Exhibit 10.45


                                    INDENTURE

                                      among


                              TRI FUNDING III, INC.
                                   ("Issuer")

                                       and


                             TRENDWEST RESORTS, INC.
                                  ("Servicer")

                                       and


                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
                                   ("Trustee")





                           Dated as of August 1, 1999
                                  Providing for

              $26,000,000 6.695%  Receivables-Backed Notes, Series 1999-1, Class
              A-1 $22,500,000 7.230%  Receivables-Backed  Notes,  Series 1999-1,
              Class A-2  $55,904,000  7.560%  Receivables-Backed  Notes,  Series
              1999-1,  Class A-3 $18,249,000  7.460%  Receivables-Backed  Notes,
              Series  1999-1,  Class  B  $19,947,000  7.685%  Receivables-Backed
              Notes,    Series    1999-1,    Class    C    $17,400,000    8.590%
              Receivables-Backed Notes, Series 1999-1, Class D






<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION                                                DESCRIPTION                                               PAGE
<S>                         <C>                                                                                  <C>
Parties...........................................................................................................1

Preliminary Statement.............................................................................................1

Granting Clause...................................................................................................1

ARTICLE ONE                DEFINITIONS............................................................................2

       Section 1.01        Definitions............................................................................2

ARTICLE TWO                NOTE FORM.............................................................................22

       Section 2.01        Form22

ARTICLE THREE              THE NOTES.............................................................................22

       Section 3.01        Denomination..........................................................................22
       Section 3.02        Execution, Authentication, Delivery and Dating........................................22
       Section 3.03        Notes as Debt.........................................................................23
       Section 3.04        Registration, Registration of Transfer and Exchange...................................23
       Section 3.05        Limitation on Transfer and Exchange...................................................24
       Section 3.06        Mutilated, Destroyed, Lost or Stolen Notes............................................24
       Section 3.07        Payment of Principal and Interest; Principal and Interest Rights
                               Preserved.........................................................................25
       Section 3.08        Persons Deemed Owner..................................................................27
       Section 3.09        Cancellation..........................................................................27
       Section 3.10        Book-Entry Registration of Class A Notes, Class B Notes, Class C Notes
                               and Class D Notes.................................................................27
       Section 3.11        Notice to Clearing Agency.............................................................28
       Section 3.12        Definitive Notes......................................................................29

ARTICLE FOUR               ORIGINAL ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL...............................30

       Section 4.01        Conditions to Original Issuance of Notes..............................................30
       Section 4.02        Security for Notes....................................................................32
       Section 4.03        Substitution and Purchase of Receivables; Upgrade Contracts...........................33
       Section 4.04        Releases..............................................................................34
       Section 4.05        Trust Estate..........................................................................35
       Section 4.06        Notice of Release.....................................................................35
       Section 4.07        Opinions as to Trust Estate...........................................................35




<PAGE>


ARTICLE FIVE               SATISFACTION AND DISCHARGE............................................................36

       Section 5.01        Satisfaction and Discharge of Indenture...............................................36

ARTICLE SIX                DEFAULTS AND REMEDIES.................................................................37

       Section 6.01        Events of Default.....................................................................37
       Section 6.02        Acceleration of Maturity; Rescission and Annulment....................................38
       Section 6.03        Collection of Indebtedness and Suits for Enforcement by Trustee.......................39
       Section 6.04        Remedies..............................................................................40
       Section 6.05        Optional Preservation of Trust Estate.................................................40
       Section 6.06        Trustee May File Proofs of Claim......................................................41
       Section 6.07        Trustee May Enforce Claims Without Possession of Notes................................41
       Section 6.08        Application of Money Collected........................................................42
       Section 6.09        Limitation on Suits...................................................................43
       Section 6.10        Unconditional Right of Noteholders to Receive Principal and Interest..................44
       Section 6.11        Restoration of Rights and Remedies....................................................44
       Section 6.12        Rights and Remedies Cumulative........................................................44
       Section 6.13        Delay or Omission; Not Waiver.........................................................45
       Section 6.14        Control by Noteholders................................................................45
       Section 6.15        Waiver of Past Defaults...............................................................45
       Section 6.16        Undertaking for Costs.................................................................46
       Section 6.17        Waiver of Stay or Extension Laws......................................................46
       Section 6.18        Sale of Trust Estate..................................................................46
       Section 6.19        Action on Notes.......................................................................47

ARTICLE SEVEN              THE TRUSTEE...........................................................................48

       Section 7.01        Certain Duties and Responsibilities...................................................48
       Section 7.02        Notice of Default.....................................................................50
       Section 7.03        Certain Rights of Trustee.............................................................50
       Section 7.04        Not Responsible for Recitals or Issuance of Notes.....................................51
       Section 7.05        May Hold Notes........................................................................52
       Section 7.06        Money Held in Trust...................................................................52
       Section 7.07        Compensation and Reimbursement........................................................52
       Section 7.08        Corporate Trustee Required; Eligibility...............................................53
       Section 7.09        Resignation and Removal; Appointment of Successor.....................................54
       Section 7.10        Acceptance of Appointment by Successor................................................54
       Section 7.11        Merger, Conversion, Consolidation or Succession to Business of Trustee................55
       Section 7.12        Co-Trustees and Separate Trustees.....................................................55

       <PAGE>
       Section 7.13        Rights with Respect to the Servicer...................................................56
       Section 7.14        Appointment of Authenticating Agent...................................................56
       Section 7.15        Collateral Agent to Hold Contracts....................................................58

ARTICLE EIGHT              RESERVED..............................................................................59


ARTICLE NINE               SUPPLEMENTAL INDENTURES...............................................................59

       Section 9.01        Supplemental Indentures Without Consent of Noteholders................................59
       Section 9.02        Supplemental Indentures with Consent of Noteholders...................................60
       Section 9.03        Execution of Supplemental Indentures..................................................61
       Section 9.04        Effect of Supplemental Indentures.....................................................61
       Section 9.05        Reference in Notes to Supplemental Indentures.........................................61

ARTICLE TEN                REDEMPTION OF NOTES...................................................................62

       Section 10.01       Redemption at the Option of the Issuer; Election to Redeem............................62
       Section 10.02       Notice to Trustee.....................................................................62
       Section 10.03       Notice of Redemption by the Issuer....................................................62
       Section 10.04       Deposit of the Redemption Price.......................................................63
       Section 10.05       Notes Payable on Redemption Date......................................................63

ARTICLE ELEVEN             REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................63

       Section 11.01       Representations and Warranties........................................................63
       Section 11.02       Covenants.............................................................................67
       Section 11.03       Other Matters as to the Issuer........................................................74

ARTICLE TWELVE             ACCOUNTS AND ACCOUNTINGS..............................................................74

       Section 12.01       Collection of Money...................................................................74
       Section 12.02       Collection Account....................................................................74
       Section 12.03       Reserve Account.......................................................................80
       Section 12.04       Prefunding Account....................................................................81
       Section 12.05       Capitalized Interest Account..........................................................82
       Section 12.06       Reports by Trustee to Noteholders.....................................................84

ARTICLE THIRTEEN           PROVISIONS OF GENERAL APPLICATION.....................................................85

       Section 13.01       Acts of Noteholders...................................................................85
       Section 13.02       Notices, etc., to Trustee, Issuer, Servicer and the Rating Agencies...................85
       Section 13.03       Notices and Other Documents to Noteholders; Waiver....................................86
       Section 13.04       Effect of Headings and Table of Contents..............................................87
       Section 13.05       Successors and Assigns................................................................87
       Section 13.06       Separability..........................................................................87

       <PAGE>
       Section 13.07       Benefits of Indenture.................................................................87
       Section 13.08       Legal Holidays........................................................................87
       Section 13.09       Governing Law.........................................................................87
       Section 13.10       Counterparts..........................................................................88
       Section 13.11       Obligation............................................................................88
       Section 13.12       Compliance Certificates and Opinions..................................................88
       Section 13.13       Effective Date of Transactions........................................................89
       Section 13.14.      Parties will Not Institute Insolvency Proceedings.....................................89

Signatures.......................................................................................................90


</TABLE>
<PAGE>



EXHIBIT A             Form of Investment Letter
EXHIBIT B             Form of Supplement for Grant of Substitute Contracts and
                       Upgrade Contracts
EXHIBIT C-1           Form of Class A-1 Note
EXHIBIT C-2           Form of Class A-2 Note
EXHIBIT C-3           Form of Class A-3 Note
EXHIBIT C-4           Form of Class B Note
EXHIBIT C-5           Form of Class C Note
EXHIBIT C-6           Form of Class D Note
Exhibit D             Note Owner Certificate


SCHEDULE A            Contract Schedule
SCHEDULE B            Targeted Principal Balance Schedule




<PAGE>

         INDENTURE,  dated  as  of  August  1,  1999  (herein,  as  amended  and
supplemented  from time to time as permitted hereby,  called this  "Indenture"),
among TRI FUNDING III, INC., a Delaware corporation  (herein,  together with its
permitted successors and assigns, called the "Issuer"), TRENDWEST RESORTS, INC.,
an  Oregon  corporation,  as  servicer  (herein,  together  with  its  permitted
successors  and assigns,  called the  "Servicer"),  and NORWEST BANK  MINNESOTA,
NATIONAL   ASSOCIATION,   a  national  banking  association,   as  trustee  (the
"Trustee").


                              PRELIMINARY STATEMENT

         The Issuer has duly  authorized  the  execution  and  delivery  of this
Indenture to provide for the issuance of the Issuer's 6.695%  Receivables-Backed
Notes,   Series  1999-1,   Class  A-1  (the  "Class  A-1  Notes"),   its  7.230%
Receivables-Backed  Notes, Series 1999-1, Class A-2 (the "Class A-2 Notes"), its
7.560% Receivables-Backed Notes, Series 1999-1, Class A-3 (the "Class A-3 Notes"
and,  together  with the Class A-1 Notes and the Class A-2  Notes,  the "Class A
Notes"), its 7.460% Receivables-Backed Notes, Series 1999-1, Class B (the "Class
B Notes"),  its 7.685%  Receivables-Backed  Notes,  Series 1999-1,  Class C (the
"Class C Notes"), and its 8.590%  Receivables-Backed Notes, Series 1999-1, Class
D (the "Class D Notes") and together  with the Class A Notes,  the Class B Notes
and the Class C Notes,  the "Notes").  All covenants and agreements  made by the
Issuer,  the Servicer and the Trustee herein are for the benefit and security of
the Holders of the Notes. The Issuer,  the Servicer and the Trustee are entering
into this Indenture, and the Trustee is accepting the trusts created hereby, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.

         All things  necessary to make this  Indenture a valid  agreement of the
Issuer,  the  Servicer  and the Trustee in  accordance  with its terms have been
done.


                                 GRANTING CLAUSE

         To secure the payment of the  principal of and interest on the Notes in
accordance  with their terms,  the payment of all of the sums payable under this
Indenture and the performance of the covenants contained in this Indenture,  the
Issuer hereby Grants to the Trustee,  solely in trust and as collateral security
as provided in this  Indenture,  for the ratable  benefit of the Holders of each
Class of Notes, respectively,  all of the Issuer's rights, title and interest in
and to the  following  whether now owned or  hereafter  acquired and any and all
benefits  accruing  to the  Issuer  from:  (a) the  Receivables  and  Contracts,
including  all  proceeds  of the  Contracts  and  Receivables  and all  payments
received on or with respect to the Contracts and  Receivables  and due after the
applicable  Cut-Off Date; (b) the Contract Files and the Collateral Agent Files;
(c) the related Vacation Credits;  (d) the Receivables  Purchase Agreement;  (e)
the Servicing  Agreement;  (f) the Collateral Agent  Agreement;  (g) all amounts
from time to time on deposit in
                                       1
         <PAGE>

         the Capitalized  Interest Account,  the Collection  Account,  the Local
Bank Account,  the  Prefunding  Account and the Reserve  Account  (including any
Eligible  Investments and other property in such accounts);  and (h) proceeds of
the  foregoing  (including,  but not by way of  limitation,  all cash  proceeds,
accounts,  accounts  receivable,  notes,  drafts,  acceptances,  chattel  paper,
checks,  deposit accounts,  insurance proceeds,  condemnation awards,  rights to
payment of any and every kind,  and other forms of obligations  and  receivables
which at any time  constitute all or part or are included in the proceeds of any
of the foregoing)  (all of the foregoing  being  hereinafter  referred to as the
"Collateral"  or "Trust  Estate").  The Trust  Estate will  include the Issuer's
interest in  Subsequent  Contracts  and the related  Receivables  and a security
interest in the related Vacation Credits but will not include the Contracts that
are released  from the lien of the Trustee on each Payment Date  pursuant to the
terms of this Indenture.

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


                                   ARTICLE ONE

                                   DEFINITIONS

         Section 1.01 Definitions. Except as otherwise expressly provided herein
or  unless  the  context  otherwise  requires,  the  following  terms  have  the
respective meanings set forth below for all purposes of this Indenture,  and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms.

         "Acquisition  Consideration":  The meaning specified in the Receivables
Purchase Agreement.

         "Act": With respect to any Noteholder, the meaning specified in Section
13.01.

         "Affiliate": At any time, and with respect to any Person, (a) any other
Person  that  at  such  time  directly  or   indirectly   through  one  or  more
intermediaries  controls,  or is controlled by, or is under common control with,
such first Person, and (b) any Person beneficially  owning or holding,  directly
or  indirectly,  10% or more of any class of voting or equity  interests of such
first  mentioned  Person or any  Person of which  such  first  mentioned  Person
beneficially  owns or holds,  in the aggregate,  directly or indirectly,  10% or
more of any class of voting or  equity  interests.  As used in this  definition,
"control" means the possession,  directly or indirectly,  of the power to direct
or cause the  direction  of the  management  and  policies of a Person,  whether
through the ownership of voting securities, by contract or otherwise.

         "Aggregate  Collateral Value": As of any date, the sum of the aggregate
of the Collateral Values outstanding at such date; provided,  however,  that the
Collateral Value of any Defaulted

                                      2
         <PAGE>

         Contract  shall  not  be  included  in  the  calculation  of  Aggregate
Collateral  Value in any Due Period after the Due Period in which such  Contract
became a Defaulted Contract.

         "Asset Assignment":  The meaning specified in the Receivables  Purchase
Agreement.

         "Authenticating Agent": Any entity appointed by the Trustee pursuant to
Section 7.14 hereof, which initially shall be the Trustee.

         "Board of Directors": Either the board of directors of the Issuer or of
the Servicer,  as the context requires, or any duly authorized committee of such
Board.

         "Board Resolution": A copy of a resolution delivered to the Trustee and
certified  by the  Secretary  or an  Assistant  Secretary of the Servicer or the
Issuer, as the case may be, to have been duly adopted by its respective Board of
Directors and to be in full force and effect on the date of such certification.

         "Book-Entry  Class A Notes":  Book-Entry  Class A-1  Notes,  Book-Entry
Class A-2 Notes or Book-Entry Class A-3 Notes, as applicable.

         "Book-Entry  Class A-1 Notes":  Beneficial  interests  in the Class A-1
Notes,  the  ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 3.10.

         "Book-Entry  Class A-2 Notes":  Beneficial  interests  in the Class A-2
Notes,  the  ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 3.10.

         "Book-Entry  Class A-3 Notes":  Beneficial  interests  in the Class A-3
Notes,  the  ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 3.10.

         "Book-Entry Class B Notes":  Beneficial interests in the Class B Notes,
the  ownership  and  transfers  of which shall be made through book entries by a
Clearing Agency as described in Section 3.10.

         "Book-Entry Class C Notes":  Beneficial interests in the Class C Notes,
the  ownership  and  transfers  of which shall be made through book entries by a
Clearing Agency as described in Section 3.10.

         "Book-Entry Class D Notes":  Beneficial interests in the Class D Notes,
the  ownership  and  transfers  of which shall be made through book entries by a
Clearing Agency as described in Section 3.10.

                                       3

         <PAGE>

         "Business  Day":  Any day other than a  Saturday,  a Sunday or a day on
which  banking  institutions  in New York City,  the State of Maryland or in the
city in  which  the  Corporate  Trust  Office  of the  Trustee  is  located  are
authorized or obligated by law or executive order to close.

         "Calculation Date":  The last day of a Due Period.

         "Capitalized Interest Account":  The account or accounts with that name
created and maintained pursuant to Section 12.05 hereof.

         "Cede & Co.": The initial  registered  holder of the Class A Notes, the
Class B Notes, the Class C Notes and the Class D Notes, acting as nominee of The
Depository Trust Company.

         "Class": Any of the Class A Notes, the Class B Notes, the Class C Notes
or the Class D Notes.

         "Class A Note Owner":  With respect to a Book-Entry  Class A Note,  the
Person who is the beneficial  owner of such Book-Entry Class A Note as reflected
on the books of the Clearing  Agency or on the books of a Person  maintaining an
account with such Clearing Agency  (directly or as an indirect  participant,  in
accordance with the rules of such Clearing Agency).

         "Class A Notes": The definition set forth in the Preliminary Statement.

         "Class A Principal  Distribution  Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) not during a Trigger Event Period,  an
amount equal to the lesser of (A) the amount  necessary to reduce the  principal
balance  of the Class A Notes to the  Targeted  Credit  Enhancement  Level  with
respect to such Class and such Payment Date and (B) the amount  available in the
Collection  Account from the related Due Period after the payment of the amounts
set forth in clauses  (i)-(vii)  of Section  12.02(d);  provided,  however,  the
amount in clauses  (a)(i)  shall be paid  first to the  holders of the Class A-1
Notes  until the Class A-1 Notes are paid in full,  then to the  holders  of the
Class A-2 Notes until the Class A-2 Notes are paid in full,  then to the holders
of the  Class A-3  Notes  until  the Class A-3 Notes are paid in full;  and (ii)
during a Trigger Event  Period,  the amount in the  Collection  Account from the
related  Due  Period  after the  payment  of the  amounts  set forth in  clauses
(i)-(vii)  of Section  12.02(e)  until the Class A Notes have been paid in full;
and (b) at Stated Maturity, an amount equal to the aggregate principal amount of
Class A Notes Outstanding as of such date.

         "Class A Supplemental  Principal  Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2002 and
not  during a Trigger  Event  Period,  an amount  equal to the lesser of (i) the
amount  necessary  to reduce the  principal  balance of the Class A Notes to the
Targeted  Principal  Balance  with respect to the Class A Notes and such Payment
Date, and (ii) the amount  available in the Collection  Account from the related
Due Period  after the payment of the amounts set forth in clauses  (i)-(xii)  of
Section  12.02(d).  Prior to the Payment Date occurring in September,  2002, the
Class A Supplemental Principal Distribution Amount shall equal zero.


                                       4
         <PAGE>

          "Class A-1 Note Rate": The rate at which interest accrues on the Class
A-1 Notes, which rate shall be equal to 6.695% per annum.

         "Class A-1  Noteholder":  Cede & Co. or a holder of a Definitive  Class
A-1 Note.

         "Class  A-1  Notes":  The  definitions  set  forth  in the  Preliminary
Statement.

         "Class A-2 Note Rate":  The rate at which interest accrues on the Class
A-2 Notes, which rate shall be equal to 7.230% per annum.

         "Class A-2  Noteholder":  Cede & Co. or a holder of a Definitive  Class
A-2 Note.

         "Class  A-2  Notes":  The  definition  set  forth  in  the  Preliminary
Statement.

         "Class A-3 Note Rate":  The rate at which interest accrues on the Class
A-3 Notes, which rate shall be equal to 7.560% per annum.

         "Class A-3  Noteholder":  Cede & Co. or a holder of a Definitive  Class
A-3 Note.

         "Class  A-3  Notes":  The  definition  set  forth  in  the  Preliminary
Statement.

         "Class B  Noteholder":  Cede & Co. or a holder of a Definitive  Class B
Note.

         "Class B Note Owner":  With respect to a Book-Entry  Class B Note,  the
Person who is the beneficial  owner of such Book-Entry Class B Note as reflected
on the books of the Clearing  Agency or on the books of a Person  maintaining an
account with such Clearing Agency  (directly or as an indirect  participant,  in
accordance with the rules of such Clearing Agency).

         "Class B Note Rate":  The rate at which interest accrues on the Class B
Notes, which rate shall be equal to 7.460% per annum.

         "Class B Notes": The definition set forth in the Preliminary Statement.

         "Class B Principal  Distribution  Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) not during a Trigger Event Period,  an
amount equal to the lesser of (A) the amount  necessary to reduce the  principal
balance  of the Class B Notes to the  Targeted  Credit  Enhancement  Level  with
respect to such Class and such Payment Date and (B) the amount  available in the
Collection  Account from the related Due Period after the payment of the amounts
set forth in clauses  (i)-(viii) of Section 12.02(d);  and (ii) during a Trigger
Event Period,  the amount in the Collection  Account from the related Due Period
after the  payment of the  amounts  set forth in clauses  (i)-(viii)  of Section
12.02(e) until the Class B Notes have been paid in full;

                                       5
         <PAGE>

         and (b) at Stated Maturity,  an amount equal to the aggregate principal
amount of Class B Notes Outstanding as of such date.

         "Class B Supplemental  Principal  Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2002 and
not  during a Trigger  Event  Period,  an amount  equal to the lesser of (i) the
amount  necessary  to reduce the  principal  balance of the Class B Notes to the
Targeted  Principal  Balance  with respect to the Class B Notes and such Payment
Date and (ii) the amount  available in the  Collection  Account from the related
Due Period after the payment of the amounts set forth in clauses  (i)-(xiii)  of
Section  12.02(d).  Prior to the Payment Date occurring in September,  2002, the
Class B Supplemental Principal Distribution Amount shall equal zero.

         "Class C  Noteholder":  Cede & Co. or a holder of a Definitive  Class C
Note.

         "Class C Note Owner":  With respect to a Book-Entry  Class C Note,  the
Person who is the beneficial  owner of such Book-Entry Class C Note as reflected
on the books of the Clearing  Agency or on the books of a Person  maintaining an
account with such Clearing Agency  (directly or as an indirect  participant,  in
accordance with the rules of such Clearing Agency).

         "Class C Note Rate":  The rate at which interest accrues on the Class C
Notes, which rate shall be equal to 7.685% per annum.

         "Class C Notes": The definition set forth in the Preliminary Statement.

         "Class C Principal  Distribution  Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) not during a Trigger Event Period,  an
amount equal to the lesser of (A) the amount  necessary to reduce the  principal
balance  of the Class C Notes to the  Targeted  Credit  Enhancement  Level  with
respect to such Class and such Payment Date and (B) the amount  available in the
Collection  Account from the related Due Period after the payment of the amounts
set forth in clauses  (i)-(ix)  of Section  12.02(d);  and (ii) during a Trigger
Event Period,  the amount in the Collection  Account from the related Due Period
after the  payment  of the  amounts  set forth in  clauses  (i)-(ix)  of Section
12.02(e)  until  the Class C Notes  have  been  paid in full;  and (b) at Stated
Maturity,  an amount equal to the  aggregate  principal  amount of Class C Notes
Outstanding as of such date.

         "Class C Supplemental  Principal  Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2002 and
not  during a Trigger  Event  Period,  an amount  equal to the lesser of (i) the
amount  necessary  to reduce the  principal  balance of the Class C Notes to the
Targeted  Principal  Balance  with respect to the Class C Notes and such Payment
Date and (ii) the amount  available in the  Collection  Account from the related
Due Period  after the payment of the amounts set forth in clauses  (i)-(xiv)  of
Section  12.02(d).  Prior to the Payment Date occurring in September,  2002, the
Class C Supplemental Principal Distribution Amount shall equal zero.

                                       6

         <PAGE>

         "Class D  Noteholder":  Cede & Co. or a holder of a Definitive  Class D
Note.

         "Class D Note Owner":  With respect to a Book-Entry  Class D Note,  the
Person who is the beneficial  owner of such Book-Entry Class D Note as reflected
on the books of the Clearing  Agency or on the books of a Person  maintaining an
account with such Clearing Agency  (directly or as an indirect  participant,  in
accordance with the rules of such Clearing Agency).

         "Class D Note Rate":  The rate at which interest accrues on the Class D
Notes, which rate shall be equal to 8.590% per annum.

         "Class D Notes": The definition set forth in the Preliminary Statement.

         "Class D Principal  Distribution  Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) not during a Trigger Event Period,  an
amount equal to the lesser of (A) the amount  necessary to reduce the  principal
balance  of the Class D Notes to the  Targeted  Credit  Enhancement  Level  with
respect to such Class and such Payment Date and (B) the amount  available in the
Collection  Account from the related Due Period after the payment of the amounts
set forth in  clauses  (i)-(x) of Section  12.02(d);  and (ii)  during a Trigger
Event Period,  the amount in the Collection  Account from the related Due Period
after the  payment  of the  amounts  set forth in  clauses  (i)-(x)  of  Section
12.02(e)  until  the Class D Notes  have  been  paid in full;  and (b) at Stated
Maturity,  an amount equal to the  aggregate  principal  amount of Class D Notes
Outstanding as of such date.

         "Class D Supplemental  Principal  Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2002 and
not  during a Trigger  Event  Period,  an amount  equal to the lesser of (i) the
amount  necessary  to reduce the  principal  balance of the Class D Notes to the
Targeted  Principal  Balance  with respect to the Class D Notes and such Payment
Date and (ii) the amount  available in the  Collection  Account from the related
Due Period  after the payment of the  amounts  set forth in clauses  (i)-(xv) of
Section  12.02(d).  Prior to the Payment Date occurring in September,  2002, the
Class D Supplemental Principal Distribution Amount shall equal zero.

         "Clearing  Agency":  An organization  registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.

         "Clearing Agency Participant":  A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry  transfers  and pledges of  securities  deposited  with the  Clearing
Agency.

         "Closing  Date":  August  25,  1999,  the  date  that  the  Transaction
Documents are originally executed and delivered by the parties thereto.

                                       7

         <PAGE>

         "Club" or "WorldMark": WorldMark, the Club, a California mutual benefit
corporation, and its successors in interest.

         "Code": The Internal Revenue Code of 1986, as amended.

         "Collateral":  The meaning  specified  in the  Granting  Clause of this
Indenture.

         "Collateral Agent": Sage Systems, Inc., a Washington  corporation,  and
its permitted successors and assigns.

         "Collateral Agent Agreement":  The Collateral Agent Agreement, dated as
of August 1, 1999, by and among the Collateral  Agent, the Servicer,  the Issuer
and the Trustee, as amended and supplemented from time to time.

         "Collateral  Agent  Files":  The meaning  set forth in the  Receivables
Purchase Agreement.

         "Collateral  Value":  With respect to each Receivable as of any date of
determination,  the  amount  of  principal  outstanding  with  respect  to  such
Receivable  at the end of such date  (without  giving effect to any write-off or
writedown of such Receivable).

         "Collection Account":  The account or accounts with that name with that
name created and maintained pursuant to Section 12.02 hereof.

         "Contract  Files":  The meaning  specified in the Receivables  Purchase
Agreement.

         "Contract  Schedule":  The  listing of  Contracts  and  Receivables  on
Schedule A hereto as amended from time to time, which shall include with respect
to each Contract listed on such schedule:  (a) its identifying  number,  (b) the
name and mailing  address of the related  Obligor,  (c) the  original  number of
months to  maturity,  (d) the  number of months to  maturity  as of the  related
Cut-Off  Date,  (e)  the  interest  rate  of the  Receivable,  (f)  its  date of
origination,  (g) the original principal balance, (h) the Collateral Value as of
the related Cut-Off Date, (i) the maturity date, (j) the monthly payment amount,
(k) the paid-through date, (l) the first payment date, (m) the date of sale, and
(n) the related number of Vacation Credits.

         "Contracts":  The retail  installment  contracts  (and all rights  with
respect  thereto,  including all guaranties and other agreements or arrangements
of whatever  character from time to time  supporting or securing  payment of any
such contract and all rights with respect to the Vacation  Credits to the extent
specifically  related to any such  contract),  which are  acquired by the Issuer
from time to time pursuant to the Receivables  Purchase Agreement and identified
on the  Contract  Schedule  attached  hereto  as  Schedule  A,  plus  Substitute
Contracts,  Subsequent  Contracts  and Upgrade  Contracts,  and any  amendments,
riders and annexes thereto; provided

                                       8
         <PAGE>

         that,  from and  after  the date on which a  Receivable  relating  to a
Contract is purchased or  substituted  by the Issuer or Trendwest in  accordance
with  Section  4.03 hereof or released  pursuant to Section  4.04  hereof,  such
Contract shall no longer constitute a "Contract" for purposes of the Transaction
Documents.

         "Controlling Class": The Class A Notes until the Class A Notes are paid
in full,  then the Class B Notes until the Class B Notes are paid in full,  then
the Class C Notes  until  the  Class C Notes are paid in full,  then the Class D
Notes.

         "Corporate Trust Office":  The principal  corporate trust office of the
Trustee   located  at  Sixth  Street  and  Marquette   Avenue,   MAC  N9311-161,
Minneapolis,  MN 55479,  or at such other  address as the Trustee may  designate
from time to time by notice to the Noteholders,  the Servicer and the Issuer, or
the principal corporate trust office of any successor Trustee.

         "Cut-Off Date": With respect to Contracts pledged to the Trustee on the
Closing  Date,  the  Initial  Cut-Off  Date,  with  respect  to each  Subsequent
Contract,  the  related  Subsequent  Cut-Off  Date,  and  with  respect  to  any
Substitute  Contract  or Upgrade  Contract,  the date on which such  Contract is
pledged to the Trustee by the Issuer.

         "DCR":  Duff & Phelps Credit Rating Co. and its successors in interest.

         "Default":  Any  occurrence  or  circumstance  which with notice or the
lapse of time or both would become an Event of Default.

         "Default Rate": For any Due Period, the sum of the Collateral Values as
of the  Calculation  Date  occurring  in such Due Period of all  Contracts  that
became Defaulted  Contracts in such Due Period and remained Defaulted  Contracts
as of the end of  business on such  Calculation  Date  divided by the  Aggregate
Collateral Value on the Calculation Date immediately preceding such Due Period.

         "Defaulted Contract":  The Contract related to a Defaulted Receivable.

          "Defaulted   Receivable":   A  Receivable  shall  become  a  Defaulted
Receivable at the earliest of (i) the date on which the Servicer receives notice
that the  related  Obligor  has (or,  if a  Receivable  has two  Obligors,  both
Obligors  have)  become  the  subject  of  bankruptcy   proceedings,   (ii)  the
Calculation  Date on which any portion of the related  Receivable would (if such
Receivable  were  owned by  Trendwest)  be  written  off  Trendwest's  financial
statements or books of account or would otherwise be deemed uncollectible in the
normal  course of business (for reasons other than disputes of amounts owed with
respect to such Receivable),  (iii) the Calculation Date on which all or part of
any Scheduled  Payment with respect to such Receivable has not been received and
remains unpaid for a period of 180 or more days as of such  Calculation  Date or
(iv) the date on which  the  related  Obligor  has (or,  if a  Contract  has two
Obligors,  both  Obligors  have) given notice to the  Servicer,  or the Servicer
otherwise has reason to believe, that

                                       9
         <PAGE>

         such  Receivable  will not be paid (for reasons  other than disputes of
amounts owed with respect to such Receivable).

         "Definitive  Class A-1 Note": A definitive,  fully registered Class A-1
Note issued pursuant to Section 3.10.

         "Definitive  Class A-2 Note": A definitive,  fully registered Class A-2
Note issued pursuant to Section 3.10.

         "Definitive  Class A-3 Note": A definitive,  fully registered Class A-3
Note issued pursuant to Section 3.10.

         "Definitive Class B Note": A definitive,  fully registered Class B Note
issued pursuant to Section 3.10.

         "Definitive Class C Note": A definitive,  fully registered Class C Note
issued pursuant to Section 3.10.

         "Definitive Class D Note": A definitive,  fully registered Class D Note
issued pursuant to Section 3.10.

         "Delinquent Contract": As of any Calculation Date, a Contract (a) as to
which a Scheduled  Payment was not received by or on behalf of the Issuer within
60 days of when such  Scheduled  Payment was due and  remains  unpaid as of such
Calculation Date and (b) is not a Defaulted Contract.

         "Delivery  Date": The date on which a Note is issued in accordance with
this Indenture.

         "Depository  Agreement":  The letter of  representations,  between  the
Issuer and the Depository Trust Company, as Clearing Agency.

         "Determination  Date": The fifth day preceding each Payment Date or, if
such day is not a Business Day, the preceding Business Day.

         "Due Date":  With respect to each Receivable,  the date of the month on
which payment is due thereunder.

         "Due Period": As to any Determination Date or Payment Date, as the case
may be, the period  beginning on and  including  the first day and ending at the
end of the last day of the  calendar  month  preceding  the month in which  such
Determination  Date or  Payment  Date,  as the  case may be,  occurs;  provided,
however, that the initial Due Period shall be the period from and including July
1, 1999 through August 31, 1999.

                                       10

         <PAGE>

         "Eligible  Account":  A  segregated  account,  which may be an  account
maintained with the Trustee,  which is maintained with a depository  institution
or trust company whose long term unsecured debt  obligations  are rated at least
F1 by Fitch and D-1 by DCR (or,  if not rated by Fitch  and DCR,  an  equivalent
rating from S&P or Moody's).

         "Eligible Investments":  Any and all of the following:

                   (i) direct  obligations of, and obligations  fully guaranteed
         by, the United  States of America or any agency or  instrumentality  of
         the United States of America the obligations of which are backed by the
         full faith and credit of the United States of America;

                  (ii) (A) demand and time deposits in,  certificates of deposit
         of,  banker's  acceptances  issued  by or  federal  funds  sold  by any
         depository  institution or trust company  (including the Trustee or its
         agent acting in their respective  commercial  capacities)  incorporated
         under the laws of the United States of America or any State thereof and
         subject  to  supervision   and  examination  by  federal  and/or  state
         authorities,  so long as at the time of such  investment or contractual
         commitment providing for such investment,  such depository  institution
         or trust  company has the highest short term  unsecured  debt rating of
         Fitch and DCR, (or, if not rated by Fitch and DCR, an equivalent rating
         from S&P or Moody's)  and  provided  that each such  investment  has an
         original maturity of no more than 180 days, and (B) any other demand or
         time deposit or deposit which is fully  insured by the Federal  Deposit
         Insurance Corporation;

                 (iii) securities  bearing interest or sold at a discount issued
         by any corporation  incorporated under the laws of the United States of
         America  or any State  thereof  which has a long  term  unsecured  debt
         rating in the highest  available  rating category of Fitch and DCR (or,
         if not  rated  by Fitch  and  DCR,  an  equivalent  rating  from S&P or
         Moody's) at the time of such investment;

                  (iv) commercial paper having, or demand notes  constituting an
         investment  vehicle in commercial paper having, an original maturity of
         less than 180 days and  issued by an  institution  having a short  term
         unsecured debt rating in the highest available rating category of Fitch
         and DCR (or, if not rated by Fitch and DCR, an  equivalent  rating from
         S&P or  Moody's)  at the time of such  investment  (the  issuer  of any
         demand notes under this paragraph (iv) must also be an institution that
         satisfies the unsecured  debt rating test  specified in this  paragraph
         (iv));

                   (v) a guaranteed  investment  contract issued by an insurance
         company or other  corporation  having a long term unsecured debt rating
         or a claims  paying  ability  rated  in the  highest  available  rating
         category  of Fitch  and DCR (or,  if not  rated  by Fitch  and DCR,  an
         equivalent  rating from S&P or Moody's) at the time of such investment;
         and


                                       11
         <PAGE>

                  (vi)  money  market  funds  having   ratings  in  the  highest
         available  rating  category  of Fitch and DCR (or if not rated by Fitch
         and DCR, an equivalent  rating from S&P or Moody's) at the time of such
         investment  (any such  money  market  funds  which  provide  for demand
         withdrawals   being   conclusively   deemed  to  satisfy  any  maturity
         requirements  for Eligible  Investments  set forth  herein),  including
         money  market  funds of the Trustee and any such funds that are managed
         by the Trustee or any of its Affiliates or for which the Trustee or any
         Affiliate of the Trustee acts as advisor.

Any  Eligible  Investments  may be purchased by or through the Trustee or any of
its Affiliates.

         "Eligible   Receivable":   All   Receivables,    including   Subsequent
Receivables,  that  are not  more  than 90 day  delinquent  as of the  close  of
business on the related Calculation Date.

         "Event of Default": The meaning specified in Section 6.01 hereof.

         "Final Due Date":  With respect to each  Receivable,  the last Due Date
specified in the related Contract.

         "Final Payment Date":  With respect to any Class, the date on which the
final  principal  payment on the Notes of such Class  becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by acceleration or
redemption.

         "Fitch":  Fitch IBCA, Inc. and its successors in interest.

         "Grant": To grant, bargain, sell, warrant,  alienate,  remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against,  deposit,  set over and confirm. A Grant of the
Contracts,  the Receivables or of any other instrument shall include all rights,
powers  and  options  (but  none  of  the  obligations)  of the  Granting  party
thereunder, including, without limitation, the immediate and continuing right to
claim, collect, receive and receipt for payments in respect of the Contracts and
the  Receivables,  or any other  payment  due  thereunder,  to give and  receive
notices  and other  communications,  to make  waivers  or other  agreements,  to
exercise  all  rights  and  options,  to  bring  proceedings  in the name of the
Granting party or otherwise,  and generally to do and receive anything which the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.

         "Holder" or "Noteholder": The person in whose name a Note is registered
in the Note Register.

         "Indenture" or "this Indenture": This instrument as originally executed
as  from  time  to  time  supplemented  or  amended  by one or  more  indentures
supplemental  hereto entered into pursuant to the applicable  provisions hereof,
as so  supplemented  or amended.  All references in this Indenture to designated
"Articles,"  "Sections,"   "Subsections"  and  other  subdivisions  are  to  the
designated  Articles,  Sections,  Subsections  and  other  subdivisions  of this
Indenture as originally executed,  or if amended or supplemented,  as so amended
and supplemented. The

                                       12
         <PAGE>

         words  "herein,"  "hereof,"  "hereunder"  and  other  words of  similar
import, when not related to a specific  subdivision of this Indenture,  refer to
this Indenture as a whole and not to any particular Article, Section, Subsection
or other subdivision.

         "Independent":  When used with  respect to any  specified  Person means
such a Person,  who (1) is in fact independent of the Issuer,  (2) does not have
any direct financial interest or any material indirect financial interest in the
Issuer or in any Affiliate of the Issuer,  (3) is not connected  with the Issuer
as an officer, employee,  promoter,  underwriter,  Trustee, partner, director, a
person performing  similar functions and (4) is not a brother,  sister,  spouse,
parent or child of any Person  listed in clauses (2) and (3) above.  Whenever it
is herein provided that any Independent Person's opinion or certificate shall be
furnished to the  Trustee,  such Person shall be appointed by a Issuer Order and
approved by the Trustee in the exercise of reasonable  care, and such opinion or
certificate  shall state that the signer has read this  definition  and that the
signer is Independent within the meaning hereof.

         "Initial Aggregate Collateral Value":  $163,540,953.49.

         "Initial Cut-Off Date":  The close of business on June 30, 1999.

         "Initial  Payment  Date":  September  15, 1999,  the first Payment Date
following the Closing Date.

         "Initial Purchaser": Prudential Securities Incorporated.

         "Interest  Shortfall  Payment":  The  definition  set forth in  Section
3.07(a).

         "Issuer":  TRI  Funding  III,  Inc.,  a Delaware  corporation,  until a
successor  Person  shall  have  become  the Issuer  pursuant  to the  applicable
provisions of this Indenture,  and thereafter "Issuer" shall mean such successor
Person.

         "Issuer Order" and "Issuer Request":  A written order or request signed
in the name of the  Issuer  by the  Chairman  of the  Board,  President,  a Vice
President,  the  Treasurer  or  Secretary  of the  Issuer and  delivered  to the
Trustee.

         "Lien": Any mortgage, deed of trust, pledge, hypothecation, assignment,
participation or equity interest, deposit arrangement, encumbrance, charge, lien
(statutory  or other),  preferences  priority  or other  security  agreement  or
preferential  arrangement of any kind or nature whatsoever,  including,  without
limitation,  any  conditional  sale or  other  title  retention  agreement,  any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing  and the filing of any financing  statement  under the UCC (other than
any  such  financing  statement  filed  for  informational   purposes  only)  or
comparable law of any jurisdiction to evidence any of the foregoing.

         "Local Bank": The meaning specified in the Servicing Agreement.

                                       13

         <PAGE>

         "Local Bank Account": The meaning specified in the Servicing Agreement.

         "Monthly  Servicer's  Report":  The  report  prepared  by the  Servicer
pursuant to Section 4.01 of the Servicing Agreement.

         "Moody's:  Moody's  Investors  Service,  Inc.  and  its  successors  in
interest.

         "Note" or "Notes":  The notes  authenticated  and delivered  under this
Indenture.

         "Note Owner":  A Class A Note Owner,  Class B Note Owner,  Class C Note
Owner or Class D Owner, as the case may be.

         "Note Owner Certificate": The certificate of a Note Owner or transferee
thereof attached as Exhibit D hereto.

         "Note Purchase  Agreement":  The Note Purchase  Agreement,  dated as of
August 18, 1999, among the Issuer,  Trendwest,  TW Holdings, TW Holdings II, TRI
I, TRI II and the Initial Purchaser.

         "Note  Rate":  The Class A-1 Note Rate,  the Class A-2 Note  Rate,  the
Class A-3 Note Rate, the Class B Note Rate, the Class C Note Rate or the Class D
Note Rate, as applicable.

         "Note Register" and "Note Registrar": The respective meanings specified
in Section 3.04 hereof.

         "Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.

         "Obligor":  The borrower  under each related  Contract,  including  any
guarantor of such borrower, and their respective successors and assigns.

         "Officer's  Certificate":  A certificate  signed by the Chairman of the
Board,  the President,  a Vice  President,  the Treasurer,  the  Controller,  an
Assistant  Controller  or the  Secretary  of the  company  on whose  behalf  the
certificate is delivered,  and delivered to the Trustee, which certificate shall
comply  with  the  applicable  requirements  of  Section  13.12  hereof.  Unless
otherwise specified, any reference in this Indenture to an Officer's Certificate
shall be to an Officer's Certificate of the Issuer on behalf of the Issuer.

         "Opinion of Counsel":  A written  opinion of counsel who may, except as
otherwise  expressly  provided in this Indenture,  be counsel for the Issuer and
who shall be  reasonably  satisfactory  to the Trustee and which  opinion  shall
comply with the applicable requirements of Section 13.12 hereof.


                                       14
         <PAGE>

         "Outstanding":   With  respect  to  the  Notes,   as  of  any  date  of
determination,  all Notes  theretofore  authenticated  and delivered  under this
Indenture except:

         (i) Notes  theretofore  canceled by the Note  Registrar or delivered to
the Note Registrar for cancellation; and

         (ii) Notes in  exchange  for or in lieu of which  other Notes have been
authenticated   and  delivered   pursuant  to  this   Indenture,   unless  proof
satisfactory  to the Trustee is presented that any such Notes are held by a bona
fide purchaser;

provided,  however,  that for purposes of determining whether the Holders of the
requisite  principal  amount of the  Outstanding  Notes have given any  request,
demand,  authorization,  direction,  notice, consent or waiver hereunder,  Notes
owned by the Issuer or any other  obligor upon such Notes,  any Affiliate of the
Issuer or  Trendwest  shall be  disregarded  and deemed  not to be  Outstanding,
except that,  in  determining  whether the Trustee shall be protected in relying
upon any such request,  demand,  authorization,  direction,  notice, consent, or
waiver,  only such  Notes  which the  Trustee  knows to be so owned  shall be so
disregarded.

         "Overdue Interest":  The meaning set forth in Section 3.07(a).

         "Overdue  Payment":  With  respect  to a Due  Period  and a  Delinquent
Contract, all payments due in a prior Due Period that the Servicer receives from
or on behalf of an Obligor  during  the  related  Due Period on such  Delinquent
Contract, including any Servicing Charges.

         "Paying  Agent":  The  Trustee  or any  other  Person  that  meets  the
eligibility  standards  for the Trustee  specified in Section 7.08 hereof and is
authorized  by the  Issuer  pursuant  to  Section  11.15(o)  hereof  to pay  the
principal of, or interest on, any Notes on behalf of the Issuer.

         "Payment  Date":  The fifteenth day of each calendar  month (or if such
day is not a Business Day, the next  succeeding  Business Day) commencing on the
Initial Payment Date.

         "Person":  Any  individual,  corporation,  limited  liability  company,
partnership,  association, joint-stock company, trust (including any beneficiary
thereof),  unincorporated  organization or government or any agency or political
subdivision thereof.

         "Prefunding Account":  The account or accounts by that name established
and maintained by the Trustee pursuant to Section 12.04.

         "Prefunding  Period":  The period  beginning  on the  Closing  Date and
ending on the Pre-Funding Period Termination Date.

                                       15

         <PAGE>

         "Prefunding  Period  Termination  Date":  The  first  to  occur  of the
following: (a) the close of business on September 30, 1999, (b) the Payment Date
on which the amount on deposit in the  Prefunding  Account is less than  $10,000
and (c) the date on which a Trigger Event occurs.

         "Principal  Distribution  Amount":  The Class A Principal  Distribution
Amount,  the  Class B  Principal  Distribution  Amount,  the  Class C  Principal
Distribution Amount or the Class D Principal Distribution Amount, as applicable.

         "Proceeding":  Any suit in equity,  action at law or other  judicial or
administrative proceeding.

         "Purchase and  Substitution  Limit":  13% of the  aggregate  Collateral
Values of all Receivables pledged by the Issuer to the Trustee on the Prefunding
Period Termination Date, measured as of their related Cut-Off Dates.

         "Purchase  Price":  With  respect to any  Contract or interest  therein
repurchased by the Issuer or Trendwest,  as the case may be, pursuant to Section
3.03 of the  Receivables  Purchase  Agreement,  Section  4.03  hereof or Section
3.10(b) of the Servicing  Agreement,  the sum of (i) the Collateral Value of the
related Receivable on the Calculation Date on or immediately succeeding the date
when the  Receivable is repurchased  and (ii) any interest  portion of Scheduled
Payments  with respect to such  Receivable  due on or prior to such  Calculation
Date but not received through such Calculation Date.

         "Rating Agency":  Each of DCR and Fitch.

         "Receivables":  With respect to any Contract,  all of, and the right to
receive all of (i) the Scheduled Payments, (ii) any Residual Proceeds, (iii) any
Recoveries and (iv) any Servicing Charges.

         "Receivables  Purchase Agreement":  The Receivables Purchase Agreement,
dated as of August 1, 1999, by and among TRI I, TRI II, Trendwest,  TW Holdings,
TW Holdings II and the Issuer,  as amended and  supplemented  from time to time,
together with the Asset Assignment and each Subsequent Asset Assignment executed
in connection therewith.

         "Record Date":  With respect to any Payment Date, the close of business
on the last day of the related Due Period, whether or not a Business Day, except
with respect to the Initial Payment Date for the Notes, the Record Date shall be
the Closing Date.

         "Recoveries":  For any Due Period occurring during or after the date on
which any  Contract  becomes  a  Defaulted  Contract  and with  respect  to such
Defaulted Contract, all payments that the Servicer received from or on behalf of
an Obligor during such Due Period in respect of such Defaulted  Contract or from
liquidation or reselling the related  Vacation Credits  (including  purchases by
Trendwest pursuant to Section 3.10(e) of the Servicing Agreement), including but
not limited to Scheduled Payments, Overdue Payments and Guaranty Amounts, as

                                       16
       <PAGE>

         reduced by any reasonably incurred  out-of-pocket  expenses incurred by
the Servicer in enforcing such Defaulted Contract.

         "Redemption Date":  A date fixed pursuant to Section 10.01 hereof.

         "Redemption  Price": With respect to any Note, and as of any Redemption
Date,  the  Outstanding  principal  amount of such Note,  together with interest
accrued  thereon  through the  Redemption  Date at the Note Rate  (exclusive  of
installments  of interest and principal  maturing on or prior to the  Redemption
Date,  payment of which shall have been made or duly  provided for to the Holder
of such Note on the  applicable  Record  Date or as  otherwise  provided in this
Indenture).

         "Redemption Record Date": With respect to any redemption of any Note, a
date fixed pursuant to Section 10.01 hereof.

         "Registered Holder": The Person whose name appears on the Note Register
on the applicable Record Date or Redemption Record Date.

         "Reinvestment  Income": Any interest or other earnings earned on all or
part of the Trust Estate.

         "Releasable Receivable": With respect to any Payment Date not occurring
during a Trigger Event Period and for which the principal  balance of each Class
of Notes has been  reduced to the  Targeted  Credit  Enhancement  Level for such
Class and  Payment  Date and the  amount in the  Reserve  Account is equal to or
greater than the Reserve Account Required Balance,  any Defaulted Receivable and
any Receivable that is more than 90 days delinquent.

         "Remittance Date": The Business Day immediately  preceding each Payment
Date.

         "Reserve Account": The trust account created and maintained pursuant to
Section 12.03 hereof.

         "Reserve Account Required  Balance":  As of any Payment Date, an amount
equal to the  greater of (i)  $800,000  and (ii) the product of (a) 3.0% and (b)
the principal  balance of the Notes  Outstanding  as of such Payment Date (after
any distributions made pursuant to Section 12.02, on such date).

         "Residual Proceeds": With respect to a Contract that is not a Defaulted
Contract  and the related  Vacation  Credits,  the net proceeds of any resale or
other disposition of such Vacation Credits.

         "Responsible  Officer":  When used with  respect  to the  Trustee,  any
officer assigned to the Corporate Trust  Department (or any successor  thereto),
including any Vice President, Assistant Vice President, Trust Officer, Assistant
Secretary or any other officer of the Trustee


                                       17
         <PAGE>

         customarily  performing  functions similar to those performed by any of
the  above  designated  officers  and  having  direct   responsibility  for  the
administration of this Indenture, and also, with respect to a particular matter,
any other  officer to whom such  matter is  referred  because of such  officer's
knowledge of and familiarity with the particular subject.

         "S&P":  Standard & Poor's Ratings Group, a division of The  McGraw-Hill
Companies, Inc., and its successors in interest.

         "Sale":  The meaning specified in Section 6.18 hereof.

         "Scheduled Payment": With respect to a Payment Date and a Contract, the
periodic  payment set forth in such Contract due from the Obligor in the related
Due Period.  Scheduled  Payments shall not include any membership  dues or other
housekeeping payments relating to the use of the Club.

         "Servicer":  Initially, Trendwest Resorts, Inc., an Oregon corporation,
and any successor  Servicer  appointed pursuant to Section 6.02 of the Servicing
Agreement.

         "Servicer Fee": On each Payment Date, an amount equal to the product of
(i) one-twelfth of 1.0% and (ii) the Aggregate  Collateral Value at the close of
business on the related Calculation Date.

         "Servicing Agreement":  The Servicing Agreement,  dated as of August 1,
1999,  by and among the Issuer,  the  Servicer  and the  Trustee,  as amended or
supplemented from time to time.

         "Servicing  Charges":  The sum of (i) all late payment  charges paid by
Obligors on Delinquent Contracts after payment in full of any Scheduled Payments
due in a prior Due Period and Scheduled  Payments for the related Due Period and
(ii) any other incidental  charges or fees received from an Obligor,  including,
but not limited to, late fees, collection fees and bounced check charges.

         "Servicing Officers": The meaning set forth in the Servicing Agreement.

         "State":  Any state of the United  States of America  and, in addition,
the District of Columbia and the Commonwealth of Puerto Rico.

         "Stated Maturity":  August 15, 2010.

         "Subordinated  Note":  The  subordinated  note dated as of the  Closing
Date, made by the Issuer to Trendwest as a part of Acquisition Consideration and
the  payments  of which  are  subordinated  by its terms to  distributions  made
pursuant to clauses  (i)-(xvii)  of Section  12.02(d)  and  clauses  (i)-(xi) of
Section  12.02(e).  The  form  of  the  Subordinated  Note  is  attached  to the
Receivables Purchase Agreement as Exhibit D.

                                       18

         <PAGE>

         "Subsequent  Contract":  A Contract which Trendwest sells to the Issuer
and  the  Issuer  pledges  to the  Trustee  in  connection  with  a draw  on the
Prefunding Account.

         "Subsequent Cut-Off Date": With respect to any Subsequent Contract, the
last day of the Due Period immediately preceding the related Subsequent Transfer
Date.

         "Subsequent  Transfer  Date":  Each date during the Prefunding  Period,
which must be a Business Day, on which one or more of Trendwest, TRI I or TRI II
sell to the Issuer and the Issuer  pledges  Subsequent  Contracts to the Trustee
hereunder.

         "Substitute  Contract":   The  meaning  specified  in  the  Receivables
Purchase Agreement.

         "Substitute  Receivable":  The  meaning  specified  in the  Receivables
Purchase Agreement.

         "Supplemental Principal Distribution Amount": With respect to the Class
A Notes, the Class A Supplemental Principal Distribution Amount, with respect to
the Class B Notes, the Class B Supplemental  Principal Distribution Amount, with
respect to the Class C Notes,  the Class C Supplemental  Principal  Distribution
Amount,  and  with  respect  to the  Class D  Notes,  the  Class D  Supplemental
Principal Distribution Amount.

         "Targeted Credit Enhancement Level": With respect to the Class A Notes,
38.50%,  with respect to the Class B Notes,  27.75%, with respect to the Class C
Notes,  16.00%,  and with respect to the Class D Notes,  5.75% of the sum of (a)
amounts remaining in the Prefunding Account after  distributions on such Payment
Date and (b) the Aggregate  Collateral  Value of all Eligible  Receivables as of
the close of business on the related  Calculation  Date or, with  respect to any
Contracts  added after the related  Calculation  Date and prior to such  Payment
Date, as of the related Cut-Off Date.

         "Targeted  Principal  Balance":  With respect to the Class A Notes, the
Class B Notes,  the Class C Notes and Class D Notes and each Payment  Date,  the
amount set forth on Schedule B attached hereto.

         "TFI":  Trendwest Funding I, Inc., the independent member of TRI I, and
its successors in interest.

         "Transaction  Documents":  This Indenture, the Note Purchase Agreement,
the Servicing  Agreement,  the Receivables  Purchase  Agreement,  the Collateral
Agent Agreement and the Notes.

         "Trendwest":  Trendwest Resorts,  Inc., an Oregon corporation,  and its
permitted successors and assigns.


                                       19
         <PAGE>

         "TRI I": TRI Funding Company I, L.L.C. and its successors in interest.

         "TRI II": TRI Funding II, Inc. and its successors in interest.

         "Trigger Event": Any of the following events or conditions:  (1) if, as
of any Calculation Date, the aggregate  Collateral Value of the Receivables that
are more than 60 days  delinquent,  as of each related  Calculation Date for the
preceding  three Due  Periods  is greater  than or equal to 6% of the  Aggregate
Collateral  Value  as of  the  related  Calculation  Date;  (2)  if,  as of  any
Calculation Date, the aggregate  Collateral Value of Defaulted  Receivables that
became Defaulted  Receivables in the related Due Period is greater than or equal
to 0.80% of the Aggregate  Collateral Value as of the related  Calculation Date;
(3) the aggregate  Collateral  Value of the  Receivables  that became  Defaulted
Receivables is greater than or equal to 17% of the aggregate Collateral Value of
Receivables  pledged to the Trustee on the Prefunding  Period  Termination Date,
measured  as of their  respective  Cut-Off  Dates;  (4) an Event of  Default  or
Servicer  Event of Default has occurred  and is  continuing;  (5) (a)  WorldMark
voluntarily incurs or is any time voluntarily liable for any debt, or any of its
property  voluntarily is or voluntarily becomes subject to any Liens (other than
(i) utility or similar  easements or licenses  which do not relate to borrowings
by  WorldMark  or (ii) Liens that in the  aggregate  for all  properties  do not
exceed  $100,000),  or  (b)  WorldMark  involuntarily  incurs  or  is  any  time
involuntarily  liable for any debt, or any of its property  involuntarily  is or
involuntarily  becomes  subject  to any Liens  (other  than  utility  or similar
easements  or licenses  which do not relate to  borrowings  by  WorldMark)  that
individually  or in the  aggregate  (with  respect  to all  such  debt  and  the
obligations  secured by all such Liens) exceed $1,000,000;  (6) WorldMark sells,
leases or otherwise transfers  voluntarily or otherwise,  any of its real estate
properties  or any interest  therein so that, in the  aggregate,  there is a net
decrease in Vacation  Credits  available for member use below  550,000,000;  (7)
WorldMark  exchanges one of its present  properties for another property that is
worth fewer  Vacation  Credits than the property so exchanged;  or (8) WorldMark
has interests in units at fewer than 24 developed resort properties.

         "Trigger Event Period": Each period beginning on the Determination Date
following  the day on which a Trigger Event occurs and ending on the last day of
the month in which no Trigger Event occurs or is continuing.

         "Trustee":  Norwest Bank Minnesota,  National  Association,  a national
banking  association  until a  successor  Person  shall have  become the Trustee
pursuant  to  the  applicable  provisions  of  this  Indenture,  and  thereafter
"Trustee" shall mean such successor Person.

         "Trust  Estate":  The meaning  specified in the Granting Clause of this
Indenture.

         "Trustee  Fee":  The fee payable on each Payment Date to the Trustee in
consideration  for the  Trustee's  performance  of its duties  pursuant  to this
Indenture as Trustee,  in an amount equal to the product of (i)  one-twelfth  of
the Trustee Fee Rate and (ii) the aggregate principal

                                       20
         <PAGE>

         amount of Outstanding  Notes on the preceding Payment Date after giving
effect to  distributions  on such date (or, in the case of the  Initial  Payment
Date, the initial aggregate principal amount of the Notes).

         "Trustee Fee Rate": 0.0325% per annum.

         "TW  Holdings":  TW  Holdings,  Inc.,  a  Nevada  corporation,  and its
permitted successors and assigns.

         "TW Holdings II": TW Holdings II, Inc., a Delaware corporation, and its
permitted successors and assigns.

         "UCC":  The Uniform  Commercial  Code as it may from time to time be in
effect in the applicable State.

         "Unreimbursed  Servicing  Transfer  Payments":   With  respect  to  any
transfer of servicing by the Servicer,  any costs or expenses of the Trustee, to
the extent not reimbursed by the Servicer or a third-party,  including,  without
limitation,  any costs or expenses  associated with the complete transfer of all
servicing data and the completion,  correction or manipulation of such servicing
data as may be required by the Trustee to correct any errors or  insufficiencies
in the  servicing  data or  otherwise  to enable  the  Trustee  to  service  the
Receivables properly and effectively.

         "Upgrade":  The  prepayment of a Contract and entry into a new contract
by an Obligor, WorldMark and Trendwest,  pursuant to which the Obligor purchases
additional Vacation Credits in exchange for an increase in the principal balance
owed by the Obligor.

         "Upgrade  Contract":  The new  contract  entered  into  by an  Obligor,
Trendwest  and the Club  related  to an Upgrade by such  Obligor.  Each  Upgrade
Contract shall be pledged to the Trustee pursuant to Section 4.03(g) hereof.

         "Vacation  Credits":  The  vacation  credits  financed  by  an  Obligor
pursuant to a Contract.

         "Vice  President":  With  respect  to a  member  of the  Issuer  or the
Trustee, any vice president,  whether or not designated by a number or a word or
words added before or after the title "vice president."

         "WorldMark"  or the "Club":  WorldMark,  the Club, a California  mutual
benefit corporation, and its successors in interest.


                                       21
<PAGE>

                                   ARTICLE TWO

                                    NOTE FORM

         Section 2.01 Form. The Class A-1 Notes,  the Class A-2 Notes, the Class
A-3 Notes, the Class B Notes, the Class C Notes and the Class D Notes,  together
with the certificates of authentication,  shall be in substantially the form set
forth in Exhibits C-1, C-2, C-3, C-4, C-5 and C-6,  respectively,  hereto,  with
such appropriate  insertions,  omissions,  substitutions and other variations as
are required or permitted by this Indenture,  and may have such letters, numbers
or other  marks  of  identification  and such  legends  or  endorsements  placed
thereon, as may, consistently  herewith, be determined by the officers executing
such Notes, as evidenced by their execution of such Notes.

         The definitive  Notes shall be  typewritten,  printed,  lithographed or
engraved or produced by any  combination  of these methods or may be produced in
any manner  acceptable  to the Trustee and the initial  purchasers of the Notes,
all as determined by the officers  executing  such Notes,  as evidenced by their
execution of such Notes.


                                  ARTICLE THREE

                                    THE NOTES

         Section 3.01 Denomination.  The aggregate principal amount of the Class
A-1 Notes,  the Class A-2 Notes,  the Class A-3  Notes,  the Class B Notes,  the
Class C Notes and the Class D Notes  which may be  authenticated  and  delivered
under this Indenture is limited to an aggregate principal amount of $26,000,000,
$22,500,000, $55,904,000, $18,249,000, $19,947,000 and $17,400,000, respectively
(except for Notes  authenticated  and delivered upon registration of transfer or
in exchange for or in lieu of, other Notes pursuant to Sections 3.03, 3.04, 3.06
or 9.05 hereof).  The Notes shall be issuable  only as registered  Notes without
coupons in the denominations of at least $250,000;  provided, however, that, the
foregoing shall not restrict or prevent the transfer in accordance with Sections
3.04 and 3.05 hereof of any Note with a remaining  outstanding  principal amount
of less than $250,000.

         Section 3.02 Execution, Authentication,  Delivery and Dating. The Notes
shall be  executed  on behalf of the  Issuer by the  President,  one of the Vice
Presidents  or the Treasurer of the Issuer.  The signature of these  officers on
the Notes must be manual.

         Notes bearing the manual signatures of individuals who were at any time
the proper  officers of the Issuer shall bind the Issuer,  notwithstanding  that
such individuals or any of them

                                       22
         <PAGE>

         have  ceased  to hold  such  offices  prior  to the  authentication  or
delivery of such Notes or did not hold offices at the date of  authentication or
delivery of such Notes.

         Each Note shall bear on its face the  appropriate  Delivery Date and be
dated as of the date of its authentication.

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

         Section 3.03 Notes as Debt. For all federal,  state,  local and foreign
tax purposes,  the Issuer,  the Servicer,  the Trustee and all Noteholders shall
treat the Notes as debt of the Issuer.

         Section 3.04 Registration,  Registration of Transfer and Exchange.  (a)
The Issuer shall cause to be kept initially at the Corporate Trust Office of the
Trustee a register (the "Note Register"),  in which,  subject to such reasonable
regulations as it may prescribe,  the Issuer shall provide for the  registration
of Notes and the  registration  of transfers of Notes.  Norwest Bank  Minnesota,
National  Association,   Sixth  Street  and  Marquette  Avenue,  MAC  N9311-161,
Minneapolis,  MN 55479, is hereby  appointed "Note Registrar" for the purpose of
registering  Notes and transfers of Notes as herein provided.  The Trustee shall
have the right to rely  conclusively upon a certificate of the Note Registrar as
to the names and addresses of the holders of the Notes and the principal amounts
and  numbers of such Notes as held.  Upon  request of any  Holder,  the  Trustee
shall,  to the extent it may lawfully do so,  furnish such Holder with a list of
the names and addresses of all Holders  entered on the Note Register  indicating
the  principal  amount  and  serial  number,  if any,  of each Note held by each
Holder.

         (b) Only upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section  11.02(n)
hereof and subject to the  conditions set forth in Section 3.05 and Section 3.06
hereof,  the  Issuer  shall  execute,   and  the  Trustee  or  its  agent  shall
authenticate  and  deliver,  in  the  name  of  the  designated   transferee  or
transferees,  one or more new Notes of any  authorized  denominations,  and of a
like aggregate principal amount and Stated Maturity.

         (c) At the option of the Holder, Notes may be exchanged for other Notes
of any authorized  denominations  and of a like aggregate  principal  amount and
Stated Maturity, only upon surrender of the Notes to be exchanged at such office
or agency, subject to Section 3.06 hereof. Whenever any Notes are so surrendered
for  exchange,  the Issuer  shall  execute,  and the  Trustee or its agent shall
authenticate and deliver,  the Notes which the Noteholder making the exchange is
entitled to receive.

                                       23

<PAGE>

         (d) All Notes issued upon any  registration  of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt and
entitled to the same benefits  under this  Indenture,  as the Notes  surrendered
upon such registration of such transfer or exchange.

         Every Note presented or  surrendered  for  registration  of transfer or
exchange  shall (if so  required  by the Issuer or the Note  Registrar)  be duly
endorsed  or  be  accompanied  by a  written  instrument  of  transfer  in  form
reasonably  satisfactory to the Issuer and the Note Registrar duly executed,  by
the Holder thereof or his attorney duly authorized in writing.

         No service  charge  shall be made to a Holder for any  registration  of
transfer  or  exchange  of Notes,  but the Issuer may  require  payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection with any  registration  of transfer or exchange of Notes,  other than
exchanges pursuant to Section 3.03 or 9.05 hereof not involving any registration
of transfer.

         Notwithstanding  anything  else  to  the  contrary  contained  in  this
Indenture,  the obligation of the Issuer to pay the principal of and interest on
the Notes is not a general  obligation of the Issuer,  but is limited  solely to
the amounts  available out of the  Collateral  pledged to the Trustee under this
Indenture.

         Section 3.05 Limitation on Transfer and Exchange. The Notes will not be
registered or qualified  under the Securities Act of 1933, as amended (the "1933
Act"),  or the  securities  laws of any State.  If the Notes of any Class are no
longer held by The Depository  Trust Company  pursuant to Section 3.10, then the
restrictions  set forth in this  Section  3.05 shall apply to  transfers of such
Notes. In such event, no transfer of any Note shall be made unless that transfer
is made in a transaction  which does not require  registration or  qualification
under the 1933 Act or under  applicable State securities laws. In the event that
a  transfer  is  to  be  made  without   registration  or  qualification,   such
Noteholder's  prospective  transferee shall either (i) deliver to the Trustee an
investment  letter  substantially in the form set forth on Exhibit A hereto (the
"Investment  Letter") or (ii)  deliver to the Trustee an opinion of counsel that
the  transfer  is exempt  from the 1933  Act.  Such  opinion  may be given by an
attorney that is an employee or officer of such  transferee.  Neither the Issuer
nor the Trustee is obligated to register or qualify the Notes under the 1933 Act
or any other securities law.

         The  Trustee  shall  have  no  liability  to the  Trust  Estate  or any
Noteholder  arising  from a  transfer  of  any  such  Note  in  reliance  upon a
certification or opinion described in this Section 3.05.

         Section 3.06  Mutilated,  Destroyed,  Lost or Stolen Notes.  If (i) any
mutilated  Note is surrendered to the Note  Registrar,  or the Trustee  receives
evidence to its satisfaction of the destruction,  loss or theft of any Note, and
(ii) there is delivered to the Trustee such security or indemnity as may be

                                       24
<PAGE>

required  by the  Trustee to save the Issuer and the Trustee or any agent of any
of them  harmless,  then,  in the  absence  of notice to the  Issuer or the Note
Registrar that such Note has been acquired by a bona fide purchaser,  the Issuer
shall execute and, upon its request, the Trustee shall authenticate and deliver,
in  exchange  for or in lieu of any such  mutilated,  destroyed,  lost or stolen
Note,  a new  Note of the  same  tenor,  initial  principal  amount  and  Stated
Maturity,  bearing  a number  not  contemporaneously  outstanding.  If after the
delivery of such new Note, a bona fide purchaser of the original Note in lieu of
which such new Note was issued  presents for payment  such  original  Note,  the
Issuer and the  Trustee  shall be  entitled  to  recover  such new Note from the
person to whom it was  delivered or any person taking  therefrom,  except a bona
fide purchaser,  and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss,  damage,  cost or expenses incurred
by the  Issuer  or the  Trustee  or any  agent  of  any of  them  in  connection
therewith.  If any such  mutilated,  destroyed,  lost or stolen  Note shall have
become or shall be about to become due and payable, or shall have become subject
to  redemption in full,  instead of issuing a new Note,  the Issuer may pay such
Note  without  surrender  thereof,  except  that  any  mutilated  Note  shall be
surrendered.

         Upon the issuance of any new Note under this Section  3.06,  the Issuer
may  require  the  payment  of a sum  sufficient  to  cover  any  tax  or  other
governmental  charge  that may be  imposed  in  relation  thereto  and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Note issued  pursuant to this  Section  3.06,  in lieu of any
destroyed,  lost  or  stolen  Note,  shall  constitute  an  original  additional
contractual  obligation  of the Issuer,  whether or not the  destroyed,  lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately  with any and all
other Notes duly issued hereunder.

         The  provisions of this Section 3.06 are  exclusive and shall  preclude
(to the  extent  lawful)  all other  rights  and  remedies  with  respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.

         Section 3.07 Payment of Principal and Interest;  Principal and Interest
Rights  Preserved.  (a) The Notes shall bear  interest  on the unpaid  principal
amount thereof at the applicable Note Rate (calculated on the basis of a 360-day
year  consisting  of 12 months of 30 days each),  monthly from and including the
first day of each Due Period  through  the last day of such Due  Period  (except
with respect to the Initial  Payment Date,  from the Closing Date through August
31, 1999) and (to the extent that the payment of such interest  shall be legally
enforceable)  on any overdue  installment of principal or interest (such overdue
interest and interest at the applicable Note Rate on such overdue interest,  the
"Overdue  Interest")  from the date such  principal  or interest  became due and
payable until fully paid.  Interest  shall be due and payable in arrears on each
Payment Date, with each payment of interest calculated as described above on the
unpaid principal amount of the Outstanding Notes at the close of business on the
Payment  Date  immediately  preceding  such  Payment  Date or,  with  respect to
interest payable on the Initial

                                       25
<PAGE>

Payment Date, on the principal  amount of the  Outstanding  Notes on the Closing
Date;  provided,  however,  that in making any interest payment, if the interest
calculation  with  respect to any Note shall result in a portion of such payment
being less than $.01,  then such payment shall be decreased to the nearest whole
cent,  and no subsequent  adjustment  shall be made in respect  thereof.  To the
extent that there is a shortfall  in the amount  available  to pay the  interest
owed on the Class A Notes,  the amount of  interest  paid to the holders of each
such  Class of Class A Notes  shall be  determined  by  multiplying  the  amount
available  for  such  distribution  by the  ratio  of  the  amount  of  interest
(including  Overdue  Interest)  owed on such  Class to the  amount  of  interest
(including Overdue Interest) owed on all Classes of the Class A Notes (each such
amount with  respect to each Class,  the  "Interest  Shortfall  Payment").  With
respect to the Notes of any Class,  due but unpaid interest will accrue interest
at the related Note Rate.

         (b) The principal of each Note shall be payable in installments  ending
no later than the Stated  Maturity of such Note unless such Note becomes due and
payable  at  an  earlier  date  by  declaration  of  acceleration  or  automatic
acceleration,  call for redemption or otherwise. All reductions in the principal
amount of any Note effected by payments of installments of principal made on any
Payment Date shall be binding upon all future  Holders of such Note,  and of any
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof,  whether or not such payment is noted on such Note. Payments of
principal  on the Notes of each  Class will be made on each  Payment  Date in an
amount equal to the sum of (a) the Principal  Distribution Amount for such Class
and (b) on and after the Payment Date  occurring on and after  September,  2002,
the  Supplemental  Principal  Distribution  Amount  for such  Class  and will be
applied  to the  Notes on a pro  rata  basis  among  the  Notes  of such  Class,
commencing on the Initial Payment Date, provided,  however, that with respect to
the Class A Notes prior to a Trigger Event Period,  the Class A-2 Notes will not
be entitled to any payments of principal until the principal amount of the Class
A-1 Notes has been reduced to zero, and the Class A-3 Notes will not be entitled
to any payments of principal  until the principal  amount of the Class A-1 Notes
and Class A-2 Notes have been  reduced  to zero.  The  principal  payable on the
Notes of each Class shall be paid (to the extent payable in accordance  with the
terms  hereof) on each  Payment Date  beginning on the Initial  Payment Date and
ending on the Final  Payment Date with respect to such Class on a pro rata basis
within  each  Class  based  upon the face  amount  of each  Note of such  Class;
provided,  however,  that if as a result of such  proration  a  portion  of such
principal  would be less than $.01,  then such payment shall be decreased to the
nearest  whole cent,  and such portion  shall be applied to the next  succeeding
principal payment.

         (c) The  principal  of and  interest  on the Notes are payable by check
mailed by  first-class  mail to the Person whose name appears as the  Registered
Holder of such Note on the Note  Register  at the  address of such  Person as it
appears on the Note Register or, if requested by such Registered Holder, by wire
transfer in immediately  available funds to the account  specified in writing to
the Trustee by such  Registered  Holder at least five Business Days prior to the
Record Date for the Payment Date on which wire transfers will commence,  in such
coin or  currency  of the United  States of America as at the time of payment is
legal  tender for the payment of public and private  debts.  All payments on the
Notes shall be paid without any  requirement  of  presentment.  The Issuer shall
notify the Trustee at the close of business on the Record Date next

                                       26
<PAGE>

preceding  the  Payment  Date  on  which  the  Issuer  expects  that  the  final
installment  of principal of such Note will be paid that the Issuer expects that
such  final  installment  will be paid on such  Payment  Date.  Notice  of final
payment on any Note shall be mailed by the Trustee to the Holder of such Note in
accordance with Section  12.05(a)  hereof.  Funds  representing  any such checks
returned  undeliverable shall be held in accordance with Section 11.02(o).  Upon
payment in full of all amounts  owed to the  Noteholder  of any Note,  such Note
shall be void, and such Noteholder  shall use reasonable  efforts to return such
Note to the Trustee at the Corporate Trust Office for cancellation  upon written
request of the Trustee or the Issuer.  In the event a Noteholder  cannot  return
its Note to the Trustee within 60 days following payment in full of the Note, it
shall send the Trustee an affidavit certifying such loss upon request.

         Section  3.08  Persons  Deemed  Owner.  Prior  to due  presentment  for
registration  of transfer of any Note, the Issuer,  the Trustee and any agent of
the  Issuer or the  Trustee  shall  treat the  Person in whose  name any Note is
registered  as the owner of such Note for the purpose of  receiving  payments of
principal  of and interest on such Note and for all other  purposes  whatsoever,
whether or not such Note be overdue, and neither the Issuer, the Trustee nor any
agent of the Issuer or the Trustee shall be affected by notice to the contrary.

         Section 3.09  Cancellation.  All Notes  surrendered  to the Trustee for
payment,  registration of transfer or exchange  (including Notes  surrendered to
any Person other than the Trustee which shall be delivered to the Trustee) shall
be promptly canceled by the Trustee.  No Notes shall be authenticated in lieu of
or in exchange for any Notes  canceled as provided in this Section 3.09,  except
as expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be disposed of by the Trustee as is customary with its standard practice.

         Section 3.10 Book-Entry  Registration of Class A Notes,  Class B Notes,
Class C Notes and Class D Notes.  Each of the  Notes,  upon  original  issuance,
shall be issued in the form of one or more  typewritten  Class A-1 Notes,  Class
A-2  Notes,  Class A-3  Notes,  Class B Notes,  Class C Notes and Class D Notes,
respectively  (the  "Book-Entry  Class A-1  Notes,"  the  "Book-Entry  Class A-2
Notes," the "Book-Entry  Class A-3 Notes," the  "Book-Entry  Class B Notes," the
"Book-Entry Class C Notes," and the "Book-Entry  Class D Notes,"  respectively),
to be delivered to The Depository Trust Company, the initial Clearing Agency, or
its agent by, or on behalf of, the  Issuer.  Each of the Class A Notes,  Class B
Notes, Class C Notes and Class D Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of The Depository Trust Company,
as the initial Clearing Agency,  and no Class A Note Owner,  Class B Note Owner,
Class C Note Owner or Class D Owner will receive a definitive note  representing
such Note Owner's interest in the Class A Notes, Class B Notes, Class C Notes or
Class D Notes,  as the case may be, except as provided in Section  3.12.  Unless
and until  Definitive  Class A-1 Notes and/or  Definitive Class A-2 Notes and/or
Definitive  Class A-3 Notes and/or  Definitive  Class B Notes and/or  Definitive
Class C Notes and/or

                                       27

<PAGE>

Definitive Class D Notes have been issued to the applicable Note Owners pursuant
to Section 3.12:

                   (a) the  provisions  of this  Section  3.10  shall be in full
         force and effect  with  respect  to the Class A-1 Notes,  the Class A-2
         Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes or the
         Class D Notes, as the case may be;

                   (b) the Issuer,  the  Servicer  and the Trustee may deal with
         the  Clearing  Agency  and the  Clearing  Agency  Participants  for all
         purposes with respect to the Class A-1 Notes,  the Class A-2 Notes, the
         Class A-3  Notes,  the Class B Notes,  the Class C Notes or the Class D
         Notes, as the case may be,  (including the making of  distributions  on
         the Class A-1  Notes,  the Class A-2 Notes,  the Class A-3  Notes,  the
         Class B Notes, the Class C Notes and the Class D Notes, as the case may
         be) as the authorized representatives of the respective Note Owners;

                   (c) to the extent that the  provisions  of this  Section 3.10
         conflict with any other provisions of this Indenture, the provisions of
         this Section 3.10 shall control; and

                   (d)  the  rights  of the  respective  Note  Owners  shall  be
         exercised  only  through the Clearing  Agency and the  Clearing  Agency
         Participants  and  shall be  limited  to those  established  by law and
         agreements  between such respective Note Owners and the Clearing Agency
         and/or the Clearing  Agency  Participants.  Pursuant to the  Depository
         Agreement,  unless and until  Definitive  Class A-1  Notes,  Definitive
         Class A-2 Notes,  Definitive Class A-3 Notes, Definitive Class B Notes,
         Definitive  Class C Notes or Definitive  Class D Notes, as the case may
         be, are issued  pursuant to Section 3.10, the initial  Clearing  Agency
         will make book-entry  transfers among the Clearing Agency  Participants
         and receive and transmit distributions of principal and interest on the
         related  Class A-1  Notes,  Class A-2 Notes,  Class A-3 Notes,  Class B
         Notes,  Class C Notes  and  Class D Notes,  as the case may be, to such
         Clearing Agency Participants.

         For purposes of any provision of this Indenture requiring or permitting
actions with the consent of, or at the direction of, holders of Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class B Notes, Class C Notes or Class D Notes,
as the  case  may be,  evidencing  a  specified  percentage  of the  Outstanding
principal  amount of the Class A-1  Notes,  the Class A-2  Notes,  the Class A-3
Notes, the Class B Notes, the Class C Notes or the Class D Notes,  respectively,
such  direction  or consent  may be given by Note  Owners  (acting  through  the
Clearing  Agency and the Clearing Agency  Participants)  owning Class A-1 Notes,
Class A-2 Notes,  Class A-3 Notes,  Class B Notes,  Class C Notes or the Class D
Notes evidencing the requisite percentage of the Outstanding Principal Amount of
such Notes, respectively.

         Section  3.11  Notice  to  Clearing  Agency.  Whenever  notice or other
communication to the Class A Noteholders,  the Class B Noteholders,  the Class C
Noteholders or the Class D Noteholders is required under this Agreement,  unless
and until Definitive Class A-1 Notes, Definitive Class A-2 Notes, Definitive

                                       28

<PAGE>

Class  A-3  Notes,  Definitive  Class  A-3  Notes,  Definitive  Class  B  Notes,
Definitive  Class C Notes or Definitive  Class D Notes shall have been issued to
the related Note Owners  pursuant to Section  3.10,  the Trustee  shall give all
such notices and communications specified herein to be given to such Noteholders
to  the   applicable   Clearing   Agency  which  shall  give  such  notices  and
communications to the related Class A Note Owners,  Class B Note Owners, Class C
Note Owners and Class D Note Owners in  accordance  with its  applicable  rules,
regulations and procedures.

         Section 3.12 Definitive Notes. If (a)(i) the Issuer advises the Trustee
in writing  that the  Clearing  Agency is no longer  willing or able to properly
discharge its  responsibilities  under the Depository  Agreement with respect to
any or all  Classes  and (ii) the  Trustee  or the  Issuer is unable to locate a
qualified  successor,  (b) the  Issuer,  at its  option,  advises the Trustee in
writing that it elects to terminate the book-entry system with respect to any or
all Classes  through the Clearing Agency or (c) after the occurrence of an Event
of Default,  Class A Note Owners,  Class B Note Owners,  Class C Note Owners and
Class D Note Owners with  respect to the Class A Notes,  Class B Notes,  Class C
Notes and Class D Notes  evidencing  not less than 50% of the  aggregate  unpaid
Outstanding  principal amount of the Class A Notes, Class B Notes, Class C Notes
and Class D Notes,  respectively,  advise the  Trustee and the  Clearing  Agency
through the Clearing Agency  Participants in writing that the  continuation of a
book-entry  system  with  respect to the Class A Notes,  Class B Notes,  Class C
Notes or Class D Notes,  respectively,  through the Clearing Agency is no longer
in the best interests of the Class A Note Owners,  Class B Note Owners,  Class C
Note Owners or Class D Note Owners, as the case may be, the Trustee shall notify
all Class A Note Owners,  Class B Note  Owners,  Class C Note Owners and Class D
Note Owners with respect to the Class A Notes,  Class B Notes, Class C Notes and
Class  D  Notes  Owners,  respectively,  through  the  Clearing  Agency,  of the
occurrence  of any such  event and of the  availability  of  Definitive  Class A
Notes,  Definitive Class B Notes, Definitive Class C Notes or Definitive Class D
Notes,  to Class A Note  Owners,  Class B Note  Owners,  Class C Note Owners and
Class D Note Owners,  respectively,  requesting the same.  Upon surrender to the
Trustee of the Class A Notes,  the Class B Notes, the Class C Notes or the Class
D Notes, as the case may be, by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Issuer shall execute
and the Trustee shall  authenticate  and deliver the  Definitive  Class A Notes,
Definitive Class B Notes,  Definitive Class C Notes or Definitive Class D Notes,
as the case may be.  Neither the Issuer nor the Trustee  shall be liable for any
delay in delivery of such  instructions and may conclusively  rely on, and shall
be protected in relying on, such  instructions.  Upon the issuance of Definitive
Class A Notes,  Definitive Class B Notes, Definitive Class C Notes or Definitive
Class D Notes, as the case may be, all references herein to obligations  imposed
upon or to be  performed  by the  Clearing  Agency shall be deemed to be imposed
upon and performed by the Trustee, to the extent applicable with respect to such
Definitive Class A Notes, Definitive Class B Notes, Definitive Class C Notes and
Definitive  Class D Notes,  respectively,  and the Trustee  shall  recognize the
holders of the Definitive Class A Notes as Class A Noteholders and/or holders of
the  Definitive  Class B Notes  as Class B  Noteholders  and/or  holders  of the
Definitive Class C Notes as Class C Noteholders and/or holders of the Definitive
Class D Notes as Class D Noteholders hereunder.

                                       29

<PAGE>

                                  ARTICLE FOUR

             ORIGINAL ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL

         Section 4.01 Conditions to Original  Issuance of Notes. (a) The Trustee
shall,  upon  receipt  of an  Issuer  Order  and  upon the  satisfaction  of the
conditions  set forth below,  authenticate  and deliver the Notes on the Closing
Date.  The  Outstanding  Notes shall be equally and ratably  entitled,  with all
other Notes as  provided  herein,  to the  benefits  of this  Indenture  without
preference,  priority  or  distinction,  except  as  set  forth  herein,  all in
accordance with the terms and provisions of this Indenture.

         (b) The obligation of the Trustee to authenticate,  execute and deliver
the Notes is subject to the satisfaction of the following conditions:

                   (i)  the  Issuer   shall  have   executed  the  Notes  to  be
         authenticated  and  delivered  on  the  Closing  Date  and  shall  have
         delivered such Notes to the Trustee on or prior to the Closing Date;

                  (ii) the Issuer shall have delivered to the  Collateral  Agent
         on or prior to the Closing Date the original  executed  counterpart  of
         each Contract  (and the rest of the contents of the related  Collateral
         Agent File)  identified  in the Contract  Schedule on the Closing Date,
         and the Trustee shall have received a receipt from the Collateral Agent
         evidencing such delivery;

                 (iii) the Issuer and the Servicer  shall have  delivered to the
         Trustee on or prior to the Closing Date an Officer's  Certificate dated
         as of the Closing Date of each of the Issuer and the Servicer, stating,
         as  applicable,  that (A) such  Person  is not in  Default  under  this
         Indenture or the Servicing Agreement and that the issuance of the Notes
         will not  result  in any  breach  of any of the  terms,  conditions  or
         provisions of, or constitute a default under, such Person's certificate
         of  incorporation,   by-laws  or  other  organizational  documents,  as
         applicable, or any material indenture, mortgage, deed of trust or other
         agreement or  instrument to which such Person is a party or by which it
         is bound, or any order of any court or administrative agency entered in
         any  proceeding  to which such  Person is a party or by which it may be
         bound  or to  which it may be  subject;  and (B)  that  all  conditions
         precedent provided in this Indenture relating to the authentication and
         delivery of the Notes have been complied with;

                  (iv) each of the Issuer,  TFI, TRI I, TRI II, TW Holdings,  TW
         Holdings II, the Collateral Agent and the Servicer shall have delivered
         to the Trustee on or prior to the Closing  Date a Board  Resolution  of
         its board of directors authorizing, as applicable, the

                                       30
         <PAGE>

         execution,  delivery and  performance  of this  Indenture and the other
         Transaction  Documents  and the  transactions  contemplated  hereby and
         thereby, certified by an officer of such Person, as applicable;

                   (v) each of the Issuer,  TFI, TRI I, TRI II, TW Holdings,  TW
         Holdings II, the Collateral Agent and the Servicer shall have delivered
         to the Trustee on or prior to the Closing Date a copy of an  officially
         certified  document,  dated not more than 30 days prior to the  Closing
         Date, evidencing its due organization and good standing;

                  (vi) each of the Issuer,  TFI, TRI I, TRI II, TW Holdings,  TW
         Holdings II, the Collateral Agent and the Servicer shall have delivered
         to the  Trustee on or prior to the  Closing  Date copies of its charter
         and by-laws (or,  with respect to TRI I, its  Certificate  of Formation
         and its Limited Liability Company Agreement) certified by its Secretary
         or an Assistant Secretary;

                 (vii)  the  Issuer  shall  have  delivered,   or  cause  to  be
         delivered, to the Trustee, on or prior to the Closing Date, evidence of
         filing  (a) with the  Secretary  of State of the State of the  Issuer's
         chief  executive  office,  UCC-1 financing  statements  executed by the
         Issuer,  as  debtor,  and  naming the  Trustee  for the  benefit of the
         Noteholders as secured party,  and the Trust Estate as collateral;  and
         (b)  with the  Secretary  of State of the  States  in which  the  chief
         executive office of each of Trendwest,  TW Holdings,  TRI I, TRI II and
         TW Holdings II is located,  UCC-1 financing  statements executed by the
         applicable transferor as debtor and naming the applicable transferee as
         secured party and naming as collateral  the  collateral  transferred by
         each transferor;

                (viii) the  Servicer  shall have  delivered to the Trustee on or
         prior to the Closing Date a certificate  listing the Servicing Officers
         of the Servicer as of the Closing Date;

                  (ix) the Issuer  shall  have  delivered  to the  Trustee on or
         prior to the Closing Date an executed copy of the  Servicing  Agreement
         and  the  Receivables   Purchase   Agreement  and  all  amendments  and
         supplements thereto;

                   (x) Trendwest,  TW Holdings, TRI I, TRI II and TW Holdings II
         shall have  delivered to the Trustee on or prior to the Closing Date an
         executed copy of the Receivables  Purchase Agreement and all amendments
         and supplements thereto;

                  (xi) the Collateral  Agent shall have delivered to the Trustee
         on or prior to the Closing  Date an Officer's  Certificate  dated as of
         the  Closing  Date  stating  that  (A)  the  execution,   delivery  and
         performance  of the  Collateral  Agent  Agreement  will not result in a
         breach of any of the terms, conditions,  provisions of, or constitute a
         default under, the Collateral  Agent's  certificate of incorporation or
         by-laws or any  material  indenture,  mortgage,  deed of trust or other
         agreement or  instrument to which such Person is a party or by which it
         is bound,  or any order of any court or  administrative  agency entered
         into in
                                       31
         <PAGE>

         any proceeding to which the Collateral  Agent is a party or by which it
         may be bound or to which it may be subject; and

                 (xii) Each of the Rating Agencies shall have delivered a letter
         rating  the  Class A Notes,  the Class B Notes and the Class C Notes at
         least "AAA", "AA" and "A," respectively, and Fitch shall have delivered
         a letter rating the Class D Notes at least "BBB."

         (c)  The  obligation  of  the  Trustee  to  accept  the  pledge  of the
Subsequent  Contracts on any  Subsequent  Transfer  Date shall be subject to the
satisfaction of the following conditions:

                   (i) the Issuer shall have delivered to the  Collateral  Agent
         on or prior to the  applicable  Subsequent  Transfer  Date the original
         executed  counterpart of each applicable  Contract (and the rest of the
         contents  of the  related  Collateral  Agent  File)  identified  in the
         schedule  to  the  applicable   Subsequent  Asset  Assignment  on  such
         Subsequent Transfer Date, and the Trustee shall have received a receipt
         from the Collateral Agent evidencing such delivery;

                  (ii) the Issuer and the Servicer  shall have  delivered to the
         Trustee on or prior to the Closing Date an Officer's  Certificate dated
         as of such  Subsequent  Transfer  Date of  each of the  Issuer  and the
         Servicer,  stating,  as  applicable,  that  (A) such  Person  is not in
         Default under this  Indenture or the  Servicing  Agreement and (B) that
         all conditions  precedent  provided in this  Indenture  relating to the
         pledge and delivery of the  applicable  Subsequent  Contracts have been
         complied with; and

                 (iii)  none  of the  ratings  from  either  Duff or  Fitch,  as
         applicable shall have been reduced or withdrawn.

         Section  4.02  Security  for Notes.  (a) Filing.  The Issuer shall file
UCC-1  financing   statements   described  in  Section  4.01(b)(vii)  hereof  in
accordance with such Section 4.01(b)(vii). From time to time, the Servicer shall
take or cause  to be taken  such  actions  and  execute  such  documents  as are
necessary or deemed by the Trustee to be  appropriate  to perfect the  Trustee's
interests  in the  Contracts  and the  Receivables  and  protect  the  Trustee's
interest in the related Vacation  Credits against all other Persons,  including,
without limitation,  the filing of financing statements,  amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.

         (b) Name  Change or  Relocation.  If any change in the  Issuer's  name,
identity,  structure or the location of its principal place of business or chief
executive  office  occurs,  then the Issuer shall deliver 30 days' prior written
notice of such change or  relocation to the  Servicer,  the Trustee,  the Rating
Agencies and the Noteholders and no later than the effective date of such change
or relocation,  the Servicer shall file such  amendments or statements as may be
required to preserve and protect the Trustee's interests in the Trust Estate.


                                       32
<PAGE>

         (c) Chief  Executive  Office.  During the term of this  Indenture,  the
Issuer will maintain its chief executive  office and principal place of business
in one of the States of the United States.

         (d) Costs and Expense.  The Servicer agrees to pay all reasonable costs
and  disbursements  in connection  with the  perfection  and the  maintenance of
perfection,  as against all third  parties,  of the Trustee's  right,  title and
interest in and to the Trust Estate.

         Section  4.03   Substitution  and  Purchase  of  Receivables;   Upgrade
Contracts.  (a) If at any time  the  Issuer  or the  Trustee  obtains  knowledge
(within the meaning of 7.01(e) hereof), discovers or is notified by the Servicer
that any of the  representations  and warranties of Trendwest in the Receivables
Purchase  Agreement were incorrect at the time as of which such  representations
and warranties were made, then the Person discovering such defect,  omission, or
circumstance  shall  promptly  notify the other parties to this  Indenture,  the
Noteholders and Trendwest.

         (b) In the event any  representation  or warranty of  Trendwest  in the
Receivables Purchase Agreement is incorrect and materially and adversely affects
the value of a Contract, the related Receivable or the related Vacation Credits,
or the  interests of the Holders of the Notes,  or in the event of any breach of
any of the  representations  and  warranties  set forth in Sections  3.01(a)(v),
3.01(a)(vi),   3.01(a)(vii),    3.01(a)(xiii),    3.01(a)(xiv),    3.01(a)(xvi),
3.01(a)(xxii) or 3.01(a)(xxiii) of the Receivables Purchase Agreement,  then the
Issuer shall require Trendwest,  pursuant to the Receivables Purchase Agreement,
to eliminate or otherwise cure the  circumstance  or condition  which has caused
such  representation  or warranty to be incorrect within 30 days of discovery or
notice  thereof.  If Trendwest  fails or is unable to cure such  circumstance or
condition in accordance with the Receivables Purchase Agreement, then the Issuer
shall require  Trendwest to substitute or purchase  pursuant to the  Receivables
Purchase  Agreement,  any  Receivable  related to any  Contract as to which such
representation  or warranty is  incorrect  within the time  specified in Section
3.03 of the Receivables Purchase Agreement. The Servicer shall deposit, or shall
cause to be deposited,  into the Local Bank Account upon receipt of such amounts
by the Servicer pursuant to Section 3.03 of the Receivables Purchase Agreement.

         (c) If the  Issuer  fails  to  enforce  the  purchase  or  substitution
obligation of Trendwest under the Receivables Purchase Agreement, the Trustee is
hereby  appointed  attorney-in-fact  to act on  behalf of and in the name of the
Issuer to require such purchase or substitution.

         (d) With respect to any Defaulted Receivable or Delinquent  Receivable,
the Issuer shall be entitled to purchase the Contract  related to such  Contract
or to deliver a  Substitute  Contract  meeting  the same  requirements  as those
specified  in  Section  3.04  of  the   Receivables   Purchase   Agreement   for
substitutions  and purchases by Trendwest upon breaches of a  representation  or
warranty  by  Trendwest  thereunder;   provided,  however,  that  the  aggregate
Collateral Value of

                                       33
<PAGE>

Defaulted   Receivables   and  Substitute   Contracts  which  are  purchased  or
substituted by the Issuer  (measured as of the date of  substitution)  shall not
exceed the Purchase and Substitution Limit;

         (e) The Issuer shall  provide to the  Trustee,  or with respect to item
(ii) below the  Collateral  Agent,  on the date of  delivery  of any  Substitute
Contract the items listed in (i) and (ii) below.

                   (i)  a  supplement  to  the  Receivables  Purchase  Agreement
         substantially  in the  form  of  Annex  A to the  Receivables  Purchase
         Agreement and Exhibit B hereto,  subjecting such Substitute Contract to
         the  provisions  thereof and hereof and providing  with respect to such
         Substitute Contract the information set forth in the Contract Schedule;
         and

                  (ii) the original executed counterpart of the Contract and the
         Collateral Agent File relating to such Substitute Contract.

         (f) If a Contract becomes a Defaulted Contract, the Issuer may purchase
such  Contract  by paying to the  Trustee  out of the amount  paid to the Issuer
pursuant to clause (xxi) of Section 12.02(d) or clause (xvi) of Section 12.02(e)
the Purchase Price for such Defaulted Contract;  provided,  however,  the Issuer
cannot  purchase  a  Defaulted  Contract  if the  Collateral  Value  of all such
Defaulted  Contracts  so  purchased  would  exceed the amount paid to the Issuer
pursuant to such clauses;  further provided, that the purchases pursuant to this
Section  4.03(f)  shall be deemed to be  purchases  subject to the  Purchase and
Substitution Limit as if repurchased pursuant to Section 4.03(b).

         (g) If an Obligor  desires to enter  into an Upgrade  Contract  and the
Issuer  purchases  such  Contract  from  Trendwest  in exchange for the existing
Contract pursuant to Section 3.04(e) of the Receivables Purchase Agreement, then
the Servicer  shall cause  Trendwest  to deliver  such  Upgrade  Contract to the
Collateral  Agent  on  behalf  of  the  Issuer  immediately  upon  execution  by
Trendwest,  WorldMark and the Obligor,  and the Issuer shall pledge such Upgrade
Contract to the Trustee immediately upon such execution by delivering (i) to the
Trustee a supplemental grant in the form of Annex A to the Receivables  Purchase
Agreement  and  Exhibit  B  hereto,  subjecting  such  Upgrade  Contract  to the
provisions  thereof  and  hereof and  providing  with  respect  to such  Upgrade
Contract  the  information  set forth in the  Contract  Schedule and (ii) to the
Collateral Agent the original  executed  counterpart of the Upgrade Contract and
the rest of the contents of the related Collateral Agent File.

         Section  4.04  Releases.  (a) The Issuer  shall be entitled to obtain a
release from the lien of this Indenture for any Contract, the related Receivable
and the related Vacation Credits at any time (i) after a payment by Trendwest of
the  Purchase  Price of the  Receivable,  (ii) after a  Substitute  Contract  is
substituted  for such Contract in accordance  with the terms hereof,  (iii) upon
the purchase of a Contract in accordance  with Section  3.10(b) of the Servicing
Agreement, or (iv) if the related Receivable is a Releaseable Receivable, if the
Issuer  delivers to the Trustee an Officer's  Certificate  (A)  identifying  the
Receivable  and the  related  Contract  and the related  Vacation  Credits to be
released, (B)

                                       34
<PAGE>

requesting the release  thereof,  (C) setting forth the amount  deposited in the
Collection Account with respect thereto, in the event such Contract, the related
Receivable and the related  Vacation Credits are being released from the lien of
this Indenture  pursuant to (i) or (iii) above,  (D) certifying  that the amount
deposited  in the  Collection  Account  equals  (x) the  Purchase  Price  of the
Receivable  related  to such  Contract,  in the event a  Contract,  the  related
Receivable and the related  Vacation Credits are being released from the lien of
this  Indenture  pursuant  to (i) above or (y) the  entire  amount  set forth in
Section  3.10(b) of the Servicing  Agreement with respect to such Contract,  the
related  Receivable and related  Vacation Credits in the event of a release from
the lien of this  Indenture  pursuant  to  (iii)  above  and (E) if  Releaseable
Receivables are to be released, that the Notes of each Class are being paid down
to their  respective  Targeted Credit  Enhancement  Levels and the amount in the
Reserve  Account  is  greater  than or equal  to the  Reserve  Account  Required
Balance;  provided,  however,  that  upon the  termination  of a  Contract,  any
residual  proceeds  from the  related  Vacation  Credits  shall be placed in the
Collection  Account  prior to the  Trustee or the Issuer  releasing  the related
Vacation Credits from the security interest granted to the Trustee by the Issuer
pursuant  to this  Indenture  or to the  Issuer  by  Trendwest  pursuant  to the
Receivables Purchase Agreement.

         (b) Upon  satisfaction  of the  conditions  specified in subsection (a)
above or upon the  satisfaction  of the  conditions  in  Section  4.03(e) or the
remittance of the Purchase  Price by the Issuer  pursuant to Section  4.03(d) or
Section  4.03(f) hereof and Section 3.04 of the Receivables  Purchase  Agreement
with  respect to a Contract,  the Trustee  shall  release  from the lien of this
Indenture the Contract,  the related Receivable and the related Vacation Credits
described in the Issuer's request for release and shall deliver, or instruct the
Collateral  Agent to deliver,  to or upon the order of the Issuer such  Contract
and the related Collateral Agent File.

         Section 4.05 Trust Estate.  When required by the provisions of Articles
Four,  Six and Twelve hereof,  the Trustee shall execute  instruments to release
property from the lien of this  Indenture,  or convey the Trustee's  interest in
the same, in a manner and under  circumstances  which are not inconsistent  with
the provisions of this Indenture.  No party relying upon an instrument  executed
by the Trustee as provided in this Article Four shall be bound to ascertain  the
Trustee's  authority,  inquire into the satisfaction of any conditions precedent
or see to the application of any monies.

         Section  4.06  Notice of  Release.  The  Trustee  shall be  entitled to
receive at least 5 days'  notice of any action to be taken  pursuant  to Section
4.04(a) hereof, accompanied by copies of any instruments involved.

         Section 4.07 Opinions as to Trust Estate.  (a) On the Closing Date, the
Issuer shall furnish to the Trustee an Opinion of Counsel  either  stating that,
in the opinion of such  counsel,  such action has been taken with respect to the
recording and filing of this Indenture,  any indentures supplemental hereto, and
any other requisite  documents,  and with respect to the execution and filing of
any UCC financing  statements and continuation  statements,  as are necessary to
(x) perfect the  transfers  from and grants of security  interests by Trendwest,
TRI I, TRI II, TW Holdings and TW Holdings II to the

                                       35
<PAGE>

Issuer,  and (y) perfect and make effective the first priority lien and security
interest  in the Trust  Estate in favor of the  Trustee,  for the benefit of the
Noteholders,  created by this Indenture and reciting the details of such action,
or stating that, in the opinion of such counsel,  no such action is necessary to
make such lien and security interest effective.

         (b) On or before each anniversary of the Closing Date, the Issuer shall
furnish to the Trustee an Opinion of Counsel with  respect to each  jurisdiction
in which a UCC financing statement has been filed against each of Trendwest,  TW
Holdings,  TW Holdings II, TRI I TRI II, and the Issuer either  stating that, in
the  opinion of such  counsel,  such  action has been taken with  respect to the
recording,  filing,  re-recording and refiling of this Indenture, any indentures
supplemental  hereto and any other  requisite  documents and with respect to the
execution and filing of any UCC financing statements and continuation statements
as is  necessary  to maintain  the first  priority  lien and  security  interest
created by this Indenture, and the security interest, if applicable,  created by
the  Receivables  Purchase  Agreement and reciting the details of such action or
stating  that in the  opinion of such  counsel no such  action is  necessary  to
maintain  such lien and security  interest.  Such Opinion of Counsel  shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures  supplemental  hereto  and  any  other  requisite  documents  and the
execution and filing of any UCC financing statements and continuation statements
that will, in the opinion of such counsel,  be required to maintain the lien and
security  interest of this Indenture and the security  interest,  if applicable,
created by the Receivables Purchase Agreement until the next date a continuation
statement must be filed to maintain the Trustee's interest in the Collateral.


<PAGE>
                                  ARTICLE FIVE


                           SATISFACTION AND DISCHARGE

         Section 5.01  Satisfaction  and Discharge of  Indenture.  (a) Following
payment in full of (i) the Notes,  (ii) the fees and  charges of the Trustee and
(iii) all other obligations of the Issuer under this Indenture,  and the release
by the Trustee of the Trust Estate in accordance  with Section  5.01(b)  hereof,
this Indenture shall be discharged.

         (b) In connection  with the discharge of this Indenture and the release
of the Trust Estate,  the Trustee shall release from the lien of this  Indenture
and shall deliver,  or instruct the Collateral Agent to deliver,  to or upon the
order of the Issuer all property remaining in the Trust Estate and shall execute
and file, at the expense of the Issuer, UCC financing statements evidencing such
discharge and release.

                                       36

<PAGE>

                                   ARTICLE SIX


                              DEFAULTS AND REMEDIES

         Section 6.01 Events of Default. "Event of Default" wherever used herein
means any one of the following events:

                   (1) failure to make any payment of interest as required under
         this Indenture which failure remains uncured for one Business Day; or

                   (2)  failure to make any  payment of  principal  as  required
         under this Indenture which failure remains uncured for one Business Day
         after the same becomes due and payable; or

                   (3) default in the  observance or performance of any covenant
         or agreement of the Issuer made in this  Indenture,  the Note  Purchase
         Agreement,  the Receivables  Purchase  Agreement,  the Collateral Agent
         Agreement or the Servicing Agreement (other than a covenant or warranty
         default,  the  observance or  performance of which is elsewhere in this
         Section  6.01  specifically  dealt  with),  or  any  representation  or
         warranty  of the  Issuer  made in this  Indenture,  the  Note  Purchase
         Agreement,  the Receivables  Purchase  Agreement,  the Collateral Agent
         Agreement,  the  Servicing  Agreement  or in any  certificate  or other
         writing delivered pursuant hereto or thereto or in connection  herewith
         or therewith  proving to have been incorrect in any material respect as
         of the time when the same shall have been made and such  default  shall
         continue or not be cured,  or the  circumstance or condition in respect
         of which such  representation  or warranty was incorrect shall not have
         been eliminated or otherwise cured, for a period of 30 days (except for
         defaults  relating to Sections 4.03 and  11.02(a),  (b), (i), (j), (l),
         (q) and (s) hereof,  which shall have no grace period) from the earlier
         of the Issuer  obtaining  actual  knowledge  of, or receiving  from the
         Trustee  or  any  Holder   notice  of,   such   default  or   incorrect
         representation or warranty; or

                   (4)  the  Issuer  becomes   subject  to  registration  as  an
         "investment  company"  under the  Investment  Company  Act of 1940,  as
         amended; or

                   (5) the  filing  of a  petition  or the  entry of a decree or
         order for relief by a court  having  jurisdiction  in the  premises  in
         respect of the Issuer  under the Federal  Bankruptcy  Code or any other
         applicable  federal or State  bankruptcy,  insolvency,  reorganization,
         liquidation  or other  similar  law now or  hereafter  in effect or any
         arrangement  with  creditors  or  appointing  a  receiver,  liquidator,
         assignee,  trustee, or sequestrator (or other similar official) for the
         Issuer or for any  substantial  part of its property in an  involuntary
         case,  or  ordering  the  winding  up or  liquidation  of the  Issuer's
         affairs, and the continuance

                                       37
         <PAGE>

         of any  such  petition  undismissed  or of any  such  decree  or  order
         unstayed and in effect for a period of 60 consecutive days; or

                   (6)  the  institution  by the  Issuer  of  proceedings  to be
         adjudicated  a bankrupt or  insolvent,  or the consent by the Issuer to
         the  institution  of bankruptcy or insolvency  proceedings  against the
         Issuer,  or the filing by the Issuer of a petition or answer or consent
         seeking  reorganization or relief under the Federal  Bankruptcy Code or
         any  other  applicable   federal  or  State   bankruptcy,   insolvency,
         reorganization,  liquidation  or other  similar law now or hereafter in
         effect, or the consent by the Issuer to the filing of any such petition
         or to the  appointment  of or  possession  by a  receiver,  liquidator,
         assignee,   custodian,   trustee  or  sequestrator  (or  other  similar
         official)  of the  Issuer or of any  substantial  part of the  Issuer's
         property, or the making by the Issuer of any assignment for the benefit
         of creditors,  or the admission by either in writing of its  inability,
         or the failure by it generally, to pay its debts as they become due, or
         the taking of corporate action by the Issuer in furtherance of any such
         action;

                   (7)  (i)  the  impairment  of the  validity  of any  security
         interest  of the  Trustee  in the Trust  Estate,  except  as  expressly
         permitted,  or (ii) creation of any encumbrance not otherwise permitted
         which is not stayed or  released  within 10 days of the  Issuer  having
         knowledge of its creation; or

                   (8) a default in the  observance or  performance by Trendwest
         of its  repurchase  obligations  under Section 3.03 of the  Receivables
         Purchase Agreement.

         Section 6.02 Acceleration of Maturity;  Rescission and Annulment. If an
Event of Default with respect to the Note Outstanding  occurs and is continuing,
then  Holders of not less than  66-2/3 % in  aggregate  principal  amount of the
Outstanding Notes of the Controlling Class may declare,  by notice in writing to
the Trustee and the Issuer,  or may direct the Trustee to declare,  by notice in
writing to the Issuer,  the principal of all the Notes to be immediately due and
payable, and upon any such declaration,  such principal shall become immediately
due and payable without any presentment,  demand, protest or other notice of any
kind (except such notices as shall be expressly  required by the  provisions  of
this Indenture),  all of which are hereby expressly waived;  provided,  however,
that if an Event of Default  under  paragraph  (5) or (6) of Section 6.01 hereof
occurs with respect to the Issuer, the Notes shall automatically  become due and
payable without any declaration notice to the Issuer or the Trustee. The Trustee
shall send a copy of any such notice to the Rating Agencies.

         At any time after such a declaration of acceleration  has been made, or
after such acceleration has automatically become effective,  but before any Sale
of the Trust  Estate  has been made or a judgment  or decree for  payment of the
money due has been  obtained  by the  Trustee  as  hereinafter  in this  Article
provided,  the Holders of not less than 66-2/3% in aggregate principal amount of
the Outstanding Notes of the Controlling  Class, by written notice to the Issuer
and  the  Trustee,   may  rescind  and  annul  such   declaration  or  automatic
acceleration and its consequences

                                       38
         <PAGE>

         (except that in the case of a payment default on the Notes, the consent
of all the Noteholders  shall be required to rescind and annul such  declaration
or automatic acceleration and its consequences) if:

                   (1)     the Issuer has paid or deposited with the Trustee a
          sum sufficient to pay

                            (A) all overdue installments of interest on all
                  Notes,

                            (B) the  principal of any Notes which has become due
                  otherwise  than  by  such   declaration  of   acceleration  or
                  automatic  acceleration and interest thereon at the rate borne
                  by such Notes from the time such  principal  first  became due
                  until the date when paid, and

                            (C)  all  sums  paid  or  advanced,   together  with
                  interest thereon,  by the Trustee or any Noteholder  hereunder
                  and the reasonable compensation,  expenses,  disbursements and
                  advances of the Trustee and the Noteholders,  their agents and
                  counsel  incurred in connection  with the  enforcement of this
                  Indenture to the date of such payment or deposit; and

                   (2) all Events of Default,  other than the  nonpayment of the
         principal of the Notes which have become due solely by such declaration
         of acceleration or by automatic acceleration, have been cured or waived
         as provided in Section 6.15 hereof.

No such  rescission  shall  affect  any  subsequent  default or impair any right
consequent thereon.

         Section 6.03  Collection of  Indebtedness  and Suits for Enforcement by
Trustee.  The Issuer  covenants  that if an Event of Default  shall occur and be
continuing and the Notes have been declared,  or automatically  become,  due and
payable and such  declaration or automatic  acceleration  has not been rescinded
and annulled,  the Issuer will, upon demand of the Trustee,  pay to the Trustee,
for the  benefit  of the  Holders of the Notes,  the whole  amount  then due and
payable on the Notes for principal and interest,  with interest upon the overdue
principal  and  overdue  interest at the  applicable  Note Rate and, in addition
thereto,  such  further  amount  as shall be  sufficient  to cover the costs and
expenses  of  collection,  including  the  reasonable  compensation,   expenses,
disbursements and advances of the Trustee, its agents and counsel.

         If the Issuer fails to pay such amount forthwith upon such demand,  the
Trustee,  in its own name and as  trustee of an  express  trust  may,  institute
Proceedings for the collection of the sums so due and unpaid, and prosecute such
Proceeding to judgment or final decree,  and enforce the same against the Issuer
and collect the monies  adjudged or decreed to be payable in the manner provided
by law out of the property of the Issuer, wherever situated.

         If an Event of Default occurs and is continuing, the Trustee may in its
discretion  proceed  to  protect  and  enforce  its rights and the rights of the
Noteholders by such appropriate

                                       39
         <PAGE>

         Proceedings  as the Trustee  shall deem most  effectual  to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement  in this  Indenture  or in aid of the  exercise  of any power  granted
herein, or to enforce any other proper remedy.

         Section 6.04  Remedies.  If an Event of Default shall have occurred and
be continuing, the Trustee may do one or more of the following:

                   (a) institute  Proceedings  for the collection of all amounts
         then due and payable on the Notes or under this  Indenture,  whether by
         declaration,  automatic acceleration or otherwise, enforce any judgment
         obtained, and collect from the Issuer the monies adjudged due;

                   (b) take possession of and sell the Trust Estate securing the
         Notes or any portion thereof or rights or interest  therein,  at one or
         more Sales called and conducted in any manner permitted by law;

                   (c)  institute  any  Proceedings  from  time to time  for the
         complete or partial  foreclosure  of the lien created by this Indenture
         with respect to the Trust Estate securing the Notes;

                   (d) during the  continuance  of a default  under a  Contract,
         exercise any of the rights of the lender under such Contract; and

                   (e) exercise any remedies of a secured party under the UCC or
         any applicable law and take any other appropriate action to protect and
         enforce  the rights and  remedies  of the Trustee or the Holders of the
         Notes hereunder;

provided,  however, that without the consent of the Holders of not less than all
of the Outstanding  Notes,  the Trustee may not sell or otherwise  liquidate any
portion of the Trust  Estate  unless the  proceeds  of such Sale or  liquidation
distributable to the Noteholders are sufficient to discharge in full the amounts
then due and unpaid upon the Notes for principal and interest.

         Section 6.05 Optional  Preservation of Trust Estate. If (i) an Event of
Default shall have occurred and be continuing with respect to the Notes and (ii)
no Notes have been declared,  or have automatically  become, due and payable, or
such  declaration  or  automatic  acceleration  and its  consequences  have been
annulled and rescinded, the Trustee, upon request from the Holders of a majority
in principal  amount of the  Outstanding  Notes,  may elect,  by giving  written
notice of such  election to the  Issuer,  to take  possession  of and retain the
Trust Estate  securing the Notes intact,  collect or cause the collection of the
proceeds  thereof and make and apply all  payments and deposits and maintain all
accounts in respect of such Notes in accordance  with the  provisions of Article
Twelve of this  Indenture.  If the Trustee is unable to or is stayed from giving
such  notice to the Issuer for any reason  whatsoever,  such  election  shall be
effective as of the time of such  determination or request,  as the case may be,
notwithstanding any failure to give such notice, and

                                       40
<PAGE>

the Trustee shall give such notice upon the removal or cure of such inability or
stay (but shall have no  obligation  to effect such  removal or cure).  Any such
election  may be  rescinded  with  respect to any  portion  of the Trust  Estate
securing the Notes remaining at the time of such rescission by written notice to
the Trustee and the Issuer from the Holders of a majority in principal amount of
the Notes Outstanding of the Controlling Class.

         Section 6.06 Trustee May File Proofs of Claim.  In case of the pendency
of  any  receivership,   insolvency,  liquidation,  bankruptcy,  reorganization,
arrangement,  adjustment, composition or other Proceeding relating to the Issuer
or any other  obligor  upon any of the Notes or the property of the Issuer or of
such other obligor or their creditors,  the Trustee (irrespective of whether the
principal of the Notes shall then be due and payable as therein  expressed or by
declaration, automatic acceleration or otherwise and irrespective of whether the
Trustee  shall have made any  demand on the  Issuer  for the  payment of overdue
principal  or  interest)  shall be entitled  and  empowered to intervene in such
Proceeding or otherwise,

                   (i) to file  and  prove  a claim  for  the  whole  amount  of
         principal, premium, if any, and interest owing and unpaid in respect of
         the Notes issued  hereunder  and to file such other papers or documents
         as may be  necessary  or  advisable  in order to have the claims of the
         Trustee (including any claim for the reasonable compensation, expenses,
         disbursements  and advances of the Trustee,  its agents and counsel and
         any other amounts due the Trustee under Section 7.07 hereof) and of the
         Noteholders allowed in such Proceeding, and

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

and any receiver,  assignee,  trustee,  liquidator,  or  sequestrator  (or other
similar official) in any such Proceeding is hereby authorized by each Noteholder
to make such  payments to the Trustee,  and in the event that the Trustee  shall
consent to the making of such payments  directly to the  Noteholders,  to pay to
the  Trustee  any amount due to it for the  reasonable  compensation,  expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.

         Nothing  herein  contained  shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any  Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such Proceeding.

         Section 6.07 Trustee May Enforce  Claims  Without  Possession of Notes.
(a) In all  Proceedings  brought  by  the  Trustee  (and  also  any  Proceedings
involving the  interpretation  of any  provision of this  Indenture to which the
Trustee shall be a party), the Trustee shall be held to

                                       41
<PAGE>

represent  all of the  Noteholders,  and it shall not be  necessary  to make any
Noteholder a party to any such Proceedings.

         (b) All rights of actions and claims under this  Indenture or the Notes
may be prosecuted  and enforced by the Trustee  without the possession of any of
the Notes or the production thereof in any Proceeding relating thereto,  and any
such  Proceedings  instituted by the Trustee shall be brought in its own name as
Trustee of an express trust, and any recovery whether by judgment, settlement or
otherwise shall, after provision for the payment of the reasonable compensation,
expenses,  disbursements and advances of the Trustee, its agents and counsel, be
for the  benefit  of the  Holders of the Notes and shall be  distributed  as set
forth in Section 6.08 hereof.

         Section 6.08  Application  of Money  Collected.  If the Notes have been
declared,  have  automatically  become,  or  otherwise  become  due and  payable
following an Event of Default and such declaration or automatic acceleration has
not been rescinded or annulled,  any money collected by the Trustee with respect
to the Notes  pursuant to this Article Six or otherwise and any other money that
may be held  thereafter  by the  Trustee as  security  for the Notes,  including
without  limitation the amounts in the Reserve Account,  shall be applied in the
following  order,  at the date or dates fixed by the Trustee and, in case of the
distribution  of such  money  on  account  of  principal  or  interest,  without
presentation of any Notes:

         FIRST:  To the payment to the Trustee of the Trustee  Fee, its expenses
then due and any Unreimbursed Servicing Transfer Payments and to the Trustee its
costs incurred in connection  with  enforcing the remedies  provided for in this
Article Six;

         SECOND:  To the payment of the Collateral Agent Fee, if not paid by the
Servicer;

         THIRD:  To the  payment of all  amounts  due the  Servicer  pursuant to
Section 3.09 of the Servicing  Agreement  and, but for the  acceleration  of the
Notes, Section 12.02(d)(ii) hereof;

         FOURTH:  To the  payment of the  amounts  then due and unpaid  upon the
Class A Notes for interest,  with interest (to the extent such interest has been
collected by the Trustee or a sum sufficient  therefor has been so collected and
payment  thereof  is  legally  enforceable  at  the  respective  rate  or  rates
prescribed  therefor in the Class A Notes) on overdue interest to the Holders of
the  Class A  Notes,  ratably,  without  preference  or  priority  of any  kind,
according  to the  amounts  due and  payable on the Class A Notes for  interest,
treating the three Classes of Class A Notes as one Class; provided,  however, if
the amount  available is  insufficient  to pay in full the interest  owed on the
Class A Notes,  the  Holders of such Class of Class A Notes  shall  receive  the
Interest  Shortfall  Payment  for such  Class,  on a pro rata basis  within such
Class;

         FIFTH: To the payment of the amounts then due and unpaid upon the Class
B Notes for  interest,  with  interest  (to the extent  such  interest  has been
collected by the

                                       42
<PAGE>

Trustee or a sum sufficient  therefor has been so collected and payment  thereof
is legally  enforceable at the respective rate or rates  prescribed  therefor in
the Class B Notes) on  overdue  interest  to the  Holders  of the Class B Notes,
ratably,  without  preference or priority of any kind,  according to the amounts
due and payable on the Class B Notes for interest;

         SIXTH: To the payment of the amounts then due and unpaid upon the Class
C Notes for  interest,  with  interest  (to the extent  such  interest  has been
collected by the Trustee or a sum sufficient  therefor has been so collected and
payment  thereof  is  legally  enforceable  at  the  respective  rate  or  rates
prescribed  therefor in the Class C Notes) on overdue interest to the Holders of
the  Class C  Notes,  ratably,  without  preference  or  priority  of any  kind,
according to the amounts due and payable on the Class C Notes for interest;

         SEVENTH:  To the  payment of the  amounts  then due and unpaid upon the
Class D Notes for interest,  with interest (to the extent such interest has been
collected by the Trustee or a sum sufficient  therefor has been so collected and
payment  thereof  is  legally  enforceable  at  the  respective  rate  or  rates
prescribed  therefor in the Class D Notes) on overdue interest to the Holders of
the  Class D  Notes,  ratably,  without  preference  or  priority  of any  kind,
according to the amounts due and payable on the Class D Notes for interest;

         EIGHTH: To the payment of the remaining  outstanding  principal balance
of the  Class A Notes  ratably  without  preference  or  priority  of any  kind,
treating the three Classes of Class A Notes as one Class;

         NINTH: To the payment of the remaining outstanding principal balance of
the Class B Notes ratably without preference or priority of any kind;

         TENTH: To the payment of the remaining outstanding principal balance of
the Class C Notes ratably without preference or priority of any kind;

         ELEVENTH: To the payment of the remaining outstanding principal balance
of the Class D Notes ratably without preference or priority of any kind;

         TWELFTH:  To the payment of any surplus to or at the written  direction
of the Issuer or any other person legally entitled thereto.

         Section 6.09  Limitation on Suits. No Holder of any Note shall have any
right to institute any Proceeding,  judicial or otherwise,  with respect to this
Indenture  or for the  appointment  of a receiver or  trustee,  or for any other
remedy hereunder, unless


                                       43
         <PAGE>

                  (1) such Holder has previously given written notice to the
         Trustee of a continuing Event of Default;

                   (2) the Holders of not less than 66-2/3% in principal  amount
         of the  Outstanding  Notes of the  Controlling  Class  shall  have made
         written  request to the Trustee to institute  Proceedings in respect of
         such Event of Default in its own name as Trustee hereunder;

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

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

                   (5) no direction  inconsistent  with such written request has
         been given to the Trustee  during such 30-day  period by the Holders of
         not less than  66-2/3% or more in principal  amount of the  Outstanding
         Notes of the Controlling  Class; it being  understood and intended that
         no one or more  Holders  of Notes  shall  have any right in any  manner
         whatever  by virtue  of,  or by  availing  of,  any  provision  of this
         Indenture  to  affect,  disturb  or  prejudice  the rights of any other
         Holders  of  Notes,  or to  obtain  or to seek to  obtain  priority  or
         preference  over any other  Holders  of Notes or to  enforce  any right
         under this Indenture,  except in the manner herein provided and for the
         equal and ratable benefit of all the Holders of Notes.

         Section 6.10  Unconditional  Right of Noteholders to Receive  Principal
and  Interest.  Notwithstanding  any  other  provision  in this  Indenture,  the
Noteholders  shall have the  right,  which is  absolute  and  unconditional,  to
receive payment of the principal, interest, and premium, if any, on such Note as
such principal,  interest,  and premium,  if any, becomes due and payable and to
institute any Proceeding for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Noteholder.

         Section 6.11 Restoration of Rights and Remedies.  If the Trustee or any
Noteholder  has  instituted  any Proceeding to enforce any right or remedy under
this Indenture and such  Proceeding has been  discontinued  or abandoned for any
reason,  or has been determined  adversely to the Trustee or to such Noteholder,
then,  and in every case,  the Issuer,  the Trustee and the  Noteholders  shall,
subject to any  determination  in such  Proceeding,  be restored  severally  and
respectively to their former positions hereunder,  and thereafter all rights and
remedies  of the Trustee and the  Noteholders  shall  continue as though no such
Proceeding had been instituted.

         Section  6.12  Rights  and  Remedies  Cumulative.  Except as  otherwise
provided with respect to the  replacement  or payment of  mutilated,  destroyed,
lost or stolen Notes in the last paragraph of Section 3.06 hereof,

                                       44

<PAGE>

no right or remedy  herein  conferred  upon or reserved to the Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy,  and every
right and remedy shall,  to the extent  permitted by law, be  cumulative  and in
addition to every other right and remedy  given  hereunder  or now or  hereafter
existing at law or in equity or  otherwise.  The  assertion or employment of any
right or remedy  hereunder,  or  otherwise,  shall not  prevent  the  concurrent
assertion or employment of any other appropriate right or remedy.

         Section 6.13 Delay or Omission; Not Waiver. No delay or omission of the
Trustee or of any Holder of any Note to  exercise  any right or remedy  accruing
upon any Event of Default  shall impair any such right or remedy or constitute a
waiver of any such Event of Default or any acquiescence therein. Every right and
remedy given by this Article Six or by law to the Trustee or to the  Noteholders
may be exercised from time to time, and as often as may be deemed expedient,  by
the Trustee or by the Noteholders, as the case may be.

         Section  6.14  Control  by  Noteholders.  The  Holders of not less than
66-2/3% in principal amount of the Outstanding  Notes of the Controlling  Class,
shall have the right to direct  the time,  method  and place of  conducting  any
Proceeding  for any remedy  available to the Trustee or exercising  any trust or
power conferred on the Trustee; provided that:

                   (1) such direction  shall not be in conflict with any rule of
         law or with this Indenture including, without limitation, any provision
         hereof which expressly  provides for greater percentage of principal of
         Outstanding Notes;

                   (2)  any  direction  to the  Trustee  by the  Noteholders  to
         undertake a private Sale of the Trust Estate shall be by the Holders of
         not less than 66-2/3% in principal  amount of Outstanding  Notes of the
         Controlling   Class,   unless  the   condition  set  forth  in  Section
         6.18(b)(ii) hereof is met;

                   (3) the Trustee may take any other  action  deemed  proper by
         the Trustee which is not  inconsistent  with such direction;  provided,
         however,  that,  subject to Section 7.01  hereof,  the Trustee need not
         take any action which a Responsible  Officer or Officers of the Trustee
         in good faith determines  might involve it in personal  liability or be
         unjustly prejudicial to the Noteholders not consenting; and

                   (4) the  Trustee  has  been  furnished  reasonable  indemnity
         against  costs,  expenses  and  liabilities  which  it  might  incur in
         connection therewith as provided in Section 7.01(f) hereof.

         Section  6.15  Waiver of Past  Defaults.  The  Holders of not less than
66-2/3% in principal  amount of the Outstanding  Notes of the Controlling  Class
may on behalf of the Holders of all the Notes waive any past  Default  hereunder
and its consequences, except a Default:

                                       45

         <PAGE>

                   (1) in the payment of the principal  of, or premium,  if any,
         or interest on any Note, or a Default described in Sections 6.01(5) and
         (6) hereof, or

                   (2) in respect of a covenant or provision  hereof which under
         Article Nine hereof  cannot be modified or amended  without the consent
         of the Holder of each Outstanding Note affected.

         Upon any such waiver,  such Default shall cease to exist, and any Event
of  Default  arising  therefrom  shall be deemed  to have  been  cured for every
purpose of this Indenture;  but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

         Section  6.16  Undertaking  for Costs.  All  parties to this  Indenture
agree, and each Holder of any Note by his acceptance  thereof shall be deemed to
have agreed,  that any court may in its discretion  require, in any suit for the
enforcement of any right or remedy under this Indenture,  or in any suit against
the Trustee  for any action  taken,  suffered  or omitted by it as Trustee,  the
filing by any party  litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion  assess  reasonable  costs,
including  reasonable  attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but notwithstanding such assessment, the provisions of this
Section 6.16 shall not apply to any suit  instituted  by the Trustee,  or to any
suit  instituted  by any  Noteholder  or group of  Noteholders,  holding  in the
aggregate  more than 50% in  principal  amount of the  Outstanding  Notes of the
Controlling  Class,  or to  any  suit  instituted  by  any  Noteholder  for  the
enforcement  of the  payment of the  principal  of or interest on any Note on or
after the Stated Maturity  provided that such suit is not deemed to be frivolous
under the applicable rules of civil procedure by such court.

         Section 6.17 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may  lawfully  do so) that it will not,  at any time,  insist
upon,  or  plead,  or in any  manner  whatsoever  claim or take the  benefit  or
advantage  of, any stay or extension  law wherever  enacted,  now or at any time
hereafter in force,  which may affect the covenants or the  performance  of this
Indenture;  and the  Issuer (to the extent  that it may  lawfully  do so) hereby
expressly  waives all benefit or advantage of any such law and covenants that it
will not hinder,  delay or impede the  execution of any power herein  granted to
the  Trustee,  but will suffer and permit the  execution  of every such power as
though no such law had been enacted.

         Section 6.18 Sale of Trust Estate.  (a) The power to effect any sale (a
"Sale") of any portion of the Trust Estate pursuant to Section 6.04 hereof shall
not be  exhausted by any one or more Sales as to any portion of the Trust Estate
remaining  unsold,  but shall continue  unimpaired until the entire Trust Estate
securing the Notes shall have been sold or all amounts  payable on the Notes and
under this

                                       46

<PAGE>

Indenture  with respect  thereto shall have been paid. The Trustee may from time
to time postpone any Sale by public  announcement  made at the time and place of
such Sale.

         (b) To the extent  permitted by applicable  law, the Trustee shall not,
in any  private  Sale,  sell to a third party the Trust  Estate,  or any portion
thereof unless:

                   (i)  the  Holders  of not less than all of the  Outstanding
         Notes,  consent to or direct the Trustee to make such Sale; or

                  (ii) the  proceeds of such Sale would not be less than the sum
         of all  amounts  due to the  Trustee  hereunder  and the entire  unpaid
         principal amount of the Notes and interest due or to become due thereon
         on the Payment Date next succeeding such Sale.

         (c) The Trustee or the  Noteholders may bid for and acquire any portion
of the Trust Estate in  connection  with a public Sale  thereof,  and in lieu of
paying cash therefor,  any Noteholder may make settlement for the purchase price
by crediting  against amounts owing on the Notes of such Holder or other amounts
owing to such Holder secured by this Indenture, that portion of the net proceeds
of such  Sale to which  such  Holder  would be  entitled,  after  deducting  the
reasonable  costs,   charges  and  expenses  incurred  by  the  Trustee  or  the
Noteholders  in  connection  with such Sale.  The Notes need not be  produced in
order to complete  any such Sale,  or in order for the net proceeds of such Sale
to be credited  against  the Notes.  The  Trustee or the  Noteholders  may hold,
lease,  operate,  manage or otherwise  deal with any property so acquired in any
manner permitted by law.

         (d) The Trustee shall execute and deliver an appropriate  instrument of
conveyance  transferring  its  interest  in any  portion of the Trust  Estate in
connection with a Sale thereof.  In addition,  the Trustee is hereby irrevocably
appointed  the agent and  attorney-in-fact  of the Issuer to transfer and convey
its  interest  in any  portion  of the Trust  Estate in  connection  with a Sale
thereof,  and to take all action  necessary to effect such Sale. No purchaser or
transferee at such a sale shall be bound to ascertain  the Trustee's  authority,
inquire  into  the  satisfaction  of  any  conditions  precedent  or  see to the
application of any monies.

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

         Section 6.19 Action on Notes.  The Trustee's  right to seek and recover
judgment  on the Notes or under  this  Indenture  shall not be  affected  by the
seeking,  obtaining or  application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the  Trustee  against the Issuer or by the levy of any  execution  under such
judgment  upon any portion of the Trust  Estate or upon any of the assets of the
Issuer.

                                       47

<PAGE>
                                  ARTICLE SEVEN


                                   THE TRUSTEE

         Section 7.01 Certain Duties and Responsibilities. (a) Except during the
continuance  of an  Event  of  Default  known  to the  Trustee  as  provided  in
subsection (e) below:

                   (i) the Trustee  undertakes  to perform  such duties and only
         such duties as are  specifically  set forth in this  Indenture,  and no
         implied  covenants  or  obligations  shall be read into this  Indenture
         against the Trustee; and

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

         (b) In case an Event of Default  known to the  Trustee as  provided  in
subsection (e) below has occurred and is continuing,  the Trustee shall exercise
such of the rights and powers vested in it by this Indenture,  and shall use the
same degree of care and skill in its  exercise,  as a  reasonable  person  would
exercise  or use  under  the  circumstances  in the  conduct  of his or her  own
affairs.

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

                   (i) this  subsection  (c) shall not be  construed to limit
         the effect of  subsection  (a) of this Section 7.01;

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

                 (iii)  the  Trustee  shall not be liable  with  respect  to any
         action  taken or omitted to be taken by it in good faith in  accordance
         with the direction the Holders of a majority (or other such  percentage
         as may be  required  by the terms  hereof) in  principal  amount of the
         Outstanding  Notes in accordance  with Section 6.14 hereof  relating to
         the time,

                                       48
         <PAGE>

         method and place of conducting any Proceeding for any remedy  available
         to the Trustee,  or exercising  any trust or power  conferred  upon the
         Trustee,  under this Indenture,  the Receivables  Purchase Agreement or
         the Servicing Agreement; and

                  (iv) no provision of this Indenture  shall require the Trustee
         to  expend  or risk its own  funds or  otherwise  incur  any  financial
         liability in the performance of any of its duties hereunder,  or in the
         exercise  of any of its rights or powers,  if it shall have  reasonable
         grounds  for  believing  that  repayment  of  such  funds  or  adequate
         indemnity  against such risk or liability is not reasonably  assured to
         it.

         (d) Whether or not therein  expressly so provided,  every  provision of
this  Indenture  relating  to the  conduct  or  affecting  the  liability  of or
affording  protection to the Trustee shall be subject to the  provisions of this
Section 7.01.

         (e) For all purposes  under this  Indenture,  the Trustee  shall not be
deemed to have notice or knowledge of any Event of Default  described in Section
6.01(4),  6.01(5) or 6.01(6)  hereof,  any Default  described in Section 6.01(3)
hereof or  Section  4.03(a)  hereof  unless a  Responsible  Officer  has  actual
knowledge thereof or unless written notice of any event which is in fact such an
Event of Default or Default is received by the  Trustee at the  Corporate  Trust
Office,  and such notice references the Notes generally,  the Issuer,  the Trust
Estate or this Indenture.

         (f) The Trustee  shall be under no obligation to institute any suit, or
to take any remedial action under this Indenture,  or to enter any appearance or
in any way defend in any suit in which it may be made defendant,  or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers  hereunder  until it shall be  indemnified  to its  reasonable
satisfaction  against any and all costs and  expenses,  outlays and counsel fees
and other reasonable  disbursements and against all liability,  except liability
resulting from the Trustee's negligence or willful misconduct as adjudicated, in
connection with any action so taken.

         (g) Notwithstanding any extinguishment of all right, title and interest
of the Issuer in and to the Trust  Estate  following  an Event of Default  and a
consequent declaration of acceleration or automatic acceleration of the maturity
of the Notes,  whether such  extinguishment  occurs  through a Sale of the Trust
Estate to another  person,  the  acquisition  of the Trust Estate by the Trustee
with respect to the Trust Estate (or the proceeds  thereof) and the  Noteholders
and the rights of the Noteholders  shall continue to be governed by the terms of
this Indenture.

         (h)  Notwithstanding  anything to the contrary  contained  herein,  the
provisions of subsections (e) through (g), inclusive, of this Section 7.01 shall
be subject to the provisions of subsections (a) through (c), inclusive,  of this
Section 7.01.

         (i) The Trustee shall provide the reports and  accountings  as required
pursuant to Section 12.04 hereof.


                                       49
         <PAGE>

         (j) The duties  and  obligations  of the  Trustee  shall be  determined
solely by the express  provisions  of this  Indenture.  The Trustee shall not be
liable  except  for  the  performance  of such  duties  and  obligations  as are
specifically set forth in this Indenture, no implied covenant shall be read into
this Indenture and, in the absence of bad faith on the part of the Trustee,  the
Trustee may conclusively  rely on the truth of the statements and corrections of
the opinions furnished to the Trustee.

         Section 7.02 Notice of Default.  Promptly  after the  occurrence of any
Default  known to the Trustee  (within the  meaning of Section  7.01(e)  hereof)
which is continuing, the Trustee shall transmit by mail to all Holders of Notes,
as their names and addresses appear on the Note Register, notice of such Default
hereunder known to the Trustee.

         Section 7.03 Certain Rights of Trustee. Except as otherwise provided in
Section 7.01,

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

                   (b) any request or direction of the Issuer  mentioned  herein
         shall be  sufficiently  evidenced by an Issuer  Request or Issuer Order
         and any  resolution  of the  Board  of  Directors  may be  sufficiently
         evidenced by a Board Resolution;

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

                   (d) the  Trustee  may  consult  with  counsel and the written
         advice of such  counsel  selected by the  Trustee  with due care or any
         Opinion  of  Counsel  shall  be full  and  complete  authorization  and
         protection  in respect of any action  taken,  suffered or omitted by it
         hereunder in good faith and in reliance thereon;

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

                   (f) the Trustee shall not be bound to make any  investigation
         into the  facts  or  matters  stated  in any  resolution,  certificate,
         statement, instrument, opinion, report, notice,

                                       50
         <PAGE>

         request,  direction,  consent,  order,  bond,  note or  other  paper or
         document,  but the Trustee,  in its  discretion,  may make such further
         inquiry or investigation  into such facts or matters as it may see fit,
         and, if the Trustee  shall  determine to make such  further  inquiry or
         investigation,  it shall be entitled to examine the books,  records and
         premises of the Issuer,  upon reasonable notice and at reasonable times
         personally or by agent or attorney; and

                   (g) the  Trustee  may  execute  any of the  trusts  or powers
         hereunder  or perform  any duties  hereunder  either  directly or by or
         through  agents or attorneys and the Trustee  shall not be  responsible
         for any  misconduct or negligence on the part of any agent or attorney,
         appointed with due care by it hereunder.

         Section 7.04 Not Responsible for Recitals or Issuance of Notes. (a) The
recitals  contained  herein  and  in  the  Notes,  except  the  certificates  of
authentication on the Notes, shall be taken as the statements of the Issuer, and
the Trustee assumes no responsibility for their  correctness.  The Trustee makes
no  representations  as to the  validity or condition of the Trust Estate or any
part  thereof,  or as to the title of the Issuer  thereto or as to the  security
afforded  thereby  or  hereby,  or as to  the  validity  or  genuineness  of any
securities at any time pledged and deposited with the Trustee hereunder or as to
the validity or sufficiency of this Indenture or of the Notes. The Trustee shall
not be  accountable  for the use or  application  by the  Issuer of Notes or the
proceeds  thereof or of any money paid to the Issuer or upon Issuer  Order under
any provisions hereof.

         (b) Except as otherwise  expressly provided herein and without limiting
the generality of the  foregoing,  the Trustee shall have no  responsibility  or
liability  for or  with  respect  to the  existence  or  validity  of any of the
Vacation Credits or Contracts,  the perfection of any security interest (whether
as of the date hereof or at any future time),  the  maintenance of or the taking
of any action to maintain such perfection, the validity of the assignment of any
portion of the Trust Estate to the Trustee or of any intervening assignment, the
review of any  Contract (it being  understood  that the Trustee has not reviewed
and does not intend to review the substance or form of any such  Contract),  the
performance  or  enforcement  of any  Contract,  the  compliance  by the Issuer,
Trendwest,  TRI I, TRI II, TW Holdings,  TW Holdings II or the Servicer with any
covenant or the breach by the Issuer,  Trendwest, TRI I, TRI II, TW Holdings, TW
Holdings II or the Servicer of any warranty or representation  made hereunder or
in any related document or the accuracy of any such warranty or  representation,
any investment of monies in the Collection Account,  the Prefunding Account, the
Upgrade Purchase Account or the Reserve Account or any loss resulting therefrom,
the acts or omissions of the Issuer,  Trendwest,  TRI I, TRI II, TW Holdings, TW
Holdings II, the Servicer or any  Obligor,  any action of the Servicer  taken in
the name of the  Trustee,  or the  validity of the  Servicing  Agreement  or the
Receivables Purchase Agreement.

         (c) The Trustee shall not have any  obligation  or liability  under any
Contract  by reason of or arising  out of this  Indenture  or the  granting of a
security  interest in such  Contract  hereunder or the receipt by the Trustee of
any payment relating to any Contract  pursuant hereto,  nor shall the Trustee be
required or obligated in any manner to perform or fulfill any of the obligations
of

                                       51

<PAGE>

the Seller under or pursuant to any Contract, or to make any payment, or to make
any inquiry as to the nature or the  sufficiency of any payment  received by it,
or the sufficiency of any performance by any party, under any Contract.

         Section 7.05 May Hold Notes.  The  Trustee,  the  Servicer,  any Paying
Agent, the Note Registrar,  any  Authenticating  Agent or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or pledgee
of Notes,  and if operative,  may  otherwise  deal with the Issuer with the same
rights  it would  have if it were not  Trustee,  Servicer,  Paying  Agent,  Note
Registrar, Authenticating Agent or such other agent.

         Section 7.06 Money Held in Trust.  Money and investments  held in trust
by the Trustee or any Paying Agent  hereunder shall be held in one or more trust
accounts  hereunder  but need not be  segregated  from other funds except to the
extent required herein or required by law. The Trustee or any Paying Agent shall
be under no liability for interest on any money received by it hereunder  except
as otherwise agreed with the Issuer or otherwise specifically provided herein.

         Section 7.07    Compensation and Reimbursement.  The Issuer agrees:

                   (i) to pay the  Trustee  monthly  its  fee  for all  services
         rendered by it hereunder  as Trustee,  in the amount of the Trustee Fee
         and any  investment  income  earned by the Trustee  pursuant to Section
         12.02  (net of losses  for  which the  Trustee  is liable  pursuant  to
         Section 12.02)(which compensation shall not otherwise be limited by any
         provision  of law in regard  to the  compensation  of a  trustee  of an
         express trust);

                  (ii)  except  as  otherwise   expressly  provided  herein,  to
         reimburse the Trustee upon its request for all  Unreimbursed  Servicing
         Transfer Expenses, reasonable out-of-pocket expenses, disbursements and
         advances  incurred  or made  by the  Trustee  in  accordance  with  any
         provision of this Indenture or the Servicing  Agreement  (including the
         reasonable  compensation  and the  expenses  and  disbursements  of the
         Trustee's agents and counsel), except any such expense, disbursement or
         advance as may be attributable to its negligence,  bad faith or willful
         misconduct; and

                 (iii) to indemnify  and hold  harmless the Trust Estate and the
         Trustee from and against any loss, liability, expense, damage or injury
         sustained or suffered pursuant to this Indenture by reason of any acts,
         omissions or alleged acts or omissions arising out of activities of the
         Trust Estate or the Trustee (including without limitation any violation
         of any  applicable  laws by the Issuer as a result of the  transactions
         contemplated  by this  Indenture),  including,  but not limited to, any
         judgment,  award,  settlement,  reasonable  attorneys'  fees and  other
         expenses  incurred  in  connection  with the  defense  of any actual or
         threatened action,  proceeding or claim; provided that the Issuer shall
         not indemnify the Trustee if such loss, liability,  expense,  damage or
         injury is due to the Trustee's

                                       52
         <PAGE>

         negligence or willful  misconduct,  willful misfeasance or bad faith in
         the performance of duties. The  indemnification of the Trustee provided
         by this  Section  7.07 shall be payable to the  Trustee out of funds on
         deposit in the Collection  Account pursuant to subsection  12.02(d)(xx)
         or 12.02(e)(xiv),  as applicable;  the Trustee shall have no ability to
         sell or otherwise liquidate the Contracts in the Trust Estate solely in
         order to obtain funds to finance this indemnification  obligation.  The
         provisions of this  indemnity  shall run directly to and be enforceable
         by an  injured  person  subject  to the  limitations  hereof  and  this
         indemnification   agreement  shall  survive  the  termination  of  this
         Indenture.

         Upon the occurrence of an Event of Default resulting in an acceleration
of maturity of the Notes that has not been  rescinded and annulled,  the Trustee
shall have,  as security  for the  performance  of the Issuer under this Section
7.07, a lien  ranking  senior to the lien of the Notes with respect to which any
claim of the Trustee  under this  Section 7.07 arose upon all property and funds
held or  collected as part of the Trust Estate by the Trustee in its capacity as
such. The Trustee shall not institute any Proceeding  seeking the enforcement of
such lien against any Trust Estate  unless (i) such  Proceeding is in connection
with a proceeding in accordance  with Article Six hereof for  enforcement of the
lien of this  Indenture  for the benefit of the Holders of the Notes  secured by
such Trust Estate  after the  occurrence  of an Event of Default  (other than an
Event of Default  due solely to a breach of this  Section  7.07) and a resulting
declaration of acceleration or automatic  acceleration of maturity of such Notes
that has not been  rescinded  and  annulled,  or (ii) such  Proceeding  does not
result in or cause a Sale or other disposition of such Trust Estate.  All monies
so collected  by the Trustee  shall be applied in  accordance  with Section 6.08
hereof,  and the Trustee shall receive  amounts  pursuant to Section 6.08 hereof
only to the extent that payment thereof will not result in a subsequent Event of
Default caused by such payments to the Trustee.

         Section 7.08 Corporate  Trustee Required;  Eligibility.  There shall at
all times be a trustee  hereunder  which shall be a corporation  or  association
organized and doing  business  under the laws of the United States of America or
of any State,  authorized  under such laws to exercise  corporate  trust powers,
having a combined capital and surplus of at least  $100,000,000,  or be a member
of a consolidated bank holding company with a combined capital and surplus of at
least  $100,000,000,  subject to  supervision or examination by Federal or state
authority and having an office within the United States of America,  and, except
with  respect to the initial  Trustee  hereunder,  which shall have a commercial
paper or other short-term  rating of the highest short term rating categories by
Fitch  and DCR (or,  if not  rated  by Fitch  and  DCR,  by S&P or  Moody's)  or
otherwise acceptable to the Holders of not less than 66-2/3% in principal amount
of the  Outstanding  Notes of the Controlling  Class.  If such Person  publishes
reports of condition at least annually,  pursuant to law or to the  requirements
of the aforesaid  supervising or examining  authority,  then for the purposes of
this Section 7.08, the combined capital and surplus of such corporation shall be
deemed to be its  combined  capital  and surplus as set forth in its most recent
report of condition so  published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.08, it shall resign
immediately  in the  manner and with the effect  hereinafter  specified  in this
Article Seven.

                                       53

<PAGE>

         Section 7.09 Resignation and Removal;  Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor  Trustee
pursuant to this Article Seven shall become  effective  until the  acceptance of
appointment by the successor Trustee under Section 7.10 hereof.

         (b) The  Trustee  may  resign at any time by  giving  60 days'  written
notice  thereof  to the  Issuer  and to each  Noteholder.  If an  instrument  of
acceptance by a successor  Trustee shall not have been  delivered to the Trustee
within 60 days after the giving of such  notice of  resignation,  the  resigning
Trustee may petition any court of competent  jurisdiction for the appointment of
a successor Trustee. Such court may thereupon,  after such notice, if any, as it
may deem proper and prescribe, appoint a successor Trustee.

         (c) The Trustee may be removed with or without  cause by the Act of the
Holders of not less than 66-2/3% in principal amount of the Outstanding Notes of
the Controlling Class by notice to the Trustee at any time.

         (d) If the Trustee  shall  resign,  be removed or become  incapable  of
acting,  or if a vacancy  shall occur in the office of the Trustee for any cause
with  respect to the Notes,  the Holders of not less than  66-2/3% in  principal
amount of the Outstanding Notes of the Controlling Class or the Issuer, with the
written  consent  of Holders of not less than  66-2/3%  in  principal  amount of
Outstanding Notes of the Controlling Class, may appoint a successor Trustee.

         (e) The Issuer shall give notice to the Servicer,  the Collateral Agent
and the  Noteholders  in the manner  provided  in Section  13.03  hereof of each
resignation and each removal of the Trustee and each  appointment of a successor
Trustee  with respect to the Notes.  Each notice  shall  include the name of the
successor Trustee and the address of its Corporate Trust Office.

         Section 7.10  Acceptance of Appointment by Successor.  Every  successor
Trustee  appointed  hereunder  shall  execute,  acknowledge  and  deliver to the
Issuer,  each Noteholder and the retiring  Trustee an instrument  accepting such
appointment,  and thereupon the  resignation or removal of the retiring  Trustee
shall become effective and such successor Trustee, without any further act, deed
or  conveyance,  shall  become  vested with all the rights,  powers,  trusts and
duties of the retiring  Trustee  but, on request of the Issuer or the  successor
Trustee,   such  retiring   Trustee  shall,   upon  payment  of  its  reasonable
out-of-pocket costs and expenses, execute and deliver an instrument transferring
to such  successor  Trustee  all the rights,  powers and trusts of the  retiring
Trustee,  and shall duly assign,  transfer and deliver to such successor Trustee
all  property  and  money  held  by such  retiring  Trustee  hereunder,  subject
nevertheless  to its lien,  if any,  provided for in Section  7.07 hereof.  Upon
request of any such successor Trustee, the Issuer shall execute any and all

                                       54
<PAGE>

instruments  for more  fully and  certainly  vesting in and  confirming  to such
successor Trustee all such rights, powers and trusts.

         No successor Trustee shall accept its appointment unless at the time of
such  acceptance  such  successor  Trustee shall be eligible  under this Article
Seven.

         Section  7.11  Merger,  Conversion,   Consolidation  or  Succession  to
Business  of  Trustee.  Any  Person  into  which  the  Trustee  may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger,  conversion or  consolidation  to which the Trustee shall be a party, or
any corporation  succeeding to all or  substantially  all of the corporate trust
business  of the  Trustee,  shall be the  successor  of the  Trustee  hereunder,
provided  such Person  shall be  otherwise  qualified  and  eligible  under this
Article  Seven,  without the execution or filing of any paper or any further act
on  the  part  of any of the  parties  hereto.  In  case  any  Notes  have  been
authenticated,  but not delivered,  by the Trustee then in office, any successor
by merger,  conversion or consolidation to such authenticating Trustee may adopt
such  authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.

         Section 7.12 Co-Trustees and Separate  Trustees.  At any time or times,
for the purpose of meeting the legal  requirements of any  jurisdiction in which
any of the Trust Estate may at the time be located,  the Issuer, and the Trustee
shall have power to appoint, and, upon the written request of the Trustee, or of
the Holders of Notes representing at least 25% of the aggregate principal amount
of the  Outstanding  Notes,  the  Issuer  shall for such  purpose  join with the
Trustee in the  execution,  delivery  and  performance  of all  instruments  and
agreements  necessary or proper to appoint,  one or more Persons approved by the
Trustee,  either to act as  co-Trustee,  jointly  with the Trustee of all or any
part of such Trust Estate,  or to act as separate  Trustee of any such property,
in  either  case  with  such  powers as may be  provided  in the  instrument  of
appointment,  and to vest in such Person or persons in the  capacity  aforesaid,
any property,  title,  right or power deemed necessary or desirable,  subject to
the other  provisions  of this Section 7.12. If the Issuer does not join in such
appointment  within 15 days after the receipt by it of a request so to do, or in
case an Event of Default has occurred and is continuing, the Trustee alone shall
have power to make such appointment.

         Should any written instrument from the Issuer be reasonably required by
any  co-Trustee or separate  Trustee so appointed  for more fully  confirming to
such co-Trustee or separate  Trustee such property,  title,  right or power, any
and all such  instruments  shall,  on request,  be  executed,  acknowledged  and
delivered by the Issuer.

         Every  co-Trustee or separate Trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:


                                       55
         <PAGE>

                   (i) the Notes shall be  authenticated  and  delivered by, and
         all rights,  powers, duties and obligations hereunder in respect of the
         custody of  securities,  cash and other  personal  property held by, or
         required to be deposited or pledged with, the Trustee hereunder,  shall
         be exercised solely by the Trustee;

                  (ii)  the  rights,   powers,  duties  and  obligations  hereby
         conferred  or imposed  upon the  Trustee  in  respect  of any  property
         covered by such  appointment  shall be  conferred  or imposed  upon and
         exercised  or  performed  by the  Trustee  or by the  Trustee  and such
         co-Trustee  or separate  Trustee  jointly,  as shall be provided in the
         instrument  appointing such co-Trustee or separate  Trustee,  except to
         the  extent  that  under  any  law of any  jurisdiction  in  which  any
         particular act is to be performed,  the Trustee shall be incompetent or
         unqualified  to perform such act, in which event such  rights,  powers,
         duties  and  obligations  shall  be  exercised  and  performed  by such
         co-Trustee or separate Trustee;

                 (iii) the  Trustee  at any time,  by an  instrument  in writing
         executed by it, with the concurrence of the Issuer evidenced by a Board
         Resolution,  may accept the  resignation of or remove any co-Trustee or
         separate  Trustee,  appointed  under this Section 7.12, and, in case an
         Event of Default has occurred and is continuing, the Trustee shall have
         power to accept the resignation  of, or remove,  any such co-Trustee or
         separate  Trustee  without  the  concurrence  of the  Issuer.  Upon the
         written request of the Trustee,  the Issuer shall join with the Trustee
         in the  execution,  delivery and  performance  of all  instruments  and
         agreements  necessary  or  proper to  effectuate  such  resignation  or
         removal.  A successor to any co-Trustee or separate Trustee that has so
         resigned or been  removed may be  appointed  in the manner  provided in
         this Section 7.12;

                  (iv) no  co-Trustee  or separate  Trustee  hereunder  shall be
         personally  liable by reason of any act or  omission  of the Trustee or
         any other such  Trustee  hereunder  nor shall the  Trustee be liable by
         reason of any act or omission  of any  co-Trustee  or separate  Trustee
         selected by the Trustee with due care or appointed in  accordance  with
         directions to the Trustee pursuant to Section 6.14 hereof; and

                   (v) any Act of Noteholders  delivered to the Trustee shall be
         deemed to have been  delivered  to each such  co-Trustee  and  separate
         Trustee.

         Section 7.13 Rights with Respect to the Servicer.  The Trustee's rights
and obligations  with respect to the Servicer shall be governed by the Servicing
Agreement.

         Section  7.14  Appointment  of  Authenticating  Agent.  The Trustee may
appoint an Authenticating  Agent or Agents with respect to the Notes which shall
be authorized to act on behalf of the Trustee to authenticate  Notes issued upon
original issue or upon exchange, registration of transfer or pursuant to Section
3.06  hereof,  and Notes so  authenticated  shall be entitled to the benefits of
this Indenture

                                       56
<PAGE>

and shall be valid and  obligatory for all purposes as if  authenticated  by the
Trustee  hereunder.  Wherever  reference  is  made  in  this  Indenture  to  the
authentication and delivery of Notes by the Trustee or the Trustee's certificate
of  authentication  or the delivery of Notes to the Trustee for  authentication,
such reference shall be deemed to include  authentication and delivery on behalf
of the Trustee by an  Authenticating  Agent and a certificate of  authentication
executed on behalf of the Trustee by an Authenticating Agent and delivery of the
Notes to the Authenticating Agent on behalf of the Trustee.  Each Authenticating
Agent  shall be  acceptable  to the Issuer and a majority  in  principal  amount
Outstanding of the Noteholders and shall at all times be a corporation  having a
combined  capital and surplus of not less than the equivalent of $50,000,000 and
subject to  supervision  or  examination  by Federal or state  authority  or the
equivalent foreign authority,  in the case of an Authenticating Agent who is not
organized and doing business under the laws of the United States of America, any
state  thereof  or the  District  of  Columbia.  If  such  Authenticating  Agent
publishes  reports of  condition  at least  annually,  pursuant to law or to the
requirements of said supervising or examining  authority,  then for the purposes
of this Section 7.14,  the combined  capital and surplus of such  Authenticating
Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.  If at any time an  Authenticating
Agent  shall  cease to be eligible in  accordance  with the  provisions  of this
Section 7.14, such  Authenticating  Agent shall resign immediately in the manner
and with the effect specified in this Section 7.14.

         Any  corporation  into which an  Authenticating  Agent may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or consolidation to which such Authenticating Agent
shall be a party,  or any  corporation  succeeding  to the  corporate  agency or
corporate trust business of such  Authenticating  Agent, shall continue to be an
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the  Trustee or such  Authenticating  Agent;  provided,  such
corporation shall be otherwise eligible under this Section 7.14.

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Issuer.  The Trustee may at any time terminate
the agency of an  Authenticating  Agent by giving written notice thereof to such
Authenticating  Agent  and to the  Issuer.  Upon  receiving  such  a  notice  of
resignation  or  upon  such  a  termination,   or  in  case  at  any  time  such
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions  of  this  Section   7.14,   the  Trustee  may  appoint  a  successor
Authenticating  Agent  which  shall be  acceptable  to the Issuer and shall mail
written notice of such appointment by first-class mail, postage prepaid,  to all
Holders of Notes, if any, with respect to which such  Authenticating  Agent will
serve, as their names and addresses  appear in the Note Register.  Any successor
Authenticating  Agent upon acceptance of its appointment  hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if  originally  named as an  Authenticating  Agent.  No successor
Authenticating  Agent shall be appointed unless eligible under the provisions of
this Section 7.14.

                                       57

         <PAGE>

         The  Trustee  agrees to pay to each  Authenticating  Agent from time to
time reasonable  compensation  for its services under this Section 7.14, but the
Trustee shall not be entitled to be reimbursed for such payments.

         If an  appointment is made pursuant to this Section 7.14, the Notes may
have   endorsed   thereon,   in  addition  to  the  Trustee's   certificate   of
authentication,  an alternate  certificate  of  authentication  in the following
form:

         This is one of the Notes described in the within-mentioned Indenture.

                                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION



                                       By
                                              As Authenticating Agent



                                       By
                                             Authorized Signatory

         Section 7.15 Collateral Agent to Hold Contracts.  The Collateral Agent,
as agent  (solely for the purpose of  perfecting  the  security  interest of the
Trustee in the Contracts and the related  Collateral  Agent Files) and bailee of
the Trustee,  shall hold each  Contract,  together with any  documents  relating
thereto that may from time to time be delivered to the Collateral  Agent,  until
such time as such Contract is released from the lien of this Indenture  pursuant
to the terms hereof.  Within 10 days of the Closing Date, the  Collateral  Agent
will review each Collateral Agent File to determine  whether or not such file is
complete, and it shall file an exception report with the Issuer, the Trustee and
the  Servicer  within such time  period.  If an exception is not cured within 40
days of the Closing Date, the related  Contract must be repurchased by Trendwest
within 30 days of the end of such  40-day  period.  The  Trustee  shall  have no
responsibility or liability for the actions or inactions of the Collateral Agent
with respect to such review.

         The Trustee shall be under no duty or obligation to inspect,  review or
examine the  Contracts  or the related  Collateral  Agent Files for any purpose,
including,   without  limitation,  to  determine  that  the  same  are  genuine,
enforceable  or  appropriate  for the  represented  purpose  or that  they  have
actually  been  recorded or that they are other than what they  purport to be on
their face.


                                       58
<PAGE>

                                  ARTICLE EIGHT

                                    RESERVED


                                  ARTICLE NINE


                             SUPPLEMENTAL INDENTURES

         Section 9.01  Supplemental  Indentures  Without Consent of Noteholders.
The Issuer, the Servicer and the Trustee,  without the consent of the Holders of
any  Notes,  at any time  and from  time to  time,  may  enter  into one or more
indentures  supplemental hereto, in form satisfactory to the Trustee, for any of
the following  purposes,  provided that any such  amendment,  as evidenced by an
Opinion of Counsel, will not have a material adverse effect on Noteholders:

                   (1) to correct or amplify the  description of any property at
         any time  subject to the lien of this  Indenture,  or better to assure,
         convey and confirm unto the Trustee any property subject or required to
         be subjected to the lien of this  Indenture,  or to subject to the lien
         of this Indenture additional property; or

                   (2) to  evidence  the  succession  of  another  Person to the
         Issuer,  and the  assumption by such  successor of the covenants of the
         Issuer herein and in the Notes  contained,  in accordance  with Section
         11.02(q) hereof; or

                   (3) to add to the covenants of the Issuer, for the benefit of
         the Holders of all Notes,  or to  surrender  any right or power  herein
         conferred upon the Issuer; or

                   (4) to  convey,  transfer,  assign,  mortgage  or pledge  any
         property to or with the Trustee for the benefit of the Noteholders; or

                   (5) to evidence  the  succession  of the Trustee  pursuant to
Article Seven hereof.

         No  supplemental  indenture  that  permits the issuance of the Notes in
coupon  form will be of any force and effect  unless the  Trustee and the Issuer
shall have received an Opinion of Counsel to the effect that such amendment will
not  adversely  affect the Issuer's  ability to deduct the interest  paid on the
Notes.  The Trustee is hereby  authorized  to join in the  execution of any such
supplemental  indenture  and to make  any  further  appropriate  agreements  and
stipulations  that  may be  therein  contained,  but the  Trustee  shall  not be
obligated  to enter  into any  such  supplemental  indenture  that  affects  the
Trustee's own rights, duties,  liabilities or immunities under this Indenture or
otherwise.

                                       59

         <PAGE>

         Promptly  after the  execution  by the  Issuer,  the  Servicer  and the
Trustee of any supplemental  indenture pursuant to this Section 9.01, the Issuer
shall  mail  to  each  Noteholder  and to the  Rating  Agencies  a copy  of such
supplemental indenture.

         Section 9.02 Supplemental Indentures with Consent of Noteholders.  With
the  consent of the  Holders of not less than  66-2/3%  in  aggregate  principal
amount of the Outstanding Notes of the Controlling Class, by Act of said Holders
delivered  to the Issuer and the  Trustee,  the  Issuer,  the  Servicer  and the
Trustee may enter into an indenture or  indentures  supplemental  hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the  provisions of this Indenture or of modifying in any manner the rights of
the Holders of the Notes under this Indenture;  provided,  however, that no such
supplemental  indenture  shall,  without  the  consent  of the  Holders  of each
Outstanding Note affected thereby:

                   (1) change the Stated Maturity of any Note or the due date of
         any installment of principal of, or any installment of interest on, any
         Note, or reduce the principal amount thereof or the Note Rate or change
         any place of payment where, or the coin or currency in which,  any Note
         or the  interest  thereon is payable,  or impair the right to institute
         suit for the enforcement of any such payment; or

                   (2)  reduce  the  percentage  in  principal   amount  of  the
         Outstanding  Notes, the consent of the Holders of which is required for
         any such supplemental indenture, or the consent of the Holders of which
         is required for any waiver of  compliance  with certain  provisions  of
         this Indenture or Events of Default or their consequences; or

                   (3) impair or  adversely  affect the Trust  Estate  except as
         otherwise permitted herein; or

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

                   (5) modify any of the provisions of this Section 9.02, except
         to increase the percentage of Holders of the Outstanding Notes required
         for any  modification  or  waiver  or to  provide  that  certain  other
         provisions of this  Indenture  cannot be modified or waived without the
         consent of the Holder of each Outstanding Note affected thereby; or

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

                                       60

         <PAGE>

                   (7)     modify any of  Sections 6.01(l)  or (2), 6.02, 6.03,
         6.08, 6.18,  12.02(d),  12.02(e) or 12.02(f) hereof.

         It shall be  necessary  for any Act of  Noteholders  under this Section
9.02 to approve the particular form of any proposed supplemental indenture.

         Promptly  after the  execution  by the  Issuer,  the  Servicer  and the
Trustee of any supplemental  indenture pursuant to this Section 9.02, the Issuer
shall mail to the Holders of the Notes and the  Placement  Agents a copy of such
supplemental indenture.

         Notwithstanding  anything  to  the  contrary  herein,  no  supplemental
Indenture  relating  to  changing  the Notes into notes in bearer  form shall be
effective until an Opinion of Counsel from a nationally  recognized law firm has
been  delivered  to the Trustee to the effect that such  supplemental  Indenture
will not subject the Issuer or the Holders of the Notes to any additional  taxes
under U.S. federal law.

         Section 9.03  Execution of  Supplemental  Indentures.  In executing any
supplemental  indenture  permitted  by this  Article  Nine or the  modifications
thereby of the trusts created by this  Indenture,  the Trustee shall be entitled
to receive upon  request,  and  (subject to Section 7.01 hereof)  shall be fully
protected  in  relying  in good faith  upon,  an  Opinion of Counsel  reasonably
acceptable  to the  Trustee  stating  that the  execution  of such  supplemental
indenture is  authorized  or permitted by this  Indenture.  The Trustee may, but
shall not be obligated  to,  enter into any such  supplemental  indenture  which
affects  the  Trustee's  own  duties  or  immunities  under  this  Indenture  or
otherwise.

         Section 9.04 Effect of Supplemental  Indentures.  Upon the execution of
any  supplemental  indenture  under this Article Nine,  this Indenture  shall be
modified in accordance therewith,  and such supplemental  indenture shall form a
part of this Indenture for all purposes;  and every Holder of Notes  theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.

         Section  9.05  Reference  in Notes to  Supplemental  Indentures.  Notes
authenticated  and delivered after the execution of any  supplemental  indenture
pursuant to this Article Nine may, and if required by the Trustee shall,  bear a
notation in form  approved by the Trustee as to any matter  provided for in such
supplemental indenture. If the Issuer shall so determine,  new Notes so modified
as to  conform,  in the  opinion  of the  Trustee  and the  Issuer,  to any such
supplemental   indenture  may  be  prepared  and  executed  by  the  Issuer  and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.

                                       61

<PAGE>

                                   ARTICLE TEN


                               REDEMPTION OF NOTES

        Section  10.01  Redemption  at the  Option of the  Issuer;  Election  to
Redeem.  The Issuer shall have the option to redeem the Notes,  in whole but not
in part, as to the then Outstanding  Notes, on any Payment Date (the "Redemption
Date") after the aggregate  principal  amount of the then  Outstanding  Notes is
less than 10% of the original  aggregate  principal  amount of the Notes, at the
applicable Redemption Price plus any fees due hereunder.

         The Issuer shall set the Redemption Date and the Redemption Record Date
and give notice thereof to the Trustee pursuant to Section 10.02 hereof.

         Installments  of interest and principal due on or prior to a Redemption
Date shall  continue to be payable to the Holders of Notes called for redemption
as of the relevant  Record Dates  according to their terms and the provisions of
Section 3.07 hereof.  The election of the Issuer to redeem any Notes pursuant to
this  Section  10.01 shall be  evidenced  by a Board  Resolution  directing  the
Trustee to make the  payment of the  applicable  Redemption  Price on all of the
Notes to be redeemed from monies  deposited with the Trustee pursuant to Section
10.04 hereof.

        Section 10.02 Notice to Trustee.  In the case of any redemption pursuant
to  Section  10.01  hereof,  the  Issuer  shall,  at least 15 days  prior to the
Redemption Date, notify the Trustee of such Redemption Date.

        Section 10.03 Notice of  Redemption by the Issuer.  Upon receipt of such
notice set forth in Section 10.02 above,  the Trustee  shall  provide  notice of
redemption  pursuant  to  Section  10.01  hereof by  first-class  mail,  postage
prepaid,  mailed no later than five  Business  Days  following the date on which
such  notice  was  received,  to each  Holder  of Notes  whose  Notes  are to be
redeemed, at his address in the Note Register.

         All notices of redemption shall state:

                   (1)     the Redemption Date;

                   (2)     the Redemption Price; and

                   (3) that on the Redemption  Date,  the Redemption  Price will
         become due and payable upon each such Note,  and that interest  thereon
         shall cease to accrue on the Redemption Date if the Redemption Price is
         paid on such date.

                                       62

         <PAGE>

         Notice of redemption of Notes shall be given by the Trustee in the name
and at the expense of the Issuer.  Failure to give notice of redemption,  or any
defect  therein,  to any Holder of any Note  selected for  redemption  shall not
impair or affect the validity of the redemption of any other Note.

        Section 10.04 Deposit of the Redemption Price. On or before the Business
Day next  preceding  any  Redemption  Date,  the Issuer  shall  deposit with the
Trustee  or,  if there is a Paying  Agent,  with the  Paying  Agent an amount of
monies  sufficient  to pay the  Redemption  Price of all  Notes  which are to be
redeemed on such Redemption Date plus any fees due hereunder.

        Section  10.05 Notes Payable on  Redemption  Date.  Notice of redemption
having been given as provided in Section 10.03 hereof,  the Notes shall,  on the
Redemption  Date,  become due and  payable at the  Redemption  Price and on such
Redemption  Date  (unless  the  Issuer  shall  default  in  the  payment  of the
Redemption  Price) such Notes shall cease to bear interest.  The Holders of such
Notes shall be paid the  Redemption  Price by the Paying  Agent on behalf of the
Issuer; provided, however, that installments of principal and interest which are
due on or prior to the  Redemption  Date shall be payable to the Holders of such
Notes  registered as such on the relevant  Record Dates according to their terms
and the provisions of Section 3.07 hereof.

         If the Holders of any Note called for redemption  shall not be so paid,
the principal and premium,  if any,  shall,  until paid,  bear interest from the
Redemption Date at the Note Rate.


                                 ARTICLE ELEVEN


                    REPRESENTATIONS, WARRANTIES AND COVENANTS

        Section 11.01  Representations  and Warranties.  The Issuer hereby makes
the following  representations and warranties for the benefit of the Trustee and
the  Noteholders  on which the Trustee  relies in accepting  the Trust Estate in
trust and in authenticating the Notes. Such  representations  and warranties are
made  as of the  Closing  Date,  but  shall  survive  the  transfer,  grant  and
assignment of the Trust Estate to the Trustee.

         (a)  Organization  and Good Standing.  The Issuer is a corporation duly
organized,  validly  existing and in good standing under the law of the State of
Delaware  and each other State where the nature of its  business  requires it to
qualify,  except to the extent that the  failure to so qualify  would not in the
aggregate materially adversely affect the ability of the Issuer to perform

                                       63

<PAGE>

its obligations under this Indenture,  the Notes, the Servicing  Agreement,  the
Note Purchase  Agreement,  the  Collateral  Agent  Agreement or the  Receivables
Purchase Agreement.

         (b) Authorization.  The Issuer has the power, authority and legal right
to execute,  deliver and perform  this  Indenture,  the Notes,  the  Receivables
Purchase Agreement, the Servicing Agreement, the Note Purchase Agreement and the
Collateral  Agent Agreement and the execution,  delivery and performance of this
Indenture,  the Notes, the Servicing Agreement, the Note Purchase Agreement, the
Collateral Agent Agreement and the Receivables Purchase Agreement have been duly
authorized by the Issuer by all necessary action.

         (c)  Binding  Obligation.  This  Indenture,  the Notes,  the  Servicing
Agreement,  the Note Purchase Agreement,  the Collateral Agent Agreement and the
Receivables  Purchase  Agreement  have been duly  executed and  delivered by the
Issuer, and this Indenture,  assuming due authorization,  execution and delivery
by the Trustee and the Servicer,  the Receivables  Purchase Agreement,  assuming
due  authorization,  execution  and delivery by TRI I, TRI II, TW  Holdings,  TW
Holdings II and Trendwest, the Servicing Agreement,  assuming due authorization,
execution  and  delivery by the  Servicer  and the  Trustee,  the Note  Purchase
Agreement,  assuming due  authorization,  execution  and delivery by the Initial
Purchaser,  and the  Collateral  Agent  Agreement,  assuming due  authorization,
execution and delivery by the Trustee,  the  Collateral  Agent and the Servicer,
each  constitutes  a  legal,   valid  and  binding  obligation  of  the  Issuer,
enforceable against the Issuer in accordance with its terms except that (A) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other  similar laws (whether  statutory,  regulatory  or  decisional)  now or
hereafter in effect relating to creditors'  rights  generally and (B) the remedy
of specific  performance and injunctive and other forms of equitable  relief may
be subject to certain  equitable  defenses  and to the  discretion  of the court
before which any proceeding therefor may be brought, whether a proceeding at law
or in equity.

         (d) No Violation. The consummation of the transactions  contemplated by
the  fulfillment  of the  terms of this  Indenture,  the  Notes,  the  Servicing
Agreement,  the Note Purchase Agreement,  the Collateral Agent Agreement and the
Receivables  Purchase  Agreement will not conflict with, result in any breach of
any of the terms and provisions of or constitute (with or without notice,  lapse
of time or both) a default under the  organizational  documents or bylaws of the
Issuer, or any material indenture,  agreement,  mortgage, deed of trust or other
instrument  to which the  Issuer  is a party or by which it is bound,  or in the
creation or  imposition of any Lien upon any of its  properties  pursuant to the
terms of such  indenture,  agreement,  mortgage,  deed of  trust  or other  such
instrument, other than any Lien created or imposed pursuant to the terms of this
Indenture or the Receivables  Purchase Agreement,  or violate any law or, to the
best of the Issuer's knowledge,  after due inquiry,  any material order, rule or
regulation  applicable  to the  Issuer of any court or of any  federal  or state
regulatory body,  administrative  agency or other  governmental  instrumentality
having jurisdiction over the Issuer or any of its properties.

         (e) No Proceedings. There are no Proceedings or investigations to which
the Issuer, or any of the Issuer's  Affiliates,  is a party pending,  or, to the
knowledge   of  Issuer,   threatened,   before  any  court,   regulatory   body,
administrative agency or other tribunal or governmental

                                       64
<PAGE>

instrumentality  (A) asserting the invalidity of this  Indenture,  the Servicing
Agreement,  the Receivables Purchase Agreement, the Note Purchase Agreement, the
Collateral  Agent Agreement or the Notes, (B) seeking to prevent the issuance of
the Notes or the  consummation  of any of the  transactions  contemplated by the
Receivables Purchase Agreement,  this Indenture,  the Servicing  Agreement,  the
Note Purchase  Agreement,  the  Collateral  Agent  Agreement or the Notes or (C)
seeking any  determination  or ruling that would materially and adversely affect
the  performance  by the Issuer of its  obligations  under,  or the  validity or
enforceability  of, this  Indenture,  the Servicing  Agreement,  the Receivables
Purchase Agreement,  the Note Purchase Agreement, the Collateral Agent Agreement
or the Notes.

         (f) Approvals. All approvals, authorizations, consents, orders or other
actions of any Person, or of any court, governmental agency or body or official,
required in connection  with the execution and delivery of this  Indenture,  the
Servicing Agreement, the Note Purchase Agreement, the Collateral Agent Agreement
or  the   Receivables   Purchase   Agreement  and  with  the  valid  and  proper
authorization, issuance and sale of the Notes pursuant to this Indenture and the
Note Purchase  Agreement (except  approvals of State securities  officials under
the Blue Sky laws),  have been or will be taken or  obtained  on or prior to the
Closing Date.

         (g) Name and Place of Business. The Issuer's legal name is as set forth
in this Indenture. The Issuer has not used or done business under any other name
in the previous  five-year period.  The Issuer's principal place of business and
chief  executive  office is located at 9805 Willows  Road,  Redmond,  Washington
98052 or at such other  location where all action  required by Section  11.02(f)
hereof shall have been taken place with respect to the Trust Estate.  The Issuer
has not used any other address in the previous five-year period.

         (h) Transfer and Asset Assignment.  Upon the delivery to the Collateral
Agent of the Contracts and the filing of the UCC financing  statements described
in  Sections  (vii) and  4.02(a)  hereof,  the  Trustee  for the  benefit of the
Noteholders  shall have a first  priority  perfected  security  interest  in the
Receivables,  the  Contracts  and in the  proceeds  thereof,  except  for  Liens
permitted under Section  11.02(a) and limited to the extent set forth in Section
9-306  of the UCC as in  effect  in the  applicable  jurisdiction.  All  filings
(including,   without   limitation,   UCC  filings)  as  are  necessary  in  any
jurisdiction  to perfect the interest of the Trustee in the Trust Estate  (other
than the Vacation  Credits),  including  the transfer of the  Contracts  and the
payments to become due thereunder, have been made.

         (i)  Stockholders of the Issuer.  Trendwest is the sole  stockholder of
the  Issuer;  all of the stock of the Issuer has been fully paid and is owned of
record,  free  and  clear  of  all  mortgages,  assignments,  pledges,  security
interests,  warrants, options and rights to purchase. The Issuer will not permit
any stockholder to transfer its stock,  other than for estate planning purposes,
without  the  consent  of the  Holders  of a  majority  in  principal  amount of
Outstanding Notes of the Controlling  Class. The Issuer shall ensure that at all
times at least one of its directors is an independent director.

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<PAGE>

         (j) Receivables Purchase Agreement.  As of the Closing Date, the Issuer
has entered into the  Receivables  Purchase  Agreement and the Asset  Assignment
with TRI I, TRI II, TW Holdings,  TW Holdings II and  Trendwest  relating to its
acquisition of the Receivables related to the Contracts identified therein and a
security  interest in related  Vacation  Credits,  and the  representations  and
warranties  made by TRI I, TRI II, TW  Holdings,  TW Holdings  II and  Trendwest
relating to such Contracts,  such  Receivables and such interests in the related
Vacation  Credits have been  validly  assigned to and are for the benefit of the
Issuer, the Trustee and the Noteholders and such  representations and warranties
are true and correct in all material respects.

         (k) Bulk Transfer Laws. The transfer,  assignment and conveyance of the
Contracts and the related  Receivables  and the grant of a security  interest in
the related Vacation  Credits by TRI I, TRI II, TW Holdings,  TW Holdings II and
Trendwest  to the Issuer to the  Trustee  pursuant to the  Receivables  Purchase
Agreement or by the Issuer pursuant to this Indenture is not subject to the bulk
transfer  or any  similar  statutory  provisions  in  effect  in any  applicable
jurisdiction.

         (l) Solvency.  Neither on the date of the transactions  contemplated by
the Transaction Documents or immediately before or after such transactions,  nor
as a result of the transactions, will the Issuer:

                   (A) be  insolvent  such that the sum of its debts is  greater
         than all of its respective property, at a fair valuation;

                   (B) be  engaged  in, or about to  engage  in,  business  or a
         transaction for which any property remaining with the Issuer will be an
         unreasonably  small capital or the remaining  assets of the Issuer will
         be  unreasonably  small in relation to its  respective  business or the
         transaction; and

                   (C) have intended to incur, or believed it would incur, debts
         that would be beyond its respective ability to pay as such debts mature
         or become due. The Issuer's  assets and cash flow enable it to meet its
         present  obligations in the ordinary  course of business as they become
         due.

         (m) Tax Returns.  All tax returns or extensions required to be filed by
the  Issuer  in any  jurisdiction  have  in fact  been  filed,  and  all  taxes,
assessments, fees and other governmental charges upon the Issuer, or upon any of
the respective  properties,  income or franchises shown to be due and payable on
such returns have been, or will be, paid. To the best of the Issuer's knowledge,
all such tax returns are true and correct and the Issuer has no knowledge of any
proposed  additional tax assessment against it in any material amount nor of any
basis  therefor.  The  provisions  for taxes on the books of the  Issuer  are in
accordance with generally accepted accounting principles.

         (n) Tax  Reporting.  The  Issuer  will  treat  the  acquisition  of the
Contracts and the related  Receivables and the security  interest in the related
Vacation Credits as a sale to the Issuer for federal, State and local income tax
reporting and accounting purposes.

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<PAGE>

         (o) Subsidiaries. The Issuer has no subsidiaries.

         (p) Pension  Plans.  Each pension plan or profit  sharing plan to which
the Issuer is a party has been fully funded in accordance  with the  obligations
of the Issuer set forth in such plan.

         (q) Constituent Documents. The Issuer will not amend its Certificate of
Incorporation  or its By-laws without the consent of the Trustee and the Holders
of a majority in principal  amount of the  Outstanding  Notes of the Controlling
Class.

         (r) Private Offering by Issuer. Assuming that the Notes are offered and
sold in the  manner  contemplated  in the  Note  Purchase  Agreement  and in the
Offering  Memorandum  and  assuming  that  the   representations   made  in  the
representation  letters of the purchasers of the Notes are true and correct, the
Notes are not required to be registered under Section 5 of the Securities Act in
connection with the offer,  issuance,  sale and delivery thereof as contemplated
by the  Offering  Memorandum  and the Note  Purchase  Agreement  and neither the
Issuer  nor any agent  acting on its  behalf,  has taken or will take any action
which would  subject the offer,  issuance,  sale or delivery of the Notes to the
provisions of Section 5 of the Securities Act or to the registration  provisions
of any state securities laws of any applicable jurisdiction.

         (s) No Untrue Statements of Material Fact. The information furnished or
caused to be furnished by the Issuer  contained in the Offering  Memorandum will
not contain any untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the  circumstances  under which they were made, not  misleading.
Any materials  concerning the Issuer provided by or on behalf of the Issuer from
time to time to holders of the Notes or to prospective  purchasers  with respect
to resales of the Notes pursuant to Rule 144A(d)(4) of the rules and regulations
promulgated  under the  Securities  Act, when so provided,  will not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
in order to make the statements  therein,  in light of the  circumstances  under
which they were made, not misleading.

         (t)  Number  of  Vacation  Credits.  As of June 30,  1999,  there  were
611,696,000 existing Vacation Credits.

         (u) Information Regarding Receivables.  As of the Initial Cut-Off Date,
the information relating to the Receivables provided to the Initial Purchaser by
or on behalf of the Issuer was true and correct in all material respects.

        Section 11.02 Covenants. The Issuer hereby makes the following covenants
on which the  Trustee  relies  in  accepting  the  Trust  Estate in trust and in
authenticating  the Notes.  Such  covenants are made as of the Closing Date, but
shall  survive the  transfer,  grant and  assignment  of the Trust Estate to the
Trustee.

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<PAGE>

         (a) No  Liens.  Except  for  the  conveyances  and  grant  of  security
interests hereunder, the Issuer will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
portion of the Trust Estate now existing or hereafter  created,  or any interest
therein  prior to the  termination  of this  Indenture  pursuant to Section 5.01
hereof;  the Issuer will notify the Trustee of the  existence of any Lien on any
portion of the Trust Estate immediately upon discovery  thereof;  and the Issuer
shall  defend the right,  title and interest of the Trustee in, to and under the
Trust  Estate now  existing or  hereafter  created,  against all claims of third
parties claiming through or under the Issuer; provided, however, that nothing in
this  Section  11.02(a)  shall  prevent or be deemed to prohibit the Issuer from
suffering to exist upon any of the Trust Estate any Liens for municipal or other
local taxes and other governmental charges if such taxes or governmental charges
shall not at the time be due and  payable or if the Issuer  shall  currently  be
contesting  the validity  thereof in good faith by appropriate  proceedings  and
shall have set aside on its books adequate reserves with respect thereto.

         (b)  Delivery of  Collections.  The Issuer  agrees to hold in trust and
promptly pay to the  Servicer  all amounts  received by the Issuer in respect of
the Trust Estate  (other than amounts  distributed  to or for the benefit of the
Issuer pursuant to Article Twelve hereof).

         (c) Obligations with Respect to Contracts. The Issuer will duly fulfill
all  obligations  on its part to be fulfilled  under or in connection  with each
Contract  and will do  nothing  to impair  the  rights of the  Trustee  (for the
benefit of the Noteholders) in the Receivables, the Contracts and any other part
of the  Trust  Estate.  As long as  there  is no  event  of  default  under  the
applicable  Contract,  the Issuer will not disturb the Obligor's use of the Club
in accordance with the rules of the Club.

         (d)  Compliance  with Law.  The Issuer  will  comply,  in all  material
respects, with all acts, rules,  regulations,  orders, decrees and directions of
any  governmental  authority  applicable  to the  Contracts or any part thereof,
provided,  however,  that the Issuer may  contest  any act,  regulation,  order,
decree or direction in any  reasonable  manner  which shall not  materially  and
adversely  affect the rights of the Trustee (for the benefit of the Noteholders)
in the Receivables,  the Contracts and the related Vacation Credits.  The Issuer
will comply, in all material  respects,  with all requirements of law applicable
to the Issuer.

         (e)  Preservation  of Security  Interest.  The Issuer shall execute and
file such continuation  statements and any other documents which may be required
by law or which the Trustee deems  appropriate to fully preserve and protect the
interest  of the  Trustee  (for the  benefit  of the  Noteholders)  in the Trust
Estate.

         (f) Maintenance of Office,  etc. The Issuer will not, without providing
30 days' prior  written  notice to the Trustee and each  Noteholder  and without
filing such  amendments  to any  previously  filed  financing  statements as the
Trustee may require or as may be  required  in order to maintain  the  Trustee's
perfected security interest in the Trust Estate (other than the Vacation

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<PAGE>

Credits),  (a) change the location of its chief executive  office, or (b) change
its name,  identity or  corporate  structure  in any manner which would make any
financing statement or continuation  statement filed by the Issuer in accordance
with the Servicing Agreement or this Indenture  seriously  misleading within the
meaning of Article 9-402(7) of any applicable enactment of the UCC.

         (g) Further  Assurances.  Except as set forth in Section 11.02(e),  the
Issuer will make,  execute or endorse,  acknowledge,  and file or deliver to the
Trustee from time to time such schedules, confirmatory assignments, conveyances,
transfer  endorsements,  powers of  attorney,  certificates,  reports  and other
assurances  or  instruments  and take such  other  steps  relating  to the Trust
Estate, as the Trustee may request and reasonably require.

         (h) Notice of Liens.  The Issuer  shall  notify  the  Trustee  and each
Noteholder promptly after becoming aware of any Lien on any Trust Estate, except
for any Liens for  municipal or other local taxes if such taxes shall not at the
time be due or payable without penalty.

         (i)  Activities of the Issuer.  The Issuer (a) shall engage in only (1)
the acquisition, ownership, selling and pledging of the property acquired by the
Issuer pursuant to the Receivables Purchase Agreement,  and causing the issuance
of,  receiving and selling the Notes issued  pursuant to this  Indenture and (2)
the  exercise  of  any  powers  permitted  to  corporations  under  the  General
Corporation  Law of the State of Delaware  which are incidental to the foregoing
or necessary to accomplish  the  foregoing;  (b) will (1) maintain its books and
records  separate from the books and records of any other  entity,  (2) maintain
separate bank accounts and no funds of the Issuer shall be commingled with funds
of any  other  entity,  (3)  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  Indenture,  (4) conduct its
business  from an office or office space  separate from the office of TRI I, TRI
II, TW  Holdings,  TW Holdings II and  Trendwest  and will  maintain a telephone
number  separate  from that of TRI I, TRI II, TW  Holdings,  TW  Holdings II and
Trendwest,  and (5) operate its business generally so as not to be substantively
consolidated  with  any of its  Affiliates;  and (c) will  not (1)  dissolve  or
liquidate  in whole or in part,  (2) own any  subsidiary  or lend or advance any
moneys  to,  or  make an  investment  in,  any  Person,  (3)  make  any  capital
expenditures,  (4)(A)  commence any case,  proceeding  or other action under any
existing  or future  bankruptcy,  insolvency  or similar  law seeking to have an
order  for  relief  entered  with  respect  to it,  or  seeking  reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution, composition or other
relief  with  respect to it or its debts,  (B) seek  appointment  of a receiver,
trustee,  custodian or other similar  official for it or any part of its assets,
(C) make a general  assignment  for the  benefit  of  creditors  (other  than as
contemplated herein), or (D) take any action in furtherance of, or consenting or
acquiescing  in, any of the foregoing,  (5) guarantee  (directly or indirectly),
endorse or otherwise become contingently liable (directly or indirectly) for the
obligations  of, or own or purchase any stock,  obligations  or securities of or
any other  interest in, or make any capital  contribution  to, any other Person,
(6) merge or consolidate with any other Person,  except as permitted pursuant to
Section 11.02(q)

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<PAGE>

hereof,  (7) engage in any other  action  that  adversely  affects  whether  the
separate  legal  identity of the Issuer  will be  respected,  including  without
limitation  (A)  holding  itself out as being  liable for the debts of any other
party or (B)  acting  other  than in its  corporate  name and  through  its duly
authorized  officers or agents, or (8) create,  incur,  assume, or in any manner
become liable in respect of any indebtedness other than that contemplated herein
or trade  payables  and  expense  accruals  incurred in the  ordinary  course of
business and which are incidental to its business purpose.  The Issuer shall not
amend any article in its Certificate of  Incorporation or its By-laws that deals
with any matter discussed above without the prior written consent of the Holders
of not less than 66-2/3% in aggregate  principal amount of the Outstanding Notes
of the Controlling Class.

         (j)  Directors.  The  Issuer  agrees  that at all  times,  at least one
director and one executive officer of the Issuer will not be a director, officer
or employee of any direct or ultimate parent,  or Affiliate of such parent or of
the  Issuer  or a  brother,  sister,  parent,  child  or  spouse  of  any of the
foregoing; provided, however, that (a) such independent director may also be the
independent  officer  and (b) such  independent  director  and such  independent
officer may serve in similar  capacities  for other "special  purpose  entities"
formed  by  the  Issuer  and  its  Affiliates.   The  Issuer's   Certificate  of
Incorporation  shall at all times provide that such  independent  director shall
have a fiduciary duty to the Holders of the Notes.

         (k) Consolidated  Return. The Issuer is a member of an affiliated group
with  Trendwest  within the meaning of Section  1504 of the Code and will file a
consolidated  return with Trendwest for federal income tax purposes at all times
until after the termination of this Indenture.

         (1) Security Interest in the Vacation Credits. The Issuer warrants that
it has a valid security interest in the Vacation Credits and that it will defend
its security  interest in such Vacation Credits against all Persons,  claims and
demands whatsoever.  The Issuer shall not assign, sell, pledge, or exchange,  or
in any way  encumber  or  otherwise  dispose  of its  interest  in the  Vacation
Credits, except as permitted under this Indenture.

         (m) Taxable  Income from the  Receivables.  The Issuer  shall treat the
Receivables as owned by it for federal, State and local income tax purposes, and
any  affiliated  group of which the  Issuer is a member  within  the  meaning of
Section 1504 of the Code shall treat the  Receivables as owned by the Issuer for
federal,  State and local income tax  purposes,  shall report and include in the
computation  of  the  Issuer's  gross  income  for  such  tax  purposes  in  its
consolidated  or  combined  return  the  income  from  the  Receivables  and the
Contracts,  and shall  deduct the  interest  paid or accrued with respect to the
Notes in accordance with its applicable method of accounting for such purposes.

         (n) Maintenance of Office or Agency. The Issuer will maintain an office
or agency  within the United  States of America  where Notes may be presented or
surrendered  for payment,  where Notes may be surrendered  for  registration  of
transfer  or  exchange  and where  notices  and  demand to or upon the Issuer in
respect of the Notes and this Indenture may be served. The

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<PAGE>

Issuer hereby  initially  appoints the Trustee at the Corporate Trust Office for
each of said purposes. The Issuer will give 30 days' prior written notice to the
Trustee and the Noteholders of any change in the location, of any such office or
agency.  If at any time the Issuer  shall fail to  maintain  any such  office or
agency or shall fail to furnish the Trustee and the Noteholders with the address
thereof,  such  presentations,  surrenders,  notices  and demands may be made or
served at the Trustee,  and the Issuer hereby  appoints the Trustee its agent to
receive all such presentations, surrenders, notices and demands.

         (o) Money for Note  Payments  to Be Held in Trust.  The  Trustee  shall
execute and  deliver,  and if there is any Paying  Agent other than the Trustee,
the Issuer  will cause each  Paying  Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee that,  subject to the provisions of this Section 11.02,  such Paying
Agent will:

                   (i) hold all sums held by it for the payment of  principal of
         or  interest  on Notes  in trust  for the  benefit  of the  Noteholders
         entitled  thereto  until  such sums  shall be paid to such  Persons  or
         otherwise disposed of as herein provided;

                  (ii) give the Trustee  notice of any Default by the Issuer (or
         any other  obligor  upon the  Notes) in the  making of any  payment  of
         principal or interest; and

                 (iii) at any time during the  continuance  of any such Default,
         upon the written  request of the Trustee,  forthwith pay to the Trustee
         all sums so held in trust by such Paying Agent.

         The  Issuer  may  at  any  time,  for  the  purpose  of  obtaining  the
satisfaction  and discharge of this Indenture or for any other purpose,  pay, or
by Issuer  Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by such Paying  Agent,  such sums to be held by the Trustee  upon the same
trusts as those upon which such sums were held by such Paying  Agent;  and, upon
such  payment by any Paying  Agent to the  Trustee,  such Paying  Agent shall be
released from all further liability with respect to such money.

         (p)  Enforcement of Servicing  Agreement and the  Receivables  Purchase
Agreement. The Issuer will take all actions necessary, and diligently pursue all
remedies available to it, to the extent commercially reasonable,  to enforce the
obligations of the Servicer under the Servicing Agreement, and Trendwest, TRI I,
TRI II, TW Holdings and TW Holdings II under the Receivables  Purchase Agreement
and to secure its rights thereunder.

         (q) Issuer May  Consolidate,  etc.,  Only on Certain Terms.  The Issuer
shall  not  consolidate  or merge  with or into any  other  Person  or convey or
transfer its properties and assets  substantially  as an entirety to any Person,
unless:

                   (i) the  Person  (if  other  than the  Issuer)  formed  by or
         surviving such  consolidation or merger or which acquires by conveyance
         or transfer the properties and

                                       71
         <PAGE>

         assets of the Issuer  substantially  as an  entirety  shall be a Person
         organized  and existing as a limited  purpose  entity under the laws of
         the  United  States of  America  or any State  thereof  and shall  have
         expressly assumed, by an indenture  supplemental  hereto,  executed and
         delivered  to the  Trustee,  in  form  reasonably  satisfactory  to the
         Trustee,  the  obligation  to make  due and  punctual  payments  of the
         principal  of and  interest  on all of the Notes and to  perform  every
         covenant of this Indenture on the part of the Issuer to be performed or
         observed; and

                  (ii) immediately after giving effect to such  transaction,  no
         Event of Default or Default shall have occurred and be continuing; and

                 (iii)  the  Issuer  shall  have  delivered  to the  Trustee  an
         Officer's  Certificate and an Opinion of Counsel each stating that such
         consolidation,  merger,  conveyance  or transfer and such  supplemental
         indenture  comply  with this  Article  Eleven  and that all  conditions
         precedent  herein relating to such transaction have been complied with;
         and

                  (iv) such consolidation,  merger, conveyance or transfer shall
         be on such terms as shall fully preserve the lien and security  hereof,
         the  perfection  and priority  thereof and the rights and powers of the
         Trustee and the Holders of the Notes hereunder; and

                   (v) the surviving entity shall be a "special purpose entity";
         i.e., shall have an organizational charter substantially similar to the
         Certificate of  Incorporation  and the By-laws of the Issuer  including
         specific  limitations  on the business  purposes,  and  provisions  for
         independent directors; and

                  (vi) the Issuer shall have obtained the prior written  consent
         of the Holders of the Notes, which shall not be unreasonably withheld.

         (r) Successor  Substituted.  Upon any  consolidation or merger,  or any
conveyance or transfer of the properties and assets of the Issuer  substantially
as an entirety in accordance with Section 11.02(q) hereof,  the Person formed by
or  surviving  such  consolidation  or merger (if other than the  Issuer) or the
Person to which such  conveyance  or transfer  is made shall  succeed to, and be
substituted  for,  and may  exercise  every right and power of, the Issuer under
this  Indenture  with the same  effect as if such  Person  had been named as the
Issuer herein. In the event of any such conveyance or transfer, the Person named
as the "Issuer" in the first paragraph of this instrument or any successor which
shall  theretofore  have become such in the manner  prescribed  in this  Article
Eleven shall be released  from its  liabilities  as obligor and maker on all the
Notes  and from its  obligations  under  this  Indenture  and may be  dissolved,
wound-up and liquidated at any time thereafter.

         (s) Use of Proceeds.  The  proceeds  from the sale of the Notes will be
used by the Issuer  (i) to pay the  Acquisition  Consideration,  (ii) to pay the
expenses  associated  with the issuance of Notes  pursuant to this Indenture and
the transactions  contemplated hereby and by the Receivables  Purchase Agreement
and the Servicing Agreement and (iii) for the Issuer's general

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<PAGE>

business purposes. None of the transactions  contemplated in this Indenture, the
Receivables  Purchase Agreement or the Servicing Agreement (including the use of
the proceeds from the sale of the Notes) will result in a violation of Section 7
of the Securities  Exchange Act of 1934, as amended,  or any regulations  issued
pursuant thereto,  including Regulations T, U and X of the Board of Governors of
the Federal  Reserve System,  12 C.F.R.,  Chapter II. The Issuer does not own or
intend to carry or  purchase  any "margin  security"  within the meaning of said
Regulation U, including margin securities originally issued by it or any "margin
stock" within the meaning of said Regulation U.

         (t)  Investment  Company  Act of 1940.  The  Issuer  will at all  times
conduct its operations in a manner which will not subject it to  registration as
an "investment company" under the Investment Company Act of 1940, as amended.

         (u)  Transactions  with  Affiliates.  The Issuer will not enter into or
cause,  suffer or permit to exist any  arrangement  or contract  with any of its
Affiliates  unless such  arrangement  or contract is fair and  equitable  to the
Issuer,  is  commercially  reasonable  and is an arrangement or contract no less
favorable  to the Issuer than  generally  available on an  arms-length  basis in
equitable transactions with third parties.

         (v) Delivery of Collateral  Agent Files.  The Issuer shall deliver,  or
cause to be  delivered,  to the  Collateral  Agent the  Collateral  Agent  Files
related to the Contracts  identified on the Contract  Schedule within 10 days of
the Closing Date in accordance with Section 4.01(b)(ii) hereof.

         (w) Rule 144A  Transfers.  The  Issuer  will  deliver  with  reasonable
promptness  any  financial  or other  information  that a Holder may  reasonably
request from time to time to permit such Holder to comply with the  requirements
of Rule 144A under the  Securities Act of 1933, as amended,  in connection  with
the resale of Notes by such Holder.

         (x)  Redemption.  The Issuer  will not,  and will not permit any of its
Affiliate  to,  purchase,  redeem,  prepay or  otherwise  acquire,  directly  or
indirectly, any of the Notes except in accordance with Article 10 hereof.

         (y) Information Regarding the Trust Estate. The Issuer shall provide to
the  Trustee  or  any  Noteholder  or  Note  Owner  and  their  duly  authorized
representatives,  attorneys or accountants  access to any and all  documentation
and to any existing data processing systems (including,  but not limited to, any
data that can  reasonably  be generated  therefrom)  regarding  the Trust Estate
(including the Contract Schedule) that the Issuer may possess, such access being
afforded at no cost to the Issuer (except during the  continuance of an Event of
Default hereunder),  but only upon reasonable request and during normal business
hours so as not to interfere unreasonably with the Issuer's normal operations or
customer or employee relations, at offices designated by the Issuer.

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<PAGE>

         (z) Closing Date Deposit of  Collections.  The Issuer shall  deposit or
cause to be deposited into the Collection Account from the proceeds of the Notes
an amount at least equal to the collections on the Trust Estate from the Initial
Cut-Off Date to the Closing Date.

        Section  11.03  Other  Matters  as to  the  Issuer.  (a)  Limitation  on
Liability of Directors,  Officers,  or Employees of the Issuer.  The  directors,
officers,  or employees  of the Issuer  shall not be under any  liability to the
Trustee, the Noteholders, the Issuer, the Servicer or any other Person hereunder
or pursuant to any document delivered  hereunder,  it being expressly understood
that all such liability is expressly  waived and released as a condition of, and
as  consideration  for, the execution of this  Indenture and the issuance of the
Notes.

         (b) Parties Will Not Institute Insolvency Proceedings.  So long as this
Indenture is in effect,  and for one year and one day following its termination,
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 or by the Issuer;  provided,  however,
that the Trustee shall not be  prohibited  from taking any such actions after an
Event of  Default if it is acting at the  direction  of Holders of not less than
66-2/3% in principal amount of Outstanding Notes of the Controlling Class.


                                 ARTICLE TWELVE


                            ACCOUNTS AND ACCOUNTINGS

        Section  12.01  Collection  of  Money.  Except  as  otherwise  expressly
provided  herein,  the  Trustee  may demand  payment or  delivery  of, and shall
receive and collect,  directly and without  intervention  or  assistance  of any
fiscal agent or other  intermediary,  all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall hold all
such money and  property so received by it as part of the Trust Estate and shall
apply it as  provided in this  Indenture.  If any  Contract  becomes a Defaulted
Contract,  the Trustee,  upon the written  request of the Issuer or the Servicer
may,  and upon the request of the Holders of a majority in  principal  amount of
the Outstanding Notes of the Controlling Class shall, take such action as may be
reasonably  necessary  to  assist  the  Servicer  to  enforce  such  payment  or
performance,   including  the   institution   and   prosecution  of  appropriate
Proceedings.  Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this  Indenture  and to proceed  thereafter as
provided in Article Six hereof.

         Section 12.02 Collection  Account.  (a) On the Closing Date, the Issuer
shall  cause the  Trustee  to open and  maintain  an  account  (the  "Collection
Account"),  which at all times shall be an  Eligible  Account and which shall be
established at the Trustee, for the benefit of the Noteholders,  for the receipt
of (i) amounts  deposited  into the Local Bank  Account,  (ii) any  Reinvestment
Income, (iii) amounts transferred

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         <PAGE>

         from the Reserve Account in accordance with Sections  12.03(d)(i),  and
(iii) hereof and (iv) amounts transferred from the Capitalized  Interest Account
in accordance with Section 12.05(d) hereof. All payments to be made from time to
time by the Issuer to the  Noteholders  out of funds in the  Collection  Account
pursuant to this  Indenture  shall be made by the Trustee or the Paying Agent of
the Issuer.  Funds in the  Collection  Account shall not be commingled  with any
other monies.  All monies deposited from time to time in the Collection  Account
pursuant to this  Indenture  shall be held in the name of the Trustee as part of
the Trust Estate as herein provided.

         (b) Upon  Issuer  Order,  the  Trustee  shall  invest  the funds in the
Collection Account in Eligible  Investments.  The Issuer Order shall specify the
Eligible  Investments in which such amounts shall be invested,  shall state that
the same are Eligible  Investments  and shall further  specify the percentage of
funds to be invested in each Eligible  Investment.  No such Eligible  Investment
shall mature later than the second  Business Day  preceding  the next  following
Payment Date and shall not be sold or disposed of prior to its maturity.  In the
absence of an Issuer  Order,  the Trustee  shall invest funds in the  Collection
Account in  Eligible  Investments  described  in clause  (vi) of the  definition
thereof.  Eligible  Investments shall be made in the name of the Trustee for the
benefit  of the  Noteholders.  The  Trustee  shall  have no  responsibility  for
verifying that any investments directed by the Issuer are Eligible  Investments.
Anything  to the  contrary  notwithstanding,  the  Trustee  shall be entitled to
invest funds in the  Collection  Account in Eligible  Investments  on the second
Business Day preceding each Payment Date and shall be entitled to the income and
gain from such Eligible  Investments for its one-day  investment;  such Eligible
Investments  shall mature not later than the Business Day  preceding the related
Payment  Date;  the Trustee  shall be liable for any loss incurred on account of
such investment.

         (c) Any income or other gain from  investments in Eligible  Investments
as outlined in (b) above  shall be  credited to the  Collection  Account and any
loss resulting from such investments shall be charged to such account; provided,
however,  that the  Issuer  shall  make or  cause  to be made no later  than the
applicable Payment Date a deposit to the Collection Account to the extent of any
losses  therein  caused  as a result  of the  Issuer's  investment  instructions
provided for herein. Except as set forth in Section 12.02(b),  the Trustee shall
not  be  liable  for  any  loss  incurred  on any  funds  invested  in  Eligible
Investments pursuant to the provisions of this Section 12.02.

         (d) On each Payment Date not  occurring  during a Trigger Event Period,
then on such Payment  Date,  after making all  transfers  and deposits  into the
Collection Account from the Reserve Account pursuant to clauses (i) and (iii) of
Section  12.03(d) hereof and from the Capitalized  Interest  Account pursuant to
Section 12.05 hereof and from the Prefunding  Account  pursuant to Section 12.04
hereof,  the Trustee shall  withdraw  from the  Collection  Account  (other than
amounts  representing  payments of Receivables due after the related Calculation
Date  immediately  preceding  such Payment  Date),  and shall make the following
disbursements  in the following  order in accordance  with the provisions of and
instructions on the Monthly Servicer's Report (the determination by the Servicer
of such  amounts  shall,  in the  absence  of  manifest  error,  be deemed to be
presumptively correct and the Trustee shall be protected in relying upon the


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<PAGE>

same with out any independent check or investigation); provided that the Trustee
shall,  to the  extent  funds are  available  in the  Collection  Account,  make
interest  payments based on the outstanding  principal balance of the Notes even
if it shall not have received the Monthly Servicer's Report:

                   (i)     to the Trustee,  the Trustee Fee and any Unreimbursed
         Servicing  Transfer  Payments (up to a cumulative limit of $50,000);

                  (ii)     to the Collateral Agent, the Collateral Agent Fee if
         not paid by the Servicer;

                 (iii) to the Servicer (if  Trendwest or an Affiliate is not the
         Servicer):  (A) the  Servicer  Fee;  and (B) the amounts  necessary  to
         reimburse  the  Servicer  and any  successor  Servicer  as  provided in
         Section  3.09 of the  Servicing  Agreement  for  reasonable  costs  and
         expenses incurred by the Servicer (including reasonable attorney's fees
         and  out-of-pocket   expenses)  in  connection  with  the  realization,
         attempted  realization  or  enforcement  of rights  and  remedies  upon
         Defaulted  Contracts,  from  amounts  received as  Recoveries  from any
         Defaulted Contracts;

                  (iv) to the Class A-1  Noteholders,  the Class A-2 Noteholders
         and the  Class  A-3  Noteholders,  the  aggregate  interest  due on the
         Outstanding  Class  A-1  Notes,  Class A-2 Notes and Class A-3 Notes on
         that Payment Date and any Overdue Interest;  provided,  however, if the
         amount  available is  insufficient  to pay in full the interest owed on
         the Class A Notes,  the  Holders of each  Class of Class A Notes  shall
         receive the Interest Shortfall Payment for such Class;

                   (v) to the Class B Noteholders, the aggregate interest due on
         the  Outstanding  Class B Notes on that  Payment  Date and any  Overdue
         Interest;

                  (vi) to the Class C Noteholders, the aggregate interest due on
         the  Outstanding  Class C Notes on that  Payment  Date and any  Overdue
         Interest;

                 (vii) to the Class D Noteholders, the aggregate interest due on
         the  Outstanding  Class D Notes on that  Payment  Date and any  Overdue
         Interest;

                (viii)  to the  Class  A  Noteholders,  the  Class  A  Principal
         Distribution  Amount,  (a) to Class A-1 Noteholders until the principal
         balance of the Class A-1 Notes has been  reduced  to zero;  then (b) to
         the Class A-2 Noteholders,  the Class A Principal  Distribution  Amount
         over any such amounts  distributed to the Class A-1 Noteholders on such
         Payment Date,  until the  principal  balance of the Class A-2 Notes has
         been reduced to zero; and then (c) to the Class A-3 Notes,  the Class A
         Principal  Distribution Amount over any such amounts distributed to the
         Class A-1 and Class A-2  Noteholders  on such Payment  Date,  until the
         principal balance of the Class A-3 Notes has been reduced to zero;

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         <PAGE>

                  (ix)  to the  Class  B  Noteholders,  the  Class  B  Principal
          Distribution Amount;

                   (x)  to the Class C Noteholders, the Class C Principal
          Distribution Amount;

                  (xi)  to the Class D Noteholders, the Class D Principal
          Distribution Amount;

                 (xii) to deposit to the Reserve Account an amount necessary, if
         any,  to bring the  amount on  deposit  in the  Reserve  Account to the
         Reserve Account Required Balance;

                (xiii)   (a)  to  the  Class  A-1   Noteholders,   the  Class  A
         Supplemental  Principal Distribution Amount until the principal balance
         of the Class A-1 Notes has been reduced to zero,  then (b) to the Class
         A-2 Noteholders, the Class A Supplemental Principal Distribution Amount
         over any such amounts  distributed to the Class A-1 Noteholders on such
         Payment Date,  until the  principal  balance of the Class A-2 Notes has
         been reduced to zero, and then (c) to the Class A-3 Notes,  the Class A
         Supplemental  Principal  Distribution  Amount  over  any  such  amounts
         distributed to the Class A-1 and Class A-2  Noteholders on such Payment
         Date,  until  the  principal  balance  of the  Class A-3 Notes has been
         reduced to zero;

                 (xiv)  to the Class B Noteholders, the Class B Supplemental
         Principal Distribution Amount;

                  (xv)   to the Class C Noteholders, the Class C Supplemental
          Principal Distribution Amount;

                 (xvi) to the  Class D  Noteholders,  the  Class D  Supplemental
          Principal Distribution Amount;

                (xvii) if  Trendwest  is the  Servicer,  to  Trendwest:  (A) the
         Servicer  Fee; and (B) the amounts  necessary to reimburse the Servicer
         as provided in Section 3.09 of the Servicing  Agreement for  reasonable
         costs and  expenses  incurred  by the  Servicer  (including  reasonable
         attorney's  fees and  out-of-pocket  expenses) in  connection  with the
         realization,   attempted  realization  or  enforcement  of  rights  and
         remedies upon Defaulted Contracts,  from amounts received as Recoveries
         from any Defaulted Contracts;

               (xviii)  to pay Trendwest interest due on the Subordinated Note;

                 (xix) to pay Trendwest, principal due on the Subordinated Note;

                  (xx)  to pay to  the  Trustee  any  other  amounts  due to the
         Trustee as expressly  provided  herein and in the Servicing  Agreement,
         including Unreimbursed Servicing Transfer Payments not paid pursuant to
         clause (i) above;


                                       77
         <PAGE>

                 (xxi) to remit any excess  funds to or at the  direction of the
         Issuer.

         The foregoing  provisions of paragraph  12.02(d)  notwithstanding,  any
monies  deposited in the  Collection  Account for  purposes of  redeeming  Notes
pursuant to Article Ten hereof shall, subject to Section 11.02(o) hereof, remain
in the Collection Account until used to redeem such Notes.

         (e) On each  Payment  Date during a Trigger  Event  Period if either no
Default or Event of Default  shall have occurred and be continuing or the entire
unpaid  principal  amount  of the  Notes  shall  not have  been  declared,  have
automatically  become or  otherwise  have  become due and  payable  pursuant  to
Section 6.02 hereof,  then on such Payment Date,  after making all transfers and
deposits  into the  Collection  Account  from the  Reserve  Account  pursuant to
clauses  (i) and  (iii) of  Section  12.03(d)  hereof  and from the  Capitalized
Interest  Account  pursuant to Section 12.05 hereof and the  Prefunding  Account
pursuant to Section 12.04 hereof, the Trustee shall withdraw from the Collection
Account (other than amounts  representing  payments of Receivables due after the
related  Calculation  Date  immediately  preceding such Payment Date), and shall
make the following  disbursements  in the following order in accordance with the
provisions of and instructions on the Monthly Servicer's  Report;  provided that
the Trustee shall, to the extent funds are available in the Collection  Account,
make interest  payments based on the outstanding  principal balance of the Notes
even if it shall not have received the Monthly Servicer's Report:

                   (i)     to the Trustee,  the Trustee Fee and any Unreimbursed
         Servicing  Transfer  Payments (up to a cumulative limit of $50,000);

                  (ii)     to the Collateral Agent, the Collateral Agent Fee if
         not paid by the Servicer;

                 (iii)  to the  Servicer:  (A)  the  Servicer  Fee;  and (B) the
         amounts necessary to reimburse the Servicer and any successor  Servicer
         as provided in Section 3.09 of the Servicing  Agreement for  reasonable
         costs and  expenses  incurred  by the  Servicer  (including  reasonable
         attorney's  fees and  out-of-pocket  expenses) in  connection  with the
         realization,   attempted  realization  or  enforcement  of  rights  and
         remedies upon Defaulted Contracts;  from amounts received as Recoveries
         from any Defaulted Contracts;

                  (iv) to the Class A-1  Noteholders,  the Class A-2 Noteholders
         and the Class A-3 Noteholders,  pro rata, the aggregate interest due on
         the Outstanding Class A-1 Notes, Class A-2 Notes and Class A-3 Notes on
         that Payment Date and any Overdue Interest;  provided,  however; if the
         amount  available is  insufficient  to pay in full the interest owed on
         the Class A Notes,  the  Holders of each  Class of Class A Notes  shall
         receive the Interest Shortfall Payment for such Class;


                                       78
         <PAGE>

                   (v) to the Class B Noteholders, the aggregate interest due on
         the  Outstanding  Class B Notes on that  Payment  Date and any  Overdue
         Interest;

                  (vi) to the Class C Noteholders, the aggregate interest due on
         the  Outstanding  Class C Notes on that  Payment  Date and any  Overdue
         Interest;

                 (vii) to the Class D Noteholders, the aggregate interest due on
         the  Outstanding  Class D Notes on that  Payment  Date and any  Overdue
         Interest;

                (viii)  to the  Class  A  Noteholders,  the  Class  A  Principal
         Distribution Amount, pro rata, until the principal balance of the Class
         A Notes is reduced to zero;

                  (ix)  to the  Class  B  Noteholders,  the  Class  B  Principal
         Distribution Amount, pro rata, until the principal balance of the Class
         B Notes is reduced to zero

                   (x) to  the  Class  C  Noteholders,  the  Class  C  Principal
         Distribution Amount, pro rata, until the principal balance of the Class
         C Notes is reduced to zero

                  (xi)  to the  Class  D  Noteholders,  the  Class  D  Principal
         Distribution Amount, pro rata, until the principal balance of the Class
         D Notes is reduced to zero

                 (xii)  to Trendwest, the interest due Trendwest under the
         Subordinated Note;

                (xiii) to Trendwest,  the  principal due to Trendwest  under the
         Subordinated  Note until the principal balance of the Subordinated Note
         is reduced to zero;

                 (xiv) to the Trustee,  any other  amounts due to the Trustee as
         expressly  provided  herein and in the Servicing  Agreement,  including
         Unreimbursed  Servicing  Transfer  Payments not paid pursuant to clause
         (i) above;

                  (xv) to the  Servicer,  any other  amounts due the Servicer as
         expressly provided herein and in the Servicing Agreement; and

                 (xvi) to remit any excess  funds to or at the  direction of the
         Issuer.

         The foregoing  provisions of paragraph  12.02(e)  notwithstanding,  any
monies  deposited in the  Collection  Account for  purposes of  redeeming  Notes
pursuant to Article Ten hereof shall, subject to Section 11.02(o) hereof, remain
in the Collection Account until used to redeem such Notes.

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<PAGE>

         (f) Upon the Issuer's or the Trustee's  obtaining  actual  knowledge of
the occurrence of any Trigger Event, the Issuer or the Trustee,  as the case may
be, shall within two Business Days of obtaining such actual knowledge notify the
other and Noteholders of such occurrence.

        Section  12.03  Reserve  Account.  (a) Prior to the  Closing  Date,  the
Trustee shall open and maintain a trust account (the "Reserve  Account"),  which
at all times will be an Eligible  Account,  for the benefit of the  Noteholders,
for the receipt of the initial deposit of $2,546,000 and of deposits pursuant to
Section  12.02(d)(xii)  hereof.  The Issuer agrees to deposit  $2,546,000 in the
Reserve Account on or prior to the Closing Date.  Monies received in the Reserve
Account  will be  invested at the  written  direction  of the Issuer in Eligible
Investments  during  the term of this  Indenture,  and any  income or other gain
realized  from  such  investment  shall be held by the  Trustee  in the  Reserve
Account  as part of the  Trust  Estate as  security  for the  Notes  subject  to
disbursement  and  withdrawal  as herein  provided.  Monies  shall be subject to
withdrawal in accordance with Section 12.03(d) hereof.

         (b) Upon Issuer Order all or a portion of the Reserve  Account shall be
invested  and  reinvested  at the  Issuer's  written  direction  in one or  more
Eligible  Investments.  In the absence of an Issuer  Order,  the  Trustee  shall
invest funds in the Reserve Account in Eligible Investments  described in clause
(vi) of the definition  thereof.  All income or other gain from such investments
shall be credited to such  Reserve  Account,  and any loss  resulting  from such
investments shall be charged to such Reserve Account;  provided,  however,  that
the Issuer  shall make or cause to be made on any  Remittance  Date a deposit to
the Reserve  Account to the extent of any losses  therein  caused as a result of
the Issuer's investment instructions.  No Eligible Investment shall mature later
than the Business Day preceding the next following Payment Date and shall not be
sold or disposed of prior to its maturity. Eligible Investments shall be made in
the name of the Trustee for the benefit of the  Noteholders.  The Trustee  shall
provide  to the  Servicer  a monthly  account  statement  showing  deposits  and
withdrawals in such month and listing such investments,  describing the Eligible
Investments in which such amounts have been invested.

         (c) If any amounts  invested as  provided  in Section  12.03(b)  hereof
shall be  needed  for  disbursement  from the  Reserve  Account  as set forth in
Section  12.03(d)  hereof,  the  Trustee  shall cause such  investments  of such
Reserve Account to be sold or otherwise  converted to cash to the credit of such
Reserve  Account.  The  Trustee  shall not be  liable  for any  investment  loss
resulting  from  investment  of money in the  Reserve  Account  in any  Eligible
Investment  in  accordance  with the terms hereof (other than in its capacity as
obligor under any Eligible Investment).

         (d) Disbursements from the Reserve Account shall be made as detailed in
the Monthly Servicer Report, to the extent funds therefor are available, only as
follows:

                   (i) in the event that the amount in the Collection Account at
         2:00  p.m.,  New  York  time,  on the  Determination  Date  immediately
         preceding any Payment Date (other than amounts representing payments of
         Receivables  due  after  the  related   Calculation   Date  immediately
         preceding  such  Payment  Date)  is less  than  the sum of the  amounts
         required to be  distributed  on the related  Payment  Date  pursuant to
         clauses (i)-(xi) of

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         <PAGE>

         Section  12.02(d)  hereof,  the Trustee shall,  in accordance  with the
         related  Monthly  Servicer's  Report,  withdraw  funds from the Reserve
         Account on or prior to 5:00 p.m., New York time, on the Remittance Date
         to the extent  necessary to make such payments on such Payment Date and
         deposit such funds into the Collection Account;

                  (ii) subject to  subparagraphs  (iii) and (iv) of this Section
         12.03(d),  in the event  that on any  Payment  Date the  balance in the
         Reserve  Account  equals an amount  greater  than the  Reserve  Account
         Required  Balance (after giving effect to the  distributions  listed in
         Section 12.02(d)(i)-(xi) hereof on such Payment Date in accordance with
         the Monthly Servicer's Report), the Trustee shall withdraw funds in the
         Reserve  Account  in such  amount so that the  remaining  amount in the
         Reserve  Account after such  withdrawal  will equal the Reserve Account
         Required  Balance,  and disburse such amounts to or at the direction of
         the Issuer;  no funds shall be released to the Issuer  pursuant to this
         subparagraph  (ii) if any of a  Trigger  Event  Period  or an  Event of
         Default has occurred and is continuing;

                 (iii) if a Trigger  Event has occurred and is  continuing,  the
         Trustee shall on the next Determination  Date,  withdraw all funds from
         the Reserve  Account  (or any such lesser  amount of such funds as such
         Holders may direct) and deposit such funds into the Collection  Account
         for  disbursement in accordance with the provisions of Section 12.02(d)
         hereof;

                  (iv) on the Final  Payment  Date with  respect  to the Class D
         Notes,  to the extent any funds  remain in the  Reserve  Account  after
         distributions pursuant to clauses (i) through (xi) of Section 12.02(d),
         such  remaining  amounts  shall be used to pay the amounts set forth in
         clauses (xiii) through (xxi) of Section 12.02(d).

        Section 12.04  Prefunding  Account.  (a) Prior to the Closing Date,  the
Trustee  shall open and  maintain a trust  account (the  "Prefunding  Account"),
which  at all  times  will  be an  Eligible  Account,  for  the  benefit  of the
Noteholders,  for the  receipt of the  initial  deposit of  $6,221,827  from the
proceeds of the Notes. The Issuer agrees to deposit $6,221,827 in the Prefunding
Account on or prior to the  Closing  Date.  Monies  received  in the  Prefunding
Account  will be  invested at the  written  direction  of the Issuer in Eligible
Investments  during  the term of this  Indenture,  and any  income or other gain
realized  from such  investment  shall be held by the Trustee in the  Prefunding
Account  as part of the  Trust  Estate as  security  for the  Notes  subject  to
disbursement  and  withdrawal  as herein  provided.  Monies  shall be subject to
withdrawal in accordance with Section 12.04(d) hereof.

         (b) Upon Issuer Order, all or a portion of the Prefunding Account shall
be invested  and  reinvested  at the Issuer's  written  direction in one or more
Eligible  Investments.  In the absence of an Issuer  Order,  the  Trustee  shall
invest  funds in the  Prefunding  Account in Eligible  Investments  described in
clause  (vi) of the  definition  thereof.  All  income  or other  gain from such
investments shall be credited to the Prefunding Account,  and any loss resulting
from such  investments  shall be charged to the  Prefunding  Account;  provided,
however, that the Issuer shall make or cause to


                                       81
<PAGE>

be made on any Remittance Date a deposit to the Prefunding Account to the extent
of  any  losses  therein   caused  as  a  result  of  the  Issuer's   investment
instructions.  No Eligible  Investment  shall mature later than the Business Day
preceding the next  following  Payment Date and shall not be sold or disposed of
prior to its  maturity.  Eligible  Investments  shall be made in the name of the
Trustee for the benefit of the  Noteholders.  The Trustee  shall  provide to the
Servicer a monthly account  statement  showing  deposits and withdrawals in such
month and listing such investments, describing the Eligible Investments in which
such amounts have been invested.

         (c) If any amounts  invested as  provided  in Section  12.04(b)  hereof
shall be needed for  disbursement  from the  Prefunding  Account as set forth in
Section  12.04(d)  hereof,  the  Trustee  shall cause such  investments  of such
Prefunding  Account to be sold or  otherwise  converted to cash to the credit of
such Prefunding Account. The Trustee shall not be liable for any investment loss
resulting  from  investment of money in the  Prefunding  Account in any Eligible
Investment  in  accordance  with the terms hereof (other than in its capacity as
obligor under any Eligible Investment).

         (d) Disbursements from the Prefunding Account shall be made as detailed
in writing by the Issuer or the Servicer on behalf of the Issuer,  to the extent
funds therefor are available, only as follows:

                   (i) on each  Subsequent  Transfer  Date,  the Servicer  shall
         instruct  the Trustee in writing (x) to  withdraw  from the  Prefunding
         Account an amount  equal to the sum of (A) the  Collateral  Value as of
         the  related  Subsequent  Cut-Off  Date  of  the  Subsequent  Contracts
         transferred to the Issuer and pledged to the Trustee on such Subsequent
         Transfer  Date as of the related  Subsequent  Cut-Off  Date and (B) any
         Scheduled Payments with respect to the related Subsequent Contracts due
         on or prior to such  Subsequent  Cut-Off Date but not received  through
         such  Subsequent  Cut-Off  Date and (y)  subject to the  receipt of the
         items described in Section 4.01(c),  to distribute such amount to or at
         the  direction  of the  Issuer  in  accordance  with  the  instructions
         provided to the Trustee; and

                  (ii) if the  amount  in the  Prefunding  Account  has not been
         reduced to zero on the Prefunding Period  Termination Date after giving
         effect to any  reductions  in the amount in the  Prefunding  Account on
         such Payment  Date  pursuant to clause (i) above,  the  Servicer  shall
         instruct the Trustee in writing to withdraw from the Prefunding Account
         on such Payment Date all amounts remaining on deposit in the Prefunding
         Account  (excluding  any  Reinvestment  Income  in  such  account)  and
         distribute  such amount to the Class A-1 Noteholders as a prepayment of
         principal;  provided,  however,  that if such  amount is  greater  than
         $100,000,  such  amount  will be paid  pro  rata to all of the  Class A
         Noteholders.

        Section  12.05  Capitalized  Interest  Account.  (a) On or  prior to the
Closing  Date,  the  Trustee  shall  open  and  maintain  a trust  account  (the
"Capitalized Interest Account"), which at all times will be an Eligible Account,
for the benefit of the  Noteholders,  for the  receipt of an initial  deposit of
$32,112.18

                                       82
<PAGE>

from the proceeds of the Notes.  The Issuer agrees to deposit  $32,112.18 in the
Capitalized Interest Account on or prior to the Closing Date. Monies received in
the Capitalized  Interest  Account will be invested at the written  direction of
the Issuer in Eligible  Investments  during the term of this Indenture,  and any
income or other gain realized from such investment  shall be held by the Trustee
in the Capitalized  Interest Account as part of the Trust Estate as security for
the Notes subject to  disbursement  and  withdrawal as herein  provided.  Monies
shall be subject to withdrawal in accordance with Section 12.05(d) hereof.

         (b) Upon  Issuer  Order all or a portion  of the  Capitalized  Interest
Account shall be invested and  reinvested at the Issuer's  written  direction in
one or more Eligible Investments. In the absence of an Issuer Order, the Trustee
shall invest funds in the Capitalized  Interest Account in Eligible  Investments
described  in clause (vi) of the  definition  thereof.  All income or other gain
from such investments shall be credited to the Capitalized Interest Account, and
any loss resulting  from such  investments  shall be charged to the  Capitalized
Interest Account;  provided,  however, that the Issuer shall make or cause to be
made on any Remittance Date a deposit to the Capitalized Interest Account to the
extent of any  losses  therein  caused as a result  of the  Issuer's  investment
instructions.  No Eligible  Investment  shall mature later than the Business Day
preceding the next  following  Payment Date and shall not be sold or disposed of
prior to its  maturity.  Eligible  Investments  shall be made in the name of the
Trustee for the benefit of the  Noteholders.  The Trustee  shall  provide to the
Servicer a monthly account  statement  showing  deposits and withdrawals in such
month and listing such investments, describing the Eligible Investments in which
such amounts have been invested.

         (c) If any amounts  invested as  provided  in Section  12.05(b)  hereof
shall be needed for  disbursement  from the Capitalized  Interest Account as set
forth in Section  12.05(d)  hereof,  the Trustee shall cause such investments of
such Capitalized  Interest Account to be sold or otherwise  converted to cash to
the credit of the Capitalized  Interest Account. The Trustee shall not be liable
for any investment  loss resulting from  investment of money in the  Capitalized
Interest Account in any Eligible  Investment in accordance with the terms hereof
(other than in its capacity as obligor under any Eligible Investment).

         (d) Disbursements  from the Capitalized  Interest Account shall be made
as detailed in the Monthly  Servicer  Report,  to the extent funds  therefor are
available, only as follows:

                   (i) On or before  each  Payment  Date  occurring  during  the
         Prefunding  Period and on or before the Payment Date on or  immediately
         succeeding the Prefunding  Period  Termination  Date, the Trustee shall
         withdraw  from the  Capitalized  Interest  Account for deposit into the
         Collection Account the amount equal to the aggregate amount of interest
         accruing at the weighted  average of  one-twelfth of the Class A-1 Note
         Rate, the Class A-2 Note Rate, the Class A-3 Note Rate, and the Class B
         Note  Rate,  the  Class C Note  Rate and the  Class D Note  Rate on the
         amount on deposit in the Prefunding Account,  less projected investment
         earnings on the  Prefunding  Account,  as of the related  Payment Date.
         Amounts in the Capitalized  Interest  Account shall be withdrawn solely
         to pay such

                                       83
         <PAGE>

         amounts and shall not be available to the Noteholders or the Trustee
         for any other purpose.

                  (ii) Any  amounts  remaining  on  deposit  in the  Capitalized
         Interest  Account on the Payment Date on or immediately  succeeding the
         Prefunding  Period  Termination Date (after taking account any transfer
         from the Capitalized Interest Account to the Collection Account on such
         Payment Date) shall be withdrawn from the Capitalized Interest Account,
         paid to the Issuer and released from the Lien of this Indenture;  after
         such payment, the Trustee shall close the Capitalized Interest Account.

        Section  12.06  Reports by Trustee to  Noteholders.  (a) On each Payment
Date the Trustee  shall account to the Initial  Purchaser,  each Holder of Notes
and to the Rating  Agencies on which payments of principal and interest are then
being made the amount which represents principal and the amount which represents
interest,  and shall  contemporaneously  advise the Issuer of all such payments.
The Trustee may satisfy its  obligations  under this Section 12.06 by delivering
the  Monthly  Servicer's  Report to each such  Holder of the  Notes,  the Rating
Agencies  and the  Issuer.  On or before the 5th day prior to the Final  Payment
Date with  respect to any Class,  the  Trustee  shall send  notice to the Rating
Agencies and to the Initial  Purchaser the Holders of the Notes of such Class of
such Final  Payment  Date.  Such notice shall  include a statement  that if such
Notes are paid in full on the Final Payment Date, interest shall cease to accrue
as of the day immediately preceding such Final Payment Date.

         The  Trustee  will make the  Monthly  Servicer's  Report  (and,  at its
option,  any additional  files containing the same information in an alternative
format)  available  each  month to  Holders  of Notes or  potential  transferees
thereof  that  provide to Norwest an executed  Note Owner  Certificate,  via the
Trustee's  internet  website  and  its  fax-on-demand   service.  The  Trustee's
fax-on-demand  service may be accessed by calling (301) 815-6610.  The Trustee's
internet website shall initially be located at "www.ctslink.com".  Assistance in
using the  website or the  fax-on-demand  service can be obtained by calling the
Trustee's  customer  service desk at (301) 815-6600.  Parties that are unable to
use the above  distribution  options are entitled to have a paper copy mailed to
them via first class mail by calling the customer  service  desk and  indicating
such.  The  Trustee  shall have the right to change the way  Monthly  Servicer's
Report are distributed in order to make such distribution more convenient and/or
more  accessible to the above  parties and the Trustee shall provide  timely and
adequate notification to all above parties regarding any such changes.

         (b) The  Servicer  shall  provide to each owner of an interest any Note
who executes and delivers an executed Note Owner Certificate to the Servicer any
information  required to be delivered to the Noteholders  pursuant to Article IV
of the Servicing Agreement to the extent such information is not provided on the
website of the Trustee described in Section  12.06(a).  The Servicer may provide
such  information  via  mail,  facsimile,   overnight  courier,  hand  delivery,
electronic  transmission in a format  reasonably  acceptable to the Servicer and
such Note Owner,  or by posting the  information to a website to which such Note
Owner is given access.

                                       84

<PAGE>

         (c)  Annually  (and more often if  required  by  applicable  law),  the
Trustee shall  distribute to  Noteholders  any Form 1099 or similar  information
returns  required by applicable tax law to be distributed to the Noteholders and
received in  accordance  with the next  sentence.  The Trustee  shall prepare or
cause to be prepared all such information for distribution by the Trustee to the
Noteholders.


                                ARTICLE THIRTEEN


                        PROVISIONS OF GENERAL APPLICATION

        Section   13.01  Acts  of   Noteholders.   (a)  Any   request,   demand,
authorization,  direction,  notice,  consent, waiver or other action provided by
this  Indenture  to be  given or taken by  Noteholders  may be  embodied  in and
evidenced by one or more  instruments of  substantially  similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided,  such action shall become effective when
such  instrument or instruments  are delivered to the Trustee,  and, where it is
hereby expressly  required,  to the Issuer.  Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such  instrument or of a writing  appointing  any such agent
shall be  sufficient  for any purpose of this  Indenture and (subject to Section
7.01 hereof)  conclusive in favor of the Trustee and the Issuer,  if made in the
manner provided in this Section 13.01.

         (b) The  fact  and  date of the  execution  by any  Person  of any such
instrument  or  writing  may be proved in any  manner  which the  Trustee  deems
sufficient.

         (c) The ownership of Notes shall be proved by the Note Register.

         (d) Any request,  demand,  authorization,  direction,  notice, consent,
waiver or other  action by the Holder of any Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof,  in respect of anything done, omitted or suffered to be done by
the Trustee or the Issuer in reliance  thereon,  whether or not notation of such
action is made upon such Note.

        Section 13.02 Notices, etc., to Trustee, Issuer, Servicer and the Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other document  provided or permitted by this Indenture
to be made upon,  given or furnished to, or filed with any party hereto shall be
sufficient  for every purpose  hereunder if in writing and telecopied or mailed,
first-class postage prepaid and addressed to the appropriate address below:

                                       85

         <PAGE>

                   (a) to the Trustee at 11000  Broken Land  Parkway,  Columbia,
         Maryland 21044 (facsimile number (410) 884-2363),  Attention: Corporate
         Trust  Services,  Asset-Backed  Administration,  TRI Funding III,  Inc.
         1999-1,  with a copy to the  Trustee  at  Sixth  Street  and  Marquette
         Avenue,  MAC N9311-161,  Minneapolis,  MN 55479 (facsimile number (612)
         667-3539),    Attention:   Corporate   Trust   Services,   Asset-Backed
         Administration or at any other address previously  furnished in writing
         to the Issuer and the Servicer; or

                   (b) to the Issuer at TRI  Funding  III,  Inc.,  9805  Willows
         Road,  Redmond,  Washington  98052  (facsimile  number (425) 498-3050),
         Attention:  Chief Financial Officer, or at any other address previously
         furnished in writing to the Trustee and the Servicer by the Issuer; or

                   (c) to the Servicer at Trendwest Resorts,  Inc., 9805 Willows
         Road,  Redmond,  Washington  98052  (facsimile  number (425) 498-3050),
         Attention:  Chief Financial Officer, or at any other address previously
         furnished in writing to the Trustee and the Issuer; or

                   (d)     to the Initial  Purchaser at One New York Plaza,
         14th Floor,  New York, New York 10292, Attention:  Asset-Backed
         Securities Group; or

                   (e) to DCR at 17 State Street, 12th Floor, New York, New York
         10004,     (facsimile     number     (212)     908-0355)     Attention:
         Securities/Timeshare   Group,  or  at  any  other  address   previously
         furnished in writing to the Trustee and the Issuer; or

                   (f) to Fitch at One State Street  Plaza,  New York,  New York
         10004  (facsimile  number  (212)  514-9879),  or at any  other  address
         previously furnished in writing to the Trustee and the Issuer.

        Section 13.03 Notices and Other  Documents to Noteholders;  Waiver.  (a)
Where this  Indenture  provides  for notice to  Noteholders  of any event,  such
notice  shall be in writing and sent (i) by  telefacsimile  if the sender on the
same day  sends a  confirming  copy of such  notice  by a  recognized  overnight
delivery service (charges prepaid), or (ii) by registered or certified mail with
return receipt requested (postage prepaid),  or (iii) by a recognized  overnight
delivery service (with charges prepaid).  Any such notice to a Noteholder or its
nominee  must be sent  (i) to such  Person  at the  address  specified  for such
communications in the Note Register,  or at such other address as the Noteholder
shall have  specified to the Trustee in writing and (ii) if  specified,  to such
other Person as shall be identified in writing to the Trustee by each Noteholder
or its nominee.  Notice under this Section 13.03 will be deemed to be given only
when actually received.

                                       86

         <PAGE>

         (b) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person  entitled to receive such notice,  either
before or after the  event,  and such  waiver  shall be the  equivalent  of such
notice.  Waivers of notice by Noteholders  shall be filed with the Trustee,  but
such filing  shall not be a condition  precedent  to the  validity of any action
taken in reliance upon such waiver.

         (c) Any reports,  documents or other  communications other than notices
to be sent to  Noteholders  may be  telecopied  or mailed,  first-class  postage
prepaid  and  shall be  addressed  to the  Noteholders  and their  nominees  and
designees, if applicable, as set forth in paragraph (a) above.

        Section 13.04 Effect of Headings and Table of Contents.  The Article and
Section  headings herein and the Table of Contents are for convenience  only and
shall not affect the construction hereof.

        Section 13.05  Successors  and Assigns.  All covenants and agreements in
this Indenture by the Issuer shall bind its  successors and assigns,  whether so
expressed or not.

        Section 13.06  Separability.  In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable,  the validity, legality
and enforceability of the remaining  provisions shall not in any way be affected
or unpaired thereby.

        Section 13.07 Benefits of Indenture. Nothing in this Indenture or in the
Notes,  express or  implied,  shall give to any  Person,  other than the parties
hereto, the Noteholders, and any Paying Agent which may be appointed pursuant to
the provisions hereof, and any of their successors hereunder, any benefit or any
legal or  equitable  right,  remedy or claim under this  Indenture  or under the
Notes.

        Section  13.08  Legal  Holidays.  In any case in  which  the date of any
Payment  Date or the Stated  Maturity  of any Note shall not be a Business  Day,
then  (notwithstanding  any  other  provision  of the  Notes or this  Indenture)
payment of  principal,  interest,  or premium,  if any, need not be made on such
date,  but may be made on the next  succeeding  Business Day with the same force
and effect as if made on the nominal date of any such Stated Maturity or Payment
Date and,  assuming  such payment is actually made on such  subsequent  Business
Day, no  additional  interest  shall accrue on the amount so paid for the period
from and after any such nominal date.

         Section  13.09  Governing  Law.  This  Indenture and each Note shall be
construed in accordance with and governed by the internal laws

                                       87

<PAGE>

of the  State of New York  applicable  to  agreements  made and to be  performed
therein, without regard to the conflict of laws provisions of any State.

        Section 13.10 Counterparts. This Indenture may be executed in any number
of  counterparts,  each of which so executed  shall be deemed to be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

        Section  13.11  Obligation.  No  recourse  may  be  taken,  directly  or
indirectly,   against  any  incorporator,   subscriber  to  the  capital  stock,
stockholder,  member, partner, employee, officer or director of the Issuer or of
any  predecessor  or  successor  of the  Issuer  with  respect  to the  Issuer's
obligations  on the Notes or under this  Indenture or any  certificate  or other
writing delivered in connection herewith;  provided,  however, that this Section
13.11 shall not  protect  any Person  from his,  her or its own fraud or willful
misconduct or from any liability that such Person may incur in another  capacity
under the Transaction Documents.

        Section  13.12   Compliance   Certificates   and   Opinions.   Upon  any
application,  order or request by the Issuer or the  Servicer  to the Trustee to
take any  action  under any  provision  of this  Indenture  for which a specific
request  is  required  under this  Indenture,  the  Issuer or the  Servicer,  as
applicable,  shall furnish to the Trustee an Officer's Certificate of the Issuer
or the Servicer, as applicable,  stating that all conditions precedent,  if any,
provided  for in this  Indenture  relating  to the  proposed  action  have  been
complied with,  except that in the case of any such application or request as to
which the furnishing of a different  certificate is specifically required by any
provision of this Indenture relating to such particular  application or request,
no additional certificate need be furnished.

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

                   (a) a statement that each individual signing such certificate
         or opinion has read or has caused to be read such covenant or condition
         and the definitions herein relating thereto;

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

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

                   (d) a statement  as to  whether,  in the opinion of each such
         individual, such condition or covenant has been complied with.


                                       88
<PAGE>

        Section 13.13  Effective  Date of  Transactions.  This Indenture and the
other  Transaction  Documents shall be deemed to be effective and shall be valid
and enforceable as of the Closing Date.

        Section 13.14 Parties will Not Institute Insolvency Proceedings.  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 or any Holder of
Outstanding  Notes (and each Holder of Outstanding Notes so agrees by acceptance
of a Note)  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
the Issuer.


                                       89

<PAGE>




         IN WITNESS  WHEREOF,  the Issuer,  the  Servicer  and the Trustee  have
caused  this  Indenture  to be  duly  executed  by the  persons  thereunto  duly
authorized as of the day and year first above written.

                      TRI FUNDING III, INC., Issuer


             By:
            Name:
           Title:


                      TRENDWEST RESORTS, INC.,
                         Servicer


             By:
            Name:
           Title:


                      NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, Trustee


             By:
            Name:
           Title:


                                       90

<PAGE>

                                    EXHIBIT A


                                INVESTMENT LETTER


                              TRI FUNDING III, INC.
           ______% RECEIVABLES-BACKED NOTES CLASS _____, SERIES 1999-1



TRI Funding III, Inc.
9805 Willows Road
Redmond, Washington 98052

Norwest Bank Minnesota,
  National Association, as Trustee
11000 Broken Land Parkway
Columbia, Maryland  21044

Ladies and Gentlemen:

         ______________________ (the "Purchaser") hereby represents and warrants
to you in connection with its purchase of $_________ in principal  amount of the
above-captioned notes (the "Notes") as follows:

          1. The  Purchaser  is  purchasing  the Notes for its own account or an
account with respect to which it exercises sole investment  discretion and it or
such account is a "QIB" ("Qualified  Institutional Buyer") and is aware that the
sale to it is being  made in  reliance  on Rule  144A  ("Rule  144A")  under the
Securities  Act of 1933,  as amended  ("Securities  Act") and is acquiring  such
Notes for  investment and not with a view to, or for offer or sale in connection
with,  any   distribution   (within  the  meaning  of  the  Securities  Act)  or
fractionalization  thereof or with any  intention of reselling  the Notes or any
part thereof,  subject to any  requirement  of law that the  disposition  of its
property or the  property of such account or accounts be at all times within its
or their  control  and  subject  to its or their  ability  to resell  such Notes
pursuant to Rule 144A.

          2. The  Purchaser  acknowledges  that the Notes have not been and will
not be registered under the Securities Act and may not be sold within the United
States or to, or for the account or benefit of, U.S. persons except as permitted
below.

          3. If the Purchaser is a person other than a foreign purchaser outside
the United States,  it agrees that (i) if it should reoffer,  resell,  pledge or
otherwise  transfer its Note prior to the second anniversary of the later of (a)
the original  issuance of such Note (or any predecessor  Note), and (b) the sale
of such Note (or any  predecessor  Note) by the Issuer or any  affiliate  of the
Issuer  (computed  in  accordance  with  paragraph  (d) of Rule  144  under  the
Securities Act), or

<PAGE>

(ii) if it was at the date of such transfer or during the three months preceding
such date of transfer an affiliate of the Issuer (a) it will do so in compliance
with any  applicable  state  securities  or "Blue  Sky" laws and only (A) to the
Issuer or (B) in compliance  with Rule 144A,  and only if a  certificate  in the
form of  Exhibit  B to the  Indenture  is  delivered  by the  transferee  to the
Trustee,  and (b) it will  give the  transferee  notice of any  restrictions  on
resale of such Note.

          4. The Purchaser  understands that the Notes,  unless otherwise agreed
by the  Issuer  and the  Holder  thereof,  will bear a legend  to the  following
effect:

                  THIS  NOTE HAS NOT BEEN AND WILL NOT BE  REGISTERED  UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"). THE HOLDER
         HEREOF,  BY PURCHASING THIS NOTE,  AGREES FOR THE BENEFIT OF THE ISSUER
         THAT THIS NOTE MAY NOT BE  RESOLD,  PLEDGED  OR  OTHERWISE  TRANSFERRED
         PRIOR  TO  THE  SECOND  ANNIVERSARY  OF THE  ISSUANCE  HEREOF  (OR  ANY
         PREDECESSOR  NOTE HERETO) OTHER THAN IN COMPLIANCE  WITH THE SECURITIES
         ACT  AND  OTHER  APPLICABLE  LAWS  (1)  TO  TRENDWEST   RESORTS,   INC.
         ("TRENDWEST")  OR ANY OF ITS AFFILIATES  CONTROLLED BY TRENDWEST OR (2)
         PURSUANT  TO RULE 144A  UNDER THE  SECURITIES  ACT TO AN  INSTITUTIONAL
         INVESTOR   THAT  THE  HOLDER   REASONABLY   BELIEVES   IS  A  QUALIFIED
         INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A, OR PURCHASING FOR
         THE  ACCOUNT  OF A  QUALIFIED  INSTITUTIONAL  BUYER WHOM THE HOLDER HAS
         INFORMED,  IN EACH CASE,  THAT THE RESALE,  PLEDGE OR OTHER TRANSFER IS
         BEING MADE IN RELIANCE ON RULE 144A, AND UPON THE RECEIPT BY THE ISSUER
         OF SUCH  OTHER  EVIDENCE  ACCEPTABLE  TO THE ISSUER  THAT SUCH  RESALE,
         PLEDGE OR TRANSFER IS IN COMPLIANCE  WITH THE  SECURITIES ACT AND OTHER
         APPLICABLE LAWS.

          5. The Purchaser has received the information, if any, requested by it
pursuant to Rule 144A, has had full  opportunity to review such  information and
has received all additional information necessary to verify such information.

          6. The  Purchaser (i) has such  knowledge and  experience in financial
and business  matters as to be capable of evaluating the merits and risks of its
investment in the Notes,  and (ii) has the ability to bear the economic risks of
its prospective investment and can afford the complete loss of such investment.

          7. The Purchaser  understands that the Issuer,  the Initial  Purchaser
and  others   will  rely  upon  the  truth  and   accuracy   of  the   foregoing
acknowledgments,  representations  and  agreements and agrees that if any of the
foregoing  acknowledgments,  representations  or agreements  deemed to have been
made by it are no longer  accurate,  it will promptly  notify the Issuer and the
Initial Purchaser.  If it is acquiring any Notes as a fiduciary or agent for one
or more investor accounts,  it represents that it has sole investment discretion
with  respect to each such  account and it has full power to make the  foregoing
acknowledgments, representations and agreements on behalf of such account.



<PAGE>

          8. Either (a) The Purchaser will not acquire the Notes with the assets
of any  "employee  benefit  plan" as  defined in  Section  3(3) of the  Employee
Retirement Income Security Act of 1974, as amended ("ERISA") which is subject to
Title I of ERISA or any "plan" as defined in Section  4975 of the Code or (b) no
non-exempt  "prohibited  transaction" under Section 406 of ERISA or Section 4975
of the Code will  occur in  connection  with our  acquisition  or holding of the
Notes.

         The  representations  and warranties  contained herein shall be binding
upon  the  heirs,   executors,   administrators  and  other  successors  of  the
undersigned.  If  there is more  than one  signatory  hereto,  the  obligations,
representations,  warranties and agreements of the  undersigned are made jointly
and severally.

         Executed at _________________________,  _________________________, this
___ day of _____________________, 19___.


---------------------------------             ---------------------------------
  Purchaser's Name and Title (Print)          Signature of Purchaser


---------------------------------
Address of Purchaser


---------------------------------
Purchaser's Taxpayer Identification or
Social Note Number



<PAGE>

                                    EXHIBIT B


                  FORM OF SUPPLEMENT FOR GRANT OF INTERESTS IN
                   SUBSTITUTE CONTRACTS AND UPGRADE CONTRACTS

         Pursuant to Section 4.03(e) and Section 4.03(g) of the Indenture, dated
as of August 1, 1999,  among TRI Funding III,  Inc.  (the  "Issuer"),  Trendwest
Resorts,  Inc. (the "Servicer") and Norwest Bank Minnesota National Association,
as Trustee (the  "Trustee"),  (such Indenture as amended and  supplemented  from
time to time, the  "Indenture"),  attached  hereto as Annex I is a supplement to
Schedule  A of the  Indenture,  which  includes  information  regarding  certain
interests in Contracts, the related Receivables and the related Vacation Credits
that are  hereby  Granted by the Issuer to the  Trustee in  accordance  with the
Indenture.  For purposes of this  Supplement,  all defined terms used herein and
not  otherwise  defined  herein shall have the meanings  assigned to them in the
Indenture.

Dated:

                                                          TRI FUNDING III, INC.




                                       By
                                      Name:
                                     Title:


<PAGE>
                                     ANNEX I


                       SUPPLEMENT FOR SUBSTITUTE CONTRACTS
                              AND UPGRADE CONTRACTS





                                   EXHIBIT C-1


                             FORM OF CLASS A-1 NOTES



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                                   EXHIBIT C-2


                             FORM OF CLASS A-2 NOTES



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                                   EXHIBIT C-3


                             FORM OF CLASS A-3 NOTES



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                                   EXHIBIT C-4


                              FORM OF CLASS B NOTES



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                                   EXHIBIT C-5


                              FORM OF CLASS C NOTES




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                                   EXHIBIT C-6


                              FORM OF CLASS D NOTES





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[Date]
                                  Exhibit D

                             Note Owner Certificate

                 (Confirmation of Party Requesting Information)






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                                     [Date]



[Norwest Bank Minnesota, National Association,                 [Servicer]
  as Trustee
11000 Broken Land Parkway
Columbia, Maryland  21044]


         Re:  TRI Funding III, Inc. Receivables-Backed Notes, Series 1999-1

Ladies and Gentlemen:

         This  letter is  delivered  to you in  connection  with a  request  for
information  by  the  undersigned   beneficial  holder  (the  "Holder")  or  the
undersigned  prospective  transferee (the  "Transferee") of Class ___ Notes (the
"Notes"). The Notes were issued pursuant to the Indenture, dated as of August 1,
1999 (the  "Indenture"),  by and between TRI Funding III,  Inc.,  as issuer (the
"Issuer"),  Trendwest Resorts,  Inc., as servicer (the "Servicer"),  and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"). All terms used
herein  and not  otherwise  defined  shall  have the  meanings  set forth in the
Indenture.  The undersigned hereby certifies,  represents,  and warrants to you,
that:

                  INITIAL BOX AS APPLICABLE:

                  1.                _____   In  the  case  of  a   request   for
                                    information by a direct or beneficial holder
                                    of  Notes:  the  undersigned  is a direct or
                                    beneficial holder of Notes and is requesting
                                    the information solely for use in evaluating
                                    such  party's  investment  in the  Notes and
                                    will   otherwise   keep   such   information
                                    confidential in accordance with its standard
                                    procedures for such information.

                  2.                _____   In  the  case  of  a   request   for
                                    information by a prospective transferee: (i)
                                    the  undersigned   holder  is  a  direct  or
                                    beneficial  holder of Notes and  undersigned
                                    the   requesting   party  is  a  prospective
                                    transferee of the undersigned holder's Notes
                                    and (ii) the undersigned requesting party is
                                    a  prospective   transferee  of  Notes,   is
                                    requesting the

                  information       solely  for  use in  evaluating  a  possible
                                    investment in Notes and will  otherwise keep
                                    such information  confidential in accordance
                                    with  its  standard   procedures   for  such
                                    information.



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         IN WITNESS WHEREOF,  ______________________ has caused this Certificate
Agreement has been executed this _____ day of _________________, 19___.



                              [-------------------------------------]
                              [HOLDER]


                        By:

                              Name:_________________________________

                              Title:________________________________




                              [-------------------------------------]
                              [TRANSFEREE]


                        By:

                              Name:__________________________________

                              Title:_________________________________










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                                   SCHEDULE A


                                CONTRACT SCHEDULE

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                                   SCHEDULE B


                           TARGETED PRINCIPAL BALANCE