<PAGE>
                                          
                                          
                                          
                                          
                                          
                                MANAGEMENT AGREEMENT
                                   by and between
                                          
                                          
                                          
                             KSL DESERT RESORTS, INC.,
                               a Delaware corporation
                                          
                                        AND
                                          
                              KSL LAND II CORPORATION,
                               a Delaware corporation


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                                  TABLE OF CONTENTS
<TABLE>
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                                                                           Page
<S>            <C>                                                         <C>
ARTICLE 1.     CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE 2.     SCOPE OF DEVELOPMENT SERVICES . . . . . . . . . . . . . . . . . . . .3

               2.1.      General . . . . . . . . . . . . . . . . . . . . . . . . . .3
               2.2.      Zoning and Land Use Approvals . . . . . . . . . . . . . . .5
               2.3.      Construction of Project Improvements/Company
                         Development Proceeds. . . . . . . . . . . . . . . . . . . .6
               2.4.      Selection of Professionals and Subcontractors, 
                         Award of Contracts and Project Control. . . . . . . . . . .7
               2.5.      Coordination of Development Documents . . . . . . . . . . .8
               2.6.      Inspection. . . . . . . . . . . . . . . . . . . . . . . . .8
               2.7.      Storage of Purchased Items; Security. . . . . . . . . . . .8
               2.8.      Bonding of Work . . . . . . . . . . . . . . . . . . . . . .8
               2.9.      Warranty Services.. . . . . . . . . . . . . . . . . . . . .8
               2.10.     Additional Services.. . . . . . . . . . . . . . . . . . . .8

ARTICLE 3.     OTHER DUTIES OF THE MANAGER . . . . . . . . . . . . . . . . . . . . .9

               3.1.      Dealing with the Company. . . . . . . . . . . . . . . . . .9
               3.2.      Insurance Coverage. . . . . . . . . . . . . . . . . . . . .9
               3.3.      Records and Inspection. . . . . . . . . . . . . . . . . . 10
               3.4.      Reports.. . . . . . . . . . . . . . . . . . . . . . . . . 10
               3.5.      Standard of Care. . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 4.     AUTHORITY OF THE MANAGER. . . . . . . . . . . . . . . . . . . . . . 11

               4.1.      Management. . . . . . . . . . . . . . . . . . . . . . . . 11
               4.2.      Business Plan and Budget: Limitation on Authority.. . . . 11

ARTICLE 5.     SALE OF THE LAND. . . . . . . . . . . . . . . . . . . . . . . . . . 12

               5.1.      Sales Plan. . . . . . . . . . . . . . . . . . . . . . . . 12
               5.2.      Sales Commissions.. . . . . . . . . . . . . . . . . . . . 12
               5.3.      Sales Costs.. . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE 6.     CONSULTATION; COMMUNICATION . . . . . . . . . . . . . . . . . . . . 13

               6.1.      Current Advice and Consultation.. . . . . . . . . . . . . 13
               6.2.      Telephone Conference Meetings . . . . . . . . . . . . . . 13

ARTICLE 7.     COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

               7.1.      Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
               7.2.      Statements. . . . . . . . . . . . . . . . . . . . . . . . 14
               7.3.      Expenses of the Manager.. . . . . . . . . . . . . . . . . 14
               7.4.      Expenses of the Company.. . . . . . . . . . . . . . . . . 15

<PAGE>

               7.5.      Cash Discounts and Rebates. . . . . . . . . . . . . . . . 17

ARTICLE 8.     REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . 17

ARTICLE 9.     TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

               9.1.      Term. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
               9.2.      Termination.. . . . . . . . . . . . . . . . . . . . . . . 18
               9.3.      Manager's Obligations After Termination.. . . . . . . . . 18
               9.4.      Rights of Termination . . . . . . . . . . . . . . . . . . 19

ARTICLE 10.    INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 20

               10.1.     Indemnity by Manager. . . . . . . . . . . . . . . . . . . 20
               10.2.     Indemnity by Company. . . . . . . . . . . . . . . . . . . 20

ARTICLE 11.    MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

               11.1.     Arbitration.. . . . . . . . . . . . . . . . . . . . . . . 20
               11.2.     Assignment. . . . . . . . . . . . . . . . . . . . . . . . 20
               11.3.     Amendments. . . . . . . . . . . . . . . . . . . . . . . . 21
               11.4.     No Implied Waivers: Remedies. . . . . . . . . . . . . . . 21
               11.5.     Notices.. . . . . . . . . . . . . . . . . . . . . . . . . 21
               11.6.     Attorneys' Fees.. . . . . . . . . . . . . . . . . . . . . 22
               11.7.     Headings... . . . . . . . . . . . . . . . . . . . . . . . 22
               11.8.     Severability. . . . . . . . . . . . . . . . . . . . . . . 22
               11.9.     Governing Law.. . . . . . . . . . . . . . . . . . . . . . 22
               11.10.    Counterparts. . . . . . . . . . . . . . . . . . . . . . . 22
               11.11.    Company Approval. . . . . . . . . . . . . . . . . . . . . 22

</TABLE>

<PAGE>

                                 MANAGEMENT AGREEMENT

     
       THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of the 30th day of April, 1998, to be effective as of April 1, 1998 (the
"Effective Date") by and between KSL LAND II CORPORATION, a Delaware corporation
(the "Manager"), and KSL DESERT RESORTS, INC., a Delaware corporation (and its
affiliates and subsidiaries) (the "Company").
                                          
                                     RECITALS:

A.     The Company intends to subdivide, entitle, develop, and sell that
       certain real property in the City of La Quinta, State of California,
       adjacent to the La Quinta Resort & Club commonly referred to by Company
       as La Quinta Resort Homes (the "Land"), including the development and
       sale of single family detached residential units thereon, all in
       accordance with the Business Plan and Budget of the Company.  The Land,
       as improved and developed with all engineering, site development,
       on-site infrastructure and single family detached residential units in
       accordance with the Business Plan and Budget and the adjacent real
       property to be improved with driveways, parking areas, sidewalks,
       landscaping and recreational amenities (collectively the "Amenities")
       are collectively referred to in this Agreement as the "Project."

B.     The Company hereby appoints Manager to manage the Project as specified
       in this Agreement.

C.     The Manager shall manage all aspects of the Project and shall perform,
       or cause to be performed, all of the services set forth in this
       Agreement (collectively, the "Development Services").

D.     The Manager is willing to manage the Project and to perform the
       Development Services for the Company.

E.     The Manager hereby acknowledges that Company intends to assign all of
       its rights, title, interest and obligations under this Agreement to its
       subsidiary, Las Casitas Corporation.
                                          
                                     AGREEMENT

       NOW, THEREFORE, in consideration of the promises and the mutual
covenants in this Agreement, the parties agree as follows:


                                      ARTICLE 1.

                                 CERTAIN DEFINITIONS
       

       Capitalized terms not otherwise defined in this Agreement shall have the
definitions set forth in this Section.

<PAGE>

       "AFFILIATE" means, as to any Person, any other Person that directly or
       indirectly through one or more intermediaries, controls, is controlled
       by, or is under common control with that Person.

       "AMENITIES" has the meaning set forth in the Recitals to this Agreement.

       "BUSINESS PLAN AND BUDGET" means the Company's Initial Business Plan and
       Budget, as such document may be amended from time to time by Manager and
       the Company.

       "CLAIMS" has the meaning given to such term in Section 10.1 of this
       Agreement.

       "COMPANY WARRANTY" shall have the meaning set forth in Section 2.9
       hereof.

       "CONTRACTS" has the meaning given to such term in Section 2.4(e) of this
       Agreement.

       "CONTRACTORS" has the meaning set forth in Section 2.4(a) of this
       Agreement.

       "DEVELOPMENT DOCUMENTS" has the meaning set forth in Section 2.1(i) of
       this Agreement.  Wherever in this Agreement a reference is made to the
       Development Documents, it shall mean and refer to the Development
       Documents which have been approved by the Company.

       "DEVELOPMENT SERVICES" has the meaning set forth in the Recitals to this
       Agreement.

       "EFFECTIVE DATE" has the meaning set forth in the first paragraph of
       this Agreement.

       "MANAGER DEFAULT" means a failure of Manager or any of the other Manager
       Parties to carry out their obligations and/or otherwise perform pursuant
       to the terms and conditions of this Agreement.

       "GOVERNMENTAL AUTHORITY" or "Governmental Authorities" shall mean
       individually and collectively the County of Riverside, the State of
       California, the City of La Quinta and any other governmental or
       quasi-governmental agencies having jurisdiction over the Land.

       "INFRASTRUCTURE" has the meaning ascribed thereto in Section 2.3(a) of
       this Agreement.

       "LAND" has the meaning set forth in the Recitals to this Agreement.

       "LAND USE APPROVALS" has the meaning ascribed thereto in Section 2.2 of
       this Agreement.

                                          2
<PAGE>

       "MANAGER" means KSL LAND II CORPORATION, a Delaware corporation, and its
       successors and permitted assigns.

       "MANAGEMENT FEE" shall have the meaning set forth in Section 7.1(a) of
       this Agreement.

       "PERMITS" has the meaning given to such term in Section 2.2(d) of this
       Agreement.

       "PERSON" means and includes any individual, corporation, limited
       liability company, joint stock company or association, joint venture,
       consortium, company, trust, bank, pension plan, commingled trust fund or
       similar institutional investor, or other entity, government, or agency,
       and any political subdivision thereof .

       "PROJECT" has the meaning set forth in the Recitals to this Agreement. 
       In addition, "Project" shall also include the offsite construction of
       maintenance facilities and an employee parking lot to replace the
       maintenance facilities and employee parking lot previously located on
       portions of the Land.

       "PROJECT COSTS" has the meaning set forth in Section 7.4(a) of this
       Agreement.

       "PROJECT SALES REVENUE" shall mean all gross revenues from Project sales
       before deduction of sales expenses. Project Sales Revenue shall not
       include any fee or other credits.

       "PUBLIC FACILITIES APPROVALS" has the meaning set forth in Section
       2.2(c) of this Agreement.

       "SALES FEE" shall have the meaning set forth in Section 7.1(b) of this
       Agreement.

       "SINGLE FAMILY DETACHED UNITS" means all single family detached homes
       constructed and sold by the Company on the Land.

       "WARRANTY WORK" shall have the meaning set forth in Section 2.9 of this
       Agreement.


                                      ARTICLE 2.

                            SCOPE OF DEVELOPMENT SERVICES


2.1.   GENERAL. The Manager shall, consistent with the Business Plan and
Budget, use its commercially reasonable efforts to entitle, subdivide, develop,
market, and sell the Land including the construction, marketing, and sale of
single family detached units on the Land, and to construct the Amenities, all as
Manager, in its good faith business judgment, deems necessary to maximize the
Net Profits of the Company.

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       In connection therewith, the Manager shall develop, coordinate, review,
process, amend, pursue and use commercially reasonable efforts to accomplish,
the following substantially in accordance with the Business Plan and Budget: 

       (i)       the preparing (and/or, if applicable, reviewing) of all plans
                 and specifications and related documents (collectively, the
                 "Development Documents") necessary for the development of the
                 entire Project, including all architectural and engineering
                 analysis and plans needed for such purposes, 

       (ii)      securing all site plan approvals, amendments to the site plan,
                 zoning and specific plan amendments, and any special
                 exceptions, use permits, or variances which the Manager deems
                 necessary,

       (iii)     preparing and obtaining approval of all tentative and final
                 subdivision maps, including final parcel maps and boundary
                 line adjustments, which the Manager determines to be
                 necessary, 

       (iv)      securing all permits and approvals necessary for the grading
                 and preparation of buildable single family lots and for the
                 construction of the single family detached units, 

       (v)       implementing all requirements set forth in, and otherwise
                 ensuring compliance with, the Land Use Approvals,

       (vi)      developing and implementing a marketing program for the sale
                 of all single family detached units constructed at the
                 Project, 

       (vii)     ensuring that all necessary and required off-site and on-site
                 infrastructure improvements , including utilities, roads,
                 water, sanitary sewer, storm water management are fully and
                 completely installed pursuant to, and in accordance with, the
                 Business Plan and Budget and the Development Documents, 

       (viii)    ensuring that all single family detached units and other
                 on-site improvements including Amenities, Landscaping and
                 parking areas are fully and completely constructed pursuant
                 to, and in accordance with, the Business Plan and Budget and
                 the Development Documents, 

       (ix)      causing all Warranty Work to be completed for the single
                 family detached units constructed and sold by the Company, 

       (x)       preparing any modifications to the Business Plan and Budget,
                 subject to the written approval of Company, as and to the
                 extent deemed necessary by Manager,

                                          4
<PAGE>

       (xi)      engaging and supervising all necessary consultants, engineers,
                 architects, supervisors, subcontractors, and other personnel
                 to complete the design, development, construction, marketing
                 and sale of the Project,

       (xii)     coordinating all materials and documents with title insurance
                 and escrow companies relating to the Project,

       (xiii)    providing all supervisory, overhead, and other similar
                 services necessary for the carrying out of this Agreement in
                 accordance with the terms hereof,

       (xiv)     obtaining all insurance required in this Agreement,

       (xv)      preparing and recording covenants, conditions, and
                 restrictions ("CC&R's") and easements for ingress, egress and
                 use of any Amenities and parking areas for the Project,
                 subject to the written approval of Company, which shall not be
                 unreasonably withheld,

       (xvi)     arranging all appropriate bonds, or letters of credit in lieu
                 thereof, in favor of Governmental Authorities that may be
                 required to develop the Project, the cost of which shall be a
                 Project Cost,

       (xvii)    keeping all books and records in accordance with this
                 Agreement, and 

       (xviii)   performing such additional Development Services as Manager
                 deems necessary to ensure the successful and timely completion
                 of each and every phase of the Project in substantial
                 accordance with the Business Plan and Budget, and any other
                 related goals which the Company otherwise may wish to pursue.

2.2.   ZONING AND LAND USE APPROVALS.  As part of the Development Services, the
Manager shall use commercially reasonable efforts to ensure that the Company
obtains all necessary approvals and permits for the development, improvement,
and sale of the Land and, for the construction and sale of the single family
detached units, all in substantial compliance with the Business Plan and Budget
(collectively the "Land Use Approvals"), and to ensure that the development and
improvement of the Project as contemplated by the Development Documents is in
substantial compliance with the Land Use Approvals.  Without limiting the
foregoing, Manager shall:

       (a)  Make application for and seek to obtain, all zoning, specific plan
            amendments, special exceptions, use permits, variances, or other
            zoning approvals necessary for the development of the Project.

       (b)  Prepare (or cause to be prepared) all site plan(s), tentative and
            final subdivision maps, and final parcel maps necessary for the
            development of the Project; apply for approval of such maps by the
            Governmental Authorities; and comply in a timely manner with all
            development conditions to such maps. 

                                          5
<PAGE>

       (c)  Make application for and seek to obtain all permits, licenses,
            easements, and approvals necessary to obtain, establish, or
            construct all on-site and off-site utilities and other off-site
            improvements necessary for the development of the Project (the
            "Public Facilities Approvals").

       (d)  Make application for and seek to obtain all building or
            construction permits, licenses, and/or approvals (the "Permits")
            necessary for the grading of the Land, installation of the
            Infrastructure, and construction of the single family detached
            units, landscaping, Amenities and parking areas.

       (e)  Without limiting the generality of subsections (a), (b), (c), and
            (d) above, diligently and in good faith (i) negotiate with the
            applicable Governmental Authorities to obtain approval of the Land
            Use Approvals, (ii) amend the Land Use Approvals, including any
            conditions thereto, (to the extent deemed necessary by Manager),
            and (iii) take all other actions which the Manager deems necessary
            to maintain and ensure compliance with the Land Use Approvals.

       (f)  In connection with obtaining and/or maintaining the Land Use 
            Approvals described in subsections (a), (b), (c), and (d) above, on
            an ongoing and timely basis, arrange, attend, and speak on behalf
            of the Company at, any and all meetings or hearings necessary or
            appropriate for the efficient and expeditious processing of
            applications to obtain or maintain such Land Use Approvals.  The
            Manager shall advise Company of all noticed public meetings or
            hearings with sufficient advance notice to enable Company to elect
            to attend such meetings or hearings.

2.3.   CONSTRUCTION OF PROJECT IMPROVEMENTS/COMPANY DEVELOPMENT PROCEEDS. 
Subject to obtaining all required Land Use Approvals, Public Facilities
Approvals, and Permits, the Manager shall use its commercially reasonable
efforts to:

       (a)  Ensure that the transportation, utility, grading, water, sanitary
            sewer, and storm water management facilities or improvements, both
            on-site and off-site, contemplated by the Development Documents and
            the Business Plan and Budget (the "Infrastructure"), and the single
            family detached units, landscaping, Amenities and parking areas are
            constructed and completed at such times as shall be set forth in
            the Business Plan and Budget.

       (b)  Monitor the construction and completion of all Infrastructure and
            single family detached units, landscaping, Amenities and parking
            areas and ensure that such construction is in substantial
            compliance with the Business Plan and Budget and the Development
            Documents, and take such actions as required by the applicable
            Governmental Authorities to secure the acceptance of any
            Infrastructure to be maintained by the applicable Governmental
            Authorities.

       (c)  On a monthly basis (and to the extent reasonably possible, in
            advance of the need for funds), (i) take all actions necessary or
            appropriate to assist the Company in 


                                          6
<PAGE>

            making requisitions for all necessary development and construction
            funds that have been approved as part of the Business Plan and
            Budget and that are required in order for the Company to timely
            complete the development and construction of the Project in
            accordance with the  Business Plan and Budget ("Company Development
            Proceeds"), and (ii) provide all necessary applications,
            certificates, releases, and other documentation, back up and
            requirements as conditions for the funding of Company Development
            Proceeds.

       (d)  Take all actions necessary or appropriate to assist the Company in
            complying with all requirements of any construction loan, including
            without limitation, complying with all conditions and requirements
            for the funding of any such construction loan and taking all
            actions necessary or appropriate in making requisitions to the
            lender for development and/or construction funds.

2.4.   SELECTION OF PROFESSIONALS AND SUBCONTRACTORS, AWARD OF CONTRACTS AND
PROJECT CONTROL.  As part of the Development Services and in substantial
compliance with the Business Plan and Budget, the Manager shall:

       (a)  From time to time, as necessary or appropriate, hire on behalf of
            the Company contractors (the "Contractors") whose services may be
            necessary or appropriate to provide planning, engineering,
            architectural, development, construction, consulting, marketing, or
            other services for the Project.

       (b)  Disclose to the Company in writing any ownership or beneficial
            interest which the Manager or any of its Affiliates has with any
            Contractors prior to the Company agreeing to engage such Contractor
            to perform any Contracts in connection with the Project.

       (c)  Coordinate, monitor, and review the work of all such Contractors to
            promote satisfactory performance of the services to be provided by
            such Contractors.

       (d)  Review bids and award Contracts or reject bids, all as the Manager
            deems appropriate, in accordance with the Business Plan and Budget.

       (e)  Use forms of contracts deemed acceptable to Manager, to engage the
            Contractors (the "Contracts").  All Contracts shall be executed by
            the Manager as the general contractor for the Company.

       (f)  Coordinate the work of all Contractors in accordance with the
            Business Plan and Budget and workmanship standards as reflected in
            the Development Documents and the Business Plan and Budget.  

       (g)  Schedule and conduct development and progress meetings at which the
            Contractors and the Manager can discuss jointly such matters as
            procedures, progress, problems, and scheduling; take such actions
            as are necessary to maintain, if possible, adherence to quality
            standards and schedules as set forth in 


                                          7
<PAGE>

            the Business Plan and Budget and Development Documents; and replace
            any Contractor or any other Person when, in the Manager's best
            professional judgment, such replacement is required or advisable to
            complete the Project in a manner consistent with the Business Plan
            and Budget.

2.5.   COORDINATION OF DEVELOPMENT DOCUMENTS.  As part of the Development
Services, the Manager shall review all existing Development Documents and all
additional Development Documents as they are being prepared.  

2.6.   INSPECTION.  As part of the Development Services, the Manager shall
conduct inspections of the work of Contractors as Manager deems necessary to
verify that the work is being performed in substantial accordance with the
Development Documents and the Business Plan and Budget.

2.7.   STORAGE OF PURCHASED ITEMS; SECURITY.  As part of the Development
Services, the Manager shall monitor the delivery of, and, if Manager deems
necessary, arrange storage, protection, and/or security for, all materials,
systems, and equipment which are to be used in the development of, or
incorporated into, the Project.  

2.8.   BONDING OF WORK.  To the extent that any bonds or other forms of surety
are necessary in connection with any aspect of the Development Services,
including, without limitation, obtaining or maintaining approvals from any
Governmental Authority, constructing the Infrastructure or single family
detached units, landscaping, Amenities and parking areas, or otherwise, as part
of the Development Services, and to the extent Company Development Proceeds are
available therefor, the Manager shall be responsible for submitting and
completing applications on behalf of the Company for the purpose of obtaining
and posting bonds or other appropriate forms of surety, and, for taking all
actions necessary or advisable to secure the release of any such bonds or other
forms of surety.  The Manager shall use its reasonable efforts to ensure that
all necessary development work is properly and timely performed as may be
necessary to ensure that none of the bonds (or other forms of surety) are called
by any lender or applicable Governmental Authority.  Manager shall execute, on
behalf of Company, any bond or construction completion guarantees.

2.9.   WARRANTY SERVICES.  Manager shall provide, or cause to be provided, all
warranty services (the "Warranty Work")  required under the Company's one-year
limited warranty (the "Company Warranty").  Any funds expended by Manager to
perform Warranty Work required under the Company Warranty shall be reimbursable
to Manager by the Company.  Expenditures to perform other customer service work
not covered by the Company Warranty which Manager determines are necessary and
in the best interest of the Company is reimbursable to Manager by Company as a
Project Cost.

2.10.  ADDITIONAL SERVICES.  In addition to the specific services and duties
expressly stated herein, and as part of the Development Services, the Manager
shall provide such other assistance consistent with the scope hereof as the
Company may reasonably require to achieve its objectives set forth in the
Business Plan and Budget.

                                          8
<PAGE>


                                      ARTICLE 3.

                             OTHER DUTIES OF THE MANAGER


3.1.   DEALING WITH THE COMPANY.

       (a)  The Manager shall not, except for the compensation payable to the
            Manager pursuant to Article 7 herein, (i) receive any commissions,
            fees, or other payments with respect to the purchase, management,
            development, or liquidation or sale of all or any part of the Land,
            or the financing or refinancing thereof, or (ii) receive any other
            compensation, fees, or other payments with respect to the business
            or operations of the Company.

       (b)  The Manager is acting as an agent of the Company in its capacity
            hereunder subject to the limitations on such agency as set forth in
            this Agreement.

       (c)  The Manager shall employ and/or retain the services of a sufficient
            number of capable employees to properly and adequately  perform and
            complete its duties hereunder, or the Manager shall engage such
            independent contractors as the Manager deems necessary to
            supplement or to complement the Manager's employees so as to
            enhance its abilities to properly and adequately perform its duties
            hereunder.  The Manager shall be responsible for all employees of
            Manager and all independent contractors and consultants hired by
            Manager to assist Manager in performing its duties hereunder. 
            Moreover, all matters pertaining to the employment, supervision,
            compensation, promotion, and discharge of the Manager's employees
            and others engaged by the Manager to assist Manager in performing
            its duties hereunder are the responsibility of the Manager. 
            Subject to Company's obligations under Section 7.4 of this
            Agreement, in no event shall the Company be the employer of such
            employees, contractors, or consultants, nor shall the Company ever
            be directly responsible for their compensation.  The Manager shall
            comply, in good faith, with all applicable laws and regulations
            relating to worker's compensation, social security, income and
            withholding tax, unemployment insurance, hours of labor, wages,
            working conditions, and other employer-employee related matters.

3.2.   INSURANCE COVERAGE.  At all times that Manager, its employees, agents,
consultants or independent contractors are on the Project or other property
owned and/or controlled by Company, its parent company or any of its affiliates,
and throughout the term of this Agreement, Manager shall carry and maintain in
full force and effect, at the cost and expense of Manager as a Project Cost, the
following insurance policies with insurance companies having an A.M. Best & Co.
rating of A-X or better and admitted to do business in the State of California.
Such policies shall include a provision requiring a minimum of thirty (30) days
notice to Company of any change or cancellation.  Manager shall provide Company
with certificate(s) of insurance evidencing the policies listed below prior to
the commencement of this Agreement.  Company, KSL Desert Resorts, Inc., a
Delaware corporation ("Desert Resorts") and their respective, 

                                          9
<PAGE>

subsidiary and affiliated entities, shall be named as additional insureds as
their interests may appear for the insurance described in Subsections (a) and
(b) hereof.  All insurance policies and the coverage evidenced thereof to be
carried and maintained by Manager hereunder, shall be primary coverage and any
of Company's, Desert Resorts' and their respective, subsidiary and affiliated
entities insurance coverage shall be deemed excess and noncontributing with such
primary coverage provided by Manager.

       (a)  Comprehensive General Liability insurance ("CGL Insurance") in an
            amount of $3,000,000 per occurrence applicable specifically to the
            Project without offset or reduction as a result of other projects
            of or claims against, Company.  Such CGL Insurance shall include
            the following coverages: contractual liability, premises
            operations, personal injury, broad form property damage and
            independent contractors;
       
       (b)  Comprehensive Automobile Liability insurance on all vehicles used
            in connection with this Agreement, in an amount of $1,000,000
            combined single limits, for bodily injury and property damage per
            occurrence; and
       
       (c)  Workers' Compensation insurance in accordance with the provisions
            of the Workers' Compensation Act of California for all its
            employees.

       Manager shall require its subcontractors and/or independent contractors,
if any, similarly to provide the insurance listed in Subsections 3.2 (a), (b)
and (c).


3.3.   RECORDS AND INSPECTION.

       (a)  The Manager shall assemble and retain all contracts, agreements,
            and other records and data as may be reasonably necessary to carry
            out Manager's functions hereunder, and similar records for
            functions performed by the Contractors and other third parties in
            connection herewith.  Notwithstanding the generality of the
            foregoing, the Manager shall retain a complete set of the
            Development Documents.

       (b)  The Manager shall keep and maintain books of contracts and records
            of the Company relating to (i) services performed under this
            Agreement, and (ii) the development, operations, expenses, and
            proceeds of sales of the Land and single family detached units. 

       (c)  The Company or any designee thereof shall have the right, at any
            time during ordinary business hours, to review at Manager's
            principal office any or all such books, records, agreements, or
            other data or documents concerning the Company, the Project, or the
            Land; and Manager shall cooperate, and cause its employees,
            contractors, and agents to cooperate fully in connection therewith.

3.4.   REPORTS.

                                          10
<PAGE>

       (a)  The Manager shall record the progress of the Project and submit
            written reports to the Company in such forms and at such times as
            Company may reasonably require, including without limitation,
            information on (i) the status of all Land Use Approvals, (ii) the
            activities of all contractors, (iii) the percentage of work which
            each contractor has completed, (iv) any material variances between
            the actual and contemplated completion dates, (v) any material
            variances between actual and budgeted costs, and (vi) the progress
            in the sale of the Land and single family units.  If the Manager
            becomes aware of any material default under or nonconformance with
            the Development Documents or the Business Plan and Budget, or any
            other situation, fact, or occurrence which will have a material
            adverse impact upon the development or marketing of the Project, or
            cause a material deviation in the Business Plan and Budget, the
            Manager shall give prompt written notice to Company.

       (b)  The Manager, shall prepare and provide to Company at Company's
            request, quarterly financial reports and business summaries of the
            Project.

3.5.   STANDARD OF CARE.  The Manager shall perform its duties and obligations
under this Agreement in good faith, using commercially reasonable efforts, and
in accordance with its best professional judgment, all to further the rights,
interests, and objectives of the Company. 


                                      ARTICLE 4.

                               AUTHORITY OF THE MANAGER


4.1.   MANAGEMENT.  The Manager shall manage the Company's day-to-day business
and operations and perform all other services set forth in this Agreement. 
Manager is prohibited from taking any actions not reasonably contemplated in
this Agreement or the Business Plan and Budget without the written consent of
the Company.

4.2.   BUSINESS PLAN AND BUDGET: LIMITATION ON AUTHORITY.  

       (a)  Concurrently with the execution and delivery hereof, Manager and
            Company have approved the Initial Business Plan and Budget for the
            Company.  Except for such "material deviations" to the Business
            Plan and Budget as set forth below, Manager may, in good faith,
            modify the Business Plan and Budget from time to time, without
            Company's approval, provided Manager shall promptly furnish Company
            with a copy of any such modification.  However, the Manager may not
            take any actions which materially deviate from the Business Plan
            and Budget without the written consent of Company.  

       (b)  Subject to those limitations on Manager's authority expressly set
            forth in this Agreement, Manager shall have the right and authority
            to enter into all Contracts or any agreements, written or oral, for
            the development or improvement of the Land, or for the sale of all
            or any portion of the Land or for the performance of any work for
            the Project; grant easements or encumbrances with respect to the 

                                          11
<PAGE>

            Land; engage the services of any Contractors on behalf of the
            Company; and make commitments to any Governmental Authorities with
            respect to the Project, which Manager, in accordance with the
            standard of care set forth in Section 3.5, deems to be in the best
            interest of the Company.


                                      ARTICLE 5.

                                   SALE OF THE LAND


5.1.   SALES PLAN.  The Manager shall diligently market all single family
detached units constructed for sale in accordance with the Business Plan and
Budget and otherwise in accordance with the Company's marketing objectives, and
shall negotiate the sale of such single family detached units on terms and
conditions consistent with the Business Plan and Budget. The Manager shall
develop sales procedures and shall develop or cause to be developed all
marketing and promotional materials.  The Manager may select, retain, and
coordinate the services of licensed brokers, if deemed necessary by Manager, in
accordance with Section 5.2 below.  Notwithstanding the foregoing, Manager may
not without the written consent of Company lower the sales price for any
particular single family detached unit (which includes a lowering of the
effective price by the granting of price discounts and non-cash incentives) more
than five percent (5%) below the base price set forth in the Business Plan and
Budget.  In the event Company approves of a price decrease, the new approved
price shall be deemed the base price for the subject single family detached
unit.  Except as provided above, Manager shall at all times have the sole
authority to establish the sales prices of the single family detached units.  

5.2.   SALES COMMISSIONS.  The Manager and Company agree that Manager may use 
licensed salespersons employed by Manager (or an Affiliate of Manager) (the 
"Salespersons") to market the single family detached units, and/or may use 
independent third-party brokers.  The compensation payable to such 
independent third party brokers may not exceed 4% of the selling price 
(including construction upgrades but expressly excluding furniture, fixtures, 
equipment and other types of personal property) without the prior written 
approval of Company. Any commissions or other compensation payable to the 
Salespersons shall be in such amounts approved as part of the Business Plan 
and Budget.  All such commissions or compensation paid to the Salespersons or 
independent brokers shall be Project Costs and paid out of Company 
Development Proceeds.  Payments made under this Section 5.2 shall not reduce 
the amount of the Sales Fee payable to Manager.

5.3.   SALES COSTS.  The marketing program for the Project developed by Manager
under this Agreement may include marketing, advertising, promotional materials,
and media activities which are exclusive to the Project (the "Direct Sales
Costs"), and may also include marketing, advertising, promotional materials, and
media activities which jointly advertise or promote the Project, together with
other unrelated projects developed by Manager or its Affiliates (the
"Cooperative Sales Costs").  The Company shall not be charged any Cooperative
Sales Costs or Direct Sales Costs, which costs shall be the sole responsibility
of Manager.  The Direct Sales Costs and Cooperative Sales Costs applicable to
the Project are collectively referred to herein as the "Sales Costs".


                                          12
<PAGE>

                                      ARTICLE 6.

                             CONSULTATION; COMMUNICATION


6.1.   CURRENT ADVICE AND CONSULTATION.  In addition to the services described
elsewhere in this Agreement, the Manager shall regularly consult with the
Company and meet with the Company's representatives promptly upon request, and
shall, at the reasonable request of the Company, give advice and recommendations
regarding the development, business, operations, performance, and affairs of the
Project.  In general, the Manager shall inform the Company of any factors that
come to its attention in connection with its activities under this Agreement
that the Manager believes (a) would significantly influence the policies of the
Company as set forth in the Business Plan and Budget, or (b) are necessary for
(i) the protection of the Land, (ii) maximizing the value and marketability of
the Land, or (iii) the disposition of all or any portion of the Land.

6.2.   TELEPHONE CONFERENCE MEETINGS.  The senior management personnel of the
Manager shall make themselves available for telephone conference meetings from
time to time, at the request of the Company, to discuss such matters relating to
the business of the Company as necessary or appropriate.


                                      ARTICLE 7.

                                     COMPENSATION


7.1.   FEES.  Except for Company's payment of all Project Costs and the
expenses of the Company pursuant to Section 7.4 below, as full and complete
compensation for the duties and services performed by the Manager under this
Agreement, the Company shall pay to the Manager compensation as follows:

       (a)  A "MANAGEMENT FEE" equal to six percent (6%) of Project Sales
            Revenues payable as follows: The Management Fee for each single
            family detached unit shall be payable to Manager upon the close of
            escrow for the sale of the applicable unit; provided that Manager
            shall be entitled to receive in advance, a portion of the
            Management Fee during the construction of those units, equal to
            four percent (4%) of the estimated gross sales price for each of
            those units as provided below.  Upon the commencement of work in
            each construction phase, Manager shall deliver to Company an
            estimate of the aggregate gross sales prices for all single family
            detached units in such phase.  Manager shall be entitled to receive
            its advance of the Management Fee as described above for each such
            construction phase in six (6) equal installments, payable monthly,
            commencing on the first day of the month subsequent to the month in
            which a construction phase begins.  There shall be an adjustment at
            close of escrow for each unit in that phase of the remaining amount
            of the Management Fee payable for each such unit based upon the
            actual Project Sales Revenues for such units.

                                          13
<PAGE>

       (b)  A "SALES FEE" payable for each single family unit sold by Company
            equal to two and seventy-five one hundredths percent (2.75%) of
            Project Sales Revenues.  The Sales Fee shall be payable to Manager
            upon the close of escrow for the sale of each single family
            detached unit.  This Sales Fee is in addition to (i) the Management
            Fee payable in paragraph (a) of this Section 7.1 and (ii) all
            commissions or other compensation described in Section 5.2. 

7.2.   STATEMENTS.  No later than ten (10) working days after the end of each
month in which closings of sales of single family detached units have occurred,
the Manager shall prepare, or cause to be prepared, and deliver to Company a
closing statement for such unit sold which shall identify the Project Sales
Revenues for each unit sale and all fees paid to Manager under this Section 7.1.

7.3.   EXPENSES OF THE MANAGER.  Without regard to the amount of compensation
received under this Agreement by the Manager and except as otherwise set forth
in Section 7.4 hereof and in the Business Plan and Budget, the Manager shall
bear the following expenses:

            (i)       Supervision, excluding direct on-site construction
                      supervision or direct on-site labor;

            (ii)      Bookkeeping;

            (iii)     All personnel required to conduct the Company's business
                      at the Project, except on-site construction personnel,
                      licensed professionals, including architects, engineers,
                      attorneys, and brokers, and such other persons described
                      in Section 7.4 below who are employed solely to provide
                      services to the Project.  All such personnel required to
                      conduct the Company's business at the Project may be and
                      remain the employees of the Manager and/or the Manager's
                      Affiliates which shall pay all salaries, withholding,
                      F.I.C.A., and other taxes and other expenses pertaining
                      to such employees;

            (iv)      All office supplies and printed materials, including
                      stationery, checks, vouchers, invoices, statements,
                      deposit receipts, escrow instructions, and construction
                      contract forms;

            (v)       Telephone and postage, other than construction site
                      telephones;

            (vi)      Use of office machines and equipment;

            (vii)     Use of office space other than on the construction site;

            (viii)    All in-house engineering and engineering supervision,
                      other than that customarily obtained by Manager from
                      independent contractors;

            (ix)      Negotiating, bidding, and letting development and
                      construction contracts;

                                          14
<PAGE>

            (x)       Estimating and purchasing;

            (xi)      All Sales Costs;

            (xii)     In-house market analysis, and sale and sales office
                      supervision, if any, (exclusive of any sales  commissions
                      or Sales Costs payable pursuant to Sections 5.2 and 5.3
                      above which are Project Costs); and

            (xiii)    Travel, housing, lodging, and entertainment.

7.4.   EXPENSES OF THE COMPANY.

       (a)  Except for those expenses to be paid by Manager as set forth in
            Section 7.3, the Company shall pay or reimburse the Manager  for
            all out-of-pocket expenses incurred by the Manager in connection
            with the services rendered under this Agreement and all other costs
            of the Project incurred by Manager which have been previously
            approved by the Company either as part of the Business Plan and
            Budget or otherwise approved by Company (collectively the "Project
            Costs").  Without limiting the generality of this Paragraph (a),
            such reimbursable costs and expenses shall include:

            (i)       The costs of all off-site and on-site improvements to the
                      Land, including the costs of all related purchase orders
                      and subcontracts;

            (ii)      The costs of all engineering, architectural, geological,
                      and other professional services;

            (iii)     The costs of all equipments, licenses, and inspections;

            (iv)      All development, impact, school, and other fees required
                      by the Governmental Authorities;

            (v)       The costs of providing customer service and other
                      warranty services not required under the Company
                      Warranty;

            (vi)      All commissions or other compensation paid to
                      Salespersons or to independent third party brokers under
                      Section 5.2 of this Agreement; 

            (vii)     The cost of the on-site superintendents and on-site
                      assistant superintendents;

            (viii)    Costs of operating temporary facilities on-site;

            (ix)      All personnel who exclusively render their services at
                      the Project for the Company;

                                          15
<PAGE>

            (x)       Costs of plans and specifications prepared by the
                      in-house engineering and/or architectural staff of
                      Manager or its Affiliates, the amount of which is
                      equivalent to the cost of securing the same from
                      independent contractors;

            (xi)      Costs, if any, of legal services, including any
                      litigation  costs, provided by the in-house legal staff
                      of Manager or its Affiliates, the amount of which is
                      equivalent to amounts charged by independent contractors; 

            (xii)     The Company's reasonable pro rata share of any insurance
                      coverage afforded as part of Manager's blanket insurance
                      policies;

            (xiii)    The costs of preparing and processing applications for
                      licenses, construction permits, and other governmental
                      approvals; 

            (xiv)     The costs of preparing and processing applications and
                      agreements for utility installation and services; and

            (xv)      Costs of planning, designing, obtaining governmental
                      approvals and constructing offsite, maintenance
                      facilities and an employee parking lot, to replace the
                      maintenance facilities and employee parking lot
                      previously located on portions of the Land.

       (b)  Company agrees to pay for all Project Costs incurred by Manager to
            complete the Project in accordance with the Business Plan and
            Budget.  Costs shall be deemed "incurred" when Manager has (i) been
            invoiced for work, labor, materials, or services furnished to the
            Project, (ii) when such work, labor, materials, or services have
            been furnished to the Project, or (iii) when Manager has paid for
            such work, labor, materials, or services.  So long as contracts for
            work, material, and services related to the Project, and any change
            orders or modifications to such contracts, are in accordance with
            the applicable Business Plan and Budget, Company agrees to allow
            Manager to execute unilaterally such contracts on behalf of
            Company.  Otherwise, all such contracts, and any change orders or
            modifications to such contracts, must be approved by Company in
            writing prior to their execution by Manager, which approval shall
            not be unreasonably withheld and shall be deemed given by Company
            if written notice of disapproval is not delivered to Manager,
            stating the reasons for disapproval, within three (3) days after
            Company's receipt of the contracts, change orders, or
            modifications.  Notwithstanding anything to the contrary above,
            Manager shall at no time be required to pay any Project Costs until
            Company has first disbursed sufficient funds to Manager to pay
            those costs.

       (c)  Manager may disburse Company funds to pay all Project Costs and to
            reimburse Manager for all reimbursable expenses incurred by Manager
            under this Section 7.4, all in accordance with the Business Plan
            and Budget, as Manager deems necessary, provided no payments shall
            be made to contractors, subcontractors, 


                                          16
<PAGE>

            materialmen, or other persons with mechanic's lien rights until
            Manager receives an appropriate lien release from such parties.

7.5.   CASH DISCOUNTS AND REBATES.  All cash discounts with respect to the
Project taken by Manager shall accrue to the Project.  All trade discounts,
rebates, and refunds and all returns from the sale of surplus material and
equipment with respect to the Project shall accrue to the Project and Manager
shall make reasonable provisions so that they may be secured.  Any such
discounts, rebates, refunds, or returns which Manager, or any of its Affiliates,
receives on a blanket (company-wide) basis by reason of all of the projects,
including the Project, in which Manager, or such Affiliates, are participating
and which cannot reasonably be segregated or prorated with respect to the
Project, shall accrue to the benefit of Manager and are not the property of
Company.


                                      ARTICLE 8.

                      REPRESENTATIONS, WARRANTIES AND COVENANTS


The Manager represents and warrants to, and covenants and agrees with, the
Company as follows:

       (a)  The Manager is a corporation duly formed, validly existing, and in
            good standing under the laws of the State of Delaware.  The Manager
            additionally has all power and authority required to execute and
            deliver this Agreement and to perform all its duties and
            obligations hereunder.

       (b)  The execution, delivery and performance of this Agreement by the
            Manager has been duly authorized by all necessary actions on the
            part of the Manager.

       (c)  This Agreement constitutes the legal, valid, and binding agreement
            of the Manager, enforceable against the Manager in accordance with
            its terms, except as limited by bankruptcy, insolvency,
            receivership, and similar laws from time to time in effect, and
            general principles of equity.

       (d)  The Manager is experienced and competent to perform the work and
            services contemplated by this Agreement.

       (e)  The Manager holds or is in the process of obtaining, all licenses
            and permits necessary to perform the services and receive the fees
            contemplated by this Agreement as may be required by applicable
            laws, rules, regulations, and ordinances.

       (f)  The Manager shall comply with all laws, rules, regulations, and
            ordinances applicable to its services and duties hereunder,
            provided Manager shall have no liability to Company for any
            immaterial or unintentional violation of such laws by Manager, or
            where the Company has approved of the act or omission of Manager
            which results in such violation.

                                          17
<PAGE>

       (g)  The Manager shall cause any mechanics' or materialmen's or similar
            liens recorded against the Project to be   bonded off or discharged
            within fifteen (15) days of any such filing unless any such lien
            was filed due to the failure of the Company to fund Project Costs
            in accordance with Section 7.4 of this Agreement.  With the
            approval of Company, Manager may contest any such liens and/or
            "bond around" such liens at the expense of Company.


                                      ARTICLE 9.

                                         TERM


9.1.   TERM.  This Agreement shall continue in full force and effect until
December 31, 1999 or until the termination thereof in accordance with Section
9.2 of this Agreement, whichever shall first occur. 

9.2.   TERMINATION.  At the election of Company, in its sole discretion, this
Agreement may be terminated with or without cause, upon five (5) days prior
written notice of termination from Company to the Manager. 

9.3.   MANAGER'S OBLIGATIONS AFTER TERMINATION.  Upon expiration or termination
of this Agreement for any reason (by expiration of time or otherwise), the
Manager shall:

       (a)  Surrender to the Company or its nominee custody and possession of
            the Land and other Project assets, as well as all keys or methods
            of access thereto;

       (b)  Deliver to the Company, or its nominee, all books, documents and
            records with respect to the Land and other Project assets, all Land
            Use Approvals, Public Facilities Approvals, Permits, Development
            Documents, and all plans and specifications, shop drawings,
            purchase orders, and materials and supplies, and all funds in its
            possession belonging to the Company;

       (c)  For a period of sixty (60) days after such termination, make itself
            available to consult with and advise the Company or any other
            person or persons designated by the Company regarding the
            development, operation, maintenance, and marketing of the Land; 

       (d)  Continue to develop, manage, and market any single family detached
            units completed or under construction as of the date of
            termination, and provide warranty services under the Company
            Warranty in connection with such units during such sixty (60) day
            period, to ensure an orderly transition between management teams;
            provided, however, that if the Manager performs such development,
            management, and/or warranty services for the benefit of the Company
            after termination of this Agreement, Manager shall be entitled to
            all compensation otherwise payable under Article 7 of this
            Agreement for all those single family detached units completed or
            under construction; 

                                          18
<PAGE>

       (e)  Upon and following such termination, cooperate with the Company or
            its designee in effecting an orderly transition of Manager's
            responsibilities hereunder including, without limitation, to the
            extent requested by the Company, preparing an updated Business Plan
            and Budgets as of the termination date; and

       (f)  Upon termination of this Agreement, render a full accounting to the
            Company (including if requested by Company, a profit and loss
            statement and balance sheet for the period up to the date of
            termination) and shall deliver all reports herein provided to be
            delivered.  In addition, Manager shall deliver to the Company a
            statement outlining in detail all fees and other amounts then
            payable to Manager pursuant to Article 7 hereof, and shall cause
            all funds held by Manager relating to the Land or other Project
            assets of Company to be delivered to the Company.  If the Company
            concurs with Manager's statement of the fees payable to Manager
            under Article 7 hereof, the Company shall promptly pay Manager in
            cash such amounts, which payment shall be made not later than
            thirty (30) days after receipt of Manager's statement; however, if
            the Company does not concur with the statement of such fees, the
            Company shall pay Manager within said 30-day period the amount the
            Company does not dispute and shall pay Manager any balance of such
            fees upon determination that the same is due pursuant to the
            arbitration procedures as set forth in Section 11.1 below.  By this
            provision, Manager expressly waives any right it may have to set
            off its claim of such fees and any other amount that may at any
            time be owing to it by the Company against any of the Company's
            funds it may hold.  By this provision, the Company waives any right
            it may have to set off any claim it may have against the Manager
            pursuant to Article 10 (Indemnification) of this Agreement or
            otherwise against the fees and other amounts then payable to
            Manager pursuant to Article 7 hereof.

9.4.   RIGHTS OF TERMINATION.  If the Company terminates this Agreement
pursuant to Section 9.2 of this Agreement, then all authority granted hereunder
to Manager shall cease and terminate and, except as set forth in Sections 9.3(d)
and 9.3(f) above, Manager's right to receive any further compensation or fees
shall terminate, and the parties shall be relieved of all duties and obligations
hereunder, except for the following, all of which shall survive such
termination: (a) any such obligations, liabilities, and claims arising on or
prior to the date of termination; (b) the obligation of Manager to submit
reports relating to the period prior to such termination; (c) the obligation of
Manager to indemnify, defend, and hold harmless the Company pursuant to Article
10 of this Agreement; (d) the obligation of the Company to indemnify, defend,
and hold harmless the Manager pursuant to Article 10 of this Agreement; (e) any
obligations of the parties pursuant to Section 9.3 above; and (f) any
obligations of Manager or Company which this Agreement expressly provides, shall
survive such termination.

                                          19
<PAGE>


                                     ARTICLE 10.

                                   INDEMNIFICATION


10.1.  INDEMNITY BY MANAGER.  To the fullest extent permitted by applicable
law, (except as otherwise set forth herein) the Manager shall and does hereby
fully defend and hold harmless the Company, its parent company, Affiliates,
officers, employees, directors, shareholders, agents, representatives,
consultants, successors and assigns from and against all costs, expenses,
claims, damages, liabilities, losses and causes of action, including attorneys'
fees, of any nature, kind or description, and of any person or entity
whomsoever, including, without limitation, any Governmental Authority
(collectively, "Claims"), relating to or arising out of the fraud, intentional
misconduct, or negligence of the Manager or its Affiliates or their respective
shareholders, officers, directors, agents, employees, consultants, Contractors
and/or subcontractors (the "Manager Parties") in connection with the services
being (or to be) performed under this Agreement, or arising out of the breach of
this Agreement by the Manager (or any of the other Manager Parties), but only to
the extent the Claims are not covered by insurance carried by Manager.

10.2.  INDEMNITY BY COMPANY.  Notwithstanding the provisions in Section 10.1
hereof, Manager shall not be liable, responsible or accountable in damages or
otherwise to the Company, its parent company, Affiliates, officers, employees,
directors, shareholders, agents, representatives, consultants, successors, or
assigns for any act performed by Company, or any omission to act made by
Company, and to the fullest extent permitted by law (except as otherwise set
forth herein), the Company shall and does hereby fully indemnify, defend, and
hold harmless Manager, its parent company, Affiliates, officers, directors,
shareholders, employees, agents, representatives, consultants, successors, and
assigns from and against all Claims by reason of and to the extent of any such
act or omission by Company.  Notwithstanding the foregoing, the Manager and
Manager Parties shall be responsible and liable for, and the Company shall not
be required to indemnify Manager or Manager Parties for Claims relating to or
arising out of, the fraud, intentional misconduct, or negligence of the Manager
or Manager Parties, or arising out of the breach of this Agreement by the
Manager (or any of the other Manager Parties) as provided above.


                                     ARTICLE 11.

                                    MISCELLANEOUS


11.1.  ARBITRATION.  Any controversy or claim between Manager and Company
arising out of or relating to this Agreement, the alleged breach thereof, or the
transactions contemplated hereby, shall be settled by arbitration held in
Riverside County, California, in accordance with the rules of the American
Arbitration Association. 

11.2.  ASSIGNMENT.  This Agreement shall not be assignable by the Manager
without the prior written consent of the Company, which consent is within the
sole discretion of the Company.  This Agreement shall be assignable by the
Company without the written consent of the Manager, 


                                          20
<PAGE>

including but not limited to, an assignment to Company's subsidiary, Las Casitas
Corporation.  Any permitted successor of the Company or Manager shall be bound
under this Agreement and by the terms of said assignment in the same manner as
the Company or Manager, respectively, is bound.  For purposes of this Agreement,
a transfer of more than twenty percent (20%) of the interests controlling the
Manager shall be deemed a transfer of this Agreement by the Manager.

11.3.  AMENDMENTS.  This Agreement shall not be changed, modified, terminated,
or discharged in whole or in part except by an instrument in writing signed by
both parties, or the respective successors or assigns, or otherwise as provided
in this Agreement.

11.4.  NO IMPLIED WAIVERS: REMEDIES.  No failure or delay on the part of any
party in exercising any right, privilege, power, or remedy under this Agreement,
and no course of dealing shall operate as a waiver of any such right, privilege,
power, or remedy; nor shall any single or partial exercise of any right,
privilege, power, or remedy under this Agreement preclude any other or further
exercise of any such right, privilege, power, or remedy.  No waiver shall be
asserted against any party unless in writing, signed by such party.  The rights,
privileges, powers, and remedies available to the parties are cumulative and not
exclusive of any other rights, privileges, powers, or remedies provided by
statute, at law, in equity or otherwise.  Except as provided in this Agreement,
no notice to or demand on any party in any case shall entitle such party to any
other or further notice or demand in any similar or other circumstances or
constitute a waiver of the right of the party giving such notice or making such
demand to take any other or further action in any circumstances without notice
or demand.

11.5.  NOTICES.  Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is accepted by the party to
whom it is given, and shall be deemed to have been given when received by the
recipient by personal delivery, Federal Express or other reputable national
overnight courier, telecopy, or certified mail, postage prepaid, return receipt
requested, and addressed as follows:

            The Company:
       
       
            KSL DESERT RESORTS, INC.
            56-140 PGA Boulevard
            La Quinta, California  92253
            Attention:  Scott Dalecio
       
            Copy to:  
       
       
            KSL Desert Resorts, Inc.
            56-140 PGA Boulevard
            La Quinta, California  92253
            Attention:  Nola Dyal, Esq.


                                          21
<PAGE>

            The Manager:
       
       
            KSL LAND II CORPORATION
            56-140 PGA Boulevard
            La Quinta, California  92253
            Attention:  Larry Lichliter

            Copy to:
       
       
            KSL LAND CORPORATION
            56-140 PGA Boulevard
            La Quinta, California  92253 
            Attention:  Nola Dyal, Esq.

       Either party may at any time give notice in accordance with this Section
to the other party of a change of its address for the purpose of this Section
11.5. 

11.6.  ATTORNEYS' FEES.  In the event of any conflict or dispute with respect
to the enforcement or interpretation of any of the terms or provisions of this
Agreement, the prevailing party shall be entitled to recover from the other
party all costs, expenses and attorneys' fees incurred in connection therewith.

11.7.  HEADINGS.  The section headings have been inserted for convenience of
reference only and shall not be construed to affect the meaning, construction or
effect of this Agreement.

11.8.  SEVERABILITY.  In the event any sentence or paragraph of this Agreement
is declared by a court of competent jurisdiction to be void, the sentence or
paragraph shall be deemed severed from the remainder of this Agreement and the
balance of this Agreement shall remain in effect.

11.9.  GOVERNING LAW.  The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of California.

11.10. COUNTERPARTS.  This Agreement may be executed in multiple counterparts,
each of which shall have the full force and effect of an original and all of
which taken together shall constitute one original document.

11.11. COMPANY APPROVAL.  Unless otherwise expressly set forth in this
Agreement, where the approval or consent of the Company is required, such
approval or consent shall not be unreasonably withheld.

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<PAGE>


       IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

"MANAGER"


KSL LAND II CORPORATION,
   a Delaware corporation

By:     /s/ Larry E. Lichliter     
    ---------------------------------
Print:    Larry E. Lichliter  
       ------------------------------
Its:        President 
     --------------------------------

"COMPANY"


KSL DESERT RESORTS, INC.,
  a Delaware corporation

By:    /s/ Scott Dalecio 
    ---------------------------------
Print:    Scott Dalecio  
       ------------------------------
Its:        President  
     --------------------------------


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