UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

 [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934.
                      For the year ended December 31, 1997

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934.
                   For the transition period from ____ to ____

                         Commission file number: 33-3657

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

                    California                         94-3199021
           (State or other jurisdiction             (I.R.S. Employer
         of incorporation or organization)         Identification No.)

       400 South El Camino Real, Suite 1100            94402-1708
               San Mateo, California                   (Zip Code)
     (Address of principal executive offices)

       Partnership's telephone number, including area code: (650) 343-9300

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                                (Title of class)

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                Yes__X__ No _____

No market for the Limited  Partnership Units exists and therefore a market value
for such Units cannot be determined.

DOCUMENTS INCORPORATED BY REFERENCE: See Exhibit Index in Item 14



                                 Page 1 of 114
<PAGE>



                                     PART I

Item 1.  Business.

Organization

Glenborough  Limited, A California Limited  Partnership  registered  pursuant to
section  15d-5 of the  Securities  Exchange  Act of 1934,  was formed in 1986 to
acquire, own, operate, develop and lease commercial and residential real estate.
To  facilitate  compliance  with certain  recording and filing  requirements,  a
second limited partnership, GOCO Realty Fund I, a California Limited Partnership
("GOCO"),  was formed in April,  1986 to hold and operate all real and  personal
property  then or  thereafter  owned by  Glenborough  Limited (the  "Partnership
Property"). At the end of 1993, there was a technical termination of Glenborough
Limited and Glenborough Partners, A California Limited Partnership ("Partners"),
commenced as successor to Glenborough Limited. In 1994, a plan of reorganization
for GOCO became  effective as a result of GOCO's 1992 Chapter 11  reorganization
petition.  GOCO  was  succeeded  in  1995  by GPA  Ltd.,  A  California  Limited
Partnership  ("GPA"). On December 31, 1997, GPA was dissolved and all of its net
assets were  transferred  to Partners.  Partners and GPA operated as an economic
unit and unless specifically designated otherwise,  are referred to collectively
as  the  "Partnership".   The  general  partners  of  Partners  are  Glenborough
Corporation,  a  California  corporation,  and Robert  Batinovich  (collectively
"Glenborough"  or "General  Partner").  Glenborough  Corporation is the managing
general partner of the Partnership (the "Managing General Partner").

Two subsidiary  partnerships were created in February,  1994: (i) GPA West, L.P.
("West"),  and  (ii) GPA  Industrial,  L.P.  ("Industrial")  to  facilitate  the
Partnership's  holding  and  transfer  of  real  property.  A  third  subsidiary
partnership,  GPA Bond, L.P. ("Bond") was created in December,  1994 to hold and
operate a property  purchased on December 29, 1994. The general partners of each
of these  partnerships were Glenborough  Corporation and Robert Batinovich while
the sole limited partner of each was GPA.

After the cancellation of a total of 1,988,589 limited  partnership units of the
Partnership  from  December  1986 through  December  1996 and the  redemption of
12,177  limited  partnership  units  in 1997,  there  remain  2,898,722  limited
partnership units outstanding at December 31, 1997.

Investment in Glenborough Properties L.P.

On December 31, 1995,  Industrial and its four properties were contributed to an
affiliated  partnership,  Glenborough  Properties,  L.P. ("GPLP"), the operating
partnership  of Glenborough  Realty Trust  Incorporated  ("GLB"),  a real estate
investment  trust  managed by  affiliates  of the  Partnership,  in exchange for
542,333  limited  partnership  units in GPLP.  The debt securing the  properties
owned by  Industrial  was  assumed  by GPLP.  As a result  of the  contribution,
Industrial ceased to be a subsidiary of the Partnership at the end of 1995.

In  July,  1996,  the  Partnership   contributed  its  45%  non-voting   limited
partnership  interest in  University  Club Tower  (UCT) to GPLP in exchange  for
10,606 limited partnership units.



                                 Page 2 of 114
<PAGE>


In September,  1996, the  Partnership  sold its interest in Bond to GPLP and GRT
Corporation,  a wholly owned  subsidiary of GLB, in exchange for 26,067  limited
partnership  units in  GPLP.  As a  result  of the  sale,  Bond  ceased  to be a
subsidiary of the Partnership.

Effective  December 12, 1997,  contingent  upon the successful  sale of the sole
property in GRC Airport Associates ("GRC Airport"), (see below), the Partnership
transferred  its 25% interest in GRC Airport to GPLP for 112,877  units in GPLP.
The contingency was satisfied on February 17, 1998.

At December 31, 1997, the Partnership owns 691,883 units or approximately a 2.2%
interest in GPLP.

Other Investments

In  September,  1995,  the  Partnership  invested  $1,050,000  for a 25% limited
partnership  interest in GRC Airport. GRC Airport owned a property consisting of
10.14 acres of improved  land with a 216,780  square  foot  industrial  building
located in San Bruno,  California.  This  property is leased to a single  tenant
(the "Operator")  which operates an off-site  long-term parking facility for the
San Francisco  International Airport. On February 17, 1998, GRC Airport sold its
sole real estate asset to an unaffiliated entity for $24,000,000,  $2,000,000 of
which is conditioned on the  purchaser's  success in its efforts to purchase the
Operator's leasehold interest. If the purchaser's efforts are successful and the
additional  $2,000,000  is paid to GPLP,  then the  Partnership  will  receive a
pro-rata share of the additional  consideration  from GPLP in the form of either
(at the option of the Partnership)  cash, GPLP limited  partnership units or GLB
common stock.

In June and July, 1996, the Partnership  acquired 131,347 units  (representing a
13% interest) of Glenco Squaw Associates ("Squaw"),  an affiliated  partnership,
for $351,985.  Squaw's sole asset was a promissory note receivable from the sale
of its interest in a resort in Squaw Valley, California. On August 29, 1997, the
Partnership  liquidated  this  investment  by selling  back to Squaw its 131,347
units for $355,810.

In December,  1996, the Partnership purchased 931 limited partnership units or a
2.7%  interest  in  Outlook   Income/Growth  Fund  VIII,  ("Outlook  VIII"),  an
affiliated  partnership,  for $162,925.  From February  through August 1997, the
Partnership  purchased an  additional  1,865 limited  partnership  units or 5.3%
interest  in  Outlook  VIII from  unaffiliated  sophisticated  secondary  market
investors for $318,810.  On November 11, 1997,  Outlook VIII  liquidated and the
Partnership received a liquidating distribution of $1,324,354.

In  February  and  April  1997,  the  Partnership  purchased  1,642,746  limited
partnership  units or a 4.6% interest in Outlook Income Fund 9 ("Outlook 9"), an
affiliated  partnership  from  sophisticated   secondary  market  investors  for
$124,699. On December 3, 1997, Outlook 9 liquidated and the Partnership received
a liquidating distribution of $295,694.

On July 31, 1997, the  Partnership  acquired a 50%  non-controlling  interest in
Windswept   Portfolio  LLC  ("Windswept"),   a  limited  liability  company  for
$1,800,000. Windswept owns five multi-family projects in Houston, Texas.


                                 Page 3 of 114
<PAGE>


On  August  25,  1997,  the  Partnership   contributed   $200,000  for  a  5.63%
non-controlling  interest in  Cheeseburger  In Paradise - Waikiki,  a California
limited  partnership  ("CIP-Waikiki")  which owns and operates a Cheeseburger In
Paradise restaurant on Waikiki Beach in Honolulu, Hawaii.

Effective June 1, 1997, the Partnership contributed $320,000 for an 80% interest
in Resort Group, LLC, a Colorado limited liability  company  ("Resort").  Resort
was formed to invest  $1,616,162 for an 80% interest in Mountain  Resorts LLC, a
Colorado limited liability company  ("Mountain  Resorts") whose primary business
is the management of various  condominiums  and  townhouses in Colorado.  Of the
$1,616,162  invested by Resort,  $400,202 was in cash and  $1,215,960 was in the
form of a promissory note to the seller of the management company.As a result of
its investment in Resort, the Partnership  consolidates its financial statements
with Resort (after Resort consolidates with Mountain Resorts) and recognizes its
joint venture partner's interest as minority interest.

From February through August 1997, the Partnership purchased limited partnership
units  from   sophisticated   secondary   market   investors  in  the  following
unaffiliated real estate partnerships:

                                                                     Net
                                                  Ownership       Acquisition
       Partnership                Units               %             Price
      -------------             -------           ---------      ------------
Rancon Pacific Realty, LP        40,093             1.4%         $  113,662
Rancon Income Fund I                715             4.9%         $  213,141
Rancon Realty Fund I                  3               *          $      150
Rancon Realty Fund IV             2,755             3.5%         $  635,034
Rancon Realty Fund V              2,665             2.7%         $  654,879

Note *: Less than 1%

On December 31, 1997,  the  Partnership  liquidated  its  investments  in Rancon
Realty Fund IV and Rancon Realty Fund V for $826,500 and $866,125, respectively.

Information  regarding  the  Partnership  Properties is  incorporated  herein by
reference to Item 2. - Properties.

Investment in Marketable Securities

During 1997, the  Partnership  purchased a total of 80,500 shares of Glenborough
Realty Trust Incorporated ("GLB") common stock for $1,851,000. GLB, an affiliate
of the Partnership,  is a real estate investment trust and is publicly traded on
the New York Stock Exchange.

Business Plan

In 1998, the Partnership's  intentions are: (i) to sell the remaining 1.16 acres
of the  Rosemead  land,  located in El Monte,  California,  (ii) to explore  the
feasibility  and  economic  benefit  of  repurchasing  its  outstanding  limited
partnership units; and (iii) to identify other suitable investments.


                                 Page 4 of 114
<PAGE>


Management and Operations

The  Partnership  engages  Glenborough   Corporation  and  its  affiliates  (the
"Property  Manager") to manage the Partnership's  assets.  Pursuant to a written
management   agreement,    Glenborough    Corporation   has   broad   managerial
responsibility for all Partnership assets, including collection of all rents and
other charges due from tenants for properties  managed by the Property  Manager.
The  agreement  as amended,  expires in 2001,  except that the  Partnership  may
terminate the agreement  without cause on 30-days  written notice or immediately
if  Glenborough   Corporation   ceases  to  be  the  managing  general  partner.

Environmental Matters

Federal,  state and local statutes,  ordinances and regulations  which have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise  relating to the protection of the environment do not presently have a
material effect on the operations of the Partnership Property nor on the capital
expenditures,  earnings or competitive position of the Partnership. There can be
no assurance that such  regulations will not change or have some material effect
on the Partnership in the future.

Other

The Partnership does not directly employ any individuals.  All regular employees
rendering  services on behalf of the  Partnership  are employees of  Glenborough
Corporation or its affiliates.

The business of the  Partnership to date has involved only one industry  segment
(real estate). The Partnership has no foreign operations and the business of the
Partnership is not seasonal.

Competition

Management  believes that  characteristics  influencing the competitiveness of a
real  estate  project  are  the  geographic   location  of  the  property,   the
professionalism  of the property  manager and the  maintenance and appearance of
the  property,  in  addition  to  external  factors  such  as  general  economic
circumstances,  trends,  and the existence of new,  competing  properties in the
vicinity.  Additional  competitive factors with respect to rental properties are
the ease of access to the property, the adequacy of related facilities,  such as
parking,  and the ability to provide rent  concessions  and tenant  improvements
commensurate  with local market  conditions.  Although  management  believes the
Partnership  Property,  joint venture properties and properties indirectly owned
through  investments in various  partnerships  are  competitive  with comparable
properties as to those factors within the Partnership's  control,  over-building
and other external factors could adversely affect the ability of the Partnership
to attract and retain tenants. The marketability of these properties may also be
affected  (either  positively  or  negatively)  by these  factors  as well as by
changes in general or local economic  conditions,  including prevailing interest
rates.  Depending  on market and economic  conditions,  the  Partnership  may be
required  to  retain  ownership  of  its  properties  for  periods  longer  than
anticipated,  or may need to dispose  earlier than  anticipated,  or refinance a
property,  at a time or under terms and  conditions  that are less  advantageous
than would be the case if  unfavorable  economic  or market  conditions  did not
exist.


                                 Page 5 of 114
<PAGE>


Item 2.  Properties.

As of December 31, 1997,  the  Partnership  owns a 1.16 acre parcel of land held
for  sale.  This  was  once  part  of  the  Rosemead   Springs  Business  Center
("Rosemead"),  a 129,500 square foot multi-tenant  office building located in El
Monte, California which was sold on April 18, 1997.

In the opinion of  management,  the  insurance  coverage on the Rosemead land is
adequate.

At December 31, 1997, the 1.16 acre parcel of land is unencumbered.

Also,  as of  December  31,  1997,  the  Partnership  owns  various  partnership
interests  ranging from less than 1% to 80% in seven affiliated and unaffiliated
real estate partnerships.


Item 3.  Legal Proceedings.

The  Partnership  did not  become a party  to,  nor were any of its  assets  the
subject of any material pending legal proceedings in 1997.


Item 4.  Results of Votes of Security Holders.

During the fourth  quarter of fiscal year 1997,  no matters were  submitted to a
vote of security holders through the solicitation of proxies or otherwise.




                                 Page 6 of 114
<PAGE>


                                     PART II

Item 5.  Market for the Registrant's Equity and Related Security Holder Matters.

Market Information

There is no public  market  for units of  limited  partnership  interest  in the
Partnership  (the  "Units") and it is not expected  that any will  develop.  The
Units have  limited  transferability.  Restrictions  on transfer  may be imposed
under certain state securities laws.  Consequently,  holders of Units may not be
able to liquidate their investments and the Units may not be readily  acceptable
as collateral.

Holders

As of December 31, 1997,  382 holders of record held the  2,898,722  outstanding
Limited Partnership Units.

Cash Distributions

The Partnership began paying quarterly cash  distributions on April 30, 1987, at
a quarterly rate of $0.375 per Limited Partnership Unit and continued paying the
same quarterly cash distribution through the fourth quarter 1988 distribution on
January  31,  1989.  In  1989,  the  Partnership   lowered  its  quarterly  cash
distribution to $0.25 per Unit for the first quarter distribution and to $0.1875
per Unit beginning with the second quarter 1989 distribution.  Regular quarterly
distributions were suspended as of the second quarter of 1990.

In the first  quarters  of 1997 and 1998,  the  Partnership  made  special  cash
distributions totaling $295,000 and $587,000 to help alleviate its partners' tax
burden  arising from their portion of the  undistributed  taxable  income of the
Partnership in 1996 and 1997,  respectively.  No other cash  distributions  have
been made since the first quarter of 1990.




                                 Page 7 of 114
<PAGE>



Item 6.  Selected Financial Data.

The selected  financial  data should be read in  conjunction  with the financial
statements and related notes contained  elsewhere in this report.  This selected
financial  data  is  not  covered  by the  reports  of  the  independent  public
accountants.
<TABLE>
<CAPTION>
                                 Condensed Consolidated Operating Data
                                (in thousands, except for Per Unit Data
                                     and actual number of assets)
                                   For the years ended December 31,

                                               1997        1996       1995        1994        1993
                                               ----        ----       ----        ----        ----
<S>                                         <C>         <C>         <C>         <C>         <C>
Total revenues                              $  3,674    $  1,581    $  3,259    $  7,729    $ 22,061

Total expenses                                 2,472       2,424       3,940      10,126      28,389
                                            --------    --------    --------    --------    --------

Income (loss) before minority
   interest and extraordinary item             1,202        (843)       (681)     (2,397)     (6,328)

Minority interest                                111          --          --          --          --

Extraordinary item  (Note 1)                      --         125          --     119,954         (30)
                                            --------    --------    --------    --------    ---------

Net income (loss)                           $  1,313    $   (718)   $   (681)   $117,557    $ (6,358)
                                            ========    ========    ========    ========    ========

Cash distributed from net
    income (Note 2)                         $    295    $     --    $     --    $     --    $     --


Per limited partnership unit (Note 3):
   Income (loss) before extraordinary item  $    .44    $   (.28)   $   (.23)   $   (.74)   $  (1.81)
   Net income (loss)                        $    .44    $   (.24)   $   (.23)   $  36.52    $  (1.82)

   Distributions of net income (Note 2)     $    .10    $     --    $     --    $     --    $     --

At December 31:
   Rental properties owned                        --           1           5           6          30
   Mortgage notes receivable held                 --          --          --          --           1




                                              (continued)
                                        See accompanying notes.
</TABLE>



                                 Page 8 of 114
<PAGE>


<TABLE>
<CAPTION>
                               Condensed Consolidated Balance Sheet Data
                                            (in thousands)

                                                                    December 31,

                                                1997       1996        1995       1994        1993
                                                ----       ----        ----       ----        ----
<S>                                         <C>         <C>         <C>         <C>         <C>
Assets
Net real estate investments                 $    265    $  3,225    $  7,493    $ 19,778    $123,701


Notes receivable, net                            457         316          14          --      44,951


Investment in partnerships and
   management contracts                        4,864       2,004          --          --          --

Minority interest                                 10          --          --          --          --

Cash and other assets                          7,263         488       2,325       3,407      16,630
                                            --------    --------    --------    --------    --------

Total assets                                $ 12,859    $  6,033    $  9,832    $ 23,185    $185,282
                                            ========    ========    ========    ========    ========


Liabilities and Partners' Equity (Deficit)
Notes payable and accrued interest          $  5,213    $  2,218    $  5,069    $ 17,267    $295,380


Other liabilities                              2,374          52         155         629       2,170
                                            --------    --------    --------    --------    --------

Total liabilities                              7,587       2,270       5,224      17,896     297,550


Total partners' equity (deficit)               5,272       3,763       4,608       5,289    (112,268)
                                            --------    --------    --------    --------    --------


Total liabilities and partners'
   equity (deficit)                         $ 12,859    $  6,033    $  9,832    $ 23,185    $185,282
                                            ========    ========    ========    ========    ========
</TABLE>


                                          NOTES TO SELECTED FINANCIAL DATA

1.   In 1996,  the  Partnership  recognized  an  extraordinary  item  from  debt
     forgiveness  after the lender forgave  $125,000 of debt secured by the Bond
     property. In 1994 and 1993, the Partnership recognized  extraordinary items
     from a Chapter 11 bankruptcy reorganization and early forgiveness of debt.

2.   The Partnership has suspended  regular  quarterly  distributions  since the
     second  quarter of 1990;  however,  a special $.10 per limited  partnership
     unit distribution was made in March 1997.

3.   In 1997,  the per  unit  data is  based  on a  97.70%  limited  partnership
     interest and 2,905,400  weighted average limited partner units outstanding.
     In 1996,  the per  unit  data is  based  on a  97.71%  limited  partnership
     interest and 2,936,376  weighted average limited partner units




                                 Page 9 of 114
<PAGE>


     outstanding.  In 1995  and  1994,  the per  unit  data is based on a 97.73%
     limited  partnership  interest and 2,961,853 and 3,146,492 weighted average
     limited partner units outstanding, respectively. In 1993, the per unit data
     is based on a 98.01% limited  partnership  interest and 3,414,839  weighted
     average limited partner units outstanding.

The  comparability  of the  Consolidated  Financial  Data reflected in the above
table has been  affected  by the  reduction  of total  assets and  related  debt
resulting  from:  (i) the  disposition  of  properties  during  the years  ended
December  31,  1997,   1996,   1995,  1994  and  1993;  and  (ii)  a  bankruptcy
reorganization and early extinguishment of debt in 1994.

Item 7.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations.

The following  discussion  addresses the  Partnership's  financial  condition at
December 31, 1997 and its results of operations for the years ended December 31,
1997, 1996 and 1995.  This  information  should be read in conjunction  with the
Consolidated Financial Statements, notes thereto and other information contained
elsewhere in this report.


LIQUIDITY AND CAPITAL RESOURCES

On January 1, 1997, the Partnership's  capital resources  consisted primarily of
interests in four affiliated limited partnerships,  Glenborough  Properties L.P.
("GPLP"),  GRC Airport  Associates  ("GRC  Airport"),  Glenco  Squaw  Associates
("Squaw") and Outlook Income / Growth Fund VIII ("Outlook VIII"), and one rental
property,  Rosemead Springs.  The Partnership also had $1,200,000 available on a
$3,400,000 revolving line of credit with Mid-Peninsula Bank ("Mid-Pen").

During 1997, the Partnership drew a total of $6,895,000 on the Mid-Pen revolving
line of credit to fund: (i) $2,068,000 in purchases of limited partnership units
in various  affiliated  and  unaffiliated  real  estate  partnerships;  (ii) the
$1,851,000 in purchases of 80,500 shares of common stock in  Glenborough  Realty
Trust Incorporated  ("GLB"), an affiliate of the Partnership which is a publicly
traded (New York Stock Exchange) real estate investment trust;  (iii) a $295,000
distribution  to its partners to help alleviate its partners' tax burden arising
from their portion of the 1996 undistributed  taxable income of the Partnership;
(iv) a $1,800,000  investment  for a 50% interest in  Windswept  Portfolio,  LLC
("Windswept"),  a  limited  liability  company  formed to own and  operate  five
multi-family  residential  properties in Texas; (v) a $320,000 investment for an
80% interest in Resort Group, LLC ("Resort"), a limited liability company formed
to indirectly own the property  management  business of various resorts;  (vi) a
$200,000  investment  for a 10%  non-controlling  interest  in  Cheeseburger  In
Paradise - Waikiki, a California  limited  partnership which owns and operates a
restaurant in Hawaii; (vii) a short-term $80,000 loan to the Partnership's joint
venture partner in Resort; (viii) $43,000 in redemption of 12,177 of its limited
partnership  units;  and (ix) its  short-term  operating cash  requirements.  To
facilitate  these  draws,  the  Partnership  obtained an increase in its Mid-Pen
revolving line of credit from $3,400,000 to $6,500,000. In 1997, the Partnership
also made a total of $5,207,000 in principal  payments on the line of credit. As
of December 31, 1997, $2,612,000 remains available on this line of credit.


                                 Page 10 of 114
<PAGE>


Resort was formed to invest  $1,616,162 for an 80% interest in Mountain  Resorts
LLC, a Colorado limited  liability  company  ("Mountain  Resorts").  The primary
business of  Mountain  Resorts is the  management  of various  condominiums  and
townhouses  in the  Steamboat  Springs  area of  Colorado.  As a  result  of its
investment in Resort, the Partnership consolidates its financial statements with
Resort (after Resort  consolidates  with Mountain  Resorts) and  recognizes  its
joint venture partner's interest as minority interest.

In December  1996,  the  Partnership  made its  initial  purchase of 931 limited
partnership units in Outlook VIII for $163,000. At that time, Outlook VIII owned
interests in three rental  properties.  From February 1997 through  August 1997,
the Partnership  purchased from  sophisticated  secondary market  investors,  an
additional 1,865 limited partnership units in Outlook VIII for $319,000.  During
1997,  Outlook  VIII  disposed of all of its real estate  assets and in November
1997,  made  final  liquidating  distributions  to its  partners  of  which  the
Partnership received $1,324,000.

Between   February  1997  and  April  1997,  the   Partnership   purchased  from
sophisticated  secondary market investors 1,642,746 limited partnership units in
Outlook Income Fund 9 ("Outlook 9"), an affiliated partnership, for $125,000. In
December 1997,  Outlook 9 liquidated and the Partnership  received a liquidating
distribution of $296,000 for its investments in Outlook 9.

From  February  1997 through  August 1997,  the  Partnership  purchased  limited
partnership  units in two unaffiliated real estate  partnerships,  Rancon Realty
Fund IV ("Rancon  IV") and Rancon  Realty Fund V ("Rancon  V") for  $635,000 and
$655,000,  respectively,  from  sophisticated  secondary  market  investors.  On
December 31, 1997, the  Partnership  liquidated its investments in Rancon IV and
Rancon V and received $826,000 and $866,000, respectively.

On April 18, 1997, the Partnership sold its Rosemead Springs property, a 129,500
square foot multi-tenant office building located in El Monte, California,  to an
unaffiliated  third  party  for$2,675,000.  The net  proceeds  from  the sale of
$2,682,000 were used to pay-down a portion of the  Partnership's  revolving line
of credit with Mid-Pen.

In August 1997, the Partnership  liquidated its investment in Squaw and received
$356,000 for its investment.

During 1997, the Partnership  acquired an additional 112,877 limited partnership
units in GPLP upon the transfer of its 25% interest in GRC Airport to GPLP.  The
transfer of the interest  was subject to a  contingency  which was  satisfied on
February 17, 1998. See Note 5 of Item 8 to the financial  statements for further
information. During 1997, the Partnership received $741,128 or $1.28 per unit in
distributions from the investment in GPLP.

As of December 31, 1997, the Partnership's  cash and cash equivalent balance was
$2,545,000  which was, in large part,  due to the  distributions  received  from
Outlook  VIII,  Outlook  9,  Rancon  IV and  Rancon V as  discussed  above.  The
remainder of the Partnership's  assets consisted primarily of its investments in
marketable securities, management contracts, reservation deposits held in escrow
for future resort guests and miscellaneous investments in various affiliated and
unaffiliated  partnerships.   The  Partnership's  primary  liabilities  included
amounts due on the Mid-Pen revolving line of credit, the Resort Group promissory
note carried by the seller of the resort


                                 Page 11 of 114
<PAGE>


management  company and deposits held for future rental use of the  condominiums
and townhouses.

The $842,000  increase in accounts payable and other liabilities at December 31,
1997  compared to December  31, 1996 is largely a result of normal and  ordinary
trade payables in connection with the addition of the Mountain Resorts in 1997.


RESULTS OF OPERATIONS

1997 versus 1996

Rental income decreased  $535,000 or 95% during the year ended December 31, 1997
compared to the year ended  December  31, 1996 due to the loss of rental  income
following  the sales of the Bond Street  property on September  24, 1996 and the
Rosemead Springs property on April 18, 1997.

Income from  management  contracts  represents  the  revenue  earned by Mountain
Resorts for managing various condominiums and townhouses in Colorado.

The  $240,000  or  48%  increase  in  income  from   investments  in  affiliated
partnerships  during  the year  ended  December  31,  1997  from the year  ended
December 31, 1996 was due to the recognition of income from the  commencement of
quarterly distributions from GPLP in April 1996. In addition, GPLP increased the
distribution  per unit in 1997 and the  Partnership  increased its investment in
GPLP on September 24, 1996.

The $291,000 or 338% increase in equity in earnings of  affiliated  partnerships
during the year ended  December  31, 1997 over the year ended  December 31, 1996
was a result of the  Partnership's  investment  in Windswept as of July 31, 1997
and the increase in GRC Airport's  income.  The increase in GRC Airport's income
was a result of a $13,000 increase in the base monthly rent as of January 1997.

The $1,420,000  gain on liquidation  of investments in  partnerships  during the
year ended December 31, 1997 represents  amounts collected by the Partnership in
excess of the carrying value of Glenco Squaw Associates,  Rancon Realty Fund IV,
Rancon Realty Fund V, Outlook Income/Growth Fund VIII and Outlook Income Fund 9.
The  Partnership's  investments in these  partnerships  were liquidated  between
August 1997 and December 1997 (See Item 8, Notes to the  Consolidated  Financial
Statements for a discussion of investments in these partnerships).

Interest  and other  income  decreased  $247,000  or 57%  during  the year ended
December 31, 1997 compared to the year ended December 31, 1996, primarily due to
the 1996 recognition of other income of: (i) a  non-refundable  deposit received
from a once potential buyer of Rosemead Springs after a sale had fallen through;
(ii) prior year property tax refunds  received for Rosemead Springs in 1996; and
(iii) a 1996 fee for the  dissolution of a  purchase/sale  agreement paid by the
owner of a property which the Partnership was negotiating to acquire.

Operating  expenses increased $167,000 or 32% during the year ended December 31,
1997 over the year ended  December 31, 1996 due to the  consolidation  of Resort
Group and Mountain  Resorts in 1997.  This  increase was slightly  offset by the
elimination  of  operating  expenses


                                 Page 12 of 114
<PAGE>


following  the sales of the Bond Street  (September  1996) and Rosemead  Springs
(April 1997) properties.

General and  administrative  expenses increased $618,000 or 196% during the year
ended  December  31,  1997 from the year ended  December  31,  1996,  due to the
consolidation of costs involved in administering Mountain Resorts.

Depreciation  and  amortization  decreased  $8,000 or 11%  during the year ended
December 31, 1997 from the year ended December 31, 1996, due largely to the sale
of the Bond Street  property in September  1996.  The  reduction of  depreciable
assets in 1996 is offset by the Partnership's  consolidation of Mountain Resorts
in  1997  which  includes  the  amortization  of its  investment  in  management
contracts.

At December  31, 1997,  management  determined  that the  carrying  value of the
Partnership's  remaining  parcel  of land  held for sale  was in  excess  of the
estimated  fair  market  value  and,  accordingly,   recorded  a  provision  for
impairment  of land held for sale in the  amount of  $252,000.  The fair  market
value  was  based  on a  preliminary  negotiated  sale  price  of the land to an
independent third party. Due to the uncertainties  inherent in this process, the
valuation does not purport to be the price at which a sale transaction involving
this property can or will take place.

During  1997,  the  Partnership  recognized  a  $95,000  loss on the sale of the
Rosemead Springs property.

1996 versus 1995

Rental  revenue  decreased  $2,404,000 or 81% during the year ended December 31,
1996 from the year  ended  December  31,  1995 due to: (i) the  contribution  of
Industrial and its four  properties  into GPLP at December 31, 1995 and (ii) the
sale of Bond to GPLP on September 24, 1996.

Income from investments in affiliated partnership during the year ended December
31, 1996 of $502,000  represents  distributions  received from its investment in
GPLP.

Equity in earnings from an investment in an affiliated  partnership increased in
1996 as such  investment was not acquired until  September  1995; and thus, 1995
represented only a partial year of operations.

Interest  and other  revenue  increased  $93,000  or 28%  during  the year ended
December  31,  1996 over the year ended  December  31,  1995  largely due to the
recognition as other income of: (i) a  non-refundable  deposit received from the
once potential buyer of Rosemead Springs after the sale fell through, and (ii) a
fee in 1996 for the dissolution of a  purchase/sale  agreement paid by the owner
of a property which the Partnership was negotiating to acquire.

Operating,  general  and  administrative,  depreciation  and  amortization,  and
interest expenses  decreased in 1996 compared to 1995 due to the contribution of
Industrial and sale of Bond to GPLP.


                                 Page 13 of 114
<PAGE>


At December 31, 1996, after several unsuccessful  contracts to sell the property
for an amount that would recover its carrying value,  management  concluded that
the  carrying  value of the  Partnership's  investment  in Rosemead  Springs and
adjacent  lots was in excess of its  estimated  fair value and a  provision  for
impairment  of the  investment in the amount of  $1,090,000  was  recorded.  The
estimated fair value of the Rosemead  property has been based on a current offer
for the property less selling costs.

The  Partnership  recognized  a $125,000  gain from debt  forgiveness  after the
lender on the loan secured by the Bond office building forgave $125,000 in debt,
prior to the sale of Bond.

Year 2000 Compliance

The Partnership  utilizes a number of computer  software  programs and operating
systems across its entire organization, including applications used in financial
business systems and various  administrative  functions.  To the extent that the
Partnership's  software  applications  contain  a source  code that is unable to
appropriately interpret the upcoming calendar year "2000" and beyond, some level
of  modification,  or replacement of such  applications  will be necessary.  The
Partnership has completed its  identification  of applications  that are not yet
"Year 2000"  compliant and has commenced  modification  or  replacement  of such
applications,  as  necessary.  Given  information  known at this time  about the
Partnership's  systems that are  non-compliant,  coupled with the  Partnership's
ongoing,  normal  course-of-business  efforts to  upgrade  or  replace  critical
systems,  as necessary,  management does not expect "Year 2000" compliance costs
to have any material  adverse impact on the  Partnership's  liquidity or ongoing
results of  operations.  No  assurance  can be given,  however,  that all of the
Partnership's  systems will be "Year 2000" compliant or that compliance costs or
the  impact of the  Partnership's  failure to achieve  substantial  "Year  2000"
compliance will not have a material adverse effect on the  Partnership's  future
liquidity or results of operations.





                                 Page 14 of 114
<PAGE>




Item 8.  Financial Statements and Supplementary Data.


             GLENBOROUGH PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP

             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE


                                                                         Page

Report of Independent Public Accountants...................................16

Financial Statements:

      Consolidated Balance Sheets - December 3l, l997
           and l996 .......................................................17

      Consolidated Statements of Operations
           for the years ended December 3l, l997, l996
           and l995........................................................18

      Consolidated Statements of Partners' Equity
           for the years ended December 3l, l997,
           l996 and l995...................................................19

      Consolidated Statements of Cash Flows for the years
           ended December 3l, l997, l996 and l995..........................20

      Notes to the Consolidated Financial Statements ......................22

Financial Statement Schedule:

Schedule III - Consolidated Real Estate
      Investments and Related Accumulated Depreciation
      at December 31, 1997 and Note thereto................................36


Other  schedules are omitted either  because of the absence of conditions  under
which they are  required or because  the  required  information  is given in the
financial statements or notes thereto.





                                 Page 15 of 114
<PAGE>









                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP:

We have audited the  accompanying  consolidated  balance  sheets of  GLENBOROUGH
PARTNERS,  A CALIFORNIA LIMITED  PARTNERSHIP,  as of December 31, 1997 and 1996,
and the related consolidated statements of operations, partners' equity and cash
flows for each of the three years in the period ended  December 31, 1997.  These
consolidated  financial  statements  and the schedule  referred to below are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated  financial statements and schedule based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
GLENBOROUGH PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP, as of December 31, 1997,
and 1996,  and the results of its  operations and its cash flows for each of the
three years in the period ended December 31, 1997, in conformity  with generally
accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial  statements taken as a whole. The accompanying  schedule
listed  in the  index to  consolidated  financial  statements  and  schedule  is
presented  for the  purpose  of  complying  with  the  Securities  and  Exchange
Commission's  rules  and is  not a  required  part  of  the  basic  consolidated
financial  statements.  This  information  has been  subjected  to the  auditing
procedures applied in our audits of the basic consolidated  financial statements
and, in our opinion,  is fairly  stated in all material  respects in relation to
the basic consolidated financial statements taken as a whole.



San Francisco, California                          /S/ ARTHUR ANDERSEN LLP
February 11, 1998 (except with respect
to the matters discussed in Note 13, as
to which the date is March 13, 1998)




                                 Page 16 of 114
<PAGE>


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                           Consolidated Balance Sheets
                           December 31, 1997 and 1996
                    (in thousands, except units outstanding)

Assets                                                         1997      1996
------                                                      --------   --------

Rental property held for sale - net                         $     --   $  2,708
Land held for sale                                               265        517
Cash and cash equivalents                                      2,545        403
Marketable securities of affiliate,
  at fair value (cost $1,851)                                  2,385         --
Deposits in escrow                                             1,762         --
Notes receivable                                                 457        316
Investments in affiliated partnerships                           973      2,004
Investments in unaffiliated partnerships                       2,441         --
Investments in management contracts, net                       1,450         --
Minority interest                                                 10         --
Other assets                                                     571         85
                                                            --------   --------

Total assets                                                $ 12,859   $  6,033
                                                            ========   ========

Liabilities and Partners' Equity
--------------------------------
Notes payable                                               $  5,021   $  2,200
Accounts payable and accrued expenses                            912         70
Reservation deposits                                           1,654         --
                                                            --------   --------

Total liabilities                                              7,587      2,270
                                                            --------   --------

Partners' equity
  General partner                                                439        404
  Limited partners, 2,898,722 and 2,910,899 units
    outstanding at December 31, 1997 and 1996, respectively    4,833      3,359
                                                            --------   --------

Total partners' equity                                         5,272      3,763
                                                            --------   --------

Total liabilities and partners' equity                      $ 12,859   $  6,033
                                                            ========   ========








  The accompanying notes are an integral part of these consolidated statements.


                                 Page 17 of 114
<PAGE>

<TABLE>
<CAPTION>
                                           GLENBOROUGH PARTNERS,
                                     A CALIFORNIA LIMITED PARTNERSHIP

                                   Consolidated Statements of Operations
                           For the years ended December 31, 1997, 1996 and 1995
                                  (in thousands, except per unit amounts)

                                                                         1997         1996         1995
                                                                      ---------    ---------    ---------
<S>                                                                   <C>          <C>          <C>
Revenue:
  Rental income                                                       $      28    $     563    $   2,967
  Income from management contracts                                          924           --           --
  Income from investments in affiliated partnerships                        742          502           --
  Equity in earnings (loss) of affiliated partnerships                      377           86          (45)
  Gain on liquidation of investments in partnerships                      1,420           --           --
  Interest and other                                                        183          430          337
                                                                      ---------    ---------    ---------

  Total revenues                                                      $   3,674    $   1,581    $   3,259
                                                                      ---------    ---------    ---------

Expenses:
  Operating, including $5, $47 and $132 paid to affiliates
    in 1997, 1996 and 1995, respectively                                    684          517          625
  General and administrative, including $172, $217 and $292
    paid to affiliates in 1997, 1996 and 1995, respectively                 934          316          521
  Depreciation and amortization                                              66           74          914
  Interest expense                                                          441          427        1,880
  Provision for impairment of real estate held for sale                     252        1,090           --
  Loss on sale of rental property                                            95           --           --
                                                                      ---------    ---------    ---------

  Total expenses                                                          2,472        2,424        3,940
                                                                      ---------    ---------    ---------

Income (loss) from operations before minority interest and
  extraordinary item                                                      1,202         (843)        (681)
Minority interest                                                           111           --           --
                                                                      ---------    ---------    ---------

  Net income (loss) before extraordinary item                             1,313         (843)        (681)

Extraordinary item:
  Gain on forgiveness of debt                                                --          125           --
                                                                      ---------    ---------    ---------

Net income (loss)                                                     $   1,313    $    (718)   $    (681)
                                                                      =========    =========    =========

Income (loss) from operations before
  extraordinary item per Limited Partnership Unit                     $     .44    $    (.28)   $    (.23)
Extraordinary item per Limited Partnership Unit                              --          .04           --
                                                                      ---------    ---------    ---------
Net income (loss) per Limited Partnership Unit                        $     .44    $    (.24)   $    (.23)
                                                                      =========    =========    =========

Distributions of net income per Limited Partnership Unit              $     .10    $      --    $      --
                                                                      =========    =========    =========

Weighted average number of Limited Partnership Units
  outstanding                                                         2,905,400    2,936,376    2,961,853
                                                                      =========    =========    =========

               The accompanying notes are an integral part of these consolidated statements.
</TABLE>



                                 Page 18 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP


                   Consolidated Statements of Partners' Equity
              For the years ended December 31, 1997, 1996 and 1995
                                 (in thousands)

                                                                     Total
                                           General      Limited     Partners
                                           Partner      Partners     Equity
                                           -------      -------      -------
Balance, December 31, 1994                 $   435      $ 4,854      $ 5,289

Net loss                                       (15)        (666)        (681)
                                           -------      -------      -------

Balance, December 31, 1995                     420        4,188        4,608

Net loss                                       (16)        (702)        (718)

Redemption of units                             --         (127)        (127)
                                           -------      -------      -------

Balance, December 31, 1996                     404        3,359        3,763

Net income                                      30        1,283        1,313

Unrealized gain on marketable securities        12          522          534

Distributions                                   (7)        (288)        (295)

Redemption of units                             --          (43)         (43)
                                           -------      -------      -------

Balance, December 31, 1997                 $   439      $ 4,833      $ 5,272
                                           =======      =======      =======













  The accompanying notes are an integral part of these consolidated statements.




                                 Page 19 of 114
<PAGE>

<TABLE>
<CAPTION>
                                    GLENBOROUGH PARTNERS,
                               A CALIFORNIA LIMITED PARTNERSHIP

                            Consolidated Statements of Cash Flows
                     For the years ended December 31, 1997, 1996 and 1995
                                        (in thousands)

                                                           1997         1996         1995
                                                         --------     --------     --------
<S>                                                      <C>          <C>          <C>
Cash flows from operating activities:
  Net income (loss)                                      $  1,313     $   (718)    $   (681)
  Adjustments to reconcile net income (loss)
   to net cash provided by operating activities:
     Depreciation and amortization                             66           74          914
     Amortization of loan fees, included in
       interest expense                                        76           22           55
     Loss on sale of rental property                           95           --           --
     Minority interest                                       (111)          --           --
     Gain on liquidation of investments in partnerships    (1,420)          --           --
     Equity in earnings of affiliated partnerships           (377)         (86)          45
     Gain on forgiveness of debt                               --         (125)          --
     Provision for impairment of real estate held for sale    252        1,090           --
     Changes in certain assets and liabilities:
       Increase in deferred financing and other fees           --          (56)         (77)
       Increase in deposits in escrow                      (1,762)          --           --
       Decrease (increase) in other assets                   (563)         131          270
       Increase (decrease) in amount due from affiliate        --          195          (60)
       Increase in reservation deposits                     1,654            1           --
       Increase (decrease) in accounts payable
         and accrued expenses                                 836          (56)        (379)
                                                         --------     --------     --------

  Net cash provided by operating activities                    59          472           87
                                                         --------     --------     --------

Cash flows from investing activities:
  Distributions from investments in partnerships              786          102           --
  Improvements to real estate                                  --          (26)        (108)
  Net proceeds from sales of real estate                    2,619           --           --
  Proceeds from liquidation of investments
    in partnerships                                         3,668           --           --
  Investment in unaffiliated partnerships                  (3,624)          --           --
  Investment in affiliated partnerships                      (443)        (515)      (1,108)
  Purchase of management contracts                         (1,515)          --           --
  Purchase of marketable securities                        (1,851)          --           --
  Increase in notes receivable                               (141)        (302)      (2,154)
  Principal payment on note receivable                         --           --        2,141
                                                         --------     --------     --------

  Net cash used for investing activities                     (501)        (741)      (1,229)
                                                         --------     --------     --------


                                         (continued)
</TABLE>



                                 Page 20 of 114
<PAGE>

<TABLE>
<CAPTION>
                                    GLENBOROUGH PARTNERS,
                               A CALIFORNIA LIMITED PARTNERSHIP

                      Consolidated Statements of Cash Flows - continued
                     For the years ended December 31, 1997, 1996 and 1995
                                        (in thousands)

                                                            1997         1996        1995
                                                         --------     --------     --------
<S>                                                      <C>          <C>          <C>
Cash flows from financing activities:
  Proceeds from notes payable                            $  8,430     $  2,200     $  1,200
  Principal payments on notes payable                      (5,609)      (2,213)      (1,850)
  Minority interest in equity                                 101           --           --
  Distribution to partners                                   (295)          --           --
  Redemption of limited partnership units                     (43)        (127)          --
                                                         --------     --------     --------

  Net cash provided by (used for) financing activities      2,584         (140)        (650)

Net increase (decrease) in cash and cash equivalents        2,142         (409)      (1,792)

Cash and cash equivalents:
  Beginning of period                                         403          812        2,604
                                                         --------     --------     --------

  End of period                                          $  2,545     $    403     $    812
                                                         ========     ========     ========

Cash paid for interest                                   $    351     $    421     $  1,898
                                                         ========     ========     ========

Supplemental disclosure of non-cash investing and financing activities:
  Purchase of existing notes receivable                  $     --     $     --     $ (2,368)
                                                         ========     ========     ========
  Notes receivable paid-off                              $     --     $     --     $  2,368
                                                         ========     ========     ========
  Note payable for investment in management
    contracts                                            $  1,216     $     --     $     --
                                                         ========     ========     ========


Contribution of subsidiary partnership to affiliated partnerships:
  Contribution of real estate, net                       $     --     $  3,145     $(11,799)
  Assumption of debt by acquiring
    partnership (including accrued interest)                   --       (2,714)      11,583
  Other assets and liabilities                                 --           10          216
                                                         --------     --------     --------

  Net investment in affiliated partnerships              $     --     $    441     $     --
                                                         ========     ========     ========







        The accompanying notes are an integral part of these consolidated statements.
</TABLE>



                                 Page 21 of 114
<PAGE>


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995


Note 1.  SUMMARY OF PARTNERSHIP ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Partnership Organization

Glenborough Limited, A California Limited Partnership, and GOCO Realty Fund I, a
California Limited Partnership  ("GOCO"),  were formed in 1986 to acquire,  own,
operate, develop and lease commercial and residential real estate. At the end of
1993, there was a technical  termination of Glenborough  Limited and Glenborough
Partners, A California Limited Partnership ("Partners"),  commenced as successor
to  Glenborough  Limited.  In 1994,  a plan of  reorganization  for GOCO  became
effective as a result of GOCO's 1992 Chapter 11  reorganization  petition.  GOCO
was succeeded in 1995 by GPA Ltd., A California Limited Partnership  ("GPA"). On
December  31,  1997,  GPA Ltd.  was  dissolved  and all of its net  assets  were
transferred  to  Partners.  Partners  and GPA  operated as an economic  unit and
unless specifically  designated  otherwise,  are referred to collectively as the
"Partnership".  The general partners of Partners are Glenborough Corporation,  a
California  corporation,  and Robert Batinovich  (collectively  "Glenborough" or
"General Partner").  Glenborough  Corporation is the managing general partner of
the Partnership (the "Managing General Partner).

Two subsidiary  partnerships were created in February,  1994: (i) GPA West, L.P.
("West"),  and  (ii) GPA  Industrial,  L.P.  ("Industrial")  to  facilitate  the
Partnership's  holding  and  transfer  of  real  property.  A  third  subsidiary
partnership,  GPA Bond, L.P. ("Bond") was created in December,  1994 to hold and
operate a property  purchased on December 29, 1994. The general partners of each
of these  partnerships were Glenborough  Corporation and Robert Batinovich while
the sole limited partner of each was GPA.

Through December 31, 1995, all three  partnerships  were subsidiaries of GPA. On
December  31,  1995,  the  Partnership   contributed  Industrial  and  its  four
properties to an affiliated partnership,  Glenborough Properties, L.P. ("GPLP"),
the operating  partnership of Glenborough Realty Trust  Incorporated  ("GLB"), a
real estate  investment  trust  managed by  affiliates  of the  Partnership,  in
exchange for 542,333  limited  partnership  units in GPLP. The debt securing the
properties  owned  by  Industrial  was  assumed  by  GPLP.  As a  result  of the
contribution,  Industrial ceased to be a subsidiary of the Partnership effective
December 31, 1995.

On July 15, 1996, the Partnership contributed its 45% non-voting limited partner
interest in an affiliated partnership, University Club Tower ("UCT"), to GPLP in
exchange for 10,606 limited partnership units in GPLP.

On September  24, 1996,  the  partners of Bond sold their  respective  ownership
interests in Bond to GPLP and GRT Corporation, a wholly owned subsidiary of GLB.
GPLP  issued  26,067  limited  partnership  units  and  paid-off   approximately
$2,800,000  of  indebtedness  secured by the Bond


                                 Page 22 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

property in exchange for the Partnership's interest in Bond. As of September 24,
1996,  as a  result  of  the  sale,  Bond  ceased  to  be a  subsidiary  of  the
Partnership.

Significant Accounting Policies

Basis of Accounting - The accompanying  financial  statements have been prepared
on the  accrual  basis of  accounting  in  accordance  with  generally  accepted
accounting  principles  under the presumption that the Partnership will continue
as a going concern.

Consolidation - The accompanying  consolidated  financial statements include the
accounts of Partners and its majority owned entities GPA, West, Resort Group LLC
(see below),  Mountain  Resorts LLC (see below),  Bond  (through  September  24,
1996), and Industrial (through December 31, 1995). All significant  intercompany
balances and transactions have been eliminated in the consolidation.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that effect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported results of operations  during the reporting  period.
Actual results could differ from those estimates.

Risks and Uncertainties - The Partnership's ability to (i) achieve positive cash
flow  from   operations,   (ii)  meet  its  debt   obligations,   (iii)  provide
distributions  either  from  operations  or  the  ultimate  disposition  of  the
Partnership's  investments or (iv) continue as a going concern,  may be impacted
by changes in interest rates or property values, geographic economic conditions,
or the  entry of  competitors  into the  markets  where  the  properties  of the
Partnership's investments in real estate are located. The accompanying financial
statements do not provide for adjustments with regard to these uncertainties.

New Accounting Pronouncements - In June 1997, the Financial Accounting Standards
Board issued  Statement of Financial  Accounting  Standards  No. 130 (SFAS 130),
"Reporting   Comprehensive  Income,"  which  will  be  effective  for  financial
statements  issued for fiscal years  beginning after December 15, 1997. SFAS 130
will require the Partnership to classify items of other comprehensive  income by
their nature in the statement of operations and display the accumulated  balance
of other  comprehensive  income seperately from retained earnings and additional
paid-in capital in the statement of partners' equity.

Other comprehensive income represents revenues, expenses, gains and losses which
are  included  in  comprehensive  income,  but  excluded  from net  income.  The
Partnership  will adopt SFAS 130 in the financial  statements for the year ended
December 31, 1998.



                                 Page 23 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 131 (SFAS 131),  "Disclosures about Segments
of an  Enterprise  and Related  Information."  SFAS 131 is effective  for fiscal
years beginning  after December 15, 1997.  Management has not yet determined the
level of  additional  disclosure,  if any,  that may be  required  by SFAS  131.
Additional  disclosures that may be required will be provided beginning with the
financial statements of the Partnership for the year ending December 31, 1998.

Rental  Property and Land Held for Sale - Rental property and land held for sale
are stated at the lower of cost or  estimated  fair  value.  Fair value is based
upon  the  estimated  sales  price  of the  property.  Due to the  uncertainties
inherent in the valuation process, the carrying value does not purport to be the
price at which a sale  transaction  involving  this  property  can or will  take
place. Once a rental property is classified as "held for sale",  depreciation of
the asset is ceased.

Cash and Cash  Equivalents - The Partnership  considers  certificates of deposit
and money market funds with  original  maturities of less than ninety days to be
cash equivalents.

Marketable Securities - The Partnership's investment in marketable securities is
recognized  at its fair  value.  The fair value is based on the  closing  market
price per share of the securities as of the balance sheet date.

Rental  Income - Rental  income is  recognized  as  earned  over the life of the
respective leases.

Allocation  of  Net  Income  (Loss)  - In  1995,  pursuant  to  the  partnership
agreements  of Partners and GPA, the general  partners and limited  partners had
ownership  interests  of 2.27% and  97.73%,  respectively.  This  percentage  is
derived  from  the  general  partners'  1%  direct  interest  in GPA and a 1.27%
indirect  interest through their 1.28% general partner interest in Partners' 99%
interest in GPA.

As a result of an offer  made to all of the  Partnership's  investors  in April,
1996, the Partnership paid $127,000,  a substantial  discount from the estimated
value  of the  units,  to  repurchase  50,954  limited  partnership  units  from
investors.  These units were canceled  with an effective  date of June 30, 1996.
The  reduction in  outstanding  limited  partnership  units  resulted in revised
ownership  interests  of 2.29% and 97.71% by the  general  partners  and limited
partners, respectively.

In 1997, the  Partnership  redeemed  12,177 limited  partnership  units from its
investors for $43,000.  These units were canceled with various  effective  dates
between June 30, 1997 and October 1, 1997. The reduction in outstanding  limited
partnership units resulted in revised ownership interests of 2.30% and 97.70% by
the general partners and limited partners, respectively.

Net Income (Loss) Per Limited  Partnership  Unit - Net income (loss) per limited
partnership  unit is based on the  limited  partners'  allocation  of net income
(loss) divided by the weighted  average



                                 Page 24 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

limited partner units outstanding.  In 1997, 1996 and 1995, the weighted average
limited  partner units  outstanding  was  2,905,400,  2,936,376  and  2,961,853,
respectively.

Income  Taxes - No provision  for income  taxes is included in the  accompanying
consolidated  financial  statements,  as the Partnership's results of operations
are  allocated  to the partners for  inclusion  in their  respective  income tax
returns.  Net  income  (loss)  and  partners'  equity  (deficit)  for  financial
reporting  purposes will differ from the  Partnership  income tax return because
accounting  methods used for certain  items differ for  financial  reporting and
income tax purposes.

Reclassifications - Certain 1996 balances have been reclassified to conform with
the current year presentation.

Note 2.  RELATED PARTY TRANSACTIONS

Glenborough  has the  exclusive  management  and control of the  business of the
Partnership.

Fees to Affiliates

Glenborough  Corporation  and its  affiliates  are  entitled to receive  expense
reimbursements,  fees,  and other  compensation  for  services  provided  to the
Partnership as follows:

Property  management  fees  - 3% to  5% of  gross  property  receipts  collected
Incentive  fee - .5% of the fair value of assets to the extent  earnings  exceed
$1.50 per unit Transaction fee - 2% of qualifying  transaction price Refinancing
fee - 1% of qualifying net loan refinancing proceeds

Fees  and  reimbursable  expenses  paid  to  Glenborough  and  included  in  the
Partnership's operating expenses for the years ended December 31, 1997, 1996 and
1995 are as follows (in thousands):

                                                1997         1996         1995
                                               ------       ------       ------
Property management fees                       $    1       $   30       $  106
Property management salaries (reimbursed)           4           17           26
                                               ------       ------       ------

Total property management fees and salaries    $    5       $   47       $  132
                                               ======       ======       ======

The Partnership also reimburses  Glenborough for expenses  incurred for services
provided  to  the  Partnership  such  as  accounting,  investor  services,  data
processing, legal and administrative services, and the actual costs of goods and
materials used for or by the Partnership.  Glenborough was reimbursed  $172,000,
$217,000 and $292,000 for such expenses in 1997, 1996 and 1995, respectively.



                                 Page 25 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

As a result of the Rosemead sale on April 18, 1997, the Partnership paid $53,500
to Glenborough in transaction fees.

Note 3.  RENTAL PROPERTY AND LAND HELD FOR SALE

At December  31, 1996 the  Partnership  had a 129,500  square foot  multi-tenant
office project in El Monte, California, known as Rosemead Springs which was held
for sale.  After  unsuccessfully  closing  on offers  which  would  recover  the
property's carrying value,  management  concluded that the carrying value of the
Partnership's  investment in Rosemead  Springs Business Center and adjacent lots
was in excess of its estimated  fair value and a provision for impairment of the
investment  in the amount of $1,090,000  was recorded at December 31, 1996.  The
estimated  fair value of the Rosemead  property was based on a current  purchase
offer for the property less selling costs.  Rosemead  Springs  (excluding a 1.16
acre parcel of land adjacent to the rental property) was sold to an unaffiliated
entity  for  total  cash   consideration   of  $2,675,000  on  April  18,  1997.
Afterincurring  $62,000 in closing and other costs,  the Partnership  realized a
$95,000  loss on the  sale of the  rental  property,  which is  included  in the
accompanying consolidated statement of operations.  The gross sale proceeds were
used to pay-down the Partnership's  revolving line of credit with  Mid-Peninsula
Bank.

At December  31, 1997,  management  determined  that the  carrying  value of the
Partnership's  remaining 1.16 acre parcel of land held for sale was in excess of
the estimated fair value and accordingly, recorded a provision for impairment of
land held for sale in the  amount  of  $252,000.  The fair  value was based on a
preliminary negotiated sale price of the land to an independent third party. Due
to the uncertainties inherent in this process, the valuation does not purport to
be the price at which a sale  transaction  involving  this  property can or will
take place.


Note 4.  MARKETABLE SECURITIES OF AFFILIATE

During 1997, the  Partnership  purchased a total of 80,500 shares of Glenborough
Realty Trust Incorporated ("GLB") common stock for $1,851,000. GLB, an affiliate
of the Partnership,  is a real estate investment trust and is publicly traded on
the New  York  Stock  Exchange.  As of  December  31,  1997,  the  Partnership's
investment in marketable  securities had an aggregate market value of $2,385,000
(based on the closing  market price of $29.625 per share on December 31,  1997).
Accordingly,  the Partnership recognized an unrealized gain of $534,000 on these
marketable securities.





                                 Page 26 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

Note 5.  INVESTMENT IN AFFILIATED PARTNERSHIPS

GLENBOROUGH PROPERTIES L.P.:
As of January 1, 1997, the Partnership  owned 579,006 limited  partnership units
in Glenborough  Properties L.P. ("GPLP"), the operating partnership of GLB, from
its various  contributions  and sales of real estate  assets to GPLP.  Effective
December 12, 1997,  contingent  upon the successful  sale of the property in GRC
Airport (see below), the Partnership transferred its 25% interest in GRC Airport
to GPLP for 112,877 limited partnership units in GPLP. This gave the Partnership
691,883 limited partnership units or an approximate 2.2% interest in GPLP. Since
the  Partnership  holds only a 2.2%  interest in GPLP at December 31, 1997,  the
Partnership accounts for this investment using the cost method.

GPLP  paid  $742,000  in  distributions  to the  Partnership  in 1997,  which is
included  in  income  from   investments  in  affiliated   partnerships  on  the
accompanying  consolidated  statement of  operations.  In 1998,  the 1997 fourth
quarter distribution of $290,591 was paid to the Partnership.

At  December  31,  1997,  the  investment  in  GPLP  is the  Partnership's  only
investment in affiliated  partnerships  with an approximate fair market value of
$20,500,000.

GLENCO SQUAW ASSOCIATES:
In 1996,  the  Partnership  purchased  131,347 units (13% of the total units) in
Glenco Squaw  Associates  ("Squaw")  from  investors  for  $352,000.  Squaw is a
partnership  whose sole asset is a promissory note from the sale of its interest
in a resort in Squaw Valley, California.  Since the Partnership owned only a 13%
interest in Squaw,  the Partnership  accounted for the investment in Squaw using
the cost method. On August 29, 1997, the Partnership  liquidated this investment
by selling back to Squaw its 131,347  units for $355,810  resulting in a gain on
liquidation of $3,755.

OUTLOOK INCOME/GROWTH FUND VIII:
In December,  1996,  the  Partnership  purchased 931 limited  partnership  units
(equal to a 2.7%  interest)  in Outlook  Income/Growth  Fund VIII,  a California
Limited Partnership ("Outlook VIII"), an affiliated  partnership,  for $163,000.
From February through August 1997, the Partnership purchased an additional 1,865
limited  partnership units or a 5.3% interest in Outlook VIII from sophisticated
secondary market  investors for  approximately  $319,000.  On November 11, 1997,
Outlook VIII liquidated and the Partnership received a liquidating  distribution
of $1,324,354 resulting in a gain on liquidation of $842,619.

OUTLOOK INCOME FUND 9:
From February through April 1997, the Partnership  purchased  1,642,746  limited
partnership  units or a 4.6% interest in Outlook Income Fund 9 ("Outlook 9"), an
affiliated  partnership,  from  sophisticated  secondary  market  investors  for
$124,699. On December 3, 1997, Outlook 9 liquidated and the Partnership received
a liquidating  distribution  of $295,694  resulting in a gain on  liquidation of
$170,995.




                                 Page 27 of 114
<PAGE>

                             GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

GRC AIRPORT ASSOCIATES:
In  September  1995,  the  Partnership  invested  $1,050,000  for a 25%  limited
partnership interest in GRC Airport Associates, a California Limited Partnership
("GRC Airport").  The sole real estate asset of GRC Airport was a 216,000 square
foot offsite airport parking facility in San Bruno, California. This property is
leased to a single tenant (the "Operator") which operates an off-site  long-term
parking facility for the San Francisco International Airport. Effective December
12,  1997,  contingent  upon the  successful  sale of the sole  property  in GRC
Airport, the Partnership transferred its 25% interest in GRC Airport to GPLP. No
step-up in the  Partnership's  investment basis was recorded as a result of this
transfer.  On February 17, 1998,  GRC Airport sold its sole real estate asset to
an unaffiliated  entity for  $24,000,000,  $2,000,000 of which is conditioned on
the  purchaser's  success in its efforts to purchase  the  Operator's  leasehold
interest.   If  the  purchaser's  efforts  are  successful  and  the  additional
$2,000,000 is paid to GPLP, then the  Partnership  will receive a pro-rata share
of the additional  consideration  from GPLP in the form of either (at the option
of the Partnership)  cash, GPLP limited  partnership  units or GLB common stock.
The  Partnership  accounted  for its  investment in GRC Airport using the equity
method.

In 1997, the Partnership  received cash distributions  from operations  totaling
$224,000 plus a return of capital distribution of $500,000 from GRC Airport. The
cash  distributions  from operations include $53,000 for the fourth quarter 1997
distributions received December 31, 1997.

Summary condensed  statement of operations for the years ended December 31, 1997
and 1996 are as follows (in thousands):

                                      1997                1996
                                  ----------          ----------
             Revenue              $    2,010          $    1,242
             Expenses                  1,179                 911
                                  ----------          ----------
                 Net income       $      831          $      331
                                  ==========          ==========







                                 Page 28 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

Note 6.  INVESTMENTS IN UNAFFILIATED PARTNERSHIPS

RANCON PARTNERSHIPS:
From  February  1997 through  August 1997,  the  Partnership  purchased  limited
partnership  units,  from  sophisticated  secondary  market  investors,  in  the
following unaffiliated real estate partnerships:

                                                                     Net
                                                  Ownership      Acquisition
       Partnership                Units               %             Price
      -------------              ------           ---------      -----------
Rancon Pacific Realty, LP        40,093             1.4%         $  113,662
Rancon Income Fund I                715             4.9%         $  213,141
Rancon Realty Fund I                  3               *          $      150
Rancon Realty Fund IV             2,755             3.5%         $  635,034
Rancon Realty Fund V              2,665             2.7%         $  654,879

Note *: Less than 1%


On December 31, 1997,  the  Partnership  liquidated  its  investments  in Rancon
Realty Fund IV and Rancon Realty Fund V for $826,500 and $866,125, respectively,
resulting in a total gain on  liquidation  of  investments  in  partnerships  of
$402,712.

Since the Partnership owns less than 5% of the individual  Rancon  partnerships,
it accounts for these investments using the cost method.

WINDSWEPT PORTFOLIO, LLC:
On July 31, 1997, the  Partnership  acquired a 50%  non-controlling  interest in
Windswept  Portfolio,  LLC  ("Windswept"),   a  limited  liability  company  for
$1,800,000.  Windswept  simultaneously  entered into a management agreement with
Investors  Management Trust Real Estate, Inc. ("IMT") where IMT is contracted to
acquire,    manage   and   operate   for    Windswept,    the   following   five
multifamily-residential projects in Houston, Texas:

        1.    Ashley Square, a 117-unit apartment complex
        2.    Hidden Pines, a 185-unit apartment complex
        3.    Shenandoah Woods, a 232-unit apartment complex
        4.    Southern Oaks, a 198-unit apartment complex
        5.    Unity Pointe, a 109-unit apartment complex






                                 Page 29 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

Since the Partnership owns a 50% interest in Windswept, the Partnership accounts
for this investment using the equity method.

Summary  condensed  balance sheet  information  as of December 31, 1997, and the
condensed  statement  of  operations  from  July 31,  1997  (inception)  through
December 31, 1997, are as follows (in thousands):

                            Windswept Portfolio, LLC
                      Balance Sheet as of December 31, 1997

         Investment in real estate                          $   14,937
         Cash                                                      479
         Other assets                                              776
                                                            ----------
           Total assets                                     $   16,192
                                                            ==========

         Notes payable                                      $   11,877
         Other liabilities                                         485
                                                            ----------
           Total liabilities                                    12,362
         Partners' equity                                        3,830
                                                            ----------
           Total liabilities and partners' equity           $   16,192
                                                            ==========


                            Windswept Portfolio, LLC
                             Statement of Operations
            From July 31, 1997 (inception) through December 31, 1997

                    Revenue                      $   1,995
                    Expenses                         1,657
                                                 ---------
                      Net income                 $     338
                                                 =========

The  Partnership's  share of Windswept's net income for the period from July 31,
1997 (inception) through December 31, 1997 was $169,000.

Commencing  in  October  1997,   the   Partnership   began   receiving   monthly
distributions of $18,000 from its investment in Windswept for a total of $54,000
in 1997.

RESORT GROUP LLC:
Effective  June 1, 1997,  the  Partnership  contributed  $320,000 cash for a 80%
interest in Resort Group LLC, a Colorado limited liability  company  ("Resort").
Resort was formed to invest  $1,616,162 for an 80% interest in Mountain  Resorts
LLC, a Colorado limited  liability  company  ("Mountain  Resorts").  The primary
business of  Mountain  Resorts is the  management  of various  condominiums  and
townhouses  in the  Steamboat  Springs  area of  Colorado.  As a  result  of its



                                 Page 30 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

investment in Resort, the Partnership consolidates its financial statements with
Resort (after Resort  consolidates  with Mountain  Resorts) and  recognizes  its
joint venture partner's interest as minority interest.

Of the $1,616,162  invested by Resort in Mountain Resorts,  $404,202 was in cash
and  $1,215,960  was in the  form  of a  promissory  note to the  seller  of the
management  contracts,  accruing at a rate of 8.5% per annum and maturing August
1, 2002. The note requires monthly principal and interest payments of $24,947.

Concurrent with the Partnership's  investment in Resort,  the Partnership loaned
$80,000 to Anthony Van Baak,  the 20%  partner of Resort.  The  promissory  note
accrued interest at "Prime Rate" plus 1.5 percentage  points  (effective rate of
10% at December 31,  1997) and required  quarterly  interest  payments  with the
entire  principal  due on February 28,  1998.  This note was paid-off in full on
March 7, 1998.

CHEESEBURGER IN PARADISE:
On  August  25,  1997,  the  Partnership   contributed   $200,000  for  a  5.63%
non-controlling  limited  partnership  interest  in  Cheeseburger  In Paradise -
Waikiki, a California limited partnership ("CIP-Waikiki").  CIP-Waikiki owns and
operates a  Cheeseburger  In Paradise  restaurant  on Waikiki Beach in Honolulu,
Hawaii.  Since  the  Partnership  owns a  5.63%  interest  in  CIP-Waikiki,  the
Partnership accounts for this investment using the cost method.

Note 7.  INVESTMENT IN MANAGEMENT CONTRACTS

Investment  in  management  contracts  reflects the  unamortized  portion of the
management  contracts  Mountain  Resorts  holds  with  various  condominium  and
townhouse owners in the Steamboat Springs area of Colorado.  These contracts are
amortized over seven years.

Note 8.  DEPOSITS IN ESCROW

Deposits in escrow  represent  amounts  collected by Mountain  Resorts for guest
reservations for visits to the resort within the next six months. This amount is
offset by a comparable reservation deposits liability.

Note 9.  NOTE RECEIVABLE AND OTHER ASSETS

On August 1, 1996, the  Partnership  purchased a $546,370  promissory note and a
$1,350,000 credit with the NuView Union School District  ("School  Credits") for
total  consideration  of $300,000  from an  unaffiliated  partnership  which was
liquidating. The promissory note is secured by a 199 acre parcel of land located
in Riverside,  California, requires no accrual or payment of interest, has a ten
year term and  provides  for a  discounted  payoff of $246,000 in the first year
increasing at increments of $30,000 in each subsequent year through the ten year
term. The




                                 Page 31 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

School Credits represent prepaid property tax assessments on specified
parcels of land in the Tri-City area of San Bernardino, California. In order for
the specified  parcels to be developed,  the School Credits must first be repaid
to the Partnership.  At December 31, 1997 and 1996, these assets are recorded at
cost of $300,000 and are included in notes receivable and other assets.

Note 10. NOTES PAYABLE

Notes payable as of December 31, 1997 and 1996 were as follows (in thousands):

                                                      1997             1996
                                                    -------           ------
$6,500 line of credit with Mid-Peninsula
Bank,   secured  by  the   Partnership's
interest  in  GPLP.  The  loan  requires
monthly  interest only  payments,  bears
interest at a rate of 1 percentage point
over the lender's index rate  (effective
rate of 9.5% at December 31, 1997),  and
matures September 8, 1998.                          $ 3,888           $2,200

Promissory note, secured by Resort's 80%
interest in Mountain  Resorts.  The note
accrues interest at a fixed rate of 8.5%
per annum and requires  monthly payments
of  principal  and interest of $25 until
August  1,   2002  at  which   time  the
principal and accrued interest are due.               1,133               --
                                                    -------            ------

Total notes payable                                 $ 5,021            $2,200
                                                    =======            ======

On January 2, 1998, the Partnership  paid-down  $1,692,000 on the  Mid-Peninsula
Bank  ("Mid-Pen")  revolving line of credit from the proceeds  received from the
Partnership's liquidation of its investments in Rancon Realty Fund IV and Rancon
Realty Fund V.

In February 1998, the Partnership drew $852,217 on its Mid-Pen revolving line of
credit to fund a special  distribution  to its partners and redeem 37,827 of its
limited partnership units from 18 limited partners.

On March 12, 1998, the  Partnership  drew an additional  $263,305 on its Mid-Pen
line of credit to purchase 10,000 shares of GLB stock.


Note 11. OPTION PLAN

The Partnership's  Option Plan provided for the grant of nonstatutory options to
purchase units to the General  Partners and the officers,  directors,  employees
and certain  consultants of the




                                 Page 32 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

Managing General Partner,  the property manager and its affiliates.  Individuals
who  rendered  services  to  Glenborough  or its  affiliates  as an  independent
contractor  may be  considered  an  "employee"  for purposes of the Option Plan,
provided services are rendered on a continuing basis.

In 1995,  all of the  options  were  terminated  except  those  held by a former
director  to  purchase  19,000  Partnership  units  at  $6.50  per  unit.  These
outstanding options remain exercisable through the year 2000.

Note 12. INCOME TAXES

Federal  and  state  income  tax laws  provide  that the  income  or loss of the
Partnership  is  reportable  by the  partners  in their  respective  income  tax
returns.  Accordingly,  no  provisions  for such  taxes  have  been  made in the
accompanying financial statements.  The Partnership reports certain transactions
differently for tax and financial reporting purposes.

The  Partnership's  tax returns,  its qualification as a partnership for federal
income tax  purposes,  and the amount of taxable  income or loss are  subject to
examination by the federal and state taxing  authorities.  If such  examinations
result in changes to the Partnership's taxable income or loss, the tax liability
of the partners could change accordingly.

For federal income tax reporting, (i) revenues and expenses are recognized on an
accrual  basis,  i.e.  lease income is  recognized  under the terms of the lease
contract,  (ii)  fees  paid for  services  related  to  seeking  and  evaluating
potential  real  estate  investments  are  deducted  if and  when  the  plans of
acquisition are subsequently abandoned, (iii) depreciation is provided for under
accelerated  and  modified  accelerated  cost  recovery  methods,  (iv)  certain
organizational  costs  classified as syndication  costs for tax purposes are not
deductible,  and  (v) bad  debts  are  deducted  and  written  off  when  deemed
uncollectible.





                                 Page 33 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

The following is a  reconciliation  for the years ended December 31, 1997,  1996
and 1995,  of the net income  (loss) for  financial  reporting  purposes  to the
estimated  taxable  income  (loss)  determined  in  accordance  with  accounting
practices used in preparation of federal income tax returns (in thousands):


                                                 1997        1996        1995
                                               --------    --------    --------
Net income (loss) per financial statements     $  1,313    $   (718)   $   (681)
  Loss from investment in affiliated
    partnerships                                     --         (54)     (1,000)
  Financial reporting depreciation in
    excess of tax depreciation                      (10)        (45)        392
  Provision for impairment of investment in
    real estate                                     252       1,090          --
  Unrealized gain on investments                 (1,467)         --          --
  Loss on sale                                     (222)         --          --
  Operating revenues and expenses recognized
    in a different period for financial
    reporting than for tax reporting, net          (463)       (116)       (388)
                                               --------    --------    --------
Partners' income (loss) for
  federal income tax purposes                  $   (597)   $    157    $ (1,677)
                                               ========    ========    ========



The following is a reconciliation  as of December 31, 1997 and 1996 of partners'
equity (deficit) for financial  reporting purposes to estimated partners' equity
(deficit) for federal income tax purposes (in thousands):

                                                  1997            1996
                                               ---------       ---------
Partners' equity per financial statements      $   5,272       $   3,763
  Investments in real estate partnerships         (7,203)        (14,500)
  Depreciation                                        --           5,801
  Cumulative provision for impairment
    of investment in real estate                     252           1,090
  Unit redemptions                               (35,501)        (35,501)
  Unrealized gain on investments                  (2,000)             --
  Operating revenues and expenses recognized
    in a different period for financial reporting
    than for tax reporting, net                      883              --
  Redemption costs                                  (166)             --
    Other                                             --            (183)
                                               ---------       ---------
Partners' equity (deficit) for
  federal income tax purposes                  $ (38,463)      $ (39,530)
                                               =========       =========




                                 Page 34 of 114
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1997, 1996 and 1995

Note 13. SUBSEQUENT EVENTS

Effective  January 1, 1998, the  Partnership  purchased for $104,000 from Arlene
and Anthony Van Baak (`Van Baak"), 80% of Casa 31 Ltd. Liability Co., a Colorado
limited liability  company ("Casa"),  which owns 21 Casa Del Mar condominiums in
Galveston, Texas. Simultaneously with this transaction,  the Partnership and Van
Baak contributed their 80% and 20% interests in Casa, respectively to Resort.

On January 8, 1998, the Partnership purchased for $500,000, a 36.36% interest in
Westward-Gulfton  Ltd., a Texas Limited Partnership  ("Westward").  Westward was
organized to acquire the Westward  Square  Apartments,  a 672 unit  multi-family
residential property in Houston, Texas.

On February 1, 1998, the Partnership made an unsecured  $50,000 loan to Van Baak
at an  interest  rate of "The Wall  Street  Journal  bank  prime  rate" plus 1.5
percentage  points.  The note is payable in four equal  annual  installments  of
principal in the amount of $12,500 plus accrued interest  commencing February 1,
1999.

On February  23, 1998,  Resort  purchased  Mountain  Resorts  Properties  LLC, a
limited  liability  company that owns nine rental  condominiums in the Steamboat
Springs,  Colorado  area.  The purchase price was $438,526 of which $132,893 was
paid in cash.  The balance was in the form of four separate notes payable to the
previous owners of Mountain  Resorts  Properties LLC. The notes bear interest at
8.5% per annum, fully amortizing on March 1, 2001.

In February and March 1998, the Partnership  purchased for $556,610,  a total of
20,000 shares of GLB stock from proceeds of the Mid-Pen revolving line of credit
and cash on hand. These purchases increased the Partnership's  holding in GLB to
100,500 shares.

From January 1, 1998 through March 13, 1998, the Partnership  redeemed 42,957 of
its limited partnership units for approximately  $294,000.  The Partnership drew
approximately $265,000 on the Mid-Pen line of credit to fund these redemptions.





                                 Page 35 of 114
<PAGE>



<TABLE>
<CAPTION>
                              GLENBOROUGH PARTNERS
                        A CALIFORNIA LIMITED PARTNERSHIP

                                  SCHEDULE III
                REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION

                                December 31, 1997
                                 (in thousands)

Column A                   Column B         Column C           Column D
-------------            -----------   ------------------   -------------
                                                              Net Costs
                                                             Capitalized
                                                              (Reduced)
                                             Initial          Subsequent
                                             Cost to           to Acqui-
                                           Partnership          sition
                                        -----------------    ------------


Properties               Encumbrances    Land   Buildings    Improvements
------------             ------------   -----  ----------    ------------
<S>                         <C>        <C>        <C>          <C>
1.16 acre Rosemead
 land, El Monte, CA (1)     $    0     $  517     $  ---       $    ---
Provision for impairment
 of land held for sale         ---        ---        ---           (252)
                            ------     ------     ------       --------

Total                       $    0     $  517     $  ---       $   (252)
                            ======     ======     ======       ========
</TABLE>



<TABLE>
<CAPTION>

Column A                          Column E               Column F     Column G       Column H      Column I
-------------            ---------------------------   -----------  -------------   ---------   --------------

                                                                                                Life on Which
                                                                                                 Depreciation
                                Gross Amount                                                    in the Latest
                                 Carried at            Accumulated      Date of        Date    Income Statement
                              December 31, 1996       Depreciation   Construction    Acquired    Is Computed
                         ---------------------------   -----------   ------------    --------   --------------
                                  Buildings
                                    and
Properties                Land     Improv     Totals
------------             -------  ---------   ------
<S>                       <C>       <C>       <C>         <C>           <C>          <C>            <C>
1.16 acre Rosemead
 land, El Monte, CA (1)   $ 517     $ ---     $  517      $  ---          N/A         7/15/83        N/A
Provision for impairment
 of land held for sale     (252)      ---       (252)        ---          N/A             N/A        N/A
                          -----     -----     ------      ------

Total                     $ 265     $ ---     $  265      $  ---
                          =====     =====     ======      ======
</TABLE>

Note (1): This asset is classified as land held for sale at December 31, 1997.








                        See accompanying reconciliations




                                 Page 36 of 114
<PAGE>




                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                       RECONCILIATION OF REAL ESTATE COST
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                 (in thousands)

NOTE TO SCHEDULE III - REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION


                                                       1997     1996     1995
                                                       ----     ----     ----

Balance, beginning of period                         $  517   $ 3,778   $18,638

Improvements                                             --        18       108
Disposition of real estate                               --    (3,279)  (14,968)
Provision for impairment of real estate held for sale  (252)       --        --
                                                     ------   -------   -------

Balance, end of period                               $  265   $   517   $ 3,778
                                                     ======   =======   =======


                   RECONCILIATION OF ACCUMULATED DEPRECIATION
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                 (in thousands)

                                                       1997      1996      1995
                                                       ----      ----      ----

Balance, beginning of period                         $   --   $    75   $ 2,901

Depreciation expense                                     --        59       343
Disposition of real estate                               --      (134)   (3,169)
                                                     ------   -------   -------

Balance, end of period                               $   --   $    --   $   75
                                                     ======   =======   =======

The  December  31,  1997 and  1996  balances  represent  only  operating  rental
properties and not land or rental property held for sale.

The aggregate  cost basis of real estate owned at December 31, 1997, for federal
income tax purposes was approximately $256,000.




                                 Page 37 of 114
<PAGE>



                                    PART III

Item 9.  Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure.

None.

Item 10. Directors and Executive Officers of the Registrant.

General Partners

The Partnership has no directors or executive officers.  The general partners of
the  Partnership  are  Glenborough  Corporation  ("GC",  the  "Managing  General
Partner") and Robert Batinovich.

Robert  Batinovich,  age 61, was the  President,  Chief  Executive  Officer  and
Chairman  of  Glenborough  Corporation  from its  inception  in 1978  until  his
resignation  effective  January 10, 1996. On August 31, 1994, Mr. Batinovich has
served as Chairman  and Chief  Executive  Officer of  Glenborough  Realty  Trust
Incorporated  ("GLB"), a newly created Real Estate Investment Trust, which began
trading on the New York Stock Exchange on January 31, 1996. Mr.  Batinovich also
served as President of GLB from August 31, 1994 through September 1997. He was a
member of the Public  Utilities  Commission from 1975 to January 1979 and served
as it President  from January 1977 to January  1979. He is a member of the Board
of  Directors  of Farr  Company,  a  publicly  held  company  that  manufactures
industrial  filters.  He has extensive real estate  investment  experience.  Mr.
Batinovich's  business  background  includes managing and owning  manufacturing,
vending and service companies and a national bank.

For informational  purposes, the following are the names and a brief description
of the background and experience of each of the controlling  persons,  directors
and executive officers of the Managing General Partner as of February 28, 1998:

Name                   Age                      Position

Andrew Batinovich      39      Chief Executive Officer and Chairman of the Board

Robert Bailey          36      Secretary and Corporate Counsel

Sandra Boyle           49      President and Chief Operating Officer

Terri Garnick          37      Chief Financial Officer

Kathleen Williams      49      Vice President

June Gardner           46      Director

Laurence Walker        65      Director


                                 Page 38 of 114
<PAGE>



Andrew  Batinovich was elected Chairman of the Board and Chief Executive Officer
of GC on January  10,  1996.  He has been  employed  by GC since  1983,  and had
functioned  since 1987 as Chief Operating  Officer and Chief Financial  Officer.
Mr. Batinovich also serves as President, Chief Operating Officer and director of
GLB. He holds a California real estate  broker's  license and is a Member of the
National Advisory Council of Building Owners and Managers  Association  ("BOMA")
International.  Prior to  joining  Glenborough,  Mr.  Batinovich  was a  lending
officer  with the  International  Banking  Group and the  Corporate  Real Estate
Division  of  Security   Pacific   National   Bank.  He  received  his  B.A.  in
International  Finance from the American  University of Paris.  He is the son of
Robert Batinovich.

Robert Bailey joined GC in 1989 as Associate  Counsel and was elected  Secretary
of GC on May 15, 1995. He is responsible for all landlord/tenant  documentation,
tenant  litigation,  corporate and partnership  matters and employment  matters.
From 1987 to 1989,  Mr.  Bailey  was an  associate  with the law firm of Pedder,
Stover,  Hesseltine & Walker, where he specialized in business litigation. He is
a member of the State Bar of  California.  In 1984,  he received his Bachelor of
Arts degree from the  University  of  California  at Santa Barbara and his Juris
Doctor degree from Vermont Law School in 1987

Sandra Boyle has been associated  with GC or its associated  entities since 1984
and has served as President and Chief Operating  Officer of GC since January 10,
1996.  She  was  originally  responsible  for  residential  marketing,  and  her
responsibilities  were  gradually  expanded to include  residential  leasing and
management in 1985,  and  commercial  leasing and  management  in 1987.  She was
elected Vice President in 1989, and continued to supervise  marketing,  leasing,
property management operations and regional offices. Ms. Boyle also serves as an
Executive  Vice  President  of GLB.  Ms.  Boyle holds a  California  real estate
broker's license and a CPM designation, and is a member of the National Advisory
and Finance Committee of BOMA International; and is on the Board of Directors of
BOMA San Francisco and BOMA California.

Terri  Garnick  has served as Chief  Financial  Officer of GC since  January 10,
1996. She is also Senior Vice President,  Chief Accounting Officer and Treasurer
of GLB. Ms. Garnick is responsible for property management accounting, financial
statements,  audits,  Securities  and  Exchange  Commission  reporting,  and tax
returns.  Prior to joining GC in 1989,  Ms.  Garnick was a controller  at August
Financial Corporation from 1986 to 1989 and was a Senior Accountant at Deloitte,
Haskins and Sells from 1983 to 1986.  She is a Certified  Public  Accountant and
has a Bachelor of Science degree from San Diego State University.

Kathleen Williams has been Vice President,  Multifamily Housing since July 1996.
She is  responsible  for  management  of the  Company's  multifamily  units.  Ms
Williams has seventeen  years  experience in property  management and previously
served eight years as Northern  California  Regional  Manager for Maxim Property
Management in Redwood City, California; and for five years as Asset and Property
Manager for Trammell  Crow Company in Dallas,  Texas.  She has a B.A. in Foreign
Language/Communications from North Texas State University.


                                 Page 39 of 114
<PAGE>

June  Gardner  was  elected  a  director  of GC on  January  10,  1996.  She was
associated  with GC from  1984  through  1995,  as  Senior  Vice  President  and
Corporate  Controller with  responsibilities in the areas of corporate financial
planning,  reporting,  accounting and banking relationships.  Before joining GC,
Ms. Gardner was Assistant Vice President of JMB Realty  Corporation from 1977 to
1984, with responsibilities in the areas of financial management and reporting.

Laurence Walker was elected a director of Glenborough  Inland Realty Corporation
(merged into  Glenborough  Corporation on June 30, 1997) on January 10, 1996. He
has been a member of the  California  State Bar since  1963,  and is an attorney
specializing  in real estate law. Mr. Walker has been a director of  Glenborough
Corporation's related entities since 1985.

Item 11. Executive Compensation.

Compensation and Fees

In accordance  with the  Partnership  Agreement,  the Managing  General  Partner
receives  expense   reimbursements   and  fees  for  services  provided  to  the
Partnership. Information regarding these fees and reimbursements is incorporated
herein by reference to Note 2 of the Notes to Consolidated  Financial Statements
under the heading "Fees to Affiliates"  and Note 1 of the Notes to  Consolidated
Financial Statements under the heading "Allocation of Net Income (Loss)".

The Partnership has no employees and pays no salary or other cash  compensation,
directly to any person other than the fees and expense reimbursements  described
above.  All officers of the Managing  General Partner receive a salary and other
benefits from Glenborough Corporation as compensation for Partnership activities
as well as other  activities  of  Glenborough  Corporation  not  related  to the
Partnership.

Option Plan

As of December 31, 1997,  all  outstanding  options,  except for 19,000  options
exercisable by a former director, have been terminated.




                                 Page 40 of 114
<PAGE>



Item 12. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth certain information  regarding the Units owned on
December  31,  1997 by (a)  each  Unitholder  known  to the  Partnership  to own
beneficially  more than 5% of the outstanding  Units;  (b) each Unitholder under
common control of an officer,  director,  or 5% Unitholder;  (c) each individual
general  partner of the  Partnership  and each director of the managing  general
partner;  and (d) all executive  officers and directors of the managing  general
partner  as  a  group.  All  outstanding  options,  except  for  19,000  options
exercisable by a former director were canceled as of December 4, 1995.

Name of Beneficial                           Units                 Percent
Owner (Notes 1 and 2)                        Owned                 Owned (3)
---------------------                        -----                 ---------

Robert Batinovich
(Note 4)                                    549,469                  18.71%

Robert Batinovich,
General Partner                              34,577                   1.18%

Glenborough Realty Trust Incorporated       116,945                   3.98%

Glenborough Corporation                       1,108                   0.04%

Glenborough Corporation
  General Partner                             3,842                   0.13%

Andrew Batinovich                            24,248                   0.83%

Laurence Walker (Note 5)                     27,102                   0.92%
2922 Forest Avenue
Berkeley,  CA  94705

Samuel Scripps (Note 6)                     459,138                  15.63%
c/o Laurence Walker
2922 Forest Avenue
Berkeley,  CA  94705

All Executive Officers and                   52,764                   1.80%
Directors as a Group
(3 persons)






                                 Page 41 of 114
<PAGE>



Notes:

(1) Unless otherwise indicated, the addresses of the above beneficial owners are
the same as that of the registrant.

(2) The persons  named on the table have sole voting and  investment  power with
respect  to all  interests  beneficially  owned by them,  subject  to  community
property laws where applicable and the information contained in the footnotes to
the table.  The table  assumes the exercise of  outstanding  options held by one
former  director to acquire an aggregate of 19,000  Units,  which are  presently
exercisable.

(3) Percent owned is calculated  by dividing the sum of the  Unitholder's  Units
and  exercisable  options by the sum of all  outstanding  Units and  exercisable
options.

(4) Excludes Mr. Batinovich's 1.18% General Partner interest in the Partnership.
Excludes  14,817  Units  that  Mr.  Batinovich  may  vote  as  Trustee  for  one
Unitholder, as to which Mr. Batinovich disclaims beneficial ownership.  Excludes
the  3,842  Units  or  0.13% in  General  Partner  interest  and  1,108  Limited
Partnership Units owned by Glenborough Corporation,  of which Mr. Batinovich was
majority  owner.  Excludes  5,198  Units  owned by the Robert  and  Garnet  Anne
Batinovich  l982  Irrevocable  Inter  Vivos  Trust  for the  benefit  of  Angela
Batinovich, as to which Robert Batinovich disclaims beneficial ownership.

(5)  Excludes  303,979  units  that  Mr.  Walker  may  vote as  Trustee  for one
Unitholder, as to which Mr. Walker disclaims beneficial ownership.

(6)  Includes  Units owned by three trusts and one  partnership  of which Samuel
Scripps is the beneficial owner.


Item l3. Certain Relationships and Related Transactions.

Fees and  Reimbursable  Expenses - During l997 and in accordance  with the prior
and  current  Limited  Partnership  Agreements  (incorporated  by  reference  to
Exhibits  10.40  through 10.43 to the  Partnership's  annual report on Form 10-K
dated December 31, 1995, No.  33-3657),  the Managing  General Partner  received
management  fees and  reimbursed  expenses  (see Item 8., Note 2 - Related Party
Transactions).


Item l4. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)      (l)      Financial Statements and
         (2)      Financial Statement Schedule

         See  Item 8 of this  Form  10-K  for the  Financial  Statements  of the
         Partnership,  Notes  thereto,  Report of Independent  Certified  Public
         Accountants,   and  Supplemental  Schedule.  A  Table


                                 Page 42 of 114
<PAGE>


          of Contents to Financial Statements, Supplemental Schedule and Exhibit
          is included in Item 2 and incorporated herein by reference.

         (3) Exhibits
                                                          Page Number or
Exhibit                                                   Incorporation
Number              Description                           By Reference to
------------------------------------------------------------------------------
10.40               Limited Partnership Agreement         Exhibit 10.40 to the
                    of Glenborough Partners, A            Annual Report on
                    California Limited Partnership        Form 10-K No. 33-3657
                                                          for the year ended
                                                          December 31, 1995

10.44               Operating Agreement of Resort         Exhibit 10.44 to the
                      Group LLC                           Annual Report on
                                                          Form 10-K No. 33-3657
                                                          for the year ended
                                                          December 31, 1997

10.45               Acquisition (Mountain Resorts LLC)    Exhibit 10.45 to the
                    Agreement                             Annual Report on
                                                          Form 10-K No. 33-3657
                                                          for the year ended
                                                          December 31, 1997

27.                 Financial Data Schedule

(b)                 Reports on Form 8-K

                   Registrant filed a Current Report on Form 8-K, dated March 3,
                   1998,   reporting  that   post-closing   contingencies   were
                   satisfied   for  the   completion  of  the  transfer  of  the
                   Registrant's  25%  interest  in  GRC  Airport  Associates  to
                   Glenborough   Properties   L.P.   ("GPLP"),   an   affiliated
                   partnership, for 112,877 limited partnership units in GPLP.





                                 Page 43 of 114
<PAGE>



                                   SIGNATURES


Pursuant to the  requirements of Section l3 or l5(d) of the Securities  Exchange
Act of l934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP



By:  /s/ Robert Batinovich                By: Glenborough Corporation,
      Robert Batinovich                       a California corporation
      General Partner                         General Partner



    Date:  March 30, 1998                     By: /s/ Andrew Batinovich
                                                  Andrew Batinovich
                                                  Chief Executive Officer
                                                  and Chairman of the Board


                                              Date:  March 30, 1998



                                              By: /s/ Terri Garnick
                                                  Terri Garnick
                                                  Chief Financial Officer

                                              Date:  March 30, 1998


                                             By: /s/ June Gardner
                                                 June Gardner
                                                 Director


                                             Date:  March 30, 1998

          (A Majority of the Board of Directors of the General Partner)


                                 Page 44 of 114
<PAGE>


                              GLENBOROUGH PARTNERS
                        A California Limited Partnership

                                INDEX TO EXHIBITS


                                                           Sequentially
Exhibit Number                      Exhibit               Numbered Page


   10.44               Operating Agreement of                  46
                           Resort Group LLC


   10.45               Acquisition (Mountain Resorts           76
                           LLC) Agreement



                                 Page 45 of 114
<PAGE>



                                                                   Exhibit 10.44

                               OPERAT1NG AGREEMENT

                                       OF

                                RESORT GROUP, LLC



THE  OWNERSHIP  INTERESTS  IN THIS  LIMITED  LIABILITY  COMPANY  HAVE  NOT  BEEN
REGISTERED  WITH THE  SECURITIES  AND EXCHANGE  COMMISSION  OR STATE  SECURITIES
AUTHORITIES  AND MAY NOT BE SOLD OR  TRANSFERRED  IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION  STATEMENT  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  AND ANY
APPLICABLE  STATE  SECURITIES  LAWS OR AN OPINION OF COUNSEL  ACCEPTABLE  TO THE
GENERAL MANAGER THAT REGISTRATION IS NOT REQUIRED. THE SALE OR OTHER TRANSFER OF
THE  OWNERSHIP  INTERESTS  IS ALSO  RESTRICTED  BY  CERTAIN  PROVISIONS  IN THIS
AGREEMENT.




                                 Page 46 of 114
<PAGE>



                                                                   Exhibit 10.44
                               OPERATING AGREEMENT

                                       OF

                                RESORT GROUP. LLC


         THIS OPERATING  AGREEMENT (this  "Agreement") is entered into as of the
13th  day of  June,  1997,  by and  between  GPA,  LTD.,  a  California  limited
partnership ("GPA") and ANTHONY E. VAN BAAK ("Van Baak").

                              EXPLANATORY STATEMENT

         The parties  have agreed to  organize  and operate a limited  liability
company in accordance  with the terms and subject to the conditions set forth in
this Agreement.

         NOW  THEREFORE,  for  good and  valuable  consideration,  the  parties,
intending to be legally bound, agree as follows:

                                    Section I
                                  Defined Terms

         The following  capitalized  terms shall have the meanings  specified in
this  Section I. Other  terms are  defined  in the text of this  Agreement;  and
throughout  this  Agreement,  those terms shall have the  meanings  respectively
ascribed to them.

         "Act" means the Colorado Limited Liability Company Act, as amended from
time to time.

         "Adjusted  Capital Account Deficit" means, with respect to any Interest
Holder, the deficit balance, if any, in the Interest Holder's Capital Account as
of the end of the relevant  taxable  year,  after giving effect to the following
adjustments:

               (i) the  deficit  shall be  decreased  by the  amounts  which the
Interest Holder is deemed obligated to restore  pursuant to Regulation  Sections
1.704-1(g)(i)  and (i)(5) (i.e., the Interest Holder's Share of Minimum Gain and
Member Minimum Gain); and

               (ii) the deficit  shall be  increased  by the items  described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

         "Adjusted  Capital Balance" means, as of any day, an Interest  Holder's
total  Capital  Contributions  less  all  amounts  actually  distributed  to the
Interest Holder  pursuant to Section 4.4 hereof.  If any Interest is transferred
in accordance with the terms of this Agreement,



                                 Page 47 of 114
<PAGE>


                                                                   Exhibit 10.44

the transferee  shall succeed to the Adjusted  Capital Balance of the transferor
to the extent the Adjusted Capital Balance relates to the Interest transferred.

         "Affiliate"  means, with respect to any Member,  any Person:  (i) which
owns directly or indirectly  more than  twenty-five  percent (25%) of the voting
interests in the Member; or (ii) in which the Member owns directly or indirectly
more than twenty-five  percent (25%) of the voting interests;  or (iii) in which
more than  twenty-five  percent (25%) of the voting interests are owned directly
or indirectly by a Person who has a  relationship  with the Member  described in
clauses (i) or (ii) above.

         "Agreement" means this Agreement, as amended from time to time.

         "Capital Account" means the account  maintained by the Company for each
Interest Holder in accordance with the following provisions:

                  (i) an Interest  Holder's  Capital  Account  shall be credited
         with the Interest  Holder's  Capital  Contributions,  the amount of any
         Company  liabilities  assumed  by the  Interest  Holder  (or  which are
         secured by Company property  distributed to the Interest  Holder),  the
         Interest Holder's  allocable share of Profit and any item in the nature
         of income or gain specially  allocated to such Interest Holder pursuant
         to the provisions of Section IV (other than Section 4.3.3); and

                  (ii) an Interest  Holder's  Capital  Account  shall be debited
         with the  amount  of money  and the fair  market  value of any  Company
         property  distributed  to the Interest  Holder,  the Interest  Holder's
         allocable  share of Loss,  and any item in the  nature of  expenses  or
         losses  specially  allocated  to the  Interest  Holder  pursuant to the
         provisions of Section IV (other than Section 4.3.3)

         If any Interest is transferred pursuant to the terms of this Agreement,
the  transferee  shall succeed to the Capital  Account of the  transferor to the
extent the Capital Account is attributable to the transferred  Interest.  If the
book value of Company  property  is  adjusted  pursuant  to Section  4.3.3,  the
Capital  Account of each  Interest  Holder  shall be  adjusted  to  reflect  the
aggregate adjustment in the same manner as if the Company had recognized gain or
loss equal to the amount of such aggregate  adjustment.  It is intended that the
Capital  Accounts of all Interest Holders shall be maintained in compliance with
the  provisions of Regulation  Section  1.704-1(b),  and all  provisions of this
Agreement  relating to the maintenance of Capital  Accounts shall be interpreted
and applied in a manner consistent with that Regulation.

         "Capital  Contribution"  means  the  total  amount of cash and the fair
market  value of any other  assets  contributed  (or  deemed  contributed  under
Regulation  Section  1.704-1(b)(2)(iv)(d))  to the  Company by a Member,  net of
liabilities assumed or to which the assets are subject.




                                 Page 48 of 114
<PAGE>


                                                                   Exhibit 10.44

         "Cash Flow" means all cash funds derived from operations of the Company
(including  interest  received on reserves),  without  reduction for any noncash
charges,  but less cash funds used to pay current operating  expenses and to pay
or establish  reasonable  reserves for future expenses,  debt payments,  capital
improvements and replacements as determined by the General Manager.

         "Code" means the  Internal  Revenue  Code of 1986,  as amended,  or any
corresponding provision of any succeeding law.

         "Company" means the limited liability company formed in accordance with
this Agreement.

         "CSOS" means the Colorado Secretary of State.

         "General Manager" is the Person designated as such in Section V.

         "Interest  Holder"  means any Person who holds a  Membership  Interest,
whether as a Member or as an unadmitted assignee of a Member.

         "Involuntary  Withdrawal"  means,  with  respect  to  any  Member,  the
occurrence of any of the following events:

               (i) the Member makes an assignment for the benefit of creditors;

               (ii) the Member files a voluntary petition of bankruptcy;

               (iii) the Member is adjudged  bankrupt or  insolvent  or there is
     entered  against  the  Member an order  for  relief  in any  bankruptcy  or
     insolvency proceeding;

               (iv) the  Member  files a  petition  seeking  for the  Member any
     reorganization,   arrangement,  composition,   readjustment,   liquidation,
     dissolution or similar relief under any statute, law or regulation;

               (v)  the  Member   seeks,   consents  to  or  acquiesces  in  the
     appointment of a trustee for,  receiver for or liquidation of the Member or
     of all or any substantial part of the Member's properties;

               (vi) the Member  files an answer or other  pleading  admitting or
     failing to contest the material allegations of a petition filed against the
     Member in any proceeding described in subsections (i) through (v);

               (vii) any proceeding  against the Member seeking  reorganization,
     arrangement, composition, readjustment, liquidation, dissolution or similar
     relief  under any statute,  law or  regulation,  continues  for one hundred
     twenty (120) days after the commencement  thereof,  or the appointment of a
     trustee, receiver or




                                 Page 49 of 114
<PAGE>


                                                                   Exhibit 10.44

     liquidator  for the Member or all or any  substantial  part of the Member's
     properties   without  the  Member's   agreement  or   acquiescence,   which
     appointment  is not vacated or stayed for one hundred twenty (120) days or,
     if the  appointment is stayed,  for one hundred twenty (120) days after the
     expiration of the stay during which period the appointment is not vacated;

               (viii) if the  Member is an  individual,  the  Member's  death or
     adjudication by a court of competent  jurisdiction as incompetent to manage
     the Member's person or property;

               (ix) if the  Member  is  acting  as a Member by virtue of being a
     trustee of a trust, the termination of the trust;

               (x) if the Member is a partnership or limited liability  company,
     the  dissolution  and  commencement  of  winding up of the  partnership  or
     limited liability company;

               (xi)  if the  Member  is a  corporation  the  dissolution  of the
     corporation or the revocation of its charter;

               (xii)  if  the  Member  is an  estate,  the  distribution  by the
     fiduciary of the estate's entire interest in the Company; or

               (xiii)  breach of the  Agreement  by the Member that is not cured
     within  thirty (30) days after  notice from the other Member or the General
     Manager,  provided if the breach  cannot  reasonably  be cured  within such
     30-day  period there shall not be an  Involuntary  Withdrawal if the Member
     commences  the cure  within  such  30-day  period,  pursues  the cure  with
     reasonable  diligence,  and  completes  the cure within a  reasonable  time
     thereafter.

         "Member"  means each Person  signing this  Agreement and any Person who
subsequently is admitted as a member of the Company.

         "Member Loan Nonrecourse  Deductions" means any Company deductions that
would be Nonrecourse  Deductions if they were not attributable to a loan made or
guaranteed by a Member within the meaning of Regulation Section 1.704-2(i).

         "Member  Minimum Gain" has the meaning set forth in Regulation  Section
1.704-2(i) for "partner nonrecourse debt minimum gain."

         "Membership  Interest" means a Person's share of the Profits and Losses
of, and the right to receive distributions from, the Company.

         "Membership Rights" means all of the rights of a Member in the Company,
including  a  Member's:  (i)  Membership  Interest;  (ii) right to  inspect  the
Company's books and





                                 Page 50 of 114
<PAGE>


                                                                   Exhibit 10.44

records; and (iii) right to participate in the management of and vote on matters
coming  before  the  Company.

         "Minimum  Gain"  has  the  meaning  set  forth  in  Regulation  Section
1.704-2(d).  Minimum Gain shall be computed  separately for each Interest Holder
in a manner consistent with the Regulations under Code Section 704(b).

         "Negative  Capital  Account" means a Capital  Account with a balance of
less than zero.

         "Nonrecourse  Deductions"  has the  meaning  set  forth  in  Regulation
Section  1.704-2(b)(1).  The amount of Nonrecourse Deductions for a taxable year
of the Company  equals the net  increase,  if any, in the amount of Minimum Gain
during that taxable year,  determined  according to the provisions of Regulation
Section 1.704-2(c).

         "Nonrecourse Liability" has the meaning set forth in Regulation Section
1.704-2(b)(3) and 1.752-1(a)(2).

         "Percentage"  means, as to a Member, the percentage set forth after the
Member's name on Exhibit A, as amended from time to time,  and as to an Interest
Holder  who is not a Member,  the  Percentage  of the  Member  whose  Membership
Interest has been acquired by such Interest  Holder,  to the extent the Interest
Holder has succeeded to that Member's Membership Interest.

         "Person" means and includes any individual,  corporation,  partnership,
association, limited liability company, trust, estate or other entity.

         "Positive  Capital  Account"  means a  Capital  Account  with a balance
greater than zero.

         "Prime  Rate" means an annual rate of interest  equal to the prime rate
as  reported  from time to time by The Wall Street  Journal,  adjusted as of the
first day of each calendar quarter to the prime rate in effect on such date.

         "Profit"  and "Loss"  mean,  for each  taxable  year of the Company (or
other period for which profit or Loss must be computed)  the  Company's  taxable
income or loss  determined  in  accordance  with Code Section  703(a),  with the
following adjustments:

               (i) all items of income, gain, loss, deduction or credit required
         to be stated  separately  pursuant to Code Section  703(a)(1)  shall be
         included in computing taxable income or loss;

               (ii) any tax-exempt  income of the Company,  not otherwise  taken
         into  account  in  computing  Profit  or  Loss,  shall be  included  in
         computing taxable income or loss;




                                 Page 51 of 114
<PAGE>


                                                                   Exhibit 10.44

               (iii) any  expenditures of the Company  described in Code Section
         705(a)(2)(B)  (or  treated  as  such  pursuant  to  Regulation  Section
         1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing
         Profit or Loss, shall be subtracted from taxable income or loss:

               (iv)  gain or loss  resulting  from any  taxable  disposition  of
         Company  property  shall be computed by reference to the adjusted  book
         value of the property  disposed of,  notwithstanding  the fact that the
         adjusted book value differs from the adjusted basis of the property for
         federal income tax purposes:

               (v) in lieu of the  depreciation,  amortization  or cost recovery
         deductions  allowable in computing  taxable income or loss, there shall
         be taken into account the depreciation computed based upon the adjusted
         book value of the asset; and

               (vi) I  notwithstanding  any other provision of this  definition,
         any items which are specially  allocated pursuant to Section 4.3 hereof
         shall not be taken into account in computing Profit or Loss.

         "Regulation" means the income tax regulations,  including any temporary
regulations, from time to time promulgated under the Code.

         "Resignation"  means a Member's  dissociation with the Company by means
other than by a Transfer or an Involuntary Withdrawal.

         "Transfer"   means,   when  used  as  a  noun,   any  voluntary   sale,
hypothecation,  pledge, assignment, attachment or other transfer, and, when used
as a verb, means voluntarily to sell,  hypothecate,  pledge, assign or otherwise
transfer.

                                   Section II
                    Formation and Name: Office; Purpose; Term

     2.1  Organization.  The  Company  was  formed on June 13,  1997,  by filing
Articles of  Organization  with CSOS in the form  attached  hereto as Exhibit B,
which are hereby ratified and confirmed

     2.2 Name of the Company. The name of the Company shall initially be "Resort
Group,  LLC." The Company  may do  business  under that name and under any other
name or names which the Members may select. If the Company does business under a
name other than that set forth in its Articles of Organization, then the Company
shall file a trade name certificate as required by law.

     2.3 Purpose:  Certain  Initial  Transactions.  Subject to the provisions of
this  Agreement,  the business and principal  purposes of the Company are (a) to
engage  in the  resort  hospitality  business  (including,  without  limitation,
property rental  management,  association  management and property  management),
either directly or through direct or




                                 Page 52 of 114
<PAGE>


                                                                   Exhibit 10.44

indirect  investments  in  businesses  that  engage  in the  resort  hospitality
business,  (b) to borrow money in furtherance of the purposes of the Company and
to issue  promissory  notes or other evidence of indebtedness in connection with
such borrowings, (c) to grant a mortgage, deed of trust, pledge or other lien on
or  security  interest  in all or any  portion of the  assets of the  Company to
secure the  Company's  obligations  as debtor under all loans,  lines of credit,
debt offerings,  credit facilities or other financing  arrangements from time to
time established to finance any portion of the Company's activities,  and (d) to
do any and all other acts or things  which may be  incidental  or  necessary  to
carry on the business of the Company as contemplated  by this Agreement.  Except
as  otherwise  provided in this  Agreement,  the Company  will not engage in any
other activity or business, and no Member will have any authority to hold itself
out as a general agent of another Member in any other  business or activity.  In
furtherance  of the  purposes of the Company,  the  following  transactions  are
expressly authorized:

                  (i) The Company shall become a party to that certain Operating
         Agreement of Mountain Resorts Acquisition, LLC dated June 13, 1997 with
         Mountain Resorts,  Inc., a Colorado  corporation (the "Mountain Resorts
         LLC Operating Agreement") and take such actions as are necessary on the
         part of the Company to consummate the transactions  contemplated by the
         Mountain Resorts LLC Operating  Agreement and carry out the obligations
         of the Company  thereunder,  subject to the terms and conditions of the
         Mountain Resorts LLC Operating Agreement.

                  (ii)  The  Company  shall  become  a  party  to  that  certain
         Acquisition Agreement dated June 1, 1997, with H. David Zabel, Patricia
         H. Zabel, Glen D. Zabel, Alice T. Klauzer,  Mountain Resorts,  Inc. and
         Mountain Resorts Acquisition,  LLC (the "Acquisition  Agreement"),  and
         take  such  actions  as are  necessary  on the part of the  Company  to
         consummate the transactions  contemplated by the Acquisition  Agreement
         and carry out the obligations of the Company thereunder, subject to the
         terms and conditions of the Acquisition Agreement.  Among other things,
         the Acquisition Agreement contemplates that the Company will purchase a
         79to  membership  interest in Mountain  Resorts  Acquisition,  LLC from
         Mountain  Resorts,   Inc.  for  a  purchase  price  of  $1  595,959.60,
         $380,000.00 of which (subject to closing  adjustments  and  prorations)
         shall  be  payable  in  cash  at the  closing  of  such  purchase,  and
         $1?2152959.60 of which will be payable by the Company's promissory note
         payable  to  Mountain  Resorts,   Inc.  (the  "Purchaser   Note").  The
         Acquisition  Agreement further  contemplates that the Company will be a
         beneficiary  of certain  Noncompetition  Covenants  (as  defined in the
         Acquisition Agreement).  The Capital Contributions to the Company shall
         be used to fund the Company's initial Capital  Contribution to Mountain
         Resorts  LLC  (which  shall  be used to pay the  consideration  for the
         Noncompetition  Covenants)  and to pay the cash portion of the purchase
         price  for  the  Mountain  Resorts  Acquisition,  LLC  interest  to  be
         purchased by the Company pursuant to the Acquisition Agreement.




                                 Page 53 of 114
<PAGE>


                                                                   Exhibit 10.44

     2.4 Term.  The term of the Company  shall begin upon the  acceptance of the
Articles of  Organization  by the CSOS and shall continue in existence until May
31, 2027, unless its existence is sooner  terminated  pursuant to Section VII of
this Agreement.

     2.5 Principal  Office.  The principal office of the Company in the State of
Colorado shall be located at 810 Lincoln Avenue,  Suite 200,  Steamboat Springs,
Colorado 80487, or at any other place which the General Manager selects.

     2.6 Resident Agent. The name and address of the Company's resident agent in
the State of  Colorado  shall be Anthony E. Van Baak 810 Lincoln  Avenue,  Suite
200, P.O. Box 774671, Steamboat Springs, Colorado 80477.

     2.7 Members.  The name,  present mailing address,  taxpayer  identification
number and Percentage of each Member are set forth on Exhibit A.

                                   Section III
                    Members; Capital; Capital Accounts; Loans

     3.1 Initial  Capital  Contributions.  Within  forty-eight  (48) hours after
notice from the General  Manager,  the Members  shall  contribute to the Company
cash in the  amounts  respectively  set forth on Exhibit  A. Such  contributions
shall be  delivered  by wire  transfer  or other  current  funds to the  account
specified by the General Manager.

     3.2 No Other Capital Contributions Required. No Member shall be required to
contribute any additional capital to the Company, and except as set forth in the
Act, no Member  shall have any personal  liability  for any  obligations  of the
Company.

     3.3 No Interest on Capital  Contributions.  Interest  Holders  shall not be
paid interest on their Capital Contributions.

     3.4 Return of Capital  Contributions.  Except as otherwise provided in this
Agreement,  no Interest Holder shall have the right to receive the return of any
Capital Contribution.

     3.5 Form of Return of Capital. If an Interest Holder is entitled to receive
a return of a Capital Contribution, the Interest Holder shall not have the right
to receive  anything other than cash in return of the Interest  Holder's Capital
Contribution.

     3.6 Capital  Accounts.  A separate  Capital Account shall be maintained for
each Interest Holder.

     3.7 Loans.

         3.7.1 Revolving Line of Credit. Throughout the term of the Company, GPA
shall make  available to the Company a revolving line of credit in the amount of
$1,000,000




                                 Page 54 of 114
<PAGE>


                                                                   Exhibit 10.44

which  may be used  in the  discretion  of the  General  Manager  for any of the
Company's  purposes.  The  outstanding  principal  balance of the line of credit
shall bear interest at the rate of one and one-half  percent  (1-1/2%) in excess
of the Prime Rate.  The General  Manager shall be entitled to make draws on such
line of credit on at least seventy-two (72) hours' prior notice to GPA.

         3.7.2 Other Loans. Any Member may, at any time, make or cause a loan to
be made to the  Company in any amount and on those  terms upon which the Company
and the Member agree.

                                   Section IV
                         Profit, Loss and Distributions

     4.1 Distributions of Cash Flow.

         4.1.1 Tax  Distributions.  For each tax year the Company  will,  during
such tax year or the immediately  subsequent tax year, but not later than ninety
(90) days following the end of such tax year, use its reasonable best efforts to
distribute to the interest holders in proportion to their  Percentages an amount
equal to 35% of the taxable income (or estimated  taxable  income) that has been
or will be allocated to the Interest  Holders for such taxable year.  The amount
and timing of such distributions shall be determined by the General Manager.

         4.1.2 Other  Distributions.  Distributions  of Cash Flow in addition to
those  provided for in Section  4.1.1 shall be made to the  Interest  Holders in
proportion  to  their  Percentages  at such  times  and in such  amounts  as are
determined by the General Manager.

     4.2  Allocation  of  Profit or Loss.  After  giving  effect to the  special
allocations set forth in Section 4.3 for any taxable year of the Company, Profit
or Loss  shall be  allocated  to the  Interest  Holders in  proportion  to their
Percentages.

     4.3 Regulatory Allocations.

         4.3.1  Qualified  Income Offset.  No Interest Holder shall be allocated
Losses or  deductions  if the  allocation  causes an Interest  Holder to have an
Adjusted  Capital  Account  Deficit.  If an  Interest  Holder  receives  (1)  an
allocation of Loss or deduction (or item thereof) or (2) any distribution, which
causes the Interest  Holder to have an Adjusted  Capital  Account Deficit at the
end of any  taxable  year,  then all  items of  income  and gain of the  Company
(consisting  of a pro rata  portion  of each item of Company  income,  including
gross income and gain) for that taxable year shall be allocated to that Interest
Holder,  before any other  allocation  is made of Company items for that taxable
year,  in the amount and in  proportions  required  to  eliminate  the excess as
quickly as possible. This Section 4.3.1 is intended to comply with, and shall be
interpreted  consistently  with, the "qualified income offset" provisions of the
Regulations promulgated under Code Section 704(b)




                                 Page 55 of 114
<PAGE>


                                                                   Exhibit 10.44

         4.3.2  Minimum  Gain  Chargeback.  Except  as set  forth in  Regulation
Section 1.704-2(f)(2),  (3) and (4), if, during any taxable year, there is a net
decrease in Minimum Gain, each Interest  Holder,  prior to any other  allocation
pursuant to this Section IV, shall be specially  allocated items of gross income
and gain for such taxable year (and, if necessary,  subsequent taxable years) in
an amount equal to that Interest  Holder's  share of the net decrease of Minimum
Gain, computed in accordance with Regulation Section 1.704-2(g)(2).  Allocations
of gross income and gain pursuant to this Section 4.3.2 shall be made first from
gain  recognized  from the  disposition of Company assets subject to nonrecourse
liabilities  (within  the  meaning  of the  Regulations  promulgated  under Code
Section  752), to the extent of the Minimum Gain  attributable  to those assets,
and  thereafter,  from a pro rata portion of the Company's other items of income
and gain for the taxable year.  It is the intent of the parties  hereto that any
allocation  pursuant to this  Section  4.3.2 shall  constitute  a "minimum  gain
chargeback" under Regulation Section 1.704-2(f).

         4.3.3  Contributed  Property  and  Book-Ups.  In  accordance  with Code
Section 704(c) and the  Regulations  thereunder,  as well as Regulation  Section
1.704-1(b)(2)(iv)(d)(3),  income,  gain,  loss and deduction with respect to any
property  contributed (or deemed  contributed) to the Company shall,  solely for
tax purposes,  be allocated among the Interest  Holders so as to take account of
any  variation  between the  adjusted  basis of the  property to the Company for
federal  income  tax  purposes  and  its  fair  market  value  at  the  date  of
contribution (or deemed contribution). If the adjusted book value of any Company
asset is adjusted as provided herein,  subsequent  allocations of income,  gain,
loss and deduction with respect to the asset shall take account of any variation
between the adjusted  basis of the asset for federal income tax purposes and its
adjusted  book value in the manner  required  under Code Section  704(c) and the
Regulations thereunder.

         4.3.4 Code Section 754  Adjustment.  To the extent an adjustment to the
tax basis of any Company asset  pursuant to Code Section  734(b) or Code Section
743(b) is required, pursuant to Regulation Section  1.704-1(b)(2)(iv)(m),  to be
taken into account in determining Capital Accounts, the amount of the adjustment
to the Capital  Accounts  shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment  decreases  basis),
and the gain or loss shall be specially  allocated to the Interest  Holders in a
manner  consistent with the manner in which their Capital  Accounts are required
to be adjusted pursuant to that Section of the Regulations.

         4.3.5 Nonrecourse Deductions. Nonrecourse deductions for a taxable year
or other  period  shall be specially  allocated  among the  Interest  Holders in
proportion to their Percentages.

         4.3.6 Member Loan Nonrecourse  Deductions.  Any Member Loan Nonrecourse
Deduction  for any taxable year or other period shall be specially  allocated to
the Interest Holder who bears the risk of loss with respect to the loan to which
the Member  Loan  Nonrecourse  Deduction  is  attributable  in  accordance  with
Regulation Section 1.704-2(b).




                                 Page 56 of 114
<PAGE>


                                                                   Exhibit 10.44

         4.3.7 Guaranteed  Payments.  To the extent any compensation paid to any
Member by the  Company,  including  any fees  payable to any Member  pursuant to
Section 5.3 hereof,  is determined by the Internal  Revenue  Service not to be a
guaranteed  payment under Code Section 707(c) or is not paid to the Member other
than in the  Person's  capacity as a Member  within the meaning of Code  Section
707(a),  the Member shall be specially  allocated gross income of the Company in
an amount equal to the amount of that  compensation,  and the  Member's  Capital
Account shall be adjusted to reflect the payment of that compensation.

         4.3.8  Unrealized  Receivables.  If an  Interest  Holder's  Interest is
reduced (provided the reduction does not result in a complete termination of the
Interest  Holder's  Interest),  the  Interest  Holder's  share of the  Company's
"unrealized  receivables" and "substantially  appreciated inventory" (within the
meaning of Code Section 751) shall not be reduced, so that,  notwithstanding any
other  provision of this  Agreement to the contrary,  that portion of the Profit
otherwise allocable upon a liquidation or dissolution of the Company pursuant to
Section 4.4 hereof which is taxable as ordinary income  (recaptured) for federal
income tax purposes shall, to the extent possible  without  increasing the total
gain to the Company or to any Interest Holder, be specially  allocated among the
Interest Holders in proportion to the deductions (or basis reductions treated as
deductions)  giving rise to such  recapture.  Any  questions as to the aforesaid
allocation of ordinary income  (recapture),  to the extent such questions cannot
be  resolved  in the manner  specified  above,  shall be resolved by the General
Manager.

         4.3.9 Withholding. All amounts required to be withheld pursuant to Code
Section 1446 or any other provision of federal,  state or local tax law shall be
treated as amounts actually distributed to the affected Interest Holders for all
purposes under this Agreement.

     4.4 Liquidation and Dissolution.

         4.4.1 If the Company is liquidated,  the assets of the Company shall be
distributed  to the Interest  Holders in  accordance  with the balances in their
respective Capital Accounts, after taking into account the allocations of Profit
or Loss pursuant to Section 4.2, if any, and  distributions,  if any, of cash or
property, if any, pursuant to Section 4.1.

         4.4.2 No  Interest  Holder  shall be  obligated  to  restore a Negative
Capital Account.

     4.5 General.

         4.5.1 Except as otherwise  provided in this  Agreement,  the timing and
amount of all distributions shall be determined by the General Manager.

         4.5.2 If any  assets  of the  Company  are  distributed  in kind to the
Interest Holders, those assets shall be valued on the basis of their fair market
value, and any Interest




                                 Page 57 of 114
<PAGE>


                                                                   Exhibit 10.44

Holder entitled to any interest in those assets shall receive that interest as a
tenant-in-common with all other Interest Holders so entitled. Unless the Members
otherwise  agree,  the fair market value of the assets shall be determined by an
independent  appraiser who shall be selected by the General Manager.  The Profit
or Loss for each unsold asset shall be  determined as if the asset had been sold
at its fair market value,  and the Profit or Loss shall be allocated as provided
in Section 4.2 and shall be properly credited or charged to the Capital Accounts
of the Interest  Holders prior to the  distribution of the assets in liquidation
pursuant to Section 4.4.

         4.5.3 All  Profit and Loss shall be  allocated,  and all  distributions
shall be made to the  Persons  shown on the  records of the Company to have been
Interest Holders as of the last day of the taxable year for which the allocation
or  distribution  is to be  made.  Notwithstanding  the  foregoing,  unless  the
Company's taxable year is separated into segments,  if there is a Transfer or an
Involuntary  Withdrawal  during the taxable  year,  the Profit and Loss shall be
allocated between the original Interest Holder and the successor on the basis of
the  number  of days  each was an  Interest  Holder  during  the  taxable  year;
provided,  however,  the Company's  taxable year shall be segregated into two or
more segments as required pursuant to Section 6.9 or as otherwise  determined by
the  General  Manager  in  order  to  account  for  Profit,   Loss  or  proceeds
attributable to any extraordinary nonrecurring items of the Company.

         4.5.4 The General Manager is hereby authorized,  upon the advice of the
Company's tax counsel,  to amend this Section IV to comply with the Code and the
Regulations  promulgated under Code Section 704(b);  provided,  however, that no
amendment shall  materially  affect  distributions to an Interest Holder without
the Interest Holder's prior written consent.

                                    Section V
                      Management: Rights, Powers and Duties

     5.1 Management.

         5.1.1  General  Manager.  The  Company  shall be  managed  by a General
Manager,  who may, but need not, be a Member.  Van Baak is hereby  designated to
serve as the initial  General  Manager.  Van Baak shall  serve as the  Company's
General Manager until his resignation, death, permanent disability or removal as
hereinafter provided.  Van Baak agrees that he shall not resign as the Company's
General  Manager  prior to  August  1,  2000.  Van Baak  may be  removed  as the
Company's  General Manager by GPA if (i) Van Baak files a voluntary  petition in
bankruptcy or is adjudged bankrupt or insolvent,  (ii) Van Baak commits material
fraud in  connection  with the  Company  or its  activities,  or (iii)  Van Bank
grossly neglects his duties as General Manager.  In the event Van Baak ceases to
act as the Company's  General Manager,  GPA shall appoint the Company's  General
Manager. Any General Manager appointed by GPA may be removed and replaced by GPA
from time to time.




                                 Page 58 of 114
<PAGE>


                                                                   Exhibit 10.44

         5.1.2 General Powers.  The General  Manager shall have full,  exclusive
and complete discretion,  power and authority, subject in all cases to the other
provisions of this Agreement  (including the  restrictions in Section 5.1.4) and
the requirements of applicable law, to manage,  control,  administer and operate
the business and affairs of the Company for the purposes  herein stated,  and to
make all  decisions  affecting  such  business and affairs,  including,  without
limitation, for Company purposes, the power to:

              5.1.2.1  Acquire  by  purchase,  lease or  otherwise,  any real or
personal property, tangible or intangible;

              5.1.2.2 Construct, operate, manage, maintain, finance and improve,
and to own,  sell,  convey,  assign,  mortgage  or lease any real estate and any
personal property, tangible or intangible;

              5.1.2.3 Sell,  dispose of, trade or exchange all or any portion of
Company assets;

              5.1.2.4 Enter into  agreements and contracts and to give receipts,
releases and discharges;

              5.1.2.5  Purchase  liability  and other  insurance  to protect the
Company's properties and business;

              5.1.2.6  Borrow  money for and on behalf of the  Company  and,  in
connection therewith, execute and deliver instruments authorizing the confession
of judgment against the Company;

              5.1.2.7  Execute or modify  leases with respect to any part or all
of the assets of the Company;

              5.1.2.8 Prepay, in whole or in part,  refinance,  amend, modify or
extend any mortgages or deeds of trust which may affect any asset of the Company
and in  connection  therewith  to execute  for and on behalf of the  Company any
extensions, renewals or modifications of such mortgages or deeds of trust;

              5.1.2.9 Execute any and all other  instruments and documents which
may be necessary or in the opinion of the General Manager desirable to carry out
the intent  and  purpose  of this  Agreement,  including,  but not  limited  to,
documents whose operation and effect extend beyond the term of the Company;

              5.1.2.10 Make any and all expenditures  which the General Manager,
in its sole  discretion,  deems  necessary or appropriate in connection with the
management of the affairs of the Company and the carrying out of its obligations
and responsibilities under this Agreement,  including,  without limitation,  all
legal, accounting and other related




                                 Page 59 of 114
<PAGE>


                                                                   Exhibit 10.44

expenses incurred in connection with the  organization,  financing and operation
of the Company;

              5.1.2.11  Exercise all the rights,  powers and  privileges  of the
Company  as a member of  Mountain  Resorts  Acquisition,  LLC,  pursuant  to the
Mountain Resorts LLC Operating  Agreement or otherwise,  including the Company's
right to vote as a member of Mountain Resorts Acquisition,  LLC, and to exercise
all the rights,  powers and  privileges  of the  Company as an owner  (direct or
indirect) of any other entity in which the Company may invest;

              5.1.2.12  Enter  into  any  kind  of  activity  necessary  to,  in
connection  with or  incidental  to the  accomplishment  of the  purposes of the
Company; and

              5.1.2.13  Invest  and  reinvest  Company  reserves  in  short-term
instruments or money market funds.

The foregoing power and authority of the General Manager may be exercised by the
General Manager in his sole and exclusive discretion. No Person dealing with the
Company will be required to inquire into the authority of the General Manager to
take any action or make any decision.

         5.1.3 Amendment of Agreement.  Notwithstanding anything to the contrary
contained in Section 5.1.4, the General Manager will have the power, without the
necessity of any vote or other action of the Members, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:

              5.1.3.1  To add to the  obligations  of  the  General  Manager  or
surrender any right or power  granted to the General  Manager for the benefit of
the Members;

              5.1.3.2 To reflect the  termination  or  withdrawal  of Members in
accordance with this Agreement; and

              5.1.3.3 To reflect a change that is of an  inconsequential  nature
and that does not have a material adverse effect on the Members,  or to cure any
ambiguity,   correct  or  supplement   any  provision  in  this   Agreement  not
inconsistent  with law or with other  provisions,  or to make other changes with
respect to matters  arising under this Agreement  that will not be  inconsistent
with law or the provisions of this Agreement.

Notwithstanding  anything to the contrary  contained in this Section 5.1.3, this
Agreement  will not be  amended  without  the  affirmative  vote of all  Members
adversely affected if such amendment would:

         (i) Modify the limited liability of a Member;

         (ii) Alter the allocations specified in Section 4.2;





                                 Page 60 of 114
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                                                                   Exhibit 10.44

         (iii) Amend the  restriction  on the General  Manager's  authority  set
     forth in Section 5.1.4: or

         (iv) Amend this Section 5.1.3.

         5.1.4  Extraordinary  Transactions.  Notwithstanding  anything  to  the
contrary in this  Agreement,  the General Manager shall not undertake any of the
following without the approval of the Members:

              5.1.4.1 Admitting additional Members to the Company;

              5.1.4.2  Amending  this  Agreement  except as  provided in Section
5.1.3;

              5.1.4.3  Purchasing  on behalf of the Company any real property or
personal  property with an aggregate cost in excess of $25,000 during any fiscal
year;

              5.1.4.4  Selling,  disposing  of,  trading or  exchanging  (i) any
Company real property, (ii) Company personal property with an aggregate value in
excess of $25,000  during any fiscal  year,  or (iii) all or  substantially  all
Company assets not in the ordinary course of the Company's business;

              5.1.4.5 Voluntarily dissolving the Company;

              5.1.4.6   Establishing   or  increasing   the  General   Manager's
compensation above the limits specified in Section 5.3.2;

              5.1.4.7 Except for amounts borrowed on the line of credit referred
to in Section 3.7.1,  borrowing money on behalf of the Company to the extent the
aggregate  outstanding  principal balance of such borrowings exceeds $150,000 at
any time.

              5.1.4.8  In  exercising   powers  pursuant  to  Section  5.1.2.11,
notwithstanding  any  provision  to the  contrary in such  Section,  the General
Manager  shall  not,  as  General  Manager of the  Company,  General  Manager of
Mountain  Resorts  Acquisition,  LLC or  otherwise,  undertake  any action  with
respect to Mountain Resorts Acquisition, LLC which the General Manager could not
undertake with respect to the Company pursuant to this Section,  except that the
General Manager may, with respect to Mountain Resorts Acquisition, LLC:

              (a) Cause  Mountain  Resorts to  acquire  or  dispose of  personal
         property in the  ordinary  course of business or pursuant to a business
         plan approved by GPA,  without regard to the  limitations  set forth in
         Sections 5.1.4.3 and 5.1.4.4 above, and

              (b) Cause the Company and  Mountain  Resorts  Acquisition,  LLC to
         perform  their  respective  obligations  pursuant  to  the  Acquisition
         Agreement (and the




                                 Page 61 of 114
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                                                                   Exhibit 10.44

         other  agreements  contemplated  thereby),  including the assumption by
         Mountain Resorts  Acquisition,  LLC of the existing  Mountain  Resorts,
         Inc.  $350,000   revolving  line  of  credit  as  contemplated  by  the
         Acquisition Agreement.

         5.1.5 Limitation on Authority of Members.

              5.1.5.1 No Member is an agent of the  Company  solely by virtue of
being a Member,  and no Member has  authority  to act for the Company  solely by
virtue of being a Member.

              5.1.5.2  Any Member  who takes any action or binds the  Company in
violation  of this  Section  5.1  shall be solely  responsible  for any loss and
expense incurred by the Company as a result of the unauthorized action and shall
indemnify and hold the Company harmless with respect to the loss or expense.

     5.2 Meetings of and Voting by Members.

         5.2.1 A meeting of the Members may be called at any time by the General
Manager or by any  Member.  Meetings of Members  shall be held at the  Company's
principal  place of  business or at any other  place  designated  by the Persons
calling the meeting. Not less than ten (10) nor more than fifty (50) days before
each meeting,  the Persons  calling the meeting shall give written notice of the
meeting to each Member  entitled to vote at the meeting.  The notice shall state
the time,  place and  purpose  of the  meeting.  Notwithstanding  the  foregoing
provisions,  each  Member who is entitle  to notice  waives  notice if before or
after the  meeting the Member  signs a waiver of the notice  which is filed with
the records of Members'  meetings,  or is present at the meeting in person or by
proxy and fails to object to the lack of notice.  Unless this Agreement provides
otherwise,  at a  meeting  of  Members,  the  presence  in person or by proxy of
Members  holding  one hundred  percent  (100%) of the  Percentages  then held by
Members  constitutes a quorum.  A Member may vote either in person or by written
proxy signed by the Member or by the Member's duly authorized attorney-in-fact.

         5.2.2 Except as otherwise  provided in this Agreement,  the affirmative
vote of Members holding one hundred percent (100%) of the Percentages  then held
by Members  present at a meeting at which there is a quorum shall be required to
approve any matter coming before the Members.

         5.2.3 An annual  meeting  shall be held each year  during  the month of
April at such time and place as the General  Manager shall fix.  Notice shall be
given to the Members in accordance with Section 5.2.1.

         5.2.4  Members may  participate  in meetings  by  telephone  or similar
communications  equipment. In lieu of holding a meeting, the Members may vote or
otherwise  take  action by a written  instrument  indicating  the consent of the
Members. Any




                                 Page 62 of 114
<PAGE>


                                                                   Exhibit 10.44

such written  instrument  may be executed in  counterparts  and  transmitted  by
facsimile or similar means.

         5.3 Personal Services.

              5.3.1 No Member  shall be  required  to perform  services  for the
Company  solely  by virtue of being a Member.  Unless  approved  by the  General
Manager,  no Member  shall  perform  services  for the Company or be entitled to
compensation for services performed for the Company.

              5.3.2  The  General   Manager  shall  be  entitled  to  reasonable
compensation for services performed for the Company,  as determined from time to
time by the General  Manager,  provided that without the approval of the Members
the  General  Manager  shall not (i)  establish  the General  Manager's  initial
compensation  at an amount in excess of $25,000  annually,  or (ii) increase the
General  Manager's  annual  compensation  by more than ten percent (10%) of then
current  compensation.  In addition,  the General  Manager  shall be entitled to
reimbursement for expenses reasonably incurred in connection with the activities
of the Company.

         5.4 Duties of Parties.

              5.4.1 (1) The General Manager shall perform his or her duties as a
manager in good faith,  in a manner he or she  reasonably  believes to be in the
best  interests  of the  limited  liability  company,  and with  such care as an
ordinarily   prudent   person  in  a  like  position  would  use  under  similar
circumstances.  A Person who so performs his duties shall not have any liability
by reason of being or having been a General Manager of the Company.

                   (2) In  performing  his duties,  a General  Manager  shall be
entitled  to  rely on  information,  opinions,  reports,  or  statements  of the
following  persons or groups  unless he has knowledge  concerning  the matter in
question that would cause such reliance to be unwarranted

                   (a) One or more employees or other agents of the Company whom
the manager  reasonably  believes to be reliable  and  competent  in the matters
presented;

                   (b) Any  attorney,  public  accountant  or other person as to
matters which the General Manager reasonably believes to be within such person's
professional or expert competence; or

                   (c) A committee upon which he does not serve, duly designated
in  accordance  with a provision  of the Articles of this  organization  or this
Agreement,  as to matters within its designated  authority,  which committee the
General Manager reasonably believes to merit confidence.




                                 Page 63 of 114
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                                                                   Exhibit 10.44

         Section  7-108-501 of the Colorado  Business  Corporation Act (entitled
"Conflicting   Interest   Transaction")   shall  apply  to  contracts  or  other
transactions  between the Company and any of its General  Managers or  committee
members and any other  entity in which any of its General  Managers or committee
members  is a director  or has a  material  financial  interest;  provided  that
references  therein to the  "corporation"  shall be deemed to be to the Company,
references  to a  "director"  shall  be  deemed  to be to the  General  Manager,
references to "shareholders"  shall be deemed to be to "Members," and references
to the "board of directors"  shall be to the  "Management  Committee," if one is
appointed.

     5.5 Liability and Indemnification.

         5.5.1  The  General  Manager  shall  not  be  liable,   responsible  or
accountable,  in damages or  otherwise,  to any Member or to the Company for any
act performed by the General Manager within the scope of the authority conferred
on the  General  Manager  by this  Agreement,  except for  actions or  omissions
constituting  fraud, gross negligence or an intentional breach of this Agreement
or applicable law.

         5.5.2 The Company shall  indemnify its Members,  managers and employees
in respect of payments made and personal liabilities reasonably incurred by such
Member,  manager or employee in the ordinary and proper  course of the Company's
business or for the preservation of the Company's business or property.  Without
limiting the foregoing,  the Company shall indemnify the General Manager for any
act performed by the General Manager within the scope of the authority conferred
on the  General  Manager  by this  Agreement,  except for  actions or  omissions
constituting  fraud, gross negligence or an intentional breach of this Agreement
or applicable law.

     5.6 Power of Attorney.

         5.6.1 Grant of Power. Each Member  constitutes and appoints the General
Manager as the Member's true and lawful  attorney-in-fact  ("Attorney-in-Fact"),
and in the Member's name, place and stead, to make, execute,  sign,  acknowledge
and file:

              5.6.1.1 One or more articles of organization;

              5.6.1.2  All  documents  (including   amendments  to  articles  of
organization)  which the  Attorney-in-Fact  deems  appropriate  to  reflect  any
amendment, change or modification of this Agreement;

              5.6.1.3  Any and  all  other  certificates  or  other  instruments
required to be filed by the  Company  under the laws of the State of Colorado or
of  any  other  state  or  jurisdiction,   including,  without  limitation,  any
certificate or other instruments  necessary in order for the Company to continue
to  qualify  as a  limited  liability  company  under  the laws of the  State of
Colorado

              5.6.1.4 One or more fictitious or trade name certificates; and




                                 Page 64 of 114
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                                                                   Exhibit 10.44

              5.6.1.5  All  documents  which may be  required  to  dissolve  and
terminate the Company and to cancel its articles or organization.

         5.6.2  Irrevocability.  The foregoing  power of attorney is irrevocable
and is coupled with an interest and, to the extent  permitted by applicable law,
shall  survive the death or  disability  of a Member.  It also shall survive the
Transfer of an Interest, except that if the transferee is approved for admission
as a Member, this power of attorney shall survive the delivery of the assignment
for the sole purpose of enabling the  Attorney-in-Fact  to execute,  acknowledge
and file any documents needed to effectuate the substitution.  Each Member shall
be bound by any  representations  made by the  Attorney-in-Fact  acting  in good
faith pursuant to this power of attorney,  and each Member hereby waives any and
all defenses  which may be available to contest,  negate or disaffirm the action
of the Attorney-in-Fact taken in good faith under this power of attorney.

                                   Section VI
                Transfer of Interests and Withdrawals of Members

     6.1 Transfers.

         6.1.1 Except as  otherwise  provided in this Section 6.1 or in Sections
6.3,  6.4 or 6.6, no Person may  Transfer all or any portion of, or any interest
or rights in, the Membership Rights owned by the Member,  and no Interest Holder
may Transfer all, or any portion of, or any interest or right in, any Membership
Interest. Each Member hereby acknowledges the reasonableness of this prohibition
in view of the purposes of the Company and the relationship of the Members.  The
Transfer of any  Membership  Rights or Membership  Interests in violation of the
prohibition  contained  in this  Section 6.1 shall be deemed  invalid,  null and
void,  and of no force or  effect.  Any  Person to whom  Membership  Rights  are
attempted  to be  transferred  in  violation  of this  Section  6.1 shall not be
entitled  to vote on matters  coming  before  the  Members,  participate  in the
management of the Company, act as an agent of the Company, receive distributions
from the  Company,  or have any other  rights in or with  respect to  Membership
Rights.  If a Member transfers any Membership  Interest in a manner permitted by
this  Agreement,  and the  transferee  is not a Member or  admitted as a Member,
there shall be no Membership  Rights  associated  with the  Membership  Interest
transferred,  and the  transferee  shall be entitled  to receive,  to the extent
transferred,  only the  distributions to which the transferor would be entitled.
If a Member  transfers  any  Membership  Interest in a manner  permitted by this
Agreement  and the  transferee  is a Member  or is  admitted  as a  Member,  the
Membership Rights associated with the Membership  Interest  transferred shall be
transferred to and may be exercised by the transferee. Additional Members may be
admitted only with the unanimous consent of all then remaining Members.

         6.1.2  Except for  Transfers  pursuant to Sections  6.3, 6.4 or 6.6, no
Person  may  transfer  all or any  portion of or any  interest  or rights in the
Person's   Membership  Rights  or  Membership   Interest  unless  the  following
conditions ("Conditions of Transfer") are satisfied:




                                 Page 65 of 114
<PAGE>


                                                                   Exhibit 10.44

              6.1.2.1 The Transfer will not require  registration  of Membership
Interests or Membership Rights under any federal or state securities law;

              6.1.2.2 The transferee delivers to the Company a written agreement
to be bound by the terms of this Agreement;

              6.1.2.3 The  Transfer  will not result in the  termination  of the
Company pursuant to Code Section 708;

              6.1.2.4 The Transfer  will not result in the Company being subject
to the Investment Company Act of 1940, as amended;

              6.1.2.5 The  transferor or the  transferee  delivers the following
information to the Company: (i) the transferee's taxpayer identification number,
and (ii) the transferee's initial tax basis in the Transferred Interest; and

              6.1.2.6 The  transferor  complies with the provisions set forth in
Section 6.1.4

         6.1.3 If the  Conditions  of Transfer are  satisfied,  then a Member or
Membership Interest Holder may Transfer that portion of that Person's Membership
Rights and/or  Membership  Interest as to which the  Conditions of Transfer have
been satisfied. Except as otherwise provided in Section 6.1.1, the Transfer of a
Membership  Interest  pursuant  to this  Section  6.1  shall  not  result in the
Transfer of any of the  transferor's  other Membership  Rights,  if any, and the
transferee of the Membership  Interest shall have no right to become a Member or
exercise any Membership Rights other than those  specifically  pertaining to the
ownership  of a  Membership  Interest  unless the  transferee  is  admitted as a
Member.

         6.1.4 Right of First Refusal.

              6.1.4.1 If a Person (individually, a "Transferor") receives a bona
fide  written  offer  (the   "Transferee   Offer")  from  any  other  Person  (a
"Transferee") to purchase all or any portion of or any interest or rights in the
Transferor's  Membership  Rights and/or  Membership  Interest  (the  "Transferor
Interest")  for a  purchase  price  denominated  and  payable  in United  States
dollars,  then, prior to any Transfer of the Transferor Interest, the Transferor
shall give the Company and each of the Members (excluding the Transferor, if the
Transferor is a Member) (the "Remaining  Members") written notice (the "Transfer
Notice") containing each of the following:

                   6.1.4.1.1 the Transferee's identity;

                   6.1.4.1.2 a true and complete copy of the  Transferee  Offer;
and




                                 Page 66 of 114
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                                                                   Exhibit 10.44

                   6.1.4.1.3  the  Transferor's  offer (the "Offer") to sell the
Transferor  Interest to the Company and/or  Remaining  Members for a total price
equal to the price set forth in the  Transferee  Offer (the  "Transfer  Purchase
Price"),  which  shall be  payable  on the  terms of  payment  set  forth in the
Transferee Offer.

              6.1.4.2  The Offer  shall be and remain  irrevocable  for a period
(the "Offer Period") ending at 11:59 p.m. local time at the Company's  principal
office,  on the sixtieth  (60th) day following  the date the Transfer  Notice is
given to the Company and Remaining Members. At any time during the Offer Period,
the  Company  and any  Remaining  Member may accept the offer by  notifying  the
Transferor in writing that it intends to purchase all, but not less than all, of
the  Transferor  Interest.  The  Company  shall have a prior right to accept the
Offer,  and if the Company accepts the Offer, no Remaining Member shall have the
right to accept  the  Offer.  If two (2) or more  Remaining  Members  accept the
Offer,  then,  in the absence of an agreement  between or among them,  each such
Remaining Members shall purchase the Transferor  Interest in the proportion that
its respective Percentage bears to the total Percentages of all of the Remaining
Members who accept the Offer.  If the Company or one or more  Remaining  Members
accept the Offer,  then the purchasing party or parties shall fix a closing date
(the "Transfer Closing Date") for the purchase,  which shall not be earlier than
ten (10) or more than sixty (60) days after the expiration of the Offer Period.

              6.1.4.3 If the Company or any Remaining  Member accepts the Offer,
the  Transfer  Purchase  Price  shall be paid on the  Transfer  Closing  Date in
accordance with the payment terms set forth in the Transferee Offer.

              6.1.4.4 If neither the Company nor any  Remaining  Member  accepts
the Offer (within the time and in the manner  specified in this  Section),  then
the Transferor shall be free for a period (the "Free Transfer Period") of thirty
(30) days after the  expiration  of the Offer Period to Transfer the  Transferor
Interest to the Transferee,  for the same or greater price and on the same terms
and  conditions  as set forth in the  Transfer  Notice.  The  Transfer  shall be
subject,  however,  to the Conditions of Transfer  (other than 6.1.2.6).  If the
Transferor  does not Transfer the Transferor  Interest  within the Free Transfer
Period, the Transferor's  right to Transfer the Transferor  Interest pursuant to
this Section shall cease and terminate.

              6.1.4.5 Any Transfer by the  Transferor  after the last day of the
Free Transfer Period or without strict compliance with the terms, provisions and
conditions  of this Section and the other terms,  provisions  and  conditions of
this Agreement, shall be null and void and of no force or effect.

     6.2 Resignation:  Voluntary Dissolution.  No Member shall have the right or
power to Resign from the Company, except as otherwise provided in Section 6.4 or
Section  6.6.  In  addition,  until  the  Purchaser  Note  (as  defined  in  the
Acquisition  Agreement) has been  satisfied,  each Member that is a corporation,
partnership or limited  liability company shall preserve its existence and shall
not voluntarily dissolve.




                                 Page 67 of 114
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                                                                   Exhibit 10.44

     6.3 Optional Buy-Out in Event of Involuntary Withdrawal.

         6.3.1 If the Members elect to continue the Company after an Involuntary
Withdrawal,  the  withdrawn  Member  shall  be  deemed  to offer  for sale  (the
"Withdrawal  Offer") to the Company and the  remaining  members (the  "Remaining
Members") all of the Membership  Rights owned of record and  beneficially by the
withdrawn Member (the "Withdrawal Interest").

         6.3.2 The Withdrawal Offer shall be and remain irrevocable for a period
(the "Withdrawal Offer Period") ending at 11:59 p.m. local time at the Company's
principal office on the sixtieth (60th) day following the date the Members elect
to continue the Company.  At any time during the  Withdrawal  Offer Period,  the
Company and any Remaining  Member may accept the  Withdrawal  Offer by notifying
the  withdrawn  Member in writing (the  "Withdrawal  Notice") that it intends to
purchase all, but not less than all, of the Withdrawal  Interest.  The withdrawn
Member  shall not be deemed a Member for the  purpose of any vote on whether the
Company shall accept the Withdrawal  Offer. The Company shall have a prior right
to accept the  Withdrawal  Offer,  and if the  Company  accepts  the  Offer,  no
Remaining Member shall have the right to accept the Withdrawal Offer. If two (2)
or more Remaining Members accept the Withdrawal  Offer,  then, in the absence of
an agreement  between or among them,  each such Remaining  Member shall purchase
the Withdrawal  Interest in the proportion that its respective  Percentage bears
to the  total  Percentages  of  all of the  Remaining  Members  who  accept  the
Withdrawal Offer.

         6.3.3 If the Company or any  Remaining  Member  accepts the  Withdrawal
Offer, the Withdrawal  Notice shall fix a closing date (the "Withdrawal  Closing
Date") for the purchase  which shall be not earlier than ten (10) nor later than
sixty (60) days after the expiration of the Withdrawal Offer Period.

         6.3.4 If the Company or any  Remaining  Member  accepts the  Withdrawal
Offer,  the purchase  price for the  Withdrawal  Interest  shall be equal to the
Agreed Value  multiplied by the Withdrawn  Member's  Percentage (the "Withdrawal
Purchase  Price").  If the  Withdrawal  Interest is owned by GPA, the Withdrawal
Purchase Price for such interest shall be payable  twenty-five  percent (25%) in
cash on the Withdrawal  Closing Date, with the balance payable in four (4) equal
annual  installments  of  principal  plus  interest  at the  Prime  Rate,  which
installments  shall be payable on the first annual anniversary of the Withdrawal
Closing Date and on the same day each year thereafter  until the balance is paid
in  full.  If the  Withdrawal  Interest  is owned by Van  Baak,  the  Withdrawal
Purchase Price for such interest shall be payable fifty percent (50%) in cash on
the  Withdrawal  Closing Date,  with the balance  payable one (1) year after the
Withdrawal  Closing  Date,  together  with  interest  on such  balance  from the
Withdrawal Closing Date until paid at the Prime Rate.

         6.3.5 If the Company  fails to accept the  Withdrawal  Offer,  then the
withdrawn Member or the withdrawn Member's  successor,  as the case may be, upon
the expiration of the Withdrawal  Offer Period,  shall  thereafter be treated as
the unadmitted assignee of a Member




                                 Page 68 of 114
<PAGE>


                                                                   Exhibit 10.44

     6.4 Put. Within ninety (90) days after the occurrence of (i) an Involuntary
Withdrawal  resulting  from the death or  incompetence  of Van Baak, or (ii) Van
Baak's  illness or  disability  which renders him incapable of acting as General
Manager for a period of sixty (60) or more  consecutive  days,  as determined by
Van Baak's physician,  Van Baak or his legal representative shall have the right
to require that GPA purchase all of Van Baak's  Membership Rights and Membership
Interest  (herein the "Put") by giving notice to GPA. The purchase price for the
Membership  Rights/Membership  Interest  owned by Van Baak  shall be the  Agreed
Value multiplied by Van Baak's  Percentage,  which amount shall be payable fifty
percent  (50%) in cash at closing,  with the balance  payable one (1) year after
closing, together with interest on such balance from the closing date until paid
at the Prime Rate.  The  closing of any  purchase  pursuant to this  Section 6.4
shall occur on a date  specified by GPA not earlier than ten (10) nor later than
sixty (60) days after  notice of exercise of the Put has been given.  If the Put
is  exercised,  the parties  shall be  obligated  to complete  the  transactions
contemplated by the Put,  notwithstanding  that the Company may be dissolved and
not continued.

     6.5 Agreed Value.  For purposes of Sections 6.3 and 6.4, the "Agreed Value"
shall be __% of Gross Revenues (as hereinafter  defined)  increased or decreased
by the Net Asset Value (as hereinafter  defined).  Gross Revenues shall mean all
of the Company's income, receipts and revenues of any nature accruing during the
Company's  immediately  preceding  complete  annual  accounting  period from any
source  whatsoever,   including  gross  receipts  from  properties  managed  and
association   management   fees   excluding  only  borrowed  funds  and  Capital
Contributions.  Net Asset Value shall mean an amount equal to all Company assets
minus all Company liabilities, as reflected on the Company's balance sheet as of
the last day of the month immediately  preceding the event resulting in the need
to determine Agreed Value,  except that any real estate owned shall be valued at
appraised  value.  The appraised  value of real estate shall be determined by an
independent appraiser who is duly licensed, certified or otherwise authorized to
conduct real estate  appraisals in the jurisdiction in question and who has been
selected by mutual  agreement of the purchaser and seller,  provided that if the
parties  do not  agree  the  appraiser  shall  be  selected  by the  head of the
governmental  agency having  jurisdiction over the licensing or certification of
appraisers  in the state in which the  property  is  located,  or such  person's
designee.  The cost of any appraisal shall be borne equally by the purchaser and
the seller.  In the event the Company  holds an ownership  interest in any other
business  entity,  the Gross  Revenues  and Net Asset  Value of each such entity
shall be determined separately and consolidated (on a proportionate basis if the
Company  owns less than 100% of such  entity)  into the Gross  Revenues  and Net
Asset Value of the Company.

     6.6  Buy/Sell.  At any time  after the  Purchaser  Note (as  defined in the
Acquisition  Agreement)  has been  satisfied,  either  Member may  implement the
provisions of this Section by giving notice (the "Buy/Sell Notice") to the other
Member. The Buy/Sell Notice shall specify a price for one hundred percent (100%)
of the Membership  Rights.  The Member  receiving the Buy/Sell Notice shall have
the option to either (i) purchase all the Membership  Rights owned by the Member
giving the Buy/Sell  Notice on the terms  specified  below,  or (ii) sell all of
such member's Membership Rights to the Member giving the Buy/Sell Notice




                                 Page 69 of 114
<PAGE>


                                                                   Exhibit 10.44

on the terms  specified  below.  The Member  receiving the Buy/Sell  Notice must
elect the option  described in clause (i) or the option described in clause (ii)
of the preceding  sentence  within sixty (60) days after receipt of the Buy/Sell
Notice.  Failure to respond  within said period shall  constitute an irrevocable
election of the option in clause (ii). The purchase price for Membership  Rights
to be purchased and sold  pursuant to this Section shall be the price  specified
in the Buy/Sell Notice multiplied by the seller's  Percentage.  If the seller of
Membership  Rights is GPA,  the  purchase  price  shall be  payable  twenty-five
percent  (25%) in cash at closing,  with the  balance  payable in four (4) equal
annual  installments  of  principal  plus  interest  at the  Prime  Rate,  which
installments shall be payable on the first annual anniversary of the closing and
on the same day each year  thereafter  until the balance is paid in full. If the
seller of  Membership  Rights is Van Baak,  the purchase  price shall be payable
fifty  percent (50%) in cash at closing,  with the balance  payable one (1) year
after  closing  together  with interest on such balance from the date of closing
until paid at the Prime Rate.  The closing of any purchase and sale  pursuant to
this Section shall occur on a date specified by the purchaser which shall be not
earlier than ten (10) nor earlier than sixty (60) days after the party receiving
the Buy/Sell Notice has made its election.

     6.7  Assignment.  Any  Person  having a right  or  obligation  to  purchase
Membership  Rights or a  Membership  Interest  in the  Company  may  assign  its
purchase  rights or obligations to a designee,  provided that no such assignment
shall release the assignor from any obligation with respect to such purchase.

     6.8 Closing  and  Conveyance.  Unless  otherwise  agreed by the  purchasing
parties and the selling  parties,  the closing of any purchase and sale pursuant
to this Section VI shall occur at 10:00 a.m. at the Company's  principal  office
on the specified closing date. At closing,  upon delivery of the purchase price,
the Membership Rights or Membership Interest in question shall be transferred to
the purchaser(s) by appropriate  instrument(s)  with warranty of title, free and
clear of all liens, encumbrances, restrictions, claims or equities of any nature
except those existing pursuant to this Agreement.

     6.9 Effective Time of Transfer;  Close of Company Books.  In the event of a
transfer of Membership  Rights pursuant to Sections 6.1.4, 6.3, 6.4 or 6.6 which
results  in  the  termination  of a  Member's  membership  in the  Company,  the
Company's books shall be closed as of the effective date of the transfer and all
allocations and distributions for the year in which the transfer occurs shall be
determined  on the  basis of such  closing.  The  transferor  shall not share in
allocations  or  distributions  accruing for periods after the effective date of
transfer. For purposes of this Section, the effective date of the transfer shall
be: (i) in the event of a transfer  pursuant to Section  6.1.4,  the last day of
the month prior to the month in which the Transfer Notice is given;  (ii) in the
event of a transfer  pursuant to Section 6.3, the last day of the month prior to
the month in which the Involuntary  Withdrawal  occurs;  (iii) in the event of a
transfer  pursuant to Section  6.4, the last day of the month prior to the month
during  which the event  occurs on which the  exercise of the Put is based;  and
(iv) in the event of a transfer  pursuant  to Section  6.6,  the last day of the
month prior to the month in which the Buy/Sell Notice is given.




                                 Page 70 of 114
<PAGE>


                                                                   Exhibit 10.44
                                   Section VII
                          Dissolution, Liquidation and
                           Termination of the Company

     7.1  Events  of  Dissolution.  The  Company  shall  be  dissolved  upon the
happening of any of the  following  events:  7.1.1 When the period fixed for its
duration in Section 2.4 has expired;

         7.1.2 Upon the unanimous written agreement of the Members; or

         7.1.3 Upon the death, retirement,  resignation,  expulsion, bankruptcy,
dissolution or Involuntary Withdrawal of a Member or the occurrence of any other
event which  terminates  the  continued  membership  of a Member in the Company,
unless all of the remaining Members,  within ninety (90) days after the event or
occurrence,  elect to continue the  business of the  Company,  at which time the
remaining  Members  may  agree  to the  appointment  of one or  more  additional
Members.

     7.2 Liquidating  Trustee. If the Company is dissolved,  the General Manager
shall act as liquidating trustee. The General Manager shall liquidate and reduce
to cash the assets of the Company as promptly as is consistent  with obtaining a
fair value  therefor  and,  unless  otherwise  required by law,  shall apply and
distribute  the proceeds of  liquidation,  as well as any other Company  assets,
first, to the payment of creditors of the Company,  including  Interest  Holders
who are creditors,  in satisfaction  of the liabilities of the Company;  then to
Interest  Holders  in  accordance  with  Section  4.4,   provided  that  if  the
dissolution is due to the termination of a Member resulting from the transfer of
all of such Member's  Membership Rights pursuant to Section 6.1.4,  Section 6.3,
Section 6.4 or Section  6.6, the  provisions  of such  Sections (as  applicable)
shall apply with respect to the transferor member in lieu of this Section.

     7.3 Filing of Statement of Intent to Dissolve and Articles of  Dissolution.
If the Company is dissolved  pursuant to Section 7.1, the General  Manager shall
promptly file a Statement of Intent to Dissolve with the CSOS. After the affairs
of the Company are wound up pursuant to Section 7.2, the General  Manager  shall
promptly  execute and file Articles of Dissolution with the CSOS. If there is no
General  Manager,  then  the  Articles  of  Cancellation  shall  be filed by the
remaining  Members;  if there are no remaining  Members,  the Articles  shall be
filed by the last Person to be a Member;  if there is neither a General Manager,
remaining  Members,  or a Person who last was a Member,  the  Articles  shall be
filed by the legal or  personal  representatives  of the  Person  who last was a
Member.

                                  SECTION VIII
                  BOOKS, RECORDS, ACCOUNTING, and TAX ELECTIONS

     8.1 Bank  Accounts.  All funds of the Company  shall be deposited in a bank
account or accounts maintained in the Company's name. The General Manager shall




                                 Page 71 of 114
<PAGE>


                                                                   Exhibit 10.44

determine the  institution or  institutions at which the accounts will be opened
and maintained,  the types of accounts,  and the Persons who will have authority
with respect to the accounts and the funds therein.

     8.2 Books and Records.  The General  Manager shall keep or cause to be kept
complete  and  accurate   books  and  records  of  the  Company  and  supporting
documentation  of  transactions  with  respect to the  conduct of the  Company's
business.  The books and records shall be  maintained  in accordance  with sound
accounting  practices and shall be available at the Company's  registered office
for inspection and copying at the reasonable request, and at the expense, of any
member during ordinary  business hours.  Without  limiting any of the foregoing,
the General Manager shall keep or cause to be kept at the registered  office the
following:

         8.2.1  A  current  list of the  full  name  and  last  known  business,
residence, or mailing address of each Member and Manager, both past and present;

         8.2.2  A copy  of the  articles  of  organization  and  all  amendments
thereto,  together  with executed  copies of any powers of attorney  pursuant to
which any amendment has been executed;

         8.2.3  Copies of the  Company's  federal,  state,  and local income tax
returns and reports, if any, for the three most recent years;

         8.2.4  Copies  of any  currently  effective  Agreement,  copies  of any
writings regarding  contributions of members or members' liability therefor, and
copies of any  financial  statements  of the  Company  for the three most recent
years;

         8.2.5 Minutes of every annual and special meeting of the Members;

         8.2.6 Any written  consents  obtained from Members  acting in lieu of a
meeting pursuant to Section 5.2.4.

     8.3 Annual Accounting  Period.  The annual accounting period of the Company
shall be its taxable year.  The Company's  taxable year shall be selected by the
General Manager subject to the requirements and limitation of the Code.

     8.4 Reports.  Within  seventy-five  (75) days after the end of each taxable
year of the Company,  the General  Manager shall cause to be sent to each Person
who was a Member at any time during the taxable  year then ended:  (i) an annual
compilation  report,  prepared  by  the  Company's  independent  accountants  in
accordance with standards  issued by the American  Institute of Certified Public
Accountants;  and (ii) a report summarizing the fees and other remuneration paid
by the Company to any Member,  the General Manager,  or any Affiliate in respect
of the taxable year. In addition, within seventy-five (75) days after the end of
each taxable year of the Company,  the General Manager shall cause to be sent to
each Person who was an Interest  Holder at any time during the taxable year then
ended,




                                 Page 72 of 114
<PAGE>


                                                                   Exhibit 10.44

that tax information concerning the Company which is necessary for preparing the
Interest  Holder's  income  tax  returns  for that year.  At the  request of any
Member,  the General  Manager  shall cause an audit of the  Company's  books and
records to be prepared by independent  accountants  for the period  requested by
the Member, at the Company's expense.

     8.5 Tax Matters  Partner.  The General  Manager  shall be the Company's tax
matters partner ("Tax Matters Partner").  The Tax Matters Partner shall have all
powers and responsibilities provided in Code Section 6221, et ~. The Tax Matters
Partner shall keep all Members informed of all notices from governmental  taxing
authorities  which may come to the  attention  of the Tax Matters  Partner.  The
Company shall pay and be responsible  for all reasonable  third-party  costs and
expenses  incurred by the Tax Matters  Partner in  performing  those  duties.  A
Member shall be responsible for any costs incurred by the Member with respect to
any tax audit or tax-related  administrative or judicial  proceeding against any
Member,  even though it relates to the Company.  The Tax Matters Partner may not
compromise any dispute with the Internal Revenue Service without the approval of
the Members

     8.6 Tax Elections. The General Manager shall have the authority to make all
Company  elections  permitted  under the Code,  including,  without  limitation,
elections of methods of  depreciation  and elections under Code Section 754. The
decision to make or not make an election shall be at the General  Manager's sole
and absolute discretion.

     8.7 Title to Company  Property.  All real and personal property acquired by
the Company shall be held and owned,  and conveyance made, by the Company in its
name.

                                   Section IX
                               General Provisions

     9.1 Assurances.  Each Member shall execute all such  certificates and other
documents and shall do all such filing, recording,  publishing and other acts as
the General Manager deems appropriate to comply with the requirements of law for
the formation and operation of the Company,  to comply with all laws, rules, and
regulations relating to the acquisition,  operation,  or holding of the property
of the Company or to carry out this Agreement.

     9.2 Notifications.  Any notice, demand, consent, election, offer, approval,
request, or other communication  (collectively a "notice") required or permitted
under this Agreement must be in writing and either actually delivered or sent by
certified or registered mail,  postage prepaid,  return receipt  requested.  Any
notice  to be given  hereunder  by the  Company  shall  be given by the  General
Manager.  A notice  must be  addressed  to an  Interest  holder at the  Interest
Holder's last known address (including  facsimile address) on the records of the
Company.  A notice to the Company must be addressed to the  Company's  principal
office. A notice delivered  personally will be deemed given only when receipt is
acknowledged  in writing by a person at the  recipient's  address  authorized to
receive




                                 Page 73 of 114
<PAGE>


                                                                   Exhibit 10.44

communications or by confirmation of fax receipt.  A notice that is sent by mail
will be deemed given three (3) business  days after it is mailed.  Any party may
designate, by notice to all of the others, substitute addresses or addresses for
notices;  and,  thereafter,  notices  are to be  directed  to  those  substitute
addresses or addressees.

     9.3 Specific  Performance.  The parties  recognize that irreparable  injury
will  result  from a breach of any  portion  of this  Agreement  and that  money
damages will be inadequate to fully remedy the injury. Accordingly, in the event
of a  breach  or  threatened  breach  of one or more of the  provisions  of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more  preliminary or
permanent  orders (i) restraining and enjoining any act which would constitute a
breach or (ii)  compelling  the  performance  of any  obligation  which,  if not
performed, would constitute a breach.

     9.4  Complete  Agreement.  This  Agreement  constitutes  the  complete  and
exclusive  statement of the agreement  among the Members It supersedes all prior
written and oral statements,  agreements or understandings,  including any prior
representation,  statement, condition, or warranty. Except as expressly provided
otherwise herein,  this Agreement may not be amended without the written consent
of all of the Members.

     9.5 APPLICABLE LAW. ALL QUESTIONS  CONCERNING THE  CONSTRUCTION,  VALIDITY,
AND  INTERPRETATION  OF THIS AGREEMENT A D THE  PERFORMANCE  OF THE  OBLIGATIONS
IMPOSED BY THIS  AGREEMENT  SHALL BE GOVERNED BY THE  INTERNAL  LAW, NOT THE LAW
RELATING TO CONFLICTS OF LAWS, OF THE STATE OF COLORADO.

     9.6  Section  Titles.  The  headings  herein  are  inserted  as a matter of
convenience  only,  and do not  define,  limit,  or  describe  the scope of this
Agreement or the intent of the provisions hereof.

     9.7 Binding  Provisions.  This Agreement is binding upon, and inures to the
benefit  of,  the  parties  hereto  and  their  respective   heirs,   executors,
administrators,  personal and legal representatives,  successors,  and permitted
assigns.

     9.8  Jurisdiction  and  Venue.  Any suit  involving  any  dispute or matter
arising under this  Agreement may only be brought in the United States  District
Court  for  the  District  of  Colorado  or  any  Colorado  State  Court  having
jurisdiction  over the  subject  matter of the  dispute or matter.  All  Members
hereby consent to the exercise of personal  jurisdiction  by any such court with
respect to any such proceeding.

     9.9  Terms.  Common  nouns  and  pronouns  shall be  deemed to refer to the
masculine,  feminine, neuter, singular and plural, as the identity of the Person
may in the context require.




                                 Page 74 of 114
<PAGE>


                                                                   Exhibit 10.44

     9.10 Separability of Provisions.  Each provision of this Agreement shall be
considered separable; and if, for any reason, any provision or provisions herein
are  determined  to be invalid and contrary to any existing or future law,  such
invalidity  shall not impair the  operation of or affect those  portions of this
Agreement which are valid.

     9.11 Counterparts.  This Agreement may be executed simultaneously in two or
more  counterparts,  each of which shall be deemed an original and all of which,
when taken together,  constitute one and the same document. The signature of any
party or any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.

     9.12 Estoppel  Certificate.  Each Member shall,  within ten (10) days after
written request by any Member or the General Manager,  deliver to the requesting
Person  a  certificate  stating,  to the  Member's  knowledge,  that:  (a)  this
Agreement is in full force and effect;  (b) this Agreement has not been modified
except by any instrument or instruments  identified in the certificate;  and (c)
there  is no  default  hereunder  by the  requesting  Person,  or if  there is a
default, the nature and extent thereof If the certificate is not received within
that ten (]0)-day  period,  the General  Manager  shall  execute and deliver the
certificate on behalf of the requested Member, without: qualification,  pursuant
to the power of attorney granted in Section 5.6.

     IN WITNESS WHEREOF,  the parties have executed,  or cause this Agreement to
be executed, under seal, as of the date set forth hereinabove.

                                    MEMBERS:

                                    GPA, LTD., a California limited partnership

                                    By: Glenborough Corporation, a
                                        California corporation,
                                        Managing General Partner

                                    By /s/ Andrew Batinovich
                                       Andrew Batinovich
                                       Chief Executive Officer


                                       /s/ Anthony E. Van Baak
                                       Anthony E. Van Baak



                                 Page 75 of 114
<PAGE>


                                                                   Exhibit 10.45
                              ACQUIS1TION AGREEMENT


     THIS ACQUIS1TION AGREEMENT (the "Agreement") is made and entered into as of
the 1st day of June, 1997, by and among H. DAVID ZABEL,  PATRICIA H. ZABEL, GLEN
D.  ZABEL and ALICE T.  KLAUZER  (each of whom  shall be  hereinafter  sometimes
individually   referred  to  as  a   "Shareholder"   and  shall  be  hereinafter
collectively, jointly and severally referred to as the "Shareholders"), MOUNTAIN
RESORTS,  INC., a Colorado corporation  ("Mountain  Resorts"),  MOUNTAIN RESORTS
ACQUISITION,  LLC, a Colorado limited liability company ("Acquisition LLC"), and
RESORT GROUP, LLC, a Colorado limited liability company ("Resort Group").

                              EXPLANATORY STATEMENT

     A.  The  Shareholders  constitute  all of the  stockholders  and all of the
directors of Mountain Resorts,  which operates a resort hospitality and property
management   business   (including   property  rental  management,   association
management and property  management) in Routt County,  Colorado (herein referred
to as the "Mountain Resorts Business").

     B. The parties have agreed that  substantially  all of the operating assets
and liabilities of Mountain  Resorts,  and all of the Mountain Resorts Business,
will be  transferred  to a  limited  liability  company  formed to  operate  the
Mountain Resorts Business,  and that Resort Group will acquire an eighty percent
(80%) interest in such limited liability company.

     NOW THEREFORE,  in consideration of the Explanatory  Statement,  which is a
substantive part of this Agreement, the mutual covenants,  promises, agreements,
representations and warranties  contained in this Agreement,  and other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  the parties do hereby  covenant,  promise,  agree,  represent and
warrant as follows:

1. Formation of Acquisition LLC; Transfer of Mountain Resorts  Business,  Assets
    and Liabilities: Ancillary Agreements.

     1.1 Formation of  Acquisition  LLC. The parties hereby approve the Articles
of  Organization  of Acquisition LLC in the form of Exhibit 1.1 which were filed
with the Colorado  Secretary of State on June 13, 1997. At the Formation Closing
on the Formation  Closing Date,  Mountain Resorts and Resort Group shall, as the
members of Acquisition  LLC, enter into an operating  agreement for  Acquisition
LLC (the "Operating  Agreement") on terms  satisfactory to Mountain  Resorts and
Resort Group but which shall include terms to the effect of the following:

         (i) Mountain  Resorts will transfer to Acquisition  LLC, as its initial
     capital  contribution,  the Assets and Assumed  Liabilities  (as defined in
     Section  1.2)  and  the  Mountain   Resorts  Business  in  exchange  for  a
     ninety-nine percent (99So) membership interest in Acquisition LLC and shall
     receive an initial capital account of $2,000,000,




                                 Page 76 of 114
<PAGE>


                                                                   Exhibit 10.45

     which the  parties  agree is the net fair  market  value of the  Assets and
     Mountain Resorts Business, less the Assumed Liabilities;

         (ii) Resort Group will  contribute  to  Acquisition  LLC as its initial
     capital  contribution  cash in the amount of $20,202 in exchange  for a one
     percent (1%) interest in Acquisition LLC, and Resort Group shall receive an
     initial capital account of $20,202;

         (iii) The initial  manager of  Acquisition  LLC shall be Anthony E. Van
     Baak;

         (iv)  Acquisition  LLC shall  promptly take steps to change its name to
     Mountain  Resorts,  LLC,  and  Mountain  Resorts  shall  change its name to
     Mountain Resorts Holdings,  Inc. Effective the earlier of August 1, 2000 or
     the date  Mountain  Resorts  ceases  to be a  member  of  Acquisition  LLC,
     Mountain  Resorts shall change its name to a name that does not include any
     reference to "Mountain Resorts" or any variation thereof;

         (v)  Mountain  Resorts will have the right to require that Resort Group
     (or its designee) purchase Mountain Resorts' remaining twenty percent (20%)
     membership  interest in Acquisition LLC (after the purchase and sale of the
     LLC Interest  contemplated  by this  Agreement) for $404,040.40 on or after
     August 1, 2000, which  obligation shall be personally  guaranteed by Robert
     Batinovich, the Robert Batinovich Trust UDT 2/16/90, Andrew Batinovich, the
     Andrew Batinovich Trust UDT 8/3/94 and Anthony E. Van Baak (the "Put"); and

         (vi)  Resort  Group or its  designee  shall have the right to  purchase
     Mountain  Resorts'  remaining twenty percent (20%)  membership  interest in
     Acquisition LLC for $404,040.40 on or after August 1, 2000.

     1.2  Transfer  of Assets and  Liabilities.  Effective  as of the  Formation
Closing on the Formation Closing Date,  Mountain Resorts shall assign,  transfer
and deliver to Acquisition LLC by instruments of transfer with warranty of title
reasonably  satisfactory  to Resort  Group  (the  "Transfer  Documents")  all of
Mountain  Resorts'  assets and  property of any kind,  tangible  or  intangible,
except and excluding  only those assets listed on Exhibit  1.2(a) (the "Excluded
Assets"),  which assets  (except the Excluded  Assets) are referred to herein as
the  "Assets."  In  addition,  effective  as of  the  Formation  Closing  on the
Formation  Closing Date Mountain  Resorts shall transfer to Acquisition  LLC the
liabilities of Mountain Resorts listed on Exhibit 1.2(b),  which are referred to
herein as the "Assumed Liabilities," and Acquisition LLC shall assume and pay in
accordance with their terms,  provided that  Acquisition  LLC's  obligation with
respect to the Assumed  Liabilities shall be limited to the amounts specified in
Sections  1.3.3 and 1.3.4.  Without  limitation,  the Assets  shall  include the
following:




                                 Page 77 of 114
<PAGE>


                                                                   Exhibit 10.45

The  Mountain  Resorts  Business  and,  except  for  the  Excluded  Assets,  all
furniture, fixtures, equipment, inventory, supplies and other property, tangible
or intangible, owned, leased or used by Mountain Resorts in the Mountain Resorts
Business;  all documents,  information  and lists  associated  with the Mountain
Resorts Business; all licenses, permits,  covenants,  approvals and certificates
related to the Mountain Resorts Business to the extent assignable; all telephone
numbers used in association with the Mountain Resorts Business;  the goodwill of
Mountain  Resorts and all names used in  association  with the Mountain  Resorts
Business;  all other  intangible and contractual  rights  (including any pending
contracts)  associated  with the Mountain  Resorts  Business;  and all inventory
associated with the Mountain Resorts Business,  including,  without  limitation,
the following items:

    (i) Tangible Assets:

        (a) All exterior and interior signage.

        (b) All computer hardware and software.

        (c) All telephone systems and equipment.

        (d) All linen.

        (e) Any and all inventory of housekeeping supplies and guest amenities.

        (f) Any and all maintenance and engineering inventory and  supplies.

        (g) Miscellaneous  office  supplies,   including  stationery, envelopes,
             folios, memo pads and reservation and other office supplies.
        (h) Condominium Unit E-102, Shadow Run Condominiums.

        (i) The Personal Property (Section 3.1.14).

    (ii) Intangible Assets:

        (a) All advance deposits and prepaid expenses related to the Mountain
             Resorts Business.

        (b) All accounts receivable and other current assets as of May 31,
             1997. which shall he reflected on a balance sheet of Mountain




                                 Page 78 of 114
<PAGE>


                                                                   Exhibit 10.45

              Resorts as of May 31, 1997 (the  "Closing  Balance  Sheet")  which
              shall be prepared and  delivered  by Mountain  Resorts at Closing.

        (c) The telephone numbers listed on Exhibit 1.2(ii)(c).

        (d) Mountain Resorts' name and all variations thereof and all
             Mountain Resorts logos and, if any, trademarks, trade names
             and any mottos, designs or other marketing devices or rights
             thereto.

        (e) All brochures, literature and other marketing materials
             connected with the Mountain Resorts Business.

        (f) Guest history, travel agent lists, customer lists and all other
             lists, documents or information compiled in connection with or
             relating to the Mountain Resorts Business.

        (g) The Management Contracts (Section 3.1.15), the Service
             Contracts (Section 3.1.16) and the Commitments (Section 3.1.17)
             and all rights of Mountain Resorts thereunder.

        (h)  All of the Mountain Resorts goodwill and similar assets.

        (i)  Copies of all of Mountain Resorts' employment and personnel
              records and copies of all books and records pertaining to the
              Mountain Resorts Business (the "Records"). Mountain Resorts
              shall maintain the Records for a period of at least thirty-six(36)
              months after Closing and shall provide such Records to
              Acquisition LLC or its representatives for inspection and
              copying upon reasonable request.

         (j)  The Villas at Walton Creek Condominium Purchase Agreement
               dated June 23, 1997 for Condominium Unit 302, the Palomino,
               including the earnest money and all rights of the purchaser
               under such contract (the "Villas Contract").

     1.3 Business Transition; Disposition of Certain Assets and Liabilities.

         1.3.1  Business  Transition.  The parties  acknowledge  and agree that,
subject to the provisions of this Agreement, the transfer of the Assets, Assumed
Liabilities  and the  Mountain  Resorts  Business  and the rights,  benefits and
obligations associated therewith shall




                                 Page 79 of 114
<PAGE>


                                                                   Exhibit 10.45

be  effective  as of  commencement  of business on June 1, 1997 (the  "Effective
Date").  All activities and operations of the Mountain  Resorts Business through
the day before the Effective Date shall be for the account of and at the expense
and risk of Mountain Resorts, and Acquisition LLC shall have no interest therein
nor obligation with respect thereto. Except as otherwise contemplated by Section
1.3.4,  all activities and  operations of the Mountain  Resorts  Business on and
after the Effective Date shall be for the account of and at the expense and risk
of  Acquisition  LLC, and Mountain  Resorts  shall have no interest  therein nor
obligation  with  respect  thereto  (except  in  its  capacity  as a  member  of
Acquisition  LLC). As of the Effective Date,  Mountain Resorts shall permanently
cease engaging in the Mountain  Resorts  Business and shall  thereafter  refrain
from engaging in any aspect of the Mountain Resorts Business, either directly or
indirectly and in any capacity whatsoever, except in its capacity as a member of
Acquisition  LLC acting  for the  benefit of  Acquisition  LLC.  Each party will
cooperate  with the other  parties in  effecting  an orderly  transition  of the
Mountain Resorts Business to Acquisition LLC including,  without limitation, the
following:

           (i)   Except as required to effect  clauses  (ii) and (iii) below the
                 transfer  of all bank  accounts  used in the  Mountain  Resorts
                 Business into the name of Acquisition LLC;

          (ii)   Unless otherwise requested by Acquisition LLC, through December
                 31, 1997 (and  thereafter as may be mutually agreed by Mountain
                 Resorts and  Acquisition  LLC)  Mountain  Resorts shall provide
                 Acquisition LLC with real estate  brokerage and escrow services
                 as required for the Mountain Resorts Business;

         (iii)   Unless otherwise requested by Acquisition LLC, through December
                 31, 1997 (and  thereafter as may be mutually agreed by Mountain
                 Resorts and  Acquisition  LLC)  Mountain  Resorts shall provide
                 Acquisition LLC with sufficient  employees and payroll services
                 (including  payroll services for parties  directly  employed by
                 Acquisition LLC) to operate the Mountain Resorts Business.

Mountain Resorts shall not be entitled to compensation for the services referred
to in clauses (ii) and (iii) above,  provided that  Acquisition LLC shall pay or
reimburse to Mountain  Resorts all direct expenses  incurred by Mountain Resorts
in providing such services,  including without limitation  expenses for payroll,
employment taxes, workers' compensation insurance and similar items.

         1.3.2  Liabilities  of Mountain  Resorts.  Anything  contained  in this
Agreement or the Ancillary  Agreements to the contrary  notwithstanding,  except
for  Acquisition  LLC's  obligations  with  respect to the Assumed  Liabilities,
Mountain Resorts shall be and remain




                                 Page 80 of 114
<PAGE>


                                                                   Exhibit 10.45

solely liable and responsible for all debts, obligations, duties and liabilities
of Mountain  Resorts and the Mountain  Resorts  Business  prior to the Effective
Date.  Except as  specifically  provided in this  Agreement  with respect to the
Assumed Liabilities, Acquisition LLC does not and shall not assume, agree to pay
or pay any debts,  obligations,  duties or liabilities of any nature of Mountain
Resorts or the Mountain  Resorts Business or any liens or encumbrances on any of
the Assets  including,  but not  limited to, any debts,  obligations,  duties or
liabilities  relating to Mountain Resorts'  employees or employee benefit plans,
regardless  of whether any such lien,  encumbrance,  debt,  obligation,  duty or
liability arises under any contract, agreement, practice, arrangement,  statute,
law, ordinance, rule, regulation or otherwise.

         1.3.3 Disposition of Certain Assets and Liabilities. Except as provided
in the following  sentence and in Section 1.3.4, all liabilities and obligations
of Mountain Resorts of any nature whatsoever  outstanding as of the day prior to
the Effective  Date or accruing for any period prior to the Effective Date shall
be paid in full or otherwise satisfied and discharged by Mountain Resorts and/or
Shareholders  as soon as practicable  after the Effective Date, but in any event
prior to the Formation  Closing Date.  The foregoing  shall not be applicable to
those specific  Assumed  Liabilities  listed on Exhibit 1.2(b),  which shall not
exceed individually or in the aggregate the amounts specified in Exhibit 1.2(b).
Mountain Resorts shall use its unrestricted cash on hand as of close of business
on the day prior to the Effective  Date to pay or provide for the payment of the
liabilities  referred to in this  Section,  but shall not liquidate or otherwise
dispose of any other assets for such  purpose.  In the event  Mountain  Resorts'
unrestricted  cash on hand as of  close  of  business  on the day  prior  to the
Effective  Date  is  insufficient  to pay or  provide  for  the  payment  of the
liabilities  referred to in this Section,  Shareholders shall contribute cash to
Mountain Resorts in an amount sufficient to satisfy such  liabilities.  Mountain
Resorts shall not distribute or otherwise  dispose of unrestricted cash received
after the close of  business  on the day prior to the  Effective  Date except in
connection with the operation of the Mountain  Resorts  Business in the ordinary
course from the Effective Date to the Formation  Closing Date as contemplated by
this Agreement.

         1.3.4  Transferred  Unrestricted  Cash,  Accounts  Payable and Accounts
Receivable.  The  parties  acknowledge  and agree that as of May 31,  1997,  the
unrestricted cash on hand of Mountain Resorts was $137,192.00 (the "Unrestricted
Cash") and that the  Unrestricted  Cash is not  intended  to be  included in the
Assets to be transferred to Acquisition LLC. The parties further acknowledge and
agree that outstanding accounts payable accruing prior to the Effective Date and
included within the Assumed  Liabilities shall be transferred to Acquisition LLC
solely as a paying agent for Mountain  Resorts,  and that such accounts  payable
will be in excess of the accounts  receivable and other current assets  accruing
prior to the Effective Date included  within the Assets.  The excess of accounts
payable  accruing prior to the Effective  Date over the accounts  receivable and
other current assets  accruing prior to the Effective  Date, as such amounts are
reflected on the




                                 Page 81 of 114
<PAGE>


                                                                   Exhibit 10.45

Closing Balance Sheet,  shall be a liability of Mountain  Resorts to Acquisition
LLC which shall be settled at  Formation  Closing as  hereinafter  provided.  At
Formation  Closing,  Mountain  Resorts  shall  provide  to  Acquisition  LLC  an
accounting from the Effective Date to the Closing Date of the Unrestricted  Cash
on hand,  disposition of Unrestricted Cash, payment of accounts payable accruing
prior to the Effective  Date  (including  the source of funds used for payment),
and  collection of accounts  receivable  accruing  prior to the  Effective  Date
(including the disposition of such funds). Such accounting is referred to herein
as the Closing Settlement Summary.  At Formation Closing,  Acquisition LLC shall
reimburse to Mountain Resorts an amount equal to the Unrestricted  Cash that has
been  transferred to Acquisition  LLC or used to pay accounts  payable  accruing
prior to the Effective Date included in the Assumed Liabilities, less the excess
of  accounts  payable  over  accounts  receivable  as  of  the  Effective  Date.
Acquisition LLC shall not be obligated to reimburse  Unrestricted  Cash used for
Mountain Resorts' obligations not included in the Assumed Liabilities or that is
otherwise used or retained by Mountain Resorts.  If additional  accounts payable
accruing for periods prior to the Effective Date arise after Formation  Closing,
Mountain  Resorts  shall  promptly  pay the amount of such  accounts  payable to
Acquisition  LLC upon the  request of  Acquisition  LLC.  To the extent not paid
prior to  Formation  Closing,  Acquisition  LLC shall pay the  Mountain  Resorts
accounts  payable  accruing prior to the Effective Date that are included in the
Assumed  Liabilities.  Acquisition  LLC shall have no obligation with respect to
any Mountain  Resorts  accounts payable except to the extent it receives payment
therefor from Mountain Resorts as contemplated by this Section.  Acquisition LLC
shall be entitled to collect and retain  accounts  receivable  and other current
assets accruing prior to the Effective Date.  Acquisition LLC shall use diligent
efforts to collect  such items in the ordinary  course of  business,  and to the
extent  any such items have not been  fully  collected  by June 1, 1998,  at the
request of Acquisition  LLC Mountain  Resorts shall pay to  Acquisition  LLC the
full (face) amount of the  uncollected  item, and  Acquisition  LLC shall assign
such items to Mountain Resorts.

         1.3.5 Line of Credit.  Mountain  Resorts  shall  maintain its operating
line of credit with Norwest Bank  Steamboat  Springs,  N.A.  until the Formation
Closing Date in the maximum  amount of $350,000,  and may,  after  obtaining the
prior  consent of Resort Group as to the amount of each draw,  utilize such line
of credit to fund normal and customary  operating  expenses of Mountain  Resorts
incurred in the ordinary  course of business  for the period from the  Effective
Date through the Formation Closing Date. The outstanding balance of such line of
credit as of the Effective  Date shall be satisfied as  contemplated  by Section
1.3.3.  Acquisition  LLC  shall use best  efforts  to cause H.  David  Zabel and
Patricia  H. Zabel to be  released as soon as  practicable  after the  Formation
Closing Date from personal  liability for the Mountain Resorts operating line of
credit to the  extent of amounts  properly  drawn on such line of credit for the
purposes  specified  in this  Section  for the period  from the  Effective  Date
through the Formation  Closing Date, and shall cause such release to be effected
no later than January 31, 1998. Acquisition LLC shall be solely




                                 Page 82 of 114
<PAGE>


                                                                   Exhibit 10.45

responsible  for repayment of amounts  properly drawn on such line of credit for
the period from the Effective Date through the Formation Closing Date, and
thereafter.

     1.4 Ancillary  Agreements.  For purposes of this Agreement,  the "Ancillary
Agreements" shall mean and include each of the following:

         (i) The Operating Agreement referred to in Section 1.1;

         (ii) The Transfer Documents referred to in Section 1.2;

         (iii) The Purchaser Note referred to in Section 2.2.1;

         (iv) The Assignment referred to in Section 2.2.2;

         (v) The Employment Contracts referred to in Section 4.1; and

         (vi) The Noncompetition Covenants referred to in Section 4.2.

2. Purchase and Sale of Membership Interest.

     2.1 Purchase and Sale. On the terms and subject to the conditions set forth
in this  Agreement,  at the  Purchase  Closing  on the  Purchase  Closing  Date,
Mountain  Resorts shall sell,  assign,  transfer and deliver to Resort Group and
Resort Group shall purchase from Mountain  Resorts a seventy-nine  percent (79%)
membership  interest in  Acquisition  LLC,  including  all rights and  interests
associated  with such membership  interest and a proportionate  part of Mountain
Resorts'  capital account  associated  with such  membership  interest (the "LLC
Interest").

     2.2 Purchase Price: Transfer of LLC Interest.

         2.2.1 The full,  entire  purchase price for the LLC Interest that shall
be paid at Purchase  Closing by Resort  Group to Mountain  Resorts  shall be One
Million Five Hundred  Ninety-Five  Thousand Nine Hundred  Fifty-Nine  and 60/100
Dollars ($1,595,959.60) (the "Purchase Price"). The Purchase Price shall be paid
$380,000 in currently  available funds at Purchase Closing (the "Cash Portion of
the Purchase Price") and $1,215,959.60 by Resort Group's  promissory note in the
form of Exhibit 2.2.1(a) (the "Purchaser Note") which shall be dated the Closing
Date, bear interest at the rate of eight and one-half  percent (8.5%) per annum,
and shall be payable in sixty (60) equal monthly  installments  of principal and
interest  commencing  one (1) month after the Closing Date.  The Purchaser  Note
shall be secured by the  guaranty of Robert  Batinovich,  the Robert  Batinovich
Trust UDT 2/16/90, Andrew Batinovich, the Andrew Batinovich Trust UDT 8/3/94 and
Anthony E. Van Baak ("Guarantors") in the form appended to Exhibit 2.2.1(a) (the
"Guaranty") and a pledge of




                                 Page 83 of 114
<PAGE>


                                                                   Exhibit 10.45

Resort Group's interest in Acquisition LLC pursuant to a pledge agreement in the
form of Exhibit 2.2.1(b) (the "Pledge").

         2.2.2  Mountain  Resorts  shall deliver to Resort Group at the Purchase
Closing on the  Purchase  Closing  Date,  concurrently  with the  payment of the
Purchase  Price,  an assignment of the LLC Interest in the form of Exhibit 2.2.2
(the  "Assignment"),  with warranty of title,  transferring  the LLC Interest to
Resort  Group  free and  clear of all  security  interests,  agreements,  liens,
encumbrances, pledges, claims and restrictions of any nature or kind.

         2.2.3 Acquisition LLC shall make an election pursuant to Section 754 of
the  Internal  Revenue  Code of  1986  (the  "Code")  to  adjust  the  basis  of
Acquisition  LLC's  assets  as a  result  of the  purchase  and  sale of the LLC
Interest.  Such  adjustment  shall be made in accordance  with the provisions of
Code Section 754 and Code  Section 743 and the  regulations  thereunder.  To the
extent  permitted by Code Sections 754 and 743 and the  regulations  thereunder,
the adjustment to basis of Acquisition  LLC's assets shall be made in accordance
with the following  allocation of values, which the parties agree represents the
fair market value of the various categories of assets of Acquisition LLC:

          Noncompetition Covenants                   $     20,000
          Association Management Contracts                 81,648
          Fixed Assets (net)                              241,808
          Goodwill (going concern value)                1,676,544

Each  of the  parties  agrees  to  take  any  actions  reasonably  requested  by
Acquisition LLC in order to effect the adjustment to basis of Acquisition  LLC's
assets as contemplated by this Section.

3. Representations and Warranties.

     3.1  Representations  and Warranties of Shareholders.  Mountain Resorts, H.
David  Zabel,  Patricia  H. Zabel and Glen D. Zabel (who,  for  purposes of this
Section 3, are referred to as the "Warrantors")  jointly and severally represent
and warrant to Resort Group and  Acquisition  LLC that as of the date hereof and
as of the Closing on the Closing Date that:

         3.1.1 Assets. Except for the Excluded Assets, the Assets constitute all
of the assets and  property  of any  nature,  tangible  or  intangible,  real or
personal,  owned or leased by Mountain Resorts in the Mountain Resorts Business.
The Assets are adequate in type and quantity for the continued  operation of the
Mountain  Resorts  Business has it has  historically  been  conducted.  Mountain
Resorts has, and at Formation  Closing will convey to Acquisition  LLC, sole and
exclusive, good, merchantable and marketable, legal and




                                 Page 84 of 114
<PAGE>


                                                                   Exhibit 10.45

beneficial title to the Assets,  free and clear of any and all pledges,  claims,
equities, threats, liens, restrictions,  agreements, leases, security interests,
charges and encumbrances of any nature, excepting only the encumbrances securing
the Assumed Liabilities as disclosed on Exhibit 1.2(b).

         3.1.2 LLC Interest.  Mountain  Resorts is the sole and exclusive record
and beneficial  owner of the LLC Interest and possesses good,  merchantable  and
marketable  title to the Interest.  At Purchase  Closing  Mountain Resorts shall
convey  to Resort  Group  good,  merchantable  and  marketable  title to the LLC
Interest,  free  and  clear  of any  and  all  security  interests,  agreements,
restrictions, claims, equities, liens, pledges and encumbrances of any nature or
kind, except as set forth in the Operating  Agreement.  Mountain Resorts has the
absolute and unconditional  right to sell, assign,  transfer and deliver the LLC
Interest to Resort Group in accordance with the terms of this Agreement. The LLC
Interest  has  been  duly,  legally  and  validly  issued,  is  fully  paid  and
nonassessable,  and is not  subject  to  capital  calls or  similar  obligations
requiring the contribution of money or property to Acquisition LLC.  Delivery of
the LLC Interest by Mountain  Resorts to Resort Group at the Purchase Closing on
the Purchase  Closing Date  pursuant to this  Agreement  will transfer to Resort
Group the full and entire legal and  equitable  title to and  ownership of a 79%
membership interest in Acquisition LLC.

         3.1.3 Due Organization: Good Standing: Authority. Mountain Resorts is a
corporation duly organized, validly existing as a stock corporation, and in good
standing  under the laws of the State of  Colorado.  Mountain  Resorts  has full
right,  power and authority to own its properties and assets and to carry on the
Mountain  Resorts  Business  as it has  historically  been  conducted.  Mountain
Resorts is not qualified and authorized to do business in any jurisdiction other
than the State of Colorado.  Mountain  Resorts is not in breach or violation of,
and the execution,  delivery and performance of this Agreement and the Ancillary
Agreements  to which it is a party will not result in a breach or  violation  of
any of the provisions of its Governing Documents, as amended to the date of this
Agreement.

         3.1.4  Authorization and Validity of Agreements.  The Shareholders have
the legal capacity,  right, power and authority to enter into this Agreement and
the  Ancillary  Agreements to which they are parties.  Mountain  Resorts has the
full right,  power and  authority to execute and deliver this  Agreement and the
Ancillary  Agreements  to which it is a party and to  perform  the  transactions
contemplated  thereby.  The  execution  and delivery of this  Agreement  and the
Ancillary Agreements by Mountain Resorts and the performance by Mountain Resorts
of the transactions  contemplated  hereby and thereby have been duly and validly
authorized by all necessary corporate and stockholder action. This Agreement has
been duly executed and delivered by the Shareholders and Mountain Resorts and is
the legal,  valid and binding  obligation of such parties,  enforceable  against
them in accordance with its terms. The Ancillary  Agreements to which any of the
Shareholders  or Mountain  Resorts is a party,  when  executed and  delivered by
them, will be the legal valid and binding




                                 Page 85 of 114
<PAGE>


                                                                   Exhibit 10.45

obligations  of  each  of  them,  respectively,   enforceable  against  them  in
accordance with their terms,  except in each case as such  enforceability may be
limited by general principles of equity, bankruptcy,  insolvency, moratorium and
similar laws relating to creditors' rights generally.

         3.1.5  Transfer  Obligations  Options  Warrants and Similar  Rights and
Agreements.  Except  for  transactions  contemplated  by this  Agreement  or the
Operating  Agreement,  there are no  options,  warrants,  calls,  subscriptions,
rights,   convertible   securities  or  other  securities  or  any  commitments,
agreements,  arrangements  or  understandings  of any kind or nature  obligating
Mountain  Resorts or Acquisition LLC to directly or indirectly issue or transfer
any membership interest in Acquisition LLC or any instruments or undertakings of
any type  convertible  into or  evidencing  the right to purchase  or  otherwise
acquire any membership interest in Acquisition LLC.

         3.1.6 No Subsidiaries.  Etc. Except for its interest in Acquisition LLC
pursuant to the  Operating  Agreement,  Mountain  Resorts does not,  directly or
indirectly, own any interest in or control any corporation,  partnership,  joint
venture, or other business entity.

         3.1.7  Agreement  Not in  Conflict  with  Other  Instruments;  Required
Approvals.  The execution,  delivery,  and performance of this Agreement and the
Ancillary  Agreements  to which they are parties by any of the  Shareholders  or
Mountain Resorts, and the consummation of the transactions  contemplated by this
Agreement and the  Ancillary  Agreements  to which any  Shareholder  or Mountain
Resorts  is  a  party  will  not  (a)  violate  or  require  any   registration,
qualification,  consent,  approval,  or  filing  under,  (i) any  law,  statute,
ordinance, rule or regulation (hereinafter collectively referred to as "Law") of
any federal, state or local government (hereinafter  collectively referred to as
"Government")  or any  agency,  bureau,  commission  or  instrumentality  of any
Government ("hereinafter  collectively referred to as "Governmental  Agencies"),
or  (ii)  any  judgment,  injunction,  order,  writ  or  decree  of  any  court,
arbitrator,  Government or Governmental  Agency by which any of the Shareholders
or Mountain  Resorts or any of their  respective  assets or properties is bound;
(b) conflict with, require any consent, approval, or filing under, result in the
breach or termination of any provision of, constitute a default under, result in
the  acceleration  of the  performance of any of the  Shareholders'  or Mountain
Resorts'  obligations  under,  or result in the creation of any claim,  security
interest, lien, charge, or encumbrance upon any of Mountain Resorts' properties,
assets, or businesses  pursuant to, (i) Mountain Resorts'  Governing  Documents,
(ii) any indenture, mortgage, deed of trust, license, permit, approval, consent,
franchise, lease, contract, or other instrument or agreement to which any of the
Shareholders or Mountain  Resorts is a party or by which any of the Shareholders
or Mountain Resorts or any of their respective assets or properties is bound, or
(iii) any judgment,  injunction, order, writ or decree of any court, arbitrator,
Government or Governmental  Agency by which any of the  Shareholders or Mountain
Resorts or any of their respective assets or properties is bound. If the consent
or approval of any Person is




                                 Page 86 of 114
<PAGE>


                                                                   Exhibit 10.45

required in order to avoid  violation  of the  foregoing,  then prior to Closing
Shareholders  and Mountain Resorts shall obtain or cause Mountain Resorts and/or
Acquisition  LLC, as  applicable,  to obtain,  on terms  satisfactory  to Resort
Group,  the  consent to or  approval of the  transactions  contemplated  by this
Agreement  from each  Person  whose  consent or approval  may be  required  (the
"Consents").

         3.1.8 Conduct of Business in Compliance with Regulatory and Contractual
Requirements.  Mountain Resorts has conducted and is conducting Mountain Resorts
Business  in  compliance  with  all  applicable  Laws  of  all  Governments  and
Governmental  Agencies.  To best of  knowledge,  neither  the  real or  personal
properties owned, leased, operated or occupied by Mountain Resorts, nor the use,
operation  or  maintenance  thereof or the  operation  of the  Mountain  Resorts
Business,  (i) violates any Laws of any Government or  Governmental  Agency,  or
(ii)  violates  any  restrictive  or similar  covenant,  agreement,  commitment,
understanding or arrangement.

         3.1.9 Licenses: Permits; Related Approvals.  Mountain Resorts possesses
all licenses, permits, consents, approvals, authorizations,  qualifications, and
orders ("hereinafter  collectively  referred to as "Permits") of all Governments
and  Governmental  Agencies  lawfully  required  to enable  Mountain  Resorts to
conduct the Mountain Resorts Business in all  jurisdictions.  All of the Permits
are in  full  force  and  effect,  and  to  best  of  knowledge  no  suspension,
modification or cancellation of any of the Permits is pending or threatened.

         3.1.10  Legal  Proceedings.  There is no action,  suit,  proceeding  or
arbitration by any Government,  Governmental  Agency or other Person (i) pending
to which Mountain  Resorts is a party,  (ii)  threatened  against or relating to
Mountain  Resorts  or any of the  Assets or  Mountain  Resorts  Business,  (iii)
challenging  Mountain  Resorts'  or  Shareholders'  right to  execute,  deliver,
perform under or consummate the transactions  contemplated by this Agreement, or
(iv) asserting any right with respect to any of the Assets or LLC Interest,  and
to best of knowledge there is no basis for any such action, suit,  proceeding or
arbitration, or any claim or investigation related to the foregoing.  Warrantors
are not aware of any set of facts or circumstances  which give rise to any claim
affecting  the Assets or the  conduct of the  Mountain  Resorts  Business or the
authority of Mountain  Resorts or  Shareholders  to consummate the  transactions
provided for in this Agreement.

         3.1.11  Financial  Statements:  Undisclosed  Liabilities.  Correct  and
complete copies of Mountain Resorts' unaudited balance sheets as of December 31,
1995, December 31, 1996, and as of May 31, 1997, and Mountain Resorts' unaudited
Statement of Operations and Retained Earnings for the years ended as of December
31, 1995,  December 31, 1996, and for the period ended May 31, 1997 (hereinafter
collectively  referred to as the "Financial  Statements")  have been provided to
Resort Group.  The  Financial  Statements  are in accordance  with the books and
records of Mountain  Resorts,  are true,  correct and  complete in all  material
respects and accurately present Mountain Resorts' financial position as of the




                                 Page 87 of 114
<PAGE>


                                                                   Exhibit 10.45

dates set forth therein and the results of Mountain Resorts'  operations for the
periods  then  ended,  all in  conformity  with  generally  accepted  accounting
principles  applied on a  consistent  basis  during  each  period and on a basis
consistent with that of prior periods.  Except (i) as disclosed in the Financial
Statements,  and (ii) as disclosed in this  Agreement,  Mountain  Resorts has no
liabilities  or  obligations  of any nature or kind,  known or unknown,  whether
accrued,  absolute,  contingent, or otherwise. To best of knowledge, there is no
basis  for  assertion  against  Mountain  Resorts  of any  claim,  liability  or
obligation not fully  disclosed in the Financial  Statements.  All prepaid items
set forth in Mountain Resorts' Financial  Statements have been properly accrued.
The representations and warranties in this Section shall also apply with respect
to the Closing Balance Sheet and Closing Settlement Summary prepared by Mountain
Resorts for Closing.

         3.1.12 Tax Matters. Mountain Resorts has duly and timely filed with all
appropriate  Governmental  Agencies,  all tax returns,  information returns, and
reports  required  to be filed by  Mountain  Resorts.  Except for  accruals  for
payroll taxes payable as set forth in Mountain  Resorts' Balance Sheet as of May
31,  1997 (the  "Accrued  Taxes"),  Mountain  Resorts has paid in full all taxes
(including taxes withheld from employees'  salaries and other  withholding taxes
and  obligations),  interest,  penalties,  assessments and deficiencies  owed by
Mountain Resorts to all taxing  authorities.  Complete and correct copies of the
income tax returns of Mountain Resorts for Mountain  Resorts' three fiscal years
ending December 31, 1994,  December 31, 1995, and December 31, 1996, as filed by
Mountain  Resorts  with the Internal  Revenue  Service (the "IRS") and all state
taxing  authorities  (collectively,  the "Returns") have been provided to Resort
Group.  The  Returns of Mountain  Resorts  for the five (5) most recent  taxable
years have not been audited by any taxing authority, and Mountain Resorts is not
a party to any consents,  agreements or similar undertakings with the IRS or any
other  taxing  authority.  All  information  reported  on the  Returns  is true,
accurate  and complete in all  material  respects.  All claims by the IRS or any
state taxing authorities for taxes due and payable by Mountain Resorts have been
paid by Mountain Resorts.  The provisions for the Accrued Taxes are adequate for
the payment of all of Mountain Resorts' liabilities for unpaid taxes (whether or
not disputed).  All federal income tax returns  required to be filed by Mountain
Resorts  have either been  examined by the IRS, or the period  during  which any
assessments  may be made by the IRS has expired  without waiver or extension for
all years through Mountain Resorts' fiscal year ended December 31, 1993, and any
deficiencies or assessments  claimed or made have been paid,  settled,  or fully
provided for in the  Financial  Statements.  Mountain  Resorts has not adopted a
plan of complete liquidation under the Internal Revenue Code of 1954, as amended
(the "Code"),  or filed a consent pursuant to Section 341 of the Code.  Mountain
Resorts  is not a party to,  and is not  aware of,  any  pending  or  threatened
action, suit,  proceeding,  or assessment against it for the collection of taxes
by any Governmental Agency.

         3.1.13 Real Property.  Except for  Condominium  Unit E-102,  Shadow Run
Condominiums,  which is owned by Mountain Resorts and included in the Assets and
the six




                                 Page 88 of 114
<PAGE>


                                                                   Exhibit 10.45

(6)  Norwegian  Log  Condominium  Units  included  within the  Excluded  Assets,
Mountain Resorts does not own any real estate.

         3.1.14  Condition  of  Personal  Property.  Attached  hereto as Exhibit
3.1.14 is a true,  correct and complete  list of each item of personal  property
owned by  Mountain  Resorts  or used in the  Mountain  Resorts  Business  with a
current replacement cost of $500.00 or more, including,  but not limited to, all
equipment,  machinery and fixtures, indicating whether it is owned or the manner
in which the Personal Property is otherwise  utilized by Mountain Resorts.  Such
items,  together with all other personal  property owned by Mountain  Resorts or
used in the  Mountain  Resorts  Business  is  referred  to  collectively  as the
"Personal Property" and is included in the Assets. Mountain Resorts has sole and
exclusive,  good and merchantable title to all of the Personal Property owned by
it,  free and  clear  of all  pledges,  claims,  liens,  restrictions,  security
interests,  charges  and other  encumbrances,  except as  disclosed  on  Exhibit
3.1.14.  The  Personal  Property  is  adequate  in  type  and  quantity  for the
continuation  of the  Mountain  Resorts  Business  as it has  historically  been
conducted.  There is no warranty as to the repair or  condition  of the Personal
Property, which shall be transferred to Acquisition LLC in "AS IS" condition.

         3.1.15 Management Contracts.  Attached hereto as Exhibit 3.1.15(a) is a
true,  correct and complete  list of all property  rental  management,  property
management and association  management contracts under which Mountain Resorts is
providing  property  rental  management,   property  management  or  association
management services (collectively,  the "Management Contracts").  Representative
samples of Mountain  Resorts'  property  rental  management  contracts have been
provided  to Resort  Group,  and  correct and  complete  copies of all  property
management  and  association  management  contracts have been provided to Resort
Group.  The date by which  each  association  that is a party to an  association
management  contract  may  determine  not to renew its  contract  with  Mountain
Resorts is set forth on Exhibit 3.1.15(a).  Each of the Management  Contracts is
in full force and effect,  is valid and binding upon each of the parties thereto
and is fully  enforceable by Mountain Resorts against the other party thereto in
accordance with its terms.  Neither  Shareholders  nor Mountain  Resorts has any
notice  of,  or any  reason to  believe  that  there is or has been any  actual,
threatened or  contemplated,  termination,  nonrenewal or modification of any of
the Management Contracts, except that the Promontory Condominium Association has
declined to renew its contract.  Except as otherwise provided below with respect
to  nonrenewal  of  association  management  contracts  as a result of  improper
financial  administration,  there is no warranty of renewal or  retention of the
Management  Contracts beyond their current terms. The Management  Contracts have
been  administered  and  accounted  for  by  Mountain  Resorts  properly  and in
accordance with their terms, and no party to any of the Management  Contracts is
in breach of or in default  thereunder,  nor has any event occurred which,  with
the lapse of time,  notice  or  election,  may  become a breach  or  default  by
Mountain Resorts or any other party to or under any of the Management Contracts.
The execution, acknowledgement, sealing, delivery and performance




                                 Page 89 of 114
<PAGE>


                                                                   Exhibit 10.45

of this Agreement by the  Shareholders  and the consummation of the transactions
contemplated  by this Agreement (i) will not result in the breach or termination
of or constitute a default under any Management Contract,  (ii) does not require
the consent of any party to a Management Contract, or any other Person for whose
benefit a  Management  Contract was  executed,  and (iii) will not give any such
party or Person  the  right to  terminate  any  Management  Contract.  Except as
otherwise  disclosed  on Exhibit  3.1.15(b),  all  payments  required to be made
pursuant to the Management Contracts by parties to the Management Contracts, and
other Persons for whose benefit  Management  Contracts were executed,  have been
paid  in  full  through  May 31,  1997.  All  amounts  payable  pursuant  to the
Management  Contracts and that accrue for any period prior to the Effective Date
shall be paid by Mountain  Resorts  pursuant to Section 1.3.3.  Without limiting
the generality of the foregoing,  it shall be a breach of the warranty set forth
in this Section if (i) any Mountain Resorts  association  management contract is
not  renewed  after the  Effective  Date for the express  reason  that  Mountain
Resorts,  prior to the Closing,  failed to comply with its financial obligations
pursuant to such contract and Acquisition LLC reasonably  determines  there is a
basis for such claim,  or (ii) any association  management  contract of Mountain
Resorts is terminated prior to its next scheduled renewal date on the basis that
such contract was not assignable to  Acquisition  LLC or as a result of a breach
of such contract by Mountain Resorts prior to Closing.  The Management Contracts
are in compliance with all applicable  Laws of all Governments and  Governmental
Agencies.  All  deposits  and  escrowed  funds held  pursuant to the  Management
Contracts as of May 31, 1997 are properly accounted for and are reflected on the
Financial  Statements  dated May 31, 1997 as: 1120 Cash in escrow;  1122 Cash in
escrow; 1123 Cash in escrow - Cds; and 1128 Cash in escrow - security deposits.

         3.1.16 Service  Agreements.  Except for the Operator Services Agreement
dated  July 7,  1992 with  AMI,  a License  Agreement  with  First  Resorts  for
reservation  system software,  and the yearly  contracts with Steamboat  Central
Reservations for reservation services  (collectively,  the "Service Contracts"),
there are no contracts or agreements  under which third parties have  contracted
with Mountain Resorts to provide services and/or supplies to Mountain Resorts.

         3.1.17 Contracts  Licenses.  and Other Agreements.  Mountain Resorts is
not a party to any contracts,  licenses,  permits or other agreements except the
Management Contracts,  the Service Contracts,  and the items referred to in this
Section 3.1.17. Regarding the contracts,  licenses, permits and other agreements
of Mountain Resorts:

         3.1.17.1 The only leases  relating to real  property to which  Mountain
Resorts is a party are:

              Office Lease.  Lease of approximately  5,000 square feet of office
         space at 2145 Resort Drive,  Suite 100.  Lessor is First  National Land
         Company.  Lease  expires  November 30, 1998,  with option to extend for
         three (3) years.




                                 Page 90 of 114
<PAGE>


                                                                   Exhibit 10.45

              Laundry Lease. Lease of approximately 1,500 square feet of laundry
         space in Building C, Big Country  Industrial  Park, 1475 South Lincoln.
         Lessor is Ski Country  Kitchens.  Lease expires May 1, 1998;  notice of
         nonrenewal has been given.

              3.1.17.2  Mountain Resorts is not a party to any lease of personal
property.

              3.1.17.3   Mountain  Resorts  is  not  a  party  to  any  license,
franchise,  assignment or other agreement  relating to trademarks,  trade names,
patents,  copyrights,  service  marks  (or  applications  therefor),  unpatented
designs or styles, know-how or technical assistance.

              3.1.17.4 No Permits are  required  for the  operation  of Mountain
Resorts'  business other than a Colorado real estate broker's  license and State
of Colorado and City of Steamboat Springs sales tax licenses,  all of which have
been obtained by Mountain Resorts and are in full force and effect.

              3.1.17.5  Except for (i) that certain  Employment  Agreement dated
May 29, 1997,  between  Mountain  Resorts and Greg Fritz (the "Fritz  Employment
Agreement"),  and (ii) that certain Settlement  Agreement and Mutual Release and
Supplementary  Agreement dated August 28, 1996,  between Lana LeChabrier,  d/b/a
The Thor Trust Company,  The Terraces  Development  Group,  L.L.C.,  Jon Peddie,
Robert S. Dick,  Terraces  Condominium  Owners Association and Mountain Resorts,
Inc., there are no employment, compensation or consulting agreements, contracts,
understandings  or arrangements of Mountain Resorts with any officer,  director,
employee, broker, agent, consultant, salesman or other Person.

              3.1.17.6  There are no  agreements  of  Mountain  Resorts  for the
purchase, sale or lease of goods,  materials,  supplies,  machinery,  equipment,
capital assets and services.

              3.1.17.7 Except for the Service Contracts, Mountain Resorts has no
agreements  and  arrangements  with any  supplier,  distributor,  franchisor  or
dealer.  Mountain  Resorts  pays  commissions  and  fees  to  various  wholesale
reservation  agents  under its  "preferred  customer"  program (two of which are
pursuant to written contract), travel agents, etc.

              3.1.17.8  Exhibit 3.1.17.8  contains a true,  correct and complete
list of all agreements and arrangements of Mountain Resorts for the borrowing or
lending of money, on a secured or unsecured basis, or guaranteeing, indemnifying
or otherwise  becoming  liable for the  obligations  or liabilities of any other
Person.




                                 Page 91 of 114
<PAGE>


                                                                   Exhibit 10.45

              3.1.17.9  There  are  no  agreements  and  arrangements  or  other
obligations  of  Mountain   Resorts  for  the   construction,   modification  or
improvement  of any building or structure  having a cost in excess of $5,000.00,
or the incurrence of any other capital expenditure  involving payments in excess
of  $5,000.00,  including  commitments  with respect to managed  properties  but
excluding commitments which Mountain Resorts has no obligation to fund, in whole
or in part.

              3.1.17.10 Exhibit 3.1.17.10  contains a true, correct and complete
list of all agreements and  understandings  of Mountain Resorts other than those
referenced in Sections  3.1.17.1  through 3.1.17.9 which are material in nature,
involve the payment or receipt,  in any 12-month period, of more than $1,000.00,
or have a term of more than twelve (12) months.

The  Service   Contracts   and  each  of  the   agreements,   arrangements   and
understandings  referred to in Sections 3.1.17.1 through 3.1.17.10  (hereinafter
collectively  referred to as the  "Commitments") is in full force and effect, is
valid and binding upon each of the parties  thereto and is fully  enforceable by
Mountain  Resorts  against the other party thereto in accordance with its terms.
Correct and complete  copies of each of the Commitments (or where they are oral,
true,  correct and  complete  written  summaries)  have been  provided to Resort
Group.  Neither  Shareholders  nor  Mountain  Resorts  has any notice of, or any
reason  to  believe  that  there  is or  has  been  any  actual,  threatened  or
contemplated termination or modification of any of the Commitments.  No party to
any of the  Commitments  is in breach of or in default  thereunder,  nor has any
event occurred which, with the lapse of time,  notice or election,  may become a
breach or default by Mountain  Resorts or any other party to or under any of the
Commitments.  Mountain  Resorts  has the  right to quiet  enjoyment  of all real
properties  leased to it for the full term of the lease thereof.  The execution,
delivery  and  performance  of  this  Agreement  and  the  consummation  of  the
transactions contemplated by this Agreement (i) will not result in the breach or
termination  of or  constitute  a default  under any  Commitment,  (ii) does not
require the consent of any party to any of the  Commitments,  and (iii) will not
give any such party the right to terminate any of the Commitments.  All payments
required to be made by Shareholders,  Mountain Resorts or any other party to any
of the  Commitments  pursuant to any of the  Commitments  have been paid in full
through May 31, 1997. The Commitments are in compliance with all applicable Laws
of all  Governments  and  Governmental  Agencies  and  there  are no Laws of any
Government or Governmental Agencies, actions, suits, proceedings,  arbitrations,
orders, writs, or decrees in any such case existing or proposed, which adversely
affect or might  adversely  affect  Mountain  Resorts'  rights  under any of the
Commitments.

              3.1.18 Insurance.  Attached hereto as Exhibit 3.1.18(a) is a true,
correct and complete list of all insurance policies of Mountain Resorts, setting
forth with respect to each policy the name of the insurer,  a description of the
policy,  the dollar  amount of  coverages,  the amount of the premium,  the date
through which all premiums have been paid, and the




                                 Page 92 of 114
<PAGE>


                                                                   Exhibit 10.45

expiration date. Each insurance policy relating to the insurance  referred to in
Exhibit  3.1.18(a) is in full force and effect,  is valid and  enforceable,  and
Mountain  Resorts  is not in breach  of or in  default  under  any such  policy.
Neither  Shareholders  nor  Mountain  Resorts has any notice of or any reason to
believe  that  there is or has  been any  actual,  threatened,  or  contemplated
termination or  cancellation  of any insurance  policy relating to the insurance
referred to in Exhibit  3.1.18(a).  Attached  hereto as Exhibit  3.1.18(b)  is a
true,  correct and complete  list and summary of all claims which have been made
under each  insurance  policy  relating to the insurance  referred to in Exhibit
3.1.18(a).  Mountain Resorts has not failed to give any notice or to present any
claim under any insurance policy in a due and timely fashion.

         3.1.19 Employment Matters.

              3.1.19.1 None of the Mountain  Resorts  employees are covered by a
collective bargaining agreement or, to the best of knowledge, are represented by
a labor  organization,  and no petition  for  representation  concerning  any of
Mountain  Resorts'  employees has been filed with the National  Labor  Relations
Board;  neither  Mountain  Resorts  nor  Shareholders  are  aware  of any  union
organizational  activity and have no reason to believe that any such activity is
being  contemplated.  Neither Mountain Resorts nor Shareholders  have engaged in
any unfair labor practice.

              3.1.19.2  Mountain Resorts is not in violation of applicable equal
employment  opportunity,  wage and hour or any other Laws of any  Government  or
Governmental  Agency relating to employment.  There are no active,  pending,  or
threatened  administrative  or  judicial  proceedings  under  any  Laws  of  any
Government or Governmental Agency relating to current or former Mountain Resorts
employees,  and there are no claims,  charges,  or  employment-related  suits or
controversies  which  have  occurred  within  the  last  five  (5)  years or are
presently  pending  or  threatened  under  any  employment  related  Laws of any
Government  or  Governmental  Agency.  Mountain  Resorts  is not  subject to any
judgments,  decrees, conciliation agreements or settlement agreements concerning
employment-related matters.

              3.1.19.3  Except  for the  Fritz  Employment  Agreement,  Mountain
Resorts  has  not  entered  into  any  employment  agreements  with  any  of its
employees,  and all employees may be terminated at will. Mountain Resorts has no
contractual  obligation  or special  termination  or  severance  arrangement  in
respect  of any  Mountain  Resorts  employee.  There  are no  present  or future
obligations to any person who is or has been employed by Mountain  Resorts under
any retirement plan or deferred compensation program or arrangement and there is
no provision of any agreement or  arrangement  with any of the Mountain  Resorts
employees, or any other legal or contractual  requirement,  which would obligate
Mountain Resorts to continue to employ any employee.




                                 Page 93 of 114
<PAGE>


                                                                   Exhibit 10.45

              3.1.19.4 Mountain Resorts has paid all wages, bonuses, commissions
and other  benefits  and sums due (and all  required  taxes,  insurance,  social
security and withholding thereon) through the Closing Date.

              3.1.19.5  Mountain  Resorts has maintained in effect all insurance
policies and other  employee  benefits  covering any  employee  claims  incurred
through the date of this Agreement and the Closing Date.

              3.1.19.6   Exhibit  3.1.19.6  sets  forth  each  Mountain  Resorts
employee's date of hire, position,  present salary,  amount of bonus paid in the
past  year,  and  announced  termination  date (if any).  Mountain  Resorts  has
provided Resort Group with access to the personnel files and employment  records
of all Mountain Resorts Employees.

              3.1.19.7  Except  for  the  Mountain  Resorts,  Inc.  Saving  Plan
administered by the Principal  Financial Group (annuity  #4-13919) (the "Plan"),
Mountain  Resorts  does  not  now nor has it  ever  established,  maintained  or
contributed  to any employee plan or practice in which any of its employees have
participated or are subject (including, but not limited to, any employee pension
plan or  employee  benefit  plan as  such  terms  are  defined  in the  Employee
Retirement  Income Security Act of 1974, as amended  ("ERISA") but excluding the
payment of current cash compensation). The Plan is not a multi-employer plan, as
that term is defined in Section  4001(a)(3)  of ERISA.  No  employer  other than
Mountain Resorts now contributes to or has ever contributed to the Plan, and the
Plan is in full force and effect and Mountain  Resorts is not and on the Closing
Date will not be in default in any manner thereunder. The Plan may be amended or
terminated by Mountain Resorts at its option. To the best of knowledge:

              (i) Mountain Resorts and its fiduciaries and administrators of the
         Plan have at all times  complied  with all  provisions  of the Plan and
         applicable law (including  without  limitation the provisions of ERISA)
         in operating and dealing with the Plan

              (ii) The Plan complies with the Internal  Revenue Code of 1986, as
         amended (the  "Code"),  and has been  established  or amended to comply
         with the  provisions  of the Code and ERISA as in effect as on the date
         of this Agreement;

              (iii) The Plan has no  "accumulated  funding  deficiency"  as that
         term is defined in Section 412 of the Code;  (iv) No fiduciary or party
         in interest (as those terms are defined in Section 3(21)(A) and (3)(14)
         of ERISA, respectively) has engaged in any "prohibited transaction" (as
         that term is  defined in  Section  406 of ERISA or Section  4975 of the
         Code) with respect to the Plan;




                                 Page 94 of 114
<PAGE>


                                                                   Exhibit 10.45

              (v) No "reportable event" (as that term is defined in Section 4043
         of ERISA) has occurred with respect to the Plan;

              (vi) No liability to the Pensions  Benefit  Guarantee  Corporation
         (except for premiums  which are not  delinquent) or to any other person
         or entity has been  incurred  or  expected  to be  incurred by Mountain
         Resorts with respect to the Plan.  All reports and returns  required to
         be filed with any  Governmental  Agency  with  respect to the Plan have
         been timely and accurately filed. No Governmental  Agency has conducted
         an audit or  investigation  or made an assessment of taxes or penalties
         in respect  to the Plan.  The Plan does not have any  liability  to any
         participant or beneficiary,  except accrued liability, payment of which
         is not due under the Plan.

         3.1.20 Patents: Trademarks:  Related Contracts. Mountain Resorts has no
patents,  trademarks,  trade names,  or  trademark or trade name  registrations,
service  marks,  and  copyrights or copyright  registrations  (the  "Proprietary
Rights").  To best of knowledge,  Mountain  Resorts has not infringed and is not
infringing  upon any patent,  trademark,  trade name, or trademark or trade name
registration,  service mark, copyright,  or copyright  registration of any other
Person.

         3.1.21 Books and Records:  Fiscal Year: Method of Accounting.  Mountain
Resorts has made available to Resort Group all of its tax, accounting, corporate
and financial  books and records.  The books and records  pertaining to Mountain
Resorts' business made available to Resort Group are true,  correct and complete
in all material  respects,  have been maintained on a current basis,  and fairly
reflect  the basis for  Mountain  Resorts'  financial  condition  and results of
operations  as set  forth in the  Financial  Statements.  Mountain  Resorts  has
consistently used the fiscal year ended December 31 as its taxable year, and has
consistently  used the  accrual  method  as its  method  of  accounting  for tax
purposes.

         3.1.22 Bank Accounts and Safe Deposit Arrangements.  Attached hereto as
Exhibit  3.1.22 is a true,  correct and complete list of each checking  account,
savings  account and other bank  account  and safe  deposit  box  maintained  by
Mountain Resorts,  and the names of all persons  authorized to withdraw funds or
other  property  from,  or otherwise  deal with,  such accounts and safe deposit
boxes.

         3.1.23  Absence of  Certain  Changes  or  Events.  Since May 31,  1997,
Mountain Resorts has not

              3.1.23.1  Incurred  any  indebtedness,   obligation  or  liability
(contingent or otherwise),  except normal trade or business obligations incurred
in the ordinary course of its business, and except the Villas Contract.




                                 Page 95 of 114
<PAGE>


                                                                   Exhibit 10.45

              3.1.23.2  Discharged or satisfied any security  interest,  lien or
encumbrance  or paid any  indebtedness,  obligation or liability  (contingent or
otherwise),  except (a) current  liabilities and (b) scheduled payments pursuant
to obligations  under contracts,  agreements,  or leases referred to in Sections
3.1.17.1 through 3.1.17.10 hereto.

              3.1.23.3  Mortgaged,   pledged,  or  subjected  to  lien,  charge,
security interest, or other encumbrance any of its assets or properties.

              3.1.23.4  Sold,  assigned,  transferred,  leased,  disposed of, or
agreed to sell,  assign,  transfer,  lease,  or dispose of, any of its assets or
properties.

              3.1.23.5  Acquired  or leased any assets or  property of any other
Person.

              3.1.23.6 Canceled or compromised any debt or claim.

              3.1.23.7 Waived or released any rights.

              3.1.23.8  Transferred  or  granted  any  rights  with  respect  to
know-how  or  any  rights  existing  under  any  leases,  licenses,  agreements,
inventions, or any of the Proprietary Rights.

              3.1.23.9 Except for salary increases for  nonmanagement  employees
in the ordinary  course of business,  granted or made any  contract,  agreement,
promise or commitment to grant any wage, salary or employee benefit increase to,
or entered into any employment  contract,  bonus, stock option,  profit sharing,
pension,  incentive,  retirement or other similar  arrangement or plan with, any
officer,  employee or other  Person.  Employment  turnover  occurs and  Mountain
Resorts will continue to hire and terminate  employees in the ordinary course of
its business,  but all  employees  will be hired as an "employee at will" unless
otherwise disclosed and approved by Resort Group.

              3.1.23.10 Entered into any collective bargaining agreement or made
any commitment or incurred any liability to any labor organization.

              3.1.23.11  Made any capital  expenditure in excess of $5,000.00 or
entered into any commitment therefor.

              3.1.23.12  Suffered  any casualty  loss or damage,  whether or not
such loss or damage is or was covered by insurance.

              3.1.23.13 Suffered any adverse change in its operations, earnings,
assets,  liabilities,  properties, or business or in its condition (financial or
otherwise).




                                 Page 96 of 114
<PAGE>


                                                                   Exhibit 10.45

              3.1.23.14  Changed  the  nature of its  business  or its method of
accounting

              3.1.23.15 Other than in the ordinary  course of business,  entered
into any transaction. contract or commitment.

              3.1.23.16 Terminated or modified,  or agreed to the termination or
modification of, any Management  Contract or any of the  Commitments,  except in
the  ordinary  course of  business.  It is  acknowledged  that  property  rental
management  contracts are routinely  acquired and/or  terminated in the ordinary
course of the  business.  Mountain  Resorts has not  terminated  or modified any
association   management  contract,   except  that  the  Promontory  Condominium
Association chose not to renew its contract.

              3.1.23.17 Suffered a loss of any supplier or suppliers, which loss
(individually  or in the  aggregate)  has had, or may have, an adverse effect on
its financial condition, results of operations, business, or prospects.

              3.1.23.18  Suffered any material  adverse  change in its assets or
liabilities,  in its  condition,  financial or  otherwise,  or in its  business,
properties, earnings or net worth.

              3.1.23.19 Amended,  revoked or terminated its Governing  Documents
in any respect, except as authorized pursuant to Section 1.1(iv).

         3.1.24  Insider  Transactions.  Except as disclosed on Exhibit  3.1.24,
there  are no  indebtedness  or  other  obligations,  agreements,  undertakings,
liabilities or commitments  (contingent or otherwise) of Mountain  Resorts to or
from any past or present officer,  director,  member,  stockholder or any Person
related to,  controlling,  controlled by or under common control with any of the
foregoing.

         3.1.25 Adverse  Conditions.  Shareholders  and Mountain Resorts have no
knowledge of any present  condition,  state of facts or circumstances  which has
affected or may affect  adversely the Assets,  Assumed  Liabilities  or Mountain
Resorts  Business  or prevent  Acquisition  LLC from  carrying  on the  Mountain
Resorts Business.

         3.1.26 Full Disclosure.  This Agreement (including the Exhibits hereto)
does not contain any untrue  statement  of a material  fact or omit to state any
material fact necessary to make the statements  contained herein not misleading.
There  is no fact  known  to  Shareholders  or  Mountain  Resorts  which  is not
disclosed in this Agreement which materially  adversely  affects the accuracy of
the  representations  and  warranties  contained  in this  Agreement or Mountain
Resorts' financial condition, results of operations, business, or prospects.




                                 Page 97 of 114
<PAGE>


                                                                   Exhibit 10.45

         3.1.27 Negotiations with Other Persons. Shareholders will not, and will
not permit Mountain Resorts to, initiate, encourage the initiation by others, or
participate in any discussions or negotiations  with any other Persons  relating
to the sale or other disposition of any of the capital stock of Mountain Resorts
or any assets of Mountain Resorts, and will promptly notify the Purchaser if any
Person initiates such discussions or negotiations with them or Mountain Resorts.

         3.1.28 No Brokerage.  Neither Mountain  Resorts nor  Shareholders  have
incurred any  obligation  or liability,  contingent or otherwise,  for brokerage
fees,  finder's fees, agent's  commissions,  or the like in connection with this
Agreement or the transactions contemplated hereby.

     3.2  Representations   and  Warranties  of  the  Purchaser.   Resort  Group
represents and warrants to Mountain Resorts and Shareholders that:

         3.2.1 Due Organization: Good Standing: Power. Resort Group is a limited
liability  company  validly  existing and in good standing under the laws of the
State of Colorado.  Resort Group has all requisite corporate power to enter into
this Agreement and to perform its obligations hereunder.

         3.2.2 Authorization and Validity of Documents. The execution,  delivery
and  performance  of this  Agreement by Resort Group,  and the  consummation  by
Resort Group of the transactions contemplated hereby, have been duly and validly
authorized by Resort Group.  This Agreement has been duly executed and delivered
by Resort Group and is a legal,  valid, and binding  obligation of Resort Group,
enforceable  against Resort Group in accordance  with its terms,  except as such
enforceability  may be  limited  by general  principles  of equity,  bankruptcy,
insolvency, moratorium and similar laws relating to creditors rights generally.

         3.2.3 No  Brokerage.  Resort Group has not incurred any  obligation  or
liability,  contingent or otherwise,  for brokerage fees, finder's fees, agent's
commissions,  or the like in connection with this Agreement or the  transactions
contemplated hereby.

         3.2.4  Authority  of Anthony E. Van Baak.  Anthony E. Van Baak has been
duly authorized by all requisite  action to act on behalf of Resort Group in the
negotiation  of and  execution of this  Agreement  and to represent  Guarantors'
agreement to guarantee the Purchaser Note.

         3.2.5 Financial Statements. Correct and complete copies of the personal
financial  statements  of each of Robert  Batinovich  dated July 7, 1997  (which
include  assets held in the Robert  Batinovich  Trust UDT  2/16/90),  the Andrew
Batinovich  Trust UDT 8/3/94 dated March 31, 1997 and June 30, 1997, and Anthony
E. Van Baak dated April 30,




                                 Page 98 of 114
<PAGE>


                                                                   Exhibit 10.45

1997, have been provided to Mountain Resorts. Such financial statements are true
and correct in all material respects as of the dates thereof, and there has been
no  material  adverse  change  in  the  financial  condition  of  either  of the
Guarantors to the date of this Agreement.

         3.2.6 Full Disclosure.  This Agreement  (including the Exhibits hereto)
does not contain  any untrue  statement  of any  material  fact with  respect to
Resort Group or  Guarantors  or omit to state any material  fact with respect to
Resort Group or Guarantors  necessary to make  statements  contained  herein not
misleading.

         3.2.7  Agreement Not in Conflict.  Neither  Resort Group nor any of the
Guarantors is a party to any contract, agreement or other obligation prohibiting
the execution,  delivery and performance of this Agreement and the  consummation
of the transactions contemplated hereby.

         3.2.8  Legal  Proceedings.  There is no  action,  suit,  proceeding  or
arbitration by any Government,  Governmental  Agency or other Person (i) pending
to which Resort Group is a party, (ii) threatened  against or relating to Resort
Group,  or (iii)  challenging  Resort Group's or  Guarantors'  right to execute,
deliver,  perform  under or consummate  the  transactions  contemplated  by this
Agreement.  Resort Group is not aware of any set of facts or circumstances which
give rise to any claim  affecting the authority of Resort Group or Guarantors to
consummate the transactions provided for in this Agreement.

         3.2.9 Investment Intent. Resort Group is acquiring the LLC Interest for
investment  only,  for Resort  Group's own account,  and not with a view to, for
offer for sale or for sale in  connection  with,  the  distribution  or transfer
thereof,  and the LLC Interest is not being  purchased  for the  subdivision  or
fractionalization thereof. Resort Group has no contract, undertaking,  agreement
or  arrangement  with any  Person  to sell,  hypothecate,  donate  or  otherwise
transfer (with or without  consideration)  to any Person any of the LLC Interest
which Resort Group is acquiring hereunder, and Resort Group has no present plans
or  intention  to enter  into  any  such  contract,  undertaking,  agreement  or
arrangement.

4. Employment Contracts and Noncompetition Covenants.

     4.1 Employment  Contracts.  At the Formation Closing  Acquisition LLC shall
enter into Employment  Contracts with H. David Zabel, Glen D. Zabel and Alice T.
Klauzer in the form of Exhibits  4.1(a),  4.1(b) and 4.1(c),  respectively  (the
"Employment Contracts").  The parties to the Employment Contracts agree to abide
by the terms of their respective  Employment Contracts in operating the Mountain
Resorts Business from the Effective Date to the Closing Date and thereafter.




                                 Page 99 of 114
<PAGE>


                                                                   Exhibit 10.45

     4.2 Noncompetition  Covenants.  The parties  acknowledge and agree that the
primary purpose and intent of this Agreement is to transfer the Mountain Resorts
Business  and  all  existing  and  future  goodwill   associated   therewith  to
Acquisition  LLC.  The  parties  further  acknowledge  and agree  that  Mountain
Resorts,  H. David Zabel, Glen D. Zabel and Alice T. Klauzer have, and by virtue
of their  employment with  Acquisition LLC will continue to possess and develop,
personal contacts and relationships  with Mountain Resorts' clients,  customers,
suppliers, agents and others having business relationships with Mountain Resorts
and  Acquisition  LLC,  all of which are  intended  to inure to the  benefit  of
Acquisition LLC.  Accordingly,  at Formation Closing Mountain Resorts,  H. David
Zabel and Patricia H. Zabel  (collectively),  Glen D. Zabel and Alice T. Klauzer
shall enter into noncompetition agreements with Acquisition LLC and Resort Group
(the  "Noncompetition  Covenants").  The  Noncompetition  Covenants with Glen D.
Zabel  and  Alice  T.  Klauzer  are  contained  in their  respective  Employment
Agreements.  The Noncompetition  Covenants with Mountain Resorts, Inc., H. David
Zabel and  Patricia  H. Zabel are in the form of  Exhibits  4.2(a)  and  4.2(b),
respectively.  The  consideration  for the  Noncompetition  Covenants  shall  be
$5,000.00 each, payable by Acquisition LLC at the Formation Closing.

5. Additional Covenants of the Parties.

     5.1 Affirmative  Covenants of Mountain  Resorts and  Shareholders.  Without
limiting  any  other   provision  of  this  Agreement,   Mountain   Resorts  and
Shareholders,  jointly and severally,  covenant, promise and agree that from the
date hereof and until the Closing Mountain Resorts and the Shareholders shall:

         5.1.1  Continue to operate the Mountain  Resorts  Business  diligently,
consistent with past practices and consistent with this Agreement,  and not take
any action,  omit to take any action, or engage in any transaction other than in
acts or transactions  in the ordinary  course of business,  as such business has
been operated historically, but subject to and in accordance with the provisions
of this Agreement and the Employment Contracts.

         5.1.2  Preserve  the  Assets  and the  Mountain  Resorts  Business  and
preserve the  relationship  of the business with suppliers,  customers,  banking
institutions and others.

         5.1.3 Maintain and continue  normal and usual  maintenance,  repair and
replacement of the Assets of Mountain Resorts.

         5.1.4 Perform the Management Contracts,  Assumed Liabilities,  Permits,
Service  Contracts  and  Commitments  in  accordance  with their terms,  and not
modify,  amend, extend or renew any of such items (except renewals of Management
Contracts  in the  ordinary  course of  business)  without the prior  consent of
Resort Group.




                                Page 100 of 114
<PAGE>


                                                                   Exhibit 10.45

         5.1.5 Pay or provide for payment of all sales, use, personal  property,
social security,  withholding,  payroll,  unemployment compensation,  income and
other taxes,  assessments,  fees and public  charges due and payable by Mountain
Resorts in respect of its  business  through  the  Closing  Date and any portion
thereof applicable to any period prior to the Closing Date.

         5.1.6 Pay all wages, bonuses, commissions and other employment benefits
and sums (and all required taxes, insurance and withholding thereon),  including
all accrued vacation,  accrued sick leave, accrued benefits and accrued payments
(and pro  rata  accruals  for a  portion  of a year)  due to  Mountain  Resorts'
employees through the Closing Date.

         5.1.7  Maintain in effect all  insurance  policies  and other  employee
benefits  covering any employee claims which may be incurred through the Closing
Date.

         5.1.8  Fully  perform  and  comply  with all  covenants,  promises  and
agreements  hereunder  which are required to be  performed  or complied  with by
Mountain Resorts and/or Shareholders prior to or at the Closing.

         5.1.9 Exert their best efforts to prevent the  occurrence  of any event
which  could   result  in  any  of  Mountain   Resort's   and/or   Shareholders'
representations  and  warranties  contained in this Agreement not being true and
correct at or as of the time immediately after the occurrence of such event, and
promptly  notify Resort Group of the occurrence of any event or the discovery of
any fact which would cause any of their covenants, promises and agreements to be
breached or violated or any of their  representations  and  warranties to become
not true and correct or which could  interfere with or prevent the  consummation
of the transactions contemplated hereby.

         5.1.10 Not apply for or consent to the appointment of, or the taking of
possession by, a receiver,  custodian, trustee or liquidator of Mountain Resorts
or  any  Shareholder  or any  of  their  respective  property,  make  a  general
assignment  for the benefit of  creditors,  or file a petition  for relief under
Title 11 of the United States Code or any similar federal or state statute.

         5.1.11  (i)  Provide  Resort  Group and its  representatives  with full
access  during normal  business  hours to all of Mountain  Resorts'  properties,
assets and records,  (ii) provide Resort Group and its representatives with such
financial and operating data and other  information with respect to the Mountain
Resorts Business and properties as Resort Group shall from time to time request,
and  (iii)  permit  Resort  Group  and  its   representatives  to  consult  with
Shareholders  and Greg  Fritz.  Resort  Group  agrees to not  contact  any other
representatives,  agents or  employees  of  Mountain  Resorts  without the prior
consent of Mountain Resorts, which consent shall not be unreasonably withheld.




                                Page 101 of 114
<PAGE>


                                                                   Exhibit 10.45

         5.1.12 Take none of the  actions  described  in Section  3.1.23 of this
Agreement  or any action  which is or would cause a violation of any Laws of any
Governments or Governmental Agencies.

         5.1.13  Provide to Resort  Group  updated  Exhibits  to this  Agreement
promptly  after any event or  occurrence  which may cause any of the Exhibits to
this Agreement to be incorrect or incomplete in any respect, and promptly notify
Resort Group of any material adverse change in Mountain  Resorts,  its business,
assets or properties.

     5.2  Affirmative  Covenants  of Resort  Group.  Without  limiting any other
provision of this Agreement,  Resort Group  covenants,  promises and agrees that
from the date hereof and until the Closing it shall:

         5.2.1  Fully  perform  and  comply  with all  covenants,  promises  and
agreements  hereunder  which are required to be  performed  or complied  with by
Resort Group prior to or at the Closing.

         5.2.3  Exert its best  efforts to prevent the  occurrence  of any event
which  could  result in any of Resort  Group's  representations  and  warranties
contained  in this  Agreement  not being  true and  correct at or as of the time
immediately  after the occurrence of such event,  and promptly  notify  Mountain
Resorts of the  occurrence of any event or the discovery of any fact which would
cause any of their covenants, promises and agreements to be breached or violated
or any of their representations and warranties to become not true and correct or
which could  interfere  with or prevent  the  consummation  of the  transactions
contemplated hereby.

         5.2.4 Promptly notify Mountain  Resorts of any material  adverse change
in Resort Group's business,  assets or properties or any material adverse change
in the financial condition of the Guarantors.

     5.4 Confidential Information.  Mountain Resorts and Shareholders on the one
hand, and Resort Group on the other hand, each acknowledge that in the course of
the  transaction  contemplated  by this  Agreement it may receive from the other
information  that is of a  confidential  or  proprietary  nature  ("Confidential
Information").  Each party agrees to hold such  Confidential  Information in the
strictest confidence and agrees that all Confidential Information received by it
from  another  party shall not at any time or in any manner be utilized  for its
advantage or disclosed by it to third parties except as the disclosing party may
otherwise  agree or as required by law. The parties agree to restrict  access to
Confidential  Information to those of their  representatives  or agents directly
participating  in the  decision-making  process  with regard to the  transaction
contemplated by this Agreement and who acknowledge  this  restriction on the use
of Confidential  Information.  In the event that the transaction contemplated by
this Agreement is not consummated, any




                                Page 102 of 114
<PAGE>


                                                                   Exhibit 10.45

party who has  received  Confidential  Information  will,  at the request of the
party  providing  such  information,  return the  Confidential  Information  and
certify that it has destroyed all copies of such information.

6. Closing.

     6.1  Formation  Closing.  The closing of the formation of  Acquisition  LLC
(including the transfer of the Assets,  Assumed Liabilities and Mountain Resorts
Business to  Acquisition  LLC along with the  initial  capital  contribution  by
Resort  Group as  contemplated  by Section 1 of this  Agreement)  is referred to
throughout  this  Agreement as the  "Formation  Closing." The Formation  Closing
shall take place at Weiss, Van Scoyk & Coe, LLP, Steamboat Springs, Colorado, at
1:00 p.m. on August 1, 1997. The time,  place and date of the Formation  Closing
are referred to  throughout  this  Agreement as the  "Formation  Closing  Date."
Without limiting any other provision of this Agreement, at the Formation Closing
the following shall occur:

         (i)  The  Assets  shall  be  assigned,  transferred  and  delivered  to
     Acquisition LLC by the execution and delivery of the Transfer Documents;

         (ii)  Resort  Group shall pay $20,200 to  Acquisition  LLC  ($20,000 of
     which may be applied to the payments referenced in subsection (vi) below;

         (iii)   Acquisition  LLC  shall  assume  the  payment  of  the  Assumed
     Liabilities;

         (iv)  Mountain  Resorts and Resort Group shall enter into the Operating
     Agreement;

         (v) Acquisition LLC, on one hand, and H. David Zabel, Glen D. Zabel and
     Alice T.  Klauzer,  on the other  hand,  shall  enter  into the  Employment
     Contracts;  and (vi) Acquisition LLC, on one hand, and Mountain Resorts, H.
     David Zabel and Patricia H. Zabel  (collectively),  Glen D. Zabel and Alice
     T.  Klauzer,  respectively,  on  the  other  hand,  shall  enter  into  the
     Noncompetition  Agreements,  and in consideration  therefor Acquisition LLC
     shall pay $5,000 to each of Mountain  Resorts,  H. David Zabel and Patricia
     H. Zabel (collectively), Glen D. Zabel and Alice T. Klauzer.

     6.2  Purchase  Closing.  The  closing of the  purchase  and sale of the LLC
Interest from Mountain  Resorts to Resort Group as  contemplated by Section 2 of
this  Agreement  is referred  to  throughout  this  Agreement  as the  "Purchase
Closing." The Purchase Closing




                                Page 103 of 114
<PAGE>


                                                                   Exhibit 10.45

shall take place at Weiss, Van Scoyk & Coe, LLP, Steamboat Springs, Colorado, at
3:00 p.m. on August 1, 1997.  The time,  place and date of the Purchase  Closing
are referred to  throughout  this  Agreement  as the  "Purchase  Closing  Date."
Without limiting any other provision of this Agreement,  at the Purchase Closing
the following shall occur:

         (i) Resort Group shall deliver to Mountain  Resorts the Cash Portion of
     the Purchase Price in currently available funds;

         (ii) Resort Group shall deliver to Mountain Resorts the Purchaser Note,
     including the Guaranty and the Pledge;

         (iii) Mountain Resorts shall deliver to Resort Group the Assignment;

         (iv) Robert Batinovich, the Robert Batinovich Trust UDT 2/16/90, Andrew
     Batinovich  and the Andrew  Batinovich  Trust UDT 8/3/94  shall  deliver to
     Mountain Resorts a guarantor  agreement in the form of Exhibit 6.2(iv) (the
     "Guarantor Agreement"); and

         (v) Mountain  Resorts and  Acquisition  LLC shall deliver to each other
     executed  copies of the Closing  Balance  Sheet and the Closing  Settlement
     Summary approved by the parties.

     6.3 Closing.  The completion of both the Formation Closing and the Purchase
Closing is referred to throughout  this  Agreement as the  "Closing."  The time,
place and date of the Closing are referred to throughout  this  Agreement as the
"Closing  Date."  Notwithstanding  any other  provision of this Agreement or the
Ancillary  Agreements,  neither this Agreement,  the Ancillary Agreements or the
transactions  contemplated  thereby shall be completed or effective  unless both
the Formation  Closing and the Purchase  Closing (i.e.,  the Closing) shall have
occurred.

     6.4  Mountain  Resorts' and  Shareholders'  Conditions  to Close.  Mountain
Resorts' and  Shareholders'  obligation to close the  transactions  contemplated
hereby  at the  Closing  shall  be  subject  to the  complete  satisfaction  and
fulfillment of all of the following  conditions  precedent,  any or all of which
may be waived in whole or in part by the benefited  party (but no such waiver of
any such  condition  precedent  shall be or constitute a waiver of any covenant,
promise,  agreement,  representation  or warranty  made by Resort  Group in this
Agreement):

         6.4.1 All  representations  and warranties made by Resort Group in this
Agreement shall be complete and accurate at and as of the Closing on the Closing
Date,  and Resort Group shall deliver a  certificate  to that effect to Mountain
Resorts at Closing.




                                Page 104 of 114
<PAGE>


                                                                   Exhibit 10.45

         6.4.2 All covenants,  promises and  agreements  made by Resort Group in
this  Agreement and all other actions  required to be performed or complied with
by Resort Group under this Agreement  prior to or at the Closing shall have been
fully performed or complied with by Resort Group, and Resort Group shall deliver
to Mountain Resorts a certificate to that effect at Closing.

         6.4.3 There shall not have occurred any material  adverse change to the
financial   condition  of  the  Guarantors,   and  Guarantors  shall  deliver  a
certificate to that effect to Mountain Resorts at Closing.

         6.4.4 There shall not have occurred any material  adverse change to the
financial  condition  of Resort  Group,  or any  other  occurrence  which  would
materially  and adversely  affect Resort  Group's  ability to perform any of its
obligations under this Agreement or the purchaser Note.

         6.4.5 Mountain Resorts and Shareholders shall have approved the Closing
Balance Sheet and the Closing Settlement Summary.

     6.5 Resort Group's Conditions to Close.  Resort Group's obligation to close
the  transactions  contemplated  hereby at the  Closing  shall be subject to the
complete  satisfaction  and  fulfillment  of  all of  the  following  conditions
precedent,  any or all of  which  may be  waived  in  whole  or in  part  by the
benefited party (but no such waiver of any such condition  precedent shall be or
constitute  a waiver of any  covenant,  promise,  agreement,  representation  or
warranty made by Mountain Resorts or the Shareholders in this Agreement):

         6.5.1 All  representations  and warranties made by Mountain Resorts and
Shareholders  in this Agreement  shall be complete and accurate at and as of the
Closing on the Closing Date, and Mountain Resorts and Shareholders shall deliver
to Resort Group a certificate to that effect at Closing.

         6.5.2 All covenants,  promises and agreements made by Mountain  Resorts
and  Shareholders  in  this  Agreement  and all  other  actions  required  to be
performed  or complied  with by Mountain  Resorts  and  Shareholders  under this
Agreement prior to or at the Closing shall have been fully performed or complied
with by Mountain Resorts and Shareholders, and Mountain Resorts and Shareholders
shall deliver to Resort Group certificates to that effect at Closing.

         6.5.3  Resort  Group  shall have  received  all things  required  to be
delivered  or furnished  to Resort  Group by Mountain  Resorts and  Shareholders
hereunder prior to or at the Closing.




                                Page 105 of 114
<PAGE>


                                                                   Exhibit 10.45

         6.5.4 There shall not have occurred any material  adverse change in the
business, assets, liabilities or prospects of Mountain Resorts

         6.5.5 Resort Group shall have  approved the Closing  Balance  Sheet and
the Closing Settlement Summary.

7. Indemnification.

     7.1 Mountain Resorts shall defend,  indemnify and hold harmless Acquisition
LLC and Resort Group from and against any and all claims, threats,  liabilities,
taxes,  interest,  fines,  penalties,  suits,  actions,  proceedings,   demands,
damages,  losses, costs and expenses (including attorneys' and experts' fees and
court  costs) of every kind and nature  arising out of,  resulting  from,  or in
connection with:

         7.1.1 Any misrepresentation or breach by Mountain Resorts or any of the
Shareholders  or any of their  representations  or warranties  contained in this
Agreement.

         7.1.2 Any  nonfulfillment,  failure  to  comply  or breach by  Mountain
Resorts or any of the Shareholders of or with any covenant, promise or agreement
of Mountain Resorts or any of the Shareholders contained in this Agreement.

         7.1.3 Any  debts,  obligations,  duties  and  liabilities  of  Mountain
Resorts  or any of the  Shareholders,  except  and  excluding  only the  Assumed
Liabilities  to the  extent  the  Assumed  Liabilities  are  the  obligation  of
Acquisition LLC pursuant to this Agreement.

         7.1.4 Any matter,  act, thing or occurrence caused by or resulting from
any act or omission of Mountain  Resorts or any of the  Shareholders on or prior
to the date of Closing or the operation of the Mountain  Resorts  Business on or
prior to the Effective Date.

     7.2  Indemnification  by  Acquisition  LLC.  Acquisition  LLC shall defend,
indemnify  and hold  harmless  Mountain  Resorts  from and  against  any and all
claims, threats, liabilities, taxes, interest, fines, penalties, suits, actions,
proceedings,  demands, damages, losses, costs and expenses (including attorneys'
and  experts'  fees and court  costs) of every kind and nature  arising  out of,
resulting from, or in connection with:

         7.2.1 Any matter,  act, thing or occurrence caused by or resulting from
any act or omission of  Acquisition  LLC  (including  acts or  omissions  of the
employees referred to in Section  1.3.1(iii)) from and after the Closing or from
the operation of the Mountain Resorts Business from and after the Effective Date
to the Closing,  provided  that the  foregoing  indemnity  shall not include any
matter resulting in whole or in part from Mountain Resorts' or any Shareholder's
involvement in the activities and operations of Acquisition  LLC or the Mountain
Resorts Business from and after the Effective Date, as members or employees of




                                Page 106 of 114
<PAGE>


                                                                   Exhibit 10.45

Acquisition  LLC,  which  indemnity  shall be governed by the  provisions of the
Operating  Agreement  and the  provisions  of law  applicable  to employers  and
employees generally.

         7.2.2 Any  nonfulfillment,  failure to comply or breach by Resort Group
of or with any covenant,  promise or agreement of Resort Group contained in this
Agreement.

     7.3 Indemnification by Resort Group.  Resort Group shall defend,  indemnify
and  hold  Mountain  Resorts  from  and  against  any and all  claims,  threats,
liabilities,  taxes, interest,  fines, penalties,  suits, actions,  proceedings,
demands,  damages, losses, costs and expenses (including attorneys' and experts'
fees and court costs) of every kind and nature arising out of,  resulting  from,
or in connection with:

         7.3.1 Any  misrepresentation  or  breach by Resort  Group of any of its
representations or warranties contained in this Agreement.

         7.3.2 Any  nonfulfillment,  failure to comply or breach by Resort Group
of or with any covenant,  promise or agreement of Resort Group contained in this
Agreement.

     7.4 Defense of Claims. In the event of any claim, threat,  liability,  tax,
interest, fine, penalty, suit, action, proceeding, demand, damage, loss, cost or
expense  with  respect  to which  indemnity  is or may be sought  hereunder  (an
"Indemnity Claim"), the indemnified party shall promptly notify the indemnifying
party of such  Indemnity  Claim,  specifying in reasonable  detail the Indemnity
Claim and the  circumstances  under which it arose. The  indemnifying  party may
elect to assume the defense of such Indemnity Claim, at its expense,  by written
notice to the  indemnified  party  given  within 10 days after the  indemnifying
party receives notice of the Claim,  and the  indemnifying  party shall promptly
engage  counsel  reasonably  acceptable to the  indemnified  party to direct and
conduct such defense;  provided,  however, that the indemnified party shall have
the right to engage its own counsel,  at its own expense, to participate in such
defense.  In the event the  indemnifying  party  does not so elect to assume the
defense of such Indemnity  Claim in the manner  specified  above,  or if, in the
reasonable  opinion of  counsel to the  indemnified  party,  there are  defenses
available to the  indemnified  party which are  different  from or additional to
those  available  to the  indemnifying  party or which  give rise to a  material
conflict  between the defense of the indemnified  party and of the  indemnifying
party,  then upon notice to the indemnifying  party,  the indemnified  party may
elect to engage separate  counsel to conduct its defense,  at the expense of the
indemnifying  party,  and the  indemnifying  party  shall  not have the right to
direct or conduct such defense.

         7.4.1 In the event the  indemnifying  party  assumes the defense of any
Indemnity  Claim,  it  may at any  time  notify  the  indemnified  party  of its
intention to settle,  compromise  or satisfy such  Indemnity  Claim and may make
such  settlement,  compromise or satisfaction (at its own expense) unless within
twenty (20) days after the giving of such




                                Page 107 of 114
<PAGE>


                                                                   Exhibit 10.45

notice the  indemnified  party shall give notice of its  intention to assume the
defense of the Indemnity Claim, in which event the  indemnifying  party shall be
relieved of its duty hereunder to indemnify the  indemnified  party.  Unless the
indemnified  party  shall  have given the notice  referred  to in the  preceding
sentence, (i) the indemnified party shall not consent to or make any settlement,
compromise or satisfaction with respect to the Indemnity Claim without the prior
written  consent  of  the  indemnifying   party,  which  consent  shall  not  be
unreasonably withheld, and (ii) any settlement,  compromise or satisfaction made
by the  indemnifying  party with respect to such Indemnity Claim shall be deemed
to have been consented to by and shall be binding upon the indemnified party.

8. Miscellaneous.

     8.1  Survival of  Representations  Warranties  and  Agreements.  All of the
representations,  warranties,  covenants, promises and agreements of the parties
contained in this  Agreement  (or in any  document  delivered or to be delivered
pursuant to this Agreement or in connection  with the Closing) shall survive the
execution,  acknowledgment,  sealing  and  delivery  of this  Agreement  and the
consummation of the transactions contemplated hereby.

     8.2 Certain Definitions.  As used throughout this Agreement,  the following
terms have the following meanings:

         "Affiliate"  has  the  meaning  ascribed  to  such  term  in  Rule  405
promulgated  under  the  Securities  Act,  as such rule is in effect on the date
hereof.

         "Bankruptcy  Code" means the United States  Bankruptcy Code, 11 U.S. C.
Section 101 et seq.,  and all future  acts  supplemental  thereto or  amendatory
thereof.

         "Governing  Documents"  means,  with  respect  to  a  corporation,  its
articles of incorporation, bylaws or similar documents, as amended to date; with
respect to a limited liability company, its articles of organization,  operating
agreement  and similar  documents,  as amended to date;  and with respect to any
other entity, its organizational and governing instruments, no matter now named.

         "Person" means an individual,  partnership,  limited liability company,
corporation,  trust,  unincorporated  organization,  government,  or  agency  or
political subdivision of a government.

         "SEC"  means  the  Securities  and  Exchange  Commission,  or any other
Federal agency at the time administering the Securities Act or the Exchange Act.




                                Page 108 of 114
<PAGE>


                                                                   Exhibit 10.45

         "Securities  Act"  means the  Securities  Act of 1933,  or any  similar
Federal  statute,   and  the  rules  and  regulations  of  the  SEC  promulgated
thereunder, all as the same shall be in effect at the relevant time.

     8.3 Notices. All notices, demands, consents, and other communications which
are  required or may be given under this  Agreement  (collectively,  a "Notice")
shall be in writing and shall be given either (a) by personal  delivery,  or (b)
by certified or registered U.S. mail, return receipt requested, postage prepaid,
to the following addresses:

If to Mountain Resorts or any of the Shareholders as applicable:

Mountain Resorts, Inc.
H. David Zabel
Patricia H. Zabel
Glen D. Zabel
Alice T. Klauzer
41225 Routt County Road 36
P.O. Box 773742
Steamboat Springs, CO 80477

with a courtesy copy to:

Sarah D. Claassen, Esquire
P.O. Box 774064
Steamboat Springs, CO 80477


If to Resort Group:

Resort Group, LLC
810 Lincoln Avenue, Suite 200
P.O. Box 774671
Steamboat Springs, CO 80477
Attention: Anthony E. Van Baak

and

GPA, Ltd.
400 South El Camino Real, Suite 1100
San Mateo, CA 94402
Attention: Andrew Batinovich




                                Page 109 of 114
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                                                                   Exhibit 10.45

with a courtesy copy to:

Weiss, Van Scoyk & Coe, LLP
P.O. Box 880550
Steamboat Springs, CO 80488

or to such other address of which written notice in accordance with this Section
8.3 shall have been  provided  by such  party.  Notices may only be given in the
manner  hereinabove  described in this Section 8.3 and shall be deemed  received
when given in such manner.

     8.4 Entire Agreement. This Agreement (including the Exhibits hereto and the
Ancillary  Agreements)  constitutes  the full,  entire and integrated  agreement
between  the parties  hereto with  respect to the  subject  matter  hereof,  and
supersedes all prior negotiations, correspondence, understandings and agreements
among the parties hereto respecting the subject matter hereof.  All Exhibits are
incorporated into this Agreement by reference.

     8.5  Assignability.  This  Agreement  shall not be  assignable by any party
hereto without the prior written consent of the other parties hereto.

     8.6 Binding Effect;  Benefit.  This Agreement shall inure to the benefit of
and be binding upon the parties  hereto,  each other  Person who is  indemnified
under any provision of this Agreement,  and their respective heirs, personal and
legal  representatives,  guardians and  successors.  Nothing in this  Agreement,
express or implied,  is  intended  to confer  upon any other  Person any rights,
remedies, obligations, or liabilities.

     8.7 Severability.  Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable shall be ineffective
to the extent of such prohibition or  unenforceability,  without invalidating or
rendering unenforceable the remaining provisions of this Agreement.

     8.8  Amendment;  Waiver.  No  provision of this  Agreement  may be amended,
waived,  or otherwise  modified  without the prior written consent of all of the
parties  hereto.  No action  taken  pursuant to this  Agreement,  including  any
investigation  by or on behalf of any  party,  shall be deemed to  constitute  a
waiver by the party taking such action of  compliance  with any  representation,
warranty, covenant or agreement herein contained. The waiver by any party hereto
of a breach of any provision or condition  contained in this Agreement shall not
operate or be  construed  as a waiver of any  subsequent  breach or of any other
conditions hereof.




                                Page 110 of 114
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                                                                   Exhibit 10.45

     8.9 Section  Headings.  The section and other  headings  contained  in this
Agreement  are for  reference  purposes only and shall not affect the meaning or
interpretation of this Agreement.

     8.10  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of which shall be deemed to be an original  and all of which
together shall be deemed to be one and the same instrument.

     8.11  Applicable Law. This Agreement is made and entered into, and shall be
governed by and construed in accordance with, the laws of the State of Colorado.

     8.12 Remedies.

         8.12.1  General.  The  parties  hereto  acknowledge  that the  Mountain
Resorts  Business which is the subject matter of this Agreement is unique;  that
any claim for monetary damages may not constitute an adequate  remedy;  and that
it may therefore be necessary for the protection of the parties and to carry out
the  terms  of this  Agreement  to apply  for the  specific  performance  of the
provisions  hereof.  It is  accordingly  hereby  agreed by all  parties  that no
objection to the form of the action or the relief  prayed for in any  proceeding
for specific  performance  of this  Agreement  shall be raised by any party,  in
order that such relief may be expeditiously  obtained by an aggrieved party. All
parties may proceed to protect and enforce  their rights  hereunder by a suit in
equity, transaction at law or other appropriate proceeding, whether for specific
performance  or for an injunction  against a violation of the terms hereof or in
aid of the exercise of any right,  power or remedy granted  hereunder or by law,
equity or statute or otherwise. No course of dealing and no delay on the part of
any party hereto in  exercising  any right,  power or remedy shall  operate as a
waiver  thereof or otherwise  prejudice its rights,  powers or remedies,  and no
right,  power or remedy  conferred hereby shall be exclusive of any other right,
power or remedy  referred  to herein or now or  hereafter  available  at law, in
equity, by statute or otherwise.

         8.12.2 Right of Offset and Suspension of Payment.  Notwithstanding  any
other provision of this Agreement,  in the event (i) any of the  Shareholders or
Mountain Resorts breach any of their  representations or warranties,  or default
in the performance of any of their obligations pursuant to this Agreement or the
Noncompetition  Covenants;  (ii) it is necessary for  Acquisition  LLC or Resort
Group to pay after  Closing any  obligation  of  Mountain  Resorts or any of the
Shareholders  (excluding  only the Assumed  Liabilities  and  obligations of the
Mountain Resorts Business after the Effective  Date);  (iii)  Acquisition LLC or
Resort  Group is entitled  to be  indemnified  or  defended by Mountain  Resorts
pursuant to Section 7; or (iv) a claim is made against Acquisition LLC or Resort
Group which  Acquisition  LLC or Resort Group,  in good faith,  believes will be
within clauses (i), (ii) or (iii) above,  then  Acquisition  LLC or Resort Group
may give notice to Mountain Resorts of




                                Page 111 of 114
<PAGE>


                                                                   Exhibit 10.45

the loss,  claim,  payment,  action or other matter,  and Mountain Resorts shall
have a reasonable  time under the  circumstances,  but not to exceed thirty (30)
days,  in which to pay the loss,  expense,  claim or matter in  question or take
other action  satisfactory  to pay,  satisfy or contest (to a  conclusion)  such
loss,  claim,  action or other matter. If Mountain Resorts fails to do so or the
third-party  claimant prevails,  Acquisition LLC and Resort Group shall have the
right (but not the  obligation),  without  further  notice,  to pay or otherwise
satisfy such  expense,  claim or other matter in the amount  necessary to remove
any threat, liability or adverse action involving Acquisition LLC, Resort Group,
or their  assets,  and in addition to all other  available  rights and remedies,
Resort Group may withhold and deduct all amounts expended from the next payments
due pursuant to the Purchaser  Note or any note given in payment for the Put the
amount of any such loss, cost or expense,  including reasonable attorneys' fees,
incurred or suffered by Acquisition LLC or Resort Group.  Acquisition LLC and/or
Resort Group may exercise this right of offset  pursuant to this Section without
any prior judicial determination with respect thereto. Further, Resort Group may
suspend  payment of amounts owing under the Purchaser Note or the Put during any
period  that a breach  or  violation  of this  Agreement  or the  Noncompetition
Covenants by Mountain Resorts or any Shareholder.  The foregoing remedies are in
addition  to, and not in lieu of, any other  rights of offset or other  remedies
available  to  Acquisition  LLC or Resort  Group  under this  Agreement  and the
Ancillary Agreements, at law or otherwise.

     8.13 Further  Assurances.  Mountain  Resorts and  Shareholders  jointly and
severally  agree  to  execute  and  deliver,  after  the  date  hereof,  without
additional  consideration,  such further assurances,  instruments and documents,
and to take such  further  actions,  as Resort  Group  may  request  in order to
fulfill the intent of this Agreement and the transactions contemplated hereby.

     8.14 Enforcement. Venue for any action brought to enforce the terms of this
Agreement may be in the District  Court of Routt  County,  Colorado or any other
place where venue is proper at the election of the enforcing party. In the event
it is necessary to enforce the terms of this  Agreement,  the  prevailing  party
shall be entitled to an award of its attorneys' fees and costs.

     8.1S Tax Risks.  Mountain Resorts and Shareholders  have consulted with and
received  advice  from their own tax  advisers  with  respect to the federal and
state income tax consequences to them of the  transactions  contemplated by this
Agreement.  Without  limiting any other  provision of this  Agreement,  Mountain
Resorts  and  Shareholders  acknowledge  and  agree  that no  representation  or
warranty  of any nature has been made to them by Resort  Group,  its  members or
their  representatives  and  advisers  regarding  the  tax  consequences  of the
transactions contemplated by this Agreement. In entering into this Agreement and
consummating  the  transactions   contemplated  hereby,   Mountain  Resorts  and
Shareholders  are relying solely on advice received from their own tax advisers.
Mountain  Resorts  and  Shareholders  further  acknowledge  that  they have been
advised as to the tax risks of the




                                Page 112 of 114
<PAGE>


                                                                   Exhibit 10.45

transactions  contemplated by this Agreement, and that the consideration payable
by Resort Group pursuant to this Agreement has been adjusted to fully compensate
them for tax risks.

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement  under seal, with the intention of making it a sealed  instrument,  on
the date first above written.


SHAREHOLDERS:                           /s/ H. David Zabel
                                        H. David Zabel

                                        /s/ Patricia H. Zabel
                                        Patricia H. Zabel

                                        /s/ Glen D. Zabel
                                        Glen D. Zabel

                                        /s/ Alice T. Klauzer
                                        Alice T. Klauzer


MOUNTAIN RESORTS:
                                        MOUNTAIN RESORTS, INC., a
                                        Colorado corporation
                                        By /s/ H. David Zabel, President
                                             H. David Zabel, President


ACQUISITON LLC:                         MOUNTAIN RESORTS ACQUISITION, LLC,
                                        A Colorado limited liability company

                                        By /s/ Anthony E. Van Baak
                                            Anthony E. Van Baak,
                                            General Manager




                                Page 113 of 114
<PAGE>


                                                                   Exhibit 10.45


RESORT GROUP:
                                        RESORT GROUP, LLC, a Colorado
                                        limited liability company

                                        By /s/ Anthony E. Van Baak
                                           Anthony E. Van Baak,
                                           General Manager


                                Page 114 of 114
<PAGE>