CREDIT AGREEMENT
                                   (ILX ESOP)

     THIS CREDIT AGREEMENT  ("Agreement") is entered into as of August 12, 1999,
by and between Patrick J. McGroder,  III, Nancy J. Stone, and James M. Myers, in
their  capacity as  Trustees  for the ILX Resorts  Incorporated  Employee  Stock
Ownership Plan and Trust, whose address is 2111 East Highland Avenue, Suite 210,
Phoenix,  AZ  85016  ("Borrower"),   and  LITCHFIELD  FINANCIAL  CORPORATION,  a
Massachusetts  corporation whose address is 13701 West Jewell Avenue, Suite 202,
Lakewood, CO 80228 ("Lender"), under the following facts:

                                R E C I T A L S:

     A. Borrower is the Trustee of the ILX Resorts  Incorporated  Employee Stock
Ownership  Plan and Trust.  Borrower has requested  that Lender extend a line of
credit to Borrower in the amounts and for the purposes set forth below.

     B.  Pursuant  to the terms and  conditions  hereinafter  set forth,  Lender
agrees to  establish a line of credit in favor of Borrower in maximum  principal
amount  of  $500,000.00,  to be  secured  by  certain  collateral  now  owned or
hereafter acquired as hereinafter set forth.

                              A G R E E M E N T S:

     In  consideration  of  the  foregoing  Recitals,   and  the  covenants  and
agreements hereinafter set forth, the legal adequacy and sufficiency of which is
hereby acknowledged, the parties hereby agree:

     1. DEFINITIONS.  In addition to the definitions set forth elsewhere in this
Agreement,  the  following  terms  shall  have  the  following  meanings  unless
otherwise agreed.

          1.1 "ADMINISTRATIVE COMMITTEE". The committee appointed by ILX Resorts
     Incorporated  ("ILX" or "Guarantor")  pursuant to Section 10.02 of the Plan
     (as hereinafter defined).

          1.2  "ADVANCE".  Means  funding  of a  portion  of the Line or Loan by
     Lender.

          1.3  "BORROWING  PERIOD".  The period of time during which Lender will
     make an Advance to or for the  benefit of  Borrower  pursuant  to the terms
     hereof,  commencing  on the date first set forth  above and ending June 30,
     2000.

          1.4 "CODE". The Internal Revenue Code of 1986 as amended.


          1.5 "COVERAGE RATIO". The ratio of the value (as shown in the reported
     closing  price as quoted by the American  Stock  Exchange) of the Stock and
     other cash, cash equivalents or other collateral deposited by ILX with, and
     acceptable  tot he Lender,  in its discretion as collateral for the Loan to
     the outstandign  principal  balance of the Loan. At all times, the Coverage
     Ratio  shall be no less than  1.25.  If, at any point in time the  Coverage
     Ratio is less than 1.25, within ten (10) days of Lender's written notice to
     Borrower and ILX, the Coverage Ratio shall be restored to no less than 1.25
     by  either a  principal  pre-payment  of the Loan or by  ILX's  deposit  of
     additional  collateral  with Lender in the form of cash or cash  equivalent
     securities or other collateral acceptable to Lender in its discretion so as
     to  restore  the  Coverage  Ratio to not less than 1.25.  By its  execution
     hereof ILX hereby grants Lender a first and prior duly  perfected  security
     interest in any  collateral  delivered  to Lender in order to maintain  the
     Coverage Ratio,  and ILX agrees to execute such other documents and perform
     such other acts as may be  necessary or  convenient  to the  perfection  of
     Lender's  security  interest on any such additional  collateral  including,
     without  limitation,  the  delivery of any such  additional  collateral  to
     Lender.  Without  limiting the foregoing,  in the event any such additional
<PAGE>
     collateral consists of promissory notes or accounts,  ILX will endorse same
     to Lender  with  recourse  and  deliver  same to Lender  and ILX  agrees to
     execute  the  Pledge  Agreement  appended  hereto  as  EXHIBIT  B-2 and the
     Irrevocable  Limited Power of Attorney  appended  hereto as EXHIBIT G-2. In
     addition,  ILX  shall  execute  and  file  UCC-1  financing  statements  as
     necessary  or  appropriate  to  perfect  Lender's  security  interest.  Any
     accounts  assigned  to  Lender  shall  be  serviced  by  Concord  Servicing
     Corporation ("Concord") pursuant to the terms of that certain April 9, 1996
     Agreement  by and  between  Concord,  ILX,  ILE  Sedona  Incorporated,  Los
     Abrigados  Partners Limited  Partnership,  and Lender.  ILX and Lender will
     provide  Concord  written advice in this regard in the form appended hereto
     as EXHIBIT H, and in the event of an uncured Event of Default, Lender shall
     have the right to direct Concord to pay to Lender all payments  received by
     Concord with respect to any such pledged accounts. All fees of Concord as a
     result  of  ILX's  pledge  of  accounts  to  Lender   (including,   without
     limitation,  Concord's  fees for providing  reports to Lender and Concord's
     fees for servicing the subject accounts) shall be paid by ILX. Lender shall
     use reasonable  care and due diligence in connection with its possession of
     any such additional collateral provided, however, that Lender shall have no
     liability of any nature to ILX in  connection  with its  possession  of any
     such additional  collateral unless damages associated with Lender's loss or
     holding of the additional collateral constitutes gross negligence or wilful
     misconduct.  Upon payment in full of the Indebtedness  after the conclusion
     of the Borrowing Period, Lender shall return any such additional collateral
     delivered to it by ILX to ILX. In the event any such additional  collateral
     comprises,  in  Lender's  discretion,  accounts  payable  to ILX,  any such
     accounts shall be endorsed by Lender to ILX without recourse at the time of
     Lender's delivery of same to ILX.

          1.6 "ERISA". The Employee Retirement  Employment Security Act of 1974,
     as amended.

          1.7 "GUARANTOR". ILX Resorts Incorporated, an Arizona corporation. ILX
     is the  "Employer"  designated in the Plan. By its  execution  hereof,  ILX
     commits  to make  Contributions  (as  defined  in the  Plan) to the Plan in
     amounts necessary to amortize the principal and interest payments due under
     the Loan contemplated hereby.

          1.8  "INDEBTEDNESS".  All sums and other obligations owed to Lender by
     Borrower   whether  under  this   Agreement  or  any  other  Loan  Document
     (including, without limitation, the Line Note) or otherwise.

          1.9 "INTEREST RATE". Refers to the rate of interest due and owing from
     Borrower to Lender,  on the  outstanding  portion of the Loan, from time to
     time. The "Regular  Interest Rate" or "Regular Rate" refers to the interest
     rate due and owing prior to an Event of Default.  The Regular Interest Rate
     shall be the Prime  Rate plus 2.5% (but in no event less than  10.5%).  The
     "Default  Interest  Rate" or "Default Rate" shall mean the rate of interest
     charged on and after an Event of Default has occurred. The Default Interest
     Rate shall be the Regular Rate plus 6%. Provided, however, that in no event
     shall the  Regular  Rate or the Default  Rate  exceed the  highest  rate of
     interest  permitted by law. The Interest  Rate shall be adjusted  with each
     change  in the Prime  Rate  from and  after the date of the first  Advance.
     Provided,  however,  that no  adjustment  that results in a decrease in the
     Interest Rate shall take effect during any period during which  Borrower is
     in default under the terms of the Line Note, this  Agreement,  or any other
     Loan Document. Any such decrease shall not become effective until the first
     day of the month following the date that all such defaults have been cured.
     After cure of all  defaults,  the Interest Rate shall revert to the Regular
     Interest Rate  effective  the first day of the month  following the cure of
     all defaults.

          1.10 "INVESTMENT MANAGER".  The agent of the Administrative  Committee
     appointed pursuant to Section 10.03(a) of the Plan.

          1.11 "LOAN OR LINE  DOCUMENTS".  All  documents  executed by Borrower,
     Lender, Guarantor, or third parties, or any of them, in connection with the
     Loan more fully described herein,  including but not limited to this Credit
<PAGE>
     Agreement,  the Line Note,  the Pledge  Agreement,  the  Guaranty and UCC-1
     Financing Statements.

          1.12 "PLAN".  The ILX Resorts  Incorporated  Employee Stock  Ownership
     Plan and Trust as established by that certain document entitled ILX Resorts
     Incorporated  Employee  Stock  Ownership Plan and Trust dated April 9, 1999
     (effective January 1, 1999) as may be amended from time to time.

          1.13 "PLAN YEAR". January 1 through December 31 or such other 12-month
     period as may be specified in the Plan as the Plan Year.

          1.14  "PRIME  RATE".  Prime Rate means the  highest  rate of  interest
     published by THE WALL STREET JOURNAL as the base rate on corporate loans at
     large  United  States  money center  commercial  banks.  If THE WALL STREET
     JOURNAL  (or any  successor)  ceases  to  exist  or  ceases  to  publish  a
     comparable  Prime  Rate,  Lender  will choose a new index which is based on
     comparable information.

          1.15 "RELEASE FEE". A principal  and/or  interest  payment on the Loan
     made by  Borrower  to  Lender in order to secure  Lender's  release  of its
     security interest in one or more shares of Stock pledged to Lender pursuant
     to paragraph 7.1,  below,  in order to allocate said share(s) of Stock to a
     participant in the Plan.

          1.16 "STOCK". Common stock issued by ILX Resorts Incorporated which is
     readily  tradeable  on the  American  Stock  Exchange,  the New York  Stock
     Exchange or other  established  securities  market approved by Lender,  and
     which  otherwise  qualifies  as "company  stock"  within the meaning of the
     Plan.

          1.17 "STOCK PRICE".  The average price per share of Stock purchased by
     Borrower with the proceeds of the Loan.

          1.18 "TRANSFER AGENT". Harris Trust and Savings Bank or its successor,
     acting as the Transfer  Agent for the common and  unexchanged  Stock of ILX
     Resorts Incorporated.

          1.19 "TRUST". ILX Resorts Incorporated  Employee Stock Ownership Trust
     as established pursuant to the Plan.

          1.20  "TRUSTEE".  The Trustee or Trustees  of the Plan  including  the
     Trustees  executing  this  Agreement  and any Successor  Trustee  appointed
     pursuant to the Plan.

     2. LOAN.  Upon the terms and  conditions  contained  herein,  Lender hereby
agrees to extend  credit to  Borrower  in a sum not to exceed  $500,000.00  (the
"Line" or "Loan").  At  Borrower's  request,  Lender may increase the  foregoing
$500,000.00 Line in its sole discretion,

     3. LOAN DOCUMENTS; SECURITY.  Concurrently herewith, Borrower shall execute
a promissory  note (the "Line Note") in the face amount of  $500,000.00,  in the
form  attached  hereto  as  EXHIBIT  A.  The  Indebtedness  (including,  without
limitation,  that portion  evidenced  by the Line Note) shall be secured,  INTER
ALIA,  by a  collateral  assignment  of the Stock  that was  purchased  with the
proceeds of the Loan pursuant to the Pledge Agreement appended hereto as EXHIBIT
B-1.  Repayment of the  Indebtedness  and all other  obligations  of Borrower to
Lender under the Loan Documents will be guaranteed by the Guarantor  pursuant to
the Guaranty in the form appended hereto as EXHIBIT C.

     4. TERM AND  REPAYMENT.  The Loan shall  bear  interest  at the  applicable
Interest  Rate and be paid as  specified  in the Line Note.  If not sooner  paid
pursuant  to the  provisions  hereof,  the Line Note shall be paid in full on or
before January 1, 2002 (the "Due Date").
<PAGE>
          4.1 BORROWING PERIOD. During the Borrowing Period payments of interest
     only  shall be due and  payable  monthly  on the  first  day of each  month
     commencing  on the  first  day of the  month  following  the  date  of this
     Agreement.

          4.2 REPAYMENT  PERIOD.  Commencing on the first day of the first month
     after the end of the Borrowing Period (i.e., July 1, 2000), for a period of
     eighteen (18) months (the "Repayment  Period")  Borrower shall make monthly
     payments of interest on the first day of each month and in addition thereto
     on each July 1 and January 1  thereafter  prior to the Due Date  (i.e.,  on
     July 1, 2000,  January 1, 2001,  and July 1, 2001),  Borrower  shall pay to
     Lender an amount equal to 25% of the principal  balance  outstanding on the
     Loan on June 30, 2000. Each principal  and/or interest  payment on the Loan
     shall constitute a Release Fee pursuant to the provisions of paragraph 7.1,
     below.

     5.  Conditions to Loan.  Satisfaction of or waiver by Lender of each of the
following  requirements  shall be  conditions  precedent  to the  making of each
Advance:

          5.1 All of the Loan  Documents in form and substance  satisfactory  to
     Lender  shall have been duly  executed  by all  parties  thereto,  with the
     signatures properly notarized and the instruments in proper form for filing
     or recordation,  as required,  and shall have been filed or recorded and/or
     delivered to Lender or Lender's agent, as appropriate.

          5.2 All representations and warranties  contained herein shall be true
     and  correct as of the day of closing  and as of the day of making each and
     every Advance.

          5.3 Borrower,  Guarantor and the  Administrative  Committee shall have
     executed and delivered such certificates and resolutions as are required by
     Lender.

          5.4 There shall be no Event of Default (as  defined in  Paragraph  12,
     below) then in existence.

          5.5 No other  person,  firm,  or entity shall have or claim a security
     interest in the Stock acquired with the proceeds of the Loan as provided in
     this Agreement, to the extent not yet released as security for the Loan.

          5.6 All necessary UCC financing  statements have been filed and Lender
     has obtained a properly  perfected first and prior security interest in the
     Stock and other  collateral  identified  in the Pledge  Agreement  securing
     same.

          5.7 Lender shall have received and approved such additional  documents
     and assurances as Lender may reasonably require.

          5.8 Lender shall have  received one or more attorney  opinion  letters
     from  counsel  for  Borrower in the form  appended  hereto as EXHIBIT D and
     otherwise in form and substance satisfactory to Lender, addressed to Lender
     covering  such  matters  relating to Borrower,  the Plan,  and the Stock as
     Lender in its discretion may require.

          5.9 There shall have been no material  adverse change to the financial
     condition of Borrower or ILX, or ILX's operations or properties.

          5.10 The Plan remains in continuing  compliance with all local, state,
     and  federal   laws,   including,   without   limitation,   the   continued
     qualification  under the provisions of Sections 401 ET SEQ. and 501 ET SEQ.
     of the Code and ERISA.
<PAGE>
          5.11 Borrower  hereby  agrees to pay, and Borrower or Guarantor  shall
     have  paid  to  Lender,  all  Lender's  reasonable  out-of-pocket  expenses
     including, without limitation,  recording costs, filing fees and legal fees
     and  disbursements  of Lender's  counsel,  incurred by Lender in connection
     with the subject Loan,  and the  preparation  of the initial Loan Documents
     (which legal  expenses  shall not exceed  $5,000.00)  and any  amendment or
     modification  thereof.  Any  unpaid  reimbursements  as  provided  in  this
     paragraph may be deducted by Lender from any Advance.

          5.12 Borrower or Guarantor shall have paid Lender a one-time  Facility
     Fee in the amount of $5,000.00.

          5.13 Borrower shall provide Lender a duly executed Request for Advance
     in the form appended hereto as EXHIBIT E.

          5.14  Lender  shall  have  received  the  duly  executed   Authorizing
     Resolution and  Incumbency  Certificate  from  Borrower,  Guarantor and the
     Administrative Committee in the form appended hereto as EXHIBIT F.

          5.15 Lender shall have received the duly executed Irrevocable Power of
     Attorney  and Stock  Power from  Borrower  in the form  appended  hereto as
     EXHIBIT G-1.

          5.16 The Coverage Ratio  resulting  after giving effect to the Advance
     shall not be less than 1.25.

     6. ADVANCES.  Subject to the terms, limitations,  and conditions herein and
in the Line Note, Lender agrees to advance funds to Borrower as follows:

          6.1  PROCEDURES  FOR  ADVANCES.  Advances  shall be made in a  minimum
     amount of  $50,000.00  (unless  said  minimum  amount is waived by Lender).
     Borrower  shall have  provided  Lender an  executed  Request for Advance at
     least five (5) days prior to the requested date of Advance. The initial and
     subsequent  Advances  shall be funded  upon  receipt by Lender of a written
     acknowledgment from the stock broker effecting the acquisition of the Stock
     that said stock  broker has or will acquire the subject  Stock,  has in its
     possession  a stock power with  respect to same duly  executed by Borrower,
     conveying the subject Stock to Lender,  and that said  stockbroker  has and
     will hold such Stock (and all Stock purchased with the proceeds of the Loan
     and not  subject  to a partial  release  as  hereinbefore  provided)  in an
     account in the name of Lender as  custodian  of the Stock held  therein for
     the ILX Resorts Incorporated Employee Stock Ownership Plan and Trust.

          6.2  ENDORSEMENT  OF NOTE.  Upon  making an  Advance  or  receiving  a
     repayment of principal or interest,  Lender shall  endorse the Line Note as
     appropriate  or  otherwise  make such  entries in its records as Lender may
     deem necessary or appropriate  to indicate the amount  outstanding.  Lender
     shall  provide  Borrower a monthly  statement  reflecting  the  outstanding
     balance due on the Line Note.  In the absence of manifest  error,  Lender's
     records shall be conclusive proof of the amount outstanding.

          6.3 FEES. The following fees will be deducted from the sums Advanced:

               6.3.1 FACILITY FEE. The $5,000.00 Facility Fee, to the extent not
          previously paid.

               6.3.2 LENDER'S  EXPENSES.  Any unpaid expenses of Lender pursuant
          to paragraph 5.11, above.

          6.4  FUNDING  OF  ADVANCE.  Lender  shall  fund each  Advance  by wire
     transfer  to the  stockbroker  acquiring  the Stock  pursuant  to a written
     letter agreement by and between said stockholder and Lender referencing the
<PAGE>
     terms set forth above in paragraph 6.1. By its execution  hereof,  Borrower
     acknowledges  and agrees that any and all Stock purchased with the proceeds
     of the Loan shall be held by any such stockbroker in an account in the name
     of Lender  as  custodian  of the Stock  held  therein  for the ILX  Resorts
     Incorporated  Employee  Stock  Ownership  Plan and  Trust so as to  perfect
     Lender's  security  interest in same by  possession.  Lender  shall have no
     further  responsibility  or  obligation  with  respect to the  delivery  or
     disbursement of funds.

     7. PLEDGE  AGREEMENT.  Borrower's  obligations under this Agreement and the
Line Note (as well as all  other  obligations  of  Borrower  to Lender  shall be
secured,  INTER ALIA,  by a first,  prior and only lien against (a) cash or cash
equivalent  collateral,  if any,  acceptable  to Lender and  provided  by ILX to
Lender in order to maintain  the  Coverage  Ratio and (b) the Stock  acquired by
Borrower with the proceeds of the Loan  pursuant to the Pledge  Agreement in the
form  appended  hereto,  to the extent not released  pursuant to  paragraph  7.1
below.

          7.1  PARTIAL  RELEASES.  At the end of each Plan Year that the Loan is
     outstanding  and a  payment  of  principal  and/or  interest  is  made,  at
     Borrower's  request,  Lender  shall grant a partial  release of share(s) of
     Stock  pledged  pursuant to the Pledge  Agreement as follows:  Lender shall
     release the number of shares equal to the number of Shares held immediately
     before the release for the current Plan Year multiplied by a fraction,  the
     numerator  of which is the amount of principal  and  interest  paid for the
     Plan Year and the  denominator of which is the principal and interest to be
     paid for all future Plan Years, based on the interest rate in effect at the
     end of the Plan Year.

          7.2 FINAL RELEASE.  All Stock and any collateral provided by ILX shall
     be fully  released  from  Lender's  lien after the  Borrowing  Period  upon
     payment in full of the Indebtedness.

     8.   REPRESENTATIONS   AND   WARRANTIES.   Borrower   makes  the  following
representations  and  warranties  to Lender,  each of which shall be deemed made
again as of the date of each Advance:

          8.1 The Plan and Trust qualify under the provisions of Sections 401 ET
     SEQ. and 501 ET SEQ. of the Code and ERISA.

          8.2  Borrower  has taken all action to permit  Borrower  to enter into
     this Agreement and any other agreement or transaction  contemplated hereby,
     and repay the Loan. No officer or agent of Lender shall be required to make
     any inquiry concerning the validity of any transaction purported to be made
     by  Borrower,  and Lender may  conclusively  assume that every  obligation,
     agreement,  instrument  or act or thing done and  executed  by such  person
     purportedly  on  behalf of  Borrower  has been so  executed  or done in his
     official capacity as an agent of Borrower.

          8.3  Neither  Borrower  nor the Plan are  subject to any  disciplinary
     actions or proceedings by any governmental authority or trade organization.

          8.4 Borrower's execution,  delivery and performance of this Agreement,
     the Loan Documents and the  borrowings  evidenced by the Line Note (a) will
     not  violate  any  law,  regulation,  indenture,  agreement  or  any  other
     instrument to which  Borrower is a party or by which Borrower or any of its
     property is governed or bound; and (b) will not be in conflict with, result
     in a breach of or  constitute  (with  due  notice  and/or  lapse of time) a
     default  under  any such law,  regulation,  indenture,  agreement  or other
     instrument,  or result in the  violation  of any law or  regulation  or the
     creation or imposition  of any lien,  charge or  encumbrance  of any nature
     whatsoever  upon any of its property or assets,  except as  contemplated by
     the provisions of this Agreement. Each of the Loan Documents, when executed
     and  delivered  to Lender,  will  constitute  the legal,  valid and binding
     obligations  of respective  signatories  thereto in  accordance  with their
     terms.
<PAGE>
          8.5 All financial  data that have been given to Lender with respect to
     Borrower and/or ILX (a) are complete and correct in all material  respects;
     and (b)  accurately  present  the  financial  condition  of Borrower in all
     material respects as of the date on which the same have been furnished. All
     balance sheets  disclose all known  liabilities,  direct and contingent (as
     determined  by  GAAP),  as of their  respective  dates.  There  has been no
     adverse change in the financial condition of Borrower since the date of the
     most recent of each such  financial  statement  given to Lender  other than
     changes in the ordinary course of business,  none of which changes has been
     materially adverse.

          8.6  Neither  the  Borrower  nor  the  Guarantor  are a  party  to any
     agreement or instrument  materially and adversely  affecting its present or
     proposed business, properties or assets, operations or condition, financial
     or otherwise; and none is in material default in performance, observance or
     fulfillment of any of the material obligations, covenants or conditions set
     forth in any agreement or instrument to which it is a party.

          8.7 All other reports,  papers,  data and information  given to Lender
     with  respect to Borrower,  the Plan,  and the  Guarantor  are accurate and
     correct in all material  respects and complete  insofar as completeness may
     be necessary to give Lender a true and accurate knowledge of the applicable
     subject matter.

          8.8 Borrower  has  properly  and timely  filed all  required  federal,
     state,  county  and  municipal  reports  and  submissions  and has paid all
     required fees due governmental  entities.  Borrower knows of no basis for a
     material additional assessment of Borrower in respect of any such fees.

          8.9 There is not now  pending  against or  affecting  Borrower  or the
     Guarantor,  nor to their knowledge is there threatened any action,  suit or
     proceeding  at law or in equity or by or before any  administrative  agency
     which,  if  adversely  determined,  would  materially  impair or affect the
     financial condition or operation of Borrower or the Guarantor.

          8.10 No authorization,  consent, approval,  license, exemption, filing
     or  registration  with any court or  governmental  department,  commission,
     board,  bureau,   agency  or  instrumentality,   domestic  or  foreign,  or
     securities exchange,  is or will be necessary to the validity of the rights
     created under this Agreement.

          8.11 This Agreement, the documents relating thereto and all aspects of
     the transactions  contemplated  therein do not violate any federal or state
     laws or  regulations,  including  without  limitation  laws or  regulations
     relating to usury.

          8.12 Borrower is not  insolvent;  has not made an  assignment  for the
     benefit of creditors;  has not suspended business or commenced  proceedings
     for  dissolution  or  become  insolvent;  has  not  filed  any  bankruptcy,
     reorganization,  arrangement,  insolvency or  liquidation  proceedings,  or
     other proceedings for relief under  bankruptcy,  insolvency or receivership
     laws for the relief of debtors,  instituted  by or against it or  consented
     thereto;  does not have any  judgment,  writ or warrant of  attachment,  or
     similar  process,  entered or filed  against it or any of its  property  or
     assets, which renders it insolvent or impairs its ability to continue doing
     business  and which has  remained  unvacated,  unbonded or  unstayed  for a
     period of 30 days; has not generally failed to pay its debts as they become
     due;  has not taken any action,  nor has any  intention to take any action,
     which would constitute an "act of bankruptcy" under the Federal  Bankruptcy
     Code or in contemplation thereof.

          8.13 The purpose of this  transaction is exclusively for commercial or
     business  purposes  and the  proceeds of each  Advance will be used for the
     purpose of acquiring Stock as set forth in Borrower's Request for Advance.
<PAGE>
          8.14 That the  undersigned  comprise  each and every Trustee under the
     Plan.

     9. PROTECTIVE COVENANTS.

          9.1 So long as any of the Indebtedness remains unpaid, Borrower shall:

               9.1.1 Not terminate and shall comply with the requirements of all
          applicable laws,  rules,  regulations,  and orders of any governmental
          authority,  including, without limitation, the Code and ERISA so as to
          remain  qualified  under  Sections  401 ET SEQ. and 501 ET SEQ. of the
          Code and ERISA.

               9.1.2 Keep adequate  records and books of account  reflecting all
          financial  transactions  in  conformity  with (i)  generally  accepted
          accounting  practices  applied  on a  consistent  basis,  and (ii) all
          applicable requirements of any governmental agency or authority having
          jurisdiction over Borrower or any of its businesses.

               9.1.3 Borrower  acknowledges that the placement of any additional
          liens upon the Stock  acquired with the proceeds of the Loan and other
          collateral  encumbered by Borrower's  Pledge  Agreement may impair the
          ability  of Lender  to obtain  assurance  that its  security  interest
          remains  in a  prior  position.  Accordingly  and  to  facilitate  the
          purposes  of this  Agreement  and to avoid  causing  damage to Lender,
          Borrower  agrees  that it shall not create or suffer to be created any
          additional lien upon any of the Stock owned by Borrower and encumbered
          by the Pledge Agreement  without Lender's prior written consent in its
          sole discretion.

               9.1.4 Borrower  hereby  subordinates  any and all sums payable to
          Guarantor, or to Borrower's or Guarantor's officers,  trustees, or any
          affiliates to repayment of the  Indebtedness,  and no such payments or
          distributions  shall  be  made  to any  such  officers,  trustees,  or
          affiliates if an Event of Default is outstanding and uncured.

               9.1.5 Upon the request of Lender, execute or cause the execution,
          acknowledgment  and delivery of such further  instruments  (including,
          without  limitation,  declarations  of no set-off) and do such further
          acts as may be  necessary,  desirable  or  proper  to  carry  out more
          effectively   the  purposes  of  this  Agreement  or  the  other  Loan
          Documents.

               9.1.6 Not take any action with respect to any of the security for
          the Loan held by Lender from time to time which is  inconsistent  with
          the  provisions  and the  purpose  of this  Agreement  or which  would
          adversely affect the rights of Lender under the Loan Documents.

               9.1.7 Permit  Lender and/or its  representative(s)  at Borrower's
          expense to review  Borrower's books and records.  Prior to an Event of
          Default,  said review  shall take place not more often than  annually.
          Borrower  or  Guarantor  shall  reimburse  Lender its  reasonable  and
          necessary  out-of-pocket expenses incurred in connection with any such
          review (including,  without limitation, travel and lodging) within ten
          (10) days of Lender's invoice  therefor.  Any such invoice not paid by
          Borrower in a timely  fashion may be paid, at Lender's  option,  by an
          Advance.

               9.1.8 Not cause,  suffer or permit the Coverage  Ratio to be less
          than 1.25.

     10. FINANCIAL STATEMENTS, REPORTS AND TAX RETURNS.

          10.1  REPORTS AND  FINANCIAL  STATEMENTS.  Borrower  shall  furnish to
     Lender the  following-described  complete and correct reports and financial
     statements accurately reflecting the performance and financial condition of
<PAGE>
     Borrower.  The reports and financial statements shall be in such detail, be
     in form and content and be prepared with such level of  accounting  control
     as Lender may require from time to time.  Borrower shall give Lender prompt
     notification of any event which has, or the  commencement of any litigation
     which if  adversely  determined  would have, a material  adverse  effect on
     Borrower's or the Project's financial condition.  The reports and financial
     statements to be provided include:

               10.1.1 Within  forty-five  (45) days after the end of each fiscal
          quarter, Borrower shall provide Lender quarterly statements of account
          as described  in Section  11.15 of the Plan and an  accounting  of all
          Employer contributions certified true and accurate by Borrower.

               10.1.2 Within ninety (90) days after the end of each fiscal year,
          Borrower shall provide Lender audited annual statements of account and
          an accounting of all Employer contributions.

               10.1.3 Within ten (10) days after each required filing  deadline,
          Borrower  will  furnish  Lender with a copy of its  executed and filed
          federal tax return or report and/or with a copy of any extension forms
          filed in lieu of the subject tax return or report.

               10.1.4  Such  other   information   and  reports  as  Lender  may
          reasonably request from time to time.

          10.2  AUDIT.  Lender  shall  have the right to  inspect  and/or  audit
     Borrower's books and records at Borrower's or Borrower's accountant's place
     of business  during  business  hours.  Borrower  shall  reimburse  Lender's
     reasonable  and  necessary  out-of-pocket  expenses  incurred  in any  such
     inspection or audit.

     11.  CROSS-DEFAULT.  Any  Event of  Default  under  this  Loan or any other
obligation from Borrower to Lender shall be deemed an Event of Default under any
and/or all of the other  loans or  agreements  by  Borrower  with  Lender or its
affiliates and any  collateral  under any or all of the above shall be deemed to
be collateral for the others;  provided,  however, that the Stock purchased with
the  proceeds  of the Loan shall not be deemed  collateral  for any other  loan.
Lender,  at its option may exercise  any of its rights and remedies  under these
agreements  to cure a default  under any of the  agreements,  including  but not
limited to retention, foreclosure or sale of any other collateral.

     12. DEFAULT.

          12.1  The  occurrence  of any  one or  more  of  the  following  shall
     constitute an "Event of Default"  hereunder,  if any such breach or default
     is not  cured  within  ten (10)  days  (twenty  (20)  days in the case of a
     non-monetary default) from Borrower's receipt of written notice:

               12.1.1  Default in the  performance of any obligation by Borrower
          under the  Indebtedness,  the Line Note, the Pledge  Agreement,  other
          Loan  Documents,  or  otherwise,  whether or not such  default is with
          respect to the payment of money or otherwise.

               12.1.2  Any  material  misrepresentation  or  warranty  contained
          herein at any time proves to be false or  misleading  in any  material
          respect.

               12.1.3 The levy of a material attachment, execution or other such
          process  against  Borrower's  property or any of it and the failure by
          Borrower  to obtain the  discharge  thereof or provide  adequate  bond
          acceptable to Lender as security therefor within 60 days.
<PAGE>
               12.1.4  Default in the  performance  of any other  obligation  of
          Borrower to Lender  under any other  agreement  between  Borrower  and
          Lender.

               12.1.5  Borrower's  or  Guarantor's  entry into or  granting of a
          general assignment for the benefit of its creditors,  the voluntary or
          involuntary  appointment of a receiver for all or substantially all of
          its assets,  filing of bankruptcy (either voluntary or involuntary) or
          Borrower or Guarantor admits in writing its inability to make payments
          on its debts as they mature.

               12.1.6 The  occurrence of any  materially  adverse  change in the
          financial conditions or operations of Borrower or Guarantor.

               12.1.7 The occurrence of a material default in the performance of
          any other payment obligation of Borrower whether owed to Lender or any
          other person, firm, or entity.

               12.1.8 The termination of Borrower.

               12.1.9  Failure to maintain at all times a Coverage  Ratio of not
          less than 1.25.

          12.2 Upon the  occurrence of any Event of Default,  Lender may, at its
     option:

               12.2.1  Declare  all  of  the  Indebtedness  (including,  without
          limitation, the Line Note) immediately due and payable;

               12.2.2 Commence  foreclosure or otherwise enforce Lender's rights
          against any security then held by Lender for the Loan in such order as
          Lender may determine;

               12.2.3  Terminate  Lender's  agreement to make  further  Advances
          under this Agreement; and/or

               12.2.4  Offset any  indebtedness  from any amounts  due  Borrower
          under any other agreement between Borrower and Lender.

          12.3 MARSHALING.  Borrower  specifically waives, to the fullest extent
     permitted  by law,  any right to  require  marshaling  of any of the assets
     encumbered to secure the Indebtedness and to direct the order in which such
     assets are sold.

          12.4  DISPOSITION  OF  PROCEEDS.  Subject  to  the  provisions  of all
     applicable  law,  the net cash  proceeds  resulting  from the sale or other
     disposition  of all or any part of the  security  held by  Lender  shall be
     applied  in the  following  order:  (i)  first,  to the costs and  expenses
     (including  any  trustee's  and  attorneys'  fees)  of  retaking,  holding,
     storing,   processing   and  preparing  for  sale,   selling,   collecting,
     liquidating   and  the  like;   (ii)  then  to  the   satisfaction  of  the
     Indebtedness, with application to principal, interest, charges and expenses
     to be in such  order  and  manner  as  determined  by  Lender  in its  sole
     discretion;  and (iii) then to satisfaction of any remaining obligations of
     Borrower  hereunder.  Any surplus after such application shall be delivered
     to Borrower,  and Borrower  shall be liable for, and shall pay to Lender on
     demand, any deficiency remaining after such application.

          12.5  REMEDIES.  The remedies  provided for herein are  cumulative and
     shall be in addition to any and all other  rights or remedies  provided for
     in  this  Agreement,   or  any  other  Loan  Document  including,   without
     limitation,  any  banker's  lien and right of offset.  The  exercise of any
     right or remedy by Lender  hereunder  shall not constitute a cure or waiver
     of any default in  connection  with the Loan nor  invalidate  any notice of
     default or act done pursuant to any such notice,  nor  prejudice  Lender in
<PAGE>
     the  exercise of any of its other  rights  unless,  in the  exercise of the
     rights or remedies  undertaken by Lender,  Lender realizes all amounts owed
     to it in connection with the Loan.

     13. MISCELLANEOUS.

          13.1 WAIVER.  No waiver by Lender of any default or breach by Borrower
     hereunder  shall be implied  from any  omission  by Lender to take,  or any
     delay in taking, action on account of such default if such default persists
     or is repeated,  and no express  waiver shall affect any default other than
     the default  expressly  made the subject of the waiver and any such express
     waiver  shall be  operative  only for the  time and to the  extent  therein
     stated.  Any waiver of any  covenant,  term or condition  contained  herein
     shall not be  construed  as a waiver of any  subsequent  breach of the same
     covenant, term or condition. The consent or approval by Lender to or of any
     act by Borrower  requiring  further consent or approval shall not be deemed
     to waive  or  render  unnecessary  the  consent  or  approval  to or of any
     subsequent  similar act.  Notwithstanding  anything set forth herein to the
     contrary,  if no notice of a default or waiver is  required  hereunder  and
     none has been given,  Lender  shall not be deemed to have waived any rights
     which it may have hereunder until seven (7) days following receipt by it of
     written notice from Borrower  alerting Lender to the fact that the time for
     exercising  any right or remedy  hereunder  has  elapsed  without  exercise
     thereof and such time for exercise shall automatically be extended to seven
     (7) days  after  such  notice.  If no action is taken by Lender  within the
     seven (7) days following notice, said right shall conclusively be deemed to
     have  been  Waived  by  Lender.  The  intent  of this  section  is to avoid
     unintentional waivers by Lender of any of its rights hereunder.

          13.2 NO DULY OF LENDER.  Nothing in this  Agreement  or any other Loan
     Document  shall  impose or imply  any duty or  obligation  whatsoever  upon
     Lender to take any  action  with  respect  to any of the  security  held by
     Lender for the Loan or to preserve  any rights of Borrower  with respect to
     any of the security held by Lender for the Loan.

          13.3 AMENDMENT.  This Agreement and the Loan Documents,  and the terms
     of each of them, is the entire agreement between the parties and may not be
     changed, waived, discharged or terminated orally, but only by an instrument
     or instruments in writing signed by the party against which  enforcement of
     the change, waiver, discharge or termination is asserted.

          13.4 INDEMNIFICATION. To the fullest extent permitted by law, Borrower
     agrees to  indemnify  and hold  harmless  Lender,  and  Lender's  officers,
     directors,  shareholders,  agents,  attorneys and  employees  (collectively
     "Indemnitee"),  from and against any and all liability, loss, damage, costs
     or expense,  including  court costs and reasonable  attorneys'  fees,  that
     Indemnitee may hereafter suffer,  incur, pay or lay out or in any manner be
     held  liable  for,  by  reason  of any  breach,  default,  misstatement  or
     misrepresentation  of any of the statements,  warranties or representations
     of Borrower contained in this or any related agreement, or by reason of any
     breach or default by Borrower, or any of Borrower's employees,  officers or
     agents, in the performance of any duties,  covenants or obligations arising
     under  this or any  related  agreement.  In this  connection,  but  without
     limitation,  Borrower  agrees to reimburse  any  Indemnitee  promptly  upon
     demand for any payments made or losses suffered by such person with respect
     to any liability,  damage,  loss or claim to which the foregoing  indemnity
     relates.

          13.5  NOTICES.  Any notice,  demand or request which may be permitted,
     required or desired to be given in connection  herewith shall be in writing
     and directed to the parties at the respective addresses set forth below (or
     at such other  addresses  as a party  hereto may  designate in writing) and
     shall be tendered by personal  delivery or by facsimile  transmission or be
     deposited  in the  U.S.  mail,  registered  or  certified,  return  receipt
     requested.  Such notice,  if forwarded by mail,  shall be deemed  effective
     seventy-two  (72) hours after  deposited in the U.S. mail, or if personally
     delivered,  upon delivery. A registered mail or certified mail receipt will
     be prima facie  evidence of the giving of such notice and the date thereof.
     If such notice is personally  served,  such notice shall be effective  upon
<PAGE>
     delivery or if such notice is sent by facsimile  transmission,  such notice
     shall be effective upon the completion of the  transmission of the same (so
     long as the sender retains evidence of the recipient's(s') receipt).

     If to Borrower: Patrick J. McGroder, III, Nancy J. Stone and James M. Myers
                     in their capacity as Trustees for the
                     The ILX Resorts Incorporated Employee Stock Ownership Plan
                     and Trust
                     2111 East Highland Avenue, Suite 210
                     Phoenix, AZ 85016
                     Attention: Nancy J. Stone
                     Facsimile: 602-957-2290

     with a copy to: ILX Resorts Incorporated
                     2111 East Highland Avenue, Suite 210
                     Phoenix, AZ 85016
                     Attention: Joseph P. Martori
                     Facsimile: 602-957-2290

     If to Lender:   Litchfield Financial Corporation
                     13701 West Jewell Avenue, Suite 200
                     Lakewood, CO 80228
                     Attention: Wayne M. Greenholtz,
                                Senior Vice President
                     Facsimile: (303)985-5375

     with a copy to: Litchfield Financial Corporation
                     430 Main Street
                     Williamstown, MA 01267
                     Attention: Jim Shippee,
                                Senior Vice President
                     Facsimile: (413)458-1020

     and:            James E. Brown, Esq.
                     James E. Brown & Associates, P.C.
                     1350 Seventeenth Street, Suite 306
                     Denver, CO 80202
                     Facsimile: (303)825-2828

     Nothing  herein  contained  shall be  construed as  preventing  the parties
     hereto,  respectively,  from  changing  the place to which  notice shall be
     addressed,  but no such  change  shall  be  valid  unless  it is  given  in
     accordance with the terms of this paragraph.

          13.6 BINDING  EFFECT;  ASSIGNMENT.  This  Agreement may be assigned by
     Lender. Borrower may not assign its interest in, or obligations under, this
     Agreement  except  with  the  written  consent  of  Lender,   in  its  sole
     discretion.  Subject  to  the  foregoing,  all  of  the  terms,  covenants,
     conditions,  representations  and  warranties  hereof  shall  inure  to the
     benefit of, and be binding upon,  the  successors and assigns of Lender and
     Borrower.

          13.7   INTERPRETATION  AND  VENUE.  Except  as  provided  below,  this
     Agreement  shall be governed and interpreted  under Colorado law.  Whenever
     the context  requires,  all words used in the singular will be construed to
     have been used in the plural,  and vice versa, and each gender will include
     any other gender.  The captions of the paragraphs of this Agreement are for
     convenience  only and do not define or limit any terms or provisions.  Time
<PAGE>
     is of the essence in the  performance  of this  Agreement by Borrower.  The
     invalidity  or  unenforceability  of any  one or  more  provisions  of this
     Agreement will in no way affect any other provision.  Any action to enforce
     or construe  this  Agreement  or any other Loan  Document  shall be brought
     exclusively  in the District Court in and for Jefferson  County,  Colorado.
     Borrower hereby consents to the foregoing exclusive jurisdiction and venue.
     Provided, however, that nothing contained herein shall preclude Lender from
     bringing one or more  actions to enforce its rights  hereunder in the State
     of Arizona  or any other  state in which  Borrower  or  Guarantor  maintain
     offices or assets.

          13.8  PREPARATION OF AGREEMENT.  The parties hereto  acknowledge  that
     this  Agreement  has  been   negotiated  and  prepared  in  an  arms-length
     transaction and that both Lender and Borrower have negotiated all the terms
     contained herein.  Accordingly,  the parties agree that neither party shall
     be deemed to have  drafted the  Agreement  and the  Agreement  shall not be
     interpreted against either party as the draftsman.

          13.9 OTHER ACTS AND  DOCUMENTS.  The parties  agree to undertake  such
     other acts and execute such other documents as may be reasonably  necessary
     to effect the purpose and intent of this Agreement.

          13.10 MERGER.  This Agreement  represents the culmination of all prior
     negotiations,  representations,  and  agreements  between the parties  with
     respect  to  the  credit  facility  contemplated  hereby.  All  such  prior
     negotiations, representations, and agreements are merged herein.

     14. ADVICE OF COUNSEL. Each party acknowledges to the other that such party
has been  advised  by legal  counsel  in  connection  with the  negotiation  and
execution  of this  Agreement  and that  each  party  understands  the terms and
conditions  contained  herein  and that each has  entered  into  this  Agreement
voluntarily.

     15. JURY WAIVER.  BORROWER  HEREBY  WAIVES ITS RIGHT TO A JURY TRIAL IN THE
EVENT OF ANY  DISPUTE  OR  LITIGATION  ARISING  HEREUNDER  OR UNDER ANY  RELATED
DOCUMENT EXECUTED IN CONNECTION HEREWITH.

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on the
day and year set forth above.

                                    BORROWER:

                                    ILX RESORTS INCORPORATED
                                    EMPLOYEE STOCK OWNERSHIP PLAN
                                    AND TRUST

                                    By: /s/ Patrick J. McGroder, III
                                        ----------------------------------------
                                        Patrick J. McGroder, III, Trustee

                                    By: /s/ Nancy J. Stone
                                        ----------------------------------------
                                        Nancy J. Stone, Trustee

                                    By: /s/ James W. Myers
                                        ----------------------------------------
                                        James M. Myers, Trustee
<PAGE>
                                    GUARANTOR:

                                    ILX RESORTS INCORPORATED,
                                    an Arizona corporation

                                    By: /s/ Joseph P. Martori, Chairman
                                        -------------------------------------
                                        Joseph P. Martori, Chairman of the Board

                                    LENDER:

                                    LITCHFIELD FINANCIAL CORPORATION,
                                    a Massachusetts corporation

                                    By: /s/ Wayne M. Greenholtz
                                        ----------------------------------------
                                        Wayne M. Greenholtz,
                                        Senior Vice President
<PAGE>
                                LIST OF EXHIBITS


EXHIBIT A   Line Note
EXHIBIT B   Pledge Agreement
            EXHIBIT B-1   Pledge Agreement of Borrower
            EXHIBIT B-2   Pledge Agreement of ILX
EXHIBIT C   Guaranty
EXHIBIT D   Form of Attorney Opinion
EXHIBIT E   Request for Advance
EXHIBIT F   Authorizing Resolution and Incumbency Certificate
            EXHIBIT F-1   Borrower
            EXHIBIT F-2   ILX Resorts Incorporated
            EXHIBIT F-3   Administrative Committee
EXHIBIT G   Irrevocable Power of Attorney
            EXHIBIT G-1   Irrevocable Power of Attorney and
                          Stock Power of Borrower
            EXHIBIT G-2   Irrevocable Power of Attorney of ILX
EXHIBIT H   ILX/Litchfield Letter to Concord