TW HOLDINGS II, INC.,
                                   as Borrower


                            TRENDWEST RESORTS, INC.,
                               as Master Servicer


                               SAGE SYSTEMS, INC.,
                                  as Custodian


                                       and

                             LASALLE NATIONAL BANK,
                                   as Trustee


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



                                 TRUST INDENTURE

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



                           Dated as of April 15, 1999







<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
ARTICLE 1.  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................................2

     SECTION 1.1.   General Definitions...........................................................................2
     SECTION 1.2.   Compliance Certificates and Opinions..........................................................2
     SECTION 1.3.   Form of Documents Delivered to Trustee........................................................3
     SECTION 1.4.   Acts of Noteholders, etc......................................................................4
     SECTION 1.5.   Notice to Noteholders; Waiver.................................................................5
     SECTION 1.6.   Effect of Headings and Table of Contents......................................................6
     SECTION 1.7.   Successors and Assigns........................................................................6
     SECTION 1.8.   GOVERNING LAW.................................................................................6
     SECTION 1.9.   Legal Holidays................................................................................6
     SECTION 1.10.  Execution in Counterparts.....................................................................6
     SECTION 1.11.  Inspection ...................................................................................7
     SECTION 1.12.  Survival of Representations and Warranties....................................................7

ARTICLE 2.  THE NOTES ............................................................................................7

     SECTION 2.1.   General Provisions............................................................................7
     SECTION 2.2.   Execution, Authentication, Delivery,
                               and Dating.........................................................................8
     SECTION 2.3.   Transfer and Exchange.........................................................................9
     SECTION 2.4.   Mutilated, Destroyed, Lost and Stolen Notes..................................................10
     SECTION 2.5.   Payment of Interest and Principal; Rights Preserved..........................................11
     SECTION 2.6.   Persons Deemed Owners........................................................................12
     SECTION 2.7.   Cancellation.................................................................................12
     SECTION 2.8.   Noteholder Lists.............................................................................12
     SECTION 2.9.   Treasury Notes...............................................................................12

ARTICLE 3.  ACCOUNTS; COLLECTION AND APPLICATION OF MONEYS; REPORTS..............................................13

     SECTION 3.1.   Trust Accounts; Investments by Trustee.......................................................13
     SECTION 3.2.   Establishment and Administration of the Collection Account...................................15
     SECTION 3.3.   Reserved.  ..................................................................................15
     SECTION 3.4.   Distributions................................................................................16
     SECTION 3.5.   Certifications to Noteholders................................................................17
     SECTION 3.6.   Returned Payments............................................................................17

ARTICLE 4.  THE TRUST ESTATE.....................................................................................17

     SECTION 4.1.   Acceptance by Trustee........................................................................17
     SECTION 4.2.   Subsequent Transfers.........................................................................18
     SECTION 4.3.   Conditions Precedent to All Transfers........................................................19
     SECTION 4.4.   Grant of Security Interest; Tax Treatment....................................................20
     SECTION 4.5.   Further Action Evidencing Assignments........................................................21
     SECTION 4.6.   Substitution of Receivables and Release of Liens.............................................21
     SECTION 4.7.   Appointment of Custodian; Delivery of
                               Receivable Documents; Verification................................................22
     SECTION 4.8.   Receipts.  ..................................................................................23
     SECTION 4.9    Duties of Custodian..........................................................................23
     SECTION 4.10.  Representations and Warranties of Custodian..................................................24
     SECTION 4.11.  Indemnification of Custodian.................................................................25
     SECTION 4.12.  Adverse Interests............................................................................25
     SECTION 4.13.  Termination of Custodian.....................................................................25

ARTICLE 5.  SERVICING OF ASSETS..................................................................................26

     SECTION 5.1.   Appointment of Master Servicer...............................................................26
     SECTION 5.2.   Duties of Master Servicer; Subservicers......................................................27
     SECTION 5.3.   Collection Responsibilities; Receivable Modifications........................................31
     SECTION 5.4.   Maintenance of Insurance.....................................................................31
     Section 5.5.   Assumption and Substitution Agreements.......................................................32
     SECTION 5.6.   Realization Upon Defaulted Receivables.......................................................32
     Section 5.7.   Representations and Warranties as to the
                               Master Servicer...................................................................33
     SECTION 5.8.   Existence; Status as Master Servicer; Merger.................................................34
     SECTION 5.9.   Performance of Obligations...................................................................35
     SECTION 5.10.  Event of Master Servicer Termination.........................................................35
     SECTION 5.11.  Optional Purchase of Vacation Credits........................................................35

ARTICLE 6.  EVENTS OF DEFAULT; REMEDIES..........................................................................36

     SECTION 6.1.   Events of Default............................................................................36
     SECTION 6.2.   Acceleration of Maturity; Rescission and Annulment...........................................38
     SECTION 6.3.   Remedies   ..................................................................................39
     SECTION 6.4.   Trustee May File Proofs of Claim.............................................................40
     SECTION 6.5.   Trustee May Enforce Claims Without Possession of Notes.......................................41
     SECTION 6.6.   Application of Money Collected...............................................................42
     SECTION 6.7.   Limitation on Suits..........................................................................42
     SECTION 6.8.   Unconditional Right of Noteholders to Receive Principal and Interest.........................43
     SECTION 6.9.   Restoration of Rights and Remedies...........................................................43
     SECTION 6.10.  Rights and Remedies Cumulative...............................................................43
     SECTION 6.11.  Delay or Omission Not Waiver.................................................................43
     SECTION 6.12.  Control by Noteholders.......................................................................43
     SECTION 6.13.  Waiver of Events of Default..................................................................44
     SECTION 6.14.  Undertaking for Costs........................................................................44
     SECTION 6.15.  Waiver of Stay or Extension Laws.............................................................45
     SECTION 6.16.  Sale of Trust Estate.........................................................................45

ARTICLE 7.  THE TRUSTEE..........................................................................................46

     SECTION 7.1.   Certain Duties...............................................................................46
     SECTION 7.2.   Notice of Events of Default..................................................................48
     SECTION 7.3.   Certain Matters Affecting the Trustee........................................................48
     SECTION 7.4.   Trustee Not Liable for Notes or Receivables..................................................49
     SECTION 7.5.   Trustee May Own Notes........................................................................49
     SECTION 7.6.   The Master Servicer to Pay Trustee's Fees and Expenses.......................................49
     SECTION 7.7.   Eligibility Requirements for Trustee.........................................................50
     SECTION 7.8.   Resignation or Removal of Trustee............................................................50
     SECTION 7.9.   Successor Trustee............................................................................51
     SECTION 7.10.  Merger or Consolidation of Trustee...........................................................52
     SECTION 7.11.  Appointment of Co-Trustee or Separate
                               Trustee...........................................................................53
     SECTION 7.12.. Paying Agent and Note Registrar Rights.......................................................54
     SECTION 7.13.  No Obligation to make Advances...............................................................55

ARTICLE 8.  COVENANTS ...........................................................................................55

     SECTION 8.1.   Payment of Principal and Interest............................................................55
     SECTION 8.2.   Maintenance of Office or Agency; Chief Executive Office......................................55
     SECTION 8.3.   Money for Payments to Noteholders to be Held in Trust........................................55
     SECTION 8.4.   Corporate Existence; Merger;
                               Consolidation, etc................................................................56
     SECTION 8.5.   Protection of Trust Estate; Further
                               Assurances........................................................................56
     SECTION 8.6.   Reserved.  ..................................................................................57
     SECTION 8.7.   Additional Covenants.........................................................................57
     SECTION 8.8.   Taxes      ..................................................................................58

ARTICLE 9.  SUPPLEMENTAL INDENTURES..............................................................................58

     SECTION 9.1.   Supplemental Indentures......................................................................58
     SECTION 9.2.   Supplemental Indentures with Consent of Noteholders..........................................59
     SECTION 9.3.   Execution of Supplemental Indentures.........................................................60
     SECTION 9.4.   Effect of Supplemental Indentures............................................................60
     SECTION 9.5.   Reference in Notes to Supplemental
                               Indentures........................................................................61

ARTICLE 10.  SATISFACTION AND DISCHARGE..........................................................................61

     SECTION 10.1.  Satisfaction and Discharge of Indenture......................................................61
     SECTION 10.2.  Application of Trust Money...................................................................61
     SECTION 10.3.  Trust Termination Date.......................................................................62

ARTICLE 11.  REPRESENTATIONS AND WARRANTIES......................................................................62

     SECTION 11.1.  Representations and Warranties of the Borrower...............................................62
     SECTION 11.2.  Representations and Warranties as to Each Trust Estate Receivable............................65

ARTICLE 12.  MISCELLANEOUS.......................................................................................65

     SECTION 12.1.  Indemnities of the Master Servicer...........................................................65
     SECTION 12.2.  Officer's Certificate and Opinion of Counsel
                               as to Conditions Precedent........................................................66
     SECTION 12.3.  Statements Required in Certificate or
                               Opinion...........................................................................66
     SECTION 12.4.  Notices    ..................................................................................67
     SECTION 12.5.  No Proceedings...............................................................................68

[SIGNATURE PAGE FOLLOWS].........................................................................................68

</TABLE>

<PAGE>



EXHIBITS

EXHIBIT A                  Form of Collateral Assignment
EXHIBIT B                  Form of Variable Note
EXHIBIT C                  Form of Rule 144A Transferee Letter
EXHIBIT D                  Form of Investor Letter
EXHIBIT E                  Form of Servicer Report
EXHIBIT F                  Form of Request for Release
EXHIBIT G                  Form of Receipt

Schedule 1        List of Assets

Annex A           Trendwest Warehouse Facility Definitions


<PAGE>



trust indenture



                                 TRUST INDENTURE

                  This  TRUST   INDENTURE  dated  as  of  April  15,  1999  (the
"Indenture"),  is by and among TW HOLDINGS II, INC., a Delaware corporation (the
"Borrower"),  TRENDWEST RESORTS, INC., an Oregon corporation, as Master Servicer
(the "Master  Servicer")  and  individually  ("TWRI"),  SAGE  SYSTEMS,  INC., as
Custodian  (the   "Custodian")  and  LASALLE  NATIONAL  BANK,  as  trustee  (the
"Trustee").


                                             RECITALS OF THE BORROWER

                  WHEREAS,  the  Borrower  is  a  bankruptcy-remote  corporation
formed for the sole purpose of acquiring from TWRI certain timeshare receivables
originated by TWRI and certain other rights and properties pertaining thereto;

                  WHEREAS,  the Borrower has duly  authorized  the execution and
delivery of this  Indenture  to provide for the  issuance of a class of variable
funding notes (the "Notes") which shall evidence Advances made from time to time
by Prudential  Securities  Credit  Corporation  (the  "Lender")  pursuant to the
Credit Agreement,  dated April 15, 1999, by and among the Borrower, TWRI and the
Lender;

                  WHEREAS, the Notes shall be secured by the Assets;

                  WHEREAS,  the Borrower intends that the Trustee,  on behalf of
the  Noteholders,  will,  from time to time,  take assignment of Receivables and
related  rights and  benefits,  including  those under any  collateral  security
agreement,  and guarantees from the Borrower simultaneously with the acquisition
of such Receivables by the Borrower from TWRI; and

                  NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH:

                  For and in  consideration  of the mutual  covenants  set forth
herein,  and for other valuable  consideration,  the receipt of which are hereby
acknowledged,  it is  mutually  covenanted  and  agreed,  for the benefit of all
parties hereto, as follows:

                                 GRANTING CLAUSE

                  The Borrower hereby Grants to the Trustee for inclusion in the
Trust  Estate on each  Assignment  Date,  for the  benefit  and  security of the
Noteholders and the Trustee,  all of the Borrower's right, title and interest in
and to the following:

(i)      all Assets specified in the related Collateral Assignment.  The Trustee
         acknowledges  receipt of the related  Trust Estate and declares that it
         will hold or shall cause the related  Custodian to hold such  documents
         and the other documents  constituting a part of the related  Receivable
         Documents, for the benefit of the Noteholders;

(ii)     the Trust Accounts and all monies, checks, securities,  investments and
         interests held in, credited to or evidencing such accounts;

(iii)    all of the Borrower's  right,  title and interest in and to investments
         made with  proceeds of the  property  described in clauses (i) and (ii)
         above; and

(iv)     all distributions, revenues, products, substitutions, benefits, profits
         and proceeds, in whatever form, of any of the foregoing.

Such Grant is made in trust to secure (i) the  payment of all amounts due on the
Notes,  (ii) the payment of all other sums  payable  under this  Indenture  with
respect to the Notes and (iii)  compliance with the provisions of this Indenture
with respect to the Notes.

                  The  Trustee  acknowledges  such  Grant,  accepts  the  trusts
hereunder in accordance  with the provisions  hereof,  and agrees to perform the
duties herein  required to the best of its ability and to the end that the Trust
Estate and the interests of the Noteholders, the Trustee and the Borrower may be
adequately and effectively protected as hereinafter provided.

                                   ARTICLE 1.

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

                  SECTION 1.1.  General Definitions.

                  In addition to the terms defined  elsewhere in this Indenture,
certain  capitalized  terms  shall have the  meanings  given them in  "Trendwest
Warehouse Facility Definitions" attached hereto as Annex A.

                  SECTION 1.2.  Compliance Certificates and Opinions.

                  Upon any written application or request by the Borrower to the
Trustee to take any action under any provision of this Indenture, other than any
request that (a) the Trustee  authenticate  the Notes specified in such request,
(b) the  Trustee  invest  moneys in any of the Trust  Accounts  pursuant  to the
written directions  specified in such request, or (c) the Trustee pay moneys due
and payable to the Borrower  hereunder to the Borrower's  assignee  specified in
such  request,  the Trustee shall require the Borrower to furnish to the Trustee
an Officer's Certificate stating that all conditions precedent, if any, provided
for in this  Indenture  relating to the proposed  action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel  stating  that in the opinion of such counsel all such
conditions precedent,  if any, have been complied with, except that, in the case
of any such requested  action as to which other evidence of  satisfaction of the
conditions  precedent thereto is specifically  required by any provision of this
Indenture, no additional certificate or opinion need be furnished.

                  SECTION 1.3.  Form of Documents Delivered to Trustee.

                  In any case where several matters are required to be certified
by, or covered by an opinion of, any specified  Person, it is not necessary that
all such  matters be  certified  by, or covered by the opinion of, only one such
Person,  or that they be so certified or covered by only one  document,  but one
such Person may certify or give an opinion  with respect to some matters and one
or more other such Persons as to other matters,  and any such Person may certify
or give an opinion as to such matters in one or several documents.

                  Any  certificate  or opinion  of an  officer  of the  Borrower
delivered to the Trustee may be based,  insofar as it relates to legal  matters,
upon a certificate or opinion of, or  representations  by, counsel,  unless such
officer  knows,  or in the exercise of  reasonable  care should  know,  that the
certificate or opinion or representations with respect to the matters upon which
his  certificate  or  opinion  is  based  are  erroneous.   Any  such  officer's
certificate  or opinion and any  Opinion of Counsel may be based,  insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the  Borrower as to such  factual  matters  unless
such  officer or counsel  knows,  or in the exercise of  reasonable  care should
know,  that the certificate or opinion or  representations  with respect to such
matters  are  erroneous.  Any  Opinion  of Counsel  may be based on the  written
opinion  of other  counsel,  in which  event such  Opinion  of Counsel  shall be
accompanied  by a copy of such  other  counsel's  opinion  and  shall  include a
statement  to the effect that such  counsel  believes  that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.

                  Where any Person is required  to make,  give or execute two or
more applications,  requests, consents,  certificates,  statements,  opinions or
other instruments under this Indenture,  they may, but need not, be consolidated
and form one instrument.

                  Wherever in this Indenture, in connection with any application
or certificate or report to the Trustee,  it is provided that the Borrower shall
deliver any document as a condition of the granting of such  application,  or as
evidence of compliance  with any term hereof,  it is intended that the truth and
accuracy,  at the time of the granting of such  application  or at the effective
date of such  certificate  or  report  (as the case may be),  of the  facts  and
opinions  stated in such document shall in such case be conditions  precedent to
the right of the Borrower to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed to
affect the Trustee's  right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Section 7.1(b).

                  Whenever in this  Indenture it is provided that the absence of
the occurrence and  continuation  of a Default or Event of Default,  or Event of
Master Servicer Termination is a condition precedent to the taking of any action
by  the  Trustee  at  the  request  or   direction   of  the   Borrower,   then,
notwithstanding that the satisfaction of such condition is a condition precedent
to the Borrower's right to make such request or direction,  the Trustee shall be
protected in acting in accordance  with such request or direction if it does not
have knowledge of the occurrence  and  continuation  of such Default or Event of
Default,  or Event of Master  Servicer  Termination.  For all  purposes  of this
Indenture,  the Trustee shall not be deemed to have  knowledge of any Default or
Event of Default, or Event of Master Servicer  Termination nor shall the Trustee
have any duty to monitor  or  investigate  to  determine  whether a default  has
occurred  (other  than an Event of  Default  of the kind  described  in  Section
6.1(a)), or Event of Master Servicer Termination unless a Responsible Officer of
the Trustee shall have actual  knowledge  thereof or shall have been notified in
writing thereof by the Borrower, the Master Servicer, or any Noteholder.

                  SECTION 1.4.  Acts of Noteholders, etc.

                  (a) Any request,  demand,  authorization,  direction,  notice,
consent,  waiver or other action provided by this Indenture to be given or taken
by Noteholders  shall be embodied in and evidenced by one or more instruments of
substantially  similar tenor signed by Noteholders  representing  66-2/3% of the
then Outstanding  Principal Amount of Outstanding  Notes;  and, except as herein
otherwise  expressly  provided,  such action  shall become  effective  when such
instrument or  instruments  are delivered to the Trustee and, where it is hereby
expressly  required,  to the Borrower.  Such instrument or instruments  (and the
action embodied therein and evidenced  thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be  sufficient  for any purpose of this  Indenture  and (subject to Section 7.1)
conclusive  in favor of the  Trustee  and the  Borrower,  if made in the  manner
provided in this Section 1.4.

                  (b) The fact and date of the  execution  by any  Person of any
such  instrument  or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer  authorized by
law to take  acknowledgments  of deeds,  certifying that the individual  signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution  is by a  signer  acting  in a  capacity  other  than  his  individual
capacity,  such certificate or affidavit shall also constitute  sufficient proof
of his authority.  The fact and date of the execution of any such  instrument or
writing,  or the authority of the Person  executing the same, may also be proved
in any other manner which the Trustee deems sufficient.

                  (c) Any request,  demand,  authorization,  direction,  notice,
consent,  waiver or other Act of the holder of any Note shall bind every  future
holder  of the  same  Note  and  the  holder  of  every  Note  issued  upon  the
registration of transfer thereof or in exchange  therefore or in lieu thereof in
respect of anything  done,  omitted or suffered to be done by the Trustee or the
Borrower in  reliance  thereon,  whether or not  notation of such action is made
upon such Note.

                  (d) By accepting the Notes issued  pursuant to this Indenture,
each  Noteholder  irrevocably  appoints  the  Trustee  hereunder  as the special
attorney-in-fact  for such  Noteholder  vested with full power on behalf of such
Noteholder to effect and enforce the rights of such  Noteholder  for the benefit
of such Noteholder; provided that nothing contained in this Section 1.4(d) shall
be deemed to confer  upon the Trustee any duty or power to vote on behalf of the
Noteholders  with respect to any matter on which the Noteholders have a right to
vote pursuant to the terms of this Indenture.

                  SECTION 1.5.  Notice to Noteholders; Waiver.

                  (a) Where this Indenture provides for notice to Noteholders of
any event,  or the mailing of any report to  Noteholders,  such notice or report
shall be sufficiently  given (unless otherwise herein expressly  provided) if in
writing and mailed, first-class postage prepaid or certified mail return receipt
requested,  or sent by private courier or confirmed  telecopy to each Noteholder
affected by such event or to whom such  report is required to be mailed,  at its
address as it appears in the Note Register,  not later than the latest date, and
not earlier than the earliest date,  prescribed for the giving of such notice or
the mailing of such report.  In any case where a notice or report to Noteholders
is mailed,  neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed,  to any particular  Noteholder  shall affect the
sufficiency  of such notice or report with respect to other  Noteholders.  Where
this Indenture  provides for notice in any manner,  such notice may be waived in
writing by the Person  entitled to receive such notice,  either  before or after
the event,  and such waiver shall be the  equivalent of such notice.  Waivers of
notice by Noteholders shall be filed with the Trustee, but such filing shall not
be a condition  precedent to the  validity of any action taken in reliance  upon
such waiver.

                  (b) In  case by  reason  of the  suspension  of  regular  mail
service  or by reason of any other  cause it shall be  impracticable  to mail or
send notice to Noteholders,  in accordance with Section 1.5(a),  of any event or
any report to Noteholders when such notice or report is required to be delivered
pursuant to any provision of this Indenture,  then such notification or delivery
as shall be made with the approval of the Trustee shall  constitute a sufficient
notification for every purpose hereunder.

                  SECTION 1.6.  Effect of Headings and Table of Contents.

                  The Article and  Section  headings  herein and in the Table of
Contents are for convenience only and shall not affect the construction hereof.

                  SECTION 1.7.  Successors and Assigns.

                  All covenants and  agreements in this Indenture by each of the
Borrower,  the  Master  Servicer  or  the  Trustee  shall  bind  its  respective
successors and permitted assigns, whether so expressed or not.

                  SECTION 1.8.  GOVERNING LAW.

                  THIS  INDENTURE  AND THE  NOTES  SHALL  BE  GOVERNED  BY,  AND
CONSTRUED IN  ACCORDANCE  WITH,  THE LAWS OF THE STATE OF NEW YORK.  UNLESS MADE
APPLICABLE IN A SUPPLEMENT  HERETO,  THIS  INDENTURE IS NOT SUBJECT TO THE TRUST
INDENTURE  ACT OF 1939,  AS  AMENDED,  AND SHALL  NOT BE  GOVERNED  THEREBY  AND
CONSTRUED IN ACCORDANCE THEREWITH.

                  SECTION 1.9.  Legal Holidays.

                  In any case where any Payment  Date or any other date on which
principal  of or  interest  on any Note is  proposed  to be paid  shall not be a
Business Day, then  (notwithstanding any other provision of this Indenture or of
the Notes) such payment need not be made on such date,  but shall be made on the
next  succeeding  Business Day with the same force and effect as if made on such
Payment  Date,  or other date on which  principal  of or interest on any Note is
proposed to be paid,  provided that no interest shall accrue for the period from
and after such Payment Date, or any other date on which principal of or interest
on any  Note is  proposed  to be  paid,  as the case  may be,  until  such  next
succeeding Business Day.

                  SECTION 1.10.  Execution in Counterparts.

                  This Indenture may be executed in any number of  counterparts,
each of which  so  executed  shall be  deemed  to be an  original,  but all such
counterparts shall together constitute but one and the same instrument.

                  SECTION 1.11.  Inspection.

                  The Borrower agrees that, on reasonable prior notice,  it will
permit the  representatives  of the  Trustee  or any  Noteholder  holding  Notes
evidencing at least 25% of the Outstanding Principal Amount of the Notes, during
the Borrower's  normal  business  hours, to examine all of the books of account,
records,  reports and other papers of the Borrower,  to make copies  thereof and
extracts therefrom,  and to discuss its affairs,  finances and accounts with its
officers,  employees  and  independent  accountants  (and by this  provision the
Borrower hereby authorizes its accountants to discuss with such  representatives
such affairs,  finances and accounts), all at such reasonable times and as often
as may be reasonably  requested  for the purpose of reviewing or evaluating  the
financial  condition  or  affairs  of the  Borrower  or the  performance  of and
compliance  with the covenants and  undertakings  of the Borrower and the Master
Servicer in this Indenture,  the Receivables  Sale Agreement or any of the other
documents referred to herein or therein. Any expense incident to the exercise by
the Trustee at any time or any Noteholder  during the continuance of any Default
or Event of Default,  of any right under this Section 1.11 shall be borne by the
Borrower.  Nothing  contained herein shall be construed as a duty of the Trustee
to perform such inspection.

                  SECTION 1.12.  Survival of Representations and Warranties.

                  The  representations,  warranties  and  certifications  of the
Borrower made in this Indenture or in any certificate or other writing delivered
by the Borrower pursuant hereto shall survive the authentication and delivery of
the Notes hereunder.

                                   ARTICLE 2.

                                    THE NOTES

                  SECTION 2.1.  General Provisions.

                  (a)  Maximum  Outstanding  Principal  Balance  of  Notes.  The
aggregate  Outstanding  Principal  Amount of the Notes that may be authenticated
and delivered under this Indenture shall not exceed $75,000,000.

                  (b)  Denominations.   The  Notes  may  be  issued  in  minimum
denominations of $500,000 and any integral multiple of $1,000 in excess thereof;
provided  that the  foregoing  shall not  restrict  or prevent  the  transfer in
accordance  with  Section 2.3 of this  Indenture of any Notes having a remaining
Outstanding  Principal Amount of other than an integral  multiple of $1,000,  or
the issuance of a single Note with a denomination less than $500,000.

                  (c) Principal Payments. For each Payment Date, the Noteholders
shall  be  entitled  to  the  Note  Principal  Payment  Amount  (the  "Principal
Payments").  Principal  Payments  on the Notes will be made in  accordance  with
Sections 3.4 or 6.6, as applicable.

                  (d) Interest Payments.  For each Payment Date, the Noteholders
shall be entitled to the Note Interest Payment Amount (the "Interest  Payments")
that has  accrued on the Notes  during the  previous  Due  Period,  plus  unpaid
interest from prior Due Periods,  at the Note Interest Rate.  Interest  Payments
will be made in accordance with Sections 3.4 and 6.6, as applicable.

                  (e) Outstanding  Principal Amount.  The Outstanding  Principal
Amount of the Notes will, at all times,  be equal to the  Outstanding  amount of
Advances made pursuant to the Credit Agreement.

                  (f) Form of Notes.  The Notes  shall be in  substantially  the
form attached hereto as Exhibit B.

                  SECTION 2.2.  Execution, Authentication, Delivery, and Dating.

                  (a) The  Notes  shall be  manually  executed  on behalf of the
Borrower by its Chairman, Vice Chairman, President, or any Vice President.

                  (b) Any Note bearing the signature of an individual who was at
the time of execution  thereof a proper  officer of the Borrower  shall bind the
Borrower,  notwithstanding that such individual ceases to hold such office prior
to the  authentication  and delivery of such Note or did not hold such office at
the date of such Note.

                  (c) No Note  shall  be  entitled  to any  benefit  under  this
Indenture or be valid or obligatory for any purpose unless there appears on such
Note a  certificate  of  authentication  substantially  in the form provided for
herein,  executed by the Trustee by manual signature,  and such certificate upon
any Note shall be conclusive evidence, and the only evidence, that such Note has
been duly  authenticated and delivered  hereunder.  Each Note shall be dated the
date of its authentication.

                  (d) The  Notes  may  from  time to  time  be  executed  by the
Borrower  and  delivered  to the  Trustee  for  authentication  together  with a
Borrower Order to the Trustee directing the  authentication and delivery of such
Notes and thereupon the same shall be authenticated and delivered by the Trustee
in accordance with such Borrower Order.

                  SECTION 2.3.  Transfer and Exchange.

                  (a) The Borrower shall cause to be kept at the Corporate Trust
Office a register  (the "Note  Register") in which,  subject to such  reasonable
regulations  as the Trustee may  prescribe,  the Borrower  shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering  Notes and transfers of Notes as
herein provided.

                  No transfer  of any Note may be made  unless that  transfer is
made pursuant to an effective  registration  statement  under the Securities Act
and  an  effective  registration  or  a  qualification  under  applicable  state
securities  laws,  or is  made in a  transaction  that  does  not  require  such
registration  or  qualification  because  the  transfer  satisfies  one  of  the
following:  (i)  such  transfer  is in  compliance  with  Rule  144A  under  the
Securities  Act,  to a  person  who  the  transferor  reasonably  believes  is a
Qualified  Institutional  Buyer (as defined in Rule 144A) that is purchasing for
its own  account or for the account of a  Qualified  Institutional  Buyer and to
whom notice is given that such transfer is being made in reliance upon Rule 144A
under the Securities Act as certified by such  transferee in a letter  delivered
to the  Note  Registrar  in the  form  of  Exhibit  C  hereto;  (ii)  after  the
appropriate  holding  period,  such  transfer is pursuant to an  exemption  from
registration  under the Securities Act provided by Rule 144 under the Securities
Act; (iii) such transfer is to a transferee  who is an accredited  investor in a
transaction exempt from the registration  requirements of the Securities Act, in
each case in accordance with any applicable  securities laws of any State of the
United  States or (iv) such transfer is otherwise  exempt from the  registration
requirements  of the  Securities  Act. In order to assure  compliance  with such
laws,  the  Noteholder's  prospective  transferee  referred to in the  preceding
clauses  (iii) or (iv) must  deliver  an  investment  letter  certifying  to the
Borrower and the Trustee as to the facts  surrounding  such transfer in the form
of Exhibit D hereto.  Except in the case of a transfer of Notes to a  transferee
referred to in the preceding clause (i) or, in general, a transfer that is to be
made  after two years from the  Issuance  Date,  the  Trustee  shall  require an
opinion of counsel  satisfactory  to it to the effect that such  transfer may be
made pursuant to an exemption from the Securities Act without such  registration
(which  opinion of counsel  shall not be an expense of the  Trustee,  the Master
Servicer or the Borrower).  None of the Borrower,  the Master Servicer, the Note
Registrar or the Trustee is obligated to register or qualify the Notes under the
Securities  Act or any other  securities law or to take any action not otherwise
required  under  this  Indenture  to permit  the  transfer  of any Note  without
registration.

                  Neither the Trustee nor the Note  Registrar  shall  effect the
registration  of transfer of any Note, if after giving effect to such  transfer,
the Notes would be held by more than ninety-eight Noteholders.

                  (b) Subject to Section 2.3(a), upon surrender for registration
of  transfer  of any Note at the office of the  Trustee  designated  pursuant to
Section 8.2 for such purpose,  the Borrower  shall execute and the Trustee shall
authenticate  and  deliver,  in  the  name  of  the  designated   transferee  or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate original principal amount.

                  (c) Every Note presented or surrendered  for  registration  of
transfer or for exchange shall be duly endorsed,  or be accompanied by a written
instrument of transfer in form satisfactory to the Borrower and the Trustee duly
executed, by the holder thereof or his attorney duly authorized in writing.

                  (d) No service  charge shall be made for any  registration  of
transfer  or  exchange  of Notes,  but the  Borrower  or the Trustee may require
payment  by the  transferor  of a sum  sufficient  to  cover  any  Tax or  other
governmental  charge that may be imposed in connection with any  registration of
transfer or exchange of Notes,  other than exchanges pursuant to Section 9.5 not
involving any transfer.

                  (e) The Master Servicer agrees to cause the Borrower,  and the
Borrower  agrees,  to provide such information as required under Rule 144A under
the  Securities  Act so as to allow resales of Notes to Qualified  Institutional
Buyers in accordance herewith.

                  SECTION 2.4.  Mutilated, Destroyed, Lost and Stolen Notes.

                  (a) If any mutilated Note is  surrendered to the Trustee,  the
Borrower  shall  execute  and the  Trustee  shall  authenticate  and  deliver in
exchange  therefore a replacement  Note of like tenor and  principal  amount and
bearing a number not contemporaneously outstanding.

                  (b) If  there  shall  be  delivered  to the  Borrower  and the
Trustee (i) evidence to their satisfaction of the destruction,  loss or theft of
any Note and (ii) such  security or indemnity as may be required by them to save
each of them and any agent of either of them  harmless  then,  in the absence of
actual notice to the Borrower or the Trustee that such Note has been acquired by
a bona fide  purchaser,  the  Borrower  shall  execute  and upon its request the
Trustee shall authenticate and deliver,  in lieu of any such destroyed,  lost or
stolen Note, a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.

                  (c) In case the final  installment  of  principal  on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable,  the  Borrower in its  discretion  may,  instead of
issuing a replacement Note, pay or cause the Trustee to pay such Note.

                  (d) Upon the  issuance  of any  replacement  Note  under  this
Section  2.4,  the  Borrower  or the  Trustee  may  require  the  payment by the
Noteholder  of a sum  sufficient to cover any Tax or other  governmental  charge
that may be imposed as a result of the issuance of such replacement Note.

                  (e) Every replacement Note issued pursuant to this Section 2.4
in lieu of any  destroyed,  lost or stolen  Note shall  constitute  an  original
additional contractual obligation of the Borrower, whether or not the destroyed,
lost or stolen  Note shall be at any time  enforceable  by anyone,  and shall be
entitled to all the benefits of this Indenture equally and proportionately  with
any and all other Notes duly issued hereunder.

                  (f) The provisions of this Section 2.4 are exclusive and shall
preclude (to the extent  lawful) all other  rights and remedies  with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.

                  SECTION 2.5.  Payment of Interest and Principal; Rights
                                Preserved.

                  (a) Any  installment of interest or principal,  payable on any
Note  that is  punctually  paid  or duly  provided  for by or on  behalf  of the
Borrower  on the  applicable  Payment  Date shall be paid to the Person in whose
name such Note was  registered  at the close of  business on the Record Date for
such Payment Date by check mailed to the address specified in the Note Register,
or upon the request of a Holder by wire transfer of federal funds to the account
and number specified in the Note Register,  in each case on such Record Date for
such Person  (which shall be, as to each  original  purchaser of the Notes,  the
account and number specified by such purchaser to the Trustee in writing, or, if
no such account or number is so specified, then by check mailed to such Person's
address as it appears in the Note Register on such Record Date).

                  (b) All reductions in the principal  amount of a Note effected
by payments  of  installments  of  principal  made on any Payment  Date shall be
binding  upon  all  Holders  of  such  Note  and of any  Note  issued  upon  the
registration  of transfer  thereof or in exchange  therefore or in lieu thereof,
whether or not such  payment is noted on such Note.  All  payments  on the Notes
shall be paid without any requirement of presentment but each Holder of any Note
shall be deemed to agree,  by its acceptance of the same, to surrender such Note
at the  Corporate  Trust  Office  against  payment of the final  installment  of
principal of such Note.

                  SECTION 2.6.  Persons Deemed Owners.

                  Prior  to  due  presentment  of a  Note  for  registration  of
transfer,  the  Borrower,  the  Trustee,  and any agent of the  Borrower  or the
Trustee may treat the  registered  Noteholder  as the owner of such Note for the
purpose of  receiving  payment of principal of and interest on such Note and for
all other purposes whatsoever,  whether or not such Note be overdue, and neither
the Borrower, the Trustee, nor any agent of the Borrower or the Trustee shall be
affected by notice to the contrary.

                  SECTION 2.7.  Cancellation.

                  All Notes surrendered for registration of transfer or exchange
or following  final payment  shall,  if surrendered to any Person other than the
Trustee,  be delivered to the Trustee and shall be promptly  canceled by it. The
Borrower  may at any time  deliver to the  Trustee  for  cancellation  any Notes
previously  authenticated  and delivered  hereunder  which the Borrower may have
acquired in any manner whatsoever,  and all Notes so delivered shall be promptly
canceled  by the  Trustee.  No  Notes  shall be  authenticated  in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted  by this  Indenture.  All  canceled  Notes held by the  Trustee may be
disposed  of in the normal  course of its  business or as directed by a Borrower
Order.

                  SECTION 2.8.  Noteholder Lists.

                  The  Trustee  shall  preserve  in  as  current  a  form  as is
reasonably  practicable  the most recent list  available  to it of the names and
addresses of Noteholders.  In the event the Trustee no longer serves as the Note
Registrar,  the Borrower (or any other  obligor upon the Notes) shall furnish to
the Trustee at least 5 Business Days before each Payment Date (and in all events
in  intervals  of not more than 6 months) and at such other times as the Trustee
may  request in  writing a list in such form and as of such date as the  Trustee
may reasonably require of the names and addresses of Noteholders.

                  SECTION 2.9.  Treasury Notes.

                  In  determining   whether  the  Noteholders  of  the  required
Outstanding  Principal  Amount of the Notes  have  concurred  in any  direction,
waiver or consent,  Notes held or redeemed by the Borrower or any other  obligor
upon the Notes or held by an  Affiliate  of the  Borrower or such other  obligor
shall be considered as though not  outstanding,  except that for the purposes of
determining  whether  the  Trustee  shall be  protected  in  relying on any such
direction,  waiver or  consent,  only Notes which a  Responsible  Officer of the
Trustee knows are so owned shall be so disregarded.

                                   ARTICLE 3.

                            ACCOUNTS; COLLECTION AND
                         APPLICATION OF MONEYS; REPORTS

                  SECTION 3.1.  Trust Accounts; Investments by Trustee.

                  (a)  On  or  before  the  Issuance  Date,  the  Trustee  shall
establish in the name of the Trustee for the benefit of the  Noteholders and the
Borrower to the extent of their interests therein as provided in this Indenture,
the Trust Accounts, which accounts shall be Eligible Bank Accounts.

               Subject to the further  provisions  of this Section  3.1(a),  the
Trustee shall,  upon receipt or upon transfer from another account,  as the case
may be, deposit into such accounts all amounts received by it which are required
to be deposited therein in accordance with the provisions of this Indenture. All
such amounts and all  investments  made with such amounts,  including all income
and other  gain  from such  investments,  shall be held by the  Trustee  in such
accounts as part of the Trust Estate as herein  provided,  subject to withdrawal
by the  Trustee  in  accordance  with,  and for the  purposes  specified  in the
provisions of, this Indenture.

                  (b) The Trustee  shall hold in trust but shall not be required
to deposit in any  account  specified  pursuant  to Section  3.1(a) any  payment
received  by it until  such time as the  Trustee  shall have  identified  to its
reasonable  satisfaction  the nature of such payment and, on the basis  thereof,
the proper  account or accounts into which such payment is to be  deposited.  In
determining  into which of the  accounts,  if any,  referred to above any amount
received by the Trustee is to be deposited,  the Trustee may  conclusively  rely
(in the  absence of bad faith on the part of the  Trustee)  on the advice of the
Master  Servicer.  Unless the Trustee is advised  differently  in writing by the
Master  Servicer,  the Trustee shall assume that any amount remitted to it is to
be deposited into the Collection Account. The Trustee may establish from time to
time  such  deadline  or  deadlines  as it shall  determine  are  reasonable  or
necessary  in the  administration  of the Trust  Estate  after which all amounts
received or collected by the Trustee on any day shall not be deemed to have been
received or collected until the next succeeding Business Day.

                  (c)  None  of  the  Master  Servicer,   the  Trustee  nor  the
institution  then acting as Trustee shall have any right of set-off with respect
to any Trust Account, or any investment therein.

                  (d) So long as no Event of Default  shall have occurred and be
continuing,  all or a  portion  of the  amounts  in any Trust  Account  shall be
invested and reinvested by the Trustee pursuant to the written directions of the
Master Servicer in one or more Eligible Investments. Subject to the restrictions
on the maturity of investments set forth in Section 3.1(f),  the Master Servicer
may authorize the Trustee to make the specific  Eligible  Investments  set forth
therein,  to make Eligible  Investments  from time to time  consistent  with the
general instructions set forth therein, or to make specific Eligible Investments
pursuant  to  instructions  received  in writing or by  telegraph  or  facsimile
transmission  from the  employees  of the Master  Servicer,  as the case may be,
identified  therein,  in each case in such amounts as the Master  Servicer shall
specify.

                  (e) In the event that  either (i) the  Master  Servicer  shall
have failed to give investment  directions to the Trustee by 12:30 P.M., Chicago
time on any Business Day on which there may be uninvested  cash or (ii) an Event
of Default shall be continuing,  the Trustee shall promptly  invest and reinvest
the funds then in the designated Trust Account to the fullest extent practicable
in one or more Eligible Investments meeting the criteria in paragraph (e) of the
definition of "Eligible  Investments",  in accordance with Section  3.2(d).  All
investments  made by the Trustee  shall mature no later than the  maturity  date
therefore permitted by Section 3.1(f).

                  (f) No  investment  of any  amount  held in any Trust  Account
shall  mature later than the Deposit  Date  preceding  the Payment Date which is
scheduled to occur immediately  following the date of investment.  All income or
other gains (net of losses) from the investment of moneys deposited in any Trust
Account  shall be  deposited  by the Trustee in such  account  immediately  upon
receipt.

                  (g) Any  investment  of any funds in any Trust Account and any
sale of any investment held in such accounts,  shall be made under the following
terms and conditions:

                           (i) each such investment shall be made in the name of
         the Trustee or in the name of a nominee of the Trustee, in each case in
         such  manner as shall be  necessary  to maintain  the  identity of such
         investments as assets of the Trust Estate;

                          (ii) any  certificate or other  instrument  evidencing
         such investment shall be delivered directly to the Trustee or its agent
         and the Trustee shall have sole possession of such instrument,  and all
         income on such investment; and

                         (iii) the proceeds of any sale of an  investment  shall
         be  remitted  by the  purchaser  thereof  directly  to the  Trustee for
         deposit in the account in which such investment was held.

                  (h) If any amounts are needed for disbursement  from any Trust
Account and sufficient  uninvested funds are not collected and available therein
to make such  disbursement,  in the  absence of a written  order from the Master
Servicer for the liquidation of investments held therein in an amount sufficient
to provide the required funds,  the Trustee shall select and cause to be sold or
otherwise  converted  to cash a  sufficient  amount of the  investments  in such
accounts.

                  (i) The Trustee  shall not in any way be held liable by reason
of any  insufficiency in any Trust Account  resulting from losses on investments
made in accordance  with the provisions of this Section 3.1  including,  but not
limited to, losses  resulting from the sale or  depreciation in the market value
of such investments  (but the institution  serving as Trustee shall at all times
remain liable for its own debt  obligations,  if any,  constituting part of such
investments).  The Trustee shall not be liable for any investment  made by it in
accordance  with this  Section 3.1 on the grounds that it could have made a more
favorable  investment or a more  favorable  selection for sale of an investment.
The  Trustee may trade with itself or an  Affiliate  in the  purchase or sale of
Eligible Investments.

                  SECTION  3.2.   Establishment   and   Administration   of  the
Collection Account. (a) The Trustee shall cause to be established and maintained
a Collection  Account for the Notes issued  hereunder.  The  Collection  Account
shall be an Eligible  Bank Account  initially  established  at the office of the
Trustee,  bearing the following  designation "TW Holdings II, Inc. -- Collection
Account,  LaSalle  National  Bank,  as Trustee".  The Trustee  shall possess all
right,  title  and  interest  in all funds on  deposit  from time to time in the
Collection Account and in all proceeds thereof.  The Collection Account shall be
under the sole  dominion  and  control  of the  Trustee  for the  benefit of the
Noteholders as their interests appear in the Trust Estate.  If, at any time, the
Collection  Account ceases to be an Eligible Bank Account,  the Master  Servicer
and the Trustee shall within 5 Business Days establish a new Collection  Account
which  shall  be  an  Eligible  Bank  Account,  transfer  any  cash  and/or  any
investments to such new Collection Account and from the date such new Collection
Account is established, it shall be the "Collection Account".

                  (a)(b) The Master  Servicer agrees to cause amounts on deposit
in the Clearing  Account to be deposited  to the  Collection  Account on a daily
basis as provided in Section 5.3 hereof.

                  (c) The Master Servicer shall direct the Trustee,  in writing,
to invest the amounts in each  Collection  Account in  accordance  with Sections
3.1(d), (e), (f) and (g).

                  (d) The Master  Servicer shall instruct the Trustee in writing
to make  withdrawals and payments from each Collection  Account for the purposes
of carrying out the Master Servicer's and the Trustee's duties hereunder.

                  SECTION 3.3.  Reserved.

                  SECTION 3.4.  Distributions.

                  (a) On each  Payment Date prior to an  Acceleration  Event (as
defined below), the Trustee shall disburse the Available Funds in the Collection
Account, based on the Servicer Report, in the following priority:

                           (i) to the Trustee, the Trustee Fee, plus any accrued
         and unpaid  Trustee Fees from any prior Due Periods and,  reimbursement
         to the Trustee of reasonable  expenses  incurred during the related Due
         Period;

                          (ii) if TWRI is no longer the Master Servicer,  to the
         Master  Servicer,  the Master Servicer Fee, plus any accrued and unpaid
         Master Servicer Fees from any prior Due Periods;

                         (iii) to the  Noteholders,  interest in an amount equal
         to Note  Interest  Payment  Amount,  plus any  accrued  and unpaid Note
         Interest Payment Amount from prior Due Periods;

                          (iv)  to  the   Noteholders,   in   reduction  of  the
         Outstanding  Principal Amount of the Notes, an amount equal to the Note
         Principal Payment Amount;

                           (v) so long as TWRI is the  Master  Servicer,  to the
         Master  Servicer,  the Master Servicer Fee, plus any accrued and unpaid
         Master Servicer Fees from any prior Due Periods;

                          (vi) the remaining funds in the Collection Account, if
         any, to or at the direction of the Borrower.

                  (b)  On  each  Payment  Date   occurring  upon  or  after  the
occurrence  of an Event of Default  specified  in this  Indenture  or the Credit
Agreement  upon  which the  Outstanding  Principal  Amount of the Notes has been
accelerated  in  accordance  with  Section  6.2  of  this  Indenture  (each,  an
"Acceleration Event"), the Trustee shall, based on the Servicer Report, disburse
the balance of Available Funds in the following priority:

                           (i) to the Trustee, the Trustee Fee, plus any accrued
         and unpaid Trustee Fees from any prior Due Periods and reimbursement of
         reasonable  expenses  incurred  by the  Trustee  during the related Due
         Period and any unreimbursed reasonable expenses from prior Due Periods;

                          (ii) if TWRI is no longer the Master Servicer,  to the
         Master  Servicer,  the Master Servicer Fee, plus any accrued and unpaid
         Master Servicer Fees from any prior Due Periods;

                         (iii) to the  Noteholders,  interest in an amount equal
         to Note  Interest  Payment  Amount,  plus any  accrued  and unpaid Note
         Interest Payment Amount from any prior Due Periods;

                          (iv) to the Noteholders, all remaining Available Funds
         until the Outstanding Principal Amount of the Notes has been reduced to
         zero; and

                           (v) if TWRI is the  Master  Servicer,  to the  Master
         Servicer,  the Master  Servicer Fee, plus any accrued and unpaid Master
         Servicer Fees from any prior Due Periods;

                          (vi) the  remainder  of funds  held in the  Collection
         Account to or at the direction of the Borrower.

                  SECTION 3.5.  Certifications  to Noteholders.  On each Payment
Date,  concurrently with the distribution or allocation to the Noteholders,  the
Trustee shall furnish to the  Noteholders a  certification  (i) that the related
Servicer  Report  is  complete  on its  face,  and (ii)  that no Event of Master
Servicer Termination has occurred, or if an Event of Master Servicer Termination
has  occurred  and is  continuing,  specifying  the  Event  of  Master  Servicer
Termination or such event and its status.

                  Notwithstanding   any  provision  of  this  Indenture  to  the
contrary,  the  Trustee  shall have no duty or  obligation  with  respect to the
information provided to it, including, without limitation, to verify, monitor or
otherwise supervise or administer the performance of the Master Servicer.

                  SECTION 3.6. Returned Payments. If the principal amount of any
Note or any other amount payable under any Note (including  interest) shall have
been reduced by any  distribution or allocation of any portion of collections or
other Payments on Trust Estate Receivables,  and thereafter such distribution or
allocation  is  rescinded  or must  otherwise be returned by or on behalf of the
recipient thereof to the Borrower, the Trust Estate or any other creditor of the
Borrower for any reason, such principal or other amount distributed or allocated
in respect of such Note shall be increased by the amount of such distribution or
allocation  to the  extent so  returned,  all as  though  such  distribution  or
allocation had not been made.

                                   ARTICLE 4.

                                THE TRUST ESTATE

               SECTION  4.1.  Acceptance  by  Trustee.   (a)  Pursuant  to  each
Collateral  Assignment,  the Trustee will acknowledge the related  conveyance of
the  Assets and other  assets  constituting  the Trust  Estate  conveyed  by the
Borrower pursuant to such Collateral Assignment,  and the Trustee will hold such
Receivables and all other assets  comprising the Trust Estate,  in trust for the
benefit of the Noteholders subject to the terms and provisions hereof.  Pursuant
to Section 4.7 hereof,  the Trustee  hereby  appoints the  Custodian to hold the
related Receivable Documents on behalf of the Trustee.

                  (a)(b) The Trustee shall perform its duties under this Section
4.1 and  hereunder  on behalf of the Trust  Estate  and for the  benefit  of the
Noteholders  in accordance  with the terms of this  Indenture and applicable law
and, in each case,  taking into  account its other  obligations  hereunder,  but
without regard to:

                         (i) any relationship  that the Trustee or any Affiliate
of the Trustee may have with the related Obligor;

                          (ii) the  ownership  of any Note by the Trustee or any
Affiliate of the Trustee;

                         (iii) the Trustee's right to receive  compensation  for
         its services  hereunder or with respect to any particular  transaction;
         or

                          (iv) the ownership, or holding in trust for others, by
         the Trustee of any other loans or property.

                  SECTION  4.2.  Subsequent   Transfers.   (a)  Subject  to  the
satisfaction of the conditions  specified in Section 4.3 hereof and the terms of
this  Indenture,  on each  Assignment  Date,  the  Borrower  shall pledge to the
Trustee,  on behalf of the Trust  Estate,  and the Trust Estate shall accept the
pledge of Receivables (each, a "Transfer") from the Borrower.

                  (a)(b) On any Business Day which is an  Assignment  Date after
the Issuance Date,  the Borrower shall give the Master  Servicer and the Trustee
written notice of each Transfer (in each case, a "Transfer  Notice")  specifying
the  Outstanding  Principal  Balance of each  Trust  Estate  Receivable  pledged
thereby to the Trust Estate on such  Assignment  Date. The Master Servicer shall
independently  confirm and hereby represents and warrants as to, and the Trustee
may,  without  any  duty to make  any  independent  investigation  with  respect
thereto, rely on, the facts set forth in such Transfer Notice.

                  (c) On  each  Assignment  Date  following  its  delivery  of a
Transfer  Notice,  the Borrower will complete,  execute and deliver a Collateral
Assignment  to the  Trustee on behalf of the Trust  Estate.  The  Trustee  shall
deliver  executed copies thereof to the Master  Servicer,  the Borrower and each
Noteholder. On each Assignment Date, the Borrower shall also deliver an original
executed UCC-1  financing  statement with exhibits which describe the collateral
as the Receivables subject to the related Transfer.

                  (d)  Following   delivery  of  a  duly   executed   Collateral
Assignment and a UCC-1  financing  statement and subject to the  satisfaction of
the conditions set forth in Sections 4.2(a) and 4.3, all  Receivables  specified
in such Collateral Assignment (including all Payments allocable to principal and
interest received after the related Cut-off Date) will be pledged to the Trustee
on behalf of the Trust Estate and such Receivables  shall become Assets and part
of  the  Trust  Estate.  The  Borrower  shall  deliver  a  revised  Schedule  of
Receivables to the Trustee and the Noteholders.

                  SECTION 4.3.  Conditions Precedent to All Transfers.

                  Each  Transfer  shall be subject to the  conditions  precedent
that:

                  (a) On the  related  Assignment  Date  (including  the initial
Transfer  on the date  hereof),  the  Borrower  (with  respect to itself and the
related Receivables) and the Master Servicer shall have certified and are deemed
to have  represented and warranted  hereunder and shall so represent and warrant
in the related Collateral Assignment that:

                           (i) the  representations  and  warranties  (A) of the
         Borrower and TWRI set forth in Sections 11.1 and 11.2 hereof and (B) of
         the Master Servicer set forth herein, are true and correct on and as of
         such date,  before and after giving effect to such Transfer,  as though
         made on and as of such date;

                          (ii) no event has occurred,  or would result from such
         Transfer  or from the  application  of the  proceeds  therefrom,  which
         constitutes an Event of Default or would constitute an Event of Default
         but for the requirement that notice be given or time elapse or both;

                         (iii)  each of the  Borrower  and  TWRI is in  material
         compliance  with  each of its  covenants  set forth  herein  and in all
         Warehouse Facility Documents; and

                          (iv) no event has occurred which  constitutes an Event
         of Master Servicer  Termination or would  constitute an Event of Master
         Servicer  Termination but for the  requirement  that notice be given or
         time elapse or both.

                  (b) The Borrower  shall have  delivered to the Trustee and the
Noteholders an executed copy of the related Collateral  Assignment,  an executed
UCC-1 financing statement and an Officer's  Certificate stating and representing
and  warranting  (and  hereby  represents  and  warrants)  that  all  conditions
precedent  to the  effectiveness  thereof as  specified  herein  shall have been
satisfied;

                  (c) The Custodian shall have confirmed  receipt of the related
Receivable  Documents and shall have  delivered a Receipt as provided in Section
4.8 hereof; and

                  (d) No Responsible Officer of the Trustee has actual knowledge
that any conditions to such Transfer have not been fulfilled,  and no Noteholder
shall have notified the Trustee of the same, and the Trustee shall have received
such other documents,  opinions,  certificates and instruments as any Noteholder
or the Trustee may request.


                  SECTION 4.4. Grant of Security  Interest;  Tax Treatment.  (a)
For  purposes of legal form and the  Intended  Tax  Characterization,  it is the
intention of the parties hereto that this Indenture and each related  Collateral
Assignment shall constitute a security  agreement under applicable law, and that
the  Borrower  has granted to the Trustee on behalf of the Trust  Estate for the
benefit of the  Noteholders  and other  creditors of the Trust  Estate,  a first
priority  perfected  security interest in all of the Borrower's right, title and
interest in, to and under the Assets and the other assets constituting the Trust
Estate.  The  Trustee  shall  treat  this  Indenture  and the Trust  Estate as a
security  device for tax  purposes  and shall not file tax  returns or obtain an
employer identification number on behalf of the Trust Estate; provided, however,
that if the Notes are  recharacterized  as equity  interests in the Trust Estate
for tax purposes,  the parties  hereto agree to treat such class as  partnership
interests in a partnership  under the New York Uniform  Partnership Act in which
the Borrower was a general partner and each such recharacterized  Noteholder was
a limited  partner.  In the event of such  treatment,  the Master Servicer shall
file all necessary  tax returns or reports.  The  provisions  of this  Indenture
shall be construed in furtherance of the foregoing  intended tax treatment.  The
conveyance  by the  Borrower of the Assets to the Trustee on behalf of the Trust
Estate on each  Assignment  Date shall not  constitute  and are not  intended to
result in an  assumption by the Trustee or any  Noteholder of any  obligation of
the  Borrower or the Master  Servicer to the  obligors,  or any other  Person in
connection with the Assets.

                  (a)(b) It is the  intention of the parties  hereto that,  with
respect to all Taxes,  the Notes will be treated as indebtedness of the Borrower
to the Noteholders secured by the Assets (the "Intended Tax  Characterization").
The  Borrower,  the Master  Servicer  and the  Trustee,  by  entering  into this
Indenture,  and each Noteholder by the purchase of a Note,  agree to report such
transactions for purposes of all Taxes in a manner  consistent with the Intended
Tax Characterization.

                  (c) The Borrower and the Master  Servicer shall take no action
inconsistent  with the  Trustee's  interest in the Assets and shall  indicate or
shall cause to be  indicated  in its books and  records  held on its behalf that
each Trust Estate Receivable and the other assets  constituting the Trust Estate
has  been  pledged  to the  Trustee  on  behalf  of the  Trust  Estate  and  the
Noteholders.

                  SECTION 4.5. Further Action  Evidencing  Assignments.  (a) The
Borrower and the Master  Servicer  each agrees that,  from time to time,  at its
respective expense, it will promptly execute and deliver all further instruments
and  documents,   and  take  all  further  action,  that  may  be  necessary  or
appropriate,  or that the Master  Servicer or the Trustee or the Noteholders may
reasonably  request,  in order to perfect,  protect or more fully  evidence  the
security  interest in the Assets or to enable the Trustee to exercise or enforce
any of its  rights  hereunder,  and under  any  Collateral  Assignment.  Without
limiting  the  generality  of the  foregoing,  the  Borrower  will,  without the
necessity  of a request  and upon the  request  of the  Master  Servicer  or the
Trustee,  execute and file (or cause to be executed and filed) such financing or
continuation statements,  or amendments thereto or assignments thereof, and such
other  instruments  or notices,  as may be necessary or  appropriate  including,
without limitation, recording and filing UCC-1 financing statements,  amendments
or continuation statements with such state and county offices as is necessary to
perfect a security  interest:  (i) each  Assignment  Date, and (ii) prior to the
effective date of any change of the name, identity or structure or relocation of
its  chief  executive  office  or any  change  that  would or could  affect  the
perfection  pursuant to any  financing  statement or  continuation  statement or
assignment  previously  filed  or  make  any  UCC-1  or  continuation  statement
previously  filed pursuant to this  Indenture  seriously  misleading  within the
meaning of  applicable  provisions  of the UCC (and the Borrower  shall give the
Trustee at least 30  Business  Days  prior  notice of any  circumstance  in (ii)
before the same  occurs).  The Borrower  shall  deliver  promptly to the Trustee
file-stamped copies of any such filing.

                  (a)(b) (i) The  Borrower  hereby  grants to each of the Master
Servicer and the Trustee a power of attorney to execute all  documents on behalf
of the Borrower as may be necessary or desirable to effectuate the foregoing and
(ii) the Master  Servicer  hereby  grants to the  Trustee a power of attorney to
execute all  documents  on behalf of the Master  Servicer as may be necessary or
desirable to effectuate the foregoing;  provided, however, that such grant shall
not  create a duty on the  Trustee  to file,  prepare,  record or monitor or any
responsibility for the contents or adequacy of any such documents.

                  SECTION 4.6. Substitution of Receivables and Release of Liens.
(a) From time to time,  the Borrower  may Grant  Substitute  Receivables  to the
Trustee for inclusion in the Trust Estate and may contemporaneously  request the
release  of a Trust  Estate  Receivable  (i) for which the  Borrower  intends to
effect  a  Liquidation,  (ii)  for  which  there  is a  breach  of  any  of  the
representations  and  warranties  set forth in Sections 11.1 or 11.2,  (iii) for
which original  Receivable  Documents required hereunder have not been delivered
to the  Custodian  which  would  adversely  affect the  Trustee's  or the Master
Servicer's  ability to enforce the  obligations  of the Obligor,  (iv) for which
filings or other actions  required in Section 4.5 have not been taken, (v) which
has  ceased to be an  Eligible  Receivable,  (vi) for which all  amounts  due in
respect of such Trust  Estate  Receivable  have been paid in full,  or (vii) for
which the related Obligor wishes to effect an Upgrade.

                  (b) Upon  delivery  of (i) a  Collateral  Assignment  for such
Substitute  Receivable,  and (ii)  delivery of a Receipt by the Custodian of the
Receivable  Documents for such Substitute  Receivable,  the Trustee on behalf of
the Trust Estate shall release such Trust Estate  Receivable and shall execute a
request for release  substantially in the form attached as Exhibit F (a "Request
for Release")  prepared by the Master Servicer which the Trustee will deliver to
the Custodian to release the related Receivable  Documents to the Borrower,  and
the Trustee shall assign without representation or warranty and without recourse
to the  Borrower  all of the Trust  Estate's  right,  title and interest in such
Trust  Estate  Receivable.  Upon  such  substitution,  such  Receivable  will be
released from the lien of the  Indenture.  All documents of assignment  shall be
prepared in accordance with Section 4.2 hereof.

                  SECTION 4.7. Appointment of Custodian;  Delivery of Receivable
Documents;  Verification (a) The Trustee hereby appoints Sage Systems, Inc. (the
"Custodian"), in its independent corporate capacity, as the custodian and bailee
with respect to the  Receivable  Documents  that are related to the Trust Estate
Receivables.  The  Custodian  hereby  accepts  such  appointment  and  agrees to
maintain and hold all such Receivable Documents received by it for the exclusive
benefit of the  Trustee,  as trustee for the  Noteholders.  With respect to such
Receivable  Documents,  the  Custodian  agrees  to act in  accordance  with this
Indenture  and in  accordance  with  any  directions  of the  Trustee.  Under no
circumstances  shall the  Custodian  (i) deliver  possession  of any  Receivable
Documents to the Borrower or any other Person,  or (ii) take any directions with
respect to any  Receivable  Documents  from the  Borrower  or any other  Person,
without the express written consent of the Trustee or the Noteholders.

         (b)  On a  date  at  least  five  Business  Days  prior  to a  proposed
Assignment  Date, the Borrower shall deliver or cause to be delivered (A) to the
Custodian,  Trustee and each Noteholder (i) a draft Collateral  Assignment,  and
(ii) a revised  draft of a Schedule  of  Receivables,  which  shall  include the
Receivables  the Borrower  wishes to pledge to the Trust Estate,  and (B) to the
Custodian,  each  Receivable  Document  listed in the  definition of "Receivable
Documents".

         (c) Upon receipt of the documents described in (b) above, the Custodian
shall verify that (i) all  documents  required to be delivered to it pursuant to
this Indenture are in the  Custodian's  possession,  (ii) such documents  appear
regular on their face and relate to the  appropriate  Receivable and none of the
Receivable Documents contains evidence of any claims,  liens, security interests
or  encumbrances  (other  than the Lien of this  Indenture),  and that (iii) the
information  contained  in the  Schedule  of  Receivables  matches  the  related
information in the Receivable Documents.

         If the Custodian determines from such verification that any discrepancy
or  deficiency  exists with respect to any  Receivable  Document,  the Custodian
shall  note such  discrepancy  or  deficiency  on a  schedule  (a  "Schedule  of
Exceptions") which the Custodian shall deliver (in both hard copy and electronic
format  acceptable to the  Noteholders)  to the  Borrower,  the Trustee and each
Noteholder  within two Business Days prior to the proposed  Assignment Date. The
delivery of such Schedule of Exceptions shall be the Custodian's  representation
that, other than the discrepancies  and deficiencies  described in such Schedule
of Exceptions,  all Receivable  Documents required to be delivered hereunder are
in the possession of the  Custodian.  The Trustee shall not accept the pledge of
Receivables  that are listed in such Schedule of Exceptions  without the express
written consent of the Noteholders.

                  SECTION  4.8.  Receipts.   On  the  Business  Day  immediately
preceding an Assignment Date, the Custodian shall deliver (in both hard copy and
electronic format  acceptable to the Noteholders) (i) an original  certification
and  receipt  in the form  attached  hereto as  Exhibit G (a  "Receipt")  to the
Trustee, and (ii) copies to the Borrower and each Noteholder. Each Receipt shall
include a list of all Trust Estate  Receivables,  including  such newly  pledged
Trust  Estate  Receivables,  for  which  the  Custodian  is  holding  Receivable
Documents.

                  SECTION 4.9.      Duties of Custodian.

                  (a) Standard of Care. The Custodian shall use reasonable care,
in accordance with the standard  customs adhered to by institutions  that act as
custodians in the performance of its obligations hereunder.

                  (b)  Facilities.   The  Custodian  shall  maintain  continuous
custody of all items delivered to it in secure fireproof  facilities  located at
2553 B 152nd Avenue,  Space #15K2,  Redmond,  Washington  98052.  All Receivable
Documents  will be marked and  physically  separated  from the files relating to
other  receivables  for which the Custodian holds on behalf of itself or others.
The  Custodian  shall provide  access to the  facilities to the Trustee and each
Noteholder  or  their  related  representatives  at such  time as the  each  may
reasonably request.

                  (b)  Reviews.  The  Custodian  shall  conduct,  or cause to be
conducted, periodic reviews of all items held by it under this Indenture in such
a manner as shall enable the Trustee and each  Noteholder to verify the accuracy
of the Custodian's record keeping. The Custodian shall immediately report to the
Trustee and each Noteholder of any defect with respect to a Receivable  Document
or any failure on its part to hold the Receivable Documents as herein provided.

                  (c)  Release  of  Documents.  Upon  receipt  of a Request  for
Release as  provided in Section 4.6 hereof,  the  Custodian  shall,  within five
Business Days,  deliver the requested  Receivable  Documents as directed in such
Request  for  Release.  Receivable  Documents  properly  released as provided in
Section 4.6 shall be free of the lien of this Indenture. Upon notice of an Event
of Default  whereby  the  Assets are to be  liquidated  under  Section  6.3 or a
Securitization  Take-out  from the Trustee,  the  Custodian  shall  cooperate to
effect the  transfer of the  Receivable  Documents  to such third  parties as is
necessary.

                  (f)  Insurance.  The  Custodian  shall,  at its  own  expense,
maintain at all times during the existence of this  Indenture,  and keep in full
force and effect (a) fidelity insurance,  (b) theft of document  insurance,  (c)
forgery insurance,  and (d) insurance covering the risk of errors and omissions.
All such insurance  shall be in amounts,  with standard  coverage and subject to
deductibles,  as are customary for insurance typically  maintained by banks that
act as  custodians in similar  transactions.  A  certificate  of the  respective
insurer as to each such policy shall be furnished to the Trustee,  upon request,
stating that such policy is in full force and effect.

                  (g) Updated Receipt and Receivable Data. On each Determination
Date or, within two Business Days of a request from the Trustee or a Noteholder,
the  Custodian  shall  provide  (i) an  updated  Receipt  (in both hard copy and
electronic format acceptable to the Noteholders) to the Trustee or a Noteholder,
as the case may be, as to the  Receivable  Documents in its  possession and (ii)
such electronic data regarding the Trust Estate Receivables reasonably requested
by the Noteholders in a format acceptable to the Noteholders.

                  (h) Copies of  Receivable  Documents.  Upon  request  from the
Trustee or a  Noteholder,  the Custodian  shall,  at the cost and expense of the
requesting  party  (other  than  the  Trustee),  provide  copies  of  Receivable
Documents.

               SECTION 4.10.  Representations  and Warranties of Custodian.  The
Custodian represents and warrants to the Trustee and the Noteholders that:

                  (a) The Custodian (i) is duly organized,  validly existing and
in good standing under the laws of the  jurisdiction  of its  incorporation  and
(ii) has full corporate  power and authority to conduct its business and affairs
as a Custodian;

                  (b) The Custodian  does not control,  is not controlled by nor
is under common control with, the Borrower;

                  (c) In respect of other lenders of TWRI where the Custodian is
acting as  custodian,  the  Custodian  is (i) in  possession  of all loan  files
required by the related loan documents, and (ii) is in compliance with such loan
documents; and

                  (d)  This  Agreement,  when  executed  and  delivered  by  the
Custodian,  shall  constitute  the valid,  legal and binding  obligation  of the
Custodian,  enforceable  against the  Custodian  in  accordance  with its terms,
except as the enforcement  thereof may be limited by applicable  receivership or
similar  debtor  relief  laws and that  certain  equitable  remedies  may not be
available regardless of whether enforcement is sought in equity or at law.

                  SECTION  4.11.  Indemnification  of  Custodian.  The Custodian
hereby agrees to indemnify and hold the Trustee,  the Borrower,  the Noteholder,
their  shareholders,   affiliates,   directors,   officers,  employees,  agents,
successors  and assigns,  harmless from and against any and all losses,  claims,
demands,  causes  of  action,  or other  legal  proceedings,  judgments,  costs,
liabilities and/or expenses,  including all reasonable attorney's fees, incurred
resulting  from the  Custodian's  negligence,  willful  misconduct or failure to
perform its obligations hereunder, or a breach of any representation or warranty
by the Custodian  contained in this  Indenture.  The  foregoing  indemnification
provisions set forth shall survive any termination of this Indenture.

                  SECTION  4.12.  Adverse   Interests.   By  execution  of  this
Indenture,  the Custodian  represents,  warrants and covenants  that it does not
currently  hold, and during the existence of this Indenture  shall not hold, any
adverse  interest,  by  way of  security  or  otherwise,  in  any  Trust  Estate
Receivable, and hereby waives and releases any such interest that it may have in
any Trust Estate  Receivable  as of the date hereof.  Notwithstanding  any other
provisions  of  this  Indenture  and  without  limiting  the  generality  of the
foregoing,  the Custodian  shall not at any time exercise or seek to enforce any
claim, right or remedy, including any statutory or common law rights of set-off,
if any,  that the  Custodian  may  otherwise  have  against all or any part of a
Receivable Document, Trust Estate Receivable or proceeds of either.

                  SECTION 4.13.  Termination of Custodian.  (a) The  Noteholders
may,  without  cause,  request that the  Custodian be replaced  with a successor
custodian.  Upon receipt of written  directions  from the  Noteholders  that the
Noteholders  desire to replace the  Custodian  with a successor  custodian,  the
Trustee shall promptly  notify the Custodian that all its rights and obligations
under this  Indenture  are  terminated  and  immediately  appoint the  successor
custodian as Custodian.

                  (b) Upon receipt of such notice,  the Custodian will take such
actions as are necessary to best facilitate the transition of the performance of
the Custodian's activities to the successor Custodian,  and the Borrower and the
Custodian shall assist the successor  custodian to assume and perform the duties
of  the  Custodian  hereunder  (including,  without  limitation,  the  immediate
delivery of all  Receivable  Documents  and  Receivable  Files to the  successor
custodian).


                                   ARTICLE 5.

                               SERVICING OF ASSETS

                  SECTION  5.1.   Appointment  of  Master   Servicer.   (a)  The
servicing, administering and collection of the Trust Estate Receivables shall be
conducted by the Master Servicer designated from time to time in accordance with
this Section.  Until the Trustee (acting upon the direction of the  Noteholders)
gives notice (the "Successor Notice") to the Borrower and the Master Servicer of
the  designation  of a new Master  Servicer,  TWRI is hereby  designated as, and
hereby  agrees to perform  the duties and  obligations  of,  Master  Servicer in
accordance  with the terms of this  Indenture.  The Trustee and the  Noteholders
agree not to provide  the  Borrower  and the Master  Servicer  with a  Successor
Notice unless an Event of Master Servicer Termination shall have occurred and be
continuing  and shall remain  unremedied  for five  Business  Days after written
notice thereof shall have been given to the Borrower and the Master  Servicer by
the Trustee.

                  (b) Upon receipt of a Successor  Notice or upon resignation of
the Master Servicer  pursuant to Section  5.1(c),  the Master Servicer will take
such  actions  as  are  necessary  to  best  facilitate  the  transition  of the
performance of the Master  Servicer's  activities to the new Master Servicer and
the Borrower and Master  Servicer shall assist the new Master Servicer to assume
and perform the duties of the Master Servicer hereunder.
Without limiting the foregoing, the Master Servicer agrees that:

                         (i) the Trustee,  at the  direction of the  Noteholder,
may direct some or all of the  Obligors to make  payment of all amounts  payable
under any Trust Estate  Receivables  directly to the Trustee,  to the new Master
Servicer or through a lockbox account designated by the Trustee;

                         (ii) the Master Servicer shall at the Master Servicer's
expense,  give notice of the  Trustee's  security  interest in the Trust  Estate
Receivables  to each  Obligor and direct that  payments be made  directly to the
Trustee,  to the new Master Servicer or through a lockbox account  designated by
the Trustee;

                         (iii) the Master Servicer shall (A) assemble all of the
documents,   instruments  and  other  records  (including,  without  limitation,
computer  programs,  tapes and disks) in its possession which evidence the Trust
Estate  Receivables,  the related Receivable  Documents,  or which are otherwise
necessary or desirable to collect such Trust Estate Receivables,  and shall make
the same available to the Trustee or the new Master Servicer at a place selected
by the Trustee, (B) segregate all cash, checks and other instruments received by
it from time to time  constituting  Collections  in a manner  acceptable  to the
Trustee  and shall,  promptly  upon  receipt,  remit all such  cash,  checks and
instruments, duly endorsed or with duly executed instruments of transfer, to the
Trustee,  the new Master Servicer or the Collection Account, as the case may be,
and (C) permit the  successor  Master  Servicer  and its agents,  employees  and
assignees  access  to its  facilities  and its  books,  records,  documents  and
instruments including,  without limitation,  computer programs,  tapes and disks
related to the Trust Estate Receivables; and

                         (iv)  the  Trustee  or  any  new  Master   Servicer  is
authorized  to take any and all steps in the Seller's  name and on behalf of the
Seller necessary or desirable,  in the Trustee's  determination,  to collect all
amounts due under the Trust Estate Receivables,  including,  without limitation,
endorsing  the  Borrower's  name on checks  and other  instruments  representing
payments  on the Trust  Estate  Receivables  and  enforcing  such  Trust  Estate
Receivables and the related Receivable Documents.

                  (c) The Master Servicer's  authorization to act as servicer of
the Trust Estate  Receivables  under this Indenture shall terminate on the first
day  following  the  Commitment  Termination  Date on which (i) the  Outstanding
Principal  Amount of the Notes shall be reduced to zero and (ii) all obligations
hereunder shall have been fully paid and performed.

                  (d) TWRI  acknowledges  that the Trustee  and the  Noteholders
have relied on TWRI's agreement to act as the initial Master Servicer  hereunder
in their  respective  decisions  to execute and deliver the  Warehouse  Facility
Documents. TWRI agrees not to resign as Master Servicer and, until any Successor
Notice  shall have been  delivered  to TWRI,  to  continue to perform all of the
duties of the Master Servicer hereunder unless it shall have determined that the
performance of such duties shall no longer be permitted by applicable law

                  SECTION 5.2.  Duties of Master Servicer; Subservicers.

                  (a) The Master  Servicer,  for the benefit of the Noteholders,
shall be responsible for, and shall, in accordance with its customary practices,
pursue  the  managing,  servicing,   administering,   enforcing  and  making  of
collections  on  the  Trust  Estate  Receivables,   the  Vacation  Credits,  the
enforcement of the Trustee's security interest in the Trust Estate  Receivables,
and if applicable,  the resale of the Vacation Credits,  each in accordance with
applicable law and the standards and procedures set forth in this Indenture. The
Master  Servicer  agrees that in providing such services,  it will exercise that
degree of skill and care  consistent  with that  which  other  servicers  in the
industry  customarily  exercise with respect to similar receivables and Vacation
Credits  owned or  serviced  by  them,  and to the  extent  more  exacting,  the
procedures  used by the Master  Servicer  in respect  of  timeshare  receivables
serviced  by it for its own  account.  The duties of the Master  Servicer  shall
include  collection  and posting of all  payments,  responding  to  inquiries of
Obligors on the Trust Estate Receivables,  investigating delinquencies,  sending
payment coupons to Obligors,  reporting tax information to Obligors,  accounting
for  collections,  using its best  efforts to maintain  the  perfected  security
interest  of the  Trustee  in the  Trust  Estate,  and  furnishing  the  monthly
statements  to the  Trustee  and each  Noteholder  substantially  in the form of
Exhibit E hereto (the "Servicer Report"), which statements shall be delivered no
later than the  Determination  Date for the related  Payment Date.  Each monthly
statement shall be accompanied by a current certificate from the Master Servicer
and each  Subservicer,  if any,  stating that to the best of the  knowledge  and
information  of the Master  Servicer or such  Subservicer  after  examination of
relevant books and records,  TWRI has not sold except to the Trustee, or granted
a security interest in, any Trust Estate  Receivable.  The Master Servicer shall
have, subject to the terms of this Indenture,  full power and authority,  acting
alone and subject only to the specific  requirements  and  prohibitions  of this
Indenture, to do any and all things in connection with such managing, servicing,
administration  and collection that it may deem necessary or desirable.  Without
limiting the generality of the foregoing, but subject to the other provisions of
this Indenture,  the Master Servicer is authorized and empowered by the Trustee,
acting  on behalf of the  Noteholders,  to  execute  and  deliver,  on behalf of
itself, the Trustee,  the Noteholders or any of them, any and all instruments of
satisfaction or  cancellation,  or of partial or full release or discharge,  and
all comparable  instruments,  with respect to the Trust Estate Receivables.  The
Trustee shall  furnish the Master  Servicer with all powers of attorney or other
documents  necessary or appropriate  to enable the Master  Servicer to carry out
its servicing and  administrative  duties  hereunder.  Notwithstanding  anything
herein to the contrary, the Trustee shall have no liability for any action taken
by the Master Servicer under the preceding authorization.

                  (b) The Master Servicer may enter into Subservicing Agreements
with one or more  Subservicers  approved by the Trustee at the  direction of the
Noteholder for the servicing and  administration  of certain of the Trust Estate
Receivables.  The Trustee and the  Noteholders  hereby agree that Sage  Systems,
Inc. is an approved  Subservicer.  The Master  Servicer shall notify the Trustee
promptly if a  Subservicer  is hired.  References  in this  Indenture to actions
taken or to be taken by the  Master  Servicer  in  servicing  the  Trust  Estate
Receivables  include  actions taken or to be taken by a Subservicer on behalf of
the Master Servicer and the Trustee.  Each  Subservicing  Agreement will be upon
such terms and conditions as are not inconsistent with this Indenture and as the
Master  Servicer  and the  Subservicer  have agreed.  The Master  Servicer and a
Subservicer may enter into amendments thereto or different forms of Subservicing
Agreements; provided, however, that any such amendments or different forms shall
be  consistent  with  and  not  violate  the  provisions  of this  Indenture  or
materially adversely affect the rights of the Trustee or the Noteholders.

                  The  Master  Servicer  shall  be  entitled  to  terminate  any
Subservicing  Agreement  that  may  exist  in  accordance  with  the  terms  and
conditions of such  Subservicing  Agreement and without any limitation by virtue
of this Indenture;  provided,  however,  that in the event of termination of any
Subservicing  Agreement by the Master Servicer or the related  Subservicer,  the
Master  Servicer  shall  either act  directly as  servicer of the related  Trust
Estate  Receivables  or enter into a  Subservicing  Agreement  with a  successor
Subservicer  approved  by the  Trustee  which  will be bound by the terms of the
related Subservicing Agreement.

                  Notwithstanding  any  Subservicing   Agreement,   any  of  the
provisions of the Agreement  relating to agreements or arrangements  between the
Master  Servicer or a  Subservicer  or reference to actions  taken  through such
Persons or otherwise,  the Master Servicer shall remain  obligated and liable to
the Trustee and the Noteholders for the servicing and administering of the Trust
Estate  Receivables in accordance with the provisions of this Indenture  without
diminution  of such  obligation  or  liability  by virtue  of such  Subservicing
Agreement or arrangements or by virtue of indemnification from a Subservicer and
to the same  extent  and under the same  terms and  conditions  as if the Master
Servicer alone were servicing and  administering  the Trust Estate  Receivables.
The  Master  Servicer  shall be  entitled  to enter  into any  agreement  with a
Subservicer for indemnification of the Master Servicer, and nothing contained in
this Indenture shall be deemed to limit or modify such indemnification.

                  Any  Subservicing  Agreement  that may be entered into and any
other  transactions  or  servicing  arrangements  relating  to the Trust  Estate
Receivables  involving a Subservicer  or an affiliate of the Master  Servicer in
its  capacity  as such shall be deemed to be between  the  Subservicer  or other
affiliate of the Master  Servicer,  as the case may be, and the Master  Servicer
alone,  and the Trustee and the Noteholders  shall not be deemed parties thereto
and shall  have no  claims,  rights,  obligations,  duties or  liabilities  with
respect to the  Subservicer  except as set forth in the  immediately  succeeding
paragraph;  provided  that the  Trustee  and the  Noteholders  may rely upon all
representations and warranties of the Subservicer contained therein.

                  In the  event the  Master  Servicer  shall  for any  reason no
longer be servicing any of the Trust Estate  Receivables,  the Trustee shall act
as successor servicer, and thereupon assume all of the rights and obligations of
such Master Servicer. In such event, the Trustee shall be deemed to have assumed
all of the Master  Servicer's  interest  therein  arising after the date of such
assumption  and to have  replaced  the Master  Servicer  as a party to each such
Subservicing  Agreement to the same extent as if such Subservicing Agreement had
been assigned to the assuming  party except that the Master  Servicer  shall not
thereby be relieved  of any  liability  or  obligations  under the  Subservicing
Agreement and the Trustee shall not assume any such liability.  The Trustee may,
if a successor  Master  Servicer has not been  appointed by the  Noteholders  in
writing  within  60 days of the  delivery  of the  Successor  Notice,  seek  the
assistance of a third party to locate a successor Master Servicer  acceptable to
the Noteholders.  The Master Servicer shall,  upon request of the Trustee but at
the expense of the Master Servicer,  deliver to the assuming party all documents
and records  relating to each such  Subservicing  Agreement and the Trust Estate
Receivables then being serviced and an accounting of amounts  collected and held
by it and  otherwise  use its best  efforts to effect the orderly and  efficient
transfer of the Subservicing Agreement to the assuming party.

                  The Master Servicer shall retain all data (including,  without
limitation,   computerized  records)  relating  directly  to  or  maintained  in
connection  with the servicing of the Trust Estate  Receivables  at 9805 Willows
Road, Redmond,  Washington 98052 or at the office of any Subservicer or, upon 15
days' notice to the Trustee,  at such other place where the servicing offices of
the Master Servicer are located,  and shall give the Trustee and the Noteholders
access to all data at all reasonable  times,  and, during the continuation of an
Event of Master Servicer Termination or an Event of Default, the Master Servicer
shall, on demand of the Trustee, deliver or cause to be delivered to the Trustee
all data (including, without limitation, computerized records and, to the extent
transferable,  related  operating  software)  necessary for the servicing of the
Trust  Estate  Receivables  and all monies  collected  by it and  required to be
deposited in or credited to the Collection Account.

                  (c) The Master  Servicer  may,  from time to time and with the
consent  of the  Trustee  and the  Noteholders,  make  changes to the Credit and
Collection  Policies,  provided  that no such change can  materially  impair the
collectibility  of any Trust  Estate  Receivable.  Copies  of each such  revised
Credit and Collection  Policies shall replace the version  existing as Exhibit B
of the Credit Agreement.

                  (d) Except as set forth in Section 5.6(b) hereof, all expenses
incurred by the Master Servicer,  including expenses incurred by any Subservicer
in performing their obligations hereunder shall be for the account of the Master
Servicer,  and the Trustee and the Noteholders shall have no obligations to make
any payments in respect thereof.

                  (e)  The  Master  Servicer  will  make  all  UCC  filings  and
recordings  as may be  required  pursuant  to the terms of this  Indenture.  The
Master Servicer shall, in accordance with its customary servicing procedures and
at its own expense,  be responsible  for such steps as are necessary to maintain
perfection of such security interests.  The Trustee hereby authorizes the Master
Servicer to re-perfect or to cause the re-perfection of such security  interests
on its behalf as Trustee, as necessary.

               SECTION    5.3.    Collection    Responsibilities;     Receivable
Modifications.

                  (a) The  Master  Servicer  shall,  on behalf  of the  Trustee,
collect all payments made under each Trust Estate  Receivable  and shall use its
best efforts (in  accordance  with the  servicing  standard set forth in Section
5.2) to collect  from each  Obligor all  payments on or in respect of such Trust
Estate Receivable after the related Cut-off Date. The Master Servicer may in its
discretion waive any assumption  fees, late payment charges,  charges for checks
returned for  insufficient  funds,  prepayment fees, if any, or other fees which
may  be  collected  in  the  ordinary  course  of  servicing  the  Trust  Estate
Receivables.

                  (b) The Master  Servicer shall cause each Obligor to remit his
or her payments to a clearing account (the "Clearing Account") which shall be an
Eligible  Bank  Account.  The Master  Servicer  shall cause any payments made by
automated  clearing  house  debit to be  deposited  directly  into the  Clearing
Account from each Obligor's  relevant account.  On each Business Day, the Master
Servicer shall cause all amounts on deposit in the Clearing  Account  related to
the Trust  Estate  Receivables  to be  remitted  to the  Collection  Account for
distribution in accordance with Section 3.4 of this Indenture.

                  (c) The Master Servicer shall hold in trust for the benefit of
the Trustee and the  Noteholders  any payments it receives until such time as it
shall  transfer such payments to the Clearing  Account.  Any amounts held in the
Clearing  Account  shall be held in trust for the benefit of the Trustee and the
Noteholders.

                  SECTION 5.4.  Maintenance of Insurance.

                  The Master  Servicer shall and shall cause any  Subservicer to
keep in  force  during  the  term of this  Indenture  a policy  or  policies  of
insurance  covering  errors  and  omissions  in  the  operation  of  the  Master
Servicer's or such Subservicer's procedures, and a fidelity bond. Such policy or
policies and fidelity bond shall be in such form and amount that is  customarily
kept by  institutions  which  service  receivables  similar to the Trust  Estate
Receivables.  The Master  Servicer  shall be deemed to have  complied  with this
provision if an affiliate of the Master  Servicer has such errors and  omissions
and  fidelity  bond  coverage  and,  by the  terms of such  insurance  policy or
fidelity bond, the coverage afforded  thereunder extends to the Master Servicer.
Each such errors and  omissions  policy and fidelity  bond shall not be canceled
without 30 days, prior written notice to the Trustee and the Noteholders.

                  SECTION 5.5. Assumption and Substitution  Agreements.  (a) The
Master  Servicer shall not modify,  waive or amend the terms of any Trust Estate
Receivable  unless a default on such Trust Estate  Receivable has occurred or is
imminent or unless such  modification,  amendment  or waiver shall not (i) alter
the interest rate on or the principal  balance of such Trust Estate  Receivable,
(ii) alter the final  maturity  of, or any other  terms of,  such  Trust  Estate
Receivable  which would have a material  adverse  affect on  Noteholders,  (iii)
materially  impair the Vacation Credits  underlying such Trust Estate Receivable
or (iv) reduce materially the likelihood that payments of interest and principal
on such Trust Estate Receivable shall be made when due; provided,  further,  the
Master  Servicer may grant an extension of the final  maturity of a Trust Estate
Receivable if the Master Servicer,  in its sole discretion,  determines that (a)
such Trust  Estate  Receivable  is in  default  or default on such Trust  Estate
Receivable is likely to occur in the foreseeable  future, and (b) that the value
of the Trust Estate  Receivable  will be enhanced by such  extension;  provided,
further,  that the Master  Servicer  shall not (1) grant more than one extension
per  calendar  year with respect to a Trust  Estate  Receivable  or (2) grant an
extension  for more than one  calendar  month  with  respect  to a Trust  Estate
Receivable;

                  (b) the Master  Servicer  may consent to the  assumption  by a
Person of the Installment  Sale Contract  related to a Trust Estate  Receivable;
provided,  however, in connection with any such assumption, the rate of interest
borne by, the maturity date of, the principal  amount of, the timing of payments
of principal  and interest in respect of, and all other  material  terms of, the
related Trust Estate Receivable shall not be changed.

         SECTION 5.6.  Realization Upon Defaulted Receivables.

                  (a) In connection  with the  foreclosure or liquidation of any
Defaulted  Receivable,  the Master  Servicer  shall  follow such  practices  and
procedures  as it shall deem  necessary or advisable  and as shall be normal and
usual in its general servicing activities. The Master Servicer shall be required
to expend its own funds in  connection  with the  liquidation  of any  Defaulted
Receivable  if it shall  determine  that such  expenditures  will  increase  the
Liquidation Proceeds available to the Borrower after reimbursement to the Master
Servicer for its Liquidation expenses.

                  (b) Liquidation  expenses  incurred by the Master Servicer can
be repaid to the Master  Servicer  only from  Liquidation  Proceeds from sale or
other disposition of the related Defaulted Receivables.

                  SECTION 5.7.  Representations  and Warranties as to the Master
Servicer.  The Master  Servicer  represents  and warrants to the Trustee for the
benefit of the Noteholders that:

                  (a) Organization and Good Standing.  The Master Servicer shall
have been duly organized and shall be validly  existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with power and
authority to own its properties  and to conduct its business as such  properties
shall be currently owned and such business is presently conducted.

                  (b) Due  Qualification.  The  Master  Servicer  shall  be duly
qualified to do business as a foreign  corporation in good  standing,  and shall
have obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business  shall require
such qualifications,  except where the failure to so qualify or to have obtained
such  licenses and  approvals  would not have a material  adverse  effect on the
ability of the Master Service to perform its obligations under this Indenture or
the other Warehouse Facility Documents to which its in and is a party.

                  (c) Power and  Authority.  The Master  Servicer shall have the
power and authority to executive,  deliver and perform its obligations under the
Agreement and each other Warehouse  Facility Document to which it is a party and
to carry out their respective terms, and the execution, delivery and performance
of this Indenture and each other  Warehouse  Facility  Document to which it is a
party shall have been duly  authorized  by the Master  Servicer by all necessary
corporate action.

                  (d) Binding  Obligation.  This  Agreement  shall  constitute a
legal,  valid and  binding  obligation  of the Master  Servicer  enforceable  in
accordance with its terms, except as enforceability may be subject to or limited
by bankruptcy,  insolvency,  reorganization  or other similar laws affecting the
enforcement of creditors, rights in general and by general principals of equity.

                  (e)  No  Violation.   The  consummation  of  the  transactions
contemplated  by this Indenture and the other  Warehouse  Facility  Documents to
which the Master  Servicer is a party and the  fulfillment  of the terms of this
Indenture and the other  Warehouse  Facility  Documents shall not conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or  without  notice  or  lapse  of  time)  a  default  under,  the  articles  of
incorporation or bylaws of the Master Servicer,  or conflict with or violate any
of the terms or provisions of, or constitute (with or without notice or lapse of
time) a default under, any material indenture,  agreement or other instrument to
which the Master Servicer is a party or by which it shall be bound;  nor violate
any law or, to the best of the Master Servicer's  knowledge,  nay order, rule or
regulation  applicable to the Master  Servicer of any court or of any federal or
state   regulatory   body,   administrative   agency   or   other   governmental
instrumentality  having jurisdiction over the Master Servicer or its properties;
which  breach,  default,  conflict or  violation  would have a material  adverse
effect on the ability of the Master  Servicer to perform its  obligations  under
this Indenture or any other Warehouse Facility Documents to which it is a party.

                  (f) On the basis of a  comprehensive  review and assessment of
the Master  Servicer's  systems and  equipment  and  inquiry  made of the Master
Servicer's material suppliers,  vendors, customers and Subservicers,  the Master
Servicer  reasonably  believes  that the Year 2000 Problem,  including  costs of
remediation,  will not result in a material  adverse  change in the  operations,
business,  properties,  condition  (financial  or otherwise) or prospects of the
Master  Servicer.  The Master  Servicer has  developed and has required that all
Subservicers develop feasible contingency plans adequate to ensure uninterrupted
and  unimpaired  business  operation in the event of the failure of its own or a
third party's system or equipment due to the Year 2000 problem,  including those
of  vendors,  customers,  and  suppliers,  as well as a  general  failure  of or
interruption in its communication and delivery infrastructure.

                  SECTION 5.8.  Existence; Status as Master Servicer; Merger.

                  (a)  The  Master  Servicer  shall  keep  in  full  effect  its
existence, rights and franchises as a corporation under the laws of the state of
its organization and shall obtain and preserve its  qualification to do business
as a foreign  corporation,  in each case to the extent  necessary to protect the
validity and enforceability of the Trust Estate Receivables and this Indenture.

                  (b) The Master  Servicer shall not  consolidate  with or merge
into any other  Person or convey,  transfer  or lease  substantially  all of its
assets  as  an  entirety  to  any  Person  unless  the  Person  formed  by  such
consolidation  or into which the Master  Servicer  has been merged or the Person
which  acquires  substantially  all the  assets  of the  Master  Servicer  as an
entirety  is a  corporation  organized  under the laws of a state in the  United
States,  can lawfully  perform the obligations of the Master Servicer  hereunder
and executes and delivers to the other parties hereto an agreement,  in form and
substance  reasonably  satisfactory to the Trustee (acting upon the direction of
the  Noteholders),  which contains an assumption by such successor entity of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Indenture.

                  (c) From the date  hereof  until the first day  following  the
Commitment Termination Date on which (i) the Notes shall have been paid in full,
and (ii) all  obligations  shall have been fully paid and performed,  the Master
Servicer  shall,  promptly after learning  thereof notify the Trustee of (i) the
details of any action,  proceeding,  investigation or claim against or affecting
the Master  Servicer  instituted  before any court,  arbitrator or  Governmental
Authority or, to its knowledge threatened to be instituted, which, if determined
adversely  to the Master  Servicer  would be likely to have a  material  adverse
effect on the performance by it of its obligations under any Warehouse  Facility
Document to which is a part or by which it is bound.

                  SECTION 5.9.  Performance of Obligations.  The Master Servicer
shall not take any  action  or, to the extent  within  its  control,  permit any
action to be taken by others,  which would  excuse any  Obligor  from any of its
covenants  or  obligations  under any  Receivable  Document  which could have an
adverse affect on the Noteholders  without the written consent of the Trustee at
the direction of the Noteholders.

                  SECTION  5.10.  Event of Master  Servicer  Termination.  The
following shall constitute an Event of Master Servicer Termination:

                  (a) the  occurrence  of an Event of Default  with respect to
the Master Servicer under Sections 6.1(a), (b) and (c); or

                  (b) if, as of any Payment Date, (i) the Charge-off Rate or the
Consolidated  Charge-off  Rate  exceeds  5% per annum,  (ii) the  average of the
Delinquency Rate Amounts or the Consolidated Delinquency Rate Amounts, in either
case for the three Due  Periods  immediately  preceding  the Due Period in which
such  Payment  Date occurs  exceeds  5%, or (iii) the  average of the  Defaulted
Receivable Amounts or the Consolidated  Defaulted  Receivable Amounts, in either
case for the three Due  Periods  immediately  preceding  the Due Period in which
such Payment Date occurs exceeds 3%.

                  SECTION 5.11.  Optional Purchase of Vacation  Credits.  On any
Determination  Date, if no Event of Default has occurred and is continuing,  the
Master Servicer may, at its option,  purchase the Vacation Credits relating to a
Defaulted  Receivable at the Vacation Credit Purchase Price. The Master Servicer
shall remit the  Vacation  Credit  Purchase  Price to the Trustee for  immediate
deposit into the Collection  Account and such remittance shall be deemed to be a
collection  of principal  with respect to such  Defaulted  Receivable.  Upon the
deposit of the Vacation Credit Purchase Price,  the Vacation  Credits  purchased
pursuant to this Section 5.11 shall be released from the lien of this Indenture.


                                   ARTICLE 6.

                           EVENTS OF DEFAULT; REMEDIES

                  SECTION 6.1.  Events of Default.

                  "Event of Default,"  wherever  used herein with respect to the
Notes, means any one of the following:

                  (a)  (i)  default  in the  making  of  Principal  Payments  or
Interest Payments in respect of the Notes when such become due and payable,  and
continuance  of such default for two Business  Days; or (ii) failure to make any
deposit when due hereunder by the Master Servicer or the Trustee and continuance
of such default for one Business Day; or

                  (b) a default in the performance,  or breach,  of any covenant
of the Borrower or the Master Servicer in this Indenture  (other than a covenant
dealing  with a default  in the  performance  of which or the breach of which is
specifically  dealt with elsewhere in this Section 6.1) and  continuance of such
default or breach for a period of 30 days after the  earliest of (i) any officer
of the Borrower or the Master Servicer first acquiring  knowledge thereof,  (ii)
the Trustee's giving written notice thereof to the Borrower or (iii) the holders
of a  majority  of the then  Outstanding  Principal  Amount of the Notes  giving
written notice thereof to the Borrower and the Trustee; or

                  (c) if any  representation  or warranty of the Borrower or the
Master  Servicer  made in this  Indenture  shall  prove to be  incorrect  in any
material  respect as of the time when the same  shall  have been made,  and such
breach is not remedied within 30 days after notice of breach from the Trustee or
the holders of a majority of Outstanding Principal Amount of the Notes; or

                  (d) the entry by a court having  jurisdiction  in the premises
of (i) a decree or order for relief in respect of the Borrower in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization,  or other  similar law or (ii) a decree or order  adjudging  the
Borrower a bankrupt or  insolvent,  or  approving  as properly  filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the  Borrower  under any  applicable  federal or state law, or  appointing  a
custodian,  receiver,  liquidator,  assignee,  trustee,  sequestrator,  or other
similar official of the Borrower or of any substantial part of its property,  or
ordering the winding up or  liquidation of its affairs,  and the  continuance of
any such decree or order for relief or any such other  decree or order  unstayed
and in effect for a period of 60 consecutive days; or

                  (e) the  commencement  by the Borrower of a voluntary  case or
proceeding  under  any  applicable  federal  or  state  bankruptcy,  insolvency,
reorganization,  or other  similar law or of any other case or  proceeding to be
adjudicated  a bankrupt  or  insolvent,  or the  consent by it to the entry of a
decree or order for relief in respect of the Borrower in an involuntary  case or
proceeding  under  any  applicable  federal  or  state  bankruptcy,  insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency  case or proceeding  against it, or the filing by it of a petition or
answer or consent seeking  reorganization or relief under any applicable federal
or state law,  or the  consent by it to the  filing of such  petition  or to the
appointment  of or  taking  possession  by a  custodian,  receiver,  liquidator,
assignee, trustee,  sequestrator,  or similar official of the Borrower or of any
substantial  part of its property,  or the making by it of an assignment for the
benefit of creditors,  or the Borrower's  failure to pay its debts  generally as
they  become  due,  or  the  taking  of  corporate  action  by the  Borrower  in
furtherance of any such action; or

                  (f) The  failure  of the  Borrower  to cure a  Borrowing  Base
Deficiency as provided in Sections 8 and 9.19 of the Credit Agreement within two
(2)  Business  Days  of  actual  knowledge  of the  Borrower  or  notice  from a
Noteholder or the Trustee; or

                  (g) The breach by TWRI or the Borrower of any  representation,
warranty,  covenant or agreement in the Credit  Agreement  which is not remedied
within  30 days  after  notice  of such  breach  from any  party to a  Warehouse
Facility Document; or

                  (h)      Any material default under the Engagement Letter; or

                  (i)      An Event of Master Servicer Termination occurs; or

                  (j)      Any Change of Control in the ownership of TWRI; or

                  (k) Any materially adverse change in the business, operations,
financial condition, properties or prospects of TWRI and any material Affiliates
of TWRI, on a consolidated  basis, in each case as determined by the Noteholders
in their sole  discretion in good faith, or the existence of any other condition
which, in the Noteholders' sole determination, constitutes an impairment of TWRI
to perform its obligations  under this Indenture or under the Credit  Agreement;
or

                  (l) Any materially adverse change in the business, operations,
financial  condition,  properties  or  prospects  of  Worldmark  in each case as
determined by the  Noteholders  in their sole  discretion in good faith,  or the
existence of any other condition which, in the Noteholders' sole  determination,
constitutes  an  impairment  of Worldmark to perform its  obligations  under any
agreements to which it is a party; or

                  (m)  TWRI  or any of its  subsidiaries  shall  default  in any
payment of principal or interest on any  indebtedness of any lender which causes
or  which  is  reasonably  likely  to  result  in the  acceleration  of any such
indebtedness to such lender or cause or permit the termination of any commitment
to lend to the TWRI or any of its subsidiaries.

                  (n)  (i)   Worldmark   voluntarily   incurs  or  is  any  time
voluntarily  liable  for any  debt,  or any of its  property  voluntarily  is or
voluntarily  becomes  subject to any Liens  (other  than (x)  utility or similar
easements  or licenses  which do not relate to  borrowings  by  Worldmark or (y)
Liens that in the  aggregate  for all Resorts do not exceed  $100,000),  or (ii)
Worldmark  involuntarily is or involuntarily becomes subject to any Liens (other
than utility or similar  easements or licenses which do not relate to borrowings
by Worldmark)  that  individually  or in the aggregate (with respect to all such
debt and the obligations secured by all such Liens) exceed $1,000,000,  or (iii)
Worldmark sells, leases or otherwise transfers voluntarily or otherwise,  any of
its real estate  properties or any interest  therein so that, in the  aggregate,
there is a net  decrease in Vacation  Credits  available  for member use greater
than or equal to 10% from the number of Vacation  Credits  available  for member
use on the Issuance Date, or (iv) Worldmark  exchanges one of its present Resort
properties for another  property that is worth fewer  Vacation  Credits than the
property so exchanged,  or (v) Worldmark has interests in units at fewer than 20
developed Resorts.

               SECTION 6.2.  Acceleration of Maturity; Rescission and Annulment.

                  (a) If an Event of  Default of the kind  specified  in Section
6.1(d) or Section 6.1(e) occurs,  the unpaid principal amount of the Notes shall
automatically become due and payable at par together with all accrued and unpaid
interest thereon,  without presentment,  demand,  protest or notice of any kind,
all of which are hereby  waived by the Borrower.  If an Event of Default  (other
than an Event of Default  of the kind  described  in  Section  6.1(d) or Section
6.1(e)) with respect to the Notes  occurs and is  continuing,  then and in every
such  case  the  Trustee  shall,  if so  directed  by  the  Noteholders,  or the
Noteholders  may, declare the unpaid principal amount of all the Notes to be due
and  payable  immediately,  by a notice in writing to the  Borrower  (and to the
Trustee if given by  Noteholders),  and upon any such declaration such principal
amount shall become  immediately  due and payable  together with all accrued and
unpaid interest thereon, without presentment, demand, protest or other notice of
any  kind,  all of which are  hereby  waived by the  Borrower.  Interest  on all
amounts due and payable under this Section 6.2 shall accrue interest at the rate
LIBOR plus 4.00%.

                  (b) At any time after such a declaration of  acceleration  has
been made and before a judgment  or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided,  the Holders of
a like  percentage  of the  Notes by  written  notice  to the  Borrower  and the
Trustee, may rescind and annul such declaration and its consequences if:

                           (i) the  Borrower  has  paid or  deposited  with  the
Trustee a sum sufficient to pay:

(A)                        all Principal Payments on the Notes which have become
                           due   otherwise   than   by   such   declaration   of
                           acceleration  and interest thereon from the date when
                           the same  first  became due until the date of payment
                           or deposit at the appropriate Note Interest Rate,

(B)                        all  Interest  Payments due with respect to the Notes
                           and, to the extent that  payment of such  interest is
                           lawful,  interest upon overdue interest from the date
                           when the same  first  became  due  until  the date of
                           payment or  deposit at a rate per annum  equal to the
                           appropriate Note Interest Rate, and

(C)                        all sums paid or advanced  by the  Trustee  hereunder
                           and   the    reasonable    compensation,    expenses,
                           disbursements,  and  advances  of each of the Trustee
                           and the Master Servicer, its agents and counsel;

                  and

                          (ii) all Events of Default  with respect to the Notes,
         other than the non-payment of the Outstanding  Principal  Amount of the
         Notes which become due solely by such declaration of acceleration, have
         been cured or waived as provided in Section 6.13.

No such  rescission  shall affect any subsequent  Event of Default or impair any
right consequent thereon.

                  SECTION 6.3.  Remedies.

                  (a) If an Event of Default  with  respect to the Notes  occurs
and is  continuing  of which a  Responsible  Officer of the  Trustee  has actual
knowledge,  the Trustee shall  immediately give notice to each Noteholder as set
forth in Section 7.2 and shall solicit such Noteholders for advice.  The Trustee
shall then take such action as so directed  by the  Noteholders,  subject to the
provisions of this Indenture.

                  (b) Following any acceleration of the Notes, the Trustee shall
have all of the rights,  powers and remedies with respect to the Trust Estate as
are available to secured parties under the UCC or other  applicable law, subject
to subsection  (d) below.  Such rights,  powers and remedies may be exercised by
the Trustee in its own name as trustee of an express trust.

                  (c) (i) If an Event of Default  specified  in  Section  6.1(a)
occurs and is continuing,  the Trustee is authorized to recover  judgment in its
own name and as trustee of an express  trust  against the Borrower for the whole
amount of principal and interest remaining unpaid with respect to the Notes.

         (i) (ii) If an Event of Default  occurs and is continuing  the Trustee,
         at the  instruction  of the  Noteholders,  shall proceed to protect and
         enforce  its  rights  and  the  rights  of  the   Noteholders  by  such
         appropriate  judicial or other  proceedings  as the Trustee  shall deem
         most effectual to protect and enforce any such rights,  whether for the
         specific  enforcement of any covenant or agreement in this Indenture or
         in aid of the exercise of any power granted  herein,  or to enforce any
         other proper remedy. The Trustee shall notify the Borrower,  the Master
         Servicer and the Noteholders of any such action.

                  (d)  If  (i)  the   Trustee   shall  have   received   written
instructions from the Noteholders, to the effect that such Persons approve of or
request the liquidation of the Assets or (ii) upon an Event of Default set forth
in Section 6.1(d) or (e), the Trustee shall,  direct the Master  Servicer or its
successor,  to  the  extent  lawful,  promptly  sell,  dispose  of or  otherwise
liquidate the Assets in a  commercially  reasonable  manner and on  commercially
reasonable  terms,  which shall include the  solicitation  of competitive  bids;
provided, however, that, upon an Event of Default set forth in Section 6.1(d) or
(e),  the  Noteholders  may notify the Trustee that such  liquidation  shall not
occur. The Trustee may obtain a prior  determination  from any such conservator,
receiver or liquidator of the Borrower that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable.

                  (e) Notwithstanding  the foregoing  provisions of Section 6.3,
if an Event of Default occurs and is continuing,  the parties hereto agree that,
in addition to or in lieu of the other  remedies  described in this Section 6.3,
the Trustee,  at the direction of the Noteholders may (i) amend the distribution
of Available  Funds  described in Section 3.4 hereof,  provided that the Trustee
Fee and the Master  Servicer Fee shall not be subordinate  to Interest  Payments
and Principal Payments,  (ii) amend this Indenture as provided in Section 9.2(b)
to  provide  for  reserve  accounts  or other  mechanisms  designed  to  provide
over-collateralization for the Noteholders,  (iii) appoint a new Master Servicer
as provided in Section 5.1 hereof,  or (iv) agree to waive such Event of Default
for a period of time as shall be determined by the Noteholders.


                  SECTION 6.4.  Trustee May File Proofs of Claim. (a) In case of
the  pendency  of  any  receivership,   insolvency,   liquidation,   bankruptcy,
reorganization,   arrangement,   adjustment,   composition   or  other  judicial
proceeding relative to the Borrower, or any other obligor upon the Notes, or the
property of the Borrower, or such other obligor or their creditors,  the Trustee
(irrespective  of  whether  the  principal  of the Notes  shall  then be due and
payable as therein  expressed or by declaration or otherwise and irrespective of
whether the Trustee  shall have made any demand on the  Borrower for the payment
of  overdue  principal  or  interest)  shall  be  entitled  and  empowered,   by
intervention in such proceeding or otherwise:

                           (i) to file and prove a claim for the whole amount of
         principal and interest  owing and unpaid in respect of the Notes or any
         amounts  owing on the Trust  Estate  Receivables  or the  other  assets
         constituting  the  Trust  Estate  and to  file  such  other  papers  or
         documents  as may be necessary or advisable in order to have the claims
         of the Trustee and any predecessor Trustee (including any claim for the
         reasonable  compensation,  expenses,  disbursements and advances of the
         Trustee and any predecessor  Trustee,  their agents and counsel) and of
         the Noteholders allowed in such judicial proceeding;

                          (ii) to  collect  and  receive  any  moneys  or  other
         property  payable or  deliverable  on any such claims and to distribute
         the same; and

                         (iii) to participate as a member,  voting or otherwise,
         of any official committee of creditors appointed in such matter;

and any custodian,  receiver,  liquidator,  assignee,  trustee,  sequestrator or
other similar official in any such judicial  proceeding is hereby  authorized by
each  Noteholder  to make such payments to the Trustee and to pay to the Trustee
any amount due it for the reasonable compensation,  expenses,  disbursements and
advances of the Trustee and any predecessor  Trustee,  their agents and counsel,
and any other amounts due the Trustee and any predecessor  Trustee under Section
7.6.

                  (a)(b) Nothing herein  contained  shall be deemed to authorize
the  Trustee  to  authorize  or  consent  to or accept or adopt on behalf of any
Noteholder  any plan of  reorganization,  agreement,  adjustment or  composition
affecting  the Notes or the rights of any  Noteholder  thereof or affecting  the
Trust Estate Receivables or the other assets constituting the Trust Estate or to
authorize  the Trustee to vote in respect of the claim of any  Noteholder in any
such proceeding.

                  SECTION 6.5. Trustee May Enforce Claims Without  Possession of
Notes.  All rights of action and claims  under this  Indenture,  the Notes,  the
Trust Estate  Receivables or the other assets  constituting the Trust Estate may
be prosecuted  and enforced by the Trustee  without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust,  and any recovery of judgment shall,  after  provisions for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee and any predecessor Trustee, their agents and counsel, be for the
benefit of the Noteholders in respect of which such judgment has been recovered,
and pursuant to the priorities contemplated by Section 3.4.

                  SECTION  6.6.  Application  of  Money  Collected.   Any  money
collected  by the Trustee  pursuant to this  Article 6 shall be deposited in the
applicable  Collection  Account or Accounts for  disbursement in accordance with
the provisions of Article 3.

                  SECTION 6.7. Limitation on Suits. No Noteholder shall have any
right to institute any proceeding,  judicial or otherwise,  with respect to this
Indenture or for any other remedy hereunder, unless:

                  (a) there is a continuing Event of Default and such Noteholder
has  previously  given  written  notice to the Trustee of a continuing  Event of
Default;

                  (b) such Noteholder or Noteholders have offered to the Trustee
reasonable indemnity against the costs,  expenses and liabilities to be incurred
in compliance with such request;

                  (c) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such proceeding; and

                  (d) no direction  inconsistent  with such written  request has
been given to the Trustee during such 30-day period by the Noteholders;

it being understood and intended that no one or more of such  Noteholders  shall
have any right in any  manner  whatever  by virtue  of, or by  availing  of, any
provision of this  Indenture to affect,  disturb or prejudice  the rights of any
other Noteholders, or to obtain or to seek to obtain priority or preference over
any other  Noteholders or to enforce any right under this  Indenture,  except in
the manner herein provided and for the ratable benefit of all such  Noteholders.
It is further  understood  and intended that so long as any portion of the Notes
remains Outstanding,  TWRI shall not have any right to institute any proceeding,
judicial  or  otherwise,  with  respect to this  Indenture  (other  than for the
enforcement  of Section  3.4) or for the  appointment  of a receiver  or trustee
(including  without  limitation a proceeding under the Bankruptcy  Code), or for
any other  remedy  hereunder.  Nothing in this Section 6.7 shall be construed as
limiting the rights of otherwise  qualified  Noteholders to petition a court for
the removal of a Trustee pursuant to Section 7.8 hereof.

                  SECTION 6.8.  Unconditional Right of Noteholders to Receive
                                Principal and Interest.

                  Notwithstanding  any other provision in this Indenture,  other
than the  provisions  hereof  limiting  the right to recover  amounts due on the
Notes to recoveries from the property of the allocated Trust Estate,  the Holder
of any Note shall have the absolute and  unconditional  right to receive payment
of the  principal  of and  interest  on such  Note on the  maturities  for  such
payments,  and such right  shall not be  impaired  without  the  consent of such
Noteholder.

                  SECTION 6.9.  Restoration of Rights and Remedies.

                  If the Trustee or any Noteholder has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason,  or has been  determined  adversely to
the Trustee or to such Noteholder,  then and in every such case,  subject to any
determination in such proceeding,  the Borrower, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and  thereafter  all rights and  remedies  of the  Trustee  and the  Noteholders
continue as though no such proceeding had been instituted.

                  SECTION 6.10.  Rights and Remedies Cumulative.

                  Except as otherwise  provided with respect to the  replacement
or payment of mutilated,  destroyed, lost, or stolen Notes in the last paragraph
of Section  2.4,  no right or remedy  herein  conferred  upon or reserved to the
Trustee or to the  Noteholders is intended to be exclusive of any other right or
remedy,  and every right and remedy  shall,  to the extent  permitted by law, be
cumulative  and in addition to every other right and remedy  given  hereunder or
now or hereafter  existing at law or in equity or  otherwise.  The  assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

                  SECTION 6.11.  Delay or Omission Not Waiver.

                  No delay or  omission  of the  Trustee or of any Holder of any
Note to exercise any right or remedy  accruing  upon any Event of Default  shall
impair  any such  right or remedy or  constitute  a waiver of any such  Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the  Noteholders  may be  exercised  from time to
time,  and as  often  as may  be  deemed  expedient,  by the  Trustee  or by the
Noteholders, as the case may be.

                  SECTION 6.12.  Control by Noteholders.

                  Except as may otherwise be provided in this  Indenture,  until
such time as the conditions  specified in Sections 10.1(a)(i) and (ii) have been
satisfied  in full,  the  Noteholders  shall  have the right to direct the time,
method and place of conducting any  proceeding  for any remedy  available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Notes. Notwithstanding the foregoing,

                           (i)   no such  direction  shall  be in  conflict
         with  any  rule  of law or  with  this Indenture;

                          (ii) the  Trustee  shall not be required to follow any
         such direction  which the Trustee  reasonably  believes might result in
         any personal liability on the part of the Trustee for which the Trustee
         is not adequately indemnified; and

                         (iii)  the  Trustee  may take any other  action  deemed
         proper  by  the  Trustee  which  is  not  inconsistent  with  any  such
         direction;  provided  that the  Trustee  shall give  notice of any such
         action to each Noteholder.

                  SECTION 6.13.  Waiver of Events of Default.

                  (a)  The  Noteholders  may,  by one  or  more  instruments  in
writing,  waive any Event of Default on behalf of all Noteholders  hereunder and
its consequences, except a continuing Event of Default:

                           (i) in respect of the payment of the  principal of or
         interest  on any Note  (which  may only be waived by the Holder of such
         Note), or

                          (ii) in  respect  of a covenant  or  provision  hereof
         which under Article 9 cannot be modified or amended without the consent
         of the Holder of each  Outstanding  Note  affected  (which  only may be
         waived by the Holders of all Outstanding Notes affected).

                  (b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished  by the  Borrower to the Trustee  and each  Noteholder.  Upon any such
waiver,  such Event of Default  shall cease to exist and shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend
to any  subsequent  or other  Event of Default  or impair  any right  consequent
thereon.

                  SECTION 6.14.  Undertaking for Costs.

                  All  parties to this  Indenture  agree (and each Holder of any
Note by its  acceptance  thereof  shall be deemed to have agreed) that any court
may in its discretion  require,  in any suit for the enforcement of any right or
remedy under this  Indenture,  or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an  undertaking  to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs,  including reasonable  attorneys'
fees,  against any party litigant in such suit,  having due regard to the merits
and good  faith of the  claims or  defenses  made by such  party  litigant;  but
notwithstanding such assessment,  the provisions of this Section shall not apply
to any suit instituted by the Trustee, to any suit instituted by any Noteholder,
or group of  Noteholders,  holding  in the  aggregate  more than 10% of the then
Outstanding  Principal  Amount of the Notes,  or to any suit  instituted  by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the maturities for such payments.

                  SECTION 6.15.  Waiver of Stay or Extension Laws.

                  The Borrower  covenants (to the extent that it may lawfully do
so)  that it will  not at any time  insist  upon,  or  plead,  or in any  manner
whatsoever  claim or take the benefit or advantage of, any stay or extension law
wherever  enacted,  now or at any time hereafter in force,  which may affect the
covenants or the performance of this Indenture;  and the Borrower (to the extent
that it may lawfully do so) hereby  expressly waives all benefit or advantage of
any such  law and  covenants  that it will  not  hinder,  delay  or  impede  the
execution of any power herein granted to the Trustee, but will suffer and permit
the  execution  of every  such  power  as  though  no such law had been  enacted
allocated to the Notes.

                  SECTION 6.16.  Sale of Trust Estate.

                  (a) The power to effect  any sale of any  portion of the Trust
Estate  pursuant to Section 6.3 shall not be  exhausted by any one or more sales
as to any  portion of the Trust  Estate  remaining  unsold,  but shall  continue
unimpaired  until the entire Trust  Estate so allocated  shall have been sold or
all amounts payable on the Notes shall have been paid. The Trustee may from time
to time, upon  directions in accordance  with Section 6.12,  postpone any public
sale by public announcement made at the time and place of such sale.

                  (b) To the extent  permitted  by  applicable  law, the Trustee
shall not sell to a third party the Trust Estate,  or any portion thereof except
as permitted under Section 6.3(d).

                  (c) In  connection  with a sale of all or any  portion  of the
Trust Estate:

                           (i)  any  one or  more  Noteholders  may  bid for and
         purchase the property  offered for sale, and upon  compliance  with the
         terms of sale  may  hold,  retain,  and  possess  and  dispose  of such
         property,  without further  accountability,  and any Noteholder may, in
         paying  the  purchase  money  therefore,  deliver  in lieu of cash  any
         Outstanding  Notes or claims  for  interest  thereon  for credit in the
         amount that shall,  upon distribution of the net proceeds of such sale,
         be  payable  thereon,  and the  Notes,  in case the  amounts so payable
         thereon shall be less than the amount due thereon, shall be returned to
         the Noteholders after being appropriately  stamped to show such partial
         payment;

                          (ii)  the  Trustee   shall   execute  and  deliver  an
         appropriate  instrument of conveyance  prepared by the Master  Servicer
         transferring  its  interest  without  representation  or  warranty  and
         without  recourse in any portion of the Trust Estate in connection with
         a sale thereof;

                         (iii)  the  Trustee  is  hereby  irrevocably  appointed
         attorney-in-fact of the Borrower to transfer and convey its interest in
         any portion of the Trust Estate in connection with a sale thereof,  and
         to take all action necessary to effect such sale;

                          (iv) no purchaser or  transferee  at such a sale shall
         be  bound  to  ascertain  the  Trustee's  authority,  inquire  into the
         satisfaction  of any conditions  precedent or see to the application of
         any moneys; and

                           (v) The method,  manner, time, place and terms of any
         sale of all or any portion of the Trust  Estate  shall be  commercially
         reasonable.

                                   ARTICLE 7.

                                   THE TRUSTEE

                  SECTION 7.1.  Certain  Duties.  (a) The Trustee  undertakes to
perform such duties and only such duties as are  specifically  set forth in this
Indenture,  and no  implied  covenants  or  obligations  shall be read into this
Indenture against the Trustee.

                  (a)(b) In the  absence of bad faith on its part,  the  Trustee
may conclusively  rely, as to the truth of the statements and the correctness of
the opinions expressed  therein,  upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the  Trustee,  the Trustee  shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture, provided however, the Trustee shall not be required to verify or
recalculate the contents thereof.

                  (c) If an Event of  Default  or an  Event of  Master  Servicer
Termination  has occurred and is continuing,  the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their  exercise,  as a prudent  Person  would  exercise or use
under the  circumstances in the conduct of such Person's own affairs;  provided,
however,  that no  provision in this  Indenture  shall be construed to limit the
obligations of the Trustee to provide notices under Section 7.2.

                  (d) The Trustee  shall be under no  obligation to exercise any
of the  rights  or powers  vested  in it by this  Indenture  at the  request  or
direction  of any of the  Noteholders  pursuant to this  Indenture,  unless such
Noteholders shall have offered to the Trustee  reasonable  security or indemnity
against the costs,  expenses  and  liabilities  which might be incurred by it in
compliance with such request or direction.

                  (e) No  provision  of this  Indenture  shall be  construed  to
relieve  the  Trustee  from  liability  for its own  negligent  action,  its own
negligent failure to act, or its own willful misconduct, except that:

                           (i)   this  Section  shall not be  construed  to
         limit the effect of Section  7.1(a) and (b);

                          (ii) the Trustee  shall not be liable for any error of
         judgment made in good faith by a Responsible Officer unless it shall be
         proved that the Trustee shall have been negligent in  ascertaining  the
         pertinent facts; and

                         (iii) the Trustee  shall not be liable with  respect to
         any  action  taken  or  omitted  to be  taken  by it in good  faith  in
         accordance  with the written  direction of the Holders of the requisite
         principal  amount of the  Outstanding  Notes, or in accordance with any
         written direction delivered to it under Section 6.2(a), relating to the
         time,  method and place of  conducting  any  proceeding  for any remedy
         available to the Trustee,  or exercising  any trust or power  conferred
         upon the Trustee, under this Indenture.

                  (f)  Whether  or not  therein  expressly  so  provided,  every
provision of this  Indenture  relating to the conduct or affecting the liability
of or affording  protection to the Trustee shall be subject to the provisions of
this Section 7.1.

                  (g) The Trustee makes no  representations  or warranties  with
respect to the Assets or the validity or  sufficiency  of any  assignment of the
Trust Estate Receivables to the Borrower or to the Trust Estate.

                  (h)  Notwithstanding  anything  to the  contrary  herein,  the
Trustee  is not  required  to expend or risk its own  funds or  otherwise  incur
financial  liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable  grounds to
believe that repayment of such funds or adequate  indemnity against such risk or
liability is not reasonably assured to it.

                  SECTION 7.2.  Notice of Events of Default.  The Trustee  shall
promptly (but in any event within 5 Business  Days) notify the Master  Servicer,
and the Noteholders upon a Responsible Officer obtaining actual knowledge of any
event  which  constitutes  an Event of  Default  or an Event of Master  Servicer
Termination  or  would  constitute  an Event of  Default  or an Event of  Master
Servicer Termination but for the requirement that notice be given or time elapse
or  both;  provided,  further,  that  this  Section  7.2  shall  not  limit  the
obligations  of the  Trustee  to  provide  notices  expressly  required  by this
Indenture.


                  SECTION 7.3.  Certain Matters Affecting the Trustee.  Subject
to the provisions of Section 7.1:

                  (a) The Trustee may rely and shall be  protected  in acting or
refraining from acting upon any resolution,  certificate, statement, instrument,
opinion,  report, notice, request,  direction,  consent, order, bond, debenture,
note,  other evidence of indebtedness or other paper or document  believed by it
to be  genuine  and to have been  signed or  presented  by the  proper  party or
parties;

                  (b) Any request or  direction of any  Noteholders,  the Master
Servicer, or the Borrower mentioned herein shall be in writing;

                  (c) Whenever in the  performance  of its duties  hereunder the
Trustee shall deem it desirable that a matter be proved or established  prior to
taking,  suffering or omitting any action  hereunder,  the Trustee (unless other
evidence be herein specifically  prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate or Opinion of Counsel;

                  (d) The  Trustee may  consult  with  counsel and the advice of
such counsel or any Opinion of Counsel shall be deemed  authorization in respect
of any action taken,  suffered,  or omitted by it hereunder in good faith and in
reliance thereon;

                  (e) Prior to the occurrence of an Event of Default or an Event
of Master Servicer Termination,  or after the curing of all Events of Default or
Events of Master Servicer Termination which may have occurred, the Trustee shall
not be bound to make any  investigation  into the facts or matters stated in any
resolution,   certificate,   statement,  instrument,  opinion,  report,  notice,
request,  consent,  order,  approval,  bond  or  other  paper  document,  unless
requested in writing so to do by the Noteholders; provided, however, that if the
payment  within a  reasonable  time to the  Trustee  of the costs,  expenses  or
liabilities  likely to be incurred by it in the making of such investigation is,
in the reasonable opinion of the Trustee,  not reasonably assured to the Trustee
by the security  afforded to it by the terms of this Indenture,  the Trustee may
require  reasonable  indemnity  against  such cost,  expense or  liability  as a
condition to so  proceeding.  The reasonable  expense of every such  examination
shall  be paid by the  Master  Servicer  or,  if paid by the  Trustee,  shall be
reimbursed by the Master Servicer upon demand; and

                  (f) The  Trustee  may  execute  any of the  trusts  or  powers
hereunder  or perform  any duties  hereunder  either  directly  or by or through
agents or attorneys or a custodian  (which may be Affiliates of the Trustee) and
the  Trustee  shall  not be liable  for any acts or  omissions  of such  agents,
attorneys or custodians appointed with due care by it hereunder.

                  SECTION 7.4. Trustee Not Liable for Notes or Receivables.  (a)
The Trustee makes no  representations  as to the validity or sufficiency of this
Indenture  or any  Warehouse  Facility  Document,  the  Notes  (other  than  the
authentication  thereof)  or  of  any  Receivable.  The  Trustee  shall  not  be
accountable  for the use or  application  by the  Borrower  of funds paid to the
Borrower in consideration of conveyance of the Receivables to the Trust Estate.

                  (a)(b) If the Trustee acts as Successor Servicer,  the Trustee
         shall have no  responsibility  or liability for or with respect to: the
         validity  of  any  security  interest  in  any  Vacation  Credits;  the
         existence or validity of any Trust Estate  Receivable,  the validity of
         the assignment of any Trust Estate Receivable to the Trust Estate or of
         any intervening  assignment;  the review of any Trust Estate Receivable
         or any Receivable  File, the  completeness of any Receivable  File, the
         receipt by the  Custodian of any Trust Estate  Receivable or Receivable
         File (it being  understood  that the Trustee has not  reviewed and does
         not intend to review such matters);  the  performance or enforcement of
         any Trust Estate  Receivable;  the compliance by the Master Servicer or
         the Borrower with any covenant or the breach by the Master  Servicer or
         the Borrower of any warranty or representation made hereunder or in any
         related   document   or  the   accuracy   of  any  such   warranty   or
         representation;  the acts or  omissions  of the Master  Servicer or any
         Obligor;  or any action of the Master Servicer taken in the name of the
         Trustee.

                  SECTION  7.5.  Trustee  May  Own  Notes.  The  Trustee  in its
individual  or any other  capacity may become the owner or pledgee of Notes with
the same rights as it would have if it were not Trustee.

                  SECTION 7.6.  The Master  Servicer to Pay  Trustee's  Fees and
Expenses.  The Master  Servicer agrees to reimburse the Trustee upon its request
for all agreed-upon third-party expenses, disbursements and advances incurred or
made by the Trustee in its capacity as such in accordance  with any provision of
this  Indenture  (including  the  reasonable  compensation  and the expenses and
disbursement of its agents and counsel),  except any such expense,  disbursement
or  advance  as may  be  attributable  to  its  negligence  or  bad  faith.  The
obligations  of the Master  Servicer  under this  Section 7.6 shall  survive the
termination of this Indenture and the resignation or removal of the Trustee. The
compensation of the Trustee shall not be limited by any law on compensation of a
trustee of an express trust.

                  SECTION 7.7. Eligibility  Requirements for Trustee. Other than
the  initial  Trustee,  the  Trustee  hereunder  shall  at  all  times  (a) be a
corporation,  depository  institution,  or trust  company  organized  and  doing
business  under the laws of the United  States of  America or any state  thereof
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least  $250,000,000,  (b) be subject to supervision or
examination  by federal or state  authority,  (c) be capable of  maintaining  an
Eligible Bank Account and (d) have a long-term unsecured debt rating of not less
than Baa2 from the Rating Agencies,  and shall be acceptable to the Noteholders.
If such institution  publishes reports of condition at least annually,  pursuant
to or to the requirements of the aforesaid  supervising or examining  authority,
then for the purpose of this Section  7.7,  the combined  capital and surplus of
such  institution  shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so  published.  In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 7.7, the Trustee  shall  resign  immediately  in the manner and with the
effect specified in Section 7.8.

                  SECTION  7.8.  Resignation  or  Removal  of  Trustee.  (a) The
Trustee may at any time resign and be  discharged  with  respect to the Notes by
giving 90 days' written notice thereof to the Master Servicer, the Borrower, and
the Noteholders.  Upon receiving such notice of resignation, the Master Servicer
shall promptly  appoint a successor  Trustee not objected to by the  Noteholders
within  30  days  after  prior  written  notice,  by  written   instrument,   in
quintuplicate, one counterpart of which instrument shall be delivered to each of
the Borrower,  the Master  Servicer,  the successor  Trustee and the predecessor
Trustee.  If no successor Trustee shall have been so appointed and have accepted
appointment  within 90 days after the giving of such notice of resignation,  the
resigning  Trustee may  petition  any court of  competent  jurisdiction  for the
appointment of a successor Trustee.

                  (a)(b) If at any time the  Trustee  shall cease to be eligible
in accordance  with the provisions of Section 7.7 and shall fail to resign after
written request therefor by the Master  Servicer,  or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property  shall be appointed,  or any public
officer  shall  take  charge or control of the  Trustee  or of its  property  or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master  Servicer or the  Noteholders  may direct,  and the Master Servicer shall
follow such  direction  and remove the Trustee.  If it removes the Trustee under
the authority of the immediately  preceding sentence,  the Master Servicer shall
promptly appoint a successor  Trustee not objected to by the Noteholders  within
30 days after prior written notice, by written instrument, in quintuplicate, one
counterpart of which instrument shall be delivered to each of the Borrower,  the
Master  Servicer,  the  Noteholders,  the successor  Trustee and the predecessor
Trustee.

                  (c) The Trustee  may be removed by the Master  Servicer at any
time by giving  written notice thereof to the Trustee and each of the Holders of
the Notes then  outstanding.  Such  removal by the Master  Servicer  will become
effective  unless  the  Holders of at least 51% of the  principal  amount of the
Notes  then  outstanding  deliver a written  statement  to the  Master  Servicer
opposing such removal within 30 days following receipt of such notice of removal
from the Master Servicer.

                  (d) Any  resignation or removal of the Trustee and appointment
of a successor  Trustee  pursuant to any of the  provisions  of this Section 7.8
shall not become  effective  until  acceptance of  appointment  by the successor
Trustee as provided in Section 7.9.

                  SECTION 7.9.  Successor  Trustee.  (a) Any  successor  Trustee
appointed as provided in Section 7.8 shall execute,  acknowledge  and deliver to
each  of  the  Master  Servicer,  the  Borrower,  the  Noteholders  and  to  its
predecessor  Trustee an instrument  accepting such  appointment  hereunder,  and
thereupon the  resignation  or removal of the  predecessor  Trustee shall become
effective  and  such  successor  Trustee,  without  any  further  act,  deed  or
conveyance,  shall become fully vested with all the rights,  powers,  duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to the
successor  Trustee or its custodian any related documents and statements held by
it or its custodian hereunder;  and the Master Servicer and the Borrower and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may  reasonably  be  required  for the full and  certain  vesting  and
confirmation  in the successor  Trustee of all such rights,  powers,  duties and
obligations.

                  (a)(b) In case of the  appointment  hereunder  of a  successor
Trustee with respect to the Notes,  the Borrower,  the retiring Trustee and each
successor  Trustee  with  respect  to the Notes  shall  execute  and  deliver an
indenture  supplemental  hereto wherein each successor Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights,  powers,  trusts and duties of the retiring  Trustee with respect to
the Notes to which the appointment of such successor  Trustee  relates,  (ii) if
the retiring  Trustee is not retiring  with respect to all Notes,  shall contain
such  provisions  as shall be deemed  necessary or desirable to confirm that all
the rights,  powers,  trusts and duties of the retiring  Trustee with respect to
the Notes as to which the retiring  Trustee is not retiring shall continue to be
vested in the  retiring  Trustee,  and (iii)  shall add to or change  any of the
provisions of this  Indenture as shall be necessary to provide for or facilitate
the  administration  of the Trust Estate hereunder by more than one Trustee,  it
being  understood  that nothing herein or in such  supplemental  indenture shall
constitute  such Trustees  co-trustees of the same allocated trust and that each
such Trustee shall be trustee of a trust or trusts hereunder  separate and apart
from any trust or trusts hereunder  administered by any other such Trustee;  and
upon the execution and delivery of such  supplemental  indenture the resignation
or removal of the retiring Trustee shall become effective to the extent provided
therein  and each such  successor  Trustee,  without any  further  act,  deed or
conveyance,  shall become vested with all the rights,  powers, trusts and duties
of the retiring  Trustee with respect to the Notes to which the  appointment  of
such successor Trustee relates; but, on request of the Borrower or any successor
Trustee,  such retiring Trustee shall duly assign,  transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Notes to which the  appointment  of such  successor  Trustee
relates.

                  Upon request of any such successor Trustee, the Borrower shall
execute  any and all  instruments  for more fully and  certainly  vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in the preceding paragraph.

                  (c) No successor Trustee shall accept  appointment as provided
in this Section 7.9 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 7.7.

                  (d) Upon  acceptance of appointment by a successor  Trustee as
provided  in this  Section  7.9,  the Master  Servicer  shall mail notice of the
succession of such Trustee  hereunder to each Noteholder at its address as shown
in the Note Register. If the Master Servicer fails to mail such notice within 10
days after  acceptance of  appointment by the successor  Trustee,  the successor
Trustee  shall cause such notice to be mailed at the expense of the Borrower and
the Master Servicer.

                  SECTION  7.10.   Merger  or  Consolidation  of  Trustee.   Any
corporation  into which the Trustee may be merged or  converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation  to  which  the  Trustee  shall  be a  party,  or any  corporation
succeeding  to the  corporate  trust  business  of  the  Trustee,  shall  be the
successor of the Trustee hereunder,  provided such corporation shall be eligible
under the  provisions  of Section  7.7,  without the  execution or filing of any
paper or any  further  act on the part of any of the  parties  hereto,  anything
herein to the contrary notwithstanding.

                  SECTION 7.11.  Appointment of Co-Trustee or Separate  Trustee.
(a) At any time or times for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust Estate may at the time be located or
in which any action of the Trustee may be required to be performed or taken, the
Trustee,  the Master  Servicer or the Holders of at least 51% of the Outstanding
Principal Amount of the Notes, by an instrument in writing signed by it or them,
may  appoint,  at the  reasonable  expense  of the  Trust  Estate,  one or  more
individuals or corporations to act as separate  trustee or separate  trustees or
co-trustee,  acting  jointly with the  Trustee,  of all or any part of the Trust
Estate,  to the full extent that local law makes it necessary  for such separate
trustee or separate  trustees or co-trustee  acting  jointly with the Trustee to
act. Notwithstanding the appointment of any separate or co-trustee,  the Trustee
shall remain  obligated and liable for the obligations of the Trustee under this
Indenture.

                  (b) The Trustee and, at the request of the Trustee, the Master
Servicer shall execute,  acknowledge and deliver all such  instruments as may be
required by the legal  requirements of any  jurisdiction or by any such separate
trustee  or  separate  trustees  or  co-trustee  for the  purpose  of more fully
confirming such title,  rights,  or duties to such separate  trustee or separate
trustees or co-trustee.  Upon the  acceptance in writing of such  appointment by
any such separate  trustee or separate  trustees or  co-trustee,  it, he, she or
they shall be vested  with such title to the Trust  Estate or any part  thereof,
and with such rights,  powers,  duties and  obligations as shall be specified in
the instrument of appointment,  and such rights,  powers, duties and obligations
shall be conferred or imposed upon and exercised or performed by the Trustee, or
the  Trustee and such  separate  trustee or  separate  trustees  or  co-trustees
jointly with the Trustee subject to all the terms of this  Indenture,  except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed  the Trustee shall be  incompetent  or  unqualified  to
perform  such act or acts,  in which  event  such  rights,  powers,  duties  and
obligations  shall be  exercised  and  performed  by such  separate  trustee  or
separate  trustees or  co-trustee,  as the case may be. Any separate  trustee or
separate  trustees or  co-trustee  may, at any time by an instrument in writing,
constitute  the  Trustee  its  attorney-in-fact  and agent  with full  power and
authority to do all acts and things and to exercise all discretion on its behalf
and in its name. In any case any such separate  trustee or co-trustee shall die,
become incapable of acting,  resign or be removed, the title to the Trust Estate
and all assets,  property,  rights,  power duties and  obligations and duties of
such separate  trustee or co-trustee  shall, so far as permitted by law, vest in
and be exercised by the Trustee,  without the appointment of a successor to such
separate trustee or co-trustee unless and until a successor is appointed.

                  (c) All provisions of this Indenture which are for the benefit
of the Trustee shall extend to and apply to each separate  trustee or co-trustee
appointed pursuant to the foregoing provisions of this Section 7.11.

                  (d) Every additional  trustee and separate  trustee  hereunder
shall,  to the extent  permitted  by law, be  appointed  and act and the Trustee
shall act, subject to the following  provisions and conditions:  (i) all powers,
duties and obligations  and rights  conferred upon the Trustee in respect of the
receipt, custody,  investment and payment of monies shall be exercised solely by
the Trustee; (ii) all other rights,  powers, duties and obligations conferred or
imposed  upon the  Trustee  shall be  conferred  or  imposed  and  exercised  or
performed  by the Trustee and such  additional  trustee or trustees and separate
trustee  or  trustees  jointly  except to the  extent  that under any law of any
jurisdiction  in  which  any  particular  act or acts are to be  performed,  the
Trustee  shall be  incompetent  or  unqualified  to perform such act or acts, in
which event such rights,  powers, duties and obligations  (including the holding
of title to the  Properties  in any such  jurisdiction)  shall be exercised  and
performed  by such  additional  trustee  or  trustees  or  separate  trustee  or
trustees; (iii) no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised  hereunder by such trustee except
jointly with, or with the consent of, the Trustee; and (iv) no trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder.

         If at any  time,  the  Trustee  shall  deem it no longer  necessary  or
prudent in order to conform to such law, the Trustee  shall  execute and deliver
all  instruments  and  agreements  necessary or proper to remove any  additional
trustee or separate trustee.

                  (e) Any request, approval or consent in writing by the Trustee
to any  additional  trustee or separate  trustee shall be sufficient  warrant to
such additional  trustee or separate  trustee,  as the case may be, to take such
action as may be so requested, approved or consented to.

                  (f)  Notwithstanding any other provision of this Section 7.11,
the powers of any additional  trustee or separate trustee shall not exceed those
of the Trustee hereunder.

                  SECTION 7.12..  Paying Agent and Note Registrar Rights So long
as the Trustee is the Paying Agent and Note Registrar, the Paying Agent and Note
Registrar  shall be entitled  to the  rights,  benefits  and  immunities  of the
Trustee  as set  forth in  Article 7 to the same  extent  and as fully as though
named in place of the Trustee.

                  SECTION  7.13.  No  Obligation  to make  Advances.  The
Trustee  shall have no obligation to make Advances under the Credit Agreement.


                                   ARTICLE 8.

                                    COVENANTS

                  SECTION 8.1.  Payment of Principal and Interest.

                  The Borrower  will cause the due and  punctual  payment of the
principal of and interest on the Notes in accordance with the terms of the Notes
and this Indenture.

                  SECTION 8.2.  Maintenance of Office or Agency; Chief
Executive Office.

                  (a) The Borrower will  maintain at the Corporate  Trust Office
an office or agency where Notes may be surrendered for  registration of transfer
or exchange and where  notices and demands to or upon the Borrower in respect of
the Notes and this  Indenture may be served.  The Borrower  hereby  appoints the
Trustee as its agent to receive all such presentations,  surrenders, notices and
demands.

                  (b) The Borrower will not change the location of its principal
place of business  without  giving the Trustee at least 60 Business  Days' prior
written notice thereof.

                  SECTION 8.3.  Money for Payments to Noteholders to be Held
in Trust.

                  (a) All  payments of amounts due and payable  with  respect to
any Notes that are to be made from  amounts  withdrawn  from the Trust  Accounts
pursuant to Section  3.4 or Section 6.6 shall be made on behalf of the  Borrower
by the  Trustee,  and no amounts so  withdrawn  from the  applicable  Collection
Account  for  payments  of Notes  shall be paid over to the  Borrower  under any
circumstances  except as provided in this Section 8.3, in Section 3.4 or Section
6.6.

                  (b) In making  payments  hereunder,  the Trustee will hold all
sums held by it for the  payment  of  amounts  due with  respect to the Notes in
trust for the benefit of the Persons  entitled  thereto until such sums shall be
paid to such  Persons or otherwise  disposed of as herein  provided and pay such
sums to such Persons as herein provided.

                  (c) Except as required by  applicable  law,  any money held by
the Trustee in trust for the payment of any amount due with  respect to any Note
and  remaining  unclaimed  for three  years after such amount has become due and
payable to the Noteholder  shall be discharged  from such trust and,  subject to
applicable  escheat laws, and so long as no Event of Default has occurred and is
continuing,  paid to the Borrower upon request; otherwise, such amounts shall be
redeposited in the Collection  Account as Available  Funds,  and such Noteholder
shall thereafter,  as an unsecured  general creditor,  look only to the Borrower
for  payment  thereof  (but  only to the  extent of the  amounts  so paid to the
Borrower),  and all  liability  of the Trustee  with respect to such trust money
shall thereupon cease.

                  SECTION 8.4.  Corporate Existence; Merger; Consolidation, etc.

                  (a) The  Borrower  will  keep in full  effect  its  existence,
rights and franchises as a corporation  under the laws of the State of Delaware,
and will  obtain and  preserve  its  qualification  to do  business as a foreign
entity in each jurisdiction in which such qualification is or shall be necessary
to protect the validity and  enforceability of this Indenture,  the Notes or any
of the Trust Estate Receivables.

                  (b) The Borrower  shall at all times observe and comply in all
material  respects with (i) all laws applicable to it, (ii) all  requirements of
law in the declaration and payment of dividends on its capital stock,  and (iii)
all requisite and appropriate corporate and other formalities (including without
limitation  meetings of the  Borrower's  Board of Directors  and, if required by
law, its charter or  otherwise,  meetings and votes of the  shareholders  of the
Borrower to authorize  corporate  action) in the  management of its business and
affairs and the conduct of the transactions contemplated hereby.

                  (c) The  Borrower  shall not issue or register the transfer of
any of its common stock to any Person other than TWRI or an Affiliate of TWRI.

                  (d) The Borrower  shall not (i)  consolidate  or merge with or
into  any  other  Person  or  convey  or  transfer  its  properties  and  assets
substantially  as an entirety to any other Person or (ii)  commingle  its assets
with those of any other Person.

                  SECTION 8.5.  Protection of Trust Estate; Further Assurances.

                  The  Borrower  will from time to time  execute and deliver all
such  supplements  and  amendments  hereto  and all such  financing  statements,
continuation   statements,   instruments   of  further   assurance,   and  other
instruments,  and will take such other  action as may be  necessary or advisable
to:

                           (i)   Grant more  effectively  the  Assets
          comprising  all or any  portion of the Trust Estate;

                          (ii)  maintain or preserve the lien of this  Indenture
         or carry out more effectively the purposes hereof;

                         (iii)  publish  notice of, or protect the  validity of,
         any Grant made or to be made by this Indenture and perfect the security
         interest  contemplated  hereby in favor of the  Trustee  in each of the
         Trust Estate  Receivables and all other property  included in the Trust
         Estate;

                          (iv)  enforce or cause the Master  Servicer to enforce
         any of the  Trust  Estate  Receivables  in  accordance  with the  terms
         hereof; and

                           (v)  preserve  and defend  title to the Trust  Estate
         Receivables  (including  the right to receive  all  payments  due or to
         become due  thereunder),  the  interests  in the  Properties,  or other
         property  included  in the Trust  Estate  and  preserve  and defend the
         rights of the  Trustee  in the  Trust  Estate  (including  the right to
         receive  all  payments  due or to become due  thereunder)  against  the
         claims of all Persons and parties other than as permitted hereunder.

The  Borrower,  upon the  Borrower's  failure to do so,  hereby  designates  the
Trustee and the Master  Servicer its agent and  attorney-in-fact  to execute any
financing statement or continuation  statement required pursuant to this Section
8.5;  provided,  however,  that such designation shall not be deemed to create a
duty in the Trustee to monitor the compliance of the Borrower with the foregoing
covenants,  and provided,  further,  that the duty of the Trustee to execute any
instrument  required  pursuant  to  this  Section  8.5  shall  arise  only  if a
Responsible  Officer of the Trustee has actual  knowledge  of any failure of the
Borrower to comply with the provisions of this Section 8.5.

                  SECTION 8.6.  Reserved.

                  SECTION 8.7.  Additional Covenants.

                  (a)      The Borrower will not:

                           (i) sell, transfer,  exchange or otherwise dispose of
         any portion of the Trust Estate  except as expressly  permitted by this
         Indenture;

                          (ii) claim any credit on, or make any deduction  from,
         the  principal  of, or  interest  on, any of the Notes by reason of the
         payment of any taxes  levied or assessed  upon any portion of the Trust
         Estate; or

                         (iii) (A) permit the validity or  effectiveness of this
         Indenture  or any Grant  hereby to be  impaired,  or permit the lien of
         this Indenture to be amended, hypothecated, subordinated, terminated or
         discharged,  or permit any Person to be released  from any covenants or
         obligations under this Indenture,  except as may be expressly permitted
         hereby,  (B) permit any lien, charge,  security  interest,  mortgage or
         other  encumbrance to be created on or to extend to or otherwise  arise
         upon or burden the Trust  Estate or any part  thereof  or any  interest
         therein or the proceeds  thereof other than the lien of this Indenture,
         or (C) except as otherwise  contemplated in this Indenture,  permit the
         lien  of this  Indenture  not to  constitute  a  valid  first  priority
         security interest in the Trust Estate.

                  (b)  Notice of Event of  Default.  Immediately  upon  becoming
aware of the existence of any condition or event which  constitutes a Default or
an Event of Default,  the Borrower shall deliver to the Trustee a written notice
describing  its nature and period of  existence  and what action the Borrower is
taking or proposes to take with respect thereto.

                  (c)  Report  on  Proceedings.  Promptly  upon  the  Borrower's
becoming  aware  of (i)  any  proposed  or  pending  investigation  of it by any
Governmental  Authority  or agency;  or (ii) any  pending or  proposed  court or
administrative  proceeding  which  involves or may involve  the  possibility  of
materially and adversely affecting the properties,  business, prospects, profits
or condition  (financial  or  otherwise)  of the  Borrower,  the Borrower  shall
deliver  to  the  Trustee  a  written  notice  specifying  the  nature  of  such
investigation  or proceeding  and what action the Borrower is taking or proposes
to take with respect thereto and evaluating its merits.

                  SECTION 8.8.  Taxes.

                  The Borrower  shall pay all Taxes of the Borrower when due and
payable or levied against the Borrower's assets, properties or income, including
any property that is part of the Trust Estate.

                                   ARTICLE 9.

                             SUPPLEMENTAL INDENTURES

                  SECTION 9.1.  Supplemental Indentures.

                  (a) The Borrower, by a Borrower Order, and the Trustee, at any
time and from time to time, may enter into one or more  indentures  supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:

                           (i)  without the  consent of any  Noteholder;  (x) to
         correct or amplify the  description of any property at any time subject
         to the lien of this Indenture,  or to better assure, convey and confirm
         unto the Trustee any  property  subject or required to be  subjected to
         the lien of this  Indenture;  provided  such  action  pursuant  to this
         clause (i) shall not adversely  affect the interests of the Noteholders
         in any respect; or

                           (y) to evidence  and provide  for the  acceptance  of
                  appointment  hereunder by a successor  Trustee with respect to
                  the  Notes and to add to or change  any of the  provisions  of
                  this  Indenture  as  shall  be  necessary  to  provide  for or
                  facilitate the  administration of the trusts hereunder by more
                  than one Trustee, pursuant to the requirements of Section 7.9;
                  or

                           (z) to cure any  ambiguity,  to correct or supplement
                  any  provision  herein which may be defective or  inconsistent
                  with  any  other  provision  herein,  or  to  make  any  other
                  provisions with respect to matters or questions  arising under
                  this  Indenture;  provided  that such action  pursuant to this
                  clause (z) shall not  adversely  affect the  interests  of the
                  Holders of Notes; or

                  (b) The Trustee shall  promptly  deliver,  at least 5 Business
Days  prior  to the  effectiveness  thereof,  to each  Noteholder  a copy of any
supplemental indenture entered into pursuant to this Section 9.1(a).

                  SECTION 9.2.  Supplemental Indentures with Consent of
Noteholders.

                  (a) With the written consent of the  Noteholders  delivered to
the Borrower and the Trustee, the Borrower, by a Borrower Order, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any  provisions  to or changing in any manner or  eliminating  any of the
provisions  of this  Indenture  or of  modifying in any manner the rights of the
Noteholders  under this  Indenture;  provided,  that no  supplemental  indenture
shall,  without  the  consent of the Holder of each  Outstanding  Note  affected
thereby,

                           (i) change the maturity of any Note or the  Principal
         Payments or Interest  Payments due or to become due on any Payment Date
         with respect to any Note, or change the priority of payment  thereof as
         set forth herein,  or reduce the principal  amount  thereof or the Note
         Interest Rate  thereon,  or change the place of payment  where,  or the
         coin or currency in which, any Note or the interest thereon is payable,
         or impair the right to institute  suit for the  enforcement of any such
         payment on or after the Maturity thereof;

                          (ii)  reduce  the   percentage   of  the   Outstanding
         Principal  Amount of the Notes,  the  consent of whose  Noteholders  is
         required  for  any  such  supplemental  indenture,  for any  waiver  of
         compliance  with  provisions of this Indenture or Events of Default and
         their consequences, provided for in this Indenture;

                         (iii) modify any of the  provisions  of this Section or
         Section  6.13 except to increase any  percentage  or fraction set forth
         therein or to provide that certain other  provisions of this  Indenture
         cannot be modified or waived without the consent of the Noteholder;

                          (iv) modify or alter the  provisions of the proviso to
         the definition of the term "Outstanding"; or

                           (v) permit the creation of any lien ranking  prior to
         or on a parity with the lien of this Indenture with respect to any part
         of the Trust  Estate or,  terminate  the lien of this  Indenture on any
         property at any time subject  hereto or deprive any  Noteholder  of the
         security afforded by the lien of this Indenture;

provided,  no such  supplemental  indenture  may  modify  or  change  any  terms
whatsoever of the Indenture that could be construed as increasing the Borrower's
or TWRI's discretion hereunder.

                  (b) If an Event of Default has occurred and is continuing,  as
provided in Section 6.3, the parties to this Indenture hereby agree to amend the
provisions of this Indenture at the direction of the Noteholders.

                  (c) The Trustee shall  promptly  deliver to each  Noteholder a
copy of any supplemental indenture entered into pursuant to Section 9.2(a).

                  SECTION 9.3.  Execution of Supplemental Indentures.

                  In executing,  or accepting the additional  trusts created by,
any supplemental  indenture (a) pursuant to Section 9.1 of this Indenture or (b)
pursuant to Section 9.2 of this Indenture  without the consent of each holder of
the Notes to the  execution  of the same,  or the  modifications  thereby of the
trusts created by this Indenture,  the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be, fully  protected in relying  upon, an Opinion
of  Counsel  stating  that  the  execution  of such  supplemental  indenture  is
authorized  or  permitted by this  Indenture.  The Trustee may, but shall not be
obligated to, enter into any supplemental  indenture which affects the Trustee's
own  rights,  duties,   obligations,  or  immunities  under  this  Indenture  or
otherwise.

                  SECTION 9.4.  Effect of Supplemental Indentures.

                  Upon the execution of any  supplemental  indenture  under this
Article,  this  Indenture  shall be modified in accordance  therewith,  and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes  theretofore  or  thereafter  authenticated  and delivered
hereunder shall be bound thereby.

                  SECTION 9.5.  Reference in Notes to Supplemental Indentures.

                  Notes  authenticated  and delivered after the execution of any
supplemental  indenture  pursuant to this  Article may, and shall if required by
the  Trustee,  bear a notation in form  approved by the Trustee as to any matter
provided  for in such  supplemental  indenture.  New  Notes  so  modified  as to
conform,  in  the  opinion  of  the  Trustee  and  the  Borrower,  to  any  such
supplemental  indenture  may  be  prepared  and  executed  by the  Borrower  and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.

                                   ARTICLE 10.

                           SATISFACTION AND DISCHARGE

                  SECTION 10.1.  Satisfaction and Discharge of Indenture.

                  (a) This Indenture shall cease to be of further effect (except
as to any  surviving  rights of  registration  of  transfer or exchange of Notes
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Borrower,  shall execute  proper  instruments  (prepared by the Borrower)
acknowledging  satisfaction  and discharge of this Indenture,  when the Borrower
and the Master  Servicer  have paid or caused to be paid all other sums  payable
hereunder  by the  Borrower  and the  Master  Servicer  for the  benefit  of the
Noteholders  and the Trustee;  and the Borrower has  delivered to the Trustee an
Officer's  Certificate  and  an  Opinion  of  Counsel,  each  stating  that  all
conditions  precedent  herein  provided  for  relating to the  satisfaction  and
discharge of this  Indenture  have been complied with. At such time, the Trustee
shall deliver to the Borrower all cash, securities and other property held by it
as part of the Trust Estate other than funds deposited with the Trustee pursuant
to Section 10.1(a)(i)(B), for the payment and discharge of the Notes.

                  (b)  Notwithstanding  the  satisfaction  and discharge of this
Indenture, the obligations of the Borrower to the Trustee under Section 7.6 and,
if money  shall  have  been  deposited  with the  Trustee  pursuant  to  Section
10.1(a)(i)(B),  the  obligations  of the Trustee  under Section 10.2 and Section
8.3(c) shall survive.

                  SECTION 10.2.  Application of Trust Money.

                  Subject  to  the  provisions  of  Section  8.3(c),  all  money
deposited  with the Trustee  pursuant to Sections  10.1 and 8.3 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture,  to the payment to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.

                  SECTION  10.3.   Trust   Termination   Date.   Upon  the  full
application of (a) moneys deposited  pursuant to this Article 10 or (b) proceeds
of the Assets  pursuant to Sections 3.4 or 6.6, the Trust Estate created by this
Indenture shall be deemed to have terminated (the "Trust Termination Date").

                                   ARTICLE 11.

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 11.1.  Representations and Warranties of the Borrower.
The Borrower  represents and warrants to the Trustee and the Noteholders,  as of
each Issuance Date and on each day until the  discharge of this  Indenture,  all
the representations and warranties contained in Section as follows:

                  (a)  The  Borrower  is  a   wholly-owned   bankruptcy   remote
subsidiary of TWRI Resorts,  Inc. and is a corporation  duly organized,  validly
existing  and in good  standing  under the laws of the State of Delaware  and is
duly qualified to do business,  and is in good standing in each  jurisdiction in
which the  nature  of its  business  requires  it to be so  qualified  and which
permits such qualification;

                  (b) The Borrower has the power and authority to own and convey
all of its  properties  and to  execute  and  deliver  this  Indenture  and  the
Warehouse Facility Documents and to perform the transactions contemplated hereby
and thereby;

                  (c)  The  Borrower  is  operated  in  such  a  manner  and  is
constituted so that it would not be substantively consolidated in the bankruptcy
trust estate of any Affiliate,  such that the separate existence of the Borrower
and any Affiliate would be disregarded, and to such end:

                           (i) the Borrower maintains separate records, books of
         account  and  financial  statements  from  those of TWRI and each other
         Affiliate of TWRI;
                          (ii) the Borrower does not commingle any of its assets
         or funds with those of TWRI or any of the other Affiliates of TWRI;

                         (iii)  the  Borrower  maintains  a  separate  board  of
         directors  with at least one  independent  director  and  observes  all
         separate corporate  formalities,  and all decisions with respect to the
         Borrower's  business  and  daily  operations  have  been  and  shall be
         independently  made  by  the  officers  of  the  Borrower  pursuant  to
         resolutions of its board of directors;

                          (iv) other than  contributions of capital,  payment of
         dividends and return of capital, no transactions have been entered into
         between the  Borrower  and TWRI or between the  Borrower and any of the
         other  Affiliates of TWRI except such  transactions as are contemplated
         by this Indenture and the Warehouse Facility Documents;

                           (v) except for such administration and collection and
         functions  as TWRI may perform on behalf of the  Borrower and the Trust
         Estate pursuant to this Indenture and the Warehouse Facility Documents,
         the Borrower acts solely in its own name and through its own authorized
         officers and agents and the  Borrower  does not act as agent of TWRI or
         any other Person in any capacity;

                          (vi) except for any funds  received from TWRI (or from
         TWRI  indirectly  by way of any of the other  Affiliates  of TWRI) as a
         capital contribution, the Borrower shall not accept for its own account
         funds  from  TWRI  or any of the  other  Affiliates  of  TWRI;  and the
         Borrower  shall not allow TWRI or any of the other  Affiliates  of TWRI
         otherwise  to supply  funds to, or  guarantee  any  obligation  of, the
         Borrower;

                         (vii) the Borrower  shall not  guarantee,  or otherwise
         become  liable with  respect to, any  obligation  of TWRI or any of the
         other Affiliates of TWRI; and

                        (viii) the  Borrower  shall at all times hold itself out
         to the public under the Borrower's own name as a legal entity  separate
         and distinct from TWRI and the other Affiliates of TWRI.

                  (d) The Borrower is a special purpose  corporation and has not
engaged,  and does not  presently  engage and shall not engage,  in any activity
other  than  the  activities  undertaken  pursuant  to  this  Indenture  and the
Warehouse Facility Documents and contemplated  hereby and thereby and activities
ancillary or incident thereto, and has no Debt other than the Notes;

                  (e) The execution, delivery and performance by the Borrower of
this  Indenture,   the  Warehouse   Facility   Documents  and  the  transactions
contemplated hereby and thereby,  (i) have been duly authorized by all necessary
corporate or other action on the part of the Borrower, (ii) do not contravene or
cause the  Borrower  to be in default  under (A) the  Borrower's  organizational
documents,  (B) any contractual restriction contained in any indenture,  loan or
credit agreement,  lease,  mortgage,  security  agreement,  bond, note, or other
agreement or instrument binding on or affecting the Borrower or its property, or
(C) any law, rule,  regulation,  order, writ, judgment,  award,  injunction,  or
decree applicable to, binding on or affecting the Borrower or its property,  and
(iii) do not result in or require the creation of any Adverse Claim upon or with
respect to any of the property of the Borrower;

                  (f) This Indenture and the Warehouse  Facility  Documents have
each been duly executed and delivered on behalf of the Borrower;

                  (g) No  consent  of, or other  action  by, and no notice to or
filing with, any Governmental  Authority or any other party, is required for the
due execution, delivery and performance by the Borrower of this Indenture or any
of the Warehouse  Facility Documents or for the perfection of or the exercise by
the Trustee or the  Noteholders  of any of their  rights or remedies  thereunder
which have not been duly obtained;

                  (h) This Indenture and each other Warehouse  Facility Document
is the legal, valid and binding obligation of the Borrower  enforceable  against
the Borrower in accordance with its respective terms; except as such enforcement
may  be  limited  by  bankruptcy,  insolvency,   reorganization,   receivership,
moratorium  or other laws  relating  to or  affecting  the  rights of  creditors
generally,  and by general  principles  of equity  (regardless  of whether  such
enforcement is considered in a proceeding in law or in equity);

                  (i) There is no pending or, to the Borrower's  best knowledge,
threatened action,  suit or proceeding,  nor any injunction,  writ,  restraining
order or other  order of any  nature  against or  affecting  the  Borrower,  its
officers  or  directors,  or the  property  of the  Borrower,  in any  court  or
tribunal,  or before any arbitrator of any kind or before or by any Governmental
Authority (i) asserting the invalidity of this Indenture or any of the Warehouse
Facility Documents, (ii) seeking to prevent the sale and assignment of any Trust
Estate  Receivable or the consummation of any of the  transactions  contemplated
thereby,  (iii) seeking any  determination  or ruling that might  materially and
adversely affect (A) the performance by the Borrower of this Indenture or any of
the Warehouse  Facility  Documents or the interests of the Noteholders,  (B) the
validity or  enforceability  of this Indenture or any of the Warehouse  Facility
Documents,   (C)  any  Trust  Estate   Receivable,   or  (D)  the  Intended  Tax
Characterization,  or (iv) asserting a claim for payment of money adverse to the
Borrower or the conduct of its  business or which is  inconsistent  with the due
consummation  of the  transactions  contemplated by this Indenture or any of the
Warehouse Facility Documents;

                  (j) The principal place of business and chief executive office
of the Borrower are located at the address in the State of Washington  indicated
in  Section  12.4 and there  are now no,  and  there  have not been  any,  other
locations  where the  Borrower  is located  (as that term is used in the UCC) or
keeps Records except, after the date of this Indenture,  as disclosed in writing
to the Trustee and the  Noteholders and the Master Servicer at least 30 Business
Days prior to any such change;

                  (k) The  legal  name of the  Borrower  is as set  forth in the
beginning of this  Indenture and the Borrower has not changed its name since its
formation,  and during  such  period,  the  Borrower  did not use,  nor does the
Borrower  now use any  tradenames,  fictitious  names,  assumed  names or "doing
business as" names;

                  (l)      The Borrower does not have any Subsidiaries;

                  (m) The  Borrower  is solvent  and will not  become  insolvent
after giving effect to the transactions  contemplated by this Indenture and each
of the Warehouse Facility Documents;  the Borrower's  transfers of Assets to the
Trust Estate have been and will be made for reasonably equivalent value and fair
consideration;  and  the  Borrower,  after  giving  effect  to the  transactions
contemplated  by this  Indenture and each of the Warehouse  Facility  Documents,
will have an adequate  amount of capital to conduct its  business in the future;
and

                  (n) The Borrower has  complied in all material  respects  with
all  applicable  laws,  rules,  regulations,  and orders with respect to it, its
business and properties and all of the Assets.

                    SECTION  11.2.  Representations  and  Warranties  as to Each
Trust Estate  Receivable.  (a) With respect to the Variable  Notes,  each of the
Borrower and TWRI hereby make and repeat the  representations  and warranties in
Section 2.3 of the Credit Agreement.

                  (b)  The  Borrower  and the  Master  Servicer  each  hereby
certifies that the representations  and warranties  contemplated in this Section
11.2 shall  survive the  transfer of the Trust Estate  Receivables  to the Trust
Estate.

                                   ARTICLE 12.

                                  MISCELLANEOUS

                  SECTION 12.1.  Indemnities of the Master Servicer.

                  (a) The  Master  Servicer  agrees to  indemnify  (i) the Trust
Estate  from,  and hold it harmless  against,  any and all losses,  liabilities,
damages,  claims or expenses (including  reasonable  attorneys' fees of counsel)
arising as a result of the Master  Servicer's acts or omissions  (subject to the
administration  standard  set forth in  Section  5.2(b))  in  violation  of this
Indenture  and (ii) the Trustee,  any separate  trustee or  co-trustee,  if any,
their  directors,  officers,  employees and agents,  from,  and hold it harmless
against, any and all losses,  liabilities,  damages, claims, expenses (including
attorney's fees and disbursements), fines or penalties, or judgments arising out
of or in connection with the performance by the Trustee,  separate  trustee,  if
any, or co-trustee,  if any, of its duties  hereunder or in connection  with the
Trust Estate,  or the issuance of the Notes except to the extent the  Trustee's,
separate  trustee's  or  co-trustee's  own  bad  faith,  willful  misconduct  or
negligence  has been  judicially  determined  to have  contributed  to the loss,
liability, damage, claim or expense.

                  (b) This Section 12.1 shall  survive the  termination  of this
Indenture  or the  resignation  or removal  of the  Trustee in respect of rights
accrued prior to such resignation or removal.

                  SECTION 12.2.  Officer's Certificate and Opinion of Counsel as
to Conditions Precedent.

                  Upon any request or  application by the Borrower (or any other
obligor upon the Notes) to the Trustee to take any action under this  Indenture,
the Borrower (or such other obligor) shall furnish to the Trustee:

                  (a)  an  Officer's   Certificate   (which  shall  include  the
statements  set forth in  Section  12.3)  stating  that,  in the  opinion of the
signer,  all conditions  precedent and covenants,  if any,  provided for in this
Indenture relating to the proposed action have been complied with; and

                  (b) an Opinion of Counsel  (which shall include the statements
set forth in Section 12.3)  stating  that,  in the opinion of such counsel,  all
such conditions precedent and covenants have been complied with.

                  SECTION 12.3.  Statements Required in Certificate or Opinion.

                  Each  certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                  (a)      a statement  that the Person making such  certificate
or opinion has read such covenant or condition;

                  (b) a  brief  statement  as to the  nature  and  scope  of the
examination or investigation  upon which the statements or opinions contained in
such certificate or opinion are based;

                  (c) a statement  that,  in the opinion of such Person,  he has
made such  examination or investigation as is necessary to enable him to express
an informed  opinion as to whether or not such  covenant or  condition  has been
complied with; and

                  (d) a  statement  as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.

                  SECTION 12.4. Notices.  (a) All communications,  instructions,
directions and notices to the parties thereto shall be (i) in writing (which may
be by  telecopy,  followed  by delivery  of  original  documentation  within one
Business Day),  (ii) effective when received and (iii) delivered or mailed first
class mail, postage prepaid to it at the following address:

                  If to the Borrower:

                  TW HOLDINGS II, INC.
                  9805 Willows Road
                  Redmond, Washington 98052
                  Attention:  Timothy P. O'Neil

                  Facsimile Number: (425) 498-3067
                  Telephone Number: (425) 498-2561

                  If to the Master Servicer:

                  Trendwest Resorts, Inc.
                  9805 Willows Road
                  Redmond, Washington 98052
                  Attention:  Timothy P. O'Neil

                  Facsimile Number: (425) 498-3062
                  Telephone Number: (425) 498-2561

                  If to the Trustee:

                  LaSalle National Bank
                  Corporate Trust Department
                  135 S. LaSalle Street
                  Suite 1625
                  Chicago, Illinois  60674
                  Attention:  Asset-Backed Securities Group-
                                      TW Holdings II

                  Facsimile Number: (312) 904-2084
                  Telephone Number: (312) 904-7807

                  If to the Custodian:

                  Sage Systems, Inc.
                  2135 112th Avenue, N.E., Suite 101
                  Bellevue, Washington 98004
                  Attention:  Mack Hendrick

                  Facsimile Number: (425) 462-0264
                  Telephone Number: (425) 451-2484

                  with copies to:

                  Interval International
                  6262 Sunset Drive
                  Miami, Florida 33143
                  Attention:  Paul Rishell

                  Facsimile Number: (800) 622-1861

or at such  other  address  as the  party may  designate  by notice to the other
parties hereto, which shall be effective when received.

                  (a)(b) All  communications  and notices  pursuant  hereto to a
Noteholder shall be in writing and delivered or mailed first class mail, postage
prepaid or  overnight  courier at the address  shown in the Note  Register.  The
Trustee agrees to deliver or mail to each Noteholder  upon receipt,  all notices
and  reports  that the Trustee may  receive  hereunder  and under any  Warehouse
Facility Documents. Unless otherwise provided herein, the Trustee may consent to
any  requests  received  under  such  documents  or, at its  option,  follow the
directions  of  Noteholders  within 30 days after  prior  written  notice to the
Noteholders.  All notices to Noteholders shall be sent simultaneously.  Expenses
for such communications and notices shall be borne by the Master Servicer.

                  SECTION  12.5. No  Proceedings.  The  Noteholders,  the Master
Servicer  and the  Trustee  each  hereby  agrees  that it will not,  directly or
indirectly  institute,  or cause to be  instituted,  against the Borrower or the
Trust Estate any proceeding of the type referred to in Section 6.1(e) so long as
there shall not have  elapsed  one year plus one day since the last  maturity of
the Notes.


                            [SIGNATURE PAGE FOLLOWS]




<PAGE>



                  IN WITNESS WHEREOF,  the parties hereto have caused this Trust
Indenture to be duly executed as of the day and year first above written.


                                TW HOLDINGS II, INC.,
                                  as Borrower


                                By:      _____________________________
                                         Name:
                                         Title:

                                 TRENDWEST RESORTS, INC.,
                                  as Master Servicer


                                By:      _____________________________
                                         Name:
                                         Title:

                                SAGE SYSTEMS, INC.,
                                  as Custodian


                                By:      _______________________
                                         Name:
                                         Title:

                                LASALLE NATIONAL BANK,
                                  as Trustee


                                By:      _____________________________
                                         Name:
                                         Title:



<PAGE>



trust indenture

                                    EXHIBIT A

                          FORM OF COLLATERAL ASSIGNMENT



<PAGE>



                              COLLATERAL ASSIGNMENT

          COLLATERAL ASSIGNMENT, dated as of [DATE] between TW HOLDINGS II, INC.
(the "Pledgor") and LASALLE NATIONAL BANK, as Trustee (the "Trustee").

         i. We refer to the Indenture (the  "Indenture"),  dated as of April 15,
1999, by and among the Pledgor,  Trendwest Resorts, Inc., Sage Systems, Inc., as
Custodian, and the Trustee. All provisions of such Indenture are incorporated by
reference.  All  capitalized  terms  shall  have the  meanings  set forth in the
Indenture.

         ii. Pledgor does hereby pledge,  transfer,  assign, set over and convey
to the Trustee on behalf of the  Noteholders and the Trustee does hereby accept,
a security  interest in all right,  title and interest of the Pledgor in, to and
under the Assets listed on Schedule 1 hereto and all other property constituting
Assets under the Indenture.

          iii.  Each of TWRI  and  the  Pledgor  does  hereby  certify:  (a) the
representations  and  warranties  of the  Pledgor and TWRI set forth in Sections
11.1  and 11.2 of the  Indenture  are  true  and  correct  on and as of the date
hereof,  before and after giving effect to the Transfer  evidenced hereby and to
the  application  of the  proceeds  therefrom,  as though made on and as of such
date; (b) no event has occurred,  or would result from such Transfer or from the
application of the proceeds therefrom,  which constitutes an Event of Default or
would  constitute  an Event of Default  but for the  requirement  that notice be
given or time elapse or both;  (c) each of TWRI and the Pledgor is in compliance
with each of its  covenants  set forth in the  Indenture;  and (d) the aggregate
Unpaid  Principal  Balance of the Receivables  listed on Schedule 1 hereto to be
pledged to the Trustee pursuant to this Collateral Assignment is $[___].

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

                        TW HOLDINGS II, INC., as Pledgor


                          By:__________________________
                                      Name:
                                     Title:

                        LASALLE NATIONAL BANK, as Trustee
                          By:__________________________
                                      Name:
                                     Title:




<PAGE>



trust indenture


                                    EXHIBIT B

                                  FORM OF NOTE


<PAGE>
trust indenture



         THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES  ACT"), OR ANY STATE SECURITIES LAWS. BY ITS ACCEPTANCE
HEREOF, EACH PURCHASER  REPRESENTS AND AGREES THAT THIS NOTE MAY NOT BE OFFERED,
SOLD,  PLEDGED  OR  OTHERWISE   TRANSFERRED,   EXCEPT  IN  COMPLIANCE  WITH  THE
REGISTRATION  PROVISIONS OF THE  SECURITIES  ACT AND ANY  APPLICABLE  PROVISIONS
UNDER STATE  SECURITIES  LAWS OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.

         NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE  REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST
OR ACCOUNT,  WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED  ("ERISA"),  OR DESCRIBED IN SECTION 4975(e)(1)
OF THE  INTERNAL  REVENUE  CODE OF 1986,  AS AMENDED,  INCLUDING  AN  INDIVIDUAL
RETIREMENT  ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF AN  INVESTMENT  IN SUCH ENTITY BY A PLAN,  TRUST OR ACCOUNT  DESCRIBED
ABOVE,  OR (B) THE  ACQUISITION  AND  HOLDING OF SUCH NOTES WILL BE COVERED BY A
DEPARTMENT OF LABOR CLASS EXEMPTION.


                              TW HOLDINGS II, INC.
                                      NOTE

                                                              April [__], 1999
                                                            New York, New York

                  FOR  VALUE   RECEIVED,   TW  Holdings  II,  Inc.,  a  Delaware
corporation  (the  "Borrower")  hereby promises to pay to PRUDENTIAL  SECURITIES
CREDIT  CORPORATION  (the  "Holder")  or  its  assigns,  the  principal  sum  of
seventy-five  million  ($75,000,000),  in lawful  money of the United  States of
America and in immediately  available  funds,  on the dates and in the principal
amounts provided in the Indenture  referred to below, and to pay interest on the
unpaid  principal amount of this Note until paid in full, at the rates per annum
and on the dates provided in the Indenture  (hereinafter defined) and the Credit
Agreement,  dated as of April  15,  1999  (the  "Credit  Agreement")  among  the
Borrower, Trendwest Resorts, Inc. and Prudential Securities Credit Corporation.

                  The  Maturity  Date of this Note is as set forth in the Credit
Agreement.

                  By its  holding  of this Note,  the Holder  shall be deemed to
accept the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Trustee referred to herein by manual signature,  this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.

                  This  Note is one of a duly  authorized  issue of Notes of the
Borrower, limited in aggregate principal amount of $75,000,000, issued under the
Trust  Indenture,  dated as of April 15, 1999 (herein  called the  "Indenture"),
among the Borrower,  Trendwest Resorts,  Inc. ("TWRI"),  Sage Systems,  Inc., as
custodian  (the   "Custodian")  and  LaSalle  National  Bank,  as  trustee  (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights,  limitations of rights,
duties and  immunities  thereunder of the Borrower,  TWRI,  the  Custodian,  the
Trustee and the Holders and of the terms upon which the Notes are  authenticated
and delivered.  Unless  otherwise  defined herein,  all  capitalized  terms used
herein shall have the meanings set forth in Annex A of the Indenture.

                  This Note is secured by the  pledge to the  Trustee  under the
Indenture of the Trust Estate and recourse is limited to the extent set forth in
the Indenture and the Credit  Agreement.  The amounts owed under this Note shall
not include any recourse to the Trustee or any affiliates thereof.

                  The  Outstanding  Principal  Amount of this Note shall, at any
time, be equal to the outstanding amount of Advances made pursuant to the Credit
Agreement;  therefore,  the  Outstanding  Principal  Amount of this  Note  shall
increase or decrease  depending on Advances  made to and Advances  repaid by the
Borrower.

                  If certain  Events of Default  under the  indenture  have been
declared,  the unpaid principal of the Notes may be declared immediately due and
payable in the manner and with the effect  provided in the Indenture.  Notice of
such  declaration  will be given by mail to  Noteholders,  as  their  names  and
addresses  appear in the Note  Register,  as  provided  in the  Indenture.  Upon
payment  of such  principal  amount  together  with all  accrued  interest,  the
obligations  of the  Borrower  with  respect  to the  payment of  principal  and
interest on this Note shall terminate.

                  The  Indenture  permits  with  certain  exceptions  as therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations of the Company and the rights of the Noteholders under the Indenture
at any time by the Company and the Trustee  with the consent of the  Noteholders
of the  percentages  specified  in the  Indenture at the time  Outstanding.  The
Indenture  also  contains   provisions   permitting  the  Holders  of  specified
percentages in aggregate principal amount of the Notes, at the time Outstanding,
on behalf of all the Holders,  to waive  compliance  by the Company with certain
provisions of the  Indenture  and certain past defaults  under the Indenture and
their consequences.  Any such consent or waiver by the Holder of this Note shall
be conclusive  and binding upon such Holder and upon all future  Holders of this
Note issued upon the  registration of transfer hereof or in exchange  herefor or
in lieu  hereof,  whether or not notation of such consent or waiver is made upon
this Note.

                  Each Note may be issued  only in  registered  form and only in
minimum  denominations of at least $500,000 and integral  multiples of $1,000 in
excess  thereof;  provided that the foregoing  shall not restrict or prevent the
transfer in  accordance  with Section 2.3 of the  Indenture of any Note having a
remaining  Outstanding  Principal  Amount of other than an integral  multiple of
$1,000, or the issuance of a single Note with a denomination less than $500,000.

                  The Borrower, the Trustee and any agent of the Borrower or the
Trustee may treat the Person in whose name this Note is  registered as the owner
hereof for all  purposes,  whether or not this Note may be overdue,  and neither
the Borrower,  the Trustee nor any such agent shall be affected by notice to the
contrary.

                  The  Indenture  and this Note shall be deemed to be  contracts
made  under  the laws of the State of New York and  shall  for all  purposes  be
governed by, and  construed  in  accordance  with,  the laws of the State of New
York.


<PAGE>



                  IN WITNESS WHEREOF, the Borrower has caused this instrument to
be duly executed by the manual signature of its duly Authorized Officer.

Dated: April 15, 1999


                                TW HOLDINGS II, INC.


                                By:      ____________________________
                                         Name:
                                         Title:


<PAGE>




                     Trustee's Certificate of Authentication

                     This is one of the Notes referred to in
                         the within mentioned Indenture.


                                            LASALLE NATIONAL BANK,
                                              as Trustee


                                          By: ____________________________
                                              Name:
                                              Title:


<PAGE>



                                 ASSIGNMENT FORM

                  If you the holder want to assign  this Note,  fill in the form
below and have your signature guaranteed:

          I or we assign and transfer this Note to:__________________________
_____________________________________________________________________________
_____________________________________________________________________________

(Print or type name,  address and zip code and social  security or tax ID number
of assignee) and irrevocably appoint  _________________,  agent to transfer this
Note on the books of the Borrower.  The agent may substitute  another to act for
him.

Dated: ____________________

Signed:________________________________
(sign exactly as the name appears on the other side of this Note)

Signature Guarantee




Important  Notice:  When you sign  your  name to this  Assignment  Form  without
filling in the name of your  "Assignee" or  "Attorney",  this Note becomes fully
negotiable,  similar to a check  endorsed in blank.  Therefore,  to  safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this Assignment Form, you may
sign a separate "power of attorney" form and then mail the unsigned Note and the
signed  "power of attorney" in separate  envelopes.  For added  protection,  use
certified or registered mail for a Note.



<PAGE>



trust indenture

                                    EXHIBIT C
                       FORM OF RULE 144A TRANSFEREE LETTER



<PAGE>




                           RULE 144A TRANSFEREE LETTER


LaSalle National Bank
135 S. LaSalle Street
Suite 1625
Chicago, Illinois  60674

Ladies and Gentlemen:

                  We propose to purchase $[___] in original aggregate  principal
amount of TW  Holdings  II,  Inc.  Notes (the  "Notes").  The Notes were  issued
pursuant to a Trust Indenture (as  supplemented,  the  "Indenture")  dated as of
April 15, 1999, among TW Holdings II, Inc. (the "Borrower"),  Trendwest Resorts,
Inc.,  as Master  Servicer  ("TWRI"),  Sage  Systems,  Inc.,  as Custodian  (the
"Custodian") and LaSalle National Bank, as trustee (the "Trustee").  Capitalized
terms used herein but not  otherwise  defined  shall have the same meaning as in
Annex A to the Indenture.

                  In  connection  with our  proposed  purchase of the Notes,  we
agree to the following  terms and  conditions and make the  representations  and
warranties stated herein with the express understanding that they will be relied
upon by TWRI, the Borrower and the Trustee.

                  1. We understand that the Notes have not been registered under
the Securities Act of 1933, as amended (the  "Securities  Act") or registered or
qualified under any state securities or "Blue Sky" laws and are being sold to us
in a  transaction  that is  exempt  from the  registration  requirements  of the
Securities Act and the registration or qualification  requirements of such state
laws.

                  2. We are (Check one):

                     ___   (a)      a   "Qualified   Institutional   Buyer"  (as
                                    defined  in Rule 144A  under the  Securities
                                    Act),  in the case of a transfer of Notes to
                                    be made in reliance on Rule 144A.

                     ___   (b)      an  institutional  investor  that  has  such
                                    knowledge  and  experience  in financial and
                                    business   matters   as  to  be  capable  of
                                    evaluating   the  merits  and  risks  of  an
                                    investment  in the Notes and is able to bear
                                    the  economic  risk  of  investment  in  the
                                    Notes.

                     ___   (c)      an "accredited  investor" as defined in Rule
                                    501  promulgated  under the  Securities  Act
                                    that has such  knowledge  and  experience in
                                    financial  and  business  matters  as  to be
                                    capable of  evaluating  the merits and risks
                                    of  investment  in the  Notes and is able to
                                    bear the economic  risk of investment in the
                                    Notes.

                  4. We agree  that,  to the extent  that  Section  2(a) of this
letter  is  applicable,  that the  Notes  will not be  transferred  unless  such
transfer is made in reliance  on Rule 144A or unless some other  exemption  from
the  registration  requirements of the Securities  Act, or any applicable  state
securities law, is available.

                  5. To the extent  that  Section  2(b) or (c) of this letter is
applicable,  that we are acquiring the Notes (i) solely for investment  purposes
for our own  account or for  accounts as to which we  exercise  sole  investment
discretion  and not with a view to any  resale or  distribution  of the Notes in
whole or in part,  or (ii)  otherwise for purposes  which will not  constitute a
distribution  of  securities  under  the  Securities  Act,  or under  any  state
securities of "Blue Sky" laws subject,  nevertheless,  to the understanding that
disposition of our property shall at all times be and remain within our control,
and under no  circumstances  will we attempt  to sell,  pledge,  hypothecate  or
otherwise  transfer  all or any portion of our  interest in the Notes  except in
accordance with the terms of the Notes and the Indenture.

                  6. We agree not to sell the Notes in whole or in part,  unless
the subsequent  purchaser agrees to be subject to the same  representations  and
warranties as were applicable to us in acquiring the Notes.

                  7. We understand that each of the Notes shall bear a legend to
substantially the following effect:

                  THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE  "SECURITIES  ACT"), OR ANY STATE  SECURITIES LAWS. BY ITS
ACCEPTANCE HEREOF,  EACH PURCHASER  REPRESENTS AND AGREES THAT THIS NOTE MAY NOT
BE OFFERED,  SOLD, PLEDGED OR OTHERWISE  TRANSFERRED,  EXCEPT IN COMPLIANCE WITH
THE REGISTRATION  PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE  SECURITIES  LAWS OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.

                  NEITHER THIS NOTE NOR ANY INTEREST  HEREIN MAY BE  TRANSFERRED
UNLESS THE TRANSFEREE  REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE  BENEFIT
PLAN,  TRUST OR  ACCOUNT,  WHETHER  OR NOT  SUBJECT  TO TITLE I OF THE  EMPLOYEE
RETIREMENT  INCOME SECURITY ACT OF 1974, AS AMENDED  ("ERISA"),  OR DESCRIBED IN
SECTION  4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,  INCLUDING
AN INDIVIDUAL  RETIREMENT  ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN  ASSETS BY  REASON  OF AN  INVESTMENT  IN SUCH  ENTITY BY A PLAN,  TRUST OR
ACCOUNT  DESCRIBED  ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL
BE COVERED BY A DEPARTMENT OF LABOR CLASS EXEMPTION.

                  8. We understand  that there is no public market for the Notes
and it is unlikely that such market will develop.

                  9. We are authorized to invest in the Notes.

                  10. We certify that, in acquiring the Notes,  we have complied
with any applicable  guidelines or regulations for or limitations on investments
established by each  regulatory  agency or body, if any, which has  jurisdiction
over  investments made by us and that our acquisition and retention of the Notes
will not violate the limitations on possession contained in any such guidelines,
regulations or limitations.

                  11.  We  further  agree to be bound  by all of the  terms  and
conditions of ownership of the Notes contained in the Indenture, as the same may
be amended from time to time.

                                      Very truly yours,

                                      [TRANSFEREE]

                                      By:      ____________________________
                                               Name:
                                               Title:



<PAGE>

                                    EXHIBIT D

                             FORM OF INVESTOR LETTER



<PAGE>



                                 INVESTOR LETTER


LaSalle National Bank
135 S. LaSalle Street
Suite 1625
Chicago, Illinois  60674

Ladies and Gentlemen:

                  We propose to purchase $[___] in original aggregate  principal
amount of TW  Holdings  II,  Inc.  Notes (the  "Notes").  The Notes were  issued
pursuant to a Trust Indenture (as  supplemented,  the  "Indenture")  dated as of
April 15, 1999, among TW Holdings II, Inc. (the "Borrower"),  Trendwest Resorts,
Inc.,  as Master  Servicer  ("TWRI"),  Sage  Systems,  Inc.,  as Custodian  (the
"Custodian") and LaSalle National Bank, as trustee (the "Trustee").  Capitalized
terms used herein but not  otherwise  defined  shall have the same meaning as in
Annex A to the Indenture.

                  In  connection  with our  proposed  purchase of the Notes,  we
agree to the following  terms and  conditions and make the  representations  and
warranties stated herein with the express understanding that they will be relied
upon by TWRI, the Borrower and the Trustee.

                  1. We understand that the Notes have not been registered under
the Securities Act of 1933, as amended (the  "Securities  Act") or registered or
qualified under any state securities or "Blue Sky" laws and are being sold to us
in a  transaction  that is  exempt  from the  registration  requirements  of the
Securities Act and the registration or qualification  requirements of such state
laws.

                  2. We are (Check one):

                           (a)      a   "Qualified   Institutional   Buyer"  (as
                                    defined  in Rule 144A  under the  Securities
                                    Act),  in the case of a transfer of Notes to
                                    be made in reliance on Rule 144A.

                           (b)      an  institutional  investor  that  has  such
                                    knowledge  and  experience  in financial and
                                    business   matters   as  to  be  capable  of
                                    evaluating   the  merits  and  risks  of  an
                                    investment  in the Notes and is able to bear
                                    the  economic  risk  of  investment  in  the
                                    Notes.

                           (c)      an "accredited  investor" as defined in Rule
                                    501  promulgated  under the  Securities  Act
                                    that has such  knowledge  and  experience in
                                    financial  and  business  matters  as  to be
                                    capable of  evaluating  the merits and risks
                                    of  investment  in the  Notes and is able to
                                    bear the economic  risk of investment in the
                                    Notes.

                  4. We agree  that,  to the extent  that  Section  2(a) of this
letter  is  applicable,  that the  Notes  will not be  transferred  unless  such
transfer is made in reliance  on Rule 144A or unless some other  exemption  from
the  registration  requirements of the Securities  Act, or any applicable  state
securities law, is available.

                  5. To the extent  that  Section  2(b) or (c) of this letter is
applicable,  that we are acquiring the Notes (i) solely for investment  purposes
for our own  account or for  accounts as to which we  exercise  sole  investment
discretion  and not with a view to any  resale or  distribution  of the Notes in
whole or in part,  or (ii)  otherwise for purposes  which will not  constitute a
distribution  of  securities  under  the  Securities  Act,  or under  any  state
securities of "Blue Sky" laws subject,  nevertheless,  to the understanding that
disposition of our property shall at all times be and remain within our control,
and under no  circumstances  will we attempt  to sell,  pledge,  hypothecate  or
otherwise  transfer  all or any portion of our  interest in the Notes  except in
accordance with the terms of the Notes and the Indenture.

                  6. We agree not to sell the Notes in whole or in part,  unless
the subsequent  purchaser agrees to be subject to the same  representations  and
warranties as were applicable to us in acquiring the Notes.

                  7. We understand that each of the Notes shall bear a legend to
substantially the following effect:

                  THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE  "SECURITIES  ACT"), OR ANY STATE  SECURITIES LAWS. BY ITS
ACCEPTANCE HEREOF,  EACH PURCHASER  REPRESENTS AND AGREES THAT THIS NOTE MAY NOT
BE OFFERED,  SOLD, PLEDGED OR OTHERWISE  TRANSFERRED,  EXCEPT IN COMPLIANCE WITH
THE REGISTRATION  PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE  SECURITIES  LAWS OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.

                  NEITHER THIS NOTE NOR ANY INTEREST  HEREIN MAY BE  TRANSFERRED
UNLESS THE TRANSFEREE  REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE  BENEFIT
PLAN,  TRUST OR  ACCOUNT,  WHETHER  OR NOT  SUBJECT  TO TITLE I OF THE  EMPLOYEE
RETIREMENT  INCOME SECURITY ACT OF 1974, AS AMENDED  ("ERISA"),  OR DESCRIBED IN
SECTION  4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,  INCLUDING
AN INDIVIDUAL  RETIREMENT  ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN  ASSETS BY  REASON  OF AN  INVESTMENT  IN SUCH  ENTITY BY A PLAN,  TRUST OR
ACCOUNT  DESCRIBED  ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL
BE COVERED BY A DEPARTMENT OF LABOR CLASS EXEMPTION.

                  8. We understand  that there is no public market for the Notes
and it is unlikely that such market will develop.

                  9. We are authorized to invest in the Notes.

                  10. We certify that, in acquiring the Notes,  we have complied
with any applicable  guidelines or regulations for or limitations on investments
established by each  regulatory  agency or body, if any, which has  jurisdiction
over  investments made by us and that our acquisition and retention of the Notes
will not violate the limitations on possession contained in any such guidelines,
regulations or limitations.

                  11.  We  further  agree to be bound  by all of the  terms  and
conditions of ownership of the Notes contained in the Indenture, as the same may
be amended from time to time.

                                      Very truly yours,

                                      [INVESTOR]

                                      By:      ____________________________
                                               Name:
                                               Title:




<PAGE>


                                    EXHIBIT E

                             FORM OF SERVICER REPORT



<PAGE>



                                    EXHIBIT F

                           FORM OF REQUEST FOR RELEASE



<PAGE>





                        REQUEST FOR RELEASE OF DOCUMENTS

SAGE SYSTEMS, INC.
2135 112th Avenue, N.E., Suite 101
Bellevue, Washington 98004


          Re:  Indenture dated as of April 15, 1999, among TW Holdings II, Inc.,
as Borrower, Trendwest Resorts, Inc., as Master Servicer, Sage Systems, Inc., as
Custodian and LaSalle National Bank, as Trustee (the "Indenture")

                  Pursuant  to Section  4.6 and  4.9(c) of the  above-referenced
Indenture, in connection with the Receivables indicated on Schedule A hereto, we
request the release of the related Receivable  Documents [specify documents] for
the reason indicated below.

                  Capitalized  terms used but not defined  herein shall have the
meanings given them in "Trendwest  Warehouse Facility  Definitions"  attached as
Annex A to the Indenture.


Loan Number:

Reason for Requesting Release (check all that apply)

___ 1.   Liquidation (Section 4.6(a)(i))
___ 2.   Breach of representation and warranty (Section 4.6(a)(ii))
___ 3.   Missing Receivable Documents (Section 4.6(a)(iii))
___ 4.   Failure to file financing statements (Section 4.6(a)(iv))
___ 5.   Cease to be an Eligible Receivable
___ 6.   Paid in Full
___ 7.   Upgrade


                                                 LASALLE NATIONAL BANK,


                                              By:___________________________
                                                  Name:
                                                  Title:

Release consented to:

[NOTEHOLDERS]


By:      __________________________
         Name:
         Title:


<PAGE>



                                   SCHEDULE A

                           RECEIVABLES TO BE RELEASED



<PAGE>



trust indenture

                                    EXHIBIT G

                                 FORM OF RECEIPT



<PAGE>




                                     RECEIPT

RECEIPT NO.                                                              [Date]

          Re:  Indenture dated as of April 15, 1999, among TW Holdings II, Inc.,
as Borrower, Trendwest Resorts, Inc., as Master Servicer, Sage Systems, Inc., as
Custodian and LaSalle National Bank, as Trustee (the "Indenture")

Ladies and Gentlemen:

                  In  accordance  with  the  provisions  of  Section  4.8 of the
above-referenced Indenture, the undersigned, as Custodian, hereby certifies that
as to each Receivable described in the Schedule of Receivables,  a copy of which
is attached hereto, it has reviewed each Receivable  Document and has determined
that (i) all documents  required to be delivered to it pursuant to the Indenture
are in its  possession,  and (ii)  based  on its  examination  of the  foregoing
documents,  such  documents  appear  regular  on their  face and  relate  to the
appropriate Receivable and none of the Receivable Documents contains evidence of
any claims,  liens,  security interests or encumbrances  (other than the Lien of
the  Indenture),  and  (iii)  the  information  contained  in  the  Schedule  of
Receivables matches the related information in the Receivable Documents.

                  The  Custodian  hereby  confirms  that it is holding each such
Receivable  Document  as agent and bailee of the  Trustee,  as  trustee  for the
Noteholders,  pursuant  to the  terms of the  Indenture.  The  Custodian  hereby
confirms it will act in accordance  with the standard of care standard  provided
in the  Indenture  and under no  circumstances  shall the  Custodian (i) deliver
possession of any  Receivable  Document to the Borrower or any other Person,  or
(ii) take any  directions  with  respect to any  Receivable  Documents  from the
Borrower or any other Person, without the express written consent of the Trustee
or the Noteholders.


                                            SAGE SYSTEMS, INC.,
                                              as Custodian


                                            By:   ____________________________
                                                  Name:
                                                  Title:


<PAGE>



                              SCHEDULE A TO RECEIPT

                             SCHEDULE OF RECEIVABLES


<PAGE>

                    TRENDWEST WAREHOUSE FACILITY DEFINITIONS

                  "Act" shall mean, with respect to any  Noteholder,  as defined
in Section 1.4 of the Indenture.

                  "Advances" means the advances provided for by Section 1.1 of
the Credit Agreement.

                  "Adverse Claim" shall mean any claim of ownership or any lien,
security  interest,  title retention,  trust or other charge or encumbrance,  or
other type of preferential  arrangement having the effect or purpose of creating
a lien or  security  interest,  other  than the  interests  created  under  this
Indenture in favor of the Trustee and the Noteholders.

                  "Affiliate"  shall  mean any  Person:  (a) which  directly  or
indirectly  controls,  or is controlled by, or is under common control with such
Person; (b) which directly or indirectly beneficially owns or holds five percent
(5%) or more of the voting  stock of such  Person;  or (c) five  percent (5%) or
more of the voting stock of which is directly or indirectly  beneficially  owned
or held by such Person.  The term "control"  means the  possession,  directly or
indirectly,  of the power to direct or cause the direction of the management and
policies of a Person,  whether  through the ownership of voting  securities,  by
contract or otherwise.

                  "Assets"  shall mean each Trust Estate  Receivable,  including
any Substitute  Receivables (but excluding any such loan which has been released
from the lien of the  Indenture  pursuant to the terms  hereof),  and  includes,
without limitation,  (a) the related  Assignment,  (b) all security interests or
liens  and  property  subject  thereto  from time to time  purporting  to secure
payment by the Obligor thereunder,  including without  limitation,  the Vacation
Credits, (c) all guarantees,  indemnities and warranties,  certificates of title
or other title  documentation  and other  agreements or arrangements of whatever
character from time to time supporting or securing  payment of such Trust Estate
Receivable, (d) all collections and all related Receivable Documents, Receivable
Files and records with respect to the foregoing,  and (e) all proceeds of any of
the foregoing.

                    "Assignee"  shall  have the  meaning  set  forth in  Section
7.1(b) of the Credit Agreement.

                  "Assignment"  shall  mean  collectively,  with  respect to any
Trust  Estate  Receivable,  the  related  Sale  Assignment  and  any  Collateral
Assignment.

                  "Assignment  Date"  shall  mean each date  when  Trust  Estate
Receivables are transferred to the Trust Estate.

                  "Authorized  Officer"  means,  with  respect  to  TWRI  or the
Borrower,  any  officer  of TWRI or the  Borrower,  as the case  may be,  who is
authorized  to act for TWRI or the  Borrower,  as the case  may be,  in  matters
relating to transactions contemplated by the Credit Agreement or the Indenture.

                  "Available  Facility  Amount"  on any  date of  determination,
shall mean (a) the Commitment, minus (b) the principal amount outstanding of all
Advances on such date.

                    "Available  Funds"  means all funds  held in the  Collection
Account as of the end of any Due Period.

                  "Board" shall mean,  with respect to any Person,  its board of
directors or, if it does not have a board of directors, its governing body which
performs the same duties as a board of directors.

                    "Borrower"  shall  mean TW  Holdings  II,  Inc.,  a Delaware
corporation.

                  "Borrower  Order" or "Borrower  Request"  shall mean a written
order or request delivered to the Trustee and signed by an Authorized Officer of
the Borrower.

                  "Borrowing  Base" shall mean, an amount equal to the lesser of
90% of (i) the aggregate  Unpaid Principal  Balance of Trust Estate  Receivables
which are  Eligible  Receivables,  and (ii) the  market  value of such  Eligible
Receivables as determined solely by PSI.

                  "Borrowing Base Deficiency" shall have occurred on any date in
which the Outstanding Principal Amount of the Notes exceeds the Borrowing Base.

                  "Borrowing Notice" shall have the meaning set forth in Section
1.3 of the Credit Agreement.

                  "Business  Day" shall mean any day other  than a  Saturday,  a
Sunday or a day on which banking  institutions  in New York, New York,  Seattle,
Washington,  or in the city and State where the Trustee's  principal offices are
located,  are authorized or obligated by law,  executive  order or  governmental
decree to be closed.

                    "Change of Control" shall have occurred with respect to TWRI
if JELD WEN inc. no longer holds a majority of the common stock of TWRI.

                  "Charge-off  Factor" means,  with respect to any Due Period, a
fraction of which the numerator is 365 and the denominator is the number of days
in such Due Period.

                  "Charge-off  Rate" means,  as of any Payment date, the average
of the Monthly Charge-off Rates for the three Due Periods immediately  preceding
the Due Period in which such Payment Date occurs.

                    "Clearing Account" shall be as defined in Section 5.3 of the
Indenture.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended from time to time and any successor statute, together with the rules and
regulations thereunder.

                  "Collateral Assignment" shall mean a certificate of assignment
by the  Borrower  to the Trustee  substantially  in the form of Exhibit A to the
Indenture  giving notice of, and  evidencing,  the pledge of Receivables and the
other Assets by the Borrower to the Trustee on behalf of the Trust Estate.

                    "Collection Account" shall have the meaning assigned to such
term in Section 3.2 of the Indenture.

                    "Commission"   shall  mean  the   Securities   and  Exchange
Commission.

                  "Commitment"  shall mean the  obligation of the Lender to make
Advances in an aggregate amount equal to $75,000,000, to the extent set forth in
the Warehouse Facility Documents.

                  "Commitment  Termination  Date"  shall mean the earlier of (i)
the Maturity Date, or (ii) the occurrence of an Event of Default.

                  "Consolidated  Charge-off Rate" means, as of any Payment Date,
the  average  of the  Consolidated  Monthly  Charge-off  Rates for the three Due
Periods immediately preceding the Due Period in which such Payment Date occurs.

                  "Consolidated  Defaulted  Receivable  Amount" means, as of any
Payment Date, a fraction,  expressed as a percentage,  the numerator of which is
the  Unpaid  Principal  Balance  of all TWRI  Receivables  that  were  Defaulted
Receivables as of the last day of the related Due Period, and the denominator of
which is the Unpaid Principal Balance of all TWRI Receivables as of the last day
of such Due Period.

                  "Consolidated  Delinquency  Rate  Amount"  means,  as  of  any
Payment Date, a fraction,  expressed as a percentage,  the numerator of which is
the  Unpaid  Principal  Balance  of all TWRI  Receivables  in respect of which a
payment of  principal  or interest was more than 30 days past due as of the last
day of the  related  Due  Period,  and the  denominator  of which is the  Unpaid
Principal Balance of all TWRI Receivables as of the last day of such Due Period.

                  "Consolidated  Monthly Charge-off Rate" means, with respect of
any Due Period, a fraction,  expressed as a percentage on a per annum basis, the
numerator  of which is the  product  of (x) the  Charge-off  Factor for such Due
Period and (y) the Unpaid  Principal  Balance of all TWRI  Receivables that were
charged-off  during such Due Period, and the denominator of which is the average
outstanding  principal  balance of all TWRI Receivables for each day in such Due
Period.

                  "Corporate  Trust Office" shall mean the office of the Trustee
at  which  at  any  particular  time  its  corporate  trust  business  shall  be
principally  administered,  which  office  at the date of the  execution  of the
Indenture is located at the address set forth in Section 12.4 of the Indenture.

                  "Credit  Agreement" shall mean the credit agreement,  dated as
of April 15, 1999, by and among the Borrower, TWRI, and the Lender.

                  "Credit and  Collection  Policies"  shall mean  TWRI's  credit
extension  procedures and policies and collection practices described in Exhibit
B of the Credit Agreement.

                    "Custodian"  shall  be  Sage  Systems,   Inc,  a  Washington
corporation.

                  "Cut-off  Date"  shall  mean  with  respect  to  Trust  Estate
Receivables  financed  on the  Initial  Funding  Date,  April 7, 1999 and,  with
respect to subsequent Trust Estate Receivables, as shall be mutually agreed upon
by the Borrower, the Trustee and the Lender.

                  "Debt"  shall mean for any Person,  (a)  indebtedness  of such
Person for borrowed  money or credit  extended,  (b)  obligations of such Person
evidenced  by  bonds,  debentures,  notes  or  other  similar  instruments,  (c)
obligations  of such Person to pay the  deferred  purchase  price of property or
services,  (d) obligations of such Person as lessee under leases which have been
or  should  be, in  accordance  with  GAAP,  recorded  as  capital  leases,  (e)
obligations secured by any lien or other charge upon property or assets owned by
such  Person,  even though such Person has not assumed or become  liable for the
payment of such  obligations,  (f)  obligations  of such Person  under direct or
indirect guaranties in respect of, and obligations  (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of,  indebtedness  or  obligations of others of the kinds referred to in
clauses (a) through (e) above, and (g) liabilities in respect of unfunded vested
benefits  under  plans  covered  by ERISA.  For the  purposes  hereof,  the term
"guarantee"  shall  include  any  agreement,  whether  such  agreement  is  on a
contingency or otherwise,  to purchase,  repurchase or otherwise acquire Debt of
any other Person, or to purchase,  sell or lease, as lessee or lessor,  property
or  services,  in any such case  primarily  for the purpose of enabling  another
Person to make payment of Debt,  or to make any payment  (whether as an advance,
capital  contribution,  purchase of an equity interest or otherwise) to assure a
minimum equity,  asset base, working capital or other balance sheet or financial
condition,  in connection with the Debt of another Person, or to supply funds to
or in any  manner  invest  in  another  Person in  connection  with Debt of such
Person.

                  "Default"  shall mean any event or condition that would become
an Event of Default after notice or passage of time or both.

                  "Defaulted  Receivable"  means any Trust Estate  Receivable in
respect of which (i) the related  Obligor has failed to pay when due any amounts
due in respect  thereof  which failure  continues for 90 days or more;  (ii) the
Obligor has failed to perform  any term or covenant on its part to be  performed
under any related  Receivable  Document  which failure  continues for 90 days or
more,  if the effect of such  failure  is to  accelerate  or to permit  (with or
without  the  giving  of  notice)  the  acceleration  of the  maturity  of  such
Receivable;  (iii)  the  related  Obligor  is  the  subject  of  a  petition  in
bankruptcy,  either  voluntary or involuntary,  or in any other proceeding under
the federal bankruptcy laws or makes an assignment for the benefit of creditors;
(iv) any liquidation,  foreclosure or similar proceedings have begun; or (v) the
Master Servicer has determined,  in accordance with the procedures and standards
set forth in the  Indenture  and in the Credit  and  Collection  Policies,  that
eventual payment in full is unlikely.

                  "Defaulted Receivable Amount" means, as of any Payment Date, a
fraction,  expressed  as a  percentage,  the  numerator  of which is the  Unpaid
Principal   Balance  of  all  Trust  Estate   Receivables  that  were  Defaulted
Receivables as of the last day of the related Due Period and the  denominator of
which is the Unpaid Principal Balance of all Trust Estate  Receivables as of the
last day of such Due Period.

                  "Delinquency  Rate Amount"  means,  as of any Payment  Date, a
fraction,  expressed  as a  percentage,  the  numerator  of which is the  Unpaid
Principal  Balance  of all  Trust  Estate  Receivables  in  respect  of  which a
principal or interest  payment was more than 30 days past due as of the last day
of the related Due Period and the  denominator of which is the Unpaid  Principal
Balance of all Trust Estate Receivables (other than Defaulted Receivables) as of
the last day of such Due Period.

                  "Deposit  Date"  shall  mean  the  Business  Day   immediately
preceding each related Payment Date.

                  "Determination  Date"  shall mean,  with  respect to a Payment
Date,  the tenth day of the related  calendar  month  (unless  such day is not a
Business Day, then the next day that is a Business Day).

                  "Dollars" or "$" shall mean the lawful  currency of the United
States of  America,  and in  relation to any  payment,  same day or  immediately
available funds.

                  "Due Period"  shall mean,  (a) with respect to the initial Due
Period, the month of April 1999, and (b) thereafter, with respect to any Payment
Date, the period commencing on the first day of the calendar month preceding the
calendar  month in which such  Payment Date occurs and ending on the last day of
the  calendar  month  preceding  the  calendar  month in which such Payment Date
occurs.

                  "Eligible Bank Account" shall mean a segregated account, which
may be an account  maintained  with the Trustee,  which is either (a) maintained
with a depository  institution or trust company whose  long-term  unsecured debt
obligations  are rated at least  BBB+ by  Standard & Poor's and Baa-1 by Moody's
and whose short-term unsecured  obligations are rated at least A-1 by Standard &
Poor's and P-1 by Moody's;  or (b) a trust account or similar account maintained
with  a  federally  or  state  chartered   depository   institution  subject  to
regulations  regarding  fiduciary funds on deposit  substantially  similar to 12
C.F.R. 9.10(b).

                  "Eligible Investment" shall mean one or more of the following:

(a) obligations of, or guaranteed as to timely payment of principal and interest
by,  the  United  States or any  agency  or  instrumentality  thereof  when such
obligations are backed by the full faith and credit of the United States;

(b) repurchase  agreements  (including those with the Trustee as a counterparty)
on obligations specified in clause (a) maturing not more than one month from the
date of acquisition thereof,  provided that the long-term unsecured  obligations
of the party agreeing to repurchase such  obligations are at the time rated by a
Rating Agency in one of the three highest rating  categories  (without regard to
numerical modifiers) available from a Rating Agency; and provided, further, that
the short-term  debt  obligations  of the party agreeing to repurchase  shall be
rated in the highest rating category (without regard to numerical  modifiers) by
a Rating Agency;

(c)  federal  funds,   certificates  of  deposit,  time  deposits  and  bankers'
acceptances,  each of which shall not have an original  maturity of more than 90
days, of any depository institution or trust company incorporated under the laws
of the United States or any state;  provided that the long-term  unsecured  debt
obligations  of such  depository  institution  or trust  company  at the date of
acquisition  thereof  have  been  rated by a Rating  Agency  in one of the three
highest rating categories (without regard to numerical modifiers) available from
a Rating Agency; and provided,  further, that the short-term obligations of such
depository  institution  or trust company  shall be rated in the highest  rating
category (without regard to numerical modifiers) by a Rating Agency;

(d) commercial paper or commercial  paper funds (having  original  maturities of
not more  than 90 days) of any  corporation  incorporated  under the laws of the
United States or any state thereof;  provided that any such commercial  paper or
commercial paper funds shall be rated in the highest  short-term rating category
(without regard to numerical modifiers) by a Rating Agency; and

(e) any  no-load  money  market  fund  rated in the  highest  short-term  rating
category or equivalent  highest  long-term  rating  category  (without regard to
numerical modifiers) by a Rating Agency;

provided that,  Eligible  Investments  purchased from funds in the Eligible Bank
Accounts shall include only such  obligations  or securities  that either may be
redeemed  daily or mature no later than the Business Day next preceding the next
Payment Date;  and provided,  further,  that no instrument  shall be an Eligible
Investment  if such  instrument  evidences  a right  to  receive  only  interest
payments with respect to the obligations  underlying such  instrument.  Eligible
Investments  may include those  Eligible  Investments  with respect to which the
Trustee or an Affiliate thereof provides services.

                  "Eligible   Receivable"   shall   mean,   for   any   date  of
determination, any Receivable as to which the representations and warranties set
forth in Section  2.3(a) of the Credit  Agreement are true and correct as of the
related  Funding  Date and for  which  the  Custodian  has  delivered  a Receipt
pursuant to the  Indenture;  provided,  however,  any  Receivable  (i) for which
payments are  delinquent for 60 or more days on such date of  determination,  or
(ii) which is a Defaulted Receivable shall not be an Eligible Receivable.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.

                  "Event of Default" shall have the meaning  assigned thereto in
Sections 6.1 of the Indenture.

                    "Event of Master  Servicer  Termination"  shall mean each of
the events described in Section 5.10 of the Indenture.

                    "Event  of  Purchase  Termination"  shall  have the  meaning
specified in Section 7 of the Receivable Sale Agreement.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.

                  "Executive  Officer"  with  respect to a Person shall mean the
Chief Executive Officer,  President,  Chief Operating Officer or Chief Financial
Officer.

                  "Foreign  Obligor" means an obligor of a Receivable who is not
a resident of, and is not making  payments from, the "United States" (as defined
in Section 7701(a)(9) of the Code).

                  "Funding Date" shall have the meaning set forth in Section 1.2
of the Credit Agreement.

                  "GAAP" shall mean,  as of the date of any  determination  with
respect  thereto,  generally  accepted  accounting  principles as understood and
applied in the United States at the time in question.

                  "Governmental  Authority" shall mean any nation or government,
any state or other  political  subdivision  thereof  and any  entity  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining to government.

                  "Grant" shall mean grant, bargain,  convey, assign,  transfer,
mortgage,  pledge,  create and grant a security interest in and right of set-off
against,  deposit,  set over and confirm. The Grant of the Trust Estate effected
by the Indenture shall include all rights,  powers, and options (but none of the
obligations)  of  the  Borrower  with  respect   thereto,   including,   without
limitation,  the immediate and continuing right to claim for, collect,  receive,
and give  receipts  for  Payments  in respect of the  Receivables  and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other  agreements,  to exercise  all rights and  options,  to
bring  judicial  proceedings  in the  name of the  Borrower  or  otherwise,  and
generally to do and receive  anything that the Borrower is or may be entitled to
do or receive thereunder or with respect thereto.

                  "Indenture"  shall be the trust  indenture,  dated as of April
15, 1999, by and among the Borrower, the Master Servicer, the Custodian, and the
Trustee.

                  "Initial  Funding  Date"  shall have the  meaning set forth in
Section 1.2 of the Credit Agreement.

                  "Installment  Sale  Contract"  shall mean the  vacation  owner
agreement executed by TWRI, Worldmark and an Obligor.

                  "Intended  Tax   Characterization"   shall  have  the  meaning
specified in Section 4.4(b) of the Indenture.

                    "Interest  Payments"  shall be as  defined  in 2.1(d) of the
Indenture.

                  "Interest  Period" shall mean the calendar month preceding the
related Payment Date.

                  "Investment" shall mean any loan, advance, extension of credit
(except for  accounts  and notes  receivable  for  merchandise  sold or services
furnished  in the ordinary  course of  business,  and amounts paid in advance on
account of the purchase price of merchandise to be delivered to the payor within
one year of the date of the  advance),  or  purchase of stock,  notes,  bonds or
other securities or capital contribution to any Person, whether in cash or other
property.  The amount of any Investment shall be its cost (the amount of cash or
the fair market value of other property given in exchange therefor).

                  "Issuance Date"  shall mean the Initial Funding Date.

                  "Lender" shall mean Prudential  Securities Credit Corporation,
its successors and permitted assigns.

                  "LIBOR" shall mean,  with respect to any date of  calculation,
an interest rate per annum equal to the rate for one month maturity appearing on
the Telerate Page 3750 at 11:00 a.m. on such date, as determined by the Lender.

                  "Lien"  shall  mean  any  interest  in  property  securing  an
obligation  owed to,  or a claim  by,  any  Person  other  than the owner of the
property,  whether such  interest  shall be based on the common law,  civil law,
statute, civil code or contract,  whether or not such interest shall be recorded
or  perfected  and whether or not such  interest  shall be  contingent  upon the
occurrence  of some  future  event or events  or the  existence  of some  future
circumstance  or  circumstances,  and  including the lien,  privilege,  security
interest  or  other  encumbrance  arising  from  a  mortgage,   deed  of  trust,
hypothecation,  cession, transfer,  assignment, pledge, adverse claim or charge,
conditional sale or trust receipt, or from a lease,  consignment or bailment for
security purposes. The term "Lien" shall also include reservations,  exceptions,
encroachments,  easements, rights-of-way,  covenants, conditions,  restrictions,
leases and other title exceptions and encumbrances  affecting property.  For the
purposes of the Credit  Agreement,  a Person  shall be deemed to be the owner of
any  property  that such Person  shall have  acquired or shall hold subject to a
conditional   sale   agreement  or  other   arrangement   (including  a  leasing
arrangement) pursuant to which title to the property shall have been retained by
or vested in some other Person for security purposes.

                    "Liquidated  Receivable" shall mean a Receivable for which a
Liquidation has occurred.

                  "Liquidation"  shall  mean,  with  respect  to  any  Defaulted
Receivable,  the sale of the related Vacation Credits,  following an enforcement
action to a Person other than the Master Servicer, the Borrower or TWRI.

                  "Liquidation  Proceeds"  shall mean the  proceeds  received in
respect of a Defaulted Receivable after Liquidation.

                  "Master Servicer" shall mean Trendwest Resorts, Inc.

                  "Master  Servicer  Fee" shall  mean,  for each day,  an amount
equal to the  product of (a) the Master  Servicer  Fee Rate,  and (b) the Unpaid
Principal  Balance of all Trust Estate  Receivables  as of such date,  and (c) a
fraction, the numerator of which is one and the denominator of which is 360.

                  "Master Servicer Fee Rate" shall mean 1.75%.

                  "Maturity Date" shall mean April 14, 2000.

                  "Maximum  Leverage  Ratio"  shall  mean  the  ratio of (1) the
aggregate of all recourse  liabilities of TWRI (including with  limitation,  all
securitization  transactions (to the extent of actual recourse available) to (2)
Tangible Net Worth.

                  "Minimum Assignment Denomination" shall mean $500,000.

                  "Monthly  Charge-off  Rate"  means,  with  respect  to any Due
Period,  a  fraction,  expressed  as a  percentage  on a per  annum  basis,  the
numerator  of which is the  product  of (x) the  Charge-off  Factor for such Due
Period,  and (y) the Unpaid  Principal  Balance of all Trust Estate  Receivables
that were charged off during such Due Period and the denominator of which is the
average Unpaid Principal Balance of all Trust Estate Receivables for each day in
such Due Period.

                  "Moody's" shall mean Moody's Investor Services, Inc.

                  "Net Income" shall mean, on a  consolidated  basis,  as of any
date  of  determination,  for  any  period,  net  income  (or  loss)  of TWRI as
determined and computed in accordance with GAAP;

                  "New Equity"  shall mean the sum of (i) the net cash  proceeds
of any sale of stock of TWRI by TWRI less (ii) the net cash proceeds received by
TWRI in  connection  with the sale of stock under TWRI's  employee  stock option
plans, or TWRI's employee stock purchase plan, approved by TWRI's shareholders.

                  "Note Daily  Interest"  shall mean for any day, the product of
the Outstanding  Principal Amount for the Notes at the close of business on such
day (including any Advances made on such day), and the applicable  Note Interest
Rate for such day.

                  "Note  Interest  Payment  Amount"  shall mean for any  Payment
Date,  the sum of Note  Daily  Interest  for  each day of the  related  Interest
Period.

                  "Note  Interest Rate" shall mean a per annum rate equal to (i)
if no Event of Default  has  occurred  and is  continuing,  one month LIBOR plus
1.00%,  reset  daily,  and (ii) if an  Event  of  Default  has  occurred  and is
continuing, one month LIBOR plus 4.00%, reset daily.

                  "Note  Principal  Payment  Amount" shall mean, for any Payment
Date, an amount  sufficient  to cause the  Outstanding  Principal  Amount of the
Notes to equal the Borrowing Base (after  application of all Payments  allocable
to  principal  in respect of the Trust  Estate  Receivables  for the related Due
Period).

                    "Note  Register"  shall be as defined in Section  2.3 of the
Indenture.

                    "Note  Registrar"  shall be as defined in Section 2.3 of the
Indenture.

                    "Noteholder" or "Holder" shall mean a holder of a Note.

                    "Notes"  shall mean the variable  funding notes issued under
Article 2 of the Indenture.

                    "Obligor" means the obligor on an Installment Sale Contract.

                    "Officer's Certificate" (i) with respect to the Trustee, any
duly authorized officer, including any vice president, assistant vice president,
or any  officer or  assistant  officer  of the  Trustee  customarily  performing
functions similar to those performed by any of the above-designated officers and
(ii) with respect to TWRI or the Borrower  shall mean a certificate  executed on
behalf of such party by the  Chairman of the Board,  the  President  or any Vice
President of the relevant entity.

                    "Outstanding"  shall mean, as of any date of  determination,
all Notes theretofore authenticated and delivered under this Indenture except:

                    (a) Notes  theretofore  canceled by the Trustee or delivered
to the Trustee for cancellation;

                    (b) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore  irrevocably deposited with the Trustee in
trust for the holders of such Notes; and

                    (c) Notes in  exchange  for or in lieu of which  other Notes
have been  authenticated  and delivered  pursuant to this Indenture unless proof
satisfactory  to the  Trustee  is  presented  that any such  Notes are held by a
Person in whose hands the Note is a valid obligation; provided, however, that in
determining  whether the holders of the requisite  percentage of the Outstanding
Principal  Amount of the Notes have given any  request,  demand,  authorization,
direction,  notice, consent, or waiver hereunder, Notes owned by the Borrower or
any  Affiliate  of the  Borrower  shall  be  disregarded  and  deemed  not to be
Outstanding,  except that, in determining whether the Trustee shall be protected
in relying upon any such  request,  demand,  authorization,  direction,  notice,
consent,  or  waiver,  only  Notes that a  Responsible  Officer  of the  Trustee
actually knows to be so owned shall be so disregarded.

                  "Outstanding Principal Amount" shall mean the aggregate unpaid
principal amount of the Notes at any time.

                  "Paying Agent" shall mean the Trustee.

                  "Payment  Date"  shall  mean (i) the  15th  day of each  month
(unless  such day is not a  Business  Day,  then the next day that is a Business
Day), commencing on May 17, 1999 and (ii) the Maturity Date.

                  "Payments"  shall mean for any  Receivable for any Due Period,
all amounts  received  with respect to such  Receivable  during such Due Period,
including,  without  limitation,   payments  (including  prepayments)  from  the
relevant Obligor (including principal, interest, late fees and other charges.

                  "Permitted Liens" shall mean Liens created under the
Indenture.

                  "Person" shall mean any individual, corporation,  partnership,
limited  liability  company,  joint venture,  association,  joint stock company,
trust,  estate,  unincorporated  organization  or  government  (or any agency or
political subsection thereof).

                    "Principal  Payments"  shall be as defined in Section 2.1(c)
of the Indenture.

                  "PSI" shall mean Prudential Securities Incorporated.

                  "Rating  Agency"  shall mean any of Fitch IBCA,  Inc.,  Duff &
Phelps Credit Rating Co., Standard & Poor's, or Moody's.

                  "Receipt" shall be defined in Section 4.8 of the Indenture.

                  "Receivable"  shall mean each of the right to use  receivables
originated by TWRI with respect to Resorts owned by Worldmark.

                  "Receivable  Acquisition  Price"  shall mean the lesser of (i)
90% of the Unpaid Principal  Balance for Eligible  Receivables as of the date of
purchase  under the  Receivable  Sale  Agreement,  and (ii) 90% of the aggregate
market value of such Eligible Receivables, as determined solely by PSI.

                  "Receivable  Coupon  Rate"  shall  mean,  with  respect to any
Receivable,  the per annum rate of interest set forth in the related Installment
Sale Contract, used to calculate the interest payment due on such Receivable.

                  "Receivable  Documents"  shall mean with respect to each Trust
Estate Receivable and each Obligor:

                    (i) an original Installment Sale Contract with evidence that
the appropriate  financing  statements have been filed in the appropriate filing
offices;

                    (ii)  a  notice  of  sale  and  assignment  affixed  to  the
Installment  Sale Contract  stating the following:  "Undivided  interests in the
Receivables  described herein have been sold to TW Holdings II, Inc. pursuant to
a  Receivable  Sale  Agreement  dated as of April 15,  1999,  between  Trendwest
Resorts,  Inc.  and TW Holdings  II, Inc. TW Holdings  II, Inc. has pledged such
interest to LaSalle National Bank, as Trustee, pursuant to an Indenture dated as
of April 15, 1999, by and among TW Holdings II, Inc.,  Trendwest  Resorts,  Inc.
and LaSalle National Bank."

                    (iii)   an   original   of   each   guarantee,   assumption,
modification  or  substitution  agreement,  if any, which relates to the related
Receivable (or copy thereof certified by an officer of the Borrower to be a true
and correct copy); and

                    (iv) copies of all other  Receivable  Files  related to such
Receivable.

                  "Receivable  Files" shall mean the  documents and other papers
and  computerized  records  customarily  maintained  by the Master  Servicer  in
servicing receivables comparable to the Receivables.

                  "Receivable  Sale  Agreement"  shall mean the Receivable  Sale
Agreement dated as of April 15, 1999 between the Borrower and TWRI,  pursuant to
which the Borrower  agrees to acquire  Eligible  Receivables  from TWRI, as from
time to time further amended, supplemented or modified.

                  "Record Date" shall mean,  with respect to a Payment Date, the
last day of the calendar month immediately preceding such Payment Date.

                  "Records"  shall refer to all  documents,  books,  records and
other information  (including,  without  limitation,  computer programs,  tapes,
disks,  punch cards,  data processing  software and related property and rights)
prepared  and  maintained  by the  Master  Servicer  or by or on  behalf  of the
Borrower with respect to Receivables and the related Obligors.

                    "Repurchase Requirement" shall be as defined in Section 5(d)
of the Receivables Sale Agreement.

                    "Request for Release" shall be as defined in the Section 4.6
of the Indenture.

                    "Required Information" shall mean, as of the related Cut-Off
Date, with respect to a Trust Estate Receivable, the following information:  (a)
its identifying number, (b) the name and mailing address of the related Obligor,
(c) the  original  number  of months to  maturity,  (d) the  number of months to
maturity as of the related Cut-Off Date, (e) the Receivable Coupon Rate, (f) its
date of  origination,  (g)  the  Original  Principal  Balance,  (h)  the  Unpaid
Principal Balance as of the Cut-Off Date, (i) the maturity date, (j) the monthly
payment amount, (k) sale price, (l) the paid-through date, (m) the first payment
date, (n) the date of sale, and (o) the related number of Vacation Credits.

                    "Requirement of Law" shall mean, as to any Person,  any law,
treaty,  rule or regulation,  or  determination of an arbitrator or Governmental
Authority,  in each case  applicable  to or binding upon such Person or to which
such Person is subject,  whether  federal,  state or local  (including,  without
limitation,  usury laws,  the federal Truth in Lending Act and  Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System).

                    "Responsible  Officer"  shall  mean,  with  respect  to  the
Trustee,  any officer or such officer's  superiors  assigned to the Asset Backed
Securities Trust Group of the Trustee and the  transactions  contemplated by the
Warehouse Facility Documents,  including any Managing Director,  Vice President,
Assistant Vice President,  Secretary, Assistant Secretary,  Treasurer, Assistant
Treasurer,  any trust  officer or any other  officer of the Trustee  customarily
performing  functions  similar to those performed by any of the above designated
officers.

                    "Resorts"  shall mean all the resorts  owned (or leased) and
operated by Worldmark, whether existing on the Issuance Date or in the future.

                    "Sale Assignment" each assignment  executed by TWRI in favor
of the Borrower  from time to time  pursuant to the  Receivable  Sale  Agreement
conveying Receivables to the Borrower.

                    "Sale Date" shall mean, with respect to any Receivable,  the
date on which such  Receivable is sold or  contributed  pursuant to Section 2 of
the Receivable Sale Agreement.

                    "Schedule of Exceptions"  shall be as defined in Section 4.6
of the Indenture.

                    "Schedule of  Receivables"  shall mean a list containing the
Required  Information with respect to each Trust Estate Receivable  delivered to
the Trustee and the Custodian under the Indenture.

                    "Securities"  shall mean,  with  respect to any Person,  any
shares of any class of such Person's  capital stock,  or any options or warrants
to purchase its capital stock or other security  exchangeable for or convertible
into its capital stock.

                    "Securities  Act" shall mean the  Securities Act of 1933, as
amended from time to time.

                    "Securitization  Take-out" shall mean a transaction pursuant
to which the Trust Estate Receivables and other related Assets  constituting the
Trust Estate are  reconveyed in connection  with the public  issuance or private
placement of securities  rated by at least one of the Rating Agencies and backed
by the Trust Estate Receivables and other related Assets.

                    "Security  Interest"  shall mean the  security  interest and
rights created under the Indenture in the Assets in favor of the Trustee.

                    "Servicer  Report" shall be as defined in Section 5.2 of the
Indenture.

                    "Solvent" shall mean, with respect to any Person, that:

                    (a) the  properties  of such  Person,  at a fair  valuation,
exceed the total liabilities (including contingent,  subordinated, unmatured and
unliquidated liabilities) of such Person;

                    (b)  based  on  current  projections,  which  are  based  on
underlying  assumptions which provide a reasonable basis for the projections and
which reflect such Person's judgment based on present  circumstances of the most
likely set of conditions  and such Person's most likely course of action for the
period projected,  such Person believes it has sufficient cash flow to enable it
to pay its debts as they mature; and

                    (c) such Person does not have an unreasonably  small capital
with which to engage in its anticipated business.

                    "Standard  & Poor's"  shall mean  Standard & Poor's  Ratings
Group, a division of The McGraw Hill Companies, Inc.

                    "Subsequent  Funding  Date" shall have the meaning set forth
in Section 1.2 of the Credit Agreement.

                    "Substitute   Receivable"   means  an  Eligible   Receivable
submitted for a Trust Estate Receivable under Section 4.6 of the Indenture:  (i)
having as of the time of  substitution a principal  balance,  after deduction of
the principal  portion of the monthly  payment due in the month of  substitution
equal to or  greater  than the  Unpaid  Principal  Balance  of the Trust  Estate
Receivable  for which it is being  substituted,  provided  that if more than one
Receivable is being submitted,  the aggregate principal balance of all submitted
Receivables  shall be equal or greater than the Unpaid Principal  Balance of the
Trust Estate  Receivables  for which they are being  substituted,  (ii) having a
Receivable  Coupon Rate equal to or greater than the  Receivable  Coupon Rate of
the  Trust  Estate  Receivable  for  which it is being  substituted,  and  (iii)
otherwise satisfying the representations and warranties contained therein.

                    "Tangible Net Worth" shall equal a Person's (i) net worth as
calculated under GAAP, less (ii)  receivables  from  stockholders or Affiliates,
less (iii) intangible assets as calculated under GAAP.

                    "Tax or Taxes" shall mean all taxes,  charges,  fees, levies
or other assessments,  including,  without limitation,  income,  gross receipts,
profits,  withholding,  excise,  property,  sales, use, occupation and franchise
taxes  (including,  in each such case,  any  interest,  penalties  or  additions
attributable to or imposed on or with respect to any such taxes,  charges,  fees
or other  assessments)  imposed by the  United  States,  any state or  political
subdivision  thereof, any foreign government or any other jurisdiction or taxing
authority.

                    "Transfer"  shall be as specified  in Section  4.2(a) of the
Indenture.

                    "Transfer Notice" shall be as specified in Section 4.2(b) of
the Indenture.

                    "Trust Accounts" shall mean such accounts as the Trustee may
create from time to time under the Indenture.

                    "Trust Estate" shall mean all money,  instruments  and other
property  and  rights  subject  to the  lien of this  Indenture,  including  all
proceeds thereof.

                    "Trust Estate  Receivables"  shall mean all Receivables that
are pledged to the Trustee and are part of the Trust Estate.

                    "Trustee" shall be LaSalle National Bank.

                    "Trustee Fee" shall mean an amount equal to $2,500 a month.

                    "TWRI"  shall  mean  Trendwest  Resorts,   Inc.,  an  Oregon
corporation.

                    "TWRI  Receivables" shall mean, as of any time, all right to
use timeshare  receivables  originated by TWRI other than  Receivables that have
been paid in full or charged off and including the Trust Estate Receivables.

                    "UCC" shall mean the Uniform Commercial Code as in effect in
the relevant state.

                    "Unpaid Principal Balance" means the unpaid principal amount
for a Receivable as of the end of the most recent Due Period,  or in the case of
the initial funding, on a date agreed upon by the Lender and the Borrower on the
Initial Funding Date.

                    "Upgrade"  shall mean the  prepayment  of a  Receivable  and
entry into a new  Installment  Sale Contract by an Obligor,  Worldmark and TWRI,
pursuant to which the Obligor purchases  additional Vacation Credits in exchange
for an increase in the principal balance owed by such Obligor.

                    "Vacation Credit Purchase Price" shall mean, with respect to
a Defaulted Receivable, the lesser of (a) an amount equal to 25% of the price at
which the related Obligor  purchased the related Vacation  Credits,  and (b) the
Unpaid Principal Balance of such Defaulted Receivable.

                    "Vacation Credits" shall mean the related Obligor's Vacation
Credits in Worldmark.

                    "Warehouse   Facility   Documents"  shall  mean  the  Credit
Agreement,   the  Receivable  Sale  Agreement,  the  Indenture,  the  Collateral
Assignments, any Subservicing Agreement, the Engagement Letter and the Notes.

                    "Worldmark"  shall mean  Worldmark,  the Club,  a California
mutual benefit corporation which holds unencumbered fee title to (or a long term
lease on) the Resorts subject to the rights of the Obligors to use the Resorts.

                    "Year 2000  Problem"  shall mean the inability of computers,
as well as embedded  microchips in  non-computing  devices,  to perform properly
date-sensitive  functions  with  respect  to  certain  dates  prior to and after
December 31, 1999.