CONSTRUCTION LOAN AGREEMENT

         This  CONSTRUCTION  LOAN  AGREEMENT  is made by and between THE CANYONS
RESORT PROPERTIES,  INC., a Maine corporation  authorized to do business in Utah
(collectively the "Borrower") having its principal place of business and mailing
address at Sunday River Access Road, P.O. Box 450, Bethel,  ME 04217 and KEYBANK
NATIONAL  ASSOCIATION,  a national  bank with a place of  business at 70 Federal
Street, Boston, Massachusetts 02110 (the "Lender" or "Bank").

SECTION 1.  DEFINITIONS AND RULES OF INTERPRETATION.

         SECTION 1.1.  Definitions.  The following terms shall have the meanings
set forth in this SECTION 1, in the other  provisions  of this  Agreement or the
other Loan Documents referred to below:

         Affiliate(s).  Any Person  directly or indirectly,  through one or more
intermediaries, controlling, controlled by or under common control with Borrower
or  Guarantor,  which,  in the case of a Person  which is a  partnership,  shall
include each of the constituent partners thereof. The term "control," as used in
the immediately  preceding  sentence,  means, with respect to a Person that is a
corporation, the right to the exercise, directly or indirectly, of more than 50%
of the voting rights or controlling interests  attributable to the shares of the
controlled corporation, and, with respect to a Person that is not a corporation,
the  possession,  directly  or  indirectly,  of the power to direct or cause the
direction of the management or policies of the controlled Person.

         Advance.  Any  disbursement  of the  proceeds of the Loan made or to be
made by the Lender pursuant to this Agreement.

         Agreement. This Agreement, including the Schedules and Exhibits hereto.

         Appraisal.  An appraisal of the value of the Project on an as completed
basis,  determined on a "fair market value" basis accepted by Lender,  performed
by a qualified independent appraiser approved by the Lender.

         Assignment of Declarant Rights. The Collateral  Assignment of Declarant
Rights pursuant to which the Borrower assigns to Lender  Borrower's  interest as
declarant in and to the Condominium Declaration under the Project, to be in form
and substance satisfactory to the Lender, and to be recorded at the recording of
the Condominium Declaration.

         Assignment of Income and Revenues. The Collateral Assignment of Income,
Revenues and Rentals pursuant to which the Borrower assigns to Lender Borrower's
interest as  operator,  manage,  and lessor of the  Mortgaged  Property  and the
Project, to be in form and substance satisfactory to the Lender.

         Assignment of Project Documents.  The Collateral  Assignment of Project
Documents  pursuant to which the Borrower assigns and grants a security interest
to Lender in the Architect's Contract,  the Construction Contract, the Plans and
Specifications,  and  the  Project  Approvals,  to  be  in  form  and  substance
satisfactory to the Lender.

         Assignment of Declarant Rights. The Collateral  Assignment of Declarant
Rights pursuant to which the Borrower assigns to Lender  Borrower's  interest as
declarant in and to the Condominium Declaration under the Project, to be in form
and substance satisfactory to the Lender, and to be recorded at the recording of
the Condominium Declaration.

         Borrower's Architect . IBI Group Architects,  Engineers and Planners of
18401 Von Karman Avenue - Suite 110, Irvine, CA 92612

         Closing  Date.  The  first  date on which the  conditions  set forth in
SECTION 11 have been satisfied and Advances are to be made.

         Collateral.  All of (a)  the  property,  rights  and  interests  of the
Borrower  that are or are  intended  to be  subject to the  Security  Documents,
including without limitation, the Project and the Mortgaged Property.

         Commercial  Unit.  The  commercial  condominium  unit to be retained by
Borrower  containing  38,370 square feet of commercial space consisting of front
desk/administrative areas, restaurant, shopping and commercial areas.

         Completion Date. March 30, 2000.

         Condominium Declaration. The document creating a condominium regime for
the Mortgaged Property to be established in accordance with the Utah Condominium
Act  Title  57,  Chapter  8 of the Utah Code  Annotated,  and  establishing  the
condominium hotel known as the "Sundial Lodge at The Canyons" consisting of: 149
residential  Condominium Units and one Commercial  Condominium Units, subject to
the execution of a Limited Joinder by Lender and the Junior Creditor.

         Condominium   Units.  The  condominium  units  with  their  appurtenant
interest  in the  common  areas and  facilities  created  under the  Condominium
Declaration.

         Construction  Contract.  The  construction  contract  entered into with
Contractor providing for the construction of the Improvements.

         Construction Schedule. The schedules by trade, job and subcontractor of
the estimated  dates of  commencement  and  completion of  construction  for the
Improvements  subject to the approval of the Lender and to be attached hereto as
Exhibit A.

         Construction  Inspector.  Construction  Risk  Consultants  of Salt Lake
City,  Utah or, at the  Lender's  option,  either an officer or  employee of the
Lender or other consulting architects,  engineers or inspectors appointed by the
Lender from time to time.

         Contingency Reserve. The amount(s) allocated as contingency  reserve(s)
in the Project  Budget in the amount of One Million Three  Hundred  Eighty Three
Thousand Eight Hundred  ($1,383,800.00),  to be advanced only in accordance with
provisions of SECTION 2.6 hereof.

         Contractor.  Okland  Construction  Company,  Inc.  of 1978  South  West
Temple, Salt Lake City, Utah.

         Debt   Subordination    Agreement.   The   agreement   from   Guarantor
subordinating  its loans and claims with respect to advances and transfers  made
to or for the benefit of Borrower including without  limitation,  the $4,000,000
in land, cash and prepaid expenses  provided by Guarantor,  such agreement to be
in form and substance acceptable to Lender.

         Default. A condition or event which would, with the giving of notice or
lapse of time or both, as defined in the Security  Deed,  constitute an Event of
Default.

         Direct Costs. The costs of the labor,  materials,  fixtures,  machinery
and equipment  required to  construct,  equip and complete the  Improvements  in
accordance with the Plans and Specifications.

         Disbursement   Schedule.  The  schedule  of  the  amounts  of  Advances
anticipated  to  be   requisitioned  by  the  Borrower  each  month  during  the
construction of the  Improvements  (including an itemization of Direct Costs and
Indirect Costs),  as approved by the Lender and to be attached hereto as Exhibit
B.

         Drawdown Date. The date on which any Advance is made or is to be made.

         Draw Request. With respect to each Advance, the Borrower's  Requisition
for such  Advance,  and documents  required by this  Agreement as a condition to
such Advance.

         Easement  Agreements  means the (i) Easement  Agreement dated August 1,
1998 entered into between Junior Creditor and American Skiing Resort  Properties
Inc. as assigned to Borrower duly recorded,  (ii) the Development  Agreement for
The Canyons  Specially  Planned  Area (SPA) Plan  entered  into ASC Utah,  Inc.,
Guarantor,  Junior  Creditor,  and  others  dated  July 14,  1998 and  (iii) The
Development  Improvements Agreement for The Canyons Resort by and between Summit
County,  a  political  subdivision  of the  State  of Utah and  Guarantor  dated
September 14, 1998, and (iv) The Canyons  Village Resort Easement and Management
Agreement to be entered  into among ASC Utah,  Inc.,  Guarantor  and Borrower in
form and substance acceptable to Lender all to be recorded in the Summit County,
Utah Public Records to the extent required to render such agreements enforceable
against all present and future owners,  with releases or subordinations from all
other parties with liens or interests  therein,  all to be in form and substance
acceptable to Lender.

         Environmental Laws.  As defined in the Security Deed.

         Event of Default.  See SECTION 13.1.

         Generally   accepted   accounting   principles.   Principles  that  are
consistent  with  the  principles   promulgated  or  adopted  by  the  Financial
Accounting  Standards Board and its predecessors,  in effect for the fiscal year
ended  on the  Balance  Sheet  Date  and  to the  extent  consistent  with  such
principles,  the prior  accounting  practices of the  Borrower  reflected in its
financial statements.

         Governmental  Authority.  The United  States of  America,  the State of
Utah,  any political  subdivision  thereof,  the County of Summit,  Utah and any
agency, authority, department,  commission, board, bureau, or instrumentality of
any of them.

          Guarantor  shall mean American  Skiing  Company Resort  Properties,  a
Maine corporation.

         Guaranty  shall  mean both the  Limited  Guaranty  of  Payment  and the
Unconditional  Guaranty  of Project  Completion  and  Payment  of Project  Costs
pursuant to which Guarantor guarantees to the Lender the payment and performance
of the  Obligations as set forth  therein,  each such Guaranty to be in form and
substance  satisfactory to the Lender but which shall be limited as set forth in
the  Guaranty.  If not paid when due,  the  Limited  Guaranty  shall  require in
addition the payment of accruing  interest and costs as described in the Limited
Guaranty.

          Improvements.  Collectively, the buildings and improvements, drainage,
utility,  infrastructure and all other common  improvements to be constructed on
or about the Land in accordance with the Plans and Specifications.

         Indebtedness.  All  obligations,  contingent  and  otherwise,  that  in
accordance with generally  accepted  accounting  principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made  by  footnotes  thereto,  including  in any  event  and  whether  or not so
classified:  (a) all debt and similar  monetary  obligations,  whether direct or
indirect;  (b)  all  liabilities  secured  by  any  mortgage,  pledge,  security
interest,  lien,  charge,  or other  encumbrance  existing on property  owned or
acquired  subject  thereto,  whether or not the liability  secured thereby shall
have been assumed;  and (c) all guarantees,  endorsements  and other  contingent
obligations whether direct or indirect in respect of indebtedness of others.

         Indemnity  Agreement.   The  Indemnity  Agreement  Regarding  Hazardous
Materials  pursuant to which the Borrower  agrees to  indemnify  the Lender with
respect to Hazardous  Materials and Environmental Laws, such Indemnity Agreement
to be in form and substance satisfactory to the Lender.

         Indirect  Costs.  Mean and include  title  insurance  premiums,  survey
charges,  engineering  fees,  architectural  fees, real estate taxes,  appraisal
costs,  commitment  fees and  interest  payable  to the  Lender  under the Loan,
premiums for insurance,  marketing,  advertising  and leasing  costs,  brokerage
commissions, legal fees, accounting fees, overhead and administrative costs, and
all other  expenses which are  expenditures  relating to the Project and are not
Direct Costs.

         Junior  Creditor.  Wolf Mountain Resort L.C., a Utah limited  liability
company with a place of business in Park City, Utah.

         Land. The real property  located on 1.902 acre site located on or about
The Canyons  Drive,  Snyderville,  Summit  County,  Utah known as "Sundial Lodge
Buildings 8 and 9" as described in Exhibit A to the Security Deed, together with
the Easement  Agreements  which shall  include  easements  for access,  parking,
construction and construction  staging and storage,  signage, ski on and ski off
access,  utilities,   drainage  and  other  purposes  in  order  to  permit  the
functioning of the Improvements as a condominium ski area hotel.

         Lease.  Leases,  licenses  and  agreements,  whether  written  or oral,
relating to the use or occupation of space in the Improvements or on the Land by
Persons other than the Borrower.

         Lender. KeyBank National Association, its successors and assigns.

         Loan. The construction loan in the amount of up to $29,000,000 which is
the subject of this Agreement.

         Loan Amount. The sum of $29,000,000 or Seventy-Seven Percent (77.0%) of
the value of the Project as completed as determined by the Appraisal approved by
Lender,  whichever is less,  to be advanced as  construction  progresses  and in
accordance with the terms and conditions specified.

         Loan Documents.  This Agreement, the Note, the Indemnity Agreement, the
Guaranty, the Subordination Agreement, the Debt Subordination Agreement, and the
Security Documents,  the Subordination  Agreement from the Junior Creditor,  and
all other  agreements,  documents and instruments  now or hereafter  evidencing,
securing or otherwise relating to the Loan.

         Maturity  Date.  The earlier to occur of Eighteen  (18) months from the
date of this Agreement or June 30, 2000, whichever date occurs first.

         Mortgaged Property.  The Land [including the Easement Agreements],  the
Improvements and the Personal Property.

         Note. The Promissory Note.

         Obligations.  The  indebtedness,  obligations  and  liabilities  of the
Borrower  to the  Lender  existing  on the  date of this  Agreement  or  arising
thereafter,  direct or  indirect,  joint or  several,  absolute  or  contingent,
matured or unmatured, liquidated or unliquidated,  secured or unsecured, arising
by  contract,  operation  of law or  otherwise,  to the  extent  that  any  such
obligation  arises or is incurred  under this Agreement or any of the other Loan
Documents or in respect of any of the Advances or the Note or other  instruments
at any time evidencing any thereof.

         Permitted  Encumbrances.  Those  encumbrances on the Mortgaged Property
permitted by the Security Deed.

         Person. Any individual,  corporation, trust, partnership or other legal
entity, and any government or any governmental  agency or political  subdivision
thereof.

         Personal Property.  All materials,  furnishings,  fixtures,  furniture,
machinery,  equipment  and  all  items  of  tangible  personal  property  now or
hereafter owned or acquired by the Borrower, wherever located, and either (i) to
be  located  on or  incorporated  into  the  Mortgaged  Property,  (ii)  used in
connection with the  construction of the Mortgaged  Property (iii) to be used in
connection  with  the  operation  or  maintenance  of  the  Mortgaged  Property,
including  without  limitation all apparatus,  fixtures and articles of personal
property owned by the Borrower now or hereafter  attached to or used or procured
for use in  connection  with  the  operation  or  maintenance  of the  Mortgaged
Property  (except  property  belonging  to  lessees  or other  occupants  of the
Mortgaged  Property),  together  with  any  and  all  replacements  thereof  and
additions thereto.

         Plans  and  Specifications.   The  plans  and  specifications  for  the
Improvements  to be prepared by Borrower and reviewed and approved by Borrower's
Architect and Contractor and more particularly  identified on Exhibit C attached
hereto.

         Project. The Mortgaged Property and Personal Property.

         Project   Approvals.   All  approvals,   consents,   waivers,   orders,
agreements, acknowledgments, authorizations, permits and licenses required under
applicable  Requirements  or under the  terms of any  restriction,  covenant  or
easement  affecting the Project,  or otherwise  necessary or desirable,  for the
ownership  and  acquisition  of the Mortgaged  Property,  the  construction  and
equipping  of the  Improvements,  and the use,  occupancy  and  operation of the
Project  following  completion  of  construction  of the  Improvements,  whether
obtained from a Governmental Authority or any other Person.

         Project Budget.  The budget for total estimated  Project Costs attached
hereto as Exhibit D, which  includes:  (a) a line item cost breakdown for Direct
Costs by trades,  jobs and  subcontractors;  (b) a line item cost  breakdown for
Indirect Costs; and (c) a schedule of the sources of funds to pay Project Costs,
indicating  by item the portion of Project  Costs to be funded  through the Loan
and Required Equity Funds.

         Project Costs. The sum of all Direct Costs and Indirect Costs that will
be incurred in connection with the acquisition of the Land and the construction,
equipping and completion of the Improvements constituting the Project.

         Promissory  Note. The  commercial  note in the principal face amount of
the Loan Amount from Borrower to Lender  evidencing  the Loan, to be in form and
substance satisfactory to the Lender.

         Purchase and Sale  Agreements.  The purchase  and sale  agreements  for
individual  Residential  Units  in the  Project,  to be in  form  and  substance
acceptable to Lender.

         Real Estate. All real property at any time owned,  leased (as lessee or
sublessee) or operated by the Borrower.

         Required  Equity Funds.  Such amount as the Lender shall determine from
time to time pursuant to SECTION 9.16 hereof.

         Requirements.  Any law,  ordinance,  code, order, rule or regulation of
any Governmental  Authority relating in any way to the acquisition and ownership
of the Project, the construction of the Improvements,  or the use, occupancy and
operation  of the  Project  following  the  completion  of  construction  of the
Improvements, including those relating to subdivision control, zoning, building,
use and occupancy,  fire prevention,  health,  safety,  sanitation,  handicapped
access,  historic  preservation  and  protection,   tidelands,  wetlands,  flood
control, access and earth removal, and all Environmental Laws.

         Residential  Units. The 149 individual  Condominium Units created under
the  Declaration  of the  Condominium  which are the subject of the Purchase and
Sale Agreements.

         Security Agreement. The Commercial Security Agreement pursuant to which
the Borrower grants a security  interest in and to the personal property forming
the Project, such Security Agreement to be in form and substance satisfactory to
the Lender.

         Security  Deed.  The Deed of Trust and Security  Agreement  pursuant to
which the Borrower  grants a mortgage  lien and security  interest in and to the
Project,  such  Security Deed to be in form and  substance  satisfactory  to the
Lender,  including  any  supplements  thereto in order to include  all  Easement
Agreements.

         Security  Documents.  The Security  Deed, the Security  Agreement,  the
Assignment  of Project  Documents,  the  Assignment  of  Declarant  Rights,  the
Assignment of Purchase and Sale  Agreements,  Assignment of Income and Revenues,
the  Financing  Statements,  the  Guaranty  from  the  Guarantor  and any  other
agreement, document or instrument now or hereafter securing the Note.

         Subordination   Agreement.  The  Subordination  Agreement  from  Junior
Creditor subordinating Junior Creditor's claims,  security interest and mortgage
liens under a certain  $2,097,495.60  loan secured by a junior deed of trust, to
be in form and substance satisfactory to the Lender.

         Survey.  An  ALTA/ACSM  survey of the Land and the  Improvements,  such
survey to be satisfactory to the Lender in form and substance,  provided that an
update  of the  1997  survey  shall  be  acceptable  so  long  as  the  surveyor
recertifies  such  survey to Lender and the Title  Insurance  Company  agrees to
provide survey coverage thereunder.

         Surveyor  Certificate.  With  respect  to  any  Survey,  a  certificate
executed by the surveyor who prepares  such Survey dated as of a recent date and
containing such  information  relating to the Project as the Lender or the Title
Insurance Company may require, such certificate to be satisfactory to the Lender
in form and substance.

          Taking.  Any  condemnation  for public use of, or damage by reason of,
the action of any  Governmental  Authority,  or any  transfer by private sale in
lieu thereof, either temporarily or permanently.

          Title Insurance Company. First American Title Insurance Company with a
place of business at Salt Lake City, Utah.

         Title Policy.  An ALTA standard form title  insurance  policy issued by
the Title Insurance Company (with such reinsurance or co-insurance as the Lender
may require,  any such reinsurance to be with direct access  endorsements) in an
amount not less than the Loan Amount  insuring the priority of the Security Deed
and each advance  under the Loan,  and that the Borrower  holds  marketable  fee
simple title to the Project,  subject only to such  exceptions as the Lender may
approve and which  shall not contain  exceptions  for  persons in  occupancy  or
matters  which  would be shown by a survey,  shall not  insure  over any  matter
except to the extent that any such  affirmative  insurance is  acceptable to the
Lender in its sole discretion,  and shall contain a pending disbursements clause
or endorsement  and such other  endorsements  and  affirmative  insurance as the
Lender in its discretion may require.


SECTION 2.  AGREEMENT TO MAKE ADVANCES; LIMITATIONS.

         SECTION  2.1.  Agreement  to Make  Advances.  Subject  to the terms and
conditions of this Agreement and pursuant to the Note, the Lender agrees to lend
to the  Borrower  and the  Borrower  may borrow  from time to time  between  the
Closing Date and the  Maturity  Date upon  submission  by the Borrower of a Draw
Request in  accordance  with SECTION 3.1,  such amounts as are  requested by the
Borrower up to a maximum aggregate  principal amount equal to the Loan Amount to
pay for the  acquisition of the Land and the Project Costs actually  incurred by
the  Borrower and  reflected in the Project  Budget as being funded as a part of
the Loan.

         Each  Draw  Request  for  an  Advance   hereunder  shall  constitute  a
representation  and warranty by the Borrower  that the  conditions  set forth in
this Agreement have been satisfied on the date of such Draw Request.

         On the Maturity Date,  the Lender's  obligation to make advances on the
Loan shall  terminate,  provided  however  that  Lender  may at its option  make
advances  on the Loan  after the  Maturity  Date  without  waiving  its right to
terminate such continuing advances.

         SECTION 2.2. Project Budget.  The Project Budget reflects,  by category
and line items,  the  purposes and the amounts for which funds to be advanced by
the Lender under this Agreement are to be used.

         SECTION  2.3.  Amount of  Advances.  In no event  shall  the  Lender be
obligated to advance  more than the Loan  Amount.  In no event shall any Advance
for Direct Costs of constructing the Improvements exceed an amount equal to:

(a)               the total value of the labor, materials,  fixtures,  machinery
                  and equipment  completed,  approved and incorporated  into the
                  Land or the Improvements prior to the date of the Draw Request
                  for such Advance, less

(b)               subject to the provisions of SECTION 2.7 hereof,  retainage in
                  an amount  equal to ten percent  (10.0%) of such total  value,
                  provided that for the Construction  Contract the 10% retainage
                  shall only apply to the first 50% of the total  contract price
                  with any  reduction in any other  contracts to be based on the
                  prior written  consent of Lender,  with no retainage  required
                  thereafter   if   no   Event   of   Default   is   outstanding
                  ("Retainage"), less

(c)               the total  amount  of any  Advances  previously  made by the
                  Lender for such Direct Costs.

         Retainage  shall be  advanced by the Lender  upon  satisfaction  of the
conditions  set forth in SECTION 12.6;  provided  however that upon  substantial
completion of the Improvements,  compliance with the other provisions of SECTION
12.6  and  approval  of the  Project  for  occupancy  such  that  purchasers  of
Residential Units under the Purchase and Sale Agreements are required to proceed
to closing,  the  Retainage may be advanced but reserving the greater of 200% of
the Direct Cost of completion of incomplete  items until final completion of all
the Improvements to be provided by Borrower.

         With respect to any other Direct  Costs and all Indirect  Costs,  in no
event  shall any  Advance  exceed an amount  equal to the amount of such  Direct
Costs and Indirect Costs approved by the Lender,  incurred by the Borrower prior
to the date of the Draw Request for such Advance,  and theretofore paid or to be
paid with the  proceeds of such  Advance,  less the total amount of any Advances
previously made by the Lender for such Direct Costs and Indirect Costs.

         SECTION 2.4.  Quality of Work.  No Advance shall be due unless the work
done for such Advance is then done in a good and workmanlike  manner and without
defects, as confirmed by the report of the Construction Inspector.

         SECTION 2.5. Cost Overruns and Savings.  If the Borrower  becomes aware
of any increase in Project Costs,  the Borrower shall promptly notify the Lender
in writing and promptly  submit a revised  Project  Budget to the Lender for its
approval.  If there is an increase in Project Costs, no further Advances need be
made by the Lender  until (a) the  revised  Project  Budget is  approved  by the
Lender,  and (b) the  Borrower  has  deposited  with the  Lender  (or made other
provision  approved by Lender) any  additional  Required  Equity  Funds.  If the
revised  Project  Budget  indicates  a decrease  in a  category  or line item of
Project  Costs,  no  reductions  in  Project  Costs  will  be  made  or  savings
reallocated by the Borrower  unless and until (c) the revised  Project Budget is
approved by the Lender,  and (d) in the case of  decreases in a category or line
item of Direct Costs,  the Borrower has furnished  evidence  satisfactory to the
Lender that related work has been  satisfactorily  completed in accordance  with
the Plans and Specifications and paid for in full.

         SECTION 2.6.  Contingency  Reserve. The amount allocated as Contingency
Reserve in the Project  Budget,  namely the sum of One Million Three Hundred and
Eighty Three Thousand Eight Hundred Dollars ($1,383,800.00),  is not intended to
be disbursed and will only be disbursed  upon the prior  approval of the Lender.
The  disbursement of a portion of Contingency  Reserve shall in no way prejudice
the Lender from  withholding  disbursement of any further portion of Contingency
Reserve.

         SECTION 2.7. Stored Materials. Lender shall not be required to disburse
any funds for any materials,  furnishings,  fixtures, machinery or equipment not
yet incorporated into the Land or Improvements ("Stored Materials"), except with
the prior written consent of Lender which shall not be unreasonably withheld and
subject to  Lender's  receipt of a  perfected  first  security  interest in such
Stored  Materials.  Any  disbursement  for the cost of Stored Materials shall be
subject to retainage in an amount equal to ten percent (10.0%) for the first 50%
of the total  price of the  Construction  Contract  unless  otherwise  agreed by
Lender  (thereafter no retainage shall be required) and shall be contingent upon
the Lender receiving satisfactory evidence that:

(a)           the Stored Materials are ready for incorporation  into the Land or
              the Improvements  and shall be so incorporated  within a period of
              30 days;

(b)           the Stored  Materials are stored at the Land, at a site controlled
              by the  Borrower,  or at  such  other  site  as the  Lender  shall
              approve,  and are fully  insured and  protected  against theft and
              damage;

(c)           the  Stored  Materials  have been paid for in full or will be paid
              for with the  retainage  funds to be disbursed and all lien rights
              or claims of the supplier  have been  released or will be released
              upon payment with disbursed funds;

(d)           the Lender has or will have upon  payment with  disbursed  funds a
              perfected,   first  priority   security  interest  in  the  Stored
              Materials; and

(e) the Stored  Materials  are insured for an amount equal to their  replacement
cost.


        SECTION 3.  MAKING THE ADVANCES.

         SECTION 3.1. Draw Request. At such time as the Borrower shall desire to
obtain an  Advance,  the  Borrower  shall  complete,  execute and deliver to the
Lender the  Borrower's  Requisition  in the form of  Exhibit E  attached  hereto
(hereinafter referred to as "Borrower's Requisition"), accompanied by:

(a)           a completed and fully itemized  Application  and  Certificate  for
              Payment (AIA Document G702 or similar form approved by the Lender)
              containing  the  certification  of the  Contractor  and either the
              Borrower's  Architect  or  the  Construction  Inspector  as to the
              accuracy of same,

(b)           copies  of  requisitions  and  invoices  from  subcontractors  and
              materialmen   supporting   all  items  of  cost  covered  by  such
              application;

(c)           written  lien  waivers  from the  Contractor  for the current Draw
              Request and, upon request from Lender from such subcontractors and
              materialmen  for work done and  materials  supplied  by them which
              were paid for  pursuant to the next  preceding  Draw Request in an
              amount in excess of $5,000.00;

(d)           a written request of the Borrower for any necessary changes in the
              Plans and  Specifications,  the Project Budget,  the  Disbursement
              Schedule or the Construction Schedule;

(e)           copies of all change orders and  construction  change  directives,
              accompanied by a change order summary  prepared by and executed by
              the  Borrower,  copies of all material  subcontracts,  and, to the
              extent requested by the Lender, of all material inspection or test
              reports and other  documents  relating to the  construction of the
              Improvements, not previously delivered to the Lender; and

(f)           If  the  Borrower's   Requisition   includes  payment  for  Stored
              Materials  it  shall  be   accompanied   by  evidence  as  to  the
              satisfaction of the requirements set forth in SECTION  2.7 hereof;

(g)           such other  information,  documentation  and certification as the
              Lender shall reasonably request.


         SECTION 3.2. Notice and Frequency of Advances.  Each Draw Request shall
be submitted to the Lender at least ten (10)  business days prior to the date of
the requested Advance, and no more frequently than once each month.

         SECTION 3.3.  Deposit of Funds  Advanced.  The Borrower  shall open and
maintain a non-interest bearing loan checking account with the Lender (the "Loan
Checking  Account").  Absent a Default or Event of  Default,  the  Lender  shall
deposit the proceeds of each Advance into the Loan Checking Account.

        At the request of  Borrower  or upon an Event of Default  with notice to
Borrower,  at its option the Lender may make any or all Advances  under the Loan
to any Person to whom the Lender in good faith determines payment is due.

         SECTION  3.4.  Advances Do Not  Constitute a Waiver.  No Advance  shall
constitute a waiver of any of the  conditions to further  Advances nor shall any
such Advance have the effect of precluding the Lender from thereafter  declaring
a failure to satisfy a condition to be an Event of Default.


        SECTION 4.  THE NOTE; INTEREST; MATURITY AND PREPAYMENT.

         SECTION 4.1 Loan Facility.  Loan Facility shall be a construction  loan
in the maximum amount of Twenty-Nine Million Dollars  ($29,000,000.00) and shall
be used by the Borrower in accordance  with the Project  Budget to construct the
Improvements on the Mortgaged Property,  being land,  buildings and improvements
constituting a resort condominium  project in Snyderville,  Summit County,  Utah
known as the  "Sundial  Lodge at The  Canyons"  consisting  of: 149  Residential
Units,  and the one  Commercial  Unit.  Lender shall not be obligated to advance
more than 77% of the Appraised value of the Mortgaged Property.

         SECTION 4.2. The Note.  The  obligation of the Borrower to pay the Loan
Amount or, if less, the aggregate  unpaid  principal amount of all Advances made
by the Lender hereunder,  plus accrued interest thereon, and other fees shall be
evidenced by the Note. In the event the Note is lost,  destroyed or mutilated at
any time prior to payment in full of the  indebtedness  evidenced  thereby,  the
Borrower  shall  execute a new note  substantially  in the form of the  relevant
Note.  The Note shall not be  necessary  to establish  the  indebtedness  of the
Borrower to the Lender on account of Advances  made under this  Agreement.  Each
Advance shall bear interest in accordance with the Note.

      Borrower shall reduce the principal balance of the Loan by 100% of the net
sale proceeds of each  Residential  Condominium  Unit.  The foregoing  principal
reductions may be accomplished  through the payments  required to obtain partial
releases of individual  Residential  Units,  but lack of Residential  Unit sales
shall not excuse  Borrower's  obligation  to pay the entire loan  balance on the
Maturity Date, when the entire Note shall be due and payable in full.

        No amount prepaid by the Borrower on the Note may be reborrowed.

         SECTION  4.3  Partial  Releases.  Lender  agrees to release  individual
Residential  Units in order to permit their sale to third party  purchasers upon
receipt of 100% of the net  proceeds of the sale of  Residential  Units based on
the  purchase  price  as set  forth  in the  Assignment  of  Purchase  and  Sale
Agreements,  provided that in the event of a default in the  Obligations and the
commencement of foreclosure  proceedings,  such release shall be contingent upon
the Borrower's  binding  agreement that such release and application of funds to
the  Obligations  does not waive any  otherwise  uncured event of default or any
pending  foreclosure.  To facilitate sales, Lender will provide partial releases
in escrow to First American Title Insurance Company.

         SECTION  4.4  Maturity.  The  Maturity  Date of the  Loan  shall  be as
provided  in the Note,  on which date the  Borrower  promises  to pay all unpaid
principal  of Loan  facility  under the Note in full with  accrued  interest and
other applicable charges to such date.


         SECTION 5. COMMITMENT FEE; PAYMENTS AND COMPUTATIONS; CAPITAL ADEQUACY.

         SECTION 5.1.  Commitment  Fees.  The Borrower shall pay to the Lender a
commitment fee in the amount of $217,500.00 upon or before the execution of this
Agreement, of which $108,750.00 has been paid on or before Borrower's acceptance
of Lender's commitment letter.

         SECTION 5.2. Funds for Payments.  All payments of principal,  interest,
fees and any other amounts due under the Note shall be made in  accordance  with
the Note.

         SECTION 5.3 Operating Account. The Borrower shall maintain an operating
deposit account with the Lender. All Advances on the Loan will be made into such
account.


         SECTION 6. COLLATERAL  SECURITY.  The Obligations shall be secured by a
perfected first priority  mortgage lien and security interest in the Collateral,
whether now owned or hereafter  acquired,  pursuant to the terms of the Security
Documents, and by the Guaranty.


        SECTION 7.  CERTAIN RIGHTS OF LENDER.

         SECTION 7.1.  Right to Retain the  Construction  Inspector.  The Lender
shall  have the  right to  retain,  at the  Borrower's  cost  and  expense,  the
Construction  Inspector  to  perform  the  following  services  on behalf of the
Lender:

(a)           to review  and advise  the  Lender  whether in the  opinion of the
              Construction Inspector, the Project Budget accurately reflects all
              Project Costs;

(b)           to review and advise the  Lender  whether,  in the  opinion of the
              Construction   Inspector,   the  Plans  and   Specifications   are
              satisfactory for the intended purposes thereof;

(c)           to make periodic  inspections of the  Improvements  for compliance
              with the Plans and  Specifications and to approve the then current
              Draw Request,  and to advise the Lender of the anticipated cost of
              and time for completion of  construction of the  Improvements  and
              the adequacy of any Contingency Reserve;

(d)           to review and advise the Lender on any proposed  change orders or
              construction change directives; and

(e)           to review the Construction Contract and subcontracts

The reasonable fees of the Construction  Inspector shall be paid by the Borrower
forthwith upon billing  therefor and expenses  incurred by the Lender on account
thereof shall be reimbursed to the Lender forthwith upon request  therefor,  but
neither the Lender nor the  Construction  Inspector  shall have any liability to
the  Borrower  on  account of (i) the  services  performed  by the  Construction
Inspector, (ii) any neglect or failure on the part of the Construction Inspector
to properly  perform its  services,  or (iii) any  approval by the  Construction
Inspector  of  construction  of the  Improvements.  Neither  the  Lender nor the
Construction  Inspector  assumes  any  obligation  to the  Borrower or any other
Person concerning the quality of construction of the Improvements or the absence
therefrom of defects.  The services  provided by the Construction  Inspector are
for the sole and exclusive benefit of Lender.

         SECTION 7.2.  Appraisal.  The Lender's  obligation  to fund the Loan is
subject to an Appraisal completed by an approved appraiser and acceptable in all
respects to the Lender  indicating  that the amount of the Loan, as a percentage
of the  value  of the  Mortgaged  Property  securing  the Loan  does not  exceed
seventy-seven percent (77%) (the "Loan To Value Ratio").

        Lender may  require an  Appraisal  at the  Borrower's  cost and  expense
subsequent to the closing of the Loan, provided that such an Appraisal shall not
be  required  more  frequently  than once within any 12 month  period  after the
closing of the Loan  unless  there is an  outstanding  uncured  Event of Default
which has arisen in the preceding 90 days or unless required as a component of a
foreclosure or sale under the Security Deed.

        If an Appraisal  indicates that the value of the Mortgaged  Property for
the Loan has  decreased  so that the Loan To Value Ratio  exceeds  seventy-seven
percent  (77%) then the  Borrower  must  either (i) make  payments to the Lender
reducing  the  amount of the Loan to a point  where  the Loan To Value  Ratio is
seventy-seven  percent (77%) or lower, (ii) grant the Lender with mortgage liens
and security interests covering additional collateral satisfactory to the Lender
in order to reduce the Loan To Value  Ratio to  seventy-seven  percent  (77%) or
lower, or (iii) repay the Loan in full.

        All  reasonable  costs  of  such  future  Appraisals  or  the  grant  of
additional  collateral  required as a result of said appraisal  shall be paid by
the Borrower.  The costs and expenses  incurred by the Lender in obtaining  such
Appraisals  shall be paid by the Borrower  forthwith  upon billing or request by
the Lender for reimbursement  therefor,  and if not paid when due shall be added
to the Loan balance and bear interest.

         SECTION 7.3. Charges Against Loan Checking Account.  To the extent that
the  same  are not  paid by the  respective  due  dates  thereof  including  any
applicable grace period,  then the Lender shall have the right, and the Borrower
hereby irrevocably  authorizes the Lender, to charge any account of the Borrower
with the  Lender,  including  the Loan  Checking  Account,  without  the further
approval of the Borrower, for (i) any installment of interest due under the Note
and,  (ii) any costs or expenses  incurred by the Lender which are to be paid or
reimbursed by the Borrower under the terms of this Agreement or any of the other
Loan Documents (including, without limiting the generality of the foregoing, all
Construction  Inspector,  Appraisal and reasonable attorney's fees) or (iii) any
other sums due to the Lender under the Note,  this Agreement or any of the other
Loan  Documents.  The Borrower  shall at all times  maintain and keep  collected
balances  in the Loan  Checking  Account  sufficient  to satisfy  the  foregoing
obligations on the respective due dates thereof.


         SECTION 8. REPRESENTATIONS AND WARRANTIES.  The Borrower represents and
warrants to the Lender as follows:

        SECTION 8.1.  Organization; Authority; Etc.

        (a)  Organization;  Good  Standing.  Each of Borrower and Guarantor is a
corporation  duly  organized and is validly  existing and in good standing under
the laws of the State of Maine and duly  authorized  to do business in the State
of Maine, and Borrower is duly authorized to do business in the State of Utah.

        The Borrower has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated.  Borrower was organized
solely for the purpose of the development,  construction,  ownership,  operation
and sale of the Mortgaged Property and no other purpose.

        (b)  Authorization.  The  execution,  delivery and  performance  of this
Agreement and the other Loan Documents and the transactions  contemplated hereby
by Borrower and Guarantor (i) are within the authority of such Person, (ii) have
been duly  authorized by all necessary  proceedings  on the part of such Person,
(iii) do not  conflict  with or result in any  breach  or  contravention  of any
provision of law, statute, rule or regulation to which such Person is subject or
any judgment,  order,  writ,  injunction,  license or permit  applicable to such
Person or any  Indebtedness  to such Borrower and Guarantor are a party and (iv)
do not conflict  with any provision of the articles of  incorporation  or bylaws
of, or any agreement or other instrument binding upon, such Person.

        (c) Enforceability. The execution and delivery of this Agreement and the
other Loan Documents to which each Borrower and Guarantor is a party will result
in valid and legally binding  obligations of such Person enforceable  against it
in  accordance  with the  respective  terms and  provisions  hereof and thereof,
except as enforceability is limited by bankruptcy,  insolvency,  reorganization,
moratorium or other laws relating to or affecting  generally the  enforcement of
creditors'  rights and except to the extent that  availability  of the remedy of
specific  performance  or injunctive  relief is subject to the discretion of the
court before which any proceeding therefor may be brought.

        SECTION 8.2.  Title to Project and other Properties.

        (a) Except as disclosed in the Security  Deed,  the Borrower  holds good
clear record and marketable fee simple absolute title to the Mortgaged Property,
and the Personal Property,  subject to no other mortgages,  leases,  conditional
sale agreements, title retention agreements, liens or other encumbrances,  other
than  the  mortgage  lien  of  the  Junior  Creditor  which  is  subject  to the
Subordination  Agreement  and the  Purchase and Sale  Agreements  subject to the
Collateral  Assignment  of  Purchase  and  Sale  Agreements  and  which  contain
subordination provisions as set forth therein.

        (b) Each of the Borrower and Guarantor owns all of the assets  reflected
in the balance sheet of the Borrower and Guarantor  respectively as delivered to
Lender (except property and assets sold or otherwise disposed of in the ordinary
course of business since that date),  subject to no rights of others,  including
any mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except as disclosed therein.

         SECTION  8.3.  Financial  Statements.  There has been  furnished to the
Lender the financial statement of Guarantor for the fiscal period ending October
25,  1998,  which  has been  prepared  in  accordance  with  generally  accepted
accounting  principles and which when considered  together with the Schedules of
Guarantor  as filed with the U.S.  Securities  and Exchange  Commission,  fairly
present  the  financial  condition  of  Guarantor  respectively  as at the  date
thereof.  As of the date of this  Agreement,  there are no known  liabilities or
contingent  liabilities of the Borrower and Guarantor which are not disclosed in
said balance sheet and the related notes thereto and said Schedule  respectively
other than the Obligations, and the obligations secured by the Permitted Liens.

        Since the date of the said Schedules filed with the U.S.  Securities and
Exchange  Commission  , there has  occurred  no material  adverse  change in the
financial condition or business of the Borrower or Guarantor, other than changes
in the  ordinary  course  of  business  that have not had any  material  adverse
effect.

         SECTION  8.5.  Franchises,   Patents,  Copyrights,  Etc.  The  Borrower
possesses all franchises, patents, copyrights, trademarks, trade names, licenses
and permits, and rights in respect of the foregoing, adequate for the conduct of
its business  substantially  as now conducted  without  known  conflict with any
rights of others.

         SECTION 8.6. Litigation. Except as disclosed in Exhibit G, there are no
actions, suits,  proceedings or investigations of any kind pending or threatened
against the Borrower or Guarantor before any court,  tribunal or  administrative
agency or board that, if adversely  determined,  might, either in any case or in
the aggregate, materially and adversely affect the properties, assets, financial
condition  or business of Borrower  and  Guarantor  respectively  or  materially
impair the right of Borrower  and  Guarantor  respectively  to carry on business
substantially as now conducted by it, or result in any material  liability which
might  affect the  Project  not  adequately  covered by  insurance  or for which
adequate  reserves are not  maintained on the balance  sheet of such Person,  or
which  question  the  validity  of  this  Agreement  or any of  the  other  Loan
Documents,  or which will  adversely  affect  the  ability  of the  Borrower  to
construct,   use  and  occupy  the  Improvements  or  to  pay  and  perform  the
Obligations.

         SECTION 8.7. No Materially Adverse Contracts,  Etc. Except as disclosed
in  Exhibit  G,  Borrower  and  Guarantor  respectively  are not  subject to any
corporate or other legal restriction,  or any judgment,  decree,  order, rule or
regulation  that has or is expected in the future to have a  materially  adverse
effect on the  business,  assets  or  financial  condition  of the  Borrower  or
Guarantor respectively. The Borrower is not a party to any contract or agreement
that has or is expected to have any materially adverse effect on the Borrower.

         SECTION 8.8.  Compliance With Other  Instruments,  Laws, Etc. Except as
disclosed  in Exhibit G, the  Borrower  and  Guarantor  respectively  are not in
violation  of their  articles of  incorporation,  by-laws,  or any  agreement or
instrument  to  which  they  may be  subject  or by  which  they  or any of they
properties may be bound,  including  without  limitation any Indebtedness or any
decree, order,  judgment,  statute,  license, rule or regulation,  in any of the
foregoing  cases in a manner  that could  result in the  imposition  of material
penalties or materially and adversely affect the financial condition, properties
or business of the Borrower or Guarantor respectively.

         SECTION 8.9. Tax Status.  Each of the  Borrower and  Guarantor  (a) has
made or filed all federal and state  income and all other tax  returns,  reports
and declarations  required by any jurisdiction to which they are is subject and,
(b) have paid all taxes and other governmental  assessments and charges shown or
determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good  faith and by  appropriate  proceedings  pursued  with
diligence. There are no unpaid taxes in any material amount claimed to be due by
any taxing  authority,  and the Borrower and Guarantor  know of no basis for any
such claim.

         SECTION 8.10.  No Event of Default.  No Default or Event of Default has
occurred  and  is  continuing  under  the  Loan  Documents  or  any  other  loan
obligations or documents to which Borrower is a party.

         SECTION  8.11.  Absence  of Other  Liens,  Etc.  There is no  financing
statement,  security agreement,  chattel mortgage, real estate mortgage or other
document filed or recorded with any filing  records,  registry,  or other public
office, that purports to cover, affect or give notice of any present or possible
future lien on, or security  interest in any  Collateral or any rights  relating
thereto.

        Borrower  shall  obtain and record a  Subordination  Agreement  from the
Junior Creditor covering the Mortgaged  Property,  including without  limitation
the Easement Agreements.

         SECTION 8.12. Setoff,  Etc. The Collateral and the Lender's rights with
respect to the Collateral are not subject to any setoff, claims, withholdings or
other defenses.  The Borrower is the owner of the Collateral free from any lien,
security interest, encumbrance and any other claim or demand except as permitted
in the  Security  Deed and the junior  mortgage in favor of the Junior  Creditor
subject to the Subordination Agreement.

         SECTION 8.13. Environmental Compliance. Except as set forth in Schedule
8.13   attached   hereto,   the  Borrower  is  in  full   compliance   with  the
representations,  covenants and warranties  regarding the Environmental Laws and
Hazardous Materials as set forth in the Security Deed.

         SECTION 8.14. Subsidiaries. The Borrower has no Subsidiaries.  Borrower
is a wholly owned subsidiary of Guarantor.

         SECTION 8.15. Availability of Utilities. All utility services necessary
and sufficient for the  construction,  development  and operation of the Project
for its intended  purposes are  presently  available  to the  boundaries  of the
Mortgaged  Property  with respect to which the Security Deed creates a valid and
enforceable first lien,  including,  but not limited to, water supply, storm and
sanitary  sewer,  electric  and  telephone  facilities,  cable  television,  and
drainage, with the certificate of an independent  professional engineer or other
evidence acceptable to Lender that such utility services are available.

         SECTION 8.16.  Access/Utilities/Independent Building. (a) The rights of
way for all roads and utility services necessary for the full utilization of the
Improvements for their intended purposes have been established pursuant to valid
and enforceable private easements set forth in Exhibit A to the Security Deed or
shall be  established  pursuant to Easement  Agreements to the  satisfaction  of
Lender,  and all such roads and utility lines shall have been completed,  or all
necessary  steps  have  been  taken by the  Borrower  and/or  such  Governmental
Authority to assure the complete  construction and installation thereof prior to
the date upon which access to the Project via such roads will be necessary.  All
curb cuts, driveways, water supplies,  electrical,  fire protection,  subsurface
sanitary sewer and storm water lines shown on the Plans and  Specifications  are
presently  existing or have been fully approved by the appropriate  Governmental
Authority.

        The  Land  and  Improvements  are  fully  independent  in  all  respects
including,  without  limitation,  in respect of parking,  structural  integrity,
heating,  ventilating  and air  conditioning,  plumbing,  mechanical  and  other
operating and mechanical systems,  fuel, and electrical,  sanitation,  drainage,
drinking water systems,  or binding  arrangements shall be established under the
Easement Agreements to the Lender's satisfaction .

        Borrower shall seek to have the Land separately assessed for purposes of
real estate tax assessment and payment. Until such separate assessment, Borrower
shall pay or cause to be paid all real estate taxes on the Land.

        The  Land  and  Improvements  and  building  service  equipment,  sewage
disposal  facilities,  parking,  and all paved or landscaped areas related to or
used in connection with the Improvements are located wholly within the perimeter
lines of the Land including the Easement Agreements.

        The Land and all  Condominium  units shall have an  easement  for direct
access to snow skiing trails under the Easement Agreements.

         SECTION  8.17.  Condition of Project.  Neither the Project nor any part
thereof is now  damaged or injured as result of any fire,  explosion,  accident,
flood  or other  casualty  or has been the  subject  of any  Taking,  and to the
knowledge of the Borrower, no Taking is pending or contemplated.

         SECTION   8.18.   Compliance   with   Requirements.   The   Plans   and
Specifications and construction of the Improvements pursuant thereto and the use
and occupancy of the Project contemplated thereby comply with all Requirements.

         SECTION  8.19.  Project  Approvals.  Except  as set  forth on  Schedule
8.19(a)  hereto,  the  Borrower has  obtained  all Project  Approvals  and fully
complies with all Requirements  without any variances or waivers.  Except as set
forth on Schedule 8.19(a) hereto, all Project Approvals obtained by the Borrower
as listed and described on Schedule  8.19(b) hereto have been validly issued and
are in full force and effect.  The Borrower has no reason to believe that any of
the Project Approvals not heretofore will not be obtained in the ordinary course
following  completion  of the  Improvements  in  accordance  with the  Plans and
Specifications.

         SECTION 8.20. Construction Contract. The Construction Contract shall be
in full force and effect with a maximum  guaranteed price of $33,225,000.00  and
both the Borrower and the Contractor  shall  thereafter be full  compliance with
their respective  obligations  under the Construction  Contract.  The work to be
performed by the Contractor under the  Construction  Contract is the work called
for by the Plans and  Specifications,  and all work  required  to  complete  the
Improvements  in accordance  with the Plans and  Specifications  is provided for
under the Construction Contract.

         SECTION  8.21.  Other  Contracts.  Except as  provided  in the  Project
Budget,  the  Borrower has made no contract or  arrangement  of any kind or type
whatsoever  (whether oral or written,  formal or informal),  the  performance of
which by the other party thereto could give rise to a lien or encumbrance on the
Project.

         SECTION 8.22. Real Property Taxes;  Special  Assessments.  There are no
overdue,  unpaid or outstanding  real estate or other taxes or assessments on or
against the Project or any part thereof which are payable by the Borrower or any
prior owner.  No abatement  proceedings  are pending with  reference to any real
estate taxes assessed against the Project.

         SECTION 8.23.  Violations.  The Borrower has received no notices of, or
has any knowledge of, any violations of any applicable  Requirements  or Project
Approvals.

         SECTION 8.24 Plans and  Specifications.  The Borrower has furnished the
Lender with true and complete  sets of the Plans and  Specifications.  The Plans
and Specifications so furnished to the Lender comply with all Requirements,  all
Project Approvals,  and all restrictions,  covenants and easements affecting the
Project, and have been approved by the Contractor, the Borrower's Architect, and
such Governmental Authority as is required for construction of the Improvements.

         SECTION 8.25.  Project Budget.  The Project Budget accurately  reflects
all Project Costs.

         SECTION 8.26. Feasibility. To the best of Borrower's knowledge, each of
the  Construction  Schedule  and the  Disbursement  Schedule  is  realistic  and
feasible, and is accurate to date.

         SECTION 8.27.  Purchase and Sale Agreements;  Leases.  The Purchase and
Sale  Agreements  as set forth in the exhibit to the  Assignment of Purchase and
Sale  Agreements  constitute the sole  agreements and  understandings  presently
outstanding which relate to sale of Condominium Units in the Mortgaged Property.
The  Purchase and Sale  Agreements  will general  gross sale  proceeds  totaling
$42,559,700.  Borrower has received and invested  directly  into the Project the
initial deposits under the Purchase and Sale Agreements totaling $3,989,170, and
upon the  completion  of the roof for the  Project,  Borrower  shall  obtain and
utilize and  additional  deposit in the amount of $3,989,170 for the expenses of
the Project.

        Borrower expressly  represents to Lender that the use of the purchasers'
deposits under the Purchase and Sale  Agreements for the expenses of the Project
is proper and legal under the terms of the  Purchase  and Sale  Agreements,  the
Utah   Condominium  Act  and  all  other   applicable   laws,   regulations  and
requirements.

        All  Purchase  and Sale  Agreements  shall be  collaterally  assigned to
Lender as security for the Obligations under the Assignment of Purchase and Sale
Agreements.  Borrower shall promptly  update Lender in writing the status of the
Purchase and Sale  Agreements  at such  intervals and in such form as Lender may
request and in any event no less frequently than once each month, and shall duly
perform its obligations  under the Purchase and Sale Agreements.  Borrower shall
obtain from First American  Title  Insurance  Company,  the escrow agent for the
deposit under the Purchase and Sale Agreements, a letter of agreement upon terms
and conditions  satisfactory  to Lender  pursuant to which the escrow  agreement
confirms  the  deposit  balances it is  holding,  agrees to provide  Lender with
information  regarding  the status of the  deposits  and  acknowledges  Lender's
security  interest  in  the  deposits  subject  however  to  the  rights  of the
purchasers under the Purchase and Sale Agreements.

        Other  than the  Purchase  and Sale  Agreements,  there  are no  Leases,
occupancies,  rights, privileges or licenses in or to the Residential Units, the
Commercial Unit or any other part of the Mortgaged Property.

        No leasing, brokerage or like commissions, fees or payments are due from
the  Borrower or any other  person to any third party or Affiliate in respect of
the Purchase and Sale Agreements in excess of the amount disclosed to Lender and
as set forth in the Project Budget.

         SECTION 8.28.  Other  Material Real  Property  Agreements;  No Options.
There are no material  agreements  pertaining  to the  Mortgaged  Property,  the
Improvements  or the operation or  maintenance  of either  thereof other than as
expressly  described in this  Agreement  (including the Schedules  hereto),  the
Security Deed, or otherwise  disclosed in writing to the Lender by the Borrower;
and no person  or entity  has any  right or  option  to  acquire  the  Mortgaged
Property or any portion thereof or interest therein.

         SECTION 8.29.  Effect of Draw Request.  Each Draw Request  submitted to
the Lender as provided in SECTION 3.1 hereof  shall  constitute  an  affirmation
that the representations and warranties contained in SECTION 8 of this Agreement
and in the other Loan Documents  remain true and correct as of the date thereof;
and unless the Lender is notified  to the  contrary,  in  writing,  prior to the
Drawdown Date of the requested Advance or any portion thereof,  shall constitute
an affirmation that the same remain true and correct on the Drawdown Date.


         SECTION  9.  AFFIRMATIVE  COVENANTS  OF  THE  BORROWER.   The  Borrower
covenants and agrees that, so long as the Loan is  outstanding or the Lender has
any obligation to make any Advances:

         SECTION 9.1.  Punctual  Payment.  The Borrower will duly and punctually
pay or cause to be paid the  principal  and  interest  on the Loan and all other
amounts provided for in the Note, this Agreement and the other Loan Documents.

         SECTION 9.2. Commencement,  Pursuit and Completion of Construction. The
Borrower will continue construction of the Improvements,  will diligently pursue
construction of all Improvements in accordance with the  Construction  Schedule,
will complete  construction of the Improvements prior to the Completion Date, at
least 10 days prior to the  expiration of the each  Purchase and Sale  Agreement
for each Unit,  all in  accordance  with the Plans and  Specifications,  in full
compliance with the Condominium Declaration and all restrictions,  covenants and
easements  affecting the Project,  all Requirements,  and all Project Approvals,
and with all terms and conditions of the Loan  Documents,  the Purchase and Sale
Agreements, and the Condominium Declaration without deviation from the foregoing
and the  requirements  of the Purchase and Sale  Agreements  unless the Borrower
obtains the prior approval of the Lender,  the purchasers under the Purchase and
Sale  Agreement if  required,  and the surety  company or companies  issuing any
Payment and  Performance  Bonds in the amount of not less than the  Construction
Contract.  The  Borrower  will pay all sums and  perform all such acts as may be
necessary or appropriate to complete such construction of the Improvements, free
from any liens,  claims or assessments  (actual or contingent)  asserted against
the  Project for any  material,  labor or other items  furnished  in  connection
therewith.

         SECTION 9.3. Correction of Defects.  The Borrower will promptly correct
or cause to be corrected all defects in the  Improvements  or any departure from
the Plans and Specifications,  the Requirements, the Condominium Declaration and
the  Purchase  and Sale  Agreements  not  previously  approved by the Lender and
purchasers.

         SECTION 9.4. Records and Accounts.  The Borrower will (a) keep true and
accurate  records and books of account in which full,  true and correct  entries
will be made in accordance with generally accepted accounting principles and (b)
maintain  adequate accounts and reserves for all taxes (including income taxes),
depreciation  and  amortization  of its  properties,  contingencies,  and  other
reserves.

         SECTION 9.5. Financial  Statements,  Certificates and Information.  The
Borrower will deliver or cause to be delivered to the Lender:

<PAGE>

(a)       Guarantor  Financial  Statements.  As soon as practicable,  but in any
          event not later than one  hundred  twenty  (120) days after the end of
          each fiscal year of the Guarantor,  the consolidated  balance sheet of
          the  Guarantor  at the end of  such  year  and  statement  of  income,
          statement of retained  earnings  and  statement of cash flows for such
          year,  each  setting  forth in  comparative  form the  figures for the
          previous  fiscal  year and all  such  statements  to be in  reasonable
          detail,  prepared in accordance  with  generally  accepted  accounting
          principles  consistently  applied (except where otherwise noted),  and
          accompanied  by an  unqualified  "audit"  opinion for American  Skiing
          Company prepared by an independent  certified  public  accounting firm
          acceptable  to Lender  with the  Guarantor's  statement  provided at a
          consolidating  level,  and any management  letter from such accounting
          firm;

(b)       Contingent  Liabilities.  Contemporaneously  with the  delivery of the
          financial  statements  referred to in clause (a) above, a statement of
          all contingent liabilities of the Guarantor which are not reflected in
          such financial  statements or referred to in the notes thereto,  and a
          statement  of  projected  cash flows of the  Borrower  for the current
          fiscal year,  all in reasonable  detail and certified by the principal
          financial or accounting officer of the Borrower and Guarantor;

(c)  Tax  Returns.  copies of all federal and state income tax returns as signed
     and filed within  fifteen (15) days of the last day when due (including any
     extensions of the filing date) for Borrower and Guarantor;

(d)  SEC Filings.  with respect to the Guarantor,  copies of all completed Forms
     10K, 10Q and 8K filed by Guarantor  with the U.S.  Securities  and Exchange
     Commission,   including  without  limitation   Guarantor's  annual  audited
     financial statements and quarterly interim statements; and

(e)  Other.  from time to time such other  financial data and information as the
     Lender may reasonably request regarding  Borrower and Guarantor,  including
     quarterly  internally prepared statements and financial covenant compliance
     within 30 days of the end of each quarter.

     SECTION 9.6. Year 2000 Compliance: All of Borrower's and Guarantor's
computer hardware and software shall provide the following functions:

(a)  consistently  handle date information  before,  during and after January 1,
     2000, including,  but not limited to, accepting date input,  providing date
     output and performing calculations on dates or portions of dates;

(b)  function  accurately in accordance with the specifications of such computer
     hardware or  software  and without  interruption  before,  during and after
     January  1, 2000,  without  any change in  operations  associated  with the
     advent of the new century;

(c)  respond to two-digit  date input in a way that resolves any ambiguity as to
     century in a disclosed, defined and predetermined manner; and

store and provide output of date  information in ways that are unambiguous as to
century.


        SECTION 9.7.  Notices.

        (a) Defaults. The Borrower will promptly notify the Lender in writing of
the  occurrence  of any Default or Event of Default,  specifying  the nature and
existence  of such  Default or Event of Default and what action the  Borrower is
taking or proposes to take with respect thereto.

        (b) Environmental  Events. The Borrower will promptly give notice to the
Lender (i) of any material  violation of any Environmental Law that the Borrower
reports in writing or is  reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to any federal, state or
local environmental agency and (ii) upon becoming aware thereof, of any inquiry,
proceeding,  investigation,  or other action, including a notice from any agency
of  potential   environmental   liability,   or  any  federal,  state  or  local
environmental  agency or board,  that in either case involves the Project or has
the potential to materially affect the assets, liabilities, financial conditions
or  operations  of the  Borrower or the  Lender's  liens or  security  interests
pursuant to the Security Documents.

        (c)  Notification  of Claims  against  Collateral.  The  Borrower  will,
immediately  upon becoming  aware  thereof,  notify the Lender in writing of any
setoff,  claims,  withholdings or other defenses to which any of the Collateral,
or the Lender's rights with respect to the Collateral, are subject.

        (d) Notice of  Nonpayment.  The  Borrower  will  immediately  notify the
Lender in writing if the Borrower  receives any notice of nonpayment for amounts
in excess of $25,000 in the aggregate from all sources, whether oral or written,
from  laborers,  subcontractors  or  materialman  for  any  labor  or  materials
furnished in connection with the construction of the Improvements.

        (e) Notice of Litigation and Judgments.  The Borrower and Guarantor will
give notice to the Lender in writing  within fifteen (15) days of becoming aware
of any litigation or proceedings threatened in writing or any pending litigation
and proceedings  affecting the Project or affecting the Borrower or Guarantor or
to which the Borrower is or is to become a party  involving  an uninsured  claim
against the Borrower or Guarantor  that could  reasonably  be expected to have a
materially  adverse  effect on the Borrower or Guarantor  and stating the nature
and status of such litigation or  proceedings.  The Borrower will give notice to
the Lender, in writing,  in form and detail  satisfactory to the Lender,  within
ten (10) days of any  judgment  not covered by  insurance,  final or  otherwise,
against the Borrower in an amount in excess of $25,000.00.

     SECTION 9.8. Existence;  Maintenance of Properties. The Borrower will do or
cause to be done all things  necessary  to  preserve  and keep in full force and
effect its existence as a Maine corporation. The Borrower will do or cause to be
done all things  necessary  to preserve and keep in full force all of its rights
and franchises.

        The Borrower (a) will cause the Land and  Improvements  to be maintained
and kept in good  condition,  repair and  working  order and  supplied  with all
necessary equipment, (b) will cause to be made all necessary repairs,  renewals,
replacements,  betterments and improvements  thereof,  all as in the judgment of
the Borrower may be  necessary  so that the  business  carried on in  connection
therewith  may be properly and  advantageously  conducted at all times,  and (c)
will continue to engage  primarily in the  businesses now conducted by it and in
related businesses.

        SECTION 9.9.  Insurance; Bonds.

        (a) The Borrower will obtain and maintain  insurance with respect to the
Project as required by the Security Deed.

         (b) The Borrower  will itself  obtain and maintain and will require the
Contractor  to obtain and maintain at all times during the  construction  of the
Improvements the insurance required by the Construction  Contract and such other
insurance  as may be  reasonably  required  by the  Lender  (including,  without
limitation,  commercial general liability  insurance,  comprehensive  automobile
liability  insurance,   all-risk   contractor's   equipment  floater  insurance,
workmen's  compensation  insurance  and employer  liability  insurance),  and to
contain  the written  agreement  of the insurer to give the Lender ten (10) days
prior written notice of cancellation, nonrenewal, modification or expiration.

        (c) The Borrower  will require the  Borrower's  Architect  and any other
architect, engineer or design professional providing services in connection with
the construction of the Improvements to obtain, provide evidence of and maintain
professional  liability  insurance  covering any claims asserted with respect to
the Project for such  insurance to be in such amounts and form,  to include such
coverages  and  endorsements,  and to be  issued  by such  insurers  as shall be
approved by the Lender,  and to contain the written  agreement of the insurer to
give the Lender ten (10) days prior written notice of cancellation,  nonrenewal,
modification or expiration.

        (d) The Borrower will obtain and provide to the Lender or will cause the
Contractor  to obtain and  provide to the Lender such  Payment  and  Performance
Bonds in 100% of the amount of the Construction Contract naming the Lender under
a  "dual  obligee"  rider,  all  in  form,  and  issued  by  a  bonding  company
satisfactory to Lender.

        SECTION 9.10.  Taxes/Liens.

        The  Borrower  will pay all taxes,  assessments  and other  governmental
charges in accordance with the Security Deed.

        The Borrower  will  promptly pay and discharge (by bonding or otherwise)
all claims for labor,  material or supplies that if unpaid might by law become a
lien or charge  against  the  Project or any part  thereof  or might  affect the
priority of the lien  created by the  Security  Deed with respect to any Advance
made or to be made by the Lender under this Agreement.

        SECTION 9.11.  Inspection of Project, Other Properties and Books.

        (a) The Borrower shall permit the Lender and the Construction Inspector,
at the Borrower's expense, to visit and inspect the Project and all materials to
be used in the  construction  thereof and will cooperate with the Lender and the
Construction  Inspector  during such  inspections  (including  making  available
working drawings of the Plans and Specifications);  provided that this provision
shall not be deemed to impose on the Lender or the  Construction  Inspector  any
obligation to undertake such inspections.

        (b) The Borrower shall permit the Lender to examine the general books of
account of the Borrower (and to make copies thereof and extracts  therefrom) and
to discuss the affairs,  finances and accounts of the Borrower  with,  and to be
advised  as to the same by,  its  officers,  all at such  reasonable  times  and
intervals as the Lender may reasonably request.

     SECTION 9.12. Compliance with Laws, Contracts,  Licenses, and Permits. Each
of the Borrower and  Guarantor  will comply with,  (a) the  applicable  laws and
regulations wherever its business is conducted, including all Environmental Laws
and all  Requirements,  (b) the provisions of its corporate  charter,  and other
charter documents and by-laws, (c) all agreements and instruments by which it or
any of its  properties may be bound,  including the  Architect's  Contract,  the
Construction  Contract,  the Purchase and Sale Agreements,  the Requirements and
all  restrictions,  covenants  and  easements  affecting  the  Project,  (d) all
applicable  decrees,  orders and  judgments,  and (e) all  licenses  and permits
required by applicable  laws and  regulations for the conduct of its business or
the ownership, use or operation of its properties, including, in the case of the
Borrower, all Project Approvals.

     SECTION  9.13.  Project  Approvals/Easement  Agreements.  The Borrower will
promptly  obtain all Project  Approvals and Easement  Agreements  not heretofore
obtained  by the  Borrower  and will  furnish  evidence  thereof  promptly  upon
request.  The Borrower shall comply with the Requirements and Project  Approvals
to  construct  the  Improvements  and to use,  occupy and  operate  the  Project
following  completion.  The  Borrower  will also  promptly  obtain  all  utility
installations  and connections  required for the Project,  and will furnish with
evidence thereof.  Lender shall not be required to make or continue any Advances
if  Borrower  has not  obtained  the  Easement  Agreements  required  under this
Agreement.

     SECTION  9.14.  Use of  Proceeds.  The  Borrower  will use the  proceeds to
construct  on the Land two 6 story  buildings  known as buildings 8 and 9 with a
total of 192,559  square  feet of space  plus 170  underground  parking  spaces,
containing 149 Residential  Units located on the upper 5 floors and a Commercial
Unit  on  the   first   floors   containing   38,370   square   feet  of   front
desk/administrative  areas and  commercial  space,  common  spaces  and  related
infrastructure  located  at The  Canyons  Ski  Area,  Summit  County,  Utah (the
"Improvements")  in  accordance  with  the  Plans  and  Specifications  and  the
requirements  of the  Purchase  and Sale  Agreements  and for paying for Project
Costs in accordance with the Project Budget.

     SECTION  9.15.  Project  Costs.  The Borrower will pay all Project Costs in
excess of the Loan Amount, regardless of the amount.

        SECTION 9.16.  Required Equity/Insufficiency of Loan Proceeds.

        Borrower shall obtain a minimum Required Equity consisting of $4,000,000
in cash, Land and services  supplied by the Guarantor plus the initial  deposits
from the Purchase and Sale Agreements for the Residential Units in the amount of
$3,989,170,  and of which shall be invested  into the Project prior to the first
Loan Advance.  In addition  within 30 days of the completion of the roof for the
Project,  Borrower shall obtain  $3,989,170 in additional cash deposits from the
purchasers  of the  Residential  Units under the Purchase  and Sale  Agreements,
which sum shall be  invested  directly  in the Project  before  additional  Loan
Advances will be made.

        If at any time while the Loan Advance is  outstanding  or the Lender has
any  obligation  to make  Advances  hereunder,  the  Lender  shall  in its  sole
discretion determine that the remaining  undisbursed portion of the Loan Advance
for the Project,  together with the  undisbursed or undrawn  balance of Required
Equity Funds and any other sums previously applied to Project Costs or deposited
by the  Borrower  with the  Lender in  connection  with the Loan,  is or will be
insufficient to fully complete and equip the Improvements in accordance with the
Plans and Specifications and the Purchase and Sale Agreements,  to pay all other
Project Costs,  to pay all interest  accrued or to accrue on the Loan during the
term of the Loan from and after the date  hereof,  and to pay all other sums due
or to become due under the Loan Documents (or as to any budget  category or line
item in the Project Budget,  if the undisbursed  funds for such category or line
item are or will be insufficient  to fully pay for the costs  attributed to such
budget  category or line item),  regardless of how such condition may be caused,
the  Borrower  will,  within  seven  (7)  days  after  written  notice  of  such
determination  from the Lender,  deposit with and pledge to the Lender such sums
of money in cash as the Lender may require,  in an amount  sufficient  to remedy
the  condition  described in such notice,  and  sufficient  to pay any liens for
labor and  materials  alleged to be due and  payable at that time in  connection
with the Improvements.

        At the  Lender's  option,  no further  Advances  need be made until this
section has been complied  with. All such monies  deposited  shall be additional
security for the Obligations and shall be disbursed by Lender in the same manner
as Advances before any further Advances of the Loan proceeds shall be made.

     SECTION 9.17. Laborers,  Subcontractors and Materialmen.  The Borrower will
furnish to the Lender at its request, from time to time, affidavits listing all
subcontractors,  materialmen,  and any other  Persons  who might or could  claim
statutory  or common law liens and are  furnishing  or have  furnished  labor or
material to the Project or any part  thereof and their  invoices and demands for
payment.  The  Borrower  will also  furnish  from time to time upon  request  of
Lender,  lien  waivers  bearing  a then  current  date  and  prepared  on a form
satisfactory  to the  Lender  from the  Contractor  and such  subcontractors  or
materialmen as the Lender may designate.

        SECTION 9.18.  Further Assurances.

        (a) Regarding  Construction.  The Borrower will furnish all instruments,
documents, boundary surveys, footing or foundation surveys, certificates,  plans
and specifications,  title and other insurance,  reports and agreements and each
and every other  document and  instrument  required to be  furnished  under this
Agreement and the other Loan Documents.

        (b) Regarding Preservation of Collateral.  The Borrower will execute and
deliver to the Lender such further documents, instruments, assignments and other
writings,  and will do such other acts  necessary  or  desirable  to  establish,
preserve and protect the Collateral, as the Lender may reasonably require.

        (c) Regarding this Agreement.  The Borrower will cooperate with, do such
further acts and execute such further  instruments  and  documents as the Lender
shall  reasonably  request  to carry out to its  satisfaction  the  transactions
contemplated by this Agreement and the other Loan Documents.

     SECTION 9.19. Financial Covenants. The Borrower covenants and agrees that,
so long as the Loan is outstanding:

a)            Appraised Value. The outstanding  balance of the Loan shall not at
              any time exceed seventy-seven percent (77%) of the Appraised Value
              of the  entire  Mortgaged  Property.  If as a  result  of any such
              Appraisal  such ratio is greater than the  percentages of the Loan
              specified above and Borrower fails to reduce the outstanding  Loan
              balance or provide  additional  collateral  securing the Loan then
              such event shall, at the option of Lender,  be an Event of Default
              under this  Agreement  which shall entitle  Lender to exercise any
              one or more default remedies under the Loan Documents as set forth
              in said documents and this Agreement.

b)            Borrower's Liquidity. Borrower shall obtain and maintain on hand a
              minimum  of  Ten  Million  Dollars  ($10,000,000.00)  in  cash  or
              marketable securities consisting  obligations of the United States
              of America or  securities  listed and  regularly  traded  national
              securities  exchanges  in the  United  States  (i.e.,  New York or
              NASDAQ  national  market  securities)  and which are acceptable to
              Lender,  or in the  alternative  Borrower shall have not less than
              $10,000,000  in cash  readily  available  under  written,  binding
              commitments   arising   out   of   the   Guarantor's   $85,000,000
              subordinated debt offering all in form and substance acceptable to
              Lender.

c)            Guarantor Tangible Net Worth.  Guarantor shall maintain a tangible
              net  worth  equal to or  greater  than the sum of:  Forty  Million
              Dollars ($40,000,000);  plus, Ten percent (10%) of Guarantor's net
              income after July 26, 1998, measured on a consolidated basis as of
              the end of each fiscal quarter.
d)            Guarantor's EBITDA.  Guarantor shall maintain a ratio of "Earnings
              Before Interest,  Taxes, Depreciation and Amortization of Deferred
              Charges" (EBITDA) to cash interest expense liabilities incurred of
              not less than 1.25 to 1.00 measured on a consolidated  basis as of
              the end of each fiscal quarter. "EBITDA" means, calculated for the
              period of the previous four fiscal quarters,  the consolidated net
              earnings  of  Guarantor  plus the  aggregate  amounts  deducted in
              determining  such net  income in  respect  of  interest  expenses,
              taxes,  depreciation and amortization;  but not,  however,  giving
              effect to extraordinary losses or gains in calculating net income.


     SECTION 10. NEGATIVE COVENANTS OF THE BORROWER.  The Borrower covenants and
agrees that, so long as the Loan is outstanding or the Lender has any obligation
to make any Advances:

     SECTION  10.1.   Restriction  on   Leases/Release   of  Purchase  and  Sale
Agreements. The Borrower will not become a party to or agree to any Lease of the
Mortgaged  Property without the prior approval of the Lender,  except for leases
of the Commercial Unit upon  commercially  reasonable terms subject to the prior
consent of Lender which consent shall not be unreasonably withheld.

        The  Borrower  will  not  amend,  supplement  or  otherwise  modify,  or
terminate or cancel,  or accept the surrender of, or grant any concessions to or
waive the  performance of any material  obligations  of any purchaser  under any
Purchase and Sale Agreement for Residential Units, without the prior approval of
the Lender.  The Borrower will not,  directly or indirectly,  cause or permit to
exist any condition which would result in the termination or cancellation of, or
which would relieve the  performance of any  obligations of any tenant under any
Purchase and Sale Agreement for Residential Units.

     SECTION 10.2.  Restriction on Change  Orders.  The Borrower will not cause,
permit or suffer to exist any deviations from the Plans and  Specifications  and
will not approve or consent to any change order or construction change directive
without the prior approval of the Lender, each purchaser of Residential Units if
required,   and  the  surety  company  or  companies  issuing  any  Payment  and
Performance Bonds, if any.

     SECTION 10.3. No Amendments, Terminations or Waivers. The Borrower will not
terminate,   amend,  or  otherwise  modify  the  Architect's   Contract  or  the
Construction  Contract without the prior approval of the Lender, and in the case
of the  Construction  Contract,  of any surety or surety  companies  issuing any
Payment and Performance  Bonds.  The Borrower will not,  directly or indirectly,
waive or agree or consent to the waiver of, the  performance of any  obligations
of any other party under the Architect's Contract or the Construction Contract.

     SECTION 10.4.  Compliance with Environmental Laws. The Borrower will not do
any of the following: (a) use any of the Real Estate or any portion thereof as a
facility  for  the  handling,  processing,  storage  or  disposal  of  Hazardous
Materials  (b) cause or  permit  to be  located  on any of the Real  Estate  any
underground tank or other underground storage receptacle for Hazardous Materials
except in full  compliance with  Environmental  Laws, (c) generate any Hazardous
Materials on any of the Real Estate except in full compliance with Environmental
Laws,  or (d) conduct any  activity at any Real Estate or use any Real Estate in
any manner so as to cause a Release.

     SECTION  10.5  Distributions  by  Borrower/Transactions   with  Affiliates.
Borrower  shall not  declare  or pay any  dividends  or other  distributions  on
corporate  stock,  whether in cash or in kind, or make any  distributions of any
kind whatsoever out of the property,  assets,  income or revenues of Borrower on
account  of or in  respect  to  all or any of  the  stock  of  Borrower,  unless
expressly permitted with the specific prior written consent of Lender.

        Borrower  will not enter into any leases  make any loans or  payments of
money (other than reasonable salaries and reimbursable  expenses incurred in the
ordinary course of Borrower's business) to officers, directors,  stockholders or
Affiliates of Borrower.

        No officer, trustee,  directors,  shareholder or employee of Borrower or
any  Affiliate  of  Borrower  is  presently  a party to or shall  engage  in any
transaction  with a Borrower,  whether for  services,  for the rental or sale of
real or personal  property,  or in conjunction with any other transaction or any
nature,  which  results  in a  Borrower  making a  payment  or  providing  other
consideration in excess of fair market value.

     SECTION  10.6  Indebtedness.  Borrower  shall not  create,  incur,  assume,
guarantee,  agree to  purchase,  repurchase  or provide  funds in respect of, or
otherwise  become or be or remain  liable  with  respect  to, any  Indebtedness,
recourse or non-recourse,  direct or indirect,  nor guaranty or otherwise become
liable for the obligations of others, whether financial or contractual, except:

(a)       The Indebtedness evidenced by the Note;

(b)       The  obligations  of  Borrower as a guarantor  of the  obligations  of
          Guarantor   under  the  ASC  East,   Inc.   $120  million  12%  Senior
          Subordinated  Notes due 2006, which obligations shall remain unsecured
          are fully  subordinated  to the obligations of Borrower under the Loan
          and this Agreement;

(c)       instruments  endorsed for deposit in the ordinary course of Borrower's
          business operations;

(d)       unsecured  trade  Indebtedness  incurred  in the  ordinary  course  of
          business due not more than 60 days from the date the goods or services
          are provided;

(e)       The obligations of Borrower to Summit County,  Utah under the Easement
          Agreements; and

(f)       the  obligations  of Borrower and Guarantor to Junior  Creditor in the
          principal  amount  not to  exceed  $2,097,495.60,  provided  that such
          obligations  are  subject  to the  Subordination  Agreement  as herein
          provided.


This  limitation  shall extend  without  limitation to  guaranties,  capitalized
leases,  lease purchase  agreements,  operating or cash flow guaranties,  and/or
joint venture or partnership financing.

     SECTION 10.7 Liens.  Borrower shall not create,  incur, assume or permit to
exist any mortgage, lien, charge, security interest,  attachment,  lien or other
encumbrance  on  any  of  its  properties  or  assets,   whether   voluntary  or
involuntary, except:

(a)       liens in respect of taxes,  fees,  assessments and other  governmental
          charges not yet due  provided,  however,  that  Borrower  shall not be
          required   to  pay  any  such  tax,   assessment,   charge  and  other
          governmental  charges  if the  same  shall  not at the time be due and
          payable or can be paid  thereafter  without penalty or if the validity
          thereof  shall  currently be  contested  in good faith by  appropriate
          proceedings  and, if Borrower shall have set aside on Borrower's books
          adequate reserves with respect to such tax, assessment,  or charge and
          which do not in the aggregate materially detract from the value of the
          property  of  Borrower or  materially  impair the sale of  Residential
          units in the Property;

(b)       liens in respect of pledges or deposits under workmen's  compensation,
          unemployment insurance, social security laws or similar legislation or
          in connection with appeal and similar bonds  incidental to litigation,
          mechanics',  laborers' and  materialmen's  and similar  liens,  if the
          obligations  secured by such liens are not then  delinquent or if such
          obligations are being contested in good faith by Borrower and adequate
          reserves  have  been  set  aside  therefor,  and  which  do not in the
          aggregate  materially  detract  from  the  value  of the  property  of
          Borrower or materially  impair the use thereof in the operation of its
          business or  materially  impair the sale of  Residential  units in the
          Property;

(c)       judgment liens for an award of Ten Thousand  Dollars  (U.S.$10,000.00)
          or less  which  shall not have been in  existence  for more than sixty
          (60) days after the creation thereof,  or if a stay of execution shall
          have been  obtained,  for a period  longer than thirty (30) days after
          the expiration of such stay; and

(d)       junior  mortgage in favor of Junior  Creditor,  subject however to the
          Subordination  Agreement,  which agreement shall include provisions as
          follows:

          i)        requiring the Junior Creditor to join in the creation of the
                    Condominium  Units to the extent  required to validly form a
                    condominium under the Utah Condominium Act.

          ii)       that insurance proceeds and condemnation awards with respect
                    to the Mortgaged Property shall be applied in such manner as
                    Lender may direct,  including  applicable to the expenses of
                    reconstruction  and rebuilding of the Mortgaged  Property or
                    to reduction of the Loan balance;

          iii)      providing  that  100%  of  the  net  sale  proceeds  of  the
                    Condominium  Units  shall be  applied  to the Loan until the
                    Loan is paid in full,  and that the  Junior  Creditor  shall
                    release  its  junior  lien in  order to  permit  the sale of
                    Condominium  Units to  buyers  under the  Purchase  and Sale
                    Agreements; and

          iv)       contain such other provisions as Lender may require.


     SECTION 10.7 Single Line of Business. Borrower is not engaged and will not
engage in any  business  other than the  development,  construction,  ownership,
operation and sale of the Mortgaged Property.


     SECTION 11. CONDITIONS TO INITIAL ADVANCES. The obligation of the Lender to
make the initial  Advances on each Note shall be subject to the  satisfaction of
the following conditions precedent:

     SECTION 11.1 Initial Advance on Note . The obligation of the Lender to make
the  initial  Advances on the Note shall be subject to the  satisfaction  of the
following conditions precedent:

a)        Loan  Documents.  Each of the Loan  Documents  shall  have  been  duly
          executed,  acknowledged  as  required,  delivered  by  the  respective
          parties   thereto  and  recorded  if  required  with  the  appropriate
          recording  office,  shall be in full  force and effect and shall be in
          form and substance satisfactory to the Lender.

b)        Purchase and Sale(s). The Purchase and Sale Agreements shall have been
          duly  executed by the  respective  parties  thereto,  shall be in full
          force and effect,  and shall be in form and substance  satisfactory to
          the Lender and in accordance  with this  Agreement and the  Collateral
          Assignment of Purchase and Sale Agreements.

c)        Certified  Copies of Organization  Documents.  With respect to each of
          Borrower and  Guarantor,  Lender shall have received a certificate  of
          good standing from the Maine Secretary of State,  and a certificate of
          foreign  corporation from the Utah Secretary of State, and if required
          by Lender, a certified copy of the articles of  incorporation,  bylaws
          and any other of its organization documents .

d)        Resolutions.  All actions necessary for the valid execution,  delivery
          and  performance  by the Borrower and Guarantor of this  Agreement and
          the  other  Loan  Documents  have  been  duly and  effectively  taken,
          including without limitation delivery to Lender of resolutions adopted
          by its directors  authorizing the transactions  described herein, each
          certified  by its  clerk as of a recent  date to be in full  force and
          effect.

e)        Incumbency  Certificate;  Authorized  Signers.  The Lender  shall have
          received  from  each  of the  Borrower  and  Guarantor  an  incumbency
          certificate, dated as of the Closing Date, signed by a duly authorized
          officer  of the  Borrower  and  Guarantor  and giving the name of each
          individual  who shall be  authorized  to act on behalf of Borrower and
          Guarantor.

f)        Validity of Liens. The Security Documents shall create in favor of the
          Lender  a legal,  valid  and  enforceable  continuing  first  lien and
          security interest in the Collateral.

g)        Legal  Opinions.  The Lender shall have  received  favorable  opinions
          addressed to the Lender and dated as of the Closing Date,  from Foster
          Stewart Jr. Esq. of Portland,  Maine, and from PARSON, BEHLE & LATIMER
          of Salt Lake City,  Utah in form and substance  satisfactory to Lender
          and  Lender's  counsel (i) stating that all Loan  documents  have been
          duly authorized,  executed and delivered by Borrower and Guarantor and
          are valid,  binding and  enforceable  against  Borrower and Guarantor,
          including,  without  limitation,  the choice of law  provisions of the
          Loan documents subject to general  principles of equity and bankruptcy
          laws of general  application,  (ii)  indicating the due  organization,
          legal  existence and good  standing of Borrower,  and the Guarantor in
          its state of  organization  and in the  state  where  the  Project  is
          located,  (iii)  indicating that the  Condominium  Declaration and the
          Purchase  and  Sale   Agreements  are  in  compliance  with  the  Utah
          Condominium Act and all related  Requirements subject to the recording
          thereof (other than land use,  building and other  specialized  codes)
          applicable to the creation and sale of the Residential Units, and (iv)
          stating  that  there  is no  action,  suit or  proceeding  pending  or
          threatened  against or affecting  Borrower or the Project,  before any
          court, administrative agency, arbitrator or governmental authority

h)        Certificate re Compliance of  Improvements  with the  Requirements.  A
          certificate  from the Architect or another  qualified  professional or
          attorney  acceptable to Lender indicating that the construction of the
          Improvements and the use,  occupancy and operation  thereof  following
          completion  of  construction   assuming  that  the   improvements  are
          constructed in accordance  with applicable  plans and  specifications,
          that adequate utility services are currently  available to service the
          Project, and are in compliance with the Requirements.

i)        Documentation   under  with  Requirements.   Copies  of  all  permits,
          correspondence,  approvals,  votes, actions and agreements  evidencing
          Borrower's and the Project's compliance with all Requirements.

j)        Contractor's  Consents.  An agreement  from the Contractor in favor of
          Lender with respect to the Project in form and substance acceptable to
          Lender  including  an  agreement  to  notify  Lender in the event of a
          default  and  consenting  to  continue  to  the  construction  of  the
          Improvement for Lender under the Construction Contract in the event of
          a default under any of the Loan Documents. k) Architect's Consents. An
          agreement  from the  Architect  in favor of Lender with respect to the
          Project  in form and  substance  acceptable  to  Lender  including  an
          agreement to notify Lender in the event of a default and consenting to
          the  Lender's  use of the plans and  specifications  prepared  by such
          Architect,  without further cost to the Lender other than as specified
          in the  Borrower's  Architect's  contract,  in the  event of a default
          under any of the Loan Documents.

l)        Lien Search. The Lender shall have received a certification from Title
          Insurance  Company  (which  shall be updated  from time to time at the
          Borrower's  expense upon request by the Lender) and from the Maine and
          Utah  Secretaries  of  State  that  a  search  of the  public  records
          disclosed no liens, security agreements,  mortgages, leases, financing
          statements,  agreements or other  matters which affect the  Collateral
          and that no real estate taxes,  assessments or other  assessments  are
          past due, except for the Security Documents, and for Junior Creditor's
          mortgage lien which shall be subject to the Subordination Agreement.

m)        Notices.  All notices  required by any  Governmental  Authority  under
          applicable Requirements shall have been filed.

n)        Performance;  No  Default.  The  Borrower  shall  have  performed  and
          complied with this Agreement and no Event of Default exists.

o)        Representations and Warranties. The representations of warranties made
          in the  Loan  Documents  or  otherwise  made  by or on  behalf  of the
          Borrower  therewith or after the date thereof shall have been true and
          correct in all  respects  when made and shall also be true and correct
          in all respects on the Drawdown Date.

p)        Proceedings  and Documents.  All  proceedings in connection  with this
          Agreement and the other Loan Documents  shall be  satisfactory  to the
          Lender in form and  substance,  and the Lender shall have received all
          information and such counterpart originals or certified copies of such
          documents  and such other  certificates,  opinions or documents as the
          Lender and the Lender's counsel may reasonably require.

q)        Construction   Documents.   Each  of  the  Architect's   Contract  and
          Construction  Contract  shall have been duly executed and delivered by
          the respective parties thereto, shall be in full force and effect, and
          shall  be in  form  and  substance  satisfactory  to the  Lender.  The
          Construction  Cost shall be  established  by contracts at least 80% of
          the cost which are for a fixed price, and the total  Construction Cost
          shall not exceed $12,901,183.00 in the aggregate.

r)        Subcontracts. The Borrower shall have delivered to the Lender, and the
          Lender  shall  have  approved,   a  list  of  all  subcontractors  and
          materialmen  who  have  been  or,  to  the  extent  identified  by the
          Borrower, will be supplying labor or materials for the Project, a copy
          of the  subcontract  to be used by the  Contractor if any, and correct
          and complete photocopies of all executed subcontracts and contracts.

s)        Junior Creditor  Agreements.  The Borrower and Guarantor shall deliver
          copies of all contracts  and  agreements  with the Junior  Creditor to
          which  they or any  predecessors  are a party or which may  affect the
          Mortgaged Property.

t)        Other  Contracts.  The  Borrower  shall have  delivered  to the Lender
          correct and complete  photocopies of all other executed contracts with
          contractors,  engineers or  consultants  for the  Project,  and of all
          development,  management,  brokerage,  sales or leasing agreements for
          the Project.

u)        Construction  Inspector  Report.  The  Lender  shall  have  received a
          satisfactory  report  regarding  the  Plans  and  Specifications,  the
          Construction Contract and the Project Budget.

v)        Deliveries. The following items or documents shall have been delivered
          to the  Lender  by the  Borrower  and  shall be in form and  substance
          satisfactory to the Lender:

          (i)       The commitment for the Title Policy with a current update of
                    title;

          (ii)      Duplicate  originals or certified  copies of all policies of
                    insurance  required to be obtained and maintained during the
                    construction of the Improvements;

          (iii)     Evidence  that the sum of (i) the  proceeds  of the Loan and
                    (ii) the  unexpended  portions of the Required  Equity Funds
                    delivered  to  the  Lender  on  the  Closing  Date  or to be
                    delivered thereafter will be sufficient to cover all Project
                    Costs reasonably  anticipated to be incurred to complete the
                    Improvements  prior to Completion Date, to carry the Project
                    through the Maturity  Date, to satisfy the  requirements  of
                    the  Purchase  and  Sale   Agreements  and  to  satisfy  the
                    obligations  of  the  Borrower  to  the  Lender  under  this
                    Agreement;

          (iv)      Evidence of access,  availability  of utilities  and Project
                    Approvals as required by this Agreement and the Purchase and
                    Sale Agreements;

          (v)       An environmental site assessment report or reports of one or
                    more   qualified   environmental   engineering   or  similar
                    inspection  firms  approved by the Lender,  which  report or
                    reports  shall  indicate  a  condition  of the  Land and any
                    existing  improvements thereon in all respects  satisfactory
                    to the Lender in its sole  discretion  and upon which report
                    or reports the Lender is expressly entitled to rely;

          (vi)      A Survey of the Land and Surveyor's Certificate;

          (vii)     Any  Required  Equity  Funds from  Borrower in excess of the
                    Loan  proceeds as required in order to complete  the Project
                    shall have been delivered to the Lender,  to the extent then
                    due , and  Lender  acknowledges  that the  prepaid  expenses
                    incurred  and  paid  for by  Borrower,  Guarantor  or  their
                    affiliates  with  respect to the Project as set forth in the
                    Project  Budget  shall be  considered a part of the Required
                    Equity  subject to  submission of  appropriate  verification
                    reasonably satisfactory to Lender; and

          (viii)    Evidence  that the  Purchase and Sale  Agreements  remain in
                    full force and effect.

          (ix)      Plans  and   Specifications  and  approval  thereof  by  any
                    necessary Governmental Authority;

          (x)       Evidence  that the sum of (a) the  proceeds  of the Loan and
                    (b) the  unexpended  portions of the  Required  Equity Funds
                    delivered  to  the  Lender  on  the  Closing  Date  or to be
                    delivered thereafter will be sufficient to cover all Project
                    Costs reasonably  anticipated to be incurred to complete the
                    Improvements  prior to Completion Date, to carry the Project
                    through the Maturity  Date, to satisfy the  requirements  of
                    the  Purchase  and  Sale   Agreements  and  to  satisfy  the
                    obligations  of  the  Borrower  to  the  Lender  under  this
                    Agreement;

          (xi)      The Easement  Agreements  conforming to the  requirements of
                    this Agreement;

          (xii)     Acknowledgment   and   agreement   from  the  escrow   agent
                    conforming to the requirements of this Agreement;

          (xiii)    The Subordination Agreement and

          (xiv)     A Draw Request  complying with the provisions of SECTION 3.1
                    hereof.



     SECTION 12. CONDITIONS OF SUBSEQUENT ADVANCES. The obligation of the Lender
to make any Advance  after the initial  Advance on each Note shall be subject to
the satisfaction of the following conditions precedent:

     SECTION 12.1. Prior Conditions  Satisfied.  All conditions precedent to the
initial  Advance and any prior Advance shall  continue to be satisfied as of the
Drawdown Date of such subsequent Advance.

     SECTION 12.2.  Performance;  No Default.  The Borrower shall have performed
and complied with this Agreement,  and on the Drawdown Date there shall exist no
Default or Event of Default.

     SECTION 12.3.  Representations and Warranties.  Each of the representations
and  warranties  made by the Borrower in the Loan  Documents or otherwise  shall
have been true and  correct in all  respects  on the date on when made and shall
also be true and correct in all material  respects on the Drawdown  Date of such
Advance   (except  to  the  extent  of  changes   resulting  from   transactions
contemplated  or permitted by the Loan  Documents  and changes  occurring in the
ordinary course of business that singly or in the aggregate are not adverse).

     SECTION 12.4. No Damage.  The  Improvements  shall not have been injured or
damaged by fire, explosion, accident, flood or other casualty, unless the Lender
shall have received insurance proceeds  sufficient in the judgment of the Lender
to effect the  satisfactory  restoration of the  Improvements  and to permit the
completion thereof on or prior to the Completion Date.

     SECTION  12.5.  Receipt of the Lender.  The Lender shall have  received the
following items or documents  which shall be in form and substance  satisfactory
to the Lender:

(a)       Draw Request.  A Draw Request  complying with the requirements of this
          Agreement;

(b)       Endorsement  to Title Policy.  A "date down"  endorsement to the Title
          Policy  indicating  no change in the state of title and  containing no
          survey exceptions not approved by the Lender,  which endorsement shall
          increase the amount of the Title Policy to the aggregate amount of the
          Loan advanced on or before the effective date of such endorsement;

(c)       Current  Survey.  An updated Survey if required by the Title Insurance
          Company or the Lender;

(d)       Approval by Construction  Inspector.  Approval of the Draw Request for
          such Advance by the Construction Inspector;

(e)       Lien  Waivers  under   Construction   Contracts.   Evidence  that  the
          Construction Contract is in full force and effect,  without any change
          orders which have not been  approved by Lender,  and that lien waivers
          as  required  by Lender  and the  Title  Insurance  Company  have been
          obtained from the Contractor and such all contractors, subcontractors,
          materialmen  or  suppliers  as  Lender  may  require,  all in form and
          substance  satisfactory to the Lender and the Title Insurance Company;
          and

(f)       Purchase  and Sale  Agreements.  Evidence  that the  Purchase and Sale
          Agreements remain in full force and effect.

     SECTION  12.6.  Release  of  Retainage.   In  addition  to  the  conditions
hereinbefore  set forth in this Article 12, the Lender's  obligation to make any
Advance of Retainage shall be subject to receipt by the Lender of the following:

(a)       Purchasers.  Evidence  satisfactory  to the Lender that the purchasers
          under the Purchase and Sale Agreements have approved the  construction
          of  the   Improvements  in  accordance  with  the  Purchase  and  Sale
          Agreements,  such that each  purchaser is obligated to close under the
          Purchase and Sale Agreements.

(b)       Project  Approvals.  Evidence  satisfactory  to the  Lender  that  the
          Borrower has obtained all remaining  Project Approvals from, given all
          notices  to, and taken all such other  actions  with  respect to, such
          Governmental  Authority as may be required under the  Requirements for
          the permanent use and occupancy of the Improvements for their intended
          uses.

(c)       Approval by Construction Inspector. Notification from the Construction
          Inspector to the effect that the Improvements have been completed in a
          good  and  workmanlike   manner  in  accordance  with  the  Plans  and
          Specifications.

(d)       Final  Survey.  If  required by the Title  Company or Lender,  a final
          Survey  acceptable to the Lender showing the as-built  location of the
          completed Improvements.

(e)       Certificate  of  the  Borrower's  Architect.   A  certificate  of  the
          Borrower's  Architect  that the  Improvements  have been  completed in
          accordance with the Plans and Specifications and that the Improvements
          comply with all applicable  Requirements and Project Approvals and are
          in all respects (except for work to be performed by tenants) ready for
          occupancy.

(f)       Payment of Costs.  Evidence  satisfactory  to the Lender that all sums
          due for the  construction of the  Improvements  have been paid in full
          (or will be paid out of the funds  requested to be advanced)  and that
          no party  claims or has a right to claim any  statutory  or common law
          lien arising out of the Project.

(g)       Final Lien Waivers.  Final lien waivers (in a form satisfactory to the
          Lender and the Title  Insurance  Company) from the Contractor and such
          laborers,  subcontractors  and  materialmen as may be requested by the
          Lender, duly executed and, if requested, notarized.

(h)       Consent by Surety.  Satisfactory  evidence that the surety  company or
          companies  issuing any Payment and  Performance  Bonds,  if any,  have
          consented  to final  payment to the  Contractor  or any  subcontractor
          named as principal therein.

          (i)       Warranties.  Copies of the warranty issued by the Contractor
                    to the Borrower  pursuant to the Construction  Contract,  if
                    any, and of all other  warranties  issued to the Borrower by
                    subcontractors  and  manufacturers  for labor  performed and
                    materials  supplied in connection  with the  construction of
                    the Improvements.

(j)           Insurance.  Duplicate original or certified copies of all policies
              of  insurance  required by the  Security  Deed to be obtained  and
              maintained by the Borrower following completion of construction of
              the Improvements.


        SECTION 13.  EVENTS OF DEFAULT AND REMEDIES.

     SECTION  13.1.  Events of  Default.  If any of the  following  ("Events  of
Default" or if either or both notice or lapse of time is required,  then,  prior
to such notice and/or lapse of time, "Defaults") shall occur:

(a)       Borrower  fails to make payment  when due and payable  within ten (10)
          days of when due, of the (i)  interest or (ii)  principal or any other
          amount  due on either the Note  after  same  shall  have  become  due,
          whether at the stated  date of  maturity  or any  accelerated  date of
          maturity or at any time fixed for payment; or

(b)       Borrower  fails to pay as and  when due and  payable  any  other  sums
          required to be paid by Borrower under any Loan  Documents  (including,
          but not  limited to, any  payments  required  for taxes and  insurance
          premiums)  and  continuance  of such  failure for a period of ten (10)
          days after written notice thereof from Lender; or

(c)       Borrower  fails to duly  observe or perform any other term,  covenant,
          condition  or  agreement  contained  in  this  Agreement  or the  Loan
          Documents,  and the continuance of such failure for a period of thirty
          (30)  days  after  written  notice  thereof  from  Lender,  except  as
          otherwise provided herein; or

(d)       any  representation  or  warranty  made in  writing by or on behalf of
          Borrower  herein  or  in  connection  with  any  of  the  transactions
          contemplated hereby shall prove to have been false or incorrect in any
          material respect on the date as of which made; or

(e)       any  violation of the loan to value  covenants set forth in Article IV
          of this Agreement; or

(f)       any other event of default which continues  beyond any applicable cure
          period,  either  under any other  Loan  Documents,  including  without
          limitation any Security  Documents,  Guaranty or under other agreement
          entered into  between  Lender and the  Borrower,  whether or not it is
          governed by or secures this Agreement; or

(g)       Borrower  or  Guarantor  fails  to  pay  at  maturity  or  within  any
          applicable  grace period any  obligation  for money borrowed or credit
          advanced,  or any  other  material  agreement  by which  it is  bound,
          evidencing or securing  money borrowed or credit  advanced,  including
          without limitation the loan from the Junior Creditor, and such failure
          or default shall continue without waiver thereof --- beyond any period
          of grace provided with respect thereto, which failure or default shall
          or could have a material  adverse effect upon the financial  condition
          of  Borrower  or  Guarantor  provided,   however,  that  Borrower  and
          Guarantor shall not be required to pay any such third -------- -------
          party debt, tax,  assessment,  charge or levy if the same shall not at
          the time be due and payable or can be paid thereafter  without penalty
          or if the validity  thereof shall currently be contested in good faith
          by appropriate  proceedings  and, except as to debts,  and if Borrower
          shall  have set  aside on  Borrower's  books  adequate  reserves  with
          respect to such judgment, tax, assessment, charge or levy; or

(h)       The entry of a decree or order for relief with  respect to Borrower or
          Guarantor in an involuntary case under the federal bankruptcy laws, as
          now or hereafter constituted, or any other applicable federal or state
          bankruptcy,  insolvency or other similar law or appointing a receiver,
          liquidator,  trustee, custodian (or similar official) of any Borrower;
          or

(i)       The  commencement by any Borrower and/or Guarantor of a voluntary case
          under the federal  bankruptcy  laws, as now  constituted  or hereafter
          amended,   or  any  other  applicable  federal  or  state  bankruptcy,
          insolvency  or other  similar  law, or the consent by any  Borrower or
          Guarantor to the  appointment  of or taking  possession by a receiver,
          liquidator,  trustee,  custodian  (or other  similar  official) of any
          Borrower or for any substantial part of its property, or the making by
          any Borrower of any  assignment  for the benefit of creditors,  or the
          insolvency  or the failure of any Borrower  generally to pay its debts
          as such debts  become due, or the taking of action by any  Borrower in
          furtherance of any of the foregoing; or

(j)       if any order  shall be entered  in any  proceeding  by or against  any
          Borrower or  Guarantor  decreeing or  permitting  the  dissolution  or
          liquidation  of Borrower  and/or  Guarantor or the  winding-up  of its
          affairs  and such order  shall  remain in effect for more than  thirty
          days, whether or not consecutive; or

(k)       if  there  shall  remain  in  force,  undischarged,   unsatisfied  and
          unstayed,  for more than  thirty  (30) days  after  notice  thereof to
          Borrower  and/or  Guarantor,  whether  or not  consecutive,  any final
          judgment  against  Borrower  and/or  Guarantor  beyond any  applicable
          appeal  period,  in an amount in excess of $10,000 or which  precludes
          Borrower's  sale of  individual  Residential  units  in the  Mortgaged
          Property; or

(l)       if any of the Loan Documents shall be canceled, terminated, revoked or
          rescinded  otherwise than in accordance with the terms thereof or with
          the express prior written agreement, consent or approval of Lender, or
          any  action at law,  suit or in equity or other  legal  proceeding  to
          cancel, revoke or rescind any of the Loan Documents shall be commenced
          by or on  behalf of  Borrower  and/or  Guarantor,  or any court or any
          other  governmental  or  regulatory  authority  or agency of competent
          jurisdiction  shall make a  determination  that,  or issue a judgment,
          order,  decree or ruling to the  effect  that,  any one or more of the
          Loan Documents is illegal, invalid or unenforceable in accordance with
          the terms thereof; or

(m)       Borrower  and/or  Guarantor  shall be indicted for a federal  crime, a
          punishment  for which could  include the  forfeiture  of any assets of
          Borrower and/or Guarantor


       THEN and in any such event,  Lender may, at its option,  without  further
notice of its election and without demand,  do any one or more of the following,
all of which are authorized by Borrower:

(1)           Forthwith suspend or terminate,  in the discretion of Lender,  the
              commitment  of  Lender to make  Loans to  Borrower  hereunder  and
              Lender shall be relieved of all  obligations  to make any Loans to
              Borrower,  provided that Borrower  shall not be relieved of any of
              its obligations  hereunder or under the Loan  Documents,  and that
              Lender may  immediately  suspend  Advances upon a Default  without
              need  to  await  the  expiration  of any  notice  or  cure  period
              established above;

(2)           Declare all amounts  owing  hereunder  or with respect to the Note
              due and payable in full together with all interest thereon and all
              other  payments  due  hereunder  and under the Note,  all  without
              presentment,  demand,  notice or protest,  all of which are hereby
              waived;

(3)           Exercise any one or all of the rights and  remedies of  mortgagee,
              secured  party  and  creditor  under  the  Loan   Documents,   the
              provisions of the Uniform Commercial Code and any other applicable
              law upon default by a borrower,  whether by suit in equity, action
              at law or other appropriate  proceeding,  whether for the specific
              performance  of  any  covenant  or  agreement  contained  in  this
              Agreement and the other Loan Documents or any instrument  pursuant
              to which the  Obligations  to such Lender are  evidenced,  and, if
              such amount shall have become due, by  declaration  or  otherwise,
              proceed  to enforce  the  payment  thereof  or any other  legal or
              equitable right of such Lender.  Such remedies may be exercised in
              such order and at such times as Lender deems appropriate,  against
              all or portions of the Collateral. No remedy herein conferred upon
              any Lender or the Agent or the holder of any Note is  intended  to
              be  exclusive  of any other remedy and each and every remedy shall
              be cumulative and shall be in addition to every other remedy given
              hereunder or now or  hereafter  existing at law or in equity or by
              statute or any other provision of law.

(4)           Set-off  against any and all deposits,  accounts,  certificate  of
              deposit balances, claims, or other sums at any time credited by or
              due from Lender and against all other  property of Borrower in the
              possession of any Lender or under its control.

(5)           Obtain the  appointment of a receiver upon  application to a court
              of competent  jurisdiction as a matter of right and without regard
              to the asserted  value of the security for the  Obligations,  with
              the receiver  having the express  power and  authority to complete
              the Improvements,  to perform the Borrower's obligations under the
              Purchase  and Sale  Agreements  and to  deliver  deeds  and  other
              closing documents under the Purchase and Sale Agreements.


       Lender may proceed to realize, from time to time, upon any portion or all
of the collateral  security for such amounts then due and payable, in such order
as Lender may elect.  No remedy herein  conferred  upon Lender is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative and
shall be in addition to all other remedies given hereunder or at law.

     SECTION 13.2.  Completion  of Project.  If any one or more of the Events of
Default  shall have  occurred,  regardless  of whether  the  obligation  to make
Advances has been  terminated or the Note  accelerated  under SECTION 13.1,  the
Lender  may cause the  Project to be  completed  and may enter upon the Land and
construct,  equip and  complete the  Project,  with such changes  therein as the
Lender may, from time to time, and in its sole discretion,  deem appropriate. In
connection with any construction of the Project,  the Lender may either directly
or through a receiver:

(a)       use any funds of the Borrower, including any balance which may be held
          by the Lender as security  or, if Borrower is entitled to the same the
          funds held in escrow under the Purchase and Sale  Agreements,  and any
          funds remaining unadvanced under the Loan;

(b)       employ  existing  contractors,   subcontractors,  agents,  architects,
          engineers, and the like, or terminate the same and employ others;

(c)       employ security watchmen to protect the Project;

(d)       make  such  additions,  changes  and  corrections  in  the  Plans  and
          Specifications  as shall, in the judgment of the Lender,  be necessary
          or desirable;

(e)       take  over and use any and all  Personal  Property  contracted  for or
          purchased by the Borrower,  if appropriate,  or dispose of the same as
          the Lender sees fit;

(f)       execute all  applications  and  certificates on behalf of the Borrower
          which may be required by any Governmental Authority or Requirements or
          contract documents or agreements;

(g)       pay,  settle or  compromise  all  existing or future  bills and claims
          which are or may be liens against the Project, or may be necessary for
          the  completion of the  Improvements  or the clearance of title to the
          Project;

(h)       enter  into new  Purchase  and Sale  Agreements,  and  modify or amend
          existing Purchase and Sale Agreements, all as the Lender shall deem to
          be necessary or desirable;

(i)       prosecute and defend all actions and  proceedings  in connection  with
          the construction of the Improvements or in any other way affecting the
          Land or the  Improvements  and  take  such  action  and  require  such
          performance  as the  Lender  deems  necessary  under any  Payment  and
          Performance Bonds;

(j)       fulfill any  obligations  of Borrower under the  Requirements  and the
          Purchase and Sale Agreements; and

(k)       take such action hereunder,  or refrain from acting hereunder,  as the
          Lender may,  in its sole and  absolute  discretion,  from time to time
          determine,  and without any  limitation  whatsoever,  to carry out the
          intent of this SECTION 13.2.


The  Borrower  shall be liable to the Lender for all costs paid or incurred  for
the  construction,  equipping and  completion  of the Project,  whether the same
shall  be  paid  or  incurred  hereunder  or  otherwise.  All  payments  made or
liabilities  incurred by the Lender hereunder of any nature  whatsoever shall be
deemed  Advances  under this  Agreement  and shall be  secured  by the  Security
Documents.  To the  extent  that any costs so paid or  incurred  by the  Lender,
together with all other Advances made by the Lender  hereunder,  exceed the Loan
Amount,  the amount of such excess costs shall be added to the Loan Amount,  and
the Borrower's  obligation to repay the same,  together with interest thereon at
the Default Rate,  shall be deemed to be evidenced by this Agreement and secured
by the  Security  Documents.  Lender  shall not be  obligated  to continue  such
construction  longer than it shall see fit and it may  thereafter,  at any time,
change any course of action  undertaken by it or abandon such  construction  and
decline to make  further  payments,  whether or not the Project  shall have been
completed.  The  construction,  equipping and completion of the Project shall be
deemed to  include  any  action  necessary  to cure any Event of  Default by the
Borrower under any of the terms and provisions of any of the Loan Documents.

     SECTION  13.3 Other  Remedies.  If any one or more of the Events of Default
shall have occurred,  then regardless of any other actions taken by Lender,  the
Lender may proceed to protect and  enforce  its rights and  remedies  under this
Agreement, the Note or any of the other Loan Documents by suit in equity, action
at law or other appropriate proceeding,  whether for the specific performance of
any  covenant  or  agreement  contained  in this  Agreement  and the other  Loan
Documents or any  instrument  pursuant to which the  Obligations  are evidenced,
including the  appointment  of a receiver.  No remedy under this Agreement or in
any of the other Loan Documents is intended to be exclusive of any other remedy.
Each and every  remedy  shall be  cumulative  and shall be in  addition to every
other remedy given  hereunder or thereunder or now or hereafter  existing at law
or in equity or by statute or any other provision of law.

     SECTION  13.4  Waivers.  The  Borrower  hereby  waives  to the  extent  not
prohibited  by applicable  law (a) all  presentments,  demands for  performance,
notices  of  nonperformance  (except to the extent  required  by the  provisions
hereof or of any of the other Loan Documents), protests and notices of dishonor,
(b) any  requirement  of diligence  or  promptness  on the Lender's  part in the
enforcement  of its rights (but not  fulfillment of its  obligations)  under the
provisions of this Agreement or any of the other Loan Documents, and (c) any and
all notices of every kind and  description  which may be required to be given by
any  statute or rule of law and any defense of any kind which the  Borrower  may
now or hereafter  have with  respect to its  liability  under this  Agreement or
under any of the other Loan Documents.

          The rights,  remedies,  powers,  privileges,  and  discretions  of the
Lender hereunder shall be cumulative and not exclusive of any rights or remedies
which it would  otherwise have. No delay or omission by the Lender in exercising
or  enforcing  any of the  Lender's  rights and  remedies  shall  operate as, or
constitute a waiver thereof.  No waiver by the Lender of any Event of Default or
of any default under any other  agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Lender's  rights or remedies,  and no other agreement or transaction,
of whatever nature entered into between the Lender and the Borrower at any time,
either express or implied,  shall preclude the other or further  exercise of the
Lender's  rights and  remedies.  No waiver by the Lender of any of the  Lender's
rights  and  remedies  on any one  occasion  shall be  deemed  a  waiver  on any
subsequent  occasion,  nor shall it be deemed a  continuing  waiver.  All of the
Lender's rights and remedies and all of the Lender's rights,  remedies,  powers,
privileges,  and  discretions  under  any other  agreement  or  transaction  are
cumulative, and not alternative or exclusive, and may be exercised by the Lender
at such time or times and in such order of  preference as the Lender in its sole
discretion may determine.

         Notice:  Under  Maine law, no promise,  contract or  agreement  to lend
         money,  extend  credit,  forbear from  collection of a debt or make any
         other  accommodation  for the  repayment  of a debt for  more  than Two
         Hundred and Fifty Thousand Dollars  ($250,000) may be enforced in court
         against Lender unless the promise,  contract or agreement is in writing
         and signed by Lender.  Accordingly,  Borrower  cannot  enforce any oral
         promise unless it is contained in a loan document signed by Lender, nor
         can any  change,  forbearance  or other  accommodation  relating to the
         loan, this agreement or any other loan document be enforced,  unless it
         is in writing and signed by Lender.

     SECTION 13.5 No Obligation of Lender to Complete Improvements. In the event
that the Lender  exercises the right to take possession of the  Improvements and
the Project under this  Agreement,  whether  directly or through a receiver,  it
shall not be obligated to continue the construction of the Project at all or, if
it does so continue the construction,  longer than it shall deem appropriate, in
its sole discretion, and may at any time abandon such construction and equipment
and refuse to make further payments for the account of the Borrower,  whether or
not the Project have been  completed  and without  affecting the validity of the
Security  Documents and any other  security  given by the Borrower to the Lender
for advances  already made under this  paragraph  and other  provisions  of this
Agreement.

     SECTION 14. SETOFF.  Regardless of the adequacy of any  collateral,  during
the continuance of any Event of Default, any deposits (general or specific, time
or demand, provisional or final, regardless of currency, maturity, or the branch
of the Lender  where such  deposits  are held) or other sums  credited by or due
from the Lender to the  Borrower  and any  securities  or other  property of the
Borrower  in the  possession  of the Lender may be applied to or set off against
the payment of the Obligations  and any and all other  liabilities,  direct,  or
indirect,  absolute  or  contingent,  due or to  become  due,  now  existing  or
hereafter arising, of the Borrower to the Lender.

     SECTION 15.  EXPENSES.  The Borrower agrees to pay (a) the reasonable costs
of producing and reproducing  this  Agreement,  the other Loan Documents and the
other agreements and instruments  mentioned herein, (b) any taxes (including any
interest and  penalties in respect  thereto)  payable by the Lender  (other than
taxes based upon the Lender's net income),  including any  recording,  transfer,
mortgage or  intangibles  taxes in connection  with the Security  Deed, or other
taxes  payable  on or with  respect  to the  transactions  contemplated  by this
Agreement, including any taxes payable by the Lender after the Closing Date, (c)
all  title  insurance   premiums,   and  the  reasonable   fees,   expenses  and
disbursements  of the Lender's counsel to the Lender incurred in connection with
the  preparation,  administration  or  interpretation  of the Loan Documents and
other instruments  mentioned herein, the making of each Advance  hereunder,  and
amendments,  modifications,  approvals, consents or waivers hereto or hereunder,
(d) the fees,  expenses and  disbursements  of the Lender incurred in connection
with the preparation, administration or interpretation of the Loan Documents and
other  instruments  mentioned  herein,  and the making of each Advance hereunder
(including  all fees paid to the  Construction  Inspector,  Appraisal  fees, and
surveyor fees) (e) all reasonable  out-of-pocket  expenses (including reasonable
attorneys'  and  paralegals'   fees  and  costs,  and  the  fees  and  costs  of
consultants,  accountants,  auctioneers,  receivers, brokers, property managers,
appraisers,  investment  bankers  or other  experts  retained  by the  Lender in
connection  with (i) the  enforcement of or  preservation of rights under any of
the Loan Documents against the Borrower or the administration  thereof after the
occurrence of a Default or Event of Default and (ii) any litigation,  proceeding
or dispute  whether  arising  hereunder or otherwise,  in any way related to the
Lender's  relationship with the Borrower or defending any  counterclaims,  cross
claims or attacks  against  Lender by Borrower or any other Person,  and (f) all
reasonable fees, expenses and disbursements of the Lender incurred in connection
with UCC  searches,  UCC filings,  title  rundowns,  title  searches or mortgage
recordings.  The covenants of this Section shall survive payment or satisfaction
of payment of all amounts owing with respect to the Note.

     SECTION  16.  INDEMNIFICATION.  Except for  Lender's  gross  negligence  or
willful  misconduct  or  Lender's  breach of  Lender's  obligations  under  this
Agreement  or the Loan  Documents,  the Borrower  agrees to  indemnify  and hold
harmless  the Lender from and  against  any and all  claims,  actions and suits,
whether  groundless or otherwise,  and from and against any and all liabilities,
losses,  damages and expenses of every nature and character  arising out of this
Agreement or any of the other Loan  Documents or the  transactions  contemplated
hereby and thereby including,  without limitation,  (a) any brokerage,  leasing,
finders or similar  fees,  (b) any  disbursement  of the  proceeds of any of the
Advances,  (c) any  condition of the Project  whether  related to the quality of
construction or otherwise, (d) any actual or proposed use by the Borrower of the
proceeds  of any of the  Advances,  (e) any actual or alleged  violation  of any
Requirements or Project Approvals,  (f) the Borrower entering into or performing
this Agreement or any of the other Loan  Documents or (g) Borrower's  failure to
comply with the Purchase and Sale  Agreements  or any other  obligations  to the
purchasers of Condominium  Units,  of (h) with respect to the Borrower and their
respective  properties and assets,  the violation of any Environmental  Law, the
Release or threatened  Release of any Hazardous  Materials or any action,  suit,
proceeding or investigation  brought or threatened with respect to any Hazardous
Materials (including,  but not limited to claims with respect to wrongful death,
personal  injury  or  damage  to  property),  in each  case  including,  without
limitation,  the  reasonable  fees and  disbursements  of  counsel  incurred  in
connection  with any such  investigation,  litigation  or other  proceeding.  In
litigation,  or the preparation therefor, the Lender shall be entitled to select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this Section are unenforceable
for any reason,  the Borrower hereby agrees to make the maximum  contribution to
the payment in  satisfaction  of such  obligations  which is  permissible  under
applicable law.

     SECTION 17.  LIABILITY  OF THE LENDER.  No action shall be commenced by the
Borrower  for any claim  against  the Lender  under the terms of this  Agreement
unless  written  notice  thereof,  specifically  setting  forth the claim of the
Borrower,  shall have been given to the Lender at least  fifteen  (15)  Business
Days prior to the  commencement of such action.  In no event shall the Lender be
liable to the  Borrower,  or anyone  claiming by, under or through the Borrower,
for any special,  exemplary,  punitive or  consequential  damages,  whatever the
nature of the breach of the terms of this Agreement by the Lender,  such damages
and claims therefor being expressly waived by the Borrower.

     SECTION 18.  RIGHTS OF THIRD  PARTIES.  This  Agreement  including  without
limitation the obligation to make Advances,  are solely and  exclusively for the
benefit of the  Lender;  no other  Person may enforce or shall be deemed to be a
beneficiary  thereof.  In particular,  the Lender makes no  representations  and
assumes  no  obligations  as to third  parties  concerning  the  quality  of the
construction  by the Borrower of the  Improvements  or the absence  therefrom of
defects or Lender's  requirement  of compliance  with this Agreement or the Loan
Documents.

     SECTION  19.  SURVIVAL  OF  COVENANTS,  ETC.  All  covenants,   agreements,
representations  and  warranties  made herein,  in the Note, in any of the other
Loan  Documents  shall  be  deemed  to have  been  relied  upon  by the  Lender,
notwithstanding any investigation  heretofore or hereafter made by Lender, shall
survive the making of the Advances,  and shall continue in full force and effect
so long as any amount due under this  Agreement  or the Note or any of the other
Loan Documents remains  outstanding or the Lender has any obligation to make any
Advances.

        SECTION 20.  PARTICIPATION; ETC.

     SECTION 20.1. Participations. The Lender may sell participations to one or
more  banks or other  entities  in all or a portion of the  Lender's  rights and
obligations under this Agreement and the other Loan Documents; provided that (a)
any such sale or  participation  shall not  affect  the rights and duties of the
Lender hereunder to the Borrower.

     SECTION 20.2.  Pledge by the Lender.  The Lender may at any time pledge all
or any portion of its interest and rights under this Agreement (including all or
any portion of the Note) to any of the twelve  Federal  Reserve Banks  organized
under  SECTION 4 of the  Federal  Reserve  Act, 12 U.S.C.  SECTION  341. No such
pledge or the enforcement  thereof shall release the Lender from its obligations
hereunder or under any of the other Loan Documents.

     SECTION 20.3. No Assignment by the Borrower.  The Borrower shall not assign
or transfer  any of its rights or  obligations  under any of the Loan  Documents
without the prior approval of the Lender.

     SECTION  21.  RELATIONSHIP.  The  relationship  between  the Lender and the
Borrower is solely that of a lender and borrower,  and nothing  contained herein
or in any of the other Loan Documents shall in any manner be construed as making
the  parties  hereto  joint  venturers,   partners,  fiduciaries  or  any  other
relationship other than lender and borrower.

     SECTION 22. NOTICES. Each notice, demand,  election or request provided for
or permitted to be given pursuant to this Agreement  shall be given as specified
in the Note.

     SECTION  23.  GOVERNING  LAW.  This  Agreement  and each of the other  Loan
Documents,  except as  otherwise  specifically  provided  therein  shall for all
purposes  be  construed  in  accordance  with and  governed by the laws of Maine
(excluding  the laws  applicable  to conflicts or choice of law),  except to the
extent the  Security  Documents  are  required to be governed by the laws of the
State of Utah.

     SECTION  24.  CONSENT  TO  JURISDICTION;   WAIVERS.   THE  BORROWER  HEREBY
IRREVOCABLY  AND  UNCONDITIONALLY  (A) SUBMITS TO PERSONAL  JURISDICTION  IN THE
STATES OF MAINE AND UTAH OVER ANY SUIT,  ACTION OR PROCEEDING  ARISING OUT OF OR
RELATING TO THIS  AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS,  AND (B) WAIVES
ANY AND ALL  PERSONAL  RIGHTS  UNDER THE LAWS OF ANY STATE (I) TO THE RIGHT,  IF
ANY, TO TRIAL BY JURY, (II) TO OBJECT TO JURISDICTION  WITHIN THE STATES OF UTAH
AND MAINE OR VENUE IN ANY PARTICULAR  FORUM WITHIN THE STATES OF UTAH AND MAINE,
AND (III) TO THE RIGHT,  IF ANY,  TO CLAIM OR RECOVER  ANY  SPECIAL,  EXEMPLARY,
PUNITIVE  OR  CONSEQUENTIAL  DAMAGES OR ANY DAMAGES  OTHER THAN ACTUAL  DAMAGES.
NOTHING  CONTAINED HEREIN,  HOWEVER,  SHALL PREVENT THE LENDER FROM BRINGING ANY
SUIT,  ACTION OR PROCEEDING OR EXERCISING  ANY RIGHTS AGAINST ANY COLLATERAL AND
AGAINST THE  BORROWER,  AND AGAINST ANY PROPERTY OF THE  BORROWER,  IN ANY OTHER
STATE.  INITIATING SUCH SUIT,  ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY
STATE SHALL IN NO EVENT  CONSTITUTE A WAIVER OF THE AGREEMENT  CONTAINED  HEREIN
THAT THE LAWS OF THE STATE OF MAINE SHALL GOVERN THE RIGHTS AND  OBLIGATIONS  OF
THE BORROWER AND THE LENDER  HEREUNDER OR THE SUBMISSION  HEREIN BY THE BORROWER
TO PERSONAL JURISDICTION WITHIN THE STATES OF UTAH AND MAINE.

          SECTION  25.  HEADINGS.   The  captions  in  this  Agreement  are  for
     convenience  of reference only and shall not define or limit the provisions
     hereof.

          SECTION 26. COUNTERPARTS.  This Agreement and any amendment hereof may
     be  executed  in  several  counterparts  and by each  party  on a  separate
     counterpart
originals.

          SECTION 27. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents  executed  in  connection  herewith  or  therewith  express the entire
understanding  of the  parties  with  respect to the  transactions  contemplated
hereby.  Neither  this  Agreement  nor any term hereof may be  changed,  waived,
discharged or terminated, except as provided in SECTION 28.

          Entire  Agreement.  This  Agreement,  together  with  the  other  Loan
Documents,  (a) constitutes the entire and final  understanding and agreement of
the parties with respect to the general subject matter hereof, including without
limitation  any  obligation to lend money or extend  credit,  or to delay in the
collection or  enforcement  of any such  obligation;  (b)  supersedes  all prior
negotiations,  discussions,  and agreements with respect thereto; (c) may not be
contradicted  by  evidence  of any alleged  oral  agreement;  and (d) may not be
amended, modified, or rescinded in any manner except by written agreement signed
by the parties  which  clearly and  unequivocally  expresses an intent to amend,
modify, or rescind the same.

     SECTION  28.  CONSENTS,  AMENDMENTS,  WAIVERS,  ETC.  Except  as  otherwise
expressly set forth in any particular  provision of this Agreement,  any consent
or approval  required or permitted  to be given by the Lender may be given,  and
any term of this Agreement or of any other Loan Document may be amended, and the
performance  or observance by the Borrower of this  Agreement or such other Loan
Documents,  the  continuance  of any  Default or Event of Default  may be waived
with, but only with, the written  consent of the Lender.  No waiver shall extend
to or affect any obligation not expressly  waived or impair any right consequent
thereon.  No course of dealing or delay or omission on the part of the Lender in
exercising  any  right  shall  operate  as a  waiver  thereof  or  otherwise  be
prejudicial  thereto.  No  Advance  made  by the  Lender  hereunder  during  the
continuance  or any  Default  or  Event of  Default  shall  constitute  a waiver
thereof.  No notice to or demand upon the Borrower shall entitle the Borrower to
other or further notice or demand in similar or other circumstances.

        SECTION 29.  TIME OF THE ESSENCE.  Time is of the essence.

     SECTION 30.  SEVERABILITY.  The provisions of this Agreement are severable,
and if any one clause or provision hereof shall be held invalid or unenforceable
in whole or in part, then such invalidity or unenforceability  shall affect only
such clause or provision,  or part  thereof,  and shall not in any manner affect
any other clause or provision of this Agreement.



<PAGE>



        IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of December 18, 1998 at Portland, Maine.

                                             The Canyons Resort Properties, Inc.

                                            by: /s/ Mark P. Girard
-----------------------------                 --------------------------------
Witness                                        its Vice President


                                                  KEYBANK NATIONAL ASSOCIATION

                                            by: John Shea
-----------------------------                 --------------------------------
Witness                                        its Vice President