Document:

FIRST AMENDMENT AGREEMENT

         THIS FIRST AMENDMENT AGREEMENT (this "First Amendment Agreement"),
dated as of August 20, 2001 among GRAND SUMMIT RESORT PROPERTIES, INC., a Maine
corporation, (herein referred to as "GSRP") and TEXTRON FINANCIAL CORPORATION, a
Delaware corporation("TFC").

                              W I T N E S S E T H:

A. WHEREAS, GSRP and TFC entered into that certain Statement of Intention and
Special Additional Financing Agreement dated July 25, 2000 (as amended to but
excluding the date hereof, the "Existing SOI" and, as amended hereunder, the
"Amended SOI"), pursuant to which the TFC agreed to make subordinated loans to
GSRP in accordance with the terms of the Existing SOI;

B. WHEREAS, capitalized terms used herein shall have the meanings ascribed to
the same in the Existing SOI and in Section 1 of that certain Fifth Amendment
Agreement (the "Fifth Amendment Agreement"), dated as of August 20, 2001, among
GSRP, TFC, as lender and Administrative Agent, and the other lenders that are
parties thereto, which Fifth Amendment Agreement amends that certain Loan and
Security Agreement, dated as of September 28, 1998, among GSRP, TFC, as lender
and administrative agent, and Green Tree Financial Services Corporation, as a
lender (as amended to the date hereof, the "Existing LSA" and, after giving
effect to the Fifth Amendment Agreement, the "Amended LSA"); and

C. WHEREAS, GSRP and TFC have agreed to certain amendments to the Existing SOI
as described and set forth below;

         NOW, THEREFORE, in consideration of the TFC's and GSRP's agreements
hereunder, and in consideration of other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the TFC and GSRP hereby
agree as follows:

          1. Fifth Amendment Agreement. TFC hereby consents to and approves the
Fifth Amendment Agreement and all actions provided to be taken therein (subject
to the terms and conditions thereof) with respect to GSRP, First Colorado/PCL
and the Administrative Agent.

          2. The Subordinated Loan Tranche Advance. GSRP and TFC agree that
Subordinated Loan Tranche Advances may be made through December 31, 2001;
Section 2 of the Existing SOI is hereby so amended. On the date on which the
Final Steamboat Construction Cost Advance is made under Section 2 of the Fifth
Amendment Agreement and subject to this First Amendment Agreement becoming
effective on the First Amendment Effective Date, TFC agrees to advance to GSRP
up to $3,058,336.15 (TFC agrees that such advance may be made in escrow pursuant
to the escrow to be established under the Steamboat Settlement Agreement and the
2001 Escrow Letter, as such terms are defined in the Fifth Amendment Agreement;
interest shall commence to accrue on such advance when made into such escrow).
On each date thereafter on which a Steamboat Penthouse Construction Advance is
made under the Fifth Amendment Agreement, TFC agrees to make a Subordinated Loan
Tranche Advance to the extent of availability, if any, under the Amended SOI and
further subject to the satisfaction of the conditions precedent set forth in
Section 3(b), (c), (d) and (e) of the Existing SOI.

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         3. Waiver. Upon this First Amendment Agreement becoming effective on
the First Amendment Effective Date, each Default and/or Event of Default
existing at such time and arising from or otherwise in respect of the failure of
GSRP to perform its obligations under the Existing SOI or the Existing LSA or
any of the Steamboat Security Documents with respect to or in respect of (a) the
Steamboat Assignment of Construction Contract (including, without limitation,
any improper notification of change orders thereunder), (b) the disputes under
the Steamboat Construction Contract which are the subject of the Steamboat
Settlement Agreement, (c) the Steamboat Construction Project Borrowing Base and
Section 2.5(c)(ii) of the Existing LSA, (d) the Completion Date for the
Steamboat Project, (e) Sections 3.8 and 7.2(i) of the Existing LSA with respect
to the mechanic's liens recorded by the Steamboat General Contractor and other
subcontractors in respect of the Steamboat Project and with respect to the
mechanic's lien recorded by IBI Group (for $166,431.15) in respect of the
Canyons Project, (f) Section 2(b)(7) of the Existing SOI are hereby waived and
(g) any and all defaults existing as of the date hereof under that certain
Collateral Assignment dated July 25, 2000 between TFC and GSRP. No other Default
or Event of Default (whether occurring prior to the date hereof or hereafter)
shall be deemed waived, and TFC hereby reserves all of its rights and remedies
under the Amended SOI, the Amended LSA, the other Security Documents, at law and
in equity with respect thereto.

         4. Release of Northeastern Commercial Core Assets. Upon this First
Amendment Agreement becoming effective on the First Amendment Effective Date,
TFC agrees and consents to the releases of the Blanket Mortgages and the other
Security Documents in respect of the Northeastern Commercial Core Assets and the
Beneficial Improvements Agreements and Host Company Lease payments (if any)
related thereto. No other Collateral shall be released or deemed released by
virtue thereof.

          5. Final Fee Component Amounts. (i) Upon this First Amendment
Agreement becoming effective on the First Amendment Effective Date, Section
1(k)(B)(2) of the Existing SOI shall be amended and restated as follows:

                  (2) in one lump sum a final payment fee (the "Final Fee"),
                  which shall be payable on the earlier of the Subordinated Loan
                  Tranche Maturity Date or the date on which all principal of
                  the Subordinated Loan Tranche is fully paid (such date is
                  referred to herein as the "Final Payment Date"), equal to the
                  sum of the Final Fee Component Amounts for each of the
                  Subordinated Loan Tranche Advances, where a "Final Fee
                  Component Amount" for a Subordinated Loan Tranche Advance
                  shall equal the difference between the original outstanding
                  principal amount of such Subordinated Loan Tranche Advance
                  minus the discounted net present value of each payment of
                  interest and principal in respect of such Subordinated Loan
                  Tranche Advance determined in accordance with customary
                  financial practice by using a discount period of one month and
                  a monthly interest rate equal to 2.083333% (or such lesser
                  rate as may be required by Paragraph 6(a) hereof) and by
                  discounting each such payment of principal and interest from
                  the date on which such payment was made to the date when such
                  Subordinated Loan Tranche Advance was originally extended by
                  the Special Subordinated Lender (for purposes of determining
                  interest to be discounted in respect of any Subordinated Loan
                  Tranche Advance, only the interest payments accruing at 20%
                  per annum thereon shall be included therein and such interest
                  payments shall be deemed paid on the dates on which they are
                  actually paid in cash and any of such interest payments that
                  are deferred, in accordance with the terms hereof, to the

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                  Final Payment Date shall be deemed, for purposes of this
                  determination, to have been paid in cash on the First
                  Amendment Effective Date; any other cash payments made in
                  respect of the principal amount of any outstanding
                  Subordinated Loan Tranche Advance made after the First
                  Amendment Effective Date shall be deemed to have been made on
                  the First Amendment Effective Date for purposes of calculating
                  the Final Fee Component Amount in respect of such Subordinated
                  Loan Tranche Advance); no interest shall accrue on the unpaid
                  portion of the Final Fee;

         (ii) Upon this First Amendment Agreement becoming effective on the
First Amendment Effective Date, Section 1(k)(C) of the Existing SOI shall be
amended and restated as follows:

                           (C) (i) to pay to the Special Subordinated Lender,
                  solely in its capacity as the subordinated lender hereunder,
                  as requested by it from time to time during the term of the
                  Subordinated Loan Tranche after the payment in full of the
                  Syndication Fee, its reasonable costs and fees, which (1) in
                  the aggregate shall not exceed $1,000,000 or such lesser
                  amount as may be required by Section 6(a) hereof (the
                  "Participation/Syndication Costs") and (2) shall have been
                  incurred or will be incurred by TFC, solely in its capacity as
                  the Special Subordinated Lender hereunder, in connection with
                  obtaining one or more participants for the Subordinated Loan
                  Tranche; such Participation/Syndication Costs shall be
                  incurred only if determined to be necessary by TFC in the
                  exercise of its professional judgment in order to attract
                  participants in the prevailing loan/participation market for
                  commercial loans; the funding of the payment of such
                  Participation/Syndication Costs will be limited to 15% of the
                  "free and clear proceeds" arising from the Collateral referred
                  to in Paragraph 2(b)(iii)(4) below; GSRP acknowledges that TFC
                  is required by its internal lending constraints to reduce its
                  aggregate loan exposure under this Statement of Intention and
                  Agreement to $5,000,000 or less as soon as possible after
                  November 30, 2000 and that the payment of such
                  Participation/Syndication Costs is essential to assist in
                  achieving that reduction; and

         (iii) Upon this First Amendment Agreement becoming effective on the
First Amendment Effective Date, a new clause (ii) is hereby added to Section
1(k)(C) of the Existing SOI shall be amended and restated as follows:

                           (ii) to pay to the Textron Financial Corporation
                  solely as a "Steamboat Lender" and/or a "Canyons Lender" under
                  the Existing LSA, as amended by that certain Fourth Amendment
                  Agreement dated as of September 15, 2000 and Fifth Amendment
                  Agreement dated as of August 20, 2001 thereto (as so amended
                  and thereafter further amended, the "LSA") as requested by it
                  from time to time prior to the March 31, 2003, its reasonable
                  costs and fees, which (1) in the aggregate shall not exceed
                  $1,000,000 (the "Steamboat/Canyons Construction Loan
                  Participation/Syndication Costs;" Steamboat/Canyons
                  Construction Loan Participation/Syndication Costs and
                  Participation/Syndication Costs are referred to hereinafter,
                  collectively, as "Participation/Syndication Costs") and (2)
                  shall have been incurred or will be incurred by TFC, solely in
                  its capacity as a Steamboat Lender and/or Canyons Lender under
                  the LSA, in connection with obtaining one or more participants
                  for its share of the Canyons Loan and/or the Steamboat Loan;
                  such Steamboat/Canyons Construction Loan
                  Participation/Syndication Costs shall be incurred only if
                  determined to be necessary by TFC in the exercise of its
                  professional judgment in order to attract participants in the
                  prevailing loan/participation market for commercial loans; the
                  funding of the payment of such Steamboat/Canyons Construction
                  Loan Participation/Syndication Costs will be limited to 15% of
                  the "free and clear proceeds" arising from the Collateral
                  referred to in Paragraph 2(b)(iii)(4) below; GSRP acknowledges
                  that TFC is required by its internal lending constraints to
                  reduce its aggregate loan exposure under the Steamboat Loan

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                  and/or the Canyons Loan to $25,000,000 or less as soon as
                  possible after November 30, 2000 and that the payment of such
                  Steamboat/Canyons Construction Participation/Syndication Costs
                  is essential to assist in achieving that reduction; the fees
                  to be paid under subparagraph (i) above and this subparagraph
                  (ii) are separate and distinct and TFC is not obligated to
                  pursue participations or syndications of the Subordinated Loan
                  Tranche at the same time as it is pursuing participations or
                  syndication of the Steamboat Loan and/or Canyons Loan.

         6. Sales of Steamboat Quartershare Interests; Colorado First/PCL
Documents and the Steamboat Settlement Agreement. Anything contained in the
Existing SOI or the Existing LSA to the contrary notwithstanding, the failure by
GSRP to comply with its undertakings in the Colorado First/PCL Promissory Note
and/or in the Colorado First/PCL Deed of Trust shall constitute an immediate
Event of Default, provided that GSRP's failure to pay in full on the maturity
date of the Colorado First/PCL Promissory Note all amounts then due thereunder
shall not constitute an event of default under the Amended SOI, the Amended LSA
or any of the other Security Documents (including, without limitation, Section
8.1(h) of the Existing LSA). The foregoing notwithstanding, it shall be an
immediate Event of Default if GSRP shall have failed to close sufficient sales
of Steamboat Quartershare Interests prior to May 17, 2002 in order to fully pay
the Colorado First/PCL Promissory Note and to obtain the full release of the
Colorado First/PCL Deed of Trust by such date. GSRP shall not amend or modify
the Colorado First/PCL Promissory Note, Colorado First/PCL Deed of Trust or the
Steamboat Settlement Agreement without the prior written consent of the TFC.

         7. Penthouse Construction. GSRP agrees to complete the construction of
all of the Steamboat Residential Units located in the penthouse of the Steamboat
Project on or prior to December 31, 2001 in accordance with the Plans for the
Steamboat Project and to obtain by such date for each of such Units a
certificate of occupancy issued by City of Steamboat, Colorado. GSRP agrees to
promptly provide to TFC copies of all construction contracts in connection with
the aforesaid completion of said "penthouse units", which contracts shall be
fixed price contracts and shall, in the aggregate, demonstrate that the
completion of construction of said "penthouse units" (in accordance with the
Plans for the Steamboat Project and on or prior to December 31, 2001) can be
effected for a fixed price not in excess of $1,600,000 and shall otherwise be in
form and substance satisfactory to TFC. GSRP agrees to effect no change order
and initiate or otherwise allow no construction change directives in respect of
such construction contracts without the prior written consent of TFC. All
contractors, subcontractors, suppliers and laborers in respect of the completion
of the construction of the "penthouse units" shall, to the extent requested by
the Administrative Agent, subordinate and make junior to the liens of the
Administrative Agent on behalf of TFC in and to the Steamboat Project all of
their respective mechanic's, materialmen's and laborer's liens, and the
subordination documentation in respect thereof shall be satisfactory in both
form and substance to TFC. All construction contracts in respect of the
completion of the "penthouse units" shall be collaterally assigned to the
Administrative Agent pursuant to assignment documents in form and substance
satisfactory to TFC and each contractor thereunder shall have consented to such
assignment in a written consent that shall also be in form and substance
satisfactory to TFC. GSRP acknowledges that TFC may provide limited financing
for the completion of the construction of the "penthouse units" through
additional Subordinated Loan Tranche Advances, which shall only be available to
the extent of availability, if any, under the Amended LSA and until December 31,
2001, shall be subject to the same conditions precedent as the Steamboat
Penthouse Construction Advances under the Fifth Amendment Agreement and to
Sections 3(b), (c), (d) and (e) of the Amended SOI , shall be subject to the
Parent's making the necessary funds available to GSRP on a timely basis to cover
projected liquidity shortfalls in the Budget, and shall be subject to no Default

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or Event of Default existing under the Amended LSA, no default or event of
default existing under the Amended SOI and no default or event of default
existing under the Fleet/ASCRP Loan Documents. TFC agrees that the pledged cash
under the Steamboat Pledged Cash Agreement may be used to pay for, in part, the
completion of such construction and such cash shall be made available to GSRP on
the same terms and conditions as any Steamboat Penthouse Construction Advance is
made available to GSRP (subject to such additional conditions of release as may
be set forth in the Steamboat Pledged Cash Agreement) and shall be made
available to GSRP for such purposes only when GSRP shall have fully utilized the
aforesaid limited financing under the Amended LSA and the Amended SOI. For the
avoidance of doubt, Section 3.8 of the Existing LSA shall continue to have full
application to the completion of the construction of the aforesaid "penthouse
units." Prior to commencing the work with respect to the aforesaid "penthouse
units," GSRP shall certify and otherwise demonstrate to TFC that it has
sufficient cash on hand or other cash equivalent availability to pay for all
costs in respect of such work and that it or its Parent has taken appropriate
measures to assure the continued availability of such cash or cash equivalents
(all of which shall be satisfactory to TFC). Upon the issuance of final
certificates of occupancy for each of the Steamboat Residential Units located in
the penthouse of the Steamboat Project, the Administrative Agent shall release
its lien and security interest in the remaining amount of cash pledged under the
Steamboat Pledged Cash Agreement. Upon the issuance of a certificate of
occupancy for any of the aforesaid "penthouse units," GSRP shall promptly close
any Contracts in respect thereof.

         8. Miscellaneous. The covenants and undertakings of GSRP set forth in
this First Amendment Agreement shall be incorporated into and made a part of the
Existing SOI. For the avoidance of doubt and by way of confirmation of the
requirements of the Existing SOI, the Subordinated Loan Tranche Obligations
constitute and are "Steamboat Obligations" under the Amended LSA and all
"Release Prices," all payments under the Host Company Lease Agreements, all
proceeds from the sale of Commercial Units and any other payments derived from
any of the Projects that become payable after all of the Canyons Obligations and
all of the Steamboat Obligations other than the Subordinated Loan Tranche
Obligations have been paid in full shall be paid by the Administrative Agent to
TFC for application to the Subordinated Loan Tranche Obligations. The
Subordinated Loan Tranche Amendment Attachment to Steamboat Project Advance Note
of Textron Financial Corporation dated as July 25, 2000 states that the
principal sum thereof is due on August 1, 2005; the Existing SOI establishes a
maturity date for the same of August 1, 2003; the Subordinated Loan Tranche
Amendment Attachment to Steamboat Project Advance Note of Textron Financial
Corporation dated as July 25, 2000 is hereby amended and modified to make the
maturity date thereof August 1, 2003.

          9. Representations and Warranties. GSRP hereby represents and warrants
as of the date hereof as follows, which representations and warranties are
hereby incorporated into and made part of the Amended SOI:

                  9.1 Except as otherwise disclosed on Schedule 1 attached
         hereto, each of the representations and warranties contained in Section
         4 of the Existing SOI is true and correct as of the date hereof.

                  9.2 Except with respect to the Permitted Exceptions and as
         other provided for in the Existing SOI, all Liens granted for the
         benefit of TFC under the Existing SOI and the other Security Documents
         are duly granted, valid, perfected and prior in right to all other
         Liens that now or hereafter may be granted to or held by any other
         Person.

                  9.3 The execution and delivery of this First Amendment
         Agreement, the Fifth Amendment Agreement, the Steamboat Cash Pledge

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         Agreement, the Modification Documents and the other documents and
         instruments contemplated herein and in the Fifth Amendment Agreement,
         and compliance by GSRP with all of the provisions of this First
         Amendment Agreement, the Existing SOI, as amended hereby, and each of
         the other documents set forth above are:

                           (i)      within the corporate powers of GSRP; and

                           (ii) valid and legal acts and will not conflict with,
                  or result in any breach in any of the provisions of, or
                  constitute a default under, or result in the creation of any
                  Lien upon any Property of GSRP under the provisions of, any
                  agreement, charter instrument, bylaw or other instrument to
                  which GSRP is a party or by which its Property may be bound.

                  9.4 Neither the nature of GSRP, nor of any of its businesses
         or Properties, nor any relationship between GSRP and any other Person,
         nor any circumstance in connection with the execution or delivery of
         this First Amendment Agreement and the other documents contemplated in
         connection herewith, nor the operation of any Project and the sale, or
         offering for sale, of any Quartershare Interest of any of the Projects
         by GSRP, is such as to require a consent, approval or authorization of,
         or filing, registration or qualification with, any governmental
         authority on the part of GSRP, as a condition of the execution,
         delivery or performance of this First Amendment Agreement, the Fifth
         Amendment Agreement, the Steamboat Settlement Agreement, the Steamboat
         Cash Pledge Agreement and the other documents contemplated in
         connection herewith.

                  9.5 GSRP will not be, on or after the date hereof, a party to
         any contract or agreement which restricts its right or ability to incur
         indebtedness under, or prohibits the execution of, or compliance with,
         this First Amendment Agreement by GSRP. GSRP has not agreed or
         consented to cause or permit in the future (upon the happening of a
         contingency or otherwise) any of its Property constituting the
         Collateral, whether now owned or hereafter acquired, to be subject to a
         Lien other than Permitted Exceptions and the Liens for the benefit of
         TFC, and all Liens for the benefit of TFC in respect of such Collateral
         remain in full force and effect.

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                  9.6 GSRP is not entering into this First Amendment Agreement
         and the transactions contemplated hereby, and does not intend to incur
         any obligations hereunder or otherwise make any transfers in connection
         herewith, with the actual intent to hinder, delay or defraud either
         present or future creditors. After giving effect to the consummation of
         the transactions contemplated by this First Amendment Agreement and the
         making of the advances contemplated hereunder, (a) the assets of GSRP
         at a fair valuation thereof on a going concern basis will not be less
         than its debts, (b) GSRP is not currently engaged in or about to engage
         in a business or transaction for which its remaining assets are
         unreasonably small in relation to such business or transaction, and (c)
         GSRP will be able to pay its respective debts as they become due.
         "Debt" for purposes of this Section 9.6 means any liability on a claim,
         and "claim" means (i) any right to payment, whether or not such right
         is reduced to judgment, liquidated, unliquidated, fixed, contingent,
         matured, unmatured, disputed, undisputed, legal, equitable, secured or
         unsecured, or (ii) any right to an equitable remedy for breach of
         performance if such breach gives rise to a right to payment, whether or
         not such right to an equitable remedy is reduced to judgment,
         liquidated, unliquidated, fixed, contingent, matured, unmatured,
         disputed, undisputed, legal, equitable, secured or unsecured.

                  9.7 After giving effect to this First Amendment Agreement, no
         Default or Event of Default has occurred or is continuing, nor does any
         event or condition exist that would constitute a Default or an Event of
         Default. No material adverse change has occurred in or in respect of
         the Collateral or any one or more of the Projects that has not been
         disclosed to the TFC. The Obligations continue to be Senior Debt under,
         and as defined in, the ASC Indenture and no default or event of default
         exists under such Indenture and, after giving effect to the purchase of
         the Sold Commercial Assets by ASC or a subsidiary thereof, no defaults
         or events of default will exist under said Indenture or any other
         agreement for indebtedness for borrowed money, any financing lease or
         any guaranty of any of the foregoing to which ASC or any subsidiary
         thereof is a party. No default by the Parent in the payment of
         indebtedness for borrowed money, any financing lease or any guarantee
         issued by the Parent in respect of indebtedness for borrowed money or
         any financing lease exists. GSRP has not issued and is not otherwise
         obligated in respect of any obligation of the Parent, ASC or any
         subsidiary of ASC for borrowed-money indebtedness, any financing lease
         or any guaranty.

         10. Conditions to Effectiveness. This First Amendment Agreement shall
become effective on the date (the "First Amendment Effective Date") on which the
parties hereto shall have executed this First Amendment Agreement and each of
the following conditions shall have been satisfied:

                  10.1 Warranties and Representations True as of First Amendment
         Effective Date. The warranties and representations contained or
         referred to in this First Amendment Agreement shall be true in all
         material respects on the First Amendment Effective Date with the same
         effect as though made on and as of that date. TFC shall have received a
         certificate, in form and substance satisfactory to the TFC, dated as of
         the First Amendment Effective Date, signed by an Executive
         Vice-President or Vice President of GSRP and certifying that the
         warranties and representations of GSRP contained in this First
         Amendment Agreement are true in all material respects on the First
         Amendment Effective Date.

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                    10.2 Secretary's Certificates.

                  The TFC shall have received a certificate of the Secretary or
         any Assistant Secretary of GSRP, in form and substance reasonably
         satisfactory to the TFC, dated as of the First Amendment Effective
         Date, certifying

                           (i) the adoption by the Board of Directors of GSRP of
                  a resolution authorizing GSRP to enter into this First
                  Amendment Agreement, the Fifth Amendment Agreement, the
                  Steamboat Settlement Agreement, the Steamboat Intercreditor
                  and Collateral Sharing Agreement and the transactions and
                  instruments contemplated hereby and thereby and to sell the
                  Northeastern Commercial Core Assets to ASC or a subsidiary
                  thereof, and

                           (ii) the incumbency and authority of, and verifying
                  the specimen signatures of, the officers of GSRP authorized to
                  execute and deliver this First Amendment Agreement, the Fifth
                  Amendment Agreement, the Modification Agreements (referred to
                  below), the Steamboat Pledged Cash Agreement, the Steamboat
                  Intercreditor and Collateral Sharing Agreement and the other
                  documents contemplated hereunder.

                    10.3 Legal Opinion. GSRP shall have delivered to TFC and the
          Lenders a legal opinion from its General Counsel in form and substance
          reasonably satisfactory to the Lenders and TFC.

                    10.4 Expenses. GSRP shall have paid all fees and expenses
          required to be paid by it pursuant to Section 6(c) of Existing SOI
          pursuant to invoices or other bills submitted to GSRP.

                    10.5 Fifth Amendment Agreement. The Fifth Amendment
          Agreement shall be in full force and effect and the Fifth Amendment
          Effective Date shall have occurred.

                    10.6 Proceedings. All actions taken in connection with the
          execution of this First Amendment Agreement and all documents and
          papers relating thereto shall be satisfactory to the TFC and its
          counsel. The TFC and its counsel shall have received copies of such
          documents and papers as it or such counsel may reasonably request in
          connection therewith, all in form and substance satisfactory to the
          TFC and its counsel.

         11.      Miscellaneous.

                  11.1 This First Amendment Agreement shall be binding upon and
         inure to the benefit of the parties hereto and their respective
         successors and permitted assigns.

                  11.2 This First Amendment Agreement shall be governed by the
         internal laws of the State of Maine. To the extent any provision of
         this First Amendment Agreement is not enforceable under applicable law,
         such provision shall be deemed null and void and shall have no effect
         on the remaining portions of this Agreement.

                  11.3 The titles of the Sections appear as a matter of
         convenience only, do not constitute a part hereof and shall not affect
         the construction hereof. The words "herein," "hereof," "hereunder" and

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         "hereto" refer to this First Amendment Agreement as a whole and not to
         any particular Section or other subdivision.

                  11.4 All warranties, representations and covenants made by
         GSRP herein or in the Existing SOI or in any certificate or other
         instrument delivered by it or on its behalf under this Agreement or in
         the Existing SOI shall be considered to have been relied upon by the
         Lenders and shall survive the execution and delivery of this First
         Amendment Agreement.

                  11.5 Except as explicitly amended by, or otherwise provided
         for in, this First Amendment Agreement , the Existing SOI, the Notes
         and the other Security Documents remain in full force and effect under
         their respective terms as in effect immediately prior to the
         effectiveness of this First Amendment Agreement, and GSRP hereby
         affirms all of its obligations thereunder.

                  11.6 This First Amendment Agreement may be executed in any
         number of counterparts, each of which shall be an original but all of
         which together shall constitute one instrument. Each counterpart may
         consist of a number of copies hereof, each signed by less than all, but
         together signed by all, of the parties hereto.

   [Remainder of page intentionally left blank. Next page is signature page.]

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

GSRP:                                   TFC:

GRAND SUMMIT RESORT PROPERTIES, INC.    TEXTRON FINANCIAL CORPORATION

By /s/ Foster A. Stewart, Jr.           By /s/ Nicholas L. Mecca
  -------------------------------         ---------------------------------
  Name: Foster A. Stewart, Jr.             Name: Nicholas L. Mecca
  Title: Senior Vice President and         Title: Division President
         General Counsel

The undersigned confirms that all indebtedness of GSRP owing to the undersigned
is junior and subordinate to all indebtedness of GSRP owing to TFC under the
Amended SOI pursuant to that certain Subordination Agreement dated as of
September 1, 1998, as amended. All of such indebtedness of GSRP owing to TFC
under the Amended SOI shall qualify as "Senior Debt" under the Amended SOI and
further confirms that all of the Subordinated Loan Tranche Loan constitutes and
is a "Permitted Construction Loan" under the Fleet/ASCRP Loan Documents and the
"Construction Loan Repayment Date" in respect thereof shall not occur until all
of the obligations under the Amended LSA and Amended SOI shall have been paid in
full.

AMERICAN SKIING COMPANY RESORT PROPERTIES, INC.

By /s/ Foster A. Stewart, Jr.
   Name: Foster A. Stewart, Jr.
   Title: Senior Vice President and
          General Counsel

<PAGE>

                                   Schedule 1

                  Exceptions to Representations and Warranties

None.<PAGE>

                                                                    Exhibit 10.1

                          OPTICAL SENSORS INCORPORATED

                              amended and restated

                             1993 STOCK OPTION PLAN

                       (As amended through July 26, 2001)

ARTICLE 1.  ESTABLISHMENT AND PURPOSE.

     1.1. Establishment. Optical Sensors Incorporated (the "Company") hereby
establishes a plan providing for stock-based compensation incentive awards for
the performance by certain eligible employees of services for the Company. This
plan shall be known as the Optical Sensors Incorporated 1993 Stock Option Plan
(the "Plan").

     1.2. Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by enabling the Company to attract and retain
persons of ability to perform services for the Company, by providing an
incentive to such persons through equity participation in the Company and by
rewarding such persons who contribute to the achievement by the Company of its
economic objectives.

ARTICLE 2.  DEFINITIONS.

     The following terms shall have the meanings set forth below, unless the
context clearly otherwise requires:

     2.1. "Board" means the Board of Directors of the Company.

     2.2. "Broker Exercise Notice" means the written notice described in Section
6.6(b) of the Plan.

     2.3. "Change in Control" means an event described in Section 9.1 of the
Plan.

     2.4. "Code" means the Internal Revenue Code of 1986, as amended.

     2.5. "Committee" means the group of individuals administering the Plan, as
provided in Article 3 of the Plan.

     2.6. "Common Stock" means the common stock of the Company, par value $.01
per share, or the number and kind of shares of stock or other securities into
which such Common Stock may be changed in accordance with Section 4.3 of the
Plan.

     2.7. "Disability" means the disability of the Participant as defined in the
long-term disability plan of the Company then covering the Participant or, if no
such plan exists, the permanent and total disability of the Participant within
the meaning of Section 22(e)(3) of the Code.

     2.8. "Eligible Recipient" means all employees (including, without
limitation, officers and directors who are also employees) and Non-Employee
Directors, consultants and independent contractors of the Company or any
Subsidiary.

     2.9. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
<PAGE>

     2.10. "Fair Market Value" means, with respect to the Common Stock, the
following:

          (a) If the Common Stock is listed or admitted to unlisted trading
     privileges on any national securities exchange or is not so listed or
     admitted but transactions in the Common Stock are reported on the NASDAQ
     National Market System, the reported closing sale price of the Common Stock
     on such exchange or by the NASDAQ National Market System as of such date
     (or, if no shares were traded on such day, as of the next preceding day on
     which there was such a trade).

          (b) If the Common Stock is not so listed or admitted to unlisted
     trading privileges or reported on the NASDAQ National Market System, and
     bid and asked prices therefor in the over-the-counter market are reported
     by the NASDAQ System or the National Quotation Bureau, Inc. (or any
     comparable reporting service), the mean of the closing bid and asked prices
     as of such date, as so reported by the NASDAQ System, or, if not so
     reported thereon, as reported by the National Quotation Bureau, Inc. (or
     such comparable reporting service).

          (c) If the Common Stock is not so listed or admitted to unlisted
     trading privileges, or reported on the NASDAQ National Market System, and
     such bid and asked prices are not so reported, such price as the Committee
     determines in good faith in the exercise of its reasonable discretion.

     2.11. "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Article 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.

     2.12. "Non-Employee Director" means any member of the Board who is not an
employee of the Company or any subsidiary.

     2.13. "Non-Statutory Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Article 6 of the Plan that does not
qualify as an Incentive Stock Option.

     2.14. "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.

     2.15. "Participant" means an Eligible Recipient who receives one or more
Options under the Plan.

     2.16. "Person" means any individual, corporation, partnership, group,
association or other "person" (as such term is used in Section 14(d) of the
Exchange Act), other than the Company, a wholly owned subsidiary of the Company
or any employee benefit plan sponsored by the Company or a wholly owned
subsidiary of the Company.

     2.17. "Previously Acquired Shares" mean shares of Common Stock that are
already owned by the Participant and shares of Common Stock that are to be
acquired by the Participant pursuant to the exercise of an Option.

     2.18. "Retirement" means the retirement of a Participant pursuant to and in
accordance with the regular or, if approved by the Board for purposes of the
Plan, early retirement/pension plan or practice of the Company or Subsidiary
then covering the Participant.

     2.19. "Securities Act" means the Securities Act of 1933, as amended.

                                       2
<PAGE>

     2.20. "Subsidiary" means any subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.

     2.21. "Tax Date" means the date any withholding tax obligation arises under
the Code for a Participant with respect to an Option.

ARTICLE 3.  PLAN ADMINISTRATION.

     3.1. The Committee. The Plan will be administered by the Board or by a
committee of the Board consisting of not less than two persons; provided,
however, that from and after the date on which the Company first registers a
class of its equity securities under Section 12 of the Exchange Act, the Plan
will be administered by the Board, all of whom will be "disinterested persons"
within the meaning of Rule 16b-3 under the Exchange Act, or by a committee
consisting solely of not fewer than two members of the Board who are such
"disinterested persons." As used in the Plan, the term "Committee" will refer to
the Board or to such a committee, if established. To the extent consistent with
corporate law, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided, however,
that only the Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16 of the Exchange
Act. Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will be conclusive and binding
for all purposes and on all persons, and no member of the Committee will be
liable for any action or determination made in good faith with respect to the
Plan or any Incentive Award granted under the Plan.

     3.2. Authority of the Committee.

          (a) In accordance with and subject to the provisions of the Plan, the
     Committee shall have the authority to determine (i) the Eligible Recipients
     who shall be selected as Participants, (ii) the nature and extent of the
     Options to be made to each Participant (including the number of shares of
     Common Stock to be subject to each Option, the exercise price and the
     manner in which Options will vest or become exercisable), (iii) the time or
     times when Options will be granted, (iv) the duration of each Option, (v)
     the restrictions and other conditions to which the exercisability or
     vesting of Options may be subject, and (vi) such other provisions of the
     Options as the Committee may deem necessary or desirable and as consistent
     with the terms of the Plan. The Committee shall determine the form or forms
     of the agreements with Participants which shall evidence the particular
     terms, conditions, rights and duties of the Company and the Participants
     with respect to Options granted pursuant to the Plan, which agreements
     shall be consistent with the provisions of the Plan.

          (b) With the consent of the Participant affected thereby, the
     Committee may amend or modify the terms of any outstanding Option in any
     manner, provided that the amended or modified terms are permitted by the
     Plan as then in effect. Without limiting the generality of the foregoing
     sentence, the Committee may, with the consent of the Participant affected
     thereby, modify the exercise price, number of shares or other terms and
     conditions of an Option, extend the term of an Option, accelerate the
     exercisability or vesting or otherwise terminate any restrictions relating
     to an Option, accept the surrender of any outstanding Option, or, to the
     extent not previously exercised or vested, authorize the grant of new
     Options in substitution for surrendered Options.

          (c) The Committee shall have the authority, subject to the provisions
     of the Plan, to establish, adopt and revise such rules and regulations
     relating to the Plan as it may deem

                                       3
<PAGE>

     necessary or advisable for the administration of the Plan. The Committee's
     decisions and determinations under the Plan need not be uniform and may be
     made selectively among Participants, whether or not such Participants are
     similarly situated. Each determination, interpretation or other action made
     or taken by the Committee pursuant to the provisions of the Plan shall be
     conclusive and binding for all purposes and on all persons, including,
     without limitation, the Company and its Subsidiaries, the shareholders of
     the Company, the Committee and each of its members, the directors, officers
     and employees of the Company and its Subsidiaries, and the Participants and
     their respective successors in interest. No member of the Committee shall
     be liable for any action or determination made in good faith with respect
     to the Plan or any Option granted under the Plan.

ARTICLE 4.  STOCK SUBJECT TO THE PLAN.

     4.1. Number of Shares. Subject to adjustment as provided in Section 4.3
below, the maximum number of shares of Common Stock that shall be authorized and
reserved for issuance under the Plan shall be 4,500,000 shares of Common Stock
or such greater number as may be approved by the Board pursuant to this Section
4.1.

     4.2. Shares Available for Use. Shares of Common Stock that may be issued
upon exercise of Options shall be applied to reduce the maximum number of shares
of Common Stock remaining available for use under the Plan. Any shares of Common
Stock that are subject to an Option (or any portion thereof) that lapses,
expires or for any reason is terminated unexercised shall automatically again
become available for use under the Plan.

     4.3. Adjustments to Shares. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in the corporate
structure or shares of the Company, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation) shall make appropriate adjustment (which determination
shall be conclusive) as to the number and kind of securities subject to and
reserved under the Plan and, in order to prevent dilution or enlargement of the
rights of Participants, the number, kind and exercise price of securities
subject to outstanding Options. Without limiting the generality of the
foregoing, in the event that any of such transactions are effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities or
assets, including cash, with respect to or in exchange for such Common Stock,
all Participants holding outstanding Options shall upon the exercise of such
Options receive, in lieu of any shares of Common Stock they may be entitled to
receive, such stock, securities or assets, including cash, as would have been
issued to such Participants if their Options had been exercised and such
Participants had received Common Stock prior to such transaction.

ARTICLE 5.  PARTICIPATION.

     Participants in the Plan shall be those Eligible Recipients who, in the
judgment of the Committee, have performed, are performing, or during the term of
an Option will perform, services in the management, operation and development of
the Company or any Subsidiary, and significantly contributed, are significantly
contributing or are expected to significantly contribute to the achievement of
corporate economic objectives. Eligible Recipients may be granted from time to
time one or more Options, as may be determined by the Committee in its sole
discretion. The number, type, terms and conditions of Options granted to various
Eligible Recipients need not be uniform, consistent or in accordance with any
plan, regardless of whether such Eligible Recipients are similarly situated.
Upon determination by the Committee that an Option is to be granted to an
Eligible Recipient, written notice

                                       4
<PAGE>

shall be given such person, specifying the terms, conditions, rights and duties
related thereto. Each Eligible Recipient to whom an Option is to be granted
shall, if requested by the Committee, enter into an agreement with the Company,
in such form as the Committee shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions, rights and duties.
Options shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date shall be the date of the related
agreement with the Participant.

ARTICLE 6.  STOCK OPTIONS.

     6.1. Grant. An Eligible Recipient may be granted one or more Options under
the Plan, and such Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by the
Committee in its sole discretion. The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option;
provided, however, that an Incentive Stock Option shall be granted only to an
Eligible Recipient who is an employee of the Company or a Subsidiary. The terms
of the agreement relating to a Non-Statutory Stock Option shall expressly
provide that such Option shall not be treated as an Incentive Stock Option.

     6.2. Exercise. An Option shall become exercisable at such times and in such
installments (which may be cumulative) as shall be determined by the Committee
in its sole discretion at the time the Option is granted. Upon the completion of
its exercise period, an Option, to the extent not then exercised, shall expire.

     6.3. Exercise Price.

          (a) Incentive Stock Options. The per share price to be paid by the
     Participant at the time an Incentive Stock Option is exercised shall be
     determined by the Committee, in its discretion, at the date of its grant;
     provided, however, that such price shall not be less than (i) 100% of the
     Fair Market Value of one share of Common Stock on the date the Incentive
     Stock Option is granted, or (ii) 110% of the Fair Market Value of one share
     of Common Stock on the date the Incentive Stock Option is granted if, at
     that time the Incentive Stock Option is granted, the Participant owns,
     directly or indirectly (as determined pursuant to Section 424(d) of the
     Code), more than 10% of the total combined voting power of all classes of
     stock of the Company or any subsidiary or parent corporation of the Company
     (within the meaning of Sections 424(f) and 424(e), respectively, of the
     Code).

          (b) Non-Statutory Stock Options. The per share price to be paid by the
     Participant at the time a Non-Statutory Stock Option is exercised shall be
     determined by the Committee in its sole discretion at the time the Option
     is granted; provided, however, that such price shall not be less than 85%
     of the Fair Market Value of one share of Common Stock on the date the
     Non-Statutory Stock Option is granted.

     6.4. Duration.

          (a) Incentive Stock Options. The period during which an Incentive
     Stock Option may be exercised shall be fixed by the Committee in its sole
     discretion at the time such Option is granted; provided, however, that in
     no event shall such period exceed 10 years from its date of grant or, in
     the case of a Participant who owns, directly or indirectly (as determined
     pursuant to Section 424(d) of the Code), more than 10% of the total
     combined voting power of all classes of stock of the Company or any
     subsidiary or parent corporation of the Company (within the meaning of
     Sections 424(f) and 424(e), respectively, of the Code), five years from its
     date of grant.

                                       5
<PAGE>

          (b) Non-Statutory Stock Options. The period during which a
     Non-Statutory Stock Option may be exercised shall be fixed by the Committee
     in its sole discretion at its date of grant.

          (c) Effect of Termination of Employment or Other Service.
     Notwithstanding this Section 6.4, except as provided in Articles 8 and 9 of
     the Plan, all Options granted to a Participant shall terminate and may no
     longer be exercised if the Participant's employment or other service with
     the Company and all Subsidiaries ceases.

     6.5. Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained herein
and in the agreement evidencing such Option, by delivery, in person or through
certified or registered mail, of written notice of exercise to the Company at
its principal executive office in Minneapolis, Minnesota (Attention: Chief
Financial Officer), and by paying in full the total Option exercise price for
the shares of Common Stock purchased. Such notice shall be in a form
satisfactory to the Committee and shall specify the particular Option (or
portion thereof) that is being exercised and the number of shares with respect
to which the Option is being exercised. Subject to compliance with Section 12.1
of the Plan, the exercise of the Option shall be deemed effective upon receipt
of such notice and payment complying with the terms of the Plan and the
agreement evidencing such Option. As soon as practicable after the effective
exercise of the Option, the Participant shall be recorded on the stock transfer
books of the Company as the owner of the shares purchased, and the Company shall
deliver to the Participant one or more duly issued stock certificates evidencing
such ownership. If a Participant exercises any Option with respect to some, but
not all, of the shares of Common Stock subject to such Option, the right to
exercise such Option with respect to the remaining shares shall continue until
it expires or terminates in accordance with its terms. An Option shall only be
exercisable with respect to whole shares.

     6.6. Payment of Exercise Price.

          (a) The total purchase price of the shares to be purchased upon
     exercise of an Option shall be paid entirely in cash (including check, bank
     draft or money order); provided, however, that the Committee, in its sole
     discretion, may allow such payments to be made, in whole or in part, by
     delivery of a Broker Exercise Notice or a promissory note (containing such
     terms and conditions as the Committee may in its discretion determine), by
     transfer from the Participant to the Company of Previously Acquired Shares,
     or by a combination thereof. In determining whether or upon what terms and
     conditions a Participant will be permitted to pay the purchase price of an
     Option in a form other than cash, the Committee may consider all relevant
     facts and circumstances, including, without limitation, the tax and
     securities law consequences to the Participant and the Company, the
     financial accounting consequences to the Company and any contractual
     restrictions applicable to the Company. In the event the Participant is
     permitted to pay the total purchase price of an Option in whole or in part
     with Previously Acquired Shares, the value of such shares shall be equal to
     their Fair Market Value on the date of exercise of the Option.

          (b) For purposes of this Section 6.6, a "Broker Exercise Notice" shall
     mean a written notice from a Participant to the Company at its principal
     executive office in Minneapolis, Minnesota (Attention: Chief Financial
     Officer), made on a form and in the manner as the Committee may from time
     to time determine, pursuant to which the Participant irrevocably elects to
     exercise all or any portion of an Option and irrevocably directs the
     Company to deliver the Participant's stock certificates to be issued to
     such Participant upon such Option exercise directly to a broker or dealer.
     A Broker Exercise Notice must be accompanied by or contain irrevocable
     instructions to the broker or dealer (i) to promptly sell a sufficient
     number of shares of such Common Stock or to loan the Participant a
     sufficient amount of money to pay the exercise price

                                       6
<PAGE>

     for the Options and, if not otherwise satisfied by the Participant, to fund
     any related employment and withholding tax obligations due upon such
     exercise, and (ii) to promptly remit such sums to the Company upon the
     broker's or dealer's receipt of the stock certificates.

     6.7. Rights as a Shareholder. The Participant shall have no rights as a
shareholder with respect to any shares of Common Stock covered by an Option
until the Participant shall have become the holder of record of such shares, and
no adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine pursuant to Section 4.3 of the Plan.

     6.8. Disposition of Common Stock Acquired Pursuant to the Exercise of
Incentive Stock Options. Prior to making a disposition (as defined in Section
424(c) of the Code) of any shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option granted under the Plan before the
expiration of two years after its date of grant or before the expiration of one
year after its date of exercise and the date on which such shares of Common
Stock were transferred to the Participant pursuant to exercise of the Option,
the Participant shall send written notice to the Company of the proposed date of
such disposition, the number of shares to be disposed of, the amount of proceeds
to be received from such disposition and any other information relating to such
disposition that the Company may reasonably request. The right of a Participant
to make any such disposition shall be conditioned on the receipt by the Company
of all amounts necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to such disposition. The
Committee shall have the right, in its sole discretion, to endorse the
certificates representing such shares with a legend restricting transfer and to
cause a stop transfer order to be entered with the Company's transfer agent
until such time as the Company receives the amounts necessary to satisfy such
withholding and employment-related tax requirements or until the later of the
expiration of two years from its date of grant or one year from its date of
exercise and the date on which such shares were transferred to the Participant
pursuant to the exercise of the Option.

     6.9. Aggregate Limitation of Stock Subject to Incentive Stock Options. To
the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or any parent corporation of the Company (within the meaning of
Sections 424(f) and 424(e), respectively, of the Code)) exceeds $100,000 (or
such other amount as may be prescribed by the Code from time to time), such
excess Options shall be treated as Non-Statutory Stock Options. The
determination shall be made by taking incentive stock options into account in
the order in which they were granted. If such excess only applies to a portion
of an Incentive Stock Option, the Committee, in its discretion, shall designate
which shares shall be treated as shares to be acquired upon exercise of an
Incentive Stock Option.

ARTICLE 7.  CASH BONUSES.

     In connection with any grant of Options or at any time thereafter, the
Committee may, in its sole discretion, grant a cash bonus to a Participant in
connection with the grant or vesting or exercise of an Option. The determination
of whether to grant such a cash bonus, the nature and amount of any such cash
bonus and the terms and conditions of such cash bonus shall be within the sole
discretion of the Committee.

                                       7
<PAGE>

ARTICLE 8.  EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.

     8.1. Termination of Employment or Other Service Due to Death, Disability or
Retirement. Except as otherwise provided in Article 9 of the Plan, in the event
a Participant's employment or other service with the Company and all
Subsidiaries is terminated by reason of such Participant's death, Disability or
Retirement, all outstanding Options then held by the Participant shall remain
exercisable to the extent exercisable as of such termination for a period of one
year after such termination in the case of death or Disability and three months
in the case of Retirement (but in no event after the expiration date of any such
Option).

     8.2. Termination of Employment or Other Service for Reasons Other than
Death, Disability or Retirement. Except as otherwise provided in Article 9 of
the Plan, in the event a Participant's employment or other service is terminated
with the Company and all Subsidiaries for any reason other than death,
Disability or Retirement, all rights of the Participant under the Plan shall
immediately terminate without notice of any kind, and no Options then held by
the Participant shall thereafter be exercisable; provided, however, that if such
termination is due to any reason other than termination by the Company or any
Subsidiary for "cause," all outstanding Options then held by such Participant
shall remain exercisable to the extent exercisable as of such termination for a
period of three months after such termination (but in no event after the
expiration date of any such Option). For purposes of this Article 8, "cause"
shall be as defined in any employment or other agreement or policy applicable to
the Participant or, if no such agreement or policy exists, shall mean (a)
dishonesty, fraud, misrepresentation, embezzlement or material or deliberate
injury or attempted injury, in each case related to the Company or any
Subsidiary, (b) any unlawful or criminal activity of a serious nature, (c) any
willful breach of duty, habitual neglect of duty or unreasonable job
performance, or (d) any material breach of a confidentiality or noncompete
agreement entered into with the Company or any Subsidiary.

     8.3. Death Following Termination. If a Participant dies within three months
following termination of employment or other service to the Company for any
reason other than cause, as defined above, all outstanding Options held by the
Participant at the time of termination shall remain exercisable to the extent
exercisable as of such termination for a period of one year after such
termination.

     8.4. Modification of Effect of Termination. Notwithstanding the provisions
of this Article 8, upon a Participant's termination of employment or other
service with the Company and all Subsidiaries, the Committee may, in its sole
discretion (which may be exercised before or following such termination), cause
Options, or any portions thereof, then held by such Participant to become
exercisable and remain exercisable following such termination in the manner
determined by the Committee; provided, however, that no Option shall be
exercisable after the expiration date thereof and any Incentive Stock Option
that remains unexercised more than three months following employment termination
by reason of Retirement or more than one year following employment termination
by reason of Disability shall thereafter be deemed to be a Non-Statutory Stock
Option.

     8.5. Breach of Confidentiality or Non-Compete Agreements. Notwithstanding
anything in the Plan to the contrary, in the event that a Participant materially
breaches the terms of any confidentiality or non-compete agreement entered into
with the Company or any Subsidiary, whether such breach occurs before or after
termination of such Participant's employment or other service with the Company
or any Subsidiary, the Committee in its sole discretion may immediately
terminate all rights of the Participant under the Plan and any agreements
evidencing an Option then held by the Participant without notice of any kind.

     8.6. Date of Termination. Unless the Committee shall otherwise determine in
its sole discretion, a Participant's employment or other service shall, for
purposes of the Plan, be deemed to have

                                       8
<PAGE>

terminated on the date such Participant ceases to perform services for the
Company and all Subsidiaries, as determined in good faith by the Committee.

ARTICLE 9.  CHANGE OF CONTROL.

     9.1. Change in Control. For purposes of this Article 9, a "Change in
Control" is the occurrence of any of the following on or after August 16, 1999:

          (a) the sale, lease, exchange or other transfer, directly or
     indirectly, of all or substantially all of the assets of the Company, in
     one transaction or in a series of related transactions, to any Person;

          (b) the approval by the shareholders of the Company of any plan or
     proposal for the liquidation or dissolution of the Company;

          (c) any Person, other than Hayden R. Fleming or Circle F. Ventures,
     LLC, a Georgia limited liability company, or any of his or its Affiliates,
     is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
     Exchange Act), directly or indirectly, of (a) 20 percent or more, but not
     more than 50 percent, of the combined voting power of the Company's
     outstanding securities ordinarily having the right to vote at elections of
     directors, unless the transaction resulting in such ownership has been
     approved in advance by the "continuity directors," as defined at Subsection
     (b), or (b) more than 50 percent of the combined voting power of the
     Company's outstanding securities ordinarily having the right to vote at
     elections of directors (regardless of any approval by the continuity
     directors);

          (d) a merger or consolidation to which the Company is a party if the
     shareholders of the Company immediately prior to the effective date of such
     merger or consolidation have, solely on account of ownership of securities
     of the Company at such time, "beneficial ownership" (as defined in Rule
     13d-3 under the Exchange Act) immediately following the effective date of
     such merger or consolidation of securities of the surviving company
     representing (a) 50 percent or more, but not more than 80 percent, of the
     combined voting power of the surviving corporation's then outstanding
     securities ordinarily having the right to vote at elections of directors,
     unless such merger or consolidation has been approved in advance by the
     continuity directors, or (b) less than 50 percent of the combined voting
     power of the surviving corporation's then outstanding securities ordinarily
     having the right to vote at elections of directors (regardless of any
     approval by the continuity directors);

          (e) the continuity directors cease for any reason to constitute at
     least a majority the Board; or

          (f) a change in control of a nature that is determined by outside
     legal counsel to the Company, in a written opinion specifically referencing
     this provision of the Plan, to be required to be reported (assuming such
     event has not been "previously reported") pursuant to section 13 or 15(d)
     of the Exchange Act, whether or not the Company is then subject to such
     reporting requirement, as of the effective date of such change in control.

     The sale, lease, exchange or other transfer, directly or indirectly, of the
assets comprising the Company's CapnoProbe Product Line, in one transaction or
in a series of related transactions, to any Person shall constituted a Change in
Control under Section 9.1(a).

                                       9
<PAGE>

     For purposes of this Section 9.1, "continuity director" means any
individual who is a member of the Board on August 16, 1999, while he or she is a
member of the Board, and any individual who subsequently becomes a member of the
Board whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors who are
continuity directors (either by a specific vote or by approval of the proxy
statement of the Company in which such individual is named as a nominee for
director without objection to such nomination). For example, if a majority of
the six individuals constituting the Board on August 16, 1999, approved a proxy
statement in which two different individuals were nominated to replace two of
the individuals who were members of the Board on August 16, 1999, upon their
election by the Company's shareholders, the two newly elected directors would
join the four remaining directors who were members of the Board on August 16,
1999 as continuity directors. Similarly if a majority of those six directors
approved a proxy statement in which three different individuals were nominated
to replace three other directors who were members of the Board on August 16,
1999, upon their election by the Company's shareholders, the three newly elected
directors would also become, along with the three other directors, continuity
directors. Individuals subsequently joining the Board could become continuity
directors under the principles reflected in this example.

     9.2. Acceleration of Vesting. If a Change of Control of the Company shall
occur, then, without any action by the Committee or the Board, all outstanding
Options shall become immediately exercisable in full and shall remain
exercisable during the remaining term thereof, regardless of whether the
employment or other status of the Participants with respect to which Options
have been granted shall continue with the Company or any subsidiary.

     9.3. Cash Payment. If a Change in Control of the Company shall occur, then
the Committee, in its discretion, and with the consent of any Participant
effected thereby, may determine that some or all Participants holding
outstanding Options shall receive, with respect to some or all of the shares of
Common Stock subject to such Options, as of the effective date of any such
Change in Control of the Company, cash in an amount equal to the excess of the
Fair Market Value of such shares immediately prior to the effective date of such
Change in Control of the Company over the exercise price per share of such
Options.

     9.4. Limitation on Acceleration of Vesting. Notwithstanding anything in
Sections 9.2 or 9.3 above to the contrary, if, with respect to a Participant,
acceleration of the vesting of Options as provided in Section 9.2 or the payment
of cash in exchange for all or part of an Option and as provided in Section 9.3
above (which acceleration or payment could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Code), together with any other payments
which such Participant has the right to receive from the Company or any
corporation which is a member of an "affiliated group" (as defined in Section
1504(a) of the Code without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a "parachute payment" (as defined in
Section 280G(b)(2) of the Code), then the acceleration of exercisability and the
payments to such Participant pursuant to Sections 9.2 and 9.3 above shall be
reduced to the largest amount as, in the sole judgment of the Committee, will
result in no portion of such payments being subject to the excise tax imposed by
Section 4999 of the Code.

ARTICLE 10.  RIGHT TO WITHHOLD; PAYMENT OF WITHHOLDING TAXES.

     10.1. General Rules. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and employment-related
tax requirements attributable to an Option, including, without limitation, the
grant, exercise or vesting of an Option or a disqualifying disposition of stock
received upon exercise of an Incentive Stock Option, or (require the

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<PAGE>

Participant promptly to remit the amount of such withholding to the Company
before taking any action, including issuing any shares of Common Stock, with
respect to an Option.

     10.2. Special Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 10.1 of the Plan by
electing to tender Previously Acquired Shares, a Broker Exercise Notice or a
promissory note (on terms acceptable to the Committee in its sole discretion),
or by a combination of such methods.

ARTICLE 11.  RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.

     11.1. Employment or Service. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.

     11.2. Restrictions on Transfer. Other than pursuant to a qualified domestic
relations order (as defined by the Code), no right or interest of any
Participant in an Option prior to the exercise of such Option shall be
assignable or transferrable, or subjected to any lien, during the lifetime of
the Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, divorce or bankruptcy. A Participant shall, however, be
entitled to designate a beneficiary to receive an Option upon such Participant's
death. In the event of a Participant's death, such Participant's rights and
interest in Options shall be transferrable by testamentary will or the laws of
descent and distribution, and payment of any amounts due under the Plan shall be
made to, and exercise of any Options (to the extent permitted pursuant to
Article 8 of the Plan) may be made by, the Participant's legal representatives,
heirs or legatees. If in the opinion of the Committee a Participant holding an
Option is disabled from caring for his or her affairs because of mental
condition, physical condition or age, any payments due the Participant may be
made to, and any rights of the Participant under the Plan shall be exercised by,
such Participant's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status.

     11.3. Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to amend, modify or rescind any previously approved compensation plans
or programs entered into by the Company. The Plan will be construed to be in
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.

ARTICLE 12.  SECURITIES LAW RESTRICTIONS.

     12.1. Share Issuances. Notwithstanding any other provision of the Plan or
any agreements entered into pursuant hereto, the Company shall not be required
to issue or deliver any certificate for shares of Common Stock under this Plan,
and an Option shall not be considered to be exercised notwithstanding the tender
by the Participant of any consideration therefor, unless and until each of the
following conditions has been fulfilled:

          (a) (i) There shall be in effect with respect to such shares a
     registration statement under the Securities Act and any applicable state
     securities laws if the Committee, in its sole discretion, shall have
     determined to file, cause to become effective and maintain the
     effectiveness of such registration statement; or (ii) if the Committee has
     determined not to so register the shares

                                       11
<PAGE>

     of Common Stock to be issued under the Plan, (A) exemptions from
     registration under the Securities Act and applicable state securities laws
     shall be available for such issuance (as determined by counsel to the
     Company) and (B) there shall have been received from the Participant (or,
     in the event of death or disability, the Participant's heir(s) or legal
     representative(s)) any representations or agreements requested by the
     Company in order to permit such issuance to be made pursuant to such
     exemptions; and

          (b) There shall have been obtained any other consent, approval or
     permit from any state or federal governmental agency which the Committee
     shall, in its sole discretion upon the advice of counsel, deem necessary or
     advisable.

     12.2. Share Transfers. Shares of Common Stock issued pursuant to Options
granted under the Plan may not be sold, assigned, transferred, pledged,
encumbered or otherwise disposed of, whether voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, except pursuant to
registration under the Securities Act and applicable state securities laws or
pursuant to exemptions from such registrations. The Company may condition the
sale, assignment, transfer, pledge, encumbrance or other disposition of such
shares not issued pursuant to an effective and current registration statement
under the Securities Act and all applicable state securities laws on the receipt
from the party to whom the shares of Common Stock are to be so transferred of
any representations or agreements requested by the Company in order to permit
such transfer to be made pursuant to exemptions from registration under the
Securities Act and applicable state securities laws.

     12.3. Legends.

          (a) Unless a registration statement under the Securities Act is in
     effect with respect to the issuance or Transfer of shares of Common Stock
     under the Plan, each certificate representing any such shares shall be
     endorsed with a legend in substantially the following form, unless counsel
     for the Company is of the opinion as to any such certificate that such
     legend is unnecessary:

          THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER APPLICABLE
          STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR
          INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
          TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT
          PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
          STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT
          AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
          THE SATISFACTION OF THE COMPANY.

          (b) The Committee, in its sole discretion, may endorse certificates
     representing shares issued pursuant to the exercise of Incentive Stock
     Options with a legend in substantially the following form:

          THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
          TRANSFERRED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF ON OR
          BEFORE [THE LATER OF THE ONE-YEAR OR TWO-YEAR INCENTIVE STOCK OPTION
          HOLDING

                                       12
<PAGE>

          PERIODS], WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY.

ARTICLE 13.  PLAN AMENDMENT, MODIFICATION AND TERMINATION.

     The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that Options under the Plan shall conform to any change
in applicable laws or regulations or in any other respect the Board may deem to
be in the best interests of the Company; provided, however, that no such
amendment shall be effective, without approval of the shareholders of the
Company, if shareholder approval of the amendment is then required pursuant to
Rule 16b-3 under the Exchange Act or any successor rule or Section 422 of the
Code or under the applicable rules or regulations of any securities exchange or
the NASD. No termination, suspension or amendment of the Plan shall alter or
impair any outstanding Option without the consent of the Participant affected
thereby; provided, however, that this sentence shall not impair the right of the
Committee to take whatever action it deems appropriate under Section 4.3 or
Article 9 of the Plan.

ARTICLE 14.  EFFECTIVE DATE OF THE PLAN.

     14.1. Effective Date. The Plan is effective as of October 5, 1993, the date
it was adopted by the Board.

     14.2. Duration of the Plan. The Plan shall terminate at midnight on October
4, 2003, and may be terminated prior thereto by Board action, and no Option
shall be granted after such termination. Options outstanding upon termination of
the Plan may continue to be exercised in accordance with their terms.

ARTICLE 15.  MISCELLANEOUS.

     15.1. Construction and Headings. The use of the masculine gender shall also
include within its meaning the feminine, and the singular may include the plural
and the plural may include the singular, unless the context clearly indicates to
the contrary. The headings of the Articles, Sections and subparts of the Plan
are for convenience of reading only and are not meant to be of substantive
significance and shall not add or detract from the meaning of such Article,
Section or subpart.

     15.2. Public Policy. No person shall have any claim or right to receipt of
an Option if, in the opinion of counsel to the Company, such receipt conflicts
with law or is opposed to governmental or public policy.

     15.3. Governing Law. The place of administration of the Plan shall be
conclusively deemed to be within the State of Minnesota, and the rights and
obligations of any and all persons having or claiming to have had an interest
under the Plan or under any agreements evidencing Options shall be governed by
and construed exclusively and solely in accordance with the laws of the State of
Minnesota without regard to the conflict of laws provisions of any
jurisdictions. All parties agree to submit to the jurisdiction of the state and
federal courts of Minnesota with respect to matters relating to the Plan and
agree not to raise or assert the defense that such forum is not convenient for
such party.

     15.4. Successors and Assigns. This Plan shall be binding upon and inure to
the benefit of the successors and permitted assigns of the Company, including,
without limitation, whether by way of merger, consolidation, operation of law,
assignment, purchase or other acquisition of substantially all of

                                       13
<PAGE>

the assets or business of the Company, and any and all such successors and
assigns shall absolutely and unconditionally assume all of the Company's
obligations under the Plan.

     15.5. Survival of Provisions. The rights, remedies, agreements, obligations
and covenants contained in or made pursuant to the Plan, any agreement
evidencing an Option and any other notices or agreements in connection
therewith, including, without limitation, any notice of exercise of an Option,
shall survive the execution and delivery of such notices and agreements and the
delivery and receipt of shares of Common Stock and shall remain in full force
and effect.

                                       14

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