VISTANA INC, S-1/A, 1997-10-23

VISTANA INC
S-1/A, 1997-10-23
HOTELS & MOTELS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1997

REGISTRATION NO. 333-38187
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
VISTANA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
FLORIDA 6552 59-3415620
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
8801 VISTANA CENTRE DRIVE
ORLANDO, FLORIDA 32821
(407) 239-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
RAYMOND L. GELLEIN, JR.
CHAIRMAN OF THE BOARD
VISTANA, INC.
8801 VISTANA CENTRE DRIVE
ORLANDO, FLORIDA 32821
(407) 239-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

WITH COPIES TO:
ROSS D. EMMERMAN, ESQ. PETER T. HEALY, ESQ.
WILLIAM M. HOLZMAN, ESQ. O'MELVENY & MYERS LLP
NEAL, GERBER & EISENBERG 275 BATTERY STREET
TWO NORTH LASALLE STREET EMBARCADERO CENTER WEST
SUITE 2200 26TH FLOOR
CHICAGO, ILLINOIS 60602 SAN FRANCISCO, CALIFORNIA 94111
(312) 269-8000 (415) 984-8833
----------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.

IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, CHECK THE FOLLOWING BOX. [_]

IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [_]

IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [_]

IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [_]

IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent offering outside the United
States and Canada (the "International Prospectus"). The two prospectuses are
identical in all respects except for the front and back cover pages and
"Underwriting." Final forms of each prospectus will be filed with the
Securities and Exchange Commission under Rule 424(b).
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION

PROSPECTUS DATED OCTOBER 23, 1997

4,000,000 SHARES

LOGO

COMMON STOCK

-----------

All of the 4,000,000 shares of common stock, par value $.01 per share
("Common Stock"), of Vistana, Inc. (the "Company") offered hereby are being
sold by the Company. Of the 4,000,000 shares of Common Stock offered hereby,
3,200,000 shares are being offered in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering") and the remaining 800,000 shares are being
offered in a concurrent offering outside the United States and Canada by the
International Managers (the "International Offering" and, together with the
U.S. Offering, the "Offering"). The price to the public and the underwriting
discount per share are identical for the U.S. Offering and the International
Offering. The Common Stock is listed for quotation on the Nasdaq National
Market under the symbol "VSTN." On October 21, 1997, the last reported sale
price of the Common Stock was $23 1/4 per share. See "Price Range of Common
Stock."

SEE "RISK FACTORS" COMMENCING ON PAGE 14 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share........................ $ $ $
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Total(3)......................... $ $ $
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</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $600,000.

(3) The Company has granted the several U.S. Underwriters and International
Managers (the "Underwriters") options to purchase up to 480,000 and 120,000
additional shares, respectively, of Common Stock to cover over-allotments,
if any. See "Underwriting." If such options are exercised in full, the
total Price to Public, Underwriting Discount, and Proceeds to Company will
be $ , $ and $ , respectively. See
"Underwriting."

-----------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to the
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York, on
or about November , 1997.

-----------

MERRILL LYNCH & CO.
LEHMAN BROTHERS NATIONSBANC MONTGOMERY SECURITIES, INC.
SMITH BARNEY INC.

-----------

The date of this Prospectus is November , 1997.
<PAGE>

Description of Inside Front Cover of Prospectus:
--------------------------------------------------

The inside front cover of the Prospectus consists of a three-page gatefold
containing various logos, photographs of the Company's existing resorts and
drawings of the Company's planned resorts. The photographs and drawings, which
are arrayed on the second and third pages of the gatefold, are arrayed against a
light blue wave-patterned background in which the words "Vistana, Inc.", or
portions thereof, are visible. The gatefold is more particularly described as
follows:

FIRST PAGE: The words "Vistana, Inc." are written across the top margin of
the first page. In the center of the page, eight logos are arrayed in three
rows - the top two rows containing three logos each and the bottom row
containing two logos. The logos from left to right are as follows: (A) top row -
(1) PROMUS HOTEL CORPORATION (R.); (2) VISTANA RESORT; and (3) PROFESSIONAL
GOLFERS' ASSOCIATION OF AMERICA (R.); (B) middle row - (1) EMBASSY VACATION
RESORT AT MYRTLE BEACH (R.); (2) VISTANA'S BEACH CLUB ON HUTCHINSON ISLAND; and
(3) WORLD GOLF VILLAGE; and (C) bottom row - (1) HAMPTON VACATION RESORT - OAK
PLANTATION (SM); and (2) EMBASSY VACATION RESORT AT SCOTTSDALE (R.). The
following legend appears along the bottom margin of the page:

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL
MARKET, ON THE OPEN MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.

EMBASSY VACATION RESORT (R.), EMBASSY SUITES (R.), HAMPTON VACATION RESORT
(SM) HAMPTON INN (R.), HOMEWOOD VACATION RESORT (SM), AND HOMEWOOD SUITES
(SM) ARE TRADEMARKS AND SERVICE MARKS OF PROMUS HOTELS, INC. AND OTHER
WHOLLY-OWNED SUBSIDIARIES OF PROMUS HOTEL CORPORATION.

PGA(R.) IS A TRADEMARK OF THE PROFESSIONAL GOLFER'S ASSOCIATION OF AMERICA.

WORLD GOLF VILLAGE (SM) IS A SERVICE MARK OF WORLD GOLF VILLAGE, INC.

THIS PROSPECTUS RELATES ONLY TO THE SALE OF THE COMMON STOCK OFFERED
HEREBY. SHAREHOLDERS OF THE COMPANY ARE NOT ENTITLED TO ANY RIGHTS WITH RESPECT
TO THE COMPANY'S RESORTS SOLELY AS A RESULT OF THEIR OWNERSHIP OF COMMON STOCK.

SECOND PAGE: The upper one-half of the second page contains three
photographs arrayed against a blue background and identified by a text box as
"VISTANA RESORT - Orlando, Florida." The photographs depict: (i) the entrance to
Vistana Resort with palm trees, flower beds and a fountain visible; (ii) an
exterior view of one of the buildings at the resort with a swimming pool in the
foreground; and (iii) an interior view of one of the units at the resort, which
shows the dining, living room and balcony areas. Under the photographs the words
"VISTANA RESORT" appear, separated by the Company's V-shaped dove logo. The
lower one-half of the second page contains two drawings arrayed against a green
background and identified by a text box as "VISTANA RESORT AT WORLD GOLF
VILLAGE - St. Augustine, Florida" and the World Golf Village logo. The drawings
depict: (i) a bird's-eye view of the planned World Golf Hall of Fame and (ii) an
exterior view of a building which depicts surrounding foliage and the balconies
attached to each individual unit.

THIRD PAGE: The upper third of the third page contains two photographs
arrayed against a peach background and identified by a text box and logo as
"HAMPTON VACATION RESORT - OAK PLANTATION - Kissimmee, Florida." The first
photograph depicts the exterior of a building with a large outdoor free-form
swimming pool. The second photograph depicts the interior of a unit, which shows
the dining, kitchen and living room areas. The middle third of the third page
contains a drawing arrayed against a peach background and identified by a text
box and logo as "EMBASSY VACATION RESORT AT MYRTLE BEACH - Myrtle Beach, South
Carolina." The drawing depicts an exterior view of a four-story building with
foliage in the foreground. The bottom third of the third page contains a drawing
of a map of the United States which depicts the locations of existing resorts
and resorts currently in design or development. Above this drawing are the words
"VISTANA, INC."

2
<PAGE>

[NARRATIVE DESCRIPTION OF GRAPHICS--EDGAR ONLY]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."

Description of Inside Back Cover of Prospectus:
----------------------------------------------

The upper one-half of the inside back cover contains two photographs
arrayed against a green background and identified by a text box and logo as
"VISTANA'S BEACH CLUB - Hutchinson Island, Florida." The photographs depict: (i)
a birds-eye view of the resort's facilities including: two tennis courts, two
buildings, the adjoining parking lots and the resort's access to the beach;
and (ii) an interior view of one of the units at the resort, which shows the
dining, living room and balcony areas. The lower one-half of the inside back
cover contains four photographs arrayed against a blue background. The first
photograph depicts an exterior view of a grey, two-story, wood-paneled building
under which is written: "FALCON POINTS RESORT, Avon, Colorado." The second
photograph depicts a grey, adobe-like building and two circular-shaped swimming
pools. The third photograph depicts an interior view of one of the units at the
resort, which shows the dining, living room and bedroom areas. Above the second
and third photographs are the words "THE VILLAS OF CAVE CREEK - near Scottsdale,
Arizona." Below these two pictures is the Points of Colorado, Inc. logo. The
fourth photograph depicts the exterior view of a building with snow-capped
mountains in the background. Below this photograph are the words: "EAGLE POINT
RESORT - Vail, Colorado."

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Combined Financial
Statements of Vistana, Inc. included elsewhere in this Prospectus. Except where
otherwise indicated, the information contained in this Prospectus (i) assumes
no exercise of the Underwriters' over-allotment option; (ii) assumes that any
outstanding options to purchase Common Stock, par value $.01 per share, of
Vistana, Inc. have not been exercised; and (iii) assumes Vacation Ownership
Interests (as defined herein) are presented on an annual, as opposed to an
alternate-year, basis. See "--The Resorts." Unless the context otherwise
requires, the "Company" means Vistana, Inc., its consolidated subsidiaries, its
corporate and partnership predecessors, partnerships in which the Company owns
a controlling interest and, following the Acquisition (as defined herein),
Success and Points (as defined herein). Unless otherwise indicated, all
vacation ownership industry data contained herein is derived from information
prepared by the American Resort Development Association ("ARDA"), the
industry's principal trade association.

This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are predictions only
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under
the caption "Risk Factors," which could cause actual results to differ
materially from those indicated in such forward-looking statements.

THE COMPANY

Founded in 1980, the Company is a leading developer and operator of high
quality timeshare resorts in the United States. The Company's principal
operations consist of (i) acquiring, developing and operating timeshare
resorts, also known as vacation ownership resorts; (ii) marketing and selling
vacation ownership interests in its resorts, which typically entitle the buyer
to ownership of a fully-furnished unit for a one-week period on either an
annual or an alternate-year basis ("Vacation Ownership Interests"); and (iii)
providing financing to its customers for their purchase of Vacation Ownership
Interests at the Company's vacation ownership resorts. The Company's pro forma
total revenues for the year ended December 31, 1996 and the six months ended
June 30, 1997 were approximately $113 million and $74 million, respectively.
The Company's pro forma net income for the year ended December 31, 1996 and the
six months ended June 30, 1997 was approximately $10.0 million and $6.8
million, respectively. See "--Summary Combined Historical and Pro Forma
Financial Information of the Company."

The Company currently operates and sells Vacation Ownership Interests at six
vacation ownership resorts. Three of these resorts are in Florida (Vistana
Resort in Orlando, Hampton Vacation Resort--Oak Plantation in Kissimmee, and
Vistana's Beach Club on Hutchinson Island), two in Colorado (Eagle Point in
Vail and Falcon Point in Avon) and one in Arizona (Villas of Cave Creek located
north of Scottsdale). As of June 30, 1997, these resorts represented a combined
total of 1,571 existing units (an aggregate of 85,476 sold and unsold Vacation
Ownership Interests) and a combined total of 457 planned units (23,307 Vacation
Ownership Interests) of which 59 were under construction. The Company has three
new resorts under development. These resorts (Embassy Vacation Resort--Myrtle
Beach in South Carolina with 44 units under construction and pre-construction
sales underway, Vistana Resort at World Golf Village near St. Augustine,
Florida with 102 units under construction, and PGA Vacation Resort by Vistana
in Port St. Lucie, Florida with construction of 40 units to commence in early
1998) are anticipated to add approximately 186 units (9,486 Vacation Ownership
Interests) to the Company's selling capacity during 1998. In addition, the
Company acts as exclusive sales and marketing agent for a large vacation
ownership resort in Colorado and plans to begin construction, and commence
sales, of a second Arizona resort during 1998 on land under contract in
Scottsdale.

3
<PAGE>

During its 17-year history, the Company has sold in excess of $600 million of
Vacation Ownership Interests and has developed an ownership base of over 60,000
Vacation Ownership Interest owners residing in more than 100 countries. The
Company was the first to open a vacation ownership resort in the Orlando,
Florida market, which has become one of the largest vacation ownership resort
markets in the world in terms of Vacation Ownership Interests sold. Raymond L.
Gellein, Jr., the Company's Chairman and Co-Chief Executive Officer, and
Jeffrey A. Adler, its President and Co-Chief Executive Officer, have been
employed by the Company since 1980 and 1983, respectively. Additionally,
Messrs. Gellein and Adler serve as the chairman of the Florida chapter of ARDA
and as a director of ARDA, respectively. Under their direction, the Company has
fostered a values-driven business culture that emphasizes excellence and
quality relationships with its employees, customers and business partners.

The quality and customer appeal of the Company's vacation ownership resorts
have been recognized through industry awards and by several leading travel
publications. At June 30, 1997, the Company's flagship resort, Vistana Resort
in Orlando, Florida, contained 1,116 units developed in seven phases on a 135-
acre landscaped complex featuring swimming pools, tennis courts, restaurants
and other recreational amenities. In 1995 and 1996, Conde Nast Traveler
magazine selected Vistana Resort as a "Gold List" resort, the only vacation
ownership resort to be included as one of the top 500 resorts in the world.
Similarly, the most recent Zagat Survey of U.S. Hotels, Resorts & Spas ranked
Vistana Resort as one of the top resorts in Orlando, commenting that it
contains the "most luxurious villas in Orlando." Each of the Company's existing
Florida-based resorts is rated as a Gold Crown resort by Resort Condominiums
International ("RCI"), and the Villas of Cave Creek and Falcon Point Resort are
rated as Five Star Resorts by Interval International ("II"). Two of the
Company's resorts under development, Vistana Resort at World Golf Village and
the Embassy Vacation Resort--Myrtle Beach, have received the Gold Crown
designation from RCI prior to their official openings. In 1996, approximately
13% of the resorts reviewed by RCI received a Gold Crown rating, the highest
rating awarded by RCI, and approximately 18% of the resorts reviewed by II
received a Five Star rating, the highest rating awarded by II.

As part of its operating strategy, the Company seeks to develop strategic
relationships with selected parties in order to broaden and enhance its
marketing and sales efforts and to provide additional vacation ownership resort
development opportunities. In furtherance of this strategy, as described below,
the Company has entered into (i) an exclusive joint venture agreement with
Promus Hotels, Inc. ("Promus"), a leading hotel company in the United States;
(ii) a long-term affiliation agreement with a subsidiary of The Professional
Golfers' Association of America ("PGA of America"); and (iii) a limited
partnership (in which the Company is the general partner) which has the
exclusive right to develop and market Vacation Ownership Interests at World
Golf Village. The Company intends to continue to expand existing and develop
new strategic alliances that will create opportunities to develop unique, high
quality vacation ownership resorts and further broaden and enhance its
marketing and sales efforts.

RECENT OPERATING RESULTS

For the three months ended September 30, 1997, the Company estimates that it
had total revenues of $39.7 million compared to $26.7 million for the three
months ended September 30, 1996, an increase of $13.0 million, or 49%. This
increase is primarily due to (i) an $11.1 million increase in sales of Vacation
Ownership Interests from $17.5 million during 1996 to $28.6 million during
1997, an increase of 63%, and (ii) a $1.0 million increase in interest revenue
from $3.6 million in 1996 to $4.6 million during 1997. The 1997 results include
15 days of operating results of Success and Points, entities which the Company
acquired on September 16, 1997. See "Pro Forma Combined Financial Information"
and "Business--The Acquisition."

GROWTH STRATEGY

The Company's goal is to expand its position as a leading developer and
operator of vacation ownership resorts by (i) continuing sales at the Company's
existing resorts; (ii) developing and selling additional resorts;

4
<PAGE>

(iii) improving operating margins; and (iv) pursuing selected acquisition
opportunities. To achieve this goal, the Company intends to adhere to its core
operating strategies of obtaining extensive access to qualified buyers,
promoting sales and marketing excellence and delivering memorable vacation
experiences to its owners and guests.

Continuing Sales at the Company's Existing Resorts. The Company sold 4,910
Vacation Ownership Interests during the six months ended June 30, 1997 at
existing resort properties, generating $51.5 million in Vacation Ownership
Interest sales, on a pro forma basis. The Company intends to continue to market
its existing inventory of Vacation Ownership Interests and to make available
for sale, based on consumer demand, additional Vacation Ownership Interests
through expansion of certain of the Company's existing vacation ownership
resorts. At June 30, 1997, the inventory of unsold Vacation Ownership Interests
at existing resorts was 14,733.

The Company intends to maintain its position as a leader in the Orlando
vacation ownership market (a popular vacation destination with over 36 million
visitors annually) by developing and selling an additional 423 units at Vistana
Resort (representing an additional 21,573 Vacation Ownership Interests), of
which 59 units (representing 3,009 Vacation Ownership Interests) were completed
in the third quarter of 1997. In addition, the Company plans to continue sales
at the Hampton Vacation Resort--Oak Plantation, a 242-unit former apartment
complex located in the Orlando market, which the Company is converting in
phases into a vacation ownership resort. This property is owned by a
partnership in which the Company holds an approximate 67% controlling ownership
interest. As of June 30, 1997, the Hampton Vacation Resort--Oak Plantation had
an unsold inventory of approximately 11,735 Vacation Ownership Interests.

The Company added resorts in Arizona and Colorado in September 1997 as a
result of the acquisition of Success and Points. It plans to continue sales of
existing inventory at these resorts and to expand these resorts where land is
available. At the Company's 58-unit Falcon Point Resort, located in Avon,
Colorado, 409 Vacation Ownership Interests remained for sale at June 30, 1997,
with an additional 24 units (representing 1,224 Vacation Ownership Interests)
planned for future development. At the Company's 54-unit Eagle Point Resort,
located in Vail, Colorado, 54 Vacation Ownership Interests remained available
for sale at June 30, 1997. At the Company's 25-unit Villas of Cave Creek
Resort, 849 Vacation Ownership Interests remained available for sale at June
30, 1997 with another 10 units (representing 510 Vacation Ownership Interests)
planned for future development.

Developing and Selling Additional Resorts. The Company intends to rely on its
operating knowledge and strategic alliances to develop additional vacation
ownership resorts, including the following projects currently in development:

. Vistana Resort at World Golf Village. In the fall of 1996, the Company
commenced construction of the 102-unit first phase (representing 5,202
Vacation Ownership Interests) of a 408-unit vacation ownership resort at
World Golf Village. The first phase is expected to be completed in the
second quarter of 1998. The centerpiece of a planned community near St.
Augustine, Florida, World Golf Village is a destination resort which will
contain the World Golf Hall of Fame, championship golf courses, a golf
academy, a hotel and convention center, restaurants, retail facilities
and related amenities which are being developed by others. The Company
holds a 37.5% controlling ownership interest in a limited partnership
which has the exclusive right to develop and market Vacation Ownership
Interests at World Golf Village. The Company believes that World Golf
Village and the golf industry in general represent attractive
opportunities for Company expansion and the development of future
vacation ownership resorts.

. Embassy Vacation Resort--Myrtle Beach. In December 1996, the Company
acquired an initial 14 acres of unimproved land in Myrtle Beach, South
Carolina for the development of the Embassy Vacation Resort--Myrtle
Beach. The Company also has an option until December 31, 2003 to acquire
up to 26 additional acres of contiguous property for phased expansion of
this resort. The Company began pre-sales in May 1997 and commenced
construction of the 44-unit first phase (representing 2,244 Vacation
Ownership Interests) of a 550-unit vacation ownership resort during the
third quarter of 1997. The first phase is expected to be completed in the
first quarter of 1998. The Company believes Myrtle Beach

5
<PAGE>

represents an attractive, growing market for the expansion of its
portfolio of vacation ownership resorts. Similar to Orlando, Myrtle Beach
has a large number of visitors whose length of stay averages approximately
five days. Consistent with its key operating strategies, the Company has
procured substantial marketing affiliations with significant tourist
venues in the Myrtle Beach area.

. PGA Vacation Resort by Vistana. The Company is the exclusive vacation
ownership development company of the PGA of America. In September 1997,
the Company acquired 25 acres of land adjacent to an existing 36-hole
championship golf facility owned by a subsidiary of PGA of America in
Port St. Lucie, Florida. The property, located approximately 40 miles
north of Palm Beach Gardens, Florida, is planned to contain approximately
387 units (representing a total of 19,737 Vacation Ownership Interests).
The 40-unit first phase (representing 2,040 Vacation Ownership Interests)
is expected to be completed during the fourth quarter of 1998. The
Company believes that PGA of America, through its approximately 20,000
affiliated golf professionals and the Company's license to use the PGA of
America name, initials, trademark and logo, will provide strategic
marketing opportunities for the Port St. Lucie vacation ownership resort
and any future PGA Vacation Resorts developed by the Company. See
"Business--Affiliation with PGA of America."

. Embassy Vacation Resort--Scottsdale. The Embassy Vacation Resort--
Scottsdale will consist of an estimated 150 units, representing 7,650
Vacation Ownership Interests, and will be constructed by the Company on
approximately 10 acres of land which the Company intends to acquire prior
to December 1997 pursuant to an existing contract entered into by Success
and Points. The Company anticipates that it will commence construction
during the first half of 1998. The Scottsdale property will be operated
as an Embassy Vacation Resort franchise pursuant to the Promus Agreement
(as defined herein).

. Promus Relationship. In December 1996, the Company and Promus entered
into an exclusive five-year agreement (the "Promus Agreement") to jointly
acquire, develop, market and operate vacation ownership resorts in North
America. The Company believes it will benefit from Promus' strong brand
recognition, large customer base, marketing capabilities and hospitality
management expertise. Subject to certain exceptions, the Promus Agreement
precludes the Company from acquiring or developing vacation ownership
resorts with any other multi-hotel brand. Promus has agreed that the
Company will be the sole franchisee in North America of the Hampton
Vacation Resort and the Homewood Vacation Resort brands, and one of only
two franchisees in North America of the Embassy Vacation Resort brand.
The Company currently operates the Hampton Vacation Resort--Oak
Plantation, is developing the Embassy Vacation Resort--Myrtle Beach and
intends to develop the Embassy Vacation Resort--Scottsdale, in each case
under a franchise arrangement. The Company and Promus have agreed on six
markets in which the Company and Promus will focus their joint venture
efforts. These six markets consist of three coastal areas of Florida
(including portions of the southeastern and western coasts of Florida and
the Panhandle); the coastal region between Jacksonville, Florida and
Myrtle Beach, South Carolina; Phoenix and Scottsdale, Arizona; and Palm
Springs and Palm Desert, California. The Company intends to franchise
and/or jointly develop additional vacation ownership resorts under the
Hampton Vacation Resort and the Embassy Vacation Resort brand names in
the future and may exercise its right to develop vacation ownership
resorts under the Homewood Vacation Resort name either jointly or as a
franchise. The Company and Promus are evaluating locations for the joint
development of vacation ownership resorts; however, at this time no
commitments exist for any joint venture resorts. See "Business--
Affiliation with Promus."

. Vistana Branded Resorts. To capitalize on the Vistana brand and
reputation, the Company intends to seek other vacation ownership resort
development opportunities, including resorts affiliated with unique, non-
multi-hotel brand hotel properties, in selected vacation markets where,
among other things, it believes it can obtain effective marketing access
to potential customers. In furtherance of this strategy, the Company is
currently engaged in discussions with the operator of a non-multi-hotel
brand resort regarding the formation of a joint venture to develop,
construct, market and operate its first vacation ownership resort outside
the United States. If the joint venture is formed and development of the
planned

6
<PAGE>

resort is commenced, the Company currently estimates that it will be
required to make an initial equity investment of approximately $5 million
in this project. There can be no assurance, however, that the joint
venture will be formed, the contemplated resort will be constructed, or if
constructed, that it will prove to be profitable.

Each of the foregoing projects and agreements requires the Company to make
substantial capital commitments and is subject to various risks, including
risks related to availability of financing, construction and development
activities, and the Company's ability to execute its sales and marketing
strategies at new locations. See "Risk Factors."

Improving Operating Margins. The Company intends to improve operating margins
by reducing (i) its financing costs by entering into more favorable borrowing
agreements and (ii) its general and administrative costs as a percentage of
revenues. In furtherance of this intention, the Company has recently entered
into new project financing and receivables financing at more favorable rates
than it has historically enjoyed and is negotiating new credit facilities
which, if established, will be on terms that management believes are favorable.
See "Business--Growth Strategies--Improving Operating Margins."

Pursuing Selected Acquisition Opportunities. The Company from time to time
seeks opportunities to acquire vacation ownership assets and additional land
upon which vacation ownership resorts may be expanded or developed. The Company
is currently considering the acquisition of several additional land parcels for
expansion of an existing resort and for the development of new resorts. The
Company also from time to time evaluates the acquisition of operating companies
that may be successfully integrated into the Company's existing operations and
enhance the Company's sales, marketing and resort ownership. However, the
Company currently has no contracts or capital commitments relating to any such
acquisitions.

Consistent with this strategy, on September 16, 1997, the Company completed
the acquisition (the "Acquisition") of entities comprising The Success
Companies, Success Developments, L.L.C. and Points of Colorado, Inc.
(collectively, "Success and Points"), the developers of Eagle Point, Falcon
Point and Villas of Cave Creek. The Company acquired the entire equity interest
in Success and Points for a purchase price of approximately $24.0 million in
cash and 638,444 shares of Common Stock of the Company. Delivery of 430,814 of
such shares is contingent upon Success and Points achieving certain operating
results for calendar years 1998 through 2000. As a result of the Acquisition,
the Company has a contract to purchase undeveloped land in Scottsdale, Arizona
on which the Company intends to develop the Embassy Vacation Resort--
Scottsdale.

The Company believes Success and Points will serve as a strong foundation for
sales, marketing and resort operations in the western region of the United
States and will provide the Company with experience in direct marketing to
consumers in Arizona and Colorado. As a result of the strategic relationships
and operational expertise gained in the Acquisition, the Company believes it
will be better able to identify other potential developments and acquisitions
in Arizona, Colorado and other western states.

The Company has historically provided financing for approximately 93% of its
customers, who are required to make a down payment of at least 10% of the
Vacation Ownership Interest's sales price and generally pay the balance of the
sales price over a period of seven years. The Company typically borrows from
third-party lending institutions in order to finance its loans to Vacation
Ownership Interest buyers. As of June 30, 1997, the Company had a portfolio of
approximately 21,400 loans to customers totaling approximately $125.2 million,
with an average contractual yield of 13.9% per annum (compared to the Company's
weighted average cost of funds of 10.5% per annum). As of June 30, 1997 (i)
approximately 3.1% of the Company's customer mortgages receivable were 60 to
120 days past due; and (ii) approximately 5.3% of the Company's customer
mortgages receivable were more than 120 days past due and the subject of legal
proceedings. In addition, as of such date, the Company's allowance for loss on
customer mortgages receivable was approximately $10.0 million. During the six
months ended June 30, 1997, the Company charged approximately $3.0 million
against such reserve (net of recoveries of related Vacation Ownership
Interests).

7
<PAGE>

The Company also provides hospitality management, operations, maintenance and
telecommunications services at its resorts. Pursuant to management agreements
between the Company and the homeowners' associations at its existing resorts,
the Company has the responsibility and authority for the day-to-day operation
of these resorts. In addition, the Company also provides telecommunications
design and installation services for third parties on a limited basis.

THE RESORTS

The following table sets forth certain information as of June 30, 1997 and
for the six months then ended regarding each of the Company's existing vacation
ownership resorts, resorts under development and planned resorts (including
existing and planned resorts acquired in the Acquisition), including location,
the year sales of Vacation Ownership Interests commenced (or are expected to
commence), the number of existing and total planned units, the number of
Vacation Ownership Interests sold at each existing resort since its development
by the Company and the number of Vacation Ownership Interests sold during the
six months ended June 30, 1997, the average sales price of Vacation Ownership
Interests sold during the six months ended June 30, 1997 and the number of
Vacation Ownership Interests available for sale currently and after giving
effect to planned expansion. The exact number of units ultimately constructed
and Vacation Ownership Interests available for sale at each resort may differ
from the following planned estimates based on, among other things, future land
use, project development, site layout considerations and customer demand. In
addition, the Company's construction and development of new vacation ownership
resorts or additional units at its existing resorts (and sales of the related
Vacation Ownership Interests) is dependent upon general economic conditions and
other factors and may also be subject to delay as a result of certain
circumstances, some of which are not within the Company's control. See "Risk
Factors."

<TABLE>
<CAPTION>
VACATION UNSOLD
OWNERSHIP VACATION OWNERSHIP
INTERESTS AVERAGE INTERESTS AT
YEAR SALES UNITS AT RESORT SOLD(A) SALES RESORTS(A)
COMMENCED/ --------------- ------------ PRICE -------------------
VACATION OWNERSHIP EXPECTED TO TOTAL IN CURRENT PLANNED
RESORT LOCATION COMMENCE(B) CURRENT PLANNED TOTAL 1997 1997(A) INVENTORY EXPANSION
- ------------------------ ------------------- ----------- ------- ------- ------ ----- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EXISTING RESORTS:
Vistana Resort (c) Orlando, Florida 1980 1,116 1,539 58,383 3,459(d) $10,259(d) 1,657 21,573
Vistana's Beach Hutchinson Island,
Club (e) Florida 1989 76 76 3,899 50 $ 9,318 29 0
Hampton Vacation
Resort--Oak
Plantation (f) Kissimmee, Florida 1996 242 242 680 547 $ 7,552 11,735 0
Eagle Point Resort (g) Vail, Colorado 1987 54 54 3,757 207 $ 7,773 54 0
Falcon Point Resort (h) Avon, Colorado 1986 58 82 3,437 152 $10,964 409 1,224
Villas of Cave Creek (i) Cave Creek, Arizona 1996 25 35 587 495 $11,239 849 510
RESORTS UNDER
DEVELOPMENT:
Embassy Vacation
Resort--Myrtle Beach Myrtle Beach,
(j) South Carolina 1997 -- 550 -- -- -- -- 28,050
Vistana Resort at World St. Augustine,
Golf Village (k) Florida 1998 -- 408 -- -- -- -- 20,808
PGA Vacation Resort by Port St. Lucie,
Vistana (l) Florida 1998 -- 387 -- -- -- -- 19,737
PLANNED RESORTS:
Embassy Vacation Scottsdale,
Resort--Scottsdale (m) Arizona 1998 -- 150 -- -- -- -- 7,650
----- ----- ------ ----- ------ ------
TOTAL 1,571 3,523 70,743 4,910 14,733 99,552
===== ===== ====== ===== ====== ======
</TABLE>
- -------

8
<PAGE>

Vacation Ownership Interests or 102 alternate-year Vacation Ownership
Interests per unit (although historically sales at Eagle Point, Falcon Point
and the Villas of Cave Creek have been based on 52 weeks per unit per year).
For purposes of calculating Vacation Ownership Interests Sold and Average
Sales Price in 1997, data with respect to Vacation Ownership Interests
reflects Vacation Ownership Interests sold regardless of classification as
an annual or alternate-year Vacation Ownership Interest. For purposes of
calculating Unsold Vacation Ownership Interests at Resorts, both the Current
Inventory and Planned Expansion numbers are based on sales of Vacation
Ownership Interests on an annual basis only and assume the sale of 51 weeks
per unit per year. To the extent that alternate-year Vacation Ownership
Interests or 52 weeks per unit per year are sold, the actual number of
unsold Vacation Ownership Interests at Resorts would be increased.
(b) Dates listed represent the dates the Company began recording (or expects
to begin recording) sales of Vacation Ownership Interests for financial
reporting purposes.

(c) At June 30, 1997, Vistana Resort consisted of seven development phases,
six of which had been completed and one of which was in development. The
number of units at Vistana Resort at June 30, 1997 included (i) 1,116
current existing units and (ii) 423 additional planned units (representing
an additional 21,573 unsold annual Vacation Ownership Interests).
Construction of 59 of the additional units, representing 3,009 Vacation
Ownership Interests for the eighth phase of the resort, was underway and
was completed in the third quarter of 1997. The Company constructs
additional units at various times depending upon general market conditions
and other factors. Accordingly, construction of the remaining 364
additional units will be commenced from time to time as demand and other
conditions merit. Figures with respect to this resort assume that all
units to be constructed will consist of one- and two-bedroom units;
however, the actual number of additional Vacation Ownership Interests
resulting from planned construction could vary depending upon the
configuration of these units.
(d) Includes 1,010 alternate-year Vacation Ownership Interests with an average
sales price of $7,529 and 2,449 annual Vacation Ownership Interests with
an average sales price of $11,385.
(e) Vistana's Beach Club consists of two buildings containing a total of 76
current existing units, which represent 3,876 Vacation Ownership
Interests. The Company's Current Inventory of 29 annual Vacation Ownership
Interests at this resort consists primarily of previously-sold Vacation
Ownership Interests that the Company has since reacquired in connection
with defaults under customer mortgages. The Company has no plans to build
any additional units at this resort.
(f) Hampton Vacation Resort--Oak Plantation consists of 242 current existing
units, representing 12,342 annual Vacation Ownership Interests. Prior to
its acquisition by the Company in June 1996, this property was operated by
a third party as a rental apartment complex. The Company commenced
conversion of the property into a vacation ownership resort in July 1996.
As of June 30, 1997, the conversion of 156 units (representing 7,956
annual Vacation Ownership Interests) had been completed. The Company
intends to convert the remaining 86 units at various times depending upon
general market conditions and other factors. The Company currently has no
plans to build any additional units at this resort. Hampton Vacation
Resort--Oak Plantation is operated on a franchise basis as the first
Hampton Vacation Resort pursuant to the Promus Agreement.
(g) Eagle Point Resort consists of 54 existing units, representing 2,808
Vacation Ownership Interests. This resort was acquired by the Company
pursuant to the Acquisition in September 1997, and is owned and operated
by the Company. All Vacation Ownership Interest sales reflected occurred
prior to the Acquisition.

(h) Falcon Point Resort consists of 58 existing units, representing 3,016
Vacation Ownership Interests and 24 additional planned units to be
constructed on property which the Company has a contract to purchase
(representing an additional 1,224 unsold annual Vacation Ownership
Interests). This resort was acquired by the Company pursuant to the
Acquisition in September 1997, and is owned and operated by the Company.
All Vacation Ownership Interest sales reflected occurred prior to the
Acquisition.
(i) Villas of Cave Creek consists of 25 existing units, representing 1,300
Vacation Ownership Interests and 10 additional planned units (representing
an additional 510 unsold annual Vacation Ownership Interests). This resort
was acquired by the Company pursuant to the Acquisition in September 1997,
and is owned and operated by the Company. All Vacation Ownership Interest
sales reflected occurred prior to the Acquisition.

(j) In December 1996, the Company acquired the initial 14 acres of unimproved
land in Myrtle Beach, South Carolina for the development of the Embassy
Vacation Resort--Myrtle Beach. The Company also has an option until
December 31, 2003 to acquire up to 26 additional acres of contiguous
property for phased expansion of this resort. The Company commenced
construction of the 44-unit first phase of this resort (representing 2,244
annual Vacation Ownership Interests) during the third quarter of 1997.
Because the Company constructs additional units at its resorts based on
general market conditions and other factors, construction of the remaining
506 units at this resort (assuming acquisition of the remaining 26 acres)
will be commenced from time to time as demand and other conditions merit.
Myrtle Beach will be operated as an Embassy Vacation Resort franchise
pursuant to the terms of the Promus Agreement.
(k) Vistana Resort at World Golf Village will consist of an estimated 408
units, representing an estimated 20,808 annual Vacation Ownership
Interests, of which 102 units, representing 5,202 annual Vacation
Ownership Interests, are currently under construction and scheduled for
completion in the first quarter of 1998. The Company intends to commence
construction of the remaining 306 additional units from time to time as
demand and other conditions merit.

(m) The Embassy Vacation Resort--Scottsdale will consist of an estimated 150
units, representing 7,650 Vacation Ownership Interests, and will be
constructed by the Company on approximately 10 acres of land which the
Company intends to acquire prior to December 1997 pursuant to an existing
contract entered into by Success and Points. The Company anticipates that
it will commence construction during the first half of 1998. The
Scottsdale property will be operated as an Embassy Vacation Resort
franchise pursuant to the Promus Agreement.

9
<PAGE>

CORPORATE BACKGROUND

The Company was incorporated in the State of Florida in December 1996 to
effect the Formation Transactions (as defined herein) and the initial public
offering of 6,382,500 shares of the Common Stock which was completed on March
5, 1997 (the "Initial Public Offering"). The Company's principal executive
offices are located at 8801 Vistana Centre Drive, Orlando, Florida 32821, and
its telephone number at that address is (407) 239-3000.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the
Company..................... 4,000,000 shares(1)
Common Stock to be
outstanding after the
Offering.................... 23,007,630 shares(1)(2)
Use of Proceeds.............. The Company intends to use approximately $62.2
million of the net proceeds of the Offering to
repay outstanding indebtedness and the balance
to fund the acquisition, development and
expansion of existing and future resorts,
working capital and general corporate purposes.
Pending any such additional uses, the Company
will invest the remaining proceeds in commercial
paper, bankers' acceptances, other short-term
investment grade securities and money-market
accounts.
Nasdaq National Market
symbol...................... VSTN
</TABLE>
- --------
(1) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."
(2) Does not include 1,854,000 shares of Common Stock issuable upon exercise
of options outstanding as of the date of this Prospectus under the
Vistana, Inc. Stock Plan (the "Stock Plan") or 430,814 shares of Common
Stock deliverable on a contingent basis in connection with the
Acquisition. See "Management--Stock Plan" and "Business--the Acquisition."

RISK FACTORS

For a discussion of risk factors that should be considered in evaluating an
investment in the Common Stock, including risks related to rapid growth, the
Acquisition, pending developments, competition, the historical concentration of
the Company's business in the Orlando and Florida markets, dependence on key
personnel, the effective control of the Company by the Principal Shareholders
(as defined herein), general economic conditions, the Company's development and
construction activities, the Company's customer financing activities,
governmental regulation, the limited trading history of the Common Stock and
the effect which certain future sales of Common Stock may have upon the market
price of the Common Stock, among others, see "Risk Factors."

10
<PAGE>

SUMMARY COMBINED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION OF THE
COMPANY(A)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND OPERATING DATA)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (UNAUDITED)
------------------------------------------------------- -----------------------------
YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, ENDED JUNE 30, DECEMBER 31, JUNE 30,
--------------------------------------- --------------- ------------ ----------------
1992 1993 1994 1995 1996 1996 1997 1996(B) 1997(B)
------- ------- ------- ------- ------- ------- ------- ------------ ----------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS:
Revenues:
Vacation Ownership
Interest sales......... $48,503 $55,658 $54,186 $50,156 $60,063 $28,622 $40,083 $ 74,125 $ 51,545
Interest............... 4,662 5,096 7,654 12,886 15,546 7,149 8,923 16,629 9,959
Resort................. 9,977 10,877 11,834 12,613 13,587 7,125 8,050 13,706 8,056
Telecommunications..... 1,703 1,980 3,378 4,802 7,054 3,216 3,195 7,054 3,195
Other.................. 489 551 584 652 686 230 246 1,371 1,286
------- ------- ------- ------- ------- ------- ------- ---------- ----------
Total revenues.......... 65,334 74,162 77,636 81,109 96,936 46,342 60,497 112,885 74,041
------- ------- ------- ------- ------- ------- ------- ---------- ----------
COSTS AND OPERATING
EXPENSES:
Vacation Ownership
Interest cost of
sales.................. 10,254 11,521 11,391 12,053 14,595 7,195 9,276 17,946 12,259
Sales and marketing.... 17,689 21,866 22,872 22,318 27,877 12,569 18,287 33,844 24,096
Loan portfolio
Interest expense--
treasury............... 1,556 2,070 3,605 6,516 6,865 3,324 3,130 8,066 4,094
Provision for doubtful
accounts............... 3,405 3,903 3,803 3,522 4,271 2,034 2,809 4,456 2,986
Resort................. 8,594 9,493 10,037 10,585 11,089 5,984 6,562 11,089 6,562
Telecommunications..... 1,358 1,537 2,520 3,654 5,613 2,597 2,580 5,613 2,580
General and
administrative......... 6,628 7,419 7,988 6,979 7,873 3,377 4,957 10,118 6,467
Depreciation and
amortization........... 875 875 1,392 2,215 2,553 1,074 1,412 3,123 1,832
Interest expense--
other.................. 2,523 2,269 2,106 3,168 4,154 2,040 1,071 965 715
Other.................. 1,688 1,318 1,241 1,020 443 145 1,470 532 1,566
Deferred executive
incentive
compensation........... 402 380 332 3,448 1,114 553 0 1,114 --
------- ------- ------- ------- ------- ------- ------- ---------- ----------
Total costs and
operating expenses...... 54,972 62,651 67,287 75,478 86,447 40,892 51,554 96,866 63,157
------- ------- ------- ------- ------- ------- ------- ---------- ----------
Operating income........ 10,362 11,511 10,349 5,631 10,489 5,450 8,943 16,019 10,884
Excess value
recognized............. 1,151 701 365 219 105 70 36 105 36
Minority interest
income................. -- -- -- -- -- -- 50 -- 50
------- ------- ------- ------- ------- ------- ------- ---------- ----------
Income before income
taxes and extraordinary
item.................... 11,513 12,212 10,714 5,850 10,594 5,520 9,029 16,124 10,970
Provision for taxes.... -- -- -- -- -- -- 2,803 6,127 4,169
Non-recurring charge
associated with the
change of tax status... -- -- -- -- -- -- 13,201 -- --
------- ------- ------- ------- ------- ------- ------- ---------- ----------
Income (loss) before
extraordinary item..... 11,513 12,212 10,714 5,850 10,594 5,520 (6,975) 9,997 6,801
Extraordinary item
early extinguishment of
debt (net of tax)...... -- -- -- -- -- -- 825 -- --
------- ------- ------- ------- ------- ------- ------- ---------- ----------
Net income.............. $11,513 $12,212 $10,714 $ 5,850 $10,594 $ 5,520 $(7,800) $ 9,997 $ 6,801
======= ======= ======= ======= ======= ======= ======= ========== ==========
Pro forma net
income(c)............... $ 6,907 $ 7,780 $ 6,730 $ 3,724 $ 6,871
Pro forma net income per
share of Common Stock... $ .53 $ .36
Pro forma weighted
average shares of Common
Stock outstanding....... 19,007,630 19,007,630
</TABLE>

11
<PAGE>

<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------------------------ -----------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
EBITDA(d)............... $ 15,316 $ 16,725 $ 17,452 $ 15,468 $ 21,304 $10,803 $ 11,745
Cash flow provided by
(used in):
Operating activities... $ 17,544 $ 10,602 $ 13,215 $ 12,524 $ 15,629 $ 2,328 $ 4,576
Investing activities... $(21,244) $(20,444) $(20,383) $(22,651) $(26,351) $(8,112) $(14,810)
Financing activities... $ 3,410 $ 11,085 $ 6,512 $ 15,131 $ 9,313 $ 6,103 $ 13,189
OPERATING DATA:
Number of resorts at
year end............... 2 2 2 2 3 2 3
Number of Vacation
Ownership Interests
sold(e)................ 4,980 5,679 5,582 5,190 5,794 2,805 4,056
Number of Vacation
Ownership Interests in
inventory at year
end(f)................. 1,967 3,781 3,822 3,054 14,774 3,142 13,421
Average price of
Vacation Ownership
Interests sold......... $ 9,740 $ 9,801 $ 9,707 $ 9,664 $ 10,366 $10,204 $ 9,882
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED(G)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash (including restricted cash)........................ $ 14,131 $ 71,306
Total assets............................................ $196,858 $254,033
Notes and mortgages payable............................. $ 84,526 $ 54,183
Shareholders' equity.................................... $ 66,068 $153,586
</TABLE>
- ------
(a) The Summary Financial Information was derived from the "Selected Combined
Historical Financial Information of the Company" and the Company's
Combined Financial Statements and related Notes thereto appearing
elsewhere in this Prospectus. The information set forth in this table
should be read in conjunction with "Selected Combined Historical Financial
Information of the Company," "Pro Forma Combined Financial Information,"
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," and the Company's Combined Financial Statements and
related Notes thereto appearing elsewhere in this Prospectus.

(b) Reflects the effects of the Formation Transactions and the treatment of
the combined Company as a C corporation rather than the treatment of the
Affiliated Companies (as defined herein) as S corporations and limited
partnerships for federal income tax purposes (but excludes one-time tax
charges resulting from such conversion), the Initial Public Offering and
the application of the net proceeds to the Company therefrom and the
acquisition of all of the outstanding stock of Success and Points for
approximately $24 million in cash (financed with bank borrowings of
approximately $24 million) and 638,444 shares of Common Stock. Delivery of
430,814 of such shares is contingent upon Success and Points achieving
certain operating results for calendar years 1998 through 2000.
(c) Reflects the effect on historical statements, assuming the Company had
been treated as a C corporation rather than the treatment of the
Affiliated Companies as S corporations and limited partnerships for
federal income tax purposes.
(d) As shown below, EBITDA represents net income before interest expense,
income taxes, depreciation and amortization and excess value recognized
which reflects the amortization of the difference between the fair value
of the Company at the time of its purchase by Messrs.

12
<PAGE>

Gellein and Adler and a third individual, less the purchase price paid to
acquire the Company. EBITDA does not represent cash flows from operations
and should not be considered to be an alternative to net income as an
indicator of operations performance or to cash flows from operations as a
measure of liquidity. In addition, the Company's presentation of EBITDA
could differ from similar presentations prepared by other companies.
Management believes that EBITDA represents a useful measure to evaluate the
Company's results of operations, without reference to its capitalization
and tax structure. Management also believes EBITDA is a useful indicator of
the Company's ability to service and/or incur indebtedness because it
adjusts net income for non-cash expenditures, taxes and existing interest
expenses. Management believes that the trends depicted by the changes in
EBITDA set forth below demonstrate the Company's use of borrowing and the
resultant increase in interest expense associated with its growth. The
following table reconciles EBITDA to net income:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income............ $11,513 $12,212 $10,714 $ 5,850 $10,594 $ 5,520 $(7,800)
Interest expense--
treasury............. 1,556 2,070 3,605 6,516 6,865 3,324 3,130
Interest expense--
other................ 2,523 2,269 2,106 3,168 4,154 2,040 1,071
Taxes................. 0 0 0 0 0 0 15,499
Depreciation and
amortization......... 875 875 1,392 2,215 2,553 1,074 1,412
Amortization of
discount on customer
mortgages
receivable........... 0 0 0 (2,062) (2,757) (1,085) (1,531)
Excess value
recognized........... (1,151) (701) (365) (219) (105) (70) (36)
------- ------- ------- ------- ------- ------- -------
EBITDA................ $15,316 $16,725 $17,452 $15,468 $21,304 $10,803 $11,745
======= ======= ======= ======= ======= ======= =======
</TABLE>
(e) Includes both annual and alternate-year Vacation Ownership Interests.
(f) Inventory classified as annual Vacation Ownership Interests.

(g) Adjusted to give effect to the Offering and the application of the net
proceeds to the Company therefrom. Of the $71.3 million of cash, $31.8
million will be used to repay $24.0 million of indebtedness incurred in
connection with the Acquisition and $7.8 million borrowed under a
mortgage receivable facility, which indebtedness was incurred subsequent
to June 30, 1997. See "Use of Proceeds" and "Capitalization." Total
assets have not been adjusted to reflect the Acquisition or the proceeds
from the additional borrowings under the mortgage receivable facility.
See "Pro Forma Combined Financial Information" and "Business--The
Acquisition."

13
<PAGE>

RISK FACTORS

Prospective investors should carefully consider the following information in
conjunction with the other information contained in this Prospectus before
purchasing any of the shares of Common Stock offered hereby. The following
sets forth the material risks of an investment in the Common Stock; however,
the Company cautions the reader that this list of risk factors may not be
exhaustive.

RISKS OF RAPID GROWTH

Risks Associated with Execution of Growth Strategy. A principal component of
the Company's growth strategy is to acquire additional unimproved real estate
for the construction and development of new vacation ownership resorts. The
Company's ability to execute its growth strategy depends on a number of
factors, including (i) the availability of attractive resort development
opportunities; (ii) the Company's ability to acquire unimproved real estate
relating to such opportunities on economically feasible terms; (iii) the
Company's ability to obtain the capital necessary to finance the acquisition
of unimproved real estate and develop vacation ownership resorts thereon, as
well as to cover any necessary sales, marketing and resort operation
expenditures; (iv) the Company's ability to market and sell Vacation Ownership
Interests at newly-developed vacation ownership resorts; and (v) the Company's
ability to manage newly-developed vacation ownership resorts cost-effectively
and in a manner which results in significant customer satisfaction. There can
be no assurance that the Company will be successful with respect to any or all
of these factors.

Risks Associated with Expansion into New Markets. Because the Company's
pending resort developments near St. Augustine, Florida, Port St. Lucie,
Florida, Myrtle Beach, South Carolina and Scottsdale, Arizona are outside the
Company's historical geographical area of operation, the Company's resort
development and operation experience in the Orlando, Florida area does not
ensure the success of the development or operation of these properties or the
marketing of Vacation Ownership Interests at such locations. Accordingly, in
connection with such pending developments, the Company may be exposed to a
number of risks, including risks associated with (i) the lack of local market
knowledge and experience; (ii) the inability to hire, train and retain sales,
marketing and resort staff at such locations; (iii) the inability to obtain,
or obtain in a timely manner, necessary permits and approvals from state and
local government agencies and qualified construction tradesmen at competitive
prices; (iv) the inability to secure sufficient marketing relationships with
local hospitality, retail and tourist attraction operators; (v) the inability
to capitalize on the new marketing relationships and development agreements
associated with certain of the Company's growth strategies; and (vi) the
uncertainty involved in, and additional costs which may be associated with,
selling Vacation Ownership Interests prior to completion of the related units.

Risks Associated with Resorts Involving the Golf Industry. The success of
the Company's golf-oriented vacation ownership resorts is substantially
dependent upon the continued popularity of golf in general, as well as the
desirability of the golf courses and golf-related facilities that will be
associated with the Company's resorts. Linking the success of the Company's
resorts to related golf course operations is a new strategy for the Company
and may require the Company to adopt new sales and marketing approaches and
enter into new business relationships. In addition, there are numerous other
factors that affect the golf industry, including seasonality, adverse weather
conditions, competition and the supply of alternative golf-related
destinations, and the popularity of the sport of golf, any of which may
adversely affect the Company's results of operations at these resorts.
Accordingly, there can be no assurance that this aspect of the Company's
growth strategy will be successful or that the Company will be able to
implement this strategy effectively.

Risks Associated with Promus Agreement. An important part of the Company's
growth strategy is to acquire, develop, market and operate vacation ownership
resorts with Promus pursuant to the Promus Agreement, which imposes capital
requirements and allocates profits and losses of all joint developments on an
equal basis. In the event that the Company and Promus are unable to develop
jointly a vacation ownership resort within the first three years of the term
of the Promus Agreement (which commenced on December 24, 1996), either party
will be entitled to terminate the Promus Agreement. This timetable may cause
the Company to overcommit its

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resources to the Promus Agreement and the development of vacation ownership
resorts thereunder at the expense of other opportunities or the Company's
existing business operations. In addition, in order to maintain its franchise
relationship with Promus, the Company may be required to incur expenditures
and meet other obligations at the franchised resorts required by the
applicable franchise agreements, which may (i) increase its operating costs
and (ii) limit the Company's flexibility with respect to the operation of the
applicable resort in order to comply with the applicable franchise agreements.
The amount of expenditures which the Company may be required to incur and the
amount of obligations which the Company may be required to satisfy will depend
upon, among other things, the extent to which the applicable franchise
agreement requires the Company to incur construction and development costs,
operating expenses, capital expenditures and maintenance costs. Moreover,
although the Promus Agreement contains mutual exclusivity provisions that the
Company believes will be beneficial to the growth of its business, the Promus
Agreement prevents (or significantly restricts) the Company's ability to
develop vacation ownership resorts with other partners in the hotel industry
or under its own name in certain markets. There can be no assurance that
Promus will be a favorable partner for the Company, or that the Promus
Agreement will not prevent the Company from developing resorts under its own
name or entering into similar agreements with other hotel companies, even
where such developments or agreements would be in the Company's best
interests.

Promus and Doubletree Corp., a Phoenix-based hotel management company,
recently announced plans to merge. The Company understands that the
transaction, which is scheduled to close by the end of calendar 1997, is
subject to regulatory and shareholder approval. The publicly disclosed terms
of the merger agreement provide for the two companies to be merged into
subsidiaries of a new holding company to be named Promus Hotel Corp., the
senior management of which is expected to be comprised of personnel from
Promus and Doubletree. While the Company does not anticipate that the merger
will have any effect on the Promus Agreement, there can be no assurance that
the Company will continue to enjoy the same relationship which it has
historically had with Promus and its senior management. See "Business--
Affiliation with Promus."

COMPETITION

The Company is subject to significant competition from other entities
engaged in the leisure and vacation industry, including vacation ownership
resorts, hotels, motels and other accommodation alternatives. Many of the
world's most widely-recognized lodging, hospitality and entertainment
companies have begun to develop and sell Vacation Ownership Interests under
their brand names, including, Marriott International, Inc. ("Marriott"), The
Walt Disney Company ("Disney"), Hilton Hotels Corporation ("Hilton"), Hyatt
Corporation ("Hyatt"), Four Seasons Hotels & Resorts, Inc. ("Four Seasons"),
Inter-Continental Hotels and Resorts, Inc. ("Inter-Continental"), Westin
Hotels & Resorts ("Westin") and Promus. In addition, other publicly-traded
companies which focus on the vacation ownership industry, such as Signature
Resorts, Inc. ("Signature"), Fairfield Communities, Inc. ("Fairfield"),
Vacation Break U.S.A., Inc. ("Vacation Break"), Silverleaf Resorts, Inc.
("Silverleaf"), Trendwest Resorts, Inc. ("Trendwest"), and Bluegreen
Corporation ("Bluegreen") currently compete, or may in the future compete,
with the Company. Moreover, competition in the Orlando market is particularly
intense and includes many nationally recognized lodging, hospitality and
entertainment companies, as well as active privately-owned local operators of
vacation ownership resorts such as Central Florida Investments, Inc. ("CFI")
and Orange Lake Country Club ("Orange Lake"). Many of these entities possess
significantly greater financial, sales and marketing, personnel and other
resources than those of the Company and may be able to grow at a more rapid
rate or more profitably as a result. Management of the Company believes that
industry competition will be increased by recent and possibly future
consolidation in the vacation ownership industry.

HISTORICAL CONCENTRATION OF ACTIVITIES IN ORLANDO AND FLORIDA MARKETS

Prior to the Acquisition, substantially all of the Company's operations were
located in Florida and substantially all of the Company's historical revenues
have been generated from this market. Although the Company has conducted the
majority of its resort operations in the Orlando area since 1980, there can be
no assurance that the Company will be able to continue to compete effectively
in the Orlando market. The failure to

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compete effectively in the Orlando market could have a material adverse effect
on the Company's results of operations. See "Business--The Resorts." Although
the Company recently acquired vacation ownership resorts in Colorado and
Arizona and is constructing and plans to develop additional vacation ownership
resorts outside the Orlando area, the current concentration of the Company's
vacation ownership resorts in the Orlando market could make the Company more
susceptible to adverse events or conditions which affect these areas in
particular, such as hurricanes, windstorms, economic recessions and changes in
tourism or vacation patterns and could result in a material adverse effect on
the Company's operations.

RISKS RELATED TO THE ACQUISITION

The September 16, 1997 acquisition of Success and Points represents the
Company's initial entry into a geographic market outside Florida and South
Carolina. Therefore, the Company may be exposed to a number of risks,
including, but not limited to risks associated with the lack of local market
knowledge and experience. In addition, the future operating results of Success
and Points depend to a significant extent on the experience and abilities of
Donald J. Dubin, the President and Chief Executive Officer of Success and Larry
D. Doll, the President and Chief Executive Officer of Points. In addition, the
Company's marketing and sales of Vacation Ownership Interests are subject to
extensive regulation by various states in which the Company has not previously
conducted operations, and any failure to comply with such regulations, or any
increases in the costs of compliance, could have a material adverse effect on
the Company. See "--Risks Associated with Governmental Regulation."

The Company and Success and Points have different systems and procedures in
many operational areas which must be integrated. There can be no assurance that
such integration will be successfully accomplished. The difficulties of such
integration may be increased by the necessity of coordinating geographically
separate organizations. The integration of certain operations following the
Acquisition will require the dedication of management resources which may
temporarily re-direct attention from the day-to-day business of the combined
companies. Failure to effectively accomplish the integration of the two
companies' operations could have a material adverse effect on the Company's
results of operations and financial condition.

In addition, future earnings will be adversely impacted by the amortization
of the goodwill associated with the Acquisition. Based upon pro forma goodwill
of approximately $17 million and an amortization period of 20 years, earnings
will be adversely impacted by approximately $850,000 per year. The goodwill
included in this calculation does not include the impact of the contingent
consideration associated with the Acquisition.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent upon the experience and
abilities of Raymond L. Gellein, Jr., the Chairman of the Board, Co-Chief
Executive Officer and a director of the Company, and Jeffrey A. Adler, the
President, Co-Chief Executive Officer and a director of the Company. The loss
of the services of one or both of these individuals could have a material
adverse effect on the Company and its business prospects. The Company's
continued success is also dependent upon its ability to hire, train and retain
qualified marketing, sales, hospitality, development, acquisition, finance,
management and administrative personnel. Such personnel are in substantial
demand and the cost of attracting or retaining such key personnel could
escalate over time. There can be no assurance that the Company will be
successful in attracting or retaining such personnel. See "Management--
Employment Agreements."

EFFECTIVE CONTROL BY PRINCIPAL SHAREHOLDERS; SHAREHOLDERS' AGREEMENT

After the completion of the Offering, Jeffrey A. Adler and Raymond L.
Gellein, Jr. (together with certain trusts primarily for their benefit and the
benefit of their family members and Mr. Gellein's former spouse, the "Principal
Shareholders") will own and/or have voting control of approximately 53.4% of
the outstanding shares of Common Stock (approximately 52.1% if the
Underwriters' over-allotment option is exercised in full). As a result, by
maintaining their ownership of Common Stock, the Principal Shareholders will
have the power to

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<PAGE>

exert substantial influence over the election of the Board of Directors, the
determination of the policies of the Company, the appointment of the persons
constituting the Company's management and the determination of the outcome of
corporate actions requiring shareholder approval. In addition, pursuant to the
Shareholders' Agreement (as defined herein), the Principal Shareholders have
agreed to vote their shares of Common Stock in favor of proxies solicited by
the Board of Directors, unless Messrs. Gellein and Adler both disagree with the
position taken by the Board of Directors. See "Certain Relationships and
Related Transactions," "Principal Shareholders" and "Description of Capital
Stock."

GENERAL ECONOMIC CONDITIONS; CONCENTRATION IN THE VACATION OWNERSHIP INDUSTRY

Any adverse change in economic conditions or significant price increases or
adverse events related to the travel and tourism industry, such as the cost and
availability of fuel, could have a material adverse effect on the Company's
business. Such conditions or increases may also adversely affect the future
availability and cost of financing for the Company or its customers and result
in a material adverse effect on the Company's business. In addition, changes in
general economic conditions may adversely affect the Company's ability to
collect on its customer mortgages receivable outstanding from the buyers of
Vacation Ownership Interests. Moreover, because the Company's operations are
conducted principally within the vacation ownership industry, any adverse
changes affecting the vacation ownership industry such as (i) an oversupply of
Vacation Ownership Interests; (ii) a reduction in demand for Vacation Ownership
Interests; (iii) changes in travel and vacation patterns; (iv) changes in
governmental regulation of the vacation ownership industry; (v) increases in
construction costs or taxes; (vi) changes in the deductibility of mortgage
interest payments for federal or state income tax purposes; or (vii) negative
publicity with respect to the vacation ownership industry, could have a
material adverse effect on the Company.

RISKS ASSOCIATED WITH DEVELOPMENT AND CONSTRUCTION ACTIVITIES

The Company intends to actively continue acquisition, development,
construction, conversion and expansion of vacation ownership resorts. Risks
associated with such activities include risks that (i) acquisition or
development opportunities may be abandoned; (ii) construction costs may exceed
original estimates, possibly making the development, expansion or conversion
uneconomical or unprofitable; (iii) construction or conversion may not be
completed on schedule, possibly resulting in delayed recognition of revenues
and increased interest expense; (iv) zoning, land-use, construction, occupancy
and other required governmental permits and authorizations may not be obtained
or may be delayed; and (v) financing necessary to complete the necessary
acquisition, development, construction, conversion or expansion activities may
not be obtained or may not be available on favorable terms. Upon the completion
of the Offering, the Company will not have the financing available to construct
and develop all of the vacation ownership resorts it plans to develop and
market. In addition, certain state and local laws may impose liability on
property developers with respect to construction defects discovered or repairs
made by future owners of such property, and, as a result, owners may be able to
recover from the Company amounts in connection with such defects or repairs
related to the property. Accordingly, there can be no assurance that the
Company will (i) complete development of Vistana Resort at World Golf Village;
(ii) complete expansion projects currently under development at Vistana Resort
and those planned at Falcon Point Resort and the Villas of Cave Creek; (iii)
complete the development of the Embassy Vacation Resort--Myrtle Beach (or
acquire the additional 26 acres at such location); (iv) complete the
development of the PGA Vacation Resort by Vistana; (v) undertake or complete
the development of the Embassy Vacation Resort--Scottsdale; or (vi) undertake
to develop other resorts or complete any such development if undertaken. As a
result of these risks, the Company's revenues and net operating income may be
materially adversely impacted.

RISKS ASSOCIATED WITH WORLD GOLF VILLAGE PROJECT

The success of the Company's development of Vistana Resort at World Golf
Village is dependent upon the concurrent development by third parties of the
surrounding properties and related component facilities comprising the World
Golf Village project and the planned community of Saint Johns in which it is
located.

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Although the Company has entered into agreements with such third parties
respecting such matters, there can be no assurance that such third parties will
fulfill their obligations under such agreements. In addition, the Company is
contingently liable for 15% of annual debt service shortfalls on certain
taxable revenue bonds (the "County Bonds") issued to finance the convention
center at World Golf Village. If the surrounding properties and related
facilities comprising the World Golf Village project are not developed, not
developed on a timely basis, are of an inferior quality, or if the annual
pledged revenues from the World Golf Village component facilities are not
adequate to support the required debt service on the County Bonds, the
Company's results of operations at Vistana Resort at World Golf Village may be
materially adversely impacted.

RISKS ASSOCIATED WITH CUSTOMER MORTGAGES RECEIVABLE

Risks of Customer Default. The Company extends financing to purchasers of
Vacation Ownership Interests at its resorts. These purchasers generally make a
down payment equal to at least 10% of the sales price and borrow the remaining
sales price from the Company. These borrowings historically bear interest at
fixed rates, are secured by first mortgages on the underlying Vacation
Ownership Interests and amortize over periods ranging up to seven years. The
Company bears the risk of defaults under its customer mortgages on Vacation
Ownership Interests. If a purchaser of a Vacation Ownership Interest defaults
on the mortgage during the early part of the loan amortization period, the
Company will not have recovered its marketing, selling (other than certain
sales commissions), and general and administrative costs per Vacation Ownership
Interest, and such costs will again be incurred in connection with the
subsequent resale of the Vacation Ownership Interest. As is sometimes the
practice in the vacation ownership industry, the Company does not verify the
credit history of its customers. In addition, although in certain jurisdictions
the Company may have recourse against a defaulting customer for the sales price
of the Vacation Ownership Interest, the Company has not historically pursued
such a remedy. Accordingly, no assurance can be given that the sales price will
be fully or partially recovered from a defaulting customer, or in the event of
such defaults, that the Company's established loan loss reserves will be
adequate. The Company has recently begun to offer customer mortgages with a
ten-year term. Although the increased term has been introduced on a limited
basis, there can be no assurance that the inclusion of customer mortgages with
a ten-year maturity will not have an adverse effect on the performance of the
Company's portfolio of customer mortgages receivable. See "Business--Customer
Financing."

Risks Related to Funding Customer Mortgages Receivable. The Company funds its
resort acquisition and development and operations in part by borrowing up to
90% of the aggregate principal amount of its customer mortgages receivable
under its existing credit facilities. The Company does not presently have
existing credit facilities or binding lender commitments to supply all of the
financing the Company anticipates that it will need to construct and develop
all of the resorts it plans to develop and market, and there can be no
assurance that alternative or additional credit arrangements can be obtained on
terms that are satisfactory to the Company. Accordingly, future sales of
Vacation Ownership Interests may be limited by the availability of funds to
finance the initial negative cash flow attributable to Vacation Ownership
Interest sales financed by the Company (i.e., the amount by which the Company's
product cost and marketing, sales and general administrative expenses per
Vacation Ownership Interest exceeds the customer's down payment). In addition,
if the Company were required to sell its customer mortgages receivable in order
to satisfy its cash flow needs, the Company would cease to be eligible to
report income attributable to sales of Vacation Ownership Interests on the
installment sales method for federal income tax purposes and, as a result, the
Company would be required to accelerate the payment of a substantial federal
income tax liability with respect to the customer mortgages receivable sold.
Such an event could have a material adverse effect on the Company's cash flow
from operations. See "Business--Customer Financing."

RISKS ASSOCIATED WITH LEVERAGE

It is likely that the Company's future business activities will be financed,
in whole or in part, with indebtedness obtained pursuant to additional
borrowings under the Company's existing credit facilities or under credit
facilities to be obtained by the Company in the future. The definitive
agreements with respect to these

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<PAGE>

credit facilities could contain restrictive covenants which limit the
Company's ability to, among other things, make capital expenditures, incur
additional indebtedness and dispose of assets, or which require the Company to
maintain certain financial ratios. The indebtedness incurred under these
credit facilities may be secured by mortgages on a portion of the Company's
vacation ownership resorts, customer mortgages receivable and other assets of
the Company. In the event of a default by the Company under one or more or
these credit facilities, the lenders could foreclose on the vacation ownership
resorts secured by a mortgage or take possession of other assets pledged as
collateral. In addition, the extent of the Company's leverage and the terms of
the Company's indebtedness (such as requirements that the Company maintain
certain debt-to-equity ratios) could impair the Company's ability to obtain
additional financing in the future, to make acquisitions or to take advantage
of significant business opportunities that may arise. Furthermore, the
Company's indebtedness and related debt service obligations may increase its
vulnerability to adverse general economic and vacation ownership industry
conditions and to increased competitive pressures. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

RISKS ASSOCIATED WITH HEDGING ACTIVITIES

The Company has historically derived net interest income from its financing
activities as a result of the difference between the interest rates it charges
its customers who finance their purchase of a Vacation Ownership Interest and
the interest rates it pays its lenders. There can be no assurance of a
continued positive difference between fixed rates of interest applicable to
the Company's customer mortgages receivable and the rates on the Company's
existing indebtedness. Because the Company's indebtedness bears interest at
variable rates and the Company's customer mortgages receivable bear interest
at fixed rates, the Company bears the risk of increases in interest rates with
respect to its indebtedness. The Company historically has engaged in limited
interest rate hedging activities from time to time in order to reduce the risk
and impact of increases in interest rates with respect to such indebtedness
but currently has no interest rate hedging positions. Derivative instruments
historically used by the Company consist only of interest rate swap
agreements, which effectively fix the interest rate on the Company's variable
interest rate indebtedness. The Company does not engage in any speculative or
profit-motivated hedging activities. The Company is exposed to risks related
to the nonperformance of the interest rate swap agreements by the other
parties thereto. There can be no assurance that any such interest rate hedging
activity will be adequate at any time to protect the Company fully from any
adverse changes in interest rates. In addition, to the extent that interest
rates decrease, the Company faces an increased risk that customers will pre-
pay their mortgage loans, an event which would decrease the Company's income
from financing activities. See "Business--Customer Financing."

LIMITED RESALE MARKET FOR VACATION OWNERSHIP INTERESTS

The Company sells Vacation Ownership Interests to buyers for leisure and not
investment purposes. The Company believes that the market for resale of
Vacation Ownership Interests by such buyers is presently limited and that any
resales of Vacation Ownership Interests are typically at prices substantially
less than the original purchase price. These factors may make ownership of
Vacation Ownership Interests less attractive to prospective buyers. In
addition, attempts by buyers to resell their Vacation Ownership Interests may
compete with sales of Vacation Ownership Interests by the Company. Moreover,
the market price of Vacation Ownership Interests sold by the Company could be
depressed by a substantial number of Vacation Ownership Interests offered for
resale by the Company's customers.

RISKS ASSOCIATED WITH VACATION OWNERSHIP INTEREST EXCHANGE NETWORKS

The attractiveness of Vacation Ownership Interests is enhanced significantly
by the availability of exchange networks that allow owners of Vacation
Ownership Interests to exchange the occupancy right granted by their Vacation
Ownership Interest during a particular year for an occupancy right granted at
another participating network resort. Several companies, including RCI,
provide broad-based Vacation Ownership Interest exchange services, and each of
the Company's operating resorts, other than its vacation ownership resorts in
Colorado and Arizona (each of which is currently qualified for participation
in the exchange network operated by II), is currently qualified for
participation in the RCI exchange network. No assurance can be given that the
Company

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<PAGE>

will continue to be able to qualify its existing resorts, or will be able to
qualify its future resorts, for participation in the RCI exchange network or
any other exchange network, or that the Company's customers will continue to
be satisfied with RCI's exchange network or any other exchange network. If
such exchange networks cease to function effectively, if the Company's resorts
are not accepted as exchanges for other desirable resorts, or if RCI or II
cease to be leading Vacation Ownership Interest exchange networks, the
Company's sales of Vacation Ownership Interests could be materially adversely
affected. Moreover, the agreements between one of the Company's predecessors
and RCI generally provide that until May 2001, the RCI exchange program will
be the only exchange program permitted at resorts developed by that entity and
any other entity which it controls. In addition, Messrs. Gellein and Adler
have agreed with RCI that, until May 2001, each vacation ownership resort
owned, developed or managed by an entity in which Messrs. Gellein or Adler,
individually or collectively, have a controlling interest will execute an
affiliation agreement with RCI with an initial six-year term.

In May 1997, CUC International Inc., the parent company of II, and HFS
Incorporated, the parent company of RCI, announced plans to combine the two
parent companies into a newly created company. The Company understands that
the closing of the transaction is subject to review under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended. The companies have
disclosed that they are currently engaged in discussions with the Federal
Trade Commission regarding the potential divestiture of II for antitrust
reasons. Should such a divestiture occur, there can be no assurance that the
relationship between the Company's Arizona and Colorado resorts and II will
continue in the manner historically maintained. Further, the Company is unable
to predict the long-term competitive effects, if any, on RCI from the proposed
merger and the possible divestiture of II. See "Business--Participation in
Vacation Ownership Interest Exchange Networks."

RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION

The Company's marketing and sales of Vacation Ownership Interests and other
resort operations are subject to extensive regulation by the federal
government and the states in which the Company's resorts are located and in
which its Vacation Ownership Interests are marketed and sold. Federal
legislation to which the Company is or may be subject includes the Federal
Trade Commission Act, the Fair Housing Act, the Truth-in-Lending Act, the Real
Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the
Interstate Land Sales Full Disclosure Act, the Telephone Consumer Protection
Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act and the
Civil Rights Acts of 1964 and 1968. The Florida Condominium Act and the
Florida Vacation Plan and Timesharing Act extensively regulate the creation
and management of timeshare condominiums, the marketing and sale of Vacation
Ownership Interests, the escrow of purchaser funds and other property prior to
completion of construction and closing, the content and use of advertising
materials and promotional offers, the creation and operation of exchange
programs and multi-site timeshare plan reservation systems, and the resale of
Vacation Ownership Interests. In addition, many states have adopted similar
legislation as well as specific laws and regulations regarding the sale of
Vacation Ownership Interests. The laws of many states, including Arizona and
Florida, require a designated state authority to approve a detailed offering
statement describing the Company and all material aspects of the resort and
sale of Vacation Ownership Interests at such resort. In addition, the laws of
most states in which the Company sells Vacation Ownership Interests grant the
purchaser of a Vacation Ownership Interest the right to rescind a contract of
purchase at any time within a specified rescission period provided by law
following the earlier of the date the contract was signed or the date the
purchaser received the last of the documents required to be provided by the
Company. Furthermore, most states have other laws which regulate the Company's
activities, such as real estate licensure laws, travel sales licensure laws,
anti-fraud laws, telemarketing laws, prize, gift and sweepstakes laws, and
labor laws. The Company believes that it is in material compliance with all
applicable federal, state, local and foreign laws and licensure laws, travel
sales licensure laws, anti-fraud laws, telemarketing laws, prize, gift and
sweepstakes laws, and labor laws. The Company believes that it is in material
compliance with all applicable federal, state, local and foreign laws and
regulations to which it is currently subject. However, there can be no
assurance that the cost of compliance with such laws and regulations will not
be significant or that the Company is in fact in compliance with such laws and
regulations. In addition, there can be no assurance that laws and regulations
applicable to the Company in any specific jurisdiction will not be revised or
that other laws or regulations will

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<PAGE>

not be adopted which could increase the Company's cost of compliance or
prevent the Company from selling Vacation Ownership Interests or conducting
other operations in such jurisdiction. Any failure to comply with any
applicable law or regulation, or any increases in the costs of compliance
could have a material adverse effect on the Company. See "Business--
Governmental Regulation."

POTENTIAL ENVIRONMENTAL LIABILITIES

Under various federal, state and local laws, the owner or operator of real
property may be liable for the costs required to remove or remediate certain
hazardous or toxic substances located on or in, or emanating from, such
property. Such laws often impose such liability without regard to whether the
owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. Noncompliance by the Company with these and
other environmental, health or safety requirements may result in the need to
cease or alter operations at one or more of its resorts. Phase I environmental
assessment reports (which typically involve inspection without soil sampling
or ground water analysis) have been prepared by independent environmental
consultants for each of the Company's existing resorts, properties under
construction or being expanded and properties subject to acquisition. None of
these reports indicate that any environmental conditions exist at any of these
properties which would have a material adverse effect on the Company.

VARIABILITY OF QUARTERLY RESULTS

The Company has historically experienced, and expects to continue to
experience, quarterly fluctuations in its gross revenues and net income from
the sale of its Vacation Ownership Interests and resort operations. The
Company's revenues are moderately seasonal with owner and guest activity the
greatest from February through April and June through August. In addition,
earnings may be adversely impacted by the timing of the completion of the
development of future resorts, changes in travel and vacation patterns, and
weather or other natural disasters at the Company's resort locations. As the
Company enters new markets, including Arizona, Colorado and South Carolina, it
may experience increased or different seasonality when compared with its
previous operating history. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Seasonality."

RISKS ASSOCIATED WITH RESORT MANAGEMENT

The Company currently provides both hospitality and homeowners' association
management services at its existing vacation ownership resorts and intends to
provide the same services, directly or through subcontracts with third
parties, at its future vacation ownership resorts pursuant to management
agreements with the homeowners' associations present at such resorts. These
agreements are generally for three-year terms which automatically renew unless
terminated by the homeowners' association. If the Company is unable to manage
a resort in a manner which maintains satisfaction among the homeowners,
applicable law may give the homeowners' association rights to terminate the
management agreement. For the six months ended June 30, 1997, approximately
1.6% of the Company's revenues were derived from management fees paid by
homeowners' associations pursuant to the homeowners' association management
agreements. No single management agreement with a homeowners' association
accounted for more than 0.3% of the Company's revenues. There can be no
assurance that a homeowners' association will not terminate its management
agreement with the Company. Any such termination could have a material adverse
effect on the results of the Company's resort management operations and
revenues.

Pursuant to management and submanagement agreements with the Company, Promus
will provide hospitality management services to the Embassy Vacation Resort--
Myrtle Beach and the Embassy Vacation Resort--Scottsdale and may provide such
services to other future resorts developed pursuant to the Promus Agreement.
Such services will be provided for a negotiated management fee which in some
cases may result in a sharing of the homeowner association management fee
payable to the Company. There can be no assurance that Promus will be an
effective manager or will provide management services which are satisfactory
to homeowners. See "Business--Other Operations--Resort Management."

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<PAGE>

RISKS ASSOCIATED WITH TELECOMMUNICATIONS OPERATIONS

The Company provides telecommunications services at certain of its resorts
pursuant to contractual arrangements with each of the homeowners' associations
at its resorts, as well as limited telecommunications design and installation
services for third parties. These telecommunications services consist primarily
of leasing telephone equipment, remarketing long distance telephone services
and designing and installing telecommunications infrastructures. Risks
associated with this aspect of the Company's business include cost overruns on
design or installation contracts, liabilities in connection with products or
services provided by the Company, increased competitive and regulatory
pressures particularly with respect to long-distance rate pricing, and non-
renewal or termination of the Company's telecommunications service contracts by
a homeowners' association. In addition, there can be no assurance that the
Company can continue to provide limited telecommunications design and
installation services on a competitive or profitable basis.

UNINSURED LOSS; NATURAL DISASTERS

There are certain types of losses that are not generally insured because they
are either uninsurable or not economically feasible to insure and for which the
Company does not have insurance coverage. Should an uninsured loss or a loss in
excess of insured limits occur, the Company could lose its investment in a
resort as well as the anticipated future revenues from such resort, and would
continue to be obligated on any mortgage indebtedness or other obligations
related to the resort. Moreover, if a homeowners' association fails to
adequately insure the property committed to the condominium form of ownership
(typically, all units, common areas, facilities and amenities), any uninsured
or under-insured casualty may affect the Company's ability to collect customer
mortgages receivable related to such condominium property. In addition, certain
of the Company's vacation ownership resorts are located in areas that are
susceptible to tropical storms and hurricanes. The Company's resorts could
suffer significant damage as a result of wind storms, hurricanes, floods and
other natural disasters. Any such damage, as well as adverse weather conditions
generally, could impair the Company's ability to sell Vacation Ownership
Interests at its resorts and adversely affect the Company's results of
operation.

LIMITED TRADING HISTORY AND POSSIBLE VOLATILITY OF STOCK PRICE

The Common Stock first became publicly traded on February 28, 1997. Since
then, the per share price of the Common Stock has risen substantially from the
Initial Public Offering price of $12.00 per share. Prior to and after the
Offering, the market price of the Common Stock is likely to be highly volatile
and could be subject to wide fluctuations in response to quarterly variations
in operating results, announcements of new acquisitions, changes in financial
estimates by securities analysts or other events or factors. The market price
of the Common Stock also may be affected by the Company's ability to meet
analysts' expectations, and any failure to meet such expectations, even if
minor, could have a material adverse effect on the market price of the Common
Stock. In addition, the stock market has experienced significant price and
volume fluctuations affecting the market prices of equity securities of many
companies and that have often been unrelated to the operating performance of
such companies. These broad market fluctuations may adversely affect the market
price of the Common Stock. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
often been instituted against such a company. Any such litigation instigated
against the Company could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse
effect on the Company's business, results of operations or financial condition.
See "Price Range of Common Stock."

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Articles of Incorporation and By-Laws, as
well as provisions of the Florida Business Corporation Act (the "FBCA"), may be
deemed to have anti-takeover effects and may delay, defer or prevent a takeover
attempt that a shareholder might consider to be in the shareholder's best
interest. For example, such provisions may deter tender offers for shares of
Common Stock, or deter purchases of large blocks

22
<PAGE>

of shares of Common Stock, thereby limiting the opportunity for the Company's
shareholders to receive a premium for their shares of Common Stock over then-
prevailing market prices. These provisions include the following:

Staggered Board of Directors. The Board of Directors of the Company
consists of three classes of directors. The initial terms of the first,
second and third classes of directors will expire in 1998, 1999 and 2000,
respectively, and directors for each class will be elected for a three-year
term upon expiration of the term of the directors in such class. In
addition, the affirmative vote of two-thirds of the outstanding shares of
Common Stock is required to remove a director. These provisions may have
the effect of increasing the difficulty of one or more shareholders of the
Company to elect directors of their choice to the Board of Directors of the
Company or to remove a director. See "--Effective Control by Principal
Shareholders; Shareholders' Agreement."

Preferred Stock. The Board of Directors has the authority to issue up to
5,000,000 shares of preferred stock and to determine the price, rights
(including voting rights), preferences, privileges and restrictions of
those shares without any vote of or action by the shareholders. The rights
of the holders of the Common Stock are subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be
issued in the future. The issuance of the preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a party to acquire a
majority of the outstanding voting stock of the Company. The Company has no
present plan to issue any shares of preferred stock. See "Description of
Capital Stock."

Florida Business Corporation Act. Florida law contains provisions that
may have the effect of delaying, deferring or preventing a non-negotiated
merger or other business combination involving the Company. These
provisions are intended to encourage any person interested in acquiring the
Company to negotiate with and obtain the approval of the Company's Board of
Directors in connection with the proposed transaction. Certain of these
provisions may, however, discourage a future acquisition of the Company not
approved by the Board of Directors in which shareholders might receive an
enhanced value for their shares, even though a substantial number or
majority of the Company's shareholders might believe the acquisition is in
their best interest. As a result, shareholders who desire to participate in
such a transaction may not have the opportunity to do so. Such provisions
could also discourage bids for the shares of Common Stock at a premium as
well as create a depressive effect on the market price of the shares of
Common Stock. See "Description of Capital Stock."

DIVIDENDS

The Company does not anticipate that it will pay any dividends on its Common
Stock in the foreseeable future. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Upon completion of the Offering, the Company will have outstanding an
aggregate of 23,007,630 shares of Common Stock, excluding shares of Common
Stock issuable upon exercise of stock options granted by the Company and
430,814 shares of Common Stock deliverable on a contingent basis in connection
with the Acquisition. The shares of Common Stock offered hereby will be freely
tradeable (other than by an "affiliate" of the Company, as such term is
defined in the Securities Act) without restriction or registration under the
Securities Act. The sale of a substantial number of shares of Common Stock, or
the perception that such a sale might occur, could adversely affect prevailing
market prices of the Common Stock. The Company is unable to make any
prediction as to the effect, if any, that future sales of Common Stock or the
availability of shares of Common Stock for sale may have on the market price
of the Common Stock prevailing from time to time. In addition, any such sale
or such perception could make it more difficult for the Company to sell equity
securities or equity-related securities in the future at such time and price
as the Company deems appropriate. All remaining outstanding shares of Common
Stock (as well as shares subject to options granted by the Principal
Shareholders which are described below) may be sold under Rule 144 promulgated
under the Securities Act, subject to holding

23
<PAGE>

period, volume, manner of sale, and other restrictions of Rule 144 and, in
certain cases, subject to 90 or 120 day lock-up agreements between the holders
of such shares (and the holders of such options) and the Underwriters. See
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting." In addition, at certain times commencing two years following
the completion of the Initial Public Offering, certain shares of Common Stock
(i) held by the Principal Shareholders and (ii) purchased by certain employees
of the Company pursuant to the exercise of options granted to such employees
by the Principal Shareholders may be sold in the public market pursuant to
certain registration statements which the Company is obligated to file with
respect to such shares. Also, at certain times commencing one year following
the completion of the Acquisition, certain shares of Common Stock held by the
former owners of Success and Points may be sold in the public market pursuant
to a registration statement which the Company is obligated to file with
respect to such shares, or pursuant to an exemption from registration. See
"Shares Eligible for Future Sale."

24
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,000,000 shares of
Common Stock offered by the Company hereby, based on an estimated offering
price of $23 1/4 per share, after deducting estimated underwriting discounts
and commissions and anticipated expenses of the Offering, are estimated to be
$87.5 million ($100.7 million, if the Underwriters' over-allotment option is
exercised in full). The Company intends to use approximately (i) $62.2 million
of the net proceeds to repay outstanding indebtedness and accrued interest; and
(ii) $25.3 million of the net proceeds to pay for the acquisition, development
and expansion of existing and future vacation ownership resorts and for working
capital and general corporate purposes. Pending such uses, the Company will
invest the net proceeds in commercial paper, bankers' acceptances, other short-
term investment-grade securities and money-market accounts.

Indebtedness to be repaid out of the net proceeds to the Company from the
Offering bears interest at rates currently ranging between approximately 8.2%
and 11.0% per annum and will mature at various times over the next seven years
(except for indebtedness incurred to finance customer mortgages receivable,
which amortizes based upon the collection of the underlying customer mortgages
receivable and finally matures seven years from the date of the Company's last
borrowing under such facility). Indebtedness to be repaid that was incurred
within the last year was incurred for financing customer mortgages receivable,
development of vacation ownership resorts, the Acquisition and general
corporate purposes. None of the net proceeds from the Offering will be used to
pay any delinquent indebtedness.

DIVIDEND POLICY

Except for certain distributions made prior to and in connection with the
Formation Transactions, the Company has never declared or paid any dividends on
its capital stock. The Company does not anticipate declaring or paying cash
dividends on its Common Stock in 1997 or in the foreseeable future. The Company
currently intends to retain future earnings to finance its operations and fund
the growth of its business. Any payment of future dividends will be at the
discretion of the Board of Directors of the Company and will depend upon, among
other things, the Company's earnings, financial condition, capital
requirements, level of indebtedness, contractual restrictions in respect of the
payment of dividends and other factors that the Company's Board of Directors
deems relevant.

PRICE RANGE OF COMMON STOCK

The Initial Public Offering of Common Stock was consummated in March 1997 at
an initial public offering price of $12.00 per share. The Company's Common
Stock is quoted on the Nasdaq National Market under the symbol "VSTN." The
following table sets forth, for the periods indicated, the range of high and
low sale prices for the Common Stock, as quoted on the Nasdaq National Market.

<TABLE>
<CAPTION>
COMMON STOCK
-------------------
HIGH LOW
------ ------------
<S> <C> <C>
Year Ending December 31, 1997:
First Quarter (commencing February 28, 1997).............. 15 3/8 11/1///1//6/
Second Quarter............................................ 15 1/2 9 3/8
Third Quarter............................................. 21 1/2 14 7/8
Fourth Quarter (through October 21, 1997)................. 27 22 3/8
</TABLE>

A recent last reported sales price for the Company's Common Stock, as quoted
on the Nasdaq National Market, is set forth on the cover of this Prospectus. On
October 21, 1997, there were approximately 45 holders of record of the
Company's Common Stock.

25
<PAGE>

CAPITALIZATION

The following table sets forth, as of June 30, 1997, the consolidated
capitalization of the Company on an actual basis and as adjusted to give effect
to the sale of the Common Stock offered hereby and the application of the net
proceeds therefrom. This table should be read in conjunction with the
historical financial statements of the Company and the related notes thereto
included elsewhere in this Prospectus. See "Use of Proceeds," "Selected
Combined Historical Financial Information" and "Pro Forma Combined Financial
Information."

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
--------------------------------
ACTUAL AS ADJUSTED
-------------- -----------------
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C>
Debt:
Notes and mortgages payable to financial
institutions(1).............................. $ 84,526 $ 54,183
-------------- --------------
Total....................................... 84,526 54,183
-------------- --------------
Shareholders' Equity:
Preferred Stock, $.01 par value, 5,000,000
shares authorized, none issued and outstand-
ing..........................................
Common Stock, $.01 par value, 100,000,000
shares authorized, 18,800,000 shares issued
and outstanding (22,800,000 shares as
adjusted for the Offering)(2)................ 188 228
Additional paid-in capital.................... 62,134 149,612
Retained earnings............................. 3,746 3,746
-------------- --------------
Total shareholders' equity.................... 66,068 153,586
-------------- --------------
Total capitalization........................ $ 150,594 $ 207,769
============== ==============
</TABLE>
- --------

(1) Includes notes collateralized by customer mortgages receivable. Does not
include approximately $24.0 million of indebtedness incurred in connection
with the Acquisition or an additional $7.8 million borrowed under a
mortgage receivable facility, which indebtedness was incurred subsequent to
June 30, 1997 and will be fully repaid with proceeds of the Offering. See
"Use of Proceeds" and "Business--The Acquisition."

(2) Does not include an aggregate of 1,854,000 shares of Common Stock issuable
pursuant to existing options granted pursuant to the Stock Plan, an
aggregate of 638,444 shares of Common Stock issued in connection with the
Acquisition (207,630 of which were delivered at the closing and 430,814 of
which are deliverable on a contingent basis), or up to 600,000 shares of
Common Stock which the Underwriters may purchase from the Company pursuant
to their over-allotment option. See "Management--Stock Plan," "Business--
The Acquisition" and "Underwriting."

26
<PAGE>

SELECTED COMBINED HISTORICAL FINANCIAL INFORMATION OF THE COMPANY
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AND OPERATING DATA)

The following table sets forth selected combined historical financial
information of the Company for the years ended December 31, 1992, 1993, 1994,
1995 and 1996. The selected combined historical financial information of the
Company (excluding "Operating Data") for the three years ended December 31,
1996 was derived from the Company's Combined Financial Statements, which were
audited by KPMG Peat Marwick LLP, independent auditors, whose report with
respect to the three-year period ended December 31, 1996, together with such
combined financial statements appears elsewhere herein. The selected combined
historical financial information of the Company for the year ended December 31,
1993 was derived from audited financial statements of the Company not included
herein. The selected combined historical financial information for the year
ended December 31, 1992 of the Company has been derived from unaudited
financial statements prepared by the Company. The selected combined historical
financial information presented below as of and for the six months ended June
30, 1996 and 1997 are derived from the unaudited combined and consolidated
financial statements of the Company included elsewhere in this Prospectus. In
the opinion of the management of the Company, the unaudited financial
statements include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial information included
herein. Results for interim periods are not necessarily indicative of results
to be expected during the remainder of the current year or any future period.

The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical combined financial statements of the Company and
Notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
REVENUES:
Vacation Ownership
Interest sales........ $ 48,503 $ 55,658 $ 54,186 $ 50,156 $60,063 $28,622 $40,083
Interest............... 4,662 5,096 7,654 12,886 15,546 7,149 8,923
Resort................. 9,977 10,877 11,834 12,613 13,587 7,125 8,050
Telecommunications..... 1,703 1,980 3,378 4,802 7,054 3,216 3,195
Other.................. 489 551 584 652 686 230 246
-------- -------- -------- -------- ------- ------- -------
Total revenues.......... 65,334 74,162 77,636 81,109 96,936 46,342 60,497
-------- -------- -------- -------- ------- ------- -------
COSTS AND OPERATING
EXPENSES:
Vacation Ownership
Interest cost of
sales................. 10,254 11,521 11,391 12,053 14,595 7,195 9,276
Sales and marketing.... 17,689 21,866 22,872 22,318 27,877 12,569 18,287
Loan portfolio
Interest expense--
treasury............ 1,556 2,070 3,605 6,516 6,865 3,324 3,130
Provision for
doubtful accounts... 3,405 3,903 3,803 3,522 4,271 2,034 2,809
Resort................. 8,594 9,493 10,037 10,585 11,089 5,984 6,562
Telecommunications..... 1,358 1,537 2,520 3,654 5,613 2,597 2,580
General and
administrative........ 6,628 7,419 7,988 6,979 7,873 3,377 4,957
Depreciation and
amortization.......... 875 875 1,392 2,215 2,553 1,074 1,412
Interest expense--
other................. 2,523 2,269 2,106 3,168 4,154 2,040 1,071
Other.................. 1,688 1,318 1,241 1,020 443 145 1,470
Deferred executive
incentive
compensation.......... 402 380 332 3,448 1,114 553 0
-------- -------- -------- -------- ------- ------- -------
Total costs and
operating expenses..... 54,972 62,651 67,287 75,478 86,447 40,892 51,554
-------- -------- -------- -------- ------- ------- -------
Operating income........ 10,362 11,511 10,349 5,631 10,489 5,450 8,943
Excess value
recognized............ 1,151 701 365 219 105 70 36
Minority Interest...... -- -- -- -- -- -- 50
-------- -------- -------- -------- ------- ------- -------
Income before income
taxes and extraordinary
item................... 11,513 12,212 10,714 5,850 10,594 5,520 9,029
Provision for taxes.... -- -- -- -- -- -- 2,803
Non-recurring charge
associated with the
change of tax
status................ -- -- -- -- -- -- 13,201
-------- -------- -------- -------- ------- ------- -------
Income (loss) before
extraordinary item.... 11,513 12,212 10,714 5,850 10,594 5,520 (6,975)
Extraordinary item
early extinguishment
of debt (net of
tax).................. -- -- -- -- -- -- 825
-------- -------- -------- -------- ------- ------- -------
Net income.............. $ 11,513 $ 12,212 $ 10,714 $ 5,850 $10,594 $ 5,520 $(7,800)
======== ======== ======== ======== ======= ======= =======
</TABLE>

27
<PAGE>

<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
EBITDA(a)............... $ 15,316 $ 16,725 $ 17,452 $ 15,468 $ 21,304 $ 10,803 $ 11,745
Cash flow provided by
(used in):
Operating activities... $ 17,544 $ 10,602 $ 13,215 $ 12,524 $ 15,629 $ 2,328 $ 4,576
Investing activities... $(21,244) $(20,444) $(20,383) $(22,651) $(26,351) $ (8,112) $(14,810)
Financing activities... $ 3,410 $ 11,085 $ 6,512 $ 15,131 $ 9,313 $ 6,103 $ 13,189
OPERATING DATA:
Number of resorts at end
of period ............. 2 2 2 2 3 2 3
Number of Vacation
Ownership Interests
sold(b)................ 4,980 5,679 5,582 5,190 5,794 2,805 4,056
Number of Vacation
Ownership Interests in
inventory at period
end(c)................. 1,967 3,781 3,822 3,054 14,774 3,142 13,421
Average price of
Vacation Ownership
Interests sold......... $ 9,740 $ 9,801 $ 9,707 $ 9,664 $ 10,366 $ 10,204 $ 9,882
BALANCE SHEET DATA (AT
YEAR END):
Cash (including
restricted cash)....... $ 3,779 $ 5,215 $ 4,864 $ 10,788 $ 9,981 $ 11,184 $ 14,131
Total assets............ $ 73,827 $ 99,431 $117,989 $140,651 $173,922 $150,089 $196,858
Long-term debt.......... $ 45,650 $ 57,474 $ 64,769 $101,504 $118,557 $109,384 $ 84,526
Shareholders' equity.... $ 12,254 $ 23,726 $ 33,658 $ 17,904 $ 26,648 $ 21,492 $ 66,068
</TABLE>
- --------
(a) As shown below, EBITDA represents net income before interest expense,
income taxes, depreciation and amortization and excess value recognized
which reflects the amortization of the difference between the fair value of
the Company at the time of its purchase by Messrs. Gellein and Adler, and a
third individual, less the purchase price paid to acquire the Company.
EBITDA does not represent cash flows from operations and should not be
considered to be an alternative to net income as an indicator of operations
performance or to cash flows from operations as a measure of liquidity. In
addition, the Company's presentation of EBITDA could differ from similar
presentations prepared by other companies. Management believes that EBITDA
represents a useful measure to evaluate the Company's results of operations
without reference to its capitalization and tax structure. Management also
believes EBITDA is a useful indicator of the Company's ability to service
and/or incur indebtedness because it adjusts net income for non-cash
expenditures, taxes and existing interest expenses. Management believes
that the trends depicted by the changes in EBITDA set forth below
demonstrate the Company's use of borrowing and the resultant increase in
interest expense associated with its growth. The following table reconciles
EBITDA to net income:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income.............. $11,513 $12,212 $10,714 $ 5,850 $10,594 $ 5,520 $(7,800)
Interest expense--
treasury............... 1,556 2,070 3,605 6,516 6,865 3,324 3,130
Interest expense--
other.................. 2,523 2,269 2,106 3,168 4,154 2,040 1,071
Taxes................... 0 0 0 0 0 0 15,499
Depreciation and
amortization........... 875 875 1,392 2,215 2,553 1,074 1,412
Amortization of discount
on customer mortgages
receivable............. 0 0 0 (2,062) (2,757) (1,085) (1,531)
Excess value
recognized............. (1,151) (701) (365) (219) (105) (70) (36)
------- ------- ------- ------- ------- ------- -------
EBITDA.................. $15,316 $16,725 $17,452 $15,468 $21,304 $10,803 $11,745
======= ======= ======= ======= ======= ======= =======
</TABLE>
(b) Includes both annual and alternate-year Vacation Ownership Interests.
(c) Inventory classified as annual Vacation Ownership Interests.

28
<PAGE>

PRO FORMA COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined balance sheet as of June 30, 1997
presents the historical combined balance sheets of the Company and Success and
Points. The purchase accounting adjustments, as described in the related notes,
are calculated as if the Acquisition had been consummated effective June 30,
1997.

The unaudited pro forma combined statements of income for the six months
ended June 30, 1997 and for the year ended December 31, 1996 present the
combined results of operations of the Company and Success and Points. The
purchase accounting and other pro forma adjustments, as described in the
related notes and below, are calculated as if the Acquisition had been
effective January 1, 1996. In addition, the pro forma statements of operations
give effect to (i) the Formation Transactions and the treatment of the combined
Company as a C corporation rather than the treatment of the Affiliated
Companies as S corporations and limited partnerships for federal income tax
purposes; and (ii) the Initial Public Offering and the application of the net
proceeds to the Company therefrom. The pro forma combined financial information
does not purport to represent what the Company's financial position and results
of operations would actually have been if such transactions had in fact
occurred on such dates. The pro forma adjustments are based on currently
available information and upon certain assumptions that management believes are
reasonable under current circumstances. The pro forma combined financial
information and accompanying notes should be read in conjunction with the
Company's Historical Combined Financial Statements and related Notes thereto,
and other financial information pertaining to the Company included in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical financial statements of Success and Points.

29
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
FORMATION
TRANSACTIONS/
INITIAL HISTORICAL
PUBLIC THE SUCCESS
OFFERING COMPANIES PRO FORMA
HISTORICAL PRO FORMA AND POINTS ACQUISITION PRO FORMA
VISTANA, INC. ADJUSTMENTS SUBTOTAL OF COLORADO ADJUSTMENTS TOTAL
------------- ------------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Vacation Ownership
Interest sales.......... $ 60,063 $ -- $ 60,063 $14,062 $ -- $ 74,125
Interest................. 15,546 -- 15,546 1,083 -- 16,629
Resort................... 13,587 -- 13,587 119 -- 13,706
Telecommunications....... 7,054 -- 7,054 -- -- 7,054
Other.................... 686 -- 686 685 -- 1,371
---------- --------- ---------- ------- ------- ----------
Total revenue........ 96,936 -- 96,936 15,949 -- 112,885
---------- --------- ---------- ------- ------- ----------
Costs and operating
expenses:
Vacation Ownership
Interests cost of
sales................... 14,595 -- 14,595 3,351 -- 17,946
Sales and marketing...... 27,877 -- 27,877 5,967 -- 33,844
Loan portfolio:
Interest expense--
treasury.............. 6,865 (961)(a) 5,904 199 1,963 (e) 8,066
Provision for doubtful
accounts.............. 4,271 -- 4,271 185 -- 4,456
Resort................... 11,089 -- 11,089 -- -- 11,089
Telecommunications....... 5,613 -- 5,613 -- -- 5,613
General and
administrative.......... 7,873 -- 7,873 2,245 -- 10,118
Depreciation and
amortization............ 2,553 (258)(a) 2,295 -- 828 (c) 3,123
Interest expense--other.. 4,154 (3,189)(a) 965 -- -- 965
Deferred executive
compensation............ 1,114 -- 1,114 -- -- 1,114
Other.................... 443 -- 443 89 -- 532
---------- --------- ---------- ------- ------- ----------
Total costs and
operating expenses.. 86,447 (4,408) 82,039 12,036 2,791 96,866
---------- --------- ---------- ------- ------- ----------
Operating income..... 10,489 4,408 14,897 3,913 (2,791) 16,019
Excess value recognized.... 105 -- 105 -- -- 105
---------- --------- ---------- ------- ------- ----------
Income before income
taxes............... 10,594 4,408 15,002 3,913 (2,791) 16,124
Provision for income
taxes..................... -- 5,382 (b) 5,382 204 541 (d) 6,127
---------- --------- ---------- ------- ------- ----------
Net income (loss).... $ 10,594 $ (974) $ 9,620 $ 3,709 $(3,332) $ 9,997
========== ========= ========== ======= ======= ==========
Historical net income per
share of common stock..... $ 0.75
==========
Historical weighted average
shares outstanding........ 14,175,000
==========
Pro forma income per share
of common stock........... $ 0.51 $ .53
========== ==========
Pro forma weighted average
shares of common stock
outstanding............... 1,482,044 18,800,000 207,630 19,007,630
========= ========== ======= ==========
</TABLE>
- -------
(a) Reflects the effect on the 1996 historical statement of income of the
assumed issuance of common stock on January 1, 1996 and the reduction of
interest expense with the early retirement of $38.9 million of debt.
(b) Reflects the effect on the 1996 historical statement of income referred to
in (a) above and assumes the Company had been treated as a C corporation,
rather than the treatment of the Company's predecessors as S corporations
and limited partnerships for federal income tax purposes.
(c) Reflects amortization of goodwill.
(d) Reflects the effect on the 1996 historical statement of income and assumes
all of the entities comprising Success had been treated as C corporations,
rather than as limited liability companies ("LLC's") for federal income tax
purposes.
(e) Reflects interest expense on bank borrowings of approximately $24 million
at LIBOR plus 2.5% (8.22% per annum at September 30, 1997). See "Use of
Proceeds."

30
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
FORMATION
TRANSACTIONS/ PRO
INITIAL HISTORICAL FORMA
PUBLIC THE SUCCESS ACQUISI-
OFFERING COMPANIES TION
HISTORICAL PRO FORMA AND POINTS ADJUST- PRO FORMA
VISTANA, INC. ADJUSTMENTS SUBTOTAL OF COLORADO MENTS TOTAL
------------- ------------- ---------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Vacation Ownership
Interest sales........ $ 40,083 $ -- $ 40,083 $11,462 $ -- $ 51,545
Interest............... 8,923 -- 8,923 1,036 -- 9,959
Resort................. 8,050 -- 8,050 6 -- 8,056
Telecommunications..... 3,195 -- 3,195 -- -- 3,195
Other.................. 246 -- 246 1,040 -- 1,286
---------- --------- ---------- ------- ------- ----------
Total revenue...... 60,497 -- 60,497 13,544 -- 74,041
---------- --------- ---------- ------- ------- ----------
Costs and operating
expenses:
Vacation Ownership
Interests cost of
sales................. 9,276 -- 9,276 2,983 -- 12,259
Sales and marketing.... 18,287 -- 18,287 5,809 -- 24,096
Loan portfolio:
Interest expense--
treasury............ 3,130 (358)(a) 2,772 340 982 (f) 4,094
Provision for
doubtful accounts... 2,809 -- 2,809 177 -- 2,986
Resort................. 6,562 -- 6,562 -- -- 6,562
Telecommunications..... 2,580 -- 2,580 -- -- 2,580
General and
administrative........ 4,957 -- 4,957 1,510 -- 6,467
Depreciation and
amortization.......... 1,412 -- 1,412 -- 420 (d) 1,832
Interest expense--
other................. 1,071 (356)(a) 715 -- -- 715
Other.................. 1,470 -- 1,470 96 -- 1,566
---------- --------- ---------- ------- ------- ----------
Total costs and
operating
expenses.......... 51,554 (714) 50,840 10,915 1,402 63,157
---------- --------- ---------- ------- ------- ----------
Operating Income... 8,943 714 9,657 2,629 (1,402) 10,884
Excess value
recognized............. 36 -- 36 -- -- 36
Minority interest
income................. 50 -- 50 -- -- 50
---------- --------- ---------- ------- ------- ----------
Income before
income taxes...... 9,029 714 9,743 2,629 (1,402) 10,970
Provision for income
taxes.................. 2,803 900 (b) 3,703 695 (229)(e) 4,169
Non-recurring charge
associated with the
change in tax status... 13,201 (13,201)(c) -- -- -- --
---------- --------- ---------- ------- ------- ----------
Net income (loss)
before
extraordinary
item.............. $ (6,975) $ 13,015 $ 6,040 $ 1,934 $(1,173) $ 6,801
========== ========= ========== ======= ======= ==========
Historical net income
(loss) per share before
extraordinary item..... $ (0.40)
==========
Historical weighted
average shares
outstanding............ 17,317,956
==========
Pro forma net income per
share of common stock.. $ 0.32 $ 0.36
---------- ----------
Pro forma weighted
average shares of
common stock
outstanding............ 1,482,044 18,800,000 207,630 19,007,630
========= ========== ======= ==========
</TABLE>
- --------
(a) Reflects the effect on the 1997 historical statement of income of the
assumed issuance of common stock on January 1, 1997 and the reduction of
interest expense with the early retirement of $38.9 million of debt.
(b) Reflects the effect on the 1997 historical statement of income referred to
in (a) above and assumes the Company had been treated as a C corporation,
rather than the treatment of the Company's predecessors as S corporations
and limited partnerships for federal income tax purposes.
(c) Reflects the elimination of the non-recurring charge for deferred taxes
that relate to the conversion of the tax status of the Company's
predecessor entities.
(d) Reflects amortization of goodwill.
(e) Reflects the effect on the 1997 historical statement of income and assumes
all of the entities comprising Success had been treated as C corporations,
rather than as LLC's for federal income tax purposes.
(f) Reflects interest expense on bank borrowings of approximately $24 million
at LIBOR plus 2.5% (8.22% per annum at September 30, 1997). See "Use of
Proceeds."

31
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1997
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL
THE SUCCESS COMPANIES PRO FORMA
HISTORICAL AND POINTS OF ACQUISITION COMPANY
VISTANA, INC. COLORADO ADJUSTMENTS PRO FORMA
------------- --------------------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
Cash and cash
equivalents............ $ 9,089 $ 819 $ -- $ 9,908
Restricted cash......... 5,042 -- -- 5,042
Customer mortgages
receivable, net........ 111,129 19,527 -- 130,656
Other receivables....... 3,959 988 -- 4,947
Inventory of Vacation
Ownership Interest..... 20,952 4,787 -- 25,739
Construction in
progress............... 13,001 -- -- 13,001
-------- ------- ------- --------
Total Vacation
Ownership
Interest........... 33,953 4,787 38,740
Prepaid expenses and
other assets........... 13,056 984 14,040
Land held for
development............ 7,664 -- -- 7,664
Property and equipment,
net.................... 12,966 459 -- 13,425
Goodwill................ -- -- 16,895 (a) 16,895
-------- ------- ------- --------
Total assets........ $196,858 $27,564 $16,895 $241,317
======== ======= ======= ========
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Accounts payable and
accrued liabilities.... $ 5,401 $ 1,298 $ 873 (b) $ 7,572
Accrued compensation and
benefits............... 7,524 443 -- 7,967
Customer deposits....... 7,008 201 -- 7,209
Deferred income taxes... 15,217 1,518 1,367 (c) 18,102
Due to related parties.. -- 285 -- 285
Other liabilities....... 6,721 907 -- 7,628
Notes and mortgages
payable................ 84,526 9,968 23,885 (d) 118,379
-------- ------- ------- --------
Total liabilities... 126,397 14,620 26,125 167,142
Minority interest....... 4,393 -- -- 4,393
Common stock............ 188 -- 2 (e) 190
Additional paid-in
capital................ 62,134 -- 3,712 (e) 65,846
Retained earnings....... 3,746 -- -- 3,746
Equity.................. -- 12,944 (12,944)(f) --
-------- ------- ------- --------
Total shareholders'
equity............. 66,068 12,944 (9,230) 69,782
-------- ------- ------- --------
Total liabilities
and shareholders'
equity............. $196,858 $27,564 $16,895 $241,317
======== ======= ======= ========
</TABLE>
- --------
(a) Reflects goodwill.

(b) Reflects accrued Acquisition expenses of $873.
(c) Reflects the change in the deferred tax liability due to the Acquisition.

(d) Reflects bank borrowings of approximately $24 million at LIBOR plus 2.5%
(8.22% per annum at September 30, 1997) to finance the cash portion of the
Acquisition purchase price. See "Use of Proceeds."
(e) Reflects the issuance of 207,630 shares of Common Stock at $17.89 per
share, the closing price of the Common Stock on the closing date of the
Acquisition.
(f) Reflects the elimination of the investment in Success and Points' equity.

32
<PAGE>

NOTES TO UNAUDITED PRO FORMA

CONDENSED COMBINED FINANCIAL STATEMENTS

NOTE A. BASIS OF PRESENTATION

The historical statements of operations for Success and Points for the year
ended December 31, 1996 and for the six months ended June 30, 1997 include
companies whose year ends were converted from March 31, to conform to the
Company's year end of December 31.

NOTE B. GOODWILL

Following is a calculation of goodwill:

<TABLE>
<CAPTION>
($ amounts in thousands)
<S> <C>
Total cost of the Acquisition*................... $ 28,472
Fair value of assets acquired.................... (11,577)
--------
Goodwill......................................... $ 16,895
========
</TABLE>
- --------

*Does not give effect to contingent consideration of approximately 430,000
shares of Common Stock (See Note C).

At this time, the Company's management believes that the fair value of net
assets acquired approximates Success and Points' book value.

NOTE C. CONTINGENT CONSIDERATION

Delivery of approximately 430,000 of the shares of Common Stock is
contingent upon Success and Points achieving certain operating results. In
each of the calendar years 1998 through 2000, upon achieving certain operating
results, a portion of the contingent consideration will be deliverable to the
selling parties. The Company's management has determined that the contingent
consideration is an additional cost of the Acquisition, rather than
compensation expense. In addition, such contingent shares are not assumed to
be outstanding in the accompanying pro forma financial statements, as the
amount is not recorded until the contingent operating results have been met.
If the contingent operating results are met and the shares are delivered, the
Company shall record the then-current fair value of the shares as an
additional cost of the purchase. The potentially affected assets, most notably
goodwill, shall be amortized over the remaining life of the assets. The impact
on future earnings through the amortization of goodwill associated with the
contingent consideration would be approximately $380,000 per year assuming a
stock price of $17.89 (the closing price of the Common Stock on the date of
the Acquisition) and assuming all of the contingent shares are delivered. This
adjustment will change based upon the fair value of the stock at the time the
contingent shares are earned and based upon the number of shares delivered.

NOTE D. AMORTIZATION PERIOD OF GOODWILL

The goodwill as a result of the acquisition of Success and Points will be
amortized over a 20-year period.

NOTE E. INCOME TAXES

The pro forma total effective income tax rate was assumed to be 38%.

33
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company was organized in December 1996 to combine the ownership of the
vacation ownership resort acquisition, development and management businesses
conducted by the Company's corporate and partnership predecessors. The Company
generates revenues from the sale and financing of annual and alternate-year
Vacation Ownership Interests at its resorts, which typically entitle the
purchaser to ownership of a fully-furnished unit for a one-week period, on
either an annual or alternate-year basis, respectively. For purposes of the
following discussion, sales of Vacation Ownership Interests reflect sales of
both annual Vacation Ownership Interests and alternate-year Vacation Ownership
Interests each as a sale of a single Vacation Ownership Interest. The Company
generates additional revenues from resort operations, which include room rental
operations and auxiliary resort operations such as food and beverage sales, and
from management fees and telecommunications services provided by the Company at
its resorts and limited telecommunications design and installation services
provided for third parties.

The Company recognizes revenues attributable to sales of Vacation Ownership
Interests on an accrual basis after the execution of a binding sales contract
between the Company and the purchaser, receipt by the Company of a down payment
of at least 10% of the sales price and the expiration of any applicable
statutory rescission period. The Company historically has not sold Vacation
Ownership Interests prior to completion of construction; however, in connection
with the Embassy Vacation Resort--Myrtle Beach the Company is selling, and in
other appropriate circumstances may sell, Vacation Ownership Interests prior to
completion of construction. To the extent the Company sells Vacation Ownership
Interests prior to completion of construction in the future, the Company
intends to recognize such sales in accordance with the percentage of completion
method in addition to the factors identified above. Costs associated with the
acquisition and development of vacation ownership resorts, including carrying
costs such as interest and taxes, are generally capitalized and subsequently
recorded as a cost of sales as the related revenues are recognized.

The Company, through its predecessor corporations and partnerships, has
operated in the vacation ownership industry since 1980. In December 1986, the
Company was sold to a corporate acquiror. In November 1991, Messrs. Gellein and
Adler, together with a third individual, acquired the Company from the
corporate acquiror. In May 1995, the Company purchased (the "Executive
Repurchase") the entire interest in the Company held by the third individual,
who was a shareholder/executive of the Company. Also in May and September 1995,
the Company redeemed options (the "Option Redemption") to purchase interests in
the partnerships which operate Vistana Resort and Vistana's Beach Club, which
were held by two institutions who had purchased receivables from the Company.
Together, the Executive Repurchase and the Option Redemption affected the
financial results in that the Company incurred additional debt to finance the
Executive Repurchase and the Option Redemption. Additionally, in connection
with the Executive Repurchase, the Company paid its former
shareholder/executive for a five-year covenant-not-to-compete, which is being
amortized through April 2000.

34
<PAGE>

RESULTS OF OPERATIONS

The following discussion of results of operations relates to entities
comprising the Company on a combined historical basis prior to the
Acquisition. Results of operations only reflect operations of entities in
existence for each respective reporting year. The following table sets forth
certain combined operating information for the entities comprising the Company
for the three years ended December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997.

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31 JUNE 30
----------------------- ---------------
1994 1995 1996 1996 1997
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
AS A PERCENTAGE OF TOTAL REVENUES
Vacation Ownership Interest sales.. 69.8% 61.8% 62.0% 61.8% 66.3%
Interest revenue................... 9.9% 15.9% 16.0% 15.4% 14.7%
Resort revenue..................... 15.2% 15.6% 14.0% 15.4% 13.3%
Telecommunications revenue......... 4.4% 5.9% 7.3% 6.9% 5.3%
Other.............................. 0.7% 0.8% 0.7% 0.5% 0.4%
------ ------ ------- ------- ------
Total revenues................... 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ======= ======= ======
AS A PERCENTAGE OF VACATION
OWNERSHIP INTEREST SALES
Vacation Ownership Interest cost of
sales............................. 21.0% 24.0% 24.3% 25.1% 23.1%
Sales and marketing................ 42.2% 44.5% 46.4% 43.9% 45.6%
Provision for doubtful accounts.... 7.0% 7.0% 7.1% 7.1% 7.0%
AS A PERCENTAGE OF INTEREST REVENUES
Interest expense--treasury......... 47.1% 50.6% 44.2% 46.5% 35.1%
AS A PERCENTAGE OF TOTAL REVENUES
General and administrative......... 10.3% 8.6% 8.1% 7.3% 8.2%
Depreciation and amortization...... 1.8% 2.7% 2.6% 2.3% 2.3%
Interest expense--other............ 2.7% 3.9% 4.3% 4.4% 1.8%
Other.............................. 1.6% 1.3% 0.5% 0.3% 2.4%
Total costs and operating
expenses......................... 86.7% 93.1% 89.2% 88.2% 85.2%
AS A PERCENTAGE OF RESORT REVENUES
Resort expenses(1)................. 84.8% 83.9% 81.6% 84.0% 81.5%
AS A PERCENTAGE OF
TELECOMMUNICATIONS REVENUES
Telecommunications expenses(1)..... 74.6% 76.1% 79.6% 80.8% 80.8%
SELECTED OPERATING DATA:
Number of resorts at year end...... 2 2 3 2 3
Number of Vacation Ownership
Interests sold(2)................. 5,582 5,190 5,794 2,805 4,056
Number of Vacation Ownership
Interests in inventory at end of
period(3)......................... 3,822 3,054 14,774 3,142 13,421
Average price of Vacation Ownership
Interests sold.................... $9,707 $9,664 $10,366 $10,204 $9,882
</TABLE>
- --------
(1) Does not include interest and depreciation expenses.
(2) Includes both sales of annual and alternate-year Vacation Ownership
Interests.
(3) Inventory classified as annual Vacation Ownership Interests.

Comparison of the six months ended June 30, 1997 to the six months ended June
30, 1996.

For the six months ended June 30, 1997, the Company recognized total
revenues of $60.5 million compared to $46.3 million for the six months ended
June 30, 1996, an increase of $14.2 million, or 30.6%. This increase is
primarily due to a $11.5 million increase in sales of Vacation Ownership
Interests from $28.6 million during 1996 to $40.1 million during 1997, an
increase of 40.0%. Vacation Ownership Interest sales increased due to a 44.6%
increase in the number of Vacation Ownership Interests sold, reduced by a 3.2%
decrease in the average sales price due to the inclusion of the Hampton
Vacation Resort--Oak Plantation which has a lower sales price. The increase in
Vacation Ownership Interests sold was a result of expanded sales and marketing
programs, both in central Florida and internationally, and sales of Vacation
Ownership Interests at the Hampton Vacation Resort--Oak Plantation which were
included in sales for 1997 but not for 1996.

35
<PAGE>

Interest income increased 24.8%, from $7.1 million to $8.9 million due to a
26.1% increase in the average principal amount of net customer mortgages
receivable from $83.8 million to $105.6 million (despite a decline in the
average interest rate on customer receivables from 14.2% to 13.9%). Also
included in interest income is the discount amortization on customer mortgages
receivable recognized during the comparable six month periods ended June 30,
1997 and June 30, 1996 of $1.5 million and $1.1 million, respectively,
relating to the repurchase of customer mortgages receivable. This discount
resulted from a 1995 transaction in which the Company reacquired customer
mortgages receivable (pursuant to a related clean-up call provision) which had
been previously sold in 1991 as well as recognition of a discount on certain
customer mortgages receivable repurchased in 1996 (pursuant to a related
clean-up call provision) from an investment partnership. As of June 30, 1997,
$4.0 million of total unamortized discount remained and is expected to be
amortized through 1999.

Resort revenue increased 13.0%, from $7.1 million to $8.1 million, as a
result of increased room rentals primarily from the impact of additional room
rentals at the Hampton Vacation Resort--Oak Plantation, which are included for
the six months ended in June 30, 1997, but not in the same period in 1996.
Telecommunication revenues (guest telephone charges relating to the existing
resorts and revenues from contracting services provided to third parties)
remained relatively constant against the comparable six month period ended
June 30, 1996.

Total operating costs and expenses increased $10.7 million or 26.1% from
$40.9 million in the period ending June 30, 1996 to $51.6 million in the
comparable 1997 period, but declined as a percentage of total revenue from
88.2% in 1996 to 85.2% in 1997. Vacation Ownership Interest product costs, as
a percentage of Vacation Ownership Interest revenues, decreased from 25.1% in
1996 to 23.1% in 1997, as a result of sales in the current period of phases
with relatively lower per unit costs at Vistana Resort and the Hampton
Vacation Resort--Oak Plantation. Sales and marketing expenses increased 45.5%
from $12.6 million in 1996 to $18.3 million in 1997 during the comparable six
month period principally due to the 40.0% increase in related Vacation
Ownership Interest sales and the Company's sales facilities expansion. As a
percentage of Vacation Ownership Interest sales, selling and marketing
expenses increased from 43.9% in the period ended June 30, 1996 to 45.6% in
the period ended June 30, 1997 as a result of higher marketing costs, as well
as expenses related to increased international sales, which carry higher sales
and marketing costs, and from the opening of new national and international
sales facilities.

Loan portfolio expenses consisting of interest expense-treasury decreased to
$3.1 million in 1997 from $3.3 million in 1996 primarily as a result of the
interest benefit obtained as a result of the debt repayment made from a
portion of the proceeds of the Initial Public Offering. Provision for doubtful
accounts remained relatively constant at 7.0% of Vacation Ownership Interest
revenues in 1997 compared to 7.1% in 1996. The Company periodically monitors
its provision for doubtful accounts to provide for future losses associated
with any defaults on customer mortgages receivable and provides for additions
to the allowance for loss on receivables through its provision for doubtful
accounts on an annual basis. Management believes that the provision is
adequate for such future losses. Resort and telecommunication expenses
increased at a rate commensurate with that of related revenues.

General and administrative expenses increased from $3.4 million for the six
months ended June 30, 1996 to $5.0 million for the six months ended June 30,
1997, increasing as a percent of total revenues, from 7.3% in 1996 to 8.2% in
1997. The increase in general and administrative expenses was the result of
(i) increased revenue levels and commensurate business activities; (ii) the
addition of a number of senior managers and key executives in order to build
the management and organizational infrastructure necessary to efficiently
manage the Company's future growth; (iii) the Company's expenses as a public
company, including the filing of periodic public reports; and (iv) added
salary, travel and office expenses attributable to the current and planned
growth in the size of the Company. Depreciation and amortization remained
constant at 2.3% as a percentage of total revenues in both respective periods
reflecting the added costs of depreciation from capital additions being spread
over a larger revenue base. Interest expense-other decreased from 4.4% in 1996
as a percentage of total revenue to 1.8% in the same period of 1997 due to
early extinguishment of debt from funds provided by the Initial Public
Offering.

Operating income increased 64.1% to $8.9 million, or 14.8% of total
revenues, during the six months ended June 30, 1997 from $5.5 million, or
11.8% of total revenues, during the six months ended June 30, 1996.

36
<PAGE>

As the result of the Initial Public Offering and the Formation Transactions,
the Company became subject to federal, state and foreign income taxes and was
required to record a nonrecurring deferred tax liability of $13.2 million for
cumulative temporary differences between financial reporting and tax reporting.
For the six months ended June 30, 1997, the Company also recorded a deferred
income tax expense provision of $2.8 million, less $0.5 million relating to the
extraordinary item which was recorded net of tax. The deferred tax assets,
deferred tax liabilities and the current tax provision were estimated based on
management's most recent information as of June 30, 1997. The provision for
income taxes reflects the income tax expense from the date of the formation
through June 30, 1997.

The Company reports most of its sales of Vacation Ownership Interests on the
installment method for federal income tax purposes. As a result, the Company
does not recognize taxable income on these sales until the installment payments
have been received from the Company's customers. The Company became subject to
the federal alternative minimum tax ("AMT") as a result of the deferred income
which results from the installment sales method in the period ended June 30,
1997. In the quarter ended June 30, 1997, the Company began paying State of
Florida AMT and the Company expects to pay State of Florida AMT for the balance
of the fiscal year.

Under Section 453(l) of the Internal Revenue Code, interest may be imposed on
the amount of tax attributable to the installment payments on customer
receivables for the period beginning on the date of sale and ending on the date
the related tax is paid. If the Company is otherwise not subject to pay tax in
a particular year, no interest is imposed since the interest is based on the
amount of tax paid in that year. The Company has not included a provision for
any of this interest since it is not currently subject to tax. However, in the
future it may become so. The Company continues to monitor its tax provision and
may adjust it to provide for this interest in the future.

During the first quarter of 1997, the Company repaid $38.9 million of debt.
The Company recorded an expense relating to the write-off of previously
capitalized fees and prepayment penalties of $0.8 million, net of related tax
benefits of $0.5 million.

Comparison of Year Ended December 31, 1996 to Year Ended December 31, 1995

For the year ended December 31, 1996, the Company recognized total revenues
of $96.9 million compared to $81.1 million for the year ended December 31,
1995, an increase of $15.8 million, or 19.5%. This increase is primarily the
result of a $9.9 million increase in sales of Vacation Ownership Interests from
$50.2 million during 1995 to $60.1 million during 1996, an increase of 19.8%.
Sales of Vacation Ownership Interests increased primarily as a result of (i) a
7.3% increase in the average sales price of Vacation Ownership Interests, and
(ii) an 11.6% increase in the number of Vacation Ownership Interests sold from
5,190 to 5,794. The increase in Vacation Ownership Interests sold was the
result of the Company's marketing activities in central Florida and a 110.4%
increase in sales generated by the Company's internationally-based marketing
efforts which grew from $4.7 million in 1995 to $9.9 million in 1996.

Interest revenue increased 20.6% from $12.9 million to $15.5 million due to a
24.4% increase in the principal amount of net customer mortgages receivable
from $80.5 million to $100.2 million, and an increased average contractual
yield on the Company's customer mortgages receivable portfolio from 13.9% to
14.4%. Also included in interest revenue, discount amortization recognized on
customer mortgages receivable increased 33.7% from $2.1 million to $2.8 million
as the Company recognized discount amortization for the full period in 1996, as
compared to a portion of the period in 1995. This discount resulted from a 1995
transaction in which the Company re-acquired customer mortgages receivable
(pursuant to a related clean-up call provision pertaining to the original
transaction) which had been previously sold in 1991 as well as recognition of a
discount on certain customer mortgages receivable repurchased in 1996 (pursuant
to a related clean-up call provision pertaining to the original transaction)
from an investment partnership. As of December 31, 1996, $5.5 million of the
unamortized discount remained and is expected to be amortized over the next
four years.

Resort revenues increased 7.7%, from $12.6 million to $13.6 million, as a
result of increased room rentals and retail operations at Vistana Resort in
Orlando. Telecommunications revenues (guest telephone charges

37
<PAGE>

relating to the existing resorts and revenues from contracting services
provided to third parties) increased 46.9%, from $4.8 million to $7.1 million,
due to increased telephone usage by resort guests and an increase in
contracting revenues from $3.5 million to $5.7 million.

Operating costs and expenses increased 14.5% from $75.5 million to $86.5
million, although, as a percentage of total revenues, operating costs and
expenses decreased from 93.1% in 1995 to 89.2% in 1996. Product costs,
telecommunications expenses and resort expenses increased at a rate
commensurate with or in excess of that of related revenues. Loan portfolio
costs, general and administrative expenses, and depreciation increased at
rates less than the rate by which revenues increased. Provision for doubtful
accounts remained relatively constant at 7.1% of revenues in 1996. The Company
periodically monitors its provision for doubtful accounts to provide for
future losses associated with any defaults on customer mortgages receivable
and provides for additions to the allowance for loss on receivables through
its provision for doubtful accounts on an annual basis. Management believes
that the provision is adequate for such future losses. Interest expense-
treasury increased due to increased borrowings secured by customer mortgages
receivable. Depreciation and amortization increased at a rate lower than that
of total revenues reflecting the leveraging of these costs and assets over a
larger revenue base. In addition, operating costs and expenses decreased by
$2.3 million as a result of a decrease in the amount of deferred executive
incentive compensation.

Costs of sales as a percentage of Vacation Ownership Interest sales
increased from 24.0% in 1995 to 24.3% in 1996 reflecting a larger percentage
of Vacation Ownership Interests sold in 1996 compared to 1995 from a more
expensive phase at Vistana Resort in Orlando, resulting from a relatively
greater per unit cost for land and amenities than prior phases. The Company
expects to complete sales from this higher-cost phase in mid-1997 and in
future periods the Company expects later phases to have relatively lower costs
for land and amenities.

Sales and marketing expenses increased 24.9% from $22.3 million to $27.9
million. As a percentage of Vacation Ownership Interest sales, these expenses
increased from 44.5% to 46.4%. This increase is attributable to higher overall
sales levels as well as opening expenses associated with expanded
international sales facilities and the commencement of sales activities at the
Hampton Vacation Resort--Oak Plantation during the fourth quarter of 1996.

General and administrative expenses increased 12.8% from $7.0 million to
$7.9 million. However, as a percentage of total revenues, these costs
decreased from 8.6% to 8.1%. Resort expenses as a percentage of resort
revenues decreased from 83.9% to 81.6% due to growth in management fee income
while telecommunications expenses as a percentage of telecommunications
revenues increased from 76.1% to 79.6% due to a higher mix of revenues from
contracting which carries a higher cost of sales.

Interest expense-treasury (consisting of interest paid on borrowings secured
by customer mortgages receivable) increased 5.4% from $6.5 million to $6.9
million. This increase reflects higher borrowings secured by customer
mortgages receivable to fund growth in the Company's operations and the
relatively higher interest income described above. However, as a percentage of
interest income, interest expense-treasury decreased from 50.6% to 44.2%.
Interest expense-other increased $1.0 million, or 31.1%, to $4.2 million in
1996 as a result of the impact for the full twelve months of the debt
associated with the Executive Repurchase and Option Redemption.

During 1995, the Company amended certain senior executives' employment
agreements, which increased deferred executive incentive compensation, on a
cumulative basis, from 1991 through 1995. As a result, deferred executive
incentive compensation decreased by 67.7% to $1.1 million in 1996 from $3.4
million in 1995. The Company entered into new employment agreements with its
senior executives effective upon completion of the Initial Public Offering
and, as a result, anticipates that there will be no equivalent expense after
1996. See "Management--Employment Agreements."

Pre-tax income increased 81.1% from $5.9 million to $10.6 million.

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Comparison of Year Ended December 31, 1995 to Year Ended December 31, 1994.

For the year ended December 31, 1995, the Company recognized total revenues
of $81.1 million compared to $77.6 million for the year ended December 31,
1994, an increase of $3.5 million or 4.5%. Such increase is primarily due to
higher interest revenue, telecommunications revenue and resort revenue, which
offset a 7.4% decrease in revenues from sales of Vacation Ownership Interests
from $54.2 million to $50.2 million. The decrease in Vacation Ownership
Interests sold is primarily the result of a $4.8 million decrease in sales from
the Company's marketing activities in central Florida.

Interest revenue increased 68.4%, from $7.7 million to $12.9 million, due to
a 25.7% increase in the principal amount of net customer mortgages receivable
from $64.0 million to $80.5 million. The year-end weighted average interest
rate on the customer mortgages receivable portfolio increased from 13.7% to
13.9% per annum. The Company also recognized additional interest revenue of
$2.1 million in 1995 as a result of the recognition of a discount amortization
on certain customer mortgages receivable repurchased (pursuant to a related
clean-up call provision pertaining to the original transaction) from an
investment partnership.

Resort revenues increased 6.6%, from $11.8 million to $12.6 million, as a
result of the increased number of rooms rented. Telecommunications revenues
increased by 42.2% from $3.4 million to $4.8 million. This increase is
primarily due to a $1.2 million increase in revenues derived from contracting
services provided to third parties.

Operating costs and expenses increased by 12.2% from $67.3 million to $75.5
million. As a percentage of total revenues, operating costs and expenses
increased from 86.7% to 93.1%. This increase is primarily attributable to a
$3.1 million increase in deferred executive incentive compensation expense
resulting from an amendment to certain senior executives' employment
agreements. Additionally, there was an increase in cost of sales of Vacation
Ownership Interests as a percentage of Vacation Ownership Interest sales from
21.0% to 24.0% due to (i) the commencement of sales of Vacation Ownership
Interests at a new phase at Vistana Resort, which had a corresponding greater
per unit land and amenity cost than prior phases, and (ii) an increased
percentage of sales of Vacation Ownership Interests at Vistana's Beach Club
(which have a lower average sales price per unit than those at Vistana Resort
and a higher product cost as a result of the high-rise nature of the
construction), from 8.5% of all Vacation Ownership Interests sold in 1994 to
16.1% in 1995 which carried a higher product cost.

Sales and marketing costs as a percentage of Vacation Ownership Interest
sales increased from 42.2% in 1994 to 44.5% in 1995, reflecting decreased
efficiencies of the Company's marketing activities in central Florida and
increased sales costs.

General and administrative costs decreased 12.6%, from $8.0 million to $7.0
million, due principally to a decrease in aggregate executive compensation and
related costs payable by the Company as a result of the Executive Repurchase.

Interest expense-treasury increased 80.7%, from $3.6 million to $6.5 million,
due to an increase in hypothecation activities pursuant to which the total
amount of notes payable secured by customer mortgages receivable increased from
a year-end balance of $44.5 million in 1994 to a year-end balance of $65.9
million in 1995. This increased borrowing funded a 14.9% increase in inventory
and units under construction during 1995, from $15.9 million at December 31,
1994 to $18.3 million at December 31, 1995. The Company's interest expense-
other increased 50.4% from $2.1 million to $3.2 million. The increase in
interest expense-other is attributable to indebtedness incurred in connection
with the Executive Repurchase and the Option Redemption. Both interest expense-
treasury and interest expense-other increased in 1995 in part due to the full-
year effect in 1995 of higher interest rates which rose during 1994 and were
sustained at higher levels throughout 1995.

Resort expenses increased 5.5% from $10.0 million in 1994 to $10.6 million in
1995. Telecommunications expenses increased 45.0% from $2.5 million in 1994 to
$3.7 million in 1995, primarily as a result of an increase in the percentage of
costs attributable to contracting services provided to third parties. These
increases were consistent with the increases in resort and telecommunications
revenues, respectively.

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Pre-tax income decreased 45.4%, from $10.7 million to $5.9 million.

LIQUIDITY AND CAPITAL RESOURCES

The Company generates cash from operations from the sales and financing of
Vacation Ownership Interests, resort operations, management activities and
telecommunication services. With respect to the sale of Vacation Ownership
Interests, the Company generates cash for operations from (i) customer down
payments and (ii) third party financing of customer mortgages receivable in
amounts typically equal to 90% of the related customer mortgage receivable. The
Company generates additional cash from the financing of Vacation Ownership
Interests equal to the difference between the interest charged on the customer
mortgages receivable (which averaged 13.9% at June 30, 1997) and the interest
paid on the notes payable secured by the Company's pledge of such customer
mortgages receivable (which averaged 10.5% at June 30, 1997). Cash provided by
operations for the six months ended June 30, 1997 and 1996 increased to $4.6
million from $2.3 million, primarily due to improved operating results in the
first six months of 1997.

Net cash used in investing activities for the six months ended June 30, 1997
and 1996 was $14.8 million and $8.1 million, respectively, principally due to
increased sales of Vacation Ownership Interests and the related increase in
customer mortgages receivable.

Net cash provided by financing activities was $13.2 million during the six
month period ended June 30, 1997 versus a net cash provided in 1996 of $6.1
million primarily due to the Company's issuance in the first quarter of 1997 of
4,625,000 shares of Common Stock in the Initial Public Offering resulting in
approximately $49.5 million of net proceeds. The net proceeds of the Initial
Public Offering were used by the Company to repay $38.9 million of outstanding
debt. The remaining $10.6 million is being used to fund expansion and to
provide the Company with working capital.

The Company's current credit facilities (the "Credit Facilities") provide for
term loans, of which $28.4 million were outstanding as of June 30, 1997, and
revolving lines of credit of which $56.2 million were outstanding as of June
30, 1997 against total available capacity at that date of $166.1 million. As of
June 30, 1997, the Company's term loans accrued interest at various rates
between 8.4% and 11.3% per annum, and the Company's revolving lines of credit
accrued interest at rates between 9.75% and 10.50% per annum. Approximately $72
million of the Company's indebtedness bears interest at variable rates based on
fixed spreads over a specified prime rate. The Company's indebtedness under the
Credit Facilities is secured primarily by pledges of the Company's receivables
(primarily its customer mortgages receivable), mortgages on certain of the
Company's unsold inventory of Vacation Ownership Interests and other owned real
and personal property. The terms of certain of the Credit Facilities impose
certain operating and financial restrictions upon the Company, including,
without limitation, (i) maintenance of a minimum tangible net worth by certain
of the Company's operating subsidiaries; (ii) maintenance of certain financial
ratios, including the ratio of selling expenses to net Vacation Ownership
Interest sales; and (iii) limitations on cash distributions by certain of the
Company's operating subsidiaries to the amount of the subsidiary's net income
or net cash flow (subject to certain exceptions for tax and other permitted
distributions).

The Company requires funds, which it obtains from its current Credit
Facilities, to finance the acquisition and development of vacation ownership
resorts and related inventory, and to finance customer purchases of Vacation
Ownership Interests. Historically, these funds have been provided by
indebtedness secured by a portion of the Company's inventory of unsold Vacation
Ownership Interests, customer mortgages receivable and other assets. Of the
amounts outstanding under the Credit Facilities, as of June 30, 1997, the
Company had $27.6 million outstanding under its notes payable secured by its
land and Vacation Ownership Interest inventory,

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$52.3 million outstanding under its notes payable secured by customer
mortgages receivable and $4.7 million of other secured and unsecured notes
payable. As of June 30, 1997, the Company's scheduled principal payments on
its long-term indebtedness through 2001 (excluding payments on Credit
Facilities secured primarily by customer mortgages receivable and Vacation
Ownership Interest inventory) were $1.0 million in the third and fourth
quarters of 1997, $1.4 million in 1998, $1.4 million in 1999, $1.1 million in
2000 and $.7 million in 2001.

Subsequent to June 30, 1997, the Company entered into the following
additional credit facilities: (i) three customer mortgage receivable based
revolving credit facilities aggregating $55.0 million; and (ii) a $12.7
million loan facility for the construction of the Embassy Vacation Resort--
Myrtle Beach and related amenities. As of September 30, 1997, these loans
accrued interest at various rates between 8.2% and 9.0%.

Also subsequent to June 30, 1997, the Company entered into a nonbinding
letter agreement with a major international bank for the establishment of $90
million in new credit facilities. These facilities include: (i) a $70.0
million warehouse facility to finance customer purchases of Vacation Ownership
Interests; and (ii) an unsecured $20 million revolving credit facility for
general corporate purposes. The letter agreement also contemplates the
eventual securitization of customer mortgage receivables which collateralize
the warehouse lending facility. The warehouse lending facility would bear
interest at the London Inter-Bank Offering Rate ("LIBOR") plus 1.0% and the
revolving credit facility would bear interest at LIBOR plus 2.25%. The new
credit facilities are expected to include certain financial and operating
covenants. The lender's obligation to provide these credit facilities is
subject to the receipt of final credit approval, execution of mutually
satisfactory legal documentation and other customary conditions; accordingly,
there can be no assurance that the new credit facilities will be established
or that if established the terms will be as described above.

The Company intends to pursue a growth-oriented strategy. Accordingly, the
Company may, from time to time acquire, among other things, additional
vacation ownership resorts, additional land upon which vacation ownership
resorts may be expanded or developed and companies operating resorts or having
vacation ownership assets, management, sales or marketing expertise
commensurate with the Company's operations in the vacation ownership industry.
The Company is currently considering the acquisition of several additional
land parcels for the expansion of an existing resort and for the development
of additional resorts. The Company also evaluates additional asset and
operating company acquisitions, but presently has no contracts or capital
commitments relating to any such potential acquisitions.

Subsequent to June 30, 1997, the Company purchased from an affiliate of PGA
of America approximately 25 acres of land adjacent to an existing 36-hole golf
facility owned by another affiliate of PGA of America in Port St. Lucie,
Florida. The present plan is for the property to contain approximately 387
units, representing a total of 19,737 Vacation Ownership Interests. The
purchase price for this property was $3.75 million, and the Company financed
its purchase of the property through the payment of $1.5 million in cash from
its existing working capital and the issuance of a non-interest bearing note
to the seller in the principal amount of approximately $2.2 million.

In the future, the Company may negotiate additional credit facilities, issue
debt, or enter into customer mortgages receivable securitizations. Any debt
incurred or issued by the Company may be secured or unsecured, bear interest
at fixed or variable rates, and be subject to terms and conditions approved by
management. The Company has historically enjoyed good credit relationships and
has been successful in establishing new relationships and expanding existing
credit facilities as its growth and opportunities have necessitated.
Management believes the Company will continue to be able to borrow in this
manner.

The Company believes that the net proceeds to the Company from the Offering
together with cash generated from operations and future borrowings, will be
sufficient to meet the Company's working capital and capital expenditure needs
for its current operations for the next 12 months. However, depending upon the
Company's growth opportunities and the conditions in the capital and other
financial markets, and other factors, the Company may from time to time
consider the issuance of debt, equity or other securities, the proceeds of
which may be used to finance acquisitions, to refinance debt or for general
corporate purposes.

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INFLATION

Inflation and changing prices have not had a material impact on the
Company's revenues, operating income and net income during any of the
Company's three most recent fiscal years. Due to the current economic climate,
the Company does not expect that inflation and changing prices will have a
material impact on the Company's revenues, operating income or net income. To
the extent inflationary trends affect short-term interest rates, a portion of
the Company's debt service costs may be affected as well as the rates the
Company charges on its customer mortgages.

SEASONALITY

The Company's revenues are moderately seasonal with owner and guest activity
the greatest from February through April and June through August. Success and
Points' revenues are moderately seasonal with owner and guest activity the
greatest from June 15 to Labor Day and Christmas to Easter. As the Company
expands into new markets and geographic locations it may experience new
seasonality dynamics creating fluctuations in operating results. See "Risk
Factors--Variability of Quarterly Results."

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BUSINESS

Founded in 1980, the Company is a leading developer and operator of high
quality timeshare resorts in the United States. The Company's principal
operations consist of (i) acquiring, developing and operating timeshare
resorts, also known as vacation ownership resorts; (ii) marketing and selling
Vacation Ownership Interests; and (iii) providing financing to its customers
for their purchase of Vacation Ownership Interests at the Company's vacation
ownership resorts. The Company's pro forma total revenues for the year ended
December 31, 1996 and the six months ended June 30, 1997 were approximately
$113 million and $74 million, respectively. The Company's pro forma net income
for the year ended December 31, 1996 and the six months ended June 30, 1997
was approximately $10.0 million and $6.8 million, respectively. See "--Summary
Combined Historical and Pro Forma Financial Information of the Company."

The Company currently operates and sells Vacation Ownership Interests at six
vacation ownership resorts. Three of these resorts are in Florida (Vistana
Resort in Orlando, Hampton Vacation Resort--Oak Plantation in Kissimmee, and
Vistana's Beach Club on Hutchinson Island), two in Colorado (Eagle Point in
Vail and Falcon Point in Avon) and one in Arizona (Villas of Cave Creek
located north of Scottsdale). As of June 30, 1997, these resorts represented a
combined total of 1,571 existing units (an aggregate of 85,476 sold and unsold
Vacation Ownership Interests) and a combined total of 457 planned units
(representing 23,307 Vacation Ownership Interests) of which 59 were under
construction. The Company has three new resorts under development. These
resorts (Embassy Vacation Resort--Myrtle Beach in South Carolina with 44 units
under construction and pre-construction sales underway, Vistana Resort at
World Golf Village near St. Augustine, Florida with 102 units under
construction, and PGA Vacation Resort by Vistana in Port St. Lucie, Florida
with construction of 40 units to commence in early 1998) are anticipated to
add approximately 186 units (9,486 Vacation Ownership Interests) to the
Company's selling capacity during 1998. In addition, the Company acts as
exclusive sales and marketing agent for a large vacation ownership resort in
Colorado and plans to begin construction, and commence sales, of a second
Arizona resort during 1998 on land under contract in Scottsdale.

During its 17-year history, the Company has sold in excess of $600 million
of Vacation Ownership Interests and has developed an ownership base of over
60,000 Vacation Ownership Interest owners residing in more than 100 countries.
The Company was the first to open a vacation ownership resort in the Orlando,
Florida market, which has become one of the largest vacation ownership resort
markets in the world in terms of Vacation Ownership Interests sold. Raymond L.
Gellein, Jr., the Company's Chairman and Co-Chief Executive Officer, and
Jeffrey A. Adler, its President and Co-Chief Executive Officer, have been
employed by the Company since 1980 and 1983, respectively. Additionally,
Messrs. Gellein and Adler serve as the chairman of the Florida chapter of ARDA
and as a director of ARDA, respectively. Under their direction, the Company
has fostered a values-driven business culture that emphasizes excellence and
quality relationships with its employees, customers and business partners.

The quality and customer appeal of the Company's vacation ownership resorts
have been recognized through industry awards and by several leading travel
publications. At June 30, 1997, the Company's flagship resort, Vistana Resort
in Orlando, Florida, contained 1,116 units developed in seven phases on a 135-
acre landscaped complex featuring swimming pools, tennis courts, restaurants
and other recreational amenities. In 1995 and 1996, Conde Nast Traveler
magazine selected Vistana Resort as a "Gold List" resort, the only vacation
ownership resort to be included as one of the top 500 resorts in the world.
Similarly, the most recent Zagat Survey of U.S. Hotels, Resorts & Spas ranked
Vistana Resort as one of the top resorts in Orlando, commenting that it
contains the "most luxurious villas in Orlando." Each of the Company's
existing Florida-based resorts is rated as a Gold Crown resort by RCI, and the
Villas of Cave Creek and Falcon Point Resort are rated as Five Star Resorts by
II. Two of the Company's resorts under development, Vistana Resort at World
Golf Village and the Embassy Vacation Resort--Myrtle Beach, have received the
Gold Crown designation from RCI prior to their official openings. In 1996,
approximately 13% of the resorts reviewed by RCI received a Gold Crown rating,
the highest rating awarded by RCI, and approximately 18% of the resorts
reviewed by II received a Five Star rating, the highest rating awarded by II.

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As part of its operating strategy, the Company seeks to develop strategic
relationships with selected parties in order to broaden and enhance its
marketing and sales efforts and to provide additional vacation ownership
resort development opportunities. In furtherance of this strategy, as
described below, the Company has entered into (i) an exclusive joint venture
agreement with Promus, a leading hotel company in the United States; (ii) a
long-term affiliation agreement with a subsidiary of PGA of America; and (iii)
a limited partnership (in which the Company is the general partner) which has
the exclusive right to develop and market Vacation Ownership Interests at
World Golf Village. The Company intends to continue to expand existing and
develop new strategic alliances that will create opportunities to develop
unique, high quality vacation ownership resorts and further broaden and
enhance its marketing and sales efforts.

THE VACATION OWNERSHIP INDUSTRY

The Market. The resort component of the leisure industry is primarily
serviced by two alternatives for overnight accommodations: commercial lodging
establishments and vacation ownership resorts. Commercial lodging consists
principally of hotels and motels in which a room is rented on a nightly,
weekly or monthly basis for the duration of the visit and is supplemented by
rentals of privately-owned condominium units or homes. For many vacationers,
particularly those with families, a lengthy stay at a quality commercial
lodging establishment can be expensive and the space provided relative to the
cost is not economical. In addition, room rates at such establishments are
subject to change periodically and availability is often uncertain. For these
and other reasons, vacation ownership presents an economical and reliable
alternative to commercial lodging for many vacationers.

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First introduced in Europe in the mid-1960s, vacation ownership has been one
of the fastest-growing segments of the hospitality industry during the past two
decades. In 1994 (the latest period for which ARDA information is available),
the industry experienced a record year, with 384,000 new owners and purchases
of 560,000 Vacation Ownership Interests resulting in a sales volume of $4.76
billion (up from approximately $490 million in 1980). Based on other industry
information, the Company believes that vacation ownership sales exceeded $5.0
billion in 1995. As shown in the following charts, the worldwide vacation
ownership industry has expanded significantly since 1980 both in terms of the
number of Vacation Ownership Interests sold and total sales volume:

LOGO

LOGO
Source: American Resort Development Association, The 1995 Worldwide Timeshare
Industry.

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In addition, the vacation ownership industry has experienced consistent and
steady growth from 1990 through 1994, achieving average annual growth rates of
approximately 10.2% in sales volume, 14.6% in number of owners and 8.4% in
number of Vacation Ownership Interests sold per year.

The Economics. The Company believes that national lodging and hospitality
companies are attracted to the vacation ownership concept because of the
industry's relatively low product cost and high profit margins and the
recognition that vacation ownership resorts provide an attractive alternative
to the traditional hotel-based vacation. In addition, vacation ownership
resorts allow hotel companies to leverage their brands into additional resort
markets where demand exists for accommodations beyond traditional rental-based
lodging operations.

The Consumer. According to information compiled by ARDA for the year ended
December 31, 1994, the prime market for Vacation Ownership Interests consists
of individuals in the 40-55 year age range who are reaching the peak of their
earning power and are rapidly gaining more leisure time. The median age of a
Vacation Ownership Interest buyer at the time of purchase is 46. The median
annual household income of current Vacation Ownership Interest owners in the
United States is approximately $63,000, with approximately 35.0% of all
Vacation Ownership Interest owners having annual household income greater than
$75,000 and approximately 17.0% of such owners having annual household income
greater than $100,000. Despite the growth in the vacation ownership industry,
less than 2% of all United States households own a Vacation Ownership Interest.
As of December 31, 1994, Vacation Ownership Interest ownership had achieved
only an approximate 3.0% market penetration among United States households with
income above $35,000 per year and 3.9% market penetration among United States
households with income above $50,000 per year. Approximately 52% of all owners
of Vacation Ownership Interests reside in the United States.

According to the ARDA study, the three primary reasons cited by consumers for
purchasing a Vacation Ownership Interest are (i) the ability to exchange the
Vacation Ownership Interest for accommodations at other resorts through
exchange networks such as RCI and II (cited by 82% of Vacation Ownership
Interest purchasers), (ii) the economic savings compared to traditional hotel
resort vacations (cited by 61% of purchasers) and (iii) the quality and appeal
of the resort at which they purchased a Vacation Ownership Interest (cited by
54% of purchasers). According to the ARDA study, Vacation Ownership Interest
buyers have a high rate of repeat purchases. Approximately 41% of all Vacation
Ownership Interest owners own more than one Vacation Ownership Interest which
represents approximately 65% of the industry inventory, and approximately 51%
of all owners who bought their first Vacation Ownership Interest before 1985
have since purchased a second Vacation Ownership Interest. In addition, the
ARDA study noted that customer satisfaction generally increases with length of
ownership, age, income, multiple location ownership and access to Vacation
Ownership Interest exchange networks.

The Company believes it is well-positioned to take advantage of these
demographic trends because of the location and quality of its resorts, the
average sales price of its Vacation Ownership Interests and the participation
of its resorts in RCI and II. The Company expects the vacation ownership
industry to continue to grow as the baby-boom generation continues to enter the
40-55 year age bracket, the age group which contained the most Vacation
Ownership Interest purchasers in 1994.

GROWTH STRATEGIES

The Company's goal is to expand its position as a leading developer and
operator of vacation ownership resorts by (i) continuing sales of Vacation
Ownership Interests at the Company's existing resorts; (ii) developing and
selling additional vacation ownership resorts; (iii) improving operating
margins; and (iv) pursuing selected acquisition opportunities. To achieve this
goal, the Company intends to adhere to its core operating strategies of
obtaining extensive access to qualified buyers, promoting sales and marketing
excellence and delivering memorable vacation experiences to its owners and
guests.

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inventory of Vacation Ownership Interests and to make available for sale,
based on consumer demand, additional Vacation Ownership Interests through
expansion of certain of the Company's existing vacation ownership resorts. At
June 30, 1997, the inventory of unsold Vacation Ownership Interests at
existing resorts was 14,773.

The Company intends to maintain its position as a leader in the Orlando
vacation ownership market (a popular vacation destination with over 36 million
visitors annually) by developing and selling an additional 423 units at
Vistana Resort (representing an additional 21,573 Vacation Ownership
Interests), of which 59 units (representing 3,009 Vacation Ownership
Interests) were completed in the third quarter of 1997. In addition, the
Company plans to continue sales at the Hampton Vacation Resort--Oak
Plantation, a 242-unit former apartment complex located in the Orlando market,
which the Company is converting in phases into a vacation ownership resort.
This property is owned by a partnership in which the Company holds an
approximately 67% controlling ownership interest. As of June 30, 1997, the
Hampton Vacation Resort--Oak Plantation had an unsold inventory of
approximately 11,735 Vacation Ownership Interests.

The Company added resorts in Arizona and Colorado in September 1997 as a
result of the acquisition of Success and Points. It plans to continue sales of
existing inventory at these resorts and to expand these resorts where land is
available. At the Company's 58-unit Falcon Point Resort, located in Avon,
Colorado, 409 Vacation Ownership Interests remained for sale at June 30, 1997,
with an additional 24 units (representing 1,224 Vacation Ownership Interests)
planned for future development. At the Company's 54-unit Eagle Point Resort,
located in Vail, Colorado, 54 Vacation Ownership Interests remained available
for sale at June 30, 1997. At the Company's 25-unit Villas of Cave Creek
Resort, located outside of Scottsdale, Arizona, 849 Vacation Ownership
Interests remained available for sale with another 10 units (representing 510
Vacation Ownership Interests) planned for future development.

Developing and Selling Additional Resorts. The Company intends to rely on
its operating knowledge and strategic alliances to develop additional vacation
ownership resorts, including the following projects currently in development:

Vistana Resort at World Golf Village. In the fall of 1996, the Company
commenced construction of the 102-unit first phase (representing 5,202
Vacation Ownership Interests), of a 408-unit vacation ownership resort at
World Golf Village. The first phase is expected to be completed in the
second quarter of 1998. The centerpiece of a planned community near St.
Augustine, Florida, World Golf Village is a destination resort which will
contain the World Golf Hall of Fame, championship golf courses, a golf
academy, a hotel and convention center, restaurants, retail facilities and
related amenities which are being developed by others. The Company holds a
37.5% controlling ownership interest in a limited partnership, which has
the exclusive right to develop and market Vacation Ownership Interests at
World Golf Village, and has exclusive multi-year marketing agreements for
solicitation at key locations throughout World Golf Village, including the
hotel/conference center, golf course, Walk of Champions and retail
facilities. The Company also has entered into an agreement with PGA Tour
Golf Course Properties, Inc. that allows the Company access to PGA Tour
databases for marketing purposes. See "--The Resorts" and "--Affiliation
with PGA of America."

The Company believes that World Golf Village and the golf industry in
general represent attractive opportunities for expansion and the
development of future vacation ownership resorts by the Company. The
Company views the World Golf Village project as a unique, high-profile
opportunity to expand its vacation ownership resort business through the
golf market in a manner that will facilitate access to qualified customers
and maintain and enhance the Company's reputation. In addition, by
developing a vacation ownership resort at World Golf Village under the
Vistana name and through a partnership which the Company controls, but in
which it has a minority interest, the Company believes it has adopted a
strategy which allows for risk diversification without sacrificing
operational control or the opportunity to build its brand awareness.

Embassy Vacation Resort--Myrtle Beach. In December 1996, the Company
acquired an initial 14 acres of unimproved land in Myrtle Beach, South
Carolina for the development of the Embassy Vacation Resort--Myrtle Beach.
The Company also has an option until December 31, 2003 to acquire up to 26
additional acres of contiguous property for phased expansion of the resort.
The Company began pre-sales in May 1997 and commenced construction of the
44-unit first phase (representing 2,244 Vacation Ownership

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Interests) of a 550-unit vacation ownership resort during the third quarter
of 1997. The first phase is expected to be completed in the first quarter
of 1998. The Company believes Myrtle Beach represents an attractive,
growing market for the expansion of its portfolio of vacation ownership
resorts. Similar to Orlando, Myrtle Beach has a large number of visitors
whose length of stay averages approximately five days. Consistent with its
key operating strategies, the Company has procured substantial marketing
affiliations with significant tourist venues in the Myrtle Beach area.

PGA Vacation Resort by Vistana. The Company is the exclusive vacation
ownership development company of PGA of America. In September 1997, the
Company acquired 25 acres of land adjacent to an existing 36-hole
championship golf facility owned by a subsidiary of PGA of America in Port
St. Lucie, Florida. The property, located approximately 40 miles north of
Palm Beach Gardens, Florida, is planned to contain approximately 387 units
(representing a total of 19,737 Vacation Ownership Interests). The 40-unit
first phase (representing 2,040 Vacation Ownership Interests) is expected
to be completed during the fourth quarter of 1998. The Company believes
that PGA of America, through its approximately 20,000 golf professionals
and the Company's license to use PGA of America's name, initials, trademark
and logo, will provide strategic marketing opportunities for the Port St.
Lucie vacation ownership resort and any future PGA Vacation Resorts
developed by the Company. In addition, in September 1997, the Company and
PGA of America executed a long-term affiliation agreement which provides
for the development of future vacation ownership resorts and marketing and
golf access agreements for the Port St. Lucie, Florida property. With
members at approximately 9,000 of the nation's leading golf facilities, PGA
of America, which recently celebrated its 80th anniversary, administers
several professional golf tournaments, including the PGA Championship, the
Ryder Cup matches, the PGA Seniors' Championship, the MasterCard PGA Grand
Slam and the PGA Club Professional Championship. Together with Vistana
Resort at World Golf Village, the Company's affiliation with PGA of America
provides it with high-profile relationships in the golf industry. See "--
The Resorts" and "--Affiliation with PGA of America."

Embassy Vacation Resort--Scottsdale. Embassy Vacation Resort--Scottsdale
will consist of an estimated 150 units, representing 7,650 Vacation
Ownership Interests, and will be constructed by the Company on
approximately 10 acres of land which the Company intends to acquire prior
to December 1997 pursuant to an existing contract entered into by Success
and Points. The Company anticipates that it will commence construction
during the first half of 1998. The Scottsdale property will be operated as
an Embassy Vacation Resort franchise pursuant to the Promus Agreement.

Promus Relationship. In December 1996, the Company and Promus entered
into an exclusive five-year agreement to jointly acquire, develop, market
and operate vacation ownership resorts in North America. Promus is a
wholly-owned operating subsidiary of Promus Hotel Corporation, a New York
Stock Exchange company, which is one of the largest lodging companies in
the United States. As of October 1, 1997, Promus Hotel Corporation had over
10,000 employees system-wide and owns, manages and/or franchises more than
900 hotels, containing over 115,000 rooms and suites.

Promus has agreed that the Company will be the sole franchisee in North
America of the Hampton Vacation Resort and the Homewood Vacation Resort
brands, and one of only two franchisees in North America of the Embassy
Vacation Resort brand. The Promus Agreement precludes the Company from
acquiring or developing vacation ownership resorts with any other multi-
hotel brand, but preserves its ability to develop vacation ownership
resorts in combination with non-hotel brands (such as PGA of America), to
develop vacation ownership resorts with unique, non-multi-hotel brand hotel
properties, and to acquire or develop vacation ownership resorts under the
Vistana name (other than in certain selected markets agreed to by the
parties). The Company currently operates the Hampton Vacation Resort--Oak
Plantation, is developing the Embassy Vacation Resort--Myrtle Beach and
intends to develop the Embassy Vacation Resort--Scottsdale, in each case
under a franchise arrangement. The Company and Promus have agreed on six
markets in which the Company and Promus will focus their joint venture
efforts. These six markets consist of three coastal areas of Florida
(including portions of the southeastern and western coasts of Florida and
the Panhandle); the coastal region between Jacksonville, Florida and Myrtle
Beach, South Carolina; Phoenix and Scottsdale, Arizona; and Palm Springs
and Palm Desert, California. The Company intends to develop additional
vacation ownership resorts under the Hampton Vacation Resort and the
Embassy Vacation Resort brand names in the future and may exercise its
right to develop vacation ownership resorts under the Homewood Vacation
Resort name, either jointly or as a franchise. The Company and Promus are
evaluating locations for the joint development of vacation ownership
resorts; however, at this time no commitments exist for any joint venture
resorts. See "--Affiliation with Promus."

48
<PAGE>

The Company believes that its strategic relationship with Promus will
offer growth opportunities with respect to the development and operation of
vacation ownership resorts by enhancing its sales and marketing of Vacation
Ownership Interests and providing further management expertise. The Company
anticipates that such growth opportunities will occur as a result of
Promus' strong brand recognition, large customer base and extensive product
development, marketing, management and information technology capabilities.
Moreover, the Company believes that its strategic relationship with Promus
will offer the Company access to a target market of prospective customers
who, because of their favorable demographics and, in the case of Promus'
Embassy Suites and Homewood Suites hotel brands, preference for suite
accommodations, will respond favorably to the Company's resorts. The
Company believes that the Embassy Vacation Resort, the Hampton Vacation
Resort and the Homewood Vacation Resort brands will generally (i) conform
to the relative price points; (ii) target similar customers; and (iii)
effect similar brand segmentation, as applicable to Promus' Embassy Suites,
Hampton Inn and Homewood Suites hotel brands, respectively. See "--
Affiliation with Promus."

Vistana Branded Resorts. To capitalize on the Vistana brand and
reputation, the Company intends to seek other vacation ownership resort
development opportunities, including resorts affiliated with unique, non-
multi-hotel brand hotel properties, in selected vacation markets where,
among other things, it believes it can obtain effective marketing access to
potential customers. In furtherance of this strategy, the Company is
currently engaged in discussions with the operator of a non-multi-hotel
brand resort regarding the formation of a joint venture to develop,
construct, market and operate its first vacation ownership resort outside
the United States. If the joint venture is formed and development of the
planned resort is commenced, the Company currently estimates that it will
be required to make an initial equity investment of approximately $5
million in this project. There can be no assurance, however, that the joint
venture will be formed, the contemplated resort will be constructed, or if
constructed, that it will prove to be profitable.

Each of the foregoing projects and agreements requires the Company to
make substantial capital commitments and is subject to various risks,
including risks related to availability of financing, construction and
development activities, and the Company's ability to execute its sales and
marketing strategies at new locations. See "Risk Factors."

Improving Operating Margins. The Company intends to improve operating
margins by reducing (i) its financing costs by entering into more favorable
borrowing agreements and (ii) its general and administrative costs as a
percentage of revenues. In furtherance of this intention, the Company has
recently entered into new project financing and receivables financing at
more favorable rates than it has historically enjoyed and is negotiating
new credit facilities which, if established, will be on terms that
management believes are favorable. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

Pursuing Selected Acquisition Opportunities. The Company from time to
time seeks opportunities to acquire vacation ownership assets and
additional land upon which vacation ownership resorts may be expanded or
developed. The Company is currently considering the acquisition of several
additional land parcels for expansion of an existing resort and for the
development of new resorts. The Company also from time to time evaluates
the acquisition of operating companies that may be successfully integrated
into the Company's existing operations and enhance the Company's sales,
marketing and resort ownership. However, the Company currently has no
contracts or capital commitments relating to any such acquisitions.

Consistent with this strategy, on September 16, 1997, the Company
completed the Acquisition of Success and Points. The Company acquired the
entire equity interest in Success and Points for a purchase price of
approximately $24.0 million in cash and 638,444 shares of Common Stock of
the Company. Delivery of 430,814 of such shares is contingent upon Success
and Points achieving certain operating results for calendar years 1998
through 2000. Success and Points own and operate one vacation ownership
resort in Arizona (the Villas of Cave Creek near Scottsdale, Arizona) and
two vacation ownership resorts in Colorado (Eagle Point Resort in Vail,
Colorado and Falcon Point Resort in Avon, Colorado) and serves as the
exclusive sales and marketing agent for a fourth resort. As a result of the
Acquisition, the Company has a contract to purchase undeveloped land in
Scottsdale, Arizona on which the Company intends to develop the Embassy
Vacation Resort--Scottsdale.

49
<PAGE>

The Company believes Success and Points will serve as a strong foundation
for sales, marketing and resort operations in the western region of the
United States and will provide the Company with experience in direct
marketing to consumers in Arizona and Colorado. As a result of the
strategic relationships and operational expertise gained in the
Acquisition, the Company believes it will be better able to identify other
potential developments and acquisitions in Arizona, Colorado and other
western states.

The Company has historically provided financing for approximately 93% of
its customers, who are required to make a down payment of at least 10% of
the Vacation Ownership Interest's sales price and generally pay the balance
of the sales price over a period of seven years. The Company typically
borrows from third-party lending institutions in order to finance its loans
to Vacation Ownership Interest buyers. As of June 30, 1997, the Company had
a portfolio of approximately 21,400 loans to customers totaling
approximately $125.2 million, with an average contractual yield of 13.9%
per annum (compared to the Company's weighted average cost of funds of
10.5% per annum). As of June 30, 1997 (i) approximately 3.1% of the
Company's customer mortgages receivable were 60 to 120 days past due; and
(ii) approximately 5.3% of the Company's customer mortgages receivable were
more than 120 days past due and the subject of legal proceedings. In
addition, as of such date, the Company's allowance for loss on customer
mortgages receivable was approximately $10.0 million. During the six months
ended June 30, 1997, the Company charged approximately $3.0 million against
such reserve (net of recoveries of related Vacation Ownership Interests).

The Company provides hospitality management, operations, maintenance and
telecommunications services at its resorts. Pursuant to management
agreements between the Company and the homeowners' associations at its
existing resorts, the Company has the responsibility and authority for the
day-to-day operation of these resorts. In addition, the Company provides
telecommunications design and installation services for third parties on a
limited basis.

50
<PAGE>

THE RESORTS

The following table sets forth certain information as of June 30, 1997 and
for the six months then ended regarding each of the Company's existing
vacation ownership resorts, resorts under construction and planned resorts
(including existing and planned resorts acquired in the Acquisition),
including location, the year sales of Vacation Ownership Interests commenced
(or are expected to commence), the number of existing and total planned units,
the number of Vacation Ownership Interests sold at each existing resort since
its development by the Company and the number of Vacation Ownership Interests
sold during the six months ended June 30, 1997, the average sales price of
Vacation Ownership Interests sold during the six months ended June 30, 1997
and the number of Vacation Ownership Interests available for sale currently
and after giving effect to planned expansion. The exact number of units
ultimately constructed and Vacation Ownership Interests available for sale at
each resort may differ from the following planned estimates based on, among
other things, future land use, project development, site layout considerations
and customer demand. In addition, the Company's construction and development
of new vacation ownership resorts or additional units at its existing resorts
(and sales of the related Vacation Ownership Interests) is dependent upon
general economic conditions and other factors and may also be subject to delay
as a result of certain circumstances, some of which are not within the
Company's control. See "Risk Factors."

<TABLE>
<CAPTION>
VACATION UNSOLD
OWNERSHIP VACATION OWNERSHIP
INTERESTS AVERAGE INTERESTS AT
YEAR SALES UNITS AT RESORT SOLD(A) SALES RESORTS(A)
COMMENCED/ --------------- ------------ PRICE -------------------
VACATION OWNERSHIP EXPECTED TO TOTAL IN CURRENT PLANNED
RESORT LOCATION COMMENCE(B) CURRENT PLANNED TOTAL 1997 1997(A) INVENTORY EXPANSION
- ------------------------ ------------------- ----------- ------- ------- ------ ----- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EXISTING RESORTS:
Vistana Resort (c) Orlando, Florida 1980 1,116 1,539 58,383 3,459(d) $10,259(d) 1,657 21,573
Vistana's Beach Hutchinson Island,
Club (e) Florida 1989 76 76 3,899 50 $ 9,318 29 0
Hampton Vacation
Resort--Oak
Plantation (f) Kissimmee, Florida 1996 242 242 680 547 $ 7,552 11,735 0
Eagle Point Resort (g) Vail, Colorado 1987 54 54 3,757 207 $ 7,773 54 0
Falcon Point Resort (h) Avon, Colorado 1986 58 82 3,437 152 $10,964 409 1,224
Villas of Cave Creek (i) Cave Creek, Arizona 1996 25 35 587 495 $11,239 849 510
RESORTS UNDER
DEVELOPMENT:
Embassy Vacation
Resort-- Myrtle Beach,
Myrtle Beach (j) South Carolina 1997 -- 550 -- -- -- -- 28,050
Vistana Resort at World St. Augustine,
Golf Village (k) Florida 1998 -- 408 -- -- -- -- 20,808
PGA Vacation Resort by Port St. Lucie,
Vistana (l) Florida 1998 -- 387 -- -- -- -- 19,737
PLANNED RESORTS:
Embassy Vacation Scottsdale,
Resort--Scottsdale (m) Arizona 1998 -- 150 -- -- -- -- 7,650
----- ----- ------ ----- ------ ------
TOTAL 1,571 3,523 70,743 4,910 14,733 99,552
===== ===== ====== ===== ====== ======
</TABLE>
- -------

(a) The Company sells both annual Vacation Ownership Interests (entitling the
owner to the use of a unit for a one-week period on an annual basis) and
alternate-year Vacation Ownership Interests (entitling the owner to the
use of a unit for a one-week period on an alternate-year basis) with
respect to 51 weeks per unit per year, with one week reserved for
maintenance of the unit. Accordingly, the Company is generally able to
sell 51 annual Vacation Ownership Interests or 102 alternate-year Vacation
Ownership Interests per unit (although historically sales at Eagle Point,
Falcon Point and the Villas of Cave Creek have been based on 52 weeks per
unit per year). For purposes of calculating Vacation Ownership Interests
Sold and Average Sales Price in 1997, data with respect to Vacation
Ownership Interests reflects Vacation Ownership Interests sold regardless
of classification as an annual or alternate-year Vacation Ownership
Interest. For purposes of calculating Unsold Vacation Ownership Interests
at Resorts, both the Current Inventory and Planned Expansion numbers are
based on sales of Vacation Ownership Interests on an annual basis only and
assume the sale of 51 weeks per unit per year. To the extent that
alternate-year Vacation Ownership Interests or 52 weeks per unit per year
are sold, the actual number of unsold Vacation Ownership Interests at
Resorts would be increased.
(b) Dates listed represent the dates the Company began recording (or expects
to begin recording) sales of Vacation Ownership Interests for financial
reporting purposes.

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<PAGE>

(l) PGA Vacation Resort by Vistana will consist of an estimated 387 units,
representing an estimated 19,737 annual Vacation Ownership Interests, and
will be constructed by the Company on 25 acres of land which the Company
acquired in September 1997. The Company anticipates that it will commence
construction of the 40-unit first phase of this resort (representing 2,040
annual Vacation Ownership Interests) during the first quarter of 1998.
Because the Company constructs additional units at its resorts based on
general market conditions and other factors, construction of the remaining
347 units at this resort are expected to be commenced from time to time as
demand and other conditions merit.
(m) The Embassy Vacation Resort--Scottsdale will consist of an estimated 150
units, representing 7,650 Vacation Ownership Interests, and will be
constructed by the Company on approximately 10 acres of land which the
Company intends to acquire prior to December 1997 pursuant to an existing
contract entered into by Success and Points. The Company anticipates that
it will commence construction during the first half of 1998. The
Scottsdale property will be operated as an Embassy Vacation Resort
franchise pursuant to the Promus Agreement.

52
<PAGE>

Pricing of Vacation Ownership Interests. The following table sets forth the
current range of selling prices of annual and alternate-year Vacation
Ownership Interests at each of the Company's resorts:

<TABLE>
<CAPTION>
SELLING PRICES(A)
-------------------------------------------
ANNUAL VACATION ALTERNATE-YEAR VACATION
RESORT OWNERSHIP INTERESTS OWNERSHIP INTERESTS
- ------ ------------------- -----------------------
<S> <C> <C>
Vistana Resort(b)................. $ 7,250 - $16,000 $6,200 - $ 8,250
Vistana's Beach Club(c)........... $ 8,995 - $ 9,950 N/A
Hampton Vacation Resort--Oak
Plantation(d).................... $ 6,050 - $ 8,750 $3,700 - $ 5,300
Eagle Point Resort(d)............. $ 7,995 - $14,995 $5,995 - $ 9,495
Falcon Point Resort(b)............ $ 8,995 - $23,995 $6,495 - $13,995
Villas of Cave Creek(c)........... $12,995 - $12,995 $8,495 - $ 8,495
Embassy Vacation Resort--Myrtle
Beach(b)(e)...................... $ 5,500 - $13,250 $3,300 - $ 7,950
Vistana Resort at World Golf
Village(b)(e).................... $ 7,500 - $16,000 (f)
PGA Vacation Resort by
Vistana(b)(e).................... $ 6,000 - $12,000 (f)
Embassy Vacation Resort--
Scottsdale(e).................... $ 7,000 - $15,000 $4,200 - $ 9,000
</TABLE>
- --------
(a) Selling prices vary depending upon the specific calendar week to which a
Vacation Ownership Interest relates and unit-specific factors.

(b) Includes one-, two- and two-bedroom lockoff unit Vacation Ownership
Interests.
(c) Includes two-bedroom unit Vacation Ownership Interests only.
(d) Includes one- and two-bedroom unit Vacation Ownership Interests.

(e) Resort not yet in operation. Selling prices listed reflect the actual
range of pre-construction prices at Embassy Vacation Resort--Myrtle Beach
and the anticipated range of selling prices at Vistana Resort at World
Golf Village, PGA Vacation Resort by Vistana and Embassy Vacation Resort--
Scottsdale.
(f) The decision to offer alternate-year Vacation Ownership Interests is made
on a site-by-site basis. As the Company has not yet commenced sales at
these properties, there has been no final decision with regard to offering
alternate-year Vacation Ownership Interests or their related pricing.

Vistana Resort (Orlando, Florida). Vistana Resort, the Company's flagship
property, is an award-winning vacation ownership destination property located
less than one mile from the Walt Disney World(R) Resort Complex. Vistana
Resort was the first vacation ownership resort in Orlando and is the only
vacation ownership resort to have been named in Conde Nast Traveler magazine's
Gold List of the "top 500 best places to stay in the whole world" for 1995 and
1996. The resort was ranked as one of the top resorts (second in unit quality)
in the Orlando area by the most recent Zagat Survey of U.S. Hotels, Resorts &
Spas, which commented that it contains "the most luxurious villas in Orlando."
In addition, Vistana Resort has received the RCI Gold Crown designation since
the inception of the designation by RCI.

Vistana Resort opened as a vacation ownership resort in July 1980 with an
initial phase, known as the Courts Villas, containing 98 units on a 25-acre
parcel. In November 1980, the Company purchased an additional 100 acres of
surrounding unimproved land, in 1987 the Company purchased 15 acres of
contiguous land and, in January 1993, it acquired the last available
contiguous parcel to Vistana Resort, consisting of 10 acres. Through September
30, 1997, the Company has constructed seven additional phases at Vistana
Resort: (i) the Falls Villas (1982), consisting of 112 units; (ii) the Spas
Villas (1984), consisting of 104 units; (iii) the Palms Villas (1987),
consisting of 144 units; (iv) the Springs Villas (1988), consisting of 102
units; (v) the Fountains Villas (1990), consisting of 372 units; (vi) the
Lakes Villas (1995), consisting of 184 units and an additional 28 units
planned; and (vii) the Cascades Villas (1997), consisting of 59 units with an
additional 95 units currently under construction and an additional 241 units
planned.

Vistana Resort is one of the foremost Orlando resorts in terms of
facilities, amenities and guest services. The gated-access resort consists of
a 135-acre complex that features tropical landscaping, lakes, waterfalls,
fountains, walking paths, scenic bridges and gazebos. The resort's athletic
facilities include six recreation centers,

53
<PAGE>

13 championship lighted tennis courts, a full-service tennis pro shop, six
outdoor temperature-controlled swimming pools, seven outdoor whirlpools, five
children's pools, an 18-hole miniature golf course, lighted basketball courts,
sand volleyball pits, shuffleboard courts and other recreational amenities.
Other guest-oriented amenities at Vistana Resort include two restaurants and a
general store containing a Pizza Hut facility. Accommodations at Vistana
Resort as of September 30, 1997 consisted of 1,141 two-bedroom units and 34
one-bedroom units, divided into eight villages--Courts, Falls, Spas, Palms,
Springs, Fountains, Lakes and Cascades. The units at Vistana Resort sleep from
four to eight people (depending upon floorplan) and include amenities such as
a fully-equipped kitchen, washer/dryer, three color televisions with cable
service, a videocassette player, and an outdoor terrace or balcony. Most units
have master bathrooms that include a whirlpool tub or feature screened
terraces or balconies with water views. In addition, the Company recently
introduced units with an optional two-bedroom lockoff floor plan, a special
feature that allows the lockoff unit to be divided into two separate one-
bedroom units or a studio and a one-bedroom unit, depending upon floor plan.
Owners of the lockoff units have increased flexibility regarding the use of
their Vacation Ownership Interest, including splitting the unit and using each
portion for separate one-week vacations.

Vistana's Beach Club (Hutchinson Island, Florida). Vistana's Beach Club on
Hutchinson Island is located on Florida's Treasure Coast, approximately 40
miles north of West Palm Beach and approximately a two hour drive from
Orlando. Vistana's Beach Club is located on 3.5-acre parcel and was purchased
by the Company in January 1989. The resort consists of one nine-story building
containing 48 units and one eight-story building containing 28 units. The
resort contains numerous recreational amenities, including a freshwater
swimming pool, outdoor whirlpool, children's pool, elevated sun deck and
access to two tennis courts. Vistana's Beach Club contains 76 fully-equipped
two-bedroom, two-bathroom oceanfront units, each of which includes a terrace
with a view of the Atlantic Ocean. The units at Vistana's Beach Club sleep up
to six people (depending upon floorplan) and include amenities such as a
fully-equipped kitchen, washer/dryer, color televisions with cable service and
a videocassette player. The Company continues to manage and operate the
property; however, sales at this resort consist primarily of previously-sold
Vacation Ownership Interests that the Company has since reacquired in
connection with defaults under customer mortgages. RCI has awarded the resort
its Gold Crown designation.

The Hampton Vacation Resort--Oak Plantation (Kissimmee, Florida). In June
1996, the Company acquired, through a related partnership, a 242-unit
multifamily rental apartment complex located in Kissimmee, Florida,
approximately ten miles from Walt Disney World(R) Resort, which it is
converting in phases into a vacation ownership resort. Sales of the first
phase containing 32 units commenced in October 1996. The gated-access 16-acre
resort contains one- and two-bedroom units, each of which offers a fully-
equipped kitchen. The resort is fully landscaped and includes a scenic lake
with a lighted fountain, swimming pools and other recreational amenities. The
Hampton Vacation Resort--Oak Plantation has received the Gold Crown
designation from RCI. Pursuant to the Promus Agreement, the Company operates
the resort on a franchise basis as the first Hampton Vacation Resort.

Falcon Point Resort (Avon, Colorado). Falcon Point is a 58-unit condominium
resort located in Avon, Colorado at the foot of Beaver Creek Ski Area in Vail
Valley. Amenities include, without limitation, a clubhouse, a heated swimming
pool, indoor and outdoor hot tubs, sauna, ski lockers and a coin operated
laundry. This resort contains studio, as well as one- and two-bedroom units.
All Falcon Point units, except studios, contain a fully-equipped kitchen.
Commencing in the first quarter of 1998, the Company intends to develop an
additional 24 units (representing 1,224 Vacation Ownership Interests) on a
parcel of land adjacent to Falcon Point Resort which the Company has a
contract to purchase. Presales for this development are planned to begin in
1998. II has awarded the resort its Five Star rating.

Villas of Cave Creek (Cave Creek, Arizona). The Villas of Cave Creek is
comprised of 25, two-story villas located at the base of Black Mountain in the
Sonoran Desert foothills, which is just north of Scottsdale. Amenities
include, without limitation, two swimming pools, a clubhouse, an exercise
room, a lawn game area and a playground. All of the villas have a master
suite, a fully-equipped kitchen, dining room, living room, a second bedroom
and two full baths. The Company intends to develop an additional 10-units at
Cave Creek representing an additional 510 Vacation Ownership Interests. II has
awarded the resort its Five Star rating.

54
<PAGE>

Eagle Point Resort (Vail, Colorado). Eagle Point Resort is a 54-unit,
courtyard resort which is bordered by Gore Creek and located in Vail, Colorado.
Amenities include, without limitation, a heated swimming pool, indoor and
outdoor hot tubs, a sauna and a coin-operated laundry. Additionally, Eagle
Point Resort offers a complimentary shuttle service to the Lionshead Gondola
during the ski season. Eagle Point is equipped with one- and two-bedroom units,
each of which includes a fully-equipped kitchen.

Vistana Resort at World Golf Village (St. Augustine, Florida). In September
1996, through a related partnership, the Company commenced construction of the
first 102-unit phase of a 408-unit vacation ownership resort at World Golf
Village. Constituting the centerpiece of an approximately 6,000-acre planned
community under development near St. Augustine, Florida, World Golf Village is
a destination resort which will contain the World Golf Hall of Fame,
championship golf courses and other amenities. The units at Vistana Resort at
World Golf Village, which will consist of one- and two-bedroom units, will
sleep from four to eight people (depending upon floorplan) and include features
such as a fully-equipped kitchen, washer/dryer, color televisions with cable
service, a videocassette player and an outdoor terrace or balcony. The
Company's resort is scheduled to open in the spring of 1998. The resort will be
located adjacent to the 17th and 18th fairways of the first golf course at
World Golf Village. Resort guests and owners will have preferred access to up
to 40% of the daily tee times on the course.

World Golf Village is being developed in conjunction with World Golf
Foundation, Inc., a collaboration of the world's leading golf organizations
formed to build and operate the World Golf Hall of Fame. The member
organizations of World Golf Foundation, Inc. include the PGA Tour, PGA of
America, Ladies Professional Golf Association, Augusta National Golf Club,
Royal Canadian Golf Association, Royal & Ancient Golf Club of St. Andrews, PGA
European Tour, PGA Tour of Japan and FNB Tour of Southern Africa. The 75,000-
square foot World Golf Hall of Fame and Museum has been designed by the
prominent museum architect E. Verner Johnson & Associates of Boston and will
feature interactive displays and exhibits developed in conjunction with Ralph
Appelbaum Associates of New York, a leading exhibit designer whose credits
include the National Holocaust Museum in Washington, D.C. World Golf
Foundation, Inc. estimates first year attendance at approximately 500,000
visitors.

In addition to the World Golf Hall of Fame and the Company's vacation
ownership resort, the World Golf Village resort complex will also include a
championship golf course named in honor of Sam Snead and Gene Sarazen, a PGA
Tour licensed golf academy, the International Golf Library and Resource Center,
the 300-room World Golf Village Resort Hotel and 80,000-square foot St. Johns
County Conference Center (which, upon completion, will be the largest
conference center between Atlanta and Orlando), 80,000-square feet of themed
retail space, the headquarters and television production studios for PGA Tour
Productions and a large format, high definition theater. The component
facilities within World Golf Village will be linked by the Walk of Champions
honoring each member of the World Golf Hall of Fame.

PGA Vacation Resort by Vistana (Port St. Lucie, Florida). In September 1997,
the Company purchased from an affiliate of PGA of America approximately 25
acres of land within The Reserve community in Port St. Lucie, Florida for the
purpose of developing, marketing and operating a vacation ownership resort. The
resort will be developed as a PGA Vacation Resort by Vistana and will be
contiguous to the South Course of the PGA Golf Club at The Reserve, a
nationally-acclaimed $15 million golf course complex that opened in early 1996.
The South Course, designed by Tom Fazio, was named the best new course in its
price category by Golf Digest magazine in December 1996. PGA of America has
announced its intention to open a golf learning center and to build a third
golf course at the facility. In addition to resort amenities and services
comparable to the Company's other resorts, the PGA Vacation Resort by Vistana
will, pursuant to a golf access agreement, also offer its owners and renters
preferential access to the PGA Golf Club and other PGA golf courses in St.
Lucie County. Owners and renters at the resort will be able to book tee times
through a centralized reservation system that is anticipated to be developed
jointly by the Company and PGA of America. The Company currently expects that
the resort will contain approximately 387 units constructed in phases. The
Company anticipates commencing sales in 1998.

55
<PAGE>

Embassy Vacation Resort--Myrtle Beach (Myrtle Beach, South Carolina). In
December 1996, the Company acquired an initial 14-acre parcel of unimproved
land on a 40-acre site in Myrtle Beach, South Carolina, on which the Company
is constructing the first 44-unit phase of a planned 550-unit vacation
ownership resort. The Company has options to acquire the remaining 26 acres of
land in multiple phases through December 31, 2003. Pursuant to the Promus
Agreement, the Company will operate the resort on a franchise basis as an
Embassy Vacation Resort. The Company commenced pre-construction sales in May
1997 and expects to complete construction of the first phase of the resort in
the first quarter of 1998.

The Company believes Myrtle Beach represents an attractive, growing market
for the expansion of its portfolio of vacation resorts. Similar to Orlando,
Myrtle Beach has a large number of visitors annually (estimated at 12 million
in 1994) whose length of stay averages approximately five days. Following its
key operating strategies, the Company has procured substantial marketing
affiliations with significant tourist venues in the Myrtle Beach area.
Moreover, Embassy Vacation Resort--Myrtle Beach will be centrally located in
Myrtle Beach, adjacent to Broadway at the Beach, a large entertainment and
specialty retail complex, which includes a Hard Rock Cafe and a Planet
Hollywood restaurant.

Embassy Vacation Resort--Scottsdale (Scottsdale, Arizona). The Embassy
Vacation Resort--Scottsdale will be built on a 10-acre site, which the Company
has under contract to purchase, near the TPC Scottsdale golf course.
Construction is scheduled to begin during the first half of 1998. Amenities
are expected to include, without limitation, a 12,000 square-foot clubhouse
and reception building, a recreation complex, a free-form swimming pool, a
children's club and a fully-equipped fitness center. All of the villas are
anticipated to have two-bedrooms, two baths, a fully-equipped kitchen, dining
room, living room, and an in-room washer and dryer.

AFFILIATION WITH PROMUS

The Company and Promus have entered into the Promus Agreement, an exclusive
five-year agreement to jointly acquire, develop, market and operate vacation
ownership resorts in North America under Promus' Embassy Vacation Resort,
Hampton Vacation Resort and Homewood Vacation Resort brands. Promus is a
wholly-owned operating subsidiary of Promus Hotel Corporation, a New York
Stock Exchange company, which is one of the largest companies in the hotel
industry. Promus Hotel Corporation has over 10,000 employees system-wide and
owns, manages and/or franchises more than 900 hotels, containing over 115,000
rooms and suites. Under the Promus Agreement, the Company will be Promus'
exclusive joint venture partner for the development and operation of vacation
ownership resorts in North America and will also have the option of operating
vacation ownership resorts on a franchise basis. Promus has agreed that the
Company will be the sole franchisee in North America of the Hampton Vacation
Resort and the Homewood Vacation Resort brands, and one of only two
franchisees in North America of the Embassy Vacation Resort brand. The Promus
Agreement precludes the Company from acquiring or developing vacation
ownership resorts with any other multi-hotel brand, but preserves its ability
to develop vacation ownership resorts in combination with non-hotel brands
(such as PGA of America), to develop vacation ownership resorts with unique,
non-multi-hotel brand hotel properties, and to acquire or develop vacation
ownership resorts under the Vistana name (other than in the six selected
markets agreed to by the parties). These six markets consist of three coastal
areas of Florida (including portions of the southeastern and western coasts of
Florida and the Panhandle); the coastal region between Jacksonville, Florida
and Myrtle Beach, South Carolina; Phoenix and Scottsdale, Arizona; and Palm
Springs and Palm Desert, California.

Each vacation ownership resort jointly developed under the Promus Agreement
will be acquired, developed and operated by a newly-formed entity that will be
owned equally by Promus and the Company and will be managed by the Company.
The parties have agreed that each of these entities will enter into a sales
and marketing agreement with the Company, pursuant to which the Company will
be responsible for marketing and sales of Vacation Ownership Interests at the
resort and for which the Company will receive a fee based on a percentage of
sales and rental revenues. Additionally, the Company and Promus have agreed to
enter into a license agreement and hospitality management agreement, pursuant
to which Promus will license the applicable brand name and provide other
hospitality-related services at the resort and for which

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Promus will receive a fee based on a percentage of sales and rental revenues.
The Promus Agreement provides that both parties must first offer vacation
ownership resort development opportunities in the six selected markets to the
joint venture (with certain exceptions for development of the Company's non-
multi-hotel branded resorts). In the event that one party elects not to pursue
the opportunity, the other party has certain rights to develop the resort
independently or, in the case of Promus, franchise an Embassy Vacation Resort
to its existing franchisee. Moreover, if Promus elects not to pursue an
opportunity through the joint venture, the Company may elect to develop the
resort as a Promus franchisee, subject to Promus' standard franchise approval,
on pre-agreed terms, conditions and fees. In order to maintain its franchise
relationship with Promus, the Company may be required to incur expenditures and
meet other obligations at the franchised resorts required by the applicable
franchise agreements, which may (i) increase its operating costs, and (ii)
limit the Company's flexibility with respect to the operation of the applicable
resort in order to comply with the applicable franchise agreements. The amount
of expenditures which the Company may be required to incur and the amount of
obligations which the Company may be required to satisfy will depend upon,
among other things, the extent to which the applicable franchise agreement
requires the Company to incur construction and development costs, operating
expenses and capital expenditures and maintenance costs. The Promus Agreement
may be terminated by either party in the event that the parties have not
jointly developed a resort during the first three years of the Promus Agreement
(which was signed in December 1996).

Although the Company and Promus are currently evaluating new resort
development opportunities for the joint venture, no commitments have been made
for a specific development at this time. However, pursuant to the Promus
Agreement, the parties have franchised two of the Companies properties: (i)
Hampton Vacation Resort--Oak Plantation which is the first vacation ownership
resort to operate under the Hampton Vacation Resorts brand and (ii) the Embassy
Vacation Resort--Myrtle Beach, currently under construction in South Carolina.
In addition, the parties have agreed to franchise the property being acquired
in Scottsdale as an Embassy Vacation Resort.

Promus and Doubletree Corp., a Phoenix-based hotel management company,
recently announced plans to merge. The Company understands that the
transaction, which is scheduled to close by the end of calendar 1997, is
subject to regulatory and shareholder approval. The publicly-disclosed terms of
the merger agreement provide for the two companies to be merged into
subsidiaries of a new holding company to be named Promus Hotel Corp., the
senior management of which is expected to be comprised of personnel from Promus
and Doubletree. See "Risk Factors--Risks of Rapid Growth--Risks Associated with
Promus Agreement."

AFFILIATION WITH PGA OF AMERICA

The Company and an affiliate of PGA of America have entered into an
affiliation agreement (the "Affiliation Agreement"), a ten-year agreement
pursuant to which the Company has the exclusive right to acquire, develop,
manage, market and sell vacation ownership resorts in St. Lucie County, Florida
and potentially in other, yet to be determined, areas under the PGA name,
initials, trademark and logo. PGA Vacation Resort by Vistana is the first
resort that will be developed pursuant to the Affiliation Agreement. See "--The
Resorts."

Under the Affiliation Agreement, the Company has the right of first offer to
be the developer of additional PGA vacation resorts at other potential
properties (outside St. Lucie County, Florida) identified by the Company or by
PGA of America or its affiliates. If the parties mutually agree to develop any
other property, the Company will have the exclusive rights and licenses to use
the PGA name, initials, trademark and logos in connection with such property.
In the event that either party elects not to pursue development of another
potential resort, the other party has certain rights to develop that resort
independently. Except for Port St. Lucie, there are no current commitments for
development of any other vacation ownership resorts, and there can be no
assurance that the parties will successfully negotiate and execute any future
development agreements. If the Company and PGA of America enter into future
development agreements, the Affiliation Agreement contemplates that the parties
will execute similar agreements and covenants as those regarding the PGA
Vacation Resort by Vistana.

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The Company's exclusive right to develop the PGA Vacation Resort by Vistana,
and its right of first offer for other potential vacation ownership resorts,
does not apply to development projects outside St. Lucie County, Florida which
already bear the PGA name. Likewise, the Affiliation Agreement does not limit,
prohibit or restrict the Company or any of its affiliates from conducting its
business in any manner it determines to be necessary or advantageous to it,
including, without limitation, developing, marketing, managing, owning,
operating or selling vacation ownership resorts other than the PGA Vacation
Resort by Vistana or other properties that may be developed by the parties.

The Company has the right under the Affiliation Agreement, but not the
obligation, to include one or more of the PGA Vacation Resorts in a vacation
club or other exchange program in combination with other vacation resorts of
comparable or superior quality owned or operated by the Company or one of its
affiliates, subject to PGA of America's approval.

In addition, the Company and PGA of America entered into a marketing
agreement under which the Company is granted access to the PGA mailing list
(which includes over 72,000 names of PGA members, apprentices and business
contacts) as well as media recognition in publications such as the PGA News,
the PGA International Golf Show Directory and listing on the PGA website. See
"--The Resorts."

THE ACQUISITION

On September 16, 1997, the Company completed its acquisition of entities
comprising The Success Companies, Success Developments, L.L.C. and Points of
Colorado, Inc. from Donald J. Dubin, Larry D. Doll, Ronald R. Sharp, David E.
Bruce and David E. Friedman (collectively, the "Sellers"). Pursuant to the
Agreement and Plan of Reorganization dated as of August 15, 1997, (the
"Agreement and Plan of Reorganization"), by and among the Company, Vistana
West, Inc. (formerly known as V Sub-1, Inc.), a wholly-owned subsidiary of the
Company, and all of the Sellers, the Company acquired all of the outstanding
stock of Success and Points for a purchase price consisting of approximately
$24 million in cash (financed with bank borrowings of approximately $24
million) and 638,444 shares of Common Stock. Delivery of 430,814 of such
shares is contingent upon Success and Points achieving certain operating
results for calendar years 1998 through 2000. The consideration was determined
as a result of arm's-length negotiations between the Company and the Sellers.

In connection with the closing of the transactions contemplated by the
Agreement and Plan of Reorganization, the Company also granted certain
registration rights to the Sellers. See "Shares Eligible for Future Sale." In
addition, a wholly-owned subsidiary of the Company entered into employment
agreements with each of the Sellers pursuant to which each of them serves as
an officer of such subsidiary.

Prior to their acquisition by the Company, Success and Points were a
closely-held group of companies which developed, marketed, financed and
operated three vacation ownership resorts: (i) the Villas of Cave Creek, near
Scottsdale, Arizona; (ii) Eagle Point Resort in Vail, Colorado; and (iii)
Falcon Point Resort in Avon, Colorado. The Company will continue to market,
finance and operate these resorts. In addition, Success and Points served, and
the Company will continue serving, as the exclusive marketing and sales agent
for the largest vacation ownership resort in Colorado, The Christie Lodge,
located in Avon. Success and Points also have additional property in Colorado
and Arizona under contract for future development, which property the Company
intends to develop.

The Company believes Success and Points will serve as a strong foundation
for sales, marketing and resort operations in the western region of the United
States and provide the Company with experience in direct marketing to
consumers in Arizona and Colorado. As a result of the strategic relationships
and operational expertise gained in this Acquisition, the Company believes it
will be better able to identify additional developments and acquisitions in
Arizona, Colorado and other western states.

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SALES AND MARKETING

General. During its 17-year history as a leading innovator, developer and
operator of vacation ownership resorts, the Company has developed skills and
expertise necessary for the cost-effective marketing and selling of Vacation
Ownership Interests at its resorts. In addition to building regional expertise
in the competitive Orlando market, the Company believes that it is positioned
to enter other regional destination resort markets and to develop marketing
and sales programs specifically targeted towards popular market segments such
as the golf industry. In the Company's view, its unique marketing strategies
and integrated sales programs have allowed it to succeed in the highly-
specialized field of Vacation Ownership Interest sales and have proven to be
critical components of the Company's continued competitiveness and
profitability.

Marketing Programs. The Company's current marketing efforts center on three
principal programs--the Vistana Preview Coordinator program (the "VPC
Program"), the VIP/In-House Program and international brokerage operations. In
addition to these programs, the Company also utilizes a variety of other
marketing approaches, including vacation sampler programs (designed to allow a
prospective purchaser to be a guest at the resort and to experience vacation
ownership prior to making a decision to buy), direct mail and telemarketing
campaigns, and, more recently, strategic alliances with travel, lodging and
recreational partners, such as Promus and PGA of America. Each of the
Company's marketing programs seeks to provide consistent access to qualified
prospective buyers and involves specific target marketing to leisure industry
customers. In the Company's view, these strategies, which often include one-
to-one contact, have proven to be more effective and cost-efficient than
conventional broad-based advertising.

The VPC Program consists of public contact marketing by an employee of the
Company who provides concierge-type services in the lobby of a hotel or
condominium vacation property, or at other attractions near one of the
Company's resorts. The goal of the VPC Program is to generate a regular flow
of qualified potential Vacation Ownership Interest purchasers to visit the on-
site sales centers at the Company's resorts. To encourage interest in the
Company's resorts, the VPC Program representative offers interested potential
buyers visitor information and assistance with their vacation plans and
invites them to tour one of the Company's resorts, often providing additional
incentives such as tickets to local attractions. The majority of the Company's
VPC Program representatives are located at facilities and properties with
which the Company has an exclusive solicitation arrangement. The Company seeks
to ensure that its VPC Program representatives are placed only at facilities
frequented by potential customers and that each representative is thoroughly
trained and courteous. Since 1980, the VPC Program has attracted approximately
400,000 families to tour the Company's properties.

The Company's VIP/In-House Program focuses on guests staying at the
Company's vacation ownership resorts, whether they are owners, renters or
exchangers. Through a combination of guest services and telephone contact,
these guests are invited to a VIP tour of the vacation ownership resort. The
Company is continually identifying cross-marketing opportunities within its
existing customer base and new vacation ownership products that will be
attractive to this segment of the market. The Company's marketing approach
towards these individuals is specifically tailored to take into account the
fact that they are already familiar with the resort and the vacation ownership
concept, and are experiencing the amenities and guest services first-hand. The
Company believes that its marketing efforts in this area are greatly enhanced
by the perceived quality and value of its resorts, amenities and guest
services, and its ability to consistently deliver an enjoyable vacation
experience. With 1,141 units operating at Vistana Resort at an approximately
88% occupancy rate, the VIP/In-House program has been a key component of the
Company's growth and, in the Company's view, will continue to play an
important role in the Company's marketing efforts as its portfolio of vacation
ownership resorts continues to grow.

In addition to the Company's domestic operations, the Company manages and
coordinates a network of independent brokers to sell Vacation Ownership
Interests abroad. In light of the increasing popularity of central Florida
among overseas visitors and the overall rise in vacation ownership worldwide,
the Company believes that the international market presents significant growth
opportunities. However, international interest in the Company's future resorts
is expected to vary depending upon the location of the project. Through June
30, 1997,

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approximately 32% of the Company's sales have been to foreign purchasers (with
approximately one-half of such sales made through brokers in other countries
and all sales made in United States dollars), many of whom buy the Vacation
Ownership Interest "sight unseen" based on the Company's reputation for
delivering a high-quality experience. This segment of the Company's sales
increased by approximately 65% for the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996. The Company is currently
enhancing its existing international brokerage operations, with a particular
focus on the South and Central American markets of Argentina, Guatemala and
Chile, where the Company maintains its only direct foreign sales office in
Santiago. The Company anticipates that the international market may offer
opportunities to market multiple property sites as the Company continues to
expand.

Sales Focus. The Company's marketing efforts are supported by an experienced
and highly-trained resort-based sales operation, which, in the Company's view,
has been the foundation of the Company's successful performance during its 17-
year history. Prospective purchasers are given a personalized on-site tour of
the Company's resorts and provided information about vacation ownership and
available financing options. Presentations to potential buyers, which
typically last between two and one-half and four hours, are individually
tailored to take into account the guest's particular needs and background,
such as vacationing habits and familiarity with the vacation ownership
concept. Prior to closing, each sale is verified by a settlement manager who
reviews all documents and pertinent facts of the sale with the purchaser and
is available to answer any questions that the new owner may have.

Because the most critical component of the Company's sales effort is its
sales personnel, the Company continually strives to attract, train and retain
a superior sales force. The Company's policy is for each of its sales
representatives to be a licensed real estate professional and undergo
intensive instruction and training. In addition, except for certain
independent contractors, each sales representative is an employee of the
Company and receives full employment benefits. The Company is continually
reviewing and improving its selling, recruiting and training processes to
achieve high levels of customer and employee satisfaction. The Company
currently employs more than 220 sales representatives and utilizes the
services of approximately 60 independent contractors as sales agents. See "--
Governmental Regulation."

CUSTOMER FINANCING

The Company extends financing to purchasers of its Vacation Ownership
Interests at its resorts. These purchasers generally make a down payment equal
to at least 10% of the sales price and borrow the remaining sales price from
the Company. These borrowings bear interest at fixed rates, are secured by
first mortgages on the underlying Vacation Ownership Interests and amortize
over periods ranging up to ten years. The Company funds its resort acquisition
and development and operations by borrowing up to 90% of the aggregate
principal amount of its customer mortgages receivable under its existing
credit facilities. As of June 30, 1997, the Company's existing credit
facilities provided for an aggregate of up to approximately $118.6 million of
available customer mortgages receivable financing to the Company bearing
interest at variable rates based on a specified prime rate. As of June 30,
1997, the Company had approximately $52.3 million of indebtedness outstanding
under its existing customer mortgages receivable credit facilities at a
weighted average interest rate of 10.5% per annum secured by the Company's
pledge of a portion of its customer mortgages receivable. As of June 30, 1997,
the Company had a portfolio of approximately 21,400 loans to customers
totalling approximately $125.2 million, with an average contractual yield of
13.9% per annum. As of June 30, 1997 (i) approximately 3.1% of the Company's
customer mortgages receivable were 60 to 120 days past due; and
(ii) approximately 5.3% of the Company's customer mortgages receivable were
more than 120 days past due and the subject of legal proceedings. The
Company's provision for doubtful accounts is 7.0% of Vacation Ownership
Interest revenues. The Company periodically monitors its provision for
doubtful accounts to provide for future losses associated with any defaults on
customer mortgages receivable and provides for additions to the allowance for
loss on receivables through its provision for doubtful accounts on an annual
basis. Management believes that the provision is adequate for such future
losses. See "Risk Factors--Risks Associated with Customer Mortgages
Receivable."

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The Company has historically derived net interest income from its financing
activities as a result of the positive difference between the interest rates
it charges its customers who finance their purchase of a Vacation Ownership
Interest and the interest rates it pays its lenders. Because the Company's
indebtedness bears interest at fixed and variable rates and the Company's
customer mortgages receivable bear interest at fixed rates, the Company bears
the risk of increases in interest rates with respect to its indebtedness. The
Company engages in limited interest rate hedging activities from time to time
in order to reduce the risk and impact of increases in interest rates with
respect to such indebtedness. See "Risk Factors--Risks Associated with Hedging
Activities."

The Company bears the risk of defaults under its customer mortgages on
Vacation Ownership Interests. If a purchaser of a Vacation Ownership Interest
defaults on the mortgage during the early part of the loan amortization
period, the Company will not have recovered its marketing, selling (other than
certain sales commissions), and general and administrative costs per Vacation
Ownership Interest, and such costs will again be incurred in connection with
the subsequent resale of the Vacation Ownership Interest. As is sometimes the
practice in the vacation ownership industry, the Company does not verify the
credit history of its customers. Based on the Company's historical customer
default rate, the fact that its customers are required to make a down payment
of at least 10% of the purchase price of a Vacation Ownership Interest (which
the Company views as indicative of a customer's financial wherewithal to meet
obligations under the mortgage related to the Vacation Ownership Interest) and
that the customer mortgage is secured by the underlying Vacation Ownership
Interest, the Company does not believe that credit history verification is
cost-effective or necessary. In addition, although in certain jurisdictions
(including Florida) the Company may seek recourse against a defaulting
customer for the sales price of the Vacation Ownership Interest, the Company
has not historically pursued such a remedy. See "Risk Factors--Risks
Associated with Customer Mortgages Receivable."

The Company had historically provided customer mortgages receivable
financing for up to seven years, as had been typical for the industry. Over
the past several years, industry trends have been to lengthen the term of such
financing to up to ten years. The Company has recently begun to offer ten-year
financing for certain of its customer mortgages receivable.

OTHER OPERATIONS

Room Rental Operations. In order to generate additional revenues at its
resorts that have an inventory of unused or unsold Vacation Ownership
Interests, the Company rents units with respect to such Vacation Ownership
Interests on a nightly or weekly basis. The Company offers these unoccupied
units through direct consumer sales, travel agents and package vacation
wholesalers. In addition to providing the Company with supplemental revenues,
the Company believes its room rental operations provide it with a good source
of lead generation for the sale of Vacation Ownership Interests. As part of
the management services provided by the Company, at the request of a Vacation
Ownership Interest owner, the Company, for a fee equal to 50% of a unit's
rental rate, net of commissions, generally will rent an owner's Vacation
Ownership Interest in the event the owner is unable to use or exchange the
Vacation Ownership Interest. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Resort Management. The Company currently provides both hospitality and
homeowners' association management services at its existing vacation ownership
resorts, and intends to provide the same services, directly or through
subcontracts with third parties, at its future vacation ownership resorts
pursuant to management agreements with the homeowners' associations present at
such resorts (which are comprised of owners of Vacation Ownership Interests at
the resort or, in the case of Vistana Resort, a particular phase of the
resort). Pursuant to each such management agreement the Company is paid by the
applicable homeowners' association an annual management fee which is generally
equal to approximately 10% of applicable costs and expenses incurred by the
homeowners' association. The Company is responsible for, and has authority
over, all activities necessary for the day-to-day operation of the resorts,
including administrative services, procurement of inventories and supplies,
and promotion and publicity. Management agreements between the Company and the
homeowners' associations typically provide for an initial term of three or
more years, with automatic renewals. In general, the homeowners' associations
may remove the Company as manager upon obtaining the requisite owner vote. The
Company also provides, directly or indirectly, managerial and other employees
necessary for

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the operation of its resorts, whose duties include, among other things, review
of the maintenance of the resorts, preparation of reports, budgets and
projections and employee training. See "Risk Factors--Risks Associated with
Resort Management."

Pursuant to management and submanagement agreements with the Company, Promus
will provide hospitality management services to the Embassy Vacation Resort--
Myrtle Beach and the Embassy Vacation Resort--Scottsdale and may provide such
services to other future resorts developed pursuant to the Promus Agreement.
Such services will be provided for a negotiated management fee which in some
cases may result in a sharing of the homeowner association management fee
payable to the Company. See "Risk Factors--Risks Associated with Resort
Management."

Telecommunications Services. The Company's telecommunications business
generates revenues from the installation of telephone, data and cable
television equipment and infrastructure at its resorts, the rental of
telephone and related cable and equipment to the homeowners' associations, and
the provision of ongoing long-distance telephone and cable television service
at its resorts pursuant to contracts with the homeowners' associations. The
Company also derives revenues from providing telecommunications design and
installation services to third parties, including hotels, universities,
hospitals and airports as a contractor or subcontractor. See "Risk Factors--
Risks Associated with Telecommunications Operations."

PARTICIPATION IN VACATION OWNERSHIP INTEREST EXCHANGE NETWORKS

The Company believes that consumers are more likely to purchase its Vacation
Ownership Interests as a result of the Company's participation in the Vacation
Ownership Interest exchange network operated by RCI, a leading exchange
network operator which was recently acquired by HFS Incorporated, and II. In a
1995 study sponsored by the Alliance for Timeshare Excellence and ARDA,
exchange opportunity was cited by purchasers of Vacation Ownership Interests
as one of the most significant factors in their decision to purchase a
Vacation Ownership Interest. Membership in RCI or II allows the Company's
customers to exchange in a particular year their occupancy right in the unit
in which they own a Vacation Ownership Interest for an occupancy right at the
same time or a different time in another participating resort, based upon
availability and the payment of a variable exchange fee. A member may exchange
his or her Vacation Ownership Interest for an occupancy right in another
participating resort by listing the Vacation Ownership Interest as available
with the exchange network operator and by requesting occupancy at another
participating resort, indicating the particular resort or geographic area to
which the member desires to travel, the size of the unit desired and the
period during which occupancy is desired. The exchange network assigns a
rating to each listed Vacation Ownership Interest, based upon a number of
factors, including the location and size of the unit, the quality of the
resort and the period of the year during which the Vacation Ownership Interest
is available, and attempts to satisfy the exchange request by providing an
occupancy right in another Vacation Ownership Interest with a similar rating.
If RCI or II is unable to meet the member's initial request, the network
operator suggests alternative resorts based on availability.

The cost of an annual membership fee in RCI, which is typically at the
option and expense of the owner of the Vacation Ownership Interest, is
approximately $65 per year. RCI has assigned Gold Crown ratings to the
Vacation Ownership Interests in each of the Company's three operating resorts
in the RCI system (Vistana Resort, Vistana's Beach Club and the Hampton
Vacation Resort--Oak Plantation), and II has assigned Five Star ratings to two
of the Company's operating resorts (Falcon Point and Villas of Cave Creek) in
the II system.

The agreements between one of the Company's predecessors and RCI generally
provide that, until May 2001, the RCI exchange program will be the only
exchange program permitted at resorts developed by that entity and any other
entity which it controls. In addition, Messrs. Gellein and Adler have agreed
with RCI that, until May 2001, each vacation ownership resort owned, developed
or managed by an entity in which Messrs. Gellein or Adler, individually or
collectively, have a controlling interest will execute an affiliation
agreement with RCI with an initial six-year term. See "Risk Factors--Risks
Associated with Vacation Ownership Interest Exchange Networks."

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COMPETITION

The vacation ownership industry historically has been highly fragmented and
dominated by a very large number of local and regional resort developers and
operators, each with small resort portfolios generally of differing quality.
More recently, many of the world's most widely-recognized lodging, hospitality
and entertainment companies have begun to develop and sell Vacation Ownership
Interests under their brand names, including Marriott, Disney, Hilton, Hyatt,
Four Seasons, Inter-Continental, Westin and Promus. In addition, other
publicly-traded companies focused on the vacation ownership industry, such as
Signature, Fairfield, Vacation Break, Silverleaf, Trendwest and Bluegreen have
competed, currently compete, or may in the future compete, with the Company.
Moreover, competition in the Orlando market is particularly intense, and
includes many nationally recognized lodging, hospitality and entertainment
companies, as well as active privately-owned local operators of vacation
ownership resorts such as CFI and Orange Lake. Furthermore, significant
competition exists in other markets in which the Company currently operates or
is developing vacation ownership resorts. Certain entities with which the
Company competes possess significantly greater financial, sales and marketing,
personnel and other resources than those of the Company and may be able to grow
at a more rapid rate or more profitably as a result. Management believes that
industry competition will be increased by recent and possibly future
consolidation in the vacation ownership industry. See "Risk Factors--
Competition."

GOVERNMENTAL REGULATION

General. The Company's marketing and sales of Vacation Ownership Interests
and other resort operations are subject to extensive regulation by the federal
government and the states in which the Company's resorts are located and in
which its Vacation Ownership Interests are marketed and sold. Federal
legislation to which the Company is or may be subject includes the Federal
Trade Commission Act, the Fair Housing Act, the Truth-in-Lending Act, the Real
Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the
Interstate Land Sales Full Disclosure Act, the Telephone Consumer Protection
Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act and the
Civil Rights Acts of 1964 and 1968. The Florida Condominium Act and the Florida
Vacation Plan and Timesharing Act extensively regulate the creation and
management of timeshare condominiums, the marketing and sale of Vacation
Ownership Interests, the escrow of purchaser funds and other property prior to
completion of construction and closing, the content and use of advertising
materials and promotional offers, the creation and operation of exchange
programs and multi-site timeshare plan reservation systems, and the resale of
Vacation Ownership Interests. In addition, many states have adopted similar
legislation as well as specific laws and regulations regarding the sale of
Vacation Ownership Interests. The laws of most states, including Arizona and
Florida, require a designated state authority to approve a detailed offering
statement describing the Company and all material aspects of the resort and
sale of Vacation Ownership Interests at such resort. In addition, the laws of
most states in which the Company sells Vacation Ownership Interests grant the
purchaser of a Vacation Ownership Interest the right to rescind a contract of
purchase at any time within a statutory rescission period. Furthermore, most
states have other laws which regulate the Company's activities, such as real
estate licensure laws, travel sales licensure laws, anti-fraud laws,
telemarketing laws, prize, gift and sweepstakes laws, and labor laws. The
Company believes that it is in material compliance with all applicable federal,
state, local and foreign laws and regulations to which it is currently subject.
See "Risk Factors--Risks Associated with Governmental Regulation."

Environmental Matters. Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real estate may be required to investigate, remediate and remove hazardous or
toxic substances or petroleum product releases at such property, and may be
held liable to a governmental entity or to third parties for property damage
and for investigation remediation and removal costs incurred by such parties in
connection with the contamination. Such laws typically impose clean-up
responsibility and liability without regard to whether the owner or operator
knew of or caused the presence of the contaminants, and the liability under
such laws has been interpreted to be joint and several unless the harm is
divisible and

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there is a reasonable basis for allocation of responsibility. The cost of
investigation, remediation or removal of such substances may be substantial,
and the presence of such substances, or the failure to properly remediate the
contamination on such property, may adversely affect the owner's or operator's
ability to sell or rent such property or to borrow using such property as
collateral. Persons who arrange for the disposal or treatment of hazardous or
toxic substances at a disposal or treatment facility also may be liable for the
costs of removal or remediation of a release of hazardous or toxic substances
at such disposal or treatment facility, whether or not such facility is owned
or operated by such person. In addition, some environmental laws create a lien
on the contaminated site in favor of the government for damages and costs it
incurs in connection with the contamination. Finally, the owner or operator of
a site may be subject to common law claims by third parties based on damages
and costs resulting from environmental contamination emanating from a site. In
connection with its ownership and operation of its properties, the Company may
be potentially liable for such costs.

The Company has conducted Phase I environmental assessments at each of its
existing resorts, properties under development and properties subject to
acquisition in order to identify potential environmental concerns. These Phase
I assessments have been carried out in accordance with accepted industry
practices and consisted of non-invasive investigations of environmental
conditions at the properties owned by the Company, including a preliminary
investigation of the sites and identification of publicly known conditions
concerning properties in the vicinity of the sites, physical site inspections,
review of aerial photographs and relevant governmental records where readily
available, interviews with knowledgeable parties, investigation for the
presence of above-ground and underground storage tanks presently or formerly at
the sites, a visual inspection of potential lead-based paint and suspect
friable asbestos containing materials where appropriate, a radon survey, and
the preparation and issuance of written reports. The Company's assessments of
its properties have not revealed any environmental liability that the Company
believes would have a material adverse effect on the Company's business,
assets, financial condition or results of operations, nor is the Company aware
of any such material environmental liability. See "Risk Factors--Potential
Environmental Liabilities."

The Company believes that its properties are in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
regarding hazardous or toxic substances. The Company has not been notified by
any governmental authority or any third party, and is not otherwise aware, of
any material noncompliance, liability or claim relating to hazardous or toxic
substances or petroleum products in connection with any of its present
properties.

Other Regulations. Under various state and federal laws governing housing and
places of public accommodation, the Company is required to meet certain
requirements related to access and use by disabled persons. Many of these
requirements did not take effect until after January 1, 1991. Although
management believes that the Company's resorts are substantially in compliance
with present requirements of such laws, the Company may incur additional costs
of compliance in connection with the development of new resorts, or conversion
or renovation of existing resorts. Additional legislation may impose further
burdens or restriction on owners with respect to access by disabled persons.
The ultimate amount of the cost of compliance with such legislation is not
currently ascertainable, and, while such costs are not expected to have a
material effect on the Company, such costs could be substantial. Limitations or
restrictions on the completion of certain renovations may limit application of
the Company's growth strategy in certain instances or reduce profit margins on
the Company's operations.

OTHER PROPERTIES

The Company's other properties include an office plaza consisting of two
three-story buildings (totalling approximately 67,000-square feet), which
headquarters the Company's administrative operations, a 27,000-square foot two-
story reception center and resort operations complex, maintenance and laundry
facilities, a freestanding general store and a gift shop leased to an
unaffiliated entity. All of these other properties are owned by the Company,
subject, in certain instances, to mortgages pursuant to the Company's existing
Credit Facilities, and are located within or adjacent to Vistana Resort in
Orlando.

64
<PAGE>

EMPLOYEES

As of September 30, 1997, the Company had approximately 1,751 full-time
employees and utilized the services of approximately 60 independent contractors
as sales agents. The Company believes that its employee relations and relations
with its independent contractors are good. None of the Company's employees are
represented by a labor union.

INSURANCE

The Company carries comprehensive liability, fire, windstorm, tropical storm
and business interruption insurance with respect to its properties and
interests in its resorts (i.e., its inventory of unsold Vacation Ownership
Interests) with policy specifications, insured limits and deductibles
customarily carried for similar properties which the Company believes are
adequate. There are, however, certain types of losses (such as losses arising
from acts of war) that are not generally insured because they are either
uninsurable or not economically insurable. Should an uninsured loss or a loss
in excess of insured limits occur, the Company could lose its capital invested
in a resort, as well as the anticipated future revenues from such resort and
would continue to be obligated on any mortgage indebtedness or other
obligations related to the property. Any such loss could have a material
adverse effect on the Company. See "Risk Factors--Uninsured Loss; Natural
Disasters."

LEGAL PROCEEDINGS

The Company is currently subject to litigation and claims respecting
employment, tort, contract, construction and commission disputes, among others.
In the judgment of the Company, none of these lawsuits or claims against the
Company, if adversely decided, is expected to have a material adverse effect on
the Company, its business operations, results of operations or financial
condition.

65
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each person who
is a director or an executive officer of the Company. Positions with the
Company include positions with the Company's predecessors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Raymond L. Gellein, 50 Chairman of the Board, Co-Chief Executive Officer
Jr..................... and Director
Jeffrey A. Adler........ 45 President, Co-Chief Executive Officer and Director
Matthew E. Avril........ 36 Executive Vice President and Chief Operating Officer
Susan Werth............. 48 Senior Vice President, General Counsel and Secretary
Carol Lytle............. 36 Vice President
John M. Sabin........... 42 Senior Vice President, Chief Financial Officer and
Treasurer
Laurence S. Geller...... 49 Director
Charles E. Harris....... 51 Director
Steven J. Heyer......... 45 Director
</TABLE>

Raymond L. Gellein, Jr., has served as Chairman of the Board, Co-Chief
Executive Officer and a Director since December 1996. Mr. Gellein served as
Chairman of the Board and a Director since November 1991 and served as Chief
Executive Officer from 1981 to November 1991. Prior to joining the Company, Mr.
Gellein served as Vice President and Division Manager in Real Estate for the
Continental Illinois National Bank and Trust Company of Chicago. Mr. Gellein
has been the Chairman of the Florida Chapter of ARDA since such chapter's
inception, and is a member of ARDA's Legislative Committee. Mr. Gellein is also
a member of the Board of Overseers of the Roy E. Crummer Graduate School of
Business Education at Rollins College. Mr. Gellein received an M.M. degree from
Northwestern University's Kellogg School of Management and a B.A. degree from
Denison University.

Jeffrey A. Adler has served as President, Co-Chief Executive Officer and a
Director since December 1996. Mr. Adler served as President and a Director
since November 1991 and served as Executive Vice President from 1983 to
November 1991. Prior thereto, Mr. Adler served as Second Vice President and
Real Estate Lending Officer for the Continental Illinois National Bank and
Trust Company of Chicago. Mr. Adler is a member of the board of directors of
ARDA, a member of ARDA's Strategic Planning Committee and Alliance for
Timeshare Excellence. Mr. Adler received an M.M. degree from Northwestern
University's Kellogg School of Management and a B.A. degree from Ohio State
University.

Matthew E. Avril has served as Executive Vice President and Chief Operating
Officer since November 1996. From February 1994 until November 1996 and
February 1997, respectively, Mr. Avril served as Senior Vice President and
Chief Financial Officer, respectively, and from January 1992 until November
1994, Mr. Avril served as Senior Vice President and Treasurer. From March 1989
to December 1991, Mr. Avril served as Vice President and Controller. Mr. Avril
is a certified public accountant and a member of the Florida Institute of
Certified Public Accountants. Mr. Avril received a B.B.A. degree from the
University of Miami located in Florida.

Susan Werth has served as Senior Vice President, General Counsel and
Secretary since December 1996. Ms. Werth served as Senior Vice President--Law
from May 1996 to December 1996. Prior thereto Ms. Werth represented the Company
as outside counsel for approximately 10 years. From January 1990 until May
1996, Ms. Werth was a partner of the law firm of Weil, Gotshal & Manges, LLP,
in Miami, Florida. Ms. Werth received an A.B. degree from Barnard College and a
J.D. degree from Columbia Law School, and is a member of the Florida Bar.

66
<PAGE>

Carol Lytle has served as Vice President of the Company since December 1996.
She also serves as President of Vistana East, Inc. in charge of overseeing the
entire sales and marketing responsibility for the Company's east coast
operations. Ms. Lytle joined the Company in its marketing area in 1980, was
promoted to a Manager of Marketing in 1981, a Director of Marketing in 1983, a
Vice President of Marketing in 1984, and a Senior Vice President of Marketing
in 1989.

John M. Sabin has served as Senior Vice President, Chief Financial Officer
and Treasurer of the Company since February 1997. From June 1996 to February
1997, Mr. Sabin served as Vice President--Finance of Choice Hotels
International, Inc. From June 1995 to February 1997, Mr. Sabin also served as
Vice President--Mergers and Acquisitions of Choice Hotels International, Inc.
and, from December 1993 to October 1996, he served as Vice President--Finance
and Assistant Treasurer of Manor Care, Inc., the former parent of Choice Hotels
International, Inc. From 1990 to December 1993, Mr. Sabin served as Vice
President--Corporate Mergers and Acquisitions of Marriott Corporation. In
addition, Mr. Sabin is a director of Competitive Technologies, Inc., a
publicly-traded technology licensing and transfer company. Mr. Sabin received
B.S., M.Acc. (Masters of Accountancy) and M.B.A. degrees from Brigham Young
University and a J.D. degree from the J. Reuben Clark Law School at Brigham
Young University.

Laurence S. Geller has served as a Director of the Company since March 1997.
Mr. Geller serves as President and Chief Executive Officer of Strategic Hotel
Capital Incorporated, a lodging real estate ownership company. Previously, he
served as the Chairman of Geller & Co., a real estate, gaming and tourism, and
lodging consulting company, since December 1989. From 1984 through December
1989, Mr. Geller served as the Executive Vice President and Chief Operating
Officer of Hyatt Development Corporation, a developer of domestic and
international hotels and resorts. From 1976 to 1981, Mr. Geller served as a
Senior Vice President of Holiday Inns, Inc. Mr. Geller is a director of
Sunstone Hotel Investors, Inc., a publicly traded lodging real estate
investment trust, and Sky Games International Limited, a publicly traded gaming
technology company. Mr. Geller is the Immediate Past Co-Chairman of the
Industry Real Estate Financing Advisory Council of the American Hotel and Motel
Association, and Past Vice Chairman and current member of the Commercial &
Retail Council of Urban Land Institute. Mr. Geller received a National Diploma
from Ealing Technical College (U.K.).

Charles E. Harris has served as a Director of the Company since March 1997.
Mr. Harris has served as President and Chief Executive Officer of Synagen
Capital Partners, Inc., a private merchant banking firm ("Synagen"), since
1989, and as President and Chief Executive Officer of Allen C. Ewing & Co.
("Ewing"), an investment banking firm, since 1995 and 1994, respectively. Mr.
Harris was Vice President--Corporate Finance of Ewing from 1992 to 1994. Mr.
Harris also served as Chairman and Chief Executive Officer of First Commerce
Banks of Florida, Inc. from September 1995 to July 1996. From 1987 to 1993, Mr.
Harris was Chairman (and from 1988 to 1993, Chief Executive Officer) of Mid-
State Federal Savings Bank. Prior thereto, Mr. Harris was engaged in the
private practice of law and served as an Assistant Professor of Law at the
University of Florida and as Senior Vice President and General Counsel of Sun
Banks, Inc. Mr. Harris received a B.A. degree from the University of Florida
and a J.D. degree from Harvard Law School. See "Underwriting."

Steven J. Heyer has served as a Director of the Company since March 1997.
Mr. Heyer has served as President, Worldwide Sales, Marketing, Distribution and
International Networks for Turner Broadcasting System, Inc., a subsidiary of
Time Warner, Inc., since September 1996. Mr. Heyer joined Turner Broadcasting
System, Inc. in May 1994 as President of Turner Broadcasting Sales, Inc. From
September 1992 to May 1994, Mr. Heyer was President of Young & Rubicam
Advertising Worldwide and Executive Vice President, a Director and a member of
the Executive Committee of Young & Rubicam, Inc., an international advertising
agency. From October 1977 to September 1992, Mr. Heyer was employed by Booz,
Allen & Hamilton, Inc., a management consulting firm, and served as Senior Vice
President and Managing Partner from 1987 to September 1992. Mr. Heyer is a
member of the board of directors of the Cable Advertising Bureau, the Ad
Council and the Partnership for a Drug Free America, and a member of the Board
of Overseers of the Tuck School at Dartmouth College. Mr. Heyer received a B.A.
degree from Cornell University and a M.B.A. degree from the Stern School of
Management at New York University.

67
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee. The Board of Directors has established an audit committee
(the "Audit Committee"), which consists of Messrs. Geller, Harris and Heyer.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit
fees, and reviews the adequacy of the Company's internal accounting controls.

Compensation Committee. The Board of Directors has established a compensation
committee (the "Compensation Committee"), which consists of Messrs. Geller and
Heyer, to determine compensation for the Company's senior executive officers,
determine awards under the Stock Plan, and administer the Employee Stock
Purchase Plan (as defined herein).

Nominating Committee. The Board of Directors has established nominating
committee (the "Nominating Committee"), which consists of Messrs. Gellein and
Adler. The function of the Nominating Committee is to recommend to the full
board of Directors nominees for election as directors of the Company and the
composition of committees of the Board of Directors.

CLASSIFIED BOARD OF DIRECTORS

The Company's Articles of Incorporation provide for the Company's Board of
Directors to be divided into three classes serving staggered terms so that
directors' initial terms will expire either on the date of the 1998, 1999 or
2000 annual meeting of shareholders. Messrs. Geller and Heyer have been
classified as the class of directors having a term expiring at the 1998 annual
meeting of shareholders, Mr. Gellein has been classified as the class of
directors having a term expiring on the date of the 1999 annual meeting of
shareholders, and Messrs. Adler and Harris have been classified as the class of
directors having a term expiring on the date of the 2000 annual meeting of
shareholders. Starting with the 1998 annual meeting of shareholders, one class
of directors will be elected each year for three-year terms. The classification
of directors makes it more difficult for a significant shareholder to change
the composition of the Board of Directors in a relatively short period of time
and, accordingly, provides the Board of Directors and shareholders time to
review any proposal that a significant shareholder may make and to pursue
alternative courses of action which the Board of Directors believes are fair to
all of the shareholders of the Company.

DIRECTOR COMPENSATION

Each director of the Company who is not an employee of the Company or the
beneficial owner of 5% or more of the outstanding Common Stock ("Eligible
Director") has been granted options to purchase 45,000 shares of Common Stock
at an exercise price equal to $12 per share. Of such options, options to
purchase 15,000 shares of Common Stock became exercisable immediately upon
grant, options to purchase 15,000 shares of Common Stock will be exercisable
immediately following the date of the 1998 annual meeting of the Company's
shareholders, and options to purchase the remaining 15,000 shares of Common
Stock will be exercisable immediately following the date of the 1999 annual
meeting of the Company's shareholders. It is the intention of the Company that
(i) each initial director of the Company who is an Eligible Director will also
be granted options to purchase 5,000 shares of Common Stock on the date of each
scheduled annual meeting of the Company's shareholders commencing immediately
following the 2000 annual meeting of the Company's shareholders and (ii) each
new director of the Company who is an Eligible Director, will be granted
options to purchase 5,000 shares of Common Stock on the date of each scheduled
annual meeting of the Company's shareholders. See "--Stock Plan."

In addition, each Eligible Director is paid an annual fee of $18,000, payable
in equal quarterly installments.

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<PAGE>

DIRECTORS' AND OFFICERS' INSURANCE

The Company has purchased a directors' and officers' liability insurance
policy with coverage typical for a public company similar to the Company. The
directors' and officers' liability insurance policy will insure (i) the
officers and directors of the Company from any claim arising out of an alleged
wrongful act by such persons while acting as officers and directors of the
Company; (ii) the Company to the extent it has indemnified the officers and
directors for such loss; and (iii) the Company for losses incurred in
connection with claims made against the Company for covered wrongful acts.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Articles of Incorporation that, to
the fullest extent provided under Florida law, limit the liability of its
directors and officers for monetary damages arising from a breach of their
fiduciary duties as directors or officers. Such limitation of liability does
not affect the availability of equitable remedies, such as injunctive relief or
rescission, nor does it limit liability for acts of fraud, knowing violation of
law, or unlawful payment of distributions. Furthermore, equitable remedies may
not, as a practical matter, be effective for various reasons. The Company's
Articles of Incorporation and By-Laws also provide that the Company shall
indemnify its directors and officers to the fullest extent permitted by Florida
law, including circumstances in which indemnification is otherwise
discretionary to the Company under Florida law. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission (the "Commission") such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

The Company has also agreed to indemnify each director and officer pursuant
to an Indemnity Agreement from and against any and all expenses, losses,
claims, damages and liabilities incurred by such director or officer for or as
a result of actions taken or not taken while such director or officer was
acting in his or her capacity as a director, officer, employee or agent of the
Company. In addition, the Company has purchased officers' and directors'
liability insurance which insures against liabilities that officers and
directors of the Company may incur in such capacities. See "--Directors' and
Officers' Insurance." The Company believes that these provisions are necessary
to attract and retain qualified persons to serve as directors and officers.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of the Company where indemnification will be required or
permitted. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.

69
<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth information with
respect to all compensation paid by the Company to the Company's Co-Chief
Executive Officers and each of the other three most highly compensated
executive officers for the year ended December 31, 1996 (the "Named Executive
Officers").

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------
SECURITIES LTIP
UNDERLYING PAYOUTS OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS(2) OPTIONS/SARS(3) (4) COMPENSATION(5)
- --------------------------- ------- ----------------------------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Gellein, 1996 $ 530,204 -- -- -- $13,125
Jr.....................
Chairman of the Board
and
Co-Chief Executive
Officer
Jeffrey A. Adler........ 1996 $ 530,204 -- -- -- $13,125
President and Co-Chief
Executive Officer
Matthew E. Avril........ 1996 $ 225,000$ 52,360 180,000 $125,000 $ 8,840
Executive Vice
President and Chief
Operating Officer
Susan Werth (6)......... 1996 $ 149,712 -- 75,000 -- $ 4,132
Senior Vice President,
General Counsel and
Secretary
Carol Lytle............. 1996 $ 225,000$ 99,921 180,000 $125,000 $ 2,400
Vice President
</TABLE>
- --------
(1) In accordance with the rules of the Commission, only information with
respect to the most recently completed fiscal year is reported in the
Summary Compensation Table because the Company was not a reporting company
during the three immediately preceding fiscal years.
(2) Reflects amounts paid in 1996 in respect of the year ended December 31,
1995.
(3) Does not include options to acquire 400,000, 125,000 and 400,000 shares of
Common Stock granted by the Principal Shareholders to Mr. Avril, Ms. Werth
and Ms. Lytle, respectively. See "Principal Shareholders."
(4) Consists of deferred executive incentive compensation under a previous
plan.
(5) In accordance with the rules of the Commission, other compensation in the
form of perquisites and other personal benefits has not been separately
itemized because such perquisites and other personal benefits constituted
less than the lesser of $50,000 or 20% of the annual salary and bonus for
the named executive officer for such year.
(6) Ms. Werth's employment by the Company commenced in May 1996. Accordingly,
salary and bonus amounts reflect a partial year of employment.

The Company has entered into employment agreements with each of Messrs.
Gellein, Adler and Avril, Ms. Werth and Ms. Lytle which provide, among other
things, that, the annual base salaries of Messrs. Gellein, Adler and Avril, Ms.
Werth and Ms. Lytle are $360,000, $360,000, $250,000, $230,000 and $250,000,
respectively. See "--Employment Agreements."

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<PAGE>

Stock Option Grants in Last Fiscal Year. The following table contains
information concerning the grant of stock options made for the fiscal year
ended December 31, 1996 to the Named Executive Officers. The table also lists
potential realizable values of such options on the basis of assumed annual
compounded stock appreciation rates of 5% and 10% over the life of the options
which are set for a maximum of ten years.

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF SHARE
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME (1) FISCAL YEAR PER SHARE DATE 5% 10%
---- --------------- ------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Gellein,
Jr..................... -- -- -- -- -- --
Jeffrey A. Adler........ -- -- -- -- -- --
Matthew E. Avril........ 180,000 33.6% $11.00 12/26/06 $1,245,211 $3,155,610
Susan Werth............. 75,000 14.0% $11.00 12/26/06 $ 518,838 $1,314,838
Carol Lytle............. 180,000 33.6% $11.00 12/26/06 $1,245,211 $3,155,610
</TABLE>
- --------
(1) These options were granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant as determined by the Board
of Directors. These options are nonqualified stock options, have a ten-year
term and, shall become 25% vested after 12 months from the date of grant
and shall vest pro rata in arrears on a monthly basis over a period of 36
months thereafter. See "--Stock Plan."
(2) The potential realizable value is reported net of the option price, but
before income taxes associated with exercise. These amounts represent
assumed annual compounded rates of appreciation of the shares of Common
Stock underlying each option at 5% and 10% from the date of grant to the
expiration date of the option.

STOCK PLAN

General. The Stock Plan was initially adopted by the Company in December
1996. The Stock Plan provides for the issuance of options to acquire up to
1,900,000 shares of Common Stock to employees, directors and officers of, and
consultants to, the Company and permits the Company to grant (i) shares of
Common Stock subject to transfer restrictions ("Restricted Stock"); (ii)
incentive stock options ("ISOs") within the meaning of Section 422 of the Code;
(iii) non-qualified stock options ("NSOs") ("ISOs" and "NSOs," individually, or
collectively, "Options"); (iv) stock appreciation rights ("SARs"); and (v)
phantom stock awards.

Purpose. The purpose of the Stock Plan is to foster the interests of the
Company and its shareholders by enabling employees, directors and officers of,
and consultants to, the Company to acquire a proprietary interest in the
Company and to provide an additional incentive for such persons to promote the
success of the Company's business.

Administration. The Stock Plan is administered by the Compensation Committee
of the Board, which selects the persons who will receive grants of awards under
the Stock Plan. The Committee is comprised of two or more outside directors who
are "non-employee directors" for purposes of Rule 16b-3 of the Exchange Act and
"independent directors" for purposes of Section 162(m) of the Code. The Board
appoints the members of the Compensation Committee, fills vacancies on the
Compensation Committee and has the power to replace members of the Compensation
Committee with other eligible persons at any time. The Compensation Committee
is authorized to make grants under the Stock Plan, to determine the terms and
conditions thereof and to otherwise administer and interpret the Stock Plan.

Eligibility. Employees, directors and officers of, and consultants to, the
Company and its subsidiaries and affiliates are eligible to participate in the
Stock Plan and receive grants of awards thereunder. The selection of employees
who will receive grants under the Stock Plan (the "Participants") is in the
sole discretion of the Compensation Committee. The aggregate number of shares
of Common Stock that may be issued under Options, as restricted stock or upon
which SARs or phantom stock may be awarded to any Participant may not exceed
1,000,000.

71
<PAGE>

Exercise Price of Options. The exercise price of any Option granted under the
Stock Plan is set in each case by the Compensation Committee; however, the
exercise price of any ISO may not be less than 100% of the fair market value of
the shares of Common Stock subject to the ISO on the date of grant (110% if the
ISO is granted to a greater than 10% shareholder of the Company).

Terms of Options. ISOs granted under the Stock Plan expire upon the earliest
to occur of (i) a period not to exceed ten years from the Option Date (as that
term is defined in the Stock Plan) (or five years if the ISO is granted to a
greater than 10% shareholder of the Company); (ii) the date on which the ISO is
forfeited under the terms of the Stock Plan due to termination of employment
(i.e., all nonvested Options are forfeited and expire upon termination of a
Participant's employment); (iii) with respect to vested and nonvested options,
the date on which the Participant's employment is terminated for Cause (as
defined in the Stock Plan); (iv) with respect to vested Options, three months
after the Participant's termination of employment by the Company for any reason
other than Cause, death or disability (within the meaning of Section 22(a)(3)
of the Code); or (v) twelve months after the Participant's death or disability.
The duration of NSOs granted under the Stock Plan are identical to those of
ISOs (except for the five year expiration period for greater than 10%
shareholders of the Company).

Exercise of Awards. Unless the Compensation Committee establishes a different
vesting schedule and except with respect to the automatic director Options
discussed below, Options, Restricted Stock, SARs and phantom stock granted or
awarded under the Stock Plan shall become 25% vested after 12 months from the
grant or award date, and shall vest pro rata in arrears on a monthly basis over
a period of 36 months thereafter. Notwithstanding the foregoing, upon a Change
in Control (as that term is defined in the Stock Plan) all Options, Restricted
Stock, SARs and phantom stock shall become 100% vested and immediately
exercisable. If a Participant's employment with the Company, membership on the
Board of Directors or retention as a consultant terminates, all unvested grants
and awards are forfeited. Under the Stock Plan, upon the exercise of an Option,
the optionee may make payment either in cash, with shares of Common Stock
having an aggregate fair market value on the date of delivery equal to the
exercise price, or by delivery of an irrevocable commitment to use the proceeds
of the sale of stock acquired from exercise of the option. No Common Stock may
be delivered upon the exercise of an Option until full payment has been made
for such shares. For individuals subject to Rule 16b-3, any withholding
obligation of the Company will be satisfied automatically by the automatic
withholding of shares of Common Stock otherwise issuable to the Participant.

Director Options. Each initial director of the Company who is an Eligible
Director has been granted NSOs to purchase 45,000 shares of Common Stock for an
exercise price per share equal to $12 per share. Of such NSOs, NSOs to purchase
15,000 shares of Common Stock became exercisable immediately upon grant, NSOs
to purchase 15,000 shares of Common Stock will be exercisable immediately
following the date of the 1998 annual meeting of the Company's shareholders
(provided that such initial director continues to be a director of the Company
following such annual meeting) and NSOs to purchase the remaining 15,000 shares
of Common Stock will be exercisable immediately following the date of the 1999
annual meeting of the Company's shareholders (provided that such initial
director continues to be a director of the Company following such annual
meeting).

In addition, it is the intention of the Company that (i) each initial
director of the Company who is an Eligible Director will also be granted
immediately-exercisable NSOs to purchase 5,000 shares of Common Stock
immediately following the date of each scheduled annual meeting of the
Company's shareholders commencing with the 2000 annual meeting of the Company's
shareholders (provided that such initial director continues to be a director of
the Company following such annual meeting) and (ii) each new director of the
Company who is an Eligible Director will be granted immediately-exercisable
NSOs to purchase 5,000 shares of Common Stock immediately following the date of
each scheduled annual meeting of the Company's shareholders (provided that such
director continues to be a director of the Company following such annual
meeting). The Company intends that the exercise price of such NSOs will be the
fair market value of the Common Stock on the date of grant.

Unless the Compensation Committee establishes an earlier termination date,
NSOs granted to a director will expire ten years from the date of grant.

72
<PAGE>

Grant of Options. There are 1,900,000 shares of Common Stock reserved for
issuance pursuant to the Stock Plan. The Company has issued to executive
officers, other key employees, Eligible Directors and consultants of the
Company options to purchase 1,854,000 shares of Common Stock pursuant to the
Stock Plan. In addition, the Company currently intends to seek Board of
Director and shareholder approval at the next Annual Meeting of Shareholders to
increase the number of shares of Common Stock reserved for issuance pursuant to
the Stock Plan.

Stock Appreciation Rights (SARs). Under the terms of the Stock Plan, the
Compensation Committee may, in its discretion, grant naked SARs and/or tandem
SARs to eligible Participants. A tandem SAR is an SAR that is granted in
connection with an Option and is exercisable only if the fair market value of
the Company's Common Stock on the date of surrender exceeds the Option Price of
the related ISO or the fair market value of the Common Stock on the Option Date
in the case of an NSO, and only to the extent that the related NSO or ISO is
exercisable. A Participant who elects to exercise a tandem SAR may surrender
the exercisable portion of related Options in exchange for a number of shares
of Common Stock determined by a formula in the Stock Plan. A naked SAR is
similar to a tandem SAR but it is not granted in connection with an underlying
Option and its terms are governed by the Participant's SAR agreement.

Phantom Stock. Under the Stock Plan, the Compensation Committee may, in its
discretion, award phantom stock to eligible Participants and, in connection
therewith, grant the Participant the right to receive payments equal to
dividends paid on the Common Stock to which the phantom stock relates. Subject
to certain terms and limitations, an award of phantom stock entitles the
Participant to surrender all or part of the vested portion of such stock and to
receive from the Company the fair market value on the date of surrender of the
Common Stock to which the phantom stock relates.

Non-Assignability of Options, SARs and Phantom Stock. Options, SARs and
phantom stock granted under the Stock Plan are generally not transferable other
than by will or the then applicable laws of descent and distribution; provided,
however that Options, SARs and phantom stock may be transferred to (i) any
members of a Participant's immediate family and (ii) a trust which has as its
exclusive beneficiaries such Participant or members of such Participant's
immediate family.

Restricted Stock. In addition to Options, SARs and phantom stock, the
Compensation Committee may, in its discretion, make awards of restricted stock
to eligible Participants under the Stock Plan. A Participant may not sell or
transfer shares of restricted stock awarded under the Stock Plan and the shares
are subject to forfeiture in the event of the termination of the Participant's
employment with the Company or membership on the Board of Directors prior to
the vesting thereof. Notwithstanding the transfer restrictions, the holder of
restricted stock has the right to vote his or her shares of restricted stock
and to receive dividends in the same amount as dividends paid on non-restricted
shares of Common Stock.

Adjustment to Reflect Change in Capital Structure. If there is any change in
the corporate structure or shares of the capital stock of the Company, the
Board of Directors has the authority to make any adjustments necessary to
prevent accretion or to protect against dilution in the number and kind of
shares authorized by the Stock Plan or in the number and kind of shares covered
by awards thereunder.

EMPLOYEE STOCK PURCHASE PLAN

The Company has established the Vistana, Inc. Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") to assist employees of the Company in
acquiring a stock ownership interest in the Company and to encourage them to
remain in the employment of the Company. The Employee Stock Purchase Plan is
neither a qualified pension, profit sharing or stock bonus plan under Section
401(a) of the Code, nor an "employee benefit plan" subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended. The following
discussion is a general summary of the material U.S. federal income tax
consequences to U.S. participants in the Employee Stock Purchase Plan. The
discussion is based on the Code, regulations thereunder, rulings and decisions
now in effect, all of which are subject to change. The summary does not discuss
all aspects of federal income taxation that may be relevant to a particular
participant in light of such participant's personal investment circumstances.

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The Employee Stock Purchase Plan is intended to meet the requirements of an
"employee stock purchase plan" under Section 423 of the Code. Neither the grant
of the right to purchase shares, nor the purchase of shares, under the Employee
Stock Purchase Plan has a federal income tax effect on employees or the
Company. Any United States tax liability to the employee and the tax deductions
to the Company are deferred until the employee sells the shares, disposes of
the shares by gift or dies. Under the Employee Stock Purchase Plan, shares are
generally purchased for 85% of the fair market value thereof, as permitted by
the Code.

In general, if shares are held for more than one year after they are
purchased and for more than two years from the beginning of the enrollment
period in which they are purchased or if the employee dies while owning the
shares, gain on the sale or other disposal of the shares constitutes ordinary
income to an employee (with no corresponding deduction to the Company) to the
extent of the lesser of (i) 15% of the fair market value of the shares at the
beginning of the enrollment period or (ii) the gain on sale of the amount by
which the market value of the shares on the date of sale, gift or death,
exceeds the purchase price. Any additional gain is capital gain. If the shares
are sold or disposed of within either or both of the holding periods, an
employee recognizes ordinary income (and the Company receives a corresponding
deduction subject to Section 162(m) of the Code) to the extent that the fair
market value of the shares at the date of exercise of the option exceeds the
option price. Any appreciation or depreciation after the date of purchase is
capital gain or loss.

A maximum of 1,000,000 shares of Common Stock have been reserved for issuance
under the Employee Stock Purchase Plan. The Employee Stock Purchase Plan will
be administered by the Compensation Committee.

OPTIONS GRANTED BY PRINCIPAL SHAREHOLDERS

The Principal Shareholders, pro rata in accordance with the ownership of
Common Stock, have granted certain executive officers and other employees of
and a consultant to the Company options to acquire an aggregate of 1,350,000
shares of Common Stock at an exercise price equal to $12 per share. These
options became exercisable in full at the date of grant and will terminate ten
years after the date of grant, subject to certain exceptions. See "Principal
Shareholders" and "Shares Eligible for Future Sale."

401(K) PLAN

The Company has established a qualified retirement plan, with a salary
deferral feature designed to qualify under Section 401 of the Code (the "401(k)
Plan"). Employees of the Company are eligible to participate in the 401(k) Plan
if they meet certain requirements concerning minimum age and period of credited
service. The 401(k) Plan allows participants to defer up to 15% of their
compensation on a pre-tax basis subject to certain maximum amounts. The 401(k)
Plan allows the Company discretionary matching contributions up to a maximum of
6% of the participant's compensation per year. The Company has historically
matched participant contributions in an amount equal to 25 cents for each
dollar of participant contributions and expects to continue to do so. Certain
other statutory limitations with respect to the Company's contribution under
the 401(k) Plan also apply. Amounts contributed by the Company will vest over
six years and will be held in trust until distributed pursuant to the terms of
the 401(k) Plan. All contributions to the 401(k) Plan are invested in
accordance with participant elections among certain investment options.
Distributions from participant accounts are not permitted before an employee
attains the age of 59 1/2, except in the event of death, disability, certain
financial hardships or termination of employment.

EMPLOYMENT AGREEMENTS

Prior to the completion of the Initial Public Offering, the Company entered
into employment agreements with each of Messrs. Gellein, Adler, Avril and
Sabin, Ms. Werth and Ms. Lytle for a term commencing on the completion of the
Initial Public Offering and ending on the fourth anniversary of the Initial
Public Offering; however, each employee's employment by the Company is
terminable at any time by either party, with or without cause. Pursuant to
these agreements, Messrs. Gellein, Adler, Avril and Sabin, Ms. Werth and Ms.
Lytle are entitled to receive an annual base salary of $360,000, $360,000,
$250,000, $210,000, $230,000 and $250,000,

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<PAGE>

respectively, as adjusted on March 1 of each year by the annual percentage
increase in the Consumer Price Index, All Urban Consumers for the Orlando,
Florida area. In addition, Messrs. Gellein, Adler, Avril and Sabin, and Ms.
Werth are eligible to receive an annual performance bonus not to exceed 60%,
60%, 60%, 40% and 40%, respectively, of such employee's annual base salary,
based upon the Company's achievement of certain predetermined performance
goals. Ms. Lytle is eligible to receive performance bonuses based on the
Company's achievement of certain operating goals. See "--Executive
Compensation." Upon termination of employment, the employee is entitled to
unpaid compensation for services rendered through the date of termination,
together with employee benefits accrued through the date of termination. In
addition, if the employee's employment by the Company is terminated, the
employee is entitled to receive certain severance payments depending on the
reason for termination (except with respect to Messrs. Gellein and Adler who
will not be entitled to any severance payments).

The Company has granted each of Messrs. Gellein and Adler options to
purchase 50,000 shares of Common Stock at an exercise price of $12.00 per
share pursuant to the Stock Plan. The Company has also granted Mr. Avril, Ms.
Werth and Ms. Lytle options to purchase 180,000, 75,000 and 180,000 shares of
Common Stock, respectively, at an exercise price of $11.00 per share pursuant
to the Stock Plan and granted Mr. Sabin options to purchase 75,000 shares of
Common Stock at an exercise price equal to $12.00 per share pursuant to the
Stock Plan. See "--Executive Compensation."

Under the terms of the employment agreements, Messrs. Gellein, Adler, Avril
and Sabin, Ms. Werth and Ms. Lytle are prohibited from disclosing any
confidential information or trade secrets of the Company. Messrs. Gellein,
Adler, Avril and Sabin, Ms. Werth and Ms. Lytle are prohibited, during the
term of their employment by the Company and for a period of one to two years
thereafter (depending on the reason for termination but, in all events, two
years for Messrs. Gellein and Adler) from (i) engaging in any business or
becoming employed or otherwise rendering services to any company engaged in
the timeshare or vacation ownership business and (ii) soliciting the
employment of any employees of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In addition to the transactions described under "Management--Employment
Agreements," the Company engaged in during its last fiscal year, or
contemplates engaging in during the current fiscal year, the transactions
described below.

Charles E. Harris, a director of the Company, is President and Chief
Executive Officer and a principal shareholder of Synagen. Synagen has served
as financial advisor to the Company and certain of the Principal Shareholders
with respect to various corporate transactions since 1991. During the years
ended December 31, 1996 and 1995, the Company paid Synagen fees of $55,000 and
$125,000, respectively. No fees were paid to Synagen during 1994. In 1997, the
Company paid fees of $280,000 to Synagen in connection with the Initial Public
Offering.

Mr. Harris is also President and Chief Executive Officer of Allen C. Ewing &
Co. ("Ewing"), and a principal shareholder of Ewing's parent holding company.
Ewing was one of the underwriters in the Initial Public Offering, and the
Representatives (as defined herein) have agreed to include Ewing as one of the
Underwriters in the Offering. See "Underwriting."

The Principal Shareholders, after giving effect to the Offering, will be the
owners of 53.4% of the Common Stock (approximately 52.1% if the Underwriters'
over-allotment option is exercised in full). The Principal Shareholders are
currently parties to a Shareholders' Agreement (the "Shareholders'
Agreement"). Pursuant to the Shareholders' Agreement, the Principal
Shareholders have agreed to vote their shares of Common Stock in favor of
proxies solicited by the Board of Directors, unless each of Messrs. Gellein
and Adler disagree with the position taken by the Board of Directors. The
Shareholders' Agreement contains restrictions on the disposition of Common
Stock and provides for certain rights of refusal. The Shareholders' Agreement
will terminate and be

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<PAGE>

of no further force and effect upon the earliest to occur of (i) the agreement
of the Principal Shareholders to terminate the Shareholders' Agreement; (ii)
the tenth anniversary of the Initial Public Offering; and (iii) the date upon
which one of the Principal Shareholders (treating all shares of Common Stock
beneficially owned by Mr. Gellein as held by one Principal Shareholder and all
shares of Common Stock beneficially owned by Mr. Adler as held by one Principal
Shareholder) fails to own 5% of the Common Stock. See "Risk Factors--Effective
Control by Principal Shareholders; Shareholders' Agreement."

Messrs. Gellein and Adler, their respective affiliates which own shares of
Common Stock and certain executive officers and other employees of and a
consultant to the Company are entitled, under certain circumstances, to require
the Company to register under the Securities Act shares of Common Stock owned
by them or which they may purchase upon exercise of options granted by the
Principal Shareholders. See "Principal Shareholders" and "Shares Eligible for
Future Sale."

The Company was incorporated in the State of Florida in December 1996 to
effect the Formation Transactions and the Initial Public Offering. Prior to the
Initial Public Offering, the business of the Company was conducted through (i)
several corporations and limited partnerships (collectively, the "Affiliated
Companies") which were directly or indirectly wholly-owned and controlled by
the Principal Shareholders, and (ii) two partnerships between one or more of
the Affiliated Companies and unaffiliated third party partners (collectively,
the "Related Partnerships"). The Affiliated Companies consisted of over 20
corporations and three limited partnerships, the ownership of each of which was
divided equally between (i) trusts for the benefit of Mr. Adler and his family
members and (ii) trusts for the benefit of Mr. Gellein and his family members
and former spouse. Each of the Related Partnerships was controlled solely by
one or more of the Affiliated Companies.

Concurrently with, and conditioned upon, the completion of the Initial Public
Offering, each of the Principal Shareholders transferred to the Company all of
the outstanding capital stock and partnership interests owned by each such
Principal Shareholder, whether directly or indirectly, in each of the
Affiliated Companies and Related Partnerships (collectively, the "Formation
Transactions"). Pursuant to the Formation Transactions and as consideration for
the transfer of interests in the Affiliated Companies and Related Partnerships,
the Company issued an aggregate of 14,174,980 shares of Common Stock to the
Principal Shareholders, certain shares of which were sold by the Principal
Shareholders in the Initial Public Offering. As a result of the Formation
Transactions, the ownership of all of the interests in the Affiliated Companies
and Related Partnerships previously held by the Principal Shareholders is owned
by the Company or one of its subsidiaries.

Pursuant to the Formation Transactions, during the three months ended March
31, 1997, the Affiliated Companies made distributions to the Principal
Shareholders of approximately $2.5 million in the aggregate representing (i)
the balance of such persons' federal and state income tax income liability for
the year ended December 31, 1996 and from January 1, 1997 through the
consummation of the Formation Transactions and (ii) retained earnings of the
Affiliated Companies for which the owners thereof had previously paid income
tax.

The Company believes that all transactions disclosed above have been, and the
Company's Board of Directors intends that any future transactions with its
officers, directors, affiliates or principal shareholders will be, effected on
terms that are no less favorable to the Company than those which would
otherwise have been obtainable in arm's length transactions with unaffiliated
third parties.

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PRINCIPAL SHAREHOLDERS

The following table sets forth information as of September 30, 1997
regarding the beneficial ownership of the Common Stock of the Company with
respect to (i) each person known by the Company to beneficially own 5% or more
of the outstanding Common Stock; (ii) each person who is a director or Named
Executive Officer of the Company; and (iii) all directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME(1) BENEFICIALLY OWNED(2) PERCENTAGE
- ------- --------------------- ----------
<S> <C> <C>
Raymond L. Gellein, Jr.(3)................... 6,208,750 32.7%
Jeffrey A. Adler(4).......................... 6,085,750 32.0%
Laurence S. Geller(5)........................ 15,000 *
Charles E. Harris(6)......................... 30,100 *
Steven J. Heyer(7)........................... 25,000 *
Matthew E. Avril(8).......................... 400,000 2.1%
Susan Werth(9)............................... 125,500 *
Carol Lytle(10).............................. 400,000 2.1%
All directors and executive officers as a
group (9 persons)(11)....................... 13,315,100 70.0%
</TABLE>
- --------
* Less than 1%.
(1) The address of each director, executive officer and beneficial owner of
more than 5% of the currently outstanding shares of Common Stock is in
care of the Company, 8801 Vistana Centre Drive, Orlando, Florida 32821.
(2) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares of Common Stock which such
person has the right to acquire within 60 days after the date of this
Prospectus. For purposes of computing the percentage of outstanding
shares of Common Stock held by each person or group of persons named
above, any security which such person or persons has or have the right to
acquire from the Company within 60 days after the date of this Prospectus
is deemed to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
(3) Includes (i) 3,439,720 shares of Common Stock held by various trusts
primarily for the benefit of Mr. Gellein and members of his family and
Mr. Gellein's former spouse and members of her family; and (ii) 2,769,030
shares of Common Stock held by the Raymond L. Gellein, Jr. Revocable
Trust, a trust for the benefit of Mr. Gellein. Mr. Gellein, who serves as
trustee of each of the foregoing trusts, has exclusive authority to vote
all shares of stock, including the Common Stock, held thereby. Of such
shares of Common Stock, an aggregate of 675,000 shares of Common Stock
are subject to options granted to certain executive officers and other
employees of the Company. See notes (8), (9), (10) and (11) below.
Excludes options to acquire 50,000 shares of Common Stock granted by the
Company in February 1997 pursuant to the Stock Plan which are not
exercisable within 60 days of the date of this Prospectus.
(4) Includes (i) 110,000 shares of Common Stock held by various trusts
primarily for the benefit of Mr. Adler and members of his family; and
(ii) 5,975,750 shares of Common Stock held by the Jeffrey A. Adler
Revocable Trust, a trust for the benefit of Mr. Adler. Mr. Adler, who
serves as trustee of each of the foregoing trusts, has exclusive
authority to vote all shares of stock, including the Common Stock, held
thereby. Of such shares of Common Stock, 675,000 shares of Common Stock
are subject to options granted to certain executive officers and other
employees of the Company. See notes (8), (9), (10) and (11) below.
Excludes an aggregate of 123,000 shares of Common Stock held by various
trusts, of which Mr. Adler is not trustee, for the benefit of Mr. Adler's
spouse and children. Also excludes options to acquire 50,000 shares of
Common Stock granted by the Company in February 1997 pursuant to the
Stock Plan which are not exercisable within 60 days of the date of this
Prospectus.

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<PAGE>

(5) Includes 15,000 shares of Common Stock which may be acquired upon
exercise of options granted under the Stock Plan. Excludes 30,000 shares
of Common Stock issuable pursuant to options granted under the Stock Plan
which are not exercisable within 60 days of the date of this Prospectus
and 25,000 shares of Common Stock held by a trust for which Mr. Geller
does not serve as a trustee and of which he is not a beneficiary.
(6) Includes 15,000 shares of Common Stock which may be acquired upon exercise
of options granted under the Stock Plan and 600 shares of Common Stock
owned by Mr. Harris' children. Excludes 30,000 shares of Common Stock
issuable pursuant to options granted under the Stock Plan which are not
exercisable within 60 days of this Prospectus.
(7) Includes 15,000 shares of Common Stock which may be acquired upon
exercise of options granted under the Stock Plan. Excludes 30,000 shares
of Common Stock issuable pursuant to options granted under the Stock Plan
which are not exercisable within 60 days of the date of this Prospectus.
(8) Represents 400,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Principal Shareholders, which options
were granted in February 1997 at an exercise price equal to $12 per
share, the price to public in the Initial Public Offering. Excludes
options to acquire 180,000 shares of Common Stock granted by the Company
in December 1996 pursuant to the Stock Plan, under which 45,000 shares
may be acquired subsequent to December 26, 1997 and the remainder of
which is not exercisable within 60 days of the date of this Prospectus.

(9) Includes 125,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Principal Shareholders, which options
were granted in February 1997 at an exercise price equal to $12 per share,
the price to public in the Initial Public Offering. Excludes options to
acquire 75,000 shares of Common Stock granted by the Company in December
1996 pursuant to the Stock Plan, under which 18,750 shares may be acquired
subsequent to December 26, 1997 and the remainder of which is not
exercisable within 60 days of the date of this Prospectus. Also excludes
1,000 shares of Common Stock owned by Ms. Werth's spouse, for which Ms.
Werth disclaims beneficial ownership.
(10) Represents 400,000 shares of Common Stock which may be acquired upon
exercise of options granted by the Principal Shareholders, which options
were granted in February 1997 at an exercise price equal to $12 per
share, the price to public in the Initial Public Offering. Excludes
options to acquire 180,000 shares of Common Stock granted by the Company
in December 1996 pursuant to the Stock Plan, under which 45,000 shares
may be acquired subsequent to December 26, 1997 and the remainder of
which is not exercisable within 60 days of the date of this Prospectus.
(11) Includes (i) 12,294,500 shares of Common Stock owned by the Principal
Shareholders; (ii) an aggregate of 950,000 shares of Common Stock which
may be acquired upon exercise of options granted by the Principal
Shareholders; and (iii) 45,000 shares of Common Stock which may be
acquired upon exercise of options granted under the Stock Plan. Excludes
options to acquire an aggregate of 700,000 shares of Common Stock granted
by the Company pursuant to the Stock Plan, which are not exercisable
within 60 days of the date of this Prospectus. See "Management--Stock
Plan."

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DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of (i) 100,000,000
shares of Common Stock, par value $.01 per share, 19,007,630 of which are
outstanding as of September 30, 1997 and (ii) 5,000,000 shares of Preferred
Stock, par value $.01 per share, none of which are outstanding as of the date
of this Prospectus. The following summary description of the capital stock of
the Company is qualified in its entirety by reference to the Articles of
Incorporation and By-Laws of the Company, copies of which are incorporated by
reference as exhibits to the Registration Statement of which this Prospectus
is a part. See "Additional Information."

COMMON STOCK

The rights of the holders of the Common Stock discussed below are subject to
such rights as the Board of Directors may hereafter confer on the holders of
the preferred stock; accordingly, rights conferred on holders of preferred
stock issued under the Articles of Incorporation may adversely affect the
rights of holders of the Common Stock.

Subject to the rights of holders of preferred stock, the holders of
outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor, at such times and in such amounts as the
Board of Directors may from time to time determine. See "Dividend Policy." The
shares of Common Stock are neither redeemable nor convertible and the holders
thereof have no preemptive or subscription rights to purchase any securities
of the Company. Upon liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to receive, pro rata, the assets of
the Company that are legally available for distribution, after payment of all
debts and other liabilities and subject to the prior rights of any holders of
preferred stock then outstanding. Each outstanding share of Common Stock is
entitled to one vote on all matters submitted to a vote of shareholders. There
is no cumulative voting in the election of directors.

PREFERRED STOCK

The Articles of Incorporation authorize the Board of Directors to issue
preferred stock in classes or series and to establish the designations,
preferences, qualifications, limitations or restrictions of any class or
series with respect to, among other things, the rate and nature of dividends,
the price, terms and conditions on which shares may be redeemed, the terms and
conditions for conversion or exchange into any other class or series of the
stock and voting rights. The Company will have authority, without approval of
the holders of Common Stock, to issue preferred stock that has voting,
dividend or liquidation rights superior to the Common Stock and that may
adversely affect the rights of holders of Common Stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of the holders of Common Stock and could
have the effect of delaying, deferring or preventing a change in control of
the Company. The Company currently has no plans to issue any shares of
preferred stock.

CLASSIFICATION OF THE BOARD OF DIRECTORS

The Company's Articles of Incorporation provide that the number of directors
of the Company shall be established by the By-Laws. The By-Laws currently
provide that the Board of Directors will consist of not fewer than three nor
more than nine members. The Company's Articles of Incorporation and By-Laws
provide for a staggered Board of Directors consisting of three classes as
nearly equal in size as practicable. One class will hold office initially for
a term expiring on the date of the annual meeting of the Company's
shareholders to be held in 1998, another class will hold office initially for
a term expiring on the date of the annual meeting of the Company's
shareholders to be held in 1999 and another class will hold office initially
for a term expiring on the date of the annual meeting of the Company's
shareholders to be held in 2000. As the term of each class expires, directors
for that class will be elected for a term of three years and until their
successors are duly elected and qualify.

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<PAGE>

The provisions of the Articles of Incorporation and the By-Laws summarized in
the preceding paragraphs and the provisions of the FBCA contain provisions that
may have the effect of delaying, deferring or preventing a non-negotiated
merger or other business combination involving the Company. These provisions
are intended to encourage any person interested in acquiring the Company to
negotiate with and obtain the approval of the Board of Directors in connection
with the transaction. Certain of these provisions may, however, discourage a
future acquisition of the Company not approved by the Board of Directors in
which shareholders might receive an enhanced value for their shares or that a
substantial number or a majority of the Company's shareholders might believe to
be in their best interest. As a result, shareholders who desire to participate
in such a transaction may not have the opportunity to do so. Such provisions
could also discourage bids for the Common Stock at a premium, as well as create
a depressive effect on the market price of the Common Stock.

CERTAIN PROVISIONS OF FLORIDA LAW

The Company is subject to several anti-takeover provisions that apply to a
public corporation organized under the FBCA, unless the corporation has elected
to opt out of those provisions in its articles of incorporation or by-laws. The
Company has not elected to opt out of those provisions. Subject to certain
exceptions, the FBCA prohibits the voting of shares in a publicly-held Florida
corporation that are acquired in a "control share acquisition" unless the
holders of a majority of the corporation's voting shares (exclusive of shares
held by officers of the corporation, inside directors or the acquiring party)
approve the granting of voting rights as to the shares acquired in the control
share acquisition. A "control share acquisition" is defined as an acquisition
that immediately thereafter entitles the acquiring party to vote in the
election of directors within each of the following ranges of voting power: (i)
one-fifth or more but less than one-third of such voting power; (ii) one-third
or more but less than a majority of such voting power; and (iii) more than a
majority of such voting power.

Subject to certain exceptions, the FBCA also contains an "affiliated
transaction" provision that prohibits a corporation organized under the FBCA
from engaging in a broad range of business combinations or other extraordinary
corporate transactions with an "interested shareholder" unless: (i) the
transaction is approved by a majority of disinterested directors before the
person becomes an interested shareholder; (ii) the interested shareholder has
owned at least 80% of the corporation's outstanding voting shares for at least
five years; or (iii) the transaction is approved by the holders of two-thirds
of the corporation's voting shares other than those owned by the interested
shareholder. An interested shareholder is defined as a person who together with
affiliates and associates beneficially owns more than 10% of the corporation's
outstanding voting shares.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is First Union National
Bank of North Carolina.

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
23,007,630 shares of Common Stock. Of these shares, 10,382,500 shares,
including the shares to be sold in the Offering will be freely tradeable in
the public market without restriction or further registration under the
Securities Act.

The remaining 12,625,130 outstanding shares of Common Stock were issued
pursuant to the Formation Transactions or in connection with the Acquisition
and are "restricted securities" as that term is defined under Rule 144 of the
Securities Act and may be sold only pursuant to registration under the
Securities Act or pursuant to an exemption therefrom, such as that provided by
Rule 144. In general, under Rule 144 as currently in effect, if one year has
elapsed since the later of the date of acquisition of shares of Common Stock
from the Company or the date of acquisition of shares of Common Stock from any
"affiliate" of the Company, as that term is defined under the Securities Act,
the acquiror or subsequent holder is entitled to sell within any three-month
period a number of shares of Common Stock that do not exceed the greater of
(i) 1% of the then-outstanding shares of Common Stock and (ii) the average
weekly trading volume of shares of Common Stock on all exchanges and reported
through the automated quotation system of a registered securities association
during the four calendar weeks preceding the date on which notice of the sale
is filed with the Commission. Sales under Rule 144 are also subject to certain
restrictions on the manner of sales, notice requirements and the availability
of current public information about the Company. If two years have elapsed
since the date of acquisition of shares of Common Stock from the Company or
from any "affiliate" of the Company, and the acquiror or subsequent holder
thereof is deemed not to have been an affiliate of the Company at any time
during the 90 days preceding a sale, such person would be entitled to sell
such shares of Common Stock in the public market under Rule 144(k) without
regard to the volume limitations, manner of sale provisions, public
information requirements or notice requirements.

In connection with the Offering, the Principal Shareholders and directors
have agreed, with certain exceptions, not to offer, sell, offer to sell,
contract to sell, or otherwise dispose of any Common Stock, or options or
warrants to acquire Common Stock, for a period of 120 days from the date of
this Prospectus without the prior written consent of Merrill Lynch & Co. The
Company has agreed not to sell any shares of Common Stock for a period of 180
days from the date of this Prospectus without the prior written consent of
Merrill Lynch & Co., except for the sale of shares pursuant to the
overallotment option, the issuance of shares upon the exercise of currently
outstanding stock options and pursuant to the Employee Stock Purchase Plan and
the issuance of shares contingently issuable in connection with the
Acquisition. In addition, certain executive officers and other employees who
are parties to the Registration Rights Agreement (as defined herein) have
agreed not to effect any public sale or distribution of any shares of Common
Stock or any other equity securities of the Company for a period of 90 days
from the date of this Prospectus without the prior written consent of Merrill
Lynch & Co.

The Company intends to file under the Securities Act a registration
statement on Form S-8 to register all of the shares of Common Stock subject to
outstanding options under the Stock Plan and reserved for future grants under
the Stock Plan. This registration statement is expected to become effective
upon filing and shares covered by this registration statement will be eligible
for sale, subject, in the case of affiliates only, to the restrictions of Rule
144, other than the holding period requirement, and subject to the expiration
of the lock-up agreements with the Underwriters. As of September 30, 1997,
options to acquire an aggregate of 1,854,000 shares of Common Stock had been
granted under the Stock Plan, and 45,000 of such options are currently
exercisable.

On September 17, 1997, the Company filed a registration statement on Form S-
8 under the Securities Act to register all of the shares of Common Stock
subject to purchase under the Employee Stock Purchase Plan. This registration
statement became effective upon filing and shares covered by this registration
statement will be eligible for sale, subject, in the case of affiliates only,
to the restrictions of Rule 144, other than the holding period requirements,
and subject to expiration of the lock-up agreements with the Underwriters. As
of September 30, 1997, no shares of Common Stock had been purchased under the
Employee Stock Purchase Plan.

The Company has entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with the Principal Shareholders and certain
executive officers and other employees of the Company pursuant to

81
<PAGE>

which the Company is obligated to register the shares owned by such persons
under the Securities Act at specified times and in specified amounts.
Specifically, the Company, subject to certain exceptions and limitations, will,
upon request, be required (i) at any time after the third anniversary of the
Initial Public Offering, to register all or a portion of the Common Stock (not
to exceed 15% of the then outstanding Common Stock on any one occasion) owned
by each of Messrs. Gellein and Adler on up to two separate occasions each in
connection with an underwritten offering of any such Common Stock; (ii) at the
beginning of each of the first two 12-month periods following the second
anniversary of the Initial Public Offering, to register up to 50% of the Common
Stock held, or acquirable pursuant to the exercise of options granted by the
Principal Shareholders, by each of the parties to the Registration Rights
Agreement, other than the Principal Shareholders, on a delayed or continuous
basis, but not as part of an underwriting (a "Shelf Registration") at the
beginning of each of the 12 month periods following the second anniversary of
the completion of the Initial Public Offering; provided, however, that the
number of shares included in any such Shelf Registration may not exceed a
maximum of 5% of the then outstanding Common Stock; (iii) to register all of
the shares of Common Stock held, or acquirable pursuant to the exercise of
options granted by the Principal Shareholders, by each party to the
Registration Rights Agreement, other than the Principal Shareholders, pursuant
to a Shelf Registration in the event of such party's death or disability, such
party's termination of employment by the Company without cause or a change in
control (as defined in the Registration Rights Agreement). The Company is
required to use its best efforts to keep all registration statements relating
to Shelf Registrations effective until the Common Stock included therein has
been sold.

Under the Registration Rights Agreement, subject to certain exceptions and
limitations, if the Company proposes to register any of its securities under
the Securities Act for its own account or the account of another person
pursuant to an underwriting, the parties to the Registration Rights Agreement
may require the Company to include in such registration all or part of the
shares of Common Stock held by such persons after completion of the Offering.

The Company is required to pay all expenses incident to the performance of
its obligations under the Registration Rights Agreement, other than any
underwriting discounts and commissions, or transfer taxes relating to shares of
Common Stock registered pursuant thereto.

Each party to the Registration Rights Agreement has agreed, if such holder is
so requested by an underwriter in an underwritten offering of the Company's
securities (whether for the account of the Company or otherwise), not to effect
any public sale or distribution of any shares of Common Stock or other Company
equity securities, including a sale pursuant to Rule 144, during the 10-day
period prior to, and during the 90-day period beginning on, the closing date of
such underwritten offering. In addition, each of Messrs. Gellein and Adler have
agreed not exercise their rights to require the Company to register all or a
portion of the Common Stock owned by them more than once during any 360-day
period.

In connection with the Acquisition, the Company has agreed to file and use
its reasonable best efforts to cause such registration statement to be declared
effective prior to approximately March 31, 1998, a shelf registration statement
with the Commission for the purpose of registering all of the 207,630 shares of
Common Stock issued by the Company in connection with the Acquisition and all
of the 430,814 shares of Common Stock contingently issuable by the Company in
connection with the Acquisition. See "Business--The Acquisition." The Company
will use its reasonable best efforts to keep this shelf registration statement
effective for a period ending on the earlier of (i) such date as all of such
shares of Common Stock are tradeable without restriction under the Securities
Act and (ii) the first date on which all of the shares of Common Stock subject
to the shelf registration statement have been sold pursuant to the shelf
registration statement. The Company will bear the expenses incident to the
registration of such shares of Common Stock, except that such expenses shall
not include any underwriting discounts or commissions, or transfer taxes
relating to such shares of Common Stock.

82
<PAGE>

UNDERWRITING

Subject to the terms and conditions contained in a purchase agreement (the
"U.S. Purchase Agreement"), the Company has agreed to sell to the U.S.
Underwriters named below (the "U.S. Underwriters"), and the U.S. Underwriters,
for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Montgomery Securities, Inc., Lehman Brothers Inc. and Smith Barney Inc. are
acting as representatives (the "U.S. Representatives"), have severally agreed
to purchase, the number of shares of Common Stock set forth opposite their
respective names below.

<TABLE>
<CAPTION>
NUMBER OF
SHARES TO BE
UNDERWRITER PURCHASED
----------- ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................
NationsBanc Montgomery Securities, Inc.......................
Lehman Brothers Inc..........................................
Smith Barney Inc.............................................
---------
Total.................................................. 3,200,000
=========
</TABLE>

The Company has also entered into a purchase agreement (the "International
Purchase Agreement" and, together with the U.S. Purchase Agreement, the
"Agreements") with certain underwriters outside the United States and Canada
(the "International Managers"), for whom Merrill Lynch International,
NationsBanc Montgomery Securities, Inc., Lehman Brothers International
(Europe) and Smith Barney Inc. are acting as lead managers (the "Lead
Managers"). Subject to the terms and conditions set forth in the International
Purchase Agreement, the Company has agreed to sell to the International
Managers, and the International Managers have severally agreed to purchase, an
aggregate of 800,000 shares of Common Stock. The public offering price per
share and the underwriting discount per share are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.

In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Managers
(collectively, the "Underwriters"), respectively, have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of
Common Stock being sold pursuant to the Agreements if any of the shares of
Common Stock being sold pursuant to the Agreements are purchased. The U.S.
Purchase Agreement provides that in the event of a default by a U.S.
Underwriter, the purchase commitments of the non-defaulting U.S. Underwriters
may in certain circumstances be increased, and the International Purchase
Agreement provides that, in the event of a default by an International
Manager, the purchase commitments of the non-defaulting International Managers
may in certain circumstances be increased. The closing with respect to the
sale of the shares of Common Stock pursuant to the U.S. Purchase Agreement is
a condition to the closing with respect to the sale of the shares of Common
Stock pursuant to the International Purchase Agreement, and the closing with
respect to the sale of the shares of Common Stock pursuant to the
International Purchase Agreement is a condition to the closing with respect to
the sale of the shares of Common Stock pursuant to the U.S. Purchase
Agreement.

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") which provides for
the coordination of their activities. Under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted
to sell shares of Common Stock to each other. Pursuant to the Intersyndicate
Agreement, sales may be made between the International Managers and the U.S.
Underwriters of such number of shares of Common Stock as may be mutually
agreed. The price of any shares of Common Stock so sold shall be the public
offering price, less an amount not greater than the selling concession.

Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will agree to offer to
sell or sell shares of Common Stock only to persons whom they

83
<PAGE>

believe are United States Persons or Canadian Persons (as defined in the
Intersyndicate Agreement) or to persons whom they believe intend to reoffer or
resell the same to United States Persons or Canadian Persons, and the
International Managers and any bank, broker or dealer to whom they sell shares
of Common Stock will agree not to offer to sell or sell shares of Common Stock
to persons whom they believe to be United States Persons or Canadian Persons
or to persons whom they believe intend to reoffer or resell the same to United
States Persons or Canadian Persons, except in each case for transactions
pursuant to the Intersyndicate Agreement which, among other things, permits
the Underwriters to purchase from each other and offer for resale such number
of shares of Common Stock as the selling Underwriter or Underwriters and the
purchasing Underwriter or Underwriters may agree.

The U.S. Representatives have advised the Company that the U.S. Underwriters
propose initially to offer the shares of Common Stock offered hereby to the
public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The U.S. Underwriters may allow, and such dealers
may reallow, a discount not in excess of $ per share to certain other
dealers. After the public offering, the public offering price, concession and
discount may be changed.

The Company has granted to the U.S. Underwriters an option, exercisable for
30 days after the date hereof, to purchase up to 480,000 additional shares of
Common Stock and to the International Managers an option, exercisable for 30
days after the date hereof, to purchase up to 120,000 additional shares of
Common Stock, in each case solely to cover over-allotments, if any, at the
public offering price less the underwriting discount. To the extent that the
U.S. Underwriters exercise such option, each of the U.S. Underwriters will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such shares which the number of shares of Common Stock to be
purchased by it shown in the foregoing table bears to the total number of
shares of Common Stock set forth in such table.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act.

The Company has agreed that it will not, with certain exceptions, offer,
sell or otherwise dispose of any shares of Common Stock for a period of 180
days from the date of this Prospectus without the prior written consent of
Merrill Lynch & Co., except for the sale of shares pursuant to the over-
allotment option, the issuance of shares upon the exercise of currently
outstanding stock options and pursuant to the Employee Stock Purchase Plan and
the issuance of shares contingently issuable in connection with the
Acquisition. The Principal Shareholders and directors have agreed, with
certain exceptions, not to offer, sell, offer to sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable for Common Stock, for a period of 120 days from the date
of this Prospectus without the prior written consent of Merrill Lynch & Co. In
addition, certain executive officers and other employees who are parties to
the Registration Rights Agreement have agreed not to effect any public sale or
distribution of any shares of Common Stock or any other equity securities of
the Company for a period of 90 days from the date of this Prospectus without
the prior written consent of Merrill Lynch & Co.

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Common Stock. As an exception to these
rules, the Underwriters are permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offering (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus), the U.S.
Representatives and the Lead Managers, respectively, may reduce that short
position by purchasing Common Stock in the open market. The U.S.
Representatives and the Lead Managers, respectively, may also elect to reduce
any short position through the exercise of all or part of the over-allotment
option described above.

84
<PAGE>

purchase shares of Common Stock in the open market to reduce the Underwriters'
short position or to stabilize the price of the Common Stock, they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Representatives or the Lead Managers will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

Charles E. Harris, a director of the Company, is President and Chief
Executive Officer of Ewing and a principal shareholder of Ewing's parent
holding company. The U.S. Representatives have agreed to include Ewing as one
of the U.S. Underwriters.

LEGAL MATTERS

The validity of the Common Stock offered hereby and certain other matters
will be passed upon for the Company by Neal, Gerber & Eisenberg, Chicago,
Illinois in reliance, as to matters of Florida corporate law, on the opinion of
Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A. Neal, Gerber &
Eisenberg will rely on the opinion of Baker & Hostetler LLP as to certain
matters of law governing the vacation ownership industry. Certain partners of
Neal, Gerber & Eisenberg and attorneys associated with the firm beneficially
own shares of Common Stock. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by O'Melveny & Myers LLP, San
Francisco, California in reliance, as to matters of Florida corporate law, on
the opinion of Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A.

EXPERTS

The Combined Financial Statements of Vistana, Inc. and combined affiliates as
of December 31, 1995 and 1996 and for each of the years in the three-year
period ended December 31, 1996 included elsewhere in this Prospectus have been
audited by KPMG Peat Marwick LLP, independent auditors, as set forth in their
reports appearing elsewhere herein. The financial statements have been so
included in reliance upon such reports given upon the authority of such firm as
experts in auditing and accounting.

The Financial Statements of Points of Colorado, Inc. as of March 31, 1997 and
1996 and for each of the years then ended, and the Balance Sheet of Success
Developments, L.L.C. as of December 31, 1996, and the related Statements of
Operations and Members' Equity and Cash Flows for the period from June 10, 1996
(Date of Inception) to December 31, 1996 included elsewhere in this Prospectus
have been audited by Kreisman Corporation CPAs, independent certified public
accountants, as set forth in their reports appearing elsewhere herein. The
financial statements have been so included in reliance upon such reports given
upon the authority of such firm as experts in auditing and accounting.

The Combined Financial Statements of The Success Companies at March 31, 1996
and 1997 and for each of the years then ended appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
certified public accountants, as set forth in their report appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-1 with respect to the Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
omits certain of the information contained in the Registration Statement and
the exhibits and

85
<PAGE>

schedules thereto on file with the Commission pursuant to the Securities Act
and the rules and regulations of the Commission thereunder. For further
information with respect to the Common Stock, reference is made to the
Registration Statement and the exhibits and schedules thereto. The Registration
Statement, including exhibits and schedules thereto, may be inspected and
copied at the public reference facilities maintained by the Commission,
including at the Commission's Public Reference Room, 450 Fifth Street, NW,
Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies may be obtained at prescribed rates from the Public Reference Section of
the Commission as its principal office in Washington, D.C. Such materials also
may be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov.

The Company intends to furnish its shareholders with annual reports
containing combined financial statements audited by an independent public
accounting firm and press releases announcing quarterly results for the first
three quarters of each fiscal year.

Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other documents filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in its entirety by such reference.

86
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
VISTANA, INC. AND COMBINED AFFILIATES
Combined Financial Statements:
Independent Auditors' Report............................................ F-2
Combined Balance Sheets as of December 31, 1995 and 1996................ F-3
Combined Statements of Income for the Years Ended December 31, 1994,
1995 and 1996.......................................................... F-4
Combined Statements of Equity for the Years Ended December 31, 1994,
1995 and 1996.......................................................... F-5
Combined Statements of Cash Flows for the Years Ended December 31, 1994,
1995 and 1996.......................................................... F-6
Notes to Combined Financial Statements.................................. F-7
Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 30, 1996 and 1997...... F-21
Condensed Consolidated Statements of Income for the Six Months Ended
June 30, 1996 and 1997................................................. F-22
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1997................................................. F-23
Notes to Unaudited Condensed Consolidated Financial Statements.......... F-24
ACQUIRED COMPANIES
POINTS OF COLORADO, INC.
Financial Statements
Independent Auditors' Report............................................ F-30
Balance Sheets as of March 31, 1996 and 1997 ........................... F-31
Statements of Income and Accumulated Deficit for the Fiscal Years Ended
March 31, 1996 and 1997................................................ F-32
Statements of Cash Flows for the Fiscal Years Ended March 31, 1996 and
1997................................................................... F-33
Notes to Financial Statements........................................... F-34
Unaudited Financial Statements
Balance Sheet as of June 30, 1997....................................... F-38
Statements of Income and Accumulated Deficit for the Three Months Ended
June 30, 1996 and 1997................................................. F-39
Statements of Cash Flows for the Three Months Ended June 30, 1996 and
1997................................................................... F-40
Notes to Unaudited Financial Statements................................. F-41
SUCCESS DEVELOPMENTS, L.L.C.
Financial Statements
Independent Auditors' Report............................................ F-44
Balance Sheet as of December 31, 1996................................... F-45
Statement of Operations and Members' Equity from June 10, 1996 (date of
inception) to December 31, 1996........................................ F-46
Statement of Cash Flows from June 10, 1996 (date of inception) to
December 31, 1996...................................................... F-47
Notes to Financial Statements........................................... F-48
Unaudited Financial Statements
Balance Sheet as of June 30, 1997....................................... F-51
Statement of Operations and Members' Equity for the Six Months Ended
June 30, 1997.......................................................... F-52
Statement of Cash Flows for the Six Months Ended June 30, 1997.......... F-53
Notes to Unaudited Financial Statements................................. F-54
THE SUCCESS COMPANIES:
Combined Financial Statements
Independent Auditors' Report............................................ F-56
Combined Balance Sheets as of March 31, 1996 and 1997 and as of June 30,
1997................................................................... F-57
Combined Statements of Operations for the Fiscal Years Ended March 31,
1996 and 1997 and for the Three Months Ended June 30, 1996 and 1997.... F-58
Combined Statements of Changes in Equity for the Fiscal Years Ended
March 31, 1996 and 1997 and for the Three Months Ended June 30, 1997... F-59
Combined Statements of Cash Flows for the Fiscal Years Ended March 31,
1996 and 1997 and for the Three Months Ended June 30, 1996 and 1997.... F-60
Notes to Combined Financial Statements.................................. F-61
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Vistana, Inc. and Combined Affiliates:

We have audited the combined balance sheets of Vistana, Inc. and Combined
Affiliates (the "Company") as of December 31, 1995 and 1996 and the related
combined statements of income, equity and cash flows for each of the years in
the three-year period ended December 31, 1996. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of Vistana, Inc. and
Combined Affiliates as of December 31, 1995 and 1996 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

LOGO

Orlando, Florida
January 24, 1997

F-2
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
(UNAUDITED)
PRO FORMA
NOTE 2(B)
DECEMBER 31, DECEMBER 31,
------------------------- ------------
1995 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash and cash equivalents.............. $ 7,543,036 $ 6,133,872 $ 3,633,872
Restricted cash........................ 3,244,873 3,847,374 3,847,374
Customer mortgages receivable, net..... 80,493,952 100,165,656 100,165,656
Other receivables, net................. 2,805,502 4,111,384 4,111,384
Inventory of Vacation Ownership Inter-
ests.................................. 9,607,814 16,540,469 16,540,469
Construction in progress............... 8,694,684 8,670,104 8,670,104
------------ ------------ ------------
Total Vacation Ownership Interests... 18,302,498 25,210,573 25,210,573
------------ ------------ ------------
Prepaid expenses and other assets...... 7,548,877 13,978,455 13,978,455
Investment in limited partnerships..... 5,058,710 -- --
Land held for development.............. 4,297,121 8,080,062 8,080,062
Property and equipment, net............ 11,356,914 12,395,090 12,395,090
------------ ------------ ------------
Total assets......................... $140,651,483 $173,922,466 $171,422,466
============ ============ ============
Accounts payable and accrued liabili-
ties.................................. 4,905,831 3,828,794 3,828,794
Accrued compensation and benefits...... 8,552,982 9,291,354 9,291,354
Customer deposits...................... 2,349,357 4,994,766 4,994,766
Repurchase obligations................. 3,002,847 -- --
Other liabilities...................... 2,432,399 6,160,284 6,160,284
Notes and mortgages payable............ 101,503,639 118,556,609 118,556,609
------------ ------------ ------------
Total liabilities.................... 122,747,055 142,831,807 142,831,807
Minority interest...................... -- 4,442,618 4,442,618
Equity................................. 17,904,428 26,648,041 24,148,041
------------ ------------ ------------
Total liabilities and equity......... $140,651,483 $173,922,466 $171,422,466
============ ============ ============
</TABLE>

See accompanying notes to combined financial statements.

F-3
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Vacation Ownership Interest sales....... $54,186,316 $50,156,397 $60,063,413
Interest................................ 7,654,323 12,886,189 15,546,269
Resort.................................. 11,834,044 12,613,242 13,586,648
Telecommunications...................... 3,377,865 4,802,025 7,053,647
Other................................... 583,765 652,039 686,263
----------- ----------- -----------
Total revenues............................ 77,636,313 81,109,892 96,936,240
----------- ----------- -----------
Costs and operating expenses:
Vacation Ownership Interests cost of
sales.................................. 11,390,644 12,052,497 14,595,630
Sales and marketing..................... 22,871,809 22,318,165 27,876,872
Interest expense--treasury.............. 3,605,227 6,515,497 6,864,713
Provision for doubtful accounts......... 3,802,905 3,522,316 4,270,887
Resort.................................. 10,036,963 10,585,320 11,089,385
Telecommunications...................... 2,519,980 3,654,386 5,613,336
General and administrative.............. 7,988,613 6,979,337 7,872,795
Depreciation and amortization........... 1,391,638 2,215,274 2,553,443
Interest expense--other................. 2,105,869 3,167,975 4,153,749
Other................................... 1,240,971 1,019,986 442,724
Deferred executive incentive compensa-
tion................................... 332,078 3,447,945 1,113,829
----------- ----------- -----------
Total costs and operating expenses........ 67,286,697 75,478,698 86,447,363
----------- ----------- -----------
Operating income.......................... 10,349,616 5,631,194 10,488,877
Excess value recognized................. 364,952 219,095 105,101
----------- ----------- -----------
Net Income................................ $10,714,568 $ 5,850,289 $10,593,978
=========== =========== ===========
Pro-forma data (unaudited):
Net income before taxes................. 10,714,568 5,850,289 10,593,978
Pro-forma provision for income taxes.... 3,984,000 2,126,000 3,723,000
----------- ----------- -----------
Pro-forma net income.................. $ 6,730,568 $ 3,724,289 $ 6,870,978
=========== =========== ===========
Pro-forma net income per share of Common
Stock.................................... $ .48
===========
Pro-forma weighted average number of
shares of Common Stock outstanding....... 14,175,000
===========
</TABLE>

See accompanying notes to combined financial statements.

F-4
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED STATEMENTS OF EQUITY

<TABLE>
<CAPTION>
EQUITY
-----------
<S> <C>
Balance at January 1, 1994......................................... $23,725,801
Distributions...................................................... (782,558)
Net income......................................................... 10,714,568
-----------
Balance at December 31, 1994....................................... 33,657,811
Distributions/redemptions.......................................... (21,603,672)
Net income......................................................... 5,850,289
-----------
Balance at December 31, 1995....................................... 17,904,428
Distributions...................................................... (1,850,365)
Net income......................................................... 10,593,978
-----------
Balance at December 31, 1996....................................... $26,648,041
===========
</TABLE>

See accompanying notes to combined financial statements.

F-5
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net income................................ $10,714,568 $ 5,850,289 $10,593,978
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense.................... 1,035,874 1,306,025 1,474,809
Amortization expense.................... 355,764 909,249 1,078,634
Amortization of discount on customer
mortgages receivable................... -- 2,061,541 2,756,905
Provision for doubtful accounts......... 3,802,905 3,522,316 4,270,887
Changes in operating assets and liabili-
ties:
Other receivables..................... (127,354) (268,293) (1,305,882)
Construction in progress.............. (3,954,546) (1,082,427) (358,924)
Prepaid expenses and other assets..... 56,254 (3,759,668) (7,508,212)
Accounts payable and accrued liabili-
ties................................. 839,216 (68,720) (1,077,037)
Accrued compensation and benefits..... 90,708 4,750,413 738,372
Customer deposits..................... 54,339 682,103 2,645,409
Repurchase obligations................ (834,849) (1,603,975) (1,407,880)
Other liabilities..................... 1,182,091 224,754 3,727,885
----------- ----------- -----------
Net cash provided by operating activ-
ities............................... 13,214,970 12,523,607 15,628,944
----------- ----------- -----------
Investing activities:
Expenditures for property and equipment... (1,290,568) (2,043,490) (2,512,985)
Sale of customer mortgages receivable..... 6,557,769 -- --
Repurchase of customer mortgages receiv-
able..................................... -- (1,692,083) (1,170,691)
Origination of customer mortgages receiv-
able..................................... (25,345,638) (17,994,446) (22,065,062)
Additions to restricted cash.............. (304,839) (920,994) (602,501)
----------- ----------- -----------
Net cash used in investing activi-
ties................................. (20,383,276) (22,651,013) (26,351,239)
----------- ----------- -----------
Financing activities:
Proceeds from notes and mortgages pay-
able..................................... 51,511,207 79,345,191 53,628,415
Payments on notes and mortgages payable... (44,216,204) (42,610,975) (46,907,537)
Equity distributions/redemptions.......... (782,558) (21,603,672) (1,850,365)
Minority interest......................... -- -- 4,442,618
----------- ----------- -----------
Net cash provided by financing activi-
ties................................... 6,512,445 15,130,544 9,313,131
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ (655,861) 5,003,138 (1,409,164)
Cash and cash equivalents, beginning of
year....................................... 3,195,759 2,539,898 7,543,036
----------- ----------- -----------
Cash and cash equivalents, end of year...... $ 2,539,898 $ 7,543,036 $ 6,133,872
=========== =========== ===========
Supplemental disclosure of cash flow infor-
mation:
Cash paid during the year for interest.... $ 5,674,646 $ 9,728,802 $10,731,633
=========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-6
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1996

(1) NATURE OF BUSINESS

The Company (see Note (2)(a)) generates revenues from the sale and financing
of Vacation Ownership Interests in its resort properties which typically
entitle the buyer to ownership of a fully-furnished unit for a one week period
on an annual or an alternate-year basis. The Company's principal operations
consist of (1) constructing, furnishing, marketing and selling vacation
ownership interests, (2) providing consumer financing for the purchase of
Vacation Ownership Interests at its resorts, and (3) managing the operations
of its resorts and related amenities, and the installation and maintenance of
telecommunications equipment for others on a limited basis. The Company sells
Vacation Ownership Interests to both domestic and foreign purchasers. All
contracts relating to the sale of Vacation Ownership Interests are denominated
in U.S. dollars.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Combination and Formation Transaction

The combined financial statements include the accounts of Vistana, Inc. and
certain wholly owned affiliates (both corporations and limited partnerships)
under common control (the "Company"). It is anticipated that in conjunction
with and conditioned upon the Offering that each of the Principal Shareholders
will transfer to the Company all of the existing common stock and partnership
interests owned by them and their affiliates in exchange for 14,174,980 shares
(20 shares of the Common Stock of Vistana, Inc. are currently outstanding) of
the Company ("Formation Transaction"). It is anticipated that a total of
5,550,000 shares of the Common Stock of the Company will be offered to the
public, comprising 4,625,000 shares to be offered by the Company and 925,000
shares by the Principal Shareholders. No assurances can be given that the
Offering will be consummated.

The majority of the combined affiliates were formed in 1991 by the current
owners to acquire and own, either directly or indirectly, the assets and
certain liabilities of the predecessor operating entities from the previous
owner hereinafter referred to as the "Seller".

The combined financial statements also include the accounts of two
partnerships between one or more affiliated companies and unaffiliated third
party partners wherein the Company exercises operational and financial control
over such partnerships. Interests of unaffiliated third parties are reflected
as minority interests.

(b) Pro Forma Balance Sheet

The pro forma balance sheet as of December 31, 1996 reflects the planned
distributions to existing shareholders prior to the anticipated completion of
the Company's intended initial public offering (the "Offering"). Such
distributions, which are estimated to aggregate $2,500,000, relate to the
undistributed S corporation earnings and anticipated tax liabilities
attributable to the Company's operations prior to the completion of the
Offering. No assurance can be given that the Offering will be consummated.

Cash and cash equivalents consist of all highly liquid investments purchased
with an original maturity of three months or less. Cash and cash equivalents
consist of cash and money market funds.

(d) Restricted Cash

Restricted cash consists of (1) deposits received on sales of Vacation
Ownership Interests that are held in escrow until the applicable statutory
rescission period has expired and the related customer mortgage has been
recorded, and (2) workman's compensation funds.

F-7
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(e) Allowance for Losses on Customer Mortgages Receivable and Repurchase
Obligations

The Company provides for estimated future losses to be incurred related to
uncollectible customer mortgages receivable. The allowance is based on the
collection history of the receivables and is net of anticipated cost
recoveries of the underlying Vacation Ownership Interests. Additionally, the
Company had established liabilities reflecting repurchase obligations which
were assumed as part of: (i) the acquisition by the Company in 1991 related to
prior sales of customer mortgages receivable by the Seller, and (ii) related
to sales with recourse of customer mortgages receivable by the Company, to
limited partnerships in which the Company had a residual interest, pursuant to
agreements entered into during 1991 and 1992 (see Note (2)(i)). Management
believes that all such allowances and estimated liabilities are adequate.

(f) Inventory of Vacation Ownership Interests

Inventory of Vacation Ownership Interests and related construction in
progress are carried at cost, which is lower than net realizable value. The
recoverability of inventory is determined on an individual project basis which
is based on each resort location.

(g) Land Held for Development

Land held for development is carried at the lower of cost or net realizable
value.

(h) Prepaid Expenses and Other Assets

Costs associated with a five-year covenant not-to-compete agreement with a
former shareholder/executive of the Company are included in prepaid expenses
and other assets in the accompanying combined balance sheets. These costs are
being amortized over the terms of the agreement.

Prepaid financing fees related to notes and mortgages payable are
capitalized and amortized over the lives of the respective debt on a straight-
line basis, and are included in depreciation and amortization in the
accompanying combined statements of income.

(i) Investments in Limited Partnerships

Investment in limited partnerships represented the Company's initial
investment in certain limited partnerships, in which it had residual
interests, formed in 1991 and 1992, to which the Company sold customer
mortgages receivable pursuant to a commitment to sell a stipulated amount,
which was fulfilled by early 1994. The Company reflected such investments on
the cost method and recorded its initial investment in limited partnerships as
the difference between the outstanding contractual amount of customer
mortgages receivable sold and the proceeds from such sale. The Company
estimated that its cost was not in excess of net realizable value. During 1995
and 1996 upon repurchasing customer mortgages receivable previously sold
pursuant to "clean-up" call provisions related to such sales, the Company
recorded the difference between the remaining outstanding contractual
receivable amount and the net repurchase amount and the balance of the
investment in the respective limited partnership as a loan discount, to be
amortized over the estimated remaining life of the repurchased receivables.
Therefore, as of December 31, 1996, the Company has no investments in limited
partnerships which have purchased customer mortgages receivable.

(j) Property and Equipment

Property and equipment are recorded at cost. Depreciation of property and
equipment is computed over the applicable estimated useful lives (between 3
and 30 years) of the assets using the straight-line method.

F-8
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(k) Customer Deposits

Until a Vacation Ownership Interest contract qualifies as a sale, all
payments received are accounted for as deposits. If a contract is canceled
after the applicable statutory period, deposits forfeited are credited to
income.

(l) Revenue Recognition

Substantially all Vacation Ownership Interests sold by the Company generate
installment receivables secured by a mortgage on the related Vacation
Ownership Interest. These customer mortgages receivable are payable in monthly
installments, including interest, with maturities up to ten years. Sales are
included in revenues when minimum down payment requirements have been met. A
provision is recorded for those contracts expected to rescind in the allowed
statutory rescission period.

Product costs and direct selling expenses related to a Vacation Ownership
Interest sale are recorded at the time the sale is recognized. Product costs
include the cost of land, professional fees, improvements to the property and
the costs of amenities constructed for the use and benefit of the Vacation
Ownership Interest owners. Product costs are allocated to each Vacation
Ownership Interest based on the total number of Vacation Ownership Interests
in the particular phase.

Resort revenues are recognized on an accrual basis. Telecommunications
revenues, primarily from contracting services to third parties, are recognized
when earned on a percentage of completion basis.

(m) Excess Value Over Consideration

In connection with the acquisition by the Company in 1991 from the Seller,
the estimated value of the assets acquired exceeded the consideration paid
(including the estimated liabilities assumed as part of the transaction) by
$3,380,621. Accordingly, the excess value over consideration has been
allocated on a pro-rata basis to reduce the recorded value of long-term assets
originally acquired from the Seller, principally customer mortgages
receivable. This excess value over consideration is being amortized into
income over the life of those assets. The amount of excess value over
consideration amortized into income was $364,952, $219,095 and $105,101 in
1994, 1995 and 1996, respectively, with $839,129 remaining unamortized as of
December 31, 1996.

(n) Interest Rate Swap Agreements

The Company only uses derivative financial instruments on a limited basis
and does not use them for trading purposes. Derivative financial instruments
are used to manage well-defined interest rate risks. The differential to be
paid or received under the terms of the interest rate swap agreements is
accrued as interest rates change and is recognized over the life of the
applicable interest rate swap agreements. The Company does not engage in
speculative or profit motivated hedging activities.

(o) Fair Market Value of Financial Instruments

The carrying amount reported in the combined balance sheets for cash and
cash equivalents, restricted cash, other receivables, accounts payable and
accrued liabilities approximates fair market value due to the immediate or
short-term maturity of these financial instruments.

The approximate fair value of customer mortgages receivable exceeds book
value by the amount of the unamortized discount on customer mortgages
receivable purchased.

The carrying amount of notes and mortgages payable approximates fair market
value as the interest rates on the underlying instruments reprice frequently.

F-9
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
The fair market value of the interest rate swaps (used for hedging purposes)
is the estimated amount the Company would pay to terminate the interest rate
swap agreements at December 31, 1996, taking into account the interest rates
and the current credit-worthiness of the interest rate swap counterparty. The
fair market value of the liability for interest rate swaps at December 31,
1996 is $60,295 based upon the estimated unwind cost which would be associated
with terminating the interest rate swap agreements. The interest rate swaps do
not have a carrying value as they did not have an initial cost when acquired.

(p) Income Taxes

The Company and its combined affiliates include entities taxed as S
corporations taxable at the shareholder level or as partnerships taxable at
the partner level. Accordingly, the accompanying combined financial statements
do not include assets or liabilities related to or provision for income taxes
(See Note (16)).

(q) Use of Estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the combined financial
statements and the reported amounts of revenues and expenses during the
reporting period to prepare these combined financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates and assumptions.

(r) Effect of New Accounting Pronouncements

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("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 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. The Company adopted
Statement 121 in the first quarter of 1996 and there was no material impact on
the Company's operations or financial position upon adoption.

In October 1995, the FASB issued Statement No. 123, "Accounting for Stock-
Based Compensation." The Statement provides that companies must either charge
the value of stock options granted to their income statement or provide pro
forma equivalent information in a footnote disclosure and continue to account
for the value of the stock options in accordance with APB Opinion No. 25. The
Company will adopt this standard in 1997 after completion of the Offering by
accounting for employee stock-based compensation under APB Opinion No. 25 and
providing pro forma equivalent information in a footnote disclosure required
by Statement No. 123.

In June 1996, the FASB issued Statement No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities"
Statement No. 125 provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishments of liabilities. Those
standards are based on consistent application of a financial-components
approach that focuses on control. Under that approach, after a transfer of
financial assets, an entity recognizes the financial and servicing assets it
controls and the liabilities it has incurred, derecognizes financial assets
when control has been surrendered, and derecognizes liabilities when
extinguished. This Statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December
31, 1996, and is to be applied prospectively. The Company does not anticipate
a material impact on its operations or financial position from the
implementation of Statement No. 125 as it has no current plans to sell
customer mortgages receivable in the foreseeable future.

F-10
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(s) Reclassifications

Certain prior year amounts have been reclassified to conform with the 1996
presentation.

(3) CUSTOMER MORTGAGES RECEIVABLE, NET

As of December 31, customer mortgages receivable, net consisted of:

<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Customer mortgages receivable, gross................ $93,342,562 $115,969,865
Less:
Unamortized discount on customer mortgages
receivable purchased............................. (3,714,702) (5,539,457)
Unamortized excess value over consideration....... (125,233) (74,160)
Allowance for loss on receivables................. (9,008,675) (10,190,592)
----------- ------------
Customer mortgages receivable, net................ $80,493,952 $100,165,656
=========== ============
</TABLE>

As of December 31, 1995 and 1996, customer mortgages receivable, gross, from
foreign buyers aggregated approximately $26,400,000 and $28,070,000,
respectively with buyers within no individual foreign country aggregating more
than 5% of gross outstanding customer mortgages receivable.

Stated interest rates on customer mortgages receivable outstanding at
December 31, 1996 range from 00.0% to 18.9% per annum (averaging approximately
14.4% per annum contractually). Interest is not imputed on customer mortgages
receivable with less than a market interest rate because such amounts are
immaterial.

The activity in the customer mortgages receivable allowance for doubtful
accounts is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Balance, beginning of year............. $10,618,538 $10,143,296 $ 9,008,675
Provision for doubtful accounts........ 3,802,905 3,522,316 4,270,887
Allowance relating to customer
mortgages receivable purchased........ -- 628,397 588,276
Customer mortgages receivable charged
off................................... (4,278,147) (5,285,334) (3,677,246)
----------- ----------- -----------
Balance, end of year................... $10,143,296 $ 9,008,675 $10,190,592
=========== =========== ===========
</TABLE>

During the first quarter of 1994, pursuant to an agreement entered into
during 1992, the Company completed the sale of $7,723,695 of customer
mortgages receivable for proceeds of $6,557,769, prior to related transaction
expenses. The sale resulted in no gain or loss in the accompanying combined
statements of income. The purchaser was a partnership in which the Company has
a residual minority limited partnership interest. The Company's interest in
the partnership, as well as other such partnerships, to which customer
mortgages receivable were sold during 1991 through 1994, have been reflected
with a carrying value of $5,058,710 as of December 31, 1995.

During 1995 and 1996, under the clean-up call provisions of the related
transactions, the Company repurchased the remaining amount of customer
mortgages receivable previously sold and effectively liquidated the
partnerships. The Company acquired gross customer mortgages receivable of
$10,473,284 and $9,804,274 and recorded a discount which amounted to
$5,776,243 and $4,581,563 for December 31, 1995 and 1996, respectively. This
discount is being amortized over the estimated remaining collection period of
the purchased customer mortgages receivable. Amortization of the discount
during 1995 and 1996 was $2,061,541 and $2,756,905, respectively, and is
included in interest income.

F-11
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(4) JOINT VENTURES

Vistana WGV, Ltd. ("WGV")

In June of 1996, the Company entered into a partnership agreement wherein
the Company would serve as general partner with operating and financial
control over the partnership as well as own a 37.5% ownership interest
therein. WGV is to develop 408 units near St. Augustine, Florida. WGV has
entered into various licensing, servicing fee and royalty arrangements based
upon stipulated percentages of sales of Vacation Ownership Interests or gross
rental revenue from operations of unoccupied units at the resort. A $5,075,000
licensing fee was paid by WGV to an unaffiliated partner for the use of names
and logos wherein such fee has been capitalized and will be amortized over the
projected sales period currently estimated at nine years. WGV is contingently
liable, along with other developers at the project, for annual debt service
shortfalls, up to a specified amount related to bond funding for a related
convention center development.

Under certain defined circumstances, the Company has the right to acquire
the interest of the other unaffiliated partners as well as such unaffiliated
partners having the right to require the Company to purchase their ownership
interests.

Oak Plantation Joint Venture ("OPJV")

In June of 1996, the Company acquired a 67% ownership interest and became
managing joint venturer for OPJV. OPJV is in the process of converting a 242
unit multi-family property in Kissimmee, Florida into a Vacation Ownership
Interest resort. The Company acquired its ownership interest without payment
of cash in a purchase transaction. The fair value of both the assets acquired
and the liabilities assumed aggregated approximately $12,232,000, which
included a liability of $1,900,000 which was paid in January 1997 to an
unaffiliated partner for the early termination of a consulting service
arrangement. Operations have been included since June of 1996 and are
immaterial to the combined statement of income.

Other and Possible Future Joint Ventures

Prior to December 31, 1996, the Company had investments in limited
partnerships. See Note (2)(i).

Also, the Company and Promus Hotels, Inc. have entered into an exclusive
five-year agreement (the "Promus Agreement") to jointly acquire, develop,
market and operate vacation ownership resorts in North America under Promus'
Embassy Vacation Resort, Hampton Vacation Resort and Homewood Vacation Resort
brands. Under the Promus Agreement, the Company will be Promus' exclusive
joint venture partner for the acquisition, development and operation of
vacation ownership resorts in North America and will also have the option of
operating vacation ownership resorts on a franchise basis. The Promus
Agreement precludes the Company from acquiring or developing vacation
ownership resorts with any other multi-hotel brand, but preserves its ability
to develop vacation ownership resorts in combination with non-hotel brands to
acquire or develop vacation ownership resorts under the Vistana name (other
than in certain selected markets agreed to by the parties), and to develop
vacation ownership resorts with unique, non-multi-hotel brand hotel
properties. Although the Company and Promus are evaluating new resort
development opportunities for the joint venture, no commitments have been made
for a specific development as of December 31, 1996.

F-12
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

In October 1996, the Company signed a letter of intent with PGA of America,
which contemplates a long-term affiliation for the development of future
vacation ownership resorts. The Company anticipates acquiring 25 acres of land
adjacent to an existing 36-hole championship golf facility owned by a
subsidiary of PGA of America in Port St. Lucie, Florida, for the development
of the first PGA Vacation Resort by Vistana. The Company anticipates that it
will commence construction of this resort during 1997 after acquisition of the
land.

No assurances can be given that a definitive agreement with PGA of America
will be consummated or that specific development will occur pursuant to the
Promus Agreement.

(5) PROPERTY AND EQUIPMENT, NET

As of December 31, property and equipment, net consisted of:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Land and land improvements............................ $ 2,483,353 $ 2,483,353
Buildings and building improvements................... 6,319,497 7,760,444
Furniture, fixtures and equipment..................... 5,265,779 7,234,221
----------- -----------
Subtotal............................................ 14,068,629 17,478,018
Less accumulated depreciation......................... (3,805,521) (5,181,641)
----------- -----------
Subtotal............................................ 10,263,108 12,296,377
Construction in progress.............................. 1,093,806 98,713
----------- -----------
Property and equipment, net........................... $11,356,914 $12,395,090
=========== ===========
</TABLE>

(6) PREPAID EXPENSES AND OTHER ASSETS

As of December 31, prepaid expenses and other assets consisted of:

<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Prepaid licensing fee................................... $ -- $ 5,075,000
Prepaid financing fees.................................. 2,459,171 2,946,781
Covenant not-to-compete (Note (9))...................... 1,589,257 1,195,857
Other................................................... 872,585 1,888,165
Prepaid expenses........................................ 726,920 975,668
Due from homeowners associations........................ 444,145 451,921
Mortgage interest earned................................ 438,223 438,223
Sales documents, premium and other inventory............ 741,086 1,006,840
Deferred servicing premiums............................. 277,490 --
---------- -----------
Total prepaid expenses and other assets............. $7,548,877 $13,978,455
========== ===========
</TABLE>

The covenant-not-to-compete with a former shareholder/executive of the
Company (see Note (9)) is being amortized over the term of the related five-
year agreement. Prepaid financing fees related to notes and mortgages payable
are capitalized and amortized over the lives of the respective debt on a
straight-line basis. Amortization expense related to prepaid financing fees
and the covenant not to compete was $305,764, $655,276 and $685,234 and
$50,000, $253,973 and $393,400, respectively in 1994, 1995 and 1996,
respectively, and are included in amortization and depreciation expense on the
combined statements of income.

F-13
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(7) REPURCHASE OBLIGATIONS

Changes in repurchase obligations during the years ended December 31 were as
follows:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Balances, beginning of year................ $7,744,671 $6,909,822 $3,002,847
Additional obligations for customer
mortgages
receivable sold during the year with
recourse.................................. 771,502 -- --
Loss on customer mortgages receivable
repurchased
under recourse provisions................. (1,606,351) (1,603,419) (1,407,880)
Remaining balance of estimated losses on
repurchase obligations relating to
customer mortgages receivable
repurchased............................... -- (2,303,556) (1,594,967)
---------- ---------- ----------
Balances, end of year...................... $6,909,822 $3,002,847 $ --
========== ========== ==========
</TABLE>

As of December 31, 1996, there were no outstanding customer mortgages
receivable for which the Company had a recourse obligation.

(8) NOTES AND MORTGAGES PAYABLE

As of December 31, notes and mortgages payable consisted of:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Notes payable and mortgage obligations to lender, cross
collateralized, which bear interest at prime plus 2%
(10.25% per annum at December 31, 1996):
Note payable secured by customer mortgages receivable.
Remaining availability under this line of credit is
$19,182,426 at December 31, 1996. The remaining
commitment term for new borrowings expires in August
1998. The note matures 84 months after the expiration
of the last borrowing during the commitment term..... $42,046,126 $62,099,374
Note payable requiring quarterly payments of principal
which matures on May 26, 2000........................ 3,600,000 2,800,000
Mortgage obligation secured by land and building with
anticipated final payment in July 1997............... 2,087,300 918,200
Mortgage obligation secured by land and office
building due May 8, 2004............................. 4,705,163 4,317,615
Notes payable to bank:
Note payable bearing interest at a variable rate
(applicable Eurodollar rate plus 4%, which has been
swapped) payable quarterly. The note requires
quarterly payments of principal and matures on June
30, 2000............................................. 12,600,000 9,800,000
Note payable bearing interest at a variable rate
(applicable Eurodollar rate plus 6%, which has been
swapped) payable quarterly. The note requires
quarterly payments of principal and matures on
December 29, 2000.................................... 6,500,410 4,695,301
Note payable to lender bearing interest at 11.37% per
annum, secured by customer mortgages receivable.
Lender receives all principal and interest collected
from customer mortgages receivable securing the note.
Final payment is expected by December 1998........... 15,903,003 8,752,094
</TABLE>

F-14
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Note payable to lender bearing interest at 10.68%
per annum, secured by customer mortgages
receivable. Lender receives all principal and
interest collected from customer mortgages
receivable securing the note. Final payment is
expected by December 1997......................... 5,462,111 1,120,152
Subordinated unsecured note payable to lender
bearing interest at prime plus 2% (10.25% per
annum at December 31, 1996) payable semi-annually.
The note requires one balloon payment of principal
on May 26, 2001................................... 4,500,000 4,500,000
Note payable to bank bearing interest at prime plus
1.5% (9.75% per annum at December 31, 1996)
secured by customer mortgages receivable.
Remaining availability under this revolving line
of credit is $3,724,213 at December 31, 1996 and
the remaining commitment term for new borrowings
expires in June 1998.............................. 2,505,078 1,275,787
Mortgage obligation, secured by land and store
building, bearing interest at 8.35% per annum due
December 5, 1997.................................. 786,059 656,666
Mortgage loan with an available line of $1,100,000
secured by land and improvements (including the
constructed premises). The loan bears interest at
prime plus 1% (9.25% per annum at December 31,
1996) and principal amortizes over a ten year term
through December 2005............................. 610,547 984,863
Various notes payable with monthly payments of
principal and interest, ranging from 8.25% to
11.03% per annum. Final payments are due through
March 1999. The notes are collateralized by
transportation and telecommunications equipment... 197,842 107,492
Notes payable and mortgage obligations to lender
which bear interest at prime plus 2% (10.25% per
annum at December 31, 1996) plus incentive fees:
Term note payable under which a total $18,275,000
may be borrowed requiring monthly interest
payments, and maturing on June 25, 2001. Secured
by real property and construction in progress..... -- 12,700,607
Unsecured note payable under a $2,500,000 working
capital loan agreement requiring monthly interest
payments and maturing on June 25, 2001............ -- 943,120
Acquisition note payable under which a total of
$3,000,000 may be borrowed requiring monthly
interest payments and maturing on July 24, 2001.
Secured by real and personal property............. -- 385,338
Construction mortgage note payable under which a
total of $15,600,000 may be borrowed requiring
monthly interest payments, and maturing on July
24, 2001. Secured by real property and
construction in progress.......................... -- 2,500,000
------------ ------------
Total notes and mortgages payable................ $101,503,639 $118,556,609
============ ============
</TABLE>

In addition, the Company has available loan facilities under which it may
borrow up to $25,000,000 bearing interest at prime plus 2% which will be
secured by customer mortgages receivable. Also, the Company has available loan
facilities in the amount of $1,726,500 at rates from 9.5% to 10.25% per annum.

As part of financing the development of units for WGV and OPJV, the joint
venturers have agreed to pay its lenders, upon fulfillment of its obligations,
incentive fees. The incentive fees will be recognized over the term of the

F-15
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
debt as an adjustment to interest expense using the effective interest method.
The debt associated with the incentive fees have outstanding balances of
$12,700,607, $943,120, $385,338 and $2,500,000 at December 31, 1996.

In addition, upon formation, WGV entered into an agreement with one of the
limited partners whereby WGV could borrow up to $1,620,000. No amounts were
outstanding under this agreement as of December 31, 1996.

Scheduled principal payments on the notes and mortgages payable where there
are agreed upon scheduled principal repayments subsequent to December 31,
1995, are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31:
-----------------------
<S> <C>
1997........................................................... 6,954,927
1998........................................................... 6,095,021
1999........................................................... 5,405,712
2000........................................................... 2,446,940
2001........................................................... 5,109,666
Thereafter..................................................... 1,760,758
-----------
$27,773,024
===========
</TABLE>

Repayment terms on the notes payable secured by customer mortgages
receivable are such that all collections on the receivables serving as
collateral are paid to the lender on a monthly basis, and are excluded from
the above. Payments are first applied to outstanding interest and then to
principal. As principal repayments on notes payable are made by collections of
the related secured customer mortgages receivable, there are no fixed
amortization dates for these notes. Total amount of pledged customer mortgages
receivable was $75,817,507 and $86,874,266 at December 31, 1995 and 1996,
respectively.

(9) EQUITY REDEMPTIONS

During 1995, the Company made distributions to one of its shareholders
sufficient to redeem all of that individual's interests in the Company. As
part of this transaction, the former shareholder/executive and the Company
entered into a five-year covenant-not-to-compete and a consulting and
management agreement. Costs associated with the five-year covenant-not-to-
compete have been included in prepaid expenses and other assets in the
accompanying combined balance sheets (see Note (6)) and are being amortized
over the life of the five-year agreement.

In connection with the sale of customer mortgages receivable concurrent with
the acquisition by the Company in 1991 (see Note 3), unaffiliated third
parties received options to purchase limited partnership interests totaling
15% of certain of the combined affiliates of the Company. During 1995, the
Company repurchased these options from the unaffiliated third parties.

These two transactions have been reflected as equity redemptions in the
amount of $20,167,055 in the accompanying combined statements of equity for
the year ended December 31, 1995.

(10) EMPLOYMENT AGREEMENTS

In 1992, the Company entered into employment agreements (which were amended
and expanded in 1995) with certain senior management executives who were not
owners of the Company. In order to receive payment under the agreements the
executives were required to remain in the employ of the Company through
December 31, 1996. The agreements, provided that these executives would be
entitled to receive, on a deferred basis, an aggregate of 3% (amended in 1995
to 10%) of the cumulative pretax income of the Company during the period of
employment, before determination of the deferred executive incentive
compensation amounts.

F-16
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The total expense associated with these deferred executive incentive
compensation agreements was $332,078, $3,447,945 and $1,113,829 for the years
ended December 31, 1994, 1995 and 1996, respectively. Amounts payable under
these agreements totaled $4,186,539 and $4,919,932 as of December 31, 1995 and
1996, respectively, and are included in accrued compensation and benefits in
the accompanying combined balance sheets. Payment of this obligation will be
made in equal installments over a three year period beginning at the earlier
of June 15, 1997 or completion of the Offering.

(11) 401(K) PLAN

(12) STOCK PLANS

The Vistana, Inc. stock plan was initially adopted by the Company's
shareholders in December 1996 and provides for the granting of stock options
to key employees, directors and officers of, and consultants to the Company at
a price equal to the fair market value of the shares (or 110% of fair market
value if the options are granted to a greater than 10% shareholder of the
Company) at the date of the grant and are for terms not exceeding ten years
(or five years if the options are granted to a greater than 10% shareholder of
the Company). There are 1,900,000 shares of common stock authorized for
issuance under the plan. Such options shall vest monthly in arrears over a
period of 48 months from the grant or award date. The plan also allows for
grants of restricted stock, stock appreciation rights (SARs") and phantom
stock awards.

Each initial director of the Company who is an eligible director will
automatically be granted options to purchase 45,000 shares of Common Stock for
an exercise price per share equal to the price to the public in the Offering.
These options will be exercisable in 15,000 share increments each of the
following times: (i) immediately upon grant, (ii) immediately following the
date of the 1998 annual shareholders' meeting, and (iii) immediately following
the date of the 1999 annual shareholders' meeting. In addition, the plan
grants each eligible director immediately exercisable options to purchase
5,000 shares of Common Stock at the date immediately following each annual
shareholders' meeting. These options will expire ten years from the date of
grant.

In December 1996, the Company granted certain executive officers and other
employees options to purchase an aggregate of 535,000 shares of Common Stock
at an exercise price of $11 per share. Concurrently with the completion of the
Offering, the Board of Directors may grant to several employees options to
purchase additional shares of Common Stock under the stock plan at an exercise
price equal to the price to the public in the Offering.

Effective upon completion of the Offering, certain of the Principal
Shareholders will grant to certain executive officers and other employees of
the Company options to acquire an aggregate of 1,350,000 shares of Common
Stock at an exercise price equal to the price to the public in the Offering.
These options will be exercisable in full at the date of grant and will
terminate ten years after the date of grant in the Offering.

F-17
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(13) COMMITMENTS AND CONTINGENCIES

The Company is, from time to time, party to certain litigation which relates
to matters arising in the ordinary course of business. Management believes
that any of such litigation is not expected to have a material impact on the
financial position or results of operations of the Company.

(14) INTEREST RATE SWAP AGREEMENTS

The Company entered into interest rate swap agreements to reduce the impact
of changes in interest rates on certain of its floating rate term debt. At
December 31, 1996, the Company had two outstanding interest rate swap
agreements with a commercial bank, having a total notional principal amount of
$14,495,301. These interest rate swap agreements effectively fix the Company's
interest rates on its $9,800,000 floating rate note due June 30, 2000 and on
its $4,695,301 floating rate note due December 29, 2000, to 9.69% per annum
and 11.69% per annum, respectively.

The interest rate swap agreements mature at the time the related notes
mature. The Company is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swap agreements. However, the
Company believes the risk of incurring losses related to credit risk is remote
and any losses would be immaterial. As of December 31, 1996, the Company had
no risk of loss as it related to the counterparty as it would have cost the
Company approximately $60,295 to terminate the agreements at that date.

(15) SUPPLEMENTAL DISCLOSURES OF NON-CASH OPERATING AND INVESTING ACTIVITIES

<TABLE>
<CAPTION>
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Supplemental schedule of non-cash operating
activities:
Transfers from construction in progress to
inventory of vacation ownership
interests................................ $4,836,553 $12,554,304 $ 9,397,063
========== =========== ===========
Transfers from land held for development
to inventory of vacation ownership
interests................................ $ 480,000 $ 1,330,808 $ 986,018
========== =========== ===========
Supplemental schedule on non-cash investing
activities:
Increases to investments in limited
partnerships attributed to customer
mortgages receivable sold in excess of
proceeds received........................ $1,157,253 $ -- $ --
========== =========== ===========
</TABLE>

F-18
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

During 1995 and 1996 the Company purchased customer mortgages receivable
previously sold pursuant to clean-up call provisions relating to such sales. A
summary of the impact of these transactions on noncash investing activities is
as follows:

<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
Contractual balance of customer mortgages receivable
acquired............................................. $10,473,284 $9,804,274
Allowance for doubtful accounts assigned to customer
mortgages receivable acquired........................ (628,397) (588,276)
Remaining balance of estimated losses on repurchase
obligations relating to customer mortgages receivable
repurchased.......................................... 2,303,556 1,594,967
Investment in limited partnership..................... (4,680,117) (5,058,711)
Cash paid upon repurchase............................. (1,692,083) (1,170,691)
----------- ----------
Discount on purchase of customer mortgages
receivable........................................... $ 5,776,243 $4,581,563
=========== ==========
</TABLE>

(16) PRO FORMA DISCLOSURES (UNAUDITED)

Upon completion of the Offering, the Company will be subject to federal and
state income taxes from the effective date of the sale of the Common Stock. In
addition, the Company will be required to provide a deferred tax liability for
cumulative temporary differences between financial reporting and tax reporting
by recording a provision for such deferred taxes in its combined statements of
income for the period following the effective date of the Offering. Such
deferred taxes will be based on the cumulative temporary differences at the
date of the Offering.

Upon effectiveness of the Offering, the Company will become subject to
federal and state income taxes. Pursuant to SFAS No. 109, "Accounting for
Income Taxes", the Company will record income tax expense and a net deferred
tax liability for the effect of cumulative temporary differences as of the
date of the Formation Transaction. Such amount would have aggregated
$10,770,000 as of December 31, 1996.

The unaudited pro forma provision for income taxes represents the estimated
income taxes that would have been reported had the Company filed federal and
state income tax returns as a regular corporation. The following summarizes
the unaudited pro forma provision for income taxes:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1995 1996
---------- ----------- ----------
<S> <C> <C> <C>
Current:
Federal.................................. $1,500,000 $(1,200,000) $2,500,000
State.................................... 200,000 -- 220,000
---------- ----------- ----------
1,700,000 (1,200,000) 2,720,000
---------- ----------- ----------
Deferred:
Federal.................................. 1,971,000 2,957,000 768,000
State.................................... 313,000 369,000 235,000
---------- ----------- ----------
2,284,000 3,326,000 1,003,000
---------- ----------- ----------
Unaudited pro forma provision for income
taxes..................................... $3,984,000 $ 2,126,000 $3,723,000
========== =========== ==========
</TABLE>

F-19
<PAGE>

VISTANA, INC. AND COMBINED AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

A reconciliation between the unaudited pro forma statutory provision for
income taxes (at 34%) and the unaudited pro forma provision for income taxes
is shown as follows for the year ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Income tax at federal statutory rate...... $3,642,953 $1,989,098 $3,601,953
State tax, net of federal benefit......... 338,580 243,540 300,300
Amortization of excess value recognized... (124,000) (74,500) (35,730)
Other..................................... 126,467 (32,138) (143,523)
---------- ---------- ----------
Unaudited pro forma provision for income
taxes.................................... $3,984,000 $2,126,000 $3,723,000
========== ========== ==========
</TABLE>

Deferred income taxes reflect the net tax affects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the pro forma net deferred tax liabilities were as follows for
the year ended December 31:

<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Deferred tax assets:
Vacation Ownership Interests....................... $ 9,739,355 $ 10,699,000
Period costs and excess servicing premium.......... 1,759,622 1,499,000
Net operating loss carryforward.................... 126,750 --
Accrued compensation and benefits.................. 1,714,000 2,373,000
Other.............................................. 139,000 79,000
Basis adjustment for tax purposes relating to
redemption of equity interests.................... 2,778,000 2,644,000
----------- ------------
Total deferred tax assets........................ $16,256,727 $ 17,294,000
=========== ============
Deferred tax liabilities:
Deferred revenue (installment sales)............... $24,627,000 $ 26,885,000
Purchase accounting book/tax difference............ 922,000 922,000
Fixed assets....................................... 49,000 --
Vacation Ownership Interest and other inventory.... 327,000 257,000
Other.............................................. 98,727 --
----------- ------------
Total deferred tax liabilities................... 26,023,727 28,064,000
----------- ------------
Pro forma net deferred tax liabilities........... $(9,767,000) $(10,770,000)
=========== ============
</TABLE>

The deferred tax benefit associated with the equity redemption deferred tax
asset in 1995 is an offset to the distributions made for that purpose rather
than as an element of the pro forma deferred tax provision for 1995.

Pro forma weighted average number of shares of Common Stock outstanding as
shown on the accompanying combined statement of income for the year ended
December 31, 1996, is based upon the number of shares to be owned by current
shareholders based upon the completion of the Formation Transactions (see Note
(2)(a)) prior to the Offering.

F-20
<PAGE>

VISTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
------ ----------- ------------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents............................. $ 9,089 $ 6,134
Restricted cash....................................... 5,042 3,847
Customer mortgages receivable, net.................... 111,129 100,166
Other receivables, net................................ 3,959 4,111
Inventory of Vacation Ownership Interests............. 20,952 16,541
Construction in progress.............................. 13,001 8,670
-------- --------
Total Vacation Ownership Interests................ 33,953 25,211
-------- --------
Prepaid expenses and other assets..................... 13,056 13,978
Land held for development............................. 7,664 8,080
Property and equipment, net........................... 12,966 12,395
-------- --------
Total Assets...................................... $196,858 $173,922
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable and accrued liabilities.............. $ 5,401 $ 3,829
Accrued compensation and benefits..................... 7,524 9,291
Customer deposits..................................... 7,008 4,995
Deferred income taxes................................. 15,217 --
Other liabilities..................................... 6,721 6,160
Notes and mortgages payable........................... 84,526 118,557
-------- --------
Total Liabilities................................. 126,397 142,832
Minority interest..................................... 4,393 4,442
Shareholder's Equity
Common stock, $.01 par value: Authorized 100,000,000
shares
Issued and outstanding 18,800,000 shares at June
30, 1997........................................... 188 --
Additional paid-in capital.......................... 62,134 --
Retained earnings................................... 3,746 --
Equity of predecessor entities...................... -- 26,648
-------- --------
Total Shareholder Equity.......................... 66,068 26,648
-------- --------
Total Liabilities and Shareholder Equity.......... $196,858 $173,922
======== ========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

F-21
<PAGE>

VISTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Vacation Ownership Interest sales.................... $ 40,083 $ 28,622
Interest............................................. 8,923 7,149
Resort............................................... 8,050 7,125
Telecommunications................................... 3,195 3,216
Other................................................ 246 230
---------- ----------
Total revenues..................................... 60,497 46,342
---------- ----------
Costs and operating expenses:
Vacation Ownership Interests cost of sales........... 9,276 7,195
Sales and marketing.................................. 18,287 12,569
Interest expense--treasury........................... 3,130 3,324
Provision for doubtful accounts...................... 2,809 2,034
Resort............................................... 6,562 5,984
Telecommunications................................... 2,580 2,597
General and administrative........................... 4,957 3,377
Depreciation and amortization........................ 1,412 1,074
Interest expense--other.............................. 1,071 2,040
Other................................................ 1,470 145
Deferred executive incentive compensation............ -- 553
---------- ----------
Total costs and operating expenses................. 51,554 40,892
---------- ----------
Operating income....................................... 8,943 5,450
Excess value recognized................................ 36 70
Minority interest...................................... 50 --
---------- ----------
Income before income taxes and extraordinary item...... 9,029 5,520
Provision for income taxes............................. 2,803 --
Non-recurring charge associated with the change of tax
status................................................ 13,201 --
---------- ----------
Income (Loss) before extraordinary item................ (6,975) 5,520
Extraordinary item early extinguishment of debt (net of
tax).................................................. (825) --
---------- ----------
Net Income (Loss).................................. $ (7,800) $ 5,520
========== ==========
Per Share Data:
Loss per share before extraordinary item............. $ (.40) --
Extraordinary item................................... $ (.05) --
---------- ----------
Net loss per share................................. $ (.45) --
========== ==========
Weighted average number of shares outstanding:......... 17,317,956 --
========== ==========
Pro Forma Share Data:
Income before income taxes........................... $ 5,520
Income tax provision................................. 2,048
----------
Net income........................................... $ 3,472
==========
Net income per share................................. $ 0.24
==========
Weighted average number of shares outstanding........ 14,175,000
==========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

F-22
<PAGE>

VISTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(AMOUNTS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1997 1996
-------- --------
<S> <C> <C>
Operating activities
Net Income (Loss)............................................ $ (7,800) $ 5,520
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization expense...................... 1,412 1,074
Amortization of discount on customer mortgages receivable.. (1,531) (1,085)
Provision for doubtful accounts............................ 2,809 2,034
Minority interest.......................................... (50) 0
Deferred income taxes...................................... 15,217 0
Changes in operating assets and liabilities
Other receivables, net................................... 152 (380)
Vacation ownership interests............................. (8,325) (4,547)
Prepaid expenses and other assets........................ 313 1,743
Accounts payable and accrued liabilities................. 1,572 (2,441)
Accrued compensation and benefits........................ (1,767) (9)
Customer deposits........................................ 2,013 1,162
Repurchase obligation.................................... 0 (1,179)
Other liabilities........................................ 561 436
-------- --------
Net cash provided by operating activities.............. 4,576 2,328
Investing activities
Expenditures for land, property and equipment................ (1,374) (473)
Origination of customer mortgages receivable................. (12,241) (7,562)
Additions to restricted cash................................. (1,195) (77)
-------- --------
Net cash used in investing activities.................. (14,810) (8,112)
Financing activities
Proceeds from notes and mortgages payable.................... 26,130 30,226
Payments on notes and mortgages payable...................... (60,161) (22,345)
Proceeds from public offering................................ 51,615 0
Payments of public offering costs............................ (2,150) 0
Equity distributions/redemption.............................. (2,245) (1,778)
-------- --------
Net cash provided by financing activities.............. 13,189 6,103
-------- --------
Net increase in cash and cash equivalents.............. 2,955 319
Cash and cash equivalents, beginning of period............... 6,134 7,543
-------- --------
Cash and cash equivalents, end of period..................... $ 9,089 $ 7,862
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest..................... $ 4,876 $ 5,376
======== ========
Cash paid during the period for taxes........................ $ 280 $ --
======== ========
</TABLE>

F-23
<PAGE>

VISTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1. GENERAL

Vistana, Inc. and its consolidated subsidiaries (the "Company") generate
revenues from the sale and financing of vacation ownership interests ("VOI's")
in its resort properties which typically entitle the buyer to ownership of a
fully-furnished unit for a one week period on an annual or an alternate-year
basis. The Company's principal operations consist of (1) constructing,
furnishing, marketing and selling VOI's, (2) providing consumer financing for
the purchase of VOI's at its resorts, (3) managing the operations of its
resorts and related amenities, and (4) installation and maintenance of
telecommunications equipment for others on a limited basis. The Company sells
VOI's to both domestic and foreign purchasers. All contracts relating to the
sale of VOI's are denominated in United States (U. S.) dollars.

The condensed consolidated financial statements shown herein for the Company
and its consolidated subsidiaries for each respective period include the
operations of its predecessors in interest. The Company became the parent
company for all of the operations of its predecessors in connection with its
initial public offering (the "Offering") completed on February 28, 1997.

At June 30, 1997, the condensed consolidated financial statements of the
Company include the accounts of the Company and its consolidated subsidiaries
and two partnerships between one or more subsidiaries and unaffiliated third
party partners wherein the Company exercises operational and financial control
over such partnerships. Interests of unaffiliated third parties are reflected
as minority interests.

The condensed consolidated financial statements of the Company as of and for
the six months ended June 30, 1997 have not been audited. In the opinion of
management, the unaudited condensed consolidated financial statements include
all adjustments and accruals (consisting of normal recurring adjustments)
necessary to present fairly the Company's consolidated financial position at
June 30, 1997 and the consolidated results of its operations for the six
months ended June 30, 1997. Results for interim periods are not necessarily
indicative of the results to be expected during the remainder of the current
year or for any future period. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted or condensed. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

NOTE 2. EFFECTIVE NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" which
simplifies the calculation of earnings per share as currently calculated under
APB 15. Compliance with this statement cannot be implemented by the Company
before December 31, 1997.

In February 1997 FASB issued Statement of Financial Accounting Standards No.
129 "Disclosure of Information about Capital Structure" which establishes
standards for disclosing information about an entity's capital structures.
This Statement is effective for financial statements for periods ending after
December 15, 1997. This Statement will not have a material impact on the
Company.

In June 1997, FASB issued Statement of Financial Accounting Standards No.
130 "Reporting Comprehensive Income" which establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial statements. This
Statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other

F-24
<PAGE>

financial statements. This statement is effective for fiscal years beginning
after December 15, 1997. This Statement will not have a material impact on the
Company.

NOTE 3. EARNINGS PER SHARE

Earnings per share is calculated on the weighted average number of shares
outstanding. The dilutive effect of common stock equivalents for the
computation of earnings per share was less than 3% for the six months ended
June 30, 1997, therefore, no adjustment has been made to the weighted average
number of shares outstanding. For periods prior to the Offering on February
28, 1997, 14,175,000 shares were assumed to be outstanding which included the
shares issued by the Company in exchange for the interests in the predecessor
corporations and limited partnerships. Earnings per share for the six month
period ended June 30, 1996 has been adjusted to reflect proforma tax expense
of $2.0 million.

NOTE 4. CAPITAL TRANSACTIONS AND PUBLIC OFFERING

During the three months ended March 31, 1997, the Company consummated the
Offering of 4,625,000 shares of the Company's common stock at a price of $12
per share. The net proceeds from the Offering, after deducting the related
issuance costs, amounted to approximately $49.5 million. In addition,
14,175,000 shares of the Company's common stock were issued just prior to and
in connection with the formation transactions to the former holders of
interests in the Company's predecessor corporations and limited partnerships.

In addition, in connection with the Offering and the formation transactions,
(1) former equity holders of the Company's predecessor corporations and
limited partnerships received a distribution of approximately $2.5 million,
$0.3 million of which represented the balance of such holders' federal and
state income tax liability attributable to their ownership of such entities
through the date of the Offering and $2.2 million of which represented the
retained earnings of the Company's predecessor corporations and limited
partnerships for which such holders had previously paid income tax; and (2)
the Company used approximately $39.8 million to prepay outstanding
indebtedness, together with accrued interest and related prepayment penalties.

The formation transactions have been accounted for as a reorganization of
entities under common control in a manner similar to a pooling of interests.
Accordingly, the net assets of the predecessor corporations and limited
partnerships were recorded at the predecessor entity's basis. In addition, the
accompanying condensed consolidated financial statements reflect historical
results of operations of the predecessor corporations and limited partnerships
on a combined basis.

NOTE 5. CUSTOMER MORTGAGES RECEIVABLE, NET

At June 30, 1997 and December 31, 1996, customer mortgages receivable, net
consisted of:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(IN THOUSANDS)
<S> <C> <C>
Customer mortgages receivable, gross............. $125,213 $115,970
Less:
Unamortized discount on repurchased customer
mortgages receivable.......................... (4,009) (5,539)
Unamortized excess value over consideration.... (50) (74)
Allowance for loss on receivables.............. (10,025) (10,191)
-------- --------
Customer mortgages receivable, net......... $111,129 $100,166
======== ========
</TABLE>

As of June 30, 1997 and December 31, 1996, customer mortgages receivable,
gross, from foreign buyers aggregated approximately $29.2 million and $28.1
million respectively, with obligors within no individual foreign country
aggregating more than 5% of gross outstanding customer mortgages receivable.

Stated interest rate on customer mortgages receivable outstanding at June
30, 1997 range from 00.0% to 17.9% per annum (averaging approximately 13.9%
per annum contractually). Interest is not imputed on customer mortgages
receivable with less than a market interest rate because such amounts are
immaterial.

F-25
<PAGE>

The activity in the customer mortgages receivable allowance for doubtful
accounts is as follows:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
----------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Balance, beginning of period............................ $10,191 $ 9,009
Provision for doubtful accounts......................... 2,809 2,034
Customer mortgages receivable charged off............... (2,975) (1,321)
------- -------
Balance, end of period.................................. $10,025 $ 9,722
======= =======
</TABLE>

NOTE 6. NOTES AND MORTGAGES PAYABLE

At June 30, 1997 and December 31, 1996 notes and mortgages payable consisted
of:

<TABLE>
<CAPTION>
JUNE
30, DECEMBER 31,
1997 1996
------- ------------
(IN THOUSANDS)
<S> <C> <C>
Notes payable and mortgage obligations to lender,
cross collateralized, which bear interest at prime
plus 2% (10.50% per annum at June 30, 1997). A
total of $147.3 million may be borrowed. Maturity
dates range from October 30, 1997 to May 2004.
Notes are secured by customer mortgages receivable,
land and improvements.............................. $50,807 $ 70,135
Notes payable to banks bearing interest ranging from
8.35% to 11.34% per annum and with maturity dates
ranging from December 1997 to December 2005. Notes
are secured by customer mortgages receivable, land
and improvements, and equipment.................... 9,487 31,893
Notes payable and mortgage obligations to lender,
cross collateralized, which bear interest at prime
plus 2% (10.50% per annum at June 30, 1997) plus
incentive fees. A total of $39.4 million may be
borrowed. Monthly interest payments are required.
Maturity dates range from June 25, 2001 to July 24,
2001............................................... 24,232 16,529
------- --------
Total notes and mortgages payable............... $84,526 $118,557
======= ========
</TABLE>

During the quarter ended March 31, 1997, the Company repaid $38.9 million of
debt from the proceeds of the Offering. In that quarter, the Company recorded
an expense relating to the write-off of previously capitalized fees and
prepayment penalties of $0.8 million, net of related tax benefits of $0.5
million.

NOTE 7. INCOME TAXES

As the result of the Offering and the formation transactions, the Company
became subject to federal, state and foreign income taxes and was required to
record in the quarter ended March 31, 1997, a deferred tax liability of $13.2
million for cumulative temporary differences between financial reporting and
tax reporting. The deferred tax assets, deferred tax liabilities and the
current tax provision were estimated based on management's current estimate as
of the end of the period. The provision for income taxes reflects the income
tax expense from the date of the Offering through the applicable three or six
month period.

F-26
<PAGE>

The Company reports most of its sales of VOI's on the installment method for
federal income tax purposes. As a result, the Company does not recognize
taxable income on these sales until the installment payments have been
received from the Company's customers. The Company became subject to the
federal Alternative Minimum Tax ("AMT") as a result of the deferred income
which results from the installment sales method in the period ended June 30,
1997. In the current quarter the Company began paying state AMT tax and the
Company expects to pay state AMT for the balance of the fiscal year.

Under Section 453(l) of the Internal Revenue Code, interest may be imposed
on the amount of tax attributable to the installment payments on customer
receivables for the period beginning on the date of sale and ending on the
date the related tax is paid. If the Company is otherwise not subject to pay
tax in a particular year, no interest is imposed since the interest is based
on the amount of tax paid in that year. The Company has not included a
provision for this interest, as it is not currently subject to the tax,
however, in the future it may become so. The Company continues to monitor its
tax provision and may adjust it to provide for this interest in the future.

NOTE 8. STOCK PLANS

In December 1996, the Company granted certain executive officers and other
employees options to purchase an aggregate of 535,000 shares of Common Stock
at an exercise price of $11.00 per share, none of which were exercised during
the period. In addition, in the quarter ended March 31, 1997, the Company
granted 1,026,000 options to purchase shares of Common Stock at an exercise
price of $12.00 per share to certain employees, directors and an outside
consultant. No options were exercised during the period. These options vest
over a period of four years and terminate ten years after the date of grant.

Certain of the former owners of the Company's predecessor corporations and
limited partnership interests granted to certain executive officers and other
employees of the Company options to acquire an aggregate of 1,350,000 shares
of Common Stock at an exercise price equal to $12 per share. These options are
currently exercisable in full and will terminate ten years after the date of
grant.

NOTE 9. PERCENTAGE OF COMPLETION

In the current quarter the Company began pre-construction sales at its
Embassy Vacation Resort in Myrtle Beach, South Carolina. Because construction
had not materially begun at June 30, 1997, no sales revenue for these pre-
construction VOI sales have been recognized. There were no pre-construction
VOI sales or any VOI sales recognized under percentage of completion method in
either the first quarter of 1997 or for the six months ended June 30, 1997.
The Company intends to recognize pre-construction VOI sales on the percentage
of completion method as construction progresses.

NOTE 10. SUBSEQUENT EVENTS

Subsequent to June 30, 1997, the Company entered into a $12.7 million loan
facility for the construction of Embassy Vacation Resort in Myrtle Beach,
South Carolina and related amenities, as well as a related $10.0 million
receivables based revolving credit facility.

F-27
<PAGE>

In addition, on September 16, 1997 the Company purchased the entities
comprising the Success Companies, Success Developments, L.L.C. and Points of
Colorado, Inc. (collectively "Success and Points"). Success and Points
develop, market, finance and operate vacation ownership resorts in Arizona and
Colorado. The Company acquired all of the outstanding stock of Success and
Points for a purchase price of approximately $24.0 million in cash,
207,630 shares of common stock and contingent consideration of 430,814 shares
of Common Stock of the Company. Payout of these shares is contingent upon
Success and Points achieving certain operating criteria. In each of the
calendar years 1998 through 2000 upon satisfying certain net proceeds from
sales levels as set forth in the Agreement and Plan of Reorganization dated
August 15, 1997, all of the contingent consideration is payable to the selling
parties. Management of the Company has determined that the contingent
consideration is an additional cost of the acquisition rather than
compensation expense.

The purchase method of accounting will be followed in accounting for this
transaction. The goodwill associated with the acquisition will be amortized on
a straight-line basis over 20 years.

F-28
<PAGE>

POINTS OF COLORADO, INC.

AUDITED FINANCIAL STATEMENTS

MARCH 31, 1997 AND 1996

F-29
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Points of Colorado, Inc.
Denver, Colorado

We have audited the accompanying balance sheets of Points of Colorado, Inc.
as of March 31, 1997 and 1996, and the related statements of income and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Points of Colorado, Inc.
as of March 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.

KREISMAN CORPORATION

Denver, Colorado
May 12, 1997

F-30
<PAGE>

POINTS OF COLORADO, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
------------------------
1997 1996
----------- -----------
ASSETS

<S> <C> <C>
Cash and Cash Equivalents $ 652,426 $ 431,928
Other Receivables 99,779 92,524
Timeshare Notes Receivable, Less Allowance for
Doubtful Notes of $686,764 in 1997 and $481,377
in 1996 13,108,055 6,545,516
Other Notes Receivable 793,349 -0-
Holdback on Timeshare Notes 549,080 883,338
Inventory--Timeshare Units 1,699,143 3,370,381
Investment--Success Developments, LLC 746,107 -0-
Prepaid Expenses and Other Assets 85,076 97,720
Deferred Compensation Asset 397,573 227,072
Furniture and Equipment 291,755 260,149
Less Accumulated Depreciation (204,221) (165,219)
----------- -----------
Total Assets $18,218,122 $11,743,409
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Accounts Payable $ 42,852 $ 83,428
Accrued Payroll and Commissions 318,651 176,784
Customer Deposits 73,061 44,107
Note Payable to Marine Midland Bank 4,000,510 1,839,715
Other Liabilities 134,677 44,145
Reserve for Reacquisition of Recourse Notes -0- 150,000
Deferred Federal and State Income Taxes 1,950,035 472,135
Deferred Compensation Payable 397,573 227,072
----------- -----------
Total Liabilities 6,917,359 3,037,386
Stockholders' Equity
Common Stock, No Par Value, Authorized 50,000
Shares, Issued and Outstanding 80 Shares 1 1
Additional Paid-In Capital 14,136,878 14,136,878
Accumulated Deficit (2,836,116) (5,430,856)
----------- -----------
Total Stockholders' Equity 11,300,763 8,706,023
----------- -----------
Total Liabilities and Stockholders' Equity $18,218,122 $11,743,409
=========== ===========
</TABLE>

See Notes to Financial Statements.

F-31
<PAGE>

POINTS OF COLORADO, INC.

STATEMENTS OF INCOME AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Income
Sales--Timeshare Units $13,694,159 $ 6,686,950
Financing Income, Net of Servicing Costs 1,086,253 591,590
Other Income 203,913 -0-
----------- -----------
14,984,325 7,278,540
Cost of Sales
Timeshare Units Sold 2,371,787 1,334,141
Closing Costs 739,790 369,918
----------- -----------
3,111,577 1,704,059
----------- -----------
Gross Profit 11,872,748 5,574,481
Other Expenses
Sales and Marketing 6,771,878 3,289,190
General and Administrative 1,175,919 1,073,539
Other Expenses -0- 175,369
----------- -----------
7,947,797 4,538,098
----------- -----------
Income Before Other Income 3,924,951 1,036,383
Other Income
Reduction of Reserve for Reacquisition of Recourse
Notes 147,689 481,969
----------- -----------
Income Before Income Taxes 4,072,640 1,518,352
Provision for Income Taxes (1,477,900) (399,199)
----------- -----------
Net Income 2,594,740 1,119,153
Accumulated Deficit
Beginning of Period (5,430,856) (6,550,009)
----------- -----------
End of Period $(2,836,116) $(5,430,856)
=========== ===========
</TABLE>

See Notes to Financial Statements.

F-32
<PAGE>

POINTS OF COLORADO, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 2,594,740 $1,119,153
Adjustments to Reconcile Net Income to Cash Provided
By Operating Activities:
Depreciation 40,487 35,570
Income from Success Developments, LLC (121,107) -0-
Deferred Federal and State Income Taxes 1,477,900 399,199
Discount Income on Note Collections (31,729) (49,453)
Reduction of Reacquisition of Uncollectible Notes
Receivable (147,689) (481,969)
Reserve for Doubtful Notes 269,186 152,928
Changes in Operating Assets and Liabilities:
Decrease in Inventory--Timeshare Units 1,671,238 1,334,141
(Increase) in Other Assets (165,112) (258,226)
Increase in Accounts Payable and Other Liabilities 391,278 242,483
----------- ----------
Total Adjustments 3,384,452 1,374,673
----------- ----------
Cash Provided by Operating Activities 5,979,192 2,493,826
----------- ----------
Cash Flows from Investing Activities
Origination of Timeshare Notes (11,226,861) (5,915,665)
Principal Reductions of Timeshare Notes 4,424,554 1,696,521
Acquisition and Loans Related to Success
Developments, LLC (1,418,349) -0-
Purchases of Furniture and Equipment (33,091) (67,822)
----------- ----------
Cash Used by Investing Activities (8,253,747) (4,286,966)
----------- ----------
Cash Flows from Financing Activities
Loan from Marine Midland Bank 3,781,499 1,977,136
Payments to Marine Midland Bank (1,620,704) (356,282)
Decrease in Holdback on Timeshare Notes 334,258 346,238
----------- ----------
Cash Provided by Financing Activities 2,495,053 1,967,092
----------- ----------
Net Increase in Cash 220,498 173,952
Cash and Equivalents
Beginning of Period 431,928 257,976
----------- ----------
End of Period $ 652,426 $ 431,928
=========== ==========
Supplemental Cash Flow Disclosures:
Interest Paid $ 279,473 $ 84,696
=========== ==========
</TABLE>

See Notes to Financial Statements.

F-33
<PAGE>

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 1997

NOTE A--THE COMPANY

Points of Colorado, Inc. (the "Company"), is the developer and manager of
Falcon Point and Eagle Point (collectively, the "Associations"), two timeshare
projects that contain 54 and 58 condominiums, respectively. The Company is the
owner of the remaining unsold timeshare interests and markets and sells them
to the public along with timeshare units purchased from Christie Lodge. The
Company is a Colorado corporation which was organized on July 31, 1986.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in the bank as well as a working cash
management account held for the primary purpose of general liquidity. The
holdings in the cash management account normally mature within three months
from the date of acquisition.

Inventory--Timeshare Units

Timeshare inventories are valued at the lower of cost to acquire, develop,
and renovate the projects or market. Cost of timeshare units sold for Eagle
Point and Falcon Point is based upon the combined costs of inventories
allocated to the individual weeks on the basis of the relative sales value of
each week, and upon actual cost for Christie Lodge.

Allowance for Doubtful Notes

The Company provides an allowance for doubtful notes for those notes held by
the Company based on a review of the current status of existing receivables
and historical collection experience.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives using
accelerated methods. The estimated lives used in determining depreciation are:

<TABLE>
<S> <C>
Furniture and Equipment......................................... 5-7 years
</TABLE>

Maintenance, repairs, and minor renewals are charged to expense as incurred,
whereas improvements and major renewals of facilities are capitalized. Upon
sale or disposition of properties, the asset account is relieved of the cost
and the accumulated depreciation account is charged with depreciation taken
prior to the sale, and any resultant gain or loss is credited or charged to
earnings.

F-34
<PAGE>

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Revenue and Cost Recognition

Revenue from timeshares is recognized upon closing of the sale. Acquisition
and other direct costs and indirect costs related to acquisition and
development of timeshare units are capitalized. Capitalized costs are allocated
to individual timeshare units. The capitalized costs of units are charged to
earnings when the related revenue is recognized. Selling and administrative
costs are charged to earnings when incurred.

Concentration of Credit Risk

Credit risk with respect to timeshare notes receivable is generally
diversified due to the large number of customers and their dispersion across
many different geographic areas of the United States. The Company performs
credit evaluations of its customers' financial condition, and all its notes
receivable are collateralized by the interval units sold.

NOTE C--INVESTMENT--SUCCESS DEVELOPMENTS, LLC

The Company and its partners organized Success Developments, LLC on June 10,
1996, and the Company contributed $625,000 for its fifty percent interest. The
Limited Liability Company is the owner and developer of Villas of Cave Creek, a
timeshare project in Arizona. The Company is the managing member. This
investment is being accounted for using the equity method of accounting. The
investment account has been increased for the Company's share of the investee's
net income as of March 31, 1997.

Condensed unaudited financial information of the Limited Liability Company as
of March 31, 1997 is summarized below:

<TABLE>
<S> <C>
Assets........................................................ $7,215,232
Liabilities................................................... $5,723,018
Results of Operations from date of inception.................. $ 242,214
</TABLE>

By an agreement dated January 1, 1997, the Company provides management
services to the Limited Liability Company.

The Company has loaned the LLC construction funds and has loaned the other
partners acquisition funds. Note principal and interest of 15% per annum from
the Limited Liability Company are due December 1, 1997. Note principal and
interest of 15% per annum from other members are due January 31, 1999. At March
31, 1997, the aggregate of the notes receivable and accrued interest was
$793,349.

The Company is guarantor on a $10,000,000 two-year line of credit dated July
29, 1996 in conjunction with the investment.

NOTE D--TRANSACTIONS WITH MARINE MIDLAND BANK

The majority of timeshare week sales are financed by notes secured by the
weeks purchased. Notes were sold to Marine by the Company during 1993 and 1994
under an Agreement of Finance ("Agreement"), dated July 30, 1993, with full
recourse to the Company to repurchase any note that becomes delinquent in
excess of sixty days. The Agreement requires the Company to maintain a net
worth of $2,500,000. The Company maintained a Reserve for the Reacquisition of
Recourse Notes, which was $150,000 for the year ended March 31, 1996. The
amount was reduced to $0 in the current year due to sufficient projected
collateral.

In addition, Marine holds back, in a Reserve Account, 10% of the principal
balance of the notes so purchased, to provide additional security in case of
default. The Company has the right to receive the amount by which the Reserve
Account exceeds 15% of the remaning principal balance of the notes owned by
Marine on

F-35
<PAGE>

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

July 30th of each year. At March 31, 1997, Marine owned 790 notes which were
sold to Marine by the Company, with a principal balance of $2,465,021. The
Reserve Account balance of $549,080 was 22.27% of that amount.

The Agreement also requires Marine to pay the Company monthly an Interest
Differential between the interest earned on the notes and a Minimum Required
Yield established by Marine at the time the note was purchased by Marine. At
March 31, 1997, the aggregate Interest Differential to be paid over four years
on the 790 notes was $188,532. The actual amount of Interest Differential that
will be received by the Company is dependent upon the performance of the
portfolio and the amount of early payoffs of the notes. Due to the inherent
uncertainty of the future value of the Differential, no asset is recorded at
the time of sale; consequently, the monthly Interest Differential is recorded
as income when earned. During the years ended March 31, 1997 and 1996, the
Company earned $167,202 and $276,710 of Interest Differential, respectively.

On December 2, 1996, Marine agreed to provide a $7,500,000 Term Loan
("Loan") to the Company for four years. Under its provisions, Marine will
advance 85% of the principal amount of all notes pledged on the Loan. Interest
on the Loan is computed at 2% over Marine's Prime Rate (10.5% at March 31,
1997). All payments from the collateralized notes go directly to Marine, and
monthly interest charges are added to the Loan balance. The Company and its
shareholders have agreed to pay Marine 85% of the outstanding principal
balance of any pledged note that is more than sixty days delinquent. At March
31, 1997, the Company owed $4,000,510 to Marine and had pledged notes with an
aggregate principal balance of $5,333,219. The Company has the option to lock-
in its interest rate under this loan. At March 31, 1997, $898,759 of the
outstanding loan balance had a fixed interest rate of 8.78%, and $1,469,409
had a fixed interest rate of 9.75%.

NOTE E--INCOME TAXES

The Company provides for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, deferred tax assets or liabilities are determined
based on the difference between the financial reporting and tax basis of
assets and liabilities and enacted tax rates that will be in effect for the
year in which the differences are expected to reverse. The provision for
deferred income taxes at March 31, 1997 and 1996, of $1,477,900 and $399,199
respectively results primarily from the use of the installment sales method of
reporting profits and the use of the specific charge off method for bad debts
for tax purposes. At March 31, 1997, the Company had aggregate operating loss
carryforwards of approximately $2,600,000, which will expire on March 31, 2011
and approximately $1,400,000, which will expire on March 31, 2012.

NOTE F--DEFERRED COMPENSATION PLAN

On July 1, 1995, the Company implemented a Nonqualified Deferred
Compensation Plan which permits an eligible officer or director to reduce the
Compensation that the Company would otherwise pay by an amount equal to a
percentage of his Compensation or by a specific dollar amount. Such election,
if any, is made in writing each quarter of the Plan Year. The deferred
compensation is distributable in cash after termination of employment, the
Participant's death, or the Participant attaining the age of 55 years, and
amounted to $397,573 and $227,072 at March 31, 1997 and 1996, respectively.
The agreement is funded under a grantor trust agreement whereby the Company
pays to the grantor trust amounts necessary to meet the obligations under the
deferred compensation agreements. The deferred compensation expense was
$170,501 and $227,072 for the years ended March 31, 1997 and 1996,
respectively.

The Company has recorded the assets and liabilities for the deferred
compensation at gross amounts in the Balance Sheet because such assets and
liabilities belong to the Company rather than to any external plan or trust.
The assets are recorded at cost, and the liability is computed and recorded in
accordance with SFAS 87, "Employers' Accounting For Pensions."

F-36
<PAGE>

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE G--STOCK REDEMPTION AGREEMENT

Under a stock redemption agreement dated December 9, 1994, the Company is
obligated to purchase the stock of a terminated, permanently disabled, or
deceased stockholder at a price determined annually by the Company at its most
recent annual meeting or by formulas and under terms contained in the
agreement. The Company has purchased life insurance on each stockholder in
order to help fund these obligations.

In addition, there are restrictive transfer provisions which govern the sale
or transfer of the Company's stock unrelated to the termination, disability,
or death of a stockholder. The Company has a first right of refusal for 30
days to purchase the shares offered. The remaining stockholder(s) have a
second right of refusal for 30 days to purchase the shares refused by the
Company. Acceptance by all the stockholders is required to sell stock to an
outside third party.

NOTE H--COMMITMENTS AND CONTINGENCIES

The Company leases its office space under a lease which expired on April 30,
1997. On May 30, 1997, the lease was renewed for a five year term. Future
required minimum annual rental payments are as follows:

<TABLE>
<S> <C>
Year Ending March 31, 1998........................................ $77,210
1999.................................................... 79,215
2000.................................................... 81,412
2001.................................................... 84,052
2002.................................................... 86,692
</TABLE>

NOTE I--FINANCIAL INSTRUMENTS

Concentration of Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of its cash. The Company
maintains cash balances at several financial institutions located in Colorado.
Balances at each bank are insured by the Federal Deposit Insurance Corporation
up to $100,000. The Company carries some funds in excess of the Federal
Deposit Insurance Corporation limit.

Fair Value

Fair value estimates presented below are based on relevant market
information. As these estimates are subjective in nature and involve
uncertainties and significant judgement, they are not necessarily indicative
of the amount that the Company could realize on a current market exchange. The
fair value disclosures for financial instruments are as follows:

Cash and Cash Equivalents: The carrying amounts reported in the balance
sheets approximate their fair values at March 31, 1997 and 1996.

Loans Receivable: The net carrying amounts of loans receivable are a
reasonable estimate of their fair values at March 31, 1997 and 1996 based
on historical payment experiences.

Financing Arrangements: The carrying amounts of the variable and fixed
interest rate borrowings approximated their fair values at March 31, 1997
and 1996.

F-37
<PAGE>

POINTS OF COLORADO, INC.

BALANCE SHEET

JUNE 30, 1997

<TABLE>
<CAPTION>
ASSETS
------ (UNAUDITED)
<S> <C>
Cash and Cash Equivalents.............................................. $ 544,598
Other Receivables...................................................... 257,419
Timeshare Notes Receivable, Less Allowance for Doubtful Notes of
$744,165.............................................................. 14,233,820
Other Notes Receivable................................................. 818,090
Holdback on Timeshare Notes............................................ 330,858
Inventory--Timeshare Units............................................. 1,461,822
Investment--Success Developments, LLC.................................. 937,856
Prepaid Expenses and Other Assets...................................... 32,321
Deferred Compensation Asset............................................ 443,448
Furniture and Equipment................................................ 300,337
Less Accumulated Depreciation........................................ (211,954)
-----------
Total Assets....................................................... $19,148,615
===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C>
Liabilities
Accounts Payable..................................................... $ 34,935
Accrued Payroll and Commissions...................................... 250,364
Customer Deposits.................................................... 145,279
Note Payable to Marine Midland Bank.................................. 3,739,283
Other Liabilities.................................................... 1,106,753
Deferred Federal and State Income Taxes.............................. 1,518,160
Deferred Compensation Payable........................................ 443,448
-----------
Total Liabilities.................................................. 7,238,222
Stockholders' Equity
Common Stock, No Par Value, Authorized 50,000 Shares, Issued and
Outstanding
80 Shares........................................................... 1
Additional Paid-In Capital........................................... 14,136,878
Accumulated Deficit.................................................. (2,226,486)
-----------
Total Stockholders' Equity......................................... 11,910,393
-----------
Total Liabilities and Stockholders' Equity....................... $19,148,615
===========
</TABLE>

See Notes to Financial Statements.

F-38
<PAGE>

POINTS OF COLORADO, INC.

STATEMENTS OF INCOME AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Income
Sales--Timeshare Units.......................... $ 3,134,200 $ 2,961,744
Financing Income, Net of Servicing Costs........ 177,065 426,029
Other Income.................................... -0- 191,749
------------- -------------
3,311,265 3,579,522
Cost of Sales
Timeshare Units Sold............................ 585,514 553,696
Closing Costs................................... 160,849 181,013
------------- -------------
746,363 734,709
------------- -------------
Gross Profit.................................. 2,564,902 2,844,813
Other Expenses....................................
Sales and Marketing............................. 1,491,725 1,547,254
General and Administrative...................... 269,669 319,804
------------- -------------
1,761,394 1,867,058
------------- -------------
Income Before Income Taxes.................... 803,508 977,755
Provision for Income Taxes...................... (309,500) (368,125)
------------- -------------
Net Income.................................... 494,008 609,630
Accumulated Deficit...............................
Beginning of Period............................. (5,430,856) (2,836,116)
------------- -------------
End of Period................................... $(4,936,848) $(2,226,486)
============= =============
</TABLE>

See Notes to Financial Statements.

F-39
<PAGE>

POINTS OF COLORADO, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities
Net Income..................................... $ 494,008 $ 609,630
Adjustments to Reconcile Net Income to Cash
Provided By Operating Activities:
Depreciation................................. 8,491 7,733
Income from Success Developments, LLC........ -0- (191,749)
Deferred Federal and State Income Taxes...... 309,500 (431,875)
Discount Income on Note Collections.......... (13,973) (5,853)
Reserve for Doubtful Notes................... 79,966 74,403
Changes in Operating Assets and Liabilities:
Decrease in Inventory--Timeshare Units....... 438,512 237,321
(Increase) in Other Assets................... (25,531) (104,885)
Increase in Accounts Payable and Other
Liabilities................................. 129,491 968,090
------------- -------------
Total Adjustments.......................... 926,456 553,185
------------- -------------
Cash Provided by Operating Activities............ 1,420,464 1,162,815
------------- -------------
Cash Flows from Investing Activities
Origination of Timeshare Notes................. (2,670,068) (2,363,003)
Principal Reductions of Timeshare Notes........ 1,011,521 1,168,688
Loans Related to Success Developments, LLC..... -0- (24,741)
Purchases of Furniture and Equipment........... (10,510) (8,582)
------------- -------------
Cash Used by Investing Activities................ (1,669,057) (1,227,638)
------------- -------------
Cash Flows from Financing Activities
Loan from Marine Midland Bank.................. 575,249 592,474
Payments to Marine Midland Bank................ (254,444) (853,701)
Decrease in Holdback on Timeshare Notes........ 11,093 218,222
------------- -------------
Cash Provided by Financing Activities............ 331,898 (43,005)
------------- -------------
Net Increase (Decrease) in Cash.................. 83,305 (107,828)
Cash and Equivalents
Beginning of Period............................ 431,928 652,426
------------- -------------
End of Period.................................. $ 515,233 $ 544,598
============= =============
Supplemental Cash Flow Disclosures:
Interest Paid.................................. $ 41,169 $ 105,100
============= =============
</TABLE>

See Notes to Financial Statements.

F-40
<PAGE>

POINTS OF COLORADO, INC.

NOTES TO FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)

NOTE A--INVESTMENT--SUCCESS DEVELOPMENTS, LLC

The Company and its partners organized Success Developments, LLC on June 10,
1996, and the Company contributed $625,000 for its fifty percent interest. The
Limited Liability Company is the owner and developer of Villas of Cave Creek,
a timeshare project in Arizona. The Company is the managing member. This
investment is being accounted for using the equity method of accounting. The
investment account has been increased for the Company's share of the
investee's net income as of June 30, 1997.

Condensed unaudited financial information of the Limited Liability Company
as of June 30, 1997 is summarized below:

<TABLE>
<S> <C>
Assets................................. $8,403,096
Liabilities............................ $6,527,384
Results of Operations from date of
inception............................. $ 625,712
</TABLE>

By agreement, the Company provides management services to the Limited
Liability Company.

The Company has loaned the LLC construction funds and has loaned the other
partners acquisition funds. Note principal and interest of 15% per annum from
the Limited Liability Company are due December 1, 1997. Note principal and
interest of 15% per annum from other members are due January 31, 1999. At June
30, 1997, the aggregate of the notes receivable and accrued interest was
$818,090.

The Company is guarantor on a $10,000,000 two year line of credit dated July
29, 1996 in conjunction with the investment.

NOTE B--TRANSACTIONS WITH MARINE MIDLAND BANK

Marine holds back, in a Reserve Account, 10% of the principal balance of the
notes so purchased, to provide additional security in case of default. The
Company has the right to receive the amount by which the Reserve Account
exceeds 15% of the remaining principal balance of the notes owned by Marine on
July 30th of each year. At June 30, 1997, Marine owned 671 notes which were
sold to Marine by the Company, with a principal balance of $2,112,155. The
Reserve Account balance of $330,858 was 15.67% of that amount.

The Agreement also requires Marine to pay the Company monthly an Interest
Differential between the interest earned on the notes and a Minimum Required
Yield established by Marine at the time the note was purchased by Marine. At
June 30, 1997, the aggregate Interest Differential to be paid over four years
on the 671 notes was $151,280. The actual amount of Interest Differential that
will be received by the Company is dependent upon the performance of the
portfolio and the amount of early payoffs of the notes. Due to the inherent
uncertainty of the future value of the Differential, no asset is recorded at
the time of sale; consequently, the monthly Interest Differential is recorded
as income when earned. During the three months ended June 30, 1997 and 1996,
the Company earned $28,000 and $51,000 of Interest Differential, respectively.

F-41
<PAGE>

On December 2, 1996, Marine agreed to provide a $7,500,000 Term Loan
("Loan") to the Company for four years. Under its provisions, Marine will
advance 85% of the principal amount of all notes pledged on the Loan. Interest
on the Loan is computed at 2% over Marine's Prime Rate (10.5% at June 30,
1997). All payments from the collateralized notes go directly to Marine, and
monthly interest charges are added to the Loan balance. The Company and its
shareholders have agreed to pay Marine 85% of the outstanding principal
balance of any pledged note that is more than sixty days delinquent. At June
30, 1997, the Company owed $3,717,109 to Marine and had pledged notes with an
aggregate principal balance of $5,180,991. The Company has the option to lock-
in its interest rate under this loan. At June 30, 1997, $773,697 of the
outstanding loan balance had a fixed interest rate of 8.78%, and $1,286,415
had a fixed interest rate of 9.75%.

NOTE C--COMMITMENTS AND CONTINGENCIES

The Company leases its office space under a five year lease dated May 30,
1997. Future required minimum annual rental payments are as follows:

<TABLE>
<C> <S> <C>
Year Ending June 30, 1998............... $ 98,363
1999............... 105,039
2000............... 108,531
2001............... 112,022
2002............... 105,611
</TABLE>

F-42
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

AUDITED FINANCIAL STATEMENTS

FROM JUNE 10, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996

F-43
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Members
Success Developments, L.L.C.
Denver, Colorado

We have audited the accompanying balance sheet of Success Developments,
L.L.C. as of December 31, 1996, and the related statements of operations and
members' equity and cash flows for the period from June 10, 1996 (Date of
Inception) to December 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 audit.

We conducted our audit 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Success Developments,
L.L.C. as of December 31, 1996, and the results of its operations and its cash
flows for the period then ended, in conformity with generally accepted
accounting principles.

KREISMAN CORPORATION

Denver, Colorado
March 5, 1997

F-44
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

BALANCE SHEET
DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

ASSETS

<TABLE>
<S> <C>
Cash and Cash Equivalents $ 77,540
Due From Members--Note H 4,375
Timeshare Notes Receivable, Less Allowance for Doubtful Notes of
$18,452--Note D 856,086
Inventory--Timeshare Units--Note D 4,089,124
Prepaid Expenses and Other Assets 172,927
Leasehold Improvements, Less Accumulated Amortization of $32,603 117,260
Furniture and Equipment, Less Accumulated Depreciation of $6,214 30,329
----------
Total Assets $5,347,641
==========

LIABILITIES AND MEMBERS' EQUITY

Liabilities
Accounts Payable $ 109,771
Customer Deposits 16,637
Note Payable to Heller Financial--Note D 3,922,999
Other Liabilities 11,259
Due to Managing Member--Note H 187,825
----------
Total Liabilities 4,248,491
Members' Equity--Note C 1,099,150
----------
Total Liabilities and Members' Equity $5,347,641
==========
</TABLE>

See Notes to Financial Statements.

F-45
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF OPERATIONS AND MEMBERS' EQUITY

FROM JUNE 10, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

<TABLE>
<S> <C>
Revenues
Sales--Timeshare Units $1,104,620
Other Revenue 9,297
----------
1,113,917
Cost of Sales
Timeshare Units Sold 283,050
Closing Costs 30,432
----------
313,482
----------
Gross Profit 800,435
Other Expenses
Sales and Marketing 570,928
Financing Costs 199,479
Association Subsidies--Note F 24,084
Development Costs--Abandoned Project 10,000
General and Administrative 146,794
----------
951,285
----------
Net Loss (150,850)
Members' Equity at June 10, 1996 -0-
Members' Contributions 1,250,000
----------
Ending Members' Equity $1,099,150
==========
</TABLE>

See Notes to Financial Statements.

F-46
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF CASH FLOWS

FROM JUNE 10, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

<TABLE>
<S> <C>
Cash Flows from Operating Activities
Net Loss $ (150,850)
Adjustments to Reconcile Net Loss to Cash Used By Operating
Activities:
Depreciation and Amortization 71,282
Reserve for Bad Debts 18,452
Completed Timeshare Units Sold 283,050
(Increase) Decrease In:
Due From Members (4,375)
Prepaid Expenses and Other Assets (49,556)
Increase (Decrease) In:
Customer Deposits 16,637
Other Liabilities 11,259
-----------
Total Adjustments 346,749
-----------
Cash Generated by Operating Activities 195,899
-----------
Cash Flows from Investing Activities
Additions To Property, Equipment and Leasehold Improvements (186,406)
Timeshare Notes Receivable (874,538)
Inventory--Timeshare Units (4,372,174)
Accounts Payable as Related to Inventory 109,771
-----------
Cash Used by Investing Activities (5,323,347)
-----------
Cash Flows from Financing Activities
Loan from Heller Financial 4,237,575
Payments to Heller Financial (314,576)
Loan Acquisition Costs (155,836)
Member Loans 187,825
Contributions of Capital 1,250,000
-----------
Cash Provided by Financing Activities 5,204,988
-----------
Net Increase in Cash 77,540
Cash and Equivalents
Beginning of Period -0-
-----------
End of Period $ 77,540
===========
Supplemental Cash Flow Disclosures:
Interest Paid $ 151,591
===========
</TABLE>

See Notes to Financial Statements.

F-47
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

(SEE INDEPENDENT AUDITORS' REPORT)

NOTE A--THE COMPANY

Success Developments, L.L.C. (the "Company"), is the owner and developer of
Villas of Cave Creek, a timeshare project that contains 25 condominium units.
The Company is in the process of selling the remaining unsold timeshare
interests. The Company is an Arizona Limited Liability Company, organized on
June 10, 1996.

The Company is owned 50% by the managing member Points of Colorado, Inc. and
50% by three individuals who own and operate the company responsible for the
sales and marketing of the timeshare units.

The Company has a finite life, and unless terminated earlier, will cease to
exist fifty years after the date of filing with the state. According to the
laws of the state of Arizona, no member of the limited liability company is
personally liable for any debts or losses of the Company beyond the capital
contribution made by that member.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

Cash and Cash Equivalents

Cash and cash equivalents include cash in the bank.

Inventory--Timeshare Units

Timeshare inventory is valued at the lower of cost to acquire, develop, and
renovate the project or market. Cost of timeshare units sold is based upon the
combined costs of Villas of Cave Creek inventory allocated to each week.

Allowance for Doubtful Notes

The Company provides an allowance for doubtful notes for those notes held by
the Company, based on a review of the current status of existing receivables
and historical collection experience within the industry.

Property and Equipment

<TABLE>
<S> <C>
Furniture and Equipment......................... 5-7 years
Leasehold Improvements.......................... 23 months (term of lease)
</TABLE>

F-48
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

of the cost and the accumulated depreciation account is charged with
depreciation taken prior to the sale, and any resultant gain or loss is
credited or charged to earnings.

Revenue and Cost Recognition

Revenue from timeshares is recognized upon closing of the sale. Acquisition
and other direct costs and indirect costs related to acquisition and
development of timeshare units are capitalized. Capitalized costs are
allocated to individual timeshare units. The capitalized costs of units are
charged to earnings when the related revenue is recognized. Selling and
administrative costs are charged to earnings when incurred.

Concentration of Credit Risk

NOTE C--MEMBERS' EQUITY

The two classes of members are manager and nonmanager. There is no
difference in interests, rights, preferences, and privileges. Equity by class
at December 31, 1996 was as follows:

<TABLE>
<S> <C>
Managing member................................................ $ 549,575
Nonmanaging members............................................ 549,575
----------
Total Members' Equity........................................ $1,099,150
==========
</TABLE>

NOTE D--TRANSACTIONS WITH HELLER FINANCIAL

On July 29, 1996, Heller Financial agreed to provide a $10,000,000 loan to
the Company for two years (due on July 28, 1998) of which $3,500,000 was
allocated to the acquisition of Villas of Cave Creek. Interest on the
acquisition portion of the note is variable, and at December 31, 1996 was
10.28%. The Agreement requires the Company to maintain a net worth of
$1,000,000 until 90% of the Interval Units are sold, and to pledge as
collateral all Interval Units at Villas at Cave Creek which have not been
sold. Under the provisions, the principal is paid when Interval Units are
sold, in the amount of $3,365 for Whole Interval Units and $1,685 for Biennial
Interval Units. All members have personally guaranteed the note.

The majority of timeshare week sales are financed by notes secured by the
weeks purchased. All of the timeshare notes are pledged on the Heller loan.
Heller advances 87.5% of the principal amount of all timeshare notes. Interest
on the pledged notes is variable, and at December 31, 1996 was 9.78%. All
payments from the collateralized notes go directly to Heller, and monthly
interest charges are added to the loan balance.

NOTE E--LEASES

The Company leases its sales facility under a lease expiring June 30, 1997,
which requires an annual rental fee of $36,000. On or before April 30, 1997,
the Company has the option to extend the lease term to June 30, 1998.

Future minimum rental payments required under the operating lease as of
December 31, 1996 are $18,000 for the year ending December 31, 1997. Total
rental expense for the Company, after reimbursements (see Note H) was $9,200.

F-49
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE F--ASSOCIATION SUBSIDY

As developer, the Company is required to subsidize the Association for the
cost of operating and maintaining the resort to the extent assessments
received from the timeshare owners fall short of the Association's financial
requirements. During the year ended December 31, 1996, the Company provided
subsidies of $24,084 to the Association.

NOTE G--INCOME TAXES

The Company is classified as a partnership for federal and state income tax
purposes. The Company's net income or loss is allocated among the members in
accordance with the operating agreement. Consequently, a provision for federal
and state income taxes has not been included in the Company's financial
statements.

NOTE H--RELATED PARTY TRANSACTIONS

The Company paid $498,839 for sales commissions to an Arizona company owned
and operated by three members. The Arizona company will reimburse the Company
for the lease expense for the sales facility during the period of sales
operations. At December 31, 1996, the Arizona organization owed the Company
$4,375 for sales expenses.

The Company paid or accrued $60,000 for management services provided by
Points of Colorado, Inc.

NOTE I--DEVELOPMENT STAGE

Although the Company is now in full operation, it was in the development
stage during a portion of the year ended December 31, 1996.

F-50
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

BALANCE SHEET

JUNE 30, 1997

<TABLE>
<CAPTION>
ASSETS
------ (UNAUDITED)
<S> <C>
Cash and Cash Equivalents......................................... $ 79,556
Due From Members.................................................. 7,875
Timeshare Notes Receivable, Less Allowance for Doubtful Notes of
$109,088......................................................... 4,536,029
Inventory--Timeshare Units........................................ 3,292,799
Prepaid Expenses and Other Assets................................. 340,075
Leasehold Improvements, Less Accumulated Amortization of $76,157.. 108,404
Furniture and Equipment, Less Accumulated Depreciation of
$11,667.......................................................... 38,358
----------
Total Assets.................................................. $8,403,096
==========
<CAPTION>
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
<S> <C>
Liabilities
Accounts Payable................................................ $ 150,569
Customer Deposits............................................... 55,503
Note Payable to Heller Financial................................ 5,915,163
Other Liabilities............................................... 14,622
Due to Managing Member.......................................... 391,527
----------
Total Liabilities............................................. 6,527,384
Members' Equity................................................... 1,875,712
----------
Total Liabilities and Members' Equity......................... $8,403,096
==========
</TABLE>

See Notes to Financial Statements.

F-51
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF OPERATIONS AND MEMBERS' EQUITY

FOR SIX MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Revenues
Sales--Timeshare Units............................................ $5,486,812
Cost of Sales.......................................................
Timeshare Units Sold.............................................. 1,453,614
Closing Costs..................................................... 146,657
----------
1,600,271
----------
Gross Profit.................................................... 3,886,541
Other Expenses
Sales and Marketing............................................... 2,549,911
Financing Costs--Net of Interest Income--$181,314................. 238,366
Association Subsidies--Note F..................................... 82,872
Development Costs--Abandoned Project.............................. 13,050
General and Administrative........................................ 225,780
----------
3,109,979
----------
Net Income...................................................... 776,562
Beginning Members' Equity........................................... 1,099,150
----------
Ending Members' Equity.......................................... $1,875,712
==========
</TABLE>

See Notes to Financial Statements.

F-52
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

STATEMENT OF CASH FLOWS

FOR SIX MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Cash Flows from Operating Activities
Net Income...................................................... $ 776,562
Adjustments to Reconcile Net Loss to Cash Used By Operating
Activities:
Depreciation and Amortization................................. 87,707
Reserve for Bad Debts......................................... 90,636
(Increase) Decrease In:
Inventory--Timeshare Units.................................. 796,325
Due From Members............................................ (3,500)
Prepaid Expenses and Other Assets........................... 9,098
Increase (Decrease) In:
Accounts Payable............................................ 40,798
Customer Deposits........................................... 38,866
Other Liabilities........................................... 3,363
-----------
Total Adjustments......................................... 1,063,293
-----------
Cash Generated by Operating Activities............................ 1,839,855
-----------
Cash Flows from Investing Activities
Additions To Property, Equipment and Leasehold Improvements..... (48,180)
Origination of Timeshare Notes.................................. (4,531,792)
Real Estate Deposits............................................ (214,946)
Principal Reductions of Timeshare Notes......................... 761,213
-----------
Cash Used by Investing Activities................................. (4,033,705)
-----------
Cash Flows from Financing Activities
Loan from Heller Financial...................................... 3,853,601
Payments to Heller Financial.................................... (1,861,437)
Member Loans.................................................... 203,702
-----------
Cash Provided by Financing Activities............................. 2,195,866
-----------
Net Increase in Cash.............................................. 2,016
Cash and Equivalents
Beginning of Period............................................. 77,540
-----------
End of Period................................................... $ 79,556
===========
Supplemental Cash Flow Disclosures:
Interest Paid................................................... $ 281,249
===========
</TABLE>

See Notes to Financial Statements.

F-53
<PAGE>

SUCCESS DEVELOPMENTS, L.L.C.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 1997
(UNAUDITED)

NOTE A--MEMBERS' EQUITY

The two classes of members are manager and nonmanager. There is no
difference in interests, rights, preferences, and privileges. Equity by class
at June 30, 1997 was as follows:

<TABLE>
<S> <C>
Managing member............................................... $ 937,856
Nonmanaging members........................................... 937,856
-----------
Total Members' Equity....................................... $ 1,875,712
===========
</TABLE>

NOTE B--TRANSACTIONS WITH HELLER FINANCIAL

On July 29, 1996, Heller Financial agreed to provide a $10,000,000 loan to
the Company for two years (due on July 28, 1998) of which $3,500,000 was
allocated to the acquisition of Villas of Cave Creek. Interest on the
acquisition portion of the note is variable, and at June 30, 1997 was 10.56%.
The Agreement requires the Company to maintain a net worth of $1,000,000 until
90% of the Interval Units are sold, and to pledge as collateral all Interval
Units at Villas at Cave Creek which have not been sold. Under the provisions,
the principal is paid when Interval Units are sold, in the amount of $3,365
for Whole Interval Units and $1,685 for Biennial Interval Units. All members
have personally guaranteed the note.

The majority of timeshare week sales are financed by notes secured by the
weeks purchased. All of the timeshare notes are pledged on the Heller loan.
Heller advances 87.5% of the principal amount of all timeshare notes. Interest
on the pledged notes is variable, and at June 30, 1997 was 10.06%. All
payments from the collateralized notes go directly to Heller, and monthly
interest charges are added to the loan balance.

NOTE C--LEASES

The Company leases its sales facility under a lease expiring June 30, 1998,
which requires an annual rental fee of $36,000. Lease payments are made by an
Arizona company owned and operated by three members (see Note D).

Total rental expense for the Company was $13,459.

NOTE D--RELATED PARTY TRANSACTIONS

The Company paid $2,470,901 for sales commissions to an Arizona company
owned and operated by three members. The Arizona company also pays for the
lease for the sales facility. At June 30, 1997, the Arizona organization owed
the Company $7,875 for sales expenses.

The Company paid or accrued $90,000 for management services provided by
Points of Colorado, Inc.

F-54
<PAGE>

COMBINED FINANCIAL STATEMENTS

THE SUCCESS COMPANIES

Years ended March 31, 1996 and 1997
with Report of Independent Certified Public Accountants
and three months ended June 30, 1997

F-55
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
The Success Companies

We have audited the accompanying combined balance sheets of The Success
Companies (the Companies) as of March 31, 1996 and 1997, and the related
combined statements of operations, changes in equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The Success
Companies at March 31, 1996 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

Ernst & Young LLP

Miami, Florida
August 27, 1997

F-56
<PAGE>

THE SUCCESS COMPANIES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
--------------------- JUNE 30,
ASSETS 1996 1997 1997
------ --------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash..................................... $ 84,098 $ 198,311 $ 195,226
Accounts receivable...................... 214,564 804,537 642,373
Due from affiliates...................... 9,501 60,150 55,633
Inventory of vacation ownership
intervals............................... -- 33,267 32,383
Prepaid expenses and other assets........ 29,713 89,760 104,910
--------- ---------- ----------
Total current assets................... 337,876 1,186,025 1,030,525
Property and equipment, net of accumulated
depreciation of $55,195, $93,416 and
$118,000 at March 31, 1996 and 1997 and
June 30, 1997, respectively............... 130,272 229,087 237,225
Deferred income taxes...................... 16,048 48,158 48,158
Other assets............................... 14,087 32,041 29,849
--------- ---------- ----------
Total assets........................... $ 498,283 $1,495,311 $1,345,757
========= ========== ==========
<CAPTION>
LIABILITIES AND EQUITY
----------------------
<S> <C> <C> <C>
Current liabilities:
Current portion of long-term debt........ $ 58,049 $ 66,511 $ 63,224
Notes payable to affiliates.............. 160,000 280,000 230,000
Accounts payable......................... 66,146 57,795 55,040
Accrued expenses......................... 202,794 650,185 587,533
Due to affiliates........................ 326,947 327,271 298,642
--------- ---------- ----------
Total current liabilities.............. 813,936 1,381,762 1,234,439
Long-term debt, net of current portion..... 10,589 26,669 24,827
Commitments and contingencies
Equity:
Common stock, no par value, 52,500 shares
authorized; 9,500 shares issued and
outstanding............................. 24,000 24,000 24,000
Due from officers for stock purchase..... (24,000) (24,000) (24,000)
Partners' capital/(deficit) retained
earnings................................ (326,242) 86,880 86,491
--------- ---------- ----------
Total equity........................... (326,242) 86,880 86,491
--------- ---------- ----------
Total liabilities and equity........... $ 498,283 $1,495,311 $1,345,757
========= ========== ==========
</TABLE>

See accompanying notes.

F-57
<PAGE>

THE SUCCESS COMPANIES

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
----------------------- ---------------------
1996 1997 1996 1997
----------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Commissions................. $ 4,288,886 $7,973,693 $1,477,104 $2,556,806
Interest income............. 10,550 5,161 871 1,650
Other....................... 225,489 461,726 92,880 57,195
----------- ---------- ---------- ----------
4,524,925 8,440,580 1,570,855 2,615,651
Expenses:
Selling expenses............ 1,675,328 2,785,844 490,990 808,837
Marketing expenses.......... 2,058,854 3,143,515 526,172 1,109,391
Resort administration....... 801,128 823,611 90,475 178,700
General and administrative
expenses................... 845,036 496,892 97,602 195,421
Fees to affiliates.......... 180,000 726,500 35,000 302,500
Depreciation................ 44,480 50,275 13,020 10,519
Interest expense............ 12,230 34,031 6,595 10,672
----------- ---------- ---------- ----------
5,617,056 8,060,668 1,259,854 2,616,040
----------- ---------- ---------- ----------
(Loss) income before benefit
for income taxes............. (1,092,131) 379,912 311,001 (389)
Benefit for income taxes...... (16,048) (32,110) -- --
----------- ---------- ---------- ----------
Net (loss) income............. $(1,076,083) $ 412,022 $ 311,001 $ (389)
=========== ========== ========== ==========
</TABLE>

See accompanying notes.

F-58
<PAGE>

THE SUCCESS COMPANIES

COMBINED STATEMENTS OF CHANGES IN EQUITY

<TABLE>
<CAPTION>
PARTNERS'
DUE FROM CAPITAL/
COMMON STOCK OFFICERS (DEFICIT)
-------------- FOR STOCK RETAINED
SHARES AMOUNT PURCHASE EARNINGS TOTAL
------ ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at April 1, 1995.... 1,500 $16,000 $(16,000) $ 63,000 $ 63,000
Common stock
issued/capital
contributions............ 8,000 8,000 (8,000) -- --
Net loss.................. -- -- -- (1,076,083) (1,076,083)
Add net loss related to
uncombined balance sheet
entities................. -- -- -- 686,841 686,841
----- ------- -------- ----------- -----------
Balance at March 31, 1996... 9,500 24,000 (24,000) (326,242) (326,242)
Net income................ -- -- -- 412,022 412,022
Capital contributions..... -- -- -- 1,100 1,100
----- ------- -------- ----------- -----------
Balance at March 31, 1997... 9,500 24,000 (24,000) 86,880 86,880
Net loss (Unaudited)...... -- -- -- (389) (389)
----- ------- -------- ----------- -----------
Balance at June 30, 1997
(Unaudited)................ 9,500 $24,000 $(24,000) $ 86,491 $ 86,491
===== ======= ======== =========== ===========
</TABLE>

See accompanying notes.

F-59
<PAGE>

THE SUCCESS COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
---------------------- -------------------
1996 1997 1996 1997
----------- --------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating activities:
Net (loss) income................ $(1,076,083) $ 412,022 $ 311,001 $ (389)
Adjustments to reconcile net
(loss) income to net cash (used
in) provided by operating
activities:
Depreciation................... 44,480 50,275 13,020 10,519
Net loss related to uncombined
balance sheet entities........ 686,841 -- -- --
Deferred income taxes.......... (16,048) (32,110) -- --
Changes in operating assets and
liabilities:
Accounts receivable.......... (214,564) (589,973) (205,437) 162,164
Due from affiliates.......... (8,187) (50,649) (2,007) 4,517
Inventory of vacation
ownership intervals......... -- (33,267) -- 884
Prepaid expenses and other
assets...................... (17,684) (60,047) (7,278) (15,150)
Other assets................. (7,855) (17,954) (174) 2,192
Accounts payable............. 66,146 (8,351) (32,832) (2,755)
Accrued expenses............. 197,210 447,391 154,313 (62,652)
Due to affiliates............ 326,947 324 54,236 (28,629)
----------- --------- --------- --------
Net cash (used in) provided
by operating activities... (18,797) 117,661 284,842 70,701
Investing activities:
Expenditures for property and
equipment....................... (91,720) (149,090) (1,310) (18,657)
----------- --------- --------- --------
Net cash used in investing
activities...................... (91,720) (149,090) (1,310) (18,657)
Financing activities:
Capital contributions............ -- 1,100 -- --
Proceeds from (repayment of)
notes payable to affiliates..... 100,000 120,000 -- (50,000)
Proceeds from debt............... 74,036 32,591 -- --
Payments on debts................ (5,398) (8,049) (3,224) (5,129)
----------- --------- --------- --------
Net cash provided by (used in)
financing activities............ 168,638 145,642 (3,224) (55,129)
----------- --------- --------- --------
Net increase (decrease) in cash.. 58,121 114,213 280,308 (3,085)
Cash at beginning of period...... 25,977 84,098 84,098 198,311
----------- --------- --------- --------
Cash at end of period............ $ 84,098 $ 198,311 $ 364,406 $195,226
=========== ========= ========= ========
Supplemental disclosure of cash
flow information:
Cash paid during the period for
interest........................ $ 5,476 $ 16,730 $ 2,288 $ 5,370
=========== ========= ========= ========
Cash paid during the period for
taxes........................... $ 33,811 $ -- $ 7,947 $ --
=========== ========= ========= ========
</TABLE>

See accompanying notes.

F-60
<PAGE>

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

MARCH 31, 1996 AND 1997
JUNE 30, 1997 (UNAUDITED)

1. DESCRIPTION OF BUSINESS AND PRINCIPLES OF COMBINATION

The Success Companies (the Companies) are principally engaged in providing
marketing and sales services of vacation ownership in Colorado and Arizona
under contracts with developers. The Companies have contracts with Success
Developments, LLC, an entity in which the principals of the Companies own a
50% interest, and Points of Colorado, Inc. which owns a 50% interest in
Success Developments, LLC. Additionally, the Companies operate a nationwide
telemarketing center in Phoenix, Arizona. The Companies also provide
management services, market research, lead sales and vacation certificate
sales.

The accompanying combined financial statements include the accounts of The
Success Companies, Inc., Success West Communications, Inc., Data Marketing
Associates, Inc., Success of Colorado, LLC (latest date the LLC can dissolve
is July 25, 2025), Success of Arizona, LLC (latest date the LLC can dissolve
is December 31, 2050), Fiesta Vacations, LLC (latest date the LLC can dissolve
is December 31, 2050), and the operations for the year ended March 31, 1996 of
Success Marketing, Inc. (SMI) and Success Ventures, Inc. (SVI). Fiesta
Vacations began operations on March 1, 1997 but was legally formed on July 16,
1997. Success of Arizona commenced operations in fiscal 1997. All significant
intercompany accounts and transactions have been eliminated in combination.

Subsequent to March 31, 1997, the shareholders/partners have agreed to sell
The Success Companies to Vistana, Inc. (Vistana). Pursuant to the Purchase and
Sales Agreement, Vistana will acquire the stock of The Success Companies,
Inc., Success West Communications, Inc., Data Marketing Associates, Inc.,
Success of Colorado, LLC, Success of Arizona, LLC, and Fiesta Vacations, LLC.
SMI and SVI are currently inactive and are not part of the Purchase and Sales
Agreement. However, for the year ended March 31, 1996, the operations of SMI
and SVI were significant in relation to the combined operations. Accordingly,
the results of operations for SMI and SVI for the year ended March 31, 1996
have been included in the accompanying combined financial statements; however,
the related combined balance sheets of these entities at March 31, 1996 and
1997 and June 30, 1997 have not been included in the accompanying balance
sheets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property and Equipment

Property and equipment are recorded at cost and includes furniture, fixtures
and equipment, tenant improvements, vehicles and marketing booths.
Depreciation is recorded using the straight-line method applied to the cost of
the assets over their estimated useful lives of five to seven years.

Revenue Recognition

Commission income is recognized on the accrual basis after a binding sales
contract has been executed, a 10 percent minimum down payment has been
received, the recision period has expired and all credit underwriting
standards have been met. Commission income is based on sales of $10,120,345,
$16,876,395, $3,005,729 and $5,410,747 for the years ended March 31, 1996 and
1997 and the three months ended June 30, 1996 and 1997, respectively.

Income Taxes

Income taxes have been provided using the liability method in accordance
with Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. Under

F-61
<PAGE>

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Statement No. 109, the liability method is used in accounting for income taxes
where deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences reverse.

Advertising Costs

The Companies expense advertising costs as incurred. Advertising expense,
included in marketing expense in the accompanying statements of operations,
were $647,975, $1,145,415, $184,292 and $323,232 for the years ended March 31,
1996 and 1997 and the three months ended June 30, 1996, and 1997,
respectively.

Use of Estimates

The preparation of 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. Accordingly, actual results could differ from those
reported.

3. INVENTORY OF VACATION OWNERSHIP INTERVALS

On March 25, 1997, the Companies entered into a marketing agreement with a
developer whereby the developer reserved 50 vacation ownership intervals of
their resort inventory for the Companies for $25,000 plus closing fees. The
Companies have the right to sell the reserved inventory for six months and are
entitled to the proceeds net of any closing and marketing costs associated
with the sales.

Subsequent to March 31, 1997, the Companies acquired the intervals from the
developer.

4. DUE FROM/TO AFFILIATES

Due from affiliates represents advances to officers or shareholders of the
Companies and receivables from affiliated entities. Due to affiliates
represents net advances from affiliated entities. Such advances are
noninterest bearing.

5. DEBT

<TABLE>
<CAPTION>
MARCH 31
---------------
1996 1997
------- -------
<S> <C> <C>
$50,000 line of credit, interest payable monthly at
prime plus 2% (10.25% and 11.25% at March 31, 1996 and
1997, respectively), due on March 31, 1998 guaranteed
by the shareholders and officers of the Companies...... $50,000 $50,000
Tenant improvement loan, interest at 10% per annum,
payable in monthly principal and interest installments
of $666 through November 2001, at which time the
principal balance and accrued interest is due.......... -- 32,591
Other notes payable..................................... 18,638 10,589
------- -------
68,638 93,180
Less current portion.................................... 58,049 66,511
------- -------
$10,589 $26,669
======= =======
</TABLE>

F-62
<PAGE>

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Scheduled principal maturities of line of credit, loans and notes payable
are as follows:

<TABLE>
<S> <C>
Year ending March 31
1998.............................................................. $66,511
1999.............................................................. 8,242
2000.............................................................. 6,471
2001.............................................................. 7,148
2002.............................................................. 4,808
-------
$93,180
=======
</TABLE>

6. RELATED PARTY TRANSACTIONS

Notes payable to affiliates consist of the following:

<TABLE>
<CAPTION>
MARCH 31,
----------------- JUNE 30,
1996 1997 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to shareholders, interest
only, at 12% per annum, payable monthly
through September 30, 1997, at which
time the principal balance is due....... $100,000 $200,000 $150,000
Note payable to Strategic Alliance
Marketing, Inc., a related party,
interest only, at 12% per annum, payable
monthly through September 30, 1997, at
which time the principal balance is
due..................................... -- 20,000 20,000
Note payable to Success Marketing, Inc.,
interest at 7% per annum................ 60,000 60,000 60,000
-------- -------- --------
$160,000 $280,000 $230,000
======== ======== ========
</TABLE>

The note payable to Success Marketing, Inc. is contractually payable in
monthly installments of principal and interest of $1,168 through August 1999.
No payments of principal and interest have been made on the note to date. The
parties intend to settle the note when the Purchase and Sales Agreement
becomes effective. See Note 1.

The Companies paid consulting fees of $180,000, $666,500, $35,000 and
$262,500 for the years ended March 31, 1996 and 1997 and for the three months
ended June 30, 1996 and 1997, respectively, to affiliates and is included in
fees to affiliates expense in the accompanying statements of operations.

Management fees of $60,000 and $40,000 were paid to an affiliate for the
year ended March 31, 1997 and for the three months ended June 30, 1997,
respectively, and is included in fees to affiliates expense in the
accompanying statements of operations.

The Companies received management fees of $30,000 during the year ended
March 31, 1997 from an affiliate and is included in other income in the
accompanying statements of operations.

Substantially all commission income represents amounts earned from entities
in which one or more of the principals of the Companies have common ownership
interests.

F-63
<PAGE>

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

7. LEASES

The Company leases office space and equipment under operating leases
expiring in various years through 2002. Minimum future rentals to be paid
under noncancelable leases with original lease terms greater than one year as
of March 31, 1997 for each of the next five years and in the aggregate are as
follows:

<TABLE>
<S> <C>
Year ending March 31
1998........................................................... $ 240,431
1999........................................................... 215,691
2000........................................................... 211,818
2001........................................................... 214,700
2002........................................................... 141,200
----------
$1,023,840
==========
</TABLE>

Rental expense under these leases was $870, $81,933, $570 and $59,392 for
the years ended March 31, 1996 and 1997 and for the three months ended June
30, 1996 and 1997, respectively.

8. INCOME TAXES

At March 31, 1996 and 1997, the Companies have net operating loss
carryforwards of approximately $58,046 and $152,486, respectively, that expire
in 2011. The use of a significant portion of these net operating loss
carryforwards may be restricted under Section 382 of the Internal Revenue
Code.

The components of the benefit for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH THREE MONTHS
31 ENDED JUNE 30,
------------------ ---------------
1996 1997 1996 1997
-------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Deferred federal...................... $(16,048) $(32,110) $ -- $ --
======== ======== ======= =======
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The net deferred tax
asset at March 31, 1996 and 1997 and is comprised of net operating losses.

The differences between the actual income tax benefit and income taxes
computed by applying the statutory federal income tax rate to loss before
income taxes as follows:

<TABLE>
<CAPTION>
MARCH 31
-------------------
1996 1997
--------- --------
<S> <C> <C>
Amount at statutory federal rate.................... $ (17,105) $(40,870)
Meal and entertainment.............................. 1,057 1,095
NOL utilization..................................... -- 7,665
--------- --------
$(16,048) $(32,110)
========= ========
</TABLE>

No taxes have been provided on income from the limited liability companies
owned by the partners. However, such income is included in the combined
statements of operations for the years ended March 31, 1996 and 1997 and for
the three months ended June 30, 1996 and 1997.

F-64
<PAGE>

THE SUCCESS COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

9. COMMITMENTS AND CONTINGENCIES

Commissions earned and received on vacation ownership sales are subject to
commission refunds in the event of default by the purchaser and are calculated
based on a formula as defined in the Marketing and Sales Agreements.
Accordingly, included in accrued liabilities at March 31, 1996 and 1997 and
June 30, 1997 is a reserve for commission refunds of $8,586, $42,239 and
$42,602, respectively.

On July 17, 1995, the Companies entered into an agreement with a contractor
for consulting services relating to generation and/or sale of qualified leads.
Under the agreement, in addition to a base compensation, the contractor was
entitled to 25 percent of the actual collected net proceeds on the sale of
lists or leads. Bonus payments were $32,425, $25,779 and $13,434 for the years
ended March 31, 1996 and 1997, and for the three months ended June 30, 1996,
respectively, and are included in marketing expense in the accompanying
statements of operations. The agreement was terminated on December 31, 1996.

The Success Companies, Inc. is a guarantor of a credit facility with Heller
Financial, Inc. on behalf of Success Development, LLC. Such credit facility
effected on May 20, 1996 consists of a $3.1 million revolving credit
acquisition loan piece and a $10 million receivable loan; however, the
aggregate of the two pieces may not exceed $10 million at any one point in
time. The acquisition loan is secured by a first priority mortgage lien and
security interest in the Villas at Cave Creek Resort. The receivable loan is
secured by a first priority lien and security interest to all notes receivable
assigned to Heller Financial, Inc. and any related accounts and proceeds. The
amount outstanding on the loans at March 31, 1997 and June 30, 1997 is
$4,933,243 and $5,883,847, respectively.

A claim for breach of contract has been asserted by a landlord of the
Companies claiming reimbursement in the amount of $55,361 for costs of tenant
improvements, which costs are payable ratably over the life of the lease
pursuant to the lease agreement. The Companies dispute the claims in part on
the basis that they were not given the opportunity to review and approve the
expenditures. The parties have agreed to submit the matter to arbitration.
Based on the information currently available to them, the Companies believe
that they have strong defenses to the complaint and intend to pursue those
defenses vigorously.

10. CLAIMS FOR COMMISSIONS EARNED

SMI and SVI have asserted claims against All Season Resorts, Inc. (ASR) for
commissions earned of approximately $1,080,000 during the year ended March 31,
1996 pursuant to specific sales and marketing agreements for services provided
to ASR.

No amounts related to this matter have been recorded in the accompanying
statement of operations for the year ended March 31, 1996.

Additional claims have been asserted by SMI and SVI against ASR for breach
of contract, promissory fraud and fraud. ASR has asserted a counterclaim for
damages. There has been no formal discovery in the case and there is no
pending trial date.

The court has granted SMI's Motion to Compel Arbitration and a preliminary
hearing has been scheduled for September 30, 1997. SMI seeks to recover
damages from ASR for ASR's failure and refusal to pay commissions for
marketing services rendered prior to termination of the existing sales and
marketing agreement and, also, for the sixty day termination period for which
SMI was denied the opportunity to market vacation intervals on behalf of ASR.

Based on management's interpretation of the specific sales and marketing
agreements and ASR's ability to pay, management believes it will prevail in
its claims.

F-65
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE REGISTERED
SECURITIES TO WHICH THIS PROSPECTUS RELATES OR ANY OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

-----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 14
Use of Proceeds.......................................................... 25
Dividend Policy.......................................................... 25
Price Range of Common Stock.............................................. 25
Capitalization........................................................... 26
Selected Combined Historical Financial Information....................... 27
Pro Forma Combined Financial Information................................. 29
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 34
Business................................................................. 43
Management............................................................... 66
Certain Relationships and Related Transactions........................... 75
Principal Shareholders................................................... 77
Description of Capital Stock............................................. 79
Shares Eligible for Future Sale.......................................... 81
Underwriting............................................................. 83
Legal Matters............................................................ 85
Experts.................................................................. 85
Additional Information................................................... 85
Index to Financial Statements............................................ F-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

4,000,000 SHARES

LOGO

COMMON STOCK

--------------

PROSPECTUS

--------------

MERRILL LYNCH & CO.

NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS
SMITH BARNEY INC.

NOVEMBER , 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION

DATED OCTOBER 23, 1997

PROSPECTUS

4,000,000 SHARES

LOGO

COMMON STOCK

-----------

All of the 4,000,000 shares of common stock, par value $.01 per share
("Common Stock"), of Vistana, Inc. (the "Company"), offered hereby are being
sold by the Company. Of the 4,000,000 shares of Common Stock offered hereby,
3,200,000 shares are being offered in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering") and the remaining 800,000 shares are being
offered in a concurrent offering outside the United States and Canada by the
International Managers (the "International Offering" and, together with the
U.S. Offering, the "Offering"). The price to the public and the underwriting
discount per share are identical for the International Offering and the U.S.
Offering. The Common Stock is listed for quotation on the Nasdaq National
Market under the symbol "VSTN." On October 21, 1997, the last reported sale
price of the Common Stock was $23 1/4 per share. See "Price Range of Common
Stock."

SEE "RISK FACTORS" COMMENCING ON PAGE 14 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $ $ $
- ---------------------------------------------------------------------
Total(3)......................... $ $ $
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $600,000.

(3) The Company has granted the several U.S. Underwriters and International
Managers (the "Underwriters") options to purchase up to 480,000 and 120,000
additional shares, respectively, of Common Stock to cover over-allotments,
if any. See "Underwriting." If such options are exercised in full, the
total Price to Public, Underwriting Discount and Proceeds to Company will
be $ , $ and $ , respectively. "See
Underwriting."

-----------

MERRILL LYNCH INTERNATIONAL
NATIONSBANC MONTGOMERY SECURITIES, INC.
SMITH BARNEY INC.
LEHMAN BROTHERS INTERNATIONAL (EUROPE)

-----------

The date of this Prospectus is November , 1997.
<PAGE>

UNDERWRITING

Subject to the terms and conditions contained in an international purchase
agreement (the "International Purchase Agreement"), the Company has agreed to
sell to the International Managers named below (the "International Managers"),
and the International Managers, for whom Merrill Lynch International,
NationsBanc Montgomery Securities, Inc., Lehman Brothers International
(Europe) and Smith Barney Inc. are acting as lead managers (the "Lead
Managers"), have severally agreed to purchase, the number of shares of Common
Stock set forth opposite their respective names below.

<TABLE>
<CAPTION>
NUMBER OF
SHARES TO BE
UNDERWRITER PURCHASED
----------- ------------
<S> <C>
Merrill Lynch International..................................
NationsBanc Montgomery Securities, Inc.......................
Lehman Brothers International (Europe).......................
Smith Barney Inc.............................................
-------
Total.................................................. 800,000
=======
</TABLE>

The Company has also entered into a purchase agreement (the "U.S. Purchase
Agreement" and, together with the International Purchase Agreement, the
"Agreements") with certain underwriters in the United States and Canada (the
"U.S. Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, NationsBanc Montgomery Securities, Inc., Lehman Brothers Inc.
and Smith Barney Inc. are acting as representatives (the "U.S.
Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, the Company has agreed to sell to the U.S. Underwriters,
and the U.S. Underwriters have severally agreed to purchase, an aggregate of
3,200,000 shares of Common Stock. The public offering price per share and the
underwriting discount per share are identical under the International Purchase
Agreement and the U.S. Purchase Agreement.

In the International Purchase Agreement and the U.S. Purchase Agreement, the
several International Managers and the several U.S. Underwriters
(collectively, the "Underwriters"), respectively, have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of
Common Stock being sold pursuant to the Agreements if any of the shares of
Common Stock being sold pursuant to the Agreements are purchased. The
International Purchase Agreement provides that in the event of a default by an
International Manager, the purchase commitments of the non-defaulting
International Managers may in certain circumstances be increased, and the U.S.
Purchase Agreement provides that, in the event of a default by a U.S.
Underwriter, the purchase commitments of the non-defaulting U.S. Underwriters
may in certain circumstances be increased. The closing with respect to the
sale of the shares of Common Stock pursuant to the International Purchase
Agreement is a condition to the closing with respect to the sale of the shares
of Common Stock pursuant to the U.S. Purchase Agreement, and the closing with
respect to the sale of the shares of Common Stock pursuant to the U.S.
Purchase Agreement is a condition to the closing with respect to the sale of
the shares of Common Stock pursuant to the International Purchase Agreement.

The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") which provides for
the coordination of their activities. Under the terms of the Intersyndicate
Agreement, the International Managers and the U.S. Underwriters are permitted
to sell shares of Common Stock to each other. Pursuant to the Intersyndicate
Agreement, sales may be made between the U.S. Underwriters and the
International Managers of such number of shares of Common Stock as may be
mutually agreed. The price of any shares of Common Stock so sold shall be the
public offering price, less an amount not greater than the selling concession.

Under the terms of the Intersyndicate Agreement, the International Managers
and any dealer to whom they sell shares of Common Stock will agree not to
offer to sell or sell shares of Common Stock to persons whom they believe are
United States Persons or Canadian Persons (as defined in the Intersyndicate
Agreement) or to

83
<PAGE>

persons whom they believe intend to reoffer or resell the same to United
States Persons or Canadian Persons, and the U.S. Underwriters and any bank,
broker or dealer to whom they sell shares of Common Stock will agree to offer
to sell or sell shares of Common Stock only to persons whom they believe to be
United States Persons or Canadian Persons or to persons whom they believe
intend to reoffer or resell the same to United States Persons or Canadian
Persons, except in each case for transactions pursuant to the Intersyndicate
Agreement which, among other things, permits the Underwriters to purchase from
each other and offer for resale such number of shares of Common Stock as the
selling Underwriter or Underwriters and the purchasing Underwriter or
Underwriters may agree.

The Lead Managers have advised the Company that the International Managers
propose initially to offer the shares of Common Stock offered hereby to the
public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The International Managers may allow, and such
dealers may reallow, a discount not in excess of $ per share to certain
other dealers. After the public offering, the public offering price,
concession and discount may be changed.

The Company has granted to the International Managers an option, exercisable
for 30 days after the date hereof, to purchase up to 120,000 additional shares
of Common Stock and to the U.S. Underwriters an option, exercisable for 30
days after the date hereof, to purchase up to 480,000 additional shares of
Common Stock, in each case solely to cover over-allotments, if any, at the
public offering price less the underwriting discount. To the extent that the
International Managers exercise such option, each of the International
Managers will be obligated, subject to certain conditions, to purchase
approximately the same percentage of such shares which the number of shares of
Common Stock to be purchased by it shown in the foregoing table bears to the
total number of shares of Common Stock set forth in such table.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act.

The Company has agreed that it will not, with certain exceptions, offer,
sell or otherwise dispose of any shares of Common Stock for a period of 180
days from the date of this Prospectus without the prior written consent of
Merrill Lynch International, except for the sale of shares pursuant to the
over-allotment option, the issuance of shares upon the exercise of currently
outstanding stock options and pursuant to the Employee Stock Purchase Plan and
the issuance of shares contingently issuable in connection with the
Acquisition. The Principal Shareholders and directors have agreed, with
certain exceptions, not to offer, sell, offer to sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable for Common Stock, for a period of 120 days from the date
of this Prospectus without the prior written consent of Merrill Lynch
International. In addition, certain executive officers and other employees who
are parties to the Registration Rights Agreement have agreed not to effect any
public sale or distribution of any shares of Common Stock or any other equity
securities of the Company for a period of 90 days from the date of this
Prospectus without the prior written consent of Merrill Lynch International.

Each of the Company and the International Managers has represented and
agreed that (a) it has not offered or sold, and prior to the date six months
after the date of this Prospectus will not offer or sell any shares of Common
Stock to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purchase of their businesses or
otherwise in circumstances which do not constitute an offer to the public in
the United Kingdom for the purposes of the Public Offers of Securities
Regulations 1995, (b) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to any thing done
by it in relation to the shares of Common Stock, from or otherwise the United
Kingdom and (c) it has only issued or passed on and will only issue or pass on
in the United Kingdom any document received by it in connection with the issue
or sale of the shares of Common Stock to a person who is of a kind described
in Article II(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document
may otherwise lawfully be issued or passed on.

84
<PAGE>

The U.S. Representatives and the Lead Managers, respectively, may also
impose a penalty bid on certain Underwriters and selling group members. This
means that if the U.S. Representatives or the Lead Managers purchase shares of
Common Stock in the open market to reduce the Underwriters' short position or
to stabilize the price of the Common Stock, they may reclaim the amount of the
selling concession from the Underwriters and selling group members who sold
those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the U.S. Representatives or the Lead Managers will engage
in such transactions or that such transactions, once commenced, will not be
discontinued without notice.

85
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

-----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 14
Use of Proceeds.......................................................... 25
Dividend Policy.......................................................... 25
Price Range of Common Stock.............................................. 25
Capitalization........................................................... 26
Selected Combined Historical Financial Information....................... 27
Pro Forma Combined Financial Information................................. 29
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 34
Business................................................................. 43
Management............................................................... 66
Certain Relationships and Related Transactions........................... 75
Principal Shareholders................................................... 77
Description of Capital Stock............................................. 79
Shares Eligible for Future Sale.......................................... 81
Underwriting............................................................. 83
Legal Matters............................................................ 86
Experts.................................................................. 86
Additional Information................................................... 86
Index to Financial Statements............................................ F-1
</TABLE>

4,000,000 SHARES

LOGO

COMMON STOCK

--------------

PROSPECTUS

--------------

MERRILL LYNCH INTERNATIONAL

NATIONSBANC MONTGOMERY

SECURITIES, INC.

LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SMITH BARNEY INC.

NOVEMBER , 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, in connection with the sale and
distribution of the shares of Common Stock being registered hereby, all of
which will be paid by Vistana, Inc. (the "Company").

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 36,940
NASD filing fee................................................ 12,690
Nasdaq National Market additional listing fee.................. 17,500
Accounting fees and expenses................................... 150,000*
Legal fees and expenses........................................ 200,000*
Printing and engraving expenses................................ 125,000*
Transfer agent and registrar fees.............................. 25,000*
Miscellaneous expenses......................................... 57,870
--------
TOTAL...................................................... $600,000*
========
</TABLE>
- --------
*Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Florida law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to an action (other than an action
by or in the right of the corporation) by reason of such person's service as a
director or officer of the corporation, or such person's service, at the
corporation's request, as a director, officer, employee or agent of another
corporation or other enterprise, against liability incurred in connection with
such action; provided that such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the corporation's
best interests and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such person's conduct was unlawful. Although
Florida law permits a corporation to indemnify any person referred to above
against expenses (including attorney fees) that are actually and reasonably
incurred by such person ("Expenses"), and amounts paid in settlement that are
actually and reasonably incurred by such person, in connection with the
defense or settlement of an action by or in the right of the corporation,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the corporation's best
interests, if such person has been judged liable to the corporation,
indemnification is only permitted to the extent that the adjudicating court
(or the court in which the action was brought) determines that, despite the
adjudication of liability, such person is entitled to indemnity for such
Expenses as the court deems proper. The determination as to whether a person
seeking indemnification has met the required standard of conduct is to be made
(i) by a majority vote of a quorum of disinterested members of the board of
directors, or (ii) by independent legal counsel in a written opinion, if such
a quorum does not exist or if the disinterested directors so direct, or (iii)
by the shareholders. The Florida Business Corporation Act also provides for
mandatory indemnification of any director, officer, employee or agent against
Expenses to the extent such person has been successful in any proceeding
covered by the statute. In addition, the Florida Business Corporation Act
provides for the general authorization of advancement of a director's or
officer's litigation expenses, subject to an undertaking by such person to
repay any such advancements if such person is ultimately found not to have
been entitled to reimbursement for such expenses and that indemnification and
advancement of expenses provided by the statute shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement or otherwise.

The Company's Articles of Incorporation and By-Laws provide that the Company
shall indemnify its directors, officers, employees and other agents to the
fullest extent permitted by Florida law.

II-1
<PAGE>

The Company has also entered into agreements to indemnify its directors and
certain of its officers, in addition to the indemnification provided for in
the Company's Articles of Incorporation and By-Laws. These agreements provide,
among other things, that, subject to certain limitations imposed by the
Florida Business Corporation Act pertaining to unlawful or improper conduct by
any such indemnified person, the Company will indemnify its directors and
officers for all direct and indirect expenses and costs (including, without
limitation, all reasonable attorneys' fees and related disbursements, other
out-of-pocket costs and reasonable compensation for time spent by such persons
for which they are not otherwise compensated by the Company or any third
person) and liabilities of any type whatsoever (including, but not limited to,
judgments, fines and settlement fees) actually and reasonably incurred by such
person in connection with either the investigation, defense, settlement or
appeal of any threatened, pending, or completed action, suit or other
proceeding, including the corporation, arising out of such person's services
as a director, employee or other agent of the Company, any subsidiary of the
Company or any other company or enterprise to which the person provides
services at the request of the Company. The Company believes that these
provisions and agreements are necessary to attract and retain talented and
experienced directors and officers.

The Company has purchased liability insurance for the benefit of its
directors and officers.

Under the terms of the Underwriting Agreement, the Underwriters have agreed
to indemnify, under certain conditions, the Company, its directors, certain of
its officers and persons who control the Company within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), against certain
liabilities. The Company has also agreed to indemnify the Underwriters against
certain liabilities which may be incurred in connection with the Offering made
by this Prospectus forming a part of the Registration Statement, including
liability under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On December 27, 1996, the Company sold ten shares of Common Stock to each of
Raymond L. Gellein, Jr. and Jeffrey A. Adler for a price of $11 per share, or
an aggregate price of $220. These transactions were effected in reliance upon
the exemption contained in Section 4(2) of the Securities Act and/or
Regulation D promulgated thereunder.

In connection with the Formation Transactions, in March 1997, the Principal
Shareholders contributed to the Company all of their respective interests in
each of the Affiliated Companies and the Related Partnerships in consideration
for the Company's issuance of 14,174,980 shares of the Company's Common Stock,
$.01 par value. Such securities were issued by the Company concurrently with
the completion of the Initial Public Offering in reliance upon an exemption
from the registration requirements of the Securities Act provided by Section
4(2) thereof.

On September 16, 1997, in connection with the Acquisition, the Company
issued (i) 77,421 shares of Common Stock to Larry D. Doll; (ii) 25,807 shares
of Common Stock to David H. Friedman; (iii) 52,202 shares of Common Stock to
Donald J. Dubin; (iv) 26,100 shares of Common Stock to Ronald R. Sharp; and
(v) 26,100 shares of Common Stock to David E. Bruce, together the former
owners of the Acquired Companies. These transactions were effected in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof and/or Regulation D promulgated thereunder.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

A list of exhibits filed with this Registration Statement on Form S-1 is set
forth in the Index to Exhibits on page E-1, and is incorporated herein by
reference.

(B) FINANCIAL STATEMENT SCHEDULES

See Financial Statement Schedule filed as Exhibit 27.1 to this Registration
Statement.

II-2
<PAGE>

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
their counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
by them is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

(b) The registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
VISTANA, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ORLANDO,
STATE OF FLORIDA, ON OCTOBER 23, 1997.

Vistana, Inc.

/s/ Raymond L. Gellein, Jr.
By: _________________________________
Name: Raymond L. Gellein, Jr.
Title: Chairman of the Board and
Co-Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON OCTOBER 23, 1997, BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:

SIGNATURE TITLE

/s/ Raymond L. Gellein, Jr. Chairman of the Board, Co-Chief
- ------------------------------------- Executive Officer and Director
RAYMOND L. GELLEIN, JR. (Principal Executive Officer)

Senior Vice President and Chief
John M. Sabin* Financial Officer and Treasurer
- ------------------------------------- (Principal Financial Officer and
JOHN M. SABIN Principal Accounting Officer)

President and Co-Chief Executive
Jeffrey A. Adler* Officer and Director
- -------------------------------------
JEFFREY A. ADLER

Director
Laurence S. Geller*
- -------------------------------------
LAURENCE S. GELLER

Director
Charles E. Harris*
- -------------------------------------
CHARLES E. HARRIS

Director
Steven J. Heyer*
- -------------------------------------
STEVEN J. HEYER

/s/ Raymond L. Gellein, Jr.

*By: ___________________________

Raymond L. Gellein, Jr.,

as Attorney-in-Fact

II-4
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S> <C>
1.1* Form of U.S. Purchase Agreement
1.2* Form of International Purchase Agreement
2.1 Agreement and Plan of Reorganization dated as of August
15, 1997 among Vistana, Inc., V Sub-1, Inc., Donald J.
Dubin, Ronald R. Sharp, David E. Bruce, Larry D. Doll,
and David H. Friedman. Complete 1 and Schedule 1.5A
thereto (incorporated by reference to Exhibit 2.1 to
Registrant's Current Report on Form 8-K dated September
29, 1997 (No. 0-29114))
3.1 Articles of Incorporation of Vistana, Inc. (incorporated
by reference to Exhibit 3.1 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
3.2 By-Laws of Vistana, Inc. (incorporated by reference to
Exhibit 3.2 to Registrant's Registration Statement on
Form S-1 (No. 333-19045))
4.1 Form of Common Stock certificate of Vistana, Inc.
(incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-1 (No. 333-19045))
5.1 Opinion of Neal, Gerber & Eisenberg, counsel to Vistana,
Inc.
10.1 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Raymond L. Gellein, Jr.
(incorporated by reference to Exhibit 10.1 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.2 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Jeffrey A. Adler (incorporated
by reference to Exhibit 10.2 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.3 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Matthew E. Avril (incorporated
by reference to Exhibit 10.3 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.4 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Susan Werth (incorporated by
reference to Exhibit 10.4 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.5 Employment Agreement, dated as of December 27, 1996,
between Vistana, Inc. and Carol Lytle (incorporated by
reference to Exhibit 10.5 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.6 Employment Agreement, dated as of February 10, 1997,
between Vistana, Inc. and John M. Sabin (incorporated by
reference to Exhibit 10.6 to Registrant's Registration
Statement on Form S-1 (No. 333-19045))
10.7 Amended and Restated Subscription Agreement, dated as of
February 10, 1997, among Vistana, Inc. and each of the
persons whose signatures appear on the execution pages
thereof (incorporated by reference to Exhibit 10.7 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.8 Vistana Stock Plan (incorporated by reference to Exhibit
10.8 to Registrant's Registration Statement on Form S-1
(No. 333-19045))
10.9 Vistana, Inc. Employee Stock Purchase Plan (incorporated
by reference to Exhibit 4.1 to Registrant's Registration
Statement on Form S-8 (No. 333-35823))
10.10 Form of Indemnification Agreement between Vistana, Inc.
and certain officers and directors of Vistana, Inc.
(incorporated by reference to Exhibit 10.10 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
</TABLE>
- --------

*Filed herewith.
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S> <C>
10.11 Registration Rights Agreement, dated as of December 27,
1996, among Vistana, Inc., the Raymond L. Gellein, Jr.
Retained Annuity Grantor Trust, the Matthew James Gellein
Irrevocable Trust, the Brett Tyler Gellein Irrevocable
Trust, the Raymond L. Gellein, Jr. Revocable Trust, the
JGG Holdings Trust, the Jeffrey A. Adler Revocable Trust,
Matthew E. Avril, Susan Werth, Carol A. Lytle, John M.
Sabin, Barbara L. Hollkamp, James A. McKnight, William
McLaughlin and Alain Grange (incorporated by reference to
Exhibit 10.11 to Registrant's Registration Statement on
Form S-1 (No. 333-19045))
10.12 Agreement for Affiliation, dated as of May 26, 1995, among
Resort Condominiums International, Inc., Vistana
Development, Ltd., Raymond L. Gellein, Jr. and Jeffrey A.
Adler (incorporated by reference to Exhibit 10.12 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.13 Limited Partnership Agreement of Vistana WGV, Ltd., dated
as of June 28, 1996, among Vistana WGV Holdings, Inc.,
Vistana WGV Investment, Ltd., United Timeshares, Inc. and
A. Zimand WGV Investment, Inc. (incorporated by reference
to Exhibit 10.13 to Registrant's Registration Statement
on Form S-1 (No. 333-19045))
10.14 Parcel One Property Sale Agreement, dated as of June 4,
1996, By and Between SJH Partnership, Ltd. and Vistana
WGV, Ltd. (incorporated by reference to Exhibit 10.14 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.15 Amended and Restated Joint Venture Agreement, dated as of
June 25, 1996, among R. Edward Noble, Andrew E. Kidd,
Noble-Kidd Corporation and VCH Oaks, Ltd. (incorporated
by reference to Exhibit 10.15 to Registrant's
Registration Statement on Form S-1 (No. 333-19045))
10.16 Limited Partnership Agreement of VCH Oaks, Ltd., dated as
of June 25, 1996, among VCH Oaks, Inc., R. Edward Noble,
Andrew E. Kidd and Vistana OP Investment, Ltd.
(incorporated by reference to Exhibit 10.16 to
Registrant's Registration Statement on Form S-1 (No. 333-
19045))
10.17 Exclusive Joint Venture Agreement, dated as of December
24, 1996, between Vistana Development, Ltd. and Promus
Hotels, Inc. (incorporated by reference to Exhibit 10.17
to Registrant's Registration Statement on Form S-1 (No.
333-19045))
10.17-A First Amendment to Exclusive Joint Venture Agreement,
dated February 7, 1997, between Vistana Development, Ltd.
and Promus Hotels, Inc. (incorporated by reference to
Exhibit 10.17-A to Registrant's Registration Statement on
Form S-1 (No. 333-19045))
10.17-B Second Amendment to Exclusive Joint Venture Agreement,
dated February 27, 1997 between Vistana Development, Ltd.
and Promus Hotels, Inc.
10.17-C Third Amendment to Exclusive Joint Venture Agreement,
dated May 1, 1997 between Vistana Development, Ltd. and
Promus Hotels, Inc.
10.18 Land Purchase Agreement, dated as of December 30, 1996,
between Myrtle Beach Farms Company, Inc. and Vistana
Myrtle Beach, L.P. (incorporated by reference to Exhibit
10.18 to Registrant's Registration Statement on Form S-1
(No. 333-19045))
10.19 Purchase and Sale Agreement dated as of August 12, 1997 by
and between PGA Golf Development, Inc. and Vistana PSL,
Inc.
10.19-A First Amendment to Purchase and Sale Agreement dated as of
September 12, 1997 by and between PGA Golf Development,
Inc. and Vistana PSL, Inc.
*10.19-B Second Amendment to Purchase and Sale Agreement dated as
of September 17, 1997 by and between PGA Golf
Development, Inc. and Vistana PSL, Inc.
10.20 Affiliation Agreement dated as of September 15, 1997 by
and between PGA Golf Properties, Inc. and Vistana, Inc.
*21.1 List of subsidiaries of Vistana, Inc.
</TABLE>
- --------

*Filed herewith.
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S> <C>
*23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Neal, Gerber & Eisenberg
*23.3 Consent of Kreisman Corporation
*23.4 Consent of Kreisman Corporation
*23.5 Consent of Ernst & Young LLP
24.1 Powers of Attorney
*27.1 Financial Data Schedule
*99.4 Consent of American Resort Development Association
</TABLE>
- --------

*Filed herewith.

<PAGE>

EXHIBIT 1.1

- -------------------------------------------------------------------------------

VISTANA, INC.

a Florida corporation

3,200,000 Shares of Common Stock

FORM OF U.S. PURCHASE AGREEMENT

Dated: _________, 1997

- -------------------------------------------------------------------------------

<PAGE>

Table of Contents
-----------------
<TABLE>
<CAPTION>
<S> <C>
FORM OF U.S. PURCHASE AGREEMENT....................................................... 1
SECTION 1. Representations and Warranties......................................... 3
(a) Representations and Warranties by the Company.......................... 3
(i) Compliance with Registration Requirements...................... 4
(ii) Incorporated Documents......................................... 4
(iii) Independent Accountants........................................ 5
(iv) Financial Statements........................................... 5
(v) No Material Adverse Change in Business......................... 5
(vi) Good Standing of the Company................................... 6
(vii) Good Standing of Subsidiaries.................................. 6
(viii) Capitalization................................................. 7
(ix) Authorization of Agreement..................................... 7
(x) Authorization and Description of Securities.................... 7
(xi) Absence of Defaults and Conflicts.............................. 7
(xii) Absence of Labor Dispute....................................... 8
(xiii) Absence of Proceedings......................................... 8
(xiv) Accuracy of Exhibits........................................... 8
(xv) Possession of Intellectual Property............................ 9
(xvi) Absence of Further Requirements................................ 9
(xvii) Possession of Licenses and Permits............................. 9
(xviii) Title to Properties............................................ 9
(xix) Compliance with Cuba Act....................................... 10
(xx) Investment Company Act......................................... 10
(xxii) Compliance with All Laws Regulating Timeshare Business......... 10
(xxiii) Intellectual Property Rights................................... 10
(xxiv) Resort Mortgages............................................... 11
(xxv) Insurance...................................................... 11
(xxvi) Compliance with Environmental Laws............................. 11
(xxvii) No Material or Undisclosed Environmental Liability............. 12
(xxix) Periodic Review of Costs of Environmental Compliance........... 12
(xxix) Environmental Engineering Firm................................. 13
(xxx) Adequate Personal Property..................................... 13
SECTION 2. Sale and Delivery to U.S. Underwriters: Closing........................ 13
(a) Initial Securities..................................................... 13
(b) Option Securities...................................................... 13
(c) Payment................................................................ 14
(d) Denominations; Registration............................................ 14
SECTION 3. Covenants of the Company............................................... 15
(a) Compliance with Securities Regulations and Commission
Requests............................................................... 15
(b) Filing of Amendments................................................... 15
(c) Delivery of Registration Statements.................................... 15
(d) Delivery of Prospectuses............................................... 16
</TABLE>

<PAGE>
<TABLE>
<S> <C>
(e) Continued Compliance with Securities Laws............................. 16
(f) Blue Sky Qualifications............................................... 16
(g) Rule 158.............................................................. 17
(h) Use of Proceeds....................................................... 17
(i) Listing............................................................... 17
(j) Restriction on Sale of Securities..................................... 17
(k) Reporting Requirements................................................ 18
SECTION 4. Payment of Expenses................................................... 18
(a) Expenses.............................................................. 18
(b) Termination of Agreement.............................................. 18
SECTION 5. Conditions of U.S. Underwriters' Obligations.......................... 18
(a) Effectiveness of Registration Statement............................... 18
(b) Opinion of Counsel for Company........................................ 19
(c) Opinion of Counsel for Managers....................................... 19
(d) Officers' Certificate................................................. 19
(e) Accountant's Comfort Letter........................................... 20
(f) Bring-down Comfort Letter............................................. 20
(g) Approval of Listing................................................... 20
(h) No Objection.......................................................... 20
(i) Lock-up Agreements.................................................... 20
(j) Purchase of Initial International Securities.......................... 20
(k) Conditions to Purchase of U.S. Option Securities...................... 20
(i) Officers' Certificate........................................... 21
(ii) Opinion of Counsel for Company.................................. 21
(iii) Opinion of Counsel for U.S. Underwriters........................ 21
(iv) Bring-down Comfort Letter....................................... 21
(l) Additional Documents.................................................. 21
(m) Termination of Agreement.............................................. 21
SECTION 6. Indemnification....................................................... 22
(a) Indemnification of U.S. Underwriters.................................. 22
(b) Indemnification of Company, Directors and Officers.................... 23
(c) Actions against Parties; Notification................................. 23
(d) Settlement without Consent if Failure to Reimburse.................... 24
SECTION 7. Contribution.......................................................... 24
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........ 25
SECTION 9. Termination of Agreement.............................................. 25
(a) Termination; General.................................................. 25
(b) Liabilities........................................................... 26
SECTION 10. Default by One or More of the U.S. Underwriters....................... 26
SECTION 11. Notices............................................................... 27
SECTION 12. Parties............................................................... 27
SECTION 13. GOVERNING LAW AND TIME................................................ 27
SECTION 14. Effect of Headings.................................................... 27
</TABLE>

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Draft
VISTANA, INC.

(a Florida corporation)

3,200,000 Shares of Common Stock

(Par Value $.01 Per Share)

FORM OF U.S. PURCHASE AGREEMENT

Dated: October 22, 1997

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith, Incorporated
NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS, INC.
SMITH BARNEY, INC.
as Representatives of the several Underwriters
c/o Merrill Lynch
101 California Street, Suite 1420
San Francisco, CA 94111

Ladies and Gentlemen:

Vistana, Inc., a Florida corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith,
Incorporated ("Merrill Lynch") and each of the other underwriters named in
Schedule A hereto (collectively, the "U.S. Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, NationsBanc Montgomery Securities, Inc., Lehman
Brothers, Inc. and Smith Barney, Inc. are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the U.S. Underwriters, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $.01 per
share, of the Company ("Common Stock") set forth in said Schedule A, and with
respect to the grant by the Company to the U.S. Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase all
or any part of 480,000 additional shares of Common Stock to cover over-
allotments, if any. The aforesaid 3,200,000 shares of Common Stock (the "Initial
U.S. Securities") to be purchased by the U.S. Underwriters and all or any part
of the 480,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "U.S. Option Securities") are hereinafter called, collectively,
the "U.S. Securities".

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It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 800,000 shares of
Common Stock (the "Initial International Securities") through arrangements with
certain underwriters in the United States and Canada (the "International
Managers") for which Merrill Lynch International, NationsBanc Montgomery
Securities, Inc., Lehman Brothers, Inc. and Smith Barney, Inc. are acting as
representatives (the "Lead Managers") and the grant by the Company to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to 120,000 additional shares of Common Stock solely to cover over allotments, if
any (the "International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities". It is understood that the Company is not obligated to sell and the
U.S. Underwriters are not obligated to purchase, any Initial U.S. Securities
unless all of the Initial International Securities are contemporaneously
purchased by the International Managers.

The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities, and the International Securities
are hereinafter collectively called the "Securities".

The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").

The Company understands that the U.S. Underwriters propose to make a public
offering of the U.S. Securities as soon as the Representatives deem advisable
after this Agreement has been executed and delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-38137) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of U.S. Prospectus is identical to the
Form of International Prospectus, except for the front cover and back cover
pages and the information under the caption "Underwriting." The information

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<PAGE>

included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such Registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A referred to
as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 Is
referred to as "Rule 434 Information." Each Form of International Prospectus
and Form of U.S. Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto, schedules thereto if any, at the time it became effective and including
the Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of International Prospectus and the final Form of U.S. Prospectus, in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated,_________, 1997 and
preliminary U.S. Prospectus dated, ___________, 1997, respectively, each
together with the applicable Term Sheet and all references in this Agreement to
the date of such Prospectuses shall mean the date of the applicable Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the International Prospectus, the U.S. Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").

All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and Form of International Prospectus) or the Prospectuses (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any of any document under the Securities Exchange Act of 1934 (the "1934 Act")
which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectuses, as the case may be.

SECTION 1. Representations and Warranties.

(a) Representations and Warranties by the Company. The Company represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred

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<PAGE>

to in Section 2(c) hereof, and as of each Date of Delivery (if any) referred to
in Section 2(b) hereof, and agrees with each U.S. Underwriter, as follows:

(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-1 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If Rule 434 is used, the Company will comply with the requirements of Rule
434. The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or the U.S.
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any U.S. Underwriter through the
Representatives expressly for use in the Registration Statement or the U.S.
Prospectus.

Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

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<PAGE>

Regulations or the 1934 Act and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), as applicable, and, when read
together with the other information in the Prospectuses, at the time the
Registration Statement became effective, at the time the Prospectuses were
issued and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.

(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.

(iv) Financial Statements. The financial statements included in the
Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectuses present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The pro forma financial statements and the related
notes thereto included in the Registration Statement and the Prospectuses
present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.

(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) Except for regular quarterly dividends on the
Common Stock in amounts per share

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<PAGE>

that are consistent with past practice, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.

(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Florida and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.

(vii) Good Standing of Subsidiaries. The Success Companies, Success
Developments, L.L.C. and Points of Colorado, Inc. (collectively, the
"Subsidiaries") have been duly organized and are validly existing as
corporations in good standing under the laws of the jurisdiction of their
incorporation, have corporate power and authority to own, lease and operate
their properties and to conduct their business as described in the
Prospectus and are duly qualified as foreign corporations to transact
business and are in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Registration Statement, all of the
issued and outstanding capital stock of each such Subsidiary has been duly
authorized and validly issues, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The acquisition of the Subsidiaries
(the "Acquisition") did not violate any provisions of any partnership
agreement, certificate of partnership, charter, bylaws or other
organizational documents, as applicable, of the Company or its
subsidiaries. The Acquisition did not conflict with, result in the breach
or violation of, or constitute, either by itself or upon notice of the
passage of time, or both, a default under (i) any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries may be bound or affected or (ii) any
statute or any authorization, judgment, decree, order, rule or regulation
of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or its subsidiaries, except as
would not have a Material Adverse Effect. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body was required, including the satisfaction
of any requirements pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, for the completion of the
Acquisitions, except for compliance with the Act, the Blue Sky and Canadian
securities laws

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<PAGE>

applicable to the Acquisition transactions, any except for any such
consent, approval, authorization or other order that was obtained by the
closing of the Acquisitions.

(viii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses or
pursuant to the exercise of convertible securities or options referred to
in the Prospectuses). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company.

(ix) Authorization of Agreement. This Agreement and the International
Purchase Agreement have been duly authorized, executed and delivered by the
Company.

(x) Authorization and Description of Securities. The Securities to be
purchased by the U.S. Underwriters and the International Managers from the
Company have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to this Agreement and the
International Purchase Agreement, respectively, against payment of the
consideration set forth herein and the International Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.

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<PAGE>

Securities as described in the Prospectuses under the caption "Use of
Proceeds") and compliance by the Company with its obligations under this
Agreement and the International Purchase Agreement have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the Company
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any subsidiary or any of
their assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company.

(xii) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse Effect.

(xiii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or its
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement and the
International Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a party
or of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.

(xiv) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.

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<PAGE>

(xv) Possession of Intellectual Property. The Company or its
subsidiary own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.

(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities under this Agreement and the International Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement and the International Purchase Agreement.

(xvii) Possession of Licenses and Permits. The Company and its
subsidiary possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and any
subsidiary are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.

(xviii) Title to Properties. The Company and its Subsidiaries have
good and marketable title to all the properties and assets reflected as
owned in the financial statements referred to in Section 1(A)(i) above (or
elsewhere in the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other
defects, except those reflected in the financial statements or elsewhere in
the Prospectus and except such as do not materially and adversely affect
the value of such property and do not materially interfere with the use
made or proposed to be made of such property by the Company or its
Subsidiaries. The real

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<PAGE>

property, improvements, equipment and personal property held under lease by
the Company and its Subsidiaries are held under valid and enforceable
leases, with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real property,
improvements, equipment or personal property by such entities.

(xix) Compliance with Cuba Act. The Company has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.

(xx) Investment Company Act. The Company is not, and upon the issuance
and sale of the Securities as herein contemplated and the application of
the net proceeds therefrom as described in the Prospectuses will not be, an
"investment company" or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company Act of 1940, as amended
(the "1940 Act").

(xxii) Compliance with All Laws Regulating Timeshare Business. The
Company and its subsidiaries are and will be, in compliance with all
federal, state, local and foreign laws and regulations regarding the
marketing, offers to sell and sales of timeshare resorts, including but not
limited to the Federal Trade Commission Act, Truth in Lending Act and
Regulation Z, Equity Opportunity Credit Act and Regulation B, Interstate
Land Sales Full Disclosure Act, Telephone Consumer Protection Act,
Telemarketing and Consumer Fraud and Abuse Prevention Act, Fair Housing Act
and Civil Rights Acts of 1964 and 1968, and all licensure, anti-fraud,
telemarketing, prize, gift, sweepstakes and labor laws to which it is or
may become subject (collectively "Timeshare Laws"), except where failure to
be in compliance would not cause a Material Adverse Change. The Company and
its subsidiaries have filed and will file, all required documents and
supporting information in compliance with federal, state, local and foreign
laws and regulations, except where failure to be in compliance would not
cause a Material Adverse Change.

(xxiii) Intellectual Property Rights. The Company and its
subsidiaries own and possess sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals, trade secrets and other similar
rights including, without limitation, rights to the names "Vistana Resort,"
"Vistana's Beach Club," "Hampton Vacation Resort - Oak Plantation," "Eagle
Point Resort," "Falcon Point Resort," Villas of Cave Creek," "Embassy
Vacation Resort - Myrtle Beach," "Embassy Vacation Resort at Scottsdale,"
"Vistana Resort at World Golf Village," and "PGA Vacation Resort by
Vistana" (collectively, "Intellectual Property Rights") reasonably
necessary to conduct their businesses; and the expected expiration of any
of such Intellectual Property Rights would not result in a Material Adverse
Change. Neither the Company nor its subsidiaries has received any notice
of infringement or conflict with asserted

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Intellectual Property Rights of others, which infringement or conflict, if
the subject of an unfavorable decision, would result in a Material Adverse
Change.

(xxiv) Resort Mortgages. The mortgages and deeds of trust encumbering
the Resorts are not convertible into equity securities of the Company or
any subsidiary of the Company nor will any lender hold a participating
interest therein; such mortgages and deeds of trust are not cross-defaulted
or cross-collateralized to any mortgage or deed of trust encumbering
property that is not to be owned directly or indirectly by the Company.

(xxv) Insurance. The Company and its subsidiaries is and will be
insured by recognized and financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks
as are generally deemed adequate and customary for their businesses
including, but not limited to, liability, property and casualty insurance
policies in favor of the Company covering each of the Resorts and the real
and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and earthquakes. The
Company has no reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that
would not result in a Material Adverse Change. Neither the Company or its
subsidiaries has been denied any insurance coverage which it has sought or
for which it has applied. Title insurance in favor of the Company is in
force with respect to each of the Resorts.

(xxvi) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i)
neither the Company or any of its subsidiaries is or will be, as of the
Closing Date, in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Hazardous Materials (as herein defined),
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively, "Materials of
Environmental Concern"), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environment Concern (collectively, "Environmental
Laws"), which violation includes, but is not limited to, non-receipt of or
noncompliance with any permits or other governmental authorizations
required for the operation of the business of any of the foregoing entities
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has any of the foregoing entities received any
written communication, whether from a governmental authority, citizens
group, employee or otherwise, that alleges that any of them is in violation
of any Environmental Law; (ii) there is no claim, action or cause of action
filed with a court or governmental

11
<PAGE>

authority, no investigation with respect to which the Company has received
written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal
injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated
by the Company or any of its subsidiaries, now or in the past
(collectively, "Environmental Claims"), pending or, to the best of the
Company's knowledge, threatened against the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) to the best of the
Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law. As used herein, "Hazardous Material"
shall mean (a) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous, or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.

(xxvii) No Material or Undisclosed Environmental Liability. There is
no liability, alleged liability or potential liability (including, without
limitation, liability, alleged liability or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties), of
the Company or any of its subsidiaries arising out of, based on or
resulting from (a) the presence or release into the environment of any
Material of Environmental Concern at any location, whether or not owned by
the Company or its subsidiaries or (b) any violation or alleged violation
of any Environmental Law, which liability, alleged liability or potential
liability is required to be disclosed in the Registration Statement, other
than as disclosed therein, or which liability, alleged liability or
potential liability, singly or in the aggregate, would cause a Material
Adverse Change.

12
<PAGE>

permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review and the amount of its established reserves, the Company has
reasonably concluded that such associated costs and liabilities would not,
individually or in the aggregate, result in a Material Adverse Change.

(xxix) Environmental Engineering Firm. No environmental engineering
firm which prepared Phase I environmental assessment reports (or other
similar reports) with respect to the Resorts as set forth in the
Registration Statement was employed for such purpose on a contingent basis
or has any substantial interest in the Company or any of its Subsidiaries.

(xxx) Adequate Personal Property. The personal property used and
maintained as part of the Resorts is adequate to enable the Company to
continue to conduct the operations of the Resorts in the manner in which
such operations have normally been conducted by the Property Partnerships.

(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby.

SECTION 2. Sale and Delivery to U.S. Underwriters: Closing.

(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each U.S. Underwriter, severally and not jointly, and
each U.S. Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in Schedule B the number of Initial
U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of Initial U.S. Securities which such
U.S. Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.

13
<PAGE>

Securities. Any such time and date of delivery for the U.S. Option Securities (a
"Date of Delivery") shall be determined by the Global Coordinator, but shall not
be later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the U.S. Option Securities, each of the
U.S. Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of U.S. Option Securities then being purchased
which the number of Initial U.S. Securities set forth in Schedule A opposite the
name of such U.S. Underwriter bears to the total number of Initial U.S.
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
O'Melveny & Myers LLP, 275 Battery Street, 26th floor, San Francisco,
California, 94111, or at such other place as shall be agreed upon by the Global
Coordinator and the Company, at 7:00 A.M. (California time) on the fourth day,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day business
day, after the date hereof (unless postponed in accordance with the provisions
of Section 10), or such other time not later than ten business days after such
date as shall be agreed upon by the Global Coordinator and the Company (such
time and date of payment and delivery being herein called "Closing Time").

In addition, in the event that any or all of the U.S. Option Securities are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.

Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each International Manager has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the Representatives may request in
writing at least one full business day before the Closing Time or the relevant
Date of Delivery, as the case may be. The certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, will be made available for

14
<PAGE>

examination and packaging by the Representatives in The City of San Francisco
not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.

SECTION 3. Covenants of the Company. The Company covenants with each U.S.
Underwriter as follows:

(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Global
Coordinator immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectuses or for additional information, and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.

(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the U.S. Underwriters shall object.

(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the U.S. Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to
be incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as

15
<PAGE>

originally filed and of each amendment thereto (without exhibits) for each
of the U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus
as such U.S. Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act.
The Company will furnish to each U.S. Underwriter, without charge, during
the period when the International Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the
International Prospectus (as amended or supplemented) as such U.S.
Underwriter may reasonably request. The International Prospectus and any
amendments or supplements thereto furnished to the U.S. Underwriters will
be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement, the International
Purchase Agreement and in the Prospectuses. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend
or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare
and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the U.S. Underwriters such
number of copies of such amendment or supplement as the U.S. Underwriters
may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the U.S. Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions as the Global Coordinator may designate and to maintain
such qualifications in effect for a period of not less than one year from
the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company

<PAGE>

shall not be obligated to file any general consent to service of process or
to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may
be required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the effective date of
the Registration Statement and any Rule 462(b) Registration Statement.

(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.

(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".

(i) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the NASDAQ National Market and
will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities
that are traded in the over-the-counter market and quotations for which are
reported by the Nasdaq National Market.

(j) Restriction on Sale of Securities. During a period of 120 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to
(A) the Securities to be sold hereunder or under the International Purchase
Agreement, (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and referred to in the Prospectuses, (C) any
shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in
the Prospectuses or (D) any shares of Common Stock issued pursuant to any
non-employee director stock plan or dividend reinvestment plan.

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<PAGE>

(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.

SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters and the
transfer of the Securities between the International Managers and the U.S.
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities and (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities.

(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all
of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the U.S. Underwriters.

SECTION 5. Conditions of U.S. Underwriters' Obligations. The obligations of
the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:

(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing

18
<PAGE>

Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of
the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A
prospectus containing the Rule 430A Information shall have been filed with
the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).

(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Neal, Gerber & Eisenberg, counsel for the Company, in form
and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibit A hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably request.

(c) Opinion of Counsel for Managers. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of O'Melveny & Myers LLP, counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters with respect to the matters set forth in clauses
(i), (ii), (v), (vi) (solely as to preemptive or other similar rights
arising by operation of law or under the charter or by-laws of the
Company), (viii) through (x), inclusive, (xiii), (xv) (solely as to the
information in the Prospectus under "Description of Capital Stock--Common
Stock" and the penultimate paragraph of Exhibit A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of Florida and the federal
law of the United States, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or

19
<PAGE>

prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.

(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from KMPG Peat Marwick
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectuses.

(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from KMPG Peat Marwick LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to Closing Time.

(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the NASDAQ National Market, subject only to
official notice of issuance.

(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.

(i) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form
of Exhibit B hereto signed by the persons listed on Schedule D hereto.

(j) Purchase of Initial International Securities. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Securities
under this Agreement, the International Managers shall have purchased the
Initial International Securities under the International Purchase
Agreement.

(k) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary
of the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives shall
have received:

20
<PAGE>

(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(d) hereof remains true and correct as of such Date of
Delivery.

(ii) Opinion of Counsel for Company. The favorable opinion of
Neal, Gerber & Eisenberg, counsel for the Company, together with the
favorable opinion of Dean, Mead, Egerton, Bloodworth, Capouano &
Bozarth, P.A., Florida counsel for the Company, each in form and
substance satisfactory to counsel for the U.S. Underwriters, dated
such Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.

(iii) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of O'Melveny & Myers LLP, counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(c) hereof.

(iv) Bring-down Comfort Letter. A letter from KMPG Peat Marwick
LLP, in form and substance satisfactory to the Representatives and
dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Representatives pursuant to
Section 5(f) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.

(l) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated shall
be satisfactory in form and substance to the Representatives and counsel
for the U.S. Underwriters.

(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of U.S.
Option Securities on a Date of Delivery which is after the Closing Time,
the obligations of the several U.S. Underwriters to purchase the relevant
Option Securities may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without

21
<PAGE>

liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.

SECTION 6. Indemnification.

(a) Indemnification of U.S. Underwriters. The Company agrees to indemnify
and hold harmless each U.S. Underwriter and each person, if any, who controls
any U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and

(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) (ii) or (iii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the

22
<PAGE>

Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto).

(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto).

(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

23
<PAGE>

(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) Section 6(a) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such-request prior to the date of such
settlement.

SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the U.S. Underwriters on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the U.S.
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.

The relative benefits received by the Company on the one hand and the U.S.
Underwriters on the other hand in connection with the offering of the U.S.
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.

The relative fault of the Company on the one hand and the U.S. Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

The Company and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in

24
<PAGE>

this Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the U.S. Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
U.S. Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls an U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.

SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the U.S. Underwriters.

SECTION 9. Termination of Agreement.

(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in

25
<PAGE>

the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.

SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:

(a) if the number of Defaulted Securities does not exceed 10% of the
number of U.S. Securities to be purchased on such date, each of the non-
defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting U.S. Underwriters, or

(b) if the number of Defaulted Securities exceeds 10% of the number
of U.S. Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the U.S. Underwriters to purchase and of the Company to sell
the Option Securities to be purchased and sold on such Date of Delivery
shall terminate without liability on the part of any non-defaulting U.S.
Underwriter.

No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.

26
<PAGE>

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the Representatives or the Company shall
have the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for an U.S. Underwriter under this Section 10.

SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the Representatives at Merrill Lynch & Co.,
North Tower, World Financial Center, New York, New York 10281-1209, attention of
________; and notices to the Company shall be directed to it at Vistana, Inc.
8801 Vistana Centre Drive, Orlando, Florida, 32821 to the attention of Raymond
L. Gellein, Jr.

SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the U.S. Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the U.S. Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any International
Manager shall be deemed to be a successor by reason merely of such purchase.

SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO SAN FRANCISCO CITY TIME.

SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

27
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with counterparts, will become a binding agreement between the
U.S. Underwriters and the Company in accordance with its terms.

Very truly yours,

VISTANA, INC.

By _____________________________
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS, INC.
SMITH BARNEY, INC.

By: MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED

By ______________________________
Authorized Signatory

For themselves and as Representatives
Managers of the other U.S. Underwriters
named in Schedule A hereto.

28
<PAGE>

SCHEDULE A

Number of
Initial
International
Name of U.S. Underwriter Securities
- ------------------------ ----------

MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED..................
NATIONSBANC MONTGOMERY SECURITIES, INC. .............................
LEHMAN BROTHERS, INC. ...............................................
SMITH BARNEY, INC....................................................

_________

Total 3,200,000

Sch A-1
<PAGE>

SCHEDULE B

VISTANA, INC.

3,200,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $___.

2. The purchase price per share for the U.S. Securities to be paid by the
several U.S. Underwriters shall be $___, being an amount equal to the initial
public offering price set forth above less $___ per share; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.

Sch B-1
<PAGE>

SCHEDULE C

[List of subsidiaries]

Sch C-1
<PAGE>

[SCHEDULE D]

[List of Persons and entities subject to lock-up]

Sch D-1

<PAGE>

EXHIBIT 1.2
================================================================================

VISTANA, INC.

a Florida corporation

800,000 Shares of Common Stock

FORM OF INTERNATIONAL PURCHASE AGREEMENT

Dated: ______________, 1997

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

<TABLE>
<CAPTION>
Table of Contents

<S> <C>
FORM OF INTERNATIONAL PURCHASE AGREEMENT.................................. 1
SECTION 1. Representations and Warranties........................... 4
(a) Representations and Warranties by the Company............ 4
(i) Compliance with Registration Requirements............ 4
(ii) Incorporated Documents.............................. 5
(iii) Independent Accountants............................ 5
(iv) Financial Statements................................ 5
(v) No Material Adverse Change in Business.............. 5
(vi) Good Standing of the Company........................ 6
(vi) Good Standing of the Company........................ 6
(vii) Good Standing of Subsidiaries...................... 6
(viii) Capitalization.................................... 7
(ix) Authorization of Agreement.......................... 7
(x) Authorization and Description of Securities.......... 7
(xi) Absence of Defaults and Conflicts................... 8
(xii) Absence of Labor Dispute........................... 8
(xiii) Absence of Proceedings............................ 8
(xiv) Accuracy of Exhibits............................... 9
(xv) Possession of Intellectual Property................. 9
(xvi) Absence of Further Requirements.................... 9
(xvii) Possession of Licenses and Permits................ 9
(xviii) Title to Properties.............................. 10
(xix) Compliance with Cuba Act.......................... 10
(xx) Investment Company Act.............................. 10
(xxii) Compliance with All Laws Regulating
Timeshare Business.............................. 10
(xxiii) Intellectual Property Rights..................... 11
(xxiv) Resort Mortgages.................................. 11
(xxv) Insurance.......................................... 11
(xxvi) Compliance with Environmental Laws................ 11
(xxvii) No Material or Undisclosed Environmental
Liability...................................... 12
(xxix) Periodic Review of Costs of Environmental
Compliance...................................... 13
(xxix) Environmental Engineering Firm.................... 13
(xxx) Adequate Personal Property......................... 13
SECTION 2. Sale and Delivery to International Managers: Closing..... 13
(a) Initial Securities....................................... 13
(b) Option Securities........................................ 14
(c) Payment.................................................. 14
(d) Denominations; Registration.............................. 15
SECTION 3. Covenants of the Company................................. 15
(a) Compliance with Securities Regulations and Commission
Requests............................................... 15
(b) Filing of Amendments..................................... 15
</TABLE>
<PAGE>

<TABLE>
<S> <C>
(c) Delivery of Registration Statements...................... 16
(d) Delivery of Prospectuses................................. 16
(e) Continued Compliance with Securities Laws................ 16
(f) Blue Sky Qualifications.................................. 17
(g) Rule 158................................................. 17
(h) Use of Proceeds.......................................... 17
(i) Listing.................................................. 17
(j) Restriction on Sale of Securities........................ 17
(k) Reporting Requirements................................... 18
SECTION 4. Payment of Expenses...................................... 18
(a) Expenses................................................. 18
(b) Termination of Agreement................................. 19
SECTION 5. Conditions of International Managers' Obligations........ 19
(a) Effectiveness of Registration Statement.................. 19
(b) Opinion of Counsel for Company........................... 19
(c) Opinion of Counsel for Managers.......................... 19
(d) Officers' Certificate.................................... 20
(e) Accountant's Comfort Letter.............................. 20
(f) Bring-down Comfort Letter................................ 20
(g) Approval of Listing...................................... 20
(h) No Objection............................................. 20
(i) Lock-up Agreements....................................... 21
(j) Purchase of Initial U.S. Securities...................... 21
(k) Conditions to Purchase of International Option Securities 21
(i) Officers' Certificate................................ 21
(ii) Opinion of Counsel for Company...................... 21
(iii) Opinion of Counsel for International Managers...... 21
(iv) Bring-down Comfort Letter........................... 21
(l) Additional Documents..................................... 22
(m) Termination of Agreement................................. 22
SECTION 6. Indemnification.......................................... 22
(a) Indemnification of International Managers................ 22
(b) Indemnification of Company, Directors and Officers....... 23
(c) Actions against Parties; Notification.................... 23
(d) Settlement without Consent if Failure to Reimburse....... 24
SECTION 7. Contribution............................................. 24
SECTION 8. Representations, Warranties and Agreements
to Survive Delivery.............
SECTION 9. Termination of Agreement................................. 26
(a) Termination; General..................................... 26
(b) Liabilities.............................................. 26
SECTION 10. Default by One or More of the International Managers..... 26
SECTION 11. Notices.................................................. 27
SECTION 12. Parties.................................................. 27
</TABLE>

ii
<PAGE>

<TABLE>
<S> <C>
SECTION 13. GOVERNING LAW AND TIME................................... 28
SECTION 14. Effect of Headings....................................... 28
</TABLE>

iii
<PAGE>

Draft
VISTANA, INC.

(a Florida corporation)

800,000 Shares of Common Stock

(Par Value $.01 Per Share)

FORM OF INTERNATIONAL PURCHASE AGREEMENT

Dated: ___________, 1997

MERRILL LYNCH INTERNATIONAL
NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SMITH BARNEY, INC.
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England

Ladies and Gentlemen:

Vistana, Inc., a Florida corporation (the "Company"), confirms its
agreement with Merrill Lynch International ("Merrill Lynch") and each of the
other international underwriters named in Schedule A hereto (collectively, the
"International Managers", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch, NationsBanc Montgomery Securities, Inc., Lehman Brothers International
(Europe) and Smith Barney, Inc. are acting as representatives (in such capacity,
the "Lead Managers"), with respect to the issue and sale by the Company and the
purchase by the International Managers, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the International Managers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 120,000 additional shares of Common Stock to cover over-allotments, if
any. The aforesaid 800,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the 120,000 shares of Common Stock subject to the option described in Section
2(b)

1
<PAGE>

hereof (the "International Option Securities") are hereinafter called,
collectively, the "International Securities".

It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of 3,200,000 shares of Common Stock
(the "Initial U.S. Securities") through arrangements with certain underwriters
in the United States and Canada (the "U.S. Underwriters") for which Merrill
Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc Montgomery Securities,
Inc., Lehman Brothers, Inc. and Smith Barney, Inc. are acting as representatives
(the "U.S. Representatives") and the grant by the Company to the U.S.
Underwriters, acting severally and not jointly, of an option to purchase all or
any part of the U.S. Underwriters' pro rata portion of up to 480,000 additional
shares of Common Stock solely to cover over allotments, if any (the "U.S. Option
Securities" and, together with the International Option Securities, the "Option
Securities"). The Initial U.S. Securities and the U.S. Option Securities are
hereinafter called the "U.S. Securities". It is understood that the Company is
not obligated to sell and the International Managers are not obligated to
purchase, any Initial International Securities unless all of the Initial U.S.
Securities are contemporaneously purchased by the U.S. Underwriters.

The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities", and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities".

The Company understands that the International Managers propose to make a
public offering of the International Securities as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-38137) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the International Securities (the "Form of
International Prospectus") and one

2
<PAGE>

relating to the U.S. Securities (the "Form of U.S. Prospectus"). The Form of
International Prospectus is identical to the Form of U.S. Prospectus, except for
the front cover and back cover pages and the information under the caption
"Underwriting." The information included in any such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
Registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 Is referred to as "Rule 434 Information." Each Form of
International Prospectus and Form of U.S. Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-1
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of
International Prospectus and the final Form of U.S. Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated,______, 1997 and
preliminary U.S. Prospectus dated, _______, 1997, respectively, each together
with the applicable Term Sheet and all references in this Agreement to the date
of such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the International Prospectus, the U.S. Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").

3
<PAGE>

SECTION 1. Representations and Warranties.

(a) Representations and Warranties by the Company. The Company represents
and warrants to each International Manager as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each international
Manager, as follows:

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto, at the time the Prospectuses or any
amendments or supplements thereto were issued and at the Closing Time (and,
if any International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If Rule 434 is used, the Company will comply
with the requirements of Rule 434. The representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or the International Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by any International Manager through the Lead Managers expressly for use in
the Registration Statement or the International Prospectus.

4
<PAGE>

(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act
and the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), as applicable, and, when read together with the other
information in the Prospectuses, at the time the Registration Statement
became effective, at the time the Prospectuses were issued and at the
Closing Time (and, if any International Option Securities are purchased, at
the Date of Delivery), did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.

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<PAGE>

subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) Except for regular quarterly dividends on the
Common Stock in amounts per share that are consistent with past practice,
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.

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<PAGE>

Acquisition did not conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice of the passage of time, or
both, a default under (i) any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries may be bound or affected or (ii) any statute or any
authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body
applicable to the Company or its subsidiaries, except as would not have a
Material Adverse Effect. No consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other governmental
body was required, including the satisfaction of any requirements pursuant
to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
for the completion of the Acquisitions, except for compliance with the Act,
the Blue Sky and Canadian securities laws applicable to the Acquisition
transactions, any except for any such consent, approval, authorization or
other order that was obtained by the closing of the Acquisitions.

(ix) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by the
Company.

(x) Authorization and Description of Securities. The Securities to
be purchased by the International Managers and the U.S. Underwriters from
the Company have been duly authorized for issuance and sale to the
International Managers pursuant to this Agreement and the U.S. Underwriters
pursuant to the U.S. Purchase Agreement, respectively, and, when issued and
delivered by the Company pursuant to this Agreement and the U.S. Purchase
Agreement, respectively, against payment of the consideration set forth
herein and the U.S. Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable; the Common Stock conforms to all
statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to personal liability
by reason of being such a holder; and the issuance of the Securities is not
subject to the preemptive or other similar rights of any securityholder of
the Company.

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<PAGE>

(xi) Absence of Defaults and Conflicts. Neither the Company nor any
subsidiary is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company nor any subsidiary is a party or by which it may be
bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments") except
for such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement and the U.S.
Purchase Agreement and the consummation of the transactions contemplated in
this Agreement, the U.S. Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the use of
the proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use of Proceeds") and compliance by the
Company with its obligations under this Agreement and the U.S. Purchase
Agreement have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations.
As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.

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<PAGE>

thereof or the consummation of the transactions contemplated in this
Agreement and the U.S. Purchase Agreement or the performance by the Company
of its obligations hereunder or thereunder; the aggregate of all pending
legal or governmental proceedings to which the Company or any subsidiary is
a party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.

(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities under this Agreement and the U.S. Purchase Agreement or the
consummation of the transactions contemplated by this Agreement and the
U.S. Purchase Agreement.

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<PAGE>

the Company has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.

(xviii) Title to Properties. The Company and its subsidiaries have
good and marketable title to all the properties and assets reflected as
owned in the financial statements referred to in Section 1(A)(i) above (or
elsewhere in the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other
defects, except those reflected in the financial statements or elsewhere in
the Prospectus and except such as do not materially and adversely affect
the value of such property and do not materially interfere with the use
made or proposed to be made of such property by the Company or its
subsidiaries. The real property, improvements, equipment and personal
property held under lease by the Company and its subsidiaries are held
under valid and enforceable leases, with such exceptions as are not
material and do not materially interfere with the use made or proposed to
be made of such real property, improvements, equipment or personal property
by such entities.

(xix) Compliance with Cuba Act. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.

(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").

10
<PAGE>

(xxiii) Intellectual Property Rights. The Company and its subsidiaries
own and possess sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights
including, without limitation, rights to the names "Vistana Resort,"
"Vistana's Beach Club," "Hampton Vacation Resort -Oak Plantation," "Eagle
Point Resort," "Falcon Point Resort," Villas of Cave Creek," "Embassy
Vacation Resort -Myrtle Beach," "Embassy Vacation Resort at Scottsdale,"
"Vistana Resort at World Golf Village," and "PGA Vacation Resort by
Vistana" (collectively, "Intellectual Property Rights") reasonably
necessary to conduct their businesses; and the expected expiration of any
of such Intellectual Property Rights would not result in a Material Adverse
Change. Neither the Company nor its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change.

11
<PAGE>

and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environment Concern (collectively, "Environmental Laws"),
which violation includes, but is not limited to, non-receipt of or
noncompliance with any permits or other governmental authorizations
required for the operation of the business of any of the foregoing entities
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has any of the foregoing entities received any
written communication, whether from a governmental authority, citizens
group, employee or otherwise, that alleges that any of them is in violation
of any Environmental Law; (ii) there is no claim, action or cause of action
filed with a court or governmental authority, no investigation with respect
to which the Company has received written notice, and no written notice by
any person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising
out of, based on or resulting from the presence, or release into the
environment, of any Material of Environmental Concern at any location
owned, leased or operated by the Company or any of its subsidiaries, now or
in the past (collectively, "Environmental Claims"), pending or, to the best
of the Company's knowledge, threatened against the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) to the best of the
Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law. As used herein, "Hazardous Material"
shall mean (a) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous, or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.

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<PAGE>

which liability, alleged liability or potential liability is required to be
disclosed in the Registration Statement, other than as disclosed therein,
or which liability, alleged liability or potential liability, singly or in
the aggregate, would cause a Material Adverse Change.

(xxix) Periodic Review of Costs of Environmental Compliance. In the
ordinary course of its business, the Company conducts a periodic review of
the effect of Environmental Laws on the business, operations and properties
of the Company or its subsidiaries, in the course of which it identifies
and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties). On the basis of such review
and the amount of its established reserves, the Company has reasonably
concluded that such associated costs and liabilities would not,
individually or in the aggregate, result in a Material Adverse Change.

(xxx) Adequate Personal Property. The personal property used and
maintained as part of the Resorts is adequate to enable the Company to continue
to conduct the operations of the Resorts in the manner in which such operations
have normally been conducted by the Property Partnerships.

(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the Lead
Managers or to counsel for the International Managers shall be deemed a
representation and warranty by the Company to each International Manager as to
the matters covered thereby.

SECTION 2. Sale and Delivery to International Managers: Closing.

(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each International Manager, severally and not jointly,
and each International Manager, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B the number of
Initial International Securities set forth in Schedule A opposite the name of
such International Manager, plus any additional number of Initial International
Securities which such International Manager may become obligated to purchase
pursuant to the provisions of Section 10 hereof.

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<PAGE>

(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the International Managers,
severally and not jointly, to purchase up to an additional 120,000 shares of
Common Stock at the price per share set forth in Schedule B less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial International Securities but not payable on the
International Option Securities. The option hereby granted will expire 30 days
after the date hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial International Securities upon
notice by the Global Coordinator to the Company setting forth the number of
International Option Securities as to which the several International Managers
are then exercising the option and the time and date of payment and delivery for
such International Option Securities. Any such time and date of delivery for the
International Option Securities (a "Date of Delivery") shall be determined by
the Global Coordinator, but shall not be later than seven full business days
after the exercise of said option, nor in any event prior to the Closing Time,
as hereinafter defined. If the option is exercised as to all or any portion of
the International Option Securities, each of the International Managers, acting
severally and not jointly, will purchase that proportion of the total number of
International Option Securities then being purchased which the number of Initial
International set forth in Schedule A opposite the name of such International
Manager bears to the total number of Initial International Securities, subject
in each case to such adjustments as the Global Coordinator in its discretion
shall make to eliminate any sales or purchases of fractional shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
O'Melveny & Myers LLP, 275 Battery Street, 26th floor, San Francisco,
California, 94111, or at such other place as shall be agreed upon by the Global
Coordinator and the Company, at 7:00 A.M. (California time) on the fourth day,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator and the Company (such time and
date of payment and delivery being herein called "Closing Time").

In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.

Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Managers for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each International Manager has

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<PAGE>

authorized the Lead Managers, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Initial International
Securities and the International Option Securities, if any, which it has agreed
to purchase. Merrill Lynch, individually and not as representative of the
International Managers, may (but shall not be obligated to) make payment of the
purchase price for the Initial International Securities or the International
Option Securities, if any, to be purchased by any International Manager whose
funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such
International Manager from its obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial International
Securities and the International Option Securities, if any, shall be in such
denominations and registered in such names as the Lead Managers may request in
writing at least one full business day before the Closing Time or the relevant
Date of Delivery, as the case may be. The certificates for the Initial
International Securities and the International Option Securities, if any, will
be made available for examination and packaging by the Lead Managers in the city
of San Francisco not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.

SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:

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<PAGE>

supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the
Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or otherwise,
will furnish the Global Coordinator with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to which the Global
Coordinator or counsel for the International Managers shall object.

(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Lead Managers and counsel for the International
Managers, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the Lead
Managers, without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the International Managers. The copies of the Registration Statement and
each amendment thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.

(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each International Manager,
without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the International Prospectus (as amended or supplemented) as such
International Manager may reasonably request. The International Prospectus
and any amendments or supplements thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.

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<PAGE>

opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 3(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectuses
comply with such requirements, and the Company will furnish to the
International Managers such number of copies of such amendment or
supplement as the International Managers may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the International Managers, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions as the Global Coordinator may designate and to maintain
such qualifications in effect for a period of not less than one year from
the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may
be required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the effective date of
the Registration Statement and any Rule 462(b) Registration Statement.

(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".

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<PAGE>

for Common Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the
Securities to be sold hereunder or under the U.S. Purchase Agreement, (B)
any shares of Common Stock issued by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
hereof and referred to in the Prospectuses, (C) any shares of Common Stock
issued or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectuses or
(D) any shares of Common Stock issued pursuant to any non-employee director
stock plan or dividend reinvestment plan.

SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters and the
transfer of the Securities between the U.S. Underwriters and the International
Managers, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities and (ix) the filing fees incident to, and
the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities.

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<PAGE>

(b) Termination of Agreement. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the International Managers for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the International Managers.

SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:

(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
International Managers. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 424(b)
(or a post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule
430A) or, if the Company has elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule 424(b).

(b) Opinion of Counsel for Company. At Closing Time, the Lead Managers
shall have received the favorable opinion, dated as of Closing Time, of
Neal, Gerber & Eisenberg, counsel for the Company, in form and substance
satisfactory to counsel for the International Managers, together with
signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibit A hereto and to
such further effect as counsel to the International Managers may reasonably
request.

(c) Opinion of Counsel for Managers. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing
Time, of O'Melveny & Myers LLP, counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the
other International Managers with respect to the matters set forth in
clauses (i), (ii), (v), (vi) (solely as to preemptive or other similar
rights arising by operation of law or under the charter or by-laws of the
Company), (viii) through (x), inclusive, (xiii), (xv) (solely as to the
information in the Prospectus under "Description of Capital Stock--Common
Stock" and the penultimate paragraph of Exhibit A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of Florida and the federal
law of the United States, upon the

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<PAGE>

opinions of counsel satisfactory to the Lead Managers. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public officials.

(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Lead Managers shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.

(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Lead Managers shall have received from KMPG Peat Marwick LLP
a letter dated such date, in form and substance satisfactory to the Lead
Managers, together with signed or reproduced copies of such letter for each
of the other International Managers containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectuses.

(f) Bring-down Comfort Letter. At Closing Time, the Lead Managers
shall have received from KMPG Peat Marwick LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to Closing Time.

(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the NASDAQ National Market, subject only to
official notice of issuance.

(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.

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<PAGE>

(i) Lock-up Agreements. At the date of this Agreement, the Lead
Managers shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule D hereto.

(j) Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Managers of the Initial International
Securities under this Agreement, the U.S. Underwriters shall have purchased
the Initial U.S. Securities under the U.S. Purchase Agreement.

(k) Conditions to Purchase of International Option Securities. In the
event that the International Managers exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the International
Option Securities, the representations and warranties of the Company
contained herein and the statements in any certificates furnished by the
Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Lead Managers shall have received:

(ii) Opinion of Counsel for Company. The favorable opinion of
Neal, Gerber & Eisenberg, counsel for the Company, together with the
favorable opinion of Dean, Mead, Egerton, Bloodworth, Capouano &
Bozarth, P.A., Florida counsel for the Company, each in form and
substance satisfactory to counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.

(iii) Opinion of Counsel for International Managers. The
favorable opinion of O'Melveny & Myers LLP, counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(c) hereof.

(iv) Bring-down Comfort Letter. A letter from KMPG Peat Marwick
LLP, in form and substance satisfactory to the Lead Managers and dated
such Date of Delivery, substantially in the same form and substance as
the letter furnished to the Lead Managers pursuant to Section 5(f)
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.

21
<PAGE>

(l) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the International Managers shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated shall
be satisfactory in form and substance to the Lead Managers and counsel for
the International Managers.

(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of
International Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several International Managers to
purchase the relevant Option Securities may be terminated by the Lead
Managers by notice to the Company at any time at or prior to Closing Time
or such Date of Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.

SECTION 6. Indemnification.

(a) Indemnification of International Managers. The Company agrees to
indemnify and hold harmless each International Manager and each person, if any,
who controls any International Manager within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:

22
<PAGE>

Section 6(d) below) any such settlement is effected with the written
consent of the Company; and

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto).

(b) Indemnification of Company, Directors and Officers. Each International
Manager severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary international
prospectus or the International Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such International Manager through the Lead Managers expressly
for use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto).

23
<PAGE>

selected by the Company. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the International Managers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Company on the one hand and the
International Managers on the other hand in connection with the offering of the
International Securities

24
<PAGE>

pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the International
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the International
Managers, in each case as set forth on the cover of the International
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the International
Securities as set forth on such cover.

The relative fault of the Company on the one hand and the International
Managers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

The Company and the International Managers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the International Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such International Manager has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.

For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are

25
<PAGE>

several in proportion to the number of Initial International Securities set
forth opposite their respective names in Schedule A hereto and not joint.

SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any International Manager or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the International Managers.

SECTION 9. Termination of Agreement.

(a) Termination; General. The Lead Managers may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the International Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the Lead
Managers, impracticable to market the Securities or to enforce contracts for the
sale of the Securities, or (iii) if trading in any securities of the Company has
been suspended or materially limited by the Commission or the Nasdaq National
Market, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.

SECTION 10. Default by One or More of the International Managers. If one or
more of the International Managers shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Lead Managers shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting International Managers, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such

26
<PAGE>

amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Lead Managers shall not have completed such arrangements within such 24-hour
period, then:

(a) if the number of Defaulted Securities does not exceed 10% of the
number of International Securities to be purchased on such date, each of
the non-defaulting International Managers shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting International Managers, or

(b) if the number of Defaulted Securities exceeds 10% of the number of
International Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing Time,
the obligation of the International Managers to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any non-
defaulting International Manager.

No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company shall have the right to postpone Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "International
Manager" includes any person substituted for an International Manager under this
Section 10.

SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at North Tower,
World Financial Center, New York, New York 10281-1209, attention of
__________________; and notices to the Company shall be directed to it at
Vistana, Inc., 8801 Vistana Centre Drive, Orlando, Florida, 32821 to the
attention of Raymond L. Gellein, Jr.

SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the International Managers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
International Managers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained.

27
<PAGE>

This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the International Managers and the Company and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
International Manager shall be deemed to be a successor by reason merely of such
purchase.

SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO SAN FRANCISCO CITY TIME.

SECTION 14. Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.

28
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with counterparts, will become a binding agreement between the
International Managers and the Company in accordance with its terms.

Very truly yours,

VISTANA, INC.

By
-------------------------
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH INTERNATIONAL
NATIONSBANC MONTGOMERY SECURITIES, INC.
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SMITH BARNEY, INC.

By: MERRILL LYNCH INTERNATIONAL

By
----------------------------
Authorized Signatory

For themselves and as Lead
Managers of the other International
Managers named in Schedule A hereto.

29
<PAGE>

SCHEDULE A

Number of
Initial
International
Name of International Manager Securities
- ----------------------------- ----------

MERRILL LYNCH INTERNATIONAL..........................................
NATIONSBANC MONTGOMERY SECURITIES, INC...............................
LEHMAN BROTHERS INTERNATIONAL (EUROPE)...............................
SMITH BARNEY, INC....................................................

_________

Total 800,000

Sch A-1
<PAGE>

SCHEDULE B

VISTANA, INC.

800,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $___.

2. The purchase price per share for the International Securities to be
paid by the several International Managers shall be $___, being an amount equal
to the initial public offering price set forth above less $___ per share;
provided that the purchase price per share for any International Option
Securities purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial International
Securities but not payable on the International Option Securities.

Sch B-1
<PAGE>

SCHEDULE C

[List of subsidiaries]

Sch C-1
<PAGE>

[SCHEDULE D]

[List of Persons and entities subject to lock-up]

Sch D-1

<PAGE>
EXHIBIT 10.19-B

SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT

This Second Amendment to Purchase and Sale Agreement entered into as of
September 17, 1997, by and between PGA GOLF DEVELOPMENT, INC. ("Seller"), and
VISTANA PSL, INC. ("Purchaser").

W I T N E S S E T H:

Whereas, Seller and Purchaser entered into a Purchase and Sale Agreement
dated as of August 12, 1997, as amended by that certain First Amendment dated as
of September 12, 1997 (collectively, the "Vistana Agreement"), for the purchase
of the Vistana Property, as defined in the Vistana Agreement; and

Whereas, Seller and Purchaser have agreed to extend the Closing.

W I T N E S S E T H:

Now, therefore, for and in consideration of the mutual covenants contained
herein and in consideration of the sum of ten ($10) dollars paid by each party
to the other, the receipt and sufficiency of same hereby acknowledged, the
parties agree as follows:

1. All terms used herein shall have the same meaning as those used in
the Vistana Agreement.

2. The Closing shall take place on September 19, 1997.

3. Except as specifically modified hereby, all terms and conditions
of the Vistana Agreement shall remain the same and Seller and Purchaser ratify
and confirm such terms and conditions.

4. This Second Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same document.

<PAGE>
Executed as of September 17, 1997 by Seller and Purchaser.

Signed, sealed and delivered "Seller"
in the presence of:
PGA GOLF DEVELOPMENT, INC., a Florida
corporation

/S/ Sandra L. Harrelson By: /S/ Jim L. Awtrey
- ------------------------------- ---------------------------
Print Name: Sandra L. Harrelson Name: Jim L. Awtrey
-------------------- --------------------------
Its: CEO
---------------------------

/S/ Christine Garrity
- ------------------------------
Print Name: Christine Garrity
------------------

"Purchaser"

VISTANA PSL, INC., a Florida corporation

/S/ Donna L. Bershaw By: /S/ Susan Werth
- ------------------------------ ----------------------------
Print Name: Donna L. Bershaw Name: Susan Werth
------------------ --------------------------
Its: Senior Vice President - Law
---------------------------

/S/ Julie Granados
- ------------------------------
Print Name: Julie Granados
------------------

<PAGE>

EXHIBIT 21.1

SUBSIDIARIES OF VISTANA, INC.

Wholly-owned corporate Subsidiaries:
- -----------------------------------
Vistana Capital Holdings, Inc.
Vistana Capital Management, Inc.
VCH Communications, Inc.
VCH Trademark, Inc.
We4fun, Inc.
Vistana WGV Holdings, Inc.
Vistana International, Inc.
VCH Sales, Inc.
VCH Oaks, Inc.
VCM Oaks, Inc.
VCH Financial Services, Inc.
VCH Administration, Inc.
VCH Systems, Inc.
Vacation Management Services, Inc.
VCH Consulting, Inc.
VCH Contracting, Inc.
Vistana MB, Inc.
Vistana WGV Investment, Inc.
Vistana OP Investment, Inc.
Vistana West, Inc.
Vistana Scottsdale, Inc.
The Success Companies, Inc.
Data Marketing Associates, Inc.
Success West Communications, Inc.
Points of Colorado, Inc.
Vistana NJ Marketing, Inc.
Vistana NJ Services, Inc.
Vistana NJ, Inc.
Vacation Marketing Services, Inc.
Vistana East, Inc.
Vistana MB Management, Inc.
Vistana PSL, Inc.

Indirectly-owned corporate Subsidiaries:
- ----------------------------------------
P-O-C Realty, Inc.
- Points of Colorado, Inc. (80% stockholder)

Partnership Subsidiaries
- ------------------------

Vistana International Chile, Ltd.
- Vistana International, Inc. (99% partner)
- Vistana Consulting, Inc. (1% partner)

Vistana Development Ltd.

- Vistana Capital Holdings, Inc. (84% general partner; 15% limited partner)
- We4fun, Inc. (1% limited partner)

Vistana Management Ltd.

- Vistana Capital Management, Inc. (84% general partner; 15% limited partner)
- We4fun, Inc. (1% limited partner)

Vistana WGV Investment, Ltd.

- Vistana WGV Investment, Inc. (2% general partner)
- Vistana, Inc. (98% limited partner)

Vistana WGV, Ltd.

- Vistana WGV Holdings, Inc. (1% general partner)
- Vistana WGV Investment, Ltd. (36.5% limited partner)

<PAGE>

Vistana OP Investment, Ltd.

- Vistana OP Investment, Inc. (2% general partner)
- Vistana, Inc. (98% limited partner)

VCH Oaks, Ltd.

- Vistana OP Investment, Ltd. (66% limited partner)
- VCH Oaks, Inc. (1% general partner)

Oak Plantation Joint Venture

- VCH Oaks, Ltd. (99% general partner)

Limited Liability Company Subsidiaries
- --------------------------------------

Success Developments, L.L.C.
- Points of Colorado, Inc. (50% member and manager)
- Vistana West, Inc. (50% member)

Fiesta Vacations, L.L.C.
- Vistana West, Inc. (99% member & manager)
- Vistana, Inc. (1% member)

Success of Arizona, L.L.C.
- Vistana West, Inc. (99% member & manager)
- Vistana, Inc. (1% member)

Success of Colorado, L.L.C.
- Vistana West, Inc. (99% member & manager)
- Vistana, Inc. (1% member)

Success of Colorado Realty, L.L.C.
- Success of Colorado, L.L.C. (80% member)

<PAGE>

EXHIBIT 23.1

ACCOUNTANTS' CONSENT

The Board of Directors
Vistana, Inc. and Combined Affiliates:

We consent to the use of our reports included herein and to the reference to
our firm under the headings "Selected Combined Historical Financial Information
of the Company" and "Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP

Orlando, Florida

October 23, 1997

<PAGE>

EXHIBIT 23.3

ACCOUNTANTS' CONSENT

The Board of Directors
Vistana, Inc.

We consent to the use of our report dated May 12, 1997 on the financial
statements of Points of Colorado, Inc. as of March 31, 1997 and 1996 and for
each of the two years in the period ended March 31, 1997 and 1996 in the
prospectus of Vistana, Inc. and to the reference to our firm under the heading
"Experts" in the prospectus.

/s/ Kreisman Corporation

Denver, Colorado

October 23, 1997

<PAGE>

EXHIBIT 23.4

ACCOUNTANTS' CONSENT

The Board of Directors
Vistana, Inc.

We consent to the use of our report dated March 5, 1997 on the financial
statements of Success Developments, LLC as of December 31, 1996 and for the
period from June 10, 1996 (Date of Inception) to December 31, 1996 in the
prospectus of Vistana, Inc. and to the reference to our firm under the heading
"Experts" in the prospectus.

/s/ Kreisman Corporation

Denver, Colorado

October 23, 1997

<PAGE>

EXHIBIT 23.5

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated August 27, 1997 with respect to the combined
financial statements of The Success Companies included in the Registration
Statement on Form S-1 and related prospectus of Vistana, Inc. for the
registration of 4,000,000 shares of its common stock.

/s/ Ernst & Young LLP

Miami, Florida
October 16, 1997

<PAGE>

EXHIBIT 99.4

CONSENT
-------

In reference to the Registration Statement on Form S-1 (No. 333-38187)
initially filed by Vistana, Inc., a Florida corporation, on October 17, 1997 (as
the same may be amended or supplemented from time to time, the "Registration
Statement"), we hereby consent to the inclusion of our name in said Registration
Statement, to the inclusion of data derived from various reports and other
information compiled by us, and to the filing of this consent as an exhibit
thereto.

Dated: October 21, 1997

AMERICAN RESORT DEVELOPMENT
ASSOCIATION