, shall not amend, modify or terminate the Declaration or the covenants, conditions, easements or restrictions against the Resort (or any portion thereof), except that if any amendment or modification is required either (a) to cause additional Units and Intervals to be annexed into the timeshare regime of the Resort, or (b) by law, Borrower shall implement the same and give prompt written notice thereof to Lender. 6.4 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 of the rights of Lender in the Collateral. 6.5 No Sales Outside of Certain States. Borrower shall not market, attempt to sell or sell any Intervals outside of the State of South Carolina, unless, prior to taking any such actions,

the Collateral (or contract to do any of the foregoing, including options to purchase and so called "installment sales contracts") except sales of Intervals to Purchasers in arms-length transactions; (b) permit any sale, assignment, encumbrance, dilution or other disposition of any ownership interests in Borrower (including any right to receive profits, losses or cash flow related to the Resort) now held by the Guarantor that would cause Guarantor to either (i) own less than less than a one hundred percent (100%) interest in Borrower or (ii) cease to have a controlling interest in Borrower; or (d) permit the creation of any new ownership interests in Borrower. 6.3 Timeshare Regime. Prior to the Funding Date, Borrower, without Lender's prior written consent, shall not amend, modify or terminate the Declaration or the covenants, conditions, easements or restrictions against the Resort (or any portion thereof) in any material respects, except that if any amendment or modification is required either (a) to cause additional Units and Intervals to be annexed into the timeshare regime of the Resort, or (b) by law, Borrower shall implement the same and give prompt written notice thereof to Lender. Subsequent to the Funding Date, Borrower, without Lender's prior written consent, shall not amend, modify or terminate the Declaration or the covenants, conditions, easements or restrictions against the Resort (or any portion thereof), except that if any amendment or modification is required either (a) to cause additional Units and Intervals to be annexed into the timeshare regime of the Resort, or (b) by law, Borrower shall implement the same and give prompt written notice thereof to Lender. 6.4 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 of the rights of Lender in the Collateral. 6.5 No Sales Outside of Certain States. Borrower shall not market, attempt to sell or sell any Intervals outside of the State of South Carolina, unless, prior to taking any such actions, Borrower delivers to Lender any applicable Compliance Documents. 6.6 Contracts. Borrower shall not materially amend, modify or assign to any other party any management, marketing, servicing, maintenance or other similar contract for the Resort. 6.7 Contracts Receivable. Borrower shall not pledge, sell, assign any PreSale Contracts Receivable or Contracts Receivable to any person other than Lender for so long as any amount remains outstanding pursuant to the inventory component of the Loan. Except for the sale of a Unit or Interval to a Purchaser, and the encumbrance of such Unit or Interval as security for the Loan, Borrower shall not otherwise assign, convey, transfer or cause to be encumbered any interest in any Unit or Interval. All easements, declarations of covenants, conditions and restrictions and private and public dedications affecting such unsold Units and Intervals shall be submitted to Lender for its 19

approval and such approval must be obtained prior to the execution or granting of any thereof by Borrower. SECTION 7. EVENTS OF DEFAULT An "Event of Default" shall exist if any of the following shall occur: 7.1 Payments. Borrower shall fail to make any payment of the Indebtedness within five (5) days of the date such payment is due. 7.2 Failure to Permit Inspections and Commence and Complete Construction. Borrower shall fail to strictly comply with the provisions of Section 5.4 and 5.19 of this Agreement. 7.3 Covenant Defaults. Borrower shall fail to perform or observe any covenant, agreement or obligation contained in this Agreement or in any of the Loan Documents (other than any covenant or agreement obligating Borrower to pay the Indebtedness), and such failure shall continue for thirty (30) days after Lender delivers written notice thereof to Borrower, provided, however, if the failure is incapable of cure within such thirty (30) day period and Borrower shall be diligently pursuing a cure, such thirty (30) day cure period shall be extended by an additional period not to exceed sixty (60) additional days or a total of ninety (90) days. 7.4 Warranties or Representations. Any representation or other statement made by or on behalf of Borrower in this Agreement, in any of the Loan Documents or in any instrument furnished in compliance with or in reference to the Loan Documents, shall be false, misleading or incorrect in any material respect as of the date made. 7.5 Bankruptcy. A petition under any Chapter of Title 11 of the United States Code or any similar law or regulation is filed by or against Borrower, or Guarantor (and in the case of an involuntary petition in bankruptcy, such petition is not discharged within sixty (60) days of its filing), or a custodian, receiver or trustee for any of the Resort is appointed, or Borrower, or Guarantor makes an assignment for the benefit of creditors, or any of them are adjudged insolvent by any state or federal court of competent jurisdiction, or any of them admit their insolvency or inability to pay their debts as they become due or an attachment or execution is levied against any of the Resort. 7.6 Attachment, Judgment, Tax Liens. The issuance, filing or levy against Borrower or Guarantor

approval and such approval must be obtained prior to the execution or granting of any thereof by Borrower. SECTION 7. EVENTS OF DEFAULT An "Event of Default" shall exist if any of the following shall occur: 7.1 Payments. Borrower shall fail to make any payment of the Indebtedness within five (5) days of the date such payment is due. 7.2 Failure to Permit Inspections and Commence and Complete Construction. Borrower shall fail to strictly comply with the provisions of Section 5.4 and 5.19 of this Agreement. 7.3 Covenant Defaults. Borrower shall fail to perform or observe any covenant, agreement or obligation contained in this Agreement or in any of the Loan Documents (other than any covenant or agreement obligating Borrower to pay the Indebtedness), and such failure shall continue for thirty (30) days after Lender delivers written notice thereof to Borrower, provided, however, if the failure is incapable of cure within such thirty (30) day period and Borrower shall be diligently pursuing a cure, such thirty (30) day cure period shall be extended by an additional period not to exceed sixty (60) additional days or a total of ninety (90) days. 7.4 Warranties or Representations. Any representation or other statement made by or on behalf of Borrower in this Agreement, in any of the Loan Documents or in any instrument furnished in compliance with or in reference to the Loan Documents, shall be false, misleading or incorrect in any material respect as of the date made. 7.5 Bankruptcy. A petition under any Chapter of Title 11 of the United States Code or any similar law or regulation is filed by or against Borrower, or Guarantor (and in the case of an involuntary petition in bankruptcy, such petition is not discharged within sixty (60) days of its filing), or a custodian, receiver or trustee for any of the Resort is appointed, or Borrower, or Guarantor makes an assignment for the benefit of creditors, or any of them are adjudged insolvent by any state or federal court of competent jurisdiction, or any of them admit their insolvency or inability to pay their debts as they become due or an attachment or execution is levied against any of the Resort. 7.6 Attachment, Judgment, Tax Liens. The issuance, filing or levy against Borrower or Guarantor of one or more attachments, injunctions, executions, tax liens or judgments for the payment of money cumulatively in excess of $50,000, which is not discharged in full or stayed within thirty (30) days after issuance or filing. 7.7 Default by Borrower in Other Agreements. Any default by Borrower in the payment of indebtedness for borrowed money after the expiration of any applicable grace 20

or cure period including, without limitation, a default by Borrower under the Construction Loan Documents; 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; or any default which permits the holders of such indebtedness to elect a majority of the Board of Directors of Borrower. 7.8 Suspension of Sales. The issuance of any stay order, cease and desist order or similar judicial or nonjudicial sanction that materially adversely limits or otherwise affects any Interval sales activities, and, with respect to any such sanction only, such sanction is not dismissed, terminated or rescinded within thirty (30) days after issuance. SECTION 8. REMEDIES 8.1 Remedies upon Default. Upon the occurrence of an Event of Default, Lender may take any one or more of the following actions, all without notice to Borrower: (a) Acceleration. Declare the unpaid balance of the Indebtedness, or any part thereof, immediately due and payable, whereupon the same shall be due and payable. (b) Termination of Obligation to Advance. Terminate any commitment of Lender to lend under this Agreement in its entirety, or any portion of any such commitment, to the extent Lender shall deem appropriate. (c) Judgment. Reduce Lender's claim to judgment, foreclose or otherwise enforce Lender's security interest in all or any part of the Collateral by any available judicial procedure, including, without limitation, the foreclosure of the Mortgage. (d) Sale of Collateral. Exercise all the rights and remedies of a secured party on default under the UCC (whether or not the UCC 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 which is reasonably convenient to both parties; (II) enter upon any premises of Borrower and take possession of the Collateral; and (111) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the 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

or cure period including, without limitation, a default by Borrower under the Construction Loan Documents; 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; or any default which permits the holders of such indebtedness to elect a majority of the Board of Directors of Borrower. 7.8 Suspension of Sales. The issuance of any stay order, cease and desist order or similar judicial or nonjudicial sanction that materially adversely limits or otherwise affects any Interval sales activities, and, with respect to any such sanction only, such sanction is not dismissed, terminated or rescinded within thirty (30) days after issuance. SECTION 8. REMEDIES 8.1 Remedies upon Default. Upon the occurrence of an Event of Default, Lender may take any one or more of the following actions, all without notice to Borrower: (a) Acceleration. Declare the unpaid balance of the Indebtedness, or any part thereof, immediately due and payable, whereupon the same shall be due and payable. (b) Termination of Obligation to Advance. Terminate any commitment of Lender to lend under this Agreement in its entirety, or any portion of any such commitment, to the extent Lender shall deem appropriate. (c) Judgment. Reduce Lender's claim to judgment, foreclose or otherwise enforce Lender's security interest in all or any part of the Collateral by any available judicial procedure, including, without limitation, the foreclosure of the Mortgage. (d) Sale of Collateral. Exercise all the rights and remedies of a secured party on default under the UCC (whether or not the UCC 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 which is reasonably convenient to both parties; (II) enter upon any premises of Borrower and take possession of the Collateral; and (111) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the 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 Borrower [GRAPHIC OMITTED]

directly. To the extent permitted by law, Borrower hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any law now existing or hereafter enacted. (e) Receiver. Apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Borrower hereby consents to any such appointment. (f) Exercise of Other Rights. Exercise any and all other rights or remedies afforded by any applicable laws or by the Loan Documents as Lender shall deem appropriate, at law, in equity or otherwise, including 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. 8.2 Application of Collateral; Termination of Agreements. Upon the occurrence of an Event of Default, Lender may apply against the Indebtedness any and all Collateral in its possession, any and all balances, credits, deposits, accounts, reserves, indebtedness or other moneys due or owing to Borrower held by Lender hereunder or under any other financing agreement or otherwise, whether accrued or not. 8.3 Waivers. 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 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 exercise thereof, or the exercise of any other right or remedy under the Loan Documents or otherwise. Further, Borrower and Guarantor severally waive notice of the occurrence of any 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 Indebtedness, or by any release or change in any security for the payment or performance of the Indebtedness, regardless of the number of such renewals, extensions, releases or changes. Borrower also hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien created by any of the Loan Documents or to any action brought to enforce the Note or any other obligation secured by the Loan Documents. 8.4 Cumulative Rights. All rights and remedies available to Lender under the Loan Documents shall

directly. To the extent permitted by law, Borrower hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any law now existing or hereafter enacted. (e) Receiver. Apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Borrower hereby consents to any such appointment. (f) Exercise of Other Rights. Exercise any and all other rights or remedies afforded by any applicable laws or by the Loan Documents as Lender shall deem appropriate, at law, in equity or otherwise, including 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. 8.2 Application of Collateral; Termination of Agreements. Upon the occurrence of an Event of Default, Lender may apply against the Indebtedness any and all Collateral in its possession, any and all balances, credits, deposits, accounts, reserves, indebtedness or other moneys due or owing to Borrower held by Lender hereunder or under any other financing agreement or otherwise, whether accrued or not. 8.3 Waivers. 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 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 exercise thereof, or the exercise of any other right or remedy under the Loan Documents or otherwise. Further, Borrower and Guarantor severally waive notice of the occurrence of any 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 Indebtedness, or by any release or change in any security for the payment or performance of the Indebtedness, regardless of the number of such renewals, extensions, releases or changes. Borrower also hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien created by any of the Loan Documents or to any action brought to enforce the Note or any other obligation secured by the Loan Documents. 8.4 Cumulative Rights. All rights and remedies available to Lender under the Loan Documents shall be cumulative and in addition to all other rights and remedies granted to Lender at law or in equity, whether or not the Indebtedness is due and payable and whether or not Lender shall have instituted any suit for collection or other action in connection with the Loan Documents.

SECTION 9. CERTAIN RIGHTS OF LENDER I 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. Borrower agrees to cooperate fully with all of Lender's efforts to preserve the Collateral and Lender's liens and security interests therein. 9.2 Performance by Lender. If Borrower fails to perform any agreement contained herein, Lender may, but shall not be obligated to, cause the performance of, such agreement, and the expenses of Lender incurred in connection therewith shall be payable by Borrower pursuant to Section 10.3 below. 9.3 Fees and Expenses. Borrower agrees to promptly pay all reasonable Costs and all such Costs shall be included as additional Indebtedness bearing interest at the Default Rate until paid. 9.4 Assignment of Lender's Interest. Lender shall have the right to assign all or any portion of its rights in this Agreement to any subsequent holder or holders of the Indebtedness. 9.5 Notice to Purchaser. Borrower authorizes both Lender and the Custodian (but neither Lender nor the Custodian shall be obligated) to communicate at any time and from time to time, whether prior to or after a sale of an Interval, with any Purchaser or any other Person primarily or secondarily liable under a Financed Pre-Sale Contract Receivable or Financed Contract Receivable with regard to the lien of Lender thereon and any other matter relating thereto. Lender may perform, at Borrowers expense, any and all credit investigations as Lender may deem necessary to determine whether any such Purchaser's purchase contract meets the requirements to be an Eligible Pre-Sale Contract Receivable or Eligible Contract Receivable. 9.6 Collection of Contracts. Borrower shall direct and authorize each party liable for the payment of the Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable to pay each installment thereon to Lockbox Agent pursuant to the Lockbox Agreement, after which such parties are directed upon the occurrence of an Event of Default to make all further payments on the Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable in accordance with the directions of Lender. Following the occurrence of an Event of Default, Lender shall have the right to (a) require that all payments due under the Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable be paid directly to Lender, and to receive, collect, hold and apply the same in accordance with the provisions of this Agreement, and (b) take such remedial action available to it for the enforcement of any defaulted Financed Pre-Sale Contract Receivable or Financed Contract Receivable

SECTION 9. CERTAIN RIGHTS OF LENDER I 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. Borrower agrees to cooperate fully with all of Lender's efforts to preserve the Collateral and Lender's liens and security interests therein. 9.2 Performance by Lender. If Borrower fails to perform any agreement contained herein, Lender may, but shall not be obligated to, cause the performance of, such agreement, and the expenses of Lender incurred in connection therewith shall be payable by Borrower pursuant to Section 10.3 below. 9.3 Fees and Expenses. Borrower agrees to promptly pay all reasonable Costs and all such Costs shall be included as additional Indebtedness bearing interest at the Default Rate until paid. 9.4 Assignment of Lender's Interest. Lender shall have the right to assign all or any portion of its rights in this Agreement to any subsequent holder or holders of the Indebtedness. 9.5 Notice to Purchaser. Borrower authorizes both Lender and the Custodian (but neither Lender nor the Custodian shall be obligated) to communicate at any time and from time to time, whether prior to or after a sale of an Interval, with any Purchaser or any other Person primarily or secondarily liable under a Financed Pre-Sale Contract Receivable or Financed Contract Receivable with regard to the lien of Lender thereon and any other matter relating thereto. Lender may perform, at Borrowers expense, any and all credit investigations as Lender may deem necessary to determine whether any such Purchaser's purchase contract meets the requirements to be an Eligible Pre-Sale Contract Receivable or Eligible Contract Receivable. 9.6 Collection of Contracts. Borrower shall direct and authorize each party liable for the payment of the Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable to pay each installment thereon to Lockbox Agent pursuant to the Lockbox Agreement, after which such parties are directed upon the occurrence of an Event of Default to make all further payments on the Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable in accordance with the directions of Lender. Following the occurrence of an Event of Default, Lender shall have the right to (a) require that all payments due under the Financed Pre-Sale Contracts Receivable or Financed Contracts Receivable be paid directly to Lender, and to receive, collect, hold and apply the same in accordance with the provisions of this Agreement, and (b) take such remedial action available to it for the enforcement of any defaulted Financed Pre-Sale Contract Receivable or Financed Contract Receivable including, without limitation, filing a certificate of default in Horry County, South Carolina which terminates Purchaser's interest in the

Interval. Borrower hereby further irrevocably authorizes, directs and empowers Lender 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. Upon payment and satisfaction in full of all Indebtedness, Lender will, at Borrower's request and sole expense, give written notice as necessary to redirect payment of the Financed Pre-Sale Contract Receivable or Financed Contract Receivable as requested by Borrower. 9.7 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 9.6 above; (b) to demand and receive from time to time any and all property, rights, titles, interests and liens hereby sold, assigned and transferred, or intended so to be, and to give receipts for same; and (c) upon the occurrence and during the continuance of any Event of Default hereunder, (i) to institute and prosecute in the name of Borrower or otherwise, but for the benefit of Lender, 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, and (11) generally to do all and any such acts and things in relation to the Collateral as Lender shall in good faith deem advisable. Borrower hereby declares that the appointment made and the powers granted pursuant to this Section are coupled with an interest and are and shall be irrevocable by Borrower in any manner, or for any reason, unless and until all obligations of Borrower to Lender have been satisfied. 9.8 Indemnification of Lender. Borrower shall indemnify Lender and hold Lender harmless from and against any and all liabilities, indebtedness, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Lender, in any way relating to or arising out of (a) this Agreement and the Loan Documents and/or (b) any of the transactions contemplated therein or thereby (including those in any way relating to or arising out of the violation by Borrower

Interval. Borrower hereby further irrevocably authorizes, directs and empowers Lender 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. Upon payment and satisfaction in full of all Indebtedness, Lender will, at Borrower's request and sole expense, give written notice as necessary to redirect payment of the Financed Pre-Sale Contract Receivable or Financed Contract Receivable as requested by Borrower. 9.7 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 9.6 above; (b) to demand and receive from time to time any and all property, rights, titles, interests and liens hereby sold, assigned and transferred, or intended so to be, and to give receipts for same; and (c) upon the occurrence and during the continuance of any Event of Default hereunder, (i) to institute and prosecute in the name of Borrower or otherwise, but for the benefit of Lender, 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, and (11) generally to do all and any such acts and things in relation to the Collateral as Lender shall in good faith deem advisable. Borrower hereby declares that the appointment made and the powers granted pursuant to this Section are coupled with an interest and are and shall be irrevocable by Borrower in any manner, or for any reason, unless and until all obligations of Borrower to Lender have been satisfied. 9.8 Indemnification of Lender. Borrower shall indemnify Lender and hold Lender harmless from and against any and all liabilities, indebtedness, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Lender, in any way relating to or arising out of (a) this Agreement and the Loan Documents and/or (b) any of the transactions contemplated therein or thereby (including those in any way relating to or arising out of the violation by Borrower of any federal or state laws including the Interstate Land Sales Full Disclosure Act or the Timeshare Act). Upon receiving knowledge of any suit, claim or demand asserted by a third party that Lender believes is covered by this indemnity, and subject to the condition that no Event of Default under this Agreement shall then exist, Lender shall give Borrower notice of the matter and an opportunity to defend it, at Borrower's sole cost and expense, with legal counsel satisfactory to Lender. Notwithstanding any defense by Borrower of any such suit, claim or demand, Lender shall have the right to participate in any material decision 24

affecting the conduct or settlement of any dispute or proceeding for which indemnification may be claimed. SECTION 10. MISCELLANEOUS 10.1 Notice. Any notice or other communication required or permitted to be given shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier or U.S. Mail and shall be deemed given: (a) if served in person, when served; (b) if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on a business day; Provided that a hard copy of such notice is also sent pursuant to (c) or (d) below; (c) if by overnight courier, on the first business day after delivery to the courier; or (d) if by U.S. Mail, certified or registered mail, return receipt requested on the fourth (4th) day after deposit in the mail postage prepaid. Notices to Borrower: Notices to Lender: With a copy to: Patten Resorts, Inc. Attn: Patrick E. Rondeau,

affecting the conduct or settlement of any dispute or proceeding for which indemnification may be claimed. SECTION 10. MISCELLANEOUS 10.1 Notice. Any notice or other communication required or permitted to be given shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier or U.S. Mail and shall be deemed given: (a) if served in person, when served; (b) if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on a business day; Provided that a hard copy of such notice is also sent pursuant to (c) or (d) below; (c) if by overnight courier, on the first business day after delivery to the courier; or (d) if by U.S. Mail, certified or registered mail, return receipt requested on the fourth (4th) day after deposit in the mail postage prepaid. Notices to Borrower: Notices to Lender: With a copy to: Patten Resorts, Inc. Attn: Patrick E. Rondeau, Esquire 5295 Town Center Road, Suite 400 Boca Raton, Florida 33486 Telephone: (407) 361-2705 Telecopy: (407) 361-2800 Heller Financial, Inc. Real Estate Financial Services Attn: Portfolio Manager, Sales Finance Division R.E. Loan No. 95-203 500 West Monroe St. 15th Fl. Chicago, Illinois 60661 Telecopy: (312) 441-7119 Heller Financial, Inc. Real Estate Financial Services Attn: Group General Counsel R.E. Loan No. 95-203 500 West Monroe St. 15th Fl. Chicago, Illinois 60661 Telecopy: (312) 441-7872 10.2 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 the extension of the 25

Indebtedness (and each part thereof), regardless of any investigation made by or on behalf of Lender. 10.3 Governing Law. This Agreement and the other Loan Documents (except as may be expressly provided therein to the contrary) shall be governed by and construed in accordance with the laws of the State of Illinois and applicable laws of the United States. 10.4 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 provision had never comprised a part hereof or thereof, and the remaining provisions hereof or thereof shall remain in full force and effect. 10.5 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 or more counterparts hereof signed by Borrower and Lender. 10.6 Lender Not 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

Indebtedness (and each part thereof), regardless of any investigation made by or on behalf of Lender. 10.3 Governing Law. This Agreement and the other Loan Documents (except as may be expressly provided therein to the contrary) shall be governed by and construed in accordance with the laws of the State of Illinois and applicable laws of the United States. 10.4 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 provision had never comprised a part hereof or thereof, and the remaining provisions hereof or thereof shall remain in full force and effect. 10.5 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 or more counterparts hereof signed by Borrower and Lender. 10.6 Lender Not 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. 10.7 Entire Agreement. This Agreement, including the Exhibits, Schedules and other Loan Documents and agreements referred to herein embody the entire agreement between the parties hereto, supersedes all prior agreements and understandings between the parties whether written or oral relating to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no oral agreements among Lender, Borrower or Guarantor or between any two or more of them. This Agreement may be modified or changed only in a writing executed by both Lender and Borrower and/or the other affected parties. 10.8 Venue. BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED, AT LENDER'S SOLE DISCRETION AND ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. Borrower HEREBY IRREVOCABLY APPOINTS AND DESIGNATES CT CORPORATION SYSTEM

WHOSE ADDRESS IS BORROWER, C/O CT CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, BORROWER SHALL, WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO BORROWER. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH. 10.9 Jury Trial Waiver. BORROWER, GUARANTOR AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER, GUARANTOR AND LENDER, AND BORROWER AND GUARANTOR ACKNOWLEDGE THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER, GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT-TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER

WHOSE ADDRESS IS BORROWER, C/O CT CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, BORROWER SHALL, WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO BORROWER. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH. 10.9 Jury Trial Waiver. BORROWER, GUARANTOR AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER, GUARANTOR AND LENDER, AND BORROWER AND GUARANTOR ACKNOWLEDGE THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER, GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT-TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER, GUARANTOR AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL. 10.10 Consent to Advertising and Publicity. Borrower hereby consents that Lender may issue and disseminate to the public information describing the credit accommodation entered into pursuant to this Agreement. 10.11 Headings. Section headings have been inserted in the Agreement as a matter of convenience of reference only; such section headings are not a part of the Agreement and shall not be used in the interpretation of this Agreement. 27

10.12 Broker's Fees. There are no brokers. finders' or other similar fees or commitments due with respect to the transactions described in the Agreement. Borrower shall defend Lender and save and hold it harmless from all claims of any Persons for any such fees which indemnity shall include reasonable attorneys' fees and legal expenses. 10.13 Non-Disturbance. Lender agrees that so long as a Purchaser of an Interval is not in default according to the terms of his or her purchase contract and any of the Project Instruments described therein that Lender shall not disturb or impair any rights of such Purchaser to have access to and use the Resort in accordance with the terms of his or her purchase contract or the Project Instruments. The parties hereto have executed this Agreement or have caused the same to be executed by their duly authorized representatives as of the date first above written. BORROWER: WITNESSES:

PATTEN RESORTS, INC. By: Alan L. Murray Name: Alan L. Murray Its: Treasurer

10.12 Broker's Fees. There are no brokers. finders' or other similar fees or commitments due with respect to the transactions described in the Agreement. Borrower shall defend Lender and save and hold it harmless from all claims of any Persons for any such fees which indemnity shall include reasonable attorneys' fees and legal expenses. 10.13 Non-Disturbance. Lender agrees that so long as a Purchaser of an Interval is not in default according to the terms of his or her purchase contract and any of the Project Instruments described therein that Lender shall not disturb or impair any rights of such Purchaser to have access to and use the Resort in accordance with the terms of his or her purchase contract or the Project Instruments. The parties hereto have executed this Agreement or have caused the same to be executed by their duly authorized representatives as of the date first above written. BORROWER: WITNESSES:

PATTEN RESORTS, INC. By: Alan L. Murray Name: Alan L. Murray Its: Treasurer (CORPORATE SEAL) LENDER: HELLER FiNANCIAL, INC. 8y: Name: Dawn Graton Its: Assistant Vice President (CORPORATE SEAL)

GUARANTOR: WITNESSES: PATTEN CORPORATION By: Alan C. Murray (CORPORATE SEAL)

CWP.349.FINOVA.PIGEON.LNAG.004 ACQUISITION, CONSTRUCTION AND RECEIVABLES LOAN AND SECURITY AGREEMENT This ACQUISITION, CONSTRUCTION AND RECEIVABLES LOAN AND SECURITY AGREEMENT is entered into as of June@, 1995, by and between FINOVA CAPITAL CORPORATION, a Delaware corporation, and PATTEN CORPORATION, a Massachusetts corporation. 1. DEFINITIONS As used in this Agreement and the other Documents (as defined below) unless otherwise expressly indicated in this Agreement or the other Documents, the following terms shall have the following meanings (such meanings to be applicable equally both to the singular and plural terms defined).

GUARANTOR: WITNESSES: PATTEN CORPORATION By: Alan C. Murray (CORPORATE SEAL)

CWP.349.FINOVA.PIGEON.LNAG.004 ACQUISITION, CONSTRUCTION AND RECEIVABLES LOAN AND SECURITY AGREEMENT This ACQUISITION, CONSTRUCTION AND RECEIVABLES LOAN AND SECURITY AGREEMENT is entered into as of June@, 1995, by and between FINOVA CAPITAL CORPORATION, a Delaware corporation, and PATTEN CORPORATION, a Massachusetts corporation. 1. DEFINITIONS As used in this Agreement and the other Documents (as defined below) unless otherwise expressly indicated in this Agreement or the other Documents, the following terms shall have the following meanings (such meanings to be applicable equally both to the singular and plural terms defined).
1.1 1.2 "Acquisition Loan": the Loan made pursuant to paragraph 2.1(a). "Acquisition Loan Advance": the Advance of the proceeds of the . Acquisition Loan by Lender on behalf of Borrower in accordance with the terms of this Agreement. "Acquisition Loan Borrowing Term": the period commencing on the date of this agreement and ending on the close of the Business Day (or if not a Business Day, the first Business Day thereafter) which is ninety (90) days from April 21, 1995 (the date of Lender approval of the Loans]. "Acquisition Loan Maturity Date": the date (or if not a Business Day, the first Business Day thereafter) thirty-six (36) months from (i) the date the Acquisition Loan is fully funded, or (ii) the last day of the Acquisition Loan Borrowing Term, whichever is earlier. "Acquisition Loan Note": the "Acquisition Loan Promissory Note"

1.3

1. 4

1.5

in form and substance identical to Exhibit D-1 to be made and delivered by Borrower to Lender pursuant to paragraph 4.IA(a)(i), as it may be from time to time renewed, amended, restated or replaced.
1.6 1.7 "Acquisition/Receivables Loan Fee: Sixty-Two Thousand Dollars ($62,000). "Advances": the Acquisition Loan Advance, the Advances and the Receivables Loan Advances; and "Advance": one of the Advances. Construction Loan

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CWP.349.FINOVA.PIGEON.LNAG.004 ACQUISITION, CONSTRUCTION AND RECEIVABLES LOAN AND SECURITY AGREEMENT This ACQUISITION, CONSTRUCTION AND RECEIVABLES LOAN AND SECURITY AGREEMENT is entered into as of June@, 1995, by and between FINOVA CAPITAL CORPORATION, a Delaware corporation, and PATTEN CORPORATION, a Massachusetts corporation. 1. DEFINITIONS As used in this Agreement and the other Documents (as defined below) unless otherwise expressly indicated in this Agreement or the other Documents, the following terms shall have the following meanings (such meanings to be applicable equally both to the singular and plural terms defined).
1.1 1.2 "Acquisition Loan": the Loan made pursuant to paragraph 2.1(a). "Acquisition Loan Advance": the Advance of the proceeds of the . Acquisition Loan by Lender on behalf of Borrower in accordance with the terms of this Agreement. "Acquisition Loan Borrowing Term": the period commencing on the date of this agreement and ending on the close of the Business Day (or if not a Business Day, the first Business Day thereafter) which is ninety (90) days from April 21, 1995 (the date of Lender approval of the Loans]. "Acquisition Loan Maturity Date": the date (or if not a Business Day, the first Business Day thereafter) thirty-six (36) months from (i) the date the Acquisition Loan is fully funded, or (ii) the last day of the Acquisition Loan Borrowing Term, whichever is earlier. "Acquisition Loan Note": the "Acquisition Loan Promissory Note"

1.3

1. 4

1.5

in form and substance identical to Exhibit D-1 to be made and delivered by Borrower to Lender pursuant to paragraph 4.IA(a)(i), as it may be from time to time renewed, amended, restated or replaced.
1.6 1.7 "Acquisition/Receivables Loan Fee: Sixty-Two Thousand Dollars ($62,000). "Advances": the Acquisition Loan Advance, the Advances and the Receivables Loan Advances; and "Advance": one of the Advances. Construction Loan

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CWP.349.FINOVA.PIGEON.LNAG.004 1.8 "Affidavit of Borrower': a sworn Affidavit of Borrower (and such other parties as Lender may require) in the form of Exhibit J-ID, to accompany a Construction Loan Advance Request. 1.9 'Affiliate': with respect to any individual or entity, any other individual or entity that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such individual or entity. 1.10 "Agents": the Servicing Agent, the Lockbox Agent, and the Contracts Escrow Agent. 1.11 'Agreement': this Acquisition, Construction and Receivables Loan and Security Agreement, as it may be

CWP.349.FINOVA.PIGEON.LNAG.004 1.8 "Affidavit of Borrower': a sworn Affidavit of Borrower (and such other parties as Lender may require) in the form of Exhibit J-ID, to accompany a Construction Loan Advance Request. 1.9 'Affiliate': with respect to any individual or entity, any other individual or entity that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such individual or entity. 1.10 "Agents": the Servicing Agent, the Lockbox Agent, and the Contracts Escrow Agent. 1.11 'Agreement': this Acquisition, Construction and Receivables Loan and Security Agreement, as it may be from time to time renewed, amended, restated or replaced. 1.12 "Applicable Usury Law": the usury law chosen by the parties pursuant to the terms of paragraph 9.10 or such other usury law which is applicable if such usury law is not. 1. 13 "Architect/Engineer": an architect, design professional or engineer employed by Borrower to perform architectural, design or engineering services. 1.14 Architect/Engineer Agreement": a contract (written or oral, now or hereafter in effect) between Borrower and an Architect/Engineer for the performance of architectural or engineering services, as approved by Lender in writing and modified from time to time with Lender's prior written consent. 1.15 "Articles of Organization': the charter, articles, operating agreement, partnership agreement, by-laws and any other written documents evidencing the formation, organization and continuing existence of an entity. 1.16 "Borrower": Patten Corporation, a Massachusetts corporation; and, subject to the restrictions on assignment and transfer contained in this Agreement, its successors and assigns. 1.17 "Borrower's Assignment(s)": a written assignment or assignments, including, without limitation, the Contracts Escrow Assignment, the Time-Share Program Governing Documents Assignment and the Time-Share Management Agreement Assignment, which may be separate from and/or included within the Borrower's Mortgage, executed by Borrower and creating in favor of Lender, as security for the Performance of the Obligations, a perfected, direct, first and exclusive assignment of the following (subject only to the Permitted Encumbrances): all leases, sales contracts, rents and sales and other proceeds pertaining to or arising from the Real Property or any business of Borrower conducted thereon; the

CWP.349.FINOVA.PIGEON.LNAG.004 - -Architect/Engineer Agreement(s), the Construction Contract(s), and the other Contracts, Intangibles, Licenses and Permits; and all rights which Borrower has with respect to the Real Property or Time-Share Program under the Time-Share Declaration or any other covenants, declarations or restrictions affecting any portion of the Real Property; as such assignments may be from time to time renewed, amended, restated or replaced.
1.18 "Borrower's Mortgage': a deed of trust executed by Borrower and under the terms of which Borrower has conveyed or granted in favor of Lender, as security for the Performance of the Obligations, a perfected, direct, first and exclusive priority lien- subject only to the Permitted Encumbrances, upon the Real Property, as it may be from time to time renewed, amended, restated or replaced. 1.19 "Borrower's Security Agreement": a written security agreement which may be separate from and/or included within the Borrower's Mortgage or this Agreement, executed by Borrower and creating in favor of Lender, as security for the Performance of the Obligations, a perfected, direct, first and exclusive priority security interest, subject only to the Permitted Encumbrances, in the Personal Property, as it may be from time to time renewed, amended, restated or replaced.

CWP.349.FINOVA.PIGEON.LNAG.004 - -Architect/Engineer Agreement(s), the Construction Contract(s), and the other Contracts, Intangibles, Licenses and Permits; and all rights which Borrower has with respect to the Real Property or Time-Share Program under the Time-Share Declaration or any other covenants, declarations or restrictions affecting any portion of the Real Property; as such assignments may be from time to time renewed, amended, restated or replaced.
1.18 "Borrower's Mortgage': a deed of trust executed by Borrower and under the terms of which Borrower has conveyed or granted in favor of Lender, as security for the Performance of the Obligations, a perfected, direct, first and exclusive priority lien- subject only to the Permitted Encumbrances, upon the Real Property, as it may be from time to time renewed, amended, restated or replaced. 1.19 "Borrower's Security Agreement": a written security agreement which may be separate from and/or included within the Borrower's Mortgage or this Agreement, executed by Borrower and creating in favor of Lender, as security for the Performance of the Obligations, a perfected, direct, first and exclusive priority security interest, subject only to the Permitted Encumbrances, in the Personal Property, as it may be from time to time renewed, amended, restated or replaced. Security Documents": the Borrower's Mortgage, the

1.20

"Borrower's

Borrower's Security Agreement, the Borrower's Assignments, this Agreement and all other documents now or hereafter securing the Obligations, as they may from time to time renewed, amended, restated or replaced. 1.21 "Borrowing Base': with respect to an Eligible Instrument an amount equal to the lesser of: (a) ninety percent (90%) of the unpaid principal balance of such Eligible Instrument; or (b) ninety percent (90%) of the present value of the.unmatured installments of principal and interest under such Eligible Instrument, discounted at the higher of (i) the applicable interest rate under the terms of the Note or (ii) the Discount Rate. 1.22 "Business Day": any day other than a Saturday, Sunday or a day on which banks in Phoenix, Arizona are required to close. 1.23 "Collateral": the Real Property, Personal Property,Receivables Col1- ateral , Insurance Policies and any and al1 other property now or hereafter serving as security for the Performance of the Obligations, and all products and proceeds thereof.

CWP.349.FiNOVA.PIGEON.LNAG.004 1.24 -"Completion": for each Phase of Construction, (a) completion of the Work, in accordance with the Plans and Specifications, the Construction Contract(s), all applicable laws, regulations and private restrictions, the Documents, sound construction, engineering and architectural principles and commonly accepted safety- standards, free of liens and free of defective materials and workmanship; (b) expiration of the statutory period in which mechanics' liens and similar liens can be filed; and (c) receipt by Lender of the following in form and substance satisfactory to it: (i) a certificate of completion from Borrower and Architect and, if Lender elects, from Lender's Inspector to the effect that the Work has been so completed, all utilities necessary to serve the Real Property have been connected and are operating, the Improvements are ready for occupancy for the intended timeshare purposes, and final payment is due under all Construction Contract(s) between Borrower and a Contractor;

CWP.349.FiNOVA.PIGEON.LNAG.004 1.24 -"Completion": for each Phase of Construction, (a) completion of the Work, in accordance with the Plans and Specifications, the Construction Contract(s), all applicable laws, regulations and private restrictions, the Documents, sound construction, engineering and architectural principles and commonly accepted safety- standards, free of liens and free of defective materials and workmanship; (b) expiration of the statutory period in which mechanics' liens and similar liens can be filed; and (c) receipt by Lender of the following in form and substance satisfactory to it: (i) a certificate of completion from Borrower and Architect and, if Lender elects, from Lender's Inspector to the effect that the Work has been so completed, all utilities necessary to serve the Real Property have been connected and are operating, the Improvements are ready for occupancy for the intended timeshare purposes, and final payment is due under all Construction Contract(s) between Borrower and a Contractor; (ii) a certificate of occupancy (or its equivalent) from the appropriate governmental authority having jurisdiction over the Work which has the effect of allowing the use of Improvements for the intended time-share purposes; (iii) if applicable laws provide that the recording of a notice of completion will cause the expiration upon a date certain of the statutory period within which mechanics' and similar liens can be filed, verification of the recording of such notice in the manner prescribed by such laws; (iv)final lien waivers; and (v) the re-issued title policy required pursuant to paragraph 6.4(h). 1.25 "Construction Budget': the detailed budget cost itemization prepared by Borrower and approved in writing by Lender which specifies by item the cost and source of payment of: (a) all labor, materials and services necessary for Completion of the Work in accordance with the Plans and Specifications, the Construction Contract(s), the Documents, all applicable laws, regulations and private restrictions, sound construction, engineering and architectural principles, and commonly accepted safety standards; (b) interest on the Construction Loan; and (c) all other expenses incidental to the Construction Loan and the Completion of the Work. The Construction Budget shall include an interest reserve .and contingency reserve determined to be adequate by Lender. The Construction Budget approved by Lender as of the date of this Agreement is attached as Exhibit H.

CWP.349.FINOVA.PIGEON.LNAG.004 1.26 ."Construction Contract": a contract (written or oral, now or hereafter in effect) between Borrower and a Contractor, between a Contractor and any other person or entity relating in any way to the construction of the Improvements, including the performing of labor and the furnishing of equipment, materials or services (other than architectural or engineering services), as approved by Lender in writing and modified from time to time with Lender's prior written consent. 1.27 "Construction Loan*: the loan made pursuant to paragraph 2.1(b). 1.28 "Construction Loan Advance": an advance of the proceeds of the Construction Loan by Lender on behalf of Borrower in accordance with the terms and conditions of this Agreement. 1.29 "Construction Loan Advance Request": the written application of Borrower on Lender's standard forms made by Borrower and such other parties as Lender may require specifying by name and amount all parties to whom Borrower is obligated for labor, materials, equipment or services supplied for the perfomance of the Work and all other expenses incidental to the Construction Loan, the Real Property and the Completion of the Work, and requesting a Construction Loan Advance for payment of such items, accompanied by an Affidavit of Borrower and such schedules, affidavits, releases, waivers, statements, invoices, bills and other documents as Lender may reasonably request.
1.30 "Construction Loan Borrowing Term": the period commencing on the date

CWP.349.FINOVA.PIGEON.LNAG.004 1.26 ."Construction Contract": a contract (written or oral, now or hereafter in effect) between Borrower and a Contractor, between a Contractor and any other person or entity relating in any way to the construction of the Improvements, including the performing of labor and the furnishing of equipment, materials or services (other than architectural or engineering services), as approved by Lender in writing and modified from time to time with Lender's prior written consent. 1.27 "Construction Loan*: the loan made pursuant to paragraph 2.1(b). 1.28 "Construction Loan Advance": an advance of the proceeds of the Construction Loan by Lender on behalf of Borrower in accordance with the terms and conditions of this Agreement. 1.29 "Construction Loan Advance Request": the written application of Borrower on Lender's standard forms made by Borrower and such other parties as Lender may require specifying by name and amount all parties to whom Borrower is obligated for labor, materials, equipment or services supplied for the perfomance of the Work and all other expenses incidental to the Construction Loan, the Real Property and the Completion of the Work, and requesting a Construction Loan Advance for payment of such items, accompanied by an Affidavit of Borrower and such schedules, affidavits, releases, waivers, statements, invoices, bills and other documents as Lender may reasonably request.
1.30 "Construction Loan Borrowing Term": the period commencing on the date of this Agreement and ending on the close of the Business Day (or if not a Business Day, the first Business Day thereafter) which is the earlier of (a) the date twelve (12) months from the date of the first Construction Loan Advance or (b) June 28, 1996.

1.31 "Construction Loan Fee": One percent (1.0%) of the amount of any Construction Loan Advance, payable at the time of any such Advance. 1.32 "Construction Loan Maturity Date": the date (or if not a Business Day, the first Business Day thereafter) thirty-six (36) months from the date of the final Construction Loan Advance. 1.33 "Construction Loan Note": the "Construction Loan Promissory Note" in form and substance identical to Exhibit D-2 to be made and delivered by Borrower to Lender pursuant to paragraph 4. 1A (a) (i i ) , as it may be from time to time renewed, amended, restated or replaced. 1.34 "Contract for Deed": a contract for deed pursuant to which Borrower has agreed to sell and a third party has agreed to purchase a Time-Share Interest.

CWP.349.FINOVA.PIGEON.LNAG.004 1.35 -"Contractor": a contractor employed by Borrower to provide labor and/or to furnish equipment, materials or services for any portion of the Work. 1.36 "Contracts Escrow': the escrow established with Contracts Escrow Agent pursuant to paragraph 5.4. 1.37 "Contracts Escrow Agent': a licensed escrow agent reasonably acceptable to Lender and Borrower, to be identified prior to execution of the Contracts Escrow Assignment, or its successor under the Contracts Escrow Assignment. 1.38 "Contracts Escrow Assignment": a written assignment to be made among Borrower, Lender and Contracts Escrow Agent, which grants to Lender a perfected, direct, first and exclusive assignment of and security interest, subject only to the Permitted Encumbrances, in all of Borrower's right, title and interest in, to and under the Contracts Escrow, as it may be from time to time renewed, amended, restated or replaced.

CWP.349.FINOVA.PIGEON.LNAG.004 1.35 -"Contractor": a contractor employed by Borrower to provide labor and/or to furnish equipment, materials or services for any portion of the Work. 1.36 "Contracts Escrow': the escrow established with Contracts Escrow Agent pursuant to paragraph 5.4. 1.37 "Contracts Escrow Agent': a licensed escrow agent reasonably acceptable to Lender and Borrower, to be identified prior to execution of the Contracts Escrow Assignment, or its successor under the Contracts Escrow Assignment. 1.38 "Contracts Escrow Assignment": a written assignment to be made among Borrower, Lender and Contracts Escrow Agent, which grants to Lender a perfected, direct, first and exclusive assignment of and security interest, subject only to the Permitted Encumbrances, in all of Borrower's right, title and interest in, to and under the Contracts Escrow, as it may be from time to time renewed, amended, restated or replaced. 1.39 "Contracts, Intangibles, Licenses and Permits": the property so described in Exhibit M. 1.40 "Default Rate ": the "Default Rate' as defined in and determined under the Notes. 1.41 "Discount Rate": thirteen percent (13.0%). 1.42 'Documents': the Notes, the Lockbox Agreement, the Servicing Agreement, the Services and Fees Agreement, the Environmental Certificate, this Agreement, the Borrower's Security Documents and all other documents now or hereafter executed in connection with the Loans, as they may be from time to time renewed, amended, restated or replaced. 1.43 "Eligible Instrument": an Instrument which confoms to the standards set forth in Exhibit B. An Instrument that has qualified as an Eligible Instrument shall cease to be an Eligible Instrument upon the date of the first occurrence of any of the fol1owing: (a) any installment due with respect to that Instrument becomes more than 59 days past due unless cured to Lender's satisfaction or (b) that Instrument otherwise fails to continue to conform to the standards set forth in Exhibit B. 1.44 "Environmental Certificate": an environmental certificate executed by Borrower and such other persons or parties as required by Lender in form and substance identical to Exhibit C, as it may be from time to time renewed, amended, restated or replaced. 1.45 "Event of Default": the meaning set forth in paragraph 7.1. -6-

CWP.349.FINOVA.PIGEON.LNAG.004 1.46 "Force Majeure Event": an act of God", a fire, a strike, a governmental order and/or injunction which is issued by a Court of competent jurisdiction for reasons other than for Borrower's acts or omissions which would constitute a default under this Agreement, or a similar event beyond Borrower's reasonable control. 1.47 "improvements': the improvements comprising Phase One of the Time-Share Project to be constructed upon, added to or made to the Real Property as part of the Work, consisting of (i) 25 two bedroom, two bathroom pre-fabricated Units (approximately 1,100 square feet), (ii) a clubhouse, maintenance building and entryway, and (iii) necessary infrastructure, all as set forth in the Plans and Specifications and the Construction Contract(s) and as described in the Construction Budget. 1.48 "Incipient Default": an event which after notice and/or lapse of time would constitute an Event of Default. 1.49 "Instrument": a Contract for Deed which has arisen out of the sale of a Time-Share Interest by Borrower to

CWP.349.FINOVA.PIGEON.LNAG.004 1.46 "Force Majeure Event": an act of God", a fire, a strike, a governmental order and/or injunction which is issued by a Court of competent jurisdiction for reasons other than for Borrower's acts or omissions which would constitute a default under this Agreement, or a similar event beyond Borrower's reasonable control. 1.47 "improvements': the improvements comprising Phase One of the Time-Share Project to be constructed upon, added to or made to the Real Property as part of the Work, consisting of (i) 25 two bedroom, two bathroom pre-fabricated Units (approximately 1,100 square feet), (ii) a clubhouse, maintenance building and entryway, and (iii) necessary infrastructure, all as set forth in the Plans and Specifications and the Construction Contract(s) and as described in the Construction Budget. 1.48 "Incipient Default": an event which after notice and/or lapse of time would constitute an Event of Default. 1.49 "Instrument": a Contract for Deed which has arisen out of the sale of a Time-Share Interest by Borrower to a Purchaser. 1.50 "Insurance Policies": the insurance policies that Borrower is required to maintain and deliver pursuant to paragraph 6.10. 1.51 "Interest Reserve Component": that portion of the Construction Loan not exceeding Three Hundred Thousand Dollars ($300,000) designated solely for the financing of interest payments under the Construction Loan in accordance with paragraph 4.4 hereof. 1.52 " Lender": FINOVA Capital Corporation and its successors and assigns. 1.53 'Lender's Inspector": the meaning given to it in paragraph 8.1. 1.54 'Loans': the Construction Loan and the Receivables Loan 1.55 "Lockbox Agent": Shawmut Bank, N.A., or its successor as lockbox agent under the Lockbox Agreement. 1.56 "Lockbox Agreement": an agreement to be made among Lender, Borrower and Lockbox Agent, which provides for Lockbox Agent to collect through a lockbox payments under Instruments constituting part of the Receivables Collateral and to remit them to Lender, as it may be from time to time renewed, amended, restated or replaced.

CWP.349.FINOVA.PIGEON.LNAG.004 1.57 ."Maximum Acquisition Loan Amount": One Million Two Hundred Thousand Dollars ($1,200,000); provided, however, that at closing Borrower
may, at Borrower's election, add to such amount the fees and costs associated with closing the loans by an amount not to exceed Ten Thousand Dollars ($10,000). 1.58 "Maximum Construction Loan Amount': the positive remainder, if any, obtained by subtracting (a) the product of (i) the Partial Release Fee (Acquisition Loan) (as defined in the Borrower's Mortgage) times (ii) the number of Time-Share Interests released from the Borrower's Mortgage when payment of Partial Release Fee (Acquisition Loan) is required from (b) the lesser of (i) Four Million Two Hundred Fifty Thousand Dollars ($4,250,000), or (ii) seventy-five percent (75%) of the cost of completion of the Improvements as set forth in the Construction Budget initially approved by Lender. "Maximum Receivables Loan Amount': Five Million Dollars ($5,000,000). 1.60 "Minimum Equity': a cash expenditure to be made by Borrower for the

1.59

CWP.349.FINOVA.PIGEON.LNAG.004 1.57 ."Maximum Acquisition Loan Amount": One Million Two Hundred Thousand Dollars ($1,200,000); provided, however, that at closing Borrower
may, at Borrower's election, add to such amount the fees and costs associated with closing the loans by an amount not to exceed Ten Thousand Dollars ($10,000). 1.58 "Maximum Construction Loan Amount': the positive remainder, if any, obtained by subtracting (a) the product of (i) the Partial Release Fee (Acquisition Loan) (as defined in the Borrower's Mortgage) times (ii) the number of Time-Share Interests released from the Borrower's Mortgage when payment of Partial Release Fee (Acquisition Loan) is required from (b) the lesser of (i) Four Million Two Hundred Fifty Thousand Dollars ($4,250,000), or (ii) seventy-five percent (75%) of the cost of completion of the Improvements as set forth in the Construction Budget initially approved by Lender. "Maximum Receivables Loan Amount': Five Million Dollars ($5,000,000). 1.60 "Minimum Equity': a cash expenditure to be made by Borrower for the

1.59

purpose of paying a portion of the Construction Costs, which expenditure shall be equal to the difference between the unpaid cost of Completion of the Work and the Maximum Construction Loan Amount. 1.61 "Minimum Required Time-Share Approvals": all approvals required from governmental agencies in order to sell Time-Share Interests and offer them for sale at the Time-Share Project. 1.62 "Notes": the Acquisition Loan Note, the Construction Loan Note and the Receivables Loan Note; and "Note": one of the Notes. 1.63 "Obligations": all obligations, agreements, duties, covenants and conditions of Borrower to Lender which Borrower is now or hereafter required to Perform under the Documents. 1.64 "Opening Prepayment Date": the date (or if not a Business Day, the first Business Day thereafter) two (2) years after the date of the last Receivables Loan Advance. 1.65 "Oversight Agreement": the agreement to be made among Lender, Borrower, Service Agent and Oversight Agent, which provides for Oversight Agent to perform for the benefit of Lender contain oversight functions with respect to the servicing of the Receivables Collateral, as it may be from time to time renewed. amended, restated or replaced. 1.66 "Partial Release Fee (Construction Loan"): with respect to a timeshare the Borrower's Mortgage, an Share Interest to be released from

CWP.349.FINOVA.PIGE-ON.LNAG.004 amount to be paid at the time of each release and to be determined as provided in the Borrower's Mortgage. 1.67 "Perfomance" or "Perform": full, timely and faithful perfomance 1.68 "Permitted Encumbrances': the rights, restrictions, reservations, encumbrances, easements and liens of record which Lender has agreed to accept as set forth in Exhibit E. 1.69 "Personal Property": the property described in Exhibit M. 1.70 'Phase of Construction": each phase of the Time-Share Project covered by a separate Construction

CWP.349.FINOVA.PIGE-ON.LNAG.004 amount to be paid at the time of each release and to be determined as provided in the Borrower's Mortgage. 1.67 "Perfomance" or "Perform": full, timely and faithful perfomance 1.68 "Permitted Encumbrances': the rights, restrictions, reservations, encumbrances, easements and liens of record which Lender has agreed to accept as set forth in Exhibit E. 1.69 "Personal Property": the property described in Exhibit M. 1.70 'Phase of Construction": each phase of the Time-Share Project covered by a separate Construction Contract approved by Lender. 1.71 'Phase One': Phase One of the Time-Share Project as set forth in the Plans and Specifications and the Construction Contract and as described in the Construction Budget for the Improvements. 1.72 "Plans and Specifications": the architectural, structural, mechanical, electrical and other plans and specifications for the construction of the Improvements and the completion of the rest of the Work prepared by Architect(s)/Engineer(s), as approved by Lender as modified from time to time with Lender's prior written consent. 1.73 "Prepayment Premium": an amount equal to (a) five percent (5%) of the outstanding principal balance of the Receivables Loan in the event of a prepayment of the Receivables Loan occurring prior to the Date or (b)a %, determined in to the Opening Prepayment in accordance with Schedule 1, of the outstanding principal balance of the Receivables Loan in the event of a prepayment of the Receivables Loan occurring subsequent to the Opening Prepayment Date. 1.74 "Principal Work-Related Items": the Plans and Specifications and all agreements between Borrower and third parties pertaining to the Work, including, without limitation, Construction Contract(s) and Architect/ Engineer Agreement(s), as approved by Lender in writing and modified from time to time with Lender's prior written consent. 1.75 "Property": the Real Property and Personal Property. 1.76 "Purchaser": a purchaser who has executed a Contract for Deed. 1.77 . "Real Property": the real property described in Exhibit L.

CWP.349.FINOV@EON.LNAG.004 1.78 "Receivables Assignment": a written assignment of specific Instruments and the proceeds thereof, delivered by Borrower to Lender in the form of Exhibit A. 1.79 "Receivables Collateral': (a) the Instruments which are now or hereafter assigned, endorsed or delivered to Lender pursuant to this Agreement or against which an Advance has been made; (b) all rights under all documents evidencing, securing or otherwise pertaining to such Instruments; (c) the Insurance Policies; (d) all Borrower's rights under any escrow agreements and accounts pertaining to the foregoing; (e) all files, books and records of Borrower pertaining to the foregoing; and (f) the -proceeds from the foregoing. 1.80 "Receivables Loan': the loan made pursuant to paragraph 2.1(b). 1.81 "Receivables Loan Advance": an advance of the proceeds of the Receivables Loan by Lender on behalf of Borrower in accordance with the terms and conditions of this Agreement.

CWP.349.FINOV@EON.LNAG.004 1.78 "Receivables Assignment": a written assignment of specific Instruments and the proceeds thereof, delivered by Borrower to Lender in the form of Exhibit A. 1.79 "Receivables Collateral': (a) the Instruments which are now or hereafter assigned, endorsed or delivered to Lender pursuant to this Agreement or against which an Advance has been made; (b) all rights under all documents evidencing, securing or otherwise pertaining to such Instruments; (c) the Insurance Policies; (d) all Borrower's rights under any escrow agreements and accounts pertaining to the foregoing; (e) all files, books and records of Borrower pertaining to the foregoing; and (f) the -proceeds from the foregoing. 1.80 "Receivables Loan': the loan made pursuant to paragraph 2.1(b). 1.81 "Receivables Loan Advance": an advance of the proceeds of the Receivables Loan by Lender on behalf of Borrower in accordance with the terms and conditions of this Agreement. 1.82 'Receivables Loan Borrowing Term": the period commencing on the date of this Agreement and ending on the close of the Business Day (or if not a Business Day, the first Business Day thereafter) on the earlier of (a) the date eighteen (18) months from the date of the first Receivables Loan Advance or (b) April 28, 1997. 1.83 "Receivables Loan Maturity Date": the date (or if not a Business Day, the first Business Day thereafter) which is eighty-four (84) months from the date of the last Receivables Loan Advance. 1.84 "Receivables Loan Note": the "Receivables Loan Promissory Note" in form and substance identical to Exhibit D-3 to be made and delivered by Borrower to Lender pursuant to paragraph 4. 1 (a) (i i i ) , as it may be from time to time renewed, amended, restated or replaced. 1.85 "Required Completion Assurance Deposit': the definition given to it in paragraph 6.4(k). 1.86 'Required Completion Date': March 31, 1995, plus such additional time which is necessary to achieve Completion of the Work and is due solely to the occurrence of one or more Force Majeure Events. 1.87 "Resolution": a resolution of a corporation certified as true and correct by an authorized officer of such corporation, a certificate signed by the manager of a limited liability company and such members whose approval is required, or a partnership certificate signed by all of the general partners of such partner- ship and such other partners whose approval is required. - -10-

CWP.349.FINOVA.PIGEON.LNAG.004 1.88 ."Security Interest": a perfected, direct, first and exclusive security interest in and charge upon the property intended to be covered by it, subject only to the Permitted Encumbrances. 1.89 "Servicing Agent': Borrower, or its successor as Servicing Agent under the Servicing Agreement. 1.90 "Servicing Agreement": an agreement to be made between, Lender and Servicing Agent, which provides for Servicing Agent to perform for the benefit of Lender accounting, reporting and other servicing functions with respect to the Instruments constituting part of the Receivables Collateral, as it may be from time to time renewed, amended, restated or replaced. 1.91 "Term': the duration of this Agreement, commencing on the date as of which this Agreement is entered into and ending when all of the Obligations shall have been Performed. 1.92 "Third Party Consents": those consents which Lender requires Borrower to obtain, or which Borrower is contractually or legally obligated to obtain, from others in connection with the transaction contemplated by the

CWP.349.FINOVA.PIGEON.LNAG.004 1.88 ."Security Interest": a perfected, direct, first and exclusive security interest in and charge upon the property intended to be covered by it, subject only to the Permitted Encumbrances. 1.89 "Servicing Agent': Borrower, or its successor as Servicing Agent under the Servicing Agreement. 1.90 "Servicing Agreement": an agreement to be made between, Lender and Servicing Agent, which provides for Servicing Agent to perform for the benefit of Lender accounting, reporting and other servicing functions with respect to the Instruments constituting part of the Receivables Collateral, as it may be from time to time renewed, amended, restated or replaced. 1.91 "Term': the duration of this Agreement, commencing on the date as of which this Agreement is entered into and ending when all of the Obligations shall have been Performed. 1.92 "Third Party Consents": those consents which Lender requires Borrower to obtain, or which Borrower is contractually or legally obligated to obtain, from others in connection with the transaction contemplated by the Documents. 1.93 "Time-Share Association": the association which will be provided for in the Time-Share Declaration to manage the Time-Share Program and in which all owners of Time-Share Interests will be members. 1.94 "Time-Share Declaration": the declaration to be recorded in the real estate records where the Real Property is located for the purpose of creating the Time-Share Program. 1.95 "Time-Share Interest": the estate described in Exhibit F in the Time-Share Project. I. 96 "Time-Share Management Agreement": the management agreement from time to time entered into between the Time-Share Association and the Time-Share Manager for the management of the Time-Share Program.
1.97 "Time-Share Management Agreement Assignment": a written assignment to be delivered to Lender (and thereafter redelivered as appropriate) from each Time-Share Manager which is an Affi1iate of Borrower and granting to Lender, as security for the performance of the Obligations, a perfected, direct, first and exclusive assignment of and security interest in the Time-Share Management Agreement, subject only to the Permitted Encumbrances, as it may be from time to time renewed, amended, replaced or restated.

- -II-

CVW.349.FINOVA.PIGEON.LNAG.004 1.98 'Time-Share Manager': the person from time to time employed by Time-Share Association to manage the Time-Share Program. 1.99 "Time-Share Program": the program by which Purchasers may own Time-Share Interests in fee simple, enjoy their respective TimeShare Interests on a recurring basis, and share the expenses associated with the operation and management of such program. 1.100 'Time-Share Program Consumer Documents: the Instrument, deed of conveyance, credit application, credit disclosures, rescission right notices, final subdivision public reports/prospectuses/ public offering statements, exchange affiliation agreement and other documents used or to be used by Borrower in connection with the sale of Time-Share Interests. 1.101 "Time-Share Program Governing Documents": the Time-Share Declaration, the Articles of Organization for the Time-Share Association, any and all rules and regulations from time to time adopted by the Time-Share

CVW.349.FINOVA.PIGEON.LNAG.004 1.98 'Time-Share Manager': the person from time to time employed by Time-Share Association to manage the Time-Share Program. 1.99 "Time-Share Program": the program by which Purchasers may own Time-Share Interests in fee simple, enjoy their respective TimeShare Interests on a recurring basis, and share the expenses associated with the operation and management of such program. 1.100 'Time-Share Program Consumer Documents: the Instrument, deed of conveyance, credit application, credit disclosures, rescission right notices, final subdivision public reports/prospectuses/ public offering statements, exchange affiliation agreement and other documents used or to be used by Borrower in connection with the sale of Time-Share Interests. 1.101 "Time-Share Program Governing Documents": the Time-Share Declaration, the Articles of Organization for the Time-Share Association, any and all rules and regulations from time to time adopted by the Time-Share Association, the Time-Share Management Agreement and any subsidy agreement by which Borrower is obligated to subsidize shortfalls in the budget of the Time-Share Program in lieu of paying assessments. 1. 102 "Time-Share Program Governing Documents Assignment": a written assignment to be delivered to Lender from Borrower, which grants to Lender a perfected, direct, first and exclusive assignment of and security interest of, subject only to the Permitted Encumbrances, Borrower's rights in, to and under the Time-Share Program Governing Documents, as it may be from time to time renewed, amended, restated or replaced. 1.103 "Time-Share Project': the time share resort or part of the resort described in Exhibit F and such other time share resorts or part thereof as Borrower may request and Lender may from time to time approve in writing. 1. 104 "Title Insurer (Borrower's Mortgage)": a title company which is acceptable to Lender and issues the Title Policy (Borrower's Mortgage). 1.105 "Title Insurer (Purchaser)": a title company which is acceptable to Lender and issues a Title Policy (Purchaser). 1.106 "Title Policy (Borrower's Mortgage)': an LP-10/ALTA lender's policy of title insurance in an amount not less than One Million Two Hundred Ten Thousand Dollars ($1,210,000), insuring Lender's interest in the Borrower's Mortgage as a perfected, direct, first and exclusive lien on the Real Property, subject only to the Permitted Encumbrances, issued by Title Insurer (Borrower's Mortgage) and in form and substance acceptable to Lender. - - 12 -

CWP.349.FINOVA.PIGEON.LNAG.004 1.107 "Title Policy (Purchaser)": an ALTA lender's policy of title insurance in an amount not less than the Borrowing Base of an Instrument, insuring Lender's interest in the Instrument as a perfected, direct, first and exclusive lien on the Time-Share Interest encumbered thereby, subject only to the Permitted Encumbrances, issued by Title Insurer (Purchaser) and in form and substance acceptable to Lender. 1. 108 *Uncovered Cost of the Work': the amount equal to the excess (if any) of (a) the remaining unpaid cost of Completion of the Work over (b) the committed and undisbursed portion of the Construction Loan and the remaining balance of any Required Completion Assurance Deposits held by Lender. 1.109 "Unit": a dwelling unit in the Time-Share Project. 1.110 -Work": the construction of the Improvements and the acquisition and installation of any and all furniture, furnishings, fixtures and/or equipment required for the time-share use of the Time-Share Project or by the terms

CWP.349.FINOVA.PIGEON.LNAG.004 1.107 "Title Policy (Purchaser)": an ALTA lender's policy of title insurance in an amount not less than the Borrowing Base of an Instrument, insuring Lender's interest in the Instrument as a perfected, direct, first and exclusive lien on the Time-Share Interest encumbered thereby, subject only to the Permitted Encumbrances, issued by Title Insurer (Purchaser) and in form and substance acceptable to Lender. 1. 108 *Uncovered Cost of the Work': the amount equal to the excess (if any) of (a) the remaining unpaid cost of Completion of the Work over (b) the committed and undisbursed portion of the Construction Loan and the remaining balance of any Required Completion Assurance Deposits held by Lender. 1.109 "Unit": a dwelling unit in the Time-Share Project. 1.110 -Work": the construction of the Improvements and the acquisition and installation of any and all furniture, furnishings, fixtures and/or equipment required for the time-share use of the Time-Share Project or by the terms of this Agreement or shown on or described in the Plans and Specifications or the Construction Contract(s) or as costs on the Construction Budget. 1. 111 "Work Progress Schedule': the schedule for the Completion of the Work and parts thereof, as approved by Lender in writing. The Work Progress Schedule approved by Lender on the date hereof is attached as Exhibit 0. 2. LOAN COMMITMENT; USE OF PROCEEDS; RIGHT OF FIRST REFUSAL 2.1 (a) Acquisition Loan Commitment; Determination of Acquisition Loan Advance Amount. Lender hereby agrees, if Borrower has performed all Obligations then due, to make an Acquisition Loan Advance. The amount of the Acquisition Loan Advance shall be equal to the Maximum Acquisition Loan Amount. The Acquisition Loan shall be used for the purposes of refinancing Borrower's purchase of the Real Property and, if Borrower so elects at or prior to closing, to finance the costs and fees associated with the closing of the Loans. (b) Construction Loan Commitment; Determination of Construction Loan Advance Amounts; Retainaqe. Lender hereby agrees. if Borrower has Performed all the Obligations then due, to make Construction Loan Advances.Lender shall have the obligation to make the initial Construction Loan Advance until the Uncovered Cost of the Work is less than or equal to the Maximum Construction Loan Amount. The amount of each Construction Loan Advance, other than an Advance under . the Interest Reserve Component, will be an amount equal to - - 13 -

CWP.349.FINOVA-PIGEON.LNAG.004 the costs of the Work covered by the applicable Construction Loan Advance Request and allocated within the Construction Loan Budget for payment out of the Construction Loan less an amount equal to the sum of (a) ten percent (10%) of the costs of such Work ('Basic Retainage") and (b) any additional retainage ('Additional Retainage") required under the Construction Contract(s); provided, however, that Construction Loan Advances will not be made for stored or ordered materials not yet incorporated into the Improvements. The Basic Retainage shall apply to all 'hard" costs of the Work and to certain "soft costs of the Work described in Exhibit M. The Additional Retainage will be disbursed as part of the next Advance occurring after Lender has reasonably determined that a Contractor is entitled to it under the applicable Construction Contract. The Basic Retainage will be disbursed at the time of Substantial Completion (as that term is defined in AIA Document A201, 1987 edition) of each Phase of Construction of the Work to the extent Contractor(s) are then entitled to it under the Construction Contract(s) between Borrower and such Contractor(s) prior to final payment, subject to Lender's right to keep such portion of the Basic Retainage as it may determine to be necessary to ensure Completion of the Work, with such retained portion to be disbursed promptly after Completion of the Work. Lender shall have no obligation to make any Construction Loan Advance if after giving effect to such Advance the sum of (i) the unpaid principal balance of the Construction Loan, (ii) the committed and undisbursed portion of the Construction

CWP.349.FINOVA-PIGEON.LNAG.004 the costs of the Work covered by the applicable Construction Loan Advance Request and allocated within the Construction Loan Budget for payment out of the Construction Loan less an amount equal to the sum of (a) ten percent (10%) of the costs of such Work ('Basic Retainage") and (b) any additional retainage ('Additional Retainage") required under the Construction Contract(s); provided, however, that Construction Loan Advances will not be made for stored or ordered materials not yet incorporated into the Improvements. The Basic Retainage shall apply to all 'hard" costs of the Work and to certain "soft costs of the Work described in Exhibit M. The Additional Retainage will be disbursed as part of the next Advance occurring after Lender has reasonably determined that a Contractor is entitled to it under the applicable Construction Contract. The Basic Retainage will be disbursed at the time of Substantial Completion (as that term is defined in AIA Document A201, 1987 edition) of each Phase of Construction of the Work to the extent Contractor(s) are then entitled to it under the Construction Contract(s) between Borrower and such Contractor(s) prior to final payment, subject to Lender's right to keep such portion of the Basic Retainage as it may determine to be necessary to ensure Completion of the Work, with such retained portion to be disbursed promptly after Completion of the Work. Lender shall have no obligation to make any Construction Loan Advance if after giving effect to such Advance the sum of (i) the unpaid principal balance of the Construction Loan, (ii) the committed and undisbursed portion of the Construction Loan and (iii) the Uncovered Cost of the Work exceeds the Maximum Construction Loan Amount. Lender shall have no obligation to make any Construction Loan Advance if after giving effect to such advance, the sum of all Construction Loan Advances, exclusive of Advances under the Interest Reserve Component would exceed Three Million Nine Hundred Fifty Thousand Dollars ($3,950,000). At no time shall the unpaid principal balance of the Construction Loan exceed the Maximum Construction Loan Amount. (c) Receivables Loan Commitment; Determination of Receivables Loan Advance . Lender hereby agrees, it borrower has Performed all of the Obligations then due$ to make Receivables Loan Advances to Borrower for the purposes specified in paragraph 2.3( ). The amount of a Receivables Loan Advance shall be equal to (i) the Borrowing Base of the Eligible Instruments less (ii) the then unpaid principal balance of the Receivables Loan;provided, however, at no time shall the unpaid principal balance of - -14-

CVR.349.FINOVA.PIGEON.LNAG.004 the Receivables Loan exceed the Maximum Receivables Loan Amount. 2.2 (a) Construction Loan Non-Revolvinq. The Construction Loan shall be non-revolving. All Construction Loan Advances shall be viewed as a single loan. Borrower shall not be entitled to obtain Construction Loan Advances after the expiration of the Construction Loan Borrowing Term unless Lender, in its discretion, agrees in writing with Borrower to make the Construction Loan Advances thereafter on terms and conditions satisfactory to Lender. Upon completion of the Improvements, Lender may consider extending additional financing for subsequent Phases of Construction not part of the original Work. Lender is not and has not committed to provide any construction financing in addition to the Construction Loan. (b) Receivables Loan Revolver. The Receivables Loan is a revolving line of credit; however, all of the Receivables Loan Advances shall be viewed as a single loan. Borrower shall be entitled to availability advances subject to the limitations of paragraph 2.1(c). Borrower shall not be entitled to obtain Receivables Loan Advances after the expiration of the Receivables Loan Borrowing Term unless Lender, in its discretion, agrees in writing with Borrower to make Receivables Loan Advances thereafter on terms and conditions satisfactory to Lender. (c) Continuation of Obligations Throughout Term. Whether or not Borrower's right to obtain Advances has terminated, this Agreement and Borrower's liability for Performance of the Obligations shall continue until the end of the Term. 2.3 (a) Borrower will use the Acquisition Loan Advance only to (i) refinance the amount previously paid for the acquisition of the Real Property, and (ii) at Borrower's election, finance the amount of the fees and costs of the closing of the Loans.

CVR.349.FINOVA.PIGEON.LNAG.004 the Receivables Loan exceed the Maximum Receivables Loan Amount. 2.2 (a) Construction Loan Non-Revolvinq. The Construction Loan shall be non-revolving. All Construction Loan Advances shall be viewed as a single loan. Borrower shall not be entitled to obtain Construction Loan Advances after the expiration of the Construction Loan Borrowing Term unless Lender, in its discretion, agrees in writing with Borrower to make the Construction Loan Advances thereafter on terms and conditions satisfactory to Lender. Upon completion of the Improvements, Lender may consider extending additional financing for subsequent Phases of Construction not part of the original Work. Lender is not and has not committed to provide any construction financing in addition to the Construction Loan. (b) Receivables Loan Revolver. The Receivables Loan is a revolving line of credit; however, all of the Receivables Loan Advances shall be viewed as a single loan. Borrower shall be entitled to availability advances subject to the limitations of paragraph 2.1(c). Borrower shall not be entitled to obtain Receivables Loan Advances after the expiration of the Receivables Loan Borrowing Term unless Lender, in its discretion, agrees in writing with Borrower to make Receivables Loan Advances thereafter on terms and conditions satisfactory to Lender. (c) Continuation of Obligations Throughout Term. Whether or not Borrower's right to obtain Advances has terminated, this Agreement and Borrower's liability for Performance of the Obligations shall continue until the end of the Term. 2.3 (a) Borrower will use the Acquisition Loan Advance only to (i) refinance the amount previously paid for the acquisition of the Real Property, and (ii) at Borrower's election, finance the amount of the fees and costs of the closing of the Loans. (b) Use of Construction Loan Advances. Borrower will use Construction Loan Advances only to pay or reimburse for the line-item expenses shown in the Construction Budget. If the amount needed by Borrower for any line item expense set forth in the Construction Budget is less than the budgeted amount of the line item expense, such excess may be reallocated to other line items as approved by Lender in writing, such approval not to be unreasonably withheld. - - 15-

CWP.349.FINOVA-PIGEON.LNAG.004
I(c) Use of Receivables Loan Advances. Borrower will use the proceeds of the Receivables Loan only for working capital and other business purposes. 2.4 Lender's Right of First Refusal and Option For Time-Share Project

financing. (a) Subject to the terms and conditions of this paragraph and the restrictions of paragraph 6.9(a), Lender shall have the right of first refusal with respect to all additional construction financings for the Time-Share Project. If Borrower wishes to have a third party- process an application from Borrower for such financing or Borrower wishes to accept a third party's financing proposal or a third party's commitment for such financing, Borrower must give Lender notice of its intent to do so, together with (a) a written copy of Borrower's application for the subject financing and the prospective third party investor's agreement to process the application, a copy of the financing proposal for the subject financing from the third party investor, or a copy of the commitment for the subject financing from the third party investor, as the case may be, and (b) all information and other materials delivered to such prospective investor in connection with the proposed financing. As used above, the term "application" means a written loan application for financing made by Borrower which an investor has expressed a willingness to consider and for which a financing proposal will not be issued as an intermediate step between the application and the commitment; the term "financing proposal" means a proposal made by an investor to provide financing to Borrower, which proposal is an expression of intent by an investor to further consider providing

CWP.349.FINOVA-PIGEON.LNAG.004
I(c) Use of Receivables Loan Advances. Borrower will use the proceeds of the Receivables Loan only for working capital and other business purposes. 2.4 Lender's Right of First Refusal and Option For Time-Share Project

financing. (a) Subject to the terms and conditions of this paragraph and the restrictions of paragraph 6.9(a), Lender shall have the right of first refusal with respect to all additional construction financings for the Time-Share Project. If Borrower wishes to have a third party- process an application from Borrower for such financing or Borrower wishes to accept a third party's financing proposal or a third party's commitment for such financing, Borrower must give Lender notice of its intent to do so, together with (a) a written copy of Borrower's application for the subject financing and the prospective third party investor's agreement to process the application, a copy of the financing proposal for the subject financing from the third party investor, or a copy of the commitment for the subject financing from the third party investor, as the case may be, and (b) all information and other materials delivered to such prospective investor in connection with the proposed financing. As used above, the term "application" means a written loan application for financing made by Borrower which an investor has expressed a willingness to consider and for which a financing proposal will not be issued as an intermediate step between the application and the commitment; the term "financing proposal" means a proposal made by an investor to provide financing to Borrower, which proposal is an expression of intent by an investor to further consider providing financing and must be accepted by Borrower as a condition precedent to the investor's further consideration to providing the financing, but does not constitute a firm and binding- offer to provide financing; and the term "commitment" means a firm and binding offer by an investor to provide financing, subject only to approval by Borrower and the completion of due diligence and closing conditions which do not involve further approval of the type or amount of investment or the type or quantity of collateral or credit enhancement by the investor's credit approval authorities. Lender shall have twenty (20) days from receipt of Borrower's required notice with regard to the subject financing and the items required to be given to it with such notice (a) to issue a financing proposal, to extend financing to Borrower upon terms financially equivalent to or better than those contained in the application, financing proposal or commitment as the case - -16-

C%W.349.FiNOVA.PIGEON.LNAG.004 may be, from the third party investor or (b) to refuse to do so. Issuance of such a conditional financing proposal in a timely manner shall constitute adequate exercise (albeit conditional) of Lender's right of first refusal. Failure to issue such a conditional financing proposal in a timely manner shall be deemed to be an election by Lender to refuse to make the newly requested financing to Borrower. Furthermore, failure of Lender to issue a commitment for financing described in a timely issued financing proposal, within sixty (60) days after Borrower's acceptance of such proposal, shall be deemed an election by Lender not to make the subject financing. Lender's election not to make any newly requested financing shall not be deemed a waiver of any of the terms and conditions of the Documents; and, except with respect to a specific financing which Lender has elected not to make shall not affect Lender's right of first refusal with respect to any future financing. (b) Subject to the terms and conditions of this paragraph and paragraph 6.9(a), Lender shall have an option to provide all additional receivables financings for the Time-Share Project ('Future Receivables Financing') upon the terms and conditions of this Agreement from time in effect. Before soliciting or accepting any Future Receivables Financings from a third party, Borrower will give Lender a notice ("Future Receivables Financing Notice") of its intent to solicit or accept an offer to provide such future financing and the amount thereof, together with such items as may be reasonably necessary for a prudent lender to evaluate such Future Receivables Financing. Lender shall have twenty (20) days from receipt of Borrower's Future Receivables Financing Notice with regard. to the subject Future Receivables Financing and the items required to be given to it with such Future Receivables Financing Notice

C%W.349.FiNOVA.PIGEON.LNAG.004 may be, from the third party investor or (b) to refuse to do so. Issuance of such a conditional financing proposal in a timely manner shall constitute adequate exercise (albeit conditional) of Lender's right of first refusal. Failure to issue such a conditional financing proposal in a timely manner shall be deemed to be an election by Lender to refuse to make the newly requested financing to Borrower. Furthermore, failure of Lender to issue a commitment for financing described in a timely issued financing proposal, within sixty (60) days after Borrower's acceptance of such proposal, shall be deemed an election by Lender not to make the subject financing. Lender's election not to make any newly requested financing shall not be deemed a waiver of any of the terms and conditions of the Documents; and, except with respect to a specific financing which Lender has elected not to make shall not affect Lender's right of first refusal with respect to any future financing. (b) Subject to the terms and conditions of this paragraph and paragraph 6.9(a), Lender shall have an option to provide all additional receivables financings for the Time-Share Project ('Future Receivables Financing') upon the terms and conditions of this Agreement from time in effect. Before soliciting or accepting any Future Receivables Financings from a third party, Borrower will give Lender a notice ("Future Receivables Financing Notice") of its intent to solicit or accept an offer to provide such future financing and the amount thereof, together with such items as may be reasonably necessary for a prudent lender to evaluate such Future Receivables Financing. Lender shall have twenty (20) days from receipt of Borrower's Future Receivables Financing Notice with regard. to the subject Future Receivables Financing and the items required to be given to it with such Future Receivables Financing Notice (a) to issue a financing proposal or a commitment to extend financing to Borrower upon terms and conditions identical to those contained in this Agreement as then in effect or (b) to refuse to do so. Failure of Lender to issue a commitment for financing described in a timely issued financing proposal, within sixty (60) days after Borrower's acceptance of such proposal, shall be deemed an election by Lender not to make the subject Future Receivables Financing. However, Lender's election not to make any Future Receivables Financing requested in a Future Receivables Financing Notice shall not be deemed a waiver of any of the terms and/or conditions of the Documents; and, except as provided for in the preceding sentence, shall not terminate or otherwise adversely affect Lender's - - 17 -

CWP.349.FINOVA-PIGEON.LNAG.004 option with respect to any Future Receivables Financing not described in the Future Receivables Financing Notice. 3. SECURITY. 3.1 Grant of Security Interest in Receivables Collateral. To secure the Performance of all of the Obligations, Borrower hereby grants to Lender a Security Interest in and assigns to Lender the Receivables Collateral. Such Security Interest shall be absolute, continuing and applicable to all existing and future Advances and to all of the Obligations. All of the Receivables Collateral shall secure repayment of the Loans and the Performance of the other Obligations. Borrower will unconditionally assign and deliver to Lender, with full recourse, all Instruments which are part of the Receivables Collateral. Lender is hereby appointed Borrower's attorney-in-fact to take any and all actions in Borrower's name and/or on Borrower's behalf deemed necessary or appropriate by Lender with respect to the collection and remittance of payments (including the endorsement of payment items) received on account of the Receivables Collateral; provided, however, that Lender shall not take any action which is described in paragraph 7.2(c) unless an Event of Default exists. 3.2 Ineligible Instruments. If a previously Eligible Instrument which is part of the Receivables Collateral ceases to be an Eligible Instrument, then within thirty (30) days thereafter Borrower will either (i) pay to Lender an amount equal to the Borrowing Base of the ineligible Instrument (calculated immediately before its ineligibility), together with interest, costs and expenses, attributable thereto, or (ii) replace such ineligible Instrument with an Eligible Instrument or Eligible Instruments having a Borrowing Base in the aggregate not less than the Borrowing Base of the ineligible Instrument being replaced. Simultaneously with the delivery of the replacement Eligible Instrument to

CWP.349.FINOVA-PIGEON.LNAG.004 option with respect to any Future Receivables Financing not described in the Future Receivables Financing Notice. 3. SECURITY. 3.1 Grant of Security Interest in Receivables Collateral. To secure the Performance of all of the Obligations, Borrower hereby grants to Lender a Security Interest in and assigns to Lender the Receivables Collateral. Such Security Interest shall be absolute, continuing and applicable to all existing and future Advances and to all of the Obligations. All of the Receivables Collateral shall secure repayment of the Loans and the Performance of the other Obligations. Borrower will unconditionally assign and deliver to Lender, with full recourse, all Instruments which are part of the Receivables Collateral. Lender is hereby appointed Borrower's attorney-in-fact to take any and all actions in Borrower's name and/or on Borrower's behalf deemed necessary or appropriate by Lender with respect to the collection and remittance of payments (including the endorsement of payment items) received on account of the Receivables Collateral; provided, however, that Lender shall not take any action which is described in paragraph 7.2(c) unless an Event of Default exists. 3.2 Ineligible Instruments. If a previously Eligible Instrument which is part of the Receivables Collateral ceases to be an Eligible Instrument, then within thirty (30) days thereafter Borrower will either (i) pay to Lender an amount equal to the Borrowing Base of the ineligible Instrument (calculated immediately before its ineligibility), together with interest, costs and expenses, attributable thereto, or (ii) replace such ineligible Instrument with an Eligible Instrument or Eligible Instruments having a Borrowing Base in the aggregate not less than the Borrowing Base of the ineligible Instrument being replaced. Simultaneously with the delivery of the replacement Eligible Instrument to Lender for an ineligible Instrument, Borrower will deliver to Lender all of the items (except for a 'Request for Advance and Certification") required to be delivered by Borrower to Lender pursuant to paragraph 4.1, together with a "Borrower's Certificate" in form and substance identical to Exhibit G. If no Event of Default or an Incipient Default has occurred and is continuing, then within a reasonable time after such payment or the delivery of a replacement Eligible Instrument to Lender for an ineligible Instrument, Lender will reassign and/or endorse to Borrower. without recourse or warranty of any kind, the ineligible Instrument. Borrower will prepare the reassignment instrument, which shall be in form and substance identical to Exhibit G-1, and shall deliver it to Lender for execution. 3.3 Maintenance of Security Borrower will deliver or cause to be delivered to Lender and will maintain or cause to be maintained - -18-

CWP.349.FINOVA.PIGEON.LNAG.004 i in full force and effect throughout the Term (except as otherwise expressly provided in such Document), the Borrower's Security Documents and all other security required to be given to Lender pursuant to the terms of this Agreement. 3.4 Partial Releases from Borrower's Mortgage. Borrower shall be entitled to the release of Time-Share Interests from the Borrower's Mortgage according to the terms and conditions of Borrower's Mortgage. 4. ADVANCES 4.IA General Conditions Precedent to Initial Advance. Lender's obligation to make the initial Acquisition Loan Advance shall be subject to and conditioned upon the terms and conditions set forth in the following subparagraphs and elsewhere in this Agreement having been satisfied: (a) Documents. Borrower shall have delivered to Lender the following Documents, duly executed, delivered and in form and substance satisfactory to Lender:

CWP.349.FINOVA.PIGEON.LNAG.004 i in full force and effect throughout the Term (except as otherwise expressly provided in such Document), the Borrower's Security Documents and all other security required to be given to Lender pursuant to the terms of this Agreement. 3.4 Partial Releases from Borrower's Mortgage. Borrower shall be entitled to the release of Time-Share Interests from the Borrower's Mortgage according to the terms and conditions of Borrower's Mortgage. 4. ADVANCES 4.IA General Conditions Precedent to Initial Advance. Lender's obligation to make the initial Acquisition Loan Advance shall be subject to and conditioned upon the terms and conditions set forth in the following subparagraphs and elsewhere in this Agreement having been satisfied: (a) Documents. Borrower shall have delivered to Lender the following Documents, duly executed, delivered and in form and substance satisfactory to Lender: (i) the Acquisition Loan Note; (ii) the Construction Loan Note; (iii) the Receivables Loan Note; (iv) the Borrower's Mortgage; (v) the Borrower's Security Agreement; (vi) Intentionally Omitted; (vii) the Time-Share Management Agreement Assignment; (viii) the Contracts Escrow Assignment; (ix) the Time-Share Program Governing Documents Assignment; (x) the other Borrower's Assignments; (xi) the Environmental Certificate; (Xii) UCC financing statements for filing and/or recording, as appropriate, where necessary to perfect the Security Interest in the Collateral; - -19-

CWP.349.FINOVA.PIGECIN.LNAG.004 (xi i i) a favorable opinion or opinions from independent counsel for Borrower in form and substance substantially identical to Exhibit H; (xiv) the Lockbox Agreement; (xv) the Servicing Agreement; (xvi) the Oversight Agreement; (xvii) the Title Policy (Borrower's Mortgage); (xviii) the Third Party Consents; (xix) this Agreement; and (xx) such other documents as Lender may reasonably require.

CWP.349.FINOVA.PIGECIN.LNAG.004 (xi i i) a favorable opinion or opinions from independent counsel for Borrower in form and substance substantially identical to Exhibit H; (xiv) the Lockbox Agreement; (xv) the Servicing Agreement; (xvi) the Oversight Agreement; (xvii) the Title Policy (Borrower's Mortgage); (xviii) the Third Party Consents; (xix) this Agreement; and (xx) such other documents as Lender may reasonably require. (b) 0rganizational; Time-Share Project and other Due Diligence Documents. Borrower shall have delivered to Lender a! least ten (10) Business Days (unless a longer period is expressly specified) prior to the date of the Advance: (i) the Articles of Organization of Borrower; (ii) the Resolutions of Borrower; (iii) a Level I environmental assessment of the Real Property; (iv) evidence that all taxes and assessments on the Property have been paid; (v) a title commitment or preliminary title report for the issuance of the Title Policy (Borrower's Mortgage), together with copies of all documents referred to therein; (vi )unless waived in writing by Lender, a 1988 ALTA/ACSM survey map of the Real Property prepared by a licensed land surveyor acceptable to Lender, showing the Real Property, evidence of access to the Real Property, all easements necessary to the operation and use of the Real Property, and such other details as Lender may reasonably require; (vii) all licenses and certificates for the use and operation of the Real Property for time-share and - - 20 -

CWP.349.FINOVA.PIGEON.LNAG.004 other intended uses, including certificates of occupancy and environmental permits; (viii ) evidence the Real Property is zoned for timeshare and other intended uses; (ix) the Minimum Required Time-Share Approvals for Phase One; (x) a copy of the Time-Share Program Consumer Documents and the Time-Share Program Governing Documents; (xi ) the Insurance Policies;

CWP.349.FINOVA.PIGEON.LNAG.004 other intended uses, including certificates of occupancy and environmental permits; (viii ) evidence the Real Property is zoned for timeshare and other intended uses; (ix) the Minimum Required Time-Share Approvals for Phase One; (x) a copy of the Time-Share Program Consumer Documents and the Time-Share Program Governing Documents; (xi ) the Insurance Policies; (Xii) evidence that the Real Property is not located within a flood prone area and drainage information; (xiii) Intentionally Omitted; (xiv) evidence of the availability of utilities necessary to serve the Real Property for timeshare and other intended uses; (xv) evidence of parking for the Real Property adequate for time-share and other intended uses; (xvi) a copy of the currently available portion of the as-built plans and specifications for the Real Property; (xvi i) a soils test report with respect to the suitability of the soils on the Real Property for purposes of constructing the Improvements; (xviii) a detailed draw schedule for the Work; (xix) all leases of space or any interest therein to third parties within the Real Property; (xx) the items described in Exhibit J-1 at least fifteen (15) Business Days prior to the date of the Advance; (xxi ) the items described in paragraph 4.lB if the Advance includes a Construction Loan Advance and the items described in paragraph 4.lF if the Advance includes a Receivables Loan Advance; - - 21 -

CWP.349.FINOVA. LNAG.004 (xxii) evidence that Borrower has carried out soil testing for environmental contamination as described in paragraph 1 of Exhibit I, attached hereto; (xxiii) evidence that Borrower continues to have invested in the Property an amount equal to the Minimum Equity; and (xxiv) such other items as Lender requests which are reasonably necessary to evaluate the request for the Advance and the satisfaction of the conditions precedent to the Advance. (c) Lender shall have received the following in form and substance satisfactory to Lender: (i) seven-year debt maturity schedule for Borrower; (ii) current lien, litigation and judgment searches for Borrower conducted in such jurisdictions as Lender deems appropriate;

CWP.349.FINOVA. LNAG.004 (xxii) evidence that Borrower has carried out soil testing for environmental contamination as described in paragraph 1 of Exhibit I, attached hereto; (xxiii) evidence that Borrower continues to have invested in the Property an amount equal to the Minimum Equity; and (xxiv) such other items as Lender requests which are reasonably necessary to evaluate the request for the Advance and the satisfaction of the conditions precedent to the Advance. (c) Lender shall have received the following in form and substance satisfactory to Lender: (i) seven-year debt maturity schedule for Borrower; (ii) current lien, litigation and judgment searches for Borrower conducted in such jurisdictions as Lender deems appropriate; (iii) a Dun and Bradstreet report with respect to Borrower; (iv) the results of a site inspection to be made by Lender's employees; (v) the report of Lender's Inspector with respect to the Budget, Plans and Specifications, Contracts, Work Progress Schedule, and other construction- related items; and (vi) the pro-forma operating budget of the Time-Share Association. 4. Conditions Precedent for Initial Construction Loan Advance. For the initial Construction Loan Advance, Lender's obligation to make such Advance shall be subject to the additional terms and conditions set forth in the following subparagraphs and elsewhere in this Agreement: (a) Borrower shall have satisfied all conditions set forth in paragraph 4.lA and the Acquisition Loan shall have been fully funded; (b) Borrower shall have satisfied the terms and conditions set forth in Exhibit J-1, including delivery to Lender of the items called for therein at least ten (10) Business Days - - 22 -

CWP.349.FINOVA.PIGEON.LNAG.004 prior to the date of such Construction Loan Advance or such longer period as may be described in Exhibit J-1; and
(c) Lender shall have received an endorsement to the Title Policy (Borrower's Mortgage) increasing the amount thereof by an amount equal to the Construction Loan Advance then contemplated. Additional Conditions Precedent for Subsequent Construction Loan Advance. For each Construction Loan Advance after the initial Construction Loan Advance, Lender's obligation to make such Advance shall be subject to the terms and conditions set forth in Exhibit J-lA, including delivery to Lender of the items called for therein at least ten (10) Business Days prior to the date of such Construction Loan Advance. In addition, prior to the first Construction Loan Advance for a subsequent Phase of Construction not part of the original Work, Borrower shall have delivered to Lender the items required in Exhibit J-1. Further, Lender shall have received an endorsement to the Title Policy (Borrower's Mortgage) increasing the

4. IC

CWP.349.FINOVA.PIGEON.LNAG.004 prior to the date of such Construction Loan Advance or such longer period as may be described in Exhibit J-1; and
(c) Lender shall have received an endorsement to the Title Policy (Borrower's Mortgage) increasing the amount thereof by an amount equal to the Construction Loan Advance then contemplated. Additional Conditions Precedent for Subsequent Construction Loan Advance. For each Construction Loan Advance after the initial Construction Loan Advance, Lender's obligation to make such Advance shall be subject to the terms and conditions set forth in Exhibit J-lA, including delivery to Lender of the items called for therein at least ten (10) Business Days prior to the date of such Construction Loan Advance. In addition, prior to the first Construction Loan Advance for a subsequent Phase of Construction not part of the original Work, Borrower shall have delivered to Lender the items required in Exhibit J-1. Further, Lender shall have received an endorsement to the Title Policy (Borrower's Mortgage) increasing the face amount thereof by an amount equal to the Construction Loan Advance then contemplated. Additional Conditions Precedent for Initial Receivables Loan advances. For the initial Receivables Loan Advance, Lender's obligation to make such Receivables Loan Advance shall be subject to the additional terms and conditions set forth in the following subparagraphs and elsewhere in this Agreement: Borrower shall have satisfied all conditions set forth in paragraph 4.IA; Borrower shall have satisfied the terms and conditions set forth in Exhibit J-2, including delivery to Lender of the items called for therein at least five (5) Business Days prior to the date of such Receivables Loan Advance; and (c) such legal opinions as Lender may require in its discretion from

4. IC

4. ID

(a) (b)

Borrower's and Lender's counsel. 4. Additional Conditions Precedent for Subsequent Receivables Loan advances. For each Receivables Loan Advance after the initial Receivables Loan Advance, Lender's obligation to make such Receivables Loan Advance shall be subject to the terms and conditions set forth in Exhibit J-2, including delivery of the items called for therein at least five (5) Business Days prior to the date of such Receivables Loan Advance. 4. 1F General Conditions Precedent to All Advances. Lender's obligation To fund any Advance is subject to and conditioned upon the - - 23 -

CWP.349.FINOVA.PIGEON.LNAG.004 - -additional terms and conditions set forth in the following subparagraphs remaining satisfied at the time of such Advance: (a) No material adverse change shall I have occurred in the TimeShare Project or in Borrower's business or financial condition since the date of the latest financial and operating statements given to Lender by or on behalf of Borrower. (b) There shall have been no material, adverse change in the warranties and representations made in the Documents by Borrower and/or any surety for the performance of the Obligations.

CWP.349.FINOVA.PIGEON.LNAG.004 - -additional terms and conditions set forth in the following subparagraphs remaining satisfied at the time of such Advance: (a) No material adverse change shall I have occurred in the TimeShare Project or in Borrower's business or financial condition since the date of the latest financial and operating statements given to Lender by or on behalf of Borrower. (b) There shall have been no material, adverse change in the warranties and representations made in the Documents by Borrower and/or any surety for the performance of the Obligations. (c) Neither an Event of Default nor Incipient Default shall have occurred and be continuing. (d) The interest rate applicable to the Advance (before giving effect to any savings clause) will not exceed the maximum rate permitted by the Applicable Usury Law. (e) Borrower shall have paid to Lender the Commitment Fees and all other fees required to be paid at the time of the Advance. (f) Borrower shall not be entitled to any Advance unless on or before July 20, 1995, all Documents have been executed by persons required to do so and the initial Acquisition Loan Advance has been made. 4. 1 I Conditions Satisfied at Borrower's Expense. The conditions to Advances shall be satisfied by Borrower at its expense. 4.2 Advance Requests and Administration Fees. Receivables Loan Advances shall not be made in amounts less than One Hundred Thousand Dollars ($100,000) or, if less, the amount which would cause the outstanding principal balance of the Receivables Loan to equal the Maximum Receivables Loan Amount. Construction Loan Advances shall not be made in amounts less than Two Hundred Fifty Thousand Dollars ($250,000) or if less, the remaining undisbursed amount of the Construction Loan. Construction Advances shall not be made more frequently than monthly; provided that two Construction Loan Advances may be made in any month so long as one such Advance is an Advance under the Interest Reserve Component. Receivables Loan Advances shall not be made more frequently than monthly; provided, however, that Borrower will pay to Lender at the time of the second Receivables Loan Advance made during a month an administrative fee equal to the greater of (a) twentyfive.one-hundredths percent (.25%) of such Advance or (b) Five Hundred Dollars ($500). - - 24-

CWP.349.FINOVA.PIGEON.LNAG.004 4.3 Disbursement of Advances. Advances may be payable to Borrower; or if requested by Borrower and approved in writing by Lender, to others, either severally or jointly with Borrower, for the credit or benefit of Borrower. Borrower will pay Lender's reasonable charge in connection with any wire transfer, which is currently Twenty-five Dollars ($25). Lender may, at its option, withhold from any Advance any sum (including costs and expenses) then due to it under the terms of the Documents or which Borrower would be obligated to reimburse Lender pursuant to the Documents if first paid directly by Lender. 4.4 Interest Reserve Advances. If Borrower has not made a scheduled interest payment on the Construction Loan during the Construction Loan Borrowing Term in accordance with the terms of the Construction Loan Note, Lender, in its discretion, may make an advance of the Construction Loan to make such interest payment, whether or not Loan proceeds have been allocated within the Construction Budget for the payment of such interest. Borrower hereby authorizes Lender to make such advances without notice to Borrower. 4.5 No Waiver. Although Lender shall have no obligation to make an advance unless and until all of the conditions precedent to the Advance have been satisfied, Lender may, at its discretion, make Advances prior to

CWP.349.FINOVA.PIGEON.LNAG.004 4.3 Disbursement of Advances. Advances may be payable to Borrower; or if requested by Borrower and approved in writing by Lender, to others, either severally or jointly with Borrower, for the credit or benefit of Borrower. Borrower will pay Lender's reasonable charge in connection with any wire transfer, which is currently Twenty-five Dollars ($25). Lender may, at its option, withhold from any Advance any sum (including costs and expenses) then due to it under the terms of the Documents or which Borrower would be obligated to reimburse Lender pursuant to the Documents if first paid directly by Lender. 4.4 Interest Reserve Advances. If Borrower has not made a scheduled interest payment on the Construction Loan during the Construction Loan Borrowing Term in accordance with the terms of the Construction Loan Note, Lender, in its discretion, may make an advance of the Construction Loan to make such interest payment, whether or not Loan proceeds have been allocated within the Construction Budget for the payment of such interest. Borrower hereby authorizes Lender to make such advances without notice to Borrower. 4.5 No Waiver. Although Lender shall have no obligation to make an advance unless and until all of the conditions precedent to the Advance have been satisfied, Lender may, at its discretion, make Advances prior to that time without waiving or releasing any of the Obligations. 5. NOTES; MAINTENANCE OF BORROWING BASE; PREPAYMENTS; SERVICING AND COLLECTION 5.1 Repayment of Loans. The Acquisition Loan, the Construction Loan and the Receivables Loan shall be evidenced by the Acquisition Loan Note, the Construction Loan Note and the Receivables Loan Note, respectively, and shall be repaid in immediately available funds according to the terms of such Notes and the Documents. 5. 2 (a) Construction Loan Partial Release Principal Payments. Until principal, interest and other sums due under the Documents have been paid, exclusive of principal, interest and other charges on the Acquisition Loan Note and the Receivables Loan Note, Borrower will make to Lender at the time of each partial release of a TimeShare Interest from the Borrower's Mortgage a principal payment equal to the Partial Release Fee required to be paid in connection with such partial release. (b) Acquisition Loan Partial Release Principal Payments. Until principal, interest and other charges on the Acquisition Loan Note have been paid, Borrower will make to Lender at . the time of each partial release of a Time-Share Interest - - 25CWP.349.FINOVA.PIGEON.LNAG.004

from the Borrower's Mortgage, in addition to the Partial Release Fee (Construction Loan) described in paragraph 5.2(a), a fee of $500 per Unit sold. (c) Acquisition Loan Minimum Principal Payments. Borrower will make to Lender, on each anniversary of the last Acquisition Loan Advance, a principal payment in an amount equal to the positive remainder obtained by subtracting the aggregate principal payments made on the Acquisition Loan prior to such anniversary date from the Minimum Aggregate Principal Payment for such anniversary date set forth below:
Anniversary Minimum Aggregate Principal Payment

1 2

$400,000 $800,000

from the Borrower's Mortgage, in addition to the Partial Release Fee (Construction Loan) described in paragraph 5.2(a), a fee of $500 per Unit sold. (c) Acquisition Loan Minimum Principal Payments. Borrower will make to Lender, on each anniversary of the last Acquisition Loan Advance, a principal payment in an amount equal to the positive remainder obtained by subtracting the aggregate principal payments made on the Acquisition Loan prior to such anniversary date from the Minimum Aggregate Principal Payment for such anniversary date set forth below:
Anniversary Minimum Aggregate Principal Payment

1 2

$400,000 $800,000

(d) Construction Loan Minimum Principal Payment. Borrower will make to Lender on each anniversary of the date of the last Construction Loan Advance, a principal payment in the amount, if any, necessary to reduce the then outstanding principal balance of the Construction Loan to an amount equal to the percentage set forth below for each such anniversary date multiplied by the principal balance of the Construction Loan immediately after the last Construction Loan Advance:
Anniversary 1 Maximum Percentage 30% of Balance at Last Advance 65% of Balance at Last Advance

(e) Receivables Loan Minimum Required Principal Payments. If for any reason the aggregate principal amount of the Receivables Loan outstanding at any time shall exceed the then Borrowing Base of all Eligible Instruments, Borrower, without notice or demand, will immediately make to Lender a principal payment in an amount equal to such excess plus accrued and unpaid interest on such principal payment unless Borrower has provided sufficient replacement Eligible Instruments as provided in paragraph 3.2. 5.3 (a) Prohibitions on Prepayment; Prepayment Premium. Borrower will not be entitled to prepay, in whole or in part, the Receivables Loan until the Opening Prepayment Date. Thereafter, if neither an Event of Default nor an Incipient Default has occurred and is continuing, then Borrower shall have the option to prepay the Receivables Loan in full, but not in part, upon 60 days prior irrevocable written notice . and the simultaneous payment of the Prepayment Premium on - - 261-1,

CWP.349.FINOVA.PIGEON.LNAG.004 any date an installment is due on the Receivables Loan Note. Except as otherwise expressly provided herein, Borrower will not be entitled to prepay, in whole or in part, the Acquisition Loan or the Construction Loan, without the prior written consent of Lender. (b) Exceptions to Prepayment Prohibitions. Notwithstanding anything in paragraph 5.3(a) to the contrary, the following shall not be deemed to be prepayments prohibited pursuant to paragraph 5.2(a), 5.2(b), 5.2(c) or 5.2 (d) or to require the payment of any Prepayment Premium: (i) principal payments scheduled under the Receivables Loan Note [including, without limitation, those payments required pursuant to paragraphs 5.2(e)]; (ii) prepayments as a result of casualty to or condemnation of the Property; and (iii) prepayments of the Receivables Loan resulting from prepayments of the Receivables Collateral by Purchasers which have not been solicited by Borrower in breach of its Obligations under this Agreement or from Performance by Borrower of its Obligations.

CWP.349.FINOVA.PIGEON.LNAG.004 any date an installment is due on the Receivables Loan Note. Except as otherwise expressly provided herein, Borrower will not be entitled to prepay, in whole or in part, the Acquisition Loan or the Construction Loan, without the prior written consent of Lender. (b) Exceptions to Prepayment Prohibitions. Notwithstanding anything in paragraph 5.3(a) to the contrary, the following shall not be deemed to be prepayments prohibited pursuant to paragraph 5.2(a), 5.2(b), 5.2(c) or 5.2 (d) or to require the payment of any Prepayment Premium: (i) principal payments scheduled under the Receivables Loan Note [including, without limitation, those payments required pursuant to paragraphs 5.2(e)]; (ii) prepayments as a result of casualty to or condemnation of the Property; and (iii) prepayments of the Receivables Loan resulting from prepayments of the Receivables Collateral by Purchasers which have not been solicited by Borrower in breach of its Obligations under this Agreement or from Performance by Borrower of its Obligations. (c) Prepayment Premium Payable for Involuntary Prepayment. The application of a Prepayment Premium determined in accordance with Schedule A shall be payable regardless of whether the prepayment of the Receivables Loan is required because repayment of such Loan has been accelerated pursuant to any of Lender's rights under the Documents. 5. 4 (a) Contracts Escrow. To the extent required by Tennessee Code Section 66-32-113, or other Tennessee law, and not satisfied by other financial assurances acceptable to the Commission under 66-32-113, Borrower shall establish the Contracts Escrow. Contracts Escrow Agent shall hold all Contracts and the monies deposited thereunder in escrow according to the terms of the Contracts Escrow Assignment. Contracts Escrow Agent shall furnish to Lender at Borrower's sole cost and expense, no later than the tenth (10th) day of each month following the date of this Agreement, a report which shows as of the end of the prior month with respect to each Contract for Deed held in escrow at any time during the preceding month (i) all deposits received under the Contracts for Deed, (ii) any closing or cancellation, and (iii) all disbursements of funds held by Contracts Escrow Agent with respect to the Contracts for Deed. (b) Lockbox Collections and Servicing. Lockbox Agent shall collect payments on the Instruments constituting part of the Receivables Collateral and and remit collected payments to Lender on the last Business Day of each and every month - - 27 -

CWP.349.FINOVA.PIGEON.LNAG.004 after the date of first Receivables Loan Advance, according to the terms of the Lockbox Agreement. Payments shall not be deemed received by Lender until Lender actually receives such payments from Lockbox Agent; provided, however, that so long as no Event of Default exists, Borrower shall be entitled to any interest accrued on funds held by Lockbox Agent and any other benefit available from Lockbox Agent because it is holding such funds. Servicing Agent shall furnish to Lender at Borrower's sole cost and expense, no later than the tenth (10th) day of each month commencing with the first full calendar month following the date of this Agreement, a report, substantially in the format of Exhibit K, which: (i) shows as of the end of the prior month with respect to each Instrument which constitutes part of the Receivables Collateral (A) all payments received, allocated between principal, interest, late charges and taxes, (B) the opening and closing balances, (C) present value, (D) average consumer interest rate, and (E) extensions, refinances, prepayments, and other similar adjustments; and (ii) indicates delinquencies of thirty (30), sixty (60), ninety (90) days and in excess of ninety (90) days. Borrower will pay without notice or demand any amount which was due and payable by Borrower on the last Business Day of the preceding month covered by such reports within three (3) Business Days of Borrower's knowledge of such amounts. If such reports are not timely received, Lender may estimate the amount which was due and payable. Borrower will pay upon demand the amount determined by Lender in good faith to be due and payable. If payment is made on the basis of Lender's estimate and thereafter reports required by this paragraph are received by Lender, the estimated payment amount shall be adjusted by an additional payment or a refund to the correct amount, as the reports may indicate; such additional amount to be paid by Borrower upon demand and such refund to be made by Lender

CWP.349.FINOVA.PIGEON.LNAG.004 after the date of first Receivables Loan Advance, according to the terms of the Lockbox Agreement. Payments shall not be deemed received by Lender until Lender actually receives such payments from Lockbox Agent; provided, however, that so long as no Event of Default exists, Borrower shall be entitled to any interest accrued on funds held by Lockbox Agent and any other benefit available from Lockbox Agent because it is holding such funds. Servicing Agent shall furnish to Lender at Borrower's sole cost and expense, no later than the tenth (10th) day of each month commencing with the first full calendar month following the date of this Agreement, a report, substantially in the format of Exhibit K, which: (i) shows as of the end of the prior month with respect to each Instrument which constitutes part of the Receivables Collateral (A) all payments received, allocated between principal, interest, late charges and taxes, (B) the opening and closing balances, (C) present value, (D) average consumer interest rate, and (E) extensions, refinances, prepayments, and other similar adjustments; and (ii) indicates delinquencies of thirty (30), sixty (60), ninety (90) days and in excess of ninety (90) days. Borrower will pay without notice or demand any amount which was due and payable by Borrower on the last Business Day of the preceding month covered by such reports within three (3) Business Days of Borrower's knowledge of such amounts. If such reports are not timely received, Lender may estimate the amount which was due and payable. Borrower will pay upon demand the amount determined by Lender in good faith to be due and payable. If payment is made on the basis of Lender's estimate and thereafter reports required by this paragraph are received by Lender, the estimated payment amount shall be adjusted by an additional payment or a refund to the correct amount, as the reports may indicate; such additional amount to be paid by Borrower upon demand and such refund to be made by Lender within 5 Business Days after receipt of written request therefor by Borrower. At the end of each calendar quarter, Borrower will deliver or cause the Servicing Agent to deliver to Lender a current list of the names, addresses and phone numbers of the obligors on each of the Instruments constituting part of the Receivables Collateral . Borrower will also deliver or cause Servicing Agent to deliver to Lender, promptly after receipt of a written request for them, such other reports with respect to Instruments constituting part of the Receivables Collateral as Lender may from time to time require. (c) Oversight Agreement. Borrower will enter into and perform and cause Servicing Agent to enter into and perform their respective obligations under the Oversight Agreement. - - 28 -

CVVP.349.FINOVA.PIGEON.LNAG.004 5.5 Borrower will pay to Oversight Agent all reasonable out-of-pocket expenses of Oversight Agent and a monthly fee equal to the lesser of (a) One Thousand Dollars ($1,000) per month or (b) One Dollar ($1.00) per each Instrument which is as part of the Receivables Collateral. (d) Replacement of agents. Lender, subject to any additional restriction thereon contained in the Contracts Escrow Assignment or in the following sentence, Lockbox Agreement, or the Servicing Agreements may at any time and from time to time substitute a successor or successors to any Agent acting under the Contracts Escrow Assignment, Lockbox Agreement or the Servicing Agreement. Lender will not replace any such Agent unless an Event of Default exists, such Agent is in default of its obligations under the relevant agreement beyond any applicable cure period, has defaulted in its obligations under the relevant agreement on a repeated basis or, in Lender's sole and absolute judgment, fails to perform its duties in accordance with standards normally employed by persons performing similar services for financial institutions on a compensated basis. If any such Agent is so removed by Lender or is otherwise removed in accordance with the terms of the relevant agreement, so long as no Event of Default exists, Borrower may appoint any successor Agent, subject to the prior written consent of Lender not to be unreasonably withheld. Application of Proceeds. Any and all payments received by Borrower with respect to the Obligations (including, without limitation, payments made with proceeds of the Collateral but excluding funds set aside/held in escrow prior to the expiration of a Purchaser's statutory rescission rights) shall be first applied to the payment of all late charges, costs , fees and expenses required by the Documents to be paid by Borrower ('First Priority Application"); then to accrued and unpaid interest on the loans in such order and manner as Lender may

CVVP.349.FINOVA.PIGEON.LNAG.004 5.5 Borrower will pay to Oversight Agent all reasonable out-of-pocket expenses of Oversight Agent and a monthly fee equal to the lesser of (a) One Thousand Dollars ($1,000) per month or (b) One Dollar ($1.00) per each Instrument which is as part of the Receivables Collateral. (d) Replacement of agents. Lender, subject to any additional restriction thereon contained in the Contracts Escrow Assignment or in the following sentence, Lockbox Agreement, or the Servicing Agreements may at any time and from time to time substitute a successor or successors to any Agent acting under the Contracts Escrow Assignment, Lockbox Agreement or the Servicing Agreement. Lender will not replace any such Agent unless an Event of Default exists, such Agent is in default of its obligations under the relevant agreement beyond any applicable cure period, has defaulted in its obligations under the relevant agreement on a repeated basis or, in Lender's sole and absolute judgment, fails to perform its duties in accordance with standards normally employed by persons performing similar services for financial institutions on a compensated basis. If any such Agent is so removed by Lender or is otherwise removed in accordance with the terms of the relevant agreement, so long as no Event of Default exists, Borrower may appoint any successor Agent, subject to the prior written consent of Lender not to be unreasonably withheld. Application of Proceeds. Any and all payments received by Borrower with respect to the Obligations (including, without limitation, payments made with proceeds of the Collateral but excluding funds set aside/held in escrow prior to the expiration of a Purchaser's statutory rescission rights) shall be first applied to the payment of all late charges, costs , fees and expenses required by the Documents to be paid by Borrower ('First Priority Application"); then to accrued and unpaid interest on the loans in such order and manner as Lender may determine; then to principal of the Loans in such order and manner as Lender may determine. Notwithstanding anything in the preceding sentence to the contrary, after the First Priority Application: (a) remaining proceeds of the payments made pursuant to paragraph 5.2(a) shall be applied first to the principal balance of the Construction Loan Note, next to accrued and unpaid interest due under the Construction Loan Note; and (c) the remaining proceeds of the Receivables Collateral shall be applied to accrued and unpaid interest due on the Receivables Loan Note and then to the unpaid principal balance of the Receivables Loan Note. The provisions of this paragraph are subject to Lender's rights under Article VII and the other Documents as to the application of proceeds of the Collateral following an Event of Default. - - 29 -

CWP.349.FINOVA.PIGEON.LNAG.004 5.6 Borrower is Unconditional Obligation to Make Payments. Whether or not the proceeds from the Collateral shall be sufficient for that purpose, Borrower will pay when due all payments required to be made pursuant to any of the Documents, Borrower's Obligation to make such payments being absolute and unconditional. 6. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 6.1 (a) Good Standing. Borrower is, and will remain at all times, duly organized, validly existing and in good standing under the laws of Massachusetts and is authorized and will remain at all times authorized, to do business in Tennessee, Florida and in each jurisdiction in which it is at any time selling Time-Share Interests or where at any time the location or nature of its properties or its business makes such qualification necessary. Borrower has and will maintain full authority to Perform the Obligations and to carry on its business and own its property. (b) Power and Authority; Enforceabi1ity. Borrower has and will maintain full power and authority to execute and deliver the Documents and to Perform the Obligations. All action necessary and required by Borrower's Articles of Organization and all applicable laws for Borrower to obtain the Loans, to execute and deliver the Documents which have been or will be executed and delivered in connection with the Loans and to perform the Obligations has been duly and effectively taken. The Documents are and shall be, legal, valid, binding and enforceable against Borrower; and do not violate the Applicable Usury Law or constitute a default or result in the imposition of a lien under the terms or provisions of any agreement to which Borrower is a party. No consent of any governmental agency or any other person not a party to this Agreement is or will be required as a condition to the execution,

CWP.349.FINOVA.PIGEON.LNAG.004 5.6 Borrower is Unconditional Obligation to Make Payments. Whether or not the proceeds from the Collateral shall be sufficient for that purpose, Borrower will pay when due all payments required to be made pursuant to any of the Documents, Borrower's Obligation to make such payments being absolute and unconditional. 6. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS 6.1 (a) Good Standing. Borrower is, and will remain at all times, duly organized, validly existing and in good standing under the laws of Massachusetts and is authorized and will remain at all times authorized, to do business in Tennessee, Florida and in each jurisdiction in which it is at any time selling Time-Share Interests or where at any time the location or nature of its properties or its business makes such qualification necessary. Borrower has and will maintain full authority to Perform the Obligations and to carry on its business and own its property. (b) Power and Authority; Enforceabi1ity. Borrower has and will maintain full power and authority to execute and deliver the Documents and to Perform the Obligations. All action necessary and required by Borrower's Articles of Organization and all applicable laws for Borrower to obtain the Loans, to execute and deliver the Documents which have been or will be executed and delivered in connection with the Loans and to perform the Obligations has been duly and effectively taken. The Documents are and shall be, legal, valid, binding and enforceable against Borrower; and do not violate the Applicable Usury Law or constitute a default or result in the imposition of a lien under the terms or provisions of any agreement to which Borrower is a party. No consent of any governmental agency or any other person not a party to this Agreement is or will be required as a condition to the execution, delivery, or enforceability of the Documents. (c) Borrower's Princii)al Place of Business. Borrower's principal place of business is located in the State of Florida, and Borrower will not move its principal place of business except upon not less than sixty (60) days prior written notice to Lender. 6.2 No Litigation. There is no action, 1itigation or other proceeding pending or, to Borrower's knowledge, threatened before any arbitration tribunal , court, governmental agency or administrative body against Borrower, which might materially adversely affect the Performance of the Obligations, the Time-Share Project, the business or financial condition of Borrower, or the ability of Borrower to Perform the Obligations. Borrower will promptly - -30 -

CWP.349.FINOVA.PIGEON.LNAG.004 - -notify Lender if any such action, litigation or proceeding is commenced or threatened. 6.3 (a) Adequacy of Principal Work-Related Items. The Principal Work-Related Items delivered to Lender are adequate [or will be adequate at the initial Advance or such later time as may be permitted pursuant to paragraph 4.lA(d) for the delivery of such items] and will continue at all times to be adequate for Completion of the Work. The Principal Work-Related Items delivered to Lender are in full force and effect; no third party bound thereby is in default of its obligations thereunder or has threatened to terminate Borrower's rights thereunder; Borrower has paid all sums and performed all other obligations it has under them; and no third party bound thereby has any defense to the enforcement of Borrower's rights thereunder. No moratorium or other legal impediment exists or, to the knowledge of Borrower, is threatened with respect to the issuance of any permit or approval necessary to use the Time-Share Project for intended time-share purposes upon Completion of the Work. (b) Adequacy of Construction Budget. Borrower will cause the Construction Budget to accurately and completely set forth the types and estimated maximum amounts of all costs which must be incurred for Completion of the Work to occur. (c) Adequacy of Streets and Utilities. All streets, easements, and utilities (including potable water, storm and sanitary sewer, gas, electric, telephone and cable television facilities and garbage removal) necessary for the Completion of the Work and use of the Real Property for intended time-share purposes have been completed, paid for in full and are available at the boundaries of the Real Property. All water and sewer treatment plants and

CWP.349.FINOVA.PIGEON.LNAG.004 - -notify Lender if any such action, litigation or proceeding is commenced or threatened. 6.3 (a) Adequacy of Principal Work-Related Items. The Principal Work-Related Items delivered to Lender are adequate [or will be adequate at the initial Advance or such later time as may be permitted pursuant to paragraph 4.lA(d) for the delivery of such items] and will continue at all times to be adequate for Completion of the Work. The Principal Work-Related Items delivered to Lender are in full force and effect; no third party bound thereby is in default of its obligations thereunder or has threatened to terminate Borrower's rights thereunder; Borrower has paid all sums and performed all other obligations it has under them; and no third party bound thereby has any defense to the enforcement of Borrower's rights thereunder. No moratorium or other legal impediment exists or, to the knowledge of Borrower, is threatened with respect to the issuance of any permit or approval necessary to use the Time-Share Project for intended time-share purposes upon Completion of the Work. (b) Adequacy of Construction Budget. Borrower will cause the Construction Budget to accurately and completely set forth the types and estimated maximum amounts of all costs which must be incurred for Completion of the Work to occur. (c) Adequacy of Streets and Utilities. All streets, easements, and utilities (including potable water, storm and sanitary sewer, gas, electric, telephone and cable television facilities and garbage removal) necessary for the Completion of the Work and use of the Real Property for intended time-share purposes have been completed, paid for in full and are available at the boundaries of the Real Property. All water and sewer treatment plants and power generation facilities intended to serve the Real Property have been constructed and are operational; and upon Completion of the Work, will have adequate capacity and size to serve the intended time-share use of the Real Property. (d) No Commencement of Work. No work, equipment, materials, services or work of any kind that may give rise to any mechanics or similar statutory lien (whether for work performed prior to or after recordation of the Borrower's Mortgage) which will have priority, including, without limitation, the destruction or removal of existing Improvements, site work, clearing, grubbing, draining or fencing of the Real Property, has been or will be performed or commenced on the Real Property prior to recordation of the Borrower's Mortgage. Lender may waive such condition in - -31 -

CWP.349.FINOVA.PIGEON.LNAG.004 its discretion; and as a condition precedent to such waiver, Lender may require that such work, equipment, materials and services have been fully disclosed in writing to Lender and Title Insurer (Borrower's Mortgage) prior to recordation of the Borrower's Mortgage, that such work, equipment, materials and services must be satisfactory to Lender and Lender's Inspector, and that Title Insurer (Borrower's Mortgage) insure the priority of the Borrower's Mortgage over all such liens. 6.4 Work-Related Covenants. Borrower will: (a) commence construction of the Work prior to June 15, 1995; cause the progress of the Work to occur in substantial compliance with the Work Progress Schedule, subject to Force Majeure Events, all in accordance with the Plans and Specifications, Construction Contract(s), applicable laws, regulations and private restrictions, the Documents, sound construction engineering and architectural principles and commonly accepted safety standards, lien free and free from defective materials and workmanship; and cause Completion of the Work to occur on or before the Required Completion Date. (b) pay when due all costs, expenses and claims pertaining to the Work; and deliver to Lender during the course of the Work in order to monitor and/or provide assurance that the Work is proceeding lien free in accordance with the Plans and Specifications, the Construction Contract(s), applicable laws, regulations and private

CWP.349.FINOVA.PIGEON.LNAG.004 its discretion; and as a condition precedent to such waiver, Lender may require that such work, equipment, materials and services have been fully disclosed in writing to Lender and Title Insurer (Borrower's Mortgage) prior to recordation of the Borrower's Mortgage, that such work, equipment, materials and services must be satisfactory to Lender and Lender's Inspector, and that Title Insurer (Borrower's Mortgage) insure the priority of the Borrower's Mortgage over all such liens. 6.4 Work-Related Covenants. Borrower will: (a) commence construction of the Work prior to June 15, 1995; cause the progress of the Work to occur in substantial compliance with the Work Progress Schedule, subject to Force Majeure Events, all in accordance with the Plans and Specifications, Construction Contract(s), applicable laws, regulations and private restrictions, the Documents, sound construction engineering and architectural principles and commonly accepted safety standards, lien free and free from defective materials and workmanship; and cause Completion of the Work to occur on or before the Required Completion Date. (b) pay when due all costs, expenses and claims pertaining to the Work; and deliver to Lender during the course of the Work in order to monitor and/or provide assurance that the Work is proceeding lien free in accordance with the Plans and Specifications, the Construction Contract(s), applicable laws, regulations and private restrictions, the Documents, sound construction, engineering and architectural principles and commonly accepted safety standards bills of sale, conveyances and paid invoices pertaining to the Work; all waivers and releases of lien or claims on the Real Property and/or the Improvements which Lender may determine to be necessary or may otherwise reasonably request for its protection; from sureties acceptable to Lender, payment and performance bonds as Lender may reasonably determine to be necessary; from persons acceptable to Lender, additional engineering or architectural studies and reports as Lender or Lender's Inspector may reasonably require; and record all notices of commencement/ completion and similar notices permitted by applicable laws and regulations which have the effect of shortening periods within which mechanics and similar liens may be filed; (c) allow Lender, Lender's Inspector and/or its agents and employees to inspect the Real Property and Work at all - -32 -

CVVP.349.FINOVA.PIGEON.LNAG.004 reasonable times, with the reasonable costs of such inspections to be borne by Borrower; (d) not enter into any Architect/Engineer Agreement or Construction Contract except upon terms and with such parties as Lender may approve in writing, such approval not to be unreasonably withheld; (e) deliver all Principal Work-Related Items to Lender promptly after obtaining them (or at such earlier time as may be required pursuant to paragraph 4.1); (f) not amend any of the Principal Work-Related Items except for change orders which (i) do not change the cost of Completion of the Work by more than Five Thousand Dollars ($5,000) individually or Twenty-Five Thousand Dollars ($25,000) in the aggregate beyond that shown in the Construction Budget as originally approved by Lender and (ii) do not affect the design, structural integrity or quality of the Improvements; (g) perform all its obligations and preserve its rights under the Principal Work-Related Items and secure the performance of the other parties to the Principal Work-Related Items; (h) deliver to Lender: prior to each Construction Loan Advance, at Lender's option, an endorsement ('date down endorsement") issued by the Title Insurer (Borrower's Mortgage) insuring Lender against any loss by reason of defects in, mechanic's or similar statutory liens upon or unmarketability of the title to the Real Property, as well as insuring that the Borrower's-Mortgage, at the time of each Construction Loan Advance, constitutes a valid first

CVVP.349.FINOVA.PIGEON.LNAG.004 reasonable times, with the reasonable costs of such inspections to be borne by Borrower; (d) not enter into any Architect/Engineer Agreement or Construction Contract except upon terms and with such parties as Lender may approve in writing, such approval not to be unreasonably withheld; (e) deliver all Principal Work-Related Items to Lender promptly after obtaining them (or at such earlier time as may be required pursuant to paragraph 4.1); (f) not amend any of the Principal Work-Related Items except for change orders which (i) do not change the cost of Completion of the Work by more than Five Thousand Dollars ($5,000) individually or Twenty-Five Thousand Dollars ($25,000) in the aggregate beyond that shown in the Construction Budget as originally approved by Lender and (ii) do not affect the design, structural integrity or quality of the Improvements; (g) perform all its obligations and preserve its rights under the Principal Work-Related Items and secure the performance of the other parties to the Principal Work-Related Items; (h) deliver to Lender: prior to each Construction Loan Advance, at Lender's option, an endorsement ('date down endorsement") issued by the Title Insurer (Borrower's Mortgage) insuring Lender against any loss by reason of defects in, mechanic's or similar statutory liens upon or unmarketability of the title to the Real Property, as well as insuring that the Borrower's-Mortgage, at the time of each Construction Loan Advance, constitutes a valid first lien upon the Real Property, subject only to the Permitted Encumbrances; and promptly after Completion of the Work has otherwise occurred, a new Title Policy (Borrower's Mortgage) re-issued pursuant to an LP-10 reissue package, with an endorsement insuring that the Improvements are located upon the Real Property; (i) after obtaining knowledge or receiving notice thereof, correct or cause to be corrected (i) any material defect in the Work, (ii) any material departure in the completion of the Work from the Plans and Specifications or the Construction Contract(s) (unless expressly permitted in this Agreement or consented to in writing by Lender), any applicable laws, regulations or private restrictions sound, construction, engineering or architectural principles or commonly accepted safety standards or (iii) any encroachment of any part of the Improvements on any - -33 -

CWP.349.FINOVA.PIGEON.LNAG.004 building line, easement line or restricted area, or any adjacent landowner's property; (j) promptly deliver to Lender any and all notices received by Borrower that it is not complying with applicable laws, regulations and private restrictions pertaining to the Work or that the Work is not being completed in accordance with the Plans and Specifications, the Construction Contract(s), sound construction, engineering and architectural principles and commonly accepted safety standards; (k) if at any time there exists or appears likely to exist any Uncovered Cost of the Work, Borrower will notify Lender within ten (10) Business Days (and in any event prior to the next Advance) after obtaining knowledge thereof; within the earlier of such ten (10) Business Day period or ten (10) Business Days after Lender's demand that it do so, Borrower will deliver to Lender a cash deposit ("Required Completion Assurance Deposit") equal to the Uncovered Cost of the Work; in the event of any dispute, the necessity for and amount of the Required Completion Assurance Deposit by Lender; the Required Completion shall be determine Assurance Deposit may be deposited in a non-interest bearing account and need not be segregated from any of Lender's other funds, provided that Lender will disburse the Required Completion Assurance Deposit to pay and/or reimburse Borrower for the costs of the Work prior to any further disbursement of the Construction Loan for such purpose, but subject to the terms and conditions of this Agreement pertaining to the disbursement of Construction Loan Advances; and Lender is hereby granted a security interest in all Required Completion Assurance Deposits from time to time held by Lender.

CWP.349.FINOVA.PIGEON.LNAG.004 building line, easement line or restricted area, or any adjacent landowner's property; (j) promptly deliver to Lender any and all notices received by Borrower that it is not complying with applicable laws, regulations and private restrictions pertaining to the Work or that the Work is not being completed in accordance with the Plans and Specifications, the Construction Contract(s), sound construction, engineering and architectural principles and commonly accepted safety standards; (k) if at any time there exists or appears likely to exist any Uncovered Cost of the Work, Borrower will notify Lender within ten (10) Business Days (and in any event prior to the next Advance) after obtaining knowledge thereof; within the earlier of such ten (10) Business Day period or ten (10) Business Days after Lender's demand that it do so, Borrower will deliver to Lender a cash deposit ("Required Completion Assurance Deposit") equal to the Uncovered Cost of the Work; in the event of any dispute, the necessity for and amount of the Required Completion Assurance Deposit by Lender; the Required Completion shall be determine Assurance Deposit may be deposited in a non-interest bearing account and need not be segregated from any of Lender's other funds, provided that Lender will disburse the Required Completion Assurance Deposit to pay and/or reimburse Borrower for the costs of the Work prior to any further disbursement of the Construction Loan for such purpose, but subject to the terms and conditions of this Agreement pertaining to the disbursement of Construction Loan Advances; and Lender is hereby granted a security interest in all Required Completion Assurance Deposits from time to time held by Lender. (i ) cause . all materials supplied for or intended to be utilized in the Completion of the Work, but previously not affixed to or incorporated into the Improvements, to be stored on the Real Property with adequate safeguards, as reasonably required by Lender, to prevent loss, theft, damage or commingling with other materials; and (m) promptly after receipt by Borrower (but in no event later than the Required Completion Date), deliver to Lender copies of all certificates of acceptance and/or occupancy relating to the Work. 6.5 (a) Compliance with Laws. Borrower has complied, and will comply, with all applicable laws and regulations, including, without limitation, all laws and regulations of the state in which the Time-Share Project is located and - -34-

CWP.349.FINOVA.PIGEON.LNAG.004 all other governmental jurisdictions in which the TimeShare Project is located or in which Time-Share Interests will be sold or offered for sale. (b) Sales Activities. As of the date of this Agreement, Borrower has not sold any Time-Share Interest or offered any Time-Share Interest for sale. Borrower will not sell any Time-Share Interest or offer any Time-Share Interest for sale in any jurisdiction, unless: (i) Borrower has delivered to Lender true and complete copies of the Minimum Required Time-Share Approvals, all other approvals required to be obtained by Borrower in such jurisdiction prior to engaging in its proposed conduct, and all other evidence required by Lender that Borrower has complied with all laws of such jurisdiction governing its proposed conduct; with respect to its proposed conduct, and other evidence received by Lender; and (ii) Borrower has delivered to Lender the Time-Share Program Consumer Documents and the Time-Share Program Governing Documents which Borrower will be using in connection with the Time-Share Project and the sale or offering for sale of Time-Share Interests and such documents have been approved by Lender, which approval shall not be unreasonably withheld. Borrower has already submitted an application for the issuance of the Minimum Required Time-Share Approvals, which complies with applicable laws and regulations and Borrower will diligently pursue approval of such application and the issuance of the Minimum Required Time-Share Approvals. Not later than June 15, 1995, Borrower will deliver to Lender the Minimum Required Time-Share Approvals, the Time-Share Program Governing Documents and Time-Share Program Consumer Documents (which have, to the extent required, been approved for use in the State of Tennessee) and will take all steps necessary to commence the sale of Time-Share Interests in Tennessee; and from and after such date, Borrower will maintain an active marketing program for the sale of Time-Share

CWP.349.FINOVA.PIGEON.LNAG.004 all other governmental jurisdictions in which the TimeShare Project is located or in which Time-Share Interests will be sold or offered for sale. (b) Sales Activities. As of the date of this Agreement, Borrower has not sold any Time-Share Interest or offered any Time-Share Interest for sale. Borrower will not sell any Time-Share Interest or offer any Time-Share Interest for sale in any jurisdiction, unless: (i) Borrower has delivered to Lender true and complete copies of the Minimum Required Time-Share Approvals, all other approvals required to be obtained by Borrower in such jurisdiction prior to engaging in its proposed conduct, and all other evidence required by Lender that Borrower has complied with all laws of such jurisdiction governing its proposed conduct; with respect to its proposed conduct, and other evidence received by Lender; and (ii) Borrower has delivered to Lender the Time-Share Program Consumer Documents and the Time-Share Program Governing Documents which Borrower will be using in connection with the Time-Share Project and the sale or offering for sale of Time-Share Interests and such documents have been approved by Lender, which approval shall not be unreasonably withheld. Borrower has already submitted an application for the issuance of the Minimum Required Time-Share Approvals, which complies with applicable laws and regulations and Borrower will diligently pursue approval of such application and the issuance of the Minimum Required Time-Share Approvals. Not later than June 15, 1995, Borrower will deliver to Lender the Minimum Required Time-Share Approvals, the Time-Share Program Governing Documents and Time-Share Program Consumer Documents (which have, to the extent required, been approved for use in the State of Tennessee) and will take all steps necessary to commence the sale of Time-Share Interests in Tennessee; and from and after such date, Borrower will maintain an active marketing program for the sale of Time-Share Interests in conformance with all applicable laws and regulations and consistent with the provisions of this paragraph and the terms and conditions of Borrower's Mortgage pertaining to the sale of Time-Share Interests. (c) Time-Share Interest Not a Security. Borrower has not sold or offered for sale any Time-Share Interest as an investment. Neither the sale nor the offering for sale of any Time-Share Interest would constitute the sale or the offering of a security for sale under any applicable law. (d) Zoning Compliance. Neither time-share use nor other transient use and occupancy of the Real Property violates - -35-

CWP.349.FINOVA.PIGEON.LNAG.004 or will violate or constitute a non-confoming use or require a variance under any private covenant or restriction or any zoning, use or similar law, ordinance or regulation affecting the use or occupancy of the Real Property. 6.6 (a) Eligible Instruments. Each Instrument which is assigned to Lender pursuant to this Agreement and against which an Advance is requested or which is assigned in satisfaction of Borrower's obligations under paragraph 3.2 shall be an Eligible Instrument at the time of assignment. Borrower further warrants and guarantees the enforceability of the Receivables Collateral. (b) No Modification of Receivables Collateral or Payments by Borrower. Without the prior written consent of Lender, Borrower will not cancel or materially modify, or consent to or acquiesce in any material modification (including, without limitation, any change in the interest rate or amount, frequency or number of payments) to, or solicit the prepayment of, any Instrument which constitutes part of the Receivables Collateral; or waive the timely perfomance of the obligations of the Purchaser under any such Instrument or its security; or release the security for any such Instrument. Borrower will not pay or advance directly or indirectly for the account of any Purchaser any sum required to be deposited or owing by the Purchaser either under any Contract for Deed or under any Instrument which constitutes part of the Receivables Collateral. (c) Fulfillment of Obligations to Purchasers. Borrower at all times will fulfill and will cause its Affiliates, agents and independent contractors at all times to fulfill all obligations to Purchasers. Borrower will perform all of its obligations under the Time-Share Program Consumer Documents and the Time-Share Program Governing

CWP.349.FINOVA.PIGEON.LNAG.004 or will violate or constitute a non-confoming use or require a variance under any private covenant or restriction or any zoning, use or similar law, ordinance or regulation affecting the use or occupancy of the Real Property. 6.6 (a) Eligible Instruments. Each Instrument which is assigned to Lender pursuant to this Agreement and against which an Advance is requested or which is assigned in satisfaction of Borrower's obligations under paragraph 3.2 shall be an Eligible Instrument at the time of assignment. Borrower further warrants and guarantees the enforceability of the Receivables Collateral. (b) No Modification of Receivables Collateral or Payments by Borrower. Without the prior written consent of Lender, Borrower will not cancel or materially modify, or consent to or acquiesce in any material modification (including, without limitation, any change in the interest rate or amount, frequency or number of payments) to, or solicit the prepayment of, any Instrument which constitutes part of the Receivables Collateral; or waive the timely perfomance of the obligations of the Purchaser under any such Instrument or its security; or release the security for any such Instrument. Borrower will not pay or advance directly or indirectly for the account of any Purchaser any sum required to be deposited or owing by the Purchaser either under any Contract for Deed or under any Instrument which constitutes part of the Receivables Collateral. (c) Fulfillment of Obligations to Purchasers. Borrower at all times will fulfill and will cause its Affiliates, agents and independent contractors at all times to fulfill all obligations to Purchasers. Borrower will perform all of its obligations under the Time-Share Program Consumer Documents and the Time-Share Program Governing Documents. (d) No Modification of Time-Share Documents. Borrower, without the prior written consent of Lender, will not cancel or materially modify any of the Time-Share Program Consumer Documents or the Time-Share Program Governing Documents. (e) Associations; Assessments and Reserves. Each Purchaser will be and, subject only to its retaining its interest under a Contract for Deed, will remain a member of the Time-Share Association upon Borrower's acceptance of such Contract for Deed. The Time-Share Association has authority to levy annual assessments to cover the costs of maintaining and operating the Time-Share Project. To Borrower's knowledge, at all times after the first - -36-

CWP.349.FINOVA.PIGEON.LNAG.004 conveyance of a Time-Share Interest, the Time-Share Association will be solvent; assessments levied from time to time will be adequate to cover then current costs of maintaining and operating the Time-Share Project and to establish and maintain a reasonable reserve for capital improvements. Borrower will promptly notify Lender in writing if it has knowledge or has reason to believe that events (other than general changes in the economy) have occurred or could occur which could give rise to a material increase in such costs. Borrower will use its best efforts to: (i) cause the Time-Share Association to (A) discharge its obligations under the Time-Share Program Governing Documents and (B) maintain the reserve described above; and (ii) so long as Borrower controls the Time-Share Association, pay to such association not less often than every twelve (12) months after such conveyance the difference between (A) the cumulative total amount of the maintenance and operating expenses incurred by such association, together with a reasonable reserve for capital improvements and the amount of any installment of real property taxes currently due and payable with respect to the TimeShare Project and related amenities, through the end of the calendar month preceding the month in which such payment is made and (B) the cumulative total amount of assessments payable to the Time-Share Association by owners or holders of Contracts for Deed other than Borrower through the end of the calendar month preceding the month in which such payment is made. (f) Title and Condition of Amenities. Except as otherwise permitted and disclosed by the Time-Share Program Governing Documents, at all times after the first conveyance of a Time-Share Interest the Time-Share Association or the owners of Time-Share Interests in common will own all the common areas in the Real

CWP.349.FINOVA.PIGEON.LNAG.004 conveyance of a Time-Share Interest, the Time-Share Association will be solvent; assessments levied from time to time will be adequate to cover then current costs of maintaining and operating the Time-Share Project and to establish and maintain a reasonable reserve for capital improvements. Borrower will promptly notify Lender in writing if it has knowledge or has reason to believe that events (other than general changes in the economy) have occurred or could occur which could give rise to a material increase in such costs. Borrower will use its best efforts to: (i) cause the Time-Share Association to (A) discharge its obligations under the Time-Share Program Governing Documents and (B) maintain the reserve described above; and (ii) so long as Borrower controls the Time-Share Association, pay to such association not less often than every twelve (12) months after such conveyance the difference between (A) the cumulative total amount of the maintenance and operating expenses incurred by such association, together with a reasonable reserve for capital improvements and the amount of any installment of real property taxes currently due and payable with respect to the TimeShare Project and related amenities, through the end of the calendar month preceding the month in which such payment is made and (B) the cumulative total amount of assessments payable to the Time-Share Association by owners or holders of Contracts for Deed other than Borrower through the end of the calendar month preceding the month in which such payment is made. (f) Title and Condition of Amenities. Except as otherwise permitted and disclosed by the Time-Share Program Governing Documents, at all times after the first conveyance of a Time-Share Interest the Time-Share Association or the owners of Time-Share Interests in common will own all the common areas in the Real Property and other amenities which have been promised or represented as being available to Purchasers, free and clear of liens and security interests except for the Permitted Encumbrances. Borrower will maintain or cause to be maintained in good condition and repair all amenities and common areas which have been promised or represented as being available to Purchasers and all roads and off-site improvements which are not the responsibility of the Time-Share Association to maintain and repair and have not been dedicated to or accepted by the responsible governmental authority or utility. Borrower will maintain a reasonable reserve to assure compliance with the terms of the foregoing sentence. 6.7 col1ection of Receivables Col1ateral . Borrower wi11 undertake the diligent and timely collection of amounts delinquent under each - -37-

CWP.349.FINOVA.PIGEON.LNAG.004 Instrument which constitutes part of the Receivables Collateral and will bear the entire expense of such collection. Lender shall have no obligation to undertake any action to collect under any Instrument. 6.8 Notice of Lender's Interest. Lender may notify persons bound thereby of the existence of Lender's interest as assignee in the Receivables Collateral and request from any person bound by them any information relating to them. Borrower will deliver such notice under its letterhead if requested. 6.9 (a) Restrictions on Time-Share Project Financing. Without the prior written consent of Lender not to be unreasonably withheld, Borrower will not incur any additional debt (including without limitation any contingent or guarantor liability) with respect to, or in connection with its ownership and operation of the Property, except for short term accounts payable incurred in connection with the operation of the Property which are not secured by any of the Collateral ("Permitted Debt"). Without limiting the generality of the foregoing, Borrower will not obtain additional receivables financing during the Receivables Loan Borrowing term without Lender's prior written consent, and the availability of Advances under the Receivables Loan shall be deemed reasonable grounds to withhold such consent. Before Borrower's acceptance of any such third party loan or financing other than the Permitted Debt, its terms must be presented to Lender for approval. Borrower agrees that Lender may require as a condition to its approval that any third parties providing financing (other than Permitted Debt) to Borrower deliver to Lender written certificates containing notice and cure rights and full subordinations and otherwise in form and substance satisfactory to Lender.

CWP.349.FINOVA.PIGEON.LNAG.004 Instrument which constitutes part of the Receivables Collateral and will bear the entire expense of such collection. Lender shall have no obligation to undertake any action to collect under any Instrument. 6.8 Notice of Lender's Interest. Lender may notify persons bound thereby of the existence of Lender's interest as assignee in the Receivables Collateral and request from any person bound by them any information relating to them. Borrower will deliver such notice under its letterhead if requested. 6.9 (a) Restrictions on Time-Share Project Financing. Without the prior written consent of Lender not to be unreasonably withheld, Borrower will not incur any additional debt (including without limitation any contingent or guarantor liability) with respect to, or in connection with its ownership and operation of the Property, except for short term accounts payable incurred in connection with the operation of the Property which are not secured by any of the Collateral ("Permitted Debt"). Without limiting the generality of the foregoing, Borrower will not obtain additional receivables financing during the Receivables Loan Borrowing term without Lender's prior written consent, and the availability of Advances under the Receivables Loan shall be deemed reasonable grounds to withhold such consent. Before Borrower's acceptance of any such third party loan or financing other than the Permitted Debt, its terms must be presented to Lender for approval. Borrower agrees that Lender may require as a condition to its approval that any third parties providing financing (other than Permitted Debt) to Borrower deliver to Lender written certificates containing notice and cure rights and full subordinations and otherwise in form and substance satisfactory to Lender. (b) Restrictions on Liens or Transfers. Borrower, without the prior written consent of Lender, will not: ' ( ' i) sell, convey, pledge, hypothecate, encumber or otherwise transfer any security for the Performance of the obligations; (ii) permit or suffer to exist any liens, security interests or other encumbrances on any security for the Performance of the Obligations, except for the Permitted Encumbrances and liens and security interests expressly granted to Lender; or (iii) sell, lease, transfer or dispose of all or substantially all of its assets to another entity.
6.10 Insurance. Borrower will pay the cost of and will maintain and deliver evidence to Lender of insurance policies required by Lender which are written by insurers and in amounts and on forms satisfactory to Lender.

- -38-

CWP,349.FINOVA.PIGEON.LNA@:cO4
6.11 (a) No Misrepresentations. The Documents and all certificates, financial statements and written materials furnished to Lender by or on behalf of Borrower in connection with the Loans do not contain any untrue statement of a material fact or omit to state a fact which materially adversely affects or in the future may materially adversely affect the Collateral, the Time-Share Project, the business or financial condition of Borrower, or the ability of Borrower to Perform the Obligations.

(b) Reliance. Lender's examination, inspection, or receipt of information pertaining to the Collateral or the TimeShare Project and its proposed operation shall not in any way be deemed to reduce the full scope and protection of the warranties, representations and Obligations contained in this Agreement.
6.12 (a) Sales Reports. On or before the tenth (10th) day of each month, Borrower will cause to be furnished to Lender (i) the reports required pursuant to paragraph 5.4(a) and (ii) if requested by Lender, a sales report for the prior month showing the number' of sales and closings of Time-Share Interests and the aggregate dollar amount thereof, including down payments.

CWP,349.FINOVA.PIGEON.LNA@:cO4
6.11 (a) No Misrepresentations. The Documents and all certificates, financial statements and written materials furnished to Lender by or on behalf of Borrower in connection with the Loans do not contain any untrue statement of a material fact or omit to state a fact which materially adversely affects or in the future may materially adversely affect the Collateral, the Time-Share Project, the business or financial condition of Borrower, or the ability of Borrower to Perform the Obligations.

(b) Reliance. Lender's examination, inspection, or receipt of information pertaining to the Collateral or the TimeShare Project and its proposed operation shall not in any way be deemed to reduce the full scope and protection of the warranties, representations and Obligations contained in this Agreement.
6.12 (a) Sales Reports. On or before the tenth (10th) day of each month, Borrower will cause to be furnished to Lender (i) the reports required pursuant to paragraph 5.4(a) and (ii) if requested by Lender, a sales report for the prior month showing the number' of sales and closings of Time-Share Interests and the aggregate dollar amount thereof, including down payments.

(b) Financial Information. Borrower will furnish or cause to be furnished to Lender within ninety (90) days after each fiscal year of the subject, a copy of the current annual financial statements of Borrower, and, subject to the best efforts of Borrower, the Time-Share Association; and shall furnish or cause to be furnished to Lender within forty five (45) days after each interim quarterly fiscal period of Borrower a copy of the current financial statements of Borrower for the period commencing with the first day of the fiscal year and concluding with such quarter end. Such financial statements shall contain a balance sheet as of the end of the relevant fiscal period and statements of income and of cash flow for such fiscal period (together, in each case, with the comparable figures for the corresponding period of the previous fiscal year), all in reasonable detail. All financial statements shall be prepared in accordance with generally accepted accounting principles, consistently applied. All financial statements of Borrower shall be certified by the chief financial officer of Borrower. Annual statements of Borrower shall be audited and certified by a recognized firm of certified public accountants reasonably satisfactory to Lender. Lender acknowledges that, as of the date hereof, the firm of Arthur Andersen & Co. is acceptable to it. Together with such financial statements, Borrower will deliver to

- -39-

CWP.349.FINOVA.PIGEON.LNAG.vv4 Lender a certificate signed by Borrower's chief financial officer stating that there exists no Event of Default or Incipient Default or, if any such Event of Default or Incipient Default exists, specifying the nature and period of its existence and what action Borrower proposes to take with respect to it. (c) Time-Share Project and Sales Information. Borrower will deliver to Lender from time to time, as available, and promptly upon amendment or effective date: current price lists, sales literature, registrations/consents to sell, and final subdivision public reports/public offering statements/prospectuses. Borrower will deliver to Lender any changes which Borrower proposes or any other person having the power to do so proposes be made to the TimeShare Program Consumer Documents and/or the Time-Share Program Governing Documents last delivered. to Lender, together with a description and explanation of the changes; and other items requested by Lender which relate to the Time-Share Interests. (d) Riqht to Inspect. Borrower will at its expense permit Lender and its representatives at all reasonable times to

CWP.349.FINOVA.PIGEON.LNAG.vv4 Lender a certificate signed by Borrower's chief financial officer stating that there exists no Event of Default or Incipient Default or, if any such Event of Default or Incipient Default exists, specifying the nature and period of its existence and what action Borrower proposes to take with respect to it. (c) Time-Share Project and Sales Information. Borrower will deliver to Lender from time to time, as available, and promptly upon amendment or effective date: current price lists, sales literature, registrations/consents to sell, and final subdivision public reports/public offering statements/prospectuses. Borrower will deliver to Lender any changes which Borrower proposes or any other person having the power to do so proposes be made to the TimeShare Program Consumer Documents and/or the Time-Share Program Governing Documents last delivered. to Lender, together with a description and explanation of the changes; and other items requested by Lender which relate to the Time-Share Interests. (d) Riqht to Inspect. Borrower will at its expense permit Lender and its representatives at all reasonable times to inspect the Time-Share Project and to inspect, audit and copy Borrower's books and records.
(e) Association Budgets. Borrower will submit to Lender annually within ten (10) days after each is available, proposed annual maintenance and operating budgets of the Time-Share Association, certified to be adequate by the Time-Share Manager and a statement of the annual assessment to be levied upon the owners of Time-Share Interests; and will use its best efforts to cause to be made available to Lender for inspection, auditing and copying, upon Lender's request, the books and records of the Time-Share Association. Additional Information. Borrower will make available such information as Lender may from time to time reasonably request. Subordination of Indebtedness. (a) Indenture. All obligations of the Borrower to Lender under this further

(f)

6.13

Agreement and the Notes are intended to, and do, constitute "Senior Indebtedness' as such term is defined in and for purposes of, the Indenture dated as of May 15, 1987 ("Indenture") between the Borrower and Shawmut Bank, N.A., as trustee, pursuant to which the Borrower's eight and one quarter percent (81%) Convertible Subordinated Debentures - -40-

CVv?.349.FINOVA.PIGEON.LNAG.004 due 2012 ("Debentures') were issued, and will be entitled to all the benefits associated with being 'Senior Indebtedness" under the Indenture, including, without limitation, ranking senior to the Debentures. (b) Subordination of Indebtedness Owing to Affiliates. Borrower wi11 cause any and all indebtedness owing by it to its shareholders, directors, officers, partners, members or Affiliates, or any relatives of any of the foregoing, and all liens, security interests and other charges on the assets of Borrower, including, without limitation, the Collateral, to be fully subordinated in all aspects to the Obligations pursuant to written agreements satisfactory to Lender; provided, however, that if neither an Event of Default nor an Incipient Default then exists, such subordination shall not extend to (i) reasonable salaries and fees at normal and customary rates for services actually rendered and other distributions expressly permitted pursuant to the terms of this Agreement or (ii) regularly scheduled payments in accordance with the written agreements described in this paragraph. Any such creditor shall execute a written subordination agreement in form and substance satisfactory to Lender. 6.14 No Default for Third Party Obligations. Borrower is not in default under any other agreement evidencing, guaranteeing or securing borrowed money or a receivables purchase financing involving an obligation in excess of Two Hundred Fifty Thousand Dollars ($250,000) to make a payment of principal or interest or to repurchase

CVv?.349.FINOVA.PIGEON.LNAG.004 due 2012 ("Debentures') were issued, and will be entitled to all the benefits associated with being 'Senior Indebtedness" under the Indenture, including, without limitation, ranking senior to the Debentures. (b) Subordination of Indebtedness Owing to Affiliates. Borrower wi11 cause any and all indebtedness owing by it to its shareholders, directors, officers, partners, members or Affiliates, or any relatives of any of the foregoing, and all liens, security interests and other charges on the assets of Borrower, including, without limitation, the Collateral, to be fully subordinated in all aspects to the Obligations pursuant to written agreements satisfactory to Lender; provided, however, that if neither an Event of Default nor an Incipient Default then exists, such subordination shall not extend to (i) reasonable salaries and fees at normal and customary rates for services actually rendered and other distributions expressly permitted pursuant to the terms of this Agreement or (ii) regularly scheduled payments in accordance with the written agreements described in this paragraph. Any such creditor shall execute a written subordination agreement in form and substance satisfactory to Lender. 6.14 No Default for Third Party Obligations. Borrower is not in default under any other agreement evidencing, guaranteeing or securing borrowed money or a receivables purchase financing involving an obligation in excess of Two Hundred Fifty Thousand Dollars ($250,000) to make a payment of principal or interest or to repurchase receivables or any other material default by Borrower permitting the acceleration of the payment or repurchase obligations of Borrower, which payment or repurchase obligations entitled to be accelerated are in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate. Borrower is not in violation of or in default under any material term in any other material agreement, instrument, order, decree or judgment of any court, arbitration or governmental authority to which it is a party or by which it is bound. 6.15 Payment of Taxes. Borrower has filed and will file tax returns and @as paid and will pay all taxes, assessments, levies and penalties, if any, required to be filed by it or paid by it to any governmental or quasigovernmental authority or subdivision, including real estate taxes and assessments relating to the Property, unless and only to the extent the item shall be contested in good faith and by appropriate proceedings by Borrower, Borrower shall set aside and cause on its books adequate reserves with respect to the contested item and, in connection with any tax assessment, levy or penalty levied against the Collateral encumbered by the Borrower's Mortgage, Borrower shall comply with the terms of the - -41-

CWP.349.FINOVA.PIGEON.LNAG.004 Borrower's Mortgage pertaining to such contest. Borrower will provide to Lender not more than -thirty (30) days after such taxes and assessments become due evidence that all taxes and assessments on the Units and TimeShare Project common areas and related amenities have been paid in full. 6. 16 Fees, Costs and Expenses. (a) Loan Fee and Documentation Fee. Borrower will pay to Lender the Construction Loan Fee and the Acquisition/ Receivables Loan Fee. Lender acknowledges receipt of Ten Thousand Dollars ($10,000) of the Acquisition/Receivables Loan Fee. Borrower will pay to Lender the balance Acquisition/Receivables Loan Fee at the time the initial Advance is made, but in no event later than June 15, 1995. Borrower will pay on demand any and all costs and expenses incurred by Lender in connection with the initiation, documentation and closing of the Loans, the making of Advances, the protection of the Collateral , or the enforcement of the Obligations against Borrower, including, without limitation, all attorneys' and other professionals' fees (including without limitation normal charges for photocopy, telecopy and computer services), consumer credit reports, and revenue, documentary stamp, documentary transaction and intangible taxes. Notwithstanding anything in this paragraph to the contrary, Borrower will have no obligation to pay or reimburse Lender for Lender's attorneys' fees which are incurred in connection with the original preparation, negotiation and execution of the Documents delivered prior to or in connection with the first Advance ("Original Documents') or are otherwise incurred in connection with the closing of the first Advance,

CWP.349.FINOVA.PIGEON.LNAG.004 Borrower's Mortgage pertaining to such contest. Borrower will provide to Lender not more than -thirty (30) days after such taxes and assessments become due evidence that all taxes and assessments on the Units and TimeShare Project common areas and related amenities have been paid in full. 6. 16 Fees, Costs and Expenses. (a) Loan Fee and Documentation Fee. Borrower will pay to Lender the Construction Loan Fee and the Acquisition/ Receivables Loan Fee. Lender acknowledges receipt of Ten Thousand Dollars ($10,000) of the Acquisition/Receivables Loan Fee. Borrower will pay to Lender the balance Acquisition/Receivables Loan Fee at the time the initial Advance is made, but in no event later than June 15, 1995. Borrower will pay on demand any and all costs and expenses incurred by Lender in connection with the initiation, documentation and closing of the Loans, the making of Advances, the protection of the Collateral , or the enforcement of the Obligations against Borrower, including, without limitation, all attorneys' and other professionals' fees (including without limitation normal charges for photocopy, telecopy and computer services), consumer credit reports, and revenue, documentary stamp, documentary transaction and intangible taxes. Notwithstanding anything in this paragraph to the contrary, Borrower will have no obligation to pay or reimburse Lender for Lender's attorneys' fees which are incurred in connection with the original preparation, negotiation and execution of the Documents delivered prior to or in connection with the first Advance ("Original Documents') or are otherwise incurred in connection with the closing of the first Advance, which are in excess of $15,000, unless caused by the negligence of Borrower or third parties, the lack of diligence or cooperation by Borrower or third parties in the negotiation of the Documents and the closing of the first Advance, or circumstances which would not reasonably have been foreseen by Lender or its counsel. (b) Custodial Fee. In addition to all other fees required to be paid in connection with the Loan, Borrower shall pay to Lender a fee ("Custodial Fee") equal to Ten Dollars ($10) per each Instrument which is delivered to Lender in connection with the Loan and is in the physical custody of Lender. The Custodial Fee for an Instrument shall be paid by Borrower to Lender at the time the Instrument is assigned to Lender. After the Custodial Fee is paid for an Instrument, no fee shall be payable to Lender for any Instrument which is delivered to Lender pursuant to para- -42-

CWP.349.FINOVA.PIGEON.LNAG.004 graph 3.2(b) in replacement of an Instrument for which Borrower has paid the Custodial Fee. Once a Custodial Fee has been paid to Lender, Borrower shall not be entitled to any reimbursement of any portion hereof. 6.17 Indemnification. Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS, and defend Lender, its successors, assigns and shareholders (including corporate shareholders), and the directors, officers, employees, agents and servants of the foregoing, for, from and against any and all losses, costs, expenses (including, without limitation, court costs, and attorneys' fees), demands, claims, suits, proceedings (whether civil or criminal), orders, judgments, penalties, fines and other sanctions arising from or brought in connection with (a) the Time-Share Project, the Collateral, Lender's status by virtue of the Documents, creation of Security Interests, the terms of the Documents or the transactions related thereto, or any act or omission of Borrower or any Agent, or their respective employees or agents, whether actual or alleged unless such act or omission is caused by Lender's gross negligence or willful misconduct, and (b) any and all brokers' commissions or finders' fees or other costs of similar type by any party in connection with any of the Loans. On written request by a person or other entity covered by the above agreement of indemnity, Borrower will undertake, at its own cost and expense, on behalf of such indemnitee, using counsel satisfactory to the indemnitee, the defense of any legal action or proceeding to which such person or entity shall be a party. At Lender's option, Lender may at Borrower's expense prosecute or defend any action involving the priority, validity or enforceability of the Security Interests in the security for the Performance of the Obligations.

CWP.349.FINOVA.PIGEON.LNAG.004 graph 3.2(b) in replacement of an Instrument for which Borrower has paid the Custodial Fee. Once a Custodial Fee has been paid to Lender, Borrower shall not be entitled to any reimbursement of any portion hereof. 6.17 Indemnification. Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS, and defend Lender, its successors, assigns and shareholders (including corporate shareholders), and the directors, officers, employees, agents and servants of the foregoing, for, from and against any and all losses, costs, expenses (including, without limitation, court costs, and attorneys' fees), demands, claims, suits, proceedings (whether civil or criminal), orders, judgments, penalties, fines and other sanctions arising from or brought in connection with (a) the Time-Share Project, the Collateral, Lender's status by virtue of the Documents, creation of Security Interests, the terms of the Documents or the transactions related thereto, or any act or omission of Borrower or any Agent, or their respective employees or agents, whether actual or alleged unless such act or omission is caused by Lender's gross negligence or willful misconduct, and (b) any and all brokers' commissions or finders' fees or other costs of similar type by any party in connection with any of the Loans. On written request by a person or other entity covered by the above agreement of indemnity, Borrower will undertake, at its own cost and expense, on behalf of such indemnitee, using counsel satisfactory to the indemnitee, the defense of any legal action or proceeding to which such person or entity shall be a party. At Lender's option, Lender may at Borrower's expense prosecute or defend any action involving the priority, validity or enforceability of the Security Interests in the security for the Performance of the Obligations. 6. 18 Restrictions on Expenses. Borrower shall not permit its selling, general and administrative expenses to exceed fifty percent (50%)of gross sales revenue generated from the sale of real estate, calculated at the end of each calendar quarter on a twelve (12) month rolling basis. As used in this paragraph, selling, general and administrative expenses shall mean selling, general and administrative expenses properly allocable to real estate calculated in accordance with generally accepted accounting principles, as previously reflected in the financial statements of Borrower provided to Lender. 6.19 Net Worth Maintenance. Borrower must maintain a tangible net worth, determined in accordance with generally accepted accounting principles, in an amount not less than Forty Two Million Dollars ($42,000,000). 6.20 Perfection of Security Interests. Borrower will execute or cause to be executed all documents and ao or cause to be done all acts necessary for Lender to perfect and to continue the perfection of - -43 -

CVVP.349.FINOVA.PIGEON.LNAG.w4 the Security Interest of Lender in the Collateral or otherwise to effect the intent and purposes of the Documents. 6.21 -Environmental Remediation. Within sixty (60) days of the date hereof, Borrower shall (a) remove (i) all contaminated soils required under paragraph 1 of Exhibit 1, attached hereto, and (ii) the storage tank, drums, buckets and septic tank required under paragraph 2 of Exhibit 1, and (b) shall delivery to Lender written evidence satisfactory to Lender that such removal has been completed in accordance with the requirements set forth in Exhibit I.
6.22 Survival and Additional Representations, Warranties and Covenants. The representations, warranties and covenants contained in this Article VI are in addition to, and not in derogation of, the representations and warranties contained elsewhere in the Documents and shall be deemed to be made and reaffirmed prior to the making of each Advance. 7. DEFAULT 7.1 Events of Default. The occurrence of any of the following events or

CVVP.349.FINOVA.PIGEON.LNAG.w4 the Security Interest of Lender in the Collateral or otherwise to effect the intent and purposes of the Documents. 6.21 -Environmental Remediation. Within sixty (60) days of the date hereof, Borrower shall (a) remove (i) all contaminated soils required under paragraph 1 of Exhibit 1, attached hereto, and (ii) the storage tank, drums, buckets and septic tank required under paragraph 2 of Exhibit 1, and (b) shall delivery to Lender written evidence satisfactory to Lender that such removal has been completed in accordance with the requirements set forth in Exhibit I.
6.22 Survival and Additional Representations, Warranties and Covenants. The representations, warranties and covenants contained in this Article VI are in addition to, and not in derogation of, the representations and warranties contained elsewhere in the Documents and shall be deemed to be made and reaffirmed prior to the making of each Advance. 7. DEFAULT 7.1 Events of Default. The occurrence of any of the following events or

conditions shall constitute an Event of Default by Borrower under the Documents: (a) failure of Lender to receive from Borrower within five (5) Business Days of the date when due and payable (i) any amount payable under any Note or (ii) any other payment due under the Documents, except for a payment due at the Maturity Date of a Note for which no grace period is al1owed; (b) any representation or warranty which is made by a person other than Lender and is contained in the Documents or in any certificate furnished to Lender under the Documents by or on behalf of Borrower proves to be, in any material adverse respect, false or misleading as of the date deemed made; (c) a default in the Performance of the Obligations set forth in paragraph 3.2, 6.9(a), 6.9(b)(i), 6.9(b)(iii), 6.10, 6.13, 6.18, 6.19 or 6.21; (d) a default in the Performance of the Obligations or a violation of any term, covenant or provision of the Documents (other than a default or violation referred to elsewhere in this paragraph 7.1) which continues unremedied (i) for a period of five (5) Business Days after notice of such default or violation to Borrower in the case of a default under or violation of paragraph 6.9(b)(ii) or any - -44-

WP.349.FINOVA.PIGEON.LNAG..@4 other default or violation which can be cured by the payment of money alone or (ii) for a period of twenty (20) Business Days after notice to Borrower in the case of any other default or violation; (e) an 'Event of Default", as defined elsewhere in any of the Documents; any default by Borrower under any other agreement evidencing, guaranteeing or securing borrowed money or a receivables purchase financing involving an obligation in excess of Two Hundred Fifty Thousand Dollars ($250,000) to make a payment of principal or interest or to repurchase receivables or any other material default by Borrower permitting the acceleration of the payment or repurchase obligations of Borrower, which payment or repurchase obligations entitled to be accelerated are in excess of Two Hundred Fifty Thousand Dollars in the aggregate; (g) any final, non-appealable judgment or decree for money damages or for a fine or penalty against Borrower which is not paid and discharged or stayed within thirty (30) days thereafter and when aggregated with all other

WP.349.FINOVA.PIGEON.LNAG..@4 other default or violation which can be cured by the payment of money alone or (ii) for a period of twenty (20) Business Days after notice to Borrower in the case of any other default or violation; (e) an 'Event of Default", as defined elsewhere in any of the Documents; any default by Borrower under any other agreement evidencing, guaranteeing or securing borrowed money or a receivables purchase financing involving an obligation in excess of Two Hundred Fifty Thousand Dollars ($250,000) to make a payment of principal or interest or to repurchase receivables or any other material default by Borrower permitting the acceleration of the payment or repurchase obligations of Borrower, which payment or repurchase obligations entitled to be accelerated are in excess of Two Hundred Fifty Thousand Dollars in the aggregate; (g) any final, non-appealable judgment or decree for money damages or for a fine or penalty against Borrower which is not paid and discharged or stayed within thirty (30) days thereafter and when aggregated with all other judgment(s) or decree(s) that have remained unpaid and undischarged or stayed for such period is in excess of Two Hundred Fifty Thousand Dollars ($250,000); (h) any party holding a lien or security interest in any Collateral (other than a lien created by Purchaser solely with respect to its Time-Share Interest) commences foreclosure or similar sale thereof; Borrower shall (i) generally not be paying its debts as they become due, (ii) file, or consent by answer or otherwise to the filing against it of a petition for relief or reorganization, arrangement or liquidation or any other petition in bankruptcy or insolvency under the laws of any jurisdiction, (iii) make an assignment for the benefit of its creditors, (iv) consent to the appointment of a custodian, receiver, trustee or other officer with similar powers for itself or any substantial part of its property, (v) be adjudicated insolvent, (vi) dissolve or commence to windup its affairs or (vii) take any action for purposes of the foregoing; or a petition for relief or reorganization, arrangement or liquidation or any other petition in bankruptcy or insolvency or the appointment of a custodian under the laws of any jurisdiction is filed against it or a custodian is appointed for Borrower, the Collateral or any material part of its properties and such - -45-

VVP.349.FINOVA.PIGEON.LNAG.004 proceeding is not dismissed and appointment vacated within ninety (90) days thereafter; (j) a material adverse change in the Collateral , the Time-Share Project or in the business or financial condition of Borrower, which change is not enumerated in this paragraph 7.1 as the result of which Lender in good faith deems the prospect of Performance of the Obligations impaired or the Collateral imperiled; (k) failure of Lender to receive from Borrower, within twenty (20) days of the date Borrower knows or should have known of such change, notice of any material change in any representations or warranties in the Documents or otherwise made in connection with the Loans; (1 ) an order or decree has been entered by any court of competent jurisdiction enjoining the intended use of the Project as a time-share resort and judgment is not vacated within ninety (90) days after Borrower has obtained knowledge or notice thereof; (m) the aggregate principal balance of all Instruments which constitute part of the Receivables Collateral and have payments more than sixty (60) days past due exceeds three percent (3%) of the aggregate principal balance of all Instruments constituting part of the Receivables Collateral as of the last day of each month, for three (3) consecutive months; or

VVP.349.FINOVA.PIGEON.LNAG.004 proceeding is not dismissed and appointment vacated within ninety (90) days thereafter; (j) a material adverse change in the Collateral , the Time-Share Project or in the business or financial condition of Borrower, which change is not enumerated in this paragraph 7.1 as the result of which Lender in good faith deems the prospect of Performance of the Obligations impaired or the Collateral imperiled; (k) failure of Lender to receive from Borrower, within twenty (20) days of the date Borrower knows or should have known of such change, notice of any material change in any representations or warranties in the Documents or otherwise made in connection with the Loans; (1 ) an order or decree has been entered by any court of competent jurisdiction enjoining the intended use of the Project as a time-share resort and judgment is not vacated within ninety (90) days after Borrower has obtained knowledge or notice thereof; (m) the aggregate principal balance of all Instruments which constitute part of the Receivables Collateral and have payments more than sixty (60) days past due exceeds three percent (3%) of the aggregate principal balance of all Instruments constituting part of the Receivables Collateral as of the last day of each month, for three (3) consecutive months; or (n) at any time prior to Completion of the Work, Borrower (i) abandons the Work or (ii) delays construction or suffers construction to be delayed for any period of time, for any reason whatsoever not covered by item (i) above so that Completion of the Work cannot be accomplished in the ordinary course of construction, in the reasonable judgment of Lender, on or before the Completion Date. 7. 2 Remedies. At any time after an Event of Default has occurred and while it is continuing, Lender may but without obligation, in addition to the rights and powers granted elsewhere in the Documents and not in limitation thereof, do any one or more of the following: (a) cease to make further Advances; (b) declare the Notes (or any one of them), together with prepayment premiums, and all other sums owing by Borrower to Lender in connection with the Documents, immediately due - -46-

CVVP.349.FINOVA.PIGEON.LNAG.004 and payable without notice, presentment, demand or protest, which are hereby waived by Borrower; (c) with respect to the Receivables Collateral, (i) institute collection, foreclosure and other enforcement actions against Purchasers and other persons obligated on the Receivables Collateral, (ii) enter into modification agreements and make extension agreements with respect to payments and other performances, (iii) release persons liable for performance, (iv) settle and compromise disputes with respect to payments and performances claimed due, all without notice to Borrower, without being called to account therefor by Borrower and without relieving Borrower from Performance of the Obligations, and (v) receive, collect, open and read all mail of Borrower for the purpose of obtaining all items pertaining to the Receivables Collateral; (d) apply the then balance of the Required Completion Assurance Deposits to the satisfaction of the Obligations and the Other Loan Obligations (as defined in paragraph 10.1(b)) in such order and manner as Lender may determine; (e) (i) continue and/or cause Completion of the Work; (ii) take exclusive possession of the Property or any part

CVVP.349.FINOVA.PIGEON.LNAG.004 and payable without notice, presentment, demand or protest, which are hereby waived by Borrower; (c) with respect to the Receivables Collateral, (i) institute collection, foreclosure and other enforcement actions against Purchasers and other persons obligated on the Receivables Collateral, (ii) enter into modification agreements and make extension agreements with respect to payments and other performances, (iii) release persons liable for performance, (iv) settle and compromise disputes with respect to payments and performances claimed due, all without notice to Borrower, without being called to account therefor by Borrower and without relieving Borrower from Performance of the Obligations, and (v) receive, collect, open and read all mail of Borrower for the purpose of obtaining all items pertaining to the Receivables Collateral; (d) apply the then balance of the Required Completion Assurance Deposits to the satisfaction of the Obligations and the Other Loan Obligations (as defined in paragraph 10.1(b)) in such order and manner as Lender may determine; (e) (i) continue and/or cause Completion of the Work; (ii) take exclusive possession of the Property or any part thereof; (iii) expend such funds as Lender may deem appropriate, including the Required Completion Assurance Deposit(s) (if any), any other funds of Borrower held by Lender and any sums which may remain unadvanced hereunder, to continue and/or cause Completion of the Work; (iv) demand and receive performances due under the Principal Work-Related Items and the other Contracts, Intangibles, Licenses and Permits; (v) make such changes to the scope of the Work and to the Principal Work-Related Items and other Contracts, Intangibles, Licenses and Permits as may be necessary or desirable in Lender's judgment; (vi) file claims, institute enforcement actions and otherwise prosecute and defend all actions or proceedings relating to the Work, the Principal Work-Related Items and the other Contracts, Intangibles, Licenses and Permits as Lender may determine to be necessary or desirable in Lender's judgment; (vii) pay, settle or compromise all existing bills and claims which are or may be liens against any of the Property or as Lender may deem to be necessary or desirable in Lender's judgment for the continuance or Completion of the Work related thereto or the clearance of title, all without notice to Borrower; (viii) execute in Borrower's name all applications, certificates, notices and other instruments and give all instructions and communications which may be required or permitted by the Principal Work-Related Items - - 47-

CWP.349.FINOVA.PIGEON.LNAG.004 and other Contracts, Intangibles, Licenses and Permits, as determined by Lender; (ix) cancel or surrender any of the Principal Work-Related Items and the other Contracts, Intangibles and Deposits and enter into new contracts for the Completion of the Work and any changes to the scope of the Work; (x) do any and every act with respect to the Completion of the Work, the Principal Work-Related Items and the other Contracts, Intangibles, Licenses and Permits which Borrower may do in its behalf; (xi) employ such contractors, subcontractors, suppliers, agents, attorneys, architects, accountants, appraisers, security guards and inspectors as Lender may in its Judgment deem necessary or desirable to accomplish any of the above purposes; and (xii) receive, collect, open and read all mail of Borrower for the purpose of obtaining all items pertaining to the Work, the Principal Work-Related Items and the other Contracts, Intangibles, Licenses and Permits; and (f) proceed to protect and enforce its rights and remedies under the Documents and to foreclose or otherwise realize upon its security for the Performance of the Obligations, or to exercise any other rights and remedies available to it at law, in equity or by statute. 7.3 Application of Proceeds During an Event of Default,. Notwithstanding anything in the Documents to the contrary, while an Event of Default exists, any Required Completion Assurance Deposits and any cash received and retained by Lender in connection with the Receivables Collateral may be applied to payment of the Obligations in the manner provided in paragraph 7.5.

CWP.349.FINOVA.PIGEON.LNAG.004 and other Contracts, Intangibles, Licenses and Permits, as determined by Lender; (ix) cancel or surrender any of the Principal Work-Related Items and the other Contracts, Intangibles and Deposits and enter into new contracts for the Completion of the Work and any changes to the scope of the Work; (x) do any and every act with respect to the Completion of the Work, the Principal Work-Related Items and the other Contracts, Intangibles, Licenses and Permits which Borrower may do in its behalf; (xi) employ such contractors, subcontractors, suppliers, agents, attorneys, architects, accountants, appraisers, security guards and inspectors as Lender may in its Judgment deem necessary or desirable to accomplish any of the above purposes; and (xii) receive, collect, open and read all mail of Borrower for the purpose of obtaining all items pertaining to the Work, the Principal Work-Related Items and the other Contracts, Intangibles, Licenses and Permits; and (f) proceed to protect and enforce its rights and remedies under the Documents and to foreclose or otherwise realize upon its security for the Performance of the Obligations, or to exercise any other rights and remedies available to it at law, in equity or by statute. 7.3 Application of Proceeds During an Event of Default,. Notwithstanding anything in the Documents to the contrary, while an Event of Default exists, any Required Completion Assurance Deposits and any cash received and retained by Lender in connection with the Receivables Collateral may be applied to payment of the Obligations in the manner provided in paragraph 7.5. 7.4 Uniform Commercial Remedies: Sale; Assembly of Col.1-ateral. (a) UCC Remedies; Sale of Receivables Collateral. Lender shall have all of the rights and remedies of a secured party of Arizona under the Uniform Commercial Code of the State . and all other rights and remedies accorded to a Secured Party at equity or law. Any notice of sale or other disposition of the Receivables Collateral given not less than ten (10) Business Days prior to such proposed action in connection with the exercise of Lender's rights and remedies shall constitute reasonable and fair notice of such action. Lender may postpone or adjourn any such sale from time to time by announcement at the time and place of sale stated on the notice of sale or by announcement of any adjourned sale, without being required to give a further notice of sale. Any such sale may be for cash or, unless prohibited by applicable law, upon such credit or installment as Lender may determine. Borrower shall be - -48-

CWP.349.FINOVA.PIGEON.LNAG.004 credited with the net proceeds of such sale only when such proceeds are actually received by Lender in good current funds. Despite the consummation of any such sale, Borrower shall remain liable for any deficiency on the Obligations which remains outstanding following such sale. All net proceeds recovered pursuant to a sale shall be applied in accordance with the provisions of paragraph 7.5. (b) Lender's Right to Execute Conveyances. Lender may.- in the name of Borrower or in its own name, make and execute all conveyances, assignments and transfers of the Receivables Collateral sold in connection with the exercise of Lender's rights and remedies; and Lender is hereby appointed Borrower's attorney-in-fact for this purpose. (c) Obligation to Assemble Collateral. Upon request of Lender when an Event of Default exists, Borrower shall assemble the Personal Property, Receivables Collateral not already in Lender's possession and make it available to Lender at a time and place designated by Lender. 7.5 Application of Proceeds. The proceeds of any sale of all or anY part of the Receivables Collateral made in connection with the exercise of Lender's rights and remedies shall be applied in the following order of priorities; first, to the payment of all costs and expenses of such sale, including without limitation, reasonable compensation to Lender and its agents, attorneys' fees, and all other expenses, liabilities and advances incurred or made by

CWP.349.FINOVA.PIGEON.LNAG.004 credited with the net proceeds of such sale only when such proceeds are actually received by Lender in good current funds. Despite the consummation of any such sale, Borrower shall remain liable for any deficiency on the Obligations which remains outstanding following such sale. All net proceeds recovered pursuant to a sale shall be applied in accordance with the provisions of paragraph 7.5. (b) Lender's Right to Execute Conveyances. Lender may.- in the name of Borrower or in its own name, make and execute all conveyances, assignments and transfers of the Receivables Collateral sold in connection with the exercise of Lender's rights and remedies; and Lender is hereby appointed Borrower's attorney-in-fact for this purpose. (c) Obligation to Assemble Collateral. Upon request of Lender when an Event of Default exists, Borrower shall assemble the Personal Property, Receivables Collateral not already in Lender's possession and make it available to Lender at a time and place designated by Lender. 7.5 Application of Proceeds. The proceeds of any sale of all or anY part of the Receivables Collateral made in connection with the exercise of Lender's rights and remedies shall be applied in the following order of priorities; first, to the payment of all costs and expenses of such sale, including without limitation, reasonable compensation to Lender and its agents, attorneys' fees, and all other expenses, liabilities and advances incurred or made by Lender, its agents and attorneys, in connection with such sale, and any other unreimbursed expenses for which Lender may be reimbursed pursuant to the Documents; second, to the payment of the other Obligations, in such order and manner as Lender shall in its discretion determine, with no amounts applied to payment of principal until all interest has been paid; and third, to the payment to borrower, its successors or assigns, or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds. 7.6 Lender's Right to Perform. Lender may, at its option, and without any obligation to do so, pay, perform and discharge any and all obligations (including, without limitation, the Obligations under paragraph 6.iO) agreed to be paid or performed in the Documents by Borrower or any surety for the Performance of the Obligations if (a) such person fails to do so and (b) (i) an Event of Default exists or (ii) in the opinion of Lender, such action must be taken because an emergency exists or to preserve any of the Collateral or its value. For such purposes Lender may use the proceeds of the Receivables Collateral. All amounts expended by Lender in so doing or in exercising its remedies under the Documents following - -49-

CWP.349.FINOVA.PIGEON.LNAG.004 an Event of Default shall become part of the Obligations, shall be immediately due and payable by Borrower to Lender upon demand, -and shall bear interest at the Default Rate from the dates of such expenditures until paid.
7. 7 Non-Exclusive Remedies. No remedy in any Document conferred on or reserved to Lender is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under any Document or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power shall be construed to be a waiver of or acquiescence to any default or a waiver of any right or power; and every such right and power may be exercised from time to time and as often as may be deemed expedient. Waiver of Marshalling. Borrower, for itself and for all who may claim through or under it, hereby expressly waives and releases all right to have the Collateral, or any part of the Collateral, marshalled on any foreclosure, sale or other enforcement of Lender's rights and remedies. Attorney-in-Fact. For the purpose of exercising its rights and remedies under paragraphs 7.2(c), 7.2(d) and 7.6, Lender may do so in

7.8

7.9

CWP.349.FINOVA.PIGEON.LNAG.004 an Event of Default shall become part of the Obligations, shall be immediately due and payable by Borrower to Lender upon demand, -and shall bear interest at the Default Rate from the dates of such expenditures until paid.
7. 7 Non-Exclusive Remedies. No remedy in any Document conferred on or reserved to Lender is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under any Document or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power shall be construed to be a waiver of or acquiescence to any default or a waiver of any right or power; and every such right and power may be exercised from time to time and as often as may be deemed expedient. Waiver of Marshalling. Borrower, for itself and for all who may claim through or under it, hereby expressly waives and releases all right to have the Collateral, or any part of the Collateral, marshalled on any foreclosure, sale or other enforcement of Lender's rights and remedies. Attorney-in-Fact. For the purpose of exercising its rights and remedies under paragraphs 7.2(c), 7.2(d) and 7.6, Lender may do so in Borrower's name or its name and is hereby appointed as Borrower's attorney-in-fact to take any and all actions in Borrower's name and/or on Borrower's behalf as Lender may deem necessary or appropriate in its discretion in the accomplishment of such purposes. LENDER'S INSPECTOR

7.8

7.9

8.

8.1 Retention of Lender's Inspector. Lender may retain an architectural/engineering firm ("Lender's Inspector") to review the Principal Work-Related Items, the other Contracts, Intangibles, Licenses and Permits and the budget proposed to be the Construction Budget and any changes to such items; inspect the Real Property prior to commencement of the Work for purposes of determining the condition of the Real Property and any existing improvements; make periodic inspections of the Real Property and Work (whether or not Construction Loan proceeds are to be used to pay or reimburse Borrower for the costs of such Work) so that Lender may monitor whether Borrower is in compliance with the terms and conditions of this Agreement, and certifying that each Construction Loan Advance Request is not in excess of the Work completed and the amount to which Borrower is entitled under the terms and conditions of this Agreement; provide evidence satisfactory to Lender prior to the funding of any Construction Loan Advance that (subject to completion thereof as part of the Work as contemplated by this Agreement), all necessary street, - - 50-

CV4P.349.FINOVA-PIGEON.LNAG.004 easements and utilities are available to the boundary of the Real Property and that the respective lines and treatment or generator plants are of adequate capacity and size for the intended timeshare use of the Property. Furthermore, Lender may require an inspection of the Work by Lender's Inspector (a) prior to each Construction Loan Advance; (b) at least once each month during the course of completion of the Work; (c) upon Completion; and (d) at such other time as Lender may, in its judgment, deem necessary due to actual or suspected noncompliance with the Plans and Specifications, Construction Contract(s), the Documents, any law, regulation or private restriction, sound architectural, engineering or construction principles or commonly accepted safety standards; or Borrower's failure to satisfy the requirements of the Documents. 8.2 No Duty of Lender to Supervise, Etc.. Lender shall have no duty to supervise or to review and inspect the Principal Work-Related Items, the other Contracts, Intangibles, Licenses and Permits, any budget proposed to be the Construction Budget, any books and records pertaining thereto or any changes to such items or the construction of the Work. Any inspection made by Lender shall be for the sole purpose of determining whether the Obligations are being Performed and preserving Lender's rights under these Documents. If Lender, or

CV4P.349.FINOVA-PIGEON.LNAG.004 easements and utilities are available to the boundary of the Real Property and that the respective lines and treatment or generator plants are of adequate capacity and size for the intended timeshare use of the Property. Furthermore, Lender may require an inspection of the Work by Lender's Inspector (a) prior to each Construction Loan Advance; (b) at least once each month during the course of completion of the Work; (c) upon Completion; and (d) at such other time as Lender may, in its judgment, deem necessary due to actual or suspected noncompliance with the Plans and Specifications, Construction Contract(s), the Documents, any law, regulation or private restriction, sound architectural, engineering or construction principles or commonly accepted safety standards; or Borrower's failure to satisfy the requirements of the Documents. 8.2 No Duty of Lender to Supervise, Etc.. Lender shall have no duty to supervise or to review and inspect the Principal Work-Related Items, the other Contracts, Intangibles, Licenses and Permits, any budget proposed to be the Construction Budget, any books and records pertaining thereto or any changes to such items or the construction of the Work. Any inspection made by Lender shall be for the sole purpose of determining whether the Obligations are being Performed and preserving Lender's rights under these Documents. If Lender, or Lender's Inspector acting on behalf of Lender, should review or inspect the Principal Work-Related Items, the other Contracts, Intangibles, Licenses and Permits, the Construction Budget, any books and records pertaining thereto or any changes to such items or the construction of the Work, Lender and Lender's Inspector shall have no liability or obligation to Borrower or any third person arising out of such inspection; and neither Borrower nor any third person shall be entitled to rely upon any such inspection or review. Inspection not followed by notice of an Event of Default shall not constitute (a) waiver of any Event of Default then existing; (b) an acknowledgement or representation by Lender or Lender's Inspector that there has been or will be compliance with the Principal Work-Related Items, the other Contracts, Intangibles, Licenses and Permits, Construction Budget, applicable laws, regulations and private restrictions, sound construction, engineering or architectural principles or commonly accepted safety standards, or that the construction is lien free or free from defective materials or workmanship; or (c) a waiver of Lender's right thereafter to insist that Completion of the Work occur in accordance with the Principal Work-Related Items, the other Contracts, Intangibles, Licenses and Permits, Construction Budget, the Documents, applicable laws, regulations and restrictions, sound construction, engineering or architectural principles or commonly safety standards and free from defective materials and workmanship. Lender and Lender's Inspector owe no duty of care to Borrower or any third person to protect against, or inform Borrower or any third person of, the existence of - - 51 -

CV,/P,349.FINOVA.PIGEON.LNAG.004 negligence, faulty, inadequate or defective design or construction of the Work. 9. CONSTRUCTION AND GENERAL TERMS 9.1 Payment Location. All monies payable under the Documents shall be paid to Lender at its address set forth in paragraph 9.5 of this Agreement in lawful monies of the United States of America, unless otherwise designated in the Documents or by Lender by notice. 9.2 Entire Agreement. The Documents exclusively and completely state the rights and obligations of Lender and Borrower with respect to the Loans. No modification, variation, termination, discharge, abandonment, or waiver of any of the provisions or conditions of the Documents shall be valid unless in writing and signed by duly authorized representatives of the party sought to be bound by such action. The Documents supersede any and all prior representations, warranties and/or inducements, written or oral, heretofore made by Lender concerning this transaction, including any commitment for financing. 9.3 Powers Coupled with an Interest. The powers and agency hereby granted by Borrower are coupled with an interest and are irrevocable until the Obligations have been paid in full and are granted as cumulative to Lender's other remedies for collection and enforcement of the Obligations.

CV,/P,349.FINOVA.PIGEON.LNAG.004 negligence, faulty, inadequate or defective design or construction of the Work. 9. CONSTRUCTION AND GENERAL TERMS 9.1 Payment Location. All monies payable under the Documents shall be paid to Lender at its address set forth in paragraph 9.5 of this Agreement in lawful monies of the United States of America, unless otherwise designated in the Documents or by Lender by notice. 9.2 Entire Agreement. The Documents exclusively and completely state the rights and obligations of Lender and Borrower with respect to the Loans. No modification, variation, termination, discharge, abandonment, or waiver of any of the provisions or conditions of the Documents shall be valid unless in writing and signed by duly authorized representatives of the party sought to be bound by such action. The Documents supersede any and all prior representations, warranties and/or inducements, written or oral, heretofore made by Lender concerning this transaction, including any commitment for financing. 9.3 Powers Coupled with an Interest. The powers and agency hereby granted by Borrower are coupled with an interest and are irrevocable until the Obligations have been paid in full and are granted as cumulative to Lender's other remedies for collection and enforcement of the Obligations. 9.4 Counterparts. Any Document may be executed simultaneously in any number of identical copies each of which shall constitute an original for all purposes. 9.5 Notices. All notices, requests or demands required or permitted to be given under the Documents shall be in writing, and shall be deemed effective (a) upon hand delivery, if hand delivered; (b) .one (1) Business Day after such are deposited for delivery via Federal Express or other nationally recognized overnight courier service; or (c) three (3) Business Days after such are deposited in the United States mails, certified or registered mail, all with delivery charges and/or postage prepaid, and addressed as shown below, or to such other address as either party may, from time to time, designate in writing. Written notice may be given by telecopy to the telecopier number shown below or to such other telecopier number as either party may designate, from time to time, in writing, provided that such notice shall not be deemed effective unless it is confirmed within twenty-four (24) hours by hand delivery, courier delivery or mailing of a copy of such notice in accordance with the requirements set forth above. - - 52 -

CWP.349.FINOVA.PIGEON.LNAG.UO4 If to Lender: (two copies) FINOVA CAPITAL CORPORATION 7272 E. Indian School Road, Suite 410 Scottsdale, Arizona 85251 Telecopy: (602) 874-6444 one copy marked "Attention: Vice President - - Group Counsel' and the other marked "Attention: Vice President - Operations Management" If to Borrower: PATTEN CORPORATION 5295 Town Center Road, Suite 400 Boca Raton, Florida 33486 Attention: Patrick Rondeau, Esq. 9.6 Successors and Assigns. All the covenants of Borrower and all the rights and remedies of the Lender contained in the Documents shall bind Borrower, and, subject to the restrictions on merger, consolidation and assignment contained in the Documents, its successors and assigns, and shall inure to the benefit of Lender, its

CWP.349.FINOVA.PIGEON.LNAG.UO4 If to Lender: (two copies) FINOVA CAPITAL CORPORATION 7272 E. Indian School Road, Suite 410 Scottsdale, Arizona 85251 Telecopy: (602) 874-6444 one copy marked "Attention: Vice President - - Group Counsel' and the other marked "Attention: Vice President - Operations Management" If to Borrower: PATTEN CORPORATION 5295 Town Center Road, Suite 400 Boca Raton, Florida 33486 Attention: Patrick Rondeau, Esq. 9.6 Successors and Assigns. All the covenants of Borrower and all the rights and remedies of the Lender contained in the Documents shall bind Borrower, and, subject to the restrictions on merger, consolidation and assignment contained in the Documents, its successors and assigns, and shall inure to the benefit of Lender, its successors and assigns, whether so expressed or not. Borrower may not assign its rights in the Documents in whole or in part. Except as may be expressly provided in a Document, no person or other entity shall be deemed a third party beneficiary of any provision of the Documents. 9.7 Severability. If any one or more of the provisions contained in any Document shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in the Document shall not in any way be affected or impaired thereby 9.8 Time of Essence. Time is of the essence in the Performance of the Obligations. 9.9 Miscellaneous. All headings are inserted for convenience only and shall not affect any construction or interpretation of the Documents. Unless otherwise indicated, all references in a Document to clauses and other subdivisions refer to the corresponding paragraphs, clauses and other subdivisions of the Document; the words "herein", "hereof", "hereto", hereunder" and words of similar import refer to the Document as a whole and not to any particular paragraph, clause or other subdivision; and reference to a numbered or lettered subdivision of an Article, or paragraph shall include relevant matter within the Article or paragraph which is applicable to but not within such numbered or lettered subdivision. All Schedules and Exhibits referred to in this Agreement are incorporated in this Agreement by reference. - - 53 -

CWP.349.FINOVA.PIGEON.LNAG.004 9.10 (a) CHOICE OF LAW. THE DOCUMENTS AND THE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES THERETO SHALL BE GOVERNED BY AND - CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA AND TO THE EXTENT THEY PREEMPT THE LAWS OF SUCH STATE, THE LAWS OF THE UNITED STATES. (b) CHOICE OF JURISDICTION: WAIVER OF VENUE. BORROWER: (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS, JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY, AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF (EXCEPT AS MAY BE SPECIFICALLY PROVIDED TO THE CONTRARY IN BORROWER'S MORTGAGE), OR, IF BORROWER INITIATES

CWP.349.FINOVA.PIGEON.LNAG.004 9.10 (a) CHOICE OF LAW. THE DOCUMENTS AND THE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES THERETO SHALL BE GOVERNED BY AND - CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA AND TO THE EXTENT THEY PREEMPT THE LAWS OF SUCH STATE, THE LAWS OF THE UNITED STATES. (b) CHOICE OF JURISDICTION: WAIVER OF VENUE. BORROWER: (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS, JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY, AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF (EXCEPT AS MAY BE SPECIFICALLY PROVIDED TO THE CONTRARY IN BORROWER'S MORTGAGE), OR, IF BORROWER INITIATES SUCH ACTION, ANY COURT IN WHICH BORROWER SHALL INITIATE SUCH ACTION AND THE CHOICE OF SUCH VENUE SHALL IN ALL INSTANCES BE AT LENDER'S ELECTION; AND (B) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT BORROWER IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. BORROWER HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER FORUM. (c) WAIVER OF JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE DOCUMENTS WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED BY A JUDGE SITTING WITHOUT A JURY, AND BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY SUCH PROCEEDING. (d) INDUCEMENT TO LENDER. ALL OF THE PROVISIONS SET FORTH IN THIS PARAGRAPH ARE A MATERIAL INDUCEMENT FOR LENDER'S MAKING THE LOANS TO BORROWER. (Borrower initials) 9.11 Compliance With Applicable Usury Law. it is the intent of the parties hereto to comply with the Applicable Usury Law. Accordingly, notwithstanding any provisions to the contrary in the Documents, in no event shall this Agreement or the Documents require the payment or permit the collection of interest in excess of the maximum contract rate permitted by the Applicable Usury Law. 9. 12 NO RELATIONSHIP WITH PURCHASERS. LENDER DOES NOT HEREBY ASSUME AND SHALL HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY TO - - 54- CWP,349.FINOVA.PIGEON.LNA(., @i4 PURCHASERS, LENDER'S RELATIONSHIP BEING THAT ONLY OF A CREDITOR WHO HAS TAKEN, AS SECURITY FOR INDEBTEDNESS OWED TO IT, A COLLATERAL ASSIGNMENT FROM BORROWER OF THE INSTRUMENTS. EXCEPT -AS REQUIRED BY LAW AND FOR FILINGS MADE WITH THE SECURITIES & EXCHANGE COMMISSION OR ANY STOCK EXCHANGE ON WHICH BORROWER'S STOCK IS TRADED, BORROWER WILL NOT, AT ANY TIME, USE THE NAME OF OR MAKE REFERENCE TO LENDER WITH RESPECT TO THE TIMESHARE PROJECT, THE SALE OF TIME-SHARE INTERESTS OR OTHERWISE, WITHOUT THE EXPRESS WRITTEN CONSENT OF LENDER.

9.13

NO JOINT VENTURE. THE RELATIONSHIP OF BORROWER AND LENDER IS THAT OF DEBTOR AND CREDITOR, AND IT IS NOT THE INTENTION OF EITHER OF SUCH PARTIES BY THIS OR ANY OTHER INSTRUMENT BEING EXECUTED IN CONNECTION WITH THE LOANS TO ESTABLISH A PARTNERSHIP, AND THE PARTIES HERETO SHALL NOT UNDER ANY CIRCUMSTANCES BE CONSTRUED TO BE PARTNERS OR JOINT VENTURERS. 9. 14 Standards to Lender's Actions. Unless otherwise

specifically stipulated elsewhere in the Documents, if a matter is left in the Documents to the decision, requirement, request, determination, judgment, opinion, approval, consent, satisfaction, acceptance, agreement, option or discretion of Lender, its employees, Lender's counsel or any agent for or contractor of Lender, such action shall be deemed to be exercisable by Lender or such other person in its sole and absolute discretion and according to standards established in its sole and absolute discretion. Without limiting the generality of the foregoing, "option' and 'discretion' shall be implied by use of the words "if" or "may". 9.15 Meaning of Subordination. Any subordinations required to be given under the Documents by third parties to Lender shall include the subordination of and the deferral of the right to receive payments on the subordinated obligations except to the extent expressly permitted in this Agreement; the remittances to Lender of all prohibited payments received by the third party; the subordination of all liens, security interests, assignments and other encumbrances and claims held by the third party on or against any of Borrower's property to Lender's interest (whenever acquired) in such property; and an agreement on the part of the third party not to exercise any remedies against Borrower so long as all obligations under the Documents have not been fully satisfied. 10. SPECIAL PROVISIONS 10. 1 Cross-Collateralization and Cross-Default of Other Loan Obligations. (a) Lender entered into an Amended and Restated Loan and Security Agreement ("PRFC Loan Agreement') dated as of - - 55-

CWP.349.FINOVA.PIGEON.LNAG.004 January 9, 1990, as amended, with Patten Receivables Finance Corporation VI, a Delaware corporation ("PRFC"), an Affiliate and wholly-owned subsidiary of Borrower. Pursuant to the PRFC Loan Agreement, Lender has committed to make to PRFC a loan in an amount not to exceed at any time Twenty Million Dollars ($20,000,000) ("PRFC Loan'), subject to the terms and conditions of the PRFC Loan Agreement. Lender has entered into a Loan Agreement ("Lake Ridge Loan Agreement") dated as of June 29, 1994, as amended, with Properties of the Southwest, Inc., a Delaware corporation ('PSI'), a wholly-owned subsidiary of Patten, pursuant to which Lender has agreed to make to PSI a loan in an amount not to exceed Four Million Five Hundred Thousand Dollars ($4,500,000) ('Lake Ridge Loan'). Lender has entered into a Credit Facility Agreement ('Land Inventory Credit Facility Agreement") dated as of December 14, 1994, with Borrower pursuant to which Lender has agreed to extend to Borrower and/or its wholly owned subsidiaries a revolving line of credit in an amount not to exceed Five Million Dollars ($5,000,000) ("Land Inventory Credit Facility"). Lender has entered into an Amended and Restated Loan Agreement ("Mountainloft Loan Agreement") dated as of December 14, 1994, with Borrower pursuant to which Lender has agreed to extend to Borrower a construction loan in a principal amount not to exceed Three Million One Hundred Thousand Dollars ($3,100,000.00) ("Mountainloft Construction Loan') and a revolving receivables line of credit in an amount not to exceed Five Million Dollars ($5,000,000.00) ("Mountainloft Receivables Loan"; and the Mountainloft Construction Loan and Mountainloft Receivables Loan collectively, "Mountainloft Loans"). As used in this Agreement, the term "Other Credit Facilities" shall mean at any time, all loans and credit facilities, other than the Loans, then outstanding between Borrower and/or any Affiliate of Borrower on the one hand, and Lender on the other hand, including, without limitation, the Lake Ridge Loan, the PRFC Loan, the Mountainloft Loans, and the Land Inventory Credit Facility; the term "Credit Facility" means any one of the Other Credit Facilities or this Loan; the term "Lake Ridge Loan Documents" shall mean the documents now or hereafter executed in connection with the Lake Ridge Loan, as

CWP.349.FINOVA.PIGEON.LNAG.004 January 9, 1990, as amended, with Patten Receivables Finance Corporation VI, a Delaware corporation ("PRFC"), an Affiliate and wholly-owned subsidiary of Borrower. Pursuant to the PRFC Loan Agreement, Lender has committed to make to PRFC a loan in an amount not to exceed at any time Twenty Million Dollars ($20,000,000) ("PRFC Loan'), subject to the terms and conditions of the PRFC Loan Agreement. Lender has entered into a Loan Agreement ("Lake Ridge Loan Agreement") dated as of June 29, 1994, as amended, with Properties of the Southwest, Inc., a Delaware corporation ('PSI'), a wholly-owned subsidiary of Patten, pursuant to which Lender has agreed to make to PSI a loan in an amount not to exceed Four Million Five Hundred Thousand Dollars ($4,500,000) ('Lake Ridge Loan'). Lender has entered into a Credit Facility Agreement ('Land Inventory Credit Facility Agreement") dated as of December 14, 1994, with Borrower pursuant to which Lender has agreed to extend to Borrower and/or its wholly owned subsidiaries a revolving line of credit in an amount not to exceed Five Million Dollars ($5,000,000) ("Land Inventory Credit Facility"). Lender has entered into an Amended and Restated Loan Agreement ("Mountainloft Loan Agreement") dated as of December 14, 1994, with Borrower pursuant to which Lender has agreed to extend to Borrower a construction loan in a principal amount not to exceed Three Million One Hundred Thousand Dollars ($3,100,000.00) ("Mountainloft Construction Loan') and a revolving receivables line of credit in an amount not to exceed Five Million Dollars ($5,000,000.00) ("Mountainloft Receivables Loan"; and the Mountainloft Construction Loan and Mountainloft Receivables Loan collectively, "Mountainloft Loans"). As used in this Agreement, the term "Other Credit Facilities" shall mean at any time, all loans and credit facilities, other than the Loans, then outstanding between Borrower and/or any Affiliate of Borrower on the one hand, and Lender on the other hand, including, without limitation, the Lake Ridge Loan, the PRFC Loan, the Mountainloft Loans, and the Land Inventory Credit Facility; the term "Credit Facility" means any one of the Other Credit Facilities or this Loan; the term "Lake Ridge Loan Documents" shall mean the documents now or hereafter executed in connection with the Lake Ridge Loan, as they may be from time to time renewed, amended, restated or replaced; the term "PRFC Loan Documents" shall mean the PRFC Loan Agreement and all other documents now or hereafter executed in connection with the PRFC Loan, as they may be from time to time renewed, amended, restated or replaced; the term "Mountainloft Loan Documents" shall mean the Mountainloft Loan Agreement and all other documents now ,.or hereafter executed in connection with the Mountainloft - -56-

CWP.349.FINOVA.PIGEON.LNAG.004 Loans, as they may be from time to time renewed, amended, restated or replaced; and the term 'Land Inventory Credit Facility Documents' shall mean the Land Inventory Credit Facility Documents Agreement in all other documents now or hereafter executed in connection with the Land Inventory Loan, as they may be from time to time renewed, amended, restated or replaced. The term "Other Credit Facilities Documents" shall mean the documents now or hereafter executed in connection with the Other Credit Facilities, including, without limitation, the Lake Ridge Loan Documents, the PRFC Loan Documents, Mountainloft Loan Documents, and the Land Inventory Credit Facility Documents as they may be from time to time renewed, amended. restated or replaced. (b) An Event of Default under the Documents shall constitute an 'Event of Default" as that term is defined in any of the Other Credit Facilities Documents; or if an 'Event of Default" is not a defined term with respect to any of the Other Credit Facilities, shall, without further condition or delay, permit Lender to accelerate the payment of such Other Credit Facility, cease funding under any Other Credit Facility or foreclose its lien or security interest on any of the collateral for such Other Credit Facility. An "Event of Default" as that term is defined in any of the Other Credit Facilities Documents and/or any act or event which, without further condition or delay, permits Lender to accelerate the payment of any Other Credit Facility and/or exercise its remedies to either cease funding under such Other Credit Facility or foreclose its lien or security interest on any collateral for any Other Credit Facility shall constitute an Event of Default under the Documents. (c) Without limiting the generality of any other provision contained herein, the Security Interest granted by Borrower hereunder and all Collateral given under the Documents as security for the Loan is intended to and does secure Performance of all obligations in connection with advances made to it and all obligations of (i) PRFC and/or Borrower now or hereafter existing under the PRFC Loan Documents ('PRFC Loan Obligations"), (ii)

CWP.349.FINOVA.PIGEON.LNAG.004 Loans, as they may be from time to time renewed, amended, restated or replaced; and the term 'Land Inventory Credit Facility Documents' shall mean the Land Inventory Credit Facility Documents Agreement in all other documents now or hereafter executed in connection with the Land Inventory Loan, as they may be from time to time renewed, amended, restated or replaced. The term "Other Credit Facilities Documents" shall mean the documents now or hereafter executed in connection with the Other Credit Facilities, including, without limitation, the Lake Ridge Loan Documents, the PRFC Loan Documents, Mountainloft Loan Documents, and the Land Inventory Credit Facility Documents as they may be from time to time renewed, amended. restated or replaced. (b) An Event of Default under the Documents shall constitute an 'Event of Default" as that term is defined in any of the Other Credit Facilities Documents; or if an 'Event of Default" is not a defined term with respect to any of the Other Credit Facilities, shall, without further condition or delay, permit Lender to accelerate the payment of such Other Credit Facility, cease funding under any Other Credit Facility or foreclose its lien or security interest on any of the collateral for such Other Credit Facility. An "Event of Default" as that term is defined in any of the Other Credit Facilities Documents and/or any act or event which, without further condition or delay, permits Lender to accelerate the payment of any Other Credit Facility and/or exercise its remedies to either cease funding under such Other Credit Facility or foreclose its lien or security interest on any collateral for any Other Credit Facility shall constitute an Event of Default under the Documents. (c) Without limiting the generality of any other provision contained herein, the Security Interest granted by Borrower hereunder and all Collateral given under the Documents as security for the Loan is intended to and does secure Performance of all obligations in connection with advances made to it and all obligations of (i) PRFC and/or Borrower now or hereafter existing under the PRFC Loan Documents ('PRFC Loan Obligations"), (ii) Borrower now or hereafter existing under the Mountainloft Loan Documents ("Mountainloft Loan Obligations"), and (iii) Borrower and/or any subsidiary under the Land Inventory Credit Facility Documents; and all collateral given by PRFC or Borrower under the PRFC Loan Documents and by Borrower under the Other Credit Facility Documents ('Other Credit Facility Obligations"). as security for the PRFC Loan Obligations and the Mountainloft Loan Obligations, - - 57-

CWP.349.FINOVA.PIGEON.LNAG.004 respectively, is intended to and does secure the Obligations. Borrower shall cause PRFC to execute all amendment documents required by Lender to reflect this cross-collateralization and other conditions of the Loans. (d) If an Event of Default exists and Lender is entitled to apply the proceeds of the Collateral to the Obligations, it may apply such proceeds to the Obligations and to the obligations under the Other Credit Facility Documents in such order and manner as Lender may determine. (e) If no Event of Default exists, then upon full satisfaction of all Obligations (other than those relating to crosscollateralization) under the Documents, Lender shall release the Collateral, together with any and all endorsements and assignments reasonably requested by Borrower, in each case without recourse or representation or warranty of any kind. Neither (i) the exercise or the failure to exercise by Lender of any rights of remedies conferred on it under the Other Credit Facilities Documents, hereunder or existing at law or otherwise, or against any security for performance of the obligations under the Other Credit Facility Documents, (ii) the commencement of an action at law or the recovery of a judgment at law against another borrower ("Third Party Borrower') under the Other Credit Facility Documents or any other obligor ('Third Party Obligor") for the Other Credit Facilities Obligations and the enforcement thereof through levy or execution or otherwise, (iii) the taking or institution or any other action or proceeding against a Third Party Borrower or any other Third Party Obligor nor (iv) any delay in taking, pursuing or exercising any of the foregoing actions, rights, powers or remedies (even though requested by Borrower by Lender or anyone acting for Lender, shall extinguish or affect the Obligations

CWP.349.FINOVA.PIGEON.LNAG.004 respectively, is intended to and does secure the Obligations. Borrower shall cause PRFC to execute all amendment documents required by Lender to reflect this cross-collateralization and other conditions of the Loans. (d) If an Event of Default exists and Lender is entitled to apply the proceeds of the Collateral to the Obligations, it may apply such proceeds to the Obligations and to the obligations under the Other Credit Facility Documents in such order and manner as Lender may determine. (e) If no Event of Default exists, then upon full satisfaction of all Obligations (other than those relating to crosscollateralization) under the Documents, Lender shall release the Collateral, together with any and all endorsements and assignments reasonably requested by Borrower, in each case without recourse or representation or warranty of any kind. Neither (i) the exercise or the failure to exercise by Lender of any rights of remedies conferred on it under the Other Credit Facilities Documents, hereunder or existing at law or otherwise, or against any security for performance of the obligations under the Other Credit Facility Documents, (ii) the commencement of an action at law or the recovery of a judgment at law against another borrower ("Third Party Borrower') under the Other Credit Facility Documents or any other obligor ('Third Party Obligor") for the Other Credit Facilities Obligations and the enforcement thereof through levy or execution or otherwise, (iii) the taking or institution or any other action or proceeding against a Third Party Borrower or any other Third Party Obligor nor (iv) any delay in taking, pursuing or exercising any of the foregoing actions, rights, powers or remedies (even though requested by Borrower by Lender or anyone acting for Lender, shall extinguish or affect the Obligations of Borrower hereunder. Borrower shall be and remain liable hereunder until all the Other Credit Facilities Obligations are fully paid and performed of all the Other Credit Facilities Obligations under the Other Credit Facilities Documents (and without limiting Borrower's obligations under paragraph 10.1(i)ll notwithstanding the previous discharge (total or partial) from further liability of any Third Party Borrower or any Third Party Obligor. (g) Borrower hereby expressly waives: (i) notice of the existence, creation or non-payment of all or any of the Other Credit Facilities Obligations except as otherwise provided in the Other Credit Facilities Documents; (ii) - - 58-

CWP.349.FINOVA.PIGEON.LNAG.004 presentment, protest, demand, dishonor, notice of dishonor, protest and all notices whatsoever with respect to the Other Credit Facilities Obligations; (iii) all diligence in collection or protection of or realization on the Other Credit Facilities Obligations or any part thereof, any obligation hereunder, or any security for or guarantee of any of the foregoing; (iv) any defense based upon an election of remedies by Lender or marshalling of assets; (v) any defense arising because of Lender's election under Section 1111(b)(2) of the United States Bankruptcy Code ('Bankruptcy Code") in any proceeding instituted under the Bankruptcy Code; (vi) any defense based on post-petition borrowing or the grant of a security interest by a Third Party Borrower under Section 365 of the Bankruptcy Code; (vii) any duty on the part of Lender to disclose to Borrower any facts Lender may now or hereafter know about any Third Party Borrower, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Borrower intends to assume or has reason to believe that such facts are known to Borrower or has a reasonable opportunity to communicate such facts to Borrower, because Borrower represents and warrants that it is fully responsible for being and keeping informed of the financial condition of any Third Party Borrower and of all circumstances bearing on the risk of non-payment of any obligation guaranteed hereby; and (viii) any and all suretyship defenses and defenses in the nature thereof under Arizona and/or any other applicable law, including, without limitation, the benefits of the provisions of Sections 12-1641 through 12-1646, of the Arizona Revised Statutes, Sections 17 and 21, A.R.C.P., and all other laws and procedural rules of similar import.

CWP.349.FINOVA.PIGEON.LNAG.004 presentment, protest, demand, dishonor, notice of dishonor, protest and all notices whatsoever with respect to the Other Credit Facilities Obligations; (iii) all diligence in collection or protection of or realization on the Other Credit Facilities Obligations or any part thereof, any obligation hereunder, or any security for or guarantee of any of the foregoing; (iv) any defense based upon an election of remedies by Lender or marshalling of assets; (v) any defense arising because of Lender's election under Section 1111(b)(2) of the United States Bankruptcy Code ('Bankruptcy Code") in any proceeding instituted under the Bankruptcy Code; (vi) any defense based on post-petition borrowing or the grant of a security interest by a Third Party Borrower under Section 365 of the Bankruptcy Code; (vii) any duty on the part of Lender to disclose to Borrower any facts Lender may now or hereafter know about any Third Party Borrower, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Borrower intends to assume or has reason to believe that such facts are known to Borrower or has a reasonable opportunity to communicate such facts to Borrower, because Borrower represents and warrants that it is fully responsible for being and keeping informed of the financial condition of any Third Party Borrower and of all circumstances bearing on the risk of non-payment of any obligation guaranteed hereby; and (viii) any and all suretyship defenses and defenses in the nature thereof under Arizona and/or any other applicable law, including, without limitation, the benefits of the provisions of Sections 12-1641 through 12-1646, of the Arizona Revised Statutes, Sections 17 and 21, A.R.C.P., and all other laws and procedural rules of similar import. (h) Without limiting the generality of the foregoing, Borrower will not assert against Lender any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, usury, illegality or unenforceability which may be available to any Third Party Borrower with respect to the Other Credit Facilities Documents, or any set off available to any Third Party Borrower against Lender, whether or not on account of a related transaction. (i) Anything else contained herein to the contrary notwithstanding, Lender, from time to time, without notice to Borrower, may take all or any of the following actions without in any manner affecting or impairing the obligations of Borrower hereunder: (i) accept a consentual lien on or a security interest in any property to secure any of the Other Credit Facilities Obligations; (ii) retain - - 59-

CWP.349.FINOVA.PIGEON.LNAG.004 or obtain the secondary liability of any party or parties, in addition to Borrower, with respect to any of the Other Credit Facilities Obligations; (iii) renew, extend or otherwise change the time for payment or perfomance of any of the Other Credit Facilities Obligations for any period; (iv) release or compromise any liability of any Third Party Borrower or any liability of any nature of any other party or parties with respect to any of the Other Credit Facilities Obligations; (v) exchange, enforce, waive, release and apply any security for the performance of any of the Other Credit Facilities Obligations and direct the order or manner of sale thereof as Lender may in Lender's discretion determine; (vi) resort to the Collateral for payment of any Other Credit Facilities Obligations, whether or not Lender shall proceed against any other party primarily or secondarily liable on any of the Other Credit Facilities Obligations; (vii) agree to any amendment (including, without limitation, any amendment which changes the amount of interest to be paid under the Other Credit Facilities Documents or extends the period of time during which any Third Party Borrower may obtain advances of the Other Credit Facilities), any alteration of the Other Credit Facilities Documents or any waiver of any of the provisions of the Other Credit Facilities Documents and/or exercise Lender's rights to consent to any action or nonaction of any Third Party Borrower which may violate the covenants and agreements contained in the Other Credit Facilities Documents, with or without consideration and on such terms and conditions as may be acceptable to lender; or (h) exercise any of Lender's rights conferred by the Other Credit Facilities Documents or by law. Notwithstanding anything herein to the contrary, if at any time all or any part of any payment theretofore applied by Lender to any of the Other Credit Facilities Obligations is or must be rescinded or returned by Lender for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of any Third Party

CWP.349.FINOVA.PIGEON.LNAG.004 or obtain the secondary liability of any party or parties, in addition to Borrower, with respect to any of the Other Credit Facilities Obligations; (iii) renew, extend or otherwise change the time for payment or perfomance of any of the Other Credit Facilities Obligations for any period; (iv) release or compromise any liability of any Third Party Borrower or any liability of any nature of any other party or parties with respect to any of the Other Credit Facilities Obligations; (v) exchange, enforce, waive, release and apply any security for the performance of any of the Other Credit Facilities Obligations and direct the order or manner of sale thereof as Lender may in Lender's discretion determine; (vi) resort to the Collateral for payment of any Other Credit Facilities Obligations, whether or not Lender shall proceed against any other party primarily or secondarily liable on any of the Other Credit Facilities Obligations; (vii) agree to any amendment (including, without limitation, any amendment which changes the amount of interest to be paid under the Other Credit Facilities Documents or extends the period of time during which any Third Party Borrower may obtain advances of the Other Credit Facilities), any alteration of the Other Credit Facilities Documents or any waiver of any of the provisions of the Other Credit Facilities Documents and/or exercise Lender's rights to consent to any action or nonaction of any Third Party Borrower which may violate the covenants and agreements contained in the Other Credit Facilities Documents, with or without consideration and on such terms and conditions as may be acceptable to lender; or (h) exercise any of Lender's rights conferred by the Other Credit Facilities Documents or by law. Notwithstanding anything herein to the contrary, if at any time all or any part of any payment theretofore applied by Lender to any of the Other Credit Facilities Obligations is or must be rescinded or returned by Lender for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of any Third Party Borrower), such Other Credit Facilities Obligations, for purposes of this paragraph 10.1, to the extent that such payment is or must be rescinded or returned, shall be deemed to have never been performed; and this paragraph 10.1 shall continue to be effective or be reinstated, as the case may be, as to such Other Credit Facilities Obligations, all as though such application by Lender had not been made. (k) Borrower shall have no right of subrogation with respect to the Other Credit Facilities Obligations or any right of indemnification, reimbursement or contribution from any Third Party Borrower or from any other Third Party Obligor - -60-

CWP,349.FINOVA.PIGEON.C. J04 with respect to the Other Credit Facilities Obligations regardless of any payment thereon resulting from the provisions of this paragraph 10.1 and Borrower hereby unconditionally waives any such right of subrogation, indemnification, reimbursement or arbitration. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective name, personally or by their duly authorized representatives as of the date above written. LENDER "BORROWER" FINOVA CAPITAL CORPORATION, a Delaware corporation By: Type/Print Name Title PATTEN CORPORATION, a Massachusetts corporation By:

CWP,349.FINOVA.PIGEON.C. J04 with respect to the Other Credit Facilities Obligations regardless of any payment thereon resulting from the provisions of this paragraph 10.1 and Borrower hereby unconditionally waives any such right of subrogation, indemnification, reimbursement or arbitration. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective name, personally or by their duly authorized representatives as of the date above written. LENDER "BORROWER" FINOVA CAPITAL CORPORATION, a Delaware corporation By: Type/Print Name Title PATTEN CORPORATION, a Massachusetts corporation By: Type/Print Type Title - -61 I

CWP.349.FINOVA.PIGEON.LNAG.004 LIST OF EXHIBITS
Exhibit A Combination Deed of Trust and Assignment of Contract Conditions of Eligible Instrument Environmental Certificate Acquisition Loan Promissory Note Construction Loan Promissory Note Receivables Loan Promissory Note Permitted Encumbrances Description of Time-Share Project and Time-Share Estate Borrower's Certificate Partial Release and Reconveyance Environmental Remediation Letter Borrower's Opinion of Counsel

Exhibit B Exhibit C Exhibit D-1 Exhibit D-2 Exhibit D-3 Exhibit E Exhibit F Exhibit G Exhibit G-1 Exhibit I Exhibit H

CWP.349.FINOVA.PIGEON.LNAG.004 LIST OF EXHIBITS
Exhibit A Combination Deed of Trust and Assignment of Contract Conditions of Eligible Instrument Environmental Certificate Acquisition Loan Promissory Note Construction Loan Promissory Note Receivables Loan Promissory Note Permitted Encumbrances Description of Time-Share Project and Time-Share Estate Borrower's Certificate Partial Release and Reconveyance Environmental Remediation Letter Borrower's Opinion of Counsel Additional Conditions to Construction Loan Advance

Exhibit B Exhibit C Exhibit D-1 Exhibit D-2 Exhibit D-3 Exhibit E Exhibit F Exhibit G Exhibit G-1 Exhibit I Exhibit H Exhibit J-1 Exhibit J-lA

FINOVA Capital Corporation ("Lender") Standard Construction Loan Administrative Procedures: Initial and Subsequent Loan Disbursement Requirements and Events AIA Form G702 and G703 Forms Request for Advance - Indirect Costs Borrower's Affidavit for Advance Check Sheet Form Waiver of Lien AIA Form G713

Exhibit J-18 Exhibit J-IC Exhibit J-lD Exhibit J-lE Exhibit J-IF Exhibit J-lG

- - 62 -

CV,/P.349.FINOVA.PIGEON.LNAG.004
Exhibit J-2 Additional Advances Conditions to Receivables Loan

Exhibit J-2A Exhibit K Exhibit L Exhibit M Exhibit N

Request for Receivables Loan Advance and Certification Borrower's Monthly Reports (Format) Personal Property Real Property Construction Budget

- - 62 -

CV,/P.349.FINOVA.PIGEON.LNAG.004
Exhibit J-2 Additional Advances Conditions to Receivables Loan

Exhibit J-2A Exhibit K Exhibit L Exhibit M Exhibit N Exhibit 0

Request for Receivables Loan Advance and Certification Borrower's Monthly Reports (Format) Personal Property Real Property Construction Budget Work Progress Schedule

- -63 -

AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Amendment") dated as of April 12, 1995, PATTEN CORPORATION, a Massachusetts corporation("Borrower"), and FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation), a Delaware corporation ("Lender"), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby confirm and agree as follows: ARTICLE 1 INTRODUCTION 1.1 Borrower and Lender previously entered into an Amended and Restated Loan and Security Agreement dated as of December 14, 1994 ("Loan Agreement") relating to a construction loan in a maximum aggregate principal amount not to exceed $3,100,000 and a revolving line of credit loan in a maximum principal amount not to exceed $5,000,000 at any time. 1.2 Borrower and Lender wish to amend the Loan Agreement, all as more fully provided below. ARTICLE 2 AGREEMENT 2.1 Capitalized terms used but not otherwise defined herein shall have the meaning given them in the Loan Agreement. 2.2 The Loan Agreement is amended by adding the following the sentence at the end of paragraph (d) of Exhibit B: " However, an Instrument will not fail to qualify as an Eligible Instrument solely because it does not bear interest, so long as the down payment is at least 50% of the total sales price (no part of which has been advanced or paid to the Purchaser by Borrower, directly or indirectly) and the unpaid principal balance of all such Instruments hypothecated to Lender does not exceed 15% of all Eligible Instruments hypothecated to Lender.

CV,/P.349.FINOVA.PIGEON.LNAG.004
Exhibit J-2 Additional Advances Conditions to Receivables Loan

Exhibit J-2A Exhibit K Exhibit L Exhibit M Exhibit N Exhibit 0

Request for Receivables Loan Advance and Certification Borrower's Monthly Reports (Format) Personal Property Real Property Construction Budget Work Progress Schedule

- -63 -

AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Amendment") dated as of April 12, 1995, PATTEN CORPORATION, a Massachusetts corporation("Borrower"), and FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation), a Delaware corporation ("Lender"), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby confirm and agree as follows: ARTICLE 1 INTRODUCTION 1.1 Borrower and Lender previously entered into an Amended and Restated Loan and Security Agreement dated as of December 14, 1994 ("Loan Agreement") relating to a construction loan in a maximum aggregate principal amount not to exceed $3,100,000 and a revolving line of credit loan in a maximum principal amount not to exceed $5,000,000 at any time. 1.2 Borrower and Lender wish to amend the Loan Agreement, all as more fully provided below. ARTICLE 2 AGREEMENT 2.1 Capitalized terms used but not otherwise defined herein shall have the meaning given them in the Loan Agreement. 2.2 The Loan Agreement is amended by adding the following the sentence at the end of paragraph (d) of Exhibit B: " However, an Instrument will not fail to qualify as an Eligible Instrument solely because it does not bear interest, so long as the down payment is at least 50% of the total sales price (no part of which has been advanced or paid to the Purchaser by Borrower, directly or indirectly) and the unpaid principal balance of all such Instruments hypothecated to Lender does not exceed 15% of all Eligible Instruments hypothecated to Lender. 2.3 Borrower will on demand pay, or at Lender's election, reimburse Lender for Lender's reasonable attorneys' fees and other reasonable out-of-pocket expenses in connection with the documentation of this Amendment. 2.4 Borrower confirms and restates to Lender as of the date hereof all its representations and warranties set forth

AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Amendment") dated as of April 12, 1995, PATTEN CORPORATION, a Massachusetts corporation("Borrower"), and FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation), a Delaware corporation ("Lender"), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby confirm and agree as follows: ARTICLE 1 INTRODUCTION 1.1 Borrower and Lender previously entered into an Amended and Restated Loan and Security Agreement dated as of December 14, 1994 ("Loan Agreement") relating to a construction loan in a maximum aggregate principal amount not to exceed $3,100,000 and a revolving line of credit loan in a maximum principal amount not to exceed $5,000,000 at any time. 1.2 Borrower and Lender wish to amend the Loan Agreement, all as more fully provided below. ARTICLE 2 AGREEMENT 2.1 Capitalized terms used but not otherwise defined herein shall have the meaning given them in the Loan Agreement. 2.2 The Loan Agreement is amended by adding the following the sentence at the end of paragraph (d) of Exhibit B: " However, an Instrument will not fail to qualify as an Eligible Instrument solely because it does not bear interest, so long as the down payment is at least 50% of the total sales price (no part of which has been advanced or paid to the Purchaser by Borrower, directly or indirectly) and the unpaid principal balance of all such Instruments hypothecated to Lender does not exceed 15% of all Eligible Instruments hypothecated to Lender. 2.3 Borrower will on demand pay, or at Lender's election, reimburse Lender for Lender's reasonable attorneys' fees and other reasonable out-of-pocket expenses in connection with the documentation of this Amendment. 2.4 Borrower confirms and restates to Lender as of the date hereof all its representations and warranties set forth in the Loan Agreement. Borrower further acknowledges that Lender has performed

and is not in default of its obligations under the Documents and the Other Loan Documents and that there are no offsets, defenses or counterclaims with respect to any of Borrower's Obligations under the Documents. 2.5 This Amendment constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and this Amendment supersedes all prior written or oral understandings and agreements between the parties in connection with its subject matter. 2.6 This Amendment may be executed in one or more counterparts, and any number of which having been signed by all the parties hereto shall be taken as one original. 2.7 Borrower and Lender hereby ratify and confirm the Loan Agreement, as amended hereby, in all respects; and, except as expressly amended hereby, the Loan Agreement shall remain in full force and effect. IN WITNESS WHEREOF this instrument is executed as of the date set forth above.

and is not in default of its obligations under the Documents and the Other Loan Documents and that there are no offsets, defenses or counterclaims with respect to any of Borrower's Obligations under the Documents. 2.5 This Amendment constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and this Amendment supersedes all prior written or oral understandings and agreements between the parties in connection with its subject matter. 2.6 This Amendment may be executed in one or more counterparts, and any number of which having been signed by all the parties hereto shall be taken as one original. 2.7 Borrower and Lender hereby ratify and confirm the Loan Agreement, as amended hereby, in all respects; and, except as expressly amended hereby, the Loan Agreement shall remain in full force and effect. IN WITNESS WHEREOF this instrument is executed as of the date set forth above. BORROWER: LENDER: PATTEN CORPORATION, a Massachusetts corporation By: Type/Print Name: Title: Chief Financial Officer FINOVA CAPITAL CORPORATION, a Delaware corporation Type/Print Name: Jack Field Group Vice President 2 [GRAPHIC OMITTED]

CONSENT By executing this Consent, PATTEN RECEIVABLES FINANCE CORPORATION VI acknowledges to FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation) its consent to the foregoing Amendment No. 1 to Amended and Restated Loan and Security Agreement ("Amendment") and that such Amendment shall not impair any of its obligations to FINOVA Capital Corporation. PATTEN RECEIVABLES CORPORATION VI. FINANCE By: Print/Type Name: Title: Treasurer

AMENDMENT NO. 2 TO MENDED AND RESTATED LOAN AND SECURITY AGREEMENT

CONSENT By executing this Consent, PATTEN RECEIVABLES FINANCE CORPORATION VI acknowledges to FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation) its consent to the foregoing Amendment No. 1 to Amended and Restated Loan and Security Agreement ("Amendment") and that such Amendment shall not impair any of its obligations to FINOVA Capital Corporation. PATTEN RECEIVABLES CORPORATION VI. FINANCE By: Print/Type Name: Title: Treasurer

AMENDMENT NO. 2 TO MENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ('Amendment') dated as of November 21, 1995, PATTEN CORPORATION, a Massachusetts corporation ('Borrower'), and FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation), a Delaware corporation ('Lender'), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby confirm and agree as follows: ARTICLE 1 INTRODUCTION 1.1 Borrower and Lender previously entered into an Amended and Restated Loan and Security Agreement dated as of December 14, 1994, as amended by Amendment No. 1 to Loan and Security Agreement dated as of April 12, 1995 (as so amended 'Loan Agreement') relating to a construction loan in a maximum aggregate principal amount not to exceed $3,100,000.00 and a revolving line of credit loan in a maximum principal amount not to exceed $5,000,000.00 at any time. 1.2 Borrower and Lender wish to amend the Loan Agreement, all as more fully provided below. ARTICLE 2 AGREEMENT 2.1 Capitalized terms used but not otherwise defined herein shall have the meaning given them in the Loan Agreement. 2.2 The Loan Agreement is amended as follows: (a) Paragraph 1.39 is deleted in its entirety and the following is inserted in its place: 1.39 "Discount Rate": twelve and nine-tenths percent (12.9%). (b) Paragraph 1.56 is deleted in its entirety and the following inserted in its place: 1.56 'Maximum Receivables Loan Amount": subject to the provisions of paragraph 2.5 pertaining to the increase of the Maximum Receivables Loan Amount, Twelve Million Dollars ($12,000,000). (c) Paragraph 1.79 is deleted in its entirety and the following inserted in its place:

AMENDMENT NO. 2 TO MENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ('Amendment') dated as of November 21, 1995, PATTEN CORPORATION, a Massachusetts corporation ('Borrower'), and FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation), a Delaware corporation ('Lender'), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby confirm and agree as follows: ARTICLE 1 INTRODUCTION 1.1 Borrower and Lender previously entered into an Amended and Restated Loan and Security Agreement dated as of December 14, 1994, as amended by Amendment No. 1 to Loan and Security Agreement dated as of April 12, 1995 (as so amended 'Loan Agreement') relating to a construction loan in a maximum aggregate principal amount not to exceed $3,100,000.00 and a revolving line of credit loan in a maximum principal amount not to exceed $5,000,000.00 at any time. 1.2 Borrower and Lender wish to amend the Loan Agreement, all as more fully provided below. ARTICLE 2 AGREEMENT 2.1 Capitalized terms used but not otherwise defined herein shall have the meaning given them in the Loan Agreement. 2.2 The Loan Agreement is amended as follows: (a) Paragraph 1.39 is deleted in its entirety and the following is inserted in its place: 1.39 "Discount Rate": twelve and nine-tenths percent (12.9%). (b) Paragraph 1.56 is deleted in its entirety and the following inserted in its place: 1.56 'Maximum Receivables Loan Amount": subject to the provisions of paragraph 2.5 pertaining to the increase of the Maximum Receivables Loan Amount, Twelve Million Dollars ($12,000,000). (c) Paragraph 1.79 is deleted in its entirety and the following inserted in its place: 1.79 "Receivables Loan Borrowing Term': subject to the provisions of paragraph 2.6 pertaining to an extension of the Receivables Loan Borrowing Term, the period of time commencing on the date of this Agreement and ending on May 30, 1997. (d) Paragraph 2.1(c) is deleted in its entirety and the following inserted in its place: (c) Limitation on Total Amount of Advances. Lender shall have no obligation to make an Advance if after giving effect to the Advance the sum of (i) the unpaid principal balances of the Construction Loan and the Receivables Loan, (ii) the committed and undisbursed portion of the Construction Loan, and (iii) the Uncovered Cost of the Work for all Phases for which Borrower has requested a Work-Related Advance exceeds the Maximum Receivables Loan Amount. (e) The following is added as a new paragraph 2.5: 2.5 Increase to Maximum Receivables Loan Amount. Borrower shall be entitled an increase ('Increase") of the Maximum Receivables Loan Amount from Twelve Million Dollars ($12,000,000) to Twenty Million Dollars ($20,000,000) subject to the following terms and conditions: (a) within a period ('Increase Notice Period") which

is at least forty-five (45), but not more than ninety (90), days prior to requesting the first Receivables Loan Advance which would cause the outstanding principal balance of the Receivables Loan to exceed Twelve Mi11ion Dol1ars ($12,000,000.00), Borrower shall have given Lender notice of its intention to do so and submitted to Lender a written request for an increase to the Maximum Receivables Loan Amount from Twelve Million Dollars ($12,000,000) to Twenty Million Dollars ($20,000,000); (b) within the Increase Notice Period, Borrower shall have delivered to Lender (or at Lender's option, Lender shall have obtained) such items as Lender may reasonably require (including, without limitation, current searches, credit bureau reports and financial statements with respect to Borrower, PRFC and the Project and opinions in form and from counsel to Borrower satisfactory to Lender) in order to determine whether the conditions set forth in paragraphs 4.lF(a) (d), inclusive, continue to be satisfied; (c) within the Increase Notice Period, Lender shall have received such documents which have been executed by Borrower, PRFC and/or third parties as Lender may reasonably require to evidence and secure the Increase, and such documents shall have been recorded and/or filed as Lender may reasonably require; (d) within the Increase Notice Period, Lender shall have received evidence that all intangible taxes required to be paid with respect to the Receivables Loan, as increased, have been paid; and (e) the Receivables Loan Borrowing Term shall not have expired. The items required pursuant to the terms of the preceding sentence will be provided at Borrower's expense. Borrower will pay to Lender a fee ("Receivables Loan Increase Fee') in connection with the increase, as follows: Forty Thousand Dollars ($40,000) of the Receivables Loan Increase Fee shall be due and payable when the first Receivables Loan Advance is made which causes the unpaid principal balance of the Receivables Loan to exceed Twelve Million Dollars ($12,000,000); and the balance of the Receivables Loan Increase Fee shall be due and payable when the first Receivables Loan Advance is made which causes the unpaid principal balance of the Receivables Loan to exceed Sixteen Million Dollars ($16,000,000). 2.6 Extension of Receivables Loan Borrowing Term. Borrower shall be entitled to a single extension of the expiration date of the Receivables Loan Borrowing Term until November 30, 1998, upon the following terms and conditions: (a) within a period ("Extension Option Period') which is at least thirty (30), but not more than ninety (90), days prior to the expiration of the Receivables Loan Borrowing Term, Borrower shall have given Lender notice of its intention to do so; (b) Borrower shall have delivered to Lender (or at Lender's option, Lender shall have obtained) such items as Lender may reasonably require (including, without limitation, current searches, credit bureau reports and financial statements with respect to Borrower, PRFC and the Project and opinions in form and from counsel to Borrower satisfactory to Lender) in order to determine whether the conditions set forth in paragraphs 4.lF(a) (d), inclusive, continues to be satisfied; (c) within the Extension Option Period, Lender shall have documents executed by Borrower, PRFC and/or third parties as Lender may reasonably require to evidence and secure the extension, and such documents shall have been recorded and/or filed as Lender may reasonably require; (d) Lender shall have received certified copies of all documents (other than advertising materials in compliance with applicable laws) which have been or are then being used in connection with the sale of Time-Share Interests and all public reports/offering statements/prospectuses required by law to be utilized in those jurisdictions where it has sold or is then selling Time-Share Interests or has offered or is then offering them for sale; (e) Lender has received all certified copies of all material changes made since January 18, 1994, to the documents (other than advertising materials in compliance with applicable laws) used in connection with the sale of Time-Share Interests and/or the governance of the Project, and copies of all public reports/offering statements/prospectuses required by law to be utilized in those jurisdictions where it is currently selling TimeShare Interests or offering them for sale; and (f) Lender has received evidence that Borrower has been registered and maintained all necessary licenses and permits as required by applicable law in all jurisdictions where it has sold or offered Time-Share Interests for sale since November 1, 1995. All items required pursuant to the terms of the preceding sentence will be provided at Borrower's expense. 2.3 Borrower will pay to Lender a fee in the amount of Seventy Thousand And No/100 Dollars ($70,000.00) for the renewal and increase of the Receivables Loan to Twelve Million Dollars ($12,000,000), which fee shall be due and payable at the time of the first Receivables Loan Advance on or after the date hereof, but not later than December 15, 1995. 2.4 Borrower will on demand pay, or at Lender's election, reimburse Lender for Lender's reasonable attorneys' fees and other reasonable out-of-pocket expenses in connection with the documentation of this Amendment. 2.5 Borrower confirms and restates to Lender as of the date hereof all its representations and warranties set forth in the Loan Agreement. Borrower represents and warrants to Lender that since December 14, 1994, except for any changes delivered to Lender pursuant to paragraph 2.7(c) and any changes to advertising materials in

conformance with applicable law, there have been no material changes to the documents used in connection with the sale of Time-Share Interests or in the governance of the Project. Borrower further acknowledges that Lender has performed and is not in default of its obligations under the Documents and the Other Loan Documents and that there are no offsets, defenses or counterclaims with respect to any of Borrower's Obligations under the Documents. 2.6 Borrower will execute and deliver such further instruments and do such things as in the sole and absolute judgment of Lender are necessary or desirable to effect the intent of this Amendment and to secure to Lender the benefits of all rights and remedies conferred upon Lender by the terms of this Amendment and any other documents executed in connection herewith, including, without limitation, amendments to recorded and filed security documents and financing statements (collectively, 'Modification Documents'). 2.7 This Amendment shall not be binding upon Lender unless and until the following conditions have been satisfied on or before December 15, 1995: (a) Borrower has delivered to Lender the following documents and other items, all of which shall be properly completed and executed and shall otherwise be satisfactory in form and substance to Lender in its sole and absolute discretion: (i) a resolution or certificate from Borrower authorizing (A) the execution and delivery of this Amendment and the other Modification Documents and (B) the transaction contemplated hereby; (ii) a resolution from PRFC authorizing (A) the execution and delivery of the Modification Documents required by this Amendment to be executed by it and (B) the performance of its obligations under those documents; (iii) an Amended and Restated Receivables Loan Promissory Note in form and substance identical to Exhibit A; (iv) an 'Amendment to Construction Deed of Trust" in form and substance identical to Exhibit B; (v) such amendments to Documents as Lender may deem necessary or appropriate as a result of the modification of the Loans; (vi ) an opinion from counsel to Borrower and PRFC as to such matters as Lender may require, which counsel shall be reasonably satisfactory to Lender; and (vii) such other items as Lender may reasonably require. (b) Lender has received any Fees due upon execution of this Agreement. (c) Lender has received and approved the following in its sole and absolute discretion: (i) results of due diligence searches to be performed with respect to Borrower, PRFC and the Project, which due diligence shall include, but not be limited to, Dun and Bradstreet reports on Borrower and PRFC, and updated lien, litigation, judgment and bankruptcy searches for Borrower and PRFC; (ii) (A) certified copies of all documents (other than advertising materials in compliance with applicable laws) which have been or are being used in connection with the sale of Time-Share Interests and all public reports/of offering statements/prospectuses required by 1aw to be utilized in those jurisdictions where it is has sold or is currently selling Time-Share Interests or has offered or is currently offering them for sale; and (B) certified copies of all material changes (other than advertising materials in compliance with applicable laws) made since January 18, 1994, to the documents used in connection with the sale of Time-Share Interests and/or the governance of the Project; and (iii) evidence that Borrower has been registered and maintained all necessary licenses and permits as required by applicable law in all jurisdictions where it has sold or offered Time-Share Interests for sale since February 18, 1994.

(d) PRFC shall have executed the Consent attached hereto; (e) Lender shall have received non-disturbance agreements from any and all creditors of Borrower having a lien on Resort common areas and any and all persons benefitting from an encumbrance on Resort common areas, which agreements Lender may deem necessary or appropriate to ensure the continued uninterrupted use of the Resorts common areas by owners of TimeShare Interests. (f) Lender shall have received such satisfactory evidence, if any, as it may require, if any, regarding the satisfactory condition of environmental status of the Resort (it being Lender's intent to require only an updated records check if the results of that records check are satisfactory). (g) Lender shall have received satisfactory evidence that all required Tennessee intangibles taxes have been paid in connection with this Amendment and the other Modification Documents. 2.8 This Amendment may not be amended or otherwise modified except in a writing duly executed by the parties hereto. 2.9 If any one or more of the provisions of this Amendment is held to be invalid, illegal or unenforceable in any respect or for any reason (all of which invalidating laws are waived to the fullest extent possible), the validity, legality and enforceability of any remaining portions of such provisions in every other respect and of the remaining provisions of this Amendment shall not be in any respect impaired. In lieu of each such unenforceable provision, there shall be added automatically as a part of this Amendment a provision that is legal, valid and enforceable and is similar in terms to such unenforceable provisions as may be possible. 2.10 This Amendment constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and this Amendment supersedes all prior written or oral understandings and agreements between the parties in connection with its subject matter. 2.11 This Amendment may be executed in one or more counterparts, and any number of which having been signed by all the parties hereto shall be taken as one original. 2.12 Borrower and Lender hereby ratify and confirm the Loan Agreement, as amended hereby, in all respects; and, except as expressly amended hereby, the Loan Agreement shall remain in full force and effect. IN WITNESS WHEREOF this instrument is executed as of the date set forth BORROWER: LENDER: PATTEN CORPORATION, a Massachusetts corporation By Federal EIN: O-0300793 FINOVA CAPITAL CORPORATION, a Delaware corporation By: Title Title: CONSENT By executing this Consent, the undersigned PATTEN RECEIVABLES FINANCE CORPORATION VI acknowledges to FINOVA CAPITAL CORPORATION (fka Greyhound Financial Corporation) ('Lender') its

consent to the foregoing Amendment No. 2 to Amended and Restated Loan and Security Agreement ('Amendment'); that such Amendment shall not impair any of its obligations to FINOVA Capital Corporation; that obligations of Patten Corporation ('Patten') to Lender, as modified by the Amendment or as may be increased in the future, shall remain fully crossdefaulted with the obligations of the undersigned under that Amended and Restated Loan and Security Agreement dated as of January 9, 1990, as amended, to which the undersigned and Lender are parties ("PRFC VI Loan Agreement'): and that all collateral now or hereafter given as security for the obligations of the undersigned under the PRFC VI Loan Agreement shall be security for all obligations of Patten to Lender, as modified by the Amendment. PATTEN RECEIVABLES FINANCE CORPORATION VI By: Print/ Title:

AMENDMENT NO. TWO TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Two To The Loan And Security Agreement (the "Amendment") is entered into as of the 16th day of February, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACTS FACT ONE: Foothill and Borrower have previously entered into that certain Loan And Security Agreement, dated as of October 29, 1993 (as amended and supplemented, the "Agreement"). FACT TWO: Foothill and Borrower desire to amend the Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified. NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. The Definition of "A Line Borrowing Base" in Section 1.1 of the Agreement is hereby amended in its entirety to read as follows: "A Line Borrowing Base" means an amount equal to the sum of (i) ninety percent (90%) of the unpaid principal balance at the time of the advance with respect to variable rate notes; and (ii) ninety percent (90%) of the present value of the unmatured installments of principal and interest, discounted to fourteen percent (14%), at the time of the advance with respect to fixed rate notes." 2. Effective January 11, 1995, the first sentence of Section 2.4(a) is hereby amended in its entirety to read as follows: "All Obligations (except for the Obligations evidenced by the Term Note and Land Inventory Advances) shall bear interest, on the average Daily Balance, at a rate of two (2) percentage points above the Reference Rate."

3. Borrower shall pay to Foothill a fee of $250. Said fee shall be fully-earned non-refundable, and due and payable on the date of signing and delivery of this Amendment by Borrower to Foothill. 4. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above. FOOTHILL CAPITAL CORPORATION PATTEN CORPORATION

AMENDMENT NO. TWO TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Two To The Loan And Security Agreement (the "Amendment") is entered into as of the 16th day of February, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACTS FACT ONE: Foothill and Borrower have previously entered into that certain Loan And Security Agreement, dated as of October 29, 1993 (as amended and supplemented, the "Agreement"). FACT TWO: Foothill and Borrower desire to amend the Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified. NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. The Definition of "A Line Borrowing Base" in Section 1.1 of the Agreement is hereby amended in its entirety to read as follows: "A Line Borrowing Base" means an amount equal to the sum of (i) ninety percent (90%) of the unpaid principal balance at the time of the advance with respect to variable rate notes; and (ii) ninety percent (90%) of the present value of the unmatured installments of principal and interest, discounted to fourteen percent (14%), at the time of the advance with respect to fixed rate notes." 2. Effective January 11, 1995, the first sentence of Section 2.4(a) is hereby amended in its entirety to read as follows: "All Obligations (except for the Obligations evidenced by the Term Note and Land Inventory Advances) shall bear interest, on the average Daily Balance, at a rate of two (2) percentage points above the Reference Rate."

3. Borrower shall pay to Foothill a fee of $250. Said fee shall be fully-earned non-refundable, and due and payable on the date of signing and delivery of this Amendment by Borrower to Foothill. 4. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above. FOOTHILL CAPITAL CORPORATION PATTEN CORPORATION / / Lisa M. Gonzales Its Assistant Vice President

AMENDMENT NO. THREE TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Three To The Loan And Security Agreement (the "Amendment") is entered into as of the 28th day of March, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, SUITE 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place

3. Borrower shall pay to Foothill a fee of $250. Said fee shall be fully-earned non-refundable, and due and payable on the date of signing and delivery of this Amendment by Borrower to Foothill. 4. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above. FOOTHILL CAPITAL CORPORATION PATTEN CORPORATION / / Lisa M. Gonzales Its Assistant Vice President

AMENDMENT NO. THREE TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Three To The Loan And Security Agreement (the "Amendment") is entered into as of the 28th day of March, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, SUITE 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at I 1 1 1 1 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACT ONE: Foothill and Borrower have previously entered into that certain Loan And Security Agreement, dated as of October 29, 1993 (as amended and supplemented, the "Agreement"). FACT TWO: Foothll and Borrower desire to amend the Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified, NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. Effective January 11, 1995, the first sentence of Section 2.4(a) is hereby amended in its entirety to read as follows: "All Obligations shall bear interest, on the average Daily Balance, at a rate of two (2) percentage points above the Reference Rate." 2. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above.
FOOTHILL CAPITAL CORPORATION PATTEN CORPORATION

BY

BY

Lisa M. Gonzales Assistant Vice President

AMENDMENT NO. THREE TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Three To The Loan And Security Agreement (the "Amendment") is entered into as of the 28th day of March, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, SUITE 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at I 1 1 1 1 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACT ONE: Foothill and Borrower have previously entered into that certain Loan And Security Agreement, dated as of October 29, 1993 (as amended and supplemented, the "Agreement"). FACT TWO: Foothll and Borrower desire to amend the Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified, NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. Effective January 11, 1995, the first sentence of Section 2.4(a) is hereby amended in its entirety to read as follows: "All Obligations shall bear interest, on the average Daily Balance, at a rate of two (2) percentage points above the Reference Rate." 2. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above.
FOOTHILL CAPITAL CORPORATION PATTEN CORPORATION

BY

BY

Lisa M. Gonzales Assistant Vice President

AMENDMENT NO. FOUR TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Four To The Loan And Security Agreement (the "Amendment") is entered into as of the 15th day of June, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 1 1 1 1 1 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACT ONE- Foothill and Borrower have previously entered into that certain Loan And Security Agreement, dated as of October 29, 1993 (as amended and supplemented, the "Agreement").

AMENDMENT NO. FOUR TO THE LOAN AND SECURITY AGREEMENT PATTEN CORPORATION This Amendment No. Four To The Loan And Security Agreement (the "Amendment") is entered into as of the 15th day of June, 1995, by and between PATTEN CORPORATION, a Massachusetts corporation ("Borrower"), whose chief executive office is located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 1 1 1 1 1 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACT ONE- Foothill and Borrower have previously entered into that certain Loan And Security Agreement, dated as of October 29, 1993 (as amended and supplemented, the "Agreement"). FACT TWO: Foothill and Borrower desire to amend the Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified. NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. The Definition "Maximum Amount" under Section 1.1 of the Agreement is hereby amended in its entirety to read as follows: " Amount" means the sum of (i) Eleven Million Five Hundred Thousand Dollars ($11,500,000) from June 8, 1995 through September 8, 1995 and (ii) Ten Million Dollars ($10,000,000) after September 8, 1995." 2. Borrower shall pay to Foothill a fee of $15,000. Said fee shall be fullyearned, non-refundable, and due and payable on the date of signing and delivery of this Amendment by Borrower to Foothill. 3. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS THEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above. FOOTHILL CAPITAL CORPORATION By Kevin M. Coyle PATTEN CORPORATION By

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made and entered into this 26TH day of June,1995, by and between PATTEN CORPORATION, a Massachusetts corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten"), PATTEN CORPORATION WEST, a Delaware corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten/West") and FOOTHILL CAPITAL CORPORATION, a California corporation, with a place of business located at 11111 Santa Monica Boulevard, Suits 1500, Los Angeles, California 90025-3333 ("Foothill"), and in made with reference to the following facts:

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made and entered into this 26TH day of June,1995, by and between PATTEN CORPORATION, a Massachusetts corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten"), PATTEN CORPORATION WEST, a Delaware corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten/West") and FOOTHILL CAPITAL CORPORATION, a California corporation, with a place of business located at 11111 Santa Monica Boulevard, Suits 1500, Los Angeles, California 90025-3333 ("Foothill"), and in made with reference to the following facts: W I T N E S S E T H: WHEREAS, on or about October 29, 1993, Foothill and Patten entered into that certain Loan and Security Agreement which provided for borrowings from time to time by Patten and pledges of various security interests to secure the repayments of such borrowings, all on the terms and conditions set forth therein; and WHEREAS, on or about December 23, 1993, Patten and Foothill entered into that certain First Amendment to Loan Agreement; and WHEREAS, on or about February 16, 1995, Patten and Borrower entered into that certain Second Amendment to Loan Agreement; and WHEREAS, on or about March 28, 1995, Patten and Foothill entered into that certain Third AmendMent to Loan Agreement (the Loan Agreement, as amended by the First, Second, and Third Amendments in hereinafter referred to as the "Loan Agreement); and WHEREAS, Patten, Patten/West, and Foothill desire to amend the Loan Agreement to provide, inter alia, that Patten/West will become a co-borrower under the Loan Agreement, that it will pledge certain real property owned by it in the County of La Plata, State of Colorado, and certain other terms and conditions, more specifically set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. The definition of Borrower shall be amended to include Patten Corporation West, a Delaware Corporation. 2. The definition of Collateral shall be amended to include, after the phrase "The Shawmut Funds", the phrase "the Water Rights". 3. There shall be added a new definition, as follows: "Water Rights" means all of Borrower's water rights with respect to its developments in La Platta County, Colorado, including, without limitation, appurtenant, riparian, or otherwise, and also including those evidenced by that certain Water Supply Agreement dated as of December 14, 1994, entered into between Patten Corporation West and Lake Durango Water Supply, Inc. a Colorado corporations 4. There shall be added a new Section 5.19, and follows: "5.19 InterCompany indebtedness. An of June 15, 1995, Patten Corporation Went is indebted to Patten Corporation in the sum of Three Million Six Hundred Eighty Seven Thousand One Hundred Dollars ($3,687,100)." 5. Except as expressly modified herein, the Loan Agreement remains in full force and effect and is reaffirmed by the parties hereto. By execution below, Patten Corporation West in a co-borrower under the Loan Agreement, and its execution binds it to all of the terms, conditions, and restrictions set forth in the Loan Agreement as a Borrower. Patten PATTEN CORPORATION a Massachusetts Corporation

By Patrick Rondeau "Patten/West" PATTEN CORPORATION WEST, a Delaware corporation by: Patrick Rondeau "Foothill" FOOTHILL CAPITAL CORPORATION a California corporation by Rhonda Foreman

SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made and entered into this 8th day of March, 1996, by and between BLUEGREEN CORPORATION, f/k/a PATTEN CORPORATION, a Massachusetts corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten"), PATTEN CORPORATION WEST, a Delaware corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten/West) and FOOTHILL CAPITAL CORPORATION, a California corporation, with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333 ("Foothill"), and is made with reference to the following facts: W I T N E S S E T H: WHEREAS, on or about October 29, 1993, Foothill and Patten entered into that certain Loan and Security Agreement which provided for borrowings from time to time by Patten and pledges of various security interests to secure the repayments of such borrowings, all on the terms and conditions set forth therein; and WHEREAS, on or about December 23, 1993, Patten and Foothill entered into that certain First Amendment to Loan Agreement; and WHEREAS, on or about February 16, 1995, Patten and Foothill entered into that certain Amendment No. Two to the Loan and Security Agreement: Patten Corporation; and WHEREAS, on or about March 28, 1995, Patten and Foothill entered into that certain Amendment No. Three to the Loan and Security Agreement: Patten Corporation; and WHEREAS, on or about June 15, 1995, Patten and Foothill entered into that certain Amendment No. Four to the Loan and Security Agreement: Patten Corporation ("Fourth Amendment"); and WHEREAS, on or about June 26, 1995 Patten, Patten/West and Foothill entered into that certain Fourth Amendment to Loan and Security Agreement ("Fifth Amendment"; The Loan Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment is hereafter referred to as the "Loan Agreement"); and WHEREAS, Patten, Patten/West, and Foothill desire to amend the Loan Agreement on the terms and conditions specifically set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. The definition of "Maximum Amount" in Section 1.1 of the Loan Agreement is deleted in its entirety and the following substituted in its place and stead: "Maximum Amount" means the sum of Fifteen Million Dollars ($15,000,000.00)." 2. The definition of "Land Inventory Borrowing Base" in Section 1.1 of the Loan Agreement is deleted in its

SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made and entered into this 8th day of March, 1996, by and between BLUEGREEN CORPORATION, f/k/a PATTEN CORPORATION, a Massachusetts corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten"), PATTEN CORPORATION WEST, a Delaware corporation, with its chief executive office located at 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486 ("Patten/West) and FOOTHILL CAPITAL CORPORATION, a California corporation, with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333 ("Foothill"), and is made with reference to the following facts: W I T N E S S E T H: WHEREAS, on or about October 29, 1993, Foothill and Patten entered into that certain Loan and Security Agreement which provided for borrowings from time to time by Patten and pledges of various security interests to secure the repayments of such borrowings, all on the terms and conditions set forth therein; and WHEREAS, on or about December 23, 1993, Patten and Foothill entered into that certain First Amendment to Loan Agreement; and WHEREAS, on or about February 16, 1995, Patten and Foothill entered into that certain Amendment No. Two to the Loan and Security Agreement: Patten Corporation; and WHEREAS, on or about March 28, 1995, Patten and Foothill entered into that certain Amendment No. Three to the Loan and Security Agreement: Patten Corporation; and WHEREAS, on or about June 15, 1995, Patten and Foothill entered into that certain Amendment No. Four to the Loan and Security Agreement: Patten Corporation ("Fourth Amendment"); and WHEREAS, on or about June 26, 1995 Patten, Patten/West and Foothill entered into that certain Fourth Amendment to Loan and Security Agreement ("Fifth Amendment"; The Loan Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment is hereafter referred to as the "Loan Agreement"); and WHEREAS, Patten, Patten/West, and Foothill desire to amend the Loan Agreement on the terms and conditions specifically set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. The definition of "Maximum Amount" in Section 1.1 of the Loan Agreement is deleted in its entirety and the following substituted in its place and stead: "Maximum Amount" means the sum of Fifteen Million Dollars ($15,000,000.00)." 2. The definition of "Land Inventory Borrowing Base" in Section 1.1 of the Loan Agreement is deleted in its entirety and the following substituted in its place and stead: "Land Inventory Borrowing Base" means an amount equal to the lesser of (a) five million dollars ($5,000,000.00), (b) fifty percent (50%) of the sum of acquisition cost of real property plus Borrower's actual costs of improvements thereon for lots which are in a ready-to-sell condition, (c) thirty percent (30%) of the projected retail sales price (established in good faith and supported by comparable lots) of the saleable lots, (d) the acquisition cost of the land to be acquired, or (e) Foothill's in-house appraisal of the Real Property." 3. Paragraph 5 of Schedule PN-A is deleted in its entirety and the following substituted in its place and stead: 115. The Pledged Notes must provide for an interest rate of at least eight percent (8%) per annum, if fixed, or R6ference Rate plus two and one-half percent (2 1/2%) if variable, provided, however, that the blended rate of interest for the entire portfolio of Pledged Notes shall not be less than the Reference Rate plus one point seven five percent (1.75%)." 4. In accordance with Section 7.5 of the Loan Agreement, Foothill consents for one time only to the name change of Patten Corporation to BLUEGREEN CORPORATION. 5. Borrower shall pay to Foothill in fee of twenty five thousand dollars ($25,000.00), which may be charged to Borrower's Obligations. The fee is fully

earned, non-refundable, and due and payable on the date of signing and delivery of this Amendment by Borrower to Foothill. 6. Except as expressly modified herein, the Loan Agreement remains in full force and effect and is reaffirmed by the parties hereto. "patten" BLUEGREEN CORPORATION, f/k/a PATTEN CORPORATION, a Massachusetts corporation "Patten/West" PATTEN CORPORATION WEST, a Delaware corporation "Foothill" FOOTHILL CAPITAL CORPORATION, a California corporation

The selected financial data set forth below should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Annual Report.
(Dollars in Thousands Except Average Sales Price Data and Per Share Data) March 31, 1996 INCOME STATEMENT DATA Sales of real estate..................... Interest income and other (1)........... Total revenues......................... Income from operations................... Net income............................... Net income per common share.............. OPERATING DATA Gross margin on sales of real estate (2). Average sales price of land parcels sold (3) Number of land parcels sold (3).......... Average sales price of timeshare intervals sold (3)................................. Number of timeshare intervals sold (3)... Average sales price of homes/lots sold... Number of homes/lots sold................ Average yield earned on notes receivable at period end............................ BALANCE SHEET DATA - -----------------Notes receivable, net (4)................ Inventory, net (4)....................... Total assets............................. Short-term debt.......................... Current portion of lines-of-credit, notes payable and receivable-backed notes payable.................................. Long-term portion of lines-of-credit, notes payable and receivable-backed notes payable.................................. 8.25% convertible subordinated debentures Shareholders' equity..................... Book value per common share.............. Shares outstanding at end of year (000's) (5)...................................... ASSET QUALITY RATIOS Charge-offs, net of recoveries, to average loans (4)................................ Reserve for loan losses to period end loans $113,422 7,388 -------120,810 10,794 6,467 .30 47.6% $ 34,856 2,347 $ 7,325 1,865 $ 71,546 206 12.4% April 2, 1995 $ 91,922 7,264 -------99,186 10,029 6,137 .29 50.9% $ 30,296 2,397 $ 7,119 952 $100,866 133 12.4% March 27, 1994 $ 63,389 7,952 -------71,341 6,778 4,931 .23 51.5% $ 25,468 2,489 $ ----$ 70,044 44 10.9% March 28, 1993 $ 53,349 10,191 -------63,540 3,604 3,457 .16 46.7% $ 20,839 2,560 $ --------11.0%

$

$ 37,014 73,595 154,963 --8,938

$ 40,311 62,345 152,222 --10,856

$ 44,203 38,793 139,617 --5,741

$ 35,653 28,245 122,853 6,500 5,684

28,073 34,739 64,698 $ 3.15 20,533

29,090 34,739 58,040 $ 2.98 19,471

31,556 34,739 51,854 $ 2.91 17,796

14,418 34,739 46,868 $ 2.74 17,083

1.4% 2.4%

1.6% 2.6%

3.6% 2.2%

3.0% 4.3%

The selected financial data set forth below should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Annual Report.
(Dollars in Thousands Except Average Sales Price Data and Per Share Data) March 31, 1996 INCOME STATEMENT DATA Sales of real estate..................... Interest income and other (1)........... Total revenues......................... Income from operations................... Net income............................... Net income per common share.............. OPERATING DATA Gross margin on sales of real estate (2). Average sales price of land parcels sold (3) Number of land parcels sold (3).......... Average sales price of timeshare intervals sold (3)................................. Number of timeshare intervals sold (3)... Average sales price of homes/lots sold... Number of homes/lots sold................ Average yield earned on notes receivable at period end............................ BALANCE SHEET DATA - -----------------Notes receivable, net (4)................ Inventory, net (4)....................... Total assets............................. Short-term debt.......................... Current portion of lines-of-credit, notes payable and receivable-backed notes payable.................................. Long-term portion of lines-of-credit, notes payable and receivable-backed notes payable.................................. 8.25% convertible subordinated debentures Shareholders' equity..................... Book value per common share.............. Shares outstanding at end of year (000's) (5)...................................... ASSET QUALITY RATIOS Charge-offs, net of recoveries, to average loans (4)................................ Reserve for loan losses to period end loans (4)...................................... $113,422 7,388 -------120,810 10,794 6,467 .30 47.6% $ 34,856 2,347 $ 7,325 1,865 $ 71,546 206 12.4% April 2, 1995 $ 91,922 7,264 -------99,186 10,029 6,137 .29 50.9% $ 30,296 2,397 $ 7,119 952 $100,866 133 12.4% March 27, 1994 $ 63,389 7,952 -------71,341 6,778 4,931 .23 51.5% $ 25,468 2,489 $ ----$ 70,044 44 10.9% March 28, 1993 $ 53,349 10,191 -------63,540 3,604 3,457 .16 46.7% $ 20,839 2,560 $ --------11.0%

$

$ 37,014 73,595 154,963 --8,938

$ 40,311 62,345 152,222 --10,856

$ 44,203 38,793 139,617 --5,741

$ 35,653 28,245 122,853 6,500 5,684

28,073 34,739 64,698 $ 3.15 20,533

29,090 34,739 58,040 $ 2.98 19,471

31,556 34,739 51,854 $ 2.91 17,796

14,418 34,739 46,868 $ 2.74 17,083

1.4% 2.4%

1.6% 2.6%

3.6% 2.2%

3.0% 4.3%

1) Interest income for fiscal 1996, 1995, 1994 and 1993 includes a $1.1 million gain, a $411,000 loss, a $238,000 loss and a $695,000 gain, respectively, from sales of notes receivable in connection with private placement REMIC transactions. 2) Gross margin is computed as the difference between the sales price and the related cost of inventory, including the cost of improvements and amenities, divided by the sales price. 3) Average sales price and unit sales data exclude the effect of deferring recognition of revenue under percentage of completion accounting. 4) The Company adopted Statement of Financial Accounting Standard No. 114, "Accounting by Creditors for Impairment of a Loan" (FAS No. 114) on April 3, 1995. FAS No. 114 amends the guidance for insubstance foreclosures contained in Financial Accounting Release No. 28. Under FAS No. 114, a collateral dependent loan shall be reported as real estate only if the lender has taken possession of the inventory. Accordingly, reclassifications have been made between notes receivable, reserve for loan losses and inventory for fiscal 1992 through 1995 to conform to the current year presentation. Furthermore, asset quality ratios have been restated for these same periods. 5) Fiscal 1994 shares outstanding reflect the payment of a 4% common stock dividend. Fiscal 1995 shares

5) Fiscal 1994 shares outstanding reflect the payment of a 4% common stock dividend. Fiscal 1995 shares outstanding reflect the payments of two additional common stock dividends of 4% and 5%. Fiscal 1996 shares outstanding reflect the payment of a fourth common stock dividend of 5%. Earnings per share data have been restated for all periods presented to give affect to all common stock dividends paid. Book value per share has not been restated to give affect to cumulative dividends paid through March 31, 1996, and rather, reflects the shares outstanding as of the respective fiscal period end.

Management's Discussion and Analysis of Financial Condition and Results of Operations The Company desires to take advantage of the new "safe harbor" provisions of the Private Securities Reform Act of 1995 (the "Act") and is making the following statements pursuant to the Act in order to do so. The Act only became law in late December, 1995 and, except for the Conference Report, no official interpretations of the Act's provisions have been published. This report contains forward-looking statements that involve a number of risks and uncertainties. The Company wishes to caution readers that the following important factors, among others, in some cases have affected, and in the future could affect, the Company's actual results and could cause the Company's actual consolidated results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. a) Changes in national or regional economic conditions that can affect the real estate market, which is cyclical in nature and highly sensitive to such changes, including, among other factors, levels of employment and discretionary disposable income, consumer confidence, available financing and interest rates. b) The imposition of additional compliance costs on the Company as the result of changes in any federal, state or local environmental, zoning or other laws and regulations that govern the acquisition, subdivision and sale of real estate and various aspects of the Company's financing operation. c) Risks associated with a large investment in real estate inventory at any given time. d) Changes in applicable usury laws or the availability of interest deductions or other provisions of federal or state tax law. e) A decreased willingness on the part of banks to extend direct customer lot financing, which could result in the Company receiving less cash in connection with the sales of real estate. f) The inability of the Company to find external sources of liquidity on favorable terms to support its operations and satisfy its debt and other obligations. g) An increase in delinquency rates or defaults with respect to Company-originated loans or an increase in the costs related to reacquiring, carrying and disposing of properties reacquired through foreclosure or deeds in lieu of foreclosure. h) Costs to develop inventory for sale exceed those anticipated. Liquidity and Capital Resources Sources of Capital. The Company's capital resources are provided from both internal and external sources. The Company's primary capital resources from internal operations include (i) downpayments on real estate sales which are financed, (ii) cash sales of real estate, (iii) principal and interest payments on the purchase money mortgage loans arising from land sales and contracts for deed arising from sales of timeshare intervals (collectively "Receivables") and (iv) proceeds from the sale of, or borrowings collateralized by, Receivables. Historically, external sources of liquidity have included borrowings under secured and unsecured lines-of-credit, seller and bank financing of inventory acquisitions and the issuance of debt and equity securities. Currently, the primary external sources of liquidity include seller and bank financing of inventory acquisitions and development along with borrowings under secured lines-of-credit. The Company anticipates that it will continue to require external sources of liquidity to support its operations and satisfy its debt and other obligations.

Management's Discussion and Analysis of Financial Condition and Results of Operations The Company desires to take advantage of the new "safe harbor" provisions of the Private Securities Reform Act of 1995 (the "Act") and is making the following statements pursuant to the Act in order to do so. The Act only became law in late December, 1995 and, except for the Conference Report, no official interpretations of the Act's provisions have been published. This report contains forward-looking statements that involve a number of risks and uncertainties. The Company wishes to caution readers that the following important factors, among others, in some cases have affected, and in the future could affect, the Company's actual results and could cause the Company's actual consolidated results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. a) Changes in national or regional economic conditions that can affect the real estate market, which is cyclical in nature and highly sensitive to such changes, including, among other factors, levels of employment and discretionary disposable income, consumer confidence, available financing and interest rates. b) The imposition of additional compliance costs on the Company as the result of changes in any federal, state or local environmental, zoning or other laws and regulations that govern the acquisition, subdivision and sale of real estate and various aspects of the Company's financing operation. c) Risks associated with a large investment in real estate inventory at any given time. d) Changes in applicable usury laws or the availability of interest deductions or other provisions of federal or state tax law. e) A decreased willingness on the part of banks to extend direct customer lot financing, which could result in the Company receiving less cash in connection with the sales of real estate. f) The inability of the Company to find external sources of liquidity on favorable terms to support its operations and satisfy its debt and other obligations. g) An increase in delinquency rates or defaults with respect to Company-originated loans or an increase in the costs related to reacquiring, carrying and disposing of properties reacquired through foreclosure or deeds in lieu of foreclosure. h) Costs to develop inventory for sale exceed those anticipated. Liquidity and Capital Resources Sources of Capital. The Company's capital resources are provided from both internal and external sources. The Company's primary capital resources from internal operations include (i) downpayments on real estate sales which are financed, (ii) cash sales of real estate, (iii) principal and interest payments on the purchase money mortgage loans arising from land sales and contracts for deed arising from sales of timeshare intervals (collectively "Receivables") and (iv) proceeds from the sale of, or borrowings collateralized by, Receivables. Historically, external sources of liquidity have included borrowings under secured and unsecured lines-of-credit, seller and bank financing of inventory acquisitions and the issuance of debt and equity securities. Currently, the primary external sources of liquidity include seller and bank financing of inventory acquisitions and development along with borrowings under secured lines-of-credit. The Company anticipates that it will continue to require external sources of liquidity to support its operations and satisfy its debt and other obligations. Net cash provided by the Company's operations was $15.3 million, $9.4 million and $16.5 million for the years ended March 31, 1996, April 2, 1995 and March 27, 1994, respectively. During fiscal 1996, sales of real estate increased over the prior year and, accordingly, cash received from customers was $16.3 million higher than during fiscal 1995. In addition, the proceeds from a Real Estate Mortgage Investment Conduit ("REMIC") transaction completed in fiscal 1996 together with borrowings (net of payments) collateralized by Receivables, generated $12.4 million more in cash during fiscal 1996 than during the prior year. Interest received, net of interest paid, increased $1.2 million from fiscal 1995 to fiscal 1996. However, cash paid for land acquisition and development increased by $12.9 million from fiscal 1995 to fiscal 1996. During fiscal 1996, the Company

acquired ten land properties along with an oceanfront property in Myrtle Beach, South Carolina which is being developed and marketed under the Resorts Division. In the prior year, the Company acquired several large land properties including approximately 22,000 acres in south-central Colorado. In addition, during fiscal 1996 a greater percentage of acquisition and development costs were paid in cash in lieu of borrowing under lines-ofcredit or obtaining seller or similar financial institution financing. Along with higher acquisition and development spending, cash paid to suppliers and employees (including sales representatives) increased from fiscal 1995 to fiscal 1996 by $11.2 million. A significant percentage of selling, general and administrative expenses ("S,G & A") is variable relative to sales and profitability levels, and therefore, increases with growth in sales of real estate. Fiscal 1994 net cash provided by operations was $7.1 million higher than during fiscal 1995 due, in part, to $3.7 million received during fiscal 1994 from a former joint venture partner for the full repayment of a loan. In addition, the increased cash collections from customers during fiscal 1995 was offset by an increase in cash paid for acquisition and development of inventories combined with an increase in cash paid to suppliers, employees and sales representatives. During fiscal 1996 and fiscal 1995, the Company received in cash $84.7 million or 74% and $67.9 million or 77%, respectively, of its sales of real estate that closed during these periods. During fiscal 1994, the Company received in cash $41.0 million or 66% of its sales of real estate that closed. The decrease in the percentage of cash received from fiscal 1995 to fiscal 1996 is primarily attributable to an increase in timeshare sales over the same period; approximately 85% of the principal balance of such sales has historically been internally financed by the Company. Timeshare sales accounted for 12% of consolidated sales of real estate during fiscal 1996, compared to 6% of consolidated sales during fiscal 1995. Management expects that in fiscal 1997, the percentage of sales received in cash may decrease further due to the recent introduction of a fixed interest rate program offered to qualified land customers along with anticipated increases in timeshare sales as a percentage of consolidated sales. The increase in the percentage of cash received during fiscal 1995 over fiscal 1994 was primarily attributable to (i) an increased willingness on the part of certain local banks to extend more direct customer lot financing during fiscal 1995 and (ii) an increased amount of home sales in certain markets in the revenue mix during fiscal 1995, the proceeds of which were received entirely in cash. Receivables arising from land and timeshare real estate sales generally are pledged to institutional lenders or sold in connection with private placement REMIC financings. The Company currently is advanced 90% of the face amount of the eligible notes when pledged to lenders. The Company classifies the indebtedness secured by Receivables as receivable-backed notes payable on the Consolidated Balance Sheet. During fiscal 1996, fiscal 1995 and fiscal 1994, the Company borrowed $19.4 million, $8.6 million and $20.7 million, respectively, through the pledge of Receivables. During fiscal 1996 and fiscal 1995, the Company raised an additional $28.7 million and $22.7 million, net of transaction costs and prior to the retirement of debt, from sales of Receivables under private placement REMIC transactions. During the twelve months ended March 27, 1994, the Company raised $8.4 million from the private sale of Class B certificates issued under the Company's 1992 REMIC financing. The discussion below and Note 8 to the Consolidated Financial Statements provide additional information with respect to credit facilities secured by Receivables and the sale of Receivables through private placement transactions. The Company has a revolving credit facility of $20.0 million with a financial institution secured by land inventory and land Receivables. The interest rate charged on borrowings secured by such inventory and Receivables is prime plus 2.75% and prime plus 2.0%, respectively. At March 31, 1996, the outstanding principal balance under the facility was $9.1 million, comprised of $2.8 million secured by inventory and $6.3 million secured by Receivables. The Company repays loans made under the inventory portion of the facility through lot release payments as the collateral is sold. In addition, the Company is required to meet certain minimum debt amortization on the outstanding inventory secured debt. The indebtedness secured by land inventory has maturities that range from December, 1996 to June, 1997. All principal and interest payments received from the pledged Receivables are applied to the principal and interest due under the Receivables portion of this facility. Furthermore, at no time may Receivable related indebtedness exceed 90% of the face amount of eligible pledged Receivables. The Company is obligated to pledge additional Receivables or make additional principal payments on the Receivable related indebtedness in order to maintain this collateralization rate. Repurchases and additional principal payments have not been material to date. The indebtedness secured by Receivables matures ten years from the date of the last advance. The ability to receive advances under the facility expires in October, 1996. The Company is currently engaged in discussions with the lender about the renewal of the facility. No assurances can be given that the facility will be renewed on terms satisfactory to the Company, if at all. The Company also has a $20.0 million credit facility with this same lender which provides for acquisition,

development, construction and Receivables financing for the first and second phases of a multi-phase timeshare project in Gatlinburg, Tennessee. The interest rate charged on borrowings secured by inventory and timeshare Receivables is prime plus 2.0%. At March 31, 1996, the outstanding principal balance under the facility was $7.5 million, comprised of $600,000 secured by inventory and $6.9 million secured by Receivables. The Company is required to repay the portion of the loan secured by inventory through two equal annual installments of $300,000 each in December, 1996 and December, 1997. All principal and interest payments received from the pledged Receivables are applied to the principal and interest due under the Receivables portion of this facility. Furthermore, at no time may the Receivable related indebtedness exceed 90% of the face amount of pledged Receivables. The Company is obligated to pledge additional Receivables or make additional principal payments on the Receivable related indebtedness in order to maintain this collateralization rate. Repurchases and additional principal payments have not been material to date. The indebtedness secured by Receivables matures seven years from the date of the last advance. The ability to borrow under the facility expires in November, 1998. The Company has another credit facility with this same lender which provides for acquisition, development, construction and Receivables financing on a second timeshare resort located in Pigeon Forge, Tennessee in the amount of $6.2 million. The interest rate charged on borrowings secured by inventory and timeshare Receivables is prime plus 2.0%. At March 31, 1996, there was $2.1 million outstanding under the facility, comprised of $1.2 million secured by inventory and $865,000 secured by Receivables. The Company is required to repay the portion of the loan secured by inventory through three annual principal payments of $400,000 in July, 1996, $400,000 in July, 1997 and $410,000 in July, 1998. All principal and interest payments received from the pledged Receivables are applied to the principal and interest due under the Receivables portion of this facility. Furthermore, at no time may Receivable related indebtedness exceed 90% of the face amount of pledged Receivables. The Company is obligated to pledge additional Receivables or make additional principal payments on the Receivable related indebtedness in order to maintain this collateralization rate. Repurchases and additional principal payments have not been material to date. The indebtedness secured by Receivables matures seven years from the date of the last advance. The ability to borrow under the facility expires in July, 1998. The Company has a $13.5 million secured line-of-credit with a South Carolina financial institution for the construction and development of Phase I of its Myrtle Beach timeshare resort. The Myrtle Beach oceanfront property was acquired during the second quarter of fiscal 1996, and Phase I consists of 114 residential units. The interest rate charged under the facility is prime plus .5%. At March 31, 1996, there was $188,000 outstanding under the facility. The indebtedness is due in May, 1997. The Company also has a $23.5 million line-of-credit with a financial institution. The credit line provides for "takeout" of the construction lender discussed in the preceding paragraph in the amount of $13.5 million as well as $10.0 million for the pledge of Myrtle Beach timeshare Receivables. The interest rate charged under the line-ofcredit is the three-month London Interbank Offered Rate ("LIBOR") plus 4.25%. Management expects the first advance under the Receivables facility to occur in June, 1996 and the "take-out" advance to occur in March, 1997. The Company has a $15.0 million revolving credit facility with another financial institution secured by land Receivables and land inventory. Under the terms of this facility, the Company is entitled to advances equal to 90% of the outstanding principal balance of eligible pledged Receivables and advances of up to $5.0 million secured by land inventory to finance real estate acquisition and development costs. The interest rate charged on borrowings secured by Receivables and inventory is prime plus 2.0%. At March 31, 1996, the outstanding principal balance under the facility was $6.0 million, comprised of $277,000 secured by inventory and $5.7 million secured by Receivables. The Company is required to pay the financial institution 55% of the contract price of land sales associated with pledged inventory when any such inventory is sold until the land indebtedness is paid in full. The Company repaid the Receivable related indebtedness in May, 1996 with a portion of the proceeds from a private placement REMIC transaction. See discussion of subsequent event in Note 14 to the Consolidated Financial Statements. With respect to future borrowings under the Receivable related portion of the facility, all principal and interest payments received on pledged Receivables will be applied to principal and interest due under the Receivables portion of this facility. The facility expires in October, 1998. In addition to the land and resorts financing described above, the Company has outstanding indebtedness under two lines-of-credit secured by a North Carolina and a Florida project managed under the Communities Division. At March 31, 1996, the aggregate outstanding indebtedness under these facilities totaled $1.3 million. The indebtedness secured by the North Carolina property matures in June, 1996 and the indebtedness secured by the Florida property matures in May, 1998. The ability to borrow under these facilities has expired and the Company

does not intend to renew the facilities. Along with inventory and Receivables financing under credit arrangements described above, the Company regularly seeks term financing for the acquisition of its real estate from sellers, banks or similar financial institutions. Accordingly, the aggregate amount of inventory acquisition and development costs obtained through term financing and lines-of-credit during fiscal 1996, fiscal 1995 and fiscal 1994 totaled $12.4 million or 18%, $23.1 million or 32% and $12.8 million or 33%, respectively. The increase in the percentage of acquisition and development costs paid in cash during fiscal 1996 reflects additional internal capital generated from higher real estate sales and proceeds of a REMIC transaction. See "Uses of Capital" and "Results of Operations" below for a further discussion of the Company's Land, Resorts and Communities Divisions. The Company is required to comply with certain covenants under several of its debt agreements discussed above, including, without limitation, the following financial covenants: I. Maintain net worth of at least $42.0 million. II. Maintain a leverage ratio of not more than 4.0 to 1.0. The leverage ratio is defined as consolidated indebtedness of the Company divided by consolidated net worth. III. Maintain an adjusted leverage ratio of not more than 2.0 to 1.0. The adjusted leverage ratio is defined as consolidated indebtedness of the Company excluding the convertible subordinated debentures divided by consolidated net worth including the convertible subordinated debentures. IV. Limit selling, general and administrative expenses to 50% of gross sales revenue from sales of real estate. The Company was in compliance with each of such covenants at March 31, 1996 and for each reporting period during fiscal 1996, fiscal 1995 and fiscal 1994. Debt Obligations. The following table sets forth the minimum contractual principal payments required on the Company's lines-of-credit and notes payable as well as the scheduled principal reductions with respect to receivable-backed indebtedness for years subsequent to fiscal 1996.
Lines-ofCredit and Notes Payable $ 4,764,643 6,202,356 2,792,180 1,225,237 954,034 1,349,317 $17,287,767 ReceivableBacked Notes Payable $ 4,173,850 3,088,351 3,267,997 3,414,547 3,431,589 2,347,132 $19,723,466

Fiscal 1997 Fiscal 1998 Fiscal 1999 Fiscal 2000 Fiscal 2001 Thereafter Total

Total $ 8,938,493 9,290,707 6,060,177 4,639,784 4,385,623 3,696,449 $37,011,233

Installments due on lines-of-credit and notes payable primarily consist of payments due on indebtedness secured by property inventory. In most instances, as inventory is sold, the Company is required to repay the creditor a predetermined percentage of the selling price or a predetermined price per acre. The agreements also generally call for certain minimum debt amortization. When the Company provides financing for its customers, it is required to pay the creditor with cash from other operating activities, principally with the proceeds from the pledge or sale of Receivables. All principal and interest collections on Receivables pledged as collateral for receivable-backed notes payable are dedicated to the payment of principal and interest on the related debt. Under the terms of the receivablebacked note agreements, the Company is not required to advance delinquent customer payments to the creditor. However, in most cases the Company is obligated to maintain a receivable-backed notes payable balance of not more than 90% of eligible pledged Receivables. In April, 1994, the Board of Directors authorized the repurchase of up to $4.0 million principal amount of the Company's 8.25% convertible subordinated debentures due 2012 in the open market from time to time subject

Company's 8.25% convertible subordinated debentures due 2012 in the open market from time to time subject to the Company's financial condition and liquidity, the terms of its credit agreements, market conditions and other factors. The Company has not purchased any of its convertible subordinated debentures under this program through March 31, 1996. See Note 7 to the Consolidated Financial Statements. In recent years, private placement REMIC financings have provided substantial capital resources to the Company. In these transactions, (i) the Company sells or otherwise absolutely transfers a pool of mortgage loans to a newly-formed special purpose subsidiary, (ii) the subsidiary sells the mortgage loans to a trust in exchange for certificates representing the entire beneficial ownership in the trust and (iii) the subsidiary sells one or more senior classes of the certificates to an institutional investor in a private placement and retains the remaining certificates, which remaining certificates are subordinated to the senior classes. The certificates are not registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registrations. The certificates are issued pursuant to a pooling and servicing agreement (the "Pooling Agreement"). Collections on the mortgage pool, net of certain servicing and trustee fees, are remitted to the certificateholders on a monthly basis in the order of priority specified in the applicable Pooling Agreement. The Company acts as servicer under the Pooling Agreement and is paid an amortized servicing fee of .5% of the scheduled principal balance of those rates in the mortgage pool on which the periodic payment of principal and interest is collected in full. Under the terms of the Pooling Agreement, the Company has the obligation to repurchase or replace mortgage loans in the pool with respect to which there was a breach of the Company's representations and warranties contained in the Pooling Agreement at the date of sale, which breach materially and adversely affects the rights of certificateholders. In addition, the Company, as servicer, is required to make advances of delinquent payments to the extent deemed recoverable. However, the certificates are not obligations of the Company, the subsidiary or any of their affiliates and the Company has no obligation to repurchase or replace the mortgage loans solely due to delinquency. On May 11, 1994, the Company sold, or otherwise absolutely transferred and assigned, $27.7 million aggregate principal amount of mortgage notes receivable (the "1994 Mortgage Pool") to a subsidiary of the Company and the subsidiary sold the 1994 Mortgage Pool to a REMIC Trust (the "1994 REMIC Trust"). Simultaneous with the sale, the 1994 REMIC Trust issued four classes of Adjustable Rate REMIC Mortgage Pass-Through Certificates. The initial principal balances of the Class A, Class B and Class C certificates were approximately $23.3 million, $2.8 million and $1.6 million, respectively. The Class R Certificates have no initial principal balance and do not bear interest. The Class A, Class B and Class C Certificates bear interest at the lesser of (i) the weighted average of the net mortgage interest rates of certain notes in the Mortgage Pool less the servicing fee rate and trustee fee rate or (ii) LIBOR for six month United States dollar deposits plus a margin of 2.5%, 3.5% and 4.5%, respectively. The 1994 REMIC Trust is comprised primarily of a pool of fixed and adjustable rate first mortgage loans secured by property sold by the Company. On May 11, 1994, the subsidiary sold the Class A and Class B Certificates issued under the Pooling Agreement to an institutional investor for aggregate proceeds of approximately $26.0 million in a private placement transaction and retained the Class C and Class R Certificates. A portion of the proceeds from the transaction was used to repay approximately $13.5 million of outstanding debt. An additional $2.4 million was used to retire securities previously sold pursuant to the Company's 1989 REMIC transaction. The balance of the proceeds, after payment of transaction expenses and fees, resulted in an increase of $12.4 million in the Company's unrestricted cash. On July 12, 1995, the Company sold, or otherwise absolutely transferred and assigned, $68.1 million aggregate principal amount of mortgage notes receivable (the "1995 Mortgage Pool") to a subsidiary of the Company and the subsidiary sold the 1995 Mortgage Pool to a REMIC Trust (the "1995 REMIC Trust"). Simultaneous with the sale, the 1995 REMIC Trust issued four classes of Adjustable Rate REMIC Mortgage Pass-Through Certificates. The initial principal balances of the Class A, Class B and Class C certificates were approximately $61.3 million, $4.8 million and $2.0 million, respectively. The Class R Certificates have no initial principal balance and do not bear interest. The Class A, Class B and Class C Certificates bear interest at the lesser of (i) the weighted average of the net mortgage interest rates of certain notes in the Mortgage Pool less the servicing fee rate and trustee fee rate or (ii) LIBOR for six month United States dollar deposits plus a margin of 1.5%, 3.55% and 4.0%, respectively. The 1995 REMIC Trust is comprised primarily of a pool of fixed and adjustable rate first mortgage loans secured by property sold by the Company. The $68.1 million of loans comprising the Mortgage Pool were previously owned by the REMIC trust established by the Company in 1992 ($46.8 million) or held by the Company or

pledged to an institutional lender ($21.3 million). The Class C and Class R Certificates are subordinated to the Class A and Class B Certificates, as provided in the Pooling Agreement. On July 12, 1995, the subsidiary sold the Class A and Class B Certificates issued under the Pooling Agreement to two institutional investors for aggregate proceeds of approximately $66.1 million in a private placement transaction. The subsidiary retained the Class C and Class R Certificates. A portion of the proceeds from the transaction was used to repay approximately $12.9 million of outstanding debt. An additional $36.3 million was used to retire securities previously sold pursuant to the Company's 1992 REMIC transaction. The balance of the proceeds, after payment of transaction expenses and fees, resulted in an increase of more than $15.8 million in the Company's unrestricted cash. The pre-tax gain from the transaction was approximately $1.1 million and the after-tax gain was approximately $672,000. On May 15, 1996, the Company sold, or otherwise absolutely transferred and assigned, $13.2 million aggregate principal amount of mortgage notes receivable (the "1996 Mortgage Pool") to a subsidiary of the Company and the subsidiary sold the 1996 Mortgage Pool to a REMIC Trust (the "1996REMIC Trust"). Simultaneous with the sale, the 1996 REMIC Trust issued three classes of Fixed Rate REMIC Mortgage Pass-Through Certificates. The initial principal balances of the Class A and Class B certificates were approximately $11.8 million and $1.3 million, respectively. The Class R Certificates have no initial principal balance and do not bear interest. The Class A and Class B Certificates bear interest at 8.8% and 9.8%, respectively. The 1996 REMIC Trust is comprised primarily of a pool of fixed and adjustable rate first mortgage loans secured by property sold by the Company. On May 15, 1996, the subsidiary sold the Class A and Class B Certificates issued under the Pooling Agreement to an institutional investor for aggregate proceeds of approximately $11.8 million in a private placement transaction and retained the Class B and Class R Certificates. A portion of the proceeds from the transaction was used to repay approximately $5.6 million of outstanding debt. An additional $263,000 was used to fund a cash reserve account. The balance of the proceeds, after payment of transaction expenses and fees, resulted in an increase of $5.8 million in the Company's unrestricted cash. In addition to the sources of capital available under credit facilities discussed above, the balance of the Company's unrestricted cash and cash equivalents was $3.7 million at March 31, 1996. At May 15, 1996, the balance of the Company's unrestricted cash and cash equivalents was $7.8 million. See discussion of subsequent event in Note 14 to the Consolidated Financial Statements and in the preceding paragraph. Based upon existing credit relationships, the current financial condition of the Company and its operating plan, management believes the Company has, or can obtain, adequate financial resources to satisfy its anticipated capital requirements. Uses of Capital. The Company's capital resources are used to support the Company's operations, including (i) acquiring and developing inventory, (ii) providing financing for customer purchases, (iii) meeting operating expenses and (iv) satisfying the Company's debt obligations. The Company's net inventory was $73.6 million at March 31, 1996 and $62.3 million at April 2, 1995. Management recognizes the inherent risk of carrying increased levels of inventory. Therefore, certain land parcels acquired for the development and sale on a retail basis have been identified for bulk sale. With respect to its inventory holdings, the Company requires capital to (i) improve land intended for recreational, vacation, retirement or primary homesite use by purchasers, (ii) develop timeshare property and (iii) fund its housing operation in certain locations. The Company estimates that the total cash required to complete preparation for the retail sale of the consolidated inventories owned as of March 31, 1996 is approximately $99.4 million, exclusive of the cost of any manufactured/modular homes not yet acquired or under contract for sale, which the Company is unable to determine at this time. The Company anticipates spending an estimated $49.2 million of the capital development requirements during fiscal 1997. The allocation of anticipated cash requirements to the Company's operating divisions is discussed below. Land Division The Company expects to spend $28.6 million to improve land which typically includes expenditures for road and utility construction, surveys and engineering fees, including $17.7 million to be spent during fiscal 1997. Resorts Division The Company expects to spend $68.7 million for building materials, amenities and other

infrastructure costs such as road and utility construction, surveys and engineering fees, including $29.4 million to be spent during fiscal 1997. See earlier discussion of lines-of-credit for the financing of Resorts Division property under "Sources of Capital". Communities Division The Company expects to spend $2.1 million for the purchase of factory built manufactured homes currently under contract for sale, building materials and other infrastructure costs, including road and utility construction, surveys and engineering fees. The Company attempts to pre-qualify prospective home purchasers and secures a purchase contract prior to commencing unit construction to reduce standing inventory risk. The total cash requirement of $2.1 million is expected to be spent during the first quarter of fiscal 1997. The table to follow outlines certain information with respect to the estimated funds expected to be spent to fully develop property owned as of March 31, 1996. The real estate market is cyclical in nature and highly sensitive to changes in national and regional economic conditions, including, among other factors, levels of employment and discretionary disposable income, consumer confidence, available financing and interest rates. No assurances can be given that actual costs will not exceed those reflected in the table or that historical gross margins which the Company has experienced will not decline in the future as a result of changing economic conditions and consumer demand or other factors.
Geographic Region Land Resorts Communities Total

Southwest $23,417,207 Rocky Mountains 1,180,591 West 2,233,993 Midwest 220,495 Southeast 748,348 Northeast 645,239 Mid-Atlantic 117,957 Total estimated spending 28,563,830 Net inventory at

$ ----41,037,333 27,701,017 ---

$

10,276 1,560 ----2,134,188 ---

$23,427,483 1,182,151 2,233,993 41,257,828 30,583,553 645,239 117,957

68,738,350

2,146,024

99,448,204

March 31, 1996 43,388,699 16,029,204 14,177,111 73,595,014 Total estimated cost basis of fully developed inventory $84,767,554 $16,323,135 $71,952,529 $173,043,218 The Company's net inventory summarized by division as of March 31, 1996 and April 2, 1995 is set forth below.
March 31, 1996 Geographic Region

Land

Resorts $------10,839,389 5,189,815 ------$16,029,204 $

Communities 142,790 50,800 ----13,983,521 ------$ 14,177,111

Total $15,260,981 9,350,144 5,923,972 17,132,397 21,425,575 1,982,895 2,490,025 29,025 $73,595,014

Southwest $15,118,191 Rocky Mountains 9,299,344 West 5,923,972 Midwest 6,293,008 Southeast 2,252,239 Northeast 1,982,895 Mid-Atlantic 2,490,025 Canada 29,025 Totals $43,388,699

April 2, 1995 Geographic Region

Land

Resorts $ -------

Communities $ 1,115,914 9,742,002 ---

Total $17,759,373 433,933 ---

Southwest $16,643,459 Rocky Mountains 9,308,069 MidWest ---

Midwest Southeast Northeast Mid-Atlantic Canada Totals

7,671,471 2,755,756 3,044,966 4,280,951 273,349 $43,978,021

5,240,911 --------$ 5,240,911

--11,575,971 ------$13,125,818

12,912,382 14,331,727 3,044,966 4,280,951 273,349 $62,344,750

The Company attempts to maintain inventory at a level adequate to support anticipated sales of real estate in its various operating regions. In addition to product diversification, the Company has sought broader geographic distribution of its land projects and increased its land holdings in the Western region of the United States due to anticipated strong consumer demand and expanded sales efforts. The Company's land acquisition in the West during the second quarter of fiscal 1996 consisted of approximately 6,200 acres located near Prescott, Arizona. Sales from the Arizona property commenced in the fourth quarter of fiscal 1996. Although no assurances can be given, management expects that its land holdings in the Southwest, Rocky Mountains, West, Midwest and Southeast will remain relatively level during fiscal 1997. At the same time, the Company plans to continue to reduce its land holdings in the Northeastern and certain parts of the Mid-Atlantic regions due to continued overall soft economic and real estate market conditions. The increase in inventory under the Resorts Division is attributable to the acquisition of an oceanfront property in Myrtle Beach, South Carolina for $3.5 million combined with development spending on the Myrtle Beach resort and the two resorts in Tennessee. Communities Division inventory as of March 31, 1996, consisted of land inventory of $10.5 million and $3.7 of housing unit construction-in-progress. As of April 2, 1995, the Communities Division had $9.9 million of land inventory with $3.2 million of housing unit construction-in-progress. The increase in land inventory which was attributable to infrastructure development and the purchase of acreage near Orlando, Florida for $507,000 was partially offset by sales of land inventory. The increase in housing unit construction-in-progress is associated with the Company's manufactured and modular home developments in North Carolina. The Company does not intend to acquire any additional communities related inventories and present operations will be terminated either through sales in the normal course of business or through the bulk sale of these assets. The Company offers financing of up to 90% of the purchase price of land real estate sold to all purchasers of its properties who qualify for such financing. The Company also offers financing of up to 90% of the purchase price to timeshare purchasers. During fiscal 1996 and fiscal 1995, the Company received 26% and 24%, respectively, of its consolidated sales of real estate which closed during the period in the form of Receivables. The increase in the percentage of sales financed by the Company from fiscal 1995 to fiscal 1996 is primarily attributable to an increase in timeshare sales over the same period; approximately 85% of timeshare sales has historically been internally financed by the Company. Timeshare sales accounted for 12% of consolidated sales of real estate during fiscal 1996, compared to 6% of consolidated sales during fiscal 1995. Management also expects that in fiscal 1997, the percentage of sales financed by the Company may further increase due to the recent introduction of a fixed interest rate program offered to qualified land customers. This program had an immaterial effect on the relationship between cash versus financed land sales during fiscal 1996. During fiscal 1994, the Company received 34% of its consolidated sales of real estate which closed during the period in the form of Receivables. The lower percentage of sales financed during fiscal 1995 compared to fiscal 1994 was primarily attributable to (i) an increased willingness on the part of certain local banks to extend more direct customer lot financing during fiscal 1995 and (ii) an increased amount of home sales in the revenue mix during fiscal 1995, the proceeds of which were received entirely in cash. At March 31, 1996, $27.0 million of Receivables were pledged as collateral to secure Company indebtedness, while $10.9 million of Receivables were not pledged or encumbered. At April 2, 1995, $28.2 million of Receivables were pledged as collateral to secure Company indebtedness while $13.2 million of Receivables were not pledged or encumbered. The table below provides further information on the Company's land and timeshare Receivables at March 31, 1996 and April 2, 1995. Proceeds from sales under the Company's Communities Division are received entirely in cash. (Dollars In Millions) March 31, 1996 April 2, 1995

Receivables

Land

Timeshare $ 8.6 3.1

Total $ 27.0 10.9 $ 37.9

Land $ 28.2 8.9 $ 37.1

Timeshare $ --4.3 4.3

Total $ 28.2 13.2 $ 41.4

Encumbered $ 18.4 Unencumbered 7.8 Total $26.2

$11.7

$

The reduction in encumbered land Receivables from April 2, 1995 to March 31, 1996 was primarily attributable to the repayment of receivable-backed debt and the sale of notes pursuant to the 1995 REMIC transaction. As discussed above, the Company completed a REMIC transaction on May 15, 1996. See "Sources of Capital" and Notes 8 and 14 to the Consolidated Financial Statements. The table below provides information with respect to the loan-to-value ratio of land and timeshare Receivables held by the Company at March 31, 1996 and April 2, 1995. Loan-to-value ratio is defined as unpaid balance of the loan divided by the contract purchase price. March 31, 1996 April 2, 1995 Receivables Land Timeshare Land Timeshare Loan-to-Value Ratio 63% 75% 56% 80% Because the Company sold a substantial portion of its more seasoned land Receivables in connection with the 1995 REMIC, the related loan-to-value ratio was higher at March 31, 1996 than at April 2, 1995. In cases of default by a customer on a land mortgage note, the Company may forgive the unpaid balance in exchange for title to the parcel securing such note. Real estate acquired through foreclosure or deed in lieu of foreclosure is recorded at the lower of estimated net realizable value or the balance of the loan. Related costs incurred to reacquire, carry and dispose of the property are capitalized to the extent deemed recoverable. Timeshare loans represent contracts for deed. Accordingly, no foreclosure process is required. Following a default on a timeshare note, the purchaser ceases to have any right to use the applicable unit and the timeshare interval can be resold to a new purchaser. Reserve for loan losses to period end notes receivable was 2.4% and 2.6% at March 31, 1996 and April 2, 1995, respectively. The adequacy of the Company's reserve for loan losses is determined by management and reviewed on a regular basis considering, among other factors, historical frequency of default, loss experience, present and expected economic conditions as well as the quality of Receivables. At March 31, 1996, approximately 7% or $2.8 million of the aggregate $39.2 million principal amount of loans which were held by the Company or by third parties under financings for which the Company had a recourse liability, were more than 30 days past due. Of the $39.2 million principal amount of loans, $37.9 million were held by the Company, while approximately $1.3 million were associated with programs under which the Company has a limited recourse liability. In most cases of limited recourse liability, the recourse to the Company terminates when the principal balance of the loan becomes 70% or less of the original selling price of the property underlying the loan. At April 2, 1995, approximately 5% or $2.1 million of the aggregate $43.2 million principal amount of loans which were held by the Company or by third parties under financings for which the Company had a recourse liability, were more than 30 days past due. Factors contributing to the increase in delinquency (including the economy and levels of unemployment in some geographic areas) are believed to be similar to those experienced by other lenders as evidenced by national statistics which cite an increase in the national delinquency rate for residential mortgages and consumer credit. In addition to the dollar amount of delinquencies increasing, the amount of Receivables decreased. This caused a further increase in the delinquency rate as a percent of Receivables. The reduction in Receivables was the result of the sale of notes under the 1995 REMIC. See "Sources of Capital" and Note 8 to the Consolidated Financial Statements. Results of Operations The following tables set forth selected financial data for the business units comprising the consolidated operations of the Company for the years ended March 31, 1996 and April 2, 1995. The Company was not involved in resort operations and the communities operation was not material during the year ended March 27, 1994. Accordingly, results of operations by business unit for fiscal 1994 are not presented. The following information should be read in conjunction with the Consolidated Financial Statement and related Notes.
(Dollars in Thousands) Year Ended March 31, 1996

Year Ended March 31, 1996 Land $84,859 100.0% 41,510 43,349 48.9% 51.1% Resorts $13,825 100.0% 4,550 9,275 32.9% 67.1% Communities 14,739 100.0% 13,333 1,406 90.5% 9.5% Total $113,422 100.0% 59,393 54,029 52.4% 47.6%

Sales of real estate Cost of real estate sold Gross profit Field selling, general and administrative expense (1) Field operating profit(loss) (2)

24,649

29.0%

8,591

62.1%

2,727

18.5%

35,967

31.7%

$18,700

22.1%

$

684

5.0%

$(1,321)

(9.0)%

$18,062

15.9

(Dollars in Thousands) Year Ended April 2, 1995 Land $72,621 100.0% 31,082 41,539 42.8% 57.2% Resorts $5,886 100.0% 2,225 3,661 37.8% 62.2% Communities $13,415 100.0% 11,799 1,616 88.0% 12.0% Total $91,922 45,106 46,816

Sales of real sold Cost of real estate sold Gross profit Field selling, general and administrative expense (1) Field operating profit (loss) (2)

100. 49. 50.

22,647

31.2%

3,523

59.9%

1,863

13.9%

28,033

30.

$18,892

26.0%

$

138

2.3%

$ (247)( 1.9)%

$18,783

20.

(1) General and administrative expenses attributable to corporate overhead have been excluded from the tables. Corporate general and administrative expense totaled $7.8 million and $8.5 million for fiscal 1996 and fiscal 1995, respectively. (2) The tables presented above outline selected financial data. Accordingly, interest income, interest expense, other income and income taxes have been excluded. Consolidated sales of real estate increased 23% to $113.4 million for fiscal 1996 compared to $91.9 million for fiscal 1995 and $63.4 million for fiscal 1994. The increase in sales of real estate during fiscal 1996 was partially offset by little to no gross profits on the liquidation of older land inventories, including those managed under the Communities Division. The real estate market is cyclical in nature and highly sensitive to changes in national and regional economic conditions, including, among other factors, levels of employment and discretionary disposable income, consumer confidence, available financing and interest rates. A downturn in the market for real estate could have a material adverse affect on the Company. The following discussion and tables set forth additional information on the business units comprising the consolidated operating results. The Company's leisure products business is currently operated through three divisions. The Land Division acquires large acreage tracts of real estate which are subdivided, improved and sold, typically on a retail basis. The Resorts Division acquires and develops timeshare property to be sold in vacation ownership intervals. Vacation ownership is a concept whereby fixed week intervals or undivided fee simple interests are sold in fully-furnished vacation units. The Communities Division is engaged in the development and sale of primary residential homes at selected sites together with land parcels. The Company does not intend to acquire any additional communities related inventories and present operations will be terminated either through sales in the normal course of business or through the bulk sale of these assets. Land Division The following table sets forth certain information for sales of parcels associated with the Company's Land Division for the periods indicated, before giving effect to the percentage of completion method of accounting. Accordingly, the application of multiplying the number of parcels sold by the average sales price per parcel yields aggregate sales different than that reported on the earlier table (outlining sales revenue by business unit after applying percentage of completion accounting to sales transactions). See Contracts Receivable and Revenue

Recognition under Note 1 to the Consolidated Financial Statements. Years Ended
March 31, 1996 Number of parcels sold Average sales price per parcel Average sales price per parcel excluding a large acreage bulk sale in each of the Rocky Mountains and Southeast regions in the most recent year Gross margin 2,347 $34,856 April 2, 1995 2,397 $30,969 March 27, 1994 2,489 $25,511

$33,628 51%

$30,969 57%

$25,511 52%

The table set forth below outlines the numbers of parcels sold and the average sales price per parcel for the Company's Land Division by geographic region for the fiscal periods indicated.
Years Ended March 31, 1996 Average Sales Price Per Parcel $ 37,489 $ 138,347 $ 44,524 $ 27,451 $ 36,925 $ 12,472 $ 21,951 $ 11,674 April 2, 1995 Average Sales Price Per Parcel $ 34,999 $ --$ 32,033 $ 28,740 $ 28,311 $ 19,382 $ 23,136 $ 10,160 March 27, 1994 Average Sales Price Per Parcel $ 27,140 $ --$ 34,180 $ 22,767 $ 26,537 $ 17,687 $ 20,700 $ 13,037

Geographic Region Southwest West Rocky Mountains Midwest Southeast Northeast Mid-Atlantic Canada

Number of Parcels Sold 1,117 19 297 334 223 106 236 15

Number of Parcels Sold 1,107 --339 317 289 113 215 17

Number of Parcels Sold 940 --242 437 376 115 367 12

Totals

2,347

$

34,856

2,397

$ 30,969

2,489

$ 25,511

The number of parcels sold in the Southwest, which includes Texas and New Mexico, increased only slightly during fiscal 1996 due to a shortage of ready-to-market Texas property during the first quarter. The reduction in the number of sales from Texas properties was offset by an increase in the number of sales from the Company's New Mexico project. The average sales price per parcel in the Southwest increased during fiscal 1996 due to a greater number of parcel sales from the Company's New Mexico project at a higher average selling price than during fiscal 1995. There were 139 sales from the New Mexico project at an average sales price of $44,141 during fiscal 1996 compared to 71 sales at an average sales price of $41,599 during fiscal 1995. The number of parcels sold in the West increased due to the Company's entry into the Arizona market during fiscal 1996. The Arizona property is being marketed in parcels of at least 35 acres at retail prices from $100,000 to $150,000. The number of parcels sold in the Rocky Mountains region decreased during fiscal 1996 due to fewer sales from the Company's Montana properties, partially offset by more sales from Colorado properties. The average sales price per parcel in the Rocky Mountains region increased during fiscal 1996 due to the sale of larger acreage tracts in two recently acquired projects located in Colorado. In addition, during fiscal 1996 the average sales price was affected by a single bulk sale constituting approximately 8,300 acres in Colorado for $2.5 million. The average sales price per parcel in the Rocky Mountains region, excluding the $2.5 million bulk sale, was $36,228. The number of parcels sold in the Midwest increased during fiscal 1996 from the Company's Tennessee properties, however, the average sales price per parcel decreased. During fiscal 1995, certain promotional pricing was offered to customers in connection with the introduction of two water-front properties (primarily during the first quarter of last year). However, this was more than offset by more less-expensive parcel sales

during the fourth quarter of fiscal 1996. The number of parcels sold in the Southeast decreased because of slow sales in a new project in South Carolina during the first quarter of fiscal 1996. This was partially offset by higher sales of more expensive parcels from the Company's North Carolina property. The Company continues to liquidate its land inventory in the Northeast, Canada and certain parts of the MidAtlantic region. The Company has reduced its presence in these areas in response to economic conditions and reduced consumer demand. The average gross margin for the Land Division was 51%, 57% and 52% for fiscal 1996, fiscal 1995 and fiscal 1994, respectively. The decrease in the gross margin from fiscal 1995 to fiscal 1996 is attributable to (i) the $2.5 million Colorado bulk sale which yielded a gross margin of 40%, (ii) an overall reduction in gross margins in the Rocky Mountains region from 56% for fiscal 1995 to 42% for fiscal 1996, (iii) a reduction in gross margins for certain parcels in Mid-Atlantic and Southeast regional projects which neared sell-out and (iv) continued sales from Northeast property where the Company has experienced little to no gross profits. The Company's Investment Committee, consisting of executive officers, approves all property acquisitions. In order to be approved for purchase by the Committee, properties under contract for sale are expected to achieve certain minimum economics, including a minimum gross margin. The sale of certain land inventory acquired prior to the formation of the Investment Committee and sales of inventory reacquired through foreclosure or deed in lieu of foreclosure will continue to adversely affect overall gross margins. Specifically, the Company anticipates little or no gross margin on the sale of the remaining $2.0 million of net inventory in the Northeast. In addition, the Company has experienced lower gross margins during fiscal 1996 in the Rocky Mountains region (which includes Colorado, Idaho and Montana) due to a reduction in sales from Montana property where gross margins have historically exceeded 55% which was partially offset by an increased number of larger acreage parcel sales from Colorado projects. The Company has experienced gross margins generally ranging from 40% to 50% on its Colorado projects and gross margins are generally not expected to exceed this range on the remaining Colorado inventories. The Company also owns a land property in New Mexico (classified under the Southwest region in the earlier tables). The Company expects the multi-phase project to generate an average gross margin of 40% over its sellout. No assurances can be given that the Company can maintain historical or anticipated gross margins in any geographic area of operation. Resorts Division During fiscal 1996 and fiscal 1995, sales of timeshare intervals contributed $13.8 million or 12% and $5.9 million or 6%, respectively, of the Company's total consolidated revenues from the sale of real estate. No sales were made under the Resorts Division during fiscal 1994. The following table sets forth certain information for sales of intervals associated with the Company's Resorts Division for the periods indicated, before giving effect to the percentage of completion method of accounting. Accordingly, the application of multiplying the number of intervals sold by the average sales price per interval yields aggregate sales different than that reported on the earlier table (outlining sales revenue by business unit after applying percentage of completion accounting to sales transactions). Years Ended
March 31, 1996 Number of intervals sold Average sales price per interval Gross margin 1,865 $7,325 67% April 2, 1995 952 $7,119 62% $ March 27, 1994 -------

The number of timeshare intervals sold increased to 1,865 during fiscal 1996 compared to 952 for fiscal 1995. During fiscal 1995, all interval sales were generated from the Company's first resort in Gatlinburg, Tennessee. During fiscal 1996, 1,374 intervals were sold from the Gatlinburg resort, 484 intervals were sold from the Company's second resort in neighboring Pigeon Forge, Tennessee and seven intervals were sold from the

Company's resort in Myrtle Beach, South Carolina. The seven sales from the Myrtle Beach resort totaling approximately $68,000 have been deferred under percentage of completion accounting. A portion of the sales revenues from Gatlinburg and Pigeon Forge have also been deferred. Gross margins on interval sales increased from 62% for fiscal 1995 to 67% for fiscal 1996. The increase in gross margins from the Company's Gatlinburg, Tennessee resort was attributable to sales at higher prices which yielded higher gross margins, partially offset by additional development costs incurred on unit construction and certain amenities of the project. In the prior year, certain introductory pricing had been offered to prospective customers. In addition, average gross margins were favorably impacted by Pigeon Forge sales which commenced in the second quarter of fiscal 1996. Communities Division During fiscal 1996, the Company's Communities Division contributed $14.7 million in sales revenue, or approximately 13% of total consolidated revenues from sales of real estate. During fiscal 1995, the Communities Division generated $13.4 million in sales revenue, or approximately 15% of total consolidated revenues from the sale of real estate. During fiscal 1994, the Communities Division generated $3.1 million in sales revenue, or approximately 5% of total consolidated revenues from the sale of real estate. The following table sets forth certain information for sales associated with the Company's Communities Division for the periods indicated.
Years Ended March 31, 1996 Number of homes/lots sold Average sales price Gross margin 206 $71,546 10% April 2, 1995 133 $100,866 12% March 27, 1994 44 $70,044 12%

The $14.7 million in fiscal 1996 sales was comprised of 114 manufactured homes with an average sales price of $75,232, 20 site-built homes with an average sales price of $198,592, 71 sales of lots-only at an average sales price of $23,279 and one larger acreage Southwestern bulk lot sale for $530,320. The $13.4 million in fiscal 1995 sales was comprised of 110 manufactured homes with an average sales price of $77,243 and 23 site-built homes with an average sales price of $213,640. Substantially all of the $3.1 million in fiscal 1994 sales was comprised of manufactured homes. The decrease in the average gross margin from 12% for fiscal 1994 and fiscal 1995 to 10% for fiscal 1996 reflects a change in the product mix to include a greater number of manufactured home sales from a project located in the Southeast. This Southeastern project yielded lower gross margins than the Company's manufactured home project in the Rocky Mountains region which is now sold out but was at the height of marketing efforts during fiscal 1995. Lower gross margins on the Southeastern home project were partially offset by a more dominant mix of lot-only sales, most heavily affected by one larger acreage bulk sale. The sale of land inventory being marketed under the Communities Division was acquired prior to the formation of the Investment Committee. Sales of these inventories are expected to continue to adversely affect overall gross margins. Furthermore, management does not intend to expand its Communities related activities beyond the projects currently being marketed. The tables set forth below outline sales by geographic region and division for the years indicated.
Year Ended March 31, 1996 Geographic Region Southwest West Rocky Mountains Midwest

Land $43,457,483 2,628,600 13,223,744 9,981,574

Resorts $ 2,734,570 ----13,825,162 $

Communities

Total 46,192,053 2,628,600 13,633,561 23,806,736

% 40.7% 2.3% 12.0% 21.0%

409,817 ---

Southeast Northeast Mid-Atlantic Canada Totals

8,569,869 1,321,982 5,500,146 175,114 $84,858,512

---------

11,594,167 -------

20,164,036 1,321,982 5,500,146 175,114 $113,422,228

17.8% 1.2% 4.8% .2% 100.0%

$13,825,162 $14,738,554

Year Ended April 2, 1995 Geographic Region

Land

Resorts ----5,886,427 --------$5,886,427 $

Communities $ 2,012,112 3,521,637 --7,881,426 ------$13,415,175

Total $ 40,612,187 14,380,917 14,183,802 15,727,769 2,190,110 4,654,483 172,722

% 44.2% 15.6% 15.4% 17.1% 2.4% 5.1% .2%

Southwest $38,600,075 Rocky Mountains 10,859,280 Midwest 8,297,375 Southeast 7,846,343 Northeast 2,190,110 Mid-Atlantic 4,654,483 Canada 172,722 Totals $72,620,388

$ 91,921,990 100.0%

Year Ended March 27, 1994 Geographic Region Land Southwest $23,855,291 Rocky Mountains 362,356 Midwest 10,520,147 Southeast 8,196,901 Northeast 2,034,000 Mid-Atlantic 7,474,934 Canada 156,438 Totals $60,307,155 Resorts $ --------------$ --Communities $ 388,890 362,356 125,716 1,780,995 --424,000 ----$3,081,957 Total $ 24,244,181 8,431,800 10,645,863 9,977,896 2,034,000 7,898,934 156,438 % 38.2% 13.3% 16.8% 15.7% 3.2% 12.5% .3%

$ 63,389,112 100.0%

Interest income was $7.4 million for fiscal 1996 compared to $7.3 million and $8.0 million for fiscal 1995 and fiscal 1994, respectively. The Company's interest income is earned from its mortgage note receivables, securities retained pursuant to REMIC financings and cash and cash equivalents. Interest income for each year was also affected by the sale of receivables in REMIC transactions. The table set forth below outlines interest income earned from each category of asset for the periods indicated.
Years Ended March 31, 1996 April 2, 1995 March 27, 1994

Interest income and other: Receivables held and servicing fees from whole-loan sale Securities retained in connection with REMIC financings including REMIC servicing fee Gain (loss) on REMIC transaction Cash and cash equivalents Totals

$4,232,887

$4,561,825

$4,460,919

1,602,831 1,119,572 432,805 $7,388,095

2,556,274 (411,000) 556,660 $7,263,759

3,017,086 238,000 235,518 $7,951,523

As discussed under "Sources of Capital", the Company completed a REMIC transaction in July, 1995. The $68.1 million of loans comprising the Mortgage Pool were previously owned by the REMIC trust established by the Company in 1992 ($46.8 million) or held by the Company or pledged to an institutional lender ($21.3 million). Because of more favorable terms offered under the 1995 REMIC, the Company retired the securities issued pursuant to the 1992 REMIC and included substantially all of the Receivables in the 1995 REMIC transaction. The Company recorded a pre-tax gain of $1.1 million on the 1995 REMIC transaction. The 1995 REMIC gain was partially offset by reduced interest income due to lower (i) average securities held for the period (due to the retirement of securities issued pursuant to the Company's 1992 REMIC), (ii) average Receivables held for the period and (iii) average cash and cash equivalents. The

Company recorded a loss of $411,300 in connection with the 1994 REMIC transaction completed in May, 1994. See Notes 8 and 14 to the Consolidated Financial Statements. S,G & A expense totaled $43.7 million, $36.5 million and $26.4 million for fiscal 1996, fiscal 1995 and fiscal 1994, respectively. A significant percentage of S,G&A expenses is variable relative to sales and profitability levels, and therefore, increases with growth in sales of real estate. As a percentage of sales of real estate, S,G & A expenses decreased from 42% for fiscal 1994 to 40% for fiscal 1995 to 39% for fiscal 1996. The decrease as a percent of sales was largely the result of lowering certain corporate general and administrative expenses and Land Division S,G&A expenses, offset by an increase in S,G&A expenses for the Communities Division and Resorts Division. The Company's Resort Division began generating sales during fiscal 1995 from its first resort in Gatlinburg, Tennessee. Two additional resorts were added in fiscal 1996. Because of the start-up costs associated with the new resorts, S,G&A is disproportionately high as a percent of sales. Interest expense totaled $6.3 million, $6.7 million and $6.6 million for fiscal 1996, fiscal 1995 and fiscal 1994, respectively. As discussed under "Uses of Capital", the Company paid cash for a greater percentage of its property acquisition and development during fiscal 1996. Therefore, while the Company's inventory increased from $38.8 million at March 27, 1994 to $62.3 million at April 2, 1995 to $73.6 million as of March 31, 1996, the Company's total indebtedness did not increase at a corresponding rate. Total indebtedness of the Company was $71.8 million, $74.7 million and $72.0 million at March 31, 1996, April 2, 1995 and March 27, 1994, respectively. In addition to maintaining relatively level average outstanding indebtedness from fiscal 1994 through fiscal 1996, the Company capitalized to inventory approximately $1.5 million more in interest expense during fiscal 1996 than in fiscal 1995. Interest capitalization was partially offset by a higher average cost of borrowing during fiscal 1996. The increase in capitalized interest is the direct result of the Company acquiring certain inventory which requires significant development over longer sellout periods. The increase in the cost of borrowings was the direct result of an increase in the prime lending rate during fiscal 1996 (approximately 50% of the Company's indebtedness provides for variable interest rates tied to the prime lending rate). The Company recorded provisions for loan losses (or related advanced real estate taxes for delinquent customers) totaling $612,000, $792,000 and $795,000 during fiscal 1996, fiscal 1995 and fiscal 1994, respectively. See related discussion of notes receivable under "Uses of Capital". Income from consolidated operations was $10.8 million, $10.0 million and $6.8 million for fiscal 1996, fiscal 1995 and fiscal 1994, respectively. The improvement from fiscal 1995 to fiscal 1996 was primarily the result of increased sales of real estate and higher net interest spread (representing the difference between interest income and interest expense) partially offset by a lower average consolidated gross margin. Gains and losses from sources other than normal operating activities of the Company are reported separately as other income (expense). Other income for fiscal 1996, fiscal 1995 and fiscal 1994 was not material to the Company's results of operations. The Company recorded a tax provision of 41% of pre-tax income for fiscal 1996 and fiscal 1995. The Company recorded a tax provision of 38% for fiscal 1994. The Company has fully utilized its operating loss carryforwards associated with certain state income taxes which resulted in a higher effective tax rate for fiscal 1996 and fiscal 1995. Net income was $6.5 million, $6.1 million and $4.9 million for fiscal 1996, fiscal 1995 and fiscal 1994, respectively. The increase in consolidated sales of real estate over the three year period was partially offset by a lower consolidated average gross margin.

Report of Management We have prepared the consolidated financial statements and other sections of this annual report and are responsible for all information and representations contained therein. Such consolidated financial information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances, based on our estimates and judgments. The Company maintains accounting and internal control systems which were designed to provide reasonable

Report of Management We have prepared the consolidated financial statements and other sections of this annual report and are responsible for all information and representations contained therein. Such consolidated financial information was prepared in accordance with generally accepted accounting principles appropriate in the circumstances, based on our estimates and judgments. The Company maintains accounting and internal control systems which were designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use and to produce records adequate for preparation of financial information. The systems are established and monitored in accordance with written policies which set forth management's responsibility for proper internal accounting controls. The consolidated financial statements have been audited by Ernst & Young LLP, Independent Certified Public Accountants, in accordance with generally accepted auditing standards. In connection with their audit, Ernst & Young LLP has developed an understanding of our accounting and financial controls and conducted such tests and related procedures as they consider necessary to render their opinion on our consolidated financial statements. The financial data contained in this annual report was subject to review by the Audit Committee of the Board of Directors. The Audit Committee, composed of three directors who are not employees, meets periodically during the year with Ernst & Young LLP and with management to review accounting, auditing, internal control and financial reporting matters. We believe that our policies and procedures provide reasonable assurance that operations are conducted in conformity with applicable laws and with our commitment to a high standard of business conduct. George F. Donovan President and Chief Executive Officer Alan L. Murray Treasurer and Chief Financial Officer Mary Jo Wiegand Controller and Vice President April 26, 1996

Report of Independent Certified Public Accountants The Board of Directors and Shareholders Bluegreen Corporation We have audited the accompanying consolidated balance sheets of Bluegreen Corporation (formerly known as Patten Corporation) as of March 31, 1996 and April 2, 1995, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended March 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated

Report of Independent Certified Public Accountants The Board of Directors and Shareholders Bluegreen Corporation We have audited the accompanying consolidated balance sheets of Bluegreen Corporation (formerly known as Patten Corporation) as of March 31, 1996 and April 2, 1995, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended March 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bluegreen Corporation at March 31, 1996 and April 2, 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 1996, in conformity with generally accepted accounting principles. Ernst & Young LLP West Palm Beach, Florida April 26,1996, except for Note 14 as to which the date is May 15, 1996

BLUEGREEN CORPORATION Consolidated Balance Sheets

Assets Cash and cash equivalents (including restricted cash of approximately $7.7 million and $5.2 million at March 31, 1996 and April 2, 1995, respectively)........ Contracts receivable, net................................. Notes receivable, net..................................... Investment in securities.................................. Inventory, net............................................ Property and equipment, net............................... Debt issuance costs....................................... Other assets.............................................. Total assets........................................... Liabilities and Shareholders' Equity Accounts payable.......................................... Accrued liabilities and other............................. Lines-of-credit and notes payable......................... Deferred income taxes..................................... Receivable-backed notes payable........................... 8.25% convertible subordinated debentures................. Total liabilities...................................... Commitments and contingencies............................. Shareholders' Equity Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued................................ Common stock, $.01 par value, 90,000,000 shares authorized; 20,533,410 and 19,470,734 shares

March 31, 1996

April 2, 1995

$

11,389,141 12,451,207 37,013,802 9,699,435 73,595,014 5,239,100 1,288,933 4,287,393

$

7,588,475 13,051,254 40,311,191 18,097,917 62,344,750 4,801,824 1,739,555 4,286,401

$154,963,033

$152,222,359

$

2,557,797 9,889,063 17,287,767 6,067,814 19,723,466 34,739,000 90,264,907 ---

$

3,134,753 11,292,846 20,431,346 5,069,719 19,514,718 34,739,000 94,182,382 ---

---

---

BLUEGREEN CORPORATION Consolidated Balance Sheets

Assets Cash and cash equivalents (including restricted cash of approximately $7.7 million and $5.2 million at March 31, 1996 and April 2, 1995, respectively)........ Contracts receivable, net................................. Notes receivable, net..................................... Investment in securities.................................. Inventory, net............................................ Property and equipment, net............................... Debt issuance costs....................................... Other assets.............................................. Total assets........................................... Liabilities and Shareholders' Equity Accounts payable.......................................... Accrued liabilities and other............................. Lines-of-credit and notes payable......................... Deferred income taxes..................................... Receivable-backed notes payable........................... 8.25% convertible subordinated debentures................. Total liabilities...................................... Commitments and contingencies............................. Shareholders' Equity Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued................................ Common stock, $.01 par value, 90,000,000 shares authorized; 20,533,410 and 19,470,734 shares outstanding at March 31, 1996 and April 2, 1995, respectively........................................... Capital-in-excess of par value............................ Retained earnings (deficit)...............................

March 31, 1996

April 2, 1995

$

11,389,141 12,451,207 37,013,802 9,699,435 73,595,014 5,239,100 1,288,933 4,287,393

$

7,588,475 13,051,254 40,311,191 18,097,917 62,344,750 4,801,824 1,739,555 4,286,401

$154,963,033

$152,222,359

$

2,557,797 9,889,063 17,287,767 6,067,814 19,723,466 34,739,000 90,264,907 ---

$

3,134,753 11,292,846 20,431,346 5,069,719 19,514,718 34,739,000 94,182,382 ---

---

---

205,334 71,296,158 (6,803,366)

194,707 66,839,599 (8,994,329)

Total shareholders' equity................................

64,698,126

58,039,977

Total liabilities and shareholders' equity.............

$154,963,033

$152,222,359

See accompanying notes to consolidated financial statements.

BLUEGREEN CORPORATION Consolidated Statements of Income Years Ended March 31, 1996 Revenues: Sales of real estate........................... Interest income and other...................... $113,422,228 7,388,095 120,810,323 Cost and expenses: Cost of real estate sold....................... Selling, general and administrative expense.... Interest expense............................... Provision for losses........................... April 2, 1995 $91,921,990 7,263,759 99,185,749 March 27 1994 $63,389, 7,951, 71,340,

59,393,392 43,734,724 6,276,187 611,979 110,016,282

45,105,841 36,520,817 6,737,687 792,000 89,156,345

30,773, 26,443, 6,551, 795, 64,562,

BLUEGREEN CORPORATION Consolidated Statements of Income Years Ended March 31, 1996 Revenues: Sales of real estate........................... Interest income and other...................... $113,422,228 7,388,095 120,810,323 Cost and expenses: Cost of real estate sold....................... Selling, general and administrative expense.... Interest expense............................... Provision for losses........................... April 2, 1995 $91,921,990 7,263,759 99,185,749 March 27 1994 $63,389, 7,951, 71,340,

59,393,392 43,734,724 6,276,187 611,979 110,016,282

45,105,841 36,520,817 6,737,687 792,000 89,156,345 10,029,404 372,443 10,401,847 4,264,758

30,773, 26,443, 6,551, 795, 64,562, 6,777, 1,174, 7,952, 3,021,

Income from operations............................ Other income...................................... Income before income taxes........................ Provision for income taxes........................

10,794,041 121,884 10,915,925 4,449,069

Net income........................................

$ 6,466,856

$6,137,089

$4,930,

Income per common share: Net income........................................

$

.30

$

.29

$

.

Weighted average number of common and common equivalent shares .......................

21,775,291

21,476,638

21,496,

See accompanying notes to consolidated financial statements.

BLUEGREEN CORPORATION Consolidated Statements of Shareholders' Equity Years Ended March 31, 1996, April 2, 1995 and March 27, 1994

Common Shares Issued Balance at March 28, 1993..... 4% stock dividend............. Cash payment for dividends in lieu of fractional shares.. Shares issued to employees upon exercise of qualified stock options.................... Net income.................... 17,083,001 683,005

Common Stock $.01 Par Value $ 170,830 6,830

Capital in Excess of Par Value

Retained Earnings (Deficit)

Total $46,868,019 ---

$59,172,395 $(12,475,206) 1,871,434 ( 1,878,274)

---

---

---

(

976)

(

976)

29,968 -------------17,795,974 711,076 925,751

300 -----------177,960 7,111 9,257

55,796 ------------61,099,625 2,570,540 3,115,152

--4,930,520 ---------( 9,423,926) ( 2,577,651) ( 3,124,409)

56,096 4,930,520 ----------51,853,659 -----

Balance at March 27, 1994..... 4% stock dividend............. 5% stock dividend............. Cash payment for dividends in lieu of fractional shares..

---

---

---

(

5,432)

(

5,432)

BLUEGREEN CORPORATION Consolidated Statements of Shareholders' Equity Years Ended March 31, 1996, April 2, 1995 and March 27, 1994

Common Shares Issued Balance at March 28, 1993..... 4% stock dividend............. Cash payment for dividends in lieu of fractional shares.. Shares issued to employees upon exercise of qualified stock options.................... Net income.................... 17,083,001 683,005

Common Stock $.01 Par Value $ 170,830 6,830

Capital in Excess of Par Value

Retained Earnings (Deficit)

Total $46,868,019 ---

$59,172,395 $(12,475,206) 1,871,434 ( 1,878,274)

---

---

---

(

976)

(

976)

29,968 -------------17,795,974 711,076 925,751

300 -----------177,960 7,111 9,257

55,796 ------------61,099,625 2,570,540 3,115,152

--4,930,520 ---------( 9,423,926) ( 2,577,651) ( 3,124,409)

56,096 4,930,520 ----------51,853,659 -----

Balance at March 27, 1994..... 4% stock dividend............. 5% stock dividend............. Cash payment for dividends in lieu of fractional shares.. Shares issued to employees upon exercise of qualified stock options.................... Net income.................... Balance at April 2, 1995...... 5% stock dividend............. Cash payment for dividends in lieu of fractional shares.. Shares issued to employees upon exercise of qualified stock options Net income....................

---

---

---

(

5,432)

(

5,432)

37,933 -----------19,470,734 976,418

379 --------194,707 9,764

54,282 -----------66,839,599 4,262,236

--6,137,089 ---------( 8,994,329) ( 4,272,000)

54,661 6,137,089 ---------58,039,977 ---

---

---

---

(

3,893)

(

3,893)

86,258 -------------20,533,410 ============

863 -----------$ 205,334 ==========

194,323 ------------$71,296,158 ===========

--6,466,856 ---------$(6,803,366) ============

195,186 6,466,856 ----------$64,698,126 ===========

Balance at March 31, 1996.....

See accompanying notes to consolidated financial statements.

BLUEGREEN CORPORATION Consolidated Statements of Cash Flows Years Ended ---------------------------------------March 31, 1996 Operating activities: Cash received from customers including net cash collected as servicer of notes receivable to be remitted to investors............................ Interest received....................................... Cash paid for land acquisitions and real estate April 2, 1995

$

94,939,565 6,220,829

$

78,667,484 5,409,259

BLUEGREEN CORPORATION Consolidated Statements of Cash Flows Years Ended ---------------------------------------March 31, 1996 Operating activities: Cash received from customers including net cash collected as servicer of notes receivable to be remitted to investors............................ Interest received....................................... Cash paid for land acquisitions and real estate development............................................ Cash paid to suppliers, employees and sales representatives........................................ Interest paid, net of capitalized interest.............. Income taxes paid, net of refunds ...................... Proceeds from borrowings collateralized by notes receivable............................................. Payments on borrowings collateralized by notes receivable............................................. Net proceeds from REMIC transactions.................... Cash received from investment in securities............ Net cash provided by operating activities.................. April 2, 1995

$

94,939,565 6,220,829 ( 61,236,096) ( 44,567,809) ( 5,918,887) ( 3,316,235) 19,438,016 ( 19,229,268) 28,688,041 275,816 ------------15,293,972 -------------

$

78,667,484 5,409,259 ( 48,374,125) ( 33,337,031) ( 6,287,133) ( 3,097,292) 8,587,550 ( 14,845,131) 22,706,101 -------------9,429,682 ------------

Investing activities: Net cash flow from purchases and sales of property and equipment................................. Additions to other long-term assets..................... Net cash flow used by investing activities.................

( 1,106,077) ( 410,814) ------------( 1,516,891) -------------

( (

1,316,255) 259,109) -----------( 1,575,364) ------------

Financing activities: Borrowings under line-of-credit facilities.............. Payments under line-of-credit facilities................ Payments under repurchase agreements.................... Borrowings under short-term secured debt facility....... Payments under short-term secured debt facility......... Payments on other long-term debt........................ Proceeds from exercise of employee stock options........ Payment for stock dividends in lieu of fractional shares. Net cash flow used by financing activities.................

5,795,604 4,053,615) ------( 11,909,697) 195,186 ( ( 3,893)

3,916,436 --------( 13,539,555) 54,661 ( 5,432) ( 9,573,890) -----------( 1,719,572) 9,308,047 -----------7,588,475 ( 5,164,650) -------------$ 2,423,825 ==============

( 9,976,415) ------------3,800,666 7,588,475 ------------11,389,141 ( 7,683,901) --------------$ 3,705,240 ===============

Net increase (decrease) in cash and cash equivalents....... Cash and cash equivalents at beginning of year............. Cash and cash equivalents at end of year................... Restricted cash and cash equivalents end of year........... Unrestricted cash and cash equivalents at end of year......

See accompanying notes to consolidated financial statements.

BLUEGREEN CORPORATION Consolidated Statements of Cash Flows (continued) Years Ended ----------------------------------------March 31, 1996 Reconciliation of net income to net cash flow provided by operating activities: Net income........................................... April 2, 1995

$

6,466,856

$

6,137,089

BLUEGREEN CORPORATION Consolidated Statements of Cash Flows (continued) Years Ended ----------------------------------------March 31, 1996 Reconciliation of net income to net cash flow provided by operating activities: Net income........................................... Adjustments to reconcile net income to net cash flow provided by operating activities: Depreciation and amortization.................... (Gain) loss on REMIC transactions................ (Gain) loss on sale of property and equipment.... Provision for losses............................. Interest accretion on investment in securities... Proceeds from borrowings collateralized by notes receivable net of principal repayments...................................... Provision for deferred income taxes.............. (Increase) decrease in operating assets: Contracts receivable............................... Investment in securities........................... Inventory.......................................... Other assets....................................... Notes receivable................................... Increase (decrease) in operating liabilities: Accounts payable, accrued liabilities and other.... Net cash flow provided by operating activities........... April 2, 1995

$

6,466,856

$

6,137,089

1,636,933 ( 1,119,572) 48,561 611,979 ( 1,170,367)

1,301,125 411,000 ( 54,519) 792,000 ( 2,222,724)

208,748 998,095 600,047 9,568,849 ( 2,003,195) 274,414 1,153,363 ( 1,980,739) -----------$ 15,293,972 ============

( 6,257,581) 1,326,791 ( 3,122,652) 13,268,891 ( 4,452,058) 1,264,688 ( 1,404,790) 2,442,422 -------------$ 9,429,682 ==============

Supplemental schedule of non-cash operating and financing activities Inventory acquired through financing............... $ 6,595,450 ============ $ 17,680,680 =============

Inventory acquired through foreclosure or deedback in lieu of foreclosure...................

$ 1,609,697 ============

$ 1,139,993 =============

Investment in securities retained in connection with REMIC transactions...............

$ 2,044,029 ============

$ 2,674,370 =============

See accompanying notes to consolidated financial statements.

BLUEGREEN CORPORATION Notes to Consolidated Financial Statements 1. Significant Accounting Policies Organization Bluegreen Corporation (the "Company") is a national leisure product company operating in twenty-one states. The Company's primary business is (i) the acquisition, development and sale of recreational and residential land and (ii) the acquisition and development of timeshare properties which are sold in weekly intervals. The Company offers financing to its land and timeshare purchasers. Land and timeshare products are typically located in scenic areas or popular vacation destinations throughout the United States. The Company's products are primarily sold to middle-class individuals with ages ranging from forty to fifty-five. The Company changed its name, effective March 8, 1996, from Patten Corporation.

BLUEGREEN CORPORATION Notes to Consolidated Financial Statements 1. Significant Accounting Policies Organization Bluegreen Corporation (the "Company") is a national leisure product company operating in twenty-one states. The Company's primary business is (i) the acquisition, development and sale of recreational and residential land and (ii) the acquisition and development of timeshare properties which are sold in weekly intervals. The Company offers financing to its land and timeshare purchasers. Land and timeshare products are typically located in scenic areas or popular vacation destinations throughout the United States. The Company's products are primarily sold to middle-class individuals with ages ranging from forty to fifty-five. The Company changed its name, effective March 8, 1996, from Patten Corporation. Principles of Consolidation The financial statements include the accounts of Bluegreen Corporation and all wholly owned subsidiaries. All significant intercompany transactions are eliminated. Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents The Company invests cash in excess of immediate operating requirements in cash equivalent short-term time deposits and money market instruments generally with original maturities of three months or less. The Company maintains cash and cash equivalents with various financial institutions. These financial institutions are located throughout the country and Company policy is designed to limit exposure to any one institution. However, a significant portion of the Company's unrestricted cash is maintained with a single bank and, accordingly, the Company is subject to credit risk. Periodic evaluations of the relative credit standing of financial institutions maintaining Company deposits are performed to evaluate and mitigate, if necessary, credit risk. Restricted cash is primarily associated with funds restricted under receivable-backed note agreements and customer deposits on real estate maintained in escrow accounts. Investment in Securities The Company's investment in securities at March 31, 1996, consists of the subordinated certificates which were retained by the Company in connection with its 1994 and 1995 REMIC transactions. At April 2, 1995, investment in securities consists of the subordinated certificates which were retained by the Company in connection with its 1992 and 1994 REMIC transactions. The certificates are being carried at their initial allocated basis plus income accreted using the estimated effective yield rates. The income accreted on the investment in securities is reported in interest income. The carrying value of investment in securities approximates fair value. Inventory Real estate acquired for sale is carried at the lower of cost, including costs of improvements and amenities incurred subsequent to acquisition, or estimated net realizable value. Real estate reacquired through foreclosure or deedback in lieu of foreclosure is recorded at the lower of estimated net realizable value or the carrying value of the loan. Costs incurred to reacquire, carry and dispose of the property are capitalized to the extent deemed recoverable.

Property and Equipment Property and equipment are stated at cost. Depreciation is computed on the straight-line method based on the estimated useful lives of the related assets. Contracts Receivable and Revenue Recognition The Company's leisure products business is currently operated through three divisions. The Land Division acquires large acreage tracts of real estate which are subdivided, improved and sold, typically on a retail basis. The Resorts Division acquires and develops timeshare property to be sold in vacation ownership intervals. Vacation ownership is a concept whereby fixed week intervals or undivided fee simple interests are sold in fullyfurnished vacation units. The Communities Division is engaged in the development and sale of primary residential homes at selected sites together with land parcels. Revenue recognition for each of the Company's operating divisions is discussed below. The Company recognizes revenue on retail land sales when a minimum of 10% of the sales price has been received in cash, collectibility of the receivable representing the remainder of the sales price is reasonably assured and the Company has completed substantially all of its obligations with respect to any development related to the real estate sold. Other land sales include large-acreage bulk transactions as well as land sales to investors and developers. The Company recognizes revenue on such other land sales when the buyer's initial and continuing investment are adequate to demonstrate a commitment to pay for the property, which requires a minimum of 20% of the sales price to be received in cash, the collectibility of the receivable representing the remainder of the sales price is reasonably assured and the Company has completed substantially all of its obligations with respect to any development related to the real estate sold. With respect to its Resorts Division sales, the Company recognizes revenue when a minimum of 10% of the sales price has been received in cash, collectibility of the receivable representing the remainder of the sales price is reasonably assured and the Company has completed substantially all of its obligations with respect to any development related to the unit sold. The excess of sales price on land and resorts sales over legally binding deposits received is recorded as contracts receivable. Contracts receivable are converted into cash and/or notes receivable, generally within sixty days. Contracts that cancel during the recission period have been excluded from sales of real estate. In cases where all development has not been completed, the Company recognizes revenue on land and timeshare sales in accordance with the percentage of completion method of accounting. All related costs are recorded prior to, or at the time, a sale is recorded. The Company recognizes revenue on Communities Division sales when the unit is complete and title is transferred to the buyer. Provision for Losses on Notes Receivable Provisions for losses on notes receivable are charged to operations when it is determined that the investment in such assets is impaired in management's judgment. The adequacy of the Company's reserve for loan losses is determined by management and reviewed on a regular basis considering, among other factors, historical frequency of default, loss experience, present and expected economic conditions as well as the quality of Receivables. Advertising Expense Advertising costs are generally expensed as incurred. The Company incurred advertising costs of $10.0 million, $7.1 million and $4.5 million for the years ended March 31, 1996, April 2, 1995 and March 27, 1994, respectively. Income Taxes Income taxes have been provided using the liability method in accordance with FASB Statement No. 109,

"Accounting for Income Taxes". Stock Based Compensation The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for stock option grants in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees", and, accordingly, recognizes no compensation expense for the stock option grants. Income Per Common Share Income per common share is determined by dividing net income by the weighted average number of common shares outstanding after giving effect to all dilutive common equivalent shares outstanding during each period. The common equivalent shares reflect the dilutive impact of shares reserved for outstanding stock options using the treasury stock method. The weighted average number of common and common equivalent shares used to calculate primary and fully diluted net income per common share has been adjusted in the Consolidated Statements of Income to give effect to stock dividends, including retroactive restatement of the net income per common share amounts for the fiscal years prior to 1996. Impact of Recently Issued Accounting Standards In March, 1995, the FASB issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Statement No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The Company will adopt Statement No. 121 in the first quarter of fiscal 1997 and, based on current circumstances, management does not believe the effect of the adoption will be material to the Company's financial position or results of operations. Reclassifications The Company adopted Statement of Financial Accounting Standard No. 114, "Accounting by Creditors for Impairment of a Loan" (FAS No. 114) on April 3, 1995. FAS No. 114 amends the guidance for insubstance foreclosures contained in Financial Accounting Release No. 28. Under FAS No. 114, a collateral dependent loan shall be reported as real estate only if the lender has taken possession of the inventory. Accordingly, insubstance foreclosure loans shall not be reported as inventory and should remain in notes receivable. Therefore, a reclassification of $1.3 million has been made from inventory to notes receivable in the April 2, 1995 Consolidated Balance Sheet to conform to the current year presentation. At March 31, 1996, notes receivable includes $1.4 million of loans for which legal action has commenced. Fiscal Year End The By-Laws of the Company provide for its fiscal year to end on the Sunday closest to the end of March. Accordingly, fiscal 1995, which began on March 28, 1994 and ended on April 2, 1995, resulted in a fifty-three week reporting period for the Company's Consolidated Statement of Income and Consolidated Statement of Cash Flows. Each quarterly period for fiscal 1995 included thirteen weeks, with the exception of the period ended January 1, 1995, which included fourteen weeks. Fiscal 1996 and 1994 represented fifty-two week reporting periods. 2. Notes Receivable The weighted average interest rate on notes receivable was 12.4% at each March 31, 1996 and April 2, 1995. The table below sets forth additional information relating to the Company's notes receivable.
March 31, 1996 Notes receivable secured by land ................. $ 26,243,222 Notes receivable secured by timeshare intervals... 11,667,049 Notes receivable, gross .......................... 37,910,271 Reserve for loan losses........................... ( 896,469) Notes receivable, net............................. $ 37,013,802 April 2, 1995 $37,089,481 4,311,362 41,400,843 1,089,652)

(

$40,311,191

Approximately 55% of the Company's notes receivable secured by land bear interest at variable rates, while approximately 45% bear interest at fixed rates. The average interest rate charged on loans secured by land was 11.6% at March 31, 1996. All of the Company's timeshare loans bear interest at fixed rates. The average interest rate charged on loans secured by timeshare intervals was 14.2% at March 31, 1996. At March 31, 1996, approximately 7% or $2.8 million of the aggregate $39.2 million principal amount of loans which were held by the Company, or by third parties under financings for which the Company has a recourse liability, were more than 30 days past due. Of the $39.2 million principal amount of loans, $37.9 million were held by the Company, while approximately $1.3 million were associated with programs under which the Company has a limited recourse liability. In most cases of limited recourse liability, the recourse to the Company terminates when the principal balance of the loan becomes 70% or less of the original selling price of the property underlying the loan. At April 2, 1995, approximately 5% or $2.1 million of the aggregate $43.2 million principal amount of loans which were held by the Company, or by third parties under financings for which the Company has a recourse liability, were more than 30 days past due. The table below sets forth activity in the reserve for estimated loan losses.
Reserve for loan losses, March 27, 1994................ Provision for losses................................... Charge-offs............................................ Reserve for loan losses, April 2, 1995................. Provision for losses................................... Charge-offs............................................ Reserve for loan losses, March 31, 1996................ 969,780 792,000 (672,128) --------1,089,652 344,718 (537,901) --------$ 896,469 ==========

Installments due on notes receivable held by the Company during each of the five fiscal years subsequent to 1996, and thereafter, are set forth below.
1997 1998 1999 2000 2001 Thereafter Total .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... $4,968,474 3,984,973 4,196,590 4,566,938 4,866,019 15,327,277 ------------$ 37,910,271 =============

3. Investment in Securities The Company's investment in securities at March 31, 1996, includes $3.4 million and $6.3 million of securities retained by the Company in connection with the 1994 and 1995 REMIC private placement transactions, respectively. See Note 8. These securities consist of certain subordinated traunches, on which interest is accreted at effective yield rates which currently range from 7.5% to 12.4%. Such effective yield rates reflect interest at pass-through rates, the arbitrage resulting from rate differentials between the notes in the REMIC pool and passthrough rates, along with the effect of estimated prepayments and foreclosure losses. At April 2, 1995, the Company's investment in securities includes $15.1 million and $3.0 million of securities retained by the Company in connection with the 1992 and 1994 REMIC private placement transactions, respectively. 4. Inventory and Property Under Contract The Company's net inventory holdings as of March 31, 1996 and April 2, 1995, summarized by division, are set forth below. Interest capitalized during fiscal 1996 and fiscal 1995 totaled $1.9 million and $427,000, respectively. March 31, 1996

Geographic Region Southwest............ Rocky Mountains ..... West ................ Midwest.............. Southeast............ Northeast............ Mid-Atlantic......... Canada............... Totals...............

Land

Resorts(1)

Communities(2) $ 142,790 50,800 ----13,983,521 -------

Total

$15,118,191 $ --9,299,344 --5,923,972 --6,293,008 10,839,389 2,252,239 5,189,815 1,982,895 --2,490,025 --29,025 --$43,388,699 $16,029,204

$15,260,981 9,350,144 5,923,972 17,132,397 21,425,575 1,982,895 2,490,025 29,025 $73,595,014

$14,177,111

April 2, 1995
Geographic Region Southwest............ Rocky Mountains ..... West ................ Midwest.............. Southeast............ Northeast............ Mid-Atlantic......... Canada............... Land $16,643,459 9,308,069 --7,671,471 2,755,756 3,044,966 4,280,951 273,349 Resorts(1) Communities(2) $ ------5,240,911 --------$ 1,115,914 433,933 ----11,575,971 ------Total

$17,759,373 9,742,002 --12,912,382 14,331,727 3,044,966 4,280,951 273,349

Totals...............

$43,978,021

$5,240,911

$13,125,818

$62,344,750

(1) Resorts Division inventory as of March 31, 1996, includes land inventory of $6.1 million and $9.9 million of unit construction-in-progress. Resorts Division inventory as of April 2, 1995, includes land inventory of $2.3 million and $2.9 million of unit construction-in-progress. (2) Communities Division inventory as of March 31, 1996, includes land inventory of $10.5 million and $3.7 million of housing unit construction-in-progress. Communities Division inventory as of April 2, 1995, includes land inventory of $9.9 million and $3.2 million of housing unit construction-in-progress. 5. Property and Equipment The table below sets forth the property and equipment held by the Company at the period end indicated.
Useful Life March 31, 1996 April 2, 1995 $ 3,589,280 3,740,558 1,192,895 419,743 8,942,476 (4,140,652) 4,801,824

Land, buildings and building improvements.. 30 years $ 3,837,382 Office equipment, furniture and fixtures.... 3-5 years 4,466,821 Aircraft.................................... 3-5 years 1,375,001 Vehicles and equipment...................... 3-5 years 451,202 10,130,406 (4,891,306)

Accumulated depreciation and amortization... Total.......................................

$ 5,239,100 $

6. Lines-of-Credit and Notes Payable The Company has outstanding borrowings with various financial institutions and other lenders which have been used to finance the acquisition of inventory and to fund operations. Significant financial data related to the Company's borrowing facilities is set forth below.
March 31, 1996 April 2, 1995

Lines-of-credit (see Item A)..................

$ 6,394,245

$ 4,652,255

Notes and mortgage notes secured by certain inventory and property and equipment with interest rates ranging from 6.2% to 11.0% at March 31, 1996 and 6.2% to
12.0% at April 2, 1995. Maturities range from 1996 to 2005........... Lease obligations with a weighted average interest rate of 11% at March 31, 1996. Maturities range from 1998 to 2001...........

10,700,245

15,779,091

193,277

---

Total.........................................

$17,287,767

$20,431,346

The table below sets forth the contractual minimum principal payments required on the Company's lines-of-credit and notes payable for each of the five fiscal years subsequent to 1996, and thereafter. Such minimum contractual payments may differ from actual payments due to the effect of principal payments required on a lot release basis for certain of the above obligations.
1997 1998 1999 2000 2001 Thereafter Total .............................................. .............................................. .............................................. .............................................. .............................................. .............................................. ............................................... $ 4,764,643 6,202,356 2,792,180 1,225,237 954,034 1,349,317 $17,287,767

Further information on the Company's inventory lines-of-credit is set forth below. Lines-of-credit associated with the pledge of notes receivables are discussed in Note 8. Item A. The Company has a $15.0 million revolving credit facility with a financial institution secured by land notes receivables and land inventory. The borrowings secured by notes receivable are included in receivable-backed notes payable. See Note 8. Under the terms of the facility, the Company is entitled to advances of up to $5.0 million secured by land inventory to finance real estate acquisition and development costs. Interest is charged at a rate of prime plus 2.0%. At March 31, 1996 and April 2, 1995, the outstanding indebtedness secured by inventory was $277,000 and $1.3 million, respectively. The Company is required to pay the financial institution 55% of the contract price of land sales associated with pledged inventory when any such inventory is sold until the land indebtedness is paid in full. The facility expires in October, 1998. In addition, the Company has a $20.0 million credit facility with another financial institution secured by land notes receivables and land inventory. See Note 8 for a discussion of borrowings secured by notes receivable. Interest is charged at a rate of prime plus 2.75%. At March 31, 1996 and April 2, 1995, the outstanding indebtedness secured by inventory was $2.8 million and $1.5 million, respectively. The Company repays loans made under the inventory portion of the facility through lot release payments as the collateral is sold. In addition, the Company is required to meet certain minimum debt amortization on the outstanding inventory secured debt. The indebtedness secured by land inventory has maturities that range from December, 1996 to June, 1998. The ability to receive advances under this facility expires in October, 1996. The Company also has a $20.0 million credit facility with this same lender which provides for acquisition, development, construction and Receivables financing for the first and second phases of a multi-phase timeshare project in Gatlinburg, Tennessee. See Note 8 for a discussion of borrowing secured by notes receivable. At March 31, 1996 and April 2, 1995, the outstanding indebtedness secured by land was $600,000 and $925,000, respectively. The interest rate charged under the facility is prime plus 2.0%. The Company is required to repay the portion of the loan secured by inventory through two equal annual installments of $300,000 each in

the portion of the loan secured by inventory through two equal annual installments of $300,000 each in December, 1996 and December, 1997. The ability to borrow under the facility expires in November, 1998. The Company has another credit facility with this same lender which provides for acquisition, development, construction and Receivables financing on a second timeshare resort located in Pigeon Forge, Tennessee in the amount of $6.2 million. See Note 8 for a discussion of borrowing secured by notes receivable. At March 31, 1996, the outstanding indebtedness secured by land was $1.2 million. (The land inventory was acquired in July, 1995 and therefore no credit facility existed at April 2, 1995.) The interest rate charged under the loan agreement is prime plus 2.0%. The Company is required to repay the portion of the loan secured by inventory through three annual principal payments of $400,000 in July, 1996, $400,000 in July, 1997 and $410,000 in July, 1998. The ability to borrow under the facility expires in July, 1998. The Company has a $13.5 million secured line-of-credit with a South Carolina financial institution for the construction and development of Phase I of its Myrtle Beach timeshare resort. The interest rate charged under the facility is prime plus .5%. At March 31, 1996, there was $188,000 outstanding under this facility. The indebtedness is due in May, 1997. See below. The Company has a $23.5 million line-of-credit with a financial institution. The credit line provides for "take-out" of the construction lender discussed in the preceding paragraph in the amount of $13.5 million as well as $10.0 million secured by timeshare Receivables. The interest rate charged under the line-of-credit is three-month LIBOR plus 4.25%. Management expects the first advance under the Receivables facility to occur in June, 1996, and the "take-out" advance to occur in March, 1997. In addition to the land and resort financing described above, the Company has outstanding indebtedness under two lines-of-credit secured by a North Carolina and a Florida project managed under the Communities Division. At March 31, 1996, the aggregate outstanding indebtedness under these facilities totaled $1.3 million. The indebtedness secured by the North Carolina property matures in June, 1996, and the indebtedness secured by the Florida property matures in May, 1998. The ability to borrow under these facilities has expired and the Company does not intend to renew the facilities. The Company is required to comply with certain covenants under several of its debt agreements discussed above, including, without limitation, requirements to (i) maintain net worth of at least $42.0 million, (ii) maintain certain minimum leverage ratios, (iii) limit S,G&A expense to 50% of revenues, and (iv) comply with various other restrictive covenants. The Company was in compliance with such covenants at March 31, 1996, and for each reporting period during fiscal 1995 and 1996. 7. Convertible Subordinated Debentures In May, 1987, the Company issued $46.0 million of its 8.25% Convertible Subordinated Debentures due 2012 (the "Debentures"). The Debentures were issued at face value. During fiscal 1989 and fiscal 1988, the Company purchased and retired $3.3 million and $8.0 million, respectively, of its outstanding Debentures. Accordingly, $34.7 million principal amount of Debentures were outstanding at March 31, 1996 and April 2, 1995. The Debentures are convertible at any time prior to maturity, unless previously redeemed, into common stock of the Company at a current conversion price of $8.24 per share, subject to adjustment under certain conditions. The Debentures are redeemable at any time, at the Company's option, in whole or in part. The redemption price for the 12-month period beginning May 15, 1995, was 101.66% of the face amount. The redemption premium declines .825% each 12-month period thereafter until May 15, 1997, at which time the redemption price is 100% of the face amount. The Company is obligated to redeem annually 10% of the principal amount of the Debentures originally issued, commencing May 15, 2003. Such redemptions are calculated to retire 90% of the principal amount of the Debentures prior to maturity. Under financial covenants of the Indenture pursuant to which the Debentures were issued, the Company is required to maintain net worth of not less than $29.0 million. Should net worth fall below $29.0 million for two consecutive quarters, the Company is required to make an offer to purchase 20% of the outstanding Debentures at par, plus accrued interest. The Debentures are unsecured and subordinated to all senior indebtedness of the Company. Interest is payable semi-annually on May 15 and November 15. 8. Sale/Pledge of Notes Receivable The information provided below summarizes activities with respect to the sale and pledge of notes receivable. As

of April 2, 1995, note receivables secured by land had been pledged, while as of March 31, 1996, note receivables secured by land and timeshare intervals had been pledged. No sales of notes receivables secured by timeshare intervals have occurred as of March 31, 1996. Receivable-Backed Notes Payable The Company has indebtedness under a $20.0 million revolving credit line with a financial institution secured by land Receivables. The indebtedness matures ten years from the date of the last advance, or in 2006. At March 31, 1996, the Receivables had a weighted average interest rate of 12.8%. Payments received on the Receivables are applied to reduce principal outstanding on the indebtedness weekly and pay interest monthly. Interest is calculated on the average indebtedness outstanding for the month at a rate of prime plus 2.0%. The outstanding indebtedness was $6.3 million and $9.1 million at March 31, 1996 and April 2, 1995, respectively. The principal balance outstanding on the pledged Receivables was $8.1 million and $11.4 million at March 31, 1996 and April 2, 1995, respectively. The pledged Receivables are serviced by the Company. The Company has indebtedness under a $15.0 million revolving credit facility with a financial institution secured by land Receivables. The indebtedness matures in October, 1998. At March 31, 1996, the Receivables had a weighted average interest rate of 10.6%. Payments received on the Receivables are applied to reduce principal outstanding on the indebtedness weekly and pay interest monthly. Interest is calculated on the average indebtedness outstanding for the month at a rate of prime plus 2.0%. The outstanding indebtedness was $5.7 million and $5.0 million at March 31, 1996 and April 2, 1995, respectively. The principal balance outstanding on the Receivables was $7.2 million and $6.8 million at March 31, 1996 and April 2, 1995, respectively. The pledged Receivables are serviced by the Company. The Company has indebtedness under a $20.0 million credit facility secured by timeshare Receivables. The indebtedness matures seven years from the date of the last advance. At March 31, 1996, the Receivables had a weighted average interest rate of 13.8%. Payments received on the Receivables are applied to reduce principal outstanding on the indebtedness weekly and pay interest monthly. Interest is calculated on the average indebtedness outstanding for the month at a rate of prime plus 2.0%. The outstanding indebtedness was $6.9 million at March 31, 1996. There was no outstanding indebtedness secured by timeshare Receivables at April 2, 1995. The principal balance outstanding on the Receivables was $7.7 million at March 31, 1996. The pledged Receivables are serviced by the Company. The Company has indebtedness under a $6.2 million credit facility secured by timeshare Receivables. The indebtedness matures seven years from the date of the last advance. At March 31, 1996, the Receivables had a weighted average interest rate of 13.7%. Payments received on the Receivables are applied to reduce principal outstanding on the indebtedness weekly and pay interest monthly. Interest is calculated on the average indebtedness outstanding for the month at a rate of prime plus 2.0%. The outstanding indebtedness was $865,000 at March 31, 1996. There was no outstanding indebtedness secured by Receivables at April 2, 1995. The principal balance outstanding on the Receivables was $909,000 at March 31, 1996. The pledged Receivables are serviced by the Company. In connection with the acquisition of a subsidiary during the year ended April 3, 1988, the Company assumed borrowings of $1.6 million under a $2.0 million term facility with a financial institution secured by land Receivables. As of March 31, 1996, the indebtedness was paid and the ability to borrow has expired. The outstanding indebtedness was $11,000 at April 2, 1995. Installments due on receivable-backed notes payable based upon principal payments due on Receivables in each of the five fiscal years subsequent to 1996, and thereafter, is set forth below.
1997 1998 1999 2000 2001 Thereafter Total .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. 4,173,850 3,088,351 3,267,997 3,414,547 3,431,589 2,347,132 ------------$ 19,723,466 ============= $

REMIC Transactions

The Company has completed private placement transactions through limited purpose subsidiaries which it has elected to treat as Real Estate Mortgage Investment Conduits. The REMICs involved the securitization of certain mortgage notes receivable which were sold to trusts. Information with respect to the REMICs completed in fiscal 1995 and 1996, is set forth below. On May 11, 1994, the Company sold approximately $27.7 million aggregate principal amount of its mortgage notes receivable to a limited purpose subsidiary which then sold the notes receivable to a REMIC trust (the "1994 REMIC Trust"), resulting in aggregate proceeds to the Company of $26.0 million and a $411,000 pre-tax loss. The 1994 REMIC Trust issued four classes of REMIC certificates representing ownership interest in the pool of notes comprising such trust. Collections of principal and interest on the notes in the 1994 REMIC Trust, net of certain servicing and trustee fees, are remitted to certificateholders on a monthly basis based on an established order of priority. In connection with the 1994 REMIC transaction, the Company retained certain subordinated classes of certificates. On July 12, 1995, the Company sold approximately $68.1 million aggregate principal amount of its mortgage notes receivable to a limited purpose subsidiary which then sold the notes receivable to a REMIC trust (the "1995 REMIC Trust"), resulting in aggregate proceeds to the Company of $66.1 million and a $1.1 million pretax gain. The 1995 REMIC Trust issued four classes of REMIC certificates representing ownership interest in the pool of notes comprising such trust. Collections of principal and interest on the notes in the 1995 REMIC Trust, net of certain servicing and trustee fees, are remitted to certificateholders on a monthly basis based on an established order of priority. In connection with the 1995 REMIC transaction, the Company retained certain subordinated classes of certificates. The subordinated certificates retained by the Company in connection with the two REMIC transactions discussed above are included in the Consolidated Balance Sheets as investment in securities. See Note 3. The Company is paid an annualized servicing fee of .5% of the scheduled principal balance of those notes in the 1994 and 1995 REMIC trusts on which the periodic payment of principal and interest is collected in full. Under the terms of the respective servicing agreements, the Company has the obligation to repurchase or replace mortgage notes in the trusts which did not materially conform to the Company's representations and warranties at the date of sale. In addition, the Company, as servicer, is required to make advances of delinquent payments to the extent deemed recoverable. The Company has no obligation, however, to repurchase or replace mortgage notes solely due to delinquency. Income recognized from servicing the notes in REMIC trusts totaled $434,000, $401,000 and $464,000 for fiscal 1996, 1995 and 1994, respectively. 9. Income Taxes The provision for income taxes consists of the following:
Years Ended April 2, 1995

March 31, 1996 Federal: Current.................$ Deferred................

March 27, 1994

2,590,910 1,207,941 3,798,851

$

2,307,313 380,195 2,687,508

$

31,582 2,443,387 2,474,969

State: Current................. Deferred................

(

860,064 209,846) 650,218 $

630,654 946,596 1,577,250 4,264,758 $

38,601 508,361 546,962 3,021,931

Total.....................$

4,449,069

Income before income taxes (excluding Canadian operations) was $10.9 million in fiscal 1996, $10.4 million in fiscal 1995 and $7.8 million in fiscal 1994. The fiscal 1994 current tax provision was offset by refunds and overpayments resulting from the reduction in amounts originally estimated during fiscal 1993. The reasons for the difference between the provision for income taxes and the amount which results from applying the federal statutory tax rate in fiscal 1996, 1995 and 1994, to income before income taxes are as

follows:
Years Ended April 2, March 27, 1995 1994

March 31, 1996 Income tax expense at statutory rate................................. $ Effect of state taxes, net of federal tax benefit.......................... $

3,720,573 $ 728,496 4,449,069 $

3,536,628 728,130 4,264,758

$ 2,703,833 318,098 $ 3,021,931

At March 31, 1996 and April 2, 1995, deferred income taxes consist of the following components:
March 31, 1996 Deferred federal and state tax liabilities: Installment sales treatment of notes............... $ 8,473,340 Deferred foreign tax liability due to installment sale treatment of notes......................... 185,000 Deferred federal and state loss carryforwards/AMT credits....................... ( 1,990,365) Other.............................................. ( 600,161) Deferred income taxes.............................. $ 6,067,814 $ 9,289,703 185,000 ( 4,217,559) ( 187,425) $ 5,069,719 April 2, 1995

As of March 31, 1996, the Company had $2.0 million of AMT credit carryforwards which have no expiration period. 10. Contingency The Company is party to certain ordinary course litigation. Although no assurances can be given, the potential outcome is not expected to have a materially adverse effect on the Company's operations. 11. Stock Options and Employee Retirement Savings Plan Employee Stock Option Plan Under the Company's Employee Stock Option Plan, options may be granted at prices not less than the fair market value on the date of grant. A summary of stock option activity, adjusted for stock dividends, is presented below.
Number of Shares Reserved 1,804,937 ----(37,933) 72,313 1,839,317 Option Price Per Share $1.25 - $12.26 $3.21 $1.31 - $12.26 $1.31 - $2.41 Nu of S Exerc

Balance at March 27, 1994............... Granted................................. Forfeited............................... Exercised............................... Stock dividends......................... Balance at April 2, 1995................

Options 1,109,470 250,000 (431,428) (37,933) 72,313 962,422

$1.25 - $12.26

Granted................................. Forfeited............................... Exercised............................... Expiration of plan...................... Stock dividends......................... Balance at March 31, 1996...............

----(82,258) (723,445) 52,268 1,085,882

250,000 (96,550) (82,258) --52,268 1,085,882

$4.51 $1.25 - $12.26 $1.25 - $3.28

$1.25 - $11.64

The Employee's Stock Option Plan expired in September, 1995. The Company received shareholder approval

for a new employee stock option plan (the 1995 Stock Incentive Plan) at a meeting held on July 20, 1995. No awards were granted under the 1995 Stock Incentive Plan as of March 31, 1996. As of March 31, 1996, there were 413 individuals eligible to participate in the 1995 Stock Incentive Plan. Outside Directors Plan In fiscal 1988, the Company's shareholders adopted a stock option plan covering the Company's non-employee Directors (the "Director Plan"). The Director Plan provided for the grant to the Company's non-employee directors (the "Outside Directors") of non-qualified stock options to purchase up to an aggregate of 150,000 shares of common stock at a price not less than the fair market value at the date of grant. The Director Plan was amended and adopted by the Company's shareholders in September, 1991, to increase the number of issuable shares from 150,000 to 300,000 and again in July, 1995, to increase the number of issuable shares by an additional 200,000. The number of issuable shares is adjusted to reflect changes in capitalization and, accordingly, the shares increased to reflect the 4% stock dividend paid in fiscal 1994, the 4% and 5% stock dividends paid in fiscal 1995 and the 5% stock dividend paid in fiscal 1996. A summary of stock option activity, adjusted for stock dividends, related to the Company's Director Plan is presented below.
Number of Shares Reserved 312,000 --28,704 340,704 200,000 --17,035 557,739 Number of Shares Exercisable 104,000

Balance at March 27, 1994............... Granted................................. Stock dividends......................... Balance at April 2, 1995................ Additional shares issuable.............. Granted................................. Stock dividends......................... Balance at March 31, 1996...............

Options 236,800 75,000 25,535 337,335 75,000 20,617 432,952

Option Price Per Share $ .83 - $4.78 $3.69

$ .83 - $4.78 $3.80

186,474

$ .83 - $4.78

276,134

Employee Retirement Savings Plan The Company's Employee Retirement Plan is a code section 401(k) Retirement Savings Plan. The plan became effective on April 1, 1992. All employees at least 21 years of age with one year of employment with the Company are eligible to participate in the plan. Employer contributions to the plan are at the sole discretion of the Company and were not material to the operations of the Company for fiscal 1996, 1995 and 1994. 12. Quarterly Financial Information (Unaudited) Summarized quarterly financial information for the years ended March 31, 1996 and April 2, 1995 is presented below (in 000's except for per share information).
July 2, 1995 24,641 2,187 155 1,588 .07 Three Months Ended October 1, December 31, 1995 1995 $ 33,258 $ 23,935 2,177 1,483 225 120 2,319 985 .11 .05 March 19 $

Sales of real estate................ Interest income and other........... Provision for losses................ Net income.......................... Income per common share

$

Sales of real estate................ Interest income and other........... Provision for losses................ Net income.......................... Income per common share

June 26, 1994 $ 22,044 1,451 165 1,278 .06

Three Months Ended September 25, January 1, 1994 1995 $ 25,384 $ 19,254 1,756 1,974 250 187 2,118 881 .09 .05

Apri 19 $

13. Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair values disclosures for financial instruments: Cash and cash equivalents: The amounts reported in the balance sheet for cash and cash equivalents approximates fair value. Notes receivable: The carrying amounts reported in the balance sheet for notes receivable approximates fair value based on (i) prices established by loan pricing services and (ii) discounted future cash flows using current rates at which similar loans with similar maturities would be made to borrowers with similar credit risk. Investment in securities: The carrying amounts reported in the balance sheet for investment in securities approximates fair value based on estimates from dealers. Lines-of-credit, notes payable and receivable-backed notes payable: The carrying amounts reported in the balance sheet approximate their fair value based upon (i) the indebtedness having short-term maturities which provide for variable interest rates and (ii) the discounted future cash flows of long-term indebtedness. 8.25% convertible subordinated debentures: The fair value of the Company's 8.25% convertible subordinated debentures is based on the quoted market price as reported on the New York Stock Exchange.
March 31, 1996 Carrying Amount Cash and cash equivalents..................... Notes receivable.............................. Investment in securities. .................... Lines-of-credit, notes payable and receivable-backed notes payable.............. 8.25% convertible subordinated debentures...... $11,389,141 37,013,802 9,699,435

Fair Value $11,389,141 37,013,802 9,699,435

37,011,233 34,739,000

37,011,233 30,570,320

14. Subsequent Event On May 15, 1996, the Company sold approximately $13.2 million aggregate principal amount of its mortgage notes receivable to a limited purpose subsidiary which then sold the notes receivable to a REMIC trust (the "1996 REMIC Trust"), resulting in aggregate proceeds to the Company of $11.8 million. The 1996 REMIC Trust issued three classes of REMIC certificates representing ownership interest in the pool of notes comprising such trust. Collections of principal and interest on the notes in the 1996 REMIC Trust, net of certain servicing and trustee fees, are remitted to certificateholders on a monthly basis based on an established order of priority. In connection with the 1996 REMIC transaction, the Company retained certain subordinated classes of certificates. A portion of the proceeds from the transaction was used to repay approximately $5.6 million of outstanding debt. An additional $263,000 was used to fund a cash reserve account. The balance of the proceeds, after payment of issuance expenses, resulted in an increase to the Company's unrestricted cash of approximately $5.8 million. The transaction was not material to the Company's statement of income.

Consent of Independent Certified Public Accountants We consent to the incorporation by reference in this Annual Report (Form ~10-K) of ~Bluegreen Corporation of our report dated April 26, 1996, except for Note 14 as to which the date is May 15, 1996 included in the 1996 Annual Report to Shareholders of ~Bluegreen Corporation. We also consent to the incorporation by reference in ~(i) the Registration Statement (Form ~S-8 No. 33-26613) pertaining to the second amended and restated 1985 stock option plan of the Registrant and in the related Prospectus, ~(ii) the Registration Statement (Form ~S-8 No. 33~-16292) pertaining to the 1987 employee

Consent of Independent Certified Public Accountants We consent to the incorporation by reference in this Annual Report (Form ~10-K) of ~Bluegreen Corporation of our report dated April 26, 1996, except for Note 14 as to which the date is May 15, 1996 included in the 1996 Annual Report to Shareholders of ~Bluegreen Corporation. We also consent to the incorporation by reference in ~(i) the Registration Statement (Form ~S-8 No. 33-26613) pertaining to the second amended and restated 1985 stock option plan of the Registrant and in the related Prospectus, ~(ii) the Registration Statement (Form ~S-8 No. 33~-16292) pertaining to the 1987 employee stock purchase plan of the Registrant and in the related Prospectus, ~(iii) the Registration Statement (Form ~S-8 No. 33-26614) pertaining to the 1988 outside directors stock option plan of the Registrant and in the related Prospectus, ~(iv) the Registration Statement (Form ~S-8 No. 33-48075) pertaining to the Registrant retirement savings plan and in the related Prospectus and ~(v) the Registration Statement (Form ~S-8 No. 33~-61687) pertaining to the amended 1988 outside directors stock option plan and the 1995 stock incentive plan of the Registrant and in the related Prospectus of our report dated April 26, 1996, except for Note 14 as to which the date is May 15, 1996, with respect to the consolidated financial statements of ~Bluegreen Corporation incorporated herein by reference for the year ended March 31, 1996. West Palm Beach, Florida June 18, 1996

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
ARTICLE 5 MULTIPLIER: 1 CURRENCY: U.S. Dollars

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES

12 MOS Mar 31 1996 Apr 03 1995 Mar 31 1996 11,389,141 9,699,435 50,361,478 896,469 73,595,014 4,286,401 10,130,406 4,891,306 154,963,033 21,385,353 34,739,000 0 0 205,334 64,492,792 154,963,033 113,422,228 120,932,207 59,393,392 59,393,392 43,734,724 611,979 6,276,187 10,915,925 4,449,069 6,466,856 0 0 0

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
ARTICLE 5 MULTIPLIER: 1 CURRENCY: U.S. Dollars

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

12 MOS Mar 31 1996 Apr 03 1995 Mar 31 1996 11,389,141 9,699,435 50,361,478 896,469 73,595,014 4,286,401 10,130,406 4,891,306 154,963,033 21,385,353 34,739,000 0 0 205,334 64,492,792 154,963,033 113,422,228 120,932,207 59,393,392 59,393,392 43,734,724 611,979 6,276,187 10,915,925 4,449,069 6,466,856 0 0 0 6,466,856 .30 .30