EXECUTION COPY

                              TRI FUNDING III, INC.
                     RECEIVABLES-BACKED NOTES, SERIES 1999-1
                       $26,000,000 6.695% CLASS A-1 NOTES
                       $22,500,000 7.230% CLASS A-2 NOTES
                       $55,904,000 7.560% CLASS A-3 NOTES
                        $18,249,000 7.460% CLASS B NOTES
                        $19,947,000 7.685% CLASS C NOTES
                        $17,400,000 8.590% CLASS D NOTES

                               PURCHASE AGREEMENT

                                 August 18, 1999

Prudential Securities Incorporated
  as the Initial Purchaser
One New York Plaza
New York, New York  10292

Ladies and Gentlemen:

                  Section 1. Notes.  TRI Funding III,  Inc.  (the  "Issuer"),  a
wholly owned special purpose  subsidiary of Trendwest  Resorts,  Inc.  ("TWRI"),
proposes to issue Receivables-Backed Notes, Series 1999-1, Class A-1, Class A-2,
Class A-3, Class B, Class C and Class D (collectively,  the "Notes").  The Notes
will be  issued  pursuant  to an  indenture,  dated as of  August  1,  1999 (the
"Indenture"),  by and among the  Issuer,  TWRI,  as servicer  and  Norwest  Bank
Minnesota,  National Association,  as trustee (the "Trustee"). The Notes will be
principally  secured by, among other things,  specific payments  ("Receivables")
required to be made under certain  consumer  retail  installment  sale contracts
("Contracts")  sold to the  Issuer  by TWRI,  TW  Holdings,  Inc.  ("TWHI"),  TW
Holdings II, Inc.  ("TWHII"),  TRI Funding Company I, L.L.C.,  ("TRIFI") and TRI
Funding II, Inc.  ("TRIFII" and together with TWRI,  TWHI,  TWHII and TRIFI, the
"Sellers") pursuant to a receivables  purchase agreement,  dated as of August 1,
1999 (the "Receivables  Purchase  Agreement"),  by and among the Sellers and the
Issuer  (collectively,  the "Trendwest  Entities").  The Notes are to be in such
form and bear  interest  and be  payable  on such  terms  as  prescribed  in the
Indenture.  Capitalized  terms used herein but not otherwise  defined shall have
the meanings set forth in the Indenture.

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<PAGE>

                  Section  2.  Purchase  of  Notes.  Subject  to the  terms  and
conditions  and  in  reliance  upon  the   representations  and  warranties  and
agreements  set forth herein,  (A) the Issuer agrees to sell all of the Notes to
Prudential  Securities  Incorporated  (the "Initial  Purchaser")  as hereinafter
provided,  and (B) the Initial  Purchaser  agrees to purchase the Notes,  on the
Closing Date (as defined in Section 3 below) such Notes at the  purchase  prices
listed on Exhibit A attached hereto. At the time of the delivery of the Notes to
the Initial  Purchaser,  the Initial  Purchaser  shall make such  payment to the
Issuer of such  purchase  price (i) by wire  transfer in  immediately  available
funds to such  account as the Issuer  shall  designate at least one Business Day
prior to the Closing  Date,  or (ii) in such other  manner as agreed upon by the
Issuer and the Initial Purchaser.

                  Section  3.   Delivery.   The  closing  of  the   transactions
contemplated  herein will be held at 10:00 am, New York time,  at the offices of
Chapman and Cutler, Chicago, Illinois, on or about August 25, 1999 (the "Closing
Date").  Delivery  of the Notes  shall be made in the form of one or more global
certificates  delivered to The Depository  Trust Company on the Closing Date and
shall be  registered  in the name of Cede & Co. The Notes will be available  for
examination at least one Business Day prior to the Closing Date.

                  Section 4.  Representations  and  Warranties  of the Trendwest
Entities.  Each of the Issuer,  and, as indicated in sub-sections  (ii),  (iii),
(v), (vi), (x) and (xii) below,  Trendwest represent and warrant, to the Initial
Purchaser, as of the Closing Date, that:

                          (i) The Offering Memorandum dated August 23, 1999 (the
         "Memorandum")  does not and will not,  and any  amendments  thereof  or
         supplement  thereof  and  any  additional   information  and  documents
         concerning  the  Notes  delivered  by or on  behalf  of the  Issuer  to
         prospective purchasers of the Notes (collectively, such information and
         documents,  the  "Additional  Offering  Documents"),  each as of  their
         respective  dates,  and any oral  statements  made by the Issuer to any
         prospective  purchaser of the Notes did not or will not, each as of its
         issue  date or date on  which  such  statement  was  made and as of the
         Closing Date, include an untrue statement of a material fact or omit to
         state a material fact necessary in order to make the statements, in

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<PAGE>

light of the circumstances under which they were made, not misleading.

                         (ii)  Each  Trendwest  Entity  is  a  corporation  or a
         limited liability company duly organized,  validly existing and in good
         standing under the laws of its state of incorporation or formation, has
         all power and  authority  necessary to own or hold its  properties  and
         conduct  its  business  in  which it is  engaged  as  described  and as
         contemplated in the Memorandum and has all licenses  necessary to carry
         on its  business  as it is now  being  conducted  and is  licensed  and
         qualified  in each  jurisdiction  in which the conduct of its  business
         requires  such  licensing or  qualification  (except  where the lack of
         licensing  or  qualification  would  not and  does not  materially  and
         adversely  affect  the  business,  operations,  property  or  financial
         obligations  of such  Trendwest  Entity,  the ability of such Trendwest
         Entity to perform its  obligations  under this  Agreement and the other
         Agreements,  or the validity or enforceability of this Agreement or any
         of the other Agreements (a "Material Adverse Effect")).

                        (iii) The Indenture, the Receivables Purchase Agreement,
         the  servicing  agreement,  dated as of August 1, 1999 (the  "Servicing
         Agreement"),  by and  among  TWRI,  as  servicer,  the  Issuer  and the
         Trustee, and this Agreement (collectively,  the "Agreements") have each
         been duly authorized,  executed and delivered by each Trendwest Entity,
         to the extent each is a party thereto, and, assuming due authorization,
         execution and delivery thereof by the other parties thereto, constitute
         valid  and  legally  binding   obligations  of  such  Trendwest  Entity
         enforceable  against such  Trendwest  Entity in  accordance  with their
         respective terms to the extent each is a party thereto,  subject to the
         effect of bankruptcy, insolvency, reorganization,  moratorium and other
         similar laws relating to or affecting  creditors'  rights  generally or
         the application of equitable  principles in any proceeding,  whether at
         law or in equity.

                         (iv) When executed,  authenticated and delivered by the
         Issuer and the Trustee in accordance with the Indenture and paid for by
         the  purchasers  thereof,  the Notes  will  have  been  duly  executed,
         authenticated,  issued  and  delivered  and  will  be  entitled  to the
         benefits of the Indenture.

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<PAGE>

                          (v)  There  are no legal or  governmental  proceedings
         pending  to which  any  Trendwest  Entity  is a party,  or of which any
         property or assets of any Trendwest  Entity is the subject,  which,  if
         determined adversely to such Trendwest Entity, as the case may be would
         individually or in the aggregate have a material  adverse effect on the
         financial  position,  stockholders'  or  members'  equity or results of
         operations  of  such  Trendwest  Entity  as the  case  may be or on the
         performance by such Trendwest Entity of its obligations hereunder or as
         contemplated  under each Agreement to which it is a party;  and, to the
         best  knowledge of the Issuer or  Trendwest,  no such  proceedings  are
         threatened or contemplated by governmental authorities or threatened by
         others.

                         (vi) The  execution  and  delivery  of the Notes by the
         Issuer,  the execution,  delivery and  performance of the Agreements by
         each  Trendwest  Entity to the extent  each is a party  thereto and the
         consummation by each Trendwest Entity of the transactions  contemplated
         herein and in all  documents  relating  to the Notes will not result in
         any  breach  or  violation  of, or  constitute  a  default  under,  any
         agreement or instrument to which such Trendwest Entity is a party or to
         which any of its  properties or assets are subject,  except for such of
         the  foregoing as to which  relevant  waivers or  amendments  have been
         obtained  and are in full force and  effect,  nor will any such  action
         result in a violation of the  Certificate  of  Incorporation,  By-Laws,
         Certificate of Formation or Limited  Liability  Company  Agreement,  as
         applicable,  of such Trendwest Entity, or any law or any order, decree,
         rule  or  regulation  of  any  court  or  governmental   agency  having
         jurisdiction over such Trendwest Entity or its properties,  a breach or
         violation  of which,  or  default  under  which,  would have a Material
         Adverse Effect on such Trendwest Entity.

                        (vii)  The  Issuer  is not,  and the  activities  of the
         Issuer  pursuant to the  Indenture  will not cause the Issuer to be, an
         "investment  company"  or an  entity  "controlled"  by  an  "investment
         company"  as such terms are  defined in the  Investment  Company Act of
         1940, as amended.

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<PAGE>

                       (viii) Assuming the Initial  Purchaser's  representations
         herein are true and accurate,  it is not  necessary in connection  with
         the offer, sale and delivery of the Notes in the manner contemplated by
         this  Agreement  and the  Memorandum  to  register  the Notes under the
         Securities Act.

                         (ix) The Notes  satisfy the  requirements  set forth in
         Rule 144A(d)(3) under the Securities Act.

                          (x) At the  time  of  execution  and  delivery  of the
         Receivables Purchase Agreement, each Seller owned the related Contracts
         and  Receivables  free and clear of all  liens,  encumbrances,  adverse
         claims or security  interests  ("Liens")  and each Seller had the power
         and authority to transfer such Contracts and  Receivables to the Issuer
         and upon execution and delivery of the Receivables  Purchase Agreement,
         the Issuer will have acquired each Seller's  right,  title and interest
         in and to such Contracts and Receivables free and clear of all Liens.

                         (xi) Upon the execution and delivery of the Receivables
         Purchase  Agreement,  the Issuer will have the power and  authority  to
         pledge the  Contracts and  Receivables  to the Trustee on behalf of the
         Noteholders.

                        (xii) Each of the representations and warranties of each
         Trendwest  Entity set forth in each of the  Agreements to which it is a
         party is true and correct in all material respects.

                       (xiii) Any taxes, fees and other governmental  charges in
         connection  with the  execution  and delivery of the  Agreements or the
         execution,  delivery  and sale of the  Notes  have been or will be paid
         prior to the Closing Date.

                           Section  5. Sale of Notes to the  Initial  Purchaser.
         (a) The sale of the Notes to the Initial Purchaser will be made without
         registration  of the Notes under the  Securities  Act, in reliance upon
         the exemption therefrom provided by Section 4(2) of the Securities Act.


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                           <PAGE>

                           (b) The Initial  Purchaser hereby  represents,  as of
         the Closing Date, and warrants to, and agrees with the Issuer that:

                                    (i) The  Initial  Purchaser  is a QIB within
                  the meaning of Rule 144A under the Securities Act.

                                    (ii)   The   Initial   Purchaser   (i)  will
                  initially  make  offers and sales  ("Exempt  Resales")  of the
                  Notes   purchased   hereunder,   solely  to  Persons  whom  it
                  reasonably believes to be "qualified  institutional buyers" as
                  defined  in Rule 144A  under the  Securities  Act  ("QIBs"  or
                  "Exempt  Purchasers") and (ii) is aware that the sales to QIBs
                  are being made in reliance on Rule 144A.

                                    (iii) The Initial Purchaser is not acquiring
                  the Notes with a view to any  distribution  thereof that would
                  violate the Securities Act or the securities laws of any state
                  of the United States or any other applicable jurisdiction.

                                    (iv)  No  form of  general  solicitation  or
                  general  advertising  (as those terms are used in Regulation D
                  under  the  Securities  Act)  has  been or will be used by the
                  Initial Purchaser or any of its  representatives in connection
                  with the offer and sale of any of the Notes  within the United
                  States  (as  those  terms are used in  Regulation  D under the
                  Securities Act).

                                    (v) The Initial  Purchaser  agrees that,  in
                  connection with the Exempt Resales,  it will solicit offers to
                  buy the Notes only from, and will offer to sell the Notes only
                  to,  Persons it reasonably  believes to be Exempt  Purchasers.
                  The  Initial  Purchaser  further  agrees that it will sell the
                  Notes only to Persons who have delivered an investment  letter
                  substantially in the form of Exhibit A to the Indenture.

                                    (vi) The Initial  Purchaser also understands
                  that the  Issuer,  counsel to the  Issuer  and  counsel to the
                  Initial Purchaser will rely upon the accuracy and truth of the
                  foregoing   representations   and  hereby   consents  to  such
                  reliance.

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 <PAGE>

                                    (vii)  One of the  following  statements  is
                  true  and  correct:  (i)  the  Initial  Purchaser  is  not  an
                  "employee  benefit plan" within the meaning of Section 3(3) of
                  ERISA or a "plan" within the meaning of Section  4975(e)(1) of
                  the  Code (a  "Plan")  and it is not  directly  or  indirectly
                  acquiring the Notes on behalf of, as investment manager of, as
                  named  fiduciary  of, as trustee of, or with assets of a Plan,
                  or (ii) the proposed  acquisition or transfer will qualify for
                  a statutory or administrative prohibited transaction exemption
                  under  ERISA or  Section  4975(c)(1)  of the Code for  which a
                  statutory or administrative exception is available.

                                    (viii) The Initial Purchaser agrees to treat
                  the Notes for  purposes of federal,  state and local income or
                  franchise  taxes (and any other tax  imposed on or measured by
                  income) as indebtedness for such tax purposes.

                                    (ix) No placement agent,  broker,  finder or
                  investment  banker has been  employed  by or has acted for the
                  Issuer  or  the  Initial  Purchaser  in  connection  with  the
                  transactions contemplated by this Agreement.

         Section 6. Certain Covenants of each Trendwest  Entity.  Each Trendwest
Entity covenants and agrees with the Initial Purchaser as follows:

                            (a) If, at any time prior to the 90th day  following
         the Closing Date, any event involving a Trendwest Entity shall occur as
         a result of which the  Memorandum  (as then  amended  or  supplemented)
         would  include an untrue  statement of a material fact or omit to state
         any material fact necessary to make the statements therein, in light of
         the  circumstances  under which they were made,  not  misleading,  such
         Trendwest  Entity  will,  at the sole  cost of such  Trendwest  Entity,
         promptly  notify the Initial  Purchaser  and prepare and furnish to the
         Initial  Purchaser an amendment or  supplement to the  Memorandum  that
         will correct such statement or omission.


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 <PAGE>

                            (b) During the period  referred to in Section  6(a),
         the Issuer  will  furnish to the  Initial  Purchaser,  without  charge,
         copies  of  the  Memorandum   (including  all  exhibits  and  documents
         incorporated by reference therein), the Agreements,  and all amendments
         or  supplements to such  documents,  in each case as soon as reasonably
         available  and  in  such  quantities  as  the  Initial   Purchaser  may
         reasonably request.

                            (c) While any Notes remain outstanding,  unless such
         Class  has been  registered,  the  Issuer  will  make  available,  upon
         request,  to the  Initial  Purchaser,  any holder  and any  prospective
         purchaser of such Notes, the information  concerning the Issuer and the
         Trust specified in Rule 144A(d)(4) under the Securities Act.

                  Section 7. Conditions of the Initial Purchaser's  Obligations.
The  obligations  of the Initial  Purchaser to purchase the Notes on the Closing
Date will be subject to the accuracy of the  representations  and  warranties of
the Trendwest  Entities  herein,  to the performance by each Trendwest Entity of
its obligations hereunder and to the following additional conditions precedent:

                            (a) The  Notes  shall  have  been  duly  authorized,
         executed,  authenticated,   delivered  and  issued,  and  each  of  the
         Agreements shall have been duly  authorized,  executed and delivered by
         the respective  parties  thereto and shall be in full force and effect,
         and all conditions  precedent  contained in the  Agreements  shall have
         been satisfied.

                            (b)  The   Initial   Purchaser   shall   receive   a
         certificate,  dated  the  Closing  Date,  of the  President  and  Chief
         Financial  Officer or a Senior  Vice  President  of the  Issuer,  and a
         certificate,  also dated the Closing Date, from a comparable officer of
         TWRI,  in each case to the  effect  that  such  officer  has  carefully
         examined each of the  Agreements  and the  Memorandum  and that, to the
         best of such  officer's  knowledge  (i) since the date  information  is
         given in the Memorandum, there has not been any material adverse change
         in the condition,  financial or otherwise, or in the earnings,  results
         of operations, business affairs or business prospects of such Trendwest
         Entity,  as the case may be  whether  or not  arising  in the  ordinary
         course of

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<PAGE>

                           business,  or the ability of such Trendwest Entity to
         perform its  obligations  hereunder  or under the other  Agreements  to
         which each is a party, (ii) the  representations and warranties of such
         Trendwest  Entity set forth herein and in the other Agreements to which
         each is a party are true and correct in all material respects as of the
         Closing Date, as though such  representations  and  warranties had been
         made on and as of such date,  (iii) each Trendwest  Entity has complied
         with  all  agreements  and  satisfied  in  all  material  respects  all
         conditions on its part to be performed or satisfied hereunder and under
         the  other  Agreements  to which  each is a  party,  on or prior to the
         Closing  Date,  and  (iv)  nothing  has come to the  attention  of such
         officer that would lead such  officer to believe  that the  Memorandum,
         and any amendment thereof or supplement  thereto, as of its date and as
         of the Closing Date, or any Additional  Offering Document contains,  as
         of its  date and as of the  Closing  Date,  an  untrue  statement  of a
         material fact or omits to state any material fact necessary in order to
         make the statements  therein, in light of the circumstances under which
         they were made, not  misleading.  The Initial  Purchaser  shall receive
         from each Trendwest Entity,  such certificates as may be required to be
         delivered pursuant to the Agreements.

                            (c) The (i) Class A-1 Notes, the Class A-2 Notes and
         the Class A-3 Notes  shall  each have been  rated no less than "AAA" by
         each of Fitch IBCA, Inc.  ("Fitch") and Duff & Phelps Credit Rating Co.
         ("DCR"), (ii) the Class B Notes shall have been rated no less than "AA"
         by each of Fitch and DCR, (iii) the Class C Notes shall have been rated
         no less than "A" by each of Fitch and DCR, (iv) the Class D Notes shall
         have  been  rated no less  than  "BBB" by  Fitch,  and (v) none of such
         ratings shall have been  rescinded,  and no public  announcement  shall
         have been made by the respective rating agencies that the rating of the
         any Class of Notes has been placed under review.

                            (d) The  Initial  Purchaser  shall have  received an
         opinion,  dated the Closing Date, of Charles A. Bott,  in-house counsel
         to each Trendwest  Entity,  with respect to such matters as the Initial
         Purchaser may reasonably require.

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  <PAGE>

                            (e) On the date of the Memorandum, Deloitte & Touche
         LLP shall have  furnished  to the  Initial  Purchaser  an "agreed  upon
         procedures"  letter,  dated the date of delivery  thereof,  in form and
         substance  reasonably  satisfactory  to  the  Initial  Purchaser,  with
         respect to certain financial and statistical  information  contained in
         the Memorandum.

                            (f) The  Initial  Purchaser  shall have  received an
         opinion, dated the Closing Date, of Timothy J. Carlin, in-house counsel
         to the Trustee and Hunton & Williams,  outside  counsel to the Trustee,
         with respect to such matters as the Initial  Purchaser  may  reasonably
         require  and  in  form  and  substance   satisfactory  to  the  Initial
         Purchaser.

                            (g)  The  Initial   Purchaser  shall  have  received
         opinions of Chapman and Cutler,  counsel to each Trendwest Entity, with
         respect to certain  matters,  including  non-consolidation,  true-sale,
         security interest, corporate authority, enforceability,  securities law
         and tax matters, and in form and substance  reasonably  satisfactory to
         the Initial Purchaser.

                            (h) The  Initial  Purchaser  shall have  received an
         opinion of in-house counsel of Interval International, Inc., the parent
         of Sage  Systems,  Inc.,  with  respect to such  matters as the Initial
         Purchaser may require.

                            (i) The Initial  Purchaser  shall have received from
         the  Trustee  a  certificate  signed  by one or  more  duly  authorized
         officers of the Trustee, dated the Closing Date, in customary form.

                            (j) Each  Trendwest  Entity shall have  furnished to
         the  Initial  Purchaser  and  its  counsel  such  further  information,
         certificates and documents as the Initial Purchaser and its counsel may
         reasonably have  requested,  and all proceedings in connection with the
         transactions  contemplated by this Agreement and all documents incident
         hereto shall be in all material  respects  reasonably  satisfactory  in
         form and substance to the Initial Purchaser and its counsel.

         If any of the  conditions  specified  in this  Section 7 shall not have
been fulfilled in all material  respects when and as provided in this Agreement,
or if any of the opinions and

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<PAGE>

certificates  mentioned above shall not be in all material  respects  reasonably
satisfactory in form and substance to the Initial Purchaser,  this Agreement and
all of the  Initial  Purchaser's  obligations  hereunder  may be canceled by the
Initial  Purchaser at or prior to delivery of and payment for the Notes.  Notice
of such cancellation shall be given to the Issuer in writing, or by telephone or
telegraph confirmed in writing.

                  Section 8.  Termination.  This  Agreement  shall be subject to
termination in the absolute discretion of the Initial Purchaser, by notice given
to the Issuer  prior to delivery of and payment for the Notes,  if prior to such
time (i) trading in securities  generally in the New York Stock  Exchange  shall
have been  suspended or materially  limited or any setting of minimum prices for
trading on such exchange has occurred, (ii) there has been, since the respective
dates as of which  information is given in the Memorandum,  any material adverse
change in the  condition,  financial or otherwise,  or in the  properties or the
earnings,  business  affairs or business  prospects of the  Trendwest  Entities,
considered as one  enterprise,  whether or not arising in the ordinary course of
business;  (iii) a general  moratorium on commercial  banking  activities in New
York shall have been declared by either  federal or New York State  authorities,
or (iv) there  shall have  occurred  any  material  outbreak  or  escalation  of
hostilities  or other  calamity  or crises the effect of which on the  financial
markets of the United States is such as to make it, in the  reasonable  judgment
of the Initial  Purchaser,  impracticable  or inadvisable to market the Notes on
the terms  and in the  manner  contemplated  by the  Memorandum  as  amended  or
supplemented.

                  Section  9.  Indemnification  and  Contribution.  (a)  Each of
Trendwest and the Issuer,  jointly and  severally,  agrees to indemnify and hold
harmless the Initial Purchaser and each person, if any, who controls the Initial
Purchaser  within the meaning of Section 15 of the  Securities Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities, joint or
several,  to which the Initial  Purchaser or such controlling  person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon: (1) any untrue  statement or alleged untrue statement made
by a Trendwest  Entity in Section 4 of this Agreement,  (2) any untrue statement
or alleged untrue statement

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<PAGE>

of any  material  fact  contained  in (A) the  Memorandum  or any  amendment  or
supplement thereto or (B) any application or other document, or any amendment or
supplement  thereto,  executed  by a  Trendwest  Entity  or based  upon  written
information  furnished  by or on  behalf  of a  Trendwest  Entity  filed  in any
jurisdiction in order to qualify the Securities under the securities or blue sky
laws thereof or filed with any  securities  association  or securities  exchange
(each an  "Application"),  (3) the omission or alleged  omission to state in the
Memorandum or any amendment or supplement thereto, or any Application a material
fact  necessary  to  make  the  statements   made  therein,   in  light  of  the
circumstances  under  which they were made,  not  misleading,  or (4) any untrue
statement or alleged  untrue  statement of any  material  fact  contained in any
audio or visual materials  prepared by a Trendwest Entity and used in connection
with the marketing of the Notes,  including without limitation,  slides, videos,
films or tape recordings, and will reimburse, as incurred, the Initial Purchaser
and each such  controlling  person  for any legal or other  expenses  reasonably
incurred by the Initial Purchaser or such controlling  person in connection with
investigating,  defending  against  or  appearing  as a  third-party  witness in
connection with any such loss,  claim,  damage,  liability or action;  provided,
however,  that no Trendwest Entity will be liable in any such case to the extent
that any such loss,  claim,  damage or liability  arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in Memorandum or any amendment or supplement  thereto or any Application in
reliance upon and in conformity with written information furnished to the Issuer
by the Initial Purchaser or through the Initial  Purchaser  specifically for use
therein.  This agreement to indemnify will be in addition to any liability which
a Trendwest  Entity may otherwise  have. No Trendwest  Entity will,  without the
prior written consent of the Initial Purchaser,  settle or compromise or consent
to the entry of any judgment any pending or threatened claim, action, suit or in
proceeding in respect of which  indemnification may be sought hereunder (whether
or not the Initial  Purchaser or any person who  controls the Initial  Purchaser
within the  meaning of  Section  15 of the  Securities  Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding),  unless such
settlement,  compromise or consent includes an unconditional release the Initial
Purchaser and each such  controlling  persons from all liability  arising out of
such claim, action, suit or proceeding.

                                       12
                  <PAGE>
                   (b) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action,  such  indemnified  party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof;
but the  omission so to notify the  indemnifying  party will not relieve it from
any liability  which it may have to any  indemnified  party otherwise than under
this  Section 9. In case any such  action is  brought  against  any  indemnified
party, and it notifies the indemnifying party of the commencement  thereof,  the
indemnifying  party will be entitled to  participate  therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly  notified,
to assume the defense  thereof,  with counsel  satisfactory to such  indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct  the  defense of such  action on behalf of such  indemnified
party or parties and such  indemnified  party or parties shall have the right to
select  separate  counsel to defend  such  action on behalf of such  indemnified
party or parties.  After notice from the indemnifying  party to such indemnified
party of its  election  so to assume the defense  thereof  and  approval by such
indemnified party of counsel  appointed to defend such action,  the indemnifying
party will not be liable to such indemnified  party under this Section 9 for any
legal  or  other  expenses,   other  than  reasonable  costs  of  investigation,
subsequently  incurred by such indemnified  party in connection with the defense
thereof,  unless (i) the indemnified  party shall have employed separate counsel
in  accordance  with  the  proviso  to the next  preceding  sentence  (it  being
understood,  however, that in connection with such action the indemnifying party
shall not be liable  for the  expenses  of more than one  separate  counsel  (in
addition  to local  counsel)  in any one action or  separate  but  substantially
similar  actions  in the  same  jurisdiction  arising  out of the  same  general
allegations or circumstances, designated by the Initial Purchaser in the case of
paragraph (a) of this Section 9, representing the indemnified parties under such
paragraph  (a)  who  are  parties  to  such  action  or  actions)  or  (ii)  the
indemnifying  party  does  not  promptly  retain  counsel  satisfactory  to  the
indemnified party or (iii) the indemnifying  party has authorized the employment
of counsel for the

                                       13
<PAGE>

indemnified  party at the expense of the indemnifying  party.  After such notice
from the indemnifying  party to such indemnified  party, the indemnifying  party
will not be liable for the costs and expenses of any  settlement  of such action
effected by such  indemnified  party  without  the  consent of the  indemnifying
party.

                  (c) In  circumstances  in which  the  agreement  to  indemnify
provided for in the  preceding  paragraphs of this Section 9 is  unavailable  or
insufficient  to hold  harmless an  indemnified  party in respect of any losses,
claims,   damages  or  liabilities  (or  actions  in  respect   thereof),   each
indemnifying  party,  in order to provide for just and  equitable  contribution,
shall  contribute to the amount paid or payable by such  indemnified  party as a
result of such losses,  claims,  damages or  liabilities  (or actions in respect
thereof)  in such  proportion  as is  appropriate  to reflect  (i) the  relative
benefits received by the indemnifying  parties  collectively on the one hand and
the  indemnified  party on the other from the offering of the Notes,  or (ii) if
the  allocation  provided  by the  foregoing  clause  (i) is  not  permitted  by
applicable  law, not only such relative  benefits but also the relative fault of
the indemnifying  parties collectively on the one hand and the indemnified party
on the  other  in  connection  with  the  statements  or  omissions  or  alleged
statements  or  omissions  that  resulted  in such  losses,  claims,  damages or
liabilities  (or  actions in  respect  thereof),  as well as any other  relevant
equitable  considerations.  The  relative  benefits  received  by the  Trendwest
Entities,  collectively,  on the one hand and the Initial Purchaser on the other
shall be deemed to be in the same  proportion  as the  total  proceeds  from the
offering (before  deducting  expenses)  received by the Issuer bear to the total
purchase  discounts  and  commissions  received  by  the  Initial  Purchaser  in
connection  with the  purchase  of the  Securities.  The  relative  fault of the
parties shall be  determined  by reference  to, among other things,  whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission  to state a  material  fact  relates  to  information  supplied  by the
Trendwest  Entities on the one hand or the Initial  Purchaser on the other,  the
parties' relative intents,  knowledge,  access to information and opportunity to
correct  or  prevent  such  statement  or  omission,  and  any  other  equitable
considerations appropriate in the circumstances.  The Trendwest Entities and the
Initial  Purchaser  agree that it would not be  equitable  if the amount of such
contribution  were  determined  by pro rata or per capita  allocation  or by any
other

                                       14
<PAGE>


method  of   allocation   that  does  not  take  into   account  the   equitable
considerations  referred to above in this  paragraph  (d).  Notwithstanding  any
other  provision  of this  paragraph  (d),  the Initial  Purchaser  shall not be
obligated  to make  contributions  hereunder  that in the  aggregate  exceed the
Purchase  Price,  less the  aggregate  amount of any  damages  that the  Initial
Purchaser  has  otherwise  been  required  to pay in  respect of the same or any
substantially    similar   claim,   and   no   person   guilty   of   fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any person who was not guilty of such
fraudulent  misrepresentation.  For purposes of this paragraph (d), each person,
if any, who controls the Initial  Purchaser  within the meaning of Section 15 of
the  Securities Act or Section 20 of the Exchange Act shall have the same rights
to  contribution  as the  Initial  Purchaser,  and each  director of a Trendwest
Entity and each person,  if any, who controls such  Trendwest  Entity within the
meaning of Section 15 of the  Securities  Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as such Trendwest Entity, as the case
may be.

                  Section  10.   Severability   Clause.  Any  part,   provision,
representation,  or warranty of this Agreement which is prohibited or is held to
be void or unenforceable in any jurisdiction shall, as to such jurisdiction,  be
ineffective  to the  extent  of such  prohibition  or  unenforceability  without
invalidating the remaining provisions hereof.

                  Section 11. Notices.  All communications  hereunder will be in
writing and shall be deemed to have been duly given if  personally  delivered at
or mailed by overnight mail, certified mail or registered mail, postage prepaid,
and effective only upon receipt,  and if sent to the Initial Purchaser,  will be
delivered to Prudential Securities  Incorporated,  One New York Plaza, New York,
New York,  10292,  Attention:  General Counsel (with a copy to the Asset Finance
Group),  or if sent to a Trendwest  Entity will be delivered  to such  Trendwest
Entity,  c/o Trendwest  Resorts,  Inc., 9805 Willows Road,  Redmond,  Washington
98052, Attention: General Counsel.

                    Section 12.  Representations and Indemnities to Survive. The
respective  agreements,  representations,   warranties,  indemnities  and  other
statements of each Trendwest  Entity and the officers of such Trendwest  Entity,
and of the Initial Purchaser

                                       15
<PAGE>

set forth in or made  pursuant to this  Agreement  will remain in full force and
effect,  regardless  of any  investigation  made by or on behalf of the  Initial
Purchaser,  a Trendwest Entity or any of the controlling  persons referred to in
Section 9, and will survive delivery of and payment for the Notes.

                  Section  13.  Successors.  This  Agreement  will  inure to the
benefit of and be binding upon the parties  hereto and Note Owners as defined in
the Indenture and their  respective  successors and the officers,  directors and
controlling persons referred to in Section 9 and their respective successors and
assigns, and, except as specifically set forth herein, no other person will have
any right or obligation hereunder.

                   Section 14.  Applicable  Law. THIS AGREEMENT WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT
REGARD TO ITS CONFLICT OF LAW PROVISIONS.

                  Section 15.  Counterparts,  Etc. This Agreement supersedes all
prior or contemporaneous  agreements and understandings  relating to the subject
matter hereof between the Initial Purchaser and the Trendwest Entities.  Neither
this  Agreement  nor any term  hereof  may be  changed,  waived,  discharged  or
terminated  except by a writing signed by the party against whom  enforcement of
such change,  waiver,  discharge or termination is sought. This Agreement may be
signed in any number of counterparts  each of which shall be deemed an original,
which taken together shall constitute one and the same instrument.

                  Section 16. No Petition. During the term of this Agreement and
for one year and one day  after  the  termination  hereof,  none of the  parties
hereto or any affiliate thereof will file any involuntary  petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other  proceeding under any federal or state bankruptcy or similar
law against TWHI, TWHII, TRIFI and TRIFII or the Issuer.

                     [REST OF PAGE INTENTIONALLY LEFT BLANK]

                                       16

<PAGE>



                  If the foregoing is in accordance with your  understanding  of
our agreement,  please sign and return to the undersigned a counterpart  hereof,
whereupon this letter and your acceptance  shall  represent a binding  agreement
among the Trendwest Entities and the Initial Purchaser.

                                 Very truly yours,

                                 TRI FUNDING III, INC.

                                 By:      _________________________________
                           Name:
                          Title:

                  TRENDWEST RESORTS, INC.

                                 By:      _________________________________
                           Name:
                          Title:

                                 TW HOLDINGS, INC.

                                 By:      _________________________________
                           Name:
                          Title:

                                 TW HOLDINGS II, INC.

                                 By:      _________________________________
                           Name:
                          Title:

                                 TRI FUNDING II, INC.

                                 By:      _________________________________
                           Name:
                          Title:

                                  TRI FUNDING COMPANY I, L.L.C.

                                  By:      TRENDWEST FUNDING I, INC.

                                      By:      ___________________________

                                               Name:
                                               Title:

The  foregoing  Agreement is hereby  confirmed and accepted as of the date first
above written.

PRUDENTIAL SECURITIES INCORPORATED

By:      _______________________________
         Name:  Andrew Yuder
         Title:


                                       17
<PAGE>
                                  Exhibit A

                          Class          Purchase Price (%)

                           A-1               99.375000%

                           A-2               99.375000%

                           A-3               99.375000%

                            B                97.922975%

                            C                98.778720%

                            D                99.375000%