Document:

SECOND AMENDED AND RESTATED

                                CREDIT AGREEMENT

                            Dated as of July 31, 2000

                                      Among

                 AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.
                                  as Borrower,

                            THE LENDERS PARTY HERETO,

                                       and

                               FLEET NATIONAL BANK
                            as Agent for the Lenders

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                                TABLE OF CONTENTS

ARTICLE I.        DEFINITIONS AND ACCOUNTING TERMS.............................1

         Section 1.1       DEFINITIONS.........................................1

         Section 1.2       ACCOUNTING TERMS...................................21

ARTICLE II.       THE CREDIT..................................................21

         Section 2.1       THE LOANS..........................................21

         Section 2.2       PRINCIPAL INSTALLMENTS AND INTEREST ON

                           THE LOANS AND PREPAYMENT...........................22

         Section 2.3       PROCEDURE FOR RESERVES.............................26

         Section 2.4       DEFAULT RATE AND LATE FEE..........................26

         Section 2.5       COMPUTATION OF INTEREST AND BALANCE................26

         Section 2.6       FEES...............................................27

         Section 2.7       SETOFF.............................................27

         Section 2.8       INCREASED COSTS, ETC...............................27

         Section 2.9       USE OF FUNDS.......................................29

         Section 2.10      PAYMENT OR OTHER ACTIONS ON NON-BUSINESS DAYS......29

         Section 2.11      METHOD AND TIMING OF PAYMENTS......................29

         Section 2.12      CURRENCY...........................................30

         Section 2.13      REPLACEMENT OF NOTES...............................30

ARTICLE III.      ADVANCES 30

         Section 3.1       CONDITIONS TO THE LOANS............................30

         Section 3.2       BUDGET.............................................33

         Section 3.3       ADVANCES AND ADVANCE REQUIREMENTS..................33

         Section 3.4       FUNDS FOR ADVANCES.................................35

         Section 3.5       CERTAIN PROCEDURES FOR ADVANCES....................36

ARTICLE IV.CASH COLLATERAL; NET INVENTORY PROCEEDS AND NET COLLATERAL
                           PROCEEDS...........................................37

         Section 4.1       SUBSIDIARY AVAILABLE CASH; NET INVENTORY PROCEEDS..37

         Section 4.2       FLOW OF CASH.......................................37

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         Section 4.3       OPERATING ACCOUNT..................................37

         Section 4.4       GENERAL CASH COLLATERAL ACCOUNT AND APPLICATION OF
                           CASH...............................................38

ARTICLE V.        COMMENCEMENT OF PROJECTS AND RELEASE PROVISIONS.............41

         Section 5.1       COMMENCEMENT OF PROJECTS...........................41

         Section 5.2       RELEASE PROVISIONS.................................44

         Section 5.3       CALCULATION OF THE AMOUNT OF LAND NOTES............45

ARTICLE VI.       REPRESENTATIONS AND WARRANTIES..............................46

         Section 6.1       EXISTENCE, CHARTER AND FORMATION DOCUMENTS, ETC....46

         Section 6.2       PRINCIPAL PLACE OF BUSINESS; LOCATION OF RECORDS...46

         Section 6.3       QUALIFICATION......................................46

         Section 6.4       SUBSIDIARIES.......................................46

         Section 6.5       POWER..............................................46

         Section 6.6       VALID AND BINDING OBLIGATIONS......................47

         Section 6.7       OTHER AGREEMENTS...................................47

         Section 6.8       PAYMENT OF TAXES...................................47

         Section 6.9       FINANCIAL STATEMENTS...............................47

         Section 6.10      OTHER MATERIALS FURNISHED..........................48

         Section 6.11      STOCK..............................................48

         Section 6.12      CHANGES IN CONDITION...............................48

         Section 6.13      ASSETS, LICENSES, PATENTS, TRADEMARKS, ETC.........48

         Section 6.14      LITIGATION.........................................48

         Section 6.15      PENSION PLANS......................................49

         Section 6.16      OUTSTANDING INDEBTEDNESS...........................49

         Section 6.17      ENVIRONMENTAL MATTERS..............................49

         Section 6.18      FOREIGN TRADE REGULATIONS..........................50

         Section 6.19      GOVERNMENTAL REGULATIONS...........................50

         Section 6.20      MARGIN STOCK.......................................51

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         Section 6.21      SOLVENCY...........................................51

         Section 6.22      COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.......51

         Section 6.23      ABSENCE OF FINANCING STATEMENTS, ETC...............51

         Section 6.24      FISCAL YEAR........................................51

         Section 6.25      TAX STATUS.........................................51

         Section 6.26      PURCHASE OPTIONS...................................51

         Section 6.27      LEASES.............................................51

         Section 6.28      PERMITTED CONSTRUCTION LOANS.......................52

         Section 6.29      STATUS MEMORANDUM..................................52

         Section 6.30      SECURITY AGREEMENTS................................52

         Section 6.31      COMPREHENSIVE EFFECT OF MASTER EASEMENT............52

         Section 6.32      CASH DEPOSITS......................................52

         Section 6.33      QUALIFIED SALES CONTRACTS..........................52

ARTICLE VII.      REPORTS AND INFORMATION.....................................53

         Section 7.1       FINANCIAL STATEMENTS AND OTHER REPORTS.............53

         Section 7.2       NOTICE OF DEFAULTS.................................54

         Section 7.3       NOTICE OF LITIGATION...............................54

         Section 7.4       REPORTABLE EVENTS..................................55

         Section 7.5       COMMUNICATIONS WITH INDEPENDENT PUBLIC ACCOUNTANTS.55

         Section 7.6       ENVIRONMENTAL REPORTS..............................55

         Section 7.7       MISCELLANEOUS......................................55

         Section 7.8       PERMITS, ZONING AND OTHER DEVELOPMENT RIGHTS.......56

         Section 7.9       PERMITTED CONSTRUCTION LOANS.......................56

ARTICLE VIII.     FINANCIAL COVENANTS.........................................56

         Section 8.1       MINIMUM TANGIBLE NET WORTH.........................56

         Section 8.2       LOAN TO VALUE RATIO................................56

         Section 8.3       MINIMUM LIQUIDITY..................................57

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ARTICLE IX.       AFFIRMATIVE COVENANTS.......................................57

         Section 9.1       REPRESENTATIONS AND WARRANTIES.....................57

         Section 9.2       TAXES AND OTHER OBLIGATIONS........................57

         Section 9.3       MAINTENANCE OF PROPERTIES AND LEASES...............57

         Section 9.4       INSURANCE..........................................57

         Section 9.5       RECORDS, ACCOUNTS AND PLACES OF BUSINESS...........58

         Section 9.6       INSPECTION.........................................59

         Section 9.7       MAINTENANCE OF ACCOUNTS............................59

         Section 9.8       OWNERSHIP OF SUBSIDIARIES..........................59

         Section 9.9       DUE DILIGENCE MATTERS..............................59

         Section 9.10      PLEDGE OF COLLATERAL...............................59

         Section 9.11      ADDITIONAL DOCUMENTS AND COLLATERAL................60

         Section 9.12      SUBORDINATED INDEBTEDNESS..........................60

         Section 9.13      PURCHASE OPTIONS AND LEASES........................60

ARTICLE X.        NEGATIVE COVENANTS..........................................60

         Section 10.1      RESTRICTIONS ON INDEBTEDNESS.......................60

         Section 10.2      RESTRICTION ON LIENS...............................62

         Section 10.3      INVESTMENTS........................................63

         Section 10.4      MERGERS, ACQUISITIONS, CREATION OF SUBSIDIARIES....63

         Section 10.5      TRANSACTIONS WITH AFFILIATES.......................64

         Section 10.6      DISTRIBUTIONS......................................64

         Section 10.7      CAPITAL EXPENDITURES...............................64

         Section 10.8      DISPOSITIONS OF ASSETS.............................64

         Section 10.9      ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF
                            OTHER PERSONS.....................................64

         Section 10.10     ERISA..............................................64

         Section 10.11     SALE AND LEASEBACK.................................65

         Section 10.12     RESTRICTIVE OR INCONSISTENT AGREEMENTS.............65
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         Section 10.13     NO AMENDMENT OF INTERCOMPANY DEBT, PURCHASE OPTIONS,
                           LEASES OR THIRD PARTY EQUITY DOCUMENTS ............65

         Section 10.14     PURCHASE MONEY MORTGAGES...........................65

         Section 10.15     PERMITTED FINANCIAL FACILITIES.....................65

         Section 10.16     CHANGE OF CONTROL..................................65

         Section 10.17     PROPERTY ACQUISITIONS..............................65

ARTICLE XI.       FURTHER ASSURANCES..........................................65

         Section 11.1      FURTHER ASSURANCES.................................65

ARTICLE XII.      EVENTS OF DEFAULT AND REMEDIES..............................66

         Section 12.1      EVENTS OF DEFAULT..................................66

         Section 12.2      REMEDIES...........................................68

ARTICLE XIII.     CONSENTS; AMENDMENTS; WAIVERS; REMEDIES.....................69

         Section 13.1      ACTIONS BY LENDERS.................................69

         Section 13.2      ACTIONS BY BORROWER................................70

ARTICLE XIV.      SUCCESSORS AND ASSIGNS......................................70

         Section 14.1      GENERAL............................................70

         Section 14.2      ASSIGNMENTS........................................71

         Section 14.3      FLEET AS AGENT UNDER SENIOR FACILITY AND ROLE OF
                              RS .............................................76

         Section 14.4      IDENTITY OF THE TRANCHE C LENDER AND TRANSFER
                             RIGHTS...........................................76

ARTICLE XV.       THE AGENT...................................................77

         Section 15.1      AUTHORIZATION AND ACTION...........................77

         Section 15.2      AGENT'S RELIANCE, ETC..............................78

         Section 15.3      AGENT AS A LENDER..................................78

         Section 15.4      LENDER CREDIT DECISION.............................78

         Section 15.5      INDEMNIFICATION OF AGENT...........................79

         Section 15.6      SUCCESSOR AGENT....................................79

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         Section 15.7      AMENDMENT OF ARTICLE 15............................79

ARTICLE XVI.      MISCELLANEOUS...............................................80

         Section 16.1      NOTICES............................................80

         Section 16.2      MERGER.............................................80

         Section 16.3      GOVERNING LAW; CONSENT TO JURISDICTION.............81

         Section 16.4      COUNTERPARTS.......................................81

         Section 16.5      EXPENSES AND INDEMNIFICATION.......................81

         Section 16.6      CONFIDENTIALITY....................................82

         Section 16.7      JOINT AND SEVERAL OBLIGATIONS......................83

         Section 16.8      WAIVER OF JURY TRIAL...............................83

         Section 16.9      APPRAISALS.........................................83

         Section 16.10     AMENDMENT AND RESTATEMENT AND GOVERNING DOCUMENT...83

         Section 16.11     NONRECOURSE OBLIGATION UNDER SENIOR NOTE INDENTURE.83

         Section 16.12     RELEASE............................................84

         Section 16.13     TIME OF THE ESSENCE................................84

         Section 16.14     CONSENT TO VENUE AND JURISDICTION..................84

         Section 16.15     BANKRUPTCY RELIEF..................................84

         Section 16.16     COLLATERAL PLEDGE AGREEMENT........................84

ARTICLE XVII.     INTERCREDITOR PROVISIONS....................................84

         Section 17.1      PAYMENTS AND OTHER COLLATERAL TO TRANCHE C LENDERS.84

         Section 17.2      BANKRUPTCY EVENTS..................................85

         Section 17.3      AGENT'S FREEDOM OF ACTION..........................87

         Section 17.4      RIGHT TO PURCHASE THE A/B LOANS....................88

         Section 17.6      APPROVALS BY TRANCHE C LENDERS.....................89

ARTICLE XVIII.    WARRANTS TO TRANCHE C LENDERS TO BE SUPPLIED BY PAUL WEISS..89

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                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

         This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
the Closing Date by and among AMERICAN SKIING COMPANY RESORT PROPERTIES, INC., a
Maine  corporation  ("Borrower"),  the  lenders  from time to time party  hereto
("Lenders"),  and FLEET  NATIONAL  BANK  (f/k/a  BankBoston,  N.A.),  a national
banking  association,  as Agent for the Lenders  from time to time party  hereto
("Agent").

                                    RECITALS

         Borrower and the Agent  entered into that certain  Amended and Restated
Credit Agreement dated as of January 8, 1999 (the "Existing Credit  Agreement").
Pursuant to the Existing Credit  Agreement,  the Agent agreed to advance the sum
of $58,000,000.00,  which was secured by certain Security Agreements (as defined
herein) which was filed of record from and after December 4, 1998.

         Borrower and Lenders  desire to amend and restate the  Existing  Credit
Agreement in order to allow for the  increase of the Loans (as defined  therein)
to a maximum principal amount of $73,000,000.00  subject to increase as provided
in Section  2.1,  and to allow for the  disbursement  of the  additional  amount
available for advance in the amount of up to $73,000,000.00  subject to increase
as provided in Section 2.1, for amounts and purposes identified in the Budget.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency of which are hereby  acknowledged,  the Borrower,  the Agent and the
Lenders agree hereby as follows:

ARTICLE I.        DEFINITIONS AND ACCOUNTING TERMS

Section 1.1  DEFINITIONS.  In addition to the terms  defined  elsewhere  in this
Agreement,  unless otherwise  specifically  provided herein, the following terms
shall have the following  meanings for all purposes when used in this Agreement,
and in any  note,  agreement,  certificate,  report  or other  document  made or
delivered in connection with this Agreement:

         "A/B  LENDERS"  shall  mean the  Tranche  A Lenders  and the  Tranche B
Lenders.

         "A/B LOANS" shall mean collectively Tranche A and Tranche B.

         "ADVANCE" shall mean a disbursement of the Loan or from the proceeds of
Reserves.

         "ADVANCE REQUIREMENTS" means the requirements set forth at Section 3.3,
which are conditions precedent for an Advance.

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         "AFFILIATE"  shall mean (a) any  director of American Ski or any of its
Subsidiaries,  (b)  any  executive  officer  of  American  Ski  or  any  of  its
Subsidiaries  or (c) any  Person  owning  more  than  ten  percent  (10%) of the
outstanding  common stock of American Ski or any of its Subsidiaries and (d) any
Person that  controls,  is controlled by or is under common  control with such a
Person  or any  Affiliate  of such  Person.  For  purposes  of this  definition,
"control" of a Person shall mean the possession,  directly or indirectly, of the
power to direct or cause the direction of its  management  or policies,  whether
through the ownership of voting securities, by contract or otherwise.

         "AGENT" shall mean Fleet National Bank (f/k/a BankBoston, N.A.), in its
capacity as agent for the Lenders, and its successors in that capacity.

         "AGREEMENT"   shall  mean  this  Second  Amended  and  Restated  Credit
Agreement,  as amended,  modified,  supplemented,  restated or consolidated from
time to time.

         "AMERICAN  SKI"  shall  mean  American  Skiing   Company,   a  Delaware
corporation.

         "APPLICABLE LAW" shall mean any law,  ordinance,  statute,  regulation,
including statutes, rules and regulations thereunder and interpretations thereof
by any  competent  court  or by any  governmental  or other  regulatory  body or
official  charged  with the  administration  or the  interpretation  thereof and
requests, directives,  instructions and notices at any time or from time to time
heretofore  or  hereafter  made upon or  otherwise  issued to any  Lender by any
central bank or other fiscal, monetary or other authority, whether or not having
the force of law.

         "APPRAISAL"  shall  mean an  appraisal  of the  Fair  Market  Value  of
property and business in full compliance  with FIRREA,  accepted and approved by
the Agent and Required Lenders,  performed by an independent  appraiser selected
by the Agent,  who is not employed by American Ski, any of its  Subsidiaries  or
the Agent;  the form of such  appraisal  and the identity of the appraiser to be
selected by the Agent.

         "APPRAISED  VALUE"  shall  mean the Fair  Market  Value of the  subject
property  determined  by the most recent  Appraisal  thereof and accepted by the
Required Lenders.

         "ASSIGNMENT AND ACCEPTANCE AGREEMENT" See Section 14.2(a).

         "ASSIGNMENT OF ENTITY INTEREST AND PROCEEDS" shall mean the instruments
by the Borrower to the Agent which grant a first in priority, perfected security
interest in all of the equity  interests  of a Borrower  Subsidiary  and all Net
Inventory Proceeds with respect to the Permitted  Construction  Project owned by
that Borrower Subsidiary; each generally in the forms attached hereto as Exhibit
"B", as amended from time to time.

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         "BALANCE"  shall mean at such time of  examination  that the funds that
remain  in:  (i) that  portion  of the Loan  allocated  on the  Budget  for each
Permitted  Construction  Project  and  purpose  therefor;   (ii)  the  Permitted
Construction  Loans;  (iii) amounts of presale deposits available for use in the
construction of improvements under Applicable Law; (iv) any amounts allocated by
Agent in the Equity Fund for a particular  Permitted  Construction  Project; and
(v) the Net Inventory  Proceeds scheduled to be received during the construction
period for the  Permitted  Construction  Project are  sufficient  at the time of
reference, to complete all improvements  constituting the Permitted Construction
Project contemplated by the Budget pursuant to plans and specifications approved
by the  applicable  Permitted  Construction  Lender and to pay all  construction
costs as they become due and as required under  contracts with the purchasers of
the applicable portion of the improvements.

         "BANKRUPTCY EVENT" With respect to any Person, the occurrence of any of
the following with respect to such Person:  (i) a court or  governmental  agency
having  jurisdiction in the premises shall enter a decree or order for relief in
respect of such Person in an involuntary  case under any applicable  bankruptcy,
insolvency  or other  similar law now or  hereafter in effect,  or  appointing a
receiver,  liquidator,  assignee,  custodian,  trustee, sequestrator (or similar
official) of such Person or for any substantial part of its property or ordering
the winding up or liquidation  of its affairs;  or (ii) there shall be commenced
against  such  Person  an  involuntary  case  under any  applicable  bankruptcy,
insolvency  or other  similar  law now or  hereafter  in  effect,  or any  case,
proceeding  or other  action  for the  appointment  of a  receiver,  liquidator,
assignee,  custodian, trustee, sequestrator (or similar official) of such Person
or for any substantial part of its property or for the winding up or liquidation
of its affairs,  and such  involuntary  case or other case,  proceeding or other
action shall remain undismissed,  undischarged or unbonded for a period of sixty
(60)  consecutive  days;  or (iii) such Person shall  commence a voluntary  case
under  any  applicable  bankruptcy,  insolvency  or  other  similar  law  now or
hereafter  in  effect,  or  consent  to the entry of an order  for  relief in an
involuntary  case under any such law,  or consent to the  appointment  or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its property
or make any general assignment for the benefit of creditors; or (iv) such Person
shall be unable to, or shall  admit in writing its  inability  to, pay its debts
generally as they become due.

         "BASE PROPERTY"  shall mean that portion of the real property  affected
by the Purchase Options at the Canyons as set forth on Exhibit "H" hereto.

         "BASE RATE"  means,  the higher of (a) the  variable  per annum rate of
interest  announced from time to time by Fleet at its Head Office in Providence,
Rhode Island as its "base rate" or (b) one-half percent (.5%) plus the overnight
federal  funds  effective  rate,  as  published by the Board of Governors of the
Federal Reserve System,  as in effect from time to time.  Changes in the rate of
interest  resulting  from changes in the Base Rate shall take place  immediately
without notice of demand of any kind.

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         "BASE RATE  MARGIN"  means eight  hundred and  twenty-five  (825) basis
points.

         "BORROWER" shall mean American Skiing Company Resort Properties,  Inc.,
a Maine corporation.

         "BORROWER AVAILABLE CASH" shall mean, on a monthly basis, the amount of
Unrestricted  Cash and Cash  Equivalents held by the Borrower on the last day of
any month, including any Subsidiary Available Cash.

         "BORROWER SUBSIDIARY" or "BORROWER  SUBSIDIARIES" shall mean any or all
of Canyons  Resort,  Grand Summit,  and Heavenly  Resort and those  Subsidiaries
listed in Schedule 1.2,  together with all  Subsidiaries of the Borrower created
in the future. The term "Borrower  Subsidiary" shall include all entities which,
when  established,  met the definition of Borrower  Subsidiary but thereafter no
longer meet the  requirements  because of the exercise of rights under the Third
Party Equity Documents, the occurrence of a Change of Control or otherwise other
than a sale of the  project  to a third  party  and the  payment  in full of the
respective Land Note.

         "BUDGET" shall mean the Budget  attached hereto as Exhibit "C" and made
a part hereof and as may be amended from time to time by consent of the Required
Lenders.

         "BUDGET  VARIANCE  REPORT"  shall  mean a report in form and  substance
acceptable  to the Agent,  prepared by the Borrower,  which  provides a detailed
analysis  of the status of each line item in the Budget and the  variance of the
actual versus projected results of such line item,  including the status of line
items with respect to a Permitted  Construction Project. The initial form of the
Budget  Variance Report is attached hereto as Exhibit "I" and made a part hereof
and may be amended from time to time by Agent.

         "BUDGET VARIANCE  REQUIREMENT" shall mean the requirement tested on the
last Business Day of the first Fiscal Quarter and thereafter monthly on the last
Business  Day of each month for each rolling  quarter and on a cumulative  basis
for the Fiscal Year.  The actual  results of the  Borrower  shall be compared to
those projected on the Budget for Budget Revenues, Budget Expenses and Cash Flow
for such period.  Actual results shown in the  comparisons  must be no less than
ninety percent (90%) of the Budget for each of the Budget Revenues and Cash Flow
and no greater than one hundred ten percent  (110%) of the Budget for the Budget
Expenses, such that in either case actual Cash Flow must be not less than ninety
percent (90%) of the Cash Flow shown on the Budget.  All  calculations  shall be
adjusted to provide  credit to the  Borrower  for work  performed  for which the
Permitted  Construction  Lenders  have  agreed to fund but have not yet made the
disbursement for such work.

         "BUSINESS  DAY"  shall  mean for all  purposes,  any day  other  than a
Saturday, Sunday or legal holiday on which banks in Providence, Rhode Island are
open for the conduct of a substantial part of their commercial banking business.

                                       4
<PAGE>

         "BUDGET REVENUES" shall mean the revenues of the Borrower designated as
revenues on the initial  Budget and all  Subsidiary  Available  Cash paid to the
Borrower.

         "BUDGET  EXPENSES"  shall mean the  expenses of the  Borrower  and each
Borrower Subsidiary designated on the initial Budget as expenses.

         "CANYONS" shall mean the recreational and resort facilities operated by
American Ski or a subsidiary located in Summit County, Utah.

         "CANYONS  RESORT"  shall mean The Canyons  Resort  Properties,  Inc., a
Maine corporation.

         "CAPITAL ASSETS" shall mean fixed assets,  both tangible (such as land,
buildings,  fixtures,  machinery and equipment) and intangible (such as patents,
copyrights,  trademarks,  contract rights,  franchises and goodwill);  PROVIDED,
HOWEVER,  that  Capital  Assets shall not include any item  customarily  charged
directly as an expense or  depreciated  over a useful life of twelve (12) months
or less in accordance with Generally Accepted Accounting Principles.

         "CAPITAL EXPENDITURE(S)" shall mean amounts paid or incurred, including
Indebtedness  incurred by Borrower or any of its Subsidiaries in connection with
the purchase or lease by Borrower or any of its Subsidiaries of Capital Assets.

         "CAPITALIZED  LEASE(S)"  shall  mean any  lease  which is or  should be
capitalized  on the balance  sheet of the lessee in  accordance  with  Generally
Accepted Accounting  Principles and Statement of Financial  Accounting Standards
No. 13.

         "CASH  EQUIVALENTS"  shall mean those immediately  available  financial
assets  classified  as Cash  Equivalents  under  Generally  Accepted  Accounting
Principles.

         "CASH FLOW" shall mean Budget Revenues minus Budget Expenses.

         "CASH FLOW EXHIBIT"  means a depiction of the cash flow of the Borrower
and Borrower  Subsidiaries,  the General Cash Collateral Account,  the Operating
Account, and the Funds, as set forth on Exhibit "K."

         "CASH FLOW REPORT"  See Section 7.1(e).

         "CASH IN TRANSIT"  shall mean cash held by title  insurance  companies,
approved  by the Agent,  which  meets all of the  following:  (i) is held by the
approved  title  insurance  company in a trust  account  and is  unconditionally
allocated  for  immediate  payment  to  the  Borrower;  (ii)  derives  from  Net
Collateral  Proceeds  and  Net  Inventory  Proceeds  from  other  than  Existing
Permitted Construction  Projects;  (iii) will be wire transferred to the General
Cash  Collateral  Account within three (3) Business Days of receipt by the title
insurance company;  (iv) is described on a report by the title insurance company

                                       5
<PAGE>

in favor of the Agent  which  describes  the  matters  set forth in (i)  through
(iii);  and (v) is directed  by the  Borrower  for  payment to the General  Cash
Collateral Account.

         "CASH INSURANCE  PROCEEDS" shall mean the proceeds received by Borrower
and its Subsidiaries under any property and casualty insurance policy carried by
Borrower and its Subsidiaries.

         "CASH  PROCEEDS"  shall mean, with respect to any disposition or lease,
the  aggregate  cash  payments  (including  any cash received by way of deferred
payment   pursuant  to  a  note  receivable   issued  in  connection  with  such
disposition,  but only as and when received)  received by Borrower or any of its
Subsidiaries from such disposition or lease.

         "CASH  RECONCILIATION  REPORT(S)"  shall  mean a  report  in  form  and
substance acceptable to the Agent,  prepared by the Borrower,  (a) which updates
the rolling three (3) month operating  expenses shown on the Budget and provides
a  reconciliation  of any  amounts  in the  Operating  Account  and (b) the cash
reconciliation  of the  Borrower  and the  Borrower  Subsidiaries  in  form  and
substance  acceptable  to the Agent  which  sets forth a report of the amount of
Unrestricted  Cash and  Cash  Equivalents  of the  Borrower  and  each  Borrower
Subsidiary as of the last day of the month.

         "CHANGE OF CONTROL" means the  occurrence of any of the following:  (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or  consolidation  permitted  hereunder)  in one or a series  of  related
transactions,  of all or substantially all of the assets of the Borrower and the
Borrower  Subsidiaries,  taken as a whole,  or of American  Ski, to any "Person"
(within the  meaning of Section  13(d)(3)  of the  Exchange  Act) other than the
Permitted  Holders;  (ii) the adoption of a plan relating to the  liquidation or
dissolution  of the Borrower or of American Ski; (iii) the  consummation  of any
transaction  (including,  without  limitation,  any merger or consolidation) the
result of which is that a "Person" (as such term is used in Section  13(d)(3) of
the Exchange Act),  other than the Permitted  Holders,  becomes the  "Beneficial
Owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the  Exchange
Act),  directly  or  indirectly,  of more than the  greater  of (a)  thirty-five
percent  (35%) of the voting power of the capital  stock of Borrower or American
Ski,  excluding  the  provisions  of Third Party Equity  Documents  prior to the
exercise of rights and remedies  thereunder  by the holder  thereof,  or (b) the
combined  voting  power of the  capital  stock  held by the  Permitted  Holders,
excluding the provisions of Third Party Equity  Documents  prior to the exercise
of rights and remedies thereunder by the holder thereof,  unless, in the case of
this clause (iii), the Permitted Holders retain the right or ability,  by voting
power, contract or otherwise, to elect or designate,  directly or indirectly,  a
majority of the board of directors of the Borrower or American  Ski; or (iv) the
first day on which more than  one-third of the members of the Board of Directors
of the Company are not Continuing Directors.

         "CLOSING DATE" shall mean July 31, 2000.

         "CLOSING DATE BALANCE" shall mean the amount of $53,891,666.16.

                                       6
<PAGE>

         "CODE" shall mean the Internal Revenue Code of 1986, as amended, and in
effect from time to time.

         "COLLATERAL"  shall mean all of the  property,  rights and interests of
Borrower  and  the  Borrower  Subsidiaries  that  are  subject  to the  security
interests,  pledges and mortgages created by the Security Agreements,  including
the General Cash Collateral Account and the Operating Account.

         "COMPLIANCE  CERTIFICATE"  shall  mean a detailed  computation  showing
compliance with the Financial Covenants certified by the chief financial officer
of the Borrower or other designated  officer of Borrower  acceptable to Agent in
the form attached hereto as Exhibit "F" and further  representing and certifying
that:  (a) such officer has reviewed this  Agreement and has no knowledge of any
Default, and if such officer has such knowledge, specifying each Default and the
nature  thereof;  (b) the progress of  construction  and  Borrower's  ability to
complete  the  Permitted  Construction  Projects  in the  time  required  by the
Permitted  Construction  Lender or under any presale  contracts  with respect to
such  Permitted  Construction  Project  and that there is no default or event of
default under the Permitted  Construction Loans, and the Permitted  Construction
Lenders have not indicated any intent to withhold any advances  under any of the
Permitted  Construction Loans; (c) that the Permitted  Construction Loans are in
Balance; and (d) the costs associated with the Permitted  Construction  Projects
are  consistent  with the Budget.  The  Compliance  Certificate  shall also have
attached the most recent reports prepared by any construction  inspector engaged
by the Permitted Construction Lender.

         "CONSOLIDATED"   when  used  with   reference  to  any  term,   whether
capitalized  or  not,  shall  mean  that  term  (or  the  terms  "combined"  and
"combining," as the case may be, in the case of partnerships, joint ventures and
Affiliates that are not Subsidiaries) as applied to the accounts of American Ski
(or other  specified  Person) and all of its  Subsidiaries  (or other  specified
Persons),  or such of its  Subsidiaries  as may be specified,  consolidated  (or
combined) in accordance with Generally Accepted  Accounting  Principles and with
appropriate  deductions for minority  interests in Subsidiaries,  as required by
Generally Accepted Accounting Principles.

         "CONTINUING  DIRECTORS"  means,  as of any date of  determination,  any
member of the board of directors of the Company or American Ski, as the case may
be, who (i) was a member of the board of  directors  on the Closing Date or (ii)
was  nominated  for election to the board of  directors  with the approval of at
least  two-thirds of the  Continuing  Directors who were members of the board of
directors at the time of such nomination or election.

         "COST  OVERRUN  FUND" shall mean the Fund  allocated for the payment of
cost overruns for expenses or expenditures required for a Permitted Construction
Project.

                                       7
<PAGE>

         "DEFAULT"  shall mean an event or  condition  which with the passage of
time, giving of notice, or both, would become an Event of Default.

         "DEFAULT  RATE" shall mean (i) the Base Rate plus the  applicable  Base
Rate  Margin  plus four  hundred  (400)  basis  points  for  Tranche A; and (ii)
twenty-nine percent (29%) per annum for Tranche B and Tranche C.

         "DIP FINANCING"   See Section 17.2.

         "DISTRIBUTION"  shall  mean:  (a) the  declaration  or  payment  of any
dividend  on or in  respect  of any  shares  of any  class of  capital  stock of
Borrower,  (b) the purchase,  redemption,  or other acquisition or retirement of
any shares of any class of capital stock of Borrower, (c) any other distribution
on or in respect of any shares of any class of capital  stock of  Borrower,  (d)
any  setting  apart or  allocating  any sum for the  payment of any  dividend or
distribution  or for the  purchase,  redemption  or  retirement of any shares of
capital stock of Borrower and (e) any payment of principal on or any  retirement
or defeasance of Subordinated  Indebtedness  other than payments  required to be
paid by the Borrower under the Senior Note Guaranty.

         "ELIGIBLE  ASSIGNEE(S)"  shall  mean  any  of  (a)  a  commercial  bank
organized under the laws of the United States, any State thereof or the District
of  Columbia  and  having  total  assets in excess of  $1,000,000,000.00;  (b) a
savings and loan  association  or savings bank  organized  under the laws of the
United  States,  any State  thereof or the District of Columbia and having a net
worth of at least  $100,000,000.00,  calculated  in  accordance  with  Generally
Accepted Accounting  Principles;  (c) a commercial bank organized under the laws
of any  other  country  which  is a  member  of the  Organization  for  Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country and having total assets in excess of  $1,000,000,000.00,  provided  that
such bank has a branch or agency in the United  States  and is acting  through a
branch or agency  located  in the  country in which it is  organized  or another
country which is also a member of the OECD;  (d) the central bank of any country
which is a member of the OECD;  (e) an  investment  fund managed by a commercial
investment advisor having total assets of at least $100,000,000.00, all with the
prior approval of the Agent; and (f) such other lender as may be approved by the
Agent and Borrower.

         "ENVIRONMENT"  means soil, surface waters,  groundwaters,  land, stream
sediments,  surface or  subsurface  strata,  ambient air, and any  environmental
medium.

         "ENVIRONMENTAL LAW" means any judgment, decree, order, common law rule,
statute,  act,  law,  code,  ordinance,  permit,  license,  rule  or  regulation
pertaining to  environmental  matters,  or any federal,  state,  county or local
statute, regulation, code, ordinance, order or decree relating to public health,
welfare,   the   Environment,   or  to   the   storage,   handling,   treatment,
transportation, use or generation of Hazardous Materials in or at the workplace,
or to worker  health or  safety,  whether  now  existing  or  hereafter  enacted
including the Resource  Conservation and Recovery Act, as amended ("RCRA"),  the
Comprehensive  Environmental  Response,  Compensation  and Liability Act of 1980

                                       8
<PAGE>

("CERCLA"),  as amended by the Superfund  Amendments and  Reauthorization Act of
1986, as amended  ("SARA"),  the Federal  Clean Water Act, the Toxic  Substances
Control Act, the Federal Clean Air Act, the Safe  Drinking  Water Act, the Flood
Disaster Protection Act of 1973 and all amendments thereto.

         "EQUITY  FUND"  shall  mean the Fund  allocated  for  payment of equity
amounts for Permitted  Construction  Projects other than the Existing  Permitted
Construction Projects.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.

         "EVENT OF DEFAULT" See Section 12.1.

         "EXCESS CASH  AMOUNT"  means the  positive  difference  produced in the
following  calculation:  (a)  Liquidity  Balance  minus  (b)  the sum of (i) the
remaining  amounts  to  be  paid  for  the  next  two  (2)  mandatory  principal
installments  under the Tranche A Notes as set forth in Section  2.2(a) and (ii)
$3,000,000.00.  For purposes of making this calculation, any of the next two (2)
principal installments under the Tranche A Notes that have been prepaid in whole
shall have a value of zero.

         "EXCESS CASH REQUIRED PAYMENTS" See Section 2.2(a).

         "EXISTING  CREDIT  AGREEMENT"  shall  mean  that  certain  Amended  and
Restated Credit  Agreement  among the Borrower,  the Agent and the Lenders party
thereto, dated as of January 8, 1999.

         "FAIR MARKET VALUE" shall mean the price a willing buyer would pay to a
willing seller in an arm's length  transaction  with neither party being under a
compulsion to act.

         "FEE  LETTERS"  shall mean that  certain Fee and Expense  Letter  dated
March 8, 1999, as modified on May __, 1999 and the Fee and Expense  Letter dated
as of the Closing Date between the Borrower and the Agent.

         "FEES" shall mean all fees and amounts  payable in connection  with the
Fee  Letters  and such  other  fees as may from time to time be  charged  by the
Agent,  or the Tranche C Lenders as permitted  hereunder or agreed to be paid by
the Borrower in connection with the Loan.

         "FIRREA" Title XI of the Financial  Institutions Reform,  Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3331 et seq.), as amended from time to time.

         "FINANCIAL COVENANTS" shall mean the covenants set forth at Article 8.

                                       9
<PAGE>

         "FISCAL  QUARTER"  shall mean each three (3) month period ending on the
last  Sunday of April,  July,  October  and  January,  that may be  modified  in
accordance with Section 6.24.

         "FISCAL YEAR" See Section 6.24.

         "FLEET" shall mean Fleet National Bank, a national banking association,
or its successors.

         "FUND  RECONCILIATION"  shall mean the reconciliation of the Funds with
the initial Fund Reconciliation attached hereto as Exhibit "G".

         "FUNDS" shall mean the various  amounts  designated  within the General
Cash Collateral Account for payment for a particular purpose,  together with any
amount reserved for  disbursement  for the purpose of a particular Fund from the
Loan proceeds  remaining to be advanced.  A  description  of the Funds as of the
Closing Date is set forth on the Cash Flow Exhibit.

         "GENERAL CASH COLLATERAL ACCOUNT" shall mean the account established by
the Borrower pursuant to the provisions of Section 4.4A.

         "GENERAL  FUND" shall mean the Fund  designated  for all amounts in the
General Cash  Collateral  Account that are not otherwise  allocated to any other
Fund.

         "GENERALLY  ACCEPTED   ACCOUNTING   PRINCIPLES"  shall  mean  Generally
Accepted Accounting  Principles as defined by controlling  pronouncements of the
Financial  Accounting  Standards  Board, as from time to time  supplemented  and
amended.

         "GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state
or other  political  subdivision  thereof and any entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government.

         "GRAND SUMMIT" shall mean Grand Summit Resort Properties, Inc., a Maine
corporation.

         "GUARANTY" or "GUARANTEE" or "GUARANTIES" shall include any arrangement
whereby a Person is or becomes liable with respect to any  Indebtedness or other
obligation of another and any other  arrangement  whereby  credit is extended to
another obligor on the basis of any promise of a guarantor, whether that promise
is expressed in terms of an obligation to pay the  Indebtedness of such obligor,
or to  purchase  or lease  assets  under  circumstances  that would  enable such
obligor to discharge one or more of its obligations, or to maintain the capital,
the working capital,  solvency or general  financial  condition of such obligor,
whether or not such  arrangement is listed in the balance sheet of the guarantor
or referred to in a footnote thereto.

                                       10
<PAGE>

         "HAZARDOUS   MATERIALS"   means  any  pollutant,   contaminant,   toxic
substance,  chemical substance or mixture,  hazardous waste, hazardous material,
or hazardous substance,  or any oil, petroleum, or petroleum product, as defined
in or pursuant to the Resource  Conservation  and Recovery Act, as amended,  the
Comprehensive  Environmental  Response,  Compensation,  and  Liability  Act,  as
amended,  the  Superfund  Amendment  and  Reauthorization  Act, as amended,  the
Federal Clean Water Act, as amended, the Hazardous Materials Transportation Act,
as amended,  the Toxic  Substances  Control  Act, as  amended,  any  regulations
promulgated under these Acts, or any other Environmental Law.

         "HEAD  OFFICE"  shall  mean the  office  of the  Agent  located  at 111
Westminster Street,  Providence,  Rhode Island 02903 or such other office as the
Agent may from time to time designate as its Head Office.

         "HEAVENLY RESORT" shall mean Heavenly Resort Properties,  LLC, a Nevada
limited liability company.

         "INDEBTEDNESS" shall mean, as to any Person,  without duplication:  (a)
all  obligations  of such  Person  for  borrowed  money or  evidenced  by bonds,
debentures, notes or similar instruments; (b) all obligations of such Person for
the  deferred  purchase  price  of  property  or  services   (including  without
limitation  deferred  payment  obligations  which are part of the  consideration
provided for in agreements not to compete),  except trade  accounts  payable and
accrued  liabilities  arising in the ordinary  course of business  which are not
overdue by more than ninety (90) days or which are being contested in good faith
by appropriate  proceedings;  (c) all capital lease  obligations of such Person;
(d) all  Indebtedness of others secured by a lien on any  properties,  assets or
revenues of such  Person;  (e) all  Indebtedness  of others  guaranteed  by such
Person (except  completion  guaranties  under which such Person has not yet been
required to perform);  (f) all net  obligations  of such Person  under  interest
rate, commodity,  foreign currency and financial markets swaps, options, futures
and  other  hedging  obligations;  and  (g)  all  obligations  of  such  Person,
contingent or otherwise, in respect of letters of credit or bankers' acceptances
or similar instruments.

         "INDEMNITY    AGREEMENT"    shall   mean   the   Hazardous    Materials
Indemnification  Agreement dated September 4, 1998, as amended, from Borrower to
the Agent.

         "INTERCOMPANY DEBT" shall mean the Indebtedness by Borrower to American
Ski or its  Affiliates  in the  principal  amount  as of  January  30,  2000  of
$58,973,000.00, together with any other Indebtedness incurred by the Borrower in
favor of  American  Ski or any  Affiliate  of  American  Ski from  time to time.
Tranche  C  Lender  Obligations  held by Oak Hill  shall  not  constitute  or be
included in Intercompany Debt.

         "INVENTORY  UNIT(S)"  shall mean all  condominium  units,  quartershare
units or other property interests held for sale or lease at any of the Permitted
Construction Projects.

                                       11
<PAGE>

         "INVESTMENT"  shall  mean (a) any  stock,  membership  interest,  joint
venture  interest,  partnership  interest,  evidence  of  Indebtedness  or other
security of another  Person,  (b) any loan,  advance,  contribution  to capital,
extension of credit (except for current trade and customer  accounts  receivable
for inventory sold or services  rendered in the ordinary  course of business and
payable in accordance  with customary  trade terms) to another  Person,  (c) any
purchase of (i) stock, membership interest, joint venture interest,  partnership
interest,  or  other  securities  of  another  Person  or (ii) any  business  or
undertaking of another Person (whether by purchase of assets or securities), any
commitment  or option to make any such  purchase if, in the case of such option,
the aggregate  consideration paid for such option was in excess of $100.00,  (d)
any  other  investment,  in all  cases  whether  existing  on the  date  of this
Agreement  or  thereafter  made or (e) any  contract  to  accomplish  any of the
foregoing.  This  definition of Investment  shall also include any commitment or
option to purchase any development rights.

         "LAND NOTE(S)" shall mean any note executed by a Borrower Subsidiary to
the order of the  Borrower in an amount  equal to: (a) for parcels  owned in fee
simple by the  Borrower,  fifteen  percent (15%) of the actual hard costs of the
Permitted  Construction  Project  as shown on the  Permitted  Project  Budget as
amended from time to time, (b) for parcels  affected by a Purchase Option (other
than as set forth in subpart (c) hereof), four percent (4%) of actual hard costs
of the Permitted  Construction  Project as shown on the Permitted Project Budget
as amended from time to time, and (c) as to the Proposed Construction Project by
Heavenly Resort, being the Grand Summit at Lake Tahoe, a mandatory  distribution
obligation in the amount of  $2,500,000.00  subject to the  verification  by the
Agent  of the  Permitted  Construction  Budget  for this  Proposed  Construction
Project.  All Land Notes must be subordinated on terms reasonably  acceptable to
the Permitted Construction Lender and the Agent.

         "LEASES"  shall mean all leases and other  agreements  under  which the
Borrower has rights to use or occupy any real property.

         "LENDER(S)"  shall  mean  (a)  initially,  each  lender  listed  on the
signature  pages  hereof or  designated  in Schedule 1, (b) any other Person who
         becomes a Successor  Lender  hereunder in accordance  with the terms of
Section 14.2
hereof and (c) the permitted  successors and assigns of the Persons described in
clauses (a) and (b).

         "LENDER  AGREEMENT(S)"  shall mean this Agreement,  the Notes,  the Fee
Letters, the Indemnity Agreement, the Security Agreements, and any other present
or future  agreement  from time to time entered into between  Borrower or any of
its  Subsidiaries  and the Agent or any Lender with  respect to this  Agreement;
each as from time to time amended or supplemented,  and all statements,  reports
and  certificates  delivered by Borrower or any of its Subsidiaries to the Agent
or any Lender in connection therewith.

         "LENDER  OBLIGATION(S)"  shall mean all present and future  obligations
and  Indebtedness of Borrower or any of its  Subsidiaries  owing to the Agent or
the Lenders,  either  jointly or  severally,  under this  Agreement or any other

                                       12
<PAGE>

Lender  Agreement,  including,  without  limitation,  the obligations to pay the
Indebtedness  from time to time evidenced by the Notes,  and  obligations to pay
interest,  charges,  expenses,  and other loan administration  costs incurred by
Agent and indemnification from time to time owed under any Lender Agreement, and
the obligations evidenced in the Fee Letters.

         "LIEN" See Section 10.2.

         "LIQUIDITY  BALANCE"  shall  mean  as to the  Borrower  on the  date of
calculation  the sum of: (i)  proceeds  of the Loans  remaining  to be  Advanced
hereunder  which are not included in the General Fund; (ii)  Unrestricted  Cash;
and (iii) Cash in Transit.  The amounts in the Operating Account and in any Fund
other than the General  Fund shall not be included  in this  definition,  unless
otherwise designated by the Agent upon the creation of a new Fund.

         "LOAN(S)"  shall  mean  all  or a  portion  of  the  loans  outstanding
hereunder or made to the  Borrower by the Lenders  pursuant to Article 2 of this
Agreement,  and "Loans" shall mean all of such loans,  collectively referring to
all of Tranche A, Tranche B and Tranche C.

         "LOAN  MATURITY  DATES"  shall mean the  Tranche A Maturity  Date,  the
Tranche B Maturity Date, and the Tranche C Maturity Date.

         "LOAN TO VALUE RATIO" See Section 8.2.

         "MARRIOTT  PROPERTY" shall mean the real property  affected or formerly
affected by that certain Purchase and Development  Agreement among American Ski,
Marriott Ownership Resorts, Inc. and Borrower dated July 22, 1998, as amended on
March 10, 2000;  the foregoing  property  being more  particularly  described on
Exhibit "J" attached hereto and made a part hereof.

         "MASTER EASEMENT" shall mean, collectively,  the easement agreements in
form and  substance  acceptable  to the Agent between the Borrower and Agent and
such other necessary  parties,  including the agent of the Senior  Facility,  to
provide  for  an  unencumbered  easement  for  utilities,   access  and  density
allocation  in  sufficient  scope to permit  the  development  of the  Mortgaged
Properties  as  resort,  hotel,  condominium  or retail  facilities  and for the
Proposed Construction Projects.

         "MATERIAL  ADVERSE EFFECT" shall mean any adverse change (or occurrence
or condition  reasonably  likely to produce an adverse  change) in the financial
condition,  properties,  business,  operations or prospects which is material to
Borrower and its Subsidiaries taken as a whole.

         "MINIMUM LIQUIDITY" See Section 8.3.

         "MINIMUM TANGIBLE NET WORTH" See Section 8.1.

                                       13
<PAGE>

         "MORTGAGED  PROPERTIES"  shall mean all real  properties  and interests
therein  owned by  Borrower  or any of its  Subsidiaries  which are  subject  to
mortgage liens or security interests in favor of the Agent, including the Master
Easement.   "Mortgaged  Property"  shall  mean  any  portion  of  the  foregoing
properties.

         "MORTGAGES"  shall  mean the  various  deeds of  trust,  mortgages  and
similar security  instruments  executed by the Borrower on September 4, 1998, as
modified and amended  from time to time and all other deeds of trust,  mortgages
and  similar  security  instruments  executed  by  the  Borrower  or a  Borrower
Subsidiary  which grants or pledges a mortgage  lien to Agent in existence as of
the date hereof or which  Borrower or Borrower  Subsidiary  may hereafter  enter
into, as amended from time to time.

         "NET COLLATERAL  PROCEEDS" shall mean the Cash Proceeds with respect to
any  disposition  of Collateral or Cash  Insurance  Proceeds with respect to the
Collateral  net of the sum of (a) the  amount of such  proceeds  required  to be
applied to repay  Indebtedness  (other than the Loans)  incurred or secured by a
lien on any asset disposed of or required to be paid under a Purchase  Option in
connection with such disposition;  plus (b) brokerage  commissions,  legal fees,
accounting  fees,  investment  banking fees,  trustee's fees,  finder's fees and
other similar fees and  commissions  (all of which amounts under this clause (b)
shall be reasonable  and customary and paid to  non-Affiliates  of the Borrower,
American Ski or a Borrower  Subsidiary);  plus (c) transfer and ad valorem taxes
payable in connection with or as a result of such transaction;  plus (d) amounts
held in escrow but excluding  any amounts held in a Reserve in  connection  with
any such disposition  (prior to the release thereof);  plus (e) other reasonable
and customary out-of-pocket costs incurred in connection therewith.

         "NET INVENTORY  PROCEEDS"  shall mean the Cash Proceeds with respect to
any  disposition  or lease of Inventory  Units or Cash  Insurance  Proceeds with
respect to Inventory  Units net of the sum of (a) the amount required to be paid
to the Permitted  Construction  Lender and any  applicable  holder of a Purchase
Money  Mortgage;  plus  (b)  brokerage  commissions  (including  commissions  of
Borrower's  sales  staff in  compliance  with the  provisions  of  Section  10.5
provided no double counting occurs in the Budget),  legal fees, accounting fees,
investment  banking fees,  trustee's fees,  finder's fees and other similar fees
and commissions  (all of which amounts under this clause (b) shall be reasonable
and customary; plus (c) transfer and ad valorem taxes payable in connection with
or as a result of such  transaction;  plus (d) amounts held in escrow  (prior to
the release  thereof);  plus (e) other  reasonable  and customary  out-of-pocket
costs incurred in connection therewith.

         "NOTES"  shall mean the Tranche A Notes,  Tranche B Notes and Tranche C
Notes  substantially  in the form of Exhibit  "A"  attached  hereto  executed by
Borrower in favor of each Lender to evidence the Loans.

         "OAK  HILL"  shall mean Oak Hill  Capital  Partners,  L.P.  or Oak Hill
Securities Fund, L.P.

                                       14
<PAGE>

         "OPERATING  ACCOUNT"  shall  mean the  Reserve  Account  in  which  the
Projected Three Month Operating Expenses are held.

         "PAYMENT  DATE" shall mean the date that Lender  Obligations to the A/B
Lenders are paid in full.

         "PAYMENT OFFICE" means 100 Federal Street, Boston, Massachusetts 02110,
or such other address as the Agent may from time to time designate as the office
for payments of the Loan.

         "PENSION AFFILIATE" See Section 6.15.

         "PENSION  PLAN"  shall  mean an  employee  benefit  plan or other  plan
maintained  for the  employees  of Borrower or any  Subsidiary  as  described in
Section 4021(a) of ERISA.

         "PERMITTED  CONSTRUCTION LENDER(S)" shall mean Textron or the lender of
any other Permitted Construction Loan.

         "PERMITTED  CONSTRUCTION LOAN(S)" shall mean the construction loans for
the Permitted Construction Projects.

         "PERMITTED CONSTRUCTION  PROJECT(S)" shall mean the following projects:
(a) the following  (i) Grand Summit Hotel at the Canyons,  (ii) the Grand Summit
Hotel at Steamboat,  (iii) Grand Summit Hotel at Jordan Bowl,  (iv) Grand Summit
Hotel at Attatash, (v) Grand Summit Hotel at Killington, (vi) Grand Summit Hotel
at  Mount  Snow and  (vii)  the  eight  (8) unit  condominium  project  at Locke
Mountain,  Sunday River, Maine and (b) a Proposed  Construction Project that the
Agent has determined meets the Permitted Project Requirements.

         "PERMITTED  EXCEPTIONS"  shall mean the title exceptions  affecting the
Mortgaged  Properties shown on the Title Policies approved by the Agent, and the
liens of the  Purchase  Money  Mortgages  and such  other  exceptions  as may be
approved from time to time by the Agent.

         "PERMITTED FINANCIAL FACILITIES"   See Section 10.1(d).

         "PERMITTED HOLDERS" shall mean (a) Leslie B. Otten (or, in the event of
his  incompetence  or  death,  his  estate  and his  estate's  heirs,  executor,
administrator,  committee or other representative  (collectively,  "Heirs"), (b)
any Person in which Leslie B. Otten and his Heirs, directly or indirectly,  have
an eighty percent (80%)  controlling  interest,  and/or (c) Oak Hill and each of
their respective affiliates and associates.

         ""PERMITTED LIENS" See Section 10.2.

                                       15
<PAGE>

         "PERMITTED  PROJECT  BUDGET"  shall  mean the  budget for the costs and
sources of payment for a Permitted Construction Project which is included in the
Budget.

         "PERMITTED  PROJECT  REQUIREMENTS"  shall mean those  requirements  set
forth at Section 5.1.

         "PERSON" shall mean an individual,  corporation,  partnership,  limited
liability  company,  joint venture,  association,  estate,  joint stock company,
trust,   organization,   business,  or  a  government  or  agency  or  political
subdivision thereof or other entity.

         "PIK AMOUNT"  means the  aggregate  amount of interest on the Tranche B
Notes  that has been  added to  principal  rather  than paid on a current  basis
pursuant to Section 2.1(b), as such aggregate amount may be reduced from time to
time by the payment of the Excess Cash Required Payments.

         "PRESALE REQUIREMENTS" See Section 5.1(h).

         "PROJECT  EQUITY"  shall mean the  difference  in the total  costs of a
Proposed  Construction  Project minus:  (i) amounts funded and to be funded from
the  construction  loan  for  the  Proposed   Construction   Project;  (ii)  any
Subordinated  Indebtedness  attributable  to such project  approved by Agent for
inclusion  in this  calculation;  (iii) the amount of any  marketing  costs with
respect to such  project  which are  included  in the  Budget;  (iv)  amounts of
presale  deposits  available for use in the construction of improvements for the
project under  Applicable  Law; and (v) the amount of any  subordinate  Purchase
Money  Mortgages  which are allocated to the project and to no other projects or
Collateral.

         "PROJECTED THREE MONTH OPERATING EXPENSES" shall mean the rolling three
(3)  month  projected  operating  amounts,  other  than  interest  on the  Loan,
determined by the Borrower,  consistent with the Budget, for any three (3) month
period as such amount may be reduced  upon the  Borrower's  failure to comply at
all times with the Budget Variance Requirement.

         "PROPOSED CONSTRUCTION PROJECT(S)" shall mean the proposed construction
of  improvements  as contemplated by and listed on the Budget and located on the
Mortgaged  Properties  or on property  owned by a Borrower  Subsidiary  prior to
being designated as a Permitted Construction Project hereunder.

         "PURCHASE  MONEY  MORTGAGE(S)"  shall mean the Purchase Money Mortgages
described in Schedule 2 attached hereto.

         "PURCHASE MONEY  INDEBTEDNESS"  shall mean Indebtedness  affecting real
property  known as Parcel A-2 of the Canyons being more  particularly  set forth
as:

         1.       $300,000.00 mortgage loan from LRJ Enterprises, Inc.; and
         2.       $1,000,000.00 mortgage loan from Songbird Enterprises.

                                       16
<PAGE>

         "PURCHASE  OPTIONS"  shall mean  collectively,  (i) that portion of the
Option to Purchase in that  certain  Ground Lease  Agreement  dated July 3, 1997
between  Wolf  Mountain  Resorts,  L.C.  and ASC Utah,  as  assigned to Borrower
pursuant to that certain  Assignment of Purchase Option Interest dated September
4, 1998  between ASC Utah and Borrower  with  respect to the  Canyons;  (ii) any
development  rights  available to Heavenly  Resort or any option to purchase any
development  rights or property  pursuant to or in connection  with that certain
Master Disposition and Development  Agreement,  dated October 28, 1999, to which
Heavenly Resort is a party; (iii) that certain Option Agreement,  dated June 15,
1998, between HKM Partners and Borrower; and (iv) any other purchase options and
development right options of Borrower or Borrower  Subsidiary in existence as of
the date hereof or that Borrower or Borrower Subsidiary may hereafter acquire.

         "QUALIFIED  SALES  CONTRACT(S)"  shall mean a contract with a bona-fide
third party  purchaser with a minimum twenty percent (20%)  non-refundable  down
payment  with  regard  to  Condominiums   (single  owner)  payable  in  two  (2)
installments,  fifty percent (50%) at or before the time of the execution of the
contract and the remainder at or before the completion of the shell improvements
and a five percent (5%)  non-refundable down payment with regard to Quartershare
Facilities.

         "QUARTERSHARE   FACILITIES"   shall  mean  dwellings   subject  to  the
condominium  form of ownership sold on the basis of multiple  ownership based on
thirteen (13) weeks per year or other commercially reasonable time period.

         "REGISTER"  See Section 14.2(c).

         "RELATED ENTITY"  See Section 14.2(a).

         "REPORTABLE  EVENT(S)"  shall mean an event  reportable  to the Pension
Benefit Guaranty Corporation under Section 4043 of Title IV of ERISA.

         "REQUIRED  LENDERS"  shall mean, at any time,  any Tranche A Lender and
Tranche B Lender or Lenders  holding at least  sixty-seven  percent (67%) of the
sum of the outstanding principal amount of Tranche A and Tranche B. For purposes
of this  definition,  the Tranche C Lenders shall be excluded  until the Payment
Date has occurred.

         "RESERVE  ACCOUNT(S)"  shall mean the account  for each  Reserve at the
Head Office where the Reserves are held.

         "RESERVE(S)"  shall mean the General  Cash  Collateral  Account and the
Operating  Account and all  proceeds  thereof,  including  any  interest  earned
thereon.

         "RS" shall mean Fleet Boston Robertson Stephens Securities, Inc.

                                       17
<PAGE>

         "SECURITY   AGREEMENTS"   shall  mean  the   following   documents  and
instruments now or hereafter existing from the Borrower to the Agent, some being
dated  September  4, 1998,  having  been  modified on January 8, 1999 and on the
Closing Date:

         (a)      the Mortgages;

         (b) that certain Grant of Security Interest in Trademarks from Borrower
to the Agent;

         (c)      the Collateral Assignment of Agreements;

         (d) that certain  Amended and  Restated  Stock  Pledge  Agreement  with
respect to all equity interests in any Borrower Subsidiary; and

         (e)      Assignments of Entity Interests and Proceeds;

         (f)  all  other  security  agreements,  pledge  agreements,  mortgages,
assignments  and other  instruments by which  Borrower or a Borrower  Subsidiary
grants or pledges  to the Agent a lien on,  security  interest  in, or pledge or
mortgage or  assignment  of any of its assets to secure the Lender  Obligations,
each as amended from time to time.

         "SENIOR  FACILITY"  shall mean the senior  secured  credit  facility in
favor of  American  Ski and  related  entities  by Fleet  National  Bank  (f/k/a
BankBoston,  N.A.),  as agent,  set forth in the  Amended  and  Restated  Credit
Agreement  dated as of November  12,  1997,  as modified  on July 20,  1998,  as
amended,  restated and  consolidated on October 12, 1999 and as further modified
from time to time.

         "SENIOR NOTE  GUARANTY"  shall mean the Guaranty by the Borrower of the
Series A and Series B twelve  percent (12%) Senior  Subordinated  Notes due 2006
pursuant to the Indenture dated June 28, 1996, as amended.

         "SOLVENT" or "SOLVENCY" shall mean, as to any Person,  that such Person
(a) has assets  having a fair  value in excess of its  liabilities  (other  than
contingent  liabilities),  (b) has  assets  having a fair value in excess of the
amount  required to pay its  liabilities  on existing debts as such debts become
absolute  and  matured and (c) has,  and expects to continue to have,  access to
adequate  capital  for the  conduct of its  business  and the ability to pay its
debts  from  time to time  incurred  in  connection  with the  operation  of its
business as such debts mature.

         "STATUS  MEMORANDUM"  shall  mean that  memorandum  as to the status of
certain aspects of the Mortgaged Properties set forth on Exhibit "D" prepared as
of September 8, 1998 and updated as of even date.

         "SUBORDINATION   AGREEMENT"  shall  mean  the  Subordination  Agreement
between  American  Ski,  Borrower and Agent dated as of  September  4, 1998,  as
ratified on even date, as amended from time to time.

                                       18
<PAGE>

         "SUBORDINATED INDEBTEDNESS" shall mean the Senior Note Guaranty and the
Intercompany  Debt and such  other  Indebtedness  by the  Borrower  which is the
subject of a Subordination Agreement acceptable to and approved by the Agent.

         "SUBSIDIARY" or "SUBSIDIARIES"  shall mean any Person of which Borrower
or a  Borrower  Subsidiary  shall now or  hereafter  the time own,  directly  or
indirectly  through one or more  Subsidiaries  or otherwise,  sufficient  voting
stock (or other beneficial  interest) to entitle it to elect at least a majority
of the board of directors or trustees, managing member or similar managing body.

         "SUBSIDIARY AVAILABLE CASH" shall mean all cash and Cash Equivalents of
the Borrower  Subsidiaries  held by or on behalf of the  Borrower  Subsidiaries,
excluding  Project  Equity and any mandatory  cash or Cash  Equivalent  reserves
required  under a  Permitted  Construction  Loan or  under  Third  Party  Equity
Documents approved by the Agent.

         "SUCCESSOR LENDER" shall mean any Person who becomes a Successor Lender
pursuant to the provisions of Section 14.2.

         "TANGIBLE  NET WORTH"  shall mean the excess of Total Assets over Total
Liabilities.

         "TEXTRON" shall mean Textron Financial Corporation.

         "THIRD PARTY  EQUITY" shall mean any and all capital  (debt,  equity or
any combination thereof) provided under Third Party Equity Documents.

         "THIRD PARTY EQUITY DOCUMENTS" shall mean the documents and instruments
in favor of an entity  that  intends to provide  either  equity or  subordinated
debt,  which establish the rights and obligations of such entity with respect to
the applicable Proposed Construction  Project;  provided,  however,  Agent shall
approve the proposed Third Party Equity and the return on such equity.

         "TITLE COMPANY" shall mean any of the following:  Land America National
Title  Services,  Inc.,  First  American  Title  Insurance  Company or any other
nationally recognized title insurance company approved by Agent.

         "TITLE  POLICIES"  shall mean the mortgagee  title  insurance  policies
issued  by the Title  Company  which  insure  the  priority  of the liens of the
Mortgages.

         "TOTAL  ASSETS"  shall  mean  all  assets  of the  Borrower,  excluding
intangible assets such as goodwill,  all determined in accordance with Generally
Accepted Accounting Principles.

                                       19
<PAGE>

         "TOTAL  LIABILITIES"  shall mean all  liabilities of the Borrower which
are  properly  accounted  for as  such in  accordance  with  Generally  Accepted
Accounting  Principles,  excluding  Intercompany  Debt, Tranche C and the Senior
Note Guaranty for so long as it is a contingent liability.

         "TRANCHE OR TRANCHES" shall mean the referenced  Tranche of the Loan or
all of Tranche A, Tranche B and Tranche C as the context requires.

         "TRANCHE  A" shall  mean  that  portion  of the Loan  evidenced  by the
Tranche A Notes.

         "TRANCHE A CLOSING DATE BALANCE" shall mean $28,891,666.16.

         "TRANCHE A  COMMITMENT  PERCENTAGE(S)"  shall mean as to Lenders  under
Tranche A Notes, each Lender's  percentage interest as to Tranche A as set forth
in Schedule 1 attached hereto and made a part hereof.

         "TRANCHE A INTEREST RATE"  See Section 2.2(b).

         "TRANCHE A LENDERS"  shall mean those Lenders who are payees or holders
of the Tranche A Notes.

         "TRANCHE  A  MATURITY  DATE"  shall  mean  the  sooner  to occur of (i)
December  31,  2002 or (ii) the date of the  acceleration  of the Loan  Maturity
Dates upon the occurrence of an Event of Default as provided herein.

         "TRANCHE A NOTES" shall mean the  promissory  notes of even date by the
Borrower to the order of the Tranche A Lenders in the aggregate principal amount
of $35,000,000.00, as amended from time to time.

         "TRANCHE  B" shall  mean  that  portion  of the Loan  evidenced  by the
Tranche B Notes.

         "TRANCHE B CLOSING DATE BALANCE" shall mean $25,000,000.00

         "TRANCHE B COMMITMENT PERCENTAGE(S)" shall mean as to Lenders under the
Tranche B Notes, each Lender's  percentage interest as to Tranche B as set forth
in Schedule 1 hereto.

         "TRANCHE B INTEREST RATE"  See Section 2.2(b).

         "TRANCHE B LENDERS"  shall mean those Lenders who are payees or holders
of the Tranche B Notes.

                                       20
<PAGE>

         "TRANCHE  B  MATURITY  DATE"  shall  mean  the  sooner  to occur of (i)
December  31,  2003 or (ii) the date of the  acceleration  of the Loan  Maturity
Dates upon the occurrence of an Event of Default as provided herein.

         "TRANCHE B NOTES" shall mean the  promissory  notes of even date by the
Borrower to the order of the Tranche B Lenders in the aggregate principal amount
of $25,000,000.00, as amended from time to time.

         "TRANCHE  C" shall  mean  that  portion  of the Loan  evidenced  by the
Tranche C Notes.

         "TRANCHE C CLOSING DATE BALANCE" shall mean $5,500,000.00.

         "TRANCHE C COMMITMENT PERCENTAGE(S)" shall mean as to Lenders under the
Tranche C Notes, each Lender's  percentage interest as to Tranche C as set forth
on Schedule 1.

         "TRANCHE C FEE"  See Section 2.6.

         "TRANCHE C FEE LETTER"  shall mean the letter of even date  between the
Tranche C Lenders and the  Borrower  with  respect to the payment of the maximum
amount fee of  $375,000.00  by the  Borrower  to the  Tranche C Lenders or their
assignees.

         "TRANCHE C INTEREST RATE"  See Section 2.2(b).

         "TRANCHE C LENDERS"  shall mean those Lenders who are payees or holders
of the Tranche C Notes.

         "TRANCHE  C  MATURITY  DATE"  shall  mean  the  sooner  to occur of (i)
December  31,  2005 or (ii) the date of the  acceleration  of the Loan  Maturity
Dates upon the occurrence of an Event of Default as provided herein.

         "TRANCHE C NOTES" shall mean the  promissory  notes of even date by the
Borrower to the order of the Tranche C Lenders in the aggregate principal amount
of $13,000,000.00,  and any additional promissory notes by Borrower to the order
of the Tranche C Lenders  issued  pursuant to Section 2.1,  each as amended from
time to time.

         "TRANCHE  C  REMAINING  BALANCE"  shall mean  $13,000,000.00  minus the
Tranche C Closing Date Balance and after the Closing Date, the amount  remaining
to be  disbursed  under  Tranche C as such  amount may change  from time to time
pursuant to Section 2.1 or 3.3(D).

         "TRANCHE  C  WARRANTS".  Warrants  or  other  equity  interests  in the
Borrower  or  American  Ski issued to the  Tranche C Lender in  connection  with
Tranche C.

                                       21
<PAGE>

         "TRANCHE  COMMITMENT  PERCENTAGE"  shall  mean as to each  Lender  in a
particular Tranche,  the designated  commitment  percentage for such Lender in a
particular Tranche.

         "UCC"  shall  mean  the  Uniform  Commercial  Code  in  effect  in  the
applicable jurisdiction, as amended from time to time.

         "UNRESTRICTED CASH" shall mean all cash in the General Fund.

         "YIELD  MAINTENANCE  AMOUNT"  shall  mean the  amount  calculated  with
respect to a prepayment of Tranche B as set forth on Exhibit "B" attached hereto
and made a part hereof.

Section 1.2 ACCOUNTING  TERMS. All accounting terms used and not defined in this
Agreement  shall be construed in accordance with Generally  Accepted  Accounting
Principles consistently applied, and all financial data required to be delivered
hereunder shall be prepared in accordance with such principles.

ARTICLE II.       THE CREDIT

Section 2.1 THE LOANS. Subject to the terms and conditions of this Agreement, on
the date hereof,  the Lenders,  severally  and not jointly,  shall make Loans to
Borrower in an amount equal to each Lender's  Tranche  Commitment  Percentage of
SEVENTY-THREE  MILLION AND NO/100 DOLLARS  ($73,000,000.00),  and Borrower shall
execute and deliver to each Lender as  applicable  a Tranche A Note, a Tranche B
Note or a Tranche C Note, in the original  principal amount of either Tranche A,
Tranche B or Tranche C allocated to such Lender as  designated on Schedule 1, as
Schedule 1 may be modified from time to time. Tranche A, Tranche B and Tranche C
taken together shall  constitute the Loans. The Borrower shall have the right to
request from time to time that the Tranche C Lenders  increase  Tranche C by the
maximum aggregate  principal amount of $10,000,000.00.  If the Tranche C Lenders
agree to such an increase at the time of such  exercise,  the  Borrower  and the
Tranche C Lenders  will  execute and deliver  documents  necessary  to close the
modification  of Tranche C subject to and in  compliance  with the terms of this
agreement  including Article 17 and provide copies to the Agent for review prior
to and executed copies upon such execution.

         A. Pari  Pasu.  Tranche A,  Tranche B and  Tranche C shall be pari pasu
with respect to the Collateral.

         B.  Tranche  A. The  Borrower  acknowledges  and agrees  that:  (i) the
outstanding balance of Tranche A as of the Closing Date is the Tranche A Closing
Date Balance and (ii) the amount  remaining to be advanced under Tranche A under
this  Agreement  is the  difference  between  $35,000,000.00  and the  Tranche A
Closing  Date  Balance.  The  remaining  amount to be advanced  with  respect to
Tranche A shall be advanced in accordance with the terms of this Agreement.  The
foregoing amount shall be advanced upon the satisfaction of the requirements for

                                       22
<PAGE>

purposes for Advances set forth herein.  The Borrower shall not be entitled to a
readvance of any principal paid with respect to Tranche A. Furthermore, upon the
full  advance of Tranche A, the  Borrower  shall not be  entitled to any further
Advance from Tranche A.

         C.  Tranche B. The Borrower  acknowledges  and agrees that Tranche B is
fully  advanced  as of the  Closing  Date and that the balance as of the Closing
Date is the Tranche B Closing Date  Balance.  No portion of Tranche B is subject
to readvance once paid to the Tranche B Lenders.

         D. Tranche C. The Borrower acknowledges and agrees that the outstanding
balance  of  Tranche C is the  Tranche C Closing  Date  Balance.  No  portion of
Tranche C is subject to readvance once  disbursed by the Tranche C Lenders.  The
Borrower may request that the Tranche C Lenders terminate any obligation to fund
the then  balance of the Tranche C Remaining  Balance at any time after July 31,
2001  subject  to the  submission  of  evidence  to the Agent and the  Tranche C
Lenders that the then balance of the Tranche C Remaining Balance is not required
under the Budget.

Section 2.2 PRINCIPAL INSTALLMENTS AND INTEREST ON THE LOANS AND PREPAYMENT.

(a) PRINCIPAL.  The Borrower  shall pay to the Agent,  on behalf of the Lenders,
mandatory  principal payments in the amounts and upon the dates designated below
with respect to Tranche A:

         April 30, 2002             $5,000,000.00
         July 31, 2002              $5,000,000.00
         October 31, 2002           $5,000,000.00

         All amounts which may be applied to principal  under Section 4.4D shall
be applied in reduction  of the next due and owing  principal  installments  set
forth above and then to the remaining  principal balance of the Tranche A Notes.
No  principal  amount  shall be applied to Tranche B until  Tranche A is paid in
full including any payments made or  realization  under the Collateral or in any
bankruptcy proceedings.  The payment timing as to Tranche C shall be governed by
the  provisions  of Article  17.  The Excess  Cash  Required  Payments  shall be
permitted  provided  no Default or Event of Default  exists.  There  shall be no
mandatory  principal  payments with respect to Tranche B or Tranche C except for
the  Excess  Cash  Required  Payments.  Upon the  payment  in full of Tranche A,
however, any amounts under Section 4.4D that may be allocated to principal shall
be then applied to the General Cash Collateral Account.

         The Borrower shall pay to the Tranche B Lenders on the first day of any
month the Excess  Cash  Amount to the extent of the balance of the PIK Amount to
be applied to reduce the PIK Amount;  provided,  however, no Default or Event of
Default  would arise  because of the making of such  prepayment.  The  foregoing
installments shall be referred to herein as the "Excess Cash Required Payments".
The Yield Maintenance Amount shall not be applicable to the Excess Cash Required
Payments.

                                       23
<PAGE>

         The Borrower shall pay the entire outstanding principal balance and all
accrued and unpaid  interest of Tranche A together  with all Lender  Obligations
payable to the Tranche A Lenders on the Tranche A Maturity  Date.  The  Borrower
shall pay the entire  outstanding  principal  balance and all accrued and unpaid
interest of Tranche B together with all other Lender Obligations  payable to the
Tranche B Lenders on the Tranche B Maturity  Date.  Subject to the provisions of
Article 17, the Borrower shall pay the entire outstanding  principal balance and
all accrued  and unpaid  interest  of Tranche C together  with all other  Lender
Obligations owed to the Tranche C Lenders on the Tranche C Maturity Date.

(b) INTEREST. The Borrower shall pay interest on the unpaid, outstanding balance
of the Loans and the Loans shall bear interest as follows:

                  1.       Interest Rates

                           (a) Tranche A shall bear interest at a per annum rate
                  equal to the Base Rate plus the Base Rate  Margin  ("Tranche A
                  Interest Rate");

                           (b)  Tranche B shall  bear  interest  at  twenty-five
                  percent (25%) per annum ("Tranche B Interest Rate"); and

                           (c) Tranche C shall bear interest at eighteen percent
                  (18%) per annum ("Tranche C Interest Rate").

                  2.       Interest Payment Amounts

                           (a)  Tranche A and  Tranche B:  Interest on Tranche A
                  and on  Tranche B shall be  payable  monthly in arrears on the
                  last  day of each  month,  commencing  August  31,  2000,  and
                  continuing  until all of the  Indebtedness  of the Borrower to
                  the A/B Lenders  under the Loans shall have been paid in full.
                  Interest  installments shall be in the amounts set forth below
                  during the designated time period:

                                    (i) Tranche A: Interest  installments  shall
                           be in the amount of all accrued  and unpaid  interest
                           on Tranche A.

                                    (ii)  Tranche B:  During the period from the
                           Closing  Date to and  through  August 31,  2001,  the
                           accrued and unpaid interest shall be divided into two
                           amounts:

                                            (1)  Accrued  and  unpaid   interest
                                    calculated  at the rate of eighteen  percent
                                    (18%) per annum  shall be due and payable on
                                    each interest  installment  date during this
                                    period;

                                       24
<PAGE>

                                            (2)  The  remaining  amount  of  the
                                    accrued and unpaid  interest  being interest
                                    calculated  at seven  percent (7%) per annum
                                    (25% minus 18%)  shall  accrue,  be added to
                                    the principal balance of Tranche B and shall
                                    bear interest at  twenty-five  percent (25%)
                                    per annum from the date of such  accrual and
                                    shall  compound  annually  on  each  May  31
                                    during the term of the Loans.

         From and after July 31, 2001,  interest  installments  under  Tranche B
shall be due and  payable  in the  amount of all  accrued  and  unpaid  interest
(excluding the PIK Amount).

                           (b) Tranche C: Interest  shall accrue on Tranche C at
                  the  Tranche  C  Interest  Rate from the  Closing  Date to and
                  through the date of the payment in full of all Indebtedness of
                  the Borrower to the Tranche C Lenders.  The accrued and unpaid
                  interest  shall accrue,  be added to the principal  balance of
                  Tranche C, and shall  bear  interest  at the rate of  eighteen
                  percent  (18%) per  annum  from the date of such  accrual  and
                  shall  compound  semi-annually  on each July 31 and January 31
                  during the term of the Loans.  All accrued and unpaid interest
                  with  respect  to  Tranche C shall be due and  payable  on the
                  Tranche C Maturity Date,  subject to the provisions of Article
                  17.

(c) PREPAYMENT. The Borrower may prepay the outstanding principal balance of the
Loans on the following conditions with respect to the Tranches:

1.                         TRANCHE A. On or before the first  anniversary of the
                           Closing  Date,  the  Borrower  may  prepay all or any
                           portion of Tranche A provided  that the Borrower pays
                           to the  Tranche A  Lenders  one  percent  (1%) of the
                           amount prepaid as a prepayment  penalty.  The payment
                           of regularly  scheduled  amortization  payments shall
                           not  be  deemed  to  be  prepayments.  No  prepayment
                           penalty   shall  be   applicable  to  Tranche  A  for
                           prepayments  made after the first  anniversary of the
                           Closing Date.

2.                         TRANCHE  B. The  Borrower  shall  have  the  right to
                           prepay  Tranche B prior to the second  anniversary of
                           the Closing Date,  provided that the Borrower pays to
                           the  Tranche B Lenders the Yield  Maintenance  Amount
                           concurrently with such payment. Unless each Tranche A
                           Lender  shall  agree  otherwise,   no  prepayment  of
                           Tranche B shall be permitted  prior to the payment in
                           full of Tranche A.  Thereafter,  the  Borrower  shall
                           have the right to prepay  Tranche B on the  following
                           conditions:

(a)                                 From the day after the second anniversary of
                                    the Closing Date through and  including  the

                                       25
<PAGE>

                                    third  anniversary  of the Closing Date, the
                                    Borrower  may prepay  all or any  portion of
                                    Tranche B provided that the Borrower pays to
                                    the Tranche B Lenders  two  percent  (2%) of
                                    the amount prepaid as a prepayment  penalty;
                                    and

(b)                                 Thereafter,  the  Borrower may prepay all or
                                    any  portion of Tranche B provided  that the
                                    Borrower  pays to the  Tranche B Lenders one
                                    percent  (1%)  of the  amount  prepaid  as a
                                    prepayment penalty.

3.                         TRANCHE C. The Borrower may prepay  Tranche C subject
                           to the provisions of Article 17 and Section 14.4. The
                           terms and  conditions  of Article 17  provide,  among
                           other terms and  conditions,  that the Borrower shall
                           not  have  the  right  to make  any  payments  to the
                           Tranche C Lenders  other  than as  authorized  herein
                           prior  to  the   payment   in  full  of  all   Lender
                           Obligations  owed to the A/B Lenders.  Subject to the
                           foregoing,  on or before the first anniversary of the
                           Closing  Date,  the  Borrower  may  prepay all or any
                           portion of Tranche C provided  that the Borrower pays
                           to the  Tranche C  Lenders  two  percent  (2%) of the
                           amount   prepaid  as  a   prepayment   penalty.   The
                           prepayment  penalty  for the next two (2) loan  years
                           shall  decrease  one  percent  (1%)  per  year on the
                           anniversary   date  of  the  Closing   Date  so  that
                           prepayments  in the second (2nd) loan year shall have
                           a  prepayment  penalty of one percent (1%) per annum,
                           and  thereafter,   no  prepayment  penalty  shall  be
                           applicable.

         Subject to the  procedures for  application  of principal  payments set
forth in Section 2.2(a) and the provisions of Section 4.4D,  Borrower may prepay
the outstanding  principal balance of Tranche A without  prepayment penalty from
Net Collateral Proceeds, Net Inventory Proceeds and Land Notes.

Section 2.3 PROCEDURE FOR RESERVES. The Borrower hereby agrees that the Reserves
shall be governed by the following procedures and provisions:

(a) Each Reserve shall be held in a separate,  interest bearing account, and the
Borrower's taxpayer identification number is 01-0514267; and

(b) The  Reserve  Accounts  shall be subject to a first in  priority,  perfected
security interest in favor of the Agent to secure the performance and payment of
the Lender Obligations.

Section 2.4       DEFAULT RATE AND LATE FEE.

(a) Upon the occurrence and during the continuance of any Event of Default,  the
Borrower  shall,  on demand,  pay to the Agent,  for the account of the Lenders,
interest  on the  unpaid  principal  balance of the  Loans,  and,  to the extent

                                       26
<PAGE>

permitted  by law, on any overdue  installments  of interest  and other  overdue
amounts, at a rate per annum equal to the Default Rate.

(b) If the entire amount of any required  principal  and/or interest is not paid
in full  within ten (10) days after the same is due,  Borrower  shall pay a late
fee  equal  to five  percent  (5%) of the  delinquent  portion  of the  required
payment.

(c) Default  Rate  interest  received by the Agent shall be allocated to the A/B
Lenders.  Any  Default  Rate  interest  calculated  on Tranche C and paid by the
Borrower to the Agent shall be paid in accordance with the provisions of Section
4.4D and shall not be delivered  by the Agent to the Tranche C Lenders.  Rather,
the amount so paid shall be  recharacterized  so as to be applied in  accordance
with Section 4.4D and the Default Rate interest so calculated  shall continue to
be accrued and unpaid Lender  Obligations  owed by the Borrower to the Tranche C
Lenders.

Section 2.5  COMPUTATION  OF INTEREST AND BALANCE.  Interest with respect to the
Loans shall be computed on the basis of a three hundred sixty (360) day year for
the number of days actually  elapsed.  The  outstanding  balance of the Notes as
reflected on the Agent's  records from time to time shall be considered  correct
and  binding on the  Borrower  and the  Lenders  (absent  manifest  error).  All
agreements  between Borrower,  Agent and Lenders are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the Loan or otherwise, shall the amount paid or agreed to be paid to
the  Lenders  for the use or the  forbearance  of the Loan  exceed  the  maximum
permissible  under  applicable law. As used herein,  the term  "applicable  law"
shall mean the law in effect as of the date hereof;  provided,  however, that in
the event  there is a change in the law which  results  in a higher  permissible
rate of  interest,  then  this  Agreement  and the  Lender  Agreements  shall be
governed  by such  new law as of its  effective  date.  In  this  regard,  it is
expressly  agreed  that it is the intent of  Borrower,  Agent and Lenders in the
execution,  delivery and acceptance of this Agreement and the Lender  Agreements
to  contract  in strict  compliance  with the laws of the State of New York from
time to  time  in  effect.  If  under  or  from  any  circumstances  whatsoever,
fulfillment  of any provision  hereof or of any of the Lender  Agreements at the
time of performance of such provision  shall be due, shall involve  transcending
the limit  prescribed  by applicable  law,  then the  obligation to be fulfilled
shall  automatically be reduced to the limits  prescribed by applicable law, and
if under  or from  circumstances  whatsoever  Agent or any  Lender  should  ever
receive as interest an amount which would exceed the highest  lawful rate,  such
amount which would be excessive  interest  shall be applied to the  reduction of
the  principal  balance  of the Loan and not to the  payment of  interest.  This
provision  shall  control  every  other  provision  of  all  agreements  between
Borrower, Agent and Lenders.

Section 2.6 FEES.  Borrower shall pay the Fees to the Agent, for the Agent's own
account, as provided in the Fee Letters. The Borrower shall also be obligated to
pay to,  pursuant to the  Tranche C Fee  Letter,  the Tranche C Lenders or their
designees  a fee in the amount of  $375,000.00  ("Tranche  C Fee") on January 2,
2001, provided no Event of Default exists hereunder. Otherwise the Tranche C Fee

                                       27
<PAGE>

shall be due and  payable  at the sooner to occur of: (i) the date that no Event
of Default exists hereunder or (ii) the Tranche C Maturity Date.

Section 2.7 SETOFF.  Borrower  hereby  grants to Agent and each Lender,  a lien,
security  interest and right of setoff as security  for all Lender  Obligations,
whether  now  existing or  hereafter  arising,  upon and  against all  deposits,
credits,  Collateral and property, now or hereafter in the possession,  custody,
safekeeping  or  control  of the  Agent or any  Lender or any  entity  under the
control of FleetBoston  Financial Group,  Inc., or in transit to any of them. At
any time, without demand or notice,  upon the occurrence of a Default and at any
time  during its  continuance,  Agent and each Lender may setoff the same or any
part thereof and apply the same to any  liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan.  ANY AND ALL RIGHTS TO REQUIRE  AGENT AND  LENDERS TO  EXERCISE  THEIR
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER  COLLATERAL WHICH SECURES THE LOAN,
PRIOR TO EXERCISING THEIR RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER  PROPERTY  OF THE  BORROWER,  ARE  HEREBY  KNOWINGLY,  VOLUNTARILY  AND
IRREVOCABLY  WAIVED. The right of setoff contained herein shall be applicable to
the Reserve Accounts.

         Each of the Lenders  agrees that if such Lender shall  receive from the
Borrower or any Borrower Subsidiary,  whether by voluntary payment,  exercise of
the  right of  setoff,  counterclaim,  cross-action,  enforcement  of the  claim
evidenced by the Notes held by such Lender by  proceedings  against the Borrower
at  law  or in  equity  or  by  proof  thereof  in  bankruptcy,  reorganization,
liquidation,  receivership or similar proceedings or otherwise, and shall retain
and apply to the  payment of the Note or Notes held by such Lender any amount in
excess of its  ratable  portion of the  payments  received by all of the Lenders
with respect to the Notes held by all of the Lenders, such Lender will make such
disposition and arrangements with the other Lenders with respect to such excess,
either by way of distribution,  assignment of claims,  subrogation, or otherwise
as shall result in each Lender  receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement.

Section 2.8       INCREASED COSTS, ETC.

(a) If any  changes in  present  or future  Applicable  Law,  including  without
limitation  any  change  according  to  a  prescribed   schedule  of  increasing
requirements, whether or not known or in effect as of the date hereof, shall (i)
subject a Lender to any tax,  levy,  impost,  duty,  charge,  fee,  deduction or
withholding  of any nature with  respect to this  Agreement  or the payment to a
Lender of any amounts due to it hereunder,  or (ii) materially  change the basis
of taxation of payments to a Lender of the  principal  of or the interest on the
Loans or any other  amounts  payable to a Lender  hereunder,  or (iii) impose or
increase or render applicable any special or supplemental  deposit or reserve or
similar requirements or assessment against assets held by, or deposits in or for
the account of, or any liabilities of, or loans by an office of such Lender with
respect to the transactions  contemplated  herein, or (iv) impose on such Lender
any other condition or requirement  with respect to this Agreement or the Loans,
and the  result  of any of the  foregoing  is (a) to  increase  the cost to such
Lender of  making,  funding or  maintaining  all or any part of the Loans or its

                                       28
<PAGE>

commitment  hereunder,  or (b) to reduce the amount of  principal,  interest  or
other amount payable to such Lender hereunder,  or (c) to require such Lender to
make any payment or to forego any interest or other sum payable  hereunder,  the
amount of which  payment or  foregone  interest  or other sum is  calculated  by
reference to the gross amount of any sum  receivable or deemed  received by such
Lender  from  Borrower  hereunder,  then,  and in each such  case not  otherwise
provided for hereunder,  Borrower will upon demand made by such Lender  promptly
following such Lender's receipt of notice pertaining to such matters accompanied
by calculations thereof in reasonable detail, pay to such Lender such additional
amounts as will be  sufficient  to  compensate  such Lender for such  additional
cost,  reduction,  payment or  foregone  interest  or other sum.  The  foregoing
provisions  shall  not  apply in the  case of any  additional  cost,  reduction,
payment or foregone  interest or other sum resulting from any taxes charged upon
or by  reference to the overall net income,  profits or gains of any Lender.  In
determining the additional  amounts payable  hereunder,  the Lenders may use any
reasonable method of averaging, allocating or attributing such additional costs,
reductions,  payments,  foregone  interest or other sums among their  respective
customers.

(b) If, after the date hereof, any Lender shall have determined that any present
or future Applicable Law, including without limitation any change according to a
prescribed  schedule  of  increasing  requirements,  whether  or not known or in
effect as of the date hereof,  regarding capital  requirements for banks or bank
holding companies  generally,  or any change therein or in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by such Lender with any of the foregoing, either imposes a requirement upon such
Lender to allocate  additional  capital  resources  or increases  such  Lender's
requirement to allocate capital  resources or such Lender's  commitment to make,
or to such Lender's maintenance of the Loans, which has or would have the effect
of reducing the return on such Lender's capital to a level below that which such
Lender  could have  achieved  (taking  into  consideration  such  Lender's  then
existing policies with respect to capital adequacy and assuming full utilization
of such Lender's capital) but for such  applicability,  change,  interpretation,
administration  or  compliance,  by any  amount  deemed  by  such  Lender  to be
material,  such Lender shall promptly after its determination of such occurrence
give notice thereof to the Borrower accompanied by an opinion of counsel to such
Lender with respect to such  matters.  The cost of the opinion  shall be paid by
Borrower. Borrower and such Lender shall thereafter attempt to negotiate in good
faith an adjustment to the compensation  payable hereunder which will adequately
compensate  such  Lender for such  reduction.  If  Borrower  and such Lender are
unable to agree on such adjustment  within thirty (30) days of the date on which
Borrower  receives such notice,  then commencing on the date of such notice (but
not  earlier  than  the  effective  date  of  any  such  applicability,  change,
interpretation,  administration or compliance), the fees payable hereunder shall
increase by an amount which will,  in such  Lender's  reasonable  determination,
evidenced by calculations in reasonable detail furnished to Borrower, compensate
such Lender for such reduction, such Lender's determination of such amount to be

                                       29
<PAGE>

conclusive and binding upon Borrower, absent manifest error. In determining such
amount,  such Lender may use any reasonable methods of averaging,  allocating or
attributing such reduction among its customers.

(c) Any amounts  owing to the Tranche C Lenders  under the terms hereof shall be
subject to the provisions of Article 17.

Section 2.9 USE OF FUNDS. The proceeds of the Loans, any Advances,  and all cash
contained  in the  General  Cash  Collateral  Account  shall be  advanced to the
Borrower  pursuant to the terms of this  Agreement and used by Borrower:  (a) to
pay the fees and expenses  associated with the transactions  contemplated hereby
including  the Fees;  (b) to fund interest  under the Loan for interest  amounts
then due and payable;  (c) to the extent (a) and (b) are paid, for amounts shown
on the  Budget;  and (d) for such other  amounts  and payees as the Agent  shall
approve.  Borrower  will  not,  directly  or  indirectly,  use any  part of such
proceeds for the purpose of  purchasing  or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal  Reserve System
or to extend  credit to any Person for the purpose of purchasing or carrying any
such margin stock.

Section 2.10 PAYMENT OR OTHER ACTIONS ON NON-BUSINESS DAYS. Whenever any payment
to be made  hereunder  shall be stated to be due on a day other  than a Business
Day,  such payment shall be made on the next  succeeding  Business Day, and such
extension of time shall in such case be included in the  computation  of payment
of interest or fees,  as the case may be. In the case of any other  action,  the
last day for  performance of which shall be a day other than a Business Day, the
date for performance shall be extended to the next succeeding Business Day.

Section  2.11 METHOD AND TIMING OF  PAYMENTS.  Borrower  shall make each payment
hereunder  not later  than 3:00  p.m.  (Providence  time) on the day when due in
lawful money of the United States to the Agent at its Payment Office.  The Agent
will, after its receipt  thereof,  distribute like funds relating to the payment
of principal,  interest or any other amounts  payable  hereunder  ratably to the
Lenders in accordance with their respective Tranche Commitment Percentages after
taking into  account the  allocation  of the payment to the  particular  Tranche
hereunder. Any payment made by the Borrower to the Agent under this Agreement or
under the Notes in the manner provided in this Agreement shall be deemed to be a
payment  to  each of the  respective  Lenders,  unless  the  provisions  of this
Agreement  expressly  provide  that any such  payment  shall be  solely  for the
account of the Agent or any specific Lender.

Section 2.12  CURRENCY.  All payments  and  prepayments  provided for under this
Agreement  shall be made in lawful  currency of the United  States of America in
immediately available funds.

Section 2.13  REPLACEMENT  OF NOTES.  Upon receipt of an affidavit and indemnity
signed  by an  officer  of any  Lender  as to the loss,  theft,  destruction  or
mutilation  of a Note or any  other  security  document  which is not of  public

                                       30
<PAGE>

record,  and, in the case of any such loss,  theft,  destruction  or mutilation,
upon cancellation of such Note or other security document,  Borrower will issue,
in lieu  thereof  a  replacement  note or other  security  document  in the same
principal amount thereof and otherwise of like tenor.

ARTICLE III.      ADVANCES

Section 3.1 CONDITIONS TO THE LOANS. The Lenders'  obligations to make the Loans
shall be subject to  compliance by Borrower  with its  obligations  contained in
this Agreement, and to the condition precedent that the Agent for the benefit of
the Lenders  shall have received  each of the  following,  in form and substance
satisfactory  to the Agent and its counsel or in the form attached  hereto as an
Exhibit or Schedule, as the case may be:

(a)      NOTES. The Notes duly executed by the Borrower.

(b) RESOLUTIONS. Copies of the resolutions of the Board of Directors of Borrower
authorizing  the  execution,  delivery and  performance of this  Agreement,  the
Notes,  the Security  Agreements  and the other Lender  Agreements  to which the
Borrower  or  any  Subsidiary  is a  party,  certified  by the  Secretary  or an
Assistant  Secretary  (or Clerk or Assistant  Clerk) of Borrower and each of its
Subsidiaries  (which  certificate  shall state that such resolutions are in full
force and effect).

(c)  INCUMBENCY.  A certificate  of the Secretary or an Assistant  Secretary (or
Clerk or Assistant Clerk) of Borrower  certifying the name and signatures of the
officers of Borrower authorized to sign this Agreement,  the Notes, the Security
Agreements, the other Lender Agreements to which Borrower or any Subsidiary is a
party and the other documents to be delivered by Borrower hereunder.

(d)  CERTIFICATES OF EXISTENCE.  Certificates of legal  existence,  corporate or
partnership good standing and foreign  qualification for Borrower of recent date
issued by the appropriate California,  Colorado,  Delaware,  Maine, Nevada, Utah
and Vermont Governmental Authorities.

(e) CERTIFICATES OF GOOD STANDING. Certificate of good standing for Borrower and
each Subsidiary of Borrower of recent date issued by the appropriate California,
Colorado, Delaware, Maine, Nevada, Utah and Vermont Governmental Authorities.

(f) LEGAL OPINIONS.  The opinions of counsel to the Borrower,  dated the date of
execution of this Agreement, in form acceptable to counsel for the Lenders.

(g) SATISFACTION OF CONDITIONS.  A certificate of the chief operating officer or
chief financial officer of Borrower,  dated the Closing Date, to the effect that
all  conditions  precedent  on the part of the  Borrower  to the  execution  and
delivery hereof and the making of the Loans have been satisfied.

                                       31
<PAGE>

(h)   GOVERNMENTAL   APPROVALS.   Evidence  of  the  receipt  of  all  necessary
governmental authorizations,  consents and approvals for the execution, delivery
and  performance  by  Borrower  and  its  Subsidiaries  party  thereto  of  this
Agreement, the Notes, the Security Agreements and the other Lender Agreements.

(i) CLOSING FEE.  Receipt by the Agent of the closing fees due to it pursuant to
the Fee Letters.

(j) TITLE. Borrower owns fee simple title or other title acceptable to the Agent
with respect to the Mortgaged Properties.

(k) PURCHASE OPTIONS.  Borrower is the owner of the Purchase Options, except for
the Purchase Option contained in that certain Master Disposition and Development
Agreement,  dated October 28, 1999 to which  Heavenly  Resort is a party,  which
Purchase Option is owned by Heavenly Resort. No encumbrance  exists with respect
to the Purchase Options other than the lien of the collateral documents securing
the Senior  Facility,  which affects all of the Purchase  Options at the Canyons
other than the Base Property.

(l) SECURITY AGREEMENTS. Each of the security agreement modifications shall have
been duly and properly authorized, executed and delivered by the parties thereto
and shall be in full force and effect, and pursuant to the Security  Agreements,
Borrower  shall have  granted to the Agent  first  valid and  binding  perfected
security interests,  liens and encumbrances in favor of the Agent subject to the
Permitted Liens on all of the assets of Borrower  (other than personal  property
which are de minimis assets of the Borrower) including without limitation:

(i)                   all fee simple and leasehold  interests in and to all real
                      property  owned or leased by Borrower,  and all  buildings
                      and improvements now located or to be constructed thereon,
                      whether now owned or hereafter acquired;

(ii)                  all tangible and  intangible  assets of Borrower,  whether
                      now  owned  or  hereafter   acquired,   including  without
                      limitation    all   machinery,    equipment,    furniture,
                      furnishings,   inventory,   appliances,  contract  rights,
                      deposit  accounts,   cash  collateral,   hotel  and  motel
                      revenues, instruments,  general intangibles, etc., whether
                      now owned or hereafter  acquired,  but excluding leasehold
                      personal  property  interests which Borrower is prohibited
                      from  assigning  under the terms of the  applicable  lease
                      agreement and deposits under pre-sales contracts;

(iii)                 all leases,  tenancies,  purchase and sale  agreements for
                      the sale of condominium units or other property, operating
                      agreements,  contract and rental agreements for the lease,
                      sale (as permitted hereunder),  rental, occupancy, hire or
                      use  of  any  of  Borrower's  assets,   including  without
                      limitation  the  Mortgaged  Properties,   or  any  portion

                                       32
<PAGE>

                      thereof together with all income, profits,  revenues, cash
                      collateral and other proceeds thereof;

(iv)                  all licenses,  permits, trade names, patents,  trademarks,
                      approvals  and  contracts  except to extent  assignment is
                      prohibited under Applicable Law;

(v)                   all Reserves; and

(vi)                  the water rights and any other  right,  title and interest
                      of the  Borrower  with respect to the water or the company
                      providing  water to the  Canyons  or any  other  Permitted
                      Construction Project.

(m) INSURANCE. The Agent shall have received certificates of insurance or copies
of policies if required by Agent as to the liability, hazard and other insurance
maintained  by Borrower  on the  Collateral  in  conformity  with the  insurance
requirements contained herein.

(n)  LEASES/SERVICE  CONTRACTS.  The Agent  shall  have  received  copies of all
material  service  contracts  and leases  affecting any portion of the Mortgaged
Properties.

(o) SUBORDINATION  AGREEMENT.  The Subordination  Agreement shall remain in full
force and effect.

(p)  MISCELLANEOUS.   The  Agent  shall  have  received  such  other  documents,
certificates and opinions as the Agent may reasonably request.

(q) PERMITTED CONSTRUCTION LOAN. No default or event of default shall exist with
respect to the Permitted  Construction  Loan,  and Textron has not indicated any
intent to discontinue  funding under its Permitted  Construction  Loan, and such
loan is in Balance.  The  Borrower  has  submitted to the Agent a summary of the
Permitted  Construction Loans  demonstrating that no default or event of default
exists  thereunder  and that such  loans are in  Balance,  and the Agent and the
Required Lenders have approved such summary.

(r) MASTER EASEMENT.  The Master Easement shall remain in full force and effect,
and the Title Policies shall insure the lien and interest  thereof  subject only
to the Permitted Exceptions.

(s) BUDGET. The Agent and the Required Lenders have each approved the Budget and
underlying business plan.

(t) TRANCHE C LENDERS.  The Tranche C Lenders have deposited in the General Fund
the full  amount of the  Tranche C Closing  Date  Balance  and shall have caused
another $2,000,000.00 to be deposited in the General Fund.

                                       33
<PAGE>

Section 3.2 BUDGET.  The Borrower and the Required  Lenders hereby designate the
Budget attached hereto as Exhibit "C" as the Budget for all purposes herein. The
Budget shall include  Permitted  Project Budgets for all Permitted  Construction
Projects. The Budget and any Permitted Project Budgets may be modified only upon
the approval of the Required  Lenders.  The Budget and all amended Budgets shall
at all times provide  projections  through the Maturity Date. The Borrower shall
have the right to allocate funds from the contingency line item in the Budget to
other line items in the Budget upon  notification  by the Borrower to the Agent.
In the event that the  Borrower is not in  compliance  with the Budget  Variance
Requirement,  disbursement  of monies from any of the Funds shall be governed by
the provisions of Section 4.3 unless or until the Required Lenders approve a new
Budget.  The Borrower  shall deliver a revised  Budget to the Agent on or before
September 1 of each calendar  year and  otherwise  upon the request of the Agent
with such Budget setting forth the projected expenditures, Capital Expenditures,
and revenues and Cash Flow for the next succeeding year.

Section 3.3 ADVANCES AND ADVANCE REQUIREMENTS. Each request for an Advance shall
be  accompanied  by a requisition  for an Advance.  The Borrower shall also have
provided to the Agent all reports then required  under Section 7.1. In the event
the financial  reports then  required  pursuant to Section 7.1 are not delivered
when due,  the  Borrower  shall not request and Agent shall not be  obligated to
fund any Advances  until the Borrower has  submitted  all reports then  required
under Section 7.1. The  obligation of each Lender to make any Advances  shall be
subject to the satisfaction of the following conditions precedent (collectively,
the "Advance Requirements"):

(a)      Tranche A Loan Proceeds.

(i)      No Default or Event of Default exists;

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<PAGE>

(ii)     The amounts to be disbursed  shall be subject to  reduction  based upon
         compliance with the Budget Variance Requirement; and

(iii)    The amount  requested  corresponds  to the amount and category for such
         purpose  in the  Budget as  allocated  to  Tranche A loan  proceeds  as
         opposed  to the  General  Cash  Collateral  Account  and as within  the
         categories and amounts shown on Exhibit E.

         The foregoing  requirements shall not apply to any Advance of Tranche A
loan  proceeds  made by the  Tranche A Lenders  for the  purpose  of  payment of
accrued and unpaid  interest or other  amounts and  purposes  that the Tranche A
Lenders determine to be appropriate for purposes set forth in the Budget, to pay
Lender Obligations, or to preserve and protect the Collateral.

(b)      Funds from the General Fund.

         These funds shall be disbursed upon the  satisfaction  of the following
conditions:

(i)      No Default or Event of Default exists;

(ii)     All proceeds of the Advance shall be paid for the purposes set forth on
         the Budget; and

(iii)    The amounts to be disbursed  shall be subject to  reduction  based upon
         compliance with the Budget Variance Requirement.

         The Agent shall have the right to advance  proceeds of the General Fund
for such purposes and amounts as the Agent deems appropriate in order to pay any
Lender  Obligations  then due and  payable or to  protect  the  Collateral.  The
foregoing requirements shall not be applicable to such Advances.

(c)      Equity Funds, Cost Overrun Fund and any other Future Funds.

(i)      No Default or Event of Default exists;

(ii)     All proceeds of the Advance shall be paid for the purposes set forth on
         the Budget or for the  purpose for which the Agent has  designated  for
         the particular Fund or for such Loan proceeds; and

(iii)    Satisfaction of conditions precedent in Section 5.1.

         With the exception of the proceeds of the Equity Fund,  the Agent shall
have the  right to  advance  proceeds  of the  Funds in this  category  for such
purposes and amounts as the Agent deems  appropriate  in order to pay any Lender
Obligations  then due and payable or to protect the  Collateral.  The  foregoing
requirements shall not be applicable to such Advances.

(d) Tranche C Remaining  Balance.  The Borrower shall be entitled to Advances of
the Tranche C Remaining Balance in increments of  $1,000,000.00,  each under the
following conditions and for the following purposes:

(i)      The  amount  and  purpose  of the  Advance  has been  requested  by the
         Borrower  and is  consistent  with the Budget,  or has  otherwise  been
         approved by the Tranche C Lenders;

(ii)     The purpose is not otherwise prohibited by this Agreement; and

(iii)    The Cash Flow  Reports and the monthly  forecast  reports  after giving
         full  credit  for the  then  Tranche  C  Remaining  Balance  shall  not
         constitute a Material Adverse Effect.

(iv)     No Event of  Default  exists  except  those  that would be cured by the
         Advance.

         All of the  Advances  of the  Tranche  C  Remaining  Balance  shall  be
disbursed  directly to the General Cash Collateral  Account and allocated to the
General  Fund unless the Tranche C Lenders  designate  allocation  to one of the
other then existing  Funds.  The foregoing  requirements  shall not apply to any

                                       35
<PAGE>

Advance of  proceeds  from the  Tranche C  Remaining  Balance for the purpose of
payment of accrued and unpaid  interest or other amounts then due and payable to
the Tranche A Lenders or the  Tranche B Lenders or to  preserve  and protect the
Collateral.  These  amounts may be Advanced by the Tranche C Lender  directly to
the payee thereof and such amounts shall  constitute  Lender  Obligations to the
Tranche C Lenders upon such Advance.

Section 3.4       FUNDS FOR ADVANCES.

(a) Requests for Advances from Tranche A.  Borrower and the Lenders  acknowledge
and  recognize  that  Tranche  B  is  fully  funded  as  of  the  Closing  Date.
Accordingly,  the  Borrower  shall not be entitled  to any  further  Advances of
Tranche B. All  provisions of this  subsection  shall apply to Tranche A and the
Tranche A Lenders.  Whenever  the  Borrower  desires to receive an Advance,  the
Borrower shall give notice to the Agent by telephone,  telecopy, telex or cable,
in each case  confirmed  in writing by the  Borrower,  delivered  to the Agent's
office at 115 Perimeter Center Place,  Suite 500, Atlanta,  Georgia 30346, Attn.
Mr. Jeff Aycock.

         Each such notice  delivered by the Borrower shall specify the aggregate
principal  amount of the Advance  requested,  the source of the proposed Advance
and the proposed date  therefor,  and must certify  compliance  with the Advance
Requirements.  Each notice  shall  obligate  the  Borrower to accept the Advance
requested  from the Lenders on the proposed date  therefor.  Whenever there is a
Lender Obligation due and payable,  the Agent may (but shall not be required to)
make an Advance in the amount of such Lender  Obligation  and apply the proceeds
of the Advance to the payment of the Lender Obligation. The Agent shall promptly
notify the Borrower of such Advance and the application of proceeds thereof.

         The time periods in this section are subject to and shall commence only
upon the completion of the Advance  Requirements  and the  determination  by the
Agent  that the  submission  meets all  requirements  for  Advances  established
herein.  The  Agent  shall  have a  minimum  of two (2)  Business  Days from the
submission of a complete request for Advance in which to make a determination of
compliance.  The  Borrower  shall  be  entitled  to  request  Advances  no  more
frequently than once per month.

         The   Borrower   shall  give  the  Agent  not  later  than  10:00  a.m.
(Providence,  Rhode  Island  time) one (1)  Business  Day prior to the date of a
proposed  Advance,  irrevocable  prior notice by telephone or telecopy and shall
confirm  any such  telephone  notice  with a  written  request  for an  Advance;
provided,  however,  that the  failure by the  Borrower to confirm any notice by
telephone or telecopy with a request for Advance shall not invalidate any notice
so given.

(b)  Notification of Lenders.  Upon receipt of a request for an Advance from the
Loan,  the Agent shall  promptly  notify each Lender by telephone or telecopy of
the  contents  thereof  and the  amount  of each  Lender's  portion  of any such
Advance. Each Lender shall, not later than 2:00 p.m.  (Providence,  Rhode Island

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<PAGE>

time) on the date  specified for such Advance in such notice,  make available to
the  Agent  at the  Agent's  office,  or at  such  account  as the  Agent  shall
designate,  the amount of such  Lender's  portion of the Advance in  immediately
available funds.

(c) Disbursement. Prior to 3:00 p.m. (Providence, Rhode Island time) on the date
of an  Advance,  the Agent  shall,  subject to the  satisfaction  of the Advance
Requirements, disburse the amounts made available to the Agent by the Lenders or
from the Funds in like funds by  transferring  the amounts so made  available by
deposit into the Operating Account.  Unless the Agent shall have received notice
from a Lender prior to 11:00 a.m. (Providence, Rhode Island time) on the date of
any Advance that such Lender will not make  available to the Agent such Lender's
ratable portion of such Advance,  the Agent may assume that such Lender has made
or will make such portion  available  to the Agent on the date of such  Advance.
The Agent may, in its sole  discretion  in reliance upon such  assumption,  make
available to the  Borrower on such date a  corresponding  amount.  If and to the
extent such Lender shall not have so made such ratable portion  available to the
Agent,  such Lender  agrees to repay to the Agent on demand  such  corresponding
amount together with interest thereon, for each day from the date such amount is
made  available  to the  Borrower  until the date  such  amount is repaid to the
Agent, (x) for the first two (2) Business Days, at the rate on overnight Federal
funds  transactions  with  members of the  Federal  Reserve  System  arranged by
Federal funds brokers,  as published for such day by the Federal  Reserve Lender
of New York, and (y) thereafter,  at the Base Rate plus the Base Rate Margin. If
such Lender shall repay to the Agent such corresponding  amount,  such amount so
repaid shall  constitute  such Lender's  portion of the  applicable  Advance for
purposes of this  Agreement,  and if both such Lender and the Borrower shall pay
and repay such  corresponding  amount,  the Agent shall  promptly  relend to the
Borrower  such  corresponding  amount.  If  such  Lender  does  not  repay  such
corresponding amount immediately upon the Agent's demand, the Agent shall notify
the Borrower,  and the Borrower shall immediately pay such corresponding  amount
to the Agent. The failure of any Lender to fund its portion of any Advance shall
not relieve any other Lender of its  obligation,  if any,  hereunder to fund its
respective  portion of the Advance on the date of such borrowing,  but no Lender
shall be responsible for any such failure of any other Lender. In the event that
a Lender  for any reason  fails or refuses to fund its  portion of an Advance in
violation of this Agreement, then, until such time as such Lender has funded its
portion of such  Advance,  or all other  Lenders have  received  payment in full
(whether by  repayment or  prepayment)  of the  principal  and interest due with
respect of such Advance, such non-funding Lender shall (i) have no right to vote
regarding  any  issue on which  voting  is  required  or  advisable  under  this
Agreement or any other Lender  Agreement,  and the Agent shall have the right to
vote such Lender's  vote, and (ii) shall not be entitled to receive any payments
of  principal,  interest  or fees from the Agent (or the other  Lenders)  or the
Borrower  with respect of its Loans.  These  amounts may be applied by the Agent
for the benefit of the Agent and the other Lenders in a manner determined by the
Agent in its sole discretion. Furthermore, upon such failure of a Lender to fund
its  portion  of an  Advance,  the  Agent  shall  have  the  right,  but not the
obligation,  at its  election,  to purchase the portion of the Loan held by such
non-funding Lender for a purchase price equal to the then outstanding  principal
balance of such Lender's Loan or portion thereof.

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<PAGE>

Section 3.5 CERTAIN  PROCEDURES  FOR ADVANCES.  Agent reserves the right to make
all  disbursements of Advances  through a nationally  recognized title insurance
company with all payees  designated  by Borrower and approved by the Agent.  The
Agent  shall  have the right to  authorize  an  Advance if a Default or Event of
Default  exists and such Advance shall not constitute a waiver of the Default or
Event of Default.

ARTICLE IV. CASH COLLATERAL; NET INVENTORY PROCEEDS AND NET COLLATERAL PROCEEDS

         Borrower agrees that the following provisions shall apply to all of the
Net Collateral Proceeds, Net Inventory Proceeds, Borrower Available Cash and all
other cash of the Borrower.

Section 4.1 SUBSIDIARY  AVAILABLE CASH; NET INVENTORY  PROCEEDS . Borrower shall
cause all Borrower  Subsidiaries to pay to the Borrower any Subsidiary Available
Cash on the  last  day of each  month  or upon the  request  of the  Agent.  The
Borrower shall deposit all Subsidiary  Available Cash, subject to the provisions
of Section 4.4C, and all Net Inventory Proceeds,  in the General Cash Collateral
Account.

Section  4.2  FLOW OF  CASH.  All  cash of the  Borrower,  including  all of the
Subsidiary  Available  Cash,  shall be placed  in the  General  Cash  Collateral
Account.  The Borrower shall be entitled to deposit cash on a monthly basis from
the General Fund into the Operating  Account in an amount so that the balance of
the  Operating  Account  is equal  to or less  than the  Projected  Three  Month
Operating  Expenses  taking the current  month into  account as one of the three
months under  consideration,  subject to compliance  with the provisions of this
Agreement.

         In the event that on the date of a proposed draw there are insufficient
funds in the  General  Fund to permit  the  complete  funding  of the  Operating
Account as  described in the  preceding  paragraph,  then the Borrower  shall be
entitled to more  frequent  draws from the General  Fund  thereafter  as cash is
deposited  in the  General  Fund so as to permit  the  complete  funding  of the
Operating  Account,  provided  that the Borrower  has  otherwise  satisfied  the
conditions for such draw at each proposed drawing date.

Section  4.3  OPERATING  ACCOUNT.  The  Borrower  shall  establish  and fund the
Operating  Account  on the  Closing  Date.  Thereafter,  the  Borrower  shall be
authorized  to  maintain  a balance  in the  Operating  Account in an amount not
greater than the Projected  Three Month Operating  Expenses.  The Borrower shall
immediately pay any excess amounts into the General Cash Collateral Account. The
Borrower  may request  Advances  from the General Cash  Collateral  Account on a
monthly basis (or more  frequently  as permitted  under Section 4.2) in order to
cause the balance of the Operating  Account to be equal to the  Projected  Three
Month  Operating  Expenses  taking the current  month into account as one of the
three months.  The Borrower shall make payments from the Operating  Account only
for amounts and purposes shown on the Budget.

                                       38
<PAGE>

         At any time that the  Borrower  is not in  compliance  with the  Budget
Variance  Requirement,  the Projected  Three Month  Operating  Expenses shall be
reduced to those amounts  required  solely for the  operational  overhead of the
Borrower  with  no  amounts  included  for  any  Proposed  Construction  Project
predevelopment costs, any marketing costs for Proposed Construction Projects, or
other amounts associated with any Proposed Construction Projects whatsoever. The
Borrower shall calculate the revised  Projected  Three Month Operating  Expenses
upon such  occurrence  for the approval of the Agent.  If the Borrower  fails to
obtain the approval of such amount within seven (7) days of the occurrence, then
the Agent shall designate the revised amount taking into account the Budget.  In
any event,  any excess funds in the Operating  Account after taking into account
such  recalculation  shall be immediately  paid into the General Cash Collateral
Account,  and the amounts  Advanced from the General Cash Collateral  Account to
the  Borrower for this purpose  shall be reduced  thereafter  to comply with the
reduced Projected Three Month Operating Expenses.

Section 4.4       GENERAL CASH COLLATERAL ACCOUNT AND APPLICATION OF CASH.

         A. General Cash  Collateral  Account.  The Borrower shall establish and
fund the general  cash  collateral  account in  accordance  with the  provisions
hereof ("General Cash Collateral Account").  The General Cash Collateral Account
shall be divided  into the Funds.  The  initial  structure  of the Funds and the
General  Cash  Collateral  Account  is set forth in the Cash Flow  Exhibit.  The
Borrower  shall not have  direct  access to the  proceeds  of the  General  Cash
Collateral  Account. In addition to other amounts described herein, the Borrower
shall  deposit or shall cause to be  deposited  in the General  Cash  Collateral
Account all Net  Inventory  Proceeds,  certain Net  Collateral  Proceeds and all
other cash or proceeds of the Borrower not otherwise authorized to be held in an
escrow account or in the Operating Account.

         The Agent shall have the right to determine  amounts to be allocated to
a  particular  Fund.  The Agent  shall  provide  notice to the  Borrower  of the
proposed  creation of any new Fund for the  approval of the  Borrower  and shall
provide  notice to Borrower of the  allocation  of any amounts to any Fund.  The
Borrower shall cause all amounts to be paid by it or a Borrower  Subsidiary with
respect to the construction and development of a Permitted  Construction Project
to be deposited  in the Equity  Fund.  The Agent shall have the right to approve
the  disbursement  procedure  for any amounts to be paid from Third Party Equity
with respect to the  construction  and  development of a Permitted  Construction
Project.  The amounts in the Equity Fund for any Permitted  Construction Project
shall be determined by the Agent as of the date of the approval of the Permitted
Construction Project by the Agent. The approval of the Required Lenders shall be
required for the Advance of any amounts from the General Fund for purposes other
than as set forth in Section 2.9.  Amounts  contained in any Fund other than the
General Fund shall be restricted  amounts and,  absent the approval of the Agent
for  transfer  to the  General  Fund or  disbursement  in  accordance  with  the
provisions of Section  3.3(d),  shall be paid only for the purpose for which the
Fund was established as provided in the Budget. The Agent shall have the right,

                                       39
<PAGE>

at its election, to pay interest on the Loan or otherwise pay Lender Obligations
then due and payable or amounts to preserve or protect the  Collateral  from any
Fund or from any Loan proceeds remaining to be Advanced at its election.

         Subject to the  foregoing,  the amounts  contained  in the General Cash
Collateral Account shall be disbursed for the following purposes:

         (a)      Payment of the Lender Obligations then due and payable;

         (b)      Amounts  designated  in the Budget for equity  approved  for a
                  Permitted Construction Project;

         (c)      Payment of amounts to the Operating Account in accordance with
                  Section  4.2 to cause the  balance to be equal to or less than
                  the Projected  Three Month  Operating  Expenses as detailed in
                  the Budget; and

         (d)      Cost overruns from a Permitted  Construction  Project provided
                  that the purpose and amount and manner of payment are approved
                  by the Agent.

         The Borrower shall not be entitled to an Advance of the proceeds of the
General Cash Collateral  Account,  absent the approval of the Agent,  unless the
Borrower complies with the Advance Requirements. Upon the occurrence of an Event
of Default,  the Agent may  exercise the setoff  rights  under  Section 2.7 with
respect to the Reserves  without  notice or demand to the  Borrower.  During the
pendency of any curative  period after the  occurrence of a Default but prior to
the  occurrence  of an Event of  Default,  the  Borrower  shall have no right to
receive any Advances  absent the approval of the Agent other than funds advanced
by the Tranche C Lenders to cure a Default or Event of Default.

         B. Net Collateral Proceeds.  Net Collateral Proceeds shall be paid upon
receipt as follows:

         (a) Threshold Land Proceeds and Marriott  Proceeds.  The Borrower shall
be entitled to deposit into the General Cash  Collateral  Account Net Collateral
Proceeds arising from:

         (i)      The first  $18,000,000.00  of Net Collateral  Proceeds arising
                  from the  sale of any of the  Collateral  that is  undeveloped
                  land and which is not  Marriott  Property  and twenty  percent
                  (20%) of the Net Collateral  Proceeds from this portion of the
                  Collateral thereafter; and

         (ii)     Marriott Property.

         The amounts set forth in (i) and (ii) above and in (b) (ii) below shall
be  subject  to the prior  application  of the Net  Collateral  Proceeds  to the
amounts then outstanding described in Section 4.4D(a) and Section 4.4D(c).

                                       40
<PAGE>

         (b) All other Net  Collateral  Proceeds.  All Net  Collateral  Proceeds
arising  from sales or  circumstances  not set forth in Section  4.4B(a)(i)  and
Section  4.4B(a)(ii) shall be paid to the Agent for application  pursuant to the
application provisions of Section 4.4D provided that:

         (i)      upon the payment in full of Tranche A, any amounts  that would
                  have been  otherwise  applied in  reduction  of the  principal
                  amount  of  Tranche  B  shall  be  paid  to the  General  Cash
                  Collateral Account, and

         (ii)     in the event that the Net Collateral Proceeds are derived from
                  the sale of a Permitted  Construction  Project,  then such Net
                  Collateral  Proceeds  shall be paid to the Agent  and  applied
                  against  the  outstanding  balance  of the Land  Note for such
                  Permitted Construction Project.

         (c) Default.  Notwithstanding  anything to the contrary in Section 4.4A
and Section  4.4B above,  during the  pendency of a Default or Event of Default,
all Net  Collateral  Proceeds  shall  be  paid to the  Agent  to be  applied  in
accordance with Section 4.4D.

         C. Net Inventory  Proceeds.  Net Inventory  Proceeds  shall be paid and
applied to amounts owing under Section  4.4D(a) and Section  4.4D(c) and then as
follows:

         (b) Land Note. At any time that any Lender  Obligations are outstanding
other than the principal amount of Tranche B and any Lender Obligations owing to
the Tranche C Lender,  then Net  Inventory  Proceeds  shall first be paid to the
Agent and the  applicable  Borrower  Subsidiary  shall  receive a  corresponding
credit  towards  the  payment  of the Land Note for the  Permitted  Construction
Project generating the Net Inventory Proceeds.  When the Tranche B principal and
any  Lender  Obligations  owing to the  Tranche  C Lenders  are the only  Lender
Obligations  outstanding,  then the proceeds of the Land Note shall be deposited
in the General Cash Collateral Account.

         (c) Net Inventory  Proceeds after the Payment of the Land Note. At such
time as the Land Note for a Permitted Construction Project is paid in full, then
the Net  Inventory  Proceeds for that  Permitted  Construction  Project shall be
payable and applied as follows:

         (i)      In the event  that  Third  Party  Equity  Documents  have been
                  executed as approved  by the Agent for the  Permitted  Project
                  Budget, then to all obligations then required to be paid under
                  the applicable Third Party Equity Documents;

         (ii)     Thereafter,  or  if no  Third  Party  Equity  exists  for  the
                  Borrower   Subsidiary   that   owns  the   subject   Permitted
                  Construction  Project,  then in  accordance  with Section 4.4D
                  until  the  only  Lender   Obligations   outstanding  are  the
                  principal amount of Tranche B and any Lender Obligations owing
                  to the Tranche C Lenders,  and  thereafter to the General Cash
                  Collateral Account.

                                       41
<PAGE>

         D. Application of Payments to Lender Obligations. Following application
of monies in  accordance  with  Section  4.4C,  all  amounts  paid to the Lender
Obligations hereunder shall be applied in the following order of priority:

         (a) To the payment of or the  reimbursement  of, the Agent for all Fees
then  due  and  payable,   amounts  payable  to  the  Agent,  costs,   expenses,
disbursements  and losses  which shall have been  incurred or  sustained  by the
Agent in  connection  with the  collection  of such  monies by the Agent,  or in
connection  with the exercise,  protection or enforcement by the Agent of all or
any of the rights,  remedies,  powers and privileges of the Agent or the Lenders
under this Agreement or any other Lender Agreement;

         (b) To the  payment  of  any  applicable  prepayment  amount  or  Yield
Maintenance Amount then due;

         (c) To the payment of all interest other than the PIK Amount, including
interest on overdue  amounts,  interest  calculated at the Default Rate and late
charges, then due and payable with respect to Tranche A and Tranche B, allocated
among the  respective  Tranche A Lenders and Tranche B Lenders in  proportion to
their respective  Tranche  Commitment  Percentages after taking into account the
allocation of such payment to the respective Tranches;

         (d) To the payment of the outstanding  principal  balance of Tranche A,
allocated among the Tranche A Lenders in proportion to their respective  Tranche
A Commitment Percentages;

         (e) To the outstanding  principal balance of Tranche B, allocated among
the Tranche B Lenders in  proportion  to their  respective  Tranche B Commitment
Percentages;

         (f) To any other outstanding Lender Obligations  payable to the Tranche
A Lenders and the Tranche B Lenders,  allocated  among the Tranche A Lenders and
the  Tranche B Lenders in  proportion  to their  respective  Tranche  Commitment
Percentages  after  taking into  account the  allocation  of such payment to the
Tranche A and  Tranche B or if payable  solely to the Agent,  then to the Agent;
and

         (g) At such time as all Lender  Obligations  payable to the A/B Lenders
have been paid in full, then to the Lender Obligations  payable to the Tranche C
Lenders.

         Upon the  occurrence of an Event of Default,  no payments shall be made
to the  Tranche B  Lenders  until  all  payments  of  principal,  interest,  and
applicable prepayment penalties have been paid to the Tranche A Lenders.

ARTICLE V.        COMMENCEMENT OF PROJECTS AND RELEASE PROVISIONS

Section  5.1  COMMENCEMENT  OF  PROJECTS.   Borrower  shall  not  undertake  any
predevelopment activities for any Proposed Construction Project unless it is set
forth on the Budget.  Borrower  shall not commence  construction  of vertical or

                                       42
<PAGE>

horizontal  improvements  on any  Proposed  Construction  Project  prior  to the
satisfaction of the following:

         (a) All Permitted Construction Loans are in Balance;

         (b) Borrower is in compliance with the Budget Variance Requirement;

         (c) The  Required  Lenders  have  approved  the  Proposed  Construction
Budget,  and a revised Budget reflecting the Proposed  Construction  Project and
the Proposed Construction Budget;

         (d) All necessary federal, state and local licenses, permits, approvals
and other  entitlements  required for commencement of the Proposed  Construction
Project  have been  obtained  or will be  provided  subject  to  release  of the
property;

         (e) A guaranteed maximum price construction  contract providing for the
construction of the Proposed  Construction  Project is in full force and effect,
or will be released upon the closing of the  applicable  Permitted  Construction
Loan,  and payment and  performance  bonds have been issued with respect to such
construction contract;

         (f) To the extent that any portion of the Proposed Construction Project
costs are to be paid from funds other than from a Permitted  Construction  Loan,
then the source of such funds has been  identified to and approved by the Agent,
such approval not to be  unreasonably  withheld,  and the proceeds of such funds
have been deposited in the Equity Fund of the General Cash Collateral Account or
in a manner  approved by the Agent and otherwise  meeting the  requirements  set
forth in Section 4.4A and otherwise  approved by the Agent in the instance where
such  amounts  are to be paid by a third party with  respect to the  development
actions of a Borrower Subsidiary,

         (g) Closing on the construction financing for the Proposed Construction
Project  in an  amount at least  sufficient  to fund all  Proposed  Construction
Project costs in excess of the Project Equity plus any amounts that the Required
Lenders have approved to be Advanced from the Equity Fund, if any;

         (h)  The  Presale  Requirements  have  been  satisfied.  The  "Presales
Requirements" are set forth below:

         (i)      As to Quartershare Facilities: Qualified Sales Contracts which
                  when closed will produce  aggregate gross sales proceeds equal
                  to or  greater  than  fifty  percent  (50%)  of the pro  forma
                  projected sales price of the proposed  Inventory Units for the
                  Proposed Construction Project; and

         (ii)     As to Condominiums  (single  owner):  Qualified Sale Contracts
                  which when  closed will  produce  sufficient  aggregate  gross
                  sales  proceeds  equal to or greater than one hundred  percent
                  (100%)  of the  construction  costs  shown  on  the  Permitted
                  Project Budget minus amounts allocated for payment from equity

                                       43
<PAGE>

                  for the Proposed Construction Project either on deposit in the
                  Equity Fund or fully  committed  under the Third Party  Equity
                  Documents approved by the Agent.

         (i) No  Default  or Event of  Default  exists or would  occur upon such
commencement or would exist after the entry into the Permitted Construction Loan
and  corresponding  release  of  a  portion  of  the  Collateral,  and,  without
limitation  of the  foregoing,  the  Borrower  will be in  compliance  with  all
Financial  Covenants  both prior to and after the  commencement  of the Proposed
Construction Project;

         (j) The Master  Easement  shall be in full force and effect and insured
by the Title Policy as unencumbered, except for the Permitted Exceptions;

         (k) Borrower has entered into or has obtained:

         (i)      an  Assignment  of  Entity  Interest  and  Proceeds  and other
                  documents  and  instruments  required by the Agent in form and
                  content acceptable to the Agent;

         (ii)     a mortgage  in escrow  with the Title  Company  and which will
                  only be recorded  after the payment in full of the  applicable
                  Permitted  Construction  Loan and Purchase  Money Mortgage and
                  the repayment of any Third Party Equity approved by the Agent;

         (iii)    the  agreement  of  the  holder  of  the  Third  Party  Equity
                  Documents to the  subordination  of the payment of any amounts
                  under the Third Party  Equity  Documents  to prior  payment in
                  full  of  the  Land  Note   associated   with  the   Permitted
                  Construction  Project to which the Third Party Equity relates,
                  including    bankruptcy   rights    restrictions   and   other
                  restrictions  acceptable  to the  Agent  with  respect  to the
                  subordination  of the Third Party Equity Documents to the Land
                  Note and the agreement by the holder of the Third Party Equity
                  Documents that no Third Party Equity Document will be modified
                  to change the timing or amount of a payment thereunder without
                  the prior consent of the Agent.

         The foregoing  instruments shall provide for an escrow payment and lien
release mechanism  enabling  realization of Net Inventory Proceeds in the manner
provided  in  this  Agreement.   The  foregoing  instruments  shall  secure  the
obligation of the Borrower to pay the Lender  Obligations to the Lenders and the
repayment of the Land Notes;

         (l) The Borrower is in compliance with the Financial Covenants and will
continue  to  be  in  compliance   with  the  Financial   Covenants  after  such
commencement;

         (m) The Permitted  Construction  Lender for the Permitted  Construction
Loan has agreed that the construction  inspector for the Permitted  Construction
Loan is authorized to provide to the Agent copies of all reports with respect to
the  Permitted   Construction   Project,   and  the  Borrower  agrees  that  the

                                       44
<PAGE>

construction  inspector  has  agreed  to  provide  such  other  information  and
certifications as the Agent may require including the monthly  certification (i)
as to use of proceeds including Project Equity and the proceeds of the Permitted
Construction Loan; and (ii) that the Permitted  Construction Loan is in Balance.
In the event the Permitted  Construction Lender is unable or unwilling to comply
with any of the above requirements, the Agent shall have the right to obtain, at
Borrower's cost, an independent construction inspection to accomplish any of the
foregoing;

         (n) The Borrower has received a non-interest  bearing Land Note in form
and substance acceptable to the Agent, and the Borrower has granted a perfected,
first in priority security  interest to the Agent in the Land Note,  irrevocably
transferred  and assigned all payments  thereunder to the Agent and the Borrower
and the Borrower Subsidiary  executing the Land Note have executed and delivered
to the Agent their agreement that the Land Note is and shall never be subject to
any  offsets,  claims or  counterclaims  between the  Borrower  and the Borrower
Subsidiary;

         (o) The Agent has  approved the Third Party  Equity  Documents  for the
Borrower  Subsidiary  that will  undertake  the  Proposed  Construction  Project
including  the credit  worthiness  of the provider of the Third Party Equity and
the disbursement procedures for the Third Party Equity; and

         (p) The Borrower has  obtained  the  required  written  approval of the
Agent based upon the approval of the  conditions set forth under (a) through (o)
above;

The  provisions set forth in (a) through (p) shall be  collectively  referred to
herein as the "Permitted Project Requirements."

Section 5.2 RELEASE PROVISIONS. The Borrower may qualify for partial releases of
the  Collateral in the  following  instances  and upon the  satisfaction  of the
requirements set forth below as to the particular category of release:

(a) RELEASE IN CONNECTION WITH THE SALE OF A PORTION OF THE COLLATERAL.  Subject
to the terms and  conditions  set forth  hereinbelow,  the Agent  shall  release
portions of the Collateral upon  satisfaction of the following  conditions:  (i)
Borrower  complies prior to and after the release with all Financial  Covenants,
including,  without  limitation,  the Loan To Value Ratio and Minimum  Liquidity
covenants;(ii)  no Default or Event of Default  exists or would  exist after the
granting of the release; and (iii) (A) the cash portion of the purchase price is
at least equal to either (a) eighty  percent (80%) of the most recent  Appraised
Value of the portion of the Collateral to be released.

(b) RELEASE IN CONNECTION WITH A PROPOSED  CONSTRUCTION PROJECT. The Agent shall
have the right to make  releases of portions  of the  Collateral  for a Proposed
Construction Project provided the following  requirements are in compliance both
before and after the release:

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         (i)      the Permitted Project Requirements;

         (ii)     the applicable  Borrower Subsidiary has executed and delivered
                  to the  Borrower  a Land  Note for the  Proposed  Construction
                  Project,  and the Borrower  has executed and  delivered to the
                  Agent a perfected,  first in priority security interest in the
                  Land Note and has irrevocably assigned all payments thereunder
                  and proceeds thereof to the Agent. The Land Note shall:

                  (1)      be  non-interest  bearing and on terms and conditions
                           acceptable to the Agent;

                  (2)      provide that mandatory  principal  installments shall
                           be due and  payable  upon  receipt of Net  Collateral
                           Proceeds  or Net  Inventory  Proceeds  as more  fully
                           described in Section 4.4B and Section 4.4C;

                  (3)      provide that upon the  occurrence  of a default under
                           the Land Note, the Agent shall have the right to, and
                           the Borrower hereby irrevocably  authorizes the Agent
                           to,   take  such   actions  as  the  Agent  may  deem
                           appropriate  to  realize  upon the Land  Note  either
                           before  or  after  the  foreclosure  of the  security
                           interest in favor of the Agent therein, including the
                           acceleration  of  the  maturity  date  thereof.   Any
                           amounts  expended  or  incurred  by the  Agent or the
                           Lenders in such  collection  effort shall  constitute
                           Lender Obligations; and

                  (4)      provide  that the  Borrower  agrees and the  Borrower
                           shall obtain the agreement by the applicable Borrower
                           Subsidiary  that  neither  the Agent nor the  Lenders
                           shall have any  liability to the Borrower or Borrower
                           Subsidiary  for any actions taken with respect to the
                           Land Note.

(c)  OTHER  RELEASES.  The  Agent  shall  have the  right to make the  following
releases in the circumstances set forth below:

         (i)      Nonmaterial  portions of the Mortgaged Property for easements,
                  licenses and other  interests  required for the development of
                  the Permitted Construction Projects, and

         (ii)     Releases  of  the  Master  Easement  to  facilitate  sales  by
                  American  Ski and its  Affiliates,  other  than  Borrower  and
                  Borrower Subsidiaries, provided that the Agent determines that
                  the value and marketability of the remaining Collateral is not
                  materially impaired by such release.

Section 5.3 CALCULATION OF THE AMOUNT OF LAND NOTES. The principal amount of the
Land  Note  shall  be  calculated  in  accordance  with  the  categories  in the

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<PAGE>

definition  of  "Land  Note"  and  shall  be  automatically  adjusted  upon  the
modification  of the  amount  of the hard  costs of the  Permitted  Construction
Project  prior to the issuance of the final  certificate  of occupancy  for such
Permitted   Construction  Project.  The  Borrower  shall  and  shall  cause  the
applicable  Borrower  Subsidiary  to execute  such  additional  documents as are
necessary so as to reflect the modification of the amount of the Land Note.

ARTICLE VI.       REPRESENTATIONS AND WARRANTIES

         In order to  induce  the  Agent  and the  Lenders  to enter  into  this
Agreement  and to induce the Lenders to make the Loans as  contemplated  hereby,
Borrower  hereby makes the following  representations  and  warranties as of the
Closing Date and on the date of each Advance or  disbursement  of any funds from
the General Cash Collateral Account pursuant to Section 4.4A.

Section 6.1  EXISTENCE,  CHARTER AND  FORMATION  DOCUMENTS,  ETC.  Borrower is a
corporation,  and is validly  organized,  legally  existing and in good standing
under the laws of the  jurisdiction  in which it is organized  and has corporate
power to own its  properties  and conduct its business as now  conducted  and as
proposed to be conducted by it.  Certified  copies of the charter  documents and
bylaws of the Borrower have been delivered to the Lenders and are true, accurate
and complete as of the date hereof.

Section 6.2 PRINCIPAL  PLACE OF BUSINESS;  LOCATION OF RECORDS.  Borrower's  and
each  Subsidiary's  principal place of business is as described in Schedule 6.2.
All of the books and records or true and complete copies thereof relating to the
accounts and  contracts of Borrower are and will be kept at such location and at
the other locations designated in Schedule 6.2.

Section 6.3  QUALIFICATION.  Borrower  and each  Subsidiary  is duly  qualified,
licensed  and  authorized  to do business  and is in good  standing as a foreign
corporation or partnership in each  jurisdiction  where its ownership or leasing
of  properties  or the conduct of its business  requires it to be so  qualified,
except  to the  extent  that any  failure  to be so  qualified  would not have a
Material Adverse Effect.

Section 6.4       SUBSIDIARIES.

(a) Borrower has no Subsidiaries except for the Borrower  Subsidiaries,  and the
Borrower Subsidiaries have no Subsidiaries.

(b) There are no material  transactions or  relationships  between  Borrower and
American Ski or its Subsidiaries  except for the Intercompany  Debt disclosed in
Schedule  6.4, or after the Closing Date,  pursuant to an Affiliate  transaction
permitted hereunder.

Section 6.5 POWER.  The execution,  delivery and  performance of this Agreement,
the Notes,  the Security  Agreements  and all other Lender  Agreements and other
documents  delivered or to be delivered by Borrower to the Agent or the Lenders,

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<PAGE>

and the incurrence of Indebtedness to the Lenders  hereunder or thereunder,  now
or hereafter owing:

(a) are within the powers of Borrower,  having been duly authorized by its Board
of Directors or other similar  governing  body,  and, if required by law, by its
charter documents or by its bylaws, by its stockholders or partners;

(b) do not require any approval or consent of, or filing with, any  governmental
agency or other Person  (except for such  approvals  and consents that have been
obtained and  delivered to the Lenders) and are not in  contravention  of law or
the  terms of the  charter  documents  or bylaws of  Borrower  or any  amendment
thereof;

(c)      do not and will not:

         (i)      result  in a breach  of or  constitute  a  default  under  any
                  indenture or loan or credit  agreement or any other agreement,
                  lease or  instrument  to which  Borrower or any  Subsidiary or
                  American Ski is a party or by which Borrower or any Subsidiary
                  or  American  Ski or any of their  respective  properties  are
                  bound or affected, except for those breaches or defaults which
                  have been waived or  consented to in writing or which will not
                  in the aggregate result in a Material Adverse Effect; and

         (ii)     result in a  violation  of or  default  under  any law,  rule,
                  regulation,   order,  writ,  judgment,   injunction,   decree,
                  determination or award having applicability to Borrower or any
                  Subsidiary, or to any of their respective properties.

Section  6.6 VALID AND  BINDING  OBLIGATIONS.  This  Agreement,  the Notes,  the
Security  Agreements and all the other Lender Agreements  executed in connection
herewith and therewith constitute,  or will constitute when delivered, the valid
and binding  obligations  of  Borrower,  enforceable  in  accordance  with their
respective  terms,  except  as the  enforceability  thereof  may be  subject  to
bankruptcy,  insolvency,  moratorium  and other  laws  affecting  the rights and
remedies  of  creditors  and  secured  parties  and to the  exercise of judicial
discretion  in  accordance  with  general  equitable   principles,   subject  to
perfection as provided herein.

Section 6.7 OTHER AGREEMENTS.  Borrower is not a party to any indenture, loan or
credit agreement,  or any lease or other agreement or instrument,  or subject to
any charter or corporate  restriction or any judgment,  decree,  order,  rule or
regulation,  which at the time it is entered into is reasonably likely to have a
Material Adverse Effect, or which restricts the ability of Borrower to carry out
any of the provisions of this Agreement,  the Notes, the Security  Agreements or
any of the Lender  Agreements  executed in  connection  herewith  and  therewith
except for the compliance by Borrower with the provisions of Section 11.1.

Section  6.8  PAYMENT OF TAXES.  Borrower  has filed all tax  returns  which are
required to be filed and has paid,  or made  adequate  provision for the payment

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<PAGE>

of,  all taxes  which  have or may become  due  pursuant  to said  returns or to
assessments  received,  except  such as are  being  contested  in good  faith by
appropriate proceedings.

Section 6.9  FINANCIAL  STATEMENTS.  All balance  sheets,  statements  and other
financial  information furnished to the Agent and the Lenders in connection with
this Agreement and the  transactions  contemplated  hereby,  including,  without
limitation,  the financial  statement  for the Fiscal  Quarter ended January 30,
2000,  have been  prepared in  accordance  with  Generally  Accepted  Accounting
Principles  consistently  applied  throughout the periods  involved  (except for
normal  year-end  adjustments  and for the  absence of  footnotes  with  interim
statements) and present fairly the Consolidated  financial condition of Borrower
and its Subsidiaries reported as of the Closing Date and all such information so
furnished was true, correct and complete as of the date thereof, in all material
respects.

Section  6.10 OTHER  MATERIALS  FURNISHED.  The written  information,  exhibits,
memoranda  and reports  furnished to the Agent or the Lenders by or on behalf of
Borrower in connection  with the negotiation of this Agreement as of the Closing
Date, taken as a whole, do not contain any material misstatement of fact or omit
to state a material fact necessary to make the statements  contained therein not
misleading.

Section 6.11 STOCK. As of the Closing Date, the issued and  outstanding  capital
stock of Borrower is as set forth in Schedule 6.11 hereto. Borrower has received
the  consideration  for which  such  stock was  authorized  to be issued and has
otherwise complied with all legal requirements relating to the authorization and
issuance of shares of stock, and all such shares are validly issued,  fully paid
and   non-assessable.   Borrower  has  no  other  capital  stock  of  any  class
outstanding.

Section 6.12 CHANGES IN  CONDITION.  Since  January 30, 2000,  there has been no
Material  Adverse  Effect,  and neither  Borrower nor any Subsidiary has entered
into any  transaction  outside  of the  ordinary  course  of  business  which is
material to Borrower  and its  Subsidiaries  taken as a whole which has not been
disclosed to Agent and which would constitute a Material Adverse Effect. Neither
Borrower  nor  any  Subsidiary  has,  as of the  Closing  Date,  any  contingent
liabilities of any material amount other than the Senior Note Guaranty.

Section 6.13      ASSETS, LICENSES, PATENTS, TRADEMARKS, ETC.

(a) Borrower and each Borrower  Subsidiary has good and marketable  title to, or
valid leasehold  interests in, all of its assets,  real and personal,  including
the Purchase Options, subject to only the Permitted Liens.

(b)  Borrower  owns  all  material  licenses,   patents,   patent  applications,
copyrights,  service marks, trademarks,  trademark applications, and trade names
necessary to continue to conduct its business.

Section  6.14  LITIGATION.  Except as set forth on  Schedule  6.14,  there is no
litigation or  arbitration,  at law or in equity,  or any proceeding  before any

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<PAGE>

federal,   state,  provincial  or  municipal  board  or  other  governmental  or
administrative agency pending or, to the knowledge of Borrower,  threatened,  or
any basis therefor,  which involves a material risk of any judgment or liability
which could have a Material Adverse Effect, and no judgment, decree, or order of
any federal,  state,  provincial or municipal court, board or other governmental
or  administrative  agency  has  been  issued  against  Borrower  or  any of its
Subsidiaries which has or may have a Material Adverse Effect.

Section 6.15 PENSION PLANS. No employee  benefit plan  established or maintained
by Borrower or any of its  Subsidiaries or any other Person a member of the same
"control  group,"  as  American  Ski  or  any  of  its  Subsidiaries   ("Pension
Affiliate"), within the meaning of Section 302(f)(6)(b) of ERISA, (including any
multi-employer   plan  to  which  American  Ski  or  any  of  its   Subsidiaries
contributes)  which is subject to Part 3 of  Subtitle B of Title I of the ERISA,
had a  material  accumulated  funding  deficiency  (as such term is  defined  in
Section 302 of ERISA) as of the last day of the most recent  fiscal year of such
plan ended prior to the date hereof,  or would have had an  accumulated  funding
deficiency  (as so defined) on such day if such year were the first year of such
plan to which Part 3 of Subtitle B of Title I of ERISA applied,  and no material
liability under Title IV of ERISA has been, or is expected by Borrower or any of
its  Subsidiaries  to be,  incurred with respect to any such plan by Borrower or
any of its Subsidiaries or any Pension Affiliate.  The only pension plans of the
Borrower,  Borrower Subsidiary or American Ski or any Subsidiary is set forth on
Schedule 6.15. The execution,  delivery and  performance by American Ski and the
Borrower of this Agreement and the other Lender Agreements  executed on the date
hereof will not involve any prohibited  transaction  within the meaning of ERISA
or Section 4975 of the Code.

Section 6.16 OUTSTANDING INDEBTEDNESS.  After application of the proceeds of the
Loans, the outstanding amount of borrowed money of Borrower and its Subsidiaries
as of the Closing Date is correctly set forth in Schedule 6.16 hereto,  and said
Schedule correctly describes the credit agreements, guaranties, leases and other
instruments pursuant to which such Indebtedness has been incurred and all liens,
charges  and  encumbrances  securing  such  Indebtedness.   This  schedule  also
describes all  agreements and other  arrangements  pursuant to which Borrower or
any  Borrower  Subsidiary  may  borrow  any  money.  Neither  Borrower  nor  any
Subsidiary  has any  Indebtedness  other than as set forth in Schedule 6.16, and
those  amounts   payable  from  Loan  Advances  on  the  Closing  Date,   except
Indebtedness permitted pursuant to Section 10.1.

Section 6.17      ENVIRONMENTAL MATTERS.  Except as set forth in Schedule 6.17:

(a)  Neither  Borrower,  any  Subsidiaries,  nor any  operator  of any of  their
respective properties is in violation,  or to Borrower's knowledge is in alleged
violation,  of any  Environmental  Law,  which  violation  would have a Material
Adverse Effect.

(b) Neither Borrower, nor any operator of any of their respective properties has
received notice from any third party,  including without limitation any federal,
state, county, or local Governmental Authority,  (i) that it has been identified

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<PAGE>

as a potentially  responsible  party under CERCLA or any  equivalent  state law,
with respect to any site or location; (ii) that any Hazardous Materials which it
has generated, transported or disposed of have been found at any site at which a
federal,  state,  county,  or local agency or other third party has conducted or
has ordered  Borrower,  or another third party or parties  (e.g., a committee of
potentially responsible parties) to conduct a remedial investigation, removal or
other response action pursuant to any Environmental  Law; or (iii) that it is or
shall  be a named  party  to any  claim,  action,  cause  of  action,  complaint
(contingent or otherwise) or legal or administrative  proceeding  arising out of
any actual or alleged release or threatened release of Hazardous Materials.  For
purposes  of this  Agreement,  "release"  means any past or  present  releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping,  leaching,  disposing or dumping of any Hazardous  Materials  into the
Environment,  or the  uncontained  presence of any  Hazardous  Materials  in the
Environment.

(c) (i) Borrower,  and each  operator of any real property  owned or operated by
Borrower, is in compliance,  to the best of Borrower's knowledge in all material
respects,  with  all  provisions  of  the  Environmental  Laws  relating  to the
handling,  manufacturing,  processing,  generation,  storage or  disposal of any
Hazardous  Materials;  (ii) to the best of Borrower's  knowledge,  no portion of
property  owned,  operated  or  controlled  by  Borrower  has been  used for the
handling,  manufacturing,   processing,   generation,  storage  or  disposal  of
Hazardous  Materials  except in accordance with applicable  Environmental  Laws;
(iii) to the best of  Borrower's  knowledge,  there  have  been no  releases  or
threatened  releases of Hazardous  Materials on, upon, into or from any property
owned, operated or controlled by Borrower,  which releases could have a Material
Adverse  Effect;  (iv) to the best of Borrower's  knowledge,  there have been no
releases of Hazardous  Materials on, upon, from or into any real property in the
vicinity of the real properties owned, operated or controlled by Borrower which,
through soil or  groundwater  contamination,  may have come to be located on the
properties of Borrower and which could have a Material  Adverse Effect;  and (v)
to the best of  Borrower's  knowledge,  there have been no releases of Hazardous
Materials on, upon, from or into any real property formerly but no longer owned,
operated  or  controlled  by Borrower  and which  could have a Material  Adverse
Effect.

(d) None of the  properties of Borrower is or shall be subject to any applicable
environmental cleanup  responsibility law or environmental  restrictive transfer
law  or  regulation  by  virtue  of  the   transactions  set  forth  herein  and
contemplated hereby.

Section 6.18 FOREIGN TRADE  REGULATIONS.  Borrower is not (a) a person  included
within the  definition  of  "designated  foreign  country"  or  "national"  of a
"designated  foreign  country" in  Executive  Order No.  8389,  as  amended,  in
Executive Order No. 9193, as amended,  in the Foreign Assets Control Regulations
(31  C.F.R.,  Chapter V, Part 500,  as  amended),  in the Cuban  Assets  Control
Regulations of the United States Treasury Department (31 C.F.R., Chapter V, Part
515,  as  amended)  or in the  Regulations  of the  Office  of  Alien  Property,
Department of Justice (8 C.F.R., Chapter II, Part 507, as amended) or within the
meanings  of any of the  said  Orders  or  Regulations,  or of any  regulations,

                                       51
<PAGE>

interpretations, or rulings issued thereunder, or in violation of said Orders or
Regulations or of any regulations, interpretations or rulings issued thereunder;
or (b) an  entity  listed  in  Section  520.101  of the  Foreign  Funds  Control
Regulations (31 C.F.R., Chapter V, Part 520, as amended).

Section 6.19  GOVERNMENTAL  REGULATIONS.  Borrower is not subject to  regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment  Company  Act of  1940,  or a common  carrier  under  the  Interstate
Commerce  Act, or engaged in a business  or  activity  subject to any statute or
regulation  which  regulates  the  incurring  by  Borrower of  Indebtedness  for
borrowed money, including statutes or regulations relating to common or contract
carriers  or to the  sale  of  electricity,  gas,  steam,  water,  telephone  or
telegraph or other public utility services.

Section 6.20 MARGIN STOCK.  Borrower does not own any "margin  stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
or any  regulations,  interpretations  or rulings  thereunder,  nor is  Borrower
engaged  principally or as one of its important  activities in extending  credit
which is used for the purpose of purchasing or carrying margin stock.

Section  6.21  SOLVENCY.  Borrower,  before  and  after  giving  effect  to  the
transactions  contemplated by this Agreement and the other Lender Agreements, is
Solvent.

Section 6.22      COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.

(a)  Neither  Borrower  nor  any  Borrower  Subsidiary  is in  violation  of any
provision of its charter  documents,  bylaws,  or any agreement or instrument to
which it may be subject or by which it or any of its  properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing  cases in a manner  that is likely to  result  in a  Material  Adverse
Effect.

(b)  Borrower  has  complied  in  all  respects  with  the  requirements  of the
Hart-Scott-Rodino Anti-Trust Improvement Act of 1976, as amended.

Section  6.23  ABSENCE OF FINANCING  STATEMENTS,  ETC. To the best  knowledge of
Borrower  and except with  respect to  Permitted  Liens,  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, effect or give notice of any present or possible
future lien on, or security  interest  in, any assets or property of Borrower or
any Subsidiary or any rights relating thereto.

Section  6.24 FISCAL  YEAR.  Borrower has a fiscal year which is the twelve (12)
months ending on the last Sunday of July of each year ("Fiscal Year").  Borrower
may change its Fiscal  Year and  corresponding  Fiscal  Quarter  with  notice to
Agent.

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<PAGE>

Section 6.25 TAX STATUS.  Borrower is a "C"  corporation  for all purposes under
the Code.

Section  6.26  PURCHASE  OPTIONS.  The  Purchase  Options  are in full force and
effect, and no event of default or default exists thereunder. No further consent
or approval of the  optionor is required  for the pledge of the  interest of the
Borrower to Agent thereunder.

Section  6.27  LEASES.  As of the Closing  Date,  neither the  Borrower  nor any
Borrower  Subsidiary is a party to any Lease other than as set forth in Schedule
6.27. Any Leases  subsequently  entered into by the Borrower must be approved by
Agent and will be subject to a first in priority  perfected  security  interest.
All such Leases are in full force and effect, and no event of default or default
shall  exist  thereunder.  No consent  shall be  required  for the pledge of the
interest of the Borrower to the Lender thereunder.

Section 6.28 PERMITTED CONSTRUCTION LOANS. The Permitted Construction Loans have
been closed, and are in full force and effect and are in Balance;  no default or
event of default exists thereunder;  neither Textron nor any lender with respect
to any  Permitted  Construction  Loan has  indicated  any intent to withhold any
advances thereunder or scheduled to be invested under the Budget to complete the
project for which they were granted in the manner  contemplated by the Permitted
Construction Loan.

Section  6.29  STATUS  MEMORANDUM.  The  information  contained  in  the  Status
Memorandum is true and correct in all material respects as of the Closing Date.

Section 6.30 SECURITY  AGREEMENTS.  The Security  Agreements  create a perfected
first in priority  security  interest in and to the  Collateral  subject only to
Permitted Exceptions. The Collateral includes all of the assets of the Borrower,
all assets of the Borrower  Subsidiaries which are not encumbered by a Permitted
Construction  Loan  and all  shares  of all  equity  interests  of the  Borrower
Subsidiaries,  except for personal property,  which is either a de minimis asset
or non-core asset of the Borrower.

Section  6.31  COMPREHENSIVE  EFFECT OF MASTER  EASEMENT.  The  Master  Easement
conveys to the Lenders all utilities,  access rights,  and development rights in
sufficient  scope and in an unencumbered  state to permit the development of the
Mortgaged  Property for the Proposed  Construction  Projects and as set forth in
the  Appraisals  delivered to the Agent on or before the Closing Date.  Borrower
acknowledges  receipt of the Appraisals on or before the Closing Date subject to
completion  of master  planning.  All such rights may be  exercised  without the
prior consent of the Borrower, any Affiliate of Borrower or American Ski, except
as set forth in the Master  Easement.  The Master  Easement  was executed by all
Borrower  related parties having any interest in the properties  surrounding the
Mortgaged  Property.  The intent of the Master  Easement is to allow  Lenders to
fully  develop and use the  Mortgaged  Property  for the  Proposed  Construction
Projects.  Borrower shall and shall cause any Borrower Subsidiary,  American Ski
or any Affiliate of either Borrower or American Ski or a Borrower  Subsidiary to

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<PAGE>

take such actions as are  necessary to permit the  development  of the Mortgaged
Properties for the Proposed Construction  Projects,  including the execution and
delivery of such other easements,  zoning  allocations,  parking rights or other
property  or use  rights as the Agent may from time to time  request in order to
permit the development of the Proposed Construction Projects.

Section  6.32 CASH  DEPOSITS.  All cash of the  Borrower  is held  either in the
General Cash Collateral  Account,  the Operating Account or a segregated payroll
account  maintained  by the  Borrower.  The Borrower has no other bank  accounts
other  than as set forth in the  preceding  sentence  other than as set forth on
Schedule 6.32.

Section 6.33 QUALIFIED SALES CONTRACTS.  The Qualified Sales Contracts  included
in the  satisfaction  of  the  Presales  Requirement,  as of the  date  of  such
satisfaction,  are:  (i) in full  force and  effect  and no  default or right of
rescission  exists  thereunder;  and (ii) in compliance with Applicable Laws and
governmental regulations.

ARTICLE VII.      REPORTS AND INFORMATION

Section 7.1 FINANCIAL  STATEMENTS AND OTHER REPORTS.  Beginning Fiscal Year end,
Borrower shall furnish or cause to be furnished  financial  statements and other
monthly,  quarterly  or other  periodic  reports  to the  Agent  and each of the
Lenders as follows:

(a)  Within  Ninety  (90) Days Of The Close Of Each  Fiscal  Year:  The  audited
consolidated   balance  sheets  and   consolidated   statements  of  cash  flows
(collectively,  the "Financial Statements") for such year, in reasonable detail,
and,  setting  forth in  comparative  form  the  corresponding  figures  for the
preceding  year,  prepared  pursuant to agreed upon procedures and in accordance
with Generally Accepted Accounting Principles consistently applied,  accompanied
by an unqualified report of Arthur Anderson or such other independent  certified
public accountant selected by Borrower and approved by the Agent.

(b) Within  forty-five  (45) Days Of The Close Of Each Fiscal Quarter Other Than
The End Of The  Fiscal  Year:  The  unaudited  balance  sheet  and  consolidated
statement of cash flows similar to those  required by clause (a) above (but with
a requirement as to comparison with the prior year) as of the end of such Fiscal
Quarter and for such Fiscal  Quarter then ended and for Fiscal  Quarter from the
beginning of the current Fiscal Year to the end of such Fiscal Quarter, prepared
in accordance with Generally Accepted Accounting Principles consistently applied
and certified as to preparation in accordance with Generally Accepted Accounting
Principles and that such  statements  fairly present the financial  condition of
the Borrower at the dates  thereof and for the periods then ended,  on behalf of
the Borrower by its chief financial  officer,  subject only to changes resulting
from audit and normal year-end adjustments.

(c) On Or Before The Last  Business Day Of Each Month The Borrower  Shall Submit
The Following For The Previous Month:

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         (i)      Compliance Certificate;

         (ii)     Budget Variance Report;

         (iii)    Cash Reconciliation Reports;

         (iv)     Fund  Reconciliation.  The Borrower  shall also provide to the
                  Agent all necessary  support in  performing  any due diligence
                  required  to verify the  information  reported  in the updated
                  Fund Reconciliation;

         (v)      a sales  report  which  shall  show (1) the total  number  and
                  dollar   value  of  all  units   closed   at  each   Permitted
                  Construction Project; (2) the total number and dollar value of
                  units for all Permitted Construction Projects; (3) the average
                  sales prices;  (4) the total units under  contract,  including
                  purchase  price and  total  deposits;  (5) the  status of such
                  contracts  and  closings as to the amounts  projected  for the
                  month in the Budget;  and (6) a detailed list of the Inventory
                  Units and the purchase price for such Inventory Units;

         (vi)     a Certification by the Chief Financial Officer of the Borrower
                  together  with  supporting   information   and   documentation
                  acceptable  to the  Agent,  which set sets forth the status of
                  all Permitted  Construction  Projects,  including the Existing
                  Permitted   Construction   Projects,   and  a  line   by  line
                  reconciliation of all Permitted Construction Budgets; and

         (vii)    an updated Real Estate  Valuation  Report in the form attached
                  as Exhibit L.

(d) On or before September 1 of each year: A revised Budget for the next year.

(e) The Borrower shall have provided to the Agent and the Tranche C Lenders each
Friday a weekly report (the "Cash Flow Reports")  setting forth  historical (for
the prior four (4) weeks) and projected (for the ensuing twenty (20) weeks) cash
flow, together with a comparison of such projected cash flow with that set forth
in  the  Cash  Flow  Report  delivered  for  the  immediately   preceding  week,
substantially  in the form  attached  hereto as Exhibit "M," or as the Tranche C
Lenders may otherwise approve.

(f) Promptly Upon Receipt:  copies of all management letters which are submitted
to Borrower by its  independent  accountants  in  connection  with any annual or
interim audit of Borrower's books made by such accountants.

(g) General Reports: such other periodic reports,  financial  statements,  other
information as the Agent from time to time  reasonably  requests,  on a monthly,
quarterly or other  periodic  basis,  including,  without  limitation,  periodic
reports of financial information,  construction progress,  inventory,  marketing
and  sales  results,  and  compliance  with  financial,  environmental  or other

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<PAGE>

covenants and including a report from an independent certified public accountant
selected  by  Borrower  and  approved  by  Agent  certifying   without  material
qualification  such  financial  matters  relating  to  Borrower  or  a  Borrower
Subsidiary as Agent may reasonably request.

Section 7.2 NOTICE OF  DEFAULTS.  As soon as  possible,  and in any event within
five (5) days after the  occurrence of each Default,  Borrower  shall furnish to
the Agent and each Lender the statement of its chief executive  officer or chief
financial  officer  setting  forth  details of such Default and the action which
Borrower has taken or proposes to take with respect thereto.

Section  7.3 NOTICE OF  LITIGATION.  Promptly  after the  commencement  thereof,
Borrower  shall  furnish  to the Agent  and each  Lender  written  notice of all
actions,  suits and  proceedings  before any court or  governmental  department,
commission,  board,  bureau,  agency or  instrumentality,  domestic  or foreign,
affecting  Borrower,  which,  if  adversely  determined,  would  have a Material
Adverse Effect.

Section  7.4  REPORTABLE  EVENTS.  At any  time  that  Borrower  or any  Pension
Affiliate  has a Pension  Plan,  Borrower  shall  furnish  to the Agent and each
Lender,  as soon as  possible,  but in any event  within  thirty (30) days after
Borrower knows or has reason to know that any  Reportable  Event with respect to
any Pension Plan has occurred,  the statement of the chief executive  officer or
chief financial officer of Borrower setting forth the details of such Reportable
Event and the  action  which  Borrower  or any  Pension  Affiliate  has taken or
proposes to take with  respect  thereto,  together  with a copy of the notice of
such Reportable Event to the Pension Benefit Guaranty Corporation.

Section  7.5  COMMUNICATIONS  WITH  INDEPENDENT  PUBLIC   ACCOUNTANTS.   At  any
reasonable  time and from time to time upon reasonable  request,  Borrower shall
provide the Agent and the Lenders and any agents or representatives of the Agent
and the Lenders access to the independent public accountants of Borrower and its
Subsidiaries to discuss their financial condition, including, without limitation
any  recommendations  of such  independent  public  accountants  concerning  the
management,  finances,  financial  controls or  operations  of Borrower  and its
Subsidiaries.

Section 7.6 ENVIRONMENTAL  REPORTS. In the event that and to the extent that any
of the following  provides notice of  circumstances,  occurrences or events that
have or could  reasonably  be expected to have a Material  Adverse  Effect,  the
Borrower  shall  furnish to the Agent and each Lender:  (a) not later than seven
(7) days after notice  thereof,  notice of any enforcement  actions,  or, to the
best knowledge of Borrower, threatened enforcement actions affecting Borrower or
any Subsidiary by any Governmental  Authority related to the Environmental Laws;
(b)  copies,  promptly  after  they are  received,  of all  orders,  notices  of
responsibility,  notices of  violation,  notices  of  enforcement  actions,  and
assessments,  and other  written  communications  pertaining to any such orders,
notices,  claims and assessments received by Borrower or any Subsidiary from any
Governmental Authority;  (c) not later than seven (7) days after notice thereof,

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<PAGE>

notice of any civil claims or threatened civil claims affecting  Borrower or any
Subsidiary by any third party  alleging any violation of  Environmental  Laws or
harm to human  health,  safety or the  environment;  (d) copies of all  clean-up
plans, site assessment reports,  response plans,  remedial  proposals,  or other
submissions  of  American  Ski or  any  Subsidiary,  other  third  party  (e.g.,
committee  of  potentially  responsible  parties at a  Superfund  site),  or any
combination of same,  submitted to a  Governmental  Authority in response to any
communication  referenced in subsections (a) and (b) herein  simultaneously with
their submission to such Governmental  Authority;  and (e) from time to time, on
reasonable request of the Agent,  evidence satisfactory to the Agent of Borrower
and  its  Subsidiaries'  insurance  coverage,  if  any,  for  any  environmental
liabilities.

Section 7.7 MISCELLANEOUS. Borrower shall provide the Agent and the Lenders with
such  other  information  as the  Agent or the  Lenders  may  from  time to time
reasonably request respecting the business, properties,  prospects, condition or
operations, financial or otherwise, of Borrower and its Subsidiaries.

Section 7.8  PERMITS,  ZONING AND OTHER  DEVELOPMENT  RIGHTS.  Borrower  and the
Lenders  acknowledge and recognize that the Mortgaged  Properties are in various
stages of permitting for ultimate  commercial  development.  Borrower shall take
such  actions as are  necessary to cause such permits to be issued and vested in
the  Borrower  and to be included in the  Security  Agreements.  Borrower  shall
provide such  additional  information  and  periodic  reports as the Lenders may
reasonably  request  concerning  the business plan and issuance of the foregoing
permits, zoning and development rights.

Section 7.9 PERMITTED  CONSTRUCTION  LOANS.  Borrower shall provide to the Agent
and each  Lender  upon  receipt  copies of all  notices  of  Default or Event of
Default  under  the  Permitted  Construction  Loans  and  copies  of all  Lender
Agreements executed in connection therewith.

ARTICLE VIII.     FINANCIAL COVENANTS

         The Borrower shall comply with the following  covenants during the term
of this Agreement:

Section 8.1 MINIMUM TANGIBLE NET WORTH. The Borrower shall maintain at all times
a  minimum  Tangible  Net  Worth  of not  less  than  the sum of  $90,000,000.00
("Minimum Tangible Net Worth").

Section 8.2       LOAN TO VALUE RATIO.

(a) Tranche A. From and after the Closing  Date through  January 31,  2002,  the
Borrower shall not permit the amount outstanding under Tranche A to exceed forty
percent (40%) of the Appraised  Value of the  Collateral,  and  thereafter,  the
Borrower  will not  permit  the  amount  outstanding  under  Tranche A to exceed
twenty-five percent (25%) of the Appraised Value of the Collateral.

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<PAGE>

(b) Loans. From and after the Closing Date through January 31, 2002 the Borrower
shall not permit the amount outstanding under the A/B Loans to exceed sixty five
percent  (65%) of the  Appraised  Value  of the  Collateral.  Thereafter,  fifty
percent  (50%)  shall  be  substituted  for  sixty-five  percent  (65%)  in this
calculation.

(c)  Calculation.  This covenant  ("Loan To Value Ratio") shall be tested on the
Closing  Date and on an annual basis  thereafter  beginning on January 31, 2001.
The following  shall be excluded from the Collateral for purposes of making this
calculation:  (i) any amounts in any Fund other than the General Fund;  (ii) any
amount in the Operating Account;  and (iii) any asset of the Borrower other than
Mortgaged  Property  which  is the  subject  of a first in  priority,  perfected
security interest to a party other than the Agent. The accrued interest added to
the  principal  balance  under  Tranche B shall not be included in the amount of
Tranche  B in  Section  8.2(b)  above for the  calculation  of the Loan to Value
Ratio.

Section 8.3 MINIMUM LIQUIDITY. Borrower shall maintain a Liquidity Balance of at
least $5,000,000.00  ("Minimum  Liquidity").  The funds in the Operating Account
and all of the Funds  other than the General  Fund shall be  excluded  from this
calculation provided that, upon the creation of any Fund after the Closing Date,
the Agent shall make a  determination  of the  treatment of such new Fund in the
calculation  of the Liquidity  Balance.  Compliance  with this covenant shall be
tested on a monthly basis on the last day of each month.

ARTICLE IX.       AFFIRMATIVE COVENANTS

         The Borrower shall comply with the following  covenants during the term
of this Agreement:

Section 9.1  REPRESENTATIONS  AND  WARRANTIES.  Borrower  shall take all actions
necessary in order to cause the representations and warranties set forth in this
Agreement to be true, accurate and in full force and effect.

Section 9.2 TAXES AND OTHER  OBLIGATIONS.  Borrower (a) shall pay and discharge,
or cause to be paid and discharged, before the same shall become in arrears, all
material taxes,  assessments and other governmental charges, imposed upon it and
its properties,  sales and activities,  or upon the income or profits therefrom,
as well as the claims for labor, materials, or supplies which if unpaid might by
law result in a lien or charge upon any of its  properties;  PROVIDED,  HOWEVER,
that  Borrower  may contest any such  charges or claims in good faith so long as
(i) an adequate  reserve  therefor has been established and is maintained if and
as required by Generally  Accepted  Accounting  Principles and (ii) no action to
foreclose any such lien has been  commenced and (b) shall  promptly pay or cause
to be paid when due, or in conformance with customary trade terms (but not later
than ninety (90) days from the due date in the case of trade debt), all material
lease  obligations,  trade  debt  and all  other  Indebtedness  incident  to its

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<PAGE>

operations.  Borrower shall cause all applicable tax returns and all amounts due
thereunder  to be filed and paid,  as the case may be, in order to maintain  its
good standing with the Internal Revenue Service and state, local and foreign tax
authorities.

Section 9.3 MAINTENANCE OF PROPERTIES AND LEASES.  Borrower shall maintain, keep
and preserve all of its material properties (tangible and intangible), including
the Mortgaged  Properties,  in good repair and working order,  ordinary wear and
tear  excepted.  Borrower  shall replace and improve its material  properties as
necessary for the conduct of its business.  Borrower and each  Subsidiary  shall
comply in all material respects with all Leases naming it as lessee.

Section 9.4 INSURANCE.  The Borrower shall maintain with  financially  sound and
reputable  insurers,  insurance  with  respect to its  properties  and  business
against such  casualties and  contingencies,  including  windstorm and hurricane
insurance,  as shall be in accordance  with the general  practices of businesses
engaged in similar  activities  in similar  geographic  areas,  and in  amounts,
containing  such terms,  in such forms and for such periods as may be reasonable
and prudent in accordance  with sound  business  practices.  With respect to the
Collateral,  all such  insurance  shall be in such amount,  such form,  for such
periods and written by such companies as may be reasonably  satisfactory  to the
Agent and shall be payable to the Agent and to the Borrower, as the case may be,
as their  interests  may appear.  If a Default  exists,  the Agent may apply all
proceeds received by it to pay the Lender  Obligations in such order as it shall
determine in its  discretion;  but if no Default then exists,  then the Borrower
shall have the right to  determine  whether to apply such  proceeds  against the
Lender  Obligations or against the costs of repairing or restoring the damage to
the Mortgaged  Property.  All policies of insurance  shall provide for a minimum
thirty  (30) days prior  written  notice to the Agent prior to  cancellation  or
reduction of coverage or change in the mortgagee  payee or  additional  insureds
provisions  and shall name the Agent as additional  insured  party,  and, in the
case of the  Collateral,  shall  name the  Agent as  mortgagee  and loss  payee.
Certificates  of insurance (or, if requested by the Agent,  certified  copies of
policies)  with respect to all renewals or  replacements  of such insurance from
time to time in force  together  with  evidence of payment of  premiums  thereon
satisfactory to the Agent shall be delivered to the Agent at least ten (10) days
before the expiration date of then current  insurance.  During the pendency of a
Default or Event of Default,  no  settlement  on account of any loss  covered by
such insurance  shall be made without the consent of the Agent.  In the event of
failure to provide and maintain insurance as herein provided,  the Agent may, at
its option,  after giving  notice to the  Borrower,  provide such  insurance and
charge  the  amount  thereof  to the  Borrower  (including  by making an Advance
therefor).  The  Borrower  shall  furnish  to the  Agent  certificates  or other
evidence  satisfactory to the Agent of compliance  with the foregoing  insurance
provision. Without limiting the foregoing, the Borrower will (i) keep all of its
physical  property  insured against fire and extended  coverage risks in amounts
and with deductibles and endorsements acceptable to the Agent, (ii) maintain all
workers'  compensation  or similar  insurance  as may be required by law,  (iii)
maintain,  in amounts,  deductibles  and  endorsements  acceptable to the Agent,
general public liability  insurance  against claims for bodily injury,  death or
property  damage  occurring  on, in or about the  properties of the Borrower and
business  interruption  insurance and (iv) in the event the Mortgaged Properties
or any  portion  thereof is located in a flood  hazard  area  identified  by the

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<PAGE>

Secretary  of Housing  and Urban  Development  as an area having  special  flood
hazards and in which flood  insurance has been made available under the National
Flood  Insurance Act of 1968, as amended by the Flood  Disaster Act of 1973 (and
any successor Act thereto), maintain a flood insurance policy as required by the
Flood  Disaster  Act of 1973.  The  Borrower  shall at all times comply with and
conform to all provisions of each such insurance  policy and to all requirements
of the insurers thereunder  applicable to Borrower,  the Mortgaged Properties or
to the use, occupation,  possession,  operation, maintenance or repair of all or
any portion of the Mortgaged Properties.

Section 9.5 RECORDS,  ACCOUNTS AND PLACES OF BUSINESS.  Borrower  shall maintain
comprehensive  and accurate  records and accounts in accordance  with  Generally
Accepted Accounting  Principles  consistently  applied.  Borrower shall maintain
adequate and proper  reserves.  Borrower shall promptly  notify the Agent of (a)
any changes in the places of business of Borrower and (b) any additional  places
of business which may arise hereafter.

Section 9.6 INSPECTION.  At any reasonable time and from time to time,  Borrower
shall  permit the Agent and the Lenders and any of the Agent's and the  Lenders'
agents or  representatives  to examine and make copies of and abstracts from the
records and books of account of, and visit the  properties  of,  Borrower and to
discuss  the  affairs,  finances  and  accounts  of  Borrower  with any of their
officers or directors and with American Ski's and its Subsidiaries'  independent
accountants. In addition, the Agent shall be entitled, and Borrower shall permit
the Agent,  to conduct  field  examinations  of  Borrower,  at  Borrower's  sole
expense, at any time or times in the Agent's sole discretion.

Section 9.7 MAINTENANCE OF ACCOUNTS.  Borrower and Borrower's Subsidiaries shall
maintain their principal  concentration and disbursement accounts with the Agent
unless otherwise required by the Permitted Construction Lender.

Section  9.8  OWNERSHIP  OF  SUBSIDIARIES.  Borrower  shall  maintain  legal and
beneficial ownership,  directly or indirectly,  of one hundred percent (100%) of
the equity  interests  of each of the  Subsidiaries,  except for its interest in
Heavenly Resort,  which is a partial percentage  interest,  and such other joint
ventures  as the  Agent  may  approve  from  time to time and  sales of stock in
existing Subsidiaries as Agent may approve from time to time.

Section 9.9 DUE DILIGENCE MATTERS.  Upon the occurrence of a Default or Event of
Default,  Borrower agrees to provide to the Agent,  upon request,  such surveys,
evidence of zoning,  title insurance  policies,  appraisals,  copies of permits,
environmental  reports,  evidence  of  utilities,  and  consents  of lessors and
optionors  as the Agent may  request,  all at the sole cost and  expense  of the
Borrower.  Notwithstanding  anything contained herein to the contrary,  Borrower
shall provide to Lender an Appraisal of the Collateral on an annual basis.

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Section 9.10 PLEDGE OF COLLATERAL.  Borrower  shall pledge a perfected  first in
priority security interest in and to all assets of the Borrower either currently
owned or immediately upon  acquisition,  all stock of all Borrower  Subsidiaries
and all assets of a Borrower  Subsidiary  which are not subject to the lien of a
Permitted   Construction   Loan  either  currently  owned  or  immediately  upon
acquisition except for personal property, which is either de minimis or non-core
asset of the Borrower. The Collateral shall include:

(a)  After  the  payoff  of the  applicable  Permitted  Construction  Loan,  any
unencumbered  real  or  personal  property  of a  Borrower  Subsidiary,  and the
Borrower  shall  cause  any  Borrower  Subsidiary  to  grant to Agent a first in
priority  perfected  security  interest in any unencumbered  asset of a Borrower
Subsidiary at that time;

(b)      The Reserves; and

(c) Any cash or Cash Equivalents  held by or on behalf of a Borrower  Subsidiary
other than required by a Permitted Construction Loan.

Section 9.11  ADDITIONAL  DOCUMENTS  AND  COLLATERAL.  Except for  collateral or
guaranties  granted  at the  closing  of the  Permitted  Construction  Loans  or
otherwise approved by the Agent,  Borrower shall grant a security interest in or
execute  and  deliver  to the  Agent  such  additional  collateral,  guaranties,
intercreditor  agreements or other documents and instruments that it executes or
delivers  in favor of any  Permitted  Construction  Lender,  agent of the Senior
Facility or the trustee of the Senior Notes.

Section 9.12  SUBORDINATED  INDEBTEDNESS.  Borrower shall cause all Subordinated
Indebtedness  to be subject  at all times to the  Subordination  Agreement  with
respect to the Lender Obligations in form and substance acceptable to the Agent.

Section  9.13  PURCHASE  OPTIONS  AND  LEASES.  Borrower  shall take all actions
necessary to cause the Leases and the  Purchase  Options to remain in full force
and  effect and to cause no event of  default  to occur or exist  thereunder  or
under any Purchase Money  Mortgage.  Borrower  hereby  authorizes the Lenders to
take such actions as the Lenders may deem  necessary  to cause this  warranty to
remain true and correct. Lenders may advance sums pursuant to the foregoing from
and after  the  expiration  of ten (10)  days  from the  giving of notice to the
Borrower of the intent of the Lender to undertake  such action  unless  either a
Lease or Purchase Option would terminate without immediate action,  and then, in
such event,  Lenders may take immediate action hereunder.  All funds so advanced
shall be secured by the Security  Agreements,  bear interest at the Default Rate
and shall be immediately due and payable.

ARTICLE X.        NEGATIVE COVENANTS

         The Borrower  shall comply with the  following  during the term of this
Agreement.

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Section 10.1 RESTRICTIONS ON INDEBTEDNESS.  Create,  incur,  suffer or permit to
exist,  or assume or  guarantee,  either  directly or  indirectly,  or otherwise
become or remain liable with respect to, any Indebtedness, except the following:

(a)  Indebtedness to the Lenders and the Agent under this Agreement,  the Notes,
and the other Lender Agreements;

(b) the  Intercompany  Debt and  such  other  Indebtedness  by the  Borrower  to
American  Ski  and  its  Subsidiaries  provided  that  it  is  governed  by  the
Subordination Agreement;

(c)      the Purchase Money Indebtedness;

(d)  as  to  the  Borrower  Subsidiaries,   Permitted  Construction  Loans,  and
Indebtedness  of a  Subsidiary  of  Borrower  associated  with the  exercise  of
Borrower's rights under the Purchase Options (collectively, "Permitted Financial
Facilities"),  Indebtedness shall not constitute a Permitted  Financial Facility
or a  Permitted  Construction  Loan  unless:  (i) the terms and  conditions  and
documents   evidencing   and  securing  the   Indebtedness,   and  any  proposed
modifications  thereto,  have been  approved in advance by the Agent and (ii) no
such document or instrument  either  prohibits or causes the acceleration of the
respective  Indebtedness upon the pledge of the equity interests of the Borrower
Subsidiary  to the Agent or upon the  foreclosure  of such  pledge by the Agent.
Agent hereby approves those documents and instruments  delivered to the Agent on
or before the Closing Date (but not otherwise)  executed in connection  with the
Permitted  Construction  Loans  which have been  closed as of the  Closing  Date
(which is solely the Permitted  Construction Loan in favor of Textron), and such
facility  shall  constitute a Permitted  Financial  Facility  regardless  of the
satisfaction  of  the  conditions  of the  preceding  sentence.  Subject  to the
preceding  sentence,  any Indebtedness of the Borrower or a Borrower  Subsidiary
that initially  qualifies as a Permitted  Financial Facility shall automatically
be  disqualified  as a  Permitted  Financial  Facility  upon the  failure of the
Borrower or the Borrower Subsidiary to meet the requirements set forth above;

(e) the existing  Indebtedness set forth in Schedule 6.16, or otherwise approved
by the  Agent  from  time to  time  subject  to the  conditions  established  in
subsection (d);

(f) guaranties by a Borrower Subsidiary for the Indebtedness permitted hereunder
of another Borrower  Subsidiary provided such guaranties are approved in advance
by the Agent;

(g)  Indebtedness  which  refinances  any  previously   permitted   Indebtedness
hereunder  provided the terms and  conditions of such  Indebtedness  are no less
stringent  as a whole  with  respect  to the  Borrower  or  applicable  Borrower
Subsidiary  that  the  previous   permitted   Indebtedness   and  the  refinance
Indebtedness  otherwise meets the requirements  established herein for permitted
Indebtedness;

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(h) the Senior Note Guaranty provided that it remains  subordinate to the Lender
Obligations;

(i) such other Subordinated Indebtedness as is approved by the Agent;

(j)  Indebtedness  under the  Purchase  Options  incurred in  connection  with a
Permitted Construction Project as permitted under the Budget;

(k) Third Party Equity  Documents in form and  substance  approved by the Agent;
and

(l) That  certain  Note  Purchase  Agreement  between the  Borrower  and Textron
provided that any third party loan made thereunder is immediately transferred to
Textron.

Section 10.2  RESTRICTION  ON LIENS.  Create or incur or suffer to be created or
incurred or permit to exist any encumbrance,  mortgage,  pledge, lien, charge or
other  security  interest of any kind upon any of its  property or assets of any
character,  whether now owned or  hereafter  acquired,  or transfer  any of such
property  or assets for the  purposes of  subjecting  the same to the payment of
Indebtedness  or performance  of any other  obligation in priority to payment of
its  general  creditors,  or acquire  or agree or have an option to acquire  any
property or assets upon  conditional  sale or other title  retention  agreement,
device or arrangement  (including  Capitalized  Leases) or suffer to exist for a
period of more than thirty (30) days after the same shall have been incurred any
materialman  or supplier  lien  against it, which if unpaid might by law or upon
bankruptcy or insolvency,  or otherwise,  be given any priority  whatsoever over
the  claims of its  general  creditors,  or sell,  assign,  pledge or  otherwise
transfer for security any of its accounts, contract rights, general intangibles,
or  chattel  paper  (as  those  terms are  defined  in the UCC) with or  without
recourse (each of the foregoing, a "Lien"); PROVIDED, HOWEVER, that Borrower may
create or incur or  suffer  to be  created  or  incurred  or permit to exist the
following (collectively, the "Permitted Liens"):

(a)      the Purchase Money Mortgages;

(b)  deposits  or pledges  made in  connection  with,  or to secure  payment of,
workmen's compensation, unemployment insurance, old age pensions or other social
security and liens for taxes,  assessments or governmental charges or levies and
liens to secure  claims for  labor,  material  or  supplies  and liens  securing
obligations to carriers,  warehousemen  and mechanics to the extent that payment
thereof shall not at the time be required to be made in accordance  with Section
9.2;

(c) encumbrances in the nature of zoning restrictions,  easements, and rights or
restrictions  of  record  on the use of real  property  which do not  materially
detract from the value of such property or impair its use in the business of the
owner or lessee;

(d) Liens (other than  judgments  and awards)  created by or resulting  from any
litigation  or  legal  proceeding  which  has not yet  resulted  in an  Event of
Default; PROVIDED that the execution or other enforcement thereof is effectively

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stayed and the claims secured thereby are being actively contested in good faith
by appropriate proceedings satisfactory to the Agent;

(e) Liens  arising by operation of law to secure  landlords,  lessors or renters
under leases or rental  agreements  made in the ordinary  course of business and
confined to the premises or property rented as set forth on Schedule 6.27;

(f) Liens in favor of the Agent for the  benefit  of the  Lenders  securing  the
Lender Obligations;

(g) the Liens created with respect to any Permitted Financial Facilities;

(h) Liens securing the Indebtedness set forth in Schedule 6.16;

(i) Liens with respect to the Indebtedness permitted under Section 10.1(j); and

(j) Third Party Equity Documents in form and substance approved by the Agent.

         Nothing  contained in this Section 10.2 shall permit  Borrower to incur
any Indebtedness or take any other action or permit to exist any other condition
which would be in contravention of any other provision of this Agreement.

Section 10.3 INVESTMENTS.  Have outstanding or hold or acquire or make or commit
itself to acquire or enter into any contract to make any  Investment  except the
following:

(a)  Investments  having a  maturity  of less  than  one (1) year  from the date
thereof by the  Borrower or any  Subsidiary  in: (i)  obligations  of any of the
Lenders;  (ii)  obligations  of the  United  States of  America or any agency or
instrumentality   thereof;  (iii)  repurchase  agreements  involving  securities
described in clauses (i) and (ii) with the Agent or any of the Lenders; and (iv)
commercial  paper  which  is  rated  not  less  than  prime-one  or A-1 or their
equivalents by Moody's Investor Service,  Inc. or Standard & Poor's Corporation,
respectively, or their successors.

(b)  Investments  received as  consideration  from the sale of assets  otherwise
permitted  hereunder,  which  Investments  are pledged to the Agent on terms and
conditions acceptable to the Agent.

(c)  Investments  consisting of advances to employees in the ordinary  course of
business up to a maximum at any one time of an aggregate of $50,000.00.

(d) Investments acquired in connection with the bankruptcy or workout of account
debtors.

(e) The  conveyance  of sites for the  Permitted  Construction  Projects  to the
Borrower Subsidiaries, and the investments permitted under the Budget.

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(f) Investments in Borrower  Subsidiaries set forth in Schedule 10.3 or pursuant
to the Budget in compliance with the terms and conditions hereof.

         The  Investments  permitted  hereunder  shall not include any  Proposed
Construction Project which is not permitted hereunder.

Section 10.4 MERGERS,  ACQUISITIONS,  CREATION OF  SUBSIDIARIES.  Enter into any
merger or consolidation  with or acquire all or substantially  all of the assets
of any Person,  or sell,  assign,  lease or otherwise dispose of (whether in one
transaction  or in a series of  transactions)  all or  substantially  all of its
assets (whether now owned or hereafter acquired) to any Person. Neither Borrower
nor a Borrower  Subsidiary shall create a Subsidiary or any other entity without
the prior  consent of the Agent.  Any consent of the Agent shall be  conditioned
upon the newly created Subsidiary  entering into such documents as the Agent may
request  based  upon the  Lender  Agreements  so that the  required  pledge  and
mortgage provisions hereof are complied with.

Section  10.5  TRANSACTIONS   WITH  AFFILIATES.   Enter  into  any  transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering  of any  service,  with any  Affiliate,  except that  Borrower and its
Subsidiaries  (a) may  pay  reasonable  salaries,  fees  and  bonuses  to  their
directors,  officers  and  employees as are usual and  customary  in  Borrower's
business, (b) may enter into transactions among each other or with Affiliates on
terms that are not  materially  less  favorable to Borrower or its  Subsidiaries
than  those  which  could be  obtained  at the  time  from  Persons  who are not
Affiliates and which  transactions  (to the extent in excess of $250,000.00  for
each transaction or a series of related transactions) are disclosed to the Agent
in  Compliance  Certificates  and, for  transactions  with  entities  other than
Borrower  Subsidiaries equal to or in excess of $1,000,000.00 are accompanied by
a prior  fairness  opinion  acceptable to the Agent,  and (c) Borrower may enter
into and perform its obligations under the Lender  Agreements,  Master Easement,
and the existing  affiliate  contracts set forth in Schedule 10.5.  This Section
10.5 shall not  prohibit  the  issuance or exercise of the Tranche C Warrants by
the Tranche C Lender.

Section 10.6  DISTRIBUTIONS.  Make any Distribution or make any other payment on
account of the purchase,  acquisition,  redemption,  or other  retirement of any
shares of stock,  whether now or hereafter  outstanding.  The provisions of this
Section 10.6 shall not apply to any  Distributions  of a Borrower  Subsidiary to
the Borrower,  but shall apply to any payment or Distribution  from the Borrower
to American Ski.

Section  10.7  CAPITAL  EXPENDITURES.  Make any  Capital  Expenditure  except as
limited by and provided in the Budget.  The Borrower  shall be permitted to make
Capital Expenditures outside of the Budget provided the Capital Expenditures are
paid for by Subordinated Debt or the investments  pursuant to Third Party Equity
Documents  approved in advance by the Agent which has been fully funded into the
General Cash Collateral  Account and paid to the  appropriate  Fund prior to the
commencement of such Capital Expenditures.

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Section 10.8  DISPOSITIONS  OF ASSETS.  Subject to the payment of Net Collateral
Proceeds,  sell,  lease or otherwise  dispose of any assets except for the sale,
lease or other  disposition of inventory,  including  residential  real property
held for resale, in the ordinary course of business,  and dispositions otherwise
permitted under this Agreement.

Section 10.9  ASSUMPTIONS,  GUARANTIES,  ETC. OF  INDEBTEDNESS OF OTHER PERSONS.
Assume,  guarantee,  endorse or otherwise be or become  directly or contingently
liable  (including,  without  limitation,  by way of  agreement,  contingent  or
otherwise, to purchase,  provide funds for payment, supply funds to or otherwise
invest in any  Person or  otherwise  assure  the  creditors  of any such  Person
against  loss) in connection  with any  Indebtedness  of any other  Person.  The
Permitted  Financial  Facilities,  the Senior Note  Guaranty and the  completion
guaranty to be executed by Borrower in connection  therewith  shall be permitted
hereunder.

Section 10.10 ERISA. At any time while Borrower or any of its Subsidiaries has a
Pension Plan, permit any accumulated funding deficiency to occur with respect to
any Pension Plan or other  employee  benefit plans  established or maintained by
American Ski or any of its  Subsidiaries or to which  contributions  are made by
Borrower  or any of its  Subsidiaries  ("Plans"),  and which are  subject to the
"Pension Reform Act" and the rules and regulations  thereunder or to Section 412
of  the  Code,  and at all  times  comply  in all  material  respects  with  the
provisions of the Act and Code which are applicable to the Plans.  Borrower will
not permit the Pension Benefit Guaranty  Corporation to cause the termination of
any Pension Plan under  circumstances which would cause the lien provided for in
Section  4068 of the  Pension  Reform Act to attach to the assets of Borrower or
any of its Subsidiaries.

Section 10.11 SALE AND LEASEBACK.  Sell or transfer any of its  properties  with
the  intention  of taking  back a lease of the same  property  or leasing  other
property  for  substantially  the  same  use  as  the  property  being  sold  or
transferred.

Section 10.12 RESTRICTIVE OR INCONSISTENT  AGREEMENTS.  Enter into any agreement
(a) other than the Lender Agreements which, directly or indirectly, prohibits or
restrains,  or has the effect of prohibiting or restraining or otherwise imposes
any materially adverse or burdensome  condition upon, the declaration or payment
of dividends or Distributions,  the incurrence of Indebtedness,  the granting of
liens,  the  making  of  Loans or  Advances  to  Borrower  or the  amendment  or
modification  of any of the Lender  Agreements or (b)  containing  any provision
that would be violated or breached by any Loan or the performance by Borrower of
its obligations hereunder or under any of the Lender Agreements.

Section 10.13 NO AMENDMENT OF INTERCOMPANY  DEBT,  PURCHASE  OPTIONS,  LEASES OR
THIRD PARTY  EQUITY  DOCUMENTS.  Modify or amend any of the  Intercompany  Debt,
Purchase Options,  Leases,  documents or instruments executed in connection with
any Permitted Construction Loan or Third Party Equity Documents.

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<PAGE>

Section 10.14 PURCHASE MONEY  MORTGAGES.  Modify or amend or permit a default or
event of default to exist under any of the Purchase Money Mortgages.

Section  10.15  PERMITTED  FINANCIAL  FACILITIES.  Modify  or amend or  permit a
default or event of default to occur or exist under any  document or  instrument
given in connection with any Permitted Financial Facility.

Section 10.16     CHANGE OF CONTROL.  Permit a Change of Control to occur.

Section  10.17  PROPERTY  ACQUISITIONS.  Be  permitted to make or commit to make
additional  property  acquisitions  or options to acquire  any real  property or
interest therein without the prior written consent of the Required Lenders.

ARTICLE XI.       FURTHER ASSURANCES

Section 11.1 FURTHER ASSURANCES.  Borrower agrees that the Mortgaged  Properties
are subject to a first in priority  security  interest in favor of the Agent for
the benefit of the Lenders subject to the Permitted  Exceptions.  Borrower shall
take such actions as are necessary in order to cause the Security  Agreements to
constitute  a perfected  first in priority  security  interest on the  Mortgaged
Properties,  subject only to the Permitted  Exceptions  and related  development
rights,  and  further  to deliver to the Agent  such  additional  due  diligence
materials  as the Lenders may request  from time to time with  respect  thereto.
Without  limitation to the  foregoing,  Borrower  shall provide such  additional
documents and  instruments as the Agent may request in order to assure the Agent
that the Mortgaged  Properties may be fully developed in the manner contemplated
by the Appraisals and the Proposed Construction Projects.

ARTICLE XII.      EVENTS OF DEFAULT AND REMEDIES

Section 12.1 EVENTS OF DEFAULT.  Each of the following events shall be deemed to
be "Events of Default" hereunder:

(a) Borrower shall fail to make any payment with respect to (i) the principal of
any of the Lender  Obligations  as the same  shall  become  due,  whether at the
stated payment date, required prepayment or by acceleration, demand or otherwise
or (ii)  interest  or  commitment  fees on or in  respect  of any of the  Lender
Obligations as the same shall become due.

(b) Borrower shall fail to perform or observe any other material term, covenant,
condition  or  provision  to be  performed  or observed  by Borrower  under this
Agreement or any other Lender Agreement, and such failure shall not be rectified
or cured to the  Agent's  satisfaction  within  thirty  (30) days after  written
notice thereof to Borrower.

(c) Any  representation  or warranty of Borrower or any Subsidiary  herein or in
any other  Lender  Agreement  or any  amendment  to any thereof  shall have been
materially false or misleading at the time made or intended to be effective.

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<PAGE>

(d) An event of default or  termination  shall  occur under the  Purchase  Money
Mortgage or the Purchase Options, a default shall have occurred and not be cured
within  the  applicable  cure  period  under  any  of  the  Permitted  Financial
Facilities,  Land Notes,  Third Party Equity  Documents or a default shall occur
under the Senior  Facility or Senior Note Guaranty or the Borrower or a Borrower
Subsidiary  shall cease to be the  controlling and managing member or partner or
otherwise  a  Change  of  Control  shall  occur  with  respect  to any  Borrower
Subsidiary.

(e)  Borrower  or  a  Borrower   Subsidiary   shall  be  involved  in  financial
difficulties as evidenced:

         (i)      by its  commencement of a voluntary case under Title 11 of the
                  United  States Code as from time to time in effect,  or by its
                  authorizing,  by  appropriate  proceedings  of  its  board  of
                  directors or other governing body, the  commencement of such a
                  voluntary case;

         (ii)     by its filing an answer or other pleading admitting or failing
                  to deny the material  allegations  of a petition filed against
                  it  commencing  an  involuntary  case  under said Title 11, or
                  seeking,  consenting to or  acquiescing  in the relief therein
                  provided,  or by its failing to controvert timely the material
                  allegations of any such petition;

         (iii)    by the entry of an order for  relief in any  involuntary  case
                  commenced under said Title 11;

         (iv)     by its seeking  relief as a debtor under any  Applicable  Law,
                  other than said Title 11, of any jurisdiction  relating to the
                  liquidation   or   reorganization   of   debtors   or  to  the
                  modification  or alteration of the rights of creditors,  or by
                  its consenting to or acquiescing in such relief;

         (v)      by the entry of an order by a court of competent  jurisdiction
                  (l) finding it to be bankrupt or  insolvent,  (2)  ordering or
                  approving its liquidation,  reorganization or any modification
                  or  alteration  of the rights of its creditors or (3) assuming
                  custody of, or  appointing a receiver or other  custodian  for
                  all or a substantial part of its property and such order shall
                  not be vacated or stayed on appeal or otherwise  stayed within
                  thirty (30) days;

         (vi)     by  the  filing  of a  petition  against  American  Ski or any
                  Subsidiary  under  said  Title ll which  shall not be  vacated
                  within thirty (30) days; or

         (vii)    by its making an  assignment  for the  benefit of, or entering
                  into a  composition  with,  its  creditors,  or  appointing or
                  consenting to the appointment of a receiver or other custodian
                  for all or a substantial part of its property.

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(f) There shall have occurred a judgment  against  Borrower or any Subsidiary in
any court which constitutes a Material Adverse Effect.

(g) A Change of Control shall occur.

(h) Any "Event of Default" under any other Lender Agreement.

(i) Any of the  Lender  Agreements  shall be  canceled,  terminated,  revoked or
rescinded  otherwise  than in  accordance  with the terms thereof or without the
express prior written agreement, consent or approval of the Agent; or any Lender
Agreement, or any Lien granted thereunder,  shall (except in accordance with its
terms or the terms of this Agreement), in whole or in part, terminate,  cease to
be  effective  or  cease  to be  the  legally  valid,  binding  and  enforceable
obligation of any Borrower; or any Lien securing any Lender Obligation shall, in
whole or in part,  cease to be a perfected first priority Lien,  subject only to
those exceptions  expressly permitted by a Lender Agreement or the terms of this
Agreement  and  except  to the  extent  that any such  Lien has  ceased  to be a
perfected first priority Lien solely due to an act or omission by the Agent or a
Lender;  or any action at law or in equity or other legal  proceeding to cancel,
revoke or rescind  any of the Lender  Agreements  or the  acquisition  of all or
portions of the property affected by the Purchase Options.

(j)  Borrower  or any  Subsidiary  shall be  indicted  for a  federal  crime,  a
punishment  for which could include the  forfeiture of any assets of Borrower or
such Subsidiary.

         An Event of Default  shall occur upon the  occurrence  of any set forth
above,  except for the  following  Defaults,  which shall ripen into an Event of
Default  after the giving of notice by the Agent to the  Borrower and failure of
the  Borrower to  completely  cure the Default  within the time period set forth
below. The cure periods applicable to certain Defaults are as set forth below:

         NO CURE PERIOD:  Monetary  events of default,  Defaults  under Sections
5.1,  9.4, 9.6,  9.8,  10.1,  10.2 (except for the right of Borrower to bond off
materialmen  liens  within  thirty (30) days of  discovery of the filing of such
lien), 10.3, 10.4, 10.6, 10.7, 10.8, 10.9, 10.11,  10.13,  10.14,  10.15, 10.16,
10.17 and 10.18. An Event of Default under the following  subsections of Section
12.1 shall have no cure period: 12.1 (a), (c), (d), (f), (g), (i) and (j).

         TEN DAY CURE PERIOD:  Sections7.1, 9.2 and 9.11.

         All other cure periods  shall be governed by the  provisions of Section
12.1(b);  provided that as to Events of Default under Section 12.1(e), the Agent
shall be  entitled to take such  actions as it deems  necessary,  including  the
exercise  of any  remedies  available  to it and the  Lenders  under the  Lender
Agreements,  subject to  discontinuance  upon the complete cure of such Event of
Default within the applicable thirty (30) day time period.

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Section 12.2 REMEDIES.  Upon the occurrence of an Event of Default,  in each and
every case,  the Agent may, and upon the request of the Required  Lenders shall,
(i) exercise any right or remedy under the Security  Agreements  or other Lender
Agreements,  (ii) proceed to protect and enforce the rights of the Agent and the
Lenders by suit in equity,  action at law and/or  other  appropriate  proceeding
either for specific  performance of any covenant or condition  contained in this
Agreement or any other Lender  Agreement or in any  instrument  delivered to the
Agent or the Lenders  pursuant  hereto or thereto,  or in aid of the exercise of
any power granted in this Agreement, any Lender Agreement or any such instrument
and (iii) by notice in writing to the Borrower declare all of the unpaid balance
of the Lender Obligations then outstanding to be due and payable. In addition to
the  foregoing,  the Agent shall  pursue legal  remedies if a monetary  Event of
Default  continues  for a  period  of  ninety  (90)  days  from  and  after  its
declaration by the Agent. The foregoing conditions shall not apply to any of the
following: (i) the occurrence of an Event of Default under Section 12.1(e) where
the Loan Maturity Dates shall  automatically be accelerated upon such occurrence
and  (ii)  the  pursuit  of  emergency  Collateral   protection  or  realization
proceedings  by the Agent at its  discretion  upon the  occurrence of a Default.
Upon the  acceleration  of the Loan Maturity  Dates,  the unpaid  balance of the
Lender Obligations shall become due and payable without presentation, protest or
further demand or notice of any kind, all of which are hereby  expressly  waived
by the Borrower. Upon such acceleration, Agent may proceed to enforce payment of
such balance in such manner as the Agent may elect.  Upon the  occurrence  of an
Event of Default,  the Agent and the Lenders  shall also have the setoff  rights
established under Section 2.7.

         The Agent  shall have the right to  advance  such sums and to take such
actions  as it  determines  to be  necessary  in order to protect  its  security
interest in the portions of the Collateral affected by such Default. The amounts
so  advanced  shall  constitute  Advances  and shall be subject  to the  Advance
provisions as to the payment by Lenders of such amounts as set forth herein. All
such curative  amounts shall: (i) be secured by the Lender  Agreements;  (ii) be
immediately due and payable; and (iii) bear interest at the Default Rate.

ARTICLE XIII.     CONSENTS; AMENDMENTS; WAIVERS; REMEDIES

Section  13.1  ACTIONS BY LENDERS.  Any  consent or approval  required or waiver
permitted by this  Agreement to be given by the Agent may be given by the Agent.
Any term of this  Agreement or of the Lender  Agreements  may be amended  unless
otherwise specified herein, any waiver or consent with respect to this Agreement
or a Lender  Agreement  may be granted by the Agent with the written  consent of
the  Borrower  and the  Required  Lenders  except as provided  in Section  15.7;
PROVIDED,  HOWEVER,  that no  amendment  of Article 15 may be made  without  the
consent of the Agent, and none of the following may be made, without the written
consent as set forth for the particular category set forth below:

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(a) reduction in the interest  rates on or any Fees or payments  relating to the
Loans unless approved by all of the Lenders for the particular  Tranche affected
by the proposed action;

(b)  extension or  postponement  of the stated time of payment of the  principal
amount of,  interest  on, or Fees  payable to the Lenders  relating to the Loans
unless approved by all of the Lenders for the particular Tranche affected by the
proposed action;

(c)  change in the  principal  amount of the  Loans  and  extension  of the Loan
Maturity Dates unless approved by the A/B Lenders;

(d) release of all or substantially all of the Collateral unless approved by the
A/B Lenders except for the release of all or portions of the Collateral pursuant
to the sale  thereof as  permitted  under  Section  5.2 which may be done by the
Agent;

(e) change in the definition of the term "Required  Lenders"  unless approved by
the A/B Lenders;

(f) Modifications of the Budget other than as permitted under Section 3.2 unless
approved by the A/B Lenders;

(g) Modification of the definitions of Net Collateral  Proceeds or Net Inventory
Proceeds unless approved by the A/B Lenders; and

(h)  Modification  of the  provisions of Sections 4.4 B; 4.4 C; and 4.4 D unless
approved by the A/B Lenders.

         The A/B Lenders and the  Borrower  shall have the right to increase the
amount of either the Tranche A Lender Obligations, Tranche B Lender Obligations,
the  Tranche  A  Interest  Rate and the  Tranche  B  Interest  Rate or any other
modification  or amendment to this Agreement  other than as set forth in (a) and
(b)  above as to  modifications  of  Tranche  C, all  without  the  approval  or
execution by the Tranche C Lenders. Upon such modification or amendment executed
by the Borrower and the A/B Lenders,  the terms and conditions  thereof shall be
automatically binding and enforceable against the Tranche C Lenders.

         The  Agent  shall  provide  to the  Tranche  C  Lenders  copies  of all
modifications made to this Agreement or Lender Agreements.  The Borrower and the
Tranche C Lenders may modify the Tranche C loan documents without the consent of
the Agent or the A/B Lenders  provided:  (i) the  modifications  recite in their
terms and conditions  that they are governed by the terms and conditions  hereof
including the provisions of Article 17; (ii) the Borrower provides copies of the
proposed  modifications to the Agent for review prior to the execution  thereof;
and  (iii)  the  Borrower  provides  to  the  Agent  executed  versions  of  the
modifications upon such execution.

Section  13.2  ACTIONS BY  BORROWER.  No delay or omission on the Agent's or the
Lenders' part in exercising  their rights and remedies  against  Borrower or any

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other  interested  party shall  constitute a waiver. A breach by Borrower of its
obligations under this Agreement may be waived only by a written waiver executed
by the Agent and the  Required  Lenders  or as set forth in  Section  13.1.  The
Agent's and the Required  Lenders'  waiver of  Borrower's  breach in one or more
instances  shall not constitute or otherwise be an implicit waiver of subsequent
breaches.  To the extent permitted by Applicable Law,  Borrower hereby agrees to
waive, and does hereby  absolutely and irrevocably  waive: (a) all presentments,
demands  for  performance,  notices  of  protest  and  notices  of  dishonor  in
connection  with  any of  the  Indebtedness  evidenced  by the  Notes;  (b)  any
requirement  of diligence or promptness on the Agent's or the Required  Lenders'
part in the  enforcement  of their rights under the provisions of this Agreement
or any  Lender  Agreement;  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 with
respect  to its  liability  (i) under  this  Agreement  or with  respect  to the
Indebtedness evidenced by the Notes or (ii) under any other Lender Agreement. No
course of dealing between the Borrower and the Lenders shall waive or modify the
terms and conditions  hereof.  The Agent's and the Lenders'  rights and remedies
under this Agreement and under all subsequent  agreements between the Agent, the
Lenders and Borrower shall be cumulative,  and any rights and remedies expressly
set forth herein shall be in addition  to, and not in  limitation  of, any other
rights and remedies  which may be applicable to the Agent and the Lenders in law
or at equity.

ARTICLE XIV.      SUCCESSORS AND ASSIGNS

Section 14.1 GENERAL.  This  Agreement  shall be binding upon and shall inure to
the benefit of the parties hereto and their respective  successors  (which shall
include  in the case of the Agent or any  Lender  any  entity  resulting  from a
merger or  consolidation)  and assigns,  except that (a) Borrower may not assign
its rights or obligations  under this Agreement,  (b) each Lender may assign its
rights in this  Agreement  only as set forth  below in this  Article 14, and (c)
prior to the occurrence of either of the Payment Date or the  acquisition of the
A/B Loans by the  Tranche C  Lenders,  the  assignment  rights of the  Tranche C
Lenders  shall be governed by the  provisions of Section 17.6 in addition to the
provisions of this Section.

Section 14.2      ASSIGNMENTS.

(a) CONDITIONS TO ASSIGNMENT BY LENDERS.  Except as provided herein, each Lender
may assign to: (1) one or more Eligible  Assignees all of its interests,  rights
and obligations under this Agreement  (including all or a portion of its Tranche
Commitment  Percentage  and  Commitment  and the same portion of the Loan at the
time owing to it, and the Notes held by it) or (2) a fund that  invests in loans
and is managed by the same  manager as any of the  Lenders or any  Affiliate  of
such manager ("Related  Entity").  Assignments set forth in (1) shall be subject
to compliance with all of the  requirements  set forth below and assignments set
forth in (2) shall be subject to compliance with all of the requirements  except
for those set forth at (i) and (iv). The conditions for assignment are:

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(i)      the  Agent  shall  have  given  its  prior  written   consent  to  such
         assignment;

(ii)     each  such  assignment  shall  be of a  constant,  and  not a  varying,
         percentage of all the assigning  Lender's rights and obligations  under
         this Agreement;

(iii)    Fleet may make partial or  non-voting  assignments  in amounts it deems
         appropriate;

(iv)     each Lender which is a Lender on the date hereof shall retain,  free of
         any such  assignment,  an  amount  of its  Commitment  of not less than
         $5,000,000.00,  and, as long as no Default exists,  Fleet shall retain,
         free of any such assignment, not less than $10,000,000.00 provided that
         Fleet may assign greater amounts of its Commitment with the approval of
         the Borrower, such approval shall not be unreasonably withheld; and

(v)      the parties to such assignment  shall execute and deliver to the Agent,
         for recording in the Register (as hereinafter  defined),  an Assignment
         and  Acceptance  Agreement,  substantially  in the form  established by
         Administrative Agent ("Assignment and Acceptance Agreement"),  together
         with  any  Notes  subject  to such  assignment.  Upon  such  execution,
         delivery,  acceptance and recording,  from and after the effective date
         specified in each Assignment and Acceptance Agreement,  which effective
         date  shall be at least  five (5)  Business  Days  after the  execution
         thereof, but in no event prior to recording (i) the assignee thereunder
         shall be a party hereto and, to the extent  provided in such Assignment
         and Acceptance  Agreement,  have the rights and obligations of a Lender
         hereunder and (ii) the assigning  Lender shall,  to the extent provided
         in such  assignment  and upon payment to the Agent of the  registration
         fee  referred  to in Section  14.2(c),  be  released  from its  further
         obligations under this Agreement with respect to the interest assigned.

         Each  Lender  may at any time  assign or  pledge  its Loan or Note to a
Federal  Reserve Bank,  and a Lender which is a "fund" may at any time assign or
pledge all or any  portion of its rights  under this  Agreement  to secure  such
Lender's  indebtedness in connection with securitization  transactions,  in each
case without the prior written  consent of the Agent or the  Borrower,  provided
that  each such  assignment  shall be made in  accordance  with  Applicable  Law
(except  for the  approval of Agent),  and no such  assignment  shall  release a
Lender from any of its  obligations  hereunder.  In order to facilitate any such
assignment,  the Borrower  shall, at the request of the assigning  Lender,  duly
execute a registered  promissory note or notes evidencing the Lender Obligations
made or extended to the Borrower by the  assigning  Lender  hereunder,  provided
that the  assignment  is  otherwise in  compliance  with the terms  hereof.  For
avoidance  of  doubt,  the  parties  to  this  Agreement  acknowledge  that  the

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provisions  of  this  subsection   concerning   assignments  does  not  prohibit
assignments  creating security interests,  including,  without  limitation,  any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with Applicable Law and the terms hereof.

(b) CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By executing
and  delivering  an  Assignment  and  Acceptance  Agreement,  the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Lender makes no  representation  or warranty
and assumes no  responsibility  with respect to any  statements,  warranties  or
representations  made in or in connection  with this Agreement or the execution,
legality, validity,  enforceability,  genuineness,  sufficiency or value of this
Agreement,  the other  Lender  Agreements  or any other  instrument  or document
furnished pursuant hereto;  (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility  with respect to the financial  condition
of the Borrower or any other Person  primarily or secondarily  liable in respect
of any of the  Lender  Obligations,  or the  performance  or  observance  by the
Borrower or any other Person  primarily or secondarily  liable in respect of any
of the Lender  Obligations or any of their  obligations  under this Agreement or
any of the other Lender Agreements or any other instrument or document furnished
pursuant hereto or thereto;  (iii) such assignee confirms that it has received a
copy of this  Agreement,  together  with  copies  of the most  recent  financial
statements  referred to in Section 6.9 and such other  documents and information
as it has deemed  appropriate  to make its own credit  analysis  and decision to
enter into such  Assignment and Acceptance  Agreement;  (iv) such assignee will,
independently and without reliance upon the assigning  Lender,  the Agent or any
Lender and based on such documents and information as it shall deem  appropriate
at the time,  continue to make its own credit  decisions in taking or not taking
action under this Agreement;  (v) such assignee  represents and warrants that it
is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise  such powers  under this
Agreement  and the other Lender  Agreements as are delegated to the Agent by the
terms hereof or thereof,  together with such powers as are reasonably incidental
thereto;  (vii) such  assignee  agrees that it will perform in  accordance  with
their  terms  all of the  obligations  that by the terms of this  Agreement  are
required to be performed by it as a Lender;  (viii) such assignee represents and
warrants  that it is  legally  authorized  to enter  into  such  Assignment  and
Acceptance Agreement; and (ix) such assignee represents that it is acquiring the
portion of the Loans  assigned to it pursuant to the  Assignment  and Acceptance
Agreement  for  investment  only and not with a view to or with any intention to
resell, distribute, subdivide or fractionalize such portion in whole or in part,
or grant any participation therein.

(c) REGISTER.  The Agent shall maintain a copy of each Assignment and Acceptance
Agreement  delivered to it and a register or similar list  ("Register")  for the
recordation of the names and addresses of the Lenders and the Tranche Commitment
Percentages and  Commitments of, and principal  amount of the Loans owing to the

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Lenders  from time to time as a  condition  to the  effectiveness  thereof.  All
assignments  of Loans or  Commitment  must be  reported  to the  Agent to permit
registration  in the Register.  The entries in the Register shall be conclusive,
in the absence of manifest  error,  and the Borrower,  the Agent and the Lenders
may treat  each  Person  whose  name is  recorded  in the  Register  as a Lender
hereunder for all purposes of this  Agreement.  The Register  shall be available
for inspection by the Borrower and the Lenders at any  reasonable  time and from
time to time upon reasonable prior notice.  Upon each such recordation,  (i) the
assigning  Lender  agrees to pay to the Agent a  registration  fee in the sum of
$5,000.00,  and  (ii) the  Agent  will  deliver  a copy of the  Register  to the
Borrower.  The $5,000.00 fee shall not be applicable to transfers to the Related
Entity permitted under Section 14.2 (a) 2.

(d) NEW  NOTES.  Upon its  receipt of an  Assignment  and  Acceptance  Agreement
executed by the parties to such  assignment,  together with each Note subject to
such assignment, the Agent shall (i) record the information contained therein in
the Register and (ii) give prompt notice thereof to the Borrower and the Lenders
(other than the assigning  Lender).  Within five (5) Business Days after receipt
of such notice, the Borrower,  at its own expense,  shall execute and deliver to
the Agent,  in exchange  for each  surrendered  Note, a new Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee  pursuant  to such  Assignment  and  Acceptance  Agreement  and, if the
assigning Lender has maintained some portion of its obligations hereunder, a new
Note to the  order of the  assigning  Lender in an  amount  equal to the  amount
retained  by  it  hereunder.   Such  new  Notes  shall  provide  that  they  are
replacements  for the  surrendered  Notes,  shall be in an  aggregate  principal
amount equal to the aggregate  principal amount of the surrendered  Notes, shall
be dated the effective  date of such  Assignment  and  Acceptance  Agreement and
shall otherwise be in substantially  the form of the Notes delivered at the time
of execution of this Agreement. Within five (5) Business Days of issuance of any
new Notes  pursuant to this Article 14, the Borrower shall deliver an opinion of
counsel,   addressed  to  the  Lenders  and  the  Agent,  relating  to  the  due
authorization,  execution  and  delivery  of such new  Notes  and the  legality,
validity, enforceability and binding effect thereof. The surrendered Notes shall
be canceled and returned to the Borrower.

(e) NO ASSIGNMENT BY BORROWER.  The Borrower shall not assign or transfer any of
its rights or obligations under any of the Lender  Agreements  without the prior
written consent of each of the Lenders.

(f)      WITHHOLDING TAX.

         (i)      If any Lender is a "foreign corporation, partnership or trust"
                  within  the  meaning  of  the  Code  and  such  Lender  claims
                  exemption from, or a reduction of, U.S.  withholding tax under
                  Sections 1441 or 1442 of the Code, such Lender agrees with and
                  in favor of the Agent, to deliver to the Agent;

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         (ii)     if such Lender  claims an exemption  from,  or a reduction of,
                  withholding  tax under a United  States tax  treaty,  properly
                  completed  IRS Forms 1001 and W-8  before  the  payment of any
                  interest in the first  calendar year and before the payment of
                  any  interest in each third  succeeding  calendar  year during
                  which interest may be paid under this Agreement;

         (iii)    if such Lender claims that interest paid under this  Agreement
                  is exempt from  United  States  withholding  tax because it is
                  effectively  connected  with a United States trade or business
                  of such Lender, two (2) properly completed and executed copies
                  of IRS Form 4224 before the payment of any  interest is due in
                  the first  taxable year of such Lender and in each  succeeding
                  taxable year of such Lender during which  interest may be paid
                  under this Agreement, and IRS Form W-9;

         (iv)     such other form or forms as may be required  under the Code or
                  other laws of the United  States as a condition  to  exemption
                  from, or reduction of, United States withholding tax; and

         (v)      in the  case  of  any  Lender  claiming  exemption  from  U.S.
                  Withholding  Tax under  Section  871(b) or 881(c) of the Code,
                  with respect to payments of  "Portfolio  Interest" a Form W-8,
                  or any subsequent versions thereof or successors thereto,  and
                  if the Lender delivers a Form W-8, a certificate  representing
                  that such Lender is not a bank for purposes of Section  881(c)
                  of the Code,  is not a ten percent (10%)  shareholder  (within
                  the  meaning  of  Section  871(h)(3)(b)  of the  Code)  of the
                  Borrower thereof,  and is not a controlled foreign corporation
                  related  to  the  Borrower  (within  the  meaning  of  Section
                  864(d)(4) of the Code).  Each such  certificate and form shall
                  be  properly  completed  and  duly  executed  by  such  Lender
                  claiming  complete  exemption  from a  reduced  rate  of  U.S.
                  Withholding  Tax  on  payments  by  the  Borrower  under  this
                  Agreement and other Lender Agreements.

         Such  Lender  agrees to  promptly  notify  the  Agent of any  change in
circumstances  which would  modify or render  invalid any claimed  exemption  or
reduction.

         (vi)     If  any  Lender  claims   exemption  from,  or  reduction  of,
                  withholding  tax under a United States tax treaty by providing
                  IRS  Form  1001  and  such  Lender  sells,  assigns,  grants a
                  participation  in, or otherwise  transfers  all or part of the
                  Lender Obligations of the Borrower to such Lender, such Lender
                  agrees to notify the Agent of the  percentage  amount in which
                  it is no longer the beneficial owner of Lender  Obligations of
                  the Borrower to such Lender.  To the extent of such percentage
                  amount, the Agent will treat such Lender's IRS Form 1001 as no
                  longer valid.

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<PAGE>

         (vii)    If  any  Lender   claiming   exemption   from  United   States
                  withholding tax by filing IRS Form 4224 with the Agent, sells,
                  assigns, grants a participation in, or otherwise transfers all
                  or part of the  Lender  Obligations  of the  Borrower  to such
                  Lender,  such Lender agrees to undertake  sole  responsibility
                  for complying with the withholding tax requirements imposed by
                  Sections 1441 and 1442 of the Code.

         (viii)   If any Lender is  entitled to a  reduction  in the  applicable
                  withholding  tax,  the Agent may  withhold  from any  interest
                  payment to such Lender an amount  equivalent to the applicable
                  withholding tax after taking into account such  reduction.  If
                  the  forms  or  other  documentation  required  by  subsection
                  Section  14.2(g)(iv) are not delivered to the Agent,  then the
                  Agent may withhold  from any  interest  payment to such Lender
                  not  providing  such  forms or other  documentation  an amount
                  equivalent to the applicable withholding tax.

         (ix)     If the IRS or any other  Governmental  Authority of the United
                  States or other  jurisdiction  asserts a claim  that the Agent
                  did not properly  withhold tax from amounts paid to or for the
                  account of any Lender  (because the  appropriate  form was not
                  delivered,  was not properly executed,  or because such Lender
                  failed to notify the Agent of a change in circumstances  which
                  rendered the exemption from, or reduction of,  withholding tax
                  ineffective,  or for  any  other  reason)  such  Lender  shall
                  indemnify  the Agent fully for all amounts  paid,  directly or
                  indirectly,  by  the  Agent  as tax  or  otherwise,  including
                  penalties and interest, and including any taxes imposed by any
                  jurisdiction  on the  amounts  payable to the Agent under this
                  Article 14  together  with all costs and  expenses  (including
                  reasonable attorney's fees and legal expenses). The obligation
                  of the Lenders  under this  subsection  (e) shall  survive the
                  payment  of all  Lender  Obligations  and the  resignation  or
                  replacement of the Agent.

Section 14.3 FLEET AS AGENT UNDER SENIOR  FACILITY AND ROLE OF RS.  Borrower and
the  Lenders   acknowledge   and  recognize  that  Fleet  National  Bank  (f/k/a
BankBoston, N.A.), is the agent under the Senior Facility and, in such capacity,
may take actions which may be in conflict with or  detrimental to this facility,
the Borrower and the Lenders. Furthermore,  Borrower and Lenders acknowledge and
recognize  that RS has advised the Borrower in  connection  with the  structure,
syndication  and funding of the Loan.  Borrower and Lenders agree that Fleet may
serve in both  capacities  and take such  actions as it deems  necessary  as the
agent of both this facility and under the Senior Facility. Furthermore, Borrower
and  Lenders  agree that the  actions  of RS or Fleet as agent  under the Senior
Facility  shall not  constitute  a conflict of interest of the  obligations  and
duties and rights of the Agent  hereunder  or create any  liability  of Agent or
Fleet with  respect  thereto and shall not  constitute  a defense by Borrower or
Lenders to the performance of any obligation of any of them hereunder  including

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the Lender  Obligations or any obligation of a Lender to timely fund its Tranche
Commitment  Percentage  of the  respective  Tranches of the Loan.  Borrower  and
Lenders agree that this Agreement and all Lender Agreements shall not constitute
"Lender Agreements" under the Senior Credit Facility.

Section 14.4      IDENTITY OF THE TRANCHE C LENDERS AND TRANSFER RIGHTS.

         The  Tranche C Lenders  may  assign all or a portion of Tranche C under
the following circumstances and requirements:

(a) The  Tranche C  Remaining  Balance  has been  reduced to an amount less than
$5,000,000.00;

(b) In the event that the Borrower or American Ski propose to cause the issuance
capital stock or other security of the Borrower,  American Ski or any Subsidiary
of  either  of them,  and to cause  the  proceeds  thereof  to be used to retire
Tranche C, then the proposed  transaction  has been approved by the A/B Lenders,
whose  approval  shall not be  unreasonably  withheld.  The  approval of the A/B
Lenders shall not be required, however, for the retirement of Tranche C from the
proceeds of the  issuance of  warrants or capital  stock of American  Ski or the
Borrower in the amount of up to an aggregate  amount of  $5,000,000.00  provided
that:  (i) no default or event of default  would  occur under any  documents  or
instruments  that  American Ski or any of its  Subsidiaries  or  Affiliates is a
party,  and (ii) no  Change of  Control  would  occur  hereunder  or under  such
documents or instruments.

(c) In the event  that the  Tranche  C Lenders  have  exercised  their  right to
acquire  the A/B Loans  pursuant to Section  17.4,  then the  assignment  of the
Tranche C Commitment Percentage or the issuance of the securities and retirement
of  Tranche C shall be closed  simultaneously  with the  acquisition  of the A/B
Loans by the Tranche C Lenders.  No Portion of Tranche C that  remains  unfunded
may be  transferred  or  assigned.  The transfer  and  assignment  of all or any
portion of the Tranche C Commitment  Percentage  shall be otherwise  governed by
the terms of this Article.

(d)  Neither  Oak Hill nor any  transferee  fund shall have any right to pledge,
hypothecate  or to mortgage any interest in Tranche C prior to the occurrence of
the Payment Date or the  acquisition  of the A/B Loans by the Tranche C Lenders.
Upon the  occurrence  of either the Payment Date or the  acquisition  of the A/B
Loans by the Tranche C Lenders, all restrictions contained in this section shall
no longer apply.

ARTICLE XV.       THE AGENT

Section  15.1  AUTHORIZATION  AND  ACTION.   Each  Lender  hereby  appoints  and
authorizes  the Agent to take such  action on its  behalf and to  exercise  such
powers under this Agreement and the other Lender  Agreements as are delegated to
the Agent by the terms  hereof and  thereof,  together  with such  powers as are
reasonably  incidental  thereto. As to any matters not expressly provided for by
this Agreement and the other Lender Agreements  (including,  without limitation,
enforcement  or  collection  of the  Notes),  the Agent shall not be required to
exercise any  discretion or take any action,  but shall be required to act or to
refrain  from acting (and shall be fully  protected  in so acting or  refraining
from  acting)  upon  the  instructions  of  the  Required   Lenders,   and  such
instructions  shall be binding upon all  Lenders;  PROVIDED,  HOWEVER,  that the
Agent  shall not be  required  to take any  action  which  exposes  the Agent to
liability or which is contrary to this Agreement or the other Lender  Agreements
or  Applicable  Law.  Subject  to the  foregoing  provisions  and  to the  other

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provisions  of this Article 15, the Agent shall,  on behalf of the Lenders:  (a)
execute any  documents  on behalf of the  Lenders  providing  Collateral  for or
guarantees of the Lender Obligations;  (b) hold and apply any Collateral for the
Lender  Obligations,  and the proceeds  thereof,  at any time received by it, in
accordance   with  the  provisions  of  this  Agreement  and  the  other  Lender
Agreements;  (c) exercise any and all rights, powers and remedies of the Lenders
under this Agreement or any of the other Lender Agreements, including the giving
of any consent or waiver or the entering into of any  amendment,  subject to the
provisions  of Section  13.1;  (d) at the  direction  of the  Lenders,  execute,
deliver and file UCC  financing  statements,  mortgages,  deeds of trust,  lease
assignments  and such other  agreements  in respect  of any  Collateral  for the
Lender Obligations, and possess instruments included in the Collateral on behalf
of the Lenders; and (e) in the event of acceleration of Borrower's  Indebtedness
hereunder,  act at the  direction  of the Lenders to exercise  the rights of the
Lenders  hereunder and under the other Lender  Agreements.  The Agent shall also
have the rights set forth in Section 17.3.

Section 15.2 AGENT'S RELIANCE,  ETC. Neither the Agent nor any of its directors,
officers,  agents or  employees  shall be liable to the  Lenders  for any action
taken or  omitted  to be taken by it or them  under or in  connection  with this
Agreement  or the other  Lender  Agreements,  except  for its or their own gross
negligence or willful  misconduct.  Without  limitation of the generality of the
foregoing,  the Agent: (a) may treat the payee of any Note as the holder thereof
until the Agent receives  written  notice of the assignment or transfer  thereof
signed by such payee and in form  required  under  Article  14  hereof;  (b) may
consult with legal counsel,  independent  public  accountants  and other experts
selected  by it  including  consultants  and shall not be liable  for any action
taken or omitted to be taken in good faith by it in  accordance  with the advice
of such counsel,  accountants,  experts or consultants; (c) makes no warranty or
representations to any Lender and shall not be responsible to any Lender for any
statements,  warranties or  representations  made in or in connection  with this
Agreement  or the  other  Lender  Agreements;  (d)  shall  not  have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Lender  Agreements on the
part of Borrower or any other Person or to inspect the property  (including  the
books and records) of Borrower or any other Person; (e) shall not be responsible
to any  Lender  for  the  due  execution,  legality,  validity,  enforceability,
genuineness,  sufficiency  or  value  of  this  Agreement  or the  other  Lender
Agreements or any other  instrument  or document  furnished  pursuant  hereto or
thereto;  (f) shall incur no liability  under or in respect of this Agreement or
the other Lender Agreements by acting upon any notice,  consent,  certificate or
other  instrument or writing (which may be by telecopy or telegram)  believed by
the Agent to be genuine and signed or sent by the proper  party or parties;  and

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(g) shall not be liable to any Lender for the failure of the  Borrower to timely
provide any report or information  required to be provided by the Borrower,  the
Agent's efforts to obtain such reports, or the information contained therein.

Section  15.3 AGENT AS A LENDER.  Fleet  shall  have the same  rights and powers
under this Agreement and the other Lender Agreements as any other Lender and may
exercise  the same as though it were not the  Agent,  and the term  "Lender"  or
"Lender(s)" shall,  unless otherwise expressly  indicated,  include Fleet in its
individual  capacity.  Fleet and its affiliates may lend money to, and generally
engage in any kind of business  with,  Borrower,  American Ski, any Affiliate of
American  Ski and any  Person  who may do  business  with or own  securities  of
American Ski or any such Affiliate of American Ski, all as if Fleet were not the
Agent and without any duty to account therefor to the Lenders.

Section  15.4 LENDER  CREDIT  DECISION.  Each Lender  acknowledges  that it has,
independently  and without reliance upon the Agent or any other Lender and based
on the financial  statements referred to in Section 6.9 and such other documents
and information as it has deemed  appropriate,  made its own credit analysis and
decision to enter into this  Agreement.  Each Lender also  acknowledges  that it
will,  independently and without reliance upon the Agent or any other Lender and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own credit  decisions in taking or not taking action
under this Agreement.

Section 15.5 INDEMNIFICATION OF AGENT. Each Lender agrees to indemnify the Agent
and its directors,  officers, employees and agents (to the extent that the Agent
is not  reimbursed  by  Borrower),  ratably  according to each Lender's pro rata
share of the original  principal  balance of the Loan,  from and against any and
all liabilities,  obligations,  losses, damages, penalties,  actions, judgments,
suits,  costs,  expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted  against the Agent or its directors,
officers,  employees  or agents in any way  relating  to or arising  out of this
Agreement  or any other  Lender  Agreement or any action taken or omitted by the
Agent in such capacity  under this  Agreement;  PROVIDED that no Lender shall be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful  misconduct.  Without limitation of
the  foregoing,  each Lender agrees to reimburse the Agent  promptly upon demand
for its ratable share of any  out-of-pocket  expenses  (including  counsel fees)
incurred by the Agent in connection with the preparation,  execution,  delivery,
administration,   modification,   amendment  or  enforcement   (whether  through
negotiations,  legal proceedings or otherwise) of, or legal advice in respect of
rights  or  responsibilities   under,  this  Agreement  and  each  other  Lender
Agreement,  to the extent that the Agent is not  reimbursed for such expenses by
Borrower.

Section 15.6 SUCCESSOR AGENT.  Except as provided below, the Agent may resign at
any time by giving written notice thereof to the Lenders and Borrower.  Upon any
such resignation,  the Lenders shall have the right to appoint a successor Agent

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which shall be reasonably  acceptable to Borrower.  If no successor  Agent shall
have been so  appointed by the Lenders  (other than the  resigning  Agent),  and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent's giving notice of resignation,  then the retiring Agent may, on behalf of
the Lenders,  appoint a successor  Agent,  which shall be a  commercial  bank or
financial  institution  organized under the laws of the United States of America
or of any state  thereof  and having a combined  capital and surplus of at least
$50,000,000.00.  After the payment in full of all Lender Obligations in favor of
the A/B Lenders, or the acquisition of the A/B Loans by the Tranche C Lenders or
other third parties,  then the Agent shall have the right to immediately appoint
one of the Tranche C Lenders as the Successor Agent.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent,  such successor Agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring  Agent,  and the retiring  Agent shall be  discharged
from its  duties  and  obligations  under this  Agreement  and the other  Lender
Agreements.  After any retiring  Agent's  resignation  hereunder  as Agent,  the
provisions of this Article 15 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent  under  this  Agreement  and the
other Lender Agreements.

Section 15.7 AMENDMENT OF ARTICLE 15.  Borrower hereby agrees that the foregoing
provisions of this Article 15  constitute  an agreement  among the Agent and the
Lenders  (and  the  Agent  and the  Lenders  acknowledge  that,  except  for the
provisions of Section 13.2,  Borrower is not party to or bound by such foregoing
provisions) and that any and all of the provisions of this Article 15 (excepting
Section  15.6) may be amended at any time by the Lenders  and the Agent  without
the consent or approval of, or notice to Borrower (other than the requirement of
notice to  Borrower of the  resignation  of the Agent and the  appointment  of a
successor Agent).

ARTICLE XVI.      MISCELLANEOUS

Section 16.1 NOTICES.  All notices and other  communications made or required to
be given pursuant to this  Agreement  shall be in writing and shall be mailed by
United  States  mail,  postage  prepaid,  or sent by  hand,  by  telecopy  or by
nationally-recognized overnight carrier service, addressed as follows:

(a) If to the Agent:  Fleet  National Bank,  115 Perimeter  Center Place,  N.E.,
Suite 500,  Atlanta,  GA 30346,  Attention:  Mr. Paul F. DiVito;  Fleet National
Bank, 111 Westminster  Street,  Providence,  Rhode Island 02903; with a copy to:
Paul,  Hastings,  Janofsky & Walker LLP, 600 Peachtree Street, N.E., Suite 2400,
Atlanta, Georgia 30308-2222,  Attention:  Charles T. Sharbaugh,  Esq. or at such
other address(es) or to the attention of such other Person(s) as the Agent shall
from time to time designate in writing to Borrower and the Lenders.

(b) If to Borrower: c/o American Skiing Company, P.O. Box 450, Bethel, ME 04217,
or for  overnight  delivery  service,  Sunday  River  Road,  Bethel,  ME  04217,
Telecopier No. 207/824-5158,  Attention:  Christopher E. Howard, Esq., Executive
Vice  President  and Chief  Administrative  Officer  and Mark J.  Miller,  Chief

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Financial Officer;  with a copy to: David J. Champoux,  Esq., Pierce Atwood, One
Monument  Square,  Portland,  ME 04101,  Telecopier No.  207/791-1350 or at such
other  address(es) or to the attention of such other Person(s) as Borrower shall
from time to time designate in writing to the Agent and the Lenders.

(c) If to any Lender:  at the  address(es) and to the attention of the Person(s)
specified  below such Lender's name on the execution  page of this Agreement (or
in the case of a Successor  Lender,  at the  address(es) and to the attention of
the Person(s)  specified in the Assignment and Acceptance  Agreement executed by
such Successor  Lender),  or at such other  address(es)  and to the attention of
such other  Person(s) as any Lender shall from time to time designate in writing
to the Agent and Borrower.

         Any notice so addressed  and mailed by  registered  or  certified  mail
shall be deemed to have been given when mailed. Any notice so addressed and sent
by hand,  by telecopy or by overnight  carrier  service  shall be deemed to have
been given when received.

         A notice from the Agent stating that it has been given on behalf of the
Lenders shall be relied upon by Borrower as having been given by the Lenders.

Section  16.2  MERGER.  This  Agreement  and the  other  Lender  Agreements  and
documents  contemplated  hereby constitute the entire agreement of the Borrower,
the Agent and the Lenders and express their entire understanding with respect to
credits advanced or to be advanced by the Lenders to the Borrower.

Section 16.3 GOVERNING LAW;  CONSENT TO  JURISDICTION.  This Agreement  shall be
governed by and construed and enforced under the laws of the State of New York.

Section 16.4  COUNTERPARTS.  This Agreement and all amendments to this Agreement
may be executed in several counterparts, each of which shall be an original. The
several counterparts shall constitute a single Agreement.

Section 16.5      EXPENSES AND INDEMNIFICATION.

(a) Borrower agrees to pay, on demand, all of the Agent's reasonable expenses in
preparing,  executing,  delivering and administering this Agreement,  the Lender
Agreements,  all related instruments and documents and any requested  amendment,
waiver or consent relating hereto or thereto, including, without limitation, the
reasonable  fees  and   out-of-pocket   expenses  of  the  Agent's   third-party
consultants,  the special counsel,  Paul,  Hastings,  Janofsky & Walker LLP, and
local counsel in each  jurisdiction  in which Borrower and or any Subsidiary has
assets and the Agent's and  Lenders'  reasonable  expenses  in  connection  with
periodic audits of Borrower and its  Subsidiaries.  Borrower also agrees to pay,
on demand, all reasonable  out-of-pocket  expenses incurred by the Agent and the
Lenders,  including,  without  limitation,   reasonable  legal,  accounting  and
third-party  consultant  fees, in connection  with the collection of amounts due
hereunder and under all other Lender Agreements upon the occurrence of a Default
hereunder, the revision,  protection or enforcement of any of the Agent's or the

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Lenders' rights against Borrower under this Agreement, and all Lender Agreements
and the  administration  of special problems that may arise under this Agreement
or any other Lender  Agreement.  Borrower also agrees to pay all stamp and other
taxes in  connection  with the  execution  and  delivery of this  Agreement  and
related instruments and documents.

(b) Without limitation of any other obligation or liability of Borrower or right
or  remedy  of the  Agent  or the  Lenders  contained  herein,  Borrower  hereby
covenants  and agrees to  indemnify  and hold the Agent,  the  Lenders,  and the
directors, officers, subsidiaries,  shareholders, agents, affiliates and Persons
controlling  the Agent and the  Lenders,  harmless  from and against any and all
damages,  losses,  settlement  payments,   obligations,   liabilities,   claims,
including, without limitation,  claims for finder's or broker's fees, actions or
causes  of  action,  and  reasonable  costs  and  expenses  incurred,  suffered,
sustained or required to be paid by any such  indemnified  party in each case by
reason  of or  resulting  from any  claim,  investigation,  litigation  or other
proceeding  related to the entering  into of this  Agreement or any other Lender
Agreement,  the  use of the  proceeds  of any  Loans,  the  consummation  of the
transactions  contemplated  herein, the exercise by the Agent and the Lenders of
their  rights  and  remedies,   or  otherwise   relating  to  the   transactions
contemplated hereby, claims by any Permitted  Construction Lender other than any
such claims which are determined by a final, non-appealable judgment or order of
a court of competent  jurisdiction  to be the result of the gross  negligence or
willful  misconduct  of such  indemnified  party.  Promptly  upon receipt by any
indemnified  party hereunder of notice of the commencement of any action against
such  indemnified  party  for  which a  claim  is to be  made  against  Borrower
hereunder,  such  indemnified  party  shall  notify  Borrower  in writing of the
commencement  thereof,  although  the failure to provide  such notice  shall not
affect the indemnification rights of any such indemnified party hereunder unless
and only to the extent Borrower  demonstrates to the reasonable  satisfaction of
such  party  that such  failure to provide  notice  prejudiced  Borrower  in its
defense of such claim.  Borrower shall have the right, at its option upon notice
to the  indemnified  parties,  to defend any such  matter at its own expense and
with its own counsel,  which shall be subject to the reasonable  approval of the
indemnified  parties,  except as provided  below.  The  indemnified  party shall
cooperate  with Borrower in the defense of such matter.  The  indemnified  party
shall  have the right to  employ  separate  counsel  and to  participate  in the
defense of such matter at its own expense.  In the event that (a) the employment
of separate  counsel by an indemnified  party has been  authorized in writing by
Borrower,  (b) Borrower  has failed to assume the defense of such matter  within
fifteen (15) days of notice thereof from the  indemnified  party or the Borrower
has not obtained the written approval of the proposed counsel,  or (c) the named
parties to any such action (including impleaded parties) include any indemnified
party who has been  advised by  counsel  that there may be one (1) or more legal
defenses  available to it or prospective  bases for liability  against it, which
are different from those available to or against Borrower, or that a conflict of
interest  could  exist,  then  Borrower  shall not have the right to assume  the
defense of such  matter  with  respect to such  indemnified  party.  In any such
event,  however,  the Borrower shall remain liable for all  indemnified  amounts
hereunder  including the cost of defense and counsel incurred by the indemnified

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party.  Borrower  shall not  compromise  or settle  any such  matter  against an
indemnified  party without the written consent of the indemnified  party,  which
consent may not be unreasonably withheld or delayed.

Section  16.6   CONFIDENTIALITY.   The  Agent  and  the  Lenders  agree  to  use
commercially  reasonable  efforts to keep in confidence  all financial  data and
other  information  relative  to the affairs of  Borrower  and its  Subsidiaries
heretofore furnished or which may hereafter be furnished to them pursuant to the
provisions of this Agreement;  PROVIDED,  HOWEVER,  that this Section 16.6 shall
not be  applicable  to  information  otherwise  disseminated  to the  public  by
Borrower or any of its  Subsidiaries  or any of their  Affiliates;  and PROVIDED
FURTHER,  that such  obligation of the Agent and the Lenders shall be subject to
the Agent's or the Lenders', as the case may be, (a) obligation to disclose such
information pursuant to a request or order under Applicable Laws and regulations
or pursuant to a subpoena or other legal process, (b) right to disclose any such
information  to  bank  or  other  regulatory  examiners,  affiliates,  auditors,
accountants and counsel or to any Person who evaluates,  approves, structures or
administers  the Loans on behalf of a Lender who agree to keep such  information
confidential  and (c) right to disclose any such  information  (i) in connection
with the transactions set forth herein  including  assignments,  so long as such
potential  assignees or  participants  shall agree in writing to be bound by the
terms of this Section 16.6 or (ii) in connection  with any litigation or dispute
involving  the Agent or any  transfer or other  disposition  by the Agent or the
Lenders,  as the case may be, of any of the Lender  Obligations;  PROVIDED  that
information  disclosed  pursuant to this provision shall be so disclosed subject
to such procedures as are reasonably  calculated to maintain the confidentiality
thereof.

Section 16.7 JOINT AND SEVERAL OBLIGATIONS. Borrower waives presentment, demand,
protest,  notice of acceptance,  notice of  indebtedness  incurred and all other
notices  of any  kind,  all  defenses  which may be  available  by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect,
any right to require the marshaling of assets of Borrower and its  Subsidiaries,
and all suretyship defenses generally.

Section 16.8 WAIVER OF JURY TRIAL.  THE AGENT,  THE LENDERS,  AND BORROWER AGREE
THAT NONE OF THEM NOR ANY ASSIGNEE OR  SUCCESSOR  SHALL (A) SEEK A JURY TRIAL IN
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION INVOLVING THE AGENT OR
ANY LENDER AS A PARTY BASED UPON OR ARISING OUT OF, THIS  AGREEMENT,  THE NOTES,
ANY LENDER AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR
THE  RELATIONSHIP  BETWEEN OR AMONG ANY OF THEM OR (B) SEEK TO  CONSOLIDATE  ANY
SUCH  ACTION  WITH ANY OTHER  ACTION IN WHICH A JURY TRIAL  CANNOT BE OR HAS NOT
BEEN WAIVED.  THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY EACH
OF THE AGENT, THE LENDERS AND BORROWER WITH THEIR RESPECTIVE COUNSEL,  AND THESE
PROVISIONS  SHALL BE SUBJECT TO NO  EXCEPTIONS.  NONE OF THE  LENDERS,  AGENT OR

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BORROWER HAVE AGREED WITH OR  REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS
OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

Section 16.9 APPRAISALS.  Borrower agrees that the Agent shall have the right to
obtain an Appraisal of the  Collateral on an annual basis and at any time that a
Default or Event of Default  exists.  Borrower agrees to pay the costs of all of
the Appraisals.

Section 16.10  AMENDMENT AND  RESTATEMENT  AND GOVERNING  DOCUMENT.  This Second
Amended and Restated  Credit  Agreement  amends and restates the Existing Credit
Agreement.  The Lender  Obligations of the Existing  Credit  Agreement  shall be
amended and  restated in  accordance  with the terms and  conditions  hereof but
shall continue to be secured,  without interruption or novation, by the Security
Agreements.  Borrower  hereby  acknowledges  and recognizes that the outstanding
principal  balance of the Lender  Obligations  as of the Closing  Date under the
Existing Credit Agreement was the Closing Date Balance and that the Closing Date
Balance is included in the Loans and Lender  Obligations as of the Closing Date.
Furthermore,  the Borrower  acknowledges  that the Closing Date Balance has been
divided on even date so that the  balance of Tranche A is the  Tranche A Closing
Date Balance and the balance of Tranche B is the Tranche B Closing Date Balance.
The  Borrower  agrees that this  Agreement  shall  control over all other Lender
Agreements.

Section 16.11  NONRECOURSE  OBLIGATION UNDER SENIOR NOTE INDENTURE.  Lenders and
Agent understand and acknowledge that this Agreement  constitutes  "Non-Recourse
Real  Estate  Debt" as defined in that  certain  Indenture  dated as of June 28,
1996, as amended,  among American Ski,  United States Trust Company of New York,
as trustee and the other  parties named  therein.  The Lenders shall not, in any
circumstance,  have  recourse  to  the  assets  of  American  Ski  or any of its
subsidiaries,  other than the Borrower and its Subsidiaries, for satisfaction of
the Lender Obligations.

Section 16.12 RELEASE.  As a condition  precedent to the  effectiveness  of this
Agreement,  Borrower,  Borrower  Subsidiary  and American Ski shall  execute and
deliver to Fleet on even date a general release of all claims,  actions,  causes
of actions,  counterclaims  and  liabilities  whatsoever  in form and  substance
satisfactory to Fleet.

Section 16.13 TIME OF THE ESSENCE. Time is of the essence of this Agreement.

Section 16.14 CONSENT TO VENUE AND JURISDICTION. Borrower hereby consents to the
venue and jurisdiction of the Federal District Court in the Northern District of
the State of Georgia for any  litigation  or judicial  remedies or actions under
this  Agreement  or under any other  Lender  Agreement  other  than  foreclosure
actions, which are required to take place in the jurisdiction where a portion of
the  Collateral is located  under laws  applicable  to the  foreclosure  of such
portion of the Collateral.

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Section 16.15 BANKRUPTCY  RELIEF.  Agent is and shall be entitled to relief from
the automatic  stay  pursuant to 11 U.S.C.  Section 362 (d) to pursue all of its
rights and remedies under this Agreement and the Lender  Agreements and relevant
state  law.  Borrower  shall  consent to and shall not  oppose  relief  from the
automatic  stay without  conditions  to permit Agent to pursue all of its rights
and remedies under the Lender Agreements or hereunder or relevant state law.

Section 16.16 COLLATERAL  PLEDGE AGREEMENT.  Agent may transfer  Collateral into
its name or that of its nominee and may receive the income and any distributions
thereon and hold the same as Collateral for the Lender Obligations, or apply the
same to any Lender  Obligation,  whether or not a Default or an Event of Default
has occurred.

ARTICLE XVII.     TRANCHE C PROVISIONS

Section  17.1  PAYMENTS  AND OTHER  COLLATERAL  TO TRANCHE C LENDERS.  Except as
permitted  under this  Section  and under  Section  2.6 as to the payment of the
Tranche C Fee,  no payment or  distribution  of any assets of the  Borrower or a
Borrower Subsidiary of any kind or character,  either directly or indirectly, or
the grant of any  collateral  other than the  Collateral  including cash or Cash
Equivalents,  for any reason whatsoever shall be made by the Borrower on account
of Tranche C until the  occurrence  of the Payment  Date.  In the event that the
Borrower  or a Borrower  Subsidiary  makes any  payment to the Tranche C Lenders
prohibited  by this  Section,  such  payment  shall  not be  deemed to have been
applied  to  Tranche  C and shall be paid over and  delivered  forthwith  by the
Tranche C Lenders to the Agent.  The provisions of this Section shall permit (i)
the payment of necessary and customary closing costs to the Tranche C Lenders on
the Closing Date and (ii) the payment of customary and reasonable  out-of-pocket
expenses  of the  Tranche C Lenders in making and  administering  Tranche C with
consent  of the Agent  (but,  prior to the  Payment  Date,  not for those  costs
associated  with  disputes or other  adversary  proceedings  with respect to the
Borrower or a Borrower Subsidiary or the A/B Lenders).

         Furthermore, prior to the Payment Date, the Tranche C Lenders shall not
take any pledge,  hypothecation,  mortgage  or  interest in any  interest of any
property or equity interests of the Borrower or a Borrower Subsidiary other than
the  Collateral as provided  herein and in the Lender  Agreements or pursuant to
the Tranche C Warrants.  The  provisions  of this Section shall not prohibit the
purchase and sale of property or equity  interests by the Tranche C Lenders from
the Borrower or a Borrower  Subsidiary  in  compliance  with the  provisions  of
Section 10.5.

         The  Borrower  or the  Tranche C Lenders  shall not take or permit  any
action prejudicial to or inconsistent with the provisions of this Article 17.

Section  17.2  BANKRUPTCY  EVENTS.  Prior to the  Payment  Date,  the  Tranche C
Lenders,  with  respect  to the  Lender  Obligations  in favor of the  Tranche C
Lenders,  will not commence or join with any other  creditor or creditors of the

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Borrower or a Borrower  Subsidiary in commencing any Bankruptcy Event other than
as a party to this Agreement.  In the event of a Bankruptcy  Event,  then and in
any such event and from and after such event:

(a) The A/B Lenders shall be entitled to receive  payment in full of all amounts
due on or in respect of all A/B Loans in cash or cash equivalents or in a manner
satisfactory to the Agent,  before the Tranche C Lenders are entitled to receive
any payment or distribution of any kind or character, or a Borrower Subsidiary.

(b) Any  payment  or  distribution  of  assets  of the  Borrower  or a  Borrower
Subsidiary of any kind or character, whether in cash, property or securities, by
setoff or  otherwise,  to which the Tranche C Lenders  would be entitled but for
the provisions of this  Agreement  shall be paid by the  liquidating  trustee or
agent or other Person making such payment or distribution,  whether a trustee in
bankruptcy,  a receiver or  liquidating  trustee or  otherwise,  directly to the
Agent on behalf of the A/B Lenders  according to the aggregate amounts remaining
unpaid on account of the A/B Loans held or  represented  by each,  to the extent
necessary to make  payment in full of all A/B Loans in cash or cash  equivalents
remaining unpaid,  after giving effect to any concurrent payment or distribution
to the A/B Lenders  with such  payments  being made in the order and pursuant to
the terms of this Agreement.

(c)  In the  event  that,  notwithstanding  the  foregoing  provisions  of  this
Agreement, the Tranche C Lenders shall have received any payment or distribution
of assets of the  Borrower or a Borrower  Subsidiary  of any kind or  character,
except as provided in Section 17.1,  whether in cash,  property or securities in
respect  of  Tranche C before  the  Payment  Date,  then and in such  event such
payment or  distribution  shall be received  and shall be paid over or delivered
forthwith to the Agent;

(d) The Tranche C Lenders,  with respect to the Lender  Obligations  in favor of
the Tranche C Lenders,  will not,  without the prior written  consent of the A/B
Lenders: (i) vote for a plan in any Bankruptcy  Proceedings not supported by the
Agent;  (ii) object to or oppose any motions by the Agent for a cash  collateral
order  on  terms  proposed  by the  Agent;  (iii)  seek or move  to  obtain  the
appointment of a trustee on behalf of the Borrower or a Borrower Subsidiary;  or
(iv)  object to or oppose  any  motions  by the  Agent  for the  lifting  of the
automatic  stay  for the  purpose  of the  foreclosure  of the  Collateral.  The
limitations and  assignments  contained in this section shall terminate upon the
Payment Date.  The Tranche C Lenders with respect to the Lender  Obligations  in
favor of the Tranche C Lenders agree,  however,  never (i) to file any appeal or
take any other action  claiming that the payment of the A/B Loans was improperly
paid; (ii) to question the validity of a plan or reorganization which caused the
A/B Loans to be paid;  or (iii) to  otherwise  question  the  payment of the A/B
Loans or any collateral realization actions under the Lender Agreements.

(e) Without  limiting the  generality  of the  foregoing,  the Tranche C Lenders
agree that if a Bankruptcy Event occurs,  the A/B Lenders may provide  financing
or consent to the granting of a priming lien to secure  post-petition  financing
on such terms and conditions  and in such amounts as the Agent,  in its sole and

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absolute discretion,  may decide without seeking or obtaining the consent of the
Tranche C  Lenders,  who shall not  oppose  any such  financing.  The  Tranche C
Lenders,  with  respect  to the  Lender  Obligations  in favor of the  Tranche C
Lenders, shall not oppose any sale or other disposition of any assets comprising
part of the  Collateral  free and clear of  security  interests,  liens or other
claims of any Person,  including any Tranche C Lender,  under section 363 of the
Bankruptcy  Code on the  basis  that the  Tranche  C  Lenders'  interest  in the
Collateral  is impaired by such sale or  inadequately  protected  as a result of
such sale.

(f) So long as the Payment  Date has not  occurred,  no Tranche C Lenders  shall
offer or make available to the Borrower or a Borrower  Subsidiary or participate
in, any loan,  credit facility,  financial  accommodation or other  Indebtedness
proposed to be provided as a debtor-in-possession financing in connection with a
Bankruptcy  Event (a "DIP  Financing"),  unless  the  Tranche C Lenders  who are
providing such DIP Financing shall first repay in full and in cash the A/B Loans
or exercise the rights of the Tranche C Lenders under Section 17.4.

Section 17.3 AGENT'S  FREEDOM OF ACTION.  The Lenders  agree that the Agent may,
upon the  declaration  of a Default or Event of  Default,  exercise  any and all
remedies that it may determine to be appropriate with respect to the Collateral,
under the Lender Agreements,  under applicable laws or otherwise.  The Tranche C
Lenders  hereby  authorize the Agent to liquidate the  Collateral in such manner
and for such  price as the Agent may  determine.  The  Tranche C Lenders  hereby
agree  never to raise any  claims or  defenses  against  the Agent or assert any
liability  against the Agent for its actions in connection  with the exercise of
such remedies,  the realization  against the Collateral,  the liquidation of the
Collateral,  the price obtained with respect thereto or any other actions by the
Agent  upon the  occurrence  of a Default  or Event of  Default.  The  Tranche C
Lenders  hereby  covenant  not to  sue  the  Agent  with  respect  to any of the
foregoing.  The foregoing  agreement  shall not apply,  however,  to the willful
misconduct or gross negligence of the Agent.

         The Tranche C Lenders  acknowledge  and recognize that the net proceeds
received by the Agent upon the realization and liquidation of the Collateral may
be  insufficient  to pay all or any part of  Tranche  C. The  Tranche  C Lenders
covenant  and agree  that the  Agent  shall  have no  obligation  whatsoever  to
maximize the net proceeds of the  foreclosure or subsequent sale and liquidation
of the Collateral and, accordingly,  the Agent shall have no obligation, duty or
requirement  to insure that upon such events,  any net proceeds are available to
the  Tranche C Lenders.  The  Tranche C Lenders  hereby  authorize  the Agent to
foreclose  the  Collateral  in  such  manner  as the  Agent  may  determine  and
thereafter  liquidate the Collateral or portions thereof at such time and order,
in such  manner  and for such  terms and price as the Agent may  determine.  The
Tranche C Lenders hereby agree never to raise any claim, counterclaim or defense
or to assert any liability  against the Agent for any of the foregoing  actions.
In  particular,  the  Tranche C Lenders  hereby  agree never to raise any claim,
counterclaim,  defense,  or  assert  any  liability  against  the  Agent for the
realization by the Agent of net proceeds with respect to the  liquidation of the

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Collateral that results in the failure of the Tranche C Lenders in receiving all
or any portion of Tranche C. The Tranche C Lenders  hereby  covenant  not to sue
the Agent with respect to any of the foregoing.

         The  Agent  may,  at any time and from  time to time,  without  (i) the
consent of the Tranche C Lenders; (ii) incurring  responsibility or liability to
the Tranche C Lenders;  or (iii)  impairing  the  obligations  hereunder  of the
Tranche C Lenders to the A/B  Lenders,  do any one (1) or more of the  following
subject to the  limitations  set forth  below:  (a) sell,  exchange,  release or
otherwise deal with the Collateral;  (b) exercise or refrain from exercising any
rights against the Borrower or a Borrower Subsidiary and any other Person either
under the Lender  Agreements or otherwise;  (c) grant waivers or consents  under
this  Agreement or modify,  amend,  restate,  or otherwise  change the terms and
conditions  of  this  Agreement  or  the  Lender  Agreements  except  for  those
amendments  set forth in Section 13.1 which  require,  under the  provisions  of
Section  13.1,  the approval of the Tranche C Lenders;  (d) admit an  additional
Tranche  A Lender  or  Tranche  B Lender,  which  shall  automatically  have the
benefits and be bound by this  Agreement;  (e) make  advances for the purpose of
protecting the Collateral,  payment of insurance premiums and taxes with respect
to the Collateral;  or (f) incur any costs or expenses with respect to Tranche A
or Tranche B, the  administration  thereof,  and any  collateral  realization or
dispute  resolution with respect to this Agreement,  the Collateral,  the Lender
Agreements or the relationship among the various Lenders and Tranches hereunder.
All such  actions  set forth in (a)  through  (f)  above  shall be senior in all
respects to the Lender  Obligations  in favor of the Tranche C Lenders and shall
not require the consent of the Tranche C Lenders.

Section 17.4 RIGHT TO PURCHASE THE A/B LOANS. At any time, the Tranche C Lenders
shall have the right to purchase all of the Lender  Obligations  in favor of the
A/B Lenders for a purchase price equal to the amount of such Lender  Obligations
at the  time  of  the  purchase,  including  any  prepayment  penalty  or  Yield
Maintenance Amount which would be due and payable if the Lender Obligations with
respect to the Tranche A Lenders or the Tranche B Lenders  were paid at the date
of such  acquisition.  The right to purchase  may be  exercised by the Tranche C
Lenders  upon  giving  written  notice to the A/B  Lenders of its  agreement  to
purchase  both  Tranche A and  Tranche B, and  thereafter,  the  closing of such
acquisition  shall occur  within  thirty (30) days from the date of such notice.
The Tranche C Lenders must purchase both the Lender  Obligations with respect to
Tranche  A and  Tranche  B, and the  Tranche C  Lenders  shall  have no right to
acquire one but not the other.  The  purchase  price shall be payable in cash or
other  immediately  available  funds.  All transfer  documents  shall be without
recourse or warranty by the A/B Lenders to the Tranche C Lenders at the closing,
except that the A/B Lenders will  represent and warrant to the Tranche C Lenders
as to the  following:  (i)  the  respective  amount  of  each  Lender's  Tranche
Commitment  Percentage  and the  outstanding  balance of the  respective  Lender
Obligations  for such; (ii) the date to which interest has been paid or accrued;
and  (iii)  that the  respective  Lender is the  owner of all  right,  title and
interest in and to that Lender's Tranche Commitment Percentage, with full right,
power and  authority to assign it to the Tranche C Lenders,  and that the Lender
has not been assigned, pledged or hypothecated the interest being conveyed.

                                       89
<PAGE>

         Nothing  contained in this Section  shall limit or otherwise  adversely
affect in any manner whatsoever the ability of the Agent to take such actions as
it deems  appropriate  under the Lender  Agreements,  including the  foreclosure
thereof, all without any consent or waiver by the Tranche C Lenders.  Rather, it
is the  intention  of this section that the Tranche C Lenders have the option to
purchase  the  Lender  Obligations  in favor of the  Tranche A  Lenders  and the
Tranche B Lenders under certain  circumstances  in an "As Is" Condition  without
imposing any obligation or duty on the Agent.

Section  17.5  CERTAIN  PROVISIONS  IN FAVOR OF THE  TRANCHE C LENDERS  UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT AND CERTAIN CURE RIGHTS. The Tranche C Lenders
shall have an  additional  cure period of five (5) days over and above any other
cure period  contained  herein in favor of the  Borrower.  The Tranche C Lenders
shall not be  obligated  to pay any late  charge or Default  Rate  interest  for
curative actions during such five (5) day period. The Tranche C Lenders may also
undertake  curative  actions  with  respect to a Default  during any cure period
allocated  to the  Borrower.  The  Agent may take  such  actions  as it may deem
appropriate   during  the  foregoing   periods  subject  to  reinstatement   and
discontinuance of such actions upon the cure of the Default. Amounts expended by
any  Tranche C Lender  to effect  such  curative  actions  shall be deemed to be
Lender Obligations owed to such Tranche C Lender.

         The  Agent  shall  provide  notice  to the  Tranche  C  Lenders  of the
declaration  of an Event of Default  hereunder and provide the Tranche C Lenders
ten (10) days in which to  notify  the Agent of the  election  by the  Tranche C
Lenders to acquire  the A/B Loans.  The  election  must be: (i)  received by the
Agent within the foregoing period; (ii) in writing;  (iii) conditioned solely on
the execution and delivery of the transfer  documents and the truth and accuracy
of the  warranties  described  in  Section  17.4;  (iv) for  cash in the  amount
required to pay the purchase  price  designated in Section 17.4; and (v) require
the closing of the  acquisition  on or before  thirty (30) days from the date of
the receipt of the offer by the Agent ("Qualified Offer"). Upon the receipt of a
Qualified  Offer,  the Agent may  continue  to take any and all actions it deems
necessary  or  appropriate  with  respect to the Event of  Default or  otherwise
hereunder; provided, that the Agent shall suspend all foreclosure advertisements
and judicial  foreclosure  actions and shall not  commence any such  foreclosure
actions  during the  foregoing  thirty (30) day period.  The  provisions of this
section  shall not be  applicable to any offers by the Tranche C Lenders that do
not constitute Qualified Offers.

         The  provisions of this section shall benefit the Tranche C Lenders and
shall not benefit or be enforceable by the Borrower.

<PAGE>

         IN WITNESS  WHEREOF,  Borrower,  the Agent and the Lenders  have caused
this Agreement to be executed by their duly  authorized  officers as of the date
set forth above.

                                    AMERICAN SKIING COMPANY RESORT
                                    PROPERTIES, INC.

                                    By:   /s/ Christopher E. Howard
                                       -----------------------------------------
                                    Name: Christopher E. Howard
                                    Title: Executive Vice President

         [EXECUTION CONTINUED ON FOLLOWING PAGES]

<PAGE>

                                            FLEET NATIONAL BANK, as Agent

                                    By:  /s/ Paul F. DiVito
                                        ----------------------------------------
                                    Name:  Paul F. DiVito
                                    Title:  Managing Director

         [EXECUTION CONTINUED ON FOLLOWING PAGES]

<PAGE>

                                            FLEET NATIONAL BANK

                                    By:  /s/ Paul F. DiVito
                                        ----------------------------------------
                                    Name:  Paul F. DiVito
                                    Title:  Managing Director

                    [EXECUTION CONTINUED ON FOLLOWING PAGES]

<PAGE>

                               SKI PARTNERS 2000, a Delaware general partnership

                               By:     EIGER, INC., a Delaware corporation,
                                       its Managing Partner

                              By:   /s/ Paul E. Rowsey, III
                                 -----------------------------------------------
                              Name: Paul E. Rowsey, III
                              Title: President

                    [EXECUTION CONTINUED ON FOLLOWING PAGES]

<PAGE>

                                   OAK HILL CAPITAL PARTNERS, L.P.,
                                   a Delaware limited partnership

                                    By:  /s/ Steven B. Gruber
                                       -----------------------------------------
                                    Name: Steven B. Gruber
                                    Title: Managing Partner

                                    Address:65 East 55th Street
                                            New York, New York 10022

<PAGE>

                                LIST OF EXHIBITS

Exhibit A                  Form of Note

Exhibit B                  Yield Maintenance Amount Calculation

Exhibit C                  Budget

Exhibit D                  Status Memorandum

Exhibit E                  Tranche A Distribution Allocation

Exhibit F                  Compliance Certificate

Exhibit G                  Fund Reconciliation

Exhibit H                  Base Property

Exhibit I                  Budget Variance Report

Exhibit J                  Marriott Property

Exhibit K                  Cash Flow Exhibit

Exhibit L                  Real Estate Valuation Report

Exhibit M                  Weekly Cash Flow Report Form

Exhibit N                  Cash Flow Report

<PAGE>

                                LIST OF SCHEDULES

Schedule 1 Commitment Percentages, Designated Lenders - to be finalized

Schedule 1.2 Borrower Subsidiaries

Schedule 2 Purchase Money Mortgages

Schedule 6.2 Borrower and each Subsidiary's principal place of business

Schedule 6.4 Intercompany Debt Disclosure

Schedule 6.11 Issued and Outstanding Capital Stock of Borrower

Schedule 6.13 Liens, Charges and Encumbrances

Schedule 6.14 Litigation

Schedule 6.15 Pension Plans

Schedule 6.16 Outstanding Indebtedness

Schedule 6.17 Environmental Matters

Schedule 6.27 Leases

Schedule 6.32 Depository Accounts

Schedule 10.3 Borrower Subsidiary Investments

Schedule 10.5 Existing Affiliate Transactions

<PAGE>AMENDMENT NO. 1 TO THE STOCKHOLDERS' AGREEMENT

AMENDMENT NO. 1 TO THE STOCKHOLDERS' AGREEMENT (the "Amendment"), dated July 31,
2000,  among OAK HILL CAPITAL  PARTNERS,  L.P., a Delaware  limited  partnership
("Oak Hill"),  OAK HILL CAPITAL  MANAGEMENT  PARTNERS,  L.P., a Delaware limited
partnership, OAK HILL SECURITIES FUND, L.P., a Delaware limited partnership, OAK
HILL SECURITIES  FUND II, L.P., a Delaware  limited  partnership,  and OHCP Ski,
L.P.,   a  Delaware   limited   partnership   (together   with  Oak  Hill,   the
"Stockholders"),  LESLIE B. OTTEN ("Mr.  Otten") and AMERICAN SKIING COMPANY,  a
Delaware corporation  ("ASC"),  amending that certain  Stockholders'  Agreement,
dated August 6, 1999 (the "Stockholders' Agreement"), among Oak Hill, Mr. Otten,
ASC and the other  parties  identified  in Annex A thereto.  Defined  terms used
herein and not otherwise  defined will have the meanings assigned to them in the
Stockholders' Agreement.

WHEREAS, it is the desire of the parties to amend the Stockholders' Agreement in
the manner specified in this Amendment;

WHEREAS, in connection with this Amendment,  the number of Otten Directors shall
be reduced from four to two and the vacancies shall be filled by two Stockholder
Directors; and

WHEREAS,  the board of directors of ASC,  including all Independent Common Stock
directors, has approved this Amendment;

NOW,  THEREFORE,  in consideration of the premises and the mutual agreements and
covenants  hereinafter set forth, and for good and valuable  consideration,  the
receipt and sufficiency of which is hereby acknowledged,  the Stockholders,  ASC
and Mr. Otten agree as follows:

                                    ARTICLE I

                    AMENDMENTS TO THE STOCKHOLDERS' AGREEMENT

     A.   Section 1.01. The  definition of Stockholder  Director in Section 1.01
shall be amended and restated in its entirety to read as follows:

          "  'Stockholder   Director'   means  a  Director   designated  by  the
          Stockholders  pursuant this Agreement or elected by the holders of the
          Series B Preferred  pursuant to the Articles of Incorporation,  except
          that,  for so long  as Mr.  Otten  is the  Company's  chief  executive
          officer,  no  employee  of  the  Company  or its  subsidiaries  may be
          designated a Stockholder Director without the consent of Mr. Otten."

<PAGE>

                                                                               2

    B.   Section 2.01(b). Section 2.01(b) of the Agreement shall be amended and
restated in its entirety to read as follows:

          "Each of Mr.  Otten and the  Stockholders  shall  vote all  Restricted
          Securities  Beneficially  Owned by him or it,  as the case may be,  to
          cause,  and the  parties  hereto  each  shall  otherwise  use its best
          efforts to cause,  there to be (i) six  Stockholder  Directors  for so
          long as the  Stockholders  Beneficially Own at least 80% of the number
          of outstanding  shares of Common Stock (on a Fully Diluted Basis) that
          it owns on the date of this Amendment; (ii) five Stockholder Directors
          for so long as the  Stockholders  Beneficially Own at least 70% of the
          number  of  outstanding  shares of  Common  Stock (on a Fully  Diluted
          Basis)  that it  owns  on the  date  of  this  Amendment;  (iii)  four
          Stockholder Directors for so long as the Stockholders Beneficially Own
          at least 60% of the number of outstanding shares of Common Stock (on a
          Fully Diluted Basis) that it owns on the date of this Amendment;  (iv)
          three   Stockholder   Directors  for  so  long  as  the   Stockholders
          Beneficially  Own at least 40% of the number of outstanding  shares of
          Common  Stock (on a Fully  Diluted  Basis) that it owns on the date of
          this  Amendment;  (v)  two  Stockholder  Directors  for so long as the
          Stockholders   Beneficially   Own  at  least  25%  of  the  number  of
          outstanding  shares of Common Stock (on a Fully Diluted Basis) that it
          owns on the date of this Amendment;  and (vi) one Stockholder Director
          for so long as the  Stockholders  Beneficially  Own at least 5% of the
          number  of  outstanding  shares of  Common  Stock (on a Fully  Diluted
          Basis) that it owns on the date of this Amendment."

     C.   Section 2.01(c). Section 2.01(c) of the Agreement shall be amended and
restated in its entirety to read as follows:

          "Each of Mr.  Otten and the  Stockholders  shall  vote all  Restricted
          Securities  Beneficially  Owned by him or it,  as the case may be,  to
          cause,  and the  parties  hereto  each  shall  otherwise  use its best
          efforts to cause,  there to be (i) two Otten  Directors for so long as
          Mr. Otten  Beneficially Owns at least 15% of the outstanding shares of
          Common Stock (on a Fully  Diluted  Basis) and (ii) one Otten  Director
          for  so  long  as Mr.  Otten  Beneficially  Owns  at  least  5% of the
          outstanding shares of Common Stock (on a Fully Diluted Basis)."

     D.   Section 2.01(d). Section  2.01(d) of the Agreement shall be amended to
delete the proviso in its entirety.

     E.   Section 2.02(d). Section  2.02(d) of the Agreement shall be amended as
such that the parenthetical  beginning on the fourth line after the words "Otten
Directors" and ending on the fifth line before the word "shall" shall be deleted
and shall instead read as follows:

<PAGE>
                                                                               3

          ..." (comprised of those Otten directors designated by Otten)"...

     F.   Section 2.02(e). A new section  2.02(e)  shall be added after  Section
2.02(d) and shall read as follows:

          "Notwithstanding  the  provisions  of Section  2.02(d),  the vacancies
          created by reducing  the number of Otten  Directors to two pursuant to
          this  Amendment  will be filled by two  individuals  designated by the
          Stockholder Directors."

     G.   Section 2.04(c). Section  2.04(c) shall be amended and restated in its
entirety to read as follows:

          "For so long as there  shall be at least  one Otten  Director  and Mr.
          Otten is the Company's  chief executive  officer,  each of the parties
          hereto  shall  use its best  efforts  to cause  (i) Mr.  Otten to be a
          member of the Nominating  Committee;  (ii) Mr. Otten to be a member of
          the Executive  Committee;  (iii) Mr. Otten to serve as a member of the
          board of  directors  of ASC Utah and American  Skiing  Company  Resort
          Properties,  Inc. or any  Material  Subsidiary  and (iv) Mr.  Otten to
          serve as a member of each  committee  of the board of directors of the
          Material  Subsidiaries;  provided,  that,  if  any  applicable  law or
          regulation of the NYSE (or other exchange on which the Common Stock is
          listed) shall prohibit the Board from appointing Mr. Otten to serve on
          any committee,  this Agreement shall not require Mr. Otten to serve on
          such committee."

     H.   Section 4.02(b)(ii). Section 4.02(b)(ii) shall be amended and restated
in its entirety to read as follows:

          "(ii) to  Persons  (or any  other  reasonably  foreseeable  subsequent
          transferee) other than Permitted Transferees, who, to the knowledge of
          any of the Stockholders,  Mr. Otten or their Permitted Transferees, as
          the case may be, following such Transfer would Beneficially Own 10% or
          more of the  outstanding  shares of Common  Stock (on a Fully  Diluted
          Basis), unless such Transfer has been approved by the Board, including
          the approval by a majority of the Independent  Common Stock directors;
          however,  the approval of a majority of the  Independent  Common Stock
          directors  will not be  required  if the  public  shareholders  of the
          Company are offered an  opportunity to participate in such Transfer on
          equivalent  terms (it being understood that such terms shall be deemed
          equivalent  if  the  value  of  the  consideration   received  by  the
          Stockholders for its Series B Preferred does not exceed the greater of
          (i) the Change of Control  Price (as  defined  in the  Certificate  of
          Designation)  of the  Series B  Preferred  and  (ii) the  value of the
          consideration payable in respect of the Conversion Stock)."

<PAGE>
                                                                               4

     I.   Section 4.02(b)(iii)(A). Section  4.02(b)(iii)(A)  shall be amended by
adding the following  language at the beginning of clause  (iii)(A) and prior to
the words "that is a direct competitor":

          ..."except as may be approved by the Board,"...

     J.   Section 4.02(b).  Section  4.02(b)  shall be  amended  by  adding  the
following sentence at the end of the paragraph:

          "Subsections (ii) and (iii)(A) of this Section 4.02(b) shall not apply
          to any  Transfers of Restricted  Securities by Mr. Otten,  except that
          Mr. Otten shall not Transfer any Restricted Securities to a Person (or
          other  reasonably  foreseeable  subsequent  transferee) who (i) to the
          knowledge of Mr. Otten or his  Permitted  Transferees  following  such
          Transfer would  Beneficially Own 10% or more of the outstanding shares
          of  Common  Stock  (on a Fully  Diluted  Basis)  and  (ii) is a direct
          competitor in the ownership and operating of ski resorts on a national
          scale."

     K.   Section 4.03(a). The last sentence of Section  4.03(a) will be amended
and restated in its entirety to read as follows:

          "With  respect  to  clause  (i)  above,  any  increase  in  Beneficial
          Ownership  by  the   Stockholders   and  any   Stockholder   Permitted
          Transferees  resulting from (u) any Accretion Amounts (as such term is
          defined in the  Certificate of  Designation),  (v) any dividend in the
          form of Common Stock made with respect to the  Conversion  Stock,  (w)
          any  repurchase  of Common Stock by the  Company,  (x) any purchase or
          series of related  purchases by any  Stockholder  of up to 1.5 million
          additional shares of Common Stock, (y) any purchase by any Stockholder
          of shares of Class A Common Stock or Common Stock owned by Mr.  Otten,
          and (z) the issuance of the Warrants (the "Warrants")  pursuant to the
          terms of the Securities Purchase Agreement, dated as of July 31, 2000,
          among Oak Hill,  the Company and the other parties  signatory  thereto
          and the shares of Common Stock issued upon exercise  thereof shall not
          be included in the Maximum  Stockholder  Stock  Ownership  Percentage;
          provided,  however,  that in all cases,  the  Stockholders may acquire
          securities of the Company  pursuant to Section 4.05 or pursuant to the
          issuance of any dividends on Common Stock."

     L.   Section 4.04.  Section  4.04 shall be amended by adding the  following
language after the words "Article IV":

          ... "including pursuant to the Warrants"....

     M.   Section 4.05(c)(ii). Section 4.05(c)(ii)shall be amended by adding the
following language before the words "the issuance of warrant shares":

<PAGE>
                                                                               5

          ..."the Warrants or the shares of Common Stock issued upon exercise of
          the Warrants or..."

     N.   Section 4.06.  A new  section 4.06  will be added to the Agreement and
will read as follows:

          "The provisions of the Stockholders'  Agreement will terminate for the
          Stockholders  or Mr. Otten,  as the case may be, at the time when such
          party  transfer or sells its holdings such that it  Beneficially  Owns
          less than 5% of the number of shares of outstanding Common Stock (on a
          Fully Diluted Basis) that it owns on the date of this Amendment."

     O.   All references in the  Agreement to "the Agreement" shall be deemed to
be references to the Agreement as amended by this Amendment.

     P.   Section 7.03(a). Section  7.03(a) of the Agreement shall be amended to
require  that a copy of all  notices  required to be sent "to the Company or Mr.
Otten" under Section 7.03 shall also be sent to:

          Oak Hill  Capital  Management, Inc.
          Park Avenue Tower
          65 East 55th Street
          New York, NY 10022
          Telecopy: 212-754-5685
          Attention: Steven B. Gruber
                     Bradford E. Bernstein

                                   ARTICLE II

                                  MISCELLANEOUS

     A.   This Amendment is entered  into  by  the  parties  hereto  pursuant to
Section 7.09 of the Agreement.

     B.   All of the other provisions of the  Agreement not specifically amended
by this Amendment shall not be deemed to be affected by this  Amendment  (other
than as described in Article I, Section O hereof) and shall remain in full force
and effect.

     C.   Article VII of the Agreement shall be incorporated  by reference  into
this Amendment and shall be deemed to be a part hereof.

<PAGE>

          IN WITNESS WHEREOF,  the parties have caused this Agreement to be duly
executed as of the date first above written.

                                           AMERICAN SKIING COMPANY

                                           By: /s/ Leslie B. Otten
                                               ---------------------------------
                                               Name: Leslie B. Otten
                                               Title:   President

                                           LESLIE B. OTTEN

                                           /s/ Leslie B. Otten
                                           -------------------------------------

                                           OAK HILL CAPITAL PARTNERS, L.P.

                                           By: OHCP GenPar, L.P.,
                                               its general partner

                                           By: OHCP MGP, LLC,
                                               its general partner

                                           By: /s/ Steven B. Gruber
                                              ----------------------------------
                                               Name: Steven B. Gruber
                                               Title:  Vice President

                                           OAK HILL CAPITAL MANAGEMENT
                                           PARTNERS, L.P.

                                           By: OHCP GenPar, L.P.,
                                               its general partner

                                           By: OHCP MGP, LLC,
                                               its general partner

                                           By: /s/ Steven B. Gruber
                                              ----------------------------------
                                               Name: Steven B. Gruber
                                               Title:  Vice President

<PAGE>

                                           OAK HILL SECURITIES FUND, L.P.

                                           By: Oak Hill Securities GenPar, L.P.,
                                               its General Partner

                                           By: Oak Hill Securities MGP, Inc.,
                                               its General Partner

                                           By: /s/ Scott D. Krase
                                              ----------------------------------
                                               Name: Scott D. Krase
                                               Title: Vice President

                                           OAK HILL SECURITIES FUND II, L.P.

                                           By: Oak Hill Securities GenPar, L.P.,
                                               its General Partner

                                           By: Oak Hill Securities MGP, Inc.,
                                               its General Partner

                                           By: /s/ Scott D. Krase
                                              ----------------------------------
                                               Name: Scott D. Krase
                                               Title: Vice President

                                           OHCP SKI, L.P.

                                           By: Oak Hill Capital Partners, L.P.,
                                               its general partner

                                           By: OHCP GenPar, L.P.,
                                               its general partner

                                           By: OHCP MGP, LLC,
                                               its general partner

                                           By: /s/ Steven B. Gruber
                                              ----------------------------------
                                               Name: Steven B. Gruber
                                               Title:  Vice President

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