CREDIT AGREEMENT

                          Dated as of February 12, 1998

                                      among

                            TRENDWEST RESORTS, INC.,



                         BANK OF AMERICA NATIONAL TRUST
                             AND SAVINGS ASSOCIATION
                                    as Agent,

                                       and

                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO












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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
         Section                                                                                               Page
         <S>                                                                                                      <C>

         ARTICLE I                                  DEFINITIONS.................................................  1

                  1.01  Certain Defined Terms...................................................................  1
                  1.02  Other Interpretive Provisions........................................................... 15
                  1.03  Accounting Principles................................................................... 16

         ARTICLE II                                 THE CREDITS................................................. 17

                  2.01  Amounts and Terms of Commitments........................................................ 17
                           (a) The Revolving Credit............................................................. 17
                  2.02  Loan Accounts........................................................................... 17
                  2.03  Procedure for Borrowing................................................................. 18
                  2.04  Conversion and Continuation Elections................................................... 18
                  2.05  Voluntary Termination or Reduction of
                  Commitments................................................................................... 20
                  2.06  Repayment............................................................................... 20
                  2.07  Interest................................................................................ 20
                  2.08  Fees.................................................................................... 21
                           (a)  Arrangement, Agency Fees........................................................ 21
                           (b)  Commitment Fees................................................................. 21
                  2.09  Computation of Fees and Interest........................................................ 21
                  2.10  Payments by the Company................................................................. 22
                  2.11  Payments by the Banks to the Agent...................................................... 22
                  2.12  Sharing of Payments, Etc................................................................ 23

         ARTICLE III                  TAXES, YIELD PROTECTION AND ILLEGALITY.................................... 24

                  3.01  Other Taxes............................................................................. 24
                  3.02  Illegality.............................................................................. 24
                  3.03  Increased Costs and Reduction of Return................................................. 25
                  3.04  Funding Losses.......................................................................... 25
                  3.05  Inability to Determine Rates............................................................ 26
                  3.06  Certificates of Banks................................................................... 26
                  3.07  Substitution of Banks................................................................... 26
                  3.08  Survival................................................................................ 27

         ARTICLE IV                            CONDITIONS PRECEDENT............................................. 27

                  4.01  Conditions of Initial Loans............................................................. 27
                           (a)      Credit Agreement............................................................ 27
                           (b)      Resolutions; Incumbency..................................................... 27
                           (c)      Organization Documents; Good Standing....................................... 27
                           (d)      Legal Opinions.............................................................. 28
                           (e)      Payment of Fees............................................................. 28
                           (f)      Certificate................................................................. 28
                           (g)      Other Documents............................................................. 28


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                  4.02  Conditions to All Borrowings............................................................ 28
                           (a)      Notice of Borrowing or
                           Conversion/Continuation.............................................................. 28
                           (b)      Continuation of Representations and
                           Warranties........................................................................... 29
                           (c)      No Existing Default......................................................... 29

         ARTICLE V                        REPRESENTATIONS AND WARRANTIES........................................ 29

                  5.01  Corporate Existence and Power........................................................... 29
                  5.02  Corporate Authorization; No Contravention............................................... 30
                  5.03  Governmental Authorization.............................................................. 30
                  5.04  Binding Effect.......................................................................... 30
                  5.05  Litigation.............................................................................. 30
                  5.06  No Default.............................................................................. 31
                  5.07  ERISA Compliance........................................................................ 31
                  5.08  Use of Proceeds; Margin Regulations..................................................... 32
                  5.09  Title to Properties..................................................................... 32
                  5.10  Taxes................................................................................... 32
                  5.11  Financial Condition..................................................................... 32
                  5.12  Environmental Matters................................................................... 33
                  5.13  Regulated Entities...................................................................... 33
                  5.14  No Burdensome Restrictions.............................................................. 33
                  5.15  Copyrights, Patents, Trademarks and Licenses,
                  etc........................................................................................... 33
                  5.16  Subsidiaries............................................................................ 33
                  5.17  Insurance............................................................................... 34
                  5.18  Swap Obligations........................................................................ 34
                  5.19  Full Disclosure......................................................................... 34

         ARTICLE VI                            AFFIRMATIVE COVENANTS............................................ 34

                  6.01  Financial Statements.................................................................... 34
                  6.02  Certificates; Other Information......................................................... 35
                  6.03  Notices................................................................................. 36
                  6.04  Preservation of Corporate Existence, Etc................................................ 37
                  6.05  Maintenance of Property................................................................. 37
                  6.06  Insurance............................................................................... 37
                  6.07  Payment of Obligations.................................................................. 38
                  6.08  Compliance with Laws.................................................................... 38
                  6.09  Compliance with ERISA................................................................... 38
                  6.10  Inspection of Property and Books and Records............................................ 38
                  6.11  Environmental Laws...................................................................... 39
                  6.12  Use of Proceeds......................................................................... 39
                  6.13  Interest Coverage Ratio................................................................. 39
                  6.14     Capitalization Ratio................................................................. 39

         ARTICLE VII                            NEGATIVE COVENANTS.............................................. 39

                  7.01  Limitation on Liens..................................................................... 39
                  7.02  Disposition of Assets................................................................... 41

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                  7.03  Consolidations and Mergers.............................................................. 41
                  7.04  Loans and Investments................................................................... 42
                  7.05  Transactions with Affiliates............................................................ 43
                  7.06  Use of Proceeds......................................................................... 43
                  7.07  Contingent Obligations.................................................................. 43
                  7.08  Joint Ventures.......................................................................... 44
                  7.09  Lease Obligations....................................................................... 44
                  7.10  Restricted Payments..................................................................... 44
                  7.11  ERISA................................................................................... 45
                  7.12  Change in Business...................................................................... 45
                  7.13  Accounting Changes...................................................................... 45
                  7.14  Agreements by Subsidiaries.............................................................. 45
                  7.15     Notes Receivable..................................................................... 45
                  7.16     Time Share Inventory................................................................. 45

         ARTICLE VIII                            EVENTS OF DEFAULT.............................................. 46

                  8.01  Event of Default........................................................................ 46
                           (a)      Non-Payment................................................................. 46
                           (b)      Representation or Warranty.................................................. 46
                           (c)      Specific Defaults........................................................... 46
                           (d)      Other Defaults.............................................................. 46
                           (e)      Cross-Default............................................................... 46
                           (f)      Insolvency; Voluntary Proceedings........................................... 47
                           (g)      Involuntary Proceedings..................................................... 47
                           (h)      ERISA....................................................................... 47
                           (i)      Monetary Judgments.......................................................... 48
                           (j)      Non-Monetary Judgments...................................................... 48
                           (k)      Change of Control........................................................... 48
                  8.02  Remedies................................................................................ 48
                  8.03  Rights Not Exclusive.................................................................... 48

         ARTICLE IX                                  THE AGENT.................................................. 49

                  9.01  Appointment and Authorization; "Agent".................................................. 49
                  9.02  Delegation of Duties.................................................................... 49
                  9.03  Liability of Agent...................................................................... 49
                  9.04  Reliance by Agent....................................................................... 50
                  9.05  Notice of Default....................................................................... 50
                  9.06  Credit Decision......................................................................... 51
                  9.07  Indemnification of Agent................................................................ 51
                  9.08  Agent in Individual Capacity............................................................ 52
                  9.09  Successor Agent......................................................................... 52
                  9.10  Withholding Tax......................................................................... 52

         ARTICLE X                                 MISCELLANEOUS................................................ 54

                  10.01  Amendments and Waivers................................................................. 54
                  10.02  Notices................................................................................ 55
                  10.03  No Waiver; Cumulative Remedies......................................................... 55
                  10.04  Costs and Expenses..................................................................... 56

                                                   iii

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                  10.05  Company Indemnification................................................................ 56
                  10.06  Payments Set Aside..................................................................... 57
                  10.07  Successors and Assigns................................................................. 57
                  10.08  Assignments, Participations, etc....................................................... 57
                  10.09  Confidentiality........................................................................ 59
                  10.10  Set-off................................................................................ 60
                  10.11  Automatic Debits of Fees............................................................... 60
                  10.12  Notification of Addresses, Lending Offices,
                  Etc........................................................................................... 60
                  10.13  Counterparts........................................................................... 60
                  10.14  Severability........................................................................... 60
                  10.15  No Third Parties Benefited............................................................. 61
                  10.16  Governing Law and Jurisdiction......................................................... 61
                  10.17  Waiver of Jury Trial................................................................... 61
                  10.18  Entire Agreement....................................................................... 61
                  10.19  Statute of Frauds...................................................................... 62
</TABLE>

SCHEDULES

Schedule 2.01              Commitments
Schedule 5.05              Litigation
Schedule 5.07              ERISA
Schedule 5.11              Permitted Liabilities
Schedule 5.12              Environmental Matters
Schedule 5.16              Subsidiaries and Minority Interests
Schedule 5.17              Insurance Matters
Schedule 7.07              Contingent Obligations
Schedule 10.02             Lending Offices; Addresses for Notices

EXHIBITS

Exhibit A                     Form of Notice of Borrowing
Exhibit B                     Form of Notice of Conversion/Continuation
Exhibit C-1                   Form of Quarterly Compliance Certificate
Exhibit C-2                   Form of Monthly Compliance Certificate
Exhibit D-1                   Form of Legal Opinion of Company's Washington
                              Counsel
Exhibit D-2                   Form of Legal Opinion of Company's Oregon
                              Counsel
Exhibit E                     Form of Assignment and Acceptance
Exhibit F                     Form of Promissory Note

                                       iv

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                                CREDIT AGREEMENT


         This CREDIT  AGREEMENT is entered  into as of February 12, 1998,  among
Trendwest  Resorts,  Inc., an Oregon  corporation (the  "Company"),  the several
financial institutions from time to time party to this Agreement  (collectively,
the "Banks";  individually,  a "Bank"),  and Bank of America  National Trust and
Savings Association as agent for the Banks.

         WHEREAS,  the Banks  have  agreed to make  available  to the  Company a
revolving  credit  facility  upon the  terms  and  conditions  set forth in this
Agreement;

         NOW, THEREFORE,  in consideration of the mutual agreements,  provisions
and covenants contained herein, the parties agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

         1.01  Certain Defined Terms.  The following terms have the
following meanings:

                  "Acquisition"  means any  transaction  or  series  of  related
         transactions  for the purpose of or resulting,  directly or indirectly,
         in (a) the acquisition of all or  substantially  all of the assets of a
         Person, or of any business or division of a Person, (b) the acquisition
         of in  excess  of 50%  of the  capital  stock,  partnership  interests,
         membership  interests or equity of any Person, or otherwise causing any
         Person to become a Subsidiary,  or (c) a merger or consolidation or any
         other  combination  with another  Person (other than a Person that is a
         Subsidiary)  provided  that  the  Company  or  the  Subsidiary  is  the
         surviving entity.

                  "Affiliate"  means, as to any Person,  any other Person which,
         directly or indirectly, is in control of, is controlled by, or is under
         common control with,  such Person.  A Person shall be deemed to control
         another  Person  if  the  controlling  Person  possesses,  directly  or
         indirectly,  the  power  to  direct  or  cause  the  direction  of  the
         management  and  policies  of the other  Person,  whether  through  the
         ownership of voting securities,  membership interests,  by contract, or
         otherwise.

                  "Agent"  means  BofA in its  capacity  as agent  for the Banks
         hereunder, and any successor agent arising under Section 9.09.

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                  "Agent-Related  Persons"  means BofA and any  successor  agent
         arising under Section 9.09,  together with their respective  Affiliates
         (including,  in the  case of BofA,  the  Arranger),  and the  officers,
         directors,  employees, agents and attorneys-in-fact of such Persons and
         Affiliates.

                  "Agent's  Payment  Office"  means the address for payments set
         forth on  Schedule  10.02 or such  other  address as the Agent may from
         time to time specify.

                  "Agreement" means this Credit Agreement.

                  "Applicable  Margin"  means,  with respect to Base Rate Loans,
         0%, and with respect to Offshore Rate Loans, 1%.

                  "Arranger" means BancAmerica Robertson Stephens, a
         Delaware corporation.

                  "Assignee" has the meaning specified in subsection
         10.08(a).

                  "Attorney Costs" means and includes all fees and disbursements
         of any law  firm or  other  external  counsel,  the  allocated  cost of
         internal legal services and all disbursements of internal counsel.

                  "Bank" has the meaning specified in the introductory
         clause hereto.

                  "Bankruptcy Code" means the Federal Bankruptcy Reform
         Act of 1978 (11 U.S.C. ss.101, et seq.).

                  "Base Rate"  means,  for any day, the higher of: (a) 0.50% per
         annum above the latest Federal Funds Rate; and (b) the rate of interest
         in effect for such day as publicly  announced from time to time by BofA
         in San Francisco,  California, as its "reference rate." (The "reference
         rate" is a rate set by BofA based upon various factors including BofA's
         costs  and  desired  return,  general  economic  conditions  and  other
         factors, and is used as a reference point for pricing some loans, which
         may be priced at, above,  or below such announced  rate.) Any change in
         the reference  rate  announced by BofA shall take effect at the opening
         of business on the day  specified  in the public  announcement  of such
         change.

                  "Base Rate Loan" means a Loan that bears interest based on the
         Base Rate.

                  "BofA"  means  Bank of  America  National  Trust  and  Savings
         Association, a national banking association.

                  "Borrowing" means a borrowing hereunder consisting of
         Revolving Loans of the same Type made to the Company on the

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         same day by the Banks under Article II, and,  other than in the case of
         Base Rate Loans, having the same Interest Period.

                  "Borrowing  Date" means any date on which a  Borrowing  occurs
         under Section 2.03.

                  "Business Day" means any day other than a Saturday,  Sunday or
         other day on which commercial banks in New York City, San Francisco, or
         Seattle  are  authorized  or  required  by law  to  close  and,  if the
         applicable Business Day relates to any Offshore Rate Loan, means such a
         day on which dealings are carried on in the London interbank market.

                  "Capital Adequacy Regulation" means any guideline,  request or
         directive of any central bank or other Governmental  Authority,  or any
         other law, rule or regulation,  whether or not having the force of law,
         in  each  case,  regarding  capital  adequacy  of  any  bank  or of any
         corporation controlling a bank.

                  "Change of Control" means Jeld-Wen, inc. shall cease to
         control the Company or cease to own beneficially at least
         51% of its voting stock.

                  "Closing   Date"  means  the  date  on  which  all  conditions
         precedent  set forth in  Section  4.01 are  satisfied  or waived by all
         Banks  (or,  in the case of  subsection  4.01(e),  waived by the Person
         entitled to receive such payment).

                  "Code" means the Internal Revenue Code of 1986, and
         regulations promulgated thereunder.

                  "Commitment" means, as to each Bank, its Revolving
         Credit Commitment.

                  "Compliance Certificate" means a Quarterly Compliance
         Certificate or a Monthly Compliance Certificate.

                  "Consolidated Net Worth" means the consolidated
         shareholders' equity of the Company and its Subsidiaries.

                  "Contingent Obligation" means, as to any Person, any direct or
         indirect liability of that Person,  whether or not contingent,  with or
         without  recourse,  (a)  with  respect  to  any  Indebtedness,   lease,
         dividend,   letter  of  credit  or  other   obligation   (the  "primary
         obligations") of another Person (the "primary obligor"),  including any
         obligation  of that Person (i) to  purchase,  repurchase  or  otherwise
         acquire such primary  obligations  or any  security  therefor,  (ii) to
         advance  or provide  funds for the  payment  or  discharge  of any such
         primary obligation, or to maintain working capital or equity capital of
         the primary  obligor or otherwise to maintain the net worth or solvency
         or any balance sheet

                                                         3

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         item,  level of income or financial  condition of the primary  obligor,
         (iii) to purchase  property,  securities or services  primarily for the
         purpose of assuring  the owner of any such  primary  obligation  of the
         ability  of the  primary  obligor  to  make  payment  of  such  primary
         obligation,  or (iv) otherwise to assure or hold harmless the holder of
         any such primary  obligation  against loss in respect  thereof (each, a
         "Guaranty  Obligation");  (b) with  respect  to any  Surety  Instrument
         issued  for the  account of that  Person or as to which that  Person is
         otherwise  liable for  reimbursement  of drawings or  payments;  (c) to
         purchase any  materials,  supplies or other property from, or to obtain
         the  services  of,  another  Person if the  relevant  contract or other
         related   document  or  obligation   requires  that  payment  for  such
         materials,  supplies or other property, or for such services,  shall be
         made  regardless  of whether  delivery of such  materials,  supplies or
         other  property is ever made or  tendered,  or such  services  are ever
         performed  or  tendered,  or (d) in respect of any Swap  Contract.  The
         amount of any  Contingent  Obligation  shall,  in the case of  Guaranty
         Obligations,  be deemed equal to the stated or  determinable  amount of
         the primary obligation in respect of which such Guaranty  Obligation is
         made or, if not stated or if  indeterminable,  the  maximum  reasonably
         anticipated  liability  in  respect  thereof,  and in the case of other
         Contingent  Obligations other than in respect of Swap Contracts,  shall
         be equal to the maximum  reasonably  anticipated  liability  in respect
         thereof and, in the case of Contingent  Obligations  in respect of Swap
         Contracts, shall be equal to the Swap Termination Value.

                  "Contractual   Obligation"   means,  as  to  any  Person,  any
         provision  of any security  issued by such Person or of any  agreement,
         undertaking,  contract,  indenture,  mortgage,  deed of  trust or other
         instrument, document or agreement to which such Person is a party or by
         which it or any of its property is bound.

                  "Conversion/Continuation  Date" means any date on which, under
         Section  2.04,  the Company (a)  converts  Loans of one Type to another
         Type,  or (b)  continues  as  Loans of the  same  Type,  but with a new
         Interest Period, Loans having Interest Periods expiring on such date.

                  "Default"  means any  event or  circumstance  which,  with the
         giving of notice,  the lapse of time,  or both,  would (if not cured or
         otherwise remedied during such time) constitute an Event of Default.

                  "Dollars", "dollars" and "$" each mean lawful money of
         the United States.

                  "Eligible Assignee" means (a) a commercial bank
         organized under the laws of the United States, or any state

                                                         4

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         thereof,  and  having  a  combined  capital  and  surplus  of at  least
         $100,000,000;  (b) a commercial  bank  organized  under the laws of any
         other  country  which  is a member  of the  Organization  for  Economic
         Cooperation and Development (the "OECD"), or a political subdivision of
         any such country, and having a combined capital and surplus of at least
         $100,000,000,  provided  that such  bank is acting  through a branch or
         agency located in the United States; and (c) a Person that is primarily
         engaged  in the  business  of  commercial  banking  and  that  is (i) a
         Subsidiary of a Bank,  (ii) a Subsidiary of a Person of which a Bank is
         a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.

                  "Environmental  Claims" means all claims, however asserted, by
         any Governmental Authority or other Person alleging potential liability
         or  responsibility  for  violation  of any  Environmental  Law,  or for
         release or injury to the environment.

                  "Environmental  Laws" means all federal,  state or local laws,
         statutes, common law duties, rules, regulations,  ordinances and codes,
         together with all  administrative  orders,  directed duties,  requests,
         licenses,  authorizations  and permits  of, and  agreements  with,  any
         Governmental  Authorities,  in each  case  relating  to  environmental,
         health, safety and land use matters.

                  "ERISA" means the Employee  Retirement  Income Security Act of
         1974, and regulations promulgated thereunder.

                  "ERISA  Affiliate" means any trade or business (whether or not
         incorporated)  under common control with the Company within the meaning
         of Section  414(b) or (c) of the Code (and  Sections  414(m) and (o) of
         the Code for  purposes  of  provisions  relating  to Section 412 of the
         Code).

                  "ERISA  Event" means (a) a Reportable  Event with respect to a
         Pension Plan;  (b) a withdrawal  by the Company or any ERISA  Affiliate
         from a Pension Plan subject to Section 4063 of ERISA during a plan year
         in  which  it  was  a  substantial  employer  (as  defined  in  Section
         4001(a)(2) of ERISA) or a cessation of  operations  which is treated as
         such a withdrawal  under  Section  4062(e) of ERISA;  (c) a complete or
         partial  withdrawal  by the  Company  or  any  ERISA  Affiliate  from a
         Multiemployer  Plan or  notification  that a  Multiemployer  Plan is in
         reorganization;  (d) the filing of a notice of intent to terminate, the
         treatment of a Plan  amendment as a  termination  under Section 4041 or
         4041A of  ERISA,  or the  commencement  of  proceedings  by the PBGC to
         terminate  a  Pension  Plan or  Multiemployer  Plan;  (e) an  event  or
         condition  which might  reasonably  be expected to  constitute  grounds
         under Section 4042 of ERISA for the  termination of, or the appointment
         of a trustee to

                                                         5

<PAGE>



         administer,  any  Pension  Plan  or  Multiemployer  Plan;  or  (f)  the
         imposition  of any liability  under Title IV of ERISA,  other than PBGC
         premiums due but not delinquent  under Section 4007 of ERISA,  upon the
         Company or any ERISA Affiliate.

                  "Eurodollar Reserve Percentage" has the meaning
         specified in the definition of "Offshore Rate".

                  "Event of Default" means any of the events or
         circumstances specified in Section 8.01.

                  "Exchange Act" means the Securities  Exchange Act of 1934, and
         regulations promulgated thereunder.

                  "FDIC" means the Federal Deposit  Insurance  Corporation,  and
         any  Governmental   Authority   succeeding  to  any  of  its  principal
         functions.

                  "Federal Funds Rate" means, for any day, the rate set forth in
         the  weekly  statistical  release  designated  as  H.15(519),   or  any
         successor  publication,  published  by the Federal  Reserve Bank of New
         York  (including  any such  successor,  "H.15(519)")  on the  preceding
         Business Day opposite the caption "Federal Funds  (Effective)";  or, if
         for  any  relevant  day  such  rate  is not so  published  on any  such
         preceding  Business  Day, the rate for such day will be the  arithmetic
         mean as determined  by the Agent of the rates for the last  transaction
         in overnight  Federal funds  arranged prior to 9:00 a.m. (New York City
         time) on that day by each of three  leading  brokers of  Federal  funds
         transactions in New York City selected by the Agent.

                  "Fee Letter" has the meaning specified in
         subsection 2.10(a).

                  "FRB"  means the Board of  Governors  of the  Federal  Reserve
         System,  and  any  Governmental  Authority  succeeding  to  any  of its
         principal functions.

                  "GAAP" means  generally  accepted  accounting  principles  set
         forth  from  time to time in the  opinions  and  pronouncements  of the
         Accounting  Principles  Board and the  American  Institute of Certified
         Public  Accountants and statements and  pronouncements of the Financial
         Accounting  Standards  Board (or  agencies  with  similar  functions of
         comparable   stature   and   authority   within  the  U.S.   accounting
         profession),  which are applicable to the  circumstances as of the date
         of determination.

                  "Governmental  Authority" means any nation or government,  any
         state or other  political  subdivision  thereof,  any central  bank (or
         similar  monetary  or  regulatory   authority)   thereof,   any  entity
         exercising executive,

                                                         6

<PAGE>



         legislative,  judicial,  regulatory or  administrative  functions of or
         pertaining to government,  and any corporation or other entity owned or
         controlled,  through stock or capital ownership or otherwise, by any of
         the foregoing.

                  "Guaranty Obligation" has the meaning specified in the
         definition of "Contingent Obligation."

                  "Indebtedness" of any Person means, without  duplication,  (a)
         all  indebtedness  for  borrowed  money;  (b) all  obligations  issued,
         undertaken  or assumed as the  deferred  purchase  price of property or
         services (other than trade payables entered into in the ordinary course
         of business on ordinary terms); (c) all non-contingent reimbursement or
         payment  obligations  with  respect  to  Surety  Instruments;  (d)  all
         obligations   evidenced  by  notes,   bonds,   debentures   or  similar
         instruments,  including obligations so evidenced incurred in connection
         with  the  acquisition  of  property,  assets  or  businesses;  (e) all
         indebtedness  created or arising  under any  conditional  sale or other
         title  retention  agreement,  or incurred as financing,  in either case
         with respect to property acquired by the Person (even though the rights
         and remedies of the seller or bank under such agreement in the event of
         default are limited to repossession or sale of such property);  (f) all
         obligations  with  respect  to  capital  leases;  (g) all  indebtedness
         referred to in clauses  (a) through (f) above  secured by (or for which
         the holder of such  Indebtedness  has an existing right,  contingent or
         otherwise,  to be secured by) any Lien upon or in  property  (including
         accounts and contracts  rights) owned by such Person,  even though such
         Person  has not  assumed  or  become  liable  for the  payment  of such
         Indebtedness;   and  (h)  all  Guaranty   Obligations   in  respect  of
         indebtedness  or  obligations  of others of the  kinds  referred  to in
         clauses (a) through (g) above;

         Provided,  that  Indebtedness  shall  not  include  sales of  Permitted
         Receivables sold pursuant to Permitted  Receivables Purchase Facilities
         and indemnification, recourse or repurchase obligations thereunder. For
         all purposes of this  Agreement,  the  Indebtedness of any Person shall
         include all recourse  Indebtedness  of any partnership or joint venture
         in which such Person is a general partner or a joint venturer.

                  "Indemnified Liabilities" has the meaning specified in
         Section 10.05.

                  "Indemnified Person" has the meaning specified in
         Section 10.05.

                  "Independent Auditor" has the meaning specified in
         subsection 6.01(a).


                                                         7

<PAGE>



                  "Insolvency Proceeding" means, with respect to any Person, (a)
         any case,  action or proceeding  with respect to such Person before any
         court  or  other   Governmental   Authority   relating  to  bankruptcy,
         reorganization,  insolvency,  liquidation,  receivership,  dissolution,
         winding-up or relief of debtors,  or (b) any general assignment for the
         benefit of creditors, composition, marshalling of assets for creditors,
         or other,  similar arrangement in respect of its creditors generally or
         any  substantial  portion  of  its  creditors;  undertaken  under  U.S.
         Federal, state or foreign law, including the Bankruptcy Code.

                  "Interest  Payment Date" means,  (i) as to any Revolving  Loan
         other  than a Base  Rate  Loan,  the last day of each  Interest  Period
         applicable  to such Loan,  and (ii) as to any Base Rate Loan,  the last
         Business Day of each calendar quarter;  provided,  however, that if any
         Interest  Period for an Offshore Rate Loan exceeds  three  months,  the
         date that falls  three  months  after the  beginning  of such  Interest
         Period and after  each  Interest  Payment  Date  thereafter  is also an
         Interest Payment Date.

                  "Interest  Period"  means,  as to any Offshore Rate Loan,  the
         period  commencing  on  the  Borrowing  Date  of  such  Loan  or on the
         Conversion/Continuation  Date on which  the Loan is  converted  into or
         continued as an Offshore  Rate Loan,  and ending on the date one,  two,
         three or six months thereafter as selected by the Company in its Notice
         of Borrowing or Notice of Conversion/Continuation;

         provided that:

                           (i) if any Interest  Period would  otherwise end on a
                  day that is not a Business Day, that Interest  Period shall be
                  extended to the following  Business Day unless, in the case of
                  an Offshore Rate Loan, the result of such  extension  would be
                  to carry such Interest Period into another  calendar month, in
                  which event such  Interest  Period shall end on the  preceding
                  Business Day;

                           (ii) any Interest  Period  pertaining  to an Offshore
                  Rate Loan that begins on the last  Business  Day of a calendar
                  month  (or  on  a  day  for  which  there  is  no  numerically
                  corresponding  day in the  calendar  month  at the end of such
                  Interest  Period)  shall end on the last  Business  Day of the
                  calendar month at the end of such Interest Period; and

                           (iii) no  Interest  Period for any Loan shall  extend
                  beyond the Revolving Termination Date.


                                                         8

<PAGE>



                  "IRS" means the Internal Revenue Service, and any Governmental
         Authority succeeding to any of its principal functions under the Code.

                  "Joint   Venture"   means   a   single-purpose    corporation,
         partnership,  limited liability company, joint venture or other similar
         legal  arrangement  (whether created by contract or conducted through a
         separate legal entity) now or hereafter formed by the Company or any of
         its  Subsidiaries  with  another  Person  in order to  conduct a common
         venture or enterprise with such Person.

                  "Lending  Office" means, as to any Bank, the office or offices
         of such Bank  specified  as its "Lending  Office" or "Domestic  Lending
         Office" or "Offshore  Lending Office",  as the case may be, on Schedule
         10.02,  or such  other  office or offices as such Bank may from time to
         time notify the
         Company and the Agent.

                  "Lien" means any security interest,  mortgage,  deed of trust,
         pledge,  hypothecation,  assignment,  charge  or  deposit  arrangement,
         encumbrance,  lien (statutory or other) or preferential  arrangement of
         any kind or nature  whatsoever  in respect of any  property  (including
         those created by, arising under or evidenced by any conditional sale or
         other title  retention  agreement,  the  interest  of a lessor  under a
         capital  lease,  any  financing  lease  having  substantially  the same
         economic effect as any of the foregoing, or the filing of any financing
         statement  naming the owner of the asset to which such lien  relates as
         debtor,  under the Uniform  Commercial Code or any comparable law), but
         not including the interest of a lessor under an operating  lease or the
         interest of a purchaser of Permitted  Receivables  under any  Permitted
         Receivables Purchase Facility.

                  "Loan" means a Revolving  Loan by a Bank to the Company  under
         Article  II,  which may be a Base Rate  Loan or an  Offshore  Rate Loan
         (each, a "Type" of Loan).

                  "Loan Documents" means this Agreement, any Notes, and
         the Fee Letter.

                  "Majority Banks" means at any time Banks then holding at least
         66-2/3% of the then aggregate unpaid principal amount of the Loans, or,
         if no such principal amount is then  outstanding,  Banks then having at
         least 66-2/3% of the Commitments.

                  "Margin Stock" means "margin stock" as such term is defined in
         Regulation G, T, U or X of the FRB.

                  "Material  Adverse Effect" means (a) a material adverse change
         in, or a  material  adverse  effect  upon,  the  operations,  business,
         properties, condition (financial or

                                                         9

<PAGE>



         otherwise) of the Company or the Company and its Subsidiaries  taken as
         a whole;  (b) a material  impairment  of the  ability of the Company to
         perform under any Loan  Document and to avoid any Event of Default;  or
         (c) a material  adverse  effect upon the  legality,  validity,  binding
         effect or enforceability against the Company of any Loan Document.

                  "Monthly Compliance Certificate" means a certificate
         substantially in the form of Exhibit C-2.

                  "Multiemployer Plan" means a "multiemployer  plan", within the
         meaning of Section  4001(a)(3)  of ERISA,  to which the  Company or any
         ERISA Affiliate makes, is making, or is obligated to make contributions
         or,  during the  preceding  three  calendar  years,  has made,  or been
         obligated to make, contributions.

                  "Note"  means a  promissory  note  executed  by the Company in
         favor of a Bank pursuant to subsection  2.02(b),  in substantially  the
         form of Exhibit F.

                  "Notice of Borrowing" means a notice in substantially
         the form of Exhibit A.

                  "Notice of Conversion/Continuation" means a notice in
         substantially the form of Exhibit B.

                  "Obligations"   means  all   advances,   debts,   liabilities,
         obligations, covenants and duties arising under any Loan Document owing
         by the  Company to any Bank,  the  Agent,  or any  Indemnified  Person,
         whether direct or indirect  (including  those acquired by  assignment),
         absolute or contingent, due or to become due, now existing or hereafter
         arising.

                  "Offshore Rate" means, for any Interest  Period,  with respect
         to Offshore Rate Loans comprising part of the same Borrowing,  the rate
         of  interest  per  annum  (rounded  upward  to the next  1/16th  of 1%)
         determined by the Agent as follows:

         Offshore Rate =           LIBOR
                         1.00 - Eurodollar Reserve Percentage

         Where,

                           "Eurodollar Reserve Percentage" means for any day for
                  any Interest Period the maximum reserve percentage  (expressed
                  as a  decimal,  rounded  upward to the next  1/100th of 1%) in
                  effect on such day  (whether  or not  applicable  to any Bank)
                  under  regulations  issued  from  time  to time by the FRB for
                  determining  the maximum  reserve  requirement  (including any
                  emergency, supplemental or other marginal reserve requirement)

                                                        10

<PAGE>



                  with respect to Eurocurrency funding (currently
                  referred to as "Eurocurrency liabilities"); and

                           "LIBOR"   means  the  rate  of  interest   per  annum
                  determined  by the Agent to be the  arithmetic  mean  (rounded
                  upward to the next 1/16th of 1%) of the rates of interest  per
                  annum  notified to the Agent by the Reference Bank as the rate
                  of interest at which dollar deposits in the approximate amount
                  of the  amount  of the  Loan to be made or  continued  as,  or
                  converted  into, an Offshore  Rate Loan by the Reference  Bank
                  and having a maturity comparable to such Interest Period would
                  be offered to major  banks in the London  interbank  market at
                  their request at  approximately  11:00 a.m.  (London time) two
                  Business  Days  prior  to the  commencement  of such  Interest
                  Period.

                  The Offshore  Rate shall be adjusted  automatically  as to all
         Offshore Rate Loans then  outstanding  as of the effective  date of any
         change in the Eurodollar Reserve Percentage.

                  "Offshore Rate Loan" means a Loan that bears interest based on
         the Offshore Rate.

                  "Organization  Documents"  means,  for  any  corporation,  the
         certificate or articles of incorporation,  the bylaws,  any certificate
         of  determination  or  instrument  relating to the rights of  preferred
         shareholders of such corporation, any shareholder rights agreement, and
         all applicable  resolutions of the board of directors (or any committee
         thereof) of such corporation.

                  "Other  Taxes"  means any  present or future  stamp,  court or
         documentary  taxes or any other  excise or property  taxes,  charges or
         similar  levies which arise from any payment made hereunder or from the
         execution,  delivery,  performance,  enforcement or registration of, or
         otherwise with respect to, this Agreement or any other Loan Documents.

                  "Participant" has the meaning specified in
         subsection 10.08(d).

                  "PBGC" means the Pension Benefit Guaranty Corporation,  or any
         Governmental  Authority  succeeding to any of its  principal  functions
         under ERISA.

                  "Pension  Plan"  means a pension  plan (as  defined in Section
         3(2) of ERISA) subject to Title IV of ERISA which the Company sponsors,
         maintains,  or to which it makes,  is making,  or is  obligated to make
         contributions, or in the case of a multiple employer plan (as described
         in Section 4064(a) of ERISA) has made  contributions at any time during
         the immediately preceding five (5) plan years.


                                                        11

<PAGE>



                  "Permitted Liens" has the meaning specified in
         Section 7.01.

                  "Permitted  Receivables"  shall  mean all  obligations  of any
         obligor  (whether now existing or hereafter  arising)  under a contract
         for  sale  of  goods  or   services  by  the  Company  or  any  of  its
         Subsidiaries,  which  shall  include  any  obligation  of such  obligor
         (whether now existing or hereafter  arising) to pay  interest,  finance
         charges or amounts with respect  thereto,  and,  with respect to any of
         the foregoing  receivables or  obligations,  (a) all of the interest of
         the Company or any of its Subsidiaries in the goods (including returned
         goods) the sale of which  gave rise to such  receivable  or  obligation
         after the passage of title thereto to any obligor,  (b) all other Liens
         and property  subject  thereto from time to time  purporting  to secure
         payment of such  receivables or  obligations,  and (c) all  guarantees,
         insurance,  letters of credit and other  agreements or  arrangements of
         whatever  character from time to time supporting or securing payment of
         any such receivables or obligations.

                  "Permitted  Receivables  Purchase  Facility"  shall  mean  any
         agreement  of the  Company  or any of its  Subsidiaries  providing  for
         sales,  transfers or conveyances of Permitted Receivables purporting to
         be  sales  (and  considered  sales  under  GAAP)  that do not  provide,
         directly  or  indirectly,  for  recourse  against  the  seller  of such
         Permitted  Receivables (or against any of such seller's  Affiliates) by
         way of a guaranty or any other support arrangement, with respect to the
         amount of such Permitted  Receivables (based on the financial condition
         or  circumstances of the obligor  thereunder),  other than such limited
         recourse as is reasonable  given market standards for transactions of a
         similar type,  taking into account such factors as historical  bad debt
         loss experience and obligor concentration levels.

                  "Permitted Swap Obligations" means all obligations (contingent
         or  otherwise)  of the  Company or any  Subsidiary  existing or arising
         under Swap Contracts,  provided that each of the following  criteria is
         satisfied:  (a) such  obligations  are (or were)  entered  into by such
         Person in the  ordinary  course of business for the purpose of directly
         mitigating  risks  associated with  liabilities,  commitments or assets
         held or reasonably  anticipated by such Person, or changes in the value
         of securities  issued by such Person in  conjunction  with a securities
         repurchase  program not  otherwise  prohibited  hereunder,  and not for
         purposes of  speculation  or taking a "market  view;" and (b) such Swap
         Contracts  do not contain  (i) any  provision  ("walk-away"  provision)
         exonerating  the  non-defaulting  party  from  its  obligation  to make
         payments on outstanding  transactions to the defaulting  party, or (ii)
         any provision  creating or permitting  the  declaration  of an event of
         default,

                                                        12

<PAGE>



         termination  event or similar event upon the  occurrence of an Event of
         Default  hereunder  (other  than an Event of Default  under  subsection
         8.01(a)).

                  "Person"  means  an  individual,   partnership,   corporation,
         limited liability company,  business trust, joint stock company, trust,
         unincorporated association, joint venture or Governmental Authority.

                  "Plan"  means an employee  benefit plan (as defined in Section
         3(3) of ERISA) which the Company  sponsors or maintains or to which the
         Company makes,  is making,  or is obligated to make  contributions  and
         includes any Pension Plan.

                  "Pro  Rata  Share"  means,  as to any  Bank at any  time,  the
         percentage  equivalent  (expressed  as a decimal,  rounded to the ninth
         decimal  place) at such time of such Bank's  Commitment  divided by the
         combined Commitments of all Banks.

                  "Quarterly Compliance Certificate" means a certificate
         substantially in the form of Exhibit C-1.

                  "Reference Bank" means BofA.

                  "Replacement Bank" has the meaning specified in
         Section 3.07.

                  "Reportable  Event"  means,  any of the  events  set  forth in
         Section 4043(c) of ERISA or the regulations thereunder,  other than any
         such event for which the 30-day notice requirement under ERISA has been
         waived in regulations issued by the PBGC.

                  "Requirement  of  Law"  means,  as  to  any  Person,  any  law
         (statutory or common),  treaty,  rule or regulation or determination of
         an arbitrator or of a Governmental  Authority,  in each case applicable
         to or binding  upon the Person or any of its  property  or to which the
         Person or any of its property is subject.

                  "Responsible Officer" means the chief executive officer or the
         president of the Company, or any other officer having substantially the
         same authority and responsibility;  or, with respect to compliance with
         financial  covenants,  the chief financial  officer or the treasurer of
         the  Company,  or any  other  officer  having  substantially  the  same
         authority and responsibility.

                  "Revolving Commitment," as to each Bank, has the
         meaning specified in Section 2.01.

                  "Revolving Loan" has the meaning specified in
         Section 2.01.

                                                        13

<PAGE>




                  "Revolving Termination Date" means the earlier to occur
         of:

                           (a)      February 12, 2001; and

                           (b)  the date on which the Commitments terminate
                  in accordance with the provisions of this Agreement.

                           "SEC" means the Securities and Exchange
         Commission, or any Governmental Authority succeeding to any
         of its principal functions.

                  "Subsidiary" of a Person means any  corporation,  association,
         partnership, limited liability company, joint venture or other business
         entity of which more than 50% of the voting stock, membership interests
         or  other  equity   interests  (in  the  case  of  Persons  other  than
         corporations),  is owned or  controlled  directly or  indirectly by the
         Person,  or one  or  more  of the  Subsidiaries  of  the  Person,  or a
         combination  thereof.  Unless the context  otherwise  clearly requires,
         references  herein  to a  "Subsidiary"  refer  to a  Subsidiary  of the
         Company.

                  "Surety  Instruments"  means all letters of credit  (including
         standby  and  commercial),   banker's  acceptances,   bank  guaranties,
         shipside bonds, surety bonds and similar instruments.

                  "Swap  Contract"  means  any  agreement,  whether  or  not  in
         writing,  relating to any transaction  that is a rate swap, basis swap,
         forward rate transaction,  commodity swap, commodity option,  equity or
         equity index swap or option,  bond, note or bill option,  interest rate
         option,  forward  foreign  exchange  transaction,  cap, collar or floor
         transaction,   currency  swap,   cross-currency  rate  swap,  swaption,
         currency option or any other, similar transaction (including any option
         to  enter  into  any  of  the  foregoing)  or  any  combination  of the
         foregoing,  and, unless the context  otherwise  clearly  requires,  any
         master agreement relating to or governing any or all of the foregoing.

                  "Swap Termination  Value" means, in respect of any one or more
         Swap  Contracts,  after  taking into  account the effect of any legally
         enforceable netting agreement relating to such Swap Contracts,  (a) for
         any date on or after the date such Swap  Contracts have been closed out
         and  termination  value(s)  determined  in accordance  therewith,  such
         termination value(s), and (b) for any date prior to the date referenced
         in clause (a) the amount(s)  determined as the mark-to-market  value(s)
         for such Swap Contracts,  as determined [by the Company] based upon one
         or more mid- market or other readily available  quotations  provided by
         any  recognized  dealer in such Swap  Contracts  (which may include any
         Bank).

                                                        14

<PAGE>




                  "Taxes"  means any and all  present or future  taxes,  levies,
         assessments, imposts, duties, deductions, fees, withholdings or similar
         charges,  and all liabilities with respect thereto,  excluding,  in the
         case of each Bank and the  Agent,  respectively,  taxes  imposed  on or
         measured  by its net  income  by the  jurisdiction  (or  any  political
         subdivision thereof) under the laws of which such Bank or the Agent, as
         the case may be, is organized or maintains a lending office.

                  "Type" has the meaning specified in the definition of
         "Loan."

                  "Unfunded  Pension  Liability"  means  the  excess of a Plan's
         benefit  liabilities  under  Section  4001(a)(16)  of  ERISA,  over the
         current value of that Plan's assets,  determined in accordance with the
         assumptions  used for funding the Pension Plan  pursuant to Section 412
         of the Code for the applicable plan year.

                  "United States" and "U.S." each means the United States
         of America.

                  "Vacation Credits" means ownership interests in WorldMark, The
         Club  that (i)  entitle  the  owner to use a  fully-furnished  vacation
         resort unit based on the number of Vacation Credits  purchased and (ii)
         are created through the transfer to WorldMark, the Club of resort units
         developed or purchased by the Company in exchange for the right to sell
         Vacation  Credits  in these  properties  based on the number of credits
         available,  as  determined  using a formula based on the number of user
         days available and the relative value of each property.

                  "Wholly-Owned  Subsidiary"  means  any  corporation  in  which
         (other than directors'  qualifying  shares required by law) 100% of the
         capital stock of each class having ordinary  voting power,  and 100% of
         the capital stock of every other class, in each case, at the time as of
         which any  determination  is being made, is owned,  beneficially and of
         record,  by the  Company,  or by one or more of the other  Wholly-Owned
         Subsidiaries, or both.

         1.02  Other Interpretive Provisions.

                  (a) The meanings of defined  terms are equally  applicable  to
the singular and plural forms of the defined terms.

                  (b) The words  "hereof",  "herein",  "hereunder"  and  similar
words refer to this Agreement as a whole and not to any particular  provision of
this Agreement; and subsection,  Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.


                                                        15

<PAGE>



                  (c) (i) The term "documents" includes any and all instruments,
         documents,  agreements,  certificates,  indentures,  notices  and other
         writings, however evidenced.

                           (ii)  The term "including" is not limiting and
         means "including without limitation."

                           (iii) In the  computation  of  periods of time from a
         specified date to a later  specified  date, the word "from" means "from
         and  including";   the  words  "to"  and  "until"  each  mean  "to  but
         excluding", and the word "through" means "to and including."

                  (d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications  thereto,
but  only  to the  extent  such  amendments  and  other  modifications  are  not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation  are to be construed as including  all  statutory  and  regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.

                  (e)  The  captions  and  headings  of this  Agreement  are for
convenience  of reference only and shall not affect the  interpretation  of this
Agreement.

                  (f) This  Agreement  and other Loan  Documents may use several
different  limitations,  tests or  measurements  to regulate the same or similar
matters.  All such limitations,  tests and measurements are cumulative and shall
each be performed in accordance  with their terms.  Unless  otherwise  expressly
provided,  any  reference  to any  action  of the  Agent or the  Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."

                  (g) This Agreement and the other Loan Documents are the result
of  negotiations  among and have been  reviewed  by counsel  to the  Agent,  the
Company and the other parties, and are the products of all parties. Accordingly,
they shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.

         1.03  Accounting Principles.

                  (a)  Unless  the  context  otherwise  clearly  requires,   all
accounting  terms not  expressly  defined  herein  shall be  construed,  and all
financial   computations  required  under  this  Agreement  shall  be  made,  in
accordance with GAAP, consistently applied.

                  (b)      References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.


                                                        16

<PAGE>





                                   ARTICLE II

                                   THE CREDITS

         2.01  Amounts and Terms of Commitments.

                  (a) The Revolving  Credit.  Each Bank severally agrees, on the
terms and conditions  set forth herein,  to make loans to the Company (each such
loan,  a  "Revolving  Loan")  from time to time on any  Business  Day during the
period from the Closing Date to the Revolving  Termination Date, in an aggregate
amount not to exceed at any time  outstanding  the amount set forth on  Schedule
2.01 (such amount,  as the same may be reduced under Section 2.05 or as a result
of one or more  assignments  under Section 10.08, the Bank's  "Revolving  Credit
Commitment");  provided,  however, that, after giving effect to any Borrowing of
Revolving  Loans, the aggregate  principal  amount of all outstanding  Revolving
Loans shall not at any time exceed the combined Revolving Credit Commitments.

                  (b)  Within  the  limits  of  each  Bank's   Revolving  Credit
Commitment,  and subject to the other terms and conditions  hereof,  the Company
may borrow, prepay, and reborrow.

         2.02  Loan Accounts.

                  (a) The Loans made by each Bank shall be  evidenced  by one or
more loan accounts or records  maintained by such Bank in the ordinary course of
business.  The loan  accounts or records  maintained  by the Agent and each Bank
shall be, absent manifest error,  conclusive evidence of the amount of the Loans
made by the Banks to the Company and the  interest  and  payments  thereon.  Any
failure  so to  record  or any error in doing so shall  not,  however,  limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.

                  (b) Upon the request of any Bank made  through the Agent,  the
Loans made by such Bank may be evidenced by one or more Notes,  instead of or in
addition to loan accounts. Each such Bank shall endorse on the schedules annexed
to its  Note(s)  the date,  amount and  maturity of each Loan made by it and the
amount of each  payment of principal  made by the Company with respect  thereto.
Each such Bank is  irrevocably  authorized by the Company to endorse its Note(s)
and each Bank's  record shall be conclusive  absent  manifest  error;  provided,
however,  that the failure of a Bank to make, or an error in making,  a notation
thereon  with  respect  to any Loan  shall not  limit or  otherwise  affect  the
obligations of the Company hereunder or under any such Note to such Bank.


                                                        17

<PAGE>



         2.03  Procedure for Borrowing.

                  (a)  Each   Borrowing   shall  be  made  upon  the   Company's
irrevocable  written  notice  delivered  to the Agent in the form of a Notice of
Borrowing (which notice must be received by the Agent prior to 9:00 a.m. Seattle
time) (i) three Business Days prior to the requested Borrowing Date, in the case
of Offshore Rate Loans; and (ii) on the requested Borrowing Date, in the case of
Base Rate Loans, specifying:

                                    (A) the amount of the Borrowing, which shall
                  be in  an  aggregate  minimum  amount  of  $1,000,000  or  any
                  multiple of $100,000 in excess thereof;

                                    (B)     the requested Borrowing Date, which
                  shall be a Business Day;

                                    (C)     the Type of Loans comprising the
                  Borrowing; and

                                    (D)  the  duration  of the  Interest  Period
                  applicable to any Offshore Rate Loans included in such notice.
                  If the Notice of  Borrowing  fails to specify the  duration of
                  the Interest  Period for any  Borrowing  comprised of Offshore
                  Rate Loans, such Interest Period
                  shall be three months.

                  (b) The Agent will promptly notify each Bank of its receipt of
any Notice of Borrowing of a Revolving Loan and of the amount of such Bank's Pro
Rata Share of that Borrowing.

                  (c) Each Bank will make available to the Agent for the account
of the Company at the Agent's Payment Office by 11:00 a.m. (Seattle time) on the
Borrowing  Date requested by the Company in funds  immediately  available to the
Agent the amount of such Bank's Pro Rata Share of each  Borrowing of a Revolving
Loan.  The proceeds of all such Loans will then be made available to the Company
by the Agent at such office by crediting the account of the Company on the books
of BofA with the  aggregate  of the amounts  made  available to the Agent by the
Banks and in like funds as received by the Agent.

                  (d) After  giving  effect to any  Borrowing,  unless the Agent
shall  otherwise  consent,  there  may not be more than six  different  Interest
Periods in effect.

         2.04  Conversion and Continuation Elections.  (a)  The
Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.04(b):

                           (i) elect,  as of any  Business  Day,  in the case of
         Base Rate Loans (other than Swing Loans),  or as of the last day of the
         applicable  Interest  Period,  in the case of Offshore  Rate Loans,  to
         convert any such Loans (or any part

                                                        18

<PAGE>



         thereof  in an  amount  not  less  than  $1,000,000,  or  that is in an
         integral  multiple  of $100,000  in excess  thereof)  into Loans of any
         other Type; or

                           (ii)  elect,  as of the  last  day of the  applicable
         Interest Period, to continue any Loans having Interest Periods expiring
         on such day (or any part thereof in an amount not less than $1,000,000,
         or that is in an integral multiple of $100,000 in excess thereof);

provided,  that if at any time the  aggregate  amount of Offshore  Rate Loans in
respect of any Borrowing is reduced,  by payment,  prepayment,  or conversion of
part  thereof  to be less  than  $1,000,000,  such  Offshore  Rate  Loans  shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into,  Offshore
Rate Loans shall terminate.

                  (b)    The    Company    shall    deliver    a    Notice    of
Conversion/Continuation  to be  received  by the Agent not later  than 9:00 a.m.
(Seattle   time)  at  least  (i)  three   Business   Days  in   advance  of  the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore  Rate Loans;  and (ii) on the  Conversion/Continuation  Date, if the
Loans are to be converted into Base Rate Loans, specifying:

                                    (A)     the proposed Conversion/Continuation
                  Date;

                                    (B)     the aggregate amount of Loans to be
                  converted or continued;

                                    (C)     the Type of Loans resulting from the
                  proposed conversion or continuation; and

                                    (D)  other  than in the case of  conversions
                  into Base Rate Loans,  the duration of the requested  Interest
                  Period.

                  (c) If upon the expiration of any Interest  Period  applicable
to Offshore  Rate Loans,  the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans,  or if any Default or Event
of Default then exists,  the Company  shall be deemed to have elected to convert
such  Offshore  Rate Loans into Base Rate Loans  effective as of the  expiration
date of such Interest Period.

                  (d) The Agent will promptly notify each Bank of its receipt of
a Notice of Conversion/Continuation,  or, if no timely notice is provided by the
Company,  the  Agent  will  promptly  notify  each  Bank of the  details  of any
automatic  conversion.  All conversions and continuations  shall be made ratably
according  to the  respective  outstanding  principal  amounts of the Loans with
respect to which the notice was given held by each Bank.

                                                        19

<PAGE>




                  (e) Unless the Majority Banks  otherwise  consent,  during the
existence of a Default or Event of Default,  the Company may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.

                  (f) After giving effect to any conversion or  continuation  of
Loans, unless the Agent shall otherwise consent,  there may not be more than six
different Interest Periods in effect.

        2.05  Voluntary Termination or Reduction of Commitments.  The
Company may, upon not less than five Business Days' prior notice
to the Agent, terminate the Commitments, or permanently reduce
the Commitments by an aggregate minimum amount of $1,000,000 or
any multiple of $100,000 in excess thereof; unless, after giving
effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding principal amount of
the Loans would exceed the amount of the combined Commitments
then in effect.  Once reduced in accordance with this Section,
the Commitments may not be increased.  Any reduction of the
Commitments shall be applied to each Bank according to its Pro
Rata Share.  All accrued commitment fees to, but not including
the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such
reduction or termination.


        2.06 Repayment.  The Company shall repay to the Agent for the account of
the Banks on the Revolving  Termination  Date the aggregate  principal amount of
Loans outstanding on such date.

        2.07  Interest.

                (a) Each Revolving  Loan shall bear interest on the  outstanding
principal amount thereof from the applicable  Borrowing Date at a rate per annum
equal to the Offshore  Rate or the Base Rate, as the case may be (and subject to
the Company's right to convert to other Types of Loans under Section 2.04), plus
the Applicable Margin.

                (b)  Interest  on each  Loan  shall be paid in  arrears  on each
Interest  Payment Date.  During the existence of any Event of Default,  interest
shall be paid on demand of the Agent at the  request or with the  consent of the
Majority Banks.

                (c)  Notwithstanding  subsection  (a) of  this  Section,  if any
amount of  principal  of or interest on any Loan,  or any other  amount  payable
hereunder or under any other Loan Document is not paid in full when due (whether
at stated maturity, by acceleration, demand or otherwise), the Company agrees to
pay interest on such unpaid principal or other amount, from the date such amount
becomes  due until the date  such  amount is paid in full,  and after as well as
before any entry of judgment thereon

                                                        20

<PAGE>



to the extent  permitted by law,  payable on demand,  at a fluctuating  rate per
annum equal to the Base Rate plus 2%.

                (d)  Anything  herein  to  the  contrary  notwithstanding,   the
obligations  of the  Company  to any  Bank  hereunder  shall be  subject  to the
limitation  that  payments of interest  shall not be required for any period for
which  interest  is computed  hereunder,  to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the  provisions of any law  applicable to such Bank limiting the highest rate of
interest that may be lawfully  contracted for, charged or received by such Bank,
and in such event the Company  shall pay such Bank  interest at the highest rate
permitted by applicable law.

        2.08  Fees.

                (a)   Arrangement,   Agency  Fees.  The  Company  shall  pay  an
arrangement fee to the Arranger for the Arranger's own account, and shall pay an
agency fee to the Agent for the Agent's own  account,  as required by the letter
agreement  ("Fee  Letter")  between the Company and the Arranger and Agent dated
November 18, 1997.

                (b) Commitment  Fees. The Company shall pay to the Agent for the
account of each Bank a commitment  fee on the average  daily  unused  portion of
such Bank's  Revolving  Commitment,  computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon the daily  utilization
for that  quarter  as  calculated  by the Agent,  equal to 0.3% per annum.  Such
commitment  fee shall accrue from the Closing Date to the Revolving  Termination
Date and shall be due and payable  quarterly in arrears on the last Business Day
of each quarter  commencing on March 31, 1998 through the Revolving  Termination
Date,  with the final  payment  to be made on the  Revolving  Termination  Date;
provided  that, in connection  with any reduction or  termination of Commitments
under Section 2.05, the accrued  commitment fee calculated for the period ending
on such date shall also be paid on the date of such  reduction  or  termination,
with the following quarterly payment being calculated on the basis of the period
from such  reduction or  termination  date to such  quarterly  payment date. The
commitment fees provided in this subsection  shall accrue at all times after the
above-mentioned  commencement  date,  including  at any time during which one or
more conditions in Article IV are not met.

        2.09  Computation of Fees and Interest.

                (a) All  computations  of interest  for Base Rate Loans when the
Base Rate is determined by BofA's "reference rate" shall be made on the basis of
a year of 365 or 366 days,  as the case may be, and  actual  days  elapsed.  All
other  computations of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed (which results in more interest being paid

                                                        21

<PAGE>



than if computed on the basis of a 365-day year). Interest and fees shall accrue
during each period  during  which  interest or such fees are  computed  from the
first day thereof to the last day thereof.

                (b) Each determination of an interest rate by the Agent shall be
conclusive  and  binding on the Company and the Banks in the absence of manifest
error. The Agent will, at the request of the Company or any Bank, deliver to the
Company or the Bank, as the case may be, a statement showing the quotations used
by the Agent in determining any interest rate and the resulting interest rate.

        2.10  Payments by the Company.

                (a) All payments to be made by the Company shall be made without
set-off,  recoupment,  counterclaim  or other  deduction.  Except  as  otherwise
expressly  provided  herein,  all  payments by the Company  shall be made to the
Agent for the account of the Banks at the Agent's Payment  Office,  and shall be
made in dollars and in  immediately  available  funds,  no later than 11:00 a.m.
(Seattle time) on the date specified herein. The Agent will promptly  distribute
to each Bank its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received.  Any payment  received by the
Agent later than 11:00 a.m. (Seattle time) shall be deemed to have been received
on the following Business Day and any applicable  interest or fee shall continue
to accrue.

                (b) Subject to the  provisions  set forth in the  definition  of
"Interest  Period"  herein,  whenever  any  payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the  computation of interest
or fees, as the case may be.

                (c) Unless the Agent  receives  notice from the Company prior to
the date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so  required),  in reliance  upon such
assumption,  distribute  to each  Bank on such due date an  amount  equal to the
amount  then due such Bank.  If and to the extent the  Company has not made such
payment in full to the Agent,  each Bank shall repay to the Agent on demand such
amount  distributed to such Bank,  together with interest thereon at the Federal
Funds Rate for each day from the date such  amount is  distributed  to such Bank
until the date repaid.

        2.11  Payments by the Banks to the Agent.

                (a)          Unless the Agent receives notice from a Bank on
or prior to the Closing Date or, with respect to any Borrowing

                                                        22

<PAGE>



after the  Closing  Date,  at least one  Business  Day prior to the date of such
Borrowing, that such Bank will not make available as and when required hereunder
to the Agent for the  account of the  Company the amount of that Bank's Pro Rata
Share of the Borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately  available funds on the Borrowing Date and
the Agent may (but shall not be so required),  in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and to the
extent any Bank shall not have made its full  amount  available  to the Agent in
immediately  available  funds  and the  Agent  in such  circumstances  has  made
available  to the  Company  such  amount,  that Bank shall on the  Business  Day
following such Borrowing Date make such amount available to the Agent,  together
with  interest at the  Federal  Funds Rate for each day during  such  period.  A
notice of the Agent  submitted to any Bank with  respect to amounts  owing under
this  subsection (a) shall be conclusive,  absent manifest error. If such amount
is so made  available,  such payment to the Agent shall  constitute  such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such amount
is not made  available to the Agent on the Business Day  following the Borrowing
Date, the Agent will notify the Company of such failure to fund and, upon demand
by the Agent,  the  Company  shall pay such  amount to the Agent for the Agent's
account,  together with interest  thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.

                (b) The  failure  of any Bank to make any Loan on any  Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a Loan
on such Borrowing  Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.

        2.12  Sharing of Payments,  Etc.  If,  other than as expressly  provided
elsewhere  herein,  any Bank shall obtain on account of the Loans made by it any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or  otherwise)  in  excess  of  its  ratable  share  (or  other  share
contemplated  hereunder),  such Bank shall  immediately  (a) notify the Agent of
such fact,  and (b)  purchase  from the other Banks such  participations  in the
Loans made by them as shall be necessary to cause such  purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all or
any portion of such excess  payment is thereafter  recovered from the purchasing
Bank,  such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor,  together with an
amount equal to such paying Bank's ratable share (according to the proportion of
(i) the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the  purchasing  Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.  The
Company agrees that any Bank so purchasing a participation from another Bank

                                                        23

<PAGE>



may, to the fullest extent permitted by law,  exercise all its rights of payment
(including  the right of set-off,  but subject to Section 10.10) with respect to
such  participation  as fully as if such Bank were the  direct  creditor  of the
Company in the amount of such participation.  The Agent will keep records (which
shall  be  conclusive  and  binding  in  the  absence  of  manifest   error)  of
participations  purchased  under this  Section  and will in each case notify the
Banks following any such purchases or repayments.


                                   ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

        3.01  Other Taxes.  The Company shall pay all Other Taxes.

        3.02  Illegality.

                (a)  If  any  Bank  determines  that  the  introduction  of  any
Requirement  of  Law,  or  any  change  in any  Requirement  of  Law,  or in the
interpretation  or  administration  of any  Requirement  of  Law,  has  made  it
unlawful, or that any central bank or other Governmental  Authority has asserted
that it is  unlawful,  for any Bank or its  applicable  Lending  Office  to make
Offshore Rate Loans,  then, on notice thereof by the Bank to the Company through
the Agent,  any  obligation  of that Bank to make  Offshore  Rate Loans shall be
suspended   until  the  Bank  notifies  the  Agent  and  the  Company  that  the
circumstances giving rise to such determination no longer exist.

                (b) If a Bank  determines  that it is unlawful  to maintain  any
Offshore Rate Loan, the Company  shall,  upon its receipt of notice of such fact
and  demand  from  such  Bank  (with a copy to the  Agent),  prepay in full such
Offshore  Rate  Loans of that  Bank then  outstanding,  together  with  interest
accrued thereon and amounts required under Section 3.04,  either on the last day
of the Interest  Period thereof,  if the Bank may lawfully  continue to maintain
such  Offshore  Rate  Loans to such  day,  or  immediately,  if the Bank may not
lawfully  continue  to  maintain  such  Offshore  Rate Loan.  If the  Company is
required  to so prepay any  Offshore  Rate  Loan,  then  concurrently  with such
prepayment,  the Company  shall borrow from the affected  Bank, in the amount of
such repayment, a Base Rate Loan.

                (c) If the  obligation of any Bank to make or maintain  Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank  through the Agent that all Loans which  would  otherwise  be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.

                (d) Before  giving any notice to the Agent  under this  Section,
the affected Bank shall designate a different Lending Office with respect to its
Offshore  Rate Loans if such  designation  will  avoid the need for giving  such
notice or making

                                                        24

<PAGE>



such demand and will not, in the  judgment of the Bank,  be illegal or otherwise
disadvantageous to the Bank.

        3.03  Increased Costs and Reduction of Return.

                (a)  If  any  Bank  determines  that,  due  to  either  (i)  the
introduction  of or any change (other than any change by way of imposition of or
increase in reserve  requirements  included in the  calculation  of the Offshore
Rate or in respect of the  assessment  rate  payable by any Bank to the FDIC for
insuring U.S.  deposits) in or in the interpretation of any law or regulation or
(ii) the  compliance by that Bank with any guideline or request from any central
bank or other  Governmental  Authority (whether or not having the force of law),
there  shall be any  increase  in the cost to such Bank of  agreeing  to make or
making,  funding or maintaining any Offshore Rate Loans,  then the Company shall
be liable for,  and shall from time to time,  upon  demand  (with a copy of such
demand to be sent to the Agent),  pay to the Agent for the account of such Bank,
additional  amounts as are sufficient to compensate such Bank for such increased
costs.

                (b) If any Bank shall have determined that (i) the  introduction
of any Capital  Adequacy  Regulation,  (ii) any change in any  Capital  Adequacy
Regulation,  (iii) any change in the  interpretation  or  administration  of any
Capital Adequacy Regulation by any central bank or other Governmental  Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending  Office) or any  corporation  controlling the Bank with
any Capital Adequacy  Regulation,  affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and  (taking  into  consideration  such  Bank's  or such  corporation's
policies  with  respect to capital  adequacy and such Bank's  desired  return on
capital)  determines  that  the  amount  of  such  capital  is  increased  as  a
consequence  of  its  Commitment,  loans,  credits  or  obligations  under  this
Agreement,  then, upon demand of such Bank to the Company through the Agent, the
Company  shall pay to the  Bank,  from  time to time as  specified  by the Bank,
additional amounts sufficient to compensate the Bank for such increase.

        3.04 Funding Losses. The Company shall reimburse each Bank and hold each
Bank  harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:

                (a)  the failure of the Company to make on a timely
basis any payment of principal of any Offshore Rate Loan;

                (b) the failure of the Company to borrow,  continue or convert a
Loan  after the  Company  has  given  (or is  deemed to have  given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;


                                                        25

<PAGE>



                (c)  the   prepayment   or  other   payment   (including   after
acceleration thereof) of an Offshore Rate Loan on a day that is not the last day
of the relevant Interest Period; or

                (d) the automatic  conversion under Section 2.04 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the  relevant
Interest Period;

including any such loss or expense  arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were  obtained.  For purposes of
calculating  amounts  payable by the Company to the Banks under this Section and
under  subsection  3.03(a),  each  Offshore  Rate  Loan made by a Bank (and each
related reserve,  special deposit or similar  requirement) shall be conclusively
deemed to have been funded at the LIBOR used in  determining  the Offshore  Rate
for such  Offshore  Rate Loan by a matching  deposit or other  borrowing  in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.

        3.05 Inability to Determine  Rates. If the Agent determines that for any
reason  adequate and reasonable  means do not exist for determining the Offshore
Rate for any requested  Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate  applicable  pursuant to subsection  2.07(a) for
any requested Interest Period with respect to a proposed Offshore Rate Loan does
not  adequately  and fairly  reflect the cost to the Banks of funding such Loan,
the Agent will  promptly so notify the Company  and each Bank.  Thereafter,  the
obligation of the Banks to make or maintain  Offshore Rate Loans hereunder shall
be suspended  until the Agent  revokes  such notice in writing.  Upon receipt of
such  notice,  the  Company  may  revoke any  Notice of  Borrowing  or Notice of
Conversion/Continuation  then  submitted  by it. If the Company  does not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Company,  in the amount specified in the applicable  notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.

        3.06   Certificates  of  Banks.  Any  Bank  claiming   reimbursement  or
compensation under this Article III shall deliver to the Company (with a copy to
the Agent) a certificate  setting forth in reasonable  detail the amount payable
to the Bank  hereunder and such  certificate  shall be conclusive and binding on
the Company in the absence of manifest error.

        3.07  Substitution  of Banks.  Upon the receipt by the Company  from any
Bank (an "Affected  Bank") of a claim for  compensation  under Section 3.03, the
Company may:  (i) request the Affected  Bank to use its best efforts to obtain a
replacement  bank or financial  institution  (which shall,  in any event,  be an
Eligible Assignee) satisfactory to the Company to acquire and assume all

                                                        26

<PAGE>



or a  ratable  part of all of such  Affected  Bank's  Loans  and  Commitment  (a
"Replacement  Bank");  (ii)  request  one more of the other Banks to acquire and
assume  all or part of such  Affected  Bank's  Loans  and  Commitment;  or (iii)
designate a Replacement  Bank. Any such  designation of a Replacement Bank under
clause (i) or (iii), or of an existing Bank under clause (ii),  shall be subject
to  the  prior  written  consent  of  the  Agent  (which  consent  shall  not be
unreasonably  withheld) and shall be effected in accordance  with the assignment
provisions contained in Section 10.08; provided, however, that the Company shall
be liable to any Affected  Bank for any amounts  arising under Section 3.04 as a
result of a Bank's or Replacement  Bank's  acquisition  of such Affected  Bank's
Commitment or Loans on a date other than the last day of the applicable Interest
Period for Offshore Loans then outstanding.

        3.08 Survival.  The  agreements  and  obligations of the Company in this
Article III shall survive the payment of all other Obligations.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

        4.01  Conditions of Initial  Loans.  The obligation of each Bank to make
its initial Loan hereunder is subject to the condition that the Agent shall have
received  on or  before  the  Closing  Date  all of the  following,  in form and
substance  satisfactory to the Agent and each Bank, and in sufficient copies for
each Bank:

                (a)          Credit Agreement.  This Agreement executed by
each party thereto;

                (b)          Resolutions; Incumbency.

                             (i)  Copies of the resolutions of the board of
        directors of the Company authorizing the transactions
        contemplated hereby, certified as of the Closing Date by the
        Secretary or an Assistant Secretary of the Company; and

                             (ii)  A certificate of the Secretary or Assistant
        Secretary of the Company certifying the names and true signatures of the
        officers of the Company authorized to execute,  deliver and perform,  as
        applicable, this Agreement, and all other Loan Documents to be delivered
        by it hereunder;


                (c)          Organization Documents; Good Standing. Each of
the following documents:

                             (i)  the articles or certificate of incorporation
        and the bylaws of the Company as in effect on the Closing

                                                        27

<PAGE>



        Date, certified by the Secretary or Assistant Secretary of
        the Company as of the Closing Date; and

                             (ii)  a good standing certificate for the Company
        from the Secretary of State of Oregon and the Secretary of
        State of Washington.

                (d) Legal  Opinions.  An  opinion  of Robert  Klein,  Washington
counsel to the Company,  and of Heidi Neel, Oregon counsel to the Company,  each
addressed  to the Agent,  substantially  in the form of Exhibit  D-1 and Exhibit
D-2, respectively.

                (e)  Payment of Fees.  Evidence of payment by the Company of all
accrued and unpaid  fees,  costs and expenses to the extent then due and payable
on the Closing Date,  together  with  Attorney  Costs of the Agent to the extent
invoiced  prior to or on the  Closing  Date,  plus such  additional  amounts  of
Attorney Costs as shall constitute the Agent's  reasonable  estimate of Attorney
Costs incurred or to be incurred by it through the closing proceedings (provided
that such estimate  shall not  thereafter  preclude  final  settling of accounts
between the Company and the Agent);  including any such costs, fees and expenses
arising under or referenced in Sections 2.08 and 10.04;

                (f)          Certificate.  A certificate signed by a
Responsible Officer, dated as of the Closing Date, stating that:

                             (i)  the representations and warranties contained
        in Article V are true and correct on and as of such date, as
        though made on and as of such date;

                             (ii)  no Default or Event of Default exists or
        would result from the initial Borrowing; and

                             (iii)  there has occurred since December 31,
        1996, no event or circumstance that has resulted or could
        reasonably be expected to result in a Material Adverse
        Effect; and

                (g)          Other Documents.  Such other approvals, opinions,
documents or materials as the Agent or any Bank may request.

        4.02 Conditions to All  Borrowings.  The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under  Section  2.04 is subject to the  satisfaction  of the  following
conditions  precedent on the relevant Borrowing Date or  Conversion/Continuation
Date:

                (a)          Notice of Borrowing or Conversion/Continuation.
The Agent shall have received (with, in the case of the initial
Loan only, a copy for each Bank) a Notice of Borrowing or a
Notice of Conversion/Continuation, as applicable;


                                                        28

<PAGE>



                (b)  Continuation  of   Representations   and  Warranties.   The
representations  and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/  Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such  representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date); and

                (c)          No Existing Default.  No Default or Event of
Default shall exist or shall result from such Borrowing or
continuation or conversion.

                (d) In the case of a Borrowing,  the total  principal  amount of
Loans  outstanding  as a result of Loans  made on any  Borrowing  Date shall not
exceed the sum of (i) 50% of inventory,  including (x) costs of unsold  Vacation
Credits and (y)  construction in progress,  and (ii) 75% of  Unencumbered  Notes
Receivable,  determined  in each case as of the date of the most recent  Monthly
Compliance  Certificate furnished pursuant to subsection 6.02(c).  "Unencumbered
Notes Receivable" means notes receivable, net of allowance for doubtful accounts
and sales returns and net of residual interest in notes receivable sold.

Each Notice of Borrowing and Notice of Conversion/Continuation  submitted by the
Company hereunder shall constitute a representation  and warranty by the Company
hereunder,  as of the date of each such notice and as of each  Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.02 are satisfied.


                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

        The Company represents and warrants to the Agent and each Bank that:

        5.01  Corporate Existence and Power.  The Company and each of
its Subsidiaries:

                (a)          is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;

                (b) has the power and authority and all  governmental  licenses,
authorizations,  consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;


                                                        29

<PAGE>



                (c) is duly qualified as a foreign  corporation  and is licensed
and in good standing  under the laws of each  jurisdiction  where its ownership,
lease or  operation  of property or the conduct of its  business  requires  such
qualification or license; and

                (d) is in compliance with all  Requirements of Law;  except,  in
each case  referred  to in clause  (c) or clause  (d),  to the  extent  that the
failure to do so could not  reasonably  be expected  to have a Material  Adverse
Effect.

        5.02 Corporate Authorization; No Contravention.  The execution, delivery
and performance by the Company of this Agreement and each other Loan Document to
which the Company is party, have been duly authorized by all necessary corporate
action, and do not and will not:

                (a)          contravene the terms of any of the Company's
Organization Documents;

                (b) conflict with or result in any breach or  contravention  of,
or the  creation of any Lien under,  any  document  evidencing  any  Contractual
Obligation  to which the  Company is a party or any order,  injunction,  writ or
decree of any  Governmental  Authority  to which the Company or its  property is
subject; or

                (c)          violate any Requirement of Law.

        5.03  Governmental  Authorization.   No  approval,  consent,  exemption,
authorization,   or  other  action  by,  or  notice  to,  or  filing  with,  any
Governmental   Authority  is  necessary  or  required  in  connection  with  the
execution,  delivery or performance by, or enforcement  against,  the Company or
any of its Subsidiaries of the Agreement or any other Loan Document.

        5.04 Binding  Effect.  This  Agreement  and each other Loan  Document to
which the Company is a party constitute the legal, valid and binding obligations
of the  Company,  enforceable  against  the  Company  in  accordance  with their
respective  terms,  except  as  enforceability  may  be  limited  by  applicable
bankruptcy,  insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.

        5.05  Litigation.  Except as  specifically  disclosed in Schedule  5.05,
there are no actions, suits, proceedings,  claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental  Authority,  against the Company,  or its
Subsidiaries or any of their respective properties which:




                                                        30

<PAGE>



                (a)          purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or

                (b) if determined  adversely to the Company or its Subsidiaries,
would reasonably be expected to have a Material  Adverse Effect.  No injunction,
writ, temporary  restraining order or any order of any nature has been issued by
any court or other Governmental  Authority  purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or  directing  that the  transactions  provided  for  herein or  therein  not be
consummated as herein or therein provided.

        5.06 No Default.  No Default or Event of Default  exists or would result
from the incurring of any  Obligations  by the Company.  As of the Closing Date,
neither the Company nor any  Subsidiary  is in default  under or with respect to
any Contractual  Obligation in any respect which,  individually or together with
all such  defaults,  could  reasonably  be expected  to have a Material  Adverse
Effect,  or that would,  if such  default had occurred  after the Closing  Date,
create an Event of Default under subsection 8.01(e).

        5.07  ERISA Compliance.  Except as specifically disclosed in
Schedule 5.07:

                (a) Each Plan is in compliance in all material respects with the
applicable  provisions  of ERISA,  the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has requested
a favorable  determination  letter from the IRS and to the best knowledge of the
Company,  nothing has occurred which would prevent receipt of such a letter. The
Company and each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no  application  for a funding waiver or
an extension of any amortization  period pursuant to Section 412 of the Code has
been made with respect to any Plan.

                (b) There are no pending or, to the best  knowledge  of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could  reasonably  be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary  responsibility  rules with respect to any Plan which
has  resulted or could  reasonably  be expected to result in a Material  Adverse
Effect.

                (c) (i) No ERISA Event has occurred or is reasonably expected to
occur;  (ii) no Pension Plan has any Unfunded Pension  Liability;  (iii) neither
the Company nor any ERISA  Affiliate  has  incurred,  or  reasonably  expects to
incur,  any  liability  under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA);



                                                        31

<PAGE>



(iv) neither the Company nor any ERISA  Affiliate  has  incurred,  or reasonably
expects to incur,  any  liability  (and no event has  occurred  which,  with the
giving of notice under  Section 4219 of ERISA,  would result in such  liability)
under Section 4201 or 4243 of ERISA with respect to a  Multiemployer  Plan;  and
(v) neither the Company  nor any ERISA  Affiliate  has engaged in a  transaction
that could be subject to Section 4069 or 4212(c) of ERISA.

        5.08 Use of Proceeds; Margin Regulations.  The proceeds of the Loans are
to be used solely for the  purposes  set forth in and  permitted by Section 6.12
and Section 7.07. Neither the Company nor any Subsidiary is generally engaged in
the business of purchasing or selling  Margin Stock or extending  credit for the
purpose of purchasing or carrying Margin Stock.

        5.09 Title to  Properties.  The  Company and each  Subsidiary  have good
record and marketable  title in fee simple to, or valid leasehold  interests in,
all real property  necessary or used in the ordinary conduct of their respective
businesses,  except for such defects in title as could not,  individually  or in
the  aggregate,  have a Material  Adverse  Effect.  As of the Closing Date,  the
property of the Company and its Subsidiaries is subject to no Liens,  other than
Permitted Liens.

        5.10 Taxes. The Company and its Subsidiaries  have filed all Federal and
other material tax returns and reports  required to be filed,  and have paid all
Federal  and other  material  taxes,  assessments,  fees and other  governmental
charges  levied  or  imposed  upon  them or their  properties,  income or assets
otherwise due and payable,  except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.

        5.11  Financial Condition.

                (a)  The  unaudited  consolidated  financial  statements  of the
Company  and  its  Subsidiaries  dated  September  30,  1997,  and  the  related
consolidated  statements of income or operations,  shareholders' equity and cash
flows for the fiscal year ended on that date:

                             (i)  were prepared in accordance with GAAP
        consistently  applied  throughout the period covered thereby,  except as
        otherwise expressly noted therein,  subject to ordinary, good faith year
        end audit adjustments;

                             (ii)  fairly present the financial condition of
        the Company and its Subsidiaries as of the date thereof and
        results of operations for the period covered thereby; and

                             (iii)  except as specifically disclosed in
        Schedule 5.11, show all material indebtedness and other

                                                        32

<PAGE>



        liabilities,  direct or contingent,  of the Company and its consolidated
        Subsidiaries  as of the date thereof,  including  liabilities for taxes,
        material commitments and Contingent Obligations.

                (b)          Since September 30, 1997, there has been no
Material Adverse Effect.

        5.12 Environmental  Matters. The Company conducts in the ordinary course
of business a review of the effect of existing  Environmental  Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof  the Company  has  reasonably  concluded  that,  except as  specifically
disclosed in Schedule 5.12, such  Environmental  Laws and  Environmental  Claims
could not,  individually  or in the aggregate,  reasonably be expected to have a
Material Adverse Effect.

        5.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment  Company Act of 1940. The Company is not subject to regulation  under
the Public  Utility  Holding  Company Act of 1935,  the Federal  Power Act,  the
Interstate  Commerce Act, any state public  utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.

        5.14 No Burdensome Restrictions.  Neither the Company nor any Subsidiary
is a  party  to or  bound  by any  Contractual  Obligation,  or  subject  to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.

        5.15 Copyrights,  Patents,  Trademarks and Licenses, etc. The Company or
its  Subsidiaries  own or are licensed or otherwise have the right to use all of
the patents,  trademarks,  service marks, trade names,  copyrights,  contractual
franchises,  authorizations  and other rights that are reasonably  necessary for
the operation of their respective  businesses,  without conflict with the rights
of any other Person.  To the best  knowledge of the Company,  no slogan or other
advertising device, product,  process, method, substance, part or other material
now  employed,  or  now  contemplated  to be  employed,  by the  Company  or any
Subsidiary  infringes  upon any  rights  held by any  other  Person.  Except  as
specifically disclosed in Schedule 5.05, no claim or litigation regarding any of
the  foregoing  is pending or  threatened,  and no  patent,  invention,  device,
application,  principle or any statute, law, rule, regulation,  standard or code
is pending or, to the knowledge of the Company, proposed, which, in either case,
could reasonably be expected to have a Material Adverse Effect.

        5.16  Subsidiaries.  The Company has no Subsidiaries other
than those specifically disclosed in part (a) of Schedule 5.16
hereto and has no equity investments in any other corporation or

                                                        33

<PAGE>



entity other than those specifically disclosed in part (b) of
Schedule 5.16.

        5.17 Insurance.  Except as specifically  disclosed in Schedule 5.17, the
properties  of the Company and its  Subsidiaries  are insured  with  financially
sound and reputable  insurance  companies not Affiliates of the Company, in such
amounts,  with such  deductibles  and  covering  such  risks as are  customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company or such Subsidiary operates.

        5.18 Swap  Obligations.  Neither the Company nor any of its Subsidiaries
has incurred any outstanding  obligations  under any Swap Contracts,  other than
Permitted  Swap  Obligations.  The Company has  undertaken  its own  independent
assessment of its  consolidated  assets,  liabilities  and  commitments  and has
considered  appropriate  means of mitigating and managing risks  associated with
such matters and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.

        5.19 Full Disclosure.  None of the representations or warranties made by
the  Company  or any  Subsidiary  in the  Loan  Documents  as of the  date  such
representations  and  warranties  are  made  or  deemed  made,  and  none of the
statements contained in any exhibit,  report, statement or certificate furnished
by or on behalf of the Company or any  Subsidiary  in  connection  with the Loan
Documents  (including the offering and disclosure  materials  delivered by or on
behalf of the  Company to the Banks  prior to the Closing  Date),  contains  any
untrue  statement of a material  fact or omits any material  fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.


                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

        So long as any Bank shall have any Commitment hereunder,  or any Loan or
other Obligation  shall remain unpaid or unsatisfied,  unless the Majority Banks
waive compliance in writing:

        6.01  Financial Statements.  The Company shall deliver to the
Agent and each Bank, in form and detail satisfactory to the Agent
and the Majority Banks:

                (a) As soon as  available  and in any event within 60 days after
the close of each  fiscal  quarter  of  Company  (90 days after the close of the
fourth quarter), its unaudited (1) consolidated balance sheet of the Company and
its consolidated subsidiaries as at the end of such fiscal quarter

                                                        34

<PAGE>



setting forth in comparative form the corresponding figures as at the end of the
preceding   fiscal   quarter,   and  (2)   consolidated   statement  of  income,
shareholders'  equity,  and  cash  flows  of the  Company  and its  consolidated
subsidiaries  for such fiscal  quarter of the Company and for the portion of the
fiscal  year ended  with such  period,  setting  forth in  comparative  form the
corresponding  figures for the previous  fiscal  quarter with  transactions  and
account  balances  accounted  for in  conformity  with GAAP  applied  on a basis
consistent  with that of the preceding  quarter or containing  disclosure of the
effect on  financial  position  or  results of  operations  of any change in the
application of accounting principles during the quarter.

                (b) As soon as available  and in any event within 120 days after
the close of each fiscal year of the Company, (1) the consolidated balance sheet
of Company and its consolidated  subsidiaries as at the end of such fiscal year,
setting forth in comparative form the corresponding figures as at the end of the
preceding   fiscal  year,  and  (2)  the   consolidated   statement  of  income,
shareholders'  equity  and  cash  flows  of the  Company  and  its  consolidated
subsidiaries  for such fiscal year of the Company,  setting forth in comparative
form the  corresponding  figures  for the  previous  fiscal  year,  prepared  in
conformity  with GAAP applied on a basis  consistent  with that of the preceding
year or containing  disclosure of the effect on financial position or results of
operations of any change in the application of accounting  principles during the
year.  Such  consolidated  balance  sheets  and  related  statements  of income,
shareholders'  equity  and cash flows  shall be  accompanied  by an  unqualified
report  and  opinion  of KPMG  Peat  Marwick  LLP or  other  independent  public
accountants   of  nationally   recognized   standing   approved  by  Agent  (the
"Independent  Auditor"),  which report and opinion shall be in  accordance  with
generally  accepted auditing  standards  relating to reporting or, if qualified,
the  opinion  shall  not be  qualified  due to any  limitation  in  scope of the
examination  or due to any  departure  from any  generally  accepted  accounting
principles,  and shall be accompanied by a statement of the Independent  Auditor
that, in making the audit  necessary  for the  certification  of such  financial
statements and such report, the Independent Auditor has obtained no knowledge of
any  Default or Event of Default  hereunder  or of any  default  under any other
evidence of Indebtedness  or, if in the opinion of the  Independent  Auditor any
such Default shall exist,  shall include a statement as to the nature and status
thereof.

        6.02  Certificates; Other Information.  The Company shall
furnish to the Agent and each Bank:

                (a)          concurrently with the delivery of the financial
statements referred to in subsections 6.01(a) and (b), a
Quarterly Compliance Certificate executed by a Responsible
Officer;


                                                        35

<PAGE>



                (b)          within 45 days after the close of each calendar
month a Monthly Compliance Certificate executed by a Responsible
Officer;

                (c)  promptly,  copies of all financial  statements  and reports
that  the  Company  sends  to its  shareholders,  and  copies  of all  financial
statements and regular,  periodical or special reports (including Forms 10K, 10Q
and 8K) that the Company or any  Subsidiary  may make to, or file with, the SEC;
and

                (e)  promptly,   such  additional   information   regarding  the
business, financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Bank, may from time to time request.

        6.03  Notices.  The Company shall promptly notify the Agent
and each Bank:

                (a)          of the occurrence of any Default or Event of
Default, and of the occurrence or existence of any event or
circumstance that foreseeably will become a Default or Event of
Default;

                (b) of any matter that has  resulted or may result in a Material
Adverse  Effect,  including  (i) breach or  non-performance  of, or any  default
under,  a  Contractual  Obligation  of the Company or any  Subsidiary;  (ii) any
dispute, litigation, investigation, proceeding or suspension between the Company
or any Subsidiary and any Governmental  Authority; or (iii) the commencement of,
or any material  development  in, any  litigation  or  proceeding  affecting the
Company or any Subsidiary;  including  pursuant to any applicable  Environmental
Laws;

                (c) of the occurrence of any of the following  events  affecting
the Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Agent and each Bank a copy of any notice with respect
to such  event  that is  filed  with a  Governmental  Authority  and any  notice
delivered by a Governmental Authority to the Company or any ERISA Affiliate with
respect to such event:

                             (i)   an ERISA Event;

                             (ii)  a material increase in the Unfunded Pension
        Liability of any Pension Plan;

                             (iii) the adoption of, or the commencement of
        contributions to, any Plan subject to Section 412 of the Code
        by the Company or any ERISA Affiliate; or

                             (iv)  the adoption of any amendment to a Plan
        subject  to  Section  412 of the Code,  if such  amendment  results in a
        material increase in contributions or Unfunded Pension Liability.

                                                        36

<PAGE>




                (d)          of any material change in accounting policies or
financial reporting practices by the Company or any of its
consolidated Subsidiaries;

                (e) upon the  request  from time to time of the Agent,  the Swap
Termination  Values,  together  with a  description  of the method by which such
values were determined, relating to any then-outstanding Swap Contracts to which
the Company or any of its Subsidiaries is party.

                Each notice under this Section shall be accompanied by a written
statement by a  Responsible  Officer  setting  forth  details of the  occurrence
referred  to  therein,  and  stating  what  action the  Company or any  affected
Subsidiary  proposes to take with respect  thereto and at what time. Each notice
under subsection  6.03(a) shall describe with  particularity any and all clauses
or  provisions  of this  Agreement  or other  Loan  Document  that have been (or
foreseeably will be) breached or violated.

        6.04  Preservation of Corporate Existence, Etc.  The Company
shall, and shall cause each Subsidiary to:

                (a)          preserve and maintain in full force and effect
its corporate existence and good standing under the laws of its
state or jurisdiction of incorporation;

                (b)   preserve  and  maintain  in  full  force  and  effect  all
governmental  rights,   privileges,   qualifications,   permits,   licenses  and
franchises  necessary or desirable in the normal conduct of its business  except
in connection  with  transactions  permitted by Section 7.03 and sales of assets
permitted by Section 7.02;

                (c)          use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and

                (d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.

        6.05  Maintenance  of Property.  The Company shall  maintain,  and shall
cause each  Subsidiary to maintain,  and preserve all its property which is used
or useful in its business in good working order and condition, ordinary wear and
tear  excepted  and  make  all  necessary   repairs  thereto  and  renewals  and
replacements  thereof  except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, except as permitted by Section 7.02.

        6.06  Insurance.  The  Company  shall  maintain,  and shall  cause  each
Subsidiary  to  maintain,  with  financially  sound  and  reputable  independent
insurers,  insurance with respect to its properties and business against loss or
damage of the kinds customarily

                                                        37

<PAGE>



insured  against by Persons  engaged  in the same or similar  business,  of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons.

        6.07 Payment of  Obligations.  The Company  shall,  and shall cause each
Subsidiary  to, pay and discharge as the same shall become due and payable,  all
their respective obligations and liabilities, including:

                (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets,  unless the same are being contested
in good faith by  appropriate  proceedings  and adequate  reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary;

                (b)          all lawful claims which, if unpaid, would by law
become a Lien upon its property; and

                (c)          all indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

        6.08  Compliance  with Laws.  The Company shall comply,  and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
of any  Governmental  Authority  having  jurisdiction  over  it or its  business
(including  the  Federal  Fair  Labor  Standards  Act),  except  such  as may be
contested in good faith or as to which a bona fide dispute may exist.

        6.09 Compliance with ERISA.  The Company shall,  and shall cause each of
its ERISA  Affiliates  to: (a) maintain  each Plan in compliance in all material
respects with the applicable  provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified  under  Section  401(a) of the
Code to maintain such qualification;  and (c) make all required contributions to
any Plan subject to Section 412 of the Code.

        6.10  Inspection  of Property and Books and Records.  The Company  shall
maintain and shall cause each  Subsidiary to maintain proper books of record and
account,  in which  full,  true and  correct  entries  in  conformity  with GAAP
consistently  applied  shall be made of all financial  transactions  and matters
involving  the assets and  business  of the  Company  and such  Subsidiary.  The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any of
their respective  properties,  to examine their respective corporate,  financial
and operating records,  and make copies thereof or abstracts  therefrom,  and to
discuss their  respective  affairs,  finances and accounts with their respective
directors,  officers,  and independent  public  accountants,  at such reasonable
times during normal  business  hours and as often as may be reasonably  desired,
upon reasonable advance notice to the Company; provided, however, when an Event

                                                        38

<PAGE>



of  Default  exists  the  Agent or any Bank may do any of the  foregoing  at the
expense of the  Company at any time  during  normal  business  hours and without
advance notice.

        6.11  Environmental Laws.  The Company shall, and shall cause
each Subsidiary to, conduct its operations and keep and maintain
its property in compliance with all Environmental Laws.

        6.12 Use of  Proceeds.  The Company  shall use the proceeds of the Loans
for working capital,  refinancing  debt,  making  Acquisitions and other general
corporate purposes not in contravention of any Requirement of Law or of any Loan
Document.

        6.13 Interest Coverage Ratio. The Company shall maintain at the close of
each fiscal quarter an Interest Coverage Ratio of at least 6.0 to 1.0. "Interest
Coverage  Ratio"  means  the  ratio of (a) the  consolidated  net  income of the
Company and its  Subsidiaries,  determined in  accordance  with GAAP but without
deducting expenses for interest, taxes on income, depreciation, or amortization,
for the period of four consecutive  fiscal quarters of the Company ending at the
close of the fiscal quarter last ended to (b) the consolidated  interest expense
of the Company and the Subsidiaries for such period.

        6.14    Capitalization Ratio.  The Company shall maintain as of
the close of each fiscal quarter a Capitalization Ratio equal to
or less than 1.0 to 2.0.  "Capitalization Ratio" means the ratio
of (a) Consolidated Indebtedness to (b) Consolidated Net Worth.
"Consolidated Indebtedness" means the consolidated Indebtedness
of the Company and its Subsidiaries.



                                   ARTICLE VII

                               NEGATIVE COVENANTS

        So long as any Bank shall have any Commitment hereunder,  or any Loan or
other Obligation  shall remain unpaid or unsatisfied,  unless the Majority Banks
waive compliance in writing:

        7.01 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer  to exist  any Lien  upon or with  respect  to any part of its  property,
whether now owned or hereafter  acquired,  other than the following  ("Permitted
Liens"):

                (a) Liens for taxes,  fees,  assessments  or other  governmental
charges which are not delinquent or remain payable  without  penalty,  or to the
extent that non-payment  thereof is permitted by Section 6.07,  provided that no
notice of lien has been filed or recorded under the Code;


                                                        39

<PAGE>



                (b)   Carriers',    warehousemen's,    mechanics',   landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable  without penalty or which
are  being  contested  in  good  faith  and by  appropriate  proceedings,  which
proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto;

                (c) Liens (other than any Lien imposed by ERISA)  consisting  of
pledges or deposits  required in the ordinary  course of business in  connection
with workers'  compensation,  unemployment  insurance and other social  security
legislation;

                (d)  Liens on the  property  of the  Company  or its  Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations,  (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business;

                (e) Liens consisting of judgment or judicial  attachment  liens,
provided that the  enforcement of such Liens is effectively  stayed and all such
liens  in the  aggregate  at any  time  outstanding  for  the  Company  and  its
Subsidiaries do not exceed $1,000,000;

                (f)  Easements,  rights-of-way,  restrictions  and other similar
encumbrances  incurred  in  the  ordinary  course  of  business  which,  in  the
aggregate,  are  not  substantial  in  amount,  and  which  do not  in any  case
materially  detract from the value of the property  subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;

                (g) Liens  arising  solely by virtue of any  statutory or common
law provision  relating to banker's  liens,  rights of set-off or similar rights
and remedies as to deposit  accounts or other funds  maintained  with a creditor
depository  institution;  provided  that  (i)  such  deposit  account  is  not a
dedicated cash  collateral  account and is not subject to  restrictions  against
access by the Company in excess of those set forth by regulations promulgated by
the FRB,  and (ii) such  deposit  account is not  intended by the Company or any
Subsidiary to provide collateral to the depository institution; and

                (h)          Liens consisting of pledges of cash collateral or
government securities to secure on a mark-to-market basis
Permitted Swap Obligations only,  provided that (i) the counterparty to any Swap
Contract  relating  to any such  Permitted  Swap  Obligation  is under a similar
requirement to deliver  similar  collateral  from time to time to the Company or
the Subsidiary party thereto on a  mark-to-market  basis; and (ii) the aggregate
value of such collateral so pledged by the Company and the

                                                        40

<PAGE>



Subsidiaries together in favor of any counterparty does not at
any time exceed $1,000,000;

                (i)          Liens on the Company's headquarters building
securing Indebtedness not exceeding $10,000,000 at any time; and

                (j) Liens on other  property  securing  Indebtedness;  provided,
that,  (i) the aggregate  amount of secured  Indebtedness  does not exceed 5% of
Consolidated Net Worth and (ii) in the case of Indebtedness of a Subsidiary, the
Indebtedness is permitted by Section 7.05.

        7.02 Disposition of Assets.  The Company shall not, and shall not suffer
or permit any  Subsidiary  to,  directly or  indirectly,  sell,  assign,  lease,
convey,  transfer  or  otherwise  dispose  of  (whether  in one or a  series  of
transactions) any property  (including  accounts and notes  receivable,  with or
without  recourse)  or enter  into  any  agreement  to do any of the  foregoing,
except:

                (a)          dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;

                (b) the sale of equipment  to the extent that such  equipment is
exchanged  for  credit  against  the  purchase  price  of  similar   replacement
equipment,  or the proceeds of such sale are reasonably  promptly applied to the
purchase price of such replacement equipment;

                (c)          dispositions of property by the Company or any
Subsidiary to the Company or any Subsidiary pursuant to
reasonable business requirements;

                (d)          dispositions of Permitted Receivables pursuant to
Permitted Receivables Purchase Facilities; and

                (e)  dispositions  not otherwise  permitted  hereunder which are
made for fair market value;  provided,  that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such disposition,  (ii) the
aggregate sales price from such disposition shall be paid in cash, and (iii) the
aggregate  value of all  assets  so sold by the  Company  and its  Subsidiaries,
together,  during any fiscal year shall not exceed 5% of Consolidated  Net Worth
at the close of the immediately preceding fiscal year.

        7.03  Consolidations  and Mergers.  The Company shall not, and shall not
suffer or permit any Subsidiary to, merge,  consolidate with or into, or convey,
transfer,  lease or  otherwise  dispose of (whether in one  transaction  or in a
series of transactions all or substantially all of its assets (whether now owned
or hereafter acquired) to or in favor of any Person, except:


                                                        41

<PAGE>



                (a) any Subsidiary may merge with the Company, provided that the
Company  shall be the  continuing or surviving  corporation,  or with any one or
more  Subsidiaries,  provided  that  if  any  transaction  shall  be  between  a
Subsidiary and a Wholly-Owned  Subsidiary,  the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;

                (b)          any Subsidiary may sell all or substantially all
of its assets (upon voluntary liquidation or otherwise), to the
Company or another Wholly-Owned Subsidiary;

                (c)          the Company or any Subsidiary may sell assets to
the extent permitted by subsection 7.02(d) or (e); and

                (d)          the Company or any Subsidiary may enter into a
merger if it is an Acquisition permitted by subsection 7.04(d).

        7.04 Loans and  Investments.  The Company shall not purchase or acquire,
or  suffer  or  permit  any  Subsidiary  to  purchase  or  acquire,  or make any
commitment therefor,  any capital stock, equity interest,  or any obligations or
other  securities of, or any interest in, any Person,  or make or commit to make
any  Acquisitions,  or make or commit to make any  advance,  loan,  extension of
credit  or  capital  contribution  to or any other  investment  in,  any  Person
including any Affiliate of the Company (together, "Investments"), except for:

                (a)          Investments held by the Company or Subsidiary in
the form of cash equivalents;

                (b)          Extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of
goods or services in the ordinary course of business;

                (c)          Extensions of credit by the Company to any of its
Wholly-Owned Subsidiaries or by any of its Wholly-Owned
Subsidiaries to another of its Wholly-Owned Subsidiaries;

                (d)  Investments  incurred in order to  consummate  Acquisitions
otherwise  permitted  herein,  provided  that  (i)  the  book  value  (as to the
purchaser)  of any  such  Acquisition  shall  not  exceed  at the  time  of such
Investment 25% of Consolidated Net Worth as calculated immediately prior to such
Acquisition,  (ii) such  Acquisitions  are  undertaken  in  accordance  with all
applicable  Requirements of Law; and (iii) the prior,  effective written consent
or  approval  to such  Acquisition  of the  board  of  directors  or  equivalent
governing body of the acquiree is obtained;

                (e)          Investments constituting Permitted Swap
Obligations or payments or advances under Swap Contracts relating
to Permitted Swap Obligations;


                                                        42

<PAGE>



                (f)          Capital expenditures in connection with lines of
business currently conducted by Company or by the Subsidiary
making the expenditure; and

                (g) Secured  loans made by the Company to  developers to finance
property development when the property is mortgaged to the Company to secure the
loan, the amount of the loan does not exceed the value of the land, the proceeds
of the  loan  are  used  for  construction  of  condominium  units  and  related
amenities,  and the Company has the right or obligation to purchase the property
from the developer upon completion of construction.

        7.05 Transactions with Affiliates.  The Company shall not, and shall not
suffer  or  permit  any  Subsidiary  to,  enter  into any  transaction  with any
Affiliate  of the  Company,  except  upon  fair  and  reasonable  terms  no less
favorable  to the Company or such  Subsidiary  than would obtain in a comparable
arm's-length  transaction  with a Person not an Affiliate of the Company or such
Subsidiary.

        7.06  Use of Proceeds.

                (a) The  Company  shall not,  and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i)
to  purchase  or  carry  Margin  Stock,  (ii) to repay  or  otherwise  refinance
indebtedness  of the Company or others  incurred  to  purchase  or carry  Margin
Stock,  (iii) to extend  credit for the purpose of  purchasing  or carrying  any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.

                (b) The  Company  shall not,  directly  or  indirectly,  use any
portion of the Loan  proceeds (i)  knowingly to purchase  Ineligible  Securities
from the Arranger during any period in which the Arranger makes a market in such
Ineligible  Securities,  (ii) knowingly to purchase  during the  underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the  Arranger,  or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of the Company or any  Affiliate of the  Company.  The Arranger is a
registered  broker-dealer  and  permitted  to  underwrite  and  deal in  certain
Ineligible  Securities;  and "Ineligible  Securities" means securities which may
not be  underwritten  or dealt in by member banks of the Federal  Reserve System
under  Section 16 of the Banking  Act of 1933 (12 U.S.C.  ss. 24,  Seventh),  as
amended.

        7.07  Contingent Obligations.  The Company shall not, and
shall not suffer or permit any Subsidiary to, create, incur,
assume or suffer to exist any Contingent Obligations except:

                (a)          endorsements for collection or deposit in the
ordinary course of business;


                                                        43

<PAGE>



                (b)          Permitted Swap Obligations;

                (c)          Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in
Schedule 7.07; and

                (d)          Contingent Obligations with respect to Surety
Instruments incurred in the ordinary course of business.

        7.08  Joint Ventures.  The Company shall not, and shall not
suffer or permit any Subsidiary to enter into any Joint Venture,
other than in the ordinary course of business.

        7.09 Lease  Obligations.  The Company shall not, and shall not suffer or
permit any  Subsidiary  to,  create or suffer to exist any  obligations  for the
payment of rent for any property under lease or agreement to lease, except for:

                (a)          leases of the Company and of Subsidiaries in
existence on the Closing Date and any renewal, extension or
refinancing thereof;

                (b)          operating leases entered into by the Company or
any Subsidiary after the Closing Date in the ordinary course of
business;

                (c)          leases entered into by the Company or any
Subsidiary after the Closing Date pursuant to sale-leaseback
transactions permitted under subsection 7.02(d);

                (d) capital leases other than those  permitted under clauses (a)
and (c) of this Section, entered into by the Company or any Subsidiary after the
Closing Date to finance the acquisition of equipment;  provided that in the case
of a Subsidiary the capital lease is permitted under subsection 7.05(c).

        7.10 Restricted Payments. The Company shall not, and shall not suffer or
permit  any  Subsidiary  to,  declare  or make  any  dividend  payment  or other
distribution of assets,  properties,  cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase,  redeem or
otherwise  acquire  for value any shares of its capital  stock or any  warrants,
rights or options to acquire such shares, now or hereafter  outstanding;  except
that:

                (a) the Company may (i)  declare and make  dividend  payments or
other distributions payable solely in its common stock and (ii) purchase, redeem
or  otherwise  acquire  shares of its  common  stock or  warrants  or options to
acquire  any such  shares  with the  proceeds  received  from the  substantially
concurrent issue of new shares of its common stock; and


                                                        44

<PAGE>



                (b)          a Wholly-Owned Subsidiary may declare or pay cash
dividends to its stockholders.

        7.11 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited  transaction or violation of
the fiduciary  responsibility  rules with respect to any Plan which has resulted
or could  reasonably  expected  to  result in  liability  of the  Company  in an
aggregate  amount in excess of $1,000,000;  or (b) engage in a transaction  that
could be subject to Section 4069 or 4212(c) of ERISA.

        7.12 Change in Business.  The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business  substantially
different  from  those  lines of  business  carried  on by the  Company  and its
Subsidiaries on the date hereof.

        7.13 Accounting Changes.  The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting  practices,  except as required by GAAP,  or change the fiscal year of
the Company or of any Subsidiary.

        7.14 Agreements by Subsidiaries.  No Subsidiary except TW Holdings, Inc.
shall enter into any agreement that restricts  dealings  between the Company and
such Subsidiary, including any agreement that prohibits or restricts the ability
of such Subsidiary to pay dividends or to make loans or advances to the Company.

        7.15 Notes Receivable. The Company shall not suffer or permit either the
number or amount of Past-Due Notes Receivable to exceed 7.5% of the total number
or amount of Notes  Receivable at the close of any calendar month, and shall not
suffer or permit either the number or amount of Delinquent  Notes  Receivable to
exceed 12% of the total number or amount of Notes Receivable at the close of any
period of two consecutive calendar months.  "Notes Receivable" means installment
notes  receivable  generated  by sales of  Vacation  Credits  and  secured by an
interest  in the  related  Vacation  Credits,  the  amount  of  which  shall  be
calculated net of allowance for doubtful accounts,  sales returns,  and deferred
gross profit. "Past-Due Notes Receivable" are Notes Receivable more than 30 days
but not more than 90 days  past-due.  "Delinquent  Notes  Receivable"  are Notes
Receivable more than 90 days past-due.

        7.16 Time Share  Inventory.  The Company  shall not suffer or permit the
amount of its inventory at the close of any fiscal quarter,  including (i) costs
of unsold Vacation Credits and (ii)  construction in progress,  to exceed 40% of
aggregate  Vacation Credit sales revenues,  net of rescissions,  reversals,  and
cash discounts, for the period of four consecutive fiscal quarters then ended.

                                                        45

<PAGE>





                                  ARTICLE VIII

                                EVENTS OF DEFAULT

        8.01  Event of Default.  Any of the following shall
constitute an "Event of Default":

                (a)  Non-Payment.  The  Company  fails  to pay,  (i) when and as
required to be paid herein,  any amount of principal of any Loan, or (ii) within
3 Business  Days after the same  becomes  due,  any  interest,  fee or any other
amount payable hereunder or under any other Loan Document; or

                (b)  Representation or Warranty.  Any representation or warranty
by the Company or any Subsidiary  made or deemed made herein,  in any other Loan
Document,  or which is  contained in any  certificate,  document or financial or
other  statement by the Company,  any Subsidiary,  or any  Responsible  Officer,
furnished  at any time  under  this  Agreement,  or in or under any  other  Loan
Document,  is  incorrect  in any  material  respect on or as of the date made or
deemed made; or

                (c)          Specific Defaults.  The Company fails to perform
or observe any term, covenant or agreement contained in any of
Section 6.03, 6.13 or 6.14 or in Article VII other than
Section 7.05, 7.12 or 7.13 thereof; or

                (d)  Other  Defaults.  The  Company  [or  any  Subsidiary  party
thereto]  fails to perform or observe  any other term or covenant  contained  in
this  Agreement or any other Loan  Document,  [and such default  shall  continue
unremedied  for a period of 20 days  after the date upon  which  written  notice
thereof is given to the Company by the Agent or any Bank; or

                (e)  Cross-Default.  (i) The Company or any Subsidiary (A) fails
to make any  payment in respect of any  Indebtedness  or  Contingent  Obligation
(other than in respect of Swap Contracts),  having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit  arrangement) of more than
$1,000,000  when  due  (whether  by  scheduled  maturity,  required  prepayment,
acceleration,  demand,  or  otherwise)  and such  failure  continues  after  the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure; or (B) fails to perform or observe any other condition
or  covenant,  or any other  event  shall occur or  condition  exist,  under any
agreement  or  instrument  relating  to  any  such  Indebtedness  or  Contingent
Obligation,  and such failure  continues  after the  applicable  grace or notice
period,  if any,  specified in the relevant document on the date of such failure
if the effect of such failure,  event or condition is to cause, or to permit the
holder or holders of such  Indebtedness or beneficiary or  beneficiaries of such
Indebtedness (or a trustee or agent on

                                                        46

<PAGE>



behalf of such holder or holders or beneficiary or  beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated  maturity,
or such  Contingent  Obligation to become payable or cash  collateral in respect
thereof to be demanded;  or (ii) there  occurs under any Swap  Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (1) any event
of default under such Swap Contract as to which the Company or any Subsidiary is
the Defaulting  Party (as defined in such Swap Contract) or (2) any  Termination
Event (as so defined) as to which the Company or any  Subsidiary  is an Affected
Party (as so defined),  and, in either event, the Swap Termination Value owed by
the Company or such  Subsidiary as a result thereof is greater than  $5,000,000;
or

                (f)  Insolvency;  Voluntary  Proceedings.  The  Company  or  any
Subsidiary  (i) ceases or fails to be  solvent,  or  generally  fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise;  (ii)
voluntarily  ceases to  conduct  its  business  in the  ordinary  course;  (iii)
commences any Insolvency  Proceeding  with respect to itself;  or (iv) takes any
action to effectuate or authorize any of the foregoing; or

                (g)  Involuntary  Proceedings.  (i) Any  involuntary  Insolvency
Proceeding is commenced or filed against the Company or any  Subsidiary,  or any
writ, judgment,  warrant of attachment,  execution or similar process, is issued
or levied  against  a  substantial  part of the  Company's  or any  Subsidiary's
properties,  and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released,  vacated or fully bonded within 60 days after commencement,  filing or
levy;  (ii) the Company or any Subsidiary  admits the material  allegations of a
petition  against it in any  Insolvency  Proceeding,  or an order for relief (or
similar order under non-U.S.  law) is ordered in any Insolvency  Proceeding;  or
(iii) the Company or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian,  conservator,  liquidator, mortgagee in possession (or agent
therefor),  or other similar  Person for itself or a substantial  portion of its
property or business; or

                (h) ERISA.  (i) An ERISA  Event  shall  occur with  respect to a
Pension Plan or  Multiemployer  Plan which has resulted or could  reasonably  be
expected to result in  liability  of the Company  under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$1,000,000;  (ii) the aggregate amount of Unfunded  Pension  Liability among all
Pension Plans at any time exceeds $1,000,000;  or (iii) the Company or any ERISA
Affiliate  shall fail to pay when due,  after the  expiration of any  applicable
grace period, any installment  payment with respect to its withdrawal  liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $1,000,000; or

                                                        47

<PAGE>




                (i)  Monetary   Judgments.   One  or  more  non-   interlocutory
judgments,  non-interlocutory  orders,  decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability (to
the extent not  covered by  independent  third-party  insurance  as to which the
insurer  does not  dispute  coverage)  as to any  single  or  related  series of
transactions, incidents or conditions, of $1,000,000 or more, and the same shall
remain  unsatisfied,  unvacated and unstayed  pending  appeal for a period of 30
days after the entry thereof; or

                (j) Non-Monetary Judgments.  Any non-monetary judgment, order or
decree is entered  against  the  Company or any  Subsidiary  which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period  of 30  consecutive  days  during  which  a stay of  enforcement  of such
judgment or order,  by reason of a pending appeal or otherwise,  shall not be in
effect; or

                (k)          Change of Control.  There occurs any Change of
Control.

        8.02  Remedies.  If any Event of Default occurs, the Agent
shall, at the request of, or may, with the consent of, the
Majority Banks,

                (a)          declare the commitment of each Bank to make Loans
to be terminated, whereupon such commitments shall be terminated;


                (b)  declare  the  unpaid  principal  amount of all  outstanding
Loans, all interest  accrued and unpaid thereon,  and all other amounts owing or
payable  hereunder or under any other Loan  Document to be  immediately  due and
payable,  without presentment,  demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; and

                (c)          exercise on behalf of itself and the Banks all
rights and remedies available to it and the Banks under the Loan
Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein),  the obligation of each Bank
to make Loans shall  automatically  terminate and the unpaid principal amount of
all  outstanding  Loans and all  interest and other  amounts as aforesaid  shall
automatically  become due and  payable  without  further act of the Agent or any
Bank.

        8.03  Rights Not Exclusive.  The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies

                                                        48

<PAGE>



provided  by law or in  equity,  or under  any  other  instrument,  document  or
agreement now existing or hereafter arising.


                                   ARTICLE IX

                                    THE AGENT

        9.01   Appointment  and   Authorization;   "Agent".   Each  Bank  hereby
irrevocably  (subject to Section 9.09)  appoints,  designates and authorizes the
Agent to take such action on its behalf under the  provisions of this  Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are  expressly  delegated  to it by the terms of this  Agreement or any other
Loan Document,  together with such powers as are reasonably  incidental thereto.
Notwithstanding  any  provision  to the  contrary  contained  elsewhere  in this
Agreement or in any other Loan Document,  the Agent shall not have any duties or
responsibilities,  except those expressly set forth herein,  nor shall the Agent
have or be  deemed to have any  fiduciary  relationship  with any  Bank,  and no
implied  covenants,   functions,   responsibilities,   duties,   obligations  or
liabilities  shall be read into this  Agreement  or any other Loan  Document  or
otherwise  exist  against the Agent.  Without  limiting  the  generality  of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not  intended  to connote  any  fiduciary  or other  implied (or
express)  obligations  arising  under  agency  doctrine of any  applicable  law.
Instead,  such term is used merely as a matter of market custom, and is intended
to create or reflect only an  administrative  relationship  between  independent
contracting parties.

        9.02 Delegation of Duties. The Agent may execute any of its duties under
this  Agreement or any other Loan  Document by or through  agents,  employees or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining to such duties.  The Agent shall not be responsible  for the
negligence or misconduct of any agent or  attorney-in-fact  that it selects with
reasonable care.

        9.03 Liability of Agent. None of the Agent-Related  Persons shall (i) be
liable  for any  action  taken or omitted to be taken by any of them under or in
connection  with this  Agreement or any other Loan Document or the  transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be  responsible  in any  manner  to any of the  Banks  for any  recital,
statement,  representation  or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document,  or in any certificate,  report,  statement or other
document  referred to or  provided  for in, or received by the Agent under or in
connection  with,  this Agreement or any other Loan  Document,  or the validity,
effectiveness,  genuineness,  enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to

                                                        49

<PAGE>



any Loan  Document  to perform  its  obligations  hereunder  or  thereunder.  No
Agent-Related  Person shall be under any  obligation to any Bank to ascertain or
to  inquire  as to the  observance  or  performance  of  any  of the  agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties,  books or records of the Company or any of the Company's
Subsidiaries or Affiliates.

        9.04  Reliance by Agent.  (a) The Agent  shall be entitled to rely,  and
shall be fully  protected  in relying,  upon any  writing,  resolution,  notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message,  statement  or other  document  or  conversation  believed  by it to be
genuine and correct and to have been signed,  sent or made by the proper  Person
or Persons,  and upon advice and statements of legal counsel  (including counsel
to the  Company),  independent  accountants  and other  experts  selected by the
Agent.  The Agent  shall be fully  justified  in failing or refusing to take any
action  under this  Agreement or any other Loan  Document  unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks  against any and all  liability and expense which may be incurred by it by
reason of taking or continuing  to take any such action.  The Agent shall in all
cases be fully  protected in acting,  or in refraining  from acting,  under this
Agreement or any other Loan Document in accordance  with a request or consent of
the  Majority  Banks and such  request  and any  action  taken or failure to act
pursuant thereto shall be binding upon all of the Banks.

                (b) For purposes of determining  compliance  with the conditions
specified in Section 4.01,  each Bank that has executed this Agreement  shall be
deemed to have consented to,  approved or accepted or to be satisfied with, each
document  or other  matter  either  sent by the Agent to such Bank for  consent,
approval,  acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.

        9.05 Notice of Default.  The Agent shall not be deemed to have knowledge
or notice of the  occurrence  of any  Default or Event of  Default,  except with
respect to defaults in the payment of  principal,  interest and fees required to
be paid to the Agent for the  account of the Banks,  unless the Agent shall have
received written notice from a Bank or the Company  referring to this Agreement,
describing  such  Default or Event of Default and stating  that such notice is a
"notice of default".  The Agent will notify the Banks of its receipt of any such
notice.  The Agent shall take such action with  respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance  with Article
VIII; provided,  however,  that unless and until the Agent has received any such
request,  the Agent may (but shall not be  obligated  to) take such  action,  or
refrain from taking such action, with respect to such Default or Event of

                                                        50

<PAGE>



Default as it shall deem advisable or in the best interest of the Banks.

        9.06  Credit  Decision.   Each  Bank   acknowledges  that  none  of  the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter  taken,  including any review of the affairs of the
Company and its Subsidiaries,  shall be deemed to constitute any  representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agent that it has,  independently  and without  reliance upon any  Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made  its own  appraisal  of and  investigation  into the  business,  prospects,
operations, property, financial and other condition and credit worthiness of the
Company and its  Subsidiaries,  and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this  Agreement  and to  extend  credit  to the  Company  and  its  Subsidiaries
hereunder.  Each Bank also  represents that it will,  independently  and without
reliance  upon  any  Agent-Related  Person  and  based  on  such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
credit  analysis,  appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents,  and to make such investigations as
it deems necessary to inform itself as to the business,  prospects,  operations,
property,  financial and other  condition and credit  worthiness of the Company.
Except for notices,  reports and other documents expressly herein required to be
furnished  to the  Banks by the  Agent,  the  Agent  shall  not have any duty or
responsibility  to  provide  any Bank  with  any  credit  or  other  information
concerning the business,  prospects,  operations,  property, financial and other
condition or credit worthiness of the Company which may come into the possession
of any of the Agent-Related Persons.

        9.07   Indemnification  of  Agent.   Whether  or  not  the  transactions
contemplated  hereby are consummated,  the Banks shall indemnify upon demand the
Agent-Related  Persons  (to the  extent  not  reimbursed  by or on behalf of the
Company and without  limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such  Indemnified  Liabilities  resulting  solely  from such  Person's  gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall  reimburse  the Agent upon  demand for its  ratable  share of any costs or
out-of-pocket  expenses  (including  Attorney  Costs)  incurred  by the Agent in
connection   with  the   preparation,   execution,   delivery,   administration,
modification,  amendment or enforcement  (whether  through  negotiations,  legal
proceedings  or  otherwise)  of,  or  legal  advice  in  respect  of  rights  or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated  by or  referred  to herein,  to the  extent  that the Agent is not
reimbursed for such expenses by or

                                                        51

<PAGE>



on behalf of the Company.  The  undertaking  in this Section  shall  survive the
payment of all  Obligations  hereunder and the resignation or replacement of the
Agent.

        9.08 Agent in  Individual  Capacity.  BofA and its  Affiliates  may make
loans to,  issue  letters of credit for the account of,  accept  deposits  from,
acquire equity interests in and generally engage in any kind of banking,  trust,
financial  advisory,  underwriting  or other  business  with the Company and its
Subsidiaries  and  Affiliates  as though BofA were not the Agent  hereunder  and
without notice to or consent of the Banks. The Banks acknowledge that,  pursuant
to such activities, BofA or its Affiliates may receive information regarding the
Company  or  its  Affiliates  (including  information  that  may be  subject  to
confidentiality  obligations  in favor of the  Company or such  Subsidiary)  and
acknowledge  that  the  Agent  shall  be under no  obligation  to  provide  such
information to them. With respect to its Loans,  BofA shall have the same rights
and powers  under this  Agreement as any other Bank and may exercise the same as
though BofA were not the Agent, and the terms "Bank" and "Banks" include BofA in
its individual capacity.

        9.09 Successor  Agent. The Agent may, and at the request of the Majority
Banks  shall,  resign as Agent upon 30 days'  notice to the Banks.  If the Agent
resigns under this  Agreement,  the Majority  Banks shall appoint from among the
Banks a successor agent for the Banks which successor agent shall be approved by
the Company.  If no successor  agent is appointed prior to the effective date of
the resignation of the Agent,  the Agent may appoint,  after consulting with the
Banks  and the  Company,  a  successor  agent  from  among the  Banks.  Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term  "Agent"  shall  mean  such  successor  agent  and  the  retiring   Agent's
appointment,  powers and duties as Agent shall be terminated. After any retiring
Agent's  resignation  hereunder as Agent,  the provisions of this Article IX and
Sections  10.04 and 10.05 shall inure to its benefit as to any actions  taken or
omitted  to be taken  by it  while it was  Agent  under  this  Agreement.  If no
successor  agent has accepted  appointment as Agent by the date which is 30 days
following  a  retiring  Agent's  notice of  resignation,  the  retiring  Agent's
resignation  shall  nevertheless  thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Majority Banks appoint a successor agent as provided for above.

        9.10  Withholding Tax.  (a)  If any Bank is a "foreign
corporation, partnership or trust" within the meaning of the Code
and such Bank claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Agent, to deliver to the
Agent:


                                                        52

<PAGE>



                             (i) if such Bank claims an exemption from, or a
        reduction  of,  withholding  tax under a United  States tax treaty,  two
        properly  completed  and  executed  copies of IRS Form 1001  before  the
        payment  of any  interest  in the first  calendar  year and  before  the
        payment of any interest in each third  succeeding  calendar  year during
        which interest may be paid under this Agreement;

                             (ii) if such Bank claims that interest paid under
        this Agreement is exempt from United States  withholding  tax because it
        is effectively  connected with a United States trade or business of such
        Bank, two properly completed and executed copies of IRS Form 4224 before
        the  payment of any  interest is due in the first  taxable  year of such
        Bank and in each  succeeding  taxable  year of such  Bank  during  which
        interest may be paid under this Agreement; and

                              (iii) such other form or forms as may be
        required  under  the  Code or  other  laws  of the  United  States  as a
        condition to exemption from, or reduction of, United States  withholding
        tax.

Such Bank  agrees to  promptly  notify the Agent of any change in  circumstances
which would modify or render invalid any claimed exemption or reduction.

                (b)  If  any  Bank  claims  exemption  from,  or  reduction  of,
withholding  tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns,  grants a participation in, or otherwise transfers all
or part of the  Obligations  of the  Company to such Bank,  such Bank  agrees to
notify  the  Agent  of the  percentage  amount  in  which  it is no  longer  the
beneficial  owner of  Obligations  of the Company to such Bank. To the extent of
such  percentage  amount,  the Agent will treat such  Bank's IRS Form 1001 as no
longer valid.

                (c)  If  any  Bank   claiming   exemption   from  United  States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns,  grants a
participation  in, or otherwise  transfers all or part of the Obligations of the
Company to such Bank,  such Bank agrees to  undertake  sole  responsibility  for
complying with the  withholding  tax  requirements  imposed by Sections 1441 and
1442 of the Code.

                (d) If any Bank is  entitled to a  reduction  in the  applicable
withholding  tax, the Agent may withhold from any interest  payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such  reduction.  However,  if the  forms or  other  documentation  required  by
subsection  (a) of this Section are not  delivered to the Agent,  then the Agent
may withhold from any interest  payment to such Bank not providing such forms or
other  documentation  an amount  equivalent to the  applicable  withholding  tax
imposed by Sections 1441 and 1442 of the Code, without reduction.

                                                        53

<PAGE>




                (e) If the IRS or any other Governmental Authority of the United
States or other  jurisdiction  asserts a claim  that the Agent did not  properly
withhold tax from  amounts  paid to or for the account of any Bank  (because the
appropriate form was not delivered or was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances  which rendered the
exemption from, or reduction of,  withholding tax ineffective,  or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or  indirectly,  by the  Agent  as tax or  otherwise,  including  penalties  and
interest,  and including any taxes  imposed by any  jurisdiction  on the amounts
payable to the Agent under this  Section,  together  with all costs and expenses
(including  Attorney  Costs).  The obligation of the Banks under this subsection
shall survive the payment of all  Obligations and the resignation or replacement
of the Agent.


                                    ARTICLE X

                                  MISCELLANEOUS

        10.01 Amendments and Waivers. No amendment or waiver of any provision of
this  Agreement or any other Loan  Document,  and no consent with respect to any
departure by the Company therefrom,  shall be effective unless the same shall be
in writing  and  signed by the  Majority  Banks (or by the Agent at the  written
request of the Majority  Banks) and the Company and  acknowledged  by the Agent,
and then any such  waiver or consent  shall be  effective  only in the  specific
instance and for the specific purpose for which given;  provided,  however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
the  Banks  and  the  Company  and  acknowledged  by  the  Agent,  do any of the
following:

                (a)          increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 8.02);

                (b)  postpone or delay any date fixed by this  Agreement  or any
other Loan  Document  for any  payment  of  principal,  interest,  fees or other
amounts  due to the Banks  (or any of them)  hereunder  or under any other  Loan
Document;

                (c) reduce the principal  of, or the rate of interest  specified
herein on any Loan,  or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;

                (d)          change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Loans which is
required for the Banks or any of them to take any action
hereunder; or


                                                        54

<PAGE>



                (e)          amend this Section, or Section 2.12, or any
provision herein providing for consent or other action by all
Banks;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing  and signed by the Agent in addition  to the  Majority  Banks or all the
Banks,  as the case may be,  affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges  thereunder  waived,  in a writing  executed by the parties
thereto.

        10.02 Notices. (a) All notices, requests,  consents,  approvals, waivers
and other  communications  shall be in writing  (including,  unless the  context
expressly  otherwise  provides,  by facsimile  transmission,  provided  that any
matter  transmitted  by the  Company  by  facsimile  (i)  shall  be  immediately
confirmed  by a  telephone  call to the  recipient  at the number  specified  on
Schedule 10.02,  and (ii) shall be followed  promptly by delivery of a hard copy
original  thereof) and mailed,  faxed or delivered,  to the address or facsimile
number  specified for notices on Schedule 10.02;  or, as directed to the Company
or the Agent,  to such other  address as shall be  designated by such party in a
written notice to the other parties, and as directed to any other party, at such
other address as shall be  designated  by such party in a written  notice to the
Company and the Agent.

                (b) All such notices,  requests and  communications  shall, when
transmitted  by overnight  delivery,  or faxed,  be effective when delivered for
overnight  (next-day)  delivery,  or  transmitted  in legible  form by facsimile
machine,  respectively, or if mailed, upon the third Business Day after the date
deposited  into the U.S.  mail,  or if  delivered,  upon  delivery;  except that
notices  pursuant to Article II or IX to the Agent shall not be effective  until
actually received by the Agent.

                (c) Any  agreement  of the Agent and the Banks herein to receive
certain  notices by telephone or facsimile is solely for the  convenience and at
the request of the Company. The Agent and the Banks shall be entitled to rely on
the authority of any Person  purporting to be a Person authorized by the Company
to give such notice and the Agent and the Banks shall not have any  liability to
the Company or other  Person on account of any action  taken or not taken by the
Agent or the Banks in reliance  upon such  telephonic or facsimile  notice.  The
obligation of the Company to repay the Loans shall not be affected in any way or
to any  extent by any  failure  by the Agent  and the Banks to  receive  written
confirmation  of any telephonic or facsimile  notice or the receipt by the Agent
and the Banks of a confirmation  which is at variance with the terms  understood
by the  Agent and the  Banks to be  contained  in the  telephonic  or  facsimile
notice.

        10.03  No Waiver; Cumulative Remedies.  No failure to
exercise and no delay in exercising, on the part of the Agent or

                                                        55

<PAGE>



any Bank, any right, remedy,  power or privilege  hereunder,  shall operate as a
waiver thereof;  nor shall any single or partial exercise of any right,  remedy,
power or privilege  hereunder  preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

        10.04  Costs and Expenses.  The Company shall:

                (a)  whether  or not the  transactions  contemplated  hereby are
consummated,  pay or reimburse BofA  (including in its capacity as Agent) within
five  Business Days after demand  (subject to subsection  4.01(e)) for all costs
and expenses incurred by BofA (including in its capacity as Agent) in connection
with the development,  preparation,  delivery,  administration and execution of,
and any amendment,  supplement, waiver or modification to (in each case, whether
or not consummated),  this Agreement,  any Loan Document and any other documents
prepared  in  connection  herewith or  therewith,  and the  consummation  of the
transactions  contemplated  hereby and thereby,  including  reasonable  Attorney
Costs  incurred  by BofA  (including  in its  capacity  as Agent)  with  respect
thereto; and

                (b) pay or  reimburse  the  Agent,  the  Arranger  and each Bank
within five Business Days after demand  (subject to subsection  4.01(e)) for all
costs and expenses  (including  Attorney  Costs)  incurred by them in connection
with the enforcement,  attempted  enforcement,  or preservation of any rights or
remedies under this Agreement or any other Loan Document during the existence of
an Event of Default or after  acceleration of the Loans (including in connection
with any "workout" or  restructuring  regarding the Loans,  and including in any
Insolvency Proceeding or appellate proceeding).

        10.05  Company   Indemnification.   Whether  or  not  the   transactions
contemplated  hereby are consummated,  the Company shall  indemnify,  defend and
hold  the  Agent-Related  Persons,  and each  Bank  and  each of its  respective
officers, directors,  employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified  Person")  harmless  from  and  against  any and  all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
charges,  expenses and disbursements  (including  Attorney Costs) of any kind or
nature  whatsoever  which  may at any  time  (including  at any  time  following
repayment of the Loans and the  termination,  resignation  or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such Person in any way  relating to or arising out of this  Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with  any  of the  foregoing,  including  with  respect  to  any  investigation,
litigation  or  proceeding  (including  any  Insolvency  Proceeding or appellate
proceeding)  related to or arising out of this Agreement or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a

                                                        56

<PAGE>



party thereto (all the foregoing,  collectively, the "Indemnified Liabilities");
provided, that the Company shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified  Liabilities  resulting solely from the gross
negligence or willful  misconduct of such Indemnified  Person. The agreements in
this Section shall survive payment of all other Obligations.

        10.06 Payments Set Aside. To the extent that the Company makes a payment
to the Agent or the Banks,  or the Agent or the Banks  exercise  their  right of
set-off,  and such  payment or the  proceeds of such set-off or any part thereof
are subsequently  invalidated,  declared to be fraudulent or  preferential,  set
aside or required  (including  pursuant to any  settlement  entered  into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the  extent  of such  recovery  the  obligation  or part  thereof  originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not  occurred,  and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.

        10.07 Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors  and assigns,  except that the Company may not assign or transfer any
of its rights or  obligations  under this  Agreement  without the prior  written
consent of the Agent and each Bank.

        10.08  Assignments,  Participations,  etc.  (a) Any Bank  may,  with the
written  consent of the Company at all times other than during the  existence of
an Event of Default  and the Agent,  which  consents  shall not be  unreasonably
withheld,  at any time  assign and  delegate to one or more  Eligible  Assignees
(provided that no written  consent of the Company or the Agent shall be required
in  connection  with any  assignment  and  delegation  by a Bank to an  Eligible
Assignee  that is an  Affiliate of such Bank) (each an  "Assignee")  all, or any
ratable  part of all, of the Loans,  the  Commitments  and the other  rights and
obligations  of  such  Bank  hereunder,  in a  minimum  amount  of  $10,000,000;
provided,  that the  assigning  Bank  shall  either  assign all of its Loans and
Commitment  or else retain at least  $10,000,000  of the amount of its Loans and
Commitment  immediately prior to the assignment;  and provided further, that the
Company and the Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment,  together with payment  instructions,  addresses and related
information  with respect to the Assignee,  shall have been given to the Company
and the Agent by such  Bank and the  Assignee;  (ii) such Bank and its  Assignee
shall have  delivered to the Company and the Agent an Assignment  and Acceptance
in the form of Exhibit E ("Assignment and Acceptance") together with any

                                                        57

<PAGE>



Note or Notes subject to such assignment and (iii) the assignor Bank or Assignee
has paid to the Agent a processing fee in the amount of $4,000.

                (b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the  above-referenced  processing  fee,
(i) the  Assignee  thereunder  shall be a party  hereto  and, to the extent that
rights and  obligations  hereunder  have been  assigned  to it  pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents,  and (ii) the assignor Bank shall, to the extent that rights
and obligations  hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and  Acceptance,  relinquish its rights and be
released from its obligations under the Loan Documents.

                (c) Within five Business Days after its receipt of notice by the
Agent that it has received an executed  Assignment and Acceptance and payment of
the  processing  fee,  (and  provided  that it  consents to such  assignment  in
accordance with subsection 10.08(a) and that the assigned Loans are evidenced by
Notes), the Company shall execute and deliver to the Agent, new Notes evidencing
such  Assignee's  assigned  Loans and  Commitment  and, if the assignor Bank has
retained a portion  of its Loans and its  Commitment,  replacement  Notes in the
principal amount of the Loans retained by the assignor Bank (such Notes to be in
exchange  for, but not in payment of, the Notes held by such Bank).  Immediately
upon each Assignee's  making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the  extent,  necessary  to reflect  the  addition  of the  Assignee  and the
resulting  adjustment  of the  Commitments  arising  therefrom.  The  Commitment
allocated to each Assignee  shall reduce such  Commitments of the assigning Bank
pro tanto.

                (d) Any  Bank  may at any  time  sell to one or more  commercial
banks  or  other  Persons  not  Affiliates  of  the  Company  (a  "Participant")
participating  interests in all or any portion of any Loans,  the  Commitment of
that  Bank  and the  other  interests  of that  Bank  (the  "originating  Bank")
hereunder and under the other Loan Documents;  provided,  however,  that (i) the
originating Bank's obligations under this Agreement shall remain unchanged, (ii)
the originating Bank shall remain solely responsible for the performance of such
obligations,  (iii) the Company and the Agent shall  continue to deal solely and
directly with the originating  Bank in connection  with the  originating  Bank's
rights and obligations  under this Agreement and the other Loan  Documents,  and
(iv) no Bank shall transfer or grant any participating  interest under which the
Participant  has rights to approve  any  amendment  to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of

                                                        58

<PAGE>



the Banks as described in the first proviso to Section 10.01. In the case of any
such participation, the Participant shall be entitled to the benefit of Sections
3.01,  3.03 and 10.05 as though it were also a Bank  hereunder,  and if  amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant  shall be deemed to have the right of set-off in respect of its
participating  interest in amounts owing under this Agreement to the same extent
as if the amount of its  participating  interest were owing  directly to it as a
Bank under this Agreement.

                (e) Notwithstanding  any other provision in this Agreement,  any
Bank may at any time  create a  security  interest  in,  or  pledge,  all or any
portion of its rights under and interest in this  Agreement and any Note held by
it in favor of any Federal  Reserve Bank in accordance  with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR ss.203.14,  and such Federal Reserve Bank
may  enforce  such pledge or security  interest  in any manner  permitted  under
applicable law.

        10.09  Confidentiality.  Each  Bank  agrees  to take  and to  cause  its
Affiliates to take normal and  reasonable  precautions  and exercise due care to
maintain the confidentiality of all information  identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary,  or
by the Agent on the Company's or such Subsidiary's  behalf, under this Agreement
or any other Loan Document,  and neither it nor any of its Affiliates  shall use
any such  information  other than in connection  with or in  enforcement of this
Agreement and the other Loan Documents or in connection  with other business now
or hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such  information  (i) was or becomes  generally  available to the
public other than as a result of  disclosure by the Bank, or (ii) was or becomes
available  on a  non-confidential  basis from a source  other than the  Company,
provided that such source is not bound by a  confidentiality  agreement with the
Company known to the Bank;  provided,  however,  that any Bank may disclose such
information   (A)  at  the  request  or  pursuant  to  any  requirement  of  any
Governmental  Authority  to which the Bank is subject or in  connection  with an
examination  of such Bank by any such  authority;  (B)  pursuant  to subpoena or
other  court  process;  (C)  when  required  to  do so in  accordance  with  the
provisions of any applicable  Requirement  of Law; (D) to the extent  reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective  Affiliates may be party; (E) to the extent  reasonably
required in  connection  with the exercise of any remedy  hereunder or under any
other  Loan  Document;  (F)  to  such  Bank's  independent  auditors  and  other
professional advisors; (G) to any Participant or Assignee,  actual or potential,
provided  that  such  Person   agrees  in  writing  to  keep  such   information
confidential to the same extent required of the Banks  hereunder;  (H) as to any
Bank or its  Affiliate,  as  expressly  permitted  under  the terms of any other
document or

                                                        59

<PAGE>



agreement  regarding  confidentiality  to which the Company or any Subsidiary is
party or is  deemed  party  with  such  Bank or such  Affiliate;  and (I) to its
Affiliates.

        10.10  Set-off.  In  addition  to any rights and  remedies  of the Banks
provided  by  law,  if an  Event  of  Default  exists  or the  Loans  have  been
accelerated,  each Bank is authorized at any time and from time to time, without
prior notice to the Company,  any such notice being waived by the Company to the
fullest  extent  permitted  by law,  to set off and apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held by,
and other  indebtedness at any time owing by, such Bank or any of its Affiliates
to or for  the  credit  or the  account  of the  Company  against  any  and  all
Obligations  owing to such Bank,  now or  hereafter  existing,  irrespective  of
whether  or not the  Agent or such  Bank  shall  have  made  demand  under  this
Agreement or any Loan Document and although such  Obligations  may be contingent
or  unmatured.  Each Bank  agrees  promptly  to notify the Company and the Agent
after any such set-off and  application  made by such Bank;  provided,  however,
that the  failure to give such  notice  shall not affect  the  validity  of such
set-off and application.

        10.11  Automatic  Debits of Fees.  With respect to any  commitment  fee,
arrangement fee, or other fee, or any other cost or expense (including  Attorney
Costs)  due and  payable  to the  Agent,  BofA or the  Arranger  under  the Loan
Documents,  the Company hereby irrevocably  authorizes BofA to debit any deposit
account of the  Company  with BofA in an amount such that the  aggregate  amount
debited from all such deposit accounts does not exceed such fee or other cost or
expense.  If there are insufficient  funds in such deposit accounts to cover the
amount  of the fee or other  cost or  expense  then  due,  such  debits  will be
reversed (in whole or in part,  in BofA's sole  discretion)  and such amount not
debited shall be deemed to be unpaid.  No such debit under this Section shall be
deemed a set-off.

        10.12 Notification of Addresses,  Lending Offices,  Etc. Each Bank shall
notify the Agent in writing of any  changes in the  address to which  notices to
the Bank should be  directed,  of addresses  of any Lending  Office,  of payment
instructions  in respect of all payments to be made to it hereunder  and of such
other administrative information as the Agent shall reasonably request.

        10.13  Counterparts.  This  Agreement  may be  executed in any number of
separate  counterparts,  each of  which,  when so  executed,  shall be deemed an
original,  and all of said  counterparts  taken  together  shall  be  deemed  to
constitute but one and the same instrument.

        10.14  Severability.  The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the

                                                        60

<PAGE>



legality or enforceability of the remaining  provisions of this Agreement or any
instrument or agreement required hereunder.

        10.15 No Third  Parties  Benefited.  This  Agreement is made and entered
into for the sole  protection and legal benefit of the Company,  the Banks,  the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal  beneficiary of, or have
any  direct  or  indirect  cause of  action or claim in  connection  with,  this
Agreement or any of the other Loan Documents.

        10.16 Governing Law and  Jurisdiction.  (a) THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE LAW OF THE STATE OF
WASHINGTON;  PROVIDED  THAT THE AGENT  AND THE BANKS  SHALL  RETAIN  ALL  RIGHTS
ARISING UNDER FEDERAL LAW.

                (b)  ANY  LEGAL  ACTION  OR  PROCEEDING  WITH  RESPECT  TO  THIS
AGREEMENT  OR ANY OTHER  LOAN  DOCUMENT  MAY BE  BROUGHT IN ANY STATE OR FEDERAL
COURT  SITTING IN SEATTLE,  WASHINGTON  AND BY  EXECUTION  AND  DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY,  TO THE NON-EXCLUSIVE  JURISDICTION OF THOSE COURTS.
EACH OF THE COMPANY,  THE AGENT AND THE BANKS IRREVOCABLY  WAIVES ANY OBJECTION,
INCLUDING  ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH  JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO.

        10.17 Waiver of Jury Trial.  THE  COMPANY,  THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED  UPON OR  ARISING  OUT OF OR  RELATED  TO THIS  AGREEMENT,  THE OTHER LOAN
DOCUMENTS,  OR THE TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED  PERSON,  PARTICIPANT OR ASSIGNEE,  WHETHER
WITH RESPECT TO CONTRACT CLAIMS,  TORT CLAIMS,  OR OTHERWISE.  THE COMPANY,  THE
BANKS AND THE AGENT EACH  AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION  SHALL BE
TRIED BY A COURT TRIAL  WITHOUT A JURY.  WITHOUT  LIMITING  THE  FOREGOING,  THE
PARTIES FURTHER AGREE THAT THEIR  RESPECTIVE  RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION,  COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN  DOCUMENTS OR ANY PROVISION  HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,  RENEWALS,  SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

        10.18  Entire Agreement.  This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Company, the Banks and the Agent, and
supersedes all prior or contemporaneous agreements and

                                                        61

<PAGE>



understandings  of such  Persons,  verbal or  written,  relating  to the subject
matter hereof and thereof.

        10.19  Statute of Frauds.  ORAL AGREEMENTS OR ORAL
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.

        IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to be
duly  executed  and  delivered in Seattle,  Washington  by their proper and duly
authorized officers as of the day and year first above written.


                           TRENDWEST RESORTS, INC.



                           By:
                           Title:




                           BANK OF AMERICA NATIONAL TRUST AND
                           SAVINGS ASSOCIATION, as Agent



                           By:
                           Title:




                           BANK OF AMERICA NATIONAL TRUST AND
                           SAVINGS ASSOCIATION, as Bank




                           By:
                           Title:





                                                       62

<PAGE>





                                THE FIRST NATIONAL BANK OF CHICAGO



                                By:
                                Title:





                                NATIONSBANK, N.A.



                                By:
                                Title:




                                    63

<PAGE>




                                  SCHEDULE 2.01




                                   COMMITMENTS
                               AND PRO RATA SHARES



                                                Pro Rata
         Bank                    Commitment      Share

Bank of America National
Trust and Savings
Association                      $10,000,000     33.3%

First National Bank of
Chicago                          $10,000,000     33.3%

NationsBank, N.A._               $10,000,000     33.3%
                                 -----------     -----


        TOTAL                    $30,000,000     100%

                                                       64

<PAGE>



                                    EXHIBIT A

                               NOTICE OF BORROWING


                                                          Date:_________, ____


To:      Bank of America National Trust and Savings Association
         as Agent for the Banks parties to the Credit Agreement
         dated as of February 12, 1998 (as amended, amended and
         restated, modified, supplemented, extended or renewed
         from time to time, the "Credit Agreement") among
                                 ----------------
         Trendwest Resorts, Inc., certain Banks which are
         signatories thereto, and Bank of America National
         Trust and Savings Association, as Agent

         Bank of American National Trust and Savings Association,
           as Agent
         Agency Administrative Services #5596
         1850 Gateway Boulevard, 5th Floor
         Concord, CA  94520-3281
         Attention:  Trendwest Resorts AO

         Fax:  (510) 675-8500
         Phone:  (510) 675-8431

Ladies and Gentlemen:

         The undersigned, Trendwest Resorts, Inc. (the "Company"), refers to the
Credit  Agreement,  the terms  defined  therein  being  used  herein as  therein
defined,  and hereby gives you notice  irrevocably,  pursuant to Section 2.03 of
the Credit Agreement, of the Borrowing specified below:

                  1.  The Business Day of the proposed Borrowing is
                                 ,      .

                  2.  The aggregate amount of the proposed Borrowing is
         $                     .

                  3.  The Borrowing is to be comprised of $
         of [Base Rate] [Offshore Rate] Loans.

                  4.  The duration of the Interest Period for the
         Offshore Rate Loans included in the Borrowing shall be
         _____ months.

         The undersigned hereby certifies that the following statements are true
on the date  hereof,  and will be true on the  date of the  proposed  Borrowing,
before and after giving effect  thereto and to the  application  of the proceeds
therefrom:

                  (a)  the representations and warranties of the Company
         contained in Article V of the Credit Agreement are true and

                                       A-1

<PAGE>



         correct  as though  made on and as of such date  (except  to the extent
         such representations and warranties relate to an earlier date, in which
         case they are true and correct as of such date);

                  (b)  no Default or Event of Default exists or shall
         result from such proposed Borrowing; and

                  (c) the  proposed  Borrowing  will  not  cause  the  aggregate
         principal  amount  of all  outstanding  Loans to  exceed  the  combined
         Commitments of the Banks.


                                TRENDWEST RESORTS, INC.



                                By:

                                Name:

                                Title:





                                       A-2

<PAGE>



                                    EXHIBIT B

                        NOTICE OF CONVERSION/CONTINUATION


                                                     Date: _______, ___


To:      Bank of America National Trust and Savings Association,
         as Agent for the Banks parties to the Credit Agreement
         dated as of February 12, 1998 (as amended, amended and
         restated, modified, supplemented, extended or renewed
         from time to time, the "Credit Agreement") among
                                 ----------------
         Trendwest Resorts, Inc., certain Banks which are
         signatories thereto, and Bank of America National Trust
         and Savings Association, as Agent

         Bank of American National Trust and Savings Association,
           as Agent
         Agency Administrative Services #5596
         1850 Gateway Boulevard, 5th Floor
         Concord, CA  94520-3281
         Attention:  Trendwest Resorts AO

         Fax:  (510) 675-8500
         Phone:  (510) 675-8431

Ladies and Gentlemen:

         The undersigned, Trendwest Resorts, Inc. (the "Company"), refers to the
Credit  Agreement,  the terms  defined  therein  being  used  herein as  therein
defined,  and hereby gives you notice  irrevocably,  pursuant to Section 2.04 of
the Credit Agreement, of the [conversion]  [continuation] of the Loans specified
herein, that:

                  1.  The Conversion/Continuation Date is             ,
               .

                  2.  The aggregate amount of the Loans to be [converted]
         [continued] is $              .

                  3.  The Loans are to be [converted into] [continued as]
         [Offshore Rate] [Base Rate] Loans.

                  4.  The duration of the Interest Period for Offshore
         Rate Loans included in the [conversion] [continuation] shall
         be      months.

         The undersigned hereby certifies that the following statements are true
on the date  hereof,  and will be true on the  proposed  Conversion/Continuation
Date,  before and after  giving  effect  thereto and to the  application  of the
proceeds therefrom:


                                       B-1

<PAGE>



                  (a)  the   representations   and  warranties  of  the  Company
         contained in Article V of the Credit  Agreement are true and correct as
         though  made  on  and as of  such  date  (except  to  the  extent  such
         representations and warranties relate to an earlier date, in which case
         they are true and correct as of such date);

                  (b)  no Default or Event of Default exists or shall
         result from such proposed [conversion] [continuation]; and

                  (c) the proposed [conversion][continuation] will not cause the
         aggregate  principal  amount of all  outstanding  Loans to  exceed  the
         combined Commitments of the Banks.



                          TRENDWEST RESORTS, INC.



                          By:

                          Name:

                          Title:



                                       B-2

<PAGE>



                                   EXHIBIT C-1


                             TRENDWEST RESORTS, INC.
                        QUARTERLY COMPLIANCE CERTIFICATE



                                    Financial
                                                     Statement Date:_____, ____

TO:      Bank of America National Trust and Savings Association,
           as Agent

         Seafirst-Commercial Wholesale Banking
         Northwest National Accounts #61101
         701 5th Avenue, CSC-12
         Seattle, WA  98104
         Attention:  Stan Diddams, Vice President

         and

         Credit Products #5771
         555 California Street, 41st Floor
         San Francisco, CA  94104-1502
         Attention:  Matthew A. Gabel, Vice President

         Reference is made to that certain Credit Agreement dated as of February
12, 1997 (as amended, amended and restated, modified, supplemented,  extended or
renewed from time to time,  the "Credit  Agreement")  among  Trendwest  Resorts,
Inc., an Oregon corporation (the "Company"),  the several financial institutions
from time to time  parties to the Credit  Agreement  (the  "Banks")  and Bank of
America National Trust and Savings Association,  as agent for the Banks (in such
capacity, the "Agent"). Unless otherwise defined herein,  capitalized terms used
herein have the respective meanings assigned to them in the Credit Agreement.

         The undersigned  Responsible Officer of Trendwest Resorts, Inc., hereby
certifies as of the date hereof that he/she is the
                of the  Company,  and that,  as such,  he/she is  authorized  to
execute and deliver this Certificate to the Banks and the Agent on the behalf of
the Company and its consolidated Subsidiaries, and that:

[Use the following paragraph if this Certificate is delivered in connection with
the  financial  statements  required  by  subsection  [6.01(a)]  of  the  Credit
Agreement.]

         1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
audited   consolidated  balance  sheet  of  the  Company  and  its  consolidated
Subsidiaries  as at the end of the fiscal year ended  _______________,  ____ and
(b) the related consolidated  statements of income or operations,  shareholders'
equity and cash flows for such fiscal year, setting forth in each

                                      C-1-1

<PAGE>



case  in  comparative  form  the  figures  for the  previous  fiscal  year,  and
accompanied  by the  unqualified  opinion  of KPMG Peat  Marwick  LLP,  or other
nationally-recognized independent public accounting firm, which states that such
consolidated  financial  statements present fairly the financial position of the
Company  and  its  consolidated   Subsidiaries  for  the  periods  indicated  in
conformity with GAAP applied on a basis consistent with prior years.

                                       or

[Use the following paragraph if this Certificate is delivered in connection with
the  financial  statements  required  by  subsection  [6.01(b)]  of  the  Credit
Agreement.]

         1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
unaudited  consolidated  balance  sheet  of the  Company  and  its  consolidated
Subsidiaries as of the end of the fiscal quarter ended __________, ____, and (b)
the related unaudited consolidated  statements of income,  shareholders' equity,
and cash flows for the period commencing on the first day and ending on the last
day of such quarter.  Such financial statements were prepared in accordance with
GAAP (subject only to ordinary,  good faith year-end audit  adjustments  and the
absence  of  footnotes)  and  present  fairly,  in all  material  respects,  the
financial  position  and  the  results  of  operations  of the  Company  and its
consolidated Subsidiaries.

         2. The  undersigned  has reviewed and is familiar with the terms of the
Credit  Agreement  and  has  made,  or  has  caused  to be  made  under  his/her
supervision,  a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the  accounting  period covered by the attached
financial statements.

         3. To the best of the undersigned's knowledge, the Company, during such
period,  has  observed,  performed or satisfied  all of its  covenants and other
agreements,  and  satisfied  every  condition  in  the  Credit  Agreement  to be
observed,  performed or satisfied by the  Company,  and the  undersigned  has no
knowledge  of any Default or Event of  Default,  including,  without  limitation
under subsection 8.01(e) of the Credit Agreement.

         4. The following  financial covenant analyses and information set forth
on  Schedule 2 attached  hereto are true and  accurate  on and as of the date of
this  Certificate.  All amounts and ratios in Schedule 2 refer to the  financial
statements  attached as Schedule 1 hereto and are determined in accordance  with
the specifications set forth in the Credit Agreement.


                                      C-1-2

<PAGE>



         IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of                    ,      .


                                                     TRENDWEST RESORTS, INC.



                                                     By:

                                      Name:

                                     Title:

                                      C-1-3

<PAGE>



                                   Schedule 2
                                       to
                             TRENDWEST RESORTS, INC.

                        QUARTERLY COMPLIANCE CERTIFICATE


                                Financial Statement Date:  _______________


Section 6.13 - Interest Coverage Ratio

         Net Income                             $__________

         Plus:  Income Tax Provision             __________

         Plus:  Interest Expense                 __________

         Plus:  Depreciation                     __________

         Plus:  Amortization                     __________

(a)      EBITDA                                 $__________

         Divided by:

(b)      Interest Expense                       $__________

(c)      (a / b)                                        ___

         Minimum Permitted                              6.0


Section 6.14 - Capitalization Ratio

         Notes Payable                          $__________

         Plus:  Capital Lease Obligations        __________

(a)      Consolidated Indebtedness              $__________

         Divided by:

(b)      Shareholders' equity                   $__________

(c)      (a / b)                                       ___%

         Maximum Permitted                              50%

                                      C-1-4

<PAGE>



Section 7.16 - Time Share Inventory

         Unsold Vacation Credits                                 $__________

         Plus:  Construction in progress                           __________

(a)      Total Inventory                                          $__________

         Divided by:

(b)      Prior four (4) quarter Vacation Credit sales,
         revenues, net                                            $__________

(c)      (a / b)                                                           ___%

         Maximum Permitted                                                 40%


Section 7.01 - Limitation on Liens

(a)      Total Secured Debt                                       $__________

(b)      Consolidated Net Worth                                   $__________

(c)      (a / b)                                                          ___%

         Maximum Permitted                                                  5%



                                      C-1-5

<PAGE>



                                   EXHIBIT C-2


                             TRENDWEST RESORTS, INC.
                         MONTHLY COMPLIANCE CERTIFICATE



                                    Calendar Month Ending: _________,_______


TO:      Bank of America National Trust and Savings Association,
           as Agent

         Seafirst-Commercial Wholesale Banking
         Northwest National Accounts #61101
         701 5th Avenue, CSC-12
         Seattle, WA  98104
         Attention:  Stan Diddams, Vice President

         and

         Credit Products #5771
         555 California Street, 41st Floor
         San Francisco, CA  94104-1502
         Attention:  Matthew A. Gabel, Vice President

         Reference is made to that certain Credit Agreement dated as of February
12, 1998 (as amended, amended and restated, modified, supplemented,  extended or
renewed from time to time,  the "Credit  Agreement")  among  Trendwest  Resorts,
Inc., an Oregon corporation (the "Company"),  the several financial institutions
from time to time  parties to the Credit  Agreement  (the  "Banks")  and Bank of
America National Trust and Savings Association,  as agent for the Banks (in such
capacity, the "Agent"). Unless otherwise defined herein,  capitalized terms used
herein have the respective meanings assigned to them in the Credit Agreement.

         The undersigned  Responsible Officer of Trendwest Resorts, Inc., hereby
certifies as of the date hereof that he/she is the  ____________________  of the
Company,  and that,  as such,  he/she is  authorized to execute and deliver this
Certificate  to the  Banks and the Agent on the  behalf of the  Company  and its
consolidated Subsidiaries, and that:

         1. The  undersigned  has reviewed and is familiar with the terms of the
Credit  Agreement  and  has  made,  or  has  caused  to be  made  under  his/her
supervision,  a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the calendar month ended __________, _____.

         2.       To the best of the undersigned's knowledge, the
Company, during such period, has observed, performed or satisfied
all of its covenants and other agreements, and satisfied every
condition in the Credit Agreement to be observed, performed or

                                      C-2-1

<PAGE>



satisfied by the Company, and the undersigned has no knowledge of any Default or
Event of Default, including,  without limitation under subsection 8.01(e) of the
Credit Agreement.

         3. The following  financial covenant analyses and information set forth
on  Schedule 1 attached  hereto are true and  accurate  on and as of the date of
this Certificate.

         IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of                    ,      .


                                                     TRENDWEST RESORTS, INC.



                                                     By:

                                      Name:

                                     Title:

                                      C-2-2

<PAGE>



                                   Schedule 1
                                       to
                             TRENDWEST RESORTS, INC.

                         MONTHLY COMPLIANCE CERTIFICATE


                                               Month Ended:  _______________


Section 7.15 Notes Receivable Past Due and Delinquent

                                         1                           2
                                                                  Balances
                                     # of Loans                 Outstanding

(a)                                    __________                 $__________

         Outstanding Past Due Amount
(b)            31 - 90 Days            __________                 $__________

(c)                b / a               __________                 $__________

           Maximum Permitted:                7.5%                        7.5%

         Outstanding Delinquent Amount
(d)              >91 days              __________                 $__________

(e)                d / a               __________                 $__________

           Maximum Permitted for any two
           (2) Consecutive Months:            12%                        12%




                                      C-2-3

<PAGE>



Section 4.02(d) - Borrowing Base Availability Calculation

         Notes Receivable                                     $__________

         Less:  Allowance for doubtful accounts,               __________

         Less:  Allowance for sales returns,                   __________

         Less:  Residual interest in notes receivable sold     __________ 

(a)      Unencumbered Notes Receivable                        $__________

(b)      NR Advance Rate                                              75%

(c)      Notes Receivable available for Advances
                  (a x b)                                     $__________

         Unsold Vacation Credits                              $__________

         Construction in Progress                              __________

              (Lower of Cost or Net Realizable Value)          __________ 

(d)      Total Inventory                                      $__________

(e)      Inventory Advance Rate                                       50%

(f)      Inventory available for Advances
                  d x e                                       $__________

         Total Available Funds (< $30,000,000)
                  c + f                                       $__________




                                      C-2-4

<PAGE>





                                   EXHIBIT D-1

                 FORM OF OPINION OF COMPANY'S WASHINGTON COUNSEL

                   [on letterhead of Trendwest Resorts, Inc.]


                               February ___, 1998




Bank of America National Trust and Savings Association as agent under the Credit
  Agreement (as hereinafter defined)
555 California Street, 41st Floor
San Francisco, California

Ladies and Gentlemen:

         I have acted as Washington counsel to Trendwest Resorts, Inc. an Oregon
corporation (the "Corporation"), in connection with the transaction contemplated
by the Credit Agreement dated as of February 12, 1998, (the "Credit  Agreement")
between  the  Corporation,  you,  and the  other  financial  institutions  party
thereto.  This  opinion  letter  is  provided  to  you  at  the  request  of the
Corporation  pursuant  to Section  4.01(d) of the  Credit  Agreement.  Except as
otherwise  indicated  herein,  capitalized terms used in this opinion letter are
defined as set forth in the Credit Agreement.

         I have examined the originals or copies of such documents, certificates
and records as I have deemed relevant or necessary as the basis for the opinions
hereinafter  expressed.  I have assumed the genuineness of all  signatures,  the
authenticity  of  documents,   certificates  and  records  submitted  to  me  as
originals,  the conformity to the originals of all documents,  certificates  and
records submitted to me as certified or reproduction  copies, the legal capacity
of all natural persons executing  documents,  certificates and records,  and the
completeness  and  accuracy  as of  the  date  of  this  opinion  letter  of the
information contained in such documents, certificates and records.

         This opinion letter is subject to all assumptions,  qualifications  and
limitations  not  inconsistent  herewith that are described in the Legal Opinion
Accord of the ABA  Section of  Business  Law (1991) at Section 4  ("Reliance  by
Opinion Giver on Assumptions"), Section 14 ("Other Common Qualifications"),

                                      D-1-1

<PAGE>


Bank of America National Trust
  and Savings Association
Page 2



Section 16 ("No Violation of Law") and Section 19 ("Specific
Legal Issues").

         The law covered by opinions  expressed herein is limited to the Federal
law of the United  States and the law of the State of  Washington.  I express no
opinion  with  respect to the laws,  regulations  or  ordinances  of any county,
municipality or other local governmental agency.

         As used in this opinion  letter,  the  expression  "to my knowledge" or
expressions  of like  import  means  my  conscious  awareness  of facts or other
information  and does not  include  information  that might be revealed if there
were to be undertaken a canvass of all offices of the Corporation or a review of
all of its files.  Except as otherwise set forth herein, I have not reviewed any
agreements, orders, writs, judgments or decrees.

         For purposes of this opinion letter I also assume that: the Corporation
is duly incorporated and validly existing under the laws of the State of Oregon;
the  Corporation has corporate power and authority to enter into and perform the
Credit  Agreement;  and the  execution,  delivery and  performance of the Credit
Agreement  have been duly  authorized by all necessary  corporate  action on the
part of the Corporation.

         Based upon and subject to the foregoing, I am of the opinion that:

         1.       The Corporation has received a certificate of authority
to transact business as a foreign corporation in the States of
Washington, ___________________, ________________________, and
-----------------------.

         2. The Credit  Agreement  has been duly  executed and  delivered by the
Corporation and constitutes the valid and binding  obligation of the Corporation
enforceable against the Corporation in accordance with its terms, except:

         (a)  The   enforceability   thereof  may  be  affected  by  bankruptcy,
insolvency, moratorium, fraudulent transfer and other similar laws affecting the
rights  and  remedies  of  creditors  generally  and by the  effect  of  general
principles  of equity,  including  without  limitation,  equitable  defenses and
concepts of materiality,  reasonableness,  unconscionability,  impracticability,
impossibility, good faith and fair dealing, and the possible

                                      D-1-2

<PAGE>


Bank of America National Trust
  and Savings Association
Page 3



unavailability of specific performance or injunctive relief,
whether applied in an action at law or in equity;

         (b) The  courts  of the State of  Washington  will  consider  extrinsic
evidence of  circumstances  surrounding  the making of the Credit  Agreement  to
ascertain the intent of the parties in using the language employed therein, even
when  such  language  is  unambiguous,   and  may   incorporate   additional  or
supplementary  terms into the Credit Agreement in order to effectuate the intent
of the parties; and

         (c)  While  certain   provisions   of  the  Credit   Agreement  may  be
unenforceable,  such  unenforceability will not in our opinion render the Credit
Agreement  invalid  as a whole  or  preclude  (i)  judicial  enforcement  of the
obligation of the Corporation to repay the indebtedness  evidenced by the Credit
Agreement,  together with interest  thereon (to the extent not deemed a penalty)
or  (ii)  acceleration  of the  obligation  of the  Corporation  to  repay  such
indebtedness  upon  material  default  by  the  Corporation  in  payment  of the
principal of or interest on such  indebtedness  or upon material  default in any
other  material  provision  of the  Credit  Agreement  (to the extent the Credit
Agreement provides for such acceleration).

         3. Execution and delivery by the Corporation of, and performance of its
agreements  in, the Agreement do not (i) breach or result in a default under any
existing material  obligation of the Corporation under any indenture,  mortgage,
contract or other  agreement to which the  Corporation is a party and of which I
have  knowledge,  or (ii)  breach or  otherwise  violate any  existing  material
obligation of the Corporation  under any court or  administrative  order,  writ,
judgment or decree of which I have knowledge that names the  corporation  and is
specifically directed to it or its property

         4.       Execution, delivery and performance by the Corporation
of the Agreement do not violate applicable provisions of
statutory law or regulations.

         5. No  authorization,  consent or approval of,  filing  with,  or other
action by, any governmental authority is required for the execution and delivery
of the Credit  Agreement by the Corporation or the repayment of the Loans by the
Corporation.


                                      D-1-3

<PAGE>


Bank of America National Trust
  and Savings Association
Page 4



         6. I confirm  to you that,  to my  knowledge,  there are no  actions or
proceedings  against the Corporation,  pending or overtly threatened in writing,
before any court, governmental agency or arbitrator which (i) seek to impair the
enforceability  of the Credit  Agreement or (ii) except as disclosed in Schedule
5.05 to the Credit Agreement, if determined adversely to the Corporation,  would
result in a judgment or order  against the  Corporation  (in excess of insurance
coverage) for more than $500,000 in any one case or $1,000,000 in the aggregate.

         This  opinion  letter  is  delivered  as of its  date and  without  any
undertaking  to advise you of any  changes  of law or fact that occur  after the
date of this opinion  letter even though the changes may affect a legal analysis
or conclusion or an information confirmation in this opinion letter.

         A copy of this opinion letter may be delivered by you to each Bank, and
they  may  rely on this  opinion  letter  as if it were  addressed  and had been
delivered to them on the date  hereof.  Subject to the  foregoing,  this opinion
letter  may be  relied  upon by you  only in  connection  with  the  transaction
described in the initial paragraph of this opinion letter and may not be used or
relied upon by you for any other  purpose or by any other person for any purpose
whatsoever without, in each instance, my prior written consent.

                                                     Very truly yours,




                                                     ROBERT KLEIN

                                      D-1-4

<PAGE>






                                   EXHIBIT D-2

                   FORM OF OPINION OF COMPANY'S OREGON COUNSEL

                        [on letterhead of Jeld-Wen, inc.]


                               February ___, 1998




Bank of America National Trust and Savings Association as agent under the Credit
  Agreement (as hereinafter defined)
555 California Street, 41st Floor
San Francisco, California

Ladies and Gentlemen:

         I have acted as Oregon  counsel to  Trendwest  Resorts,  Inc. an Oregon
corporation  (the  "Corporation")  and  a  subsidiary  of  Jeld-Wen,   inc.,  in
connection with the transaction contemplated by the Credit Agreement dated as of
February 12, 1998 (the "Credit Agreement") between the Corporation, you, and the
other financial  institutions party thereto.  This opinion letter is provided to
you at the request of the Corporation  pursuant to Section 4.01(d) of the Credit
Agreement.  Except as otherwise indicated herein, capitalized terms used in this
opinion letter are defined as set forth in the Credit Agreement.

         I have examined the originals or copies of such documents, certificates
and records as I have deemed relevant or necessary as the basis for the opinions
hereinafter  expressed.  I have assumed the genuineness of all  signatures,  the
authenticity  of  documents,   certificates  and  records  submitted  to  me  as
originals,  the conformity to the originals of all documents,  certificates  and
records submitted to me as certified or reproduction  copies, the legal capacity
of all natural persons executing  documents,  certificates and records,  and the
completeness  and  accuracy  as of  the  date  of  this  opinion  letter  of the
information contained in such documents, certificates and records.

         This opinion letter is subject to all assumptions,  qualifications  and
limitations  not  inconsistent  herewith that are described in the Legal Opinion
Accord of the ABA  Section of  Business  Law (1991) at Section 4  ("Reliance  by
Opinion Giver on

                                      D-2-1

<PAGE>


Bank of America National Trust
  and Savings Association
Page 2



Assumptions"),  Section 16 ("No  Violation  of Law") and  Section 19  ("Specific
Legal Issues").

         The law covered by opinions  expressed herein is limited to the Federal
law of the  United  States  and the law of the State of  Oregon.  I  express  no
opinion  with  respect to the laws,  regulations  or  ordinances  of any county,
municipality or other local governmental agency.

         As used in this opinion  letter,  the  expression  "to my knowledge" or
expressions  of like  import  means  my  conscious  awareness  of facts or other
information  and does not  include  information  that might be revealed if there
were to be undertaken a canvass of all offices of the Corporation or a review of
all of its files.  Except as otherwise set forth herein, I have not reviewed any
agreements, orders, writs, judgments or decrees.

         Based upon and subject to the foregoing, I am of the opinion that:

         1. The  Corporation  is a  corporation  duly  incorporated  and validly
existing  under the laws of the State of Oregon and has the corporate  power and
corporate  authority  to own and operate its  properties  and assets and, to our
knowledge, to engage in the business that it now carries on.

         2. The  Corporation has corporate power and authority to enter into and
perform the Agreement. The execution,  delivery and performance of the Agreement
have been duly authorized by all necessary  corporate  action on the part of the
Corporation,  and the  Agreement  has been duly  executed  and  delivered by the
Corporation.

         3. Execution and delivery by the Corporation of, and performance of its
agreements  in, the Agreement do not (i) violate the  Corporation's  articles of
incorporation  or bylaws,  (ii) breach or result in a default under any existing
material obligation of the Corporation under any indenture,  mortgage,  contract
or other  agreement  to which  the  Corporation  is a party  and of which I have
knowledge, or (iii) breach or otherwise violate any existing material obligation
of the Corporation under any court or administrative  order,  writ,  judgment or
decree of which I have knowledge that names the  corporation and is specifically
directed to it or its property


                                      D-2-2

<PAGE>


Bank of America National Trust
  and Savings Association
Page 3



         4.       Execution, delivery and performance by the Corporation
of the Agreement do not violate applicable provisions of
statutory law or regulations.

         5. No  authorization,  consent or approval of,  filing  with,  or other
action by, any governmental authority is required for the execution and delivery
of the Credit  Agreement by the Corporation or the repayment of the Loans by the
Corporation.

         6. I confirm  to you that,  to my  knowledge,  there are no  actions or
proceedings  against the Corporation,  pending or overtly threatened in writing,
before any court, governmental agency or arbitrator which (i) seek to impair the
enforceability  of the Credit  Agreement or (ii) except as disclosed in Schedule
5.05 to the Credit Agreement, if determined adversely to the Corporation,  would
result in a judgment or order  against the  Corporation  (in excess of insurance
coverage) for more than $500,000 in any one case or $1,000,000 in the aggregate.

         This  opinion  letter  is  delivered  as of its  date and  without  any
undertaking  to advise you of any  changes  of law or fact that occur  after the
date of this opinion  letter even though the changes may affect a legal analysis
or conclusion or an information confirmation in this opinion letter.

         A copy of this opinion letter may be delivered by you to each Bank, and
they  may  rely on this  opinion  letter  as if it were  addressed  and had been
delivered to them on the date  hereof.  Subject to the  foregoing,  this opinion
letter  may be  relied  upon by you  only in  connection  with  the  transaction
described in the initial paragraph of this opinion letter and may not be used or
relied upon by you for any other  purpose or by any other person for any purpose
whatsoever without, in each instance, my prior written consent.

                                                     Very truly yours,




                                                     HEIDI NEEL

                                      D-2-3

<PAGE>



                                    EXHIBIT E

                   FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT



         This  ASSIGNMENT  AND  ACCEPTANCE   AGREEMENT  (this   "Assignment  and
Acceptance")    dated    as   of    __________,    _____    is   made    between
______________________________ (the "Assignor") and
__________________________ (the "Assignee").


                                    RECITALS

         WHEREAS,  the Assignor is party to that certain Credit  Agreement dated
as  of  February  12,  1998  (as  amended,   amended  and  restated,   modified,
supplemented,  extended or renewed  from time to time,  the "Credit  Agreement")
among  Trendwest  Resorts,  Inc., an Oregon  corporation  (the  "Company"),  the
several financial  institutions  from time to time party thereto  (including the
Assignor,  the  "Banks"),  and  Bank  of  America  National  Trust  and  Savings
Association,  as agent for the Banks  (the  "Agent").  Any terms  defined in the
Credit  Agreement and not defined in this  Assignment  and  Acceptance  are used
herein as defined in the Credit Agreement;

         WHEREAS,  as provided  under the Credit  Agreement,  the  Assignor  has
committed to making Loans (the "Committed Loans") to the Company in an aggregate
amount not to exceed $__________ (the "Commitment");

         WHEREAS,  [the  Assignor  has made  Committed  Loans  in the  aggregate
principal  amount  of  $__________  to the  Company]  [no  Committed  Loans  are
outstanding under the Credit Agreement];

         WHEREAS,  the Assignor  wishes to assign to the Assignee  [part of the]
[all]  rights and  obligations  of the  Assignor  under the Credit  Agreement in
respect of its Commitment, [together with a corresponding portion of each of its
outstanding  Committed  Loans,] in an amount equal to $__________ (the "Assigned
Amount") on the terms and  subject to the  conditions  set forth  herein and the
Assignee  wishes  to  accept  assignment  of  such  rights  and to  assume  such
obligations from the Assignor on such terms and subject to such conditions;

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
agreements contained herein, the parties hereto agree as follows:

         1.       Assignment and Acceptance.

                  (a) Subject to the terms and conditions of this Assignment and
Acceptance,  (i)  the  Assignor  hereby  sells,  transfers  and  assigns  to the
Assignee,  and (ii) the Assignee hereby  purchases,  assumes and undertakes from
the Assignor,

                                       E-1

<PAGE>



without recourse and without  representation  or warranty (except as provided in
this Assignment and Acceptance) __% (the "Assignee's  Percentage  Share") of (A)
the  Commitment  [and the  Committed  Loans] of the Assignor and (B) all related
rights, benefits, obligations, liabilities and indemnities of the Assignor under
and in connection with the Credit Agreement and the Loan Documents.

                  (b) With effect on and after the Effective Date (as defined in
Section 5 hereof),  the Assignee  shall be a party to the Credit  Agreement  and
succeed to all of the rights and be obligated to perform all of the  obligations
of a Bank under the Credit  Agreement,  including  the  requirements  concerning
confidentiality  and the payment of  indemnification,  with a  Commitment  in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance  with their  terms all of the  obligations  which by the terms of the
Credit  Agreement are required to be performed by it as a Bank. It is the intent
of the parties  hereto that the  Commitment  of the  Assignor  shall,  as of the
Effective  Date,  be reduced by an amount equal to the  Assigned  Amount and the
Assignor shall relinquish its rights and be released from its obligations  under
the Credit  Agreement  to the extent such  obligations  have been assumed by the
Assignee;  provided,  however,  the Assignor  shall not relinquish its indemnity
rights under the Loan Documents  (including rights arising under Article III and
Sections  10.04 and 10.05 of the Credit  Agreement)  to the extent  such  rights
relate to the time prior to the Effective Date.

                  (c)      After giving effect to the assignment and
assumption set forth herein, on the Effective Date the Assignee's
Commitment will be $__________.

                  (d)      After giving effect to the assignment and
assumption set forth herein, on the Effective Date the Assignor's
Commitment will be $__________.

         2.       Payments.

                  (a) As  consideration  for the sale,  assignment  and transfer
contemplated in Section 1 hereof,  the Assignee shall pay to the Assignor on the
Effective Date in immediately  available  funds an amount equal to  $__________,
representing  the  Assignee's  Pro Rata  Share of the  principal  amount  of all
Committed Loans.  [Add, if applicable,  payment of accrued interest on, and fees
with respect to, Committed Loans assigned.]

                  (b)      The [Assignor] [Assignee] further agrees to pay to
the Agent a processing fee in the amount specified in
subsection 10.08(a) of the Credit Agreement.


                                       E-2

<PAGE>



         3.       Reallocation of Payments.

         Any interest,  fees and other  payments  accrued to the Effective  Date
with respect to the Commitment[,] [and Committed Loans] shall be for the account
of the Assignor. Any interest,  fees and other payments accrued on and after the
Effective  Date with respect to the Assigned  Amount shall be for the account of
the Assignee.  Each of the Assignor and the Assignee agrees that it will hold in
trust for the other  party any  interest,  fees and other  amounts  which it may
receive to which the other party is entitled pursuant to the preceding  sentence
and pay to the other party any such amounts  which it may receive  promptly upon
receipt.

         4.       Independent Credit Decision.

         The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules  and Exhibits  thereto,  together with copies of the
most  recent  financial  statements  referred  to in Section  6.01 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own  credit  and legal  analysis  and  decision  to enter  into this
Assignment  and  Acceptance;  and (b)  agrees  that it will,  independently  and
without  reliance  upon the  Assignor,  the Agent or any other Bank and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue  to make its own  credit  and legal  decisions  in taking or not taking
action under the Credit Agreement.

         5.       Effective Date; Notices.

                  (a) As between the Assignor and the  Assignee,  the  effective
date  for  this  Assignment  and  Acceptance  shall be  __________,  _____  (the
"Effective Date");  provided that the following  conditions  precedent have been
satisfied on or before the Effective Date:

                             (i)    this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;

                            (ii)    the consent of the Company and the Agent
required for an effective  assignment of the Assigned  Amount by the Assignor to
the Assignee under  subsection  10.08(a) of the Credit Agreement shall have been
duly obtained and shall be in full force and effect as of the Effective Date;

                           (iii)    the Assignee shall pay to the Assignor all
amounts due to the Assignor under this Assignment and Acceptance;

                            (iv)    the Assignee shall have complied with
subsection 9.10(a) of the Credit Agreement (if applicable); and

                             (v)    the processing fee referred to in
Section 2(b) hereof shall have been paid to the Agent.

                                       E-3

<PAGE>



                  (b) Promptly  following the execution of this  Assignment  and
Acceptance,  the  Assignor  shall  deliver  to the  Company,  and the  Agent for
acknowledgement  by the Agent, a Notice of Assignment  substantially in the form
attached hereto as Schedule 1.

         6.       Agent.

                  (a) The Assignee  hereby  appoints and authorizes the Assignor
to take such action as agent on its behalf and to exercise such powers under the
Credit  Agreement  as are  delegated  to the Agent by the Banks  pursuant to the
terms of the Credit Agreement.

                  [(b) The Assignee shall assume no duties or  obligations  held
by the Assignor in its capacity as Agent under the Credit  Agreement.]  [INCLUDE
ONLY IF ASSIGNOR IS AGENT]

         7.       Withholding Tax.

         The Assignee (a) represents and warrants to the Assignor, the Agent and
the Company that under applicable law and treaties no tax will be required to be
withheld by the Assignor with respect to any payments to be made to the Assignee
hereunder,  (b)  agrees to  furnish  (if it is  organized  under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Company  prior to the time that the Agent or Company is required to make any
payment of principal,  interest or fees hereunder,  duplicate executed originals
of either U.S.  Internal  Revenue  Service  Form 4224 or U.S.  Internal  Revenue
Service Form 1001 (wherein the Assignee claims  entitlement to the benefits of a
tax treaty that  provides  for a complete  exemption  from U.S.  federal  income
withholding tax on all payments  hereunder) and agrees to provide new Forms 4224
or 1001 upon the  expiration  of any  previously  delivered  form or  comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto,  duly executed and completed by the Assignee,  and (c) agrees to comply
with all applicable  U.S. laws and regulations  with regard to such  withholding
tax exemption.

         8.       Representations and Warranties.

                  (a) The Assignor  represents  and warrants  that (i) it is the
legal and  beneficial  owner of the interest  being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii) it
is duly  organized and existing and it has the full power and authority to take,
and has taken,  all action  necessary to execute and deliver this Assignment and
Acceptance  and any other  documents  required  or  permitted  to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder;  (iii) no notices to, or consents,  authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and

                                       E-4

<PAGE>



performance of this Assignment and Acceptance,  and apart from any agreements or
undertakings or filings required by the Credit Agreement,  no further action by,
or notice to, or filing with,  any Person is required of it for such  execution,
delivery or  performance;  and (iv) this Assignment and Acceptance has been duly
executed  and  delivered  by it and  constitutes  the legal,  valid and  binding
obligation of the Assignor,  enforceable against the Assignor in accordance with
the  terms  hereof,  subject,  as to  enforcement,  to  bankruptcy,  insolvency,
moratorium,  reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles.

                  (b) The  Assignor  makes no  representation  or  warranty  and
assumes  no  responsibility  with  respect  to  any  statements,  warranties  or
representations  made in or in  connection  with  the  Credit  Agreement  or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document  furnished  pursuant
thereto.  The Assignor makes no  representation  or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of the Company,  or the  performance or observance by the Company,
of any of its  respective  obligations  under the Credit  Agreement or any other
instrument or document furnished in connection therewith.

                  (c) The Assignee  represents  and warrants that (i) it is duly
organized  and  existing and it has full power and  authority  to take,  and has
taken,  all  action  necessary  to  execute  and  deliver  this  Assignment  and
Acceptance  and any other  documents  required  or  permitted  to be executed or
delivered  by it in  connection  with this  Assignment  and  Acceptance,  and to
fulfill  its   obligations   hereunder;   (ii)  no  notices  to,  or   consents,
authorizations  or approvals of, any Person are required (other than any already
given or  obtained)  for its due  execution,  delivery and  performance  of this
Assignment  and  Acceptance;  and apart from any agreements or  undertakings  or
filings required by the Credit Agreement, no further action by, or notice to, or
filing  with,  any Person is  required  of it for such  execution,  delivery  or
performance;  (iii) this  Assignment  and  Acceptance has been duly executed and
delivered by it and constitutes the legal,  valid and binding  obligation of the
Assignee,  enforceable against the Assignee in accordance with the terms hereof,
subject,   as   to   enforcement,   to   bankruptcy,   insolvency,   moratorium,
reorganization  and other laws of general  application  relating to or affecting
creditors'  rights  and to  general  equitable  principles;  and  (iv)  it is an
Eligible Assignee.

         9.       Further Assurances.

         The Assignor and the Assignee  each hereby agree to execute and deliver
such  other  instruments,  and take  such  other  action,  as  either  party may
reasonably request in connection with the

                                       E-5

<PAGE>



transactions  contemplated  by this  Assignment  and  Acceptance,  including the
delivery of any notices or other  documents or instruments to the Company or the
Agent,  which may be required in connection  with the  assignment and assumption
contemplated hereby.

         10.      Miscellaneous.

                  (a)  Any   amendment  or  waiver  of  any  provision  of  this
Assignment and Acceptance  shall be in writing and signed by the parties hereto.
No failure or delay by either party  hereto in  exercising  any right,  power or
privilege  hereunder  shall  operate as a waiver  thereof  and any waiver of any
breach of the  provisions of this  Assignment  and  Acceptance  shall be without
prejudice to any rights with respect to any other or further breach thereof.

                  (b)           All payments made hereunder shall be made
without any set-off or counterclaim.

                  (c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.

                  (d) This  Assignment  and  Acceptance  may be  executed in any
number of  counterparts  and all of such  counterparts  taken  together shall be
deemed to constitute one and the same instrument.

                  (e) THIS  ASSIGNMENT AND  ACCEPTANCE  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE  WITH THE LAW OF THE STATE OF  WASHINGTON.  The Assignor
and the Assignee each irrevocably  submits to the non-exclusive  jurisdiction of
any State or  Federal  court  sitting  in  Washington  over any suit,  action or
proceeding  arising out of or relating to this  Assignment  and  Acceptance  and
irrevocably  agrees that all claims in respect of such action or proceeding  may
be heard and determined in such Washington State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably  waives, to the fullest extent
it  may  effectively  do  so,  the  defense  of an  inconvenient  forum  to  the
maintenance of such action or proceeding.

                  (f) THE  ASSIGNOR  AND THE  ASSIGNEE  EACH  HEREBY  KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY  WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY  LITIGATION  BASED  HEREON,  OR ARISING OUT OF,  UNDER,  OR IN
CONNECTION  WITH THIS  ASSIGNMENT  AND  ACCEPTANCE,  THE CREDIT  AGREEMENT,  ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).

                  [Other provisions to be added as may be negotiated between the
Assignor and the Assignee,  provided that such  provisions are not  inconsistent
with the Credit Agreement.]

                                       E-6

<PAGE>




         IN WITNESS  WHEREOF,  the Assignor  and the  Assignee  have caused this
Assignment and Acceptance to be executed and delivered by their duly  authorized
officers as of the date first above written.


                                     [ASSIGNOR]


                                                     By:

                                      Name:

                                     Title:



                                     [ASSIGNEE]


                                                     By:

                                      Name:

                                     Title:






                                       E-7

<PAGE>



                                   SCHEDULE 1

                       NOTICE OF ASSIGNMENT AND ACCEPTANCE


                                                     ---------------, -----



Bank of America National Trust and Savings Association,
  as Agent
1850 Gateway Boulevard, 5th Floor
Concord, CA  94520-3281
Attn:  Agency Administrative Services #5596
Re:  Trendwest Resorts

Bank of America National Trust and Savings Association,
  as Agent
Credit Products #5771
555 California Street, 41st Floor
San Francisco, CA  94104-1502
Attention:  Matthew A. Gabel, Vice President

Trendwest Resorts, Inc.
12301 N.E. 10th Place
Bellevue, WA   98005
Attn:  Gary A. Florence

Ladies and Gentlemen:

         We refer to the Credit  Agreement  dated as of  February  12,  1998 (as
amended, amended and restated, modified, supplemented,  extended or renewed from
time to time,  the  "Credit  Agreement")  among  Trendwest  Resorts,  Inc.  (the
"Company"),  the Banks referred to therein,  and Bank of America  National Trust
and Savings  Association as agent for the Banks (the "Agent").  Terms defined in
the Credit Agreement are used herein as therein defined.

         1. We hereby  give you notice  of, and  request  your  consent  to, the
assignment by  __________________  (the  "Assignor")1  to  _______________  (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
the Credit  Agreement  (including,  without  limitation,  the  right,  title and
interest of the Assignor in and to the Commitments of the Assignor[,]  [and] all
outstanding  Loans  made  by  the  Assignor)  pursuant  to  the  Assignment  and
Acceptance  Agreement attached hereto (the "Assignment and Acceptance").  Before
giving effect to such assignment the Assignor's  Commitment is $  ___________[,]
[and the aggregate amount of its outstanding Loans is $_____________].

--------
1            See Section 10.08 of Credit Agreement regarding
             circumstances under which Company consent is or is not
             required.

                                       E-8

<PAGE>



             2. The Assignee  agrees  that,  upon  receiving  the consent of the
Agent and, if applicable,  the Company, to such assignment, the Assignee will be
bound by the terms of the Credit Agreement as fully and to the same extent as if
the  Assignee  were the Bank  originally  holding  such  interest  in the Credit
Agreement.

             3.   The following administrative details apply to the
Assignee:

                  (A)      Notice Address:

                           Assignee name: __________________________
                           Address:  _______________________________
                                     -------------------------------
                           Attention:  _____________________________
                           Telephone:  (___) _______________________
                           Telecopier:  (___) ______________________
                           Telex (Answerback):  ____________________

                  (B)      Payment Instructions:

                           Account No.:  ___________________________
                                    At:  ___________________________
                                         ---------------------------
                                         ---------------------------
                           Reference:    ___________________________
                           Attention:    ___________________________

             4. You are  entitled to rely upon the  representations,  warranties
and covenants of each of the Assignor and Assignee  contained in the  Assignment
and Acceptance.

             IN WITNESS WHEREOF,  the Assignor and the Assignee have caused this
Notice of  Assignment  and  Acceptance to be executed by their  respective  duly
authorized officials, officers or agents as of the date first above mentioned.


                                                     Very truly yours,

                                                     [NAME OF ASSIGNOR]


                                                     By:

                                      Name:

                                     Title:



                                                     By:

                                      Name:

                                     Title:


1424\80\00006.AGM/2.5.98
Seattle
                                       E-9

<PAGE>



                                                     [NAME OF ASSIGNEE]


                                                     By:

                                      Name:

                                     Title:



                                                     By:

                                      Name:

                                     Title:



ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:


TRENDWEST RESORTS, INC.


By:

Name:

Title:



By:

Name:

Title:



BANK OF AMERICA NATIONAL TRUST AND
  SAVINGS ASSOCIATION, as Agent


By:

Name:

Title:




                                      E-10

<PAGE>



                                    EXHIBIT F


                             FORM OF PROMISSORY NOTE



                                                             [Seattle, WA]

$-----------------                                     ------------, -----



         FOR VALUE RECEIVED, the undersigned, Trendwest Resorts, Inc., an Oregon
corporation (the "Company"), hereby promises to pay to the order of (the "Bank")
the principal sum of Dollars ($ ) or, if less,  the aggregate  unpaid  principal
amount of all  Loans  made by the Bank to the  Company  pursuant  to the  Credit
Agreement  dated as of February  12,  1998 (as  amended,  amended and  restated,
modified,  supplemented,  extended  or renewed  from time to time,  the  "Credit
Agreement")  among the Company,  the Bank, the other banks parties thereto,  and
Bank of America  National Trust and Savings  Association as Agent for the Banks,
on the dates and in the amounts  provided in the Credit  Agreement.  The Company
further  promises to pay  interest on the unpaid  principal  amount of the Loans
evidenced  hereby from time to time at the rates, on the dates, and otherwise as
provided in the Credit Agreement.

         The Bank is authorized to endorse the amount and the date on which each
Loan is made,  the maturity  date  therefor  and each payment of principal  with
respect  thereto on the schedules  annexed hereto and made a part hereof,  or on
continuations  thereof  which shall be attached  hereto and made a part  hereof;
provided,  that any  failure to endorse  such  information  on such  schedule or
continuation  thereof  shall not in any  manner  affect  any  obligation  of the
Company under the Credit Agreement and this Promissory Note (the "Note").

         This Note is one of the Notes  referred  to in, and is  entitled to the
benefits of, the Credit Agreement,  which Credit Agreement,  among other things,
contains  provisions for  acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

         Terms  defined  in the  Credit  Agreement  are used  herein  with their
defined  meanings therein unless  otherwise  defined herein.  This Note shall be
governed by, and construed and interpreted in
Seattle
                                       F-1

<PAGE>



accordance  with,  the laws of the State of  Washington  applicable to contracts
made and to be performed entirely within such State.



                             TRENDWEST RESORTS, INC.




                                            By:

                                            Name:

                                            Title:


                                       F-2

<PAGE>



                                                          Schedule A to Note




                BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS






                 (2)           (3)           (4)
               Amount       Maturity      Amount of
                 of          Date of        Base          (5)
    (1)         Base          Base        Rate Loan     Notation
   Date       Rate Loan     Rate Loan       Repaid      Made By



































                                       F-3

<PAGE>


                                                       Schedule B to Note




            OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS





                 (2)           (3)           (4)
                Amount      Maturity       Amount of
                  of        Date of        Offshore        (5)
    (1)        Offshore     Offshore       Rate Loan    Notation
   Date       Rate Loan     Rate Loan       Repaid      Made By





































                                       F-4

<PAGE>