




                           THIRD AMENDMENT AND CONSENT

                  THIRD  AMENDMENT  AND CONSENT  dated as of September  30, 1996
(this  "Amendment"),  among TWS  FUNDING,  INC.,  a  Delaware  corporation  (the
"Borrower"), FLAGSTAR CORPORATION, a Delaware corporation ("Flagstar"), and each
financial institution executing this Amendment as a "Lender" (each, a "Lender").

                  PRELIMINARY STATEMENTS:

                  1.  The  Borrower,   Flagstar  and  the  Lender  Parties,  the
Co-Administrative  Agents and the Funding Agent referred to therein have entered
into a Second Amended and Restated  Credit  Agreement dated as of April 10, 1996
(as amended to date,  the "Credit  Agreement";  the terms defined  therein being
used herein as therein defined unless otherwise defined herein).

                  2. The Borrower and Flagstar have  requested  that the Lenders
agree (a) to amend certain provisions of the Credit Agreement as herein provided
and (b) to consent to a variance from Section 5.02(m) of the Credit Agreement to
the  extent  required  to  permit  a change  to  Flagstar's  fiscal  year end as
described on Schedule I hereto.

                  3. The Lenders have expressed  their  willingness to grant the
Borrower's and Flagstar's requests on the terms and conditions set forth below.

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

                  SECTION  1.  Amendments  to the Credit  Agreement.  The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the  conditions  precedent  set forth in  Section 3 hereof,  hereby  amended  as
follows:

                  (a) Section 5.04(a) is amended by deleting therefrom the ratio
         set  opposite  each  of  the  Rolling   Periods  set  forth  below  and
         substituting  therefor  the ratio set forth  below  opposite  each such
         Rolling Period:


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                  Rolling Periods Ending                 Ratio
                  ----------------------                 -----
                  September 30, 1996                  8.40 : 1.00
                  December 31, 1996                   8.40 : 1.00
                  March 31, 1997                      8.70 : 1.00
                  June 30, 1997                       8.60 : 1.00
                  September 30, 1997                  8.20 : 1.00
                  December 31, 1997                   8.20 : 1.00
                  March 31, 1998                      8.10 : 1.00

                  (b) Section 5.04(b) is amended by deleting therefrom the ratio
         set  opposite  each  of  the  Rolling   Periods  set  forth  below  and
         substituting  therefor  the ratio set forth  below  opposite  each such
         Rolling Period:

                  Rolling Periods Ending                  Ratio
                  ----------------------                  -----
                  September 30, 1996                   4.00 : 1.00
                  December 31, 1996                    4.05 : 1.00
                  March 31, 1997                       4.25 : 1.00
                  June 30, 1997                        4.25 : 1.00
                  September 30, 1997                   4.05 : 1.00
                  December 31, 1997                    4.00 : 1.00
                  March 31, 1998                       3.90 : 1.00

                  (c) Section 5.04(c) is amended by deleting therefrom the ratio
         set  opposite  each  of  the  Rolling   Periods  set  forth  below  and
         substituting  therefor  the ratio set forth  below  opposite  each such
         Rolling Period:

                  Rolling Periods Ending                  Ratio
                  ----------------------                  -----
                  September 30, 1996                   1.00 : 1.00
                  December 31, 1996                    1.05 : 1.00
                  March 31, 1997                       1.00 : 1.00
                  June 30, 1997                        1.03 : 1.00
                  September 30, 1997                   1.05 : 1.00
                  December 31, 1997                    1.05 : 1.00
                  March 31, 1998                       1.10 : 1.00

                  (d)  Section   5.04(d)  is  amended  by  deleting  the  amount
"$115,000,000"   set  opposite   "Fiscal  Year  Ending  in  December  1997"  and
substituting therefor the amount "$100,000,000."

                  SECTION 2 Consent. Effective as of the date hereof and subject
to the satisfaction of the conditions  precedent set forth in Section 3, hereof,
the Required  Lenders hereby  consent to a variance from Section  5.02(m) of the
Credit Agreement to the extent required to permit a change to Flagstar's  fiscal
year as described on Schedule I hereto.

                  SECTION 3. Conditions of  Effectiveness.  This Amendment shall
become  effective  when, and only when (a) the Funding Agent shall have received
counterparts  of this  Amendment  executed  by the  Borrower,  Flagstar  and the
Required  Lenders  or,  as to any of the  Lenders,  advice  satisfactory  to the
Funding Agent that such Lenders have executed  this  Amendment,  (b) the Funding
Agent shall have received the Consent attached hereto,  signed by each Guarantor
and  Grantor  (as such term is defined in the  Security  Agreement)  and (c) the
Funding  Agent  shall  have  received a  certificate,  dated the date of receipt
thereof by the Funding Agent, in form and substance  satisfactory to the Funding
Agent,  signed by a duly authorized officer of Flagstar,  to the effect that (i)
the  representations and warranties set forth in Section 4 hereof are correct on
and as of the date of such certificate as though made on and as of such date and
(ii) no event has occurred and is continuing that constitutes a Default.

                  SECTION 4. Representations and Warranties. Flagstar represents
and warrants as follows:

                  (a) The execution, delivery and performance by each Loan Party
         of this Amendment and the Credit Agreement,  as amended hereby, and the
         consummation of the transactions  contemplated hereby and thereby,  are
         within such Loan Party's corporate powers, have been duly authorized by
         all necessary  corporate  action on the part of such Loan Party, and do
         not (i) contravene such Loan Party's  charter or by-laws,  (ii) violate
         any law (including,  without limitation, the Securities Exchange Act of
         1934, as amended),  rule,  regulation  (including,  without limitation,
         Regulation X of the Board of Governors of the Federal  Reserve  System,
         as in effect from time to time),  order,  writ,  judgment,  injunction,
         decree,  determination  or award  applicable  to any Loan Party,  (iii)
         conflict  with or result in the  breach  of,  or  constitute  a default
         under,  any contract,  loan  agreement,  indenture,  mortgage,  deed of
         trust,  lease or other  instrument  binding  on or  affecting  any Loan
         Party,  any of its  Subsidiaries  or any of  their  properties  or (iv)
         result in or require the creation or imposition of any Lien (other than
         Liens created by or permitted  under the Loan  Documents)  upon or with
         respect  to any of the  properties  of  any  Loan  Party  or any


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         of its Subsidiaries except, as to (ii) and (iii) above, as would not,
         and would not be reasonably likely to, have a Material Adverse Effect.

                  (b) No  authorization  or approval or other  action by, and no
         notice to or filing with, any governmental authority or regulatory body
         or any other third party is required for the due  execution,  delivery,
         recordation,  filing or performance by any Loan Party of this Amendment
         or  the   Credit   Agreement,   as   amended   hereby,   except   those
         authorizations, approvals, actions, notices and filings which have been
         duly obtained, take, given, or made and are in full force and effect.

                  (c) This Amendment and the Consent have been duly executed and
         delivered by each Loan Party party thereto.  The Credit  Agreement,  as
         amended hereby, is the legal, valid and binding obligation of each Loan
         Party party thereto,  enforceable against such Loan Party in accordance
         with its terms, except as the enforceability  thereof may be limited by
         bankruptcy,  insolvency,  moratorium,  reorganization  or other similar
         laws  affecting  creditors'  rights  generally  and  subject to general
         principles of equity  (regardless of whether considered in a proceeding
         in equity or at law).

                  SECTION 5. Reference to and Effect on the Loan Documents.  (a)
Upon the  effectiveness  hereof,  on and after the date hereof each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import  referring to the Credit  Agreement and each  reference in the other Loan
Documents  to the Credit  Agreement,  "thereunder",  "thereof"  or words of like
import referring to the Credit  Agreement,  shall mean and be a reference to the
Credit Agreement, as amended hereby.

                  (b) Except as specifically  provided,  the Credit Agreement is
and shall  continue to be in full force and effect and is hereby in all respects
ratified and confirmed.

                  (c)  The  execution,   delivery  and   effectiveness  of  this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any  right,  power or remedy of any  Lender  or  Co-Administrative  Agent or the
Funding Agent under any of the Loan  Documents,  nor  constitute a waiver of any
provision of any of the Loan Documents.

                  SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.

                  SECTION 7.  Execution in  Counterparts.  This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed to be an original and all of which taken  together  shall  constitute but
one and the same agreement.  Delivery of an executed  counterpart of a signature
page to this  Amendment  by  telecopier  shall be  effective  as  delivery  of a
manually executed counterpart of this Amendment.


<PAGE>


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

Borrowers


                              TWS FUNDING, INC.


                              By:
                                  ----------------------------------------------
                                  Title:  Vice President and Treasurer


                              FLAGSTAR CORPORATION


                              By:
                                  ----------------------------------------------
                                  Title:  Vice President and Treasurer


Lenders

                                  ---------------------------------------------
                                  [Print or type name of institution]



                              By:
                                 -----------------------------------------------
                                  Title:



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