CREDIT AGREEMENT



                              TW HOLDINGS II, INC.
                                 (as Borrower),



                             TRENDWEST RESORTS, INC.



                                       and



                    PRUDENTIAL SECURITIES CREDIT CORPORATION
                                   (as Lender)





                           Dated as of April 15, 1999

<PAGE>



CREDIT AGREEMENT
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                 PAGE

<S>                                                                                                               <C>
SECTION 1.  COMMITMENT............................................................................................1

         Section 1.1.  Advances  .................................................................................1
         Section 1.2.  Borrowings; Closings.......................................................................2
         Section 1.3.  Borrowing Notices..........................................................................2
         Section 1.4.  Amount of Advances.........................................................................3
         Section 1.5.  Indenture .................................................................................3
         Section 1.6.  Term      .................................................................................3
         Section 1.7.  Payment Instructions.......................................................................3

SECTION 2.  REPRESENTATIONS AND WARRANTIES........................................................................4

         Section 2.1.  General Representations and Warranties of the Borrower.....................................4
         Section 2.2.  General Representations and Warranties of TWRI and the Borrower............................6
         Section 2.3.  Representations and Warranties with Respect to the Receivables............................10

SECTION 3.  CONDITIONS OF OBLIGATION TO MAKE INITIAL ADVANCE ON INITIAL FUNDING DATE.............................15

         Section 3.1.  Other Agreements..........................................................................15
         Section 3.2.  Opinion of Special Counsel................................................................15
         Section 3.3.  Reserved  ................................................................................15
         Section 3.4.  Opinion of Trustee's Counsel..............................................................15
         Section 3.5.  Organizational and Other Documents........................................................15
         Section 3.6.  Necessary Consents........................................................................15
         Section 3.7.  Representations True; No Event of Default.................................................15
         Section 3.8.  Engagement Letter.........................................................................16
         Section 3.9.  Perfection ...............................................................................16
         Section 3.10. Bankruptcy Issues.........................................................................16

SECTION 4.  CONDITIONS OF OBLIGATION TO MAKE ADVANCES ON ANY FUNDING DATE........................................16

         Section 4.1.  Performance of Obligations................................................................16
         Section 4.2.  Representations True; No Event of Default.................................................16
         Section 4.3.  No Merger or Change in Control............................................................17
         Section 4.4.  Searches  ................................................................................17
         Section 4.5.  Consents and Approvals....................................................................17
         Section 4.6.  Proceedings, Instruments, etc.............................................................17
         Section 4.7.  Other Documents...........................................................................17
         Section 4.8.  Continuance of an Event of Default........................................................17
         Section 4.9.  Validity of Notes.........................................................................17
         Section 4.10.  Trust Receipt............................................................................17
         Section 4.11.  UCC-1 Financing Statements...............................................................18

SECTION 5.  CERTAIN SPECIAL RIGHTS...............................................................................18

         Section 5.1.  Home Office Payment.......................................................................18
         Section 5.2.  Certain Taxes.............................................................................18
         Section 5.3.  Substitution of Lender....................................................................19

SECTION 6.  ADVANCE MATURITY; ADVANCE PREPAYMENTS................................................................19

         Section 6.1.  Advance Maturity..........................................................................19
         Section 6.2.  Mandatory Prepayments.....................................................................19
         Section 6.3. Voluntary Prepayments......................................................................20

SECTION 7. ASSIGNMENTS AND PARTICIPATIONS........................................................................20

         Section 7.1. Assignments ...............................................................................20
         Section 7.2.  Participations............................................................................21

SECTION 8.  CERTAIN COVENANTS OF THE BORROWER....................................................................21


SECTION 9.  CERTAIN COVENANTS OF TWRI............................................................................26

         Section 9.1.  Existence ................................................................................26
         Section 9.2.  Compliance with Law, etc..................................................................26
         Section 9.3.  Payment of Taxes and Claims...............................................................27
         Section 9.4.  Inspection.  .............................................................................27
         Section 9.5.  Consolidation and Merger..................................................................27
         Section 9.6.  Control   ................................................................................27
         Section 9.7.  Tax Returns...............................................................................27
         Section 9.8. Protection of Right, Title and Interest....................................................28
         Section 9.9.  Further Assurances........................................................................29
         Section 9.10.  Independence.............................................................................29
         Section 9.11.  Other Agreements and Parties.............................................................30
         Section 9.12.  Insurance Coverage.......................................................................30
         Section 9.13.  Financial Covenants......................................................................30
         Section 9.14. Reserved  ................................................................................30
         Section 9.15. Interest Rate Protection..................................................................30
         Section 9.16. Break-up Fee..............................................................................31
         Section 9.17. Reserved  ................................................................................31
         Section 9.18. Worldmark ................................................................................31

SECTION 10.  INFORMATION TO BE FURNISHED TO LENDER...............................................................31

         Section 10.1.  Information to be Furnished by the Borrower or TWRI......................................31

SECTION 11. DEFAULTS, REMEDIES AND TERMINATION...................................................................33

         Section 11.1.  Events of Default........................................................................33
         Section 11.2.  Termination of Funding Obligation........................................................33

SECTION 12. INTERPRETATION OF AGREEMENT..........................................................................33

         Section 12.1.  Definitions..............................................................................33
         Section 12.2.  Accounting Terms.........................................................................33
         Section 12.3.  Governing Law............................................................................33
         Section 12.4.  Headings ................................................................................33
         Section 12.5.  Independence of Covenants, etc...........................................................33

SECTION 13.  MISCELLANEOUS.......................................................................................33

         Section 13.1.  Notices  ................................................................................33
         Section 13.2.  Survival ................................................................................34
         Section 13.3.  Successors and Assigns...................................................................34
         Section 13.4.  Amendment and Waiver.....................................................................34
         Section 13.5.  Counterparts.............................................................................35
         Section 13.6.  Reproduction of Documents................................................................35
         Section 13.7.  Consent to Jurisdiction and Venue........................................................35
         Section 13.8.  No Petition..............................................................................36
         Section 13.9.  Acts of Lender...........................................................................36
         Section 13.10.  Confidentiality.........................................................................37

</TABLE>
<PAGE>

Exhibit A:  Form of Borrowing Notice
Exhibit B:  TWRI Credit and Collection Policies
Exhibit C:  Form of Installment Sale Contract

Annex A:  Trendwest Warehouse Facility Definitions



<PAGE>

                  CREDIT  AGREEMENT dated as of April 15, 1999 among TW Holdings
II, Inc., a Delaware corporation (the "Borrower"),  Trendwest Resorts,  Inc., an
Oregon  corporation  ("TWRI") and Prudential  Securities Credit Corporation (the
"Lender").

                  WHEREAS,  the  Borrower  has  requested  that the Lender  make
advances to the Borrower and the Lender is prepared to make such  advances  upon
the terms and subject to the conditions hereof.

                  WHEREAS,  the  advances  hereunder  shall be  evidenced by the
Borrower's  variable  funding notes (the "Notes"),  issued to the Lender under a
trust  indenture,  dated as of April  15,  1999  (the  "Indenture"),  among  the
Borrower,  TWRI,  the  Custodian  and LaSalle  National  Bank,  as trustee  (the
"Trustee").

                  WHEREAS,  in  connection  with and  pursuant  to the terms and
conditions  of an  engagement  letter  dated  April 15,  1999  (the  "Engagement
Letter"),  between  TWRI and  Prudential  Securities  Incorporated  ("PSI"),  an
affiliate of the Lender,  the Lender is entering  into this  Agreement  with the
Borrower and TWRI.

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

SECTION 1.  COMMITMENT

                  Section 1.1. Advances. The Lender agrees, on the terms of this
Agreement and subject to the conditions  hereof, to make Advances,  beginning on
the date hereof and ending on the Commitment  Termination  Date, to the Borrower
in an  aggregate  principal  amount  at any one time  outstanding  up to but not
exceeding the amount of the Commitment as then in effect. Each Advance shall (a)
mature on the Maturity  Date and (b) bear  interest  from the date thereof until
such  Advance  shall be paid in  accordance  with the terms  hereof  (whether at
maturity,  mandatory  prepayment,  by  acceleration or otherwise) and payable on
each  Payment  Date in  accordance  with the  provisions  of Section  3.4 of the
Indenture.  Interest  shall be  computed  on an  actual/360  basis,  and on each
Payment Date shall equal all unpaid  interest  accrued in respect of the related
Interest  Period.  If the Borrower shall have paid or agreed to pay any interest
on any Advance in excess of that permitted by law, then it is the express intent
of the parties hereto with respect thereto that (i) to the extent possible given
the term of such Advance,  all excess amounts  previously  paid or to be paid by
the Borrower be applied to reduce the  principal  amount of such Advance and the
provisions  thereof  immediately be deemed  reformed and the amounts  thereafter
collectable  thereunder  reduced,  without the necessity of the execution of any
new document,  so as to comply with the then applicable law, but so as to permit
the recovery of the fullest amount  otherwise  called for thereunder and (ii) to
the extent  that the  reduction  of the  principal  amount  of, and the  amounts
collectible  under,  such Advance and the reformation of the provisions  thereof
described in the  immediately  preceding  clause (i) are not possible  given the
term of such Advance,  such excess amount shall be deemed to have been paid with
respect to such Advance as a result of an error,  and, upon the Lender obtaining
actual  knowledge of such error,  such amount shall be refunded to the Borrower.
Each Advance  shall be subject to mandatory  prepayment  as set forth in Section
6.2  hereof.  All sums  payable by the  Borrower  under this  Agreement  and the
Advances shall be paid without counterclaim,  set-off,  deduction or defense and
without abatement, suspension, deferment, diminution or reduction.

                  Section  1.2.  Borrowings;   Closings.   (a)  Subject  to  the
satisfaction  of the  conditions  set  forth in  Sections  3 and 4, the  initial
Advance is to be made on a date  mutually  agreed upon by the  Borrower  and the
Lender  (the  "Initial  Funding  Date").  Additional  Advances  may be  made  on
subsequent  Business Days (each,  a "Subsequent  Funding  Date",  the Subsequent
Funding Dates, together with the Initial Funding Date, the "Funding Dates," and,
either the Initial Funding Date or a Subsequent  Funding Date, a "Funding Date")
to the extent the Lender has received  prior notice  thereof in accordance  with
the  provisions of Section 1.3 hereof and the  conditions set forth in Section 4
have been satisfied.

                  (a)(b) The Advances shall be evidenced by the Borrower's Notes
issued  pursuant  to the  terms of the  Indenture,  payable  to the  Lender in a
principal  amount equal to the maximum amount of the Commitment and as otherwise
duly  completed.  The date and amount of each  Advance made by the Lender to the
Borrower,  the applicable  interest rate and each payment made on account of the
principal  thereof,  shall be recorded by the Lender on its books and,  prior to
any transfer of the Notes,  endorsed by the Lender on the  schedule  attached to
the Notes or any continuation thereof.

                  (c) The Lender shall be entitled to have the Notes subdivided,
by exchange for Notes of lesser denominations or otherwise in connection with an
assignment  of all or any portion of the Advances and the Notes  pursuant to the
terms of this  Agreement;  provided that in no event may the Notes be subdivided
into denominations of less than $500,000.

                  Section 1.3. Borrowing Notices.  The Borrower will give notice
substantially  in the form of  Exhibit A hereto of each  Advance  (a  "Borrowing
Notice") to the Lender,  the Trustee and the  Custodian,  which  notice shall be
irrevocable  and effective only upon receipt by the Lender,  the Trustee and the
Custodian. A Borrowing Notice for an Advance must be received by the Lender, the
Trustee and the Custodian not later than 1 p.m. New York City time on the second
Business  Day prior to the  proposed  Funding  Date of such  Advance;  provided,
however,  that if the  proposed  Funding  Date shall  occur  within the last ten
Business Days of a calendar quarter,  a Borrowing Notice must be received by the
Lender,  the Trustee and the  Custodian not later than 1 p.m. New York City time
on the fifth  Business Day prior to the proposed  Funding Date. The Borrower may
not request more than one Advance in any one calendar  week.  Accompanying  each
Borrowing  Notice  shall be a current true and correct  Schedule of  Receivables
containing  the  Required  Information,  in  electronic  format with hard copies
thereof,  with respect to the Receivables  that are the subject of the Borrowing
Notice.

                  Section  1.4.  Amount of  Advances.  Except as provided in the
next  paragraph,  on each Funding  Date,  the Lender will make an Advance to the
Borrower in amount equal to the amount requested in the related Borrowing Notice
(which  amount  shall equal the  Receivable  Acquisition  Price for the Eligible
Receivables  to be funded  by such  Advance)  available  to the  account  of the
Borrower not later than 5:00 P.M. (New York City time). Such funds shall be made
available  by the Lender to the  Borrower in  immediately  available  funds,  by
deposit directly to an account designated by the Borrower to the Lender.

                  Notwithstanding  the previous paragraph and anything herein to
the contrary,  the Lender shall not be required to make an Advance in the amount
specified in the related  Borrowing  Notice to the Borrower if (i) the requested
Advance is in excess of the Available  Facility  Amount;  (ii) a Borrowing  Base
Deficiency exists, (iii) the requested Advance would, if such Advance were made,
cause a Borrowing Base  Deficiency or (iv) the Lender has not received a Receipt
from the Custodian. In the event of (i), (ii) or (iii), however, the Lender will
make an Advance equal to the lesser of (a) the Available  Facility  Amount,  (b)
the amount of the Advance  less an amount  which would cure the  Borrowing  Base
Deficiency, or (c) one dollar less than the amount which would cause a Borrowing
Base Deficiency.

                  Section  1.5.  Indenture.  The Notes  evidencing  the
Advances  made  hereunder  are to be secured  pursuant  to the Indenture. The
Assets allocated to secure the Borrower's obligations under this Agreement are
set forth in the Indenture.

                  Section 1.6.  Term.  The Commitment will terminate on the
Commitment Termination Date.

                  Section 1.7. Payment Instructions. Each of the Lender and TWRI
shall provide written payment instructions  (including the account number of the
bank account to which payments are to be directed and the name,  address and ABA
number of the bank in which such  account is  maintained,  if payments are to be
made to such party by the wire transfer of immediately  available  funds) to the
Trustee.  No later than the second Business Day of each month,  the Lender shall
also  provide an invoice  to TWRI,  the  Borrower,  the  Trustee  and the Master
Servicer  in respect of the Notes  Interest  due for the related  Payment  Date.
Failure to provide such notice  shall not affect such  party's  right to receive
any funds to which it is otherwise  entitled in  accordance  with the  Warehouse
Facility Documents,  but failure to deliver such notice may result in a delay in
the receipt of such funds.

SECTION  2.  REPRESENTATIONS AND WARRANTIES.

                  Each of the Borrower and TWRI  represents and warrants to the
Lender,  as of the date hereof,  and as of each Funding Date, as follows:

                  Section 2.1.  General Representations and Warranties of the
Borrower.

                  (a) Due  Formation;  Valid  Existence and Good  Standing.  The
Borrower is a corporation  duly organized and validly  existing in good standing
under the laws of the jurisdiction of its formation; and is duly qualified to do
business as a foreign  corporation or corporation and in good standing under the
laws of each jurisdiction where the character of its property, the nature of its
business or the performance of its  obligations  under this Agreement makes such
qualification  necessary  except where the failure to be so  qualified  will not
have a material adverse effect on the business of the Borrower or its ability to
perform  its  obligations  under  this  Agreement  or  any  other  documents  or
transactions  contemplated  hereunder or the validity or  enforceability  of the
Receivables.

                  (b)  Possession  of  Licenses,  Certificates,  Franchises  and
Permits. The Borrower holds all material licenses, certificates,  franchises and
permits  from all  governmental  authorities  necessary  for the  conduct of its
business and has received no notice of proceedings relating to the revocation of
any such  license,  certificate,  franchise  or permit,  which  singly or in the
aggregate,  if the subject of an unfavorable decision,  ruling or finding, would
materially  and adversely  affect the business of the Borrower or its ability to
perform  its  obligations  under  this  Agreement  or  any  other  documents  or
transactions  contemplated  hereunder or the validity or  enforceability  of the
Receivables.

                  (c) Authority and Power.  The Borrower has all requisite power
and authority to own its  properties,  to conduct its  business,  to execute and
deliver this Agreement and all documents  (including the Assignments  from it to
TWRI or the Trustee) and transactions  contemplated hereunder and to perform all
of its obligations  under this Agreement and any other documents or transactions
contemplated  hereunder.  The Borrower has all requisite  power and authority to
originate, acquire, own, purchase and receive from TWRI the Receivables.

                  (d) Authorization,  Execution and Delivery; Valid and Binding.
This Agreement and all other documents and instruments  required or contemplated
hereby to be executed and delivered by the Borrower  have been duly  authorized,
executed and  delivered  by the Borrower  and,  assuming the due  execution  and
delivery by the other party or parties  hereto and  thereto,  constitute  legal,
valid and binding agreements enforceable against the Borrower in accordance with
their  respective  terms  subject,  as  to  the  enforcement  of  remedies,   to
bankruptcy,  insolvency,  reorganization,  moratorium  and  other  similar  laws
affecting the  enforceability of creditors'  rights generally  applicable in the
event of the  bankruptcy,  insolvency or  reorganization  of the Borrower and to
general principles of equity.

                  (e) No Violation of Law, Rule, Regulation, etc. The execution,
delivery  and  performance  by the  Borrower  of this  Agreement  and any  other
documents (including the Assignments from it to the Trustee) and transactions in
connection  herewith to which the  Borrower is a party do not (i) violate any of
the provisions of the Articles of Incorporation or by-laws of the Borrower, (ii)
violate any provision of any law,  governmental rule or regulation  currently in
effect  applicable to the Borrower or its properties or by which the Borrower or
its properties may be bound or affected, including, without limitation, any bulk
transfer laws,  (iii) violate any judgment,  decree,  writ,  injunction,  award,
determination  or order  currently in effect  applicable  to the Borrower or its
properties  or by which the  Borrower or its  properties  are bound or affected,
(iv) conflict with, or result in a breach of, or constitute a default under, any
of the provisions of any indenture,  mortgage,  deed of trust, contract or other
instrument  to  which  the  Borrower  is a party  or by which it is bound or (v)
result in the  creation  or  imposition  of any Lien upon any of its  properties
pursuant to the terms of any such indenture,  mortgage,  deed of trust, contract
or other instrument.

                  (f)  Governmental  Consent.  No  consent,  approval,  order or
authorization  of,  and no  filing  with  or  notice  to,  any  court  or  other
governmental authority in respect of the Borrower is required in connection with
the  authorization,  execution,  delivery or performance by the Borrower of this
Agreement or any of the other documents or transactions  contemplated hereunder,
including, without limitation, the Assignment and the sale of the Receivables.

                  (g) Fair  Consideration.  The Borrower paid fair consideration
and reasonably  equivalent value in exchange for the purchase of the Receivables
from TWRI.

                  (h) Bulk Transfer. No contribution, sale, transfer, assignment
or  conveyance  of  Receivables  by TWRI  to the  Borrower  contemplated  by the
Receivable  Sale  Agreement  will be subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.

                  (i) Place of  Business.  The  principal  place of business and
chief  executive  office of the Borrower are located at the address set forth in
the Indenture.

                  Section 2.2.  General Representations and Warranties of TWRI
and the Borrower.

                  As  specified,  TWRI and/or the Borrower each  represents  and
warrants to the Lender,  as of the date hereof,  and as of each Funding Date, as
follows:

                  (a)      Organization and Authority.  TWRI:

                   (i)     is a  corporation  duly  organized,  validly
existing and in good  standing  under the laws of the State of Oregon;

                   (ii) has all requisite power and authority to own and operate
its  properties  and to conduct  its  business  as  currently  conducted  and as
proposed to be conducted as contemplated by the Warehouse  Facility Documents to
which it is a party, to enter into the Warehouse  Facility Documents to which it
is a party and to perform its obligations under the Warehouse Facility Documents
to which it is a party; and

                   (iii) has made all filings and holds all material franchises,
licenses,  permits and  registrations  which are required under the laws of each
jurisdiction  in which the  properties  owned (or held under lease) by it or the
nature of its activities makes such filings,  franchises,  licenses,  permits or
registrations necessary.

                  (b) Place of Business.  The address of the principal  place of
business and chief  executive  office of TWRI is Trendwest  Resorts,  Inc., 9805
Willows Road,  Redmond,  Washington  98052 and other than 12301 N.E. 10th Place,
Bellevue,  Washington 98005 , there have been no other such locations during the
immediately preceding three years.

                  (c)  Compliance  with Other  Instruments,  etc. TWRI is not in
violation  of  any  term  of its  articles  of  incorporation  or  by-laws.  The
execution,  delivery and performance by TWRI of the Warehouse Facility Documents
to which it is a party do not and will  not (i)  conflict  with or  violate  the
articles of  incorporation or by-laws of TWRI, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
under,  or result in the creation of any Lien on any of the properties or assets
of TWRI pursuant to the terms of any  instrument or agreement to which TWRI is a
party or by which it is bound,  or (iii)  require any consent of or other action
by any trustee or any creditor of, any lessor to or any investor in TWRI.

                  (d)  Compliance  with  Law.  TWRI is in  compliance  with  all
statutes,  laws and ordinances  and all  governmental  rules and  regulations to
which it is subject,  the  violation  of which,  either  individually  or in the
aggregate, could materially adversely affect the business, earnings,  properties
or condition  (financial or other) of TWRI, each taken as a whole.  The policies
and  procedures  set forth in the TWRI  Credit and  Collection  Policies  are in
material  compliance with all applicable  statutes,  laws and ordinances and all
governmental rules and regulations.  The execution,  delivery and performance of
the  Warehouse  Facility  Documents  to  which it is a party do not and will not
cause TWRI to be in violation  of any law or  ordinance,  or any order,  rule or
regulation,  of any federal,  state,  municipal or other  governmental or public
authority or agency.

                  (e)  Pending  Litigation  or  Other  Proceedings.  There is no
pending or, to the best of TWRI's or Borrower's  knowledge,  threatened  action,
suit,  proceeding  or  investigation  before any court,  administrative  agency,
arbitrator or  governmental  body against or affecting TWRI or the Borrower,  as
applicable,  which, if decided adversely,  would materially and adversely affect
(i) the condition  (financial or  otherwise),  business or operations of TWRI or
the  Borrower,  as  applicable  (ii) the ability of the  Borrower to perform its
obligations  under, or the validity or  enforceability  of this Agreement or any
other documents or transactions  contemplated  under this Agreement,  (iii) such
Person's  Vacation  Credits or title of any Obligor to any  Vacation  Credits or
(iv) the  Trustee's  ability to foreclose or otherwise  enforce the Liens of the
Receivables.

                  (f) No Deficiency  Accumulation.  As of the Funding Date,  the
Borrower has not incurred any "accumulated  funding deficiency" (as such term is
defined under the Employee  Retirement  Income  Security Act of 1974, as amended
("ERISA")  and the Code) with respect to any  "employee  benefit  plan" (as such
term is defined under ERISA) sponsored by the Borrower.

                  (g) Taxes.  TWRI and the  Borrower  have each timely filed all
tax returns  (Federal,  state and local)  which are required to be filed and has
paid all taxes related  thereto,  other than those which are being  contested in
good faith or which have been previously disclosed to the Lender.

                  (h)   Transactions  in  Ordinary   Course.   The  transactions
contemplated  by this  Agreement are in the ordinary  course of business of TWRI
and the Borrower.

                  (i)  Securities  Laws.  Neither  TWRI nor the  Borrower  is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

                  (j)  Proceedings.  Each of TWRI and the Borrower has taken all
action  necessary to authorize the execution and delivery by it of the Warehouse
Facility Documents to which it is a party and the performance of all obligations
to be performed by it under the Warehouse Facility Documents.

                  (k)  Defaults.  Neither  TWRI nor the  Borrower  is in default
under any material agreement, contract, instrument or indenture to which it is a
party or by which it or its  properties is or are bound,  or with respect to any
order of any court, administrative agency, arbitrator or governmental body which
would have a material adverse effect on the transactions contemplated hereunder;
and to TWRI's or the Borrower's knowledge, as applicable,  no event has occurred
which with notice or lapse of time or both would  constitute such a default with
respect  to any such  agreement,  contract,  instrument  or  indenture,  or with
respect to any such order of any court,  administrative  agency,  arbitrator  or
governmental body.

                  (l)  Insolvency.  TWRI is  solvent  and will  not be  rendered
insolvent by the transfer of the  Receivables by TWRI to the Borrower.  Prior to
the date hereof,  TWRI did not,  and is not about to,  engage in any business or
transaction  for which any  property  remaining  with TWRI would  constitute  an
unreasonably small amount of capital.  In addition,  TWRI has not incurred debts
that would be beyond TWRI's ability to pay as such debts matured.

                  (m) No Consents.  No prior consent,  approval or authorization
of,  registration,  qualification,  designation,  declaration or filing with, or
notice  to any  federal,  state or local  governmental  or public  authority  or
agency,  is,  was or will be  required  for the valid  execution,  delivery  and
performance by TWRI of the Warehouse  Facility Documents to which it is a party.
TWRI has  obtained  all  consents,  approvals  or  authorizations  of,  made all
declarations  or filings  with,  or given all notices to, all federal,  state or
local governmental or public authorities or agencies which are necessary for the
continued conduct by TWRI of its respective  businesses as now conducted,  other
than such consents, approvals, authorizations, declarations, filings and notices
which,  neither  individually  nor in the  aggregate,  materially  and adversely
affect,  or in the future will  materially and adversely  affect,  the business,
earnings, prospects, properties or condition (financial or other) of TWRI.

                  (n) Name.  The legal names of TWRI and the Borrower are as set
forth in this  Agreement,  and neither TWRI nor the Borrower has any tradenames,
fictitious names, assumed names or "doing business as" names.

                  (o)  Repayment of  Receivables.  Neither TWRI nor the Borrower
has any reason to believe  that, at the time of the sale of the  Receivables  by
TWRI and the  purchase  of the  Receivables  by the  Borrower,  the  obligations
thereunder will not be paid in full.

                  (p) Validity of Agreement. The Warehouse Facility Documents to
which it is a party have been duly executed and delivered by TWRI and constitute
the legal, valid and binding obligation of TWRI,  enforceable in accordance with
their  terms,  except  as  enforceability  may be  limited  by  (a)  bankruptcy,
insolvency,  liquidation,  receivership,  moratorium,  reorganization  or  other
similar laws affecting the enforcement of the rights of creditors generally, and
(b) general principals of equity,  whether enforcement is sought in a proceeding
in equity or at law.

                  (q)  Representations  and  Warranties  in  Warehouse  Facility
Documents.   (i)  The   representations  of  TWRI  contained  in  any  document,
certificate or instrument delivered pursuant to the Warehouse Facility Documents
are true and correct in all material  respects,  and the Lender may rely on such
representations  and warranties,  if not made directly to the Lender, as if such
representations and warranties were made directly to the Lender.

                  (r) Information. No document,  certificate or report furnished
by TWRI  and  the  Borrower,  in  writing,  pursuant  to  this  Agreement  or in
connection with the transactions  contemplated hereby,  contains or will contain
when furnished any untrue  statement of a material fact or fails or will fail to
state a  material  fact  necessary  in order to make  the  statements  contained
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  There  are no facts  relating  to the  Borrower  as of the  related
Funding  Date  which  when  taken as a whole,  materially  adversely  affect the
financial  condition  or assets or business of TWRI and  Borrower,  or which may
impair the ability of TWRI or the Borrower to perform its obligations under this
Agreement, which have not been disclosed herein or in the certificates and other
documents  furnished by or on behalf of TWRI or the Borrower  pursuant hereto or
thereto  specifically for use in connection with the  transactions  contemplated
hereby or thereby.

                  (s) Intent.  TWRI did not sell any  Receivable to the Borrower
with any intent to hinder, delay or defraud any of its respective creditors.

                  (t)  Engagement  Letter.  PSI, an  affiliate of the Lender and
TWRI have entered into the Engagement  Letter,  and TWRI is not in default under
the Engagement Letter.

                  (u) Treatment as Sale. The Borrower will treat the transfer of
the  Receivables  from  TWRI to  Borrower  as a sale for  legal  and  accounting
purposes. If a third party,  including a potential purchaser of the Receivables,
should inquire,  TWRI will promptly indicate that the Receivables have been sold
and will claim no ownership interest therein.

                  (v)    Representations    and    Warranties    Updated.    The
representations  and warranties set forth above shall be deemed repeated on, and
made as of, each Funding Date.

                  Section 2.3.  Representations  and Warranties  with Respect to
the  Receivables.  (a) With  respect  to each  Receivable,  each of TWRI and the
Borrower  represents and warrants to the Lender, as of the related Funding Date,
that:

                           (i) All  Federal,  state  and local  laws,  rules and
                  regulations,  including, without limitation, those relating to
                  usury,  truth-in-lending,  the offer  and sale of  securities,
                  consumer  credit  protection  and equal credit  opportunity or
                  disclosure,  applicable to such  Receivable or the sale of the
                  timeshare interest securing such Receivable have been complied
                  with in all material  respects.  No Receivable  was originated
                  in, or is subject to the laws of, any jurisdiction under which
                  the  sale,   transfer,   conveyance   or  assignment  of  such
                  Receivable would be unlawful, void or voidable.

                           (ii) Each Receivable  Document is genuine,  there are
                  no more than two (one of which was  delivered  to the  related
                  Obligor at the time of execution) originals of the Installment
                  Sale Contract and each Receivable Document is the legal, valid
                  and binding  obligation of the maker  thereof,  enforceable in
                  accordance with its terms (except as such  enforceability  may
                  be limited by bankruptcy, insolvency, reorganization, or other
                  similar laws affecting the enforcement of creditors' rights in
                  general and by general  principles  of equity,  regardless  of
                  whether  such   enforceability   shall  be   considered  in  a
                  proceeding  in equity or at law),  and is not  subject  to any
                  dispute, right of rescission,  setoff, abatement,  diminution,
                  recoupment, counterclaim or defense of any kind.

                           (iii) All  parties to the  related  Installment  Sale
                  Contract  had legal  capacity  to enter into such  Installment
                  Sale   Contract  and  to  execute  and  deliver  such  related
                  Installment  Sale  Contract and the related  Installment  Sale
                  Contract has been duly and properly  executed by such parties.
                  Any  amendments to such related  Installment  Sale Contract or
                  any other related Receivable  Document required as a result of
                  any mergers  involving  the Borrower or its  predecessors,  to
                  maintain  the  rights  of the  Borrower  or  its  predecessors
                  thereunder as an obligee have been completed.

                           (iv) The Receivable has not been satisfied, canceled,
                  rescinded or subordinated,  in whole or in part; no portion of
                  the Vacation  Credits has been  released from the Lien created
                  by the  Installment  Sale  Contract,  in whole or in part;  no
                  instrument  has  been  executed  that  would  effect  any such
                  satisfaction,   cancellation,   rescission,  subordination  or
                  release.  The terms of the  Installment  Sale  Contract do not
                  provide for a release of any portion of the  Vacation  Credits
                  from the Lien created by the Installment  Sale Contract except
                  upon the payment of the Receivable in full.

                           (v)  Immediately  prior  to  the  conveyance  to  the
                  Trustee of a Receivable,  the Borrower will own full legal and
                  equitable title to such Receivable, free and clear of any Lien
                  or participation  or ownership  interest in favor of any other
                  Person, and had full right and authority to sell, transfer and
                  assign such Receivable.

                           (vi) At the time  TWRI  executed  and  delivered  the
                  Installment  Sale Contract,  TWRI had full power and authority
                  to originate such Receivable.

                           (vii) The related  Installment Sale Contract contains
                  customary  and  enforceable  provisions  so as to  render  the
                  rights and  remedies of the holder  thereof  adequate  for the
                  realization  against  the  related  Vacation  Credits  of  the
                  benefits  of the  security  interests  intended to be provided
                  thereby.

                           (viii) The Borrower and any of its Affiliates and, to
                  the best of the Borrower's  knowledge,  each other party which
                  has had an interest in the  Installment  Sale Contract is (or,
                  during the period in which  such  party held and  disposed  of
                  such interest,  was) in compliance with any and all applicable
                  filing,  licensing and "doing  business"  requirements  of the
                  laws of the State of  Washington  to the extent  necessary  to
                  permit  the   Borrower  to  maintain  or  defend   actions  or
                  proceedings  with respect to the Receivable in all appropriate
                  forums in such state  without  any  further act on the part of
                  any such party.

                           (ix) The related Installment Sale Contract is not and
                  has not been  secured by any  collateral  except  the  related
                  Vacation Credits.

                           (x) The related Installment Sale Contract evidences a
                  fully  amortizing debt obligation  which bears a fixed rate of
                  interest and provides for level monthly  payments of principal
                  and interest (which is calculated on a simple interest basis).
                  The  related  Installment  Sale  Contract  is  payable in U.S.
                  Dollars.

                           (xi)  The  maximum   original  term  of  the  related
                  Installment  Sale  Contract  is less  than or  equal  to seven
                  years.

                           (xii)    The  Receivable  is not more  than 30 days
                  past due in  respect  of any  payment  of  principal  or
                  interest as of the Cut-off Date.

                           (xiii)   All   applicable    intangible   taxes   and
                  documentary  stamp taxes,  if any, were paid as to the related
                  Installment Sale Contract.

                           (xiv) The proceeds of each Receivable have been fully
                  disbursed,  there is no obligation to make future  advances or
                  to lend additional funds under the originator's  commitment or
                  the  documents  and  instruments  evidencing  or securing  the
                  Receivable and no such advances or Receivables  have been made
                  since the origination of the Receivable.

                           (xv) The terms of each Installment Sale Contract have
                  not been impaired, waived, altered or modified in any respect,
                  except by written  instruments  which are part of the  related
                  Receivable Documents. No other instrument has been executed or
                  agreed to which  would  effect  any such  impairment,  waiver,
                  alteration or modification.  No Obligor has been released from
                  liability on or with respect to any Receivable, in whole or in
                  part,  except  in such  cases  where  such  release  would not
                  materially and adversely affect the obligee's security for the
                  related  Receivable,  and any such  release is  reflected by a
                  written  instrument which is a part of the related  Receivable
                  Documents.

                           (xvi) Each Receivable was acquired by the Borrower or
                  originated by TWRI in the normal course of its business.  Each
                  Receivable  originated by TWRI was  underwritten in accordance
                  with the Credit and  Collection  Policies and the  downpayment
                  related  to each  Receivable  was equal to at least 10% of the
                  purchase   price  of  the  related   Vacation   Credits.   The
                  origination,  servicing and collection  practices used by TWRI
                  and its Affiliates  with respect to each  Receivable have been
                  in all respects,  legal, proper, prudent and customary and are
                  in accordance  with the Credit and  Collection  Policies.  The
                  related Installment Sale Contract is substantially in the form
                  attached hereto as Exhibit C.

                           (xvii)  The  related  Installment  Sale  Contract  is
                  assignable  to and by  the  obligee  and  its  successors  and
                  assigns,  and the related Vacation Credits are assignable upon
                  liquidation of the related Receivable,  without the consent of
                  any  other  Person,  and there  are no other  restrictions  on
                  resale thereof.

                           (xviii) The Security  Interest created by the related
                  Installment Sale Contract is and will be prior to any Lien on,
                  or other interests relating to, the Vacation Credits.

                           (xix) The  related  Obligor  is not the  subject of a
                  voluntary or involuntary  bankruptcy  proceeding and is not an
                  Affiliate of the Borrower.

                           (xx) There is no default,  breach, violation or event
                  of acceleration  existing under the related  Installment  Sale
                  Contract  or any  other  document  or  instrument  evidencing,
                  guaranteeing,  insuring or otherwise  securing the Receivable,
                  and no event which,  with the lapse of time or with notice and
                  the expiration of any grace or cure period, would constitute a
                  material default,  breach,  violation or event of acceleration
                  thereunder;  and the Borrower has not waived any such material
                  default,  breach, violation or event of acceleration under the
                  Installment Sale Contract or any other related document.

                           (xxi) There is no current  obligation  on the part of
                  any other person  (including any buy down arrangement) to make
                  payments   on  behalf  of  the   Obligor  in  respect  of  the
                  Receivable.

                           (xxii) The entries with respect to such Receivable as
                  set forth on the Schedule of Receivables  are true and correct
                  as of the related Cut-off Date.

                           (xxiii)  Each  rescission  period  applicable  to the
                  Receivable has expired.

                           (xxiv) No  selection  procedures  were  intentionally
                  utilized  by TWRI or the  Borrower  which were  adverse to the
                  Trustee  or  the  Lender  were   utilized  in  selecting   the
                  Receivables  sold to the  Borrower  and pledged to the Trustee
                  pursuant to the Indenture, respectively.

                           (xxv) The weighted average of Receivable Coupon Rates
                  of the Receivables is at least 13.5%.

                           (xxvi) Each Receivable which has been acquired by the
                  Borrower and Granted to the Trustee was owned by the Borrower,
                  prior to the Borrower's acquisition thereof, free and clear of
                  all Liens and is secured by Vacation Credits in Worldmark.

                           (xxvii) (A) The  percentage  of Eligible  Receivables
                  having Foreign  Obligors  (other than Canadian  Obligors) does
                  not exceed 1.0% of the aggregate Unpaid  Principal  Balance of
                  all Trust Estate  Receivables which are Eligible  Receivables,
                  and (B) the percentage of Eligible Receivables having Canadian
                  Obligors  does  not  exceed  6.0%  of  the  aggregate   Unpaid
                  Principal  Balance of all Trust Estate  Receivables  which are
                  Eligible Receivables.

                           (xxviii)  Worldmark  is a  nonprofit  mutual  benefit
                  corporation  duly  organized  and  validly  existing  in  good
                  standing under the laws of the jurisdiction of its formation.

                           (xxix)   Worldmark  has  all   requisite   power  and
                  authority to own its properties,  to conduct its business,  to
                  execute and deliver the Installment Sale Agreements.

                           (xxx)  Worldmark is the owner of each Resort free and
                  clear of any  liens or  encumbrances  subject  only to (a) the
                  lien of real  property  taxes,  ground rents,  water  charges,
                  sewer rents and assessments  not yet due and payable,  and (b)
                  covenants,   conditions  and  restrictions,   rights  of  way,
                  easements and other matters of public records,  none of which,
                  individually or in the aggregate,  materially  interferes with
                  the current or intended use of the Resorts.

                           (xxxi) The issuance and transfer of Vacation  Credits
                  in  Worldmark do not and will not require  registration  under
                  the Securities Act.

                           (xxxii)  The  Vacation   Credits  entitle  the  owner
                  thereof to the use of all existing and future Resorts operated
                  by or associated  with the Worldmark,  to vote and participate
                  in corporate  ownership and  management of the real estate and
                  other assets of Worldmark; and ownership is perpetual.

                           (xxxiii)  The  Vacation   Credits   related  to  each
                  Receivable is free and clear of all Liens.

                           (xxxiv)  Immediately prior to the sale,  transfer and
                  assignment of the  Receivables to the Borrower,  TWRI had good
                  marketable   title  to,  and  was  the  sole  owner  of,  each
                  Receivable, and had full right and authority to sell, transfer
                  and assign such Receivable.

                           (xxxv)  The  Receivable  is  similar to and meets the
                  criteria (other than seasoning  criteria) of other receivables
                  previously  securitized  in a  transaction  rated  by a Rating
                  Agency.

                           (xxxvi) Except for Upgrades,  the related Obligor has
                  made  at  least  one   Payment  in  respect  of  the   related
                  Receivable.

                           (xxxvii)  The  percentage  of  Eligible   Receivables
                  having a single Obligor or affiliated Obligors does not exceed
                  1% of the aggregate Unpaid  Principal  Balance of all Eligible
                  Receivables.

                  It is  understood  and  agreed  that the  representations  and
warranties set forth in this Section 2.3 shall survive the sale or  contribution
of a  Receivable  to the  Borrower  and any  pledge  of such  Receivable  by the
Borrower to the Trustee  pursuant to the Indenture and shall continue so long as
any such Receivable shall remain  outstanding until such time as such Receivable
is removed pursuant to the Indenture.

SECTION 3.  CONDITIONS OF OBLIGATION TO MAKE INITIAL ADVANCE ON INITIAL
            FUNDING DATE.

                  The Lender's  obligation to make the initial Advance hereunder
on the Initial  Funding Date shall be subject to the  satisfaction,  prior to or
concurrently  with the making of such Advance,  of the  conditions  set forth in
Section 4 hereof, as well as the following conditions:

                  Section  3.1.  Other   Agreements.   The  Warehouse   Facility
Documents  and the Notes shall each have been duly  authorized  by all necessary
action.  The  Borrower  and TWRI  shall have duly  executed  and  delivered  the
Warehouse  Facility  Documents to which they are a party and, in the case of the
Borrower,  the Notes and such Warehouse Facility Documents are in full force and
effect.

                  Section 3.2. Opinion of Special Counsel. The Lender shall have
received  from  Chapman  and  Cutler,  counsel  for  TWRI  and the  Borrower  in
connection with the transactions contemplated by this Agreement, opinions, dated
the Initial Funding Date, in a form satisfactory to the Lender and its counsel.

                  Section 3.3.  Reserved.

                  Section 3.4.  Opinion of  Trustee's  Counsel.  The Lender
shall have  received the opinion of counsel to the Trustee, in form and
substance satisfactory to the Lender.

                  Section 3.5.  Organizational  and Other Documents.  The Lender
shall have  received  certified  copies of the  organizational  documents of the
Borrower,  TWRI and Worldmark and of all formalities  authorizing the execution,
delivery and performance hereof and of the Warehouse Facility Documents to which
each is a party and, in the case of the Borrower,  the Notes. The Borrower shall
be a special purpose bankruptcy remote corporation in a form satisfactory to the
Lender.

                  Section  3.6.  Necessary  Consents.   The  Lender  shall  have
received a copy of all  consents  to, or  releases of any lien in respect to any
Receivables subject or to be subject hereto, in form and substance  satisfactory
to the Lender.

                  Section 3.7.  Representations  True; No Event of Default.  The
representations and warranties of the Borrower and TWRI pursuant to Sections 2.1
and 2.2 shall be true on and as of such Funding  Date,  and the  representations
and warranties with respect to the Receivables  pursuant to Section 2.3 shall be
true on and as of the related  Funding  Date.  There shall exist on such Funding
Date no Default or Event of Default hereunder or under the Indenture.

                  Section 3.8.  Engagement Letter.  TWRI shall have paid all
fees due under the Engagement Letter.

                  Section 3.9. Perfection and Priority.  The Lender shall have a
first perfected  security  interest in the Trust Estate (other than the Vacation
Credits). The Lender shall have received (i) a written search report listing all
effective  financing  statements  that name TWRI or the  Borrower as "debtor" or
"assignor"  covering  the  States  of  Washington  and  Oregon  and  such  other
jurisdictions as the Lender may reasonably require, together with copies of such
financing  statements;  and no such financing statements shall cover any portion
of the Trust Estate, (ii) evidence satisfactory to the Lender that the pledge of
the Assets to the Trustee has been duly perfected by the filing of all necessary
UCC financing  statements and the taking of all such other or additional acts as
may be necessary to grant the Lender a perfected  security interest in the Trust
Estate, and (iii) an opinion as to the foregoing from Chapman and Cutler,  dated
the Initial Funding Date, in a form satisfactory to the Lender and its counsel.

                  Section  3.10.   Bankruptcy  Issues.  The  Lender  shall  have
received a true sale  bankruptcy  opinion  from  Chapman and  Cutler,  dated the
Initial Funding Date, in connection with the  Receivables  Sale Agreement,  in a
form satisfactory to the Lender and its counsel.


SECTION  4.  CONDITIONS OF OBLIGATION TO MAKE ADVANCES ON ANY FUNDING DATE.

                  The  Lender's  obligation  to make  Advances  hereunder on any
Funding Date shall be subject to the satisfaction, prior to or concurrently with
the making of such Advances, of the following conditions:

                  Section 4.1. Performance of Obligations. The Borrower and TWRI
shall each have  performed  in all  material  respects  all of their  respective
obligations to be performed hereunder prior to or on such Funding Date.

                  Section 4.2.  Representations  True; No Event of Default.  The
representations and warranties of the Borrower and TWRI pursuant to Sections 2.1
and 2.2 shall be true on and as of such Funding  Date,  and the  representations
and warranties with respect to the Receivables  pursuant to Section 2.3 shall be
true on and as of the related  Funding  Date with the same effect as though such
representations  and  warranties  had been made on and as of such Funding  Date.
There shall exist on such Funding Date no Default or Event of Default  hereunder
or under the Indenture.

                  Section 4.3. No Merger or Change in Control.  Neither TWRI nor
the Borrower shall have dissolved or liquidated or  consolidated or merged with,
or been  wound  up  into,  or  sold,  leased  or  otherwise  disposed  of all or
substantially  all of its  Properties to, any Person (other than a merger into a
wholly-owned Subsidiary for the purposes of reincorporation).

                  Section 4.4.  Searches.  The Borrower  shall have delivered to
the Lender such evidence (including without limitation,  Uniform Commercial Code
search  certificates,  releases and  termination  statements)  as the Lender may
request to establish  that there are no financing  statements  filed against the
Assets other than with respect to Permitted Liens.

                  Section  4.5.  Consents and  Approvals.  The Borrower and TWRI
shall have obtained any necessary consents, waivers, approvals,  authorizations,
registrations,  filings,  licenses and notifications  (including,  if necessary,
qualifying to do business in, and qualifying under the applicable  consumer laws
of, each jurisdiction where the Borrower and TWRI is then doing business,  or is
expected to be doing  business  utilizing  the proceeds of such Advance) and the
same shall be in full force and effect.

                  Section 4.6.  Proceedings,  Instruments,  etc. All proceedings
and  actions  taken on or  prior to such  Funding  Date in  connection  with the
transactions  contemplated by this Agreement,  the Warehouse  Facility Documents
and the  Note,  and all  instruments  incident  thereto,  shall  be in form  and
substance  reasonably  satisfactory  to the  Lender,  and the Lender  shall have
received  copies of all  documents  that the  Lender may  reasonably  request in
connection with such proceedings, actions and transactions.

                  Section 4.7. Other Documents. The Borrower and TWRI shall have
delivered to the Lender such other  documents,  instruments,  approvals  (and if
requested certified  duplication of executed copies thereof) and opinions as the
Lender may have reasonably  requested.  Each of the Warehouse Facility Documents
shall remain in full force and effect.

                  Section 4.8.  Continuance of an Event of Default.  No Event of
Default shall have occurred and be continuing.

                  Section 4.9.  Validity of Notes.  The Notes shall have been
duly and validly issued and  outstanding  and entitled to the benefits provided
by the Indenture.

                  Section 4.10.  Receipt.  The Lender  shall,  no later than one
Business Day prior to the related Funding Date, have received a Receipt from the
Custodian  indicating  that no material  deficiencies  exist with respect to the
Receivable Documents.

                  Section  4.11.  UCC-1  Financing  Statements  Pursuant  to the
Indenture,  in connection with any Advance, the Borrower shall have delivered to
the Lender,  original,  executed UCC-1 financing  statements with exhibits which
describe the collateral as the Receivables related to such Advance.


SECTION 5.  CERTAIN SPECIAL RIGHTS.

                  Section  5.1.  Home  Office   Payment.   Notwithstanding   any
provision to the contrary in the Warehouse Facility Documents, the Borrower will
punctually  pay on  each  Payment  Date  from  Available  Funds  in  immediately
available  funds prior to 2:00 pm, New York City time, all amounts  payable with
respect to the Advances in accordance  with the provisions of this Agreement and
the Indenture  (without the necessity for any presentation or surrender  thereof
or any notation of such payment thereon) in the manner and at any address as the
Lender may from time to time  direct in  writing.  The Lender  agrees  that,  as
promptly as  practicable  after the payment or  prepayment  of any Advance,  the
Lender will record such payment or  prepayment  on the Notes.  The Borrower will
afford the benefits of this Section 5.1 to any Assignee,  each of which,  by its
receipt  and  acceptance  of a  Notes,  will be  deemed  to have  made  the same
agreement  relating to the  Advances as the Lender has made in this Section 5.1.
The  Borrower  shall only be  obligated  to make  payments  on any Advance to an
Assignee in the manner provided in this Section 5.1 from and after the time such
Assignee provides to the Borrower and the Trustee written notice of its election
to receive  payments in such manner and the address to which  payments are to be
directed  (including  the account  number of  Assignee's  bank  account to which
payments are to be directed and the name,  address and ABA number of the bank in
which such account is maintained, if payments are to be made to such Assignee by
the wire transfer of immediately available funds).

                  Section 5.2.  Certain  Taxes.  The Borrower will pay all Taxes
(other than income or franchise taxes incurred by the Lender) in connection with
the execution and delivery of this Agreement and the Indenture,  the issuance of
the Note(s) by the Borrower,  the borrowings  hereunder and any  modification of
the  Warehouse  Facility  Documents  or the Notes  requested  or required by the
Borrower  and will save the  Lender  harmless,  without  limitation  as to time,
against any and all liabilities (including,  without limitation, any interest or
penalty  for  nonpayment  or delay in payment,  or any income  taxes paid by the
Lender or any Assignee in connection with any  reimbursement by the Borrower for
the  payment by any other  Person of any such  taxes)  with  respect to all such
taxes.  The obligations of the Borrower under this Section 5.2 shall survive the
payment in full of the Advances and the  termination  of the Warehouse  Facility
Documents.

                  Section 5.3. Substitution of Lender. The Lender shall have the
right to  substitute  any of the Lender's  Affiliates as the maker of all or any
portion of the aggregate  principal amount of Advances to be made by the Lender,
by written  notice  delivered to the  Borrower,  which notice shall be signed by
both the Lender and such Affiliate and shall contain such Affiliate's  agreement
to be bound by this  Agreement.  The  Borrower  agrees that upon receipt of such
notice (a) wherever the word "the Lender" is used in this Agreement  (other than
in this  Section  5.3) such word shall be deemed to refer to such  Affiliate  in
addition to or instead of to the Lender,  as the case may be, and (b) the Lender
shall,  to the  extent  of the  assumption  by such  Affiliate  of the  Lender's
obligations  hereunder,  be released from its obligations  under this Agreement.
The  Borrower  also agrees that if the Lender,  at any time,  acquires  from any
Affiliate all or any portion of such  Affiliate's  rights under this  Agreement,
wherever  the word  "the  Lender"  is used in this  Agreement  such  word  shall
thereafter be deemed to refer to the Lender in addition to or instead of to such
Affiliate,  as the case may be, and such Affiliate  shall,  to the extent of the
assumption by the Lender of such Affiliate's  obligations hereunder, be released
from all of its  obligations  under this  Agreement.  Notwithstanding  any other
provision  of this  Section 5.3,  neither the Lender nor any  Affiliate  thereof
shall be entitled to substitute  any other party as the maker of any Advances if
as a result of such  substitution  the Borrower would be required to register as
an "investment company" under the Investment Company Act of 1940, as amended.

SECTION 6. ADVANCE MATURITY; ADVANCE PREPAYMENTS.

                  Section 6.1. Advance  Maturity.  Each Advance shall be due and
payable on the related Maturity Date.

                  Section  6.2.  Mandatory   Prepayments.   The  Borrower  shall
immediately prepay, or be deemed to have prepaid, the Advances, without premium,
together  with  interest  accrued  on the  amount to be  prepaid  to the date of
prepayment and any unpaid fees with respect  thereto,  to the extent required on
each  Payment  Date  pursuant to Section  3.4 of the  Indenture.  No  prepayment
pursuant  to this  Section  6.2  shall in and of itself  have any  effect on the
obligation of the Lender to make Advances  under this Agreement nor the right of
the Borrower to reborrow an amount equal to such repayment.

                   Upon the  occurrence  of an Event of Default,  the Borrower
will make  payments on the Advances in  accordance  with Section 11 hereof and
in the Indenture.

                  Section 6.3.      Voluntary Prepayments.  The Borrower may
prepay Advances in full, without premium, at any time.

SECTION 7.  ASSIGNMENTS AND PARTICIPATIONS.

                  Section 7.1. Assignments.  (a) The Borrower may not assign its
rights or obligations  hereunder or under the Notes without the prior consent of
the Lender in its sole  discretion  (or,  if  multiple  Lenders,  the Lenders in
respect of a majority in aggregate principal amount of Advances outstanding).

                  (a)(b) Pursuant to the terms of the Indenture,  the Lender may
assign to any person or entity all or any portion of the Advances and the Notes;
provided that any assignment of a portion of the Advances and the Notes shall be
in an  amount  not less  than the  Minimum  Assignment  Denomination,  provided,
however,  the Lender shall not sell or assign a portion of the Advances or Notes
to any purchasers which are (or the Affiliates thereof are) primarily engaged in
the business of timeshare  development,  without  TWRI's prior written  consent.
Upon  written  notice  to the  Borrower  and the  Trustee  of an  assignment  in
accordance with the preceding sentence (which notice shall identify the Assignee
and the amount of the Advances and Notes assigned),  the Assignee shall have, to
the extent of such assignment  (unless  otherwise  provided in such assignment),
the obligations, rights and benefits of the Lender hereunder with respect to the
Advance(s)  assigned to it. For all  purposes of this  Agreement,  the  Assignee
shall,  so long as the Advance(s)  assigned to such Assignee  remain unpaid,  be
entitled  to the rights  and  benefits  of this  Agreement  with  respect to the
Advance(s) assigned to it as if (and the Borrower shall be directly obligated to
such  Assignee  under this  Agreement as if) such Assignee were the "Lender" for
purposes of this Agreement. Accordingly, unless otherwise provided, whenever any
action,  waiver,  notice or  consent  is to be  provided  to or by the Lender as
herein specified, such action, waiver, notice or consent shall (unless otherwise
expressly specified herein) also be provided to or by each Assignee.

                  (c) The Lender shall provide written notice of each assignment
to the Trustee and TWRI;  provided that failure to provide such notice shall not
affect the validity of any assignment.

                  (d)  Notwithstanding  the  provisions  of this Section 7.1, no
assignment  of an interest in an Advance to an entity  outside the United States
of America shall be effective unless the prospective  Assignee thereof certifies
to the Borrower and TWRI that payments to it in respect of the Advances will not
be subject to  withholding  taxes imposed by any  Governmental  Authority in the
United  States of  America  or any  political  subdivision  or taxing  authority
thereof or therein  or that if it is subject to such  withholding  taxes it will
not seek reimbursement or gross-up from the Borrower or TWRI.

                  Section 7.2. Participations.  (a) The Lender may sell or agree
to sell to any  person  or  entity  a  participation  in all or any  part of any
Advance held by it or Advances made or to be made by it. All amounts  payable by
the Borrower to the Lender under this  Agreement  shall be  determined as if the
Lender had not sold or agreed to sell any  participations in such Advance and as
if the  Lender  were  funding  all of such  Advance  in the  same way that it is
funding the Advance in which no participations have been sold.

                  (a)(b) The Lender may furnish any  information  concerning the
Borrower,  TWRI or any of their other Affiliates in the possession of the Lender
from time to time to assignees and participants.

SECTION 8. CERTAIN COVENANTS OF THE BORROWER.

                  The Borrower  covenants and agrees that so long as any Advance
shall remain unpaid:

                  (a) The  Borrower  shall be  operated in such a manner that it
would not be substantively  consolidated in the trust estate of any other Person
in the event of a bankruptcy  or  insolvency  of such Person and in such regard,
the Borrower shall:

                           (i)      not become involved in the day-to-day
                  management of any other Person;

                           (ii) not permit any  Affiliate to become  involved in
                  the day-to-day management of the Borrower except to the extent
                  provided in the Warehouse Facility Documents;

                           (iii)  not  engage  in  transactions  with any  other
                  Person  other  than  those  activities  described  herein  and
                  matters necessarily incident thereto;

                           (iv) maintain separate corporate records and books of
                  account in a separate business office from any other Person;

                           (v) the financial statements and books and records of
                  the Borrower and of TWRI reflect the separate existence of the
                  Borrower;

                           (vi) maintain its assets  separately  from the assets
                  of any other Person  (including  through the  maintenance of a
                  separate bank account);

                           (vii) maintain separate financial  statements,  books
                  and records from any other Person;

                           (viii) not guarantee any other  Person's  obligations
                  or advance  funds to, or accept  funds from,  any other Person
                  for the payment of expenses or otherwise  permit any Affiliate
                  to guarantee any of the Borrower's obligations;

                           (ix)  conduct  all  business  correspondence  of  the
                  Borrower and other communications in the Borrower's own name;

                           (x) not act as an agent of any  other  Person  in any
                  capacity except pursuant to contractual  documents  indicating
                  such  capacity and only in respect of  transactions  described
                  herein and matters necessarily incident thereto;

                           (xi) not  fail to hold  appropriate  meetings  of the
                  Board of  Directors  at least once per annum and  otherwise as
                  necessary to authorize all corporate action;

                           (xii) not fail to hold  meetings of the  stockholders
                  at least one time per annum;

                           (xiii)   not form, or cause to be formed, any
                  subsidiaries;

                           (xiv) not act as an agent of an Affiliate  nor permit
                  any Affiliate to act as its agent except to the limited extent
                  permitted under the Warehouse Facility Documents;

                           (xv) maintain a separate  office from each Affiliate,
                  which  office  may  be  on  premises  owned  or  leased  by an
                  Affiliate provided that such arrangement is set forth; and

                           (xvi)  not  engage  in  intercorporate   transactions
                  except to the extent  permitted  under the Warehouse  Facility
                  Documents   or  as   contemplated   in  its   certificate   of
                  incorporation,   including   ordinary   course   of   business
                  parent-subsidiary   transactions  not  inconsistent  with  any
                  specific  provision of this  Agreement  including this Section
                  8(a).

                  (b) The  Borrower's  certificate of  incorporation  limits the
Borrower's  activities to (i) the  purchasing and lending  against  interests in
pools of Receivables,  (ii) issuing  securities  secured by such obligations and
(iii) any activities incidental to the foregoing;

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

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

                  (e) The  Borrower  shall not issue or register the transfer of
any of its capital stock to any Person other than TWRI or any of its Affiliates;

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

                  (g) The Borrower will, at all times,  (i) maintain  minutes of
the meetings and other  proceedings of its  shareholders and board of directors;
(ii)  continuously  maintain the resolutions,  agreements and other  instruments
underlying the transactions  contemplated  hereby and by the Warehouse  Facility
Documents as official records of the Borrower; (iii) act solely in its corporate
name and  through  its  duly  authorized  officers  or  agents  to  maintain  an
arm's-length  relationship with its Affiliates and (iv) pay all of its operating
expenses and liabilities from its own funds;

                  (h) The Borrower shall conduct its business  solely in its own
name so as to not  mislead  others as to the  identity of the  corporation  with
which those others are concerned,  and particularly will use its best efforts to
avoid the  appearance of conducting  business on behalf of any of its Affiliates
or that the assets of the Borrower are  available to pay the creditors of any of
its Affiliates;

                  (i) The  Borrower  will not:  (a)  engage in any  business  or
activity  other than in  connection  with,  or relating to the ownership of, the
Receivables  and the  interests  in the  Vacation  Credits,  the issuance of the
Notes, and the specific transactions contemplated hereby; (b) become liable for,
issue,  incur,  assume,  or allow to remain  outstanding  any  indebtedness,  or
guaranty  any  indebtedness  of any  Person,  other  than the  Notes,  except as
contemplated   Warehouse  Facility  Documents;   and  (c)  seek  dissolution  or
liquidation in whole or in part or reorganization of its business or affairs;

                  (j) At any  time  and from  time to  time,  upon  the  written
request of the Trustee  (it being  acknowledged  that the Trustee  shall have no
obligation  to so  request)  or  the  Lender,  and at the  sole  expense  of the
Borrower,  the Borrower will promptly and duly complete and deliver such further
instruments  and documents  and take such further  actions as the Trustee or the
Lender may reasonably request (it being acknowledged that the Trustee shall have
no obligation to so request) for the purpose of obtaining or preserving the full
benefits to the Trustee on behalf of the  Noteholders  under the  Indenture,  as
supplemented  from time to time, and of the rights and powers therein granted to
the Trustee on behalf of the Noteholders,  including,  without  limitation,  the
filing of any financing or continuation  statements under the Uniform Commercial
Code in  effect in any  jurisdiction  with  respect  to the  security  interests
created thereby.  The Borrower also hereby  authorizes the Trustee or the Lender
to file any such financing or  continuation  statement  without the signature of
the Borrower to the extent  permitted by applicable  law. The Trustee shall have
no obligation to determine  whether or not financing or continuation  statements
need be filed or where such financing or continuation  statements,  if any, need
to be filed. A photographic  or other  reproduction  of this Agreement  shall be
sufficient as a financing statement for filing in any jurisdiction;

                  (k) The Borrower  will not, nor will it permit or allow others
to, create,  incur or permit to exist any lien, security interest or claim on or
to the  related  Assets,  other  than  the  security  interests  created  by the
Indenture. The Borrower will defend the Trust Estate against, and will take such
other action as is necessary to remove, any lien,  security interest or claim on
or to the  related  Assets,  other than the  security  interests  created by the
Indenture,  and the  Borrower  will defend the right,  title and interest of the
Trustee on behalf of the Noteholders in and to any of the related Assets against
the claims and demands of all persons whomsoever;

                  (l) The Borrower  will not, nor will it permit or allow others
to, amend,  modify,  terminate or waive any  provision of any  Receivable in any
manner which could  reasonably  be expected to materially  adversely  affect the
value of the related Assets;

                  (m) The Borrower will furnish to the Trustee from time to time
statements and schedules  further  identifying and describing the related Assets
and such other reports in connection  with the related  Assets as the Trustee or
the Lender  may  reasonably  request  (the  Trustee  not being  obligated  to so
request), all in reasonable detail;

                  (n) The  Borrower  will  notify  the  Trustee  and the  Lender
promptly, in reasonable detail, (i) of any lien or security interest (other than
security  interests created thereby) on, or claim asserted  against,  any of the
related  Assets,  or (ii) of the  occurrence  of any  other  event  which  could
reasonably be expected to have a material adverse effect on the aggregate market
value of the related  Assets or on the  security  interests,  created  under the
Indenture;

                  (o) The  Borrower  will not change the  location  of its chief
executive  office/chief  place of business or remove its books and records  from
the  location  specified  in the first  paragraph  hereof  or  change  its name,
identity or corporate  structure to such an extent that any financing  statement
filed by the Borrower or the Trustee in  connection  with this  Agreement  would
become  seriously  misleading,  unless it shall have given the  Trustee  and the
Lender at least 60 days prior written notice thereof;

                  (p) The Borrower shall at any reasonable time and from time to
time upon reasonable notice to the Borrower,  permit the Trustee,  the Lender or
any agent or  representative  thereof,  to examine and make copies and abstracts
from the  records  and books of  account  of, and visit the  properties  of, the
Borrower and to discuss the  affairs,  finances,  accounts and  prospects of the
Borrower with any of its officers and directors and the  Borrower's  independent
accountants;  once a year, or at anytime there exists an Event of Default,  upon
reasonable notice to the Borrower,  permit the Trustee,  the Lender or any agent
or  representative  thereof,  to examine  and audit the books and records of the
Borrower (including,  without limitation, any licenses necessary for the conduct
of its  business)  which  examination  and audit  shall be at the expense of the
Borrower;

                  (q) The Borrower  shall  permit the Trustee or the Lender,  at
such entity's sole discretion, to conduct, or may permit an agent of such entity
to conduct a due diligence  review of any Receivable  Documents  relating to the
Receivables  being pledged  hereunder,  either before or after the making of the
related Advance (the Trustee shall not be obligated to review);

                  (r) The Borrower shall not,  without the prior written consent
of the Trustee or the Lender,  change,  amend,  modify or supplement  any of the
following:  (i) its  certificate of  incorporation;  (ii) by-laws;  or (iii) its
shareholders  agreements,  which consent shall not be  unreasonably  withheld so
long as such change,  amendment,  modification  or supplement does not adversely
affect the rights of the Lender, as Noteholder hereunder or in, to and under the
related  Assets on behalf  of the  Lender,  as  Noteholder,  including,  without
limitation,  the  priority  of the  Trustee's  security  interest in the related
Assets on behalf of the Lender, as Noteholder;

                  (s) The Borrower  shall pay its own expenses and shall pay (i)
all  reasonable  legal costs,  incurred under or in the  implementation  of this
Agreement, (ii) any third party costs incurred under or in the implementation of
this Agreement, and (iii) after the occurrence of an Event of Default, all costs
and expenses (including attorneys' fees and costs of settlement) incurred by the
Lender in enforcing any  obligations  of or in collecting  any payments due from
the  Borrower  hereunder  or under the Notes by reason of such Event of Default.
Attorneys' fees, expenses and disbursements incurred in enforcing,  or on appeal
from, a judgment  pursuant  hereto shall be recoverable  separately  from and in
addition  to any other  amount  included  in such  judgment,  and this clause is
intended to be severable  from the other  provisions  of this  Agreement  and to
survive and not be merged into such judgment;

                  (t) To the  extent  that a  Rating  Agency  requires  that the
Borrower have more than one independent  director,  the Borrower shall amend its
organizational documents to comply with such Rating Agency's request;

                  (u) If an Event of Default has occurred and is continuing, the
Borrower shall not declare a dividend or make any  distributions  on its capital
stock; and

                  (v)  Maintenance  of  Borrowing  Base.  Upon  notice  from the
Trustee,  the Master Servicer or the Noteholders under the Indenture or from the
Lender,  or actual knowledge of a Borrowing Base Deficiency,  the Borrower shall
no later than two Business Days after such notice or knowledge of such Borrowing
Base  Deficiency,  either prepay  principal on the Notes in whole or in part, or
Grant  additional  Eligible   Receivables  to  the  Trustee  on  behalf  of  the
Noteholders,  such that  after  giving  effect to such  prepayment  or Grant,  a
Borrowing Base Deficiency will not exist.


SECTION 9. CERTAIN COVENANTS OF TWRI.

                  TWRI  covenants and agrees that so long as any Advances  shall
remain unpaid:

                  Section 9.1.  Existence.  TWRI will take and fulfill, or cause
to be taken and fulfilled,  all actions and conditions necessary to preserve and
keep in full  force  and  effect  its  existence,  rights  and  privileges  as a
corporation and will not liquidate or dissolve, and it will take and fulfill, or
cause to be taken  and  fulfilled,  all  actions  and  conditions  necessary  to
qualify, and to preserve and keep in full force and effect its qualification, to
do business  in each  jurisdiction  in which the conduct of its  business or the
ownership or leasing of its properties requires such qualification.

                  Section  9.2.  Compliance  with  Law,  etc.  TWRI will not (a)
violate any laws,  ordinances,  governmental rules or regulations to which it is
or may become subject or (b) fail to obtain or maintain any patents, trademarks,
service marks, trade names, copyrights,  licenses,  permits, franchises or other
governmental  authorizations  necessary to the ownership of its Vacation Credits
or to the conduct of its business.

                  Section  9.3.  Payment of Taxes and Claims.  TWRI will pay and
discharge  promptly,  as and when due, all taxes,  assessments and  governmental
charges  and  levies  imposed  upon it,  its  income  or  profits  or any of its
properties;  provided,  however,  that the foregoing  need not be paid while the
same is being  contested  in good faith by  appropriate  proceedings  diligently
conducted so long as:

                  (a)  adequate   reserves   shall  have  been   established  in
accordance with GAAP with respect thereto; and

                  (b)  the  right  of  TWRI,  as the  case  may  be,  to use the
particular property shall not be materially and adversely affected thereby.

                  Section 9.4. Inspection.  TWRI will permit, once a year, or at
anytime  there  exists an Event of Default,  upon  reasonable  notice to it, the
Trustee, the Lender, or any representative or agent, (a) to examine all books of
account,  records,  reports  and other  papers of TWRI  relevant  to its role as
originator of the  Receivable  (including  the  Receivable  Files),  (b) to make
copies and take extracts from any thereof, (c) to discuss the affairs,  finances
and  accounts of TWRI with its  respective  officers and  independent  certified
public   accountants  (and  by  this  provision  TWRI  hereby   authorizes  said
accountants  to discuss with the Lender the finances and accounts of TWRI),  and
(d) to visit and inspect,  at reasonable times during normal business hours, the
properties of TWRI. It is understood  and agreed by the parties  hereto that all
reasonable  expenses  in  connection  with any  such  inspection  or  discussion
incurred  by the Lender or TWRI,  any  officers  and  employees  thereof and the
independent  certified public accountants  therefor shall be expenses payable by
TWRI.

                  Section 9.5. Consolidation and Merger. TWRI shall not merge or
consolidate with any other Person.

                  Section  9.6.  Control.  So long as any of the Notes  remains
Outstanding,  TWRI will not sell,  pledge or otherwise transfer any of the
capital stock of the Borrower held by TWRI.

                  Section 9.7. Tax Returns.  (a) At all times, so long as any of
the Notes or the other obligations  secured by the Indenture remain outstanding,
TWRI and the Borrower shall be members of the same  affiliated  group within the
meaning of Section  1504 of the Code (the  "TWRI  Group")  and shall join in the
filing of a  consolidated  return for federal  income tax  purposes  and, to the
extent  permitted by law, in the filing of consolidated or combined  returns for
state, local and foreign tax purposes.

                  (a) (b) TWRI shall  promptly pay and  discharge,  or cause the
payment and discharge of, all the TWRI Group,  or federal  income taxes (and all
other  material  taxes) when due and payable by TWRI,  the Borrower,  except (i)
such as may be paid thereafter  without penalty or (ii) such as may be contested
in good faith by appropriate  proceedings and for which an adequate  reserve has
been  established and is maintained in accordance with GAAP. TWRI shall promptly
notify the Borrower,  the Trustee and the Noteholders of any material challenge,
contest or proceeding pending by or against TWRI or TWRI Group before any taxing
authority.

                  Section 9.8. Protection of Right, Title and Interest.

                  (a) TWRI  shall  deliver  (or  cause to be  delivered)  to the
Borrower and the Trustee  file-stamped  copies of, or filing  receipts  for, any
document filed as provided above, as soon as available following such filing. In
the event that TWRI fails to perform its obligations under this subsection,  the
Borrower  or the Trustee  may do so, on TWRI's  behalf,  at the expense of TWRI.
TWRI  hereby  grants  the  Borrower  and the  Trustee  a power  of  attorney  to
effectuate the provisions of the preceding sentence.

                  (b) TWRI  shall not  change its name  identity,  or  corporate
structure  in any manner  that  would,  could,  or might make any UCC  financing
statement or  continuation  statement filed by TWRI in accordance with paragraph
(a) above  seriously  misleading  within the meaning of ss. 9-402(7) of the UCC,
unless it shall  have  given the  Borrower  and the  Trustee at least five days'
prior  written  notice  thereof  and  shall  have  promptly  filed   appropriate
amendments  to all  previously  filed UCC financing  statements or  continuation
statements.

                  (c) TWRI shall give the  Borrower  and the Trustee at least 60
days' prior written notice of any relocation of its principal  place of business
or chief  executive  office if, as a result of such  relocation,  the applicable
provisions  of  the  UCC  would  require  the  filing  of any  amendment  of any
previously  filed UCC  financing  or  continuation  statement  or of any new UCC
financing  statement and shall promptly file any such  amendment.  TWRI shall at
all times maintain each office from which it shall service the  Receivables  and
its principal executive office,  within the United States of America. TWRI shall
pay all  filing  fees or  taxes  payable  in  respect  of any UCC  financing  or
continuation statements required to be filed pursuant to this Section 9.8(c).

                  (d)  TWRI  shall  deliver  to the  Borrower  and  the  Trustee
promptly after the execution and delivery of each amendment  hereto,  an Opinion
of Counsel  either (i) stating  that,  in the opinion of such  counsel,  all UCC
financing  statements  and  continuation  statements  necessary  to preserve and
protect  fully the  interest of the Borrower and the Trustee in the Trust Estate
have been filed,  or (ii) stating that, in the opinion of such counsel,  no such
action shall be necessary to preserve and protect such interest.

                  (e) Other Liens or Interests. Except for the conveyances under
the  Indenture,  TWRI will not sell,  pledge,  assign or  transfer  to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on the Trust
Estate or any  interest  therein,  and TWRI shall defend the right,  title,  and
interest  of the  Borrower  and the  Trustee  in, to and under the Trust  Estate
against all claims of third  parties  claiming  through or under TWRI;  provided
however, that TWRI's obligations under this Section 9.8 shall terminate upon the
repayment in full of the Note and the  expiration of any  applicable  preference
period.

                  Section 9.9.  Further  Assurances.  TWRI will promptly execute
and deliver all further  instruments  and documents and take all further  action
that may be necessary in order to give effect to the provisions of the Warehouse
Facility Documents and the transactions contemplated hereby.

                  Section  9.10.  Independence.  Until  367  days  have  elapsed
following payment and satisfaction of all obligations of the Borrower  hereunder
and in respect of the Advances, TWRI shall be required to (and shall assure that
each other  Affiliate of TWRI shall) observe the applicable  legal  requirements
for the  recognition  of the Borrower as a legal entity  separate and apart from
TWRI and each other Affiliate of TWRI, including,  without limitation,  assuring
that each of the following is complied with:

                  (a) TWRI and  each  other  Affiliate  of TWRI  shall  maintain
separate records and books of account (each of which shall be sufficiently  full
and complete to permit a determination  of the assets and liabilities of TWRI or
such  Affiliate,  as the case  may be,  separate  and  apart  from  those of the
Borrower and to permit a determination  of the obligees thereon and the time for
performance on each of the  obligations of TWRI or such  Affiliate,  as the case
may be,  separate  and  apart  from  those of the  Borrower)  from  those of the
Borrower;

                  (b)      neither TWRI nor any of its other  Affiliates  shall
commingle any of its assets or funds with those of the Borrower;

                  (c) the board of directors of TWRI shall not dictate decisions
with respect to the  Borrower's  business and daily  operations,  and TWRI shall
maintain its own corporate  formalities and shall otherwise respect the separate
corporate identity of the Borrower;

                  (d) other than the transactions  contemplated by the Warehouse
Facility  Documents,  neither TWRI nor any of its other  Affiliates  shall enter
into any transactions with the Borrower;

                  (e) neither TWRI nor any of its other  Affiliates shall accept
appointment as, or act as, an agent of the Borrower  except,  to the extent TWRI
performs certain servicing and collection functions pursuant to the Indenture;

                  (f) neither TWRI nor any of its other Affiliates shall advance
funds to the  Borrower  (except  for the making of capital  contributions);  and
neither TWRI nor any of its other  Affiliates will otherwise supply funds to, or
guarantee any obligation of, the Borrower;

                  (g)  neither  TWRI  nor  any of  its  other  Affiliates  shall
guarantee,  or otherwise  become  liable with respect to, any  obligation of the
Borrower;

                  (h) TWRI and each of its other  Affiliates  shall at all times
hold  itself  out to the  public  under its  respective  name as a legal  entity
separate and distinct from the Borrower; and

                  (i) all  financial  reports  prepared  by TWRI and each of its
other Affiliates shall comply with GAAP.

                  Section 9.11. Other  Agreements and Parties.  TWRI will comply
with all terms of the Warehouse  Facility Documents to which it is a party. TWRI
will  not  (a)  except  as  otherwise  expressly  set  forth  herein  and in the
Indenture,  agree to any amendment,  supplement or  modification to or waiver of
the terms of the Warehouse Facility Documents to which it is a party without the
consent of the Lender,  or (b) consent to the  appointment  of any  Subservicer,
without the consent of the Lender, such consent not to be unreasonably withheld.

                  Section 9.12. Insurance Coverage. TWRI will maintain insurance
coverage, for itself and its subsidiaries, that encompasses employee dishonesty,
forgery or alteration,  theft,  disappearance and destruction,  robbery and safe
burglary,  property (other than money and securities),  and computer fraud in an
aggregate amount of at least $1,000,000.

                  Section 9.13..  Financial Covenants.

                  (a) Minimum Tangible Net Worth.  TWRI shall maintain a minimum
Tangible  Net Worth equal to or greater than the sum of (A)  $113,000,000,  plus
(B) fifty  percent  (50%) of TWRI's Net Income  (without  regard to net  losses)
after  December 31, 1998,  plus (C) eighty percent (80%) of New Equity raised by
TWRI.

                  (b)      Maximum Leverage Ratio.  The Borrower shall maintain
a Maximum Leverage Ratio not to exceed 2.00 to 1.00.

                  Section 9.14.     Reserved.

                  Section  9.15.  Interest  Rate  Protection.  If on any date of
determination,  (a) the  weighted  average  Receivable  Coupon Rate of the Trust
Estate  Receivables is less than (b) the Notes Interest Rate plus 6%, TWRI shall
purchase  interest rate caps  satisfactory  to the Lender.  The proceeds of such
interest  rate caps shall be pledged to the  Borrower.  TWRI shall remain liable
for any costs associated with such interest rate caps.

                  Section 9.16.     Break-up  Fee.  TWRI shall pay the Lender
the Break-up Fee pursuant to the terms and  conditions of the Engagement Letter.

                  Section 9.17.     Reserved.

                  Section 9.18.     Worldmark.  (a) TWRI  will not  consent  to
any  request  from  Worldmark  to  allow  Worldmark  to encumber, pledge or
hypothecate any Resort property without the written consent of the Lender.

                  (a)(b) TWRI will  continue to manage  Worldmark in  accordance
with the management agreement between TWRI and Worldmark,  as such agreement may
be amended  from time to time with the  written  consent of the Lender as may be
amended  from time to time on account of (i) a change in the  agreement  made in
order to keep TWRI or Worldmark in compliance with federal, state or local laws,
rules and regulations, or (ii) as such agreement may be amended with the written
consent of the Lender.


SECTION 10. INFORMATION TO BE FURNISHED TO LENDER.

                  Section 10.1.  Information to be Furnished by the Borrower
or TWRI.

                  (a)  Financial  Statements.  The  Borrower  and TWRI will each
deliver or cause to be delivered to the Lender (i) no later than forty-five (45)
days  following  the end of each  quarter  (other  than  the 4th  quarter),  its
quarterly consolidated financial statements, (ii) no later than ninety (90) days
following the end of each fiscal year, its audited annual consolidated financial
statements prepared by KPMG LLP or another nationally recognized accounting firm
approved by the Lender,  reflecting material inter-company  adjustments,  all of
which shall conform with GAAP.

                  (b) TWRI Officer's Certificate. Concurrently with the delivery
of the reports required in Section  10.1(a),  TWRI shall provide the Lender with
an Officer's  Certificate  which shall (i) indicate TWRI's Tangible Net Worth at
the end of such  quarter,  (ii)  certify  that  TWRI is in  compliance  with the
financial covenants  contained in Section 9.13 hereof,  together with details of
all calculations used to determine such compliance, (iii) certify that no Events
of Default have  occurred,  or if an Event of Default has  occurred,  the status
thereof,  and (iv) that it is in compliance with each of the Warehouse  Facility
Documents to which it is a party.

                  (c)  Borrower  Officer's  Certificate.  Concurrently  with the
delivery of the reports required in Section 10.1(a),  the Borrower shall provide
the Lender with an Officer's  Certificate which shall (i) certify that no Events
of Default have  occurred,  or if an Event of Default has  occurred,  the status
thereof,  and (ii) that it is in compliance with each of the Warehouse  Facility
Documents to which it is a party.

                  (d) Event of Default Officer's Certificate.  In the event that
any Officer of TWRI or the Borrower shall have obtained knowledge of any Default
or Event of Default,  TWRI or Borrower,  as the case may be, shall promptly (and
in any event  within  five (5) days)  deliver an  Officer's  Certificate  to the
Lender  specifying the nature and period of existence  thereof,  what action the
Borrower  or TWRI has  taken or is  taking  or  proposes  to take  with  respect
thereto,  and an estimate of the time necessary to cure such condition or event.
Nothing in this  Section  10.1(d)  or in any such  Officer's  Certificate  shall
affect the length of the cure periods set forth in the Indenture.

                  (e)  Receivables  Data. On each  Determination  Date or at the
request by the  Lender,  TWRI or the  Borrower  shall  deliver  such other data,
filings and  information  in electronic  format  (including,  but not limited to
cumulative  data  with  respect  to  the  Receivables  regarding  delinquencies,
prepayments,  any repurchases and/or substitutions of Receivables by TWRI or the
Borrower) as the Lender may require to verify the  information  contained in the
related  Servicer  Report or to determine  whether a Borrowing  Base  Deficiency
exists or such information the Lender may from time to time reasonably request.

                  (f) Worldmark Financial Statements.  Within one hundred twenty
(120) days of the end of  Worldmark's  fiscal year,  TWRI or the Borrower  shall
deliver the audited annual  consolidated  financial  statements of Worldmark and
the Annual  Report  required  to be  delivered  to holders of  Vacation  Credits
pursuant to Section 7.2(c) of the by-laws of Worldmark.

                  (g) Vacation Credits Data.  Within forty-five (45) days of the
end of each  quarter,  TWRI shall  deliver any audit  reports  prepared by third
parties relating to TWRI and Worldmark  (including but not limited to reports on
the number of Vacation Credits sold and remaining in inventory).

                  (h) Public  Reports.  TWRI shall  promptly  provide the Lender
with copies of all public announcements and public filings relating to TWRI.


SECTION 11. DEFAULTS, REMEDIES AND TERMINATION.

                  Section  11.1.  Events of Default.  Events of Default and
Remedies  therefor  are set forth in Sections  6.1, 6.2 and 6.3 of
the Indenture.

                  Section 11.2.  Termination of Funding Obligation.  If an
Event of Default has occurred and is continuing,  the Lender shall have no
obligation to make Advances hereunder.


SECTION 12. INTERPRETATION OF AGREEMENT.

                  Section 12.1.  Definitions.  Capitalized terms used herein but
not defined shall have the meanings set forth in "Trendwest  Warehouse  Facility
Definitions" attached hereto as Annex A.

                  Section 12.2.  Accounting  Terms.  All  accounting  terms used
herein  that are not  otherwise  expressly  defined  shall  have the  respective
meanings given to them in accordance with GAAP at the particular time.

                  Section  12.3.  Governing  Law. THIS  AGREEMENT  AND THE NOTES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAW OF THE STATE OF
NEW YORK.

                  Section 12.4. Headings. The headings of the Sections and other
subsections of this  Agreement  have been inserted for  convenience of reference
only and shall not affect the meaning of this Agreement.

                  Section   12.5.   Independence   of   Covenants,   etc.   Each
representation,  covenant or Event of Default herein shall be given  independent
effect so that if any action or condition  would violate any of such  covenants,
would breach any of such  representations or would constitute any of such Events
of Default,  the fact that such action or condition would not violate or breach,
any other  covenant or  representation  or  constitute  another Event of Default
shall  not  avoid  the  violation  of such  covenant  or  representation  or the
occurrence of such Event of Default.

SECTION 13. MISCELLANEOUS.

                  Section  13.1.  Notices.  (a) All  communications  under  this
Agreement  shall be in  writing  and  shall be  delivered  or  mailed or sent by
facsimile  transmission  and  confirmed  in  writing  (i) if to the  Lender,  to
Prudential Securities  Incorporated,  Attention:  Ken Leavy, One New York Plaza,
12th Floor,  New York,  New York 10292,  facsimile  number:  212-778-8876,  with
copies to (A) Prudential  Securities  Incorporated-Credit  Analysis  Department,
Attention:  James Maitland,  One Seaport Plaza, 199 Water Street,  27th Fl., New
York,  New  York  10292,  facsimile  number:  212-214-7678,  and (B)  Prudential
Securities  Incorporated,  Attention:  Andrew  Yuder,  One New York Plaza,  14th
Floor, New York, New York 10292,  facsimile number:  212-778-7401 and (ii) if to
the  Borrower or TWRI,  at the  address  set forth in Section  2.2(b) or at such
other address or facsimile  number as it shall have  furnished in writing to the
Lender.

                  (a)(b) Any written  communication  so addressed  and mailed by
certified or registered mail, return receipt requested,  shall be deemed to have
been given when so mailed. All other written  communications  shall be deemed to
have been given upon receipt thereof.

                  Section 13.2. Survival.  All  representations,  warranties and
covenants made by the Borrower  herein or by the Borrower in any  certificate or
other  instrument  delivered under or in connection with this Agreement shall be
considered to have been relied upon by the Lender and shall  survive  regardless
of any investigation made by the Lender or on the Lender's behalf.

                  Section 13.3.  Successors and Assigns. This Agreement shall be
binding upon the parties hereof and their respective successors and assigns, and
shall inure to the benefit of and be enforceable by the parties hereof and their
respective successors and assigns permitted hereunder.  Whether or not expressly
so stated and subject to the  restrictions  set forth herein,  the provisions of
Sections 5 through 13 of this  Agreement  are  intended  to be for the  Lender's
benefit and shall be enforceable by the Lender; and, provided further,  that the
provisions of Sections 6.2 and 11.1 hereof shall also be for the benefit of, and
shall be  enforceable  by, any Person who shall no longer be a Lender  hereunder
but who shall have  incurred  any  expense or been  subjected  to any  liability
referred to therein while, or on the basis of being, a Lender.

                  Section 13.4. Amendment and Waiver. (a) This Agreement and the
Notes may be amended or  supplemented,  and the observance of any term hereof or
thereof may be waived, with the written consent of the Borrower, TWRI and (i) on
or prior to the Initial  Funding  Date,  the Lender,  and (ii) after the Initial
Funding Date,  the Lender (or, if multiple  Lenders,  Lenders with respect to at
least 66-2/3% in aggregate unpaid  principal  amount of the Advances;  provided,
however, that no such amendment, supplement or waiver shall, without the written
consent of all Lenders, (a) change, with respect to the Advances,  the amount or
time of any required  prepayment  or payment of principal or premium or the rate
or time of payment of interest,  or change the funds in which any  prepayment or
payment on the Advances is required to be made; (b) reduce the percentage of the
aggregate  principal amount of Advances  required for any amendment,  consent or
waiver  hereunder;  (c) release any material  Lien of the Trustee,  held for the
benefit of Noteholders,  on any of the Assets or affect the priority  thereof or
(d) make changes which would have an adverse effect on the Lenders.

                  (b)   Any amendment,  supplement or waiver effected in
accordance with this Section 13.4 shall be binding upon the Lender, each
Assignee and the Borrower.

                  (c) The Borrower will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of the
Warehouse Facility Documents or the Notes unless the Lender (irrespective of the
amount of Advances  made by it) shall be informed  thereof by the  Borrower  and
shall be afforded the  opportunity of considering the same and shall be supplied
by the Borrower  with  sufficient  information  to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
effected  pursuant to the  provisions of this Section 13.4 shall be delivered by
the Borrower to the Lender forthwith  following the date on which the same shall
have been executed and  delivered by the Lender of the  requisite  percentage of
Advances.

                   (d) Any amendment which adversely affects the Trustee's
rights,  duties and immunities shall require the consent of the Trustee.

                  Section 13.5. Counterparts. This Agreement may be executed and
delivered simultaneously in two (2) or more counterparts, each of which shall be
deemed an original,  but all such counterparts shall together constitute but one
and the same instrument.

                  Section 13.6.  Reproduction  of Documents.  This Agreement and
all  documents  relating  hereto  (other  than the  Notes),  including,  without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be
executed,  (b)  documents  received by the Lender at the closing of the Lender's
making  of  Advances,  and (c)  financial  statements,  certificates  and  other
information  heretofore or hereafter  furnished to the Lender, may be reproduced
by the Lender by any photographic or other similar  process,  and the Lender may
destroy any original document so reproduced.  The Borrower agrees and stipulates
that, to the extent  permitted by applicable law and court or agency rules,  any
such reproduction  shall be admissible in evidence as the original itself in any
judicial  or  administrative  proceeding  (whether  or not  the  original  is in
existence  and  whether or not such  reproduction  was made by the Lender in the
regular  course of  business)  and that any  enlargement,  facsimile  or further
reproduction  of such  reproduction  shall be admissible in evidence to the same
extent.

                  Section 13.7.  Consent to Jurisdiction and Venue. The Borrower
and TWRI each hereby irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to the Warehouse Facility Documents or any
Notes  may be  brought  in a court of  record in the State of New York or in the
courts of the United States of America  located in such State,  (ii) consents to
the jurisdiction of each such court in any such suit, action or proceeding,  and
(iii) waives any objection  which it may have to the laying of venue of any such
claim  that  any  such  suit,  action  or  proceeding  has  been  brought  in an
inconvenient  forum  and  covenants  that it will  not  seek  to  challenge  the
jurisdiction  of any such  court or seek to oust  the  jurisdiction  of any such
court, whether on the basis of inconvenient forum or otherwise. The Borrower and
TWRI each irrevocably  consent to the service of any and all process in any such
suit, action or proceeding by mail copies of such process to the Borrower at its
address for notices provided in Section 13.1 hereof.  The Borrower and TWRI each
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced  in other  jurisdictions  by suit on the  judgment or in any
other manner  provided by law. All mailings  under this Section 13.7 shall be by
registered or certified mail, return receipt requested.  Nothing in this Section
13.7 shall affect the Lender's  right to serve legal process in any other manner
permitted  by law or affect  the  Lender's  right to bring  any suit,  action or
proceeding  against the Borrower or any of its  properties  in the courts of any
other jurisdiction.

                  Section 13.8. No Petition. The Lender and each Assignee hereby
covenant and agree that,  until the expiration of the date which is one year and
one day after the payment in full of all Notes  outstanding  and issued pursuant
to the  Indenture,  it will not institute  against the Borrower,  or join in any
institution   against  the   Borrower   of,  any   bankruptcy,   reorganization,
arrangement,  insolvency or liquidation proceedings,  or other proceedings under
any  applicable  bankruptcy  or similar law in connection  with any  obligations
relating to the Advances or the Warehouse Facility Documents.

                  Section  13.9.  Acts  of  Lender.  (a)  Any  request,  demand,
authorization,  direction,  notice,  consent, waiver or other action provided by
this  Agreement  to be  given  or taken by the  Lender  may be  embodied  in and
evidenced by one or more  instruments of  substantially  similar tenor signed by
the  Lender in person or by agents  duly  appointed  in  writing;  and except as
herein otherwise expressly provided such action shall become effective when such
instrument  or  instruments  is or are  delivered  to  the  Borrower.  Proof  of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this  Agreement if made in the manner  provided
in this Section 13.9.

                  (a)(b) The fact and date of the execution by any person of any
such  instrument or writing may be proved in any manner that the Borrower  deems
sufficient.

                  (c) Any request,  demand,  authorization,  direction,  notice,
consent,  waiver or other  action by the Lender or any  Assignee  shall bind the
Lender and such Assignee in respect of anything done,  omitted or suffered to be
done by the Borrower in reliance thereon, whether or not notation of such action
is made upon such Note.

                  Section 13.10.  Confidentiality.  All  non-public  information
relating  to  this  Agreement,   the  Warehouse   Facility   Documents  and  the
transactions  contemplated  thereby  will  be kept  confidential  by  TWRI,  the
Borrower and the Lender, except to the extent disclosure of such information may
be required by law,  rule or regulation  applicable  to such Person.  The Lender
agrees to cause each assignee and Participant  with which it is a party to agree
to keep such  information  confidential.  The  provisions  of this Section 13.10
shall survive the termination of this Agreement.



<PAGE>





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

                       TW HOLDINGS II, INC.



                       By:      ___________________________
                                Name:
                                Title:


                       TRENDWEST RESORTS, INC.



                       By:      __________________________
                                Name:
                                Title:



                       PRUDENTIAL SECURITIES
                       CREDIT CORPORATION


                       By:      _________________________
                                Name:
                                Title:



<PAGE>



                                    EXHIBIT A



                            FORM OF BORROWING NOTICE


Prudential Securities Credit Corporation
One Seaport Plaza, 27th Floor
New York, New York 10292
Fax: (212) 214-7535
Attention:  Robert Troiano

         In  accordance  with Section 1.3 of the Credit  Agreement,  dated as of
April 15, 1999 (the "Credit Agreement"),  by and among TW Holdings II, Inc. (the
"Borrower"),   Trendwest  Resorts,   Inc.,  and  Prudential   Securities  Credit
Corporation (the "Lender"), the undersigned, an authorized representative of the
Borrower  gives  notice to the Lender that the Borrower  proposes to borrow,  in
accordance  and  subject to the terms of the Credit  Agreement,  from the Lender
$[__] (the "Advance") on [DATE] (the "Proposed  Funding Date").  All capitalized
terms  used but not  defined  herein  shall  have  the  meanings  given  them in
"Trendwest  Warehouse  Facility  Definitions"  attached hereto as Annex A to the
Credit Agreement.

         In connection with this Borrowing Notice and the requested Advance:

     1.  The  Borrower  represents  that  on  the  Proposed  Funding  Date,  all
conditions  precedent  required in Sections 3 and 4 and  elsewhere in the Credit
Agreement have been satisfied.

     2.  Pursuant  to Section  1.3 of the Credit  Agreement,  the  Borrower  has
attached hereto the Schedule of Receivables  containing the Required Information
in hard copy and in electronic format.

     3. No Borrowing Base Deficiency exists.

     4. The Advance should be wired to [WIRING INSTRUCTIONS].

                                    TW HOLDINGS II, INC.


                                    By:      ____________________________
                                             Name:
                                             Title:

cc:  Dan Lynch (PSCC - Fax: (212) 214-7533)
     Peter Austin (PSI - Fax: (212) 778-7401)
     Lina Hsu (PSI - Fax: (212) 778-3716)


<PAGE>




                                    EXHIBIT B

                       TWRI CREDIT AND COLLECTION POLICIES



<PAGE>




                                    EXHIBIT C

                        FORM OF INSTALLMENT SALE CONTRACT