COST SHARING AGREEMENT This COST-SHARING AGREEMENT (this "Agreement") is entered into as of October 27, 2003, by and between

LB HILLS GOLF LLC, a limited liability company ("Seller"), and TRENDWEST RESORTS, INtC., an Oregon corporation ("Purchaser"), with reference to the following facts: RECITALS: A. Seller and Purchaser are parties to that certain Purchase and Sale Agreement (Indio Resort) dated as of June 6, 2003 (the "Purchase Agreement"), whereby Seller has agreed to sell to Purchaser and Purchaser has agreed to purchase from Seller, certain real property more particularly described in the Purchase Agreement (the "Property"). Capitalized terms used herein and not otherwise defined shall have the meaning given to such term in the Purchase Agreement. Seller and Purchaser have agreed, on the terms and conditions set forth herein, B. that Purchaser shall pay to or reimburse Seller for a portion of the costs Seller has or will incur to cause the completion of the Improvements (as hereinafter defined). THEREFORE, in consideration of the foregoing and in reliance upon the mutual promises herein contained, the parties agree as follows: Improvements. Exhibit "A" attached hereto and incorporated herein by this 1. reference sets forth the improvements (the "Improvements") to be performed by Seller upon the terms and conditions set forth herein, which Improvements shall be constructed in accordance with the requirements of that certain Development Agreement with the City of Indio dated as of December 16, 1996 (the "Development Agreement"), the requirements of the Governmental Authorities (hereinafter defined) and the Purchase Agreement. Seller has or will submit to the City of Indio (the "City") the plans and specifications detailing the Improvements prepared by Seller in accordance with the foregoing requirements (the "Plans and Specifications"). Seller shall select in its sole, but commercially reasonable discretion, qualified contractors and subcontractors to perform the Improvements. Subject to the qualification set forth in Section 6(f), Seller shall complete the Improvements on or before the later of (i) February 1, 2005 or (ii) fourteen (14) months after Purchaser commences its clearing and grading of the Property. Seller shall use commercially reasonable efforts to promptly commence and diligently prosecute to completion the Improvements from and after the later to occur of the Closing Date and the approval by the City of the Plans and Specifications and the Improvements. Seller makes no representations or warranties of any kind with respect to the construction of the Improvements other than to warrant and represent that (a) Seller shall use commercially reasonable efforts to cause the Improvements to be constructed in a good and workmanlike manner and (b) the Improvements will be constructed in accordance with the requirements of the Development Agreement, the Purchase Agreement and all requirements for the construction of the Improvements imposed by the City of Indio and any applicable governmental authorities ("Governmental Authorities").

Cost Sharing AgmtFINAL 10-15 with Exhbit.DOC

2. Cost Estimate. Purchaser acknowledges that it has reviewed and by execution and delivery of this Agreement approves construction of the Improvements listed in Exhibit A in accordance with all requirements for the construction of the Improvements imposed by the Governmental Authorities. Purchaser further acknowledges and agrees that Purchaser shall have no right to dispute in any manner the Improvements except as otherwise expressly set forth herein. Purchaser agrees and acknowledges that Exhibit "A" represents a good faith description by Seller and Purchaser of the presently anticipated scope of the Improvements, but that such scope of the Improvements may change due to factors beyond the control of Seller. Seller and Purchaser agree and acknowledge that: (i) if the costs incurred by Seller to cause the performance of the Improvements exceed the cost estimate upon which Purchaser's Share was based, Purchaser shall not be obligated for any portion of such difference; and (ii) if the cost estimate is greater than the costs incurred by Seller to cause the performance of the Improvements, Purchaser shall not be entitled to any refund or credit as a result therefrom. 3. Purchaser's Allocation of Costs for Improvements. Purchaser and Seller have agreed that Purchaser shall be responsible for and shall pay the sum of Seven Hundred Eighty Four Thousand and No/100 Dollars ($784,000.00) ("Purchaser's Share") of the cost of the Improvements. In addition to the Purchase Price to be delivered by Purchaser to Seller pursuant to the terms and conditions set forth in the Purchase Agreement, Purchaser shall deliver the Purchaser's Share to Escrow Agent which shall be released by Escrow Agent. Escrow Agent shall release one third (33 and 1/3%) of Purchaser's Share to Seller at Closing. Seller shall have no obligation to segregate Purchaser's Share in a separate account at any time after receipt of any portion of the Purchaser's Share. The second third (33 1/3%) of Purchaser's Share shall be disbursed to Seller upon its commencement of the construction of the Improvements. Seller shall simultaneously deliver notice to Purchaser and Escrow Agent when Seller commences construction of the Improvements (the "Commencement Notice") and Purchaser shall have five (5) business days after the effective date of the Commencement Notice to confirm such commencement and to deliver notice to Escrow Agent authorizing release of those funds. Upon receipt of that notice Escrow Agent shall release the second third (33 1/3%) of Purchaser's Share to Seller five (5) business days after the effective date of the Commencement Notice. The final third (33 1/3%) of Purchaser's Share shall be disbursed to Seller upon Seller's completion of the construction of the Improvements. Seller shall simultaneously deliver notice to Purchaser and Escrow Agent when Seller completes construction of the Improvements (the "Completion Notice"). Purchaser shall have five (5) business days after the effective date of the Completion Notice to confirm such completion and to deliver notice to Escrow Agent authorizing release of those funds. Upon receipt of that notice, Escrow Agent shall promptly release the final third (33 1/3%) of Purchaser's Share to Seller five (5) business days after the effective date of the Completion Notice. In the event that the Improvements are not completed on or before the later of (i) February 1, 2005 or (ii) fourteen (14) months after Purchaser commences its clearing and grading of the Property, Purchaser shall be entitled to complete the Improvements and to use the remaining third of Purchaser's Share still in escrow to fund such completion. Refinements. Purchaser acknowledges that the Governmental Authorities may 4. impose revisions to the Plans and Specifications and/or the Improvements ("Project Refinements") in connection with the City's approval of the Plans and Specifications for the Improvements. Purchaser agrees and acknowledges that Seller may make revisions to the Plans and Specifications andJor the Improvements without the consent of Purchaser from time to time

Cost Sharing AgmtFINAL 10-15 with Exhbit.DOC

in response to requirements of the Governmental Authorities so long as such changes do not adversely affect Purchaser's development; PROVIDED, HOWEVER, that Purchaser's Share shall not be increased as a result of any such change; and PROVIDED, FURTHER, that Seller shall provide Purchaser notice of any such revisions. Cooperation. The Parties shall act in good faith and agree to use their best efforts 5. to assist and cooperate with the other party in doing all things reasonably necessary to complete the Improvements contemplated by this Agreement; PROVIDED, HOWEVER, such cooperation shall not require either party to incur any additional significant expense or expend any significant time. In connection with Seller's processing of the Governmental Authorities' approval of the Plans and Specifications and Improvements, Seller shall provide Purchaser with copies of all material applications, documents, correspondence, agreements and maps submitted to the City and shall notify Purchaser of and permit Purchaser to attend any meetings and hearings with the City. Subject to the teinis of this Agreement, Purchaser shall not directly or indirectly oppose, seek to restrict, interfere with or impose any conditions upon the development, construction or use of the Improvements. In the event Escrow Agent has instructions from Seller and Purchaser that are inconsistent, Escrow Agent has at its sole discretion the right to interplead the funds into an appropriate Washington Court of competent jurisdiction for determination as to outcome and disbursement of the funds so interpleaded. Further, Escrow Agent has the absolute right at its sole discretion the right to deduct its reasonable attorney fees and costs from the amount so interpleaded. 6. reference. (b) this Agreement. Time of Essence. Time is of the essence of each and every provision of General Provisions. (a) Recitals. The recitals are true and accurate and incorporated herein by this

Notices. All notices required or permitted to be given under this (c) Agreement shall be in writing and shall be given or made to the respective party(ies) at the address or facsimile number set forth below by (i) personal service; (ii) mailing by registered or certified mail, return receipt requested, postage prepaid; (iii) reputable courier that provides written evidence of delivery; or (iv) facsimile with the date and time imprinted during transmission. Notice by personal service, overnight delivery or facsimile shall be effective on receipt as evidenced by proof of transmission or delivery and notice by mail shall be effective three days after mailing. To LB Hills: LB Hills Golf LLC do Lehman Brothers 399 Park Avenue New York, New York 10022 Attn: Mr. Robert G. Turner (646) 758-5417 Fax No: Phone No: (212) 526-5811

Cost Sharing Agmt--FINAL 10-15 with Exhbit.DOC

and with a copy to:

Gibson, Dunn & Crutcher LLP One Montgomery Street, 3151 Floor San Francisco, California 94104 Attn: Fred L. Pillon, Esq. and Deborah A. Cussen, Esq. Fax No: (415) 986-5309 Phone No: (415) 393-8200 Trendwest Resorts, Inc. 9805 Willows Road Redmond, Washington 98052 Attn: Mr. Mark Lukens and Ms. Carmen. Cook Fax No: (425) 498-3059 Phone No: (425) 498-2500 First American Title Insurance 2101 Fourth Avenue, Suite 712 Seattle, WA 98121-2387 Attn: Dave Stuczynski Fax No: (206) 448-6348 Phone No: (206) 615-3160

To Trendwest:

To Escrow Agent:

Subject to clause (I) below, either Owner may (and shall if it acquires a Property from LB Hills or Trendwest) change its address for notices by at least three (3) days' advance written notice to the other Owner and upon recordation in the Official Records of the County of a notice of change of address ("Notice of Address Change"). Assignments and Successors. This Agreement may only be assigned (c) pursuant to Section 11(c) of the Purchase Agreement. Subject to the foregoing, this Agreement shall be binding on the parties and their respective heirs, successors and assigns. Notices. All notices required or permitted to be given under this (d) Agreement shall be in writing and shall be given or made pursuant to Section 11(d) of the Purchase Agreement. (e) the Closing Date. Effectiveness of this Agreement. This Agreement shall take effect upon

Force Majeure. Neither party shall be liable for nonperformance or delay (0 in performance by any event reasonably beyond the control of such party, including, wars, hostilities, revolutions, riots, civil commotion, national emergency, strikes, lockouts, epidemics, fire, flood, earthquake, force of nature, explosion, embargo, or any Act of God, or any law, proclamation, regulation, ordinance, other act or order of any court, government or governmental agency, or any other circumstance, event or occurrence beyond its reasonable control. Waiver. Failure of either party at any time to require performance of any (g) provision of this Agreement shall not limit the party's right to enforce the provision. Waiver of

Cost Sharing AgmtFINAL 10-15 with Exhbit.DOC

any breach of any provision shall not be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other provision. (h) Attorneys' Fees. In the event suit or action is instituted to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover from the other party such sum as the court may adjudge reasonable as attorneys' fees in the preparation of its case at trial, on any appeal, on any petition for review or in any insolvency or bankruptcy proceeding, in addition to all other sums provided by law. In the event any judgment is obtained by the prevailing party, all such costs and attorneys' fees shall be included in the judgment. Integration. This Agreement and Exhibit "A" attached hereto (which us (i) hereby incorporated by reference), and all documents referenced in this Agreement constitute the entire agreement between the parties. There are no oral or other agreements. This Agreement may not be modified, amended, or otherwise changed except by a writing executed by the Party to be charged. (j) Applicable Law. This Agreement shall be construed, applied and enforced in accordance with the laws of the State of California. Subsequent Modifications. This Agreement and any of its terms may only (k) be changed, waived, discharged or terminated by a written instrument signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. Counterparts; Facsimile Signatures. This Agreement, along with any (1) amendments or addendum, may be executed simultaneously or in counterparts, each of which shall be deemed an original, and all of which together shall constitute but one and the same Agreement. Facsimile transmission of a signed copy of this Agreement or any amendment or addendum, and the retransmission of any signed facsimile transmission shall be the same as delivery of an original. Saturday, Sunday, and Legal Holidays. If the time for performance of any (m) the terms, conditions and provisions hereof shall fall on a Saturday, Sunday or legal holiday, then the time of such performance shall be extended to the next business day thereafter. Invalidity of Provisions. If any provision of this Agreement is declared (n) invalid or is unenforceable for any reason, such provision shall be deleted from such document and shall not invalidate any other provision contained in the document. Confidentiality. All information delivered to Purchaser hereunder or (o) otherwise obtained by Purchaser shall be kept confidential by Purchaser and shall not be disclosed to any third party except for disclosures necessary in connection with Purchaser's decision whether or not to purchase the Property, including disclosures to governmental agencies in connection with its timeshare registration. Post-Closing Confidentiality. The terms of this transaction shall not be (p) disclosed to third parties without the consent of both of Seller and Purchaser. There is to be no press release regarding the transaction unless it is approved by both Seller and Purchaser.

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[SIGNATURE PAGE FOLLOWS)

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in duplicate as of the day and year first above written. SELLER: LB HILLS GOLF, LLC By: PAMI LLC, a Delaware limited liability company, its managing Member By: Property Asset Management, Inc. a Delaware corporation, its sole member By: Name: PURCHASER: TRENDWEST RESORTS, IN By Name: /4/1/

Date:

Await.
Date:

-o5

Date: /613 743

FIRST AMERICAN TITLE COMPANY

By: Name:

6hg_ii "gosh i9 -r

Date:

1 a4"/ A f.2

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in duplicate as of the day and year first above written. SELLER: LB HILLS GOLF, LLC By: PAMI LLC, a Delaware limited liability company, its managing Member By: Prope y Asset Management, Inc. rporation, its sole member aD

ame: PURCHASER:

o ert . Turner

Date: /

TRENDWEST RESORTS, INC. By: Name: By: Name: ESCROW AGENT: FIRST AMERICAN TITLE COMPANY By: Name: Date: Date: Date:

EXHIBIT A
SITE DEVELOPMENT COSTS PHASE II IMPROVEMENTS (Golf Center Dr.) (Per Conditions of Approval) ITEM I. Golf Center Parkway 4" AC over 14" CL 8" Curb & gutter 6" Barrier curb 6" Sidewalk Signing and striping Median Landscaping Street Lights Traffic Signal Secondary Access (3,960') IV. Water Connection to 44th Avenue 3,960 LF 12" Dip 9 EA FHA 1 EA 12" TEE 3 EA 12" GV 1 LS Connection at 44th IID Conduit system Cabling Telephone Conduit system Television Conduit QUANTITY UNIT PRICE $ $ $ $ $ $ $ $ $ $ $ 20.00 $ $ 2,800.00 $ $ 900.00 $ $ 1,040.00 $ $ 15,000.00 $ $ $ $ 65.00 45.00 $ $ $ $ $ $ $ $ $ COST 142,692.00 15,840.00 21,120.00 11,880.00 2,500.00 42,900.00 20,000.00 256,932.00 125,000.00 305,532.00 79,200.00 25,200.00 900.00 3,120.00 15,000.00 123,420.00 260,000.00 180,000.00 440,000.00 100,000.00 100,000.00 40,000.00 40,000.00 75,000.00 40,000.00 Trend West Share

62,040 SF $ 2.30 1320 LF $ 12.00 2,640 LF $ 8.00 1,320 LF $ 9.00 1 LS $ 2,500.00 17,160 SF $ 2.50 8 EA $ 2,500.00

50.6% $ 130,007.59 50.6% $ 63,250.00 28.4% $ 86,771.09

II.

28.4% $ 35,051.28

V.

4,000 LF 4,000 LF

50.6% $ 222,640.00

VI.

4,000 LF

25.00

50.6% $ 50,600.00

VII.

4,000 LF

10.00

50.6% $ 20,240.00 33.3% $ 24,975.00 33.3% $ 13,320.00 33.3% $ 2,497.50 $ 649,352.46 $ 64,935.25 $ 714,287.71 33.3% $ 27,717.63 33.3% $ 5,543.53 $ 747,548.86 $ 37,377.44 $ 784,926.30

VIII. Engineering IV. X. Construction Staking Geotechnical 10% Continget General Conditions Liabilty Insurance SUBTOTAL: OH & P

$ 7,500.00 $ 1,513,384.00 10.0% $ 151,338.40 $ 1,664,722.40 $ 83,236.12 $ 16,647.22 $ 1,764,605.74 5.0% $ 88,230.29 $ 1,852,836.03

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