Exhibit 10-3

                            BUSINESS AGREEMENT Among
            ILX Resorts Incorporated, an Arizona Corporation ("ILX")
        Premiere Vacation Club, an Arizona Nonprofit Corporation ("Club")
     Premiere Development Incorporated, an Arizona Corporation ("Premiere")
 Treasures of the Sea of Cortez, an Arizona limited liability company, ("TSC"),
 Promotora de Inversion Turistica, S.A. de C.V., a Mexican Corporation ("PIT"),
   Immobiliaria y Hotelera Los Algodones, S.A. de C.V., a Mexican Corporation
                                    ("IHLA")
      Immobiliaria Cerro Pelon, S.A. de C.V., a Mexican Corporation ("ICP")

R E C I T A L S:

         A.  Promotora  de  Inversion  Turistica,  S.A.  de C. V.  is a  Mexican
corporation  ("PIT")  that owns  certain  real  property  located in San Carlos,
Sonora,   Mexico   upon  which  PIT  has  begun   construction   of  a  42  unit
condominium/timeshare  project  known as the Sea of Cortez  Beach Club,  as such
property and proposed improvements are more particularly  described in the legal
description and the  construction  plans and  specifications  attached hereto as
Exhibit A (the "Timeshare Project").

         B.  Immobiliaria  y Hotelera Los  Algodones,  S.A. de C.V. is a Mexican
corporation ("IHLA") that owns certain real and personal property in San Carlos,
Sonora, Mexico upon which IHLA has constructed and is operating a 173 room hotel
known as the San Carlos Plaza Hotel, as such property and  improvements are more
particularly described in attached Exhibit B (the "Hotel").

         C.  Immobiliaria  Cerro  Pelon,  S.A. de C.V. is a Mexican  corporation
("ICP") that owns certain real property  located in San Carlos,  Sonora,  Mexico
upon which ICP intends to construct future  improvements,  as such real property
is more particularly described in attached Exhibit C (the "Beach Property").

         D.  Treasures  of the  Sea of  Cortez,  L.L.C.  is an  Arizona  limited
liability company ("TSC") to which PIT has granted the exclusive right to market
and sell one week interval right-to-use interests in the Timeshare Project.

         E. Premiere  Vacation Club is an Arizona  non-profit  corporation  (the
"Club") that  provides  each of its members with one week  membership  interests
that may be used at any one or more of the  resort  properties  included  in the
Club's  inventory,  which interest may, at each Member's  option,  be split into
multiple stays of a minimum two day duration and also may be exchanged for stays
at other resorts through a participating exchange network.

         F.  Premiere   Development   incorporated  is  an  Arizona  corporation
("Premiere")  that is a wholly owned subsidiary of ILX Resorts  Incorporated,  a
leading developer,  marketer and operator of timeshare resorts located primarily
in the Western  United States  ("ILX").  On May ___ 1998,  Premiere  contributed
5,000 one week interval,  perpetual fee simple  timeshare  interests to the Club
and in  exchange  therefore  became the  exclusive  marketer  and seller of Club
memberships.
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                                                                               2

         G.  TSC  desires  to  contribute  1,500  one  week  interval,  25  year
right-to-use  timeshare  interests in the  Timeshare  Project  (the  "Weeks") to
Premiere with the  understanding  that Premiere will then transfer such Weeks to
the Club  (subject  to approval by the  Arizona  Department  of Real  Estate) in
exchange  for the payment by Premiere to TSC of the  consideration  set forth in
this Agreement, and Premiere and the Club desire to accept such contribution and
payment  obligations,  pursuant  to the terms and  conditions  set forth in this
Agreement.

         H. PIT and TSC desire to grant  Premiere the exclusive  right to market
and Sell the Weeks in the  Timeshare  Project,  and Premiere  desires to provide
such services on an exclusive  basis,  subject to the terms and  conditions  set
forth below.

         I. To facilitate  sales of the Weeks and  construction of the Timeshare
Project,  IHLA desires to grant to the Club and its Members the right to use the
Hotel in the place and stead of the  Timeshare  Project  until  such time as the
Timeshare  Project  has  been  constructed  in  accordance  with the  plans  and
specifications attached hereto as Exhibit A and is open to the public. The right
to use the Hotel will be  coordinated  through  TSC and will be subject to space
availability at the Hotel.

For good and valuable  consideration,  the receipt and  sufficiency of which the
parties  acknowledge,  and  in  reliance  upon  the  recitals,  representations,
warranties,  covenants and  conditions  set forth  herein,  the parties agree as
follows:

A G R E E M E N T:

1. Definitions.  For purposes of this Agreement,  the following terms shall have
the meanings ascribed to them in this Section 1:

         a. "Amenities Core" shall mean all of the amenities associated with the
Hotel, including but not limited to the Hotel pools, restaurants, lobbies, beach
club, tennis courts, palapas, bars and stores.

         b.  "Combined  Club Weeks" shall mean the Weeks  contributed by TSC and
PIT to Premiere  and,  upon  approval of the Arizona  Department of Real Estate,
transferred by Premiere to the Club,  plus the 5,000  Existing Club Weeks,  plus
any  additional  interval  interests  contributed to the Club from time to time.
"Combined Club Week" shall mean one of the Combined Club Weeks.

         c.  "Distributions"  shall mean any and all payments of any nature made
by  Premiere  or  the  Club  to TSC or PIT in  accordance  with  the  terms  and
conditions of this Agreement.

         d.  "Existing  Club  Weeks"  shall  mean the 5,000  one week  interval,
perpetual fee simple timeshare interests conveyed to the Club by Premiere on May
___, 1998.
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                                                                               3

         e. "Expenses" shall mean any and all costs, charges and expenses of any
nature directly or indirectly attributable to each Combined Club Week, including
but not limited to Product Costs (defined below),  sales and marketing expenses,
general and administrative expenses,  financing costs, collection costs, closing
costs,   exchange  fees,   recording  fees,  loan  servicing  fees,  home  owner
association  subsidies,  interest  expenses,  bad debt reserves,  and any period
expenses that are not typically  allocated on a per Week basis,  which Expenses,
if estimated,  shall be adjusted on a quarterly basis to reflect actual Expenses
directly or indirectly  attributable to each Combined Club Week. Premiere agrees
that the cost estimates set forth in the proforma financial  statements attached
hereto as  Exhibit G will  not,  during  the  three  years  commencing  upon the
execution of this  Agreement,  increase by more than 10% of the projected  costs
set forth in the attached proforma financial  statements.  During the three year
period, any costs increases in excess of 10% will be absorbed by Premiere.

         f. "Net Sales  Price" shall mean the actual  purchase  price paid by an
unaffiliated  third party  purchaser  to Premiere for the purchase of a Combined
Club Week less any and all sales  concessions.  Premiere agrees that the average
minimum price to be charged per Club membership  type to third party  purchasers
will not be less than the prices established in attached Exhibit H.

         g. "Percentage Interest" shall mean a fraction,  the numerator of which
is the number of Weeks  contributed  to Premiere by TSC and the  denominator  of
which is the total number of Combined  Club Weeks in the Club,  as adjusted from
time to time.

         h. "Product  Cost" shall be deemed to mean U.S.  $2,415.00 per Combined
Club Week.

         i.   "Timeshare    Project"   shall   mean   that   certain   42   unit
timeshare/condominium  project  known  as the  Sea of  Cortez  Beach  Club to be
constructed  by PIT in  accordance  with the plans and  specifications  attached
hereto as Exhibit A on that certain real property more particularly described in
attached Exhibit A.

         j. "Week" shall mean a seven day period,  consisting of one weekend and
five weekdays  during each calendar year for a period of twenty-five  (25) years
from the date of  execution  of this  Agreement  (or for a period of fifty  (50)
years from the date hereof if the Extension  Option  referenced in Section 10 of
this  Agreement is exercised by Premiere)  during which period a Club member may
reserve  and  use a Unit  in the  Timeshare  Project  or,  until  completion  of
construction  of the  Timeshare  Project,  a suite or room in the Hotel  that is
equivalent to the use right purchased by such Club member.

         k. "Weeks" shall mean the 1,500 Week interests in two-bedroom  units in
the Timeshare Project  contributed by TSC and PIT to Premiere in accordance with
Section 2 of this Agreement and, upon approval of the Arizona Department of Real
Estate, transferred by Premiere to the Club.
<PAGE>
                                                                               4

2.  Contribution  of Weeks to Premiere  and  Transfer  to the Club.  TSC and PIT
hereby contribute 1,500 Weeks in the Timeshare Project to Premiere, each Week of
which includes a twenty-five (25) year  right-to-use  the Timeshare  Project and
the  Hotel in  accordance  with  the  terms  and  conditions  set  forth in this
Agreement.  Upon  receipt of the Weeks and  receipt of  approval  of the Arizona
Department of Real Estate, Premiere shall transfer the Weeks to the Club, and in
exchange  therefore Premiere shall retain the exclusive right to market and sell
the Weeks.  TSC and PIT acknowledge and agree that the Weeks shall become a part
of the Club's membership inventory and that all Club members will be entitled to
use the  Timeshare  Project  and the  Hotel in  accordance  with the  terms  and
conditions  set  forth  in this  Agreement  and in the  Premiere  Vacation  Club
Membership  Plan,  a copy of which is attached  hereto as Exhibit D. TSC and PIT
agree to  execute  any  additional  documents  and take any  additional  actions
required to transfer the Weeks to Premiere. It is understood by the parties that
TSC and PIT may, from time to time contribute  additional timeshare weeks to the
Club,  subject to the advanced  approval of ILX and  Premiere.  [Grant  language
subject to revision based on advice of Mexican counsel]

3. Product Cost Distributions. For each Combined Club Week sold by Premiere, TSC
shall be entitled to receive an amount equal to the following:

         a. Until such time as TSC has  received  aggregate  Distributions  from
Premiere  pursuant to this  Section 3 and Section 4 below in an amount  equal to
U.S. $2.7 million, TSC shall be entitled to receive an amount equal to two times
(2x) the Product Cost  multiplied by the then current  Percentage  Interest [2 x
(Product Cost x Percentage  Interest)],  one-half (1/2) of which shall be deemed
to be an advance by Premiere to TSC and PIT (the  "Advance")  for the purpose of
facilitating  construction of the Timeshare  Project,  and 95% of which Advances
TSC and PIT hereby agree to use for constructing the Timeshare Project;

         b. At and after such time as TSC has received  aggregate  Distributions
from Premiere  pursuant to this Section 3 and Section 4 below in an amount equal
to U.S.  $2.7  million,  TSC shall be  entitled  to receive  an amount  equal to
one-half of the Product Cost multiplied by the then Current Percentage  Interest
[1/2 x (Product Cost x Percentage  Interest)]  until such time as TSC has repaid
all of the Advances to the  Premiere,  together with interest on the Advances at
the rate of ten percent  (10%) per annum.  For each  payment made by Premiere to
TSC pursuant to this Section 3(b),  Premiere shall apply an amount equal to each
such payment toward the repayment of the Advance,  all of which repayments shall
be applied  first toward the  repayment  any interest  then due and owing on the
Advance and then toward the repayment of the principal; and

         c. At and after such time as TSC has repaid the  Advances  and interest
thereon to  Premiere,  TSC shall be entitled  to receive an amount  equal to the
Product Cost multiplied by the then current Percentage  Interest [Product Cost x
Percentage Interest].

         d. All  Distributions  required  pursuant  to this  Section  3 shall be
estimated and paid on a monthly  basis,  and shall be adjusted to reflect actual
Distribution on a quarterly basis.
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                                                                               5

4.  Profit  Distributions.  In  addition  to the monies  paid by Premiere to TSC
pursuant to Section 2 above,  for each Combined Club Week sold by Premiere,  TSC
shall be entitled to receive an amount equal to the following:

         a. Until such time as TSC has  received  aggregate  Distributions  from
Premiere  pursuant to Section 3 above,  and this Section 4 in an amount equal to
U.S. $2.7 million, TSC shall be entitled to receive an amount equal to two times
(2x)  the sum of the  Net  Sales  Price  less  Expenses  plus  interest  income,
multiplied  by the then  current  Percentage  Interest  [2 x ((Net Sales Price -
Expenses) x Percentage Interest)], one-half (1/2) of which shall be deemed to be
an Advance to TSC and PIT for the purpose of  facilitating  construction  of the
Timeshare Project, and 95% of which Advances TSC and PIT hereby agree to use for
constructing the Timeshare Project;

         b. At and after such time as TSC has received  aggregate  Distributions
from Premiere  pursuant to Section 3 above and this Section 4 in an amount equal
to U.S.  $2.7  million,  TSC shall be  entitled  to receive  an amount  equal to
one-half times (1/2x) the sum of the Net Sales Price less  Expenses,  multiplied
by the then current  Percentage  Interest  [1/2 x ((Net Sales Price  Expenses) x
Percentage  Interest)]  until  such  time  as TSC has  repaid  the  Advances  to
Premiere,  together  with  interest  on the  Advances at the rate of ton percent
(10%) per annum.  For each  payment  made by  Premiere  to TSC  pursuant to this
Section 4(b),  Premiere  shall apply an amount equal to each such payment toward
the  repayment of the Advance,  all of which  repayments  shall be applied first
toward the  repayment of any interest then due and owing on the Advance and then
toward the repayment of the principal; and

         c. At and after such time as TSC has repaid the  Advances  and interest
thereon to Premiere, TSC shall be entitled to receive an amount equal to the Net
Sales Price less Expenses,  multiplied by the then current  Percentage  Interest
[(Net Sales Price - Expenses) x Percentage Interest].

         d. All  Distributions  required  pursuant  to this  Section  4 shall be
estimated and paid on a monthly  basis,  and shall be adjusted to reflect actual
Distributions on a quarterly basis.

         e. If Premiere has not made aggregate  Distributions  to TSC and PIT in
an amount of not less than U.S.  $2.7 million  within three years after the date
of execution of this Agreement, and if PIT has not completed construction of the
Timeshare  Project  within such three year period,  then  Premiere or ILX or its
designee  will loan to PIT an amount equal to the  difference  between U.S. $2.7
million and the aggregate  Distributions  paid by Premiere within the three year
period,  which  loan  proceeds  shall  be used  for the  purpose  of  completing
construction of the Timeshare Project.

         f. TSC shall be entitled  to receive  its  prorata  share of the income
earned from the difference in interest paid by Premiere and interest  charged to
each Club member.
<PAGE>
                                                                               6

5. Maintenance Fee Distributions.  In addition to the monies paid by Premiere to
TSC  pursuant to  Sections 3 and 4 above,  for each  Combined  Club Week sold by
Premiere,  PIT shall be  entitled  to receive an amount  annually  to offset the
Maintenance  Fees  associated  with such  Combined  Club Week equal to the total
Maintenance  Fees  received  by the Club from its  members  during each year for
which the Maintenance Fees apply less  administrative  expenses  associated with
operating the Club,  multiplied by the Percentage Interest  [(Maintenance Fees -
Club's administrative expenses) x Percentage Interest],  which payments shall be
made by the Club to PIT in equal quarterly  installments,  commencing on January
10 of each year.

6. Term.  The term of this Agreement  shall be for a period of twenty-five  (25)
years from the date of execution hereof, unless otherwise extended by Premiere's
exercise of the Extension  Option  (defined below) in accordance with Section 10
of this  Agreement,  whereupon  the term of this  Agreement  shall be fifty (50)
years.

7.  Representations and Warranties of TSC, PIT, IHLA and ICP. TSC, PIT, IHLA and
ICP each  independently  represent  and  warrant  to the Club  and  Premiere  as
follows:

         a.  Authority of TSC,  PIT,  IHLA and ICP.  TSC, PIT, IHLA and ICP each
represent and warrant that this Agreement has been duly and validly executed and
delivered by each of TSC,  PIT,  IHLA and ICP and is a legal,  valid and binding
obligation of each of TSC, PIT, IHLA and ICP, enforceable in accordance with its
terms. Neither the execution and delivery of this Agreement nor the consummation
of the transactions  contemplated hereby nor compliance by TSC, PIT, IHLA or ICP
with any of the provisions  hereof will (i) result in any conflict with,  breach
of,  or  default  (or give  rise to any right of  termination,  cancellation  or
acceleration)  under any of the terms,  conditions  or  provisions  of any note,
bond,  mortgage,  indenture  or  warrant  or  any  franchise,  license,  permit,
agreement or other  instrument or obligation to which TSC, PIT, IHLA or ICP is a
party  or by  which  any of TSC,  PIT,  IHLA or ICP or any of  their  respective
properties  or assets may be bound,  (ii) violate any order,  writ,  injunction,
judgment,  decree, law, statute, rule or regulation applicable to TSC, PIT, IHLA
or ICP or any of their  respective  properties  or assets,  or (iii) violate any
provision of any of TSC's,  PIT's,  IHLA's or ICP's  articles of  incorporation,
bylaws or  regulations.  No action,  consent or approval by, or filing with, any
federal,  state,  municipal,  court or  governmental or  administrative  body or
agency,  or any  other  regulatory  or  self-regulatory  body,  is  required  in
connection  with the  execution  and delivery by any of TSC, PIT, IHLA or ICP of
this Agreement or the  consummation by TSC, PIT, IHLA or ICP of the transactions
contemplated hereby.

         b.  Corporate  Existence.  TSC, PIT, IHLA and ICP,  respectively,  each
represent and warrant that it: (i) is a corporation  or company duly  organized,
validly  existing and in good  standing  under the laws of its  jurisdiction  of
incorporation,  (ii) has the  corporate  power and  authority  to enter into and
perform all its obligations  under this Agreement,  including but not limited to
the power and  authority  to convey the Weeks to  Premiere  in  accordance  with
Section 2 of this Agreement,  (iii) has the corporate power and authority to own
its property and carry on its business as presently  conducted and possesses all
rights, privileges,  franchises, licenses, permits, concessions,  authorizations
and approvals, governmental or otherwise necessary
<PAGE>
                                                                               7

to entitle it to use, own,  lease or otherwise  hold its  properties and assets,
including but not limited to the Hotel, the Timeshare  Project and the Weeks, as
applicable,  and to carry on its business as presently  conducted or as proposed
to be conducted,  including business associated with the Hotel and the Timeshare
Project,  as  applicable,  and (iv) has duly and  validly  granted all powers of
attorney  required to execute this Agreement and all such powers of attorney are
in full force and effect.

         c. Liabilities and Obligations.  Except as disclosed in Exhibit E or in
this Agreement, PIT and IHLA have not, with respect to the Timeshare Project and
the Hotel, respectively,  (i) sold, assigned,  transferred,  conveyed, leased or
otherwise  disposed of or agreed to sell,  assign,  transfer,  convey,  lease or
otherwise  dispose of any of the real property,  improvements or other assets of
the Timeshare Project  (including but not limited to the Weeks) or the Hotel, or
(ii) taken any  action,  or  omitted  to take any  action,  that  resulted  in a
material breach of or constituted a material  default under (or would,  with the
giving  of  notice  or  passage  of time,  result  in a  material  breach  of or
constitute a material default under) any note, bond, indenture, mortgage, (ease,
license,  agreement or other  instrument  or  obligation  to which the Timeshare
Project,  the Hotel or the Weeks are bound,  or resulted in (or would,  with the
giving of notice or the passage of time,  result in) the creation or  imposition
of any material  lien,  material  charge or material  encumbrance  of any nature
whatsoever upon the Timeshare Project, the Hotel or the Weeks.

         d. Taxes.  TSC, PIT and IHLA each  independently  represent and warrant
that  it  has  timely  filed  with  all  appropriate   governmental  authorities
(including tax, customs,  social security,  housing and retirement  authorities)
all federal,  state,  local and foreign tax returns and reports  required  under
applicable law to be filed on or before the date hereof in respect of any fiscal
period  ended on or before  the date  hereof  and each such  return or report is
complete and correct. All taxes, assessments and other governmental charges upon
each of TSC, PIT and IHLA or upon any of their assets, including but not limited
to the Timeshare Project or the Hotel that are due and payable have been paid in
full,  other than those currently  payable  without penalty or interest.  No tax
return of any of TSC, PIT or IHLA is currently under examination by the Ministry
of Finance or any other Mexican authority, nor is the Ministry of Finance or any
other  authority  (whether  domestic or foreign and  including  customs,  social
security,  housing,  and  retirement  authorities)  asserting  or,  to the  best
knowledge of any of TSC, PIT or IHLA,  threatening to assert against any of TSC,
PIT or IHLA any adjustment,  deficiency or claim for additional taxes,  payments
or interest thereon or penalties in connection therewith.

         e.  Litigation.  There  has not been and  there is not now  pending  or
threatened, any claim, action, suit, proceeding,  arbitration,  investigation or
inquiry  before  any  federal,  state,  municipal,   court  or  governmental  or
administrative body or agency,  other regulatory body or any private arbitration
tribunal,  relating to or affecting any of TSC, PIT, IHLA or ICP or any director
or  officer  thereof  in his  capacity  as such,  or the Hotel or the  Timeshare
Project. There are no orders,  judgments or decrees of any court or governmental
or administrative body or agency, or any other regulatory body, affecting any of
TSC, PIT, IHLA or ICP or the Hotel or the  Timeshare  Project.  Each of TSC, PIT
and IHLA independently represent and warrant that
<PAGE>
                                                                               8

it is not in default under any order, writ, injunction or decree of any court or
governmental or administrative  body or agency or any other regulatory body with
respect to, or any way affecting, the Hotel or the Timeshare Project.

         f.  Compliance  with Law. Each of TSC, PIT, IHLA and ICP  independently
represent and warrant that: (i) it has complied and is complying in all material
respects  with all  laws,  regulations,  rules,  ordinances  and  orders  of all
applicable governmental authorities or any other regulatory bodies applicable to
each of TSC,  PIT,  IHLA  and ICP and  each  of  their  properties,  assets  and
businesses,  including  but not limited to those  applicable  to the Hotel,  the
Timeshare  Project and the, Weeks,  as applicable,  and (ii) it has all federal,
state,  local and foreign  governmental  licenses,  permits  (including  but not
limited to the federal permit  necessary to create and sell timeshare  interests
in Mexico, any permits, filings or registrations required by the State of Sonora
with respect to the creation and sale of interests in a timeshare  project,  the
local  building  permits  required to construct the Timeshare  Project,  and any
other  local or state  licenses  or  permits  required  to create  and  convey a
timeshare  interest in Mexico) and  concessions  (including but not limited to a
federal beach  concession for that portion of the real property  associated with
the  Hotel,  the  Timeshare  Project  and the Beach  Property  that lies  within
Mexico's federal zone), material or necessary to the conduct of its business and
all such licenses, permits and concessions are in full force and effect.

         g. Accuracy of Information. The information contained in this Agreement
and the Exhibits and the written information  provided by each of TSC, PIT, IHLA
and ICP and their respective agents to Premiere and the Club and their agents is
true, complete and correct in all material respects.

         h. Brokers and Finders. None of TSC, PIT, IHLA or ICP, nor any officer,
director or employee thereof has employed any broker or finder,  or incurred any
liability for any brokerage  fees,  commissions  or finders' fees, in connection
with the transactions contemplated by this Agreement.

         i.  Environmental  Matters.  There  has been no  storage,  disposal  or
treatment of solid wastes or hazardous  wastes at or on the Hotel, the Timeshare
Project or the Beach  Property in violation of any applicable  Mexican  federal,
state or local law,  regulation,  order, or permit and none of TSC, PIT, IHLA or
ICP have  received  any  notice of nor have any  knowledge  of or any  reason to
believe  that  there  exists  any  such  violation.  There  has  been no  spill,
discharge,  leak, emission,  injection,  escape,  dumping or release of any kind
onto  the  Beach  Property,  the  Hotel  or the  Timeshare  Project  or into the
environment  surrounding any such property, of any toxic or hazardous substances
as  defined  under any  Mexican  federal,  state or local  regulations,  laws or
statutes.  None of TSC,  PIT,  IHLA or ICP have  any  obligation  or  liability,
absolute or  contingent,  with  respect to the  storage,  treatment,  cleanup or
disposal  of any solid  wastes,  hazardous  wastes or other  toxic or  hazardous
substances.  Each of TSC,  PIT,  IHLA  and ICP  have  complied  with  all  laws,
regulations,  rules,  standards and other  requirements  imposed by governmental
authorities  on  environmental  matters,   including  those  relating  to  water
discharges, air emissions, and soil contamination.
<PAGE>
                                                                               9

         j. Real Property and Improvements.  PIT, TSC and IHLA, respectively are
the owners of and possess good and  marketable  title to the  Timeshare  Project
(including but not limited to the Weeks to be conveyed to Premiere in accordance
with  Section  2 of  this  Agreement)  and  the  Hotel,  respectively,  and  the
improvements constructed or proposed to be constructed thereon free and clear of
all mortgages,  security interests,  charges,  claims,  options, rights of first
refusal, easements,  restrictions, liens, rights-of-way or other encumbrances of
any nature  whatsoever,  except  for the liens and  encumbrances  identified  in
Schedule B of the title  insurance  policies  attached  hereto as Exhibit E. The
Hotel and the  Timeshare  Project  comply and,  during and after  completion  of
construction of the Timeshare Project,  will continue to comply, in all material
respects with all applicable  building and zoning codes,  ordinances and PIT and
IHLA have  obtained all permits,  concessions  and  contracts  for the utilities
necessary  to  service  the  Timeshare  Project  and the Hotel,  as  applicable,
including but not limited to water, sewer,  telephone and electricity,  and that
all such permits, concessions and contracts are validly issued and fully paid.

         k. No  Bankruptcy.  Except  with  respect  to  matters  related  to the
devaluation  of the  peso  in  1994,  each of TSC,  PIT and  IHLA  independently
represent and warrant that there has not been filed any petition or application,
or any  proceeding  commenced,  by or against any of TSC,  PIT or IHLA under any
law,  domestic or foreign,  relating to bankruptcy,  reorganization,  compromise
arrangements,  insolvency,  readjustment  of debt or  creditors  rights,  and no
assignment  for the  benefit of  creditors  has been made by any of TSC,  PIT or
IHLA.

         1. Insurance. IHLA represents and warrants that the Hotel is insured in
an amount reasonably deemed adequate,  against all risks usually insured against
by persons operating similar  properties in the country of Mexico under policies
that  are not void or  voidable  and  that  IHLA  believes  are  enforceable  in
accordance with their terms.

8.  Representations  and Warranties of ILX, Premiere and the Club. ILX, Premiere
and the Club each independently  represent and warrant to TSC, PIT, IHLA and ICP
as follows:

         a.  Authority of Premiere and the Club.  Each of ILX,  Premiere and the
Club have full right,  power and authority to enter into this Agreement,  and to
consummate the transactions  contemplated  herein.  This Agreement has been duly
and validly executed and delivered by ILX, Premiere and the Club and is a legal,
valid and  binding  obligation  of ILX,  Premiere  and the Club  enforceable  in
accordance with its terms.  Except as disclosed in this  Agreement,  neither the
execution  and  delivery  of  this  Agreement  nor  the   consummation   of  the
transactions  contemplated  hereby nor compliance by ILX,  Premiere and the Club
with any of the provisions  hereof will (i) result in any conflict with,  breach
of,  or  default  (or give  rise to any right of  termination,  cancellation  or
acceleration)  under any of the terms,  conditions  or  provisions  of any note,
bond,  mortgage,  indenture  or  warrant  or  any  franchise,  license,  permit,
agreement or other  instrument or obligation to which ILX,  Premiere or the Club
is a party or by which ILX,  Premiere  or the Club,  or any of their  respective
properties  or assets may be bound,  (ii) violate any order,  writ,  injunction,
judgment,  decree, law, statute,  rule or regulation applicable to ILX, Premiere
or the Club or any of their respective properties or assets or (iii) violate any
provision
<PAGE>
                                                                              10

of  ILX's,  Premiere's  or the  Club's  articles  of  incorporation,  bylaws  or
regulations.  Except for the approval of the Arizona  Department of Real Estate,
no action,  consent or approval by, or filing with, any federal,  state,  local,
court or governmental or administrative  body or agency, or any other regulatory
or  self-regulatory  body,  is required in  connection  with the  execution  and
delivery by ILX,  Premiere or the Club of this Agreement or the  consummation by
ILX, Premiere or the Club of the transactions contemplated hereby.

         b. Corporate  Existence.  ILX, Premiere and the Club each represent and
warrant that each of them are fully  incorporated,  validly existing and in good
standing under the laws of the State of Arizona and have the corporate power and
authority  to enter into and perform  their  respective  obligations  under this
Agreement  and to own property and carry on business as presently  conducted and
possesses the rights, privileges,  franchises, licenses, permits, authorizations
and approvals, governmental or otherwise necessary to carry on their business as
presently conducted.

         c.  Litigation.  There  has not been and  there is not now  pending  or
threatened, any claim, action, suit, proceeding,  arbitration,  investigation or
inquiry  before  any  federal,   state,   local,   court  or   governmental   or
administrative body or agency,  other regulatory body or any private arbitration
tribunal,  relating to or affecting ILX, Premiere,  the Club, or any director or
officer  thereof in his  capacity  as such.  There are no orders,  judgments  or
decrees of any court or governmental or  administrative  body or agency,  or any
other regulatory body, effecting, or with respect to, ILX, Premiere or the Club.
Neither  ILX,  Premiere  nor the Club are in  default  under  any  order,  writ,
injunction  or decree of any court or  governmental  or  administrative  body or
agency or any other regulatory body.

         d. Accuracy of Information. The information contained in this Agreement
and the Exhibits and the written  information  provided by ILX, Premiere and the
Club or their  respective  agents to TSC,  PIT,  IHLA and ICP or their agents is
true, complete and correct in all material respects.

         e.  Brokers and  Finders.  None of ILX,  Premiere or the Club,  nor any
officer,  director or employee  thereof has  employed  any broker or finder,  or
incurred any liability for any brokerage fees,  commissions or finders' fees, in
connection with the transactions contemplated by this Agreement.

         f. Real  Property  and  Improvements.  Attached  Exhibit F  contains  a
complete  list,  by deed  reference  or  otherwise,  of all  real  property  and
interests  in  real  property  owned,  leased  or used in  connection  with  the
operation  of the Club (the  "Club  Assets").  The Club has good and  marketable
title to the Club Assets free and clear of all  mortgages,  security  interests,
charges,  claims,  options,  rights of first refusal,  easements,  restrictions,
liens, rights-of-way or other encumbrances of any nature whatsoever,  except for
the liens, encumbrances and security interests disclosed on attached Exhibit F.
<PAGE>
                                                                              11

9. Covenants of TSC, PIT and IHLA. TSC, PIT and IHLA hereby covenant to the Club
and Premiere as follows:

         a.  Hotel Use  Rights.  IHLA  hereby  agrees  that  until  such time as
construction  of the  Timeshare  Project has been  completed  and the  Timeshare
Project is open to the  public,  all Club  members  shall be entitled to use the
Hotel  and the  Amenities  Core in lieu of the  Timeshare  Project  and such use
rights  shall be  consistent  with the use  rights  that  would  be  granted  to
purchasers of timeshare interests in the fully constructed Timeshare Project. In
addition,  IHLA  agrees  that all Club  members  shall  be  entitled  to use the
Amenities Core throughout the entire term of this Agreement,  such use rights to
be  consistent  with the use  rights  granted  to Hotel  guests,  except for the
convention facilities.

         b. Recordation of Condominium  Regime.  Upon completion of construction
of the  Timeshare  Project,  PIT  immediately  will  prepare and record with the
public  registry for the City of Guaymas a condominium  regime for the Timeshare
Project,  which  condominium  regime  shall be subject  to the prior  review and
approval of Premiere, such approval not to be unreasonably withheld.

         c. Monthly Financial Reports. TSC and PIT shall deliver to Premiere, by
the twentieth  (20th) day of each month during the period of construction of the
Timeshare  Project,  a written financial report (the "Monthly Financial Report")
detailing  the  manner  in which  the  Advances  have been  applied  toward  the
construction of the Timeshare  Project,  which Monthly Financial Report shall be
in a form  acceptable to Premiere.  Upon request by Premiere,  PIT shall provide
Premiere  with  copies of  invoices  and  evidence  of payment for the items and
services referenced in the Monthly Financial Report.

         d. No Liens or  Encumbrances  on the  Weeks.  Except as  identified  in
Schedule B of the title insurance  policies attached hereto as Exhibit E, during
the term of this  Agreement,  PIT, IHLA and TSC shall not permit the creation of
any lien or encumbrance of any nature whatsoever,  direct or indirect, affecting
the Weeks. PIT and TSC shall take any and all actions and execute and record any
and all  documents  reasonably  deemed  necessary by Premiere to provide  public
notice of  Premiere's  and the Club's  interest in the Weeks and in the right of
Club members to use the Hotel,  including but not limited to recordation of such
interests in the Public Registry of the City of Guaymas.

         e.  Obligation  to Build.  PIT and TSC hereby  agree to  construct  the
Timeshare  Project  in  accordance  with the plans and  specifications  attached
hereto as Exhibit A and in accordance  with all  applicable  building  codes and
regulations  within a period  of 3 years  from  the  date of  execution  of this
Agreement.  PIT also  agrees  promptly  to  obtain  all  licenses,  permits  and
concessions  required to operate the Timeshare  Project in  accordance  with all
applicable local, state and federal laws and regulations.

         f. Obligation to Maintain. PIT and IHLA agree to maintain the Timeshare
Project and the Hotel, respectively, in good condition and repair throughout the
term of this Agreement.
<PAGE>
                                                                              12

         g.  Obligation  to  Operate.  PIT,  TSC and IHLA agree to  operate  the
Timeshare Project and the Hotel, as applicable, in a manner consistent with good
business practices and in accordance with the promises, terms and conditions set
forth in the timeshare  documents  distributed to purchasers of interests in the
Timeshare  Project,  including but not limited to the purchasers of the Combined
Club Weeks. PIT, TSC and IHLA hereby agree to provide to all Club members all of
the rights and privileges  accorded under the Premiere  Vacation Club Membership
Plan and to operate the Timeshare  Project and the Hotel in a manner  consistent
with the Premiere Vacation Club Membership Plan.

         h.  Insurance  for  the  Timeshare  Project.  Prior  to  completion  of
construction of the Timeshare  Project,  PIT agrees to obtain  insurance for the
Timeshare  Project in amounts  reasonably  deemed  adequate,  against  all risks
usually insured against by persons operating  similar  properties in the Country
of Mexico.  The  insurance  obtained by PIT shall name  Premiere and the Club as
third party beneficiaries of the insurance policy.

10. Extension  Option.  PIT and TSC, jointly and severally grant to Premiere the
option to renew its interest in the Weeks for one  additional  twenty-five  (25)
year period (the "Extension Option"), which Extension Option may be exercised by
Premiere  anytime during the last five years of the initial 25 year term of this
Agreement,  provided Premiere is not then in default of its payment  obligations
as provided in Sections 3, 4 and 5 of this Agreement. Premiere shall provide PIT
and TSC with written notice of its election to exercise the Extension Option. If
Premiere  exercises the Extension Option,  then during the term of the Extension
Option  (Year 26 through  Year 50), TSC and PIT shall be entitled to receive the
Distributions  referenced in Sections 3(c),  4(c) and 5 of this  Agreement.  The
prices to be charged for the Weeks during the term of the Extension  Option will
be negotiated between the parties after written notice of Premiere's election to
exercise the Extension Option is deliver to PIT and TSC.

11.  Right  of First  Refusal.  ICP  hereby  grants  the  following  rights  and
privileges  to  Premiere  with  respect to the Beach  Property,  and agrees that
Premiere may assign such rights to a Mexican  subsidiary  corporation  formed by
Premiere for the purpose of developing or acquiring real property in Mexico:

         a. Joint Development. Prior to undertaking any development of the Beach
Property,   ICP  shall  first  provide  Premiere  with  written  notice  of  its
development  plans and offer  Premiere the right to  participate as a partner in
any such  development  plans on terms and conditions that are agreed upon by the
parties.  Premiere  shall  notify ICP, in writing,  whether  Premiere  elects to
accept or reject the offer to joint venture within one hundred twenty (120) days
of delivery of such notice to  Premiere.  If Premiere  accepts  such offer,  the
parties  shall  proceed in good faith to form the joint  venture and develop the
Beach Property in accordance  with the terms and  conditions  agreed between the
parties.

         b. Sale or Transfer.  Any sale or transfer of all or any portion of the
Beach Property to a third party  purchaser  ("Purchaser")  must be pursuant to a
bona fide  written  offer (the  "Bona Fide  Offer")  from a  Purchaser  with the
financial ability to perform. If ICP receives a Bona Fide
<PAGE>
                                                                              13

Offer from a  Purchaser,  and  desires  to sell all or any  portion of the Beach
property, the following procedure shall apply:

                  i. ICP shall  first  offer the Beach  Property  to Premiere by
giving  written  notice of the Bona Fide Offer to Premiere.  The notice shall be
deemed an offer (the "Offer") to sell the Beach  Property to Premiere at a price
and on terms  equal to the Bona  Fide  Offer.  Premiere  shall  notify  ICP,  in
writing, whether Premiere elects to accept or reject the Offer within sixty (60)
days of delivery of the Offer to Premiere.  If Premiere  accepts the Offer,  the
transaction shall close at the date determined by Premiere, but in no event more
than sixty (60) days after acceptance of the Offer by Premiere.  Failure to send
such a notice  of  acceptance,  within  the time  prescribed,  shall be deemed a
rejection of the Offer.

                  ii. If  Premiere  rejects  the  Offer,  ICP may sell the Beach
Property  within a period  of sixty  (60) days  from the  rejection  date to the
Purchaser  at a  purchase  price and on terms no more  favorable  than those set
forth in the Bona Fide Offer.  If ICP: (i) desires to sell the Beach Property to
the Purchaser on terms more favorable  than the Bona Fide Offer;  or (ii) if the
transaction is to be  consummated  more than sixty (60) days after the rejection
date,  notice  identifying  the proposed  Purchaser and all of the terms of sale
shall be given to Premiere and such notice shall  constitute a new Offer subject
to this Section.

12.  Indemnities.  ILX,  Premiere  and the Club jointly and  severally  agree to
indemnify,  defend  and  hold  harmless  each of PIT,  TSC and  IHLA  and  their
respective  officers,  directors,  employees and agents from and against any and
all  liabilities,  obligations,  losses,  damages,  claims,  actions or expenses
(including  court costs and attorneys' fees) of any nature  whatsoever,  imposed
on, incurred by or asserted  against PIT, TSC or IHLA,  occasioned or caused by,
resulting  from or  arising  out of any  inaccuracy  in or  breach of any of the
representations, warranties, covenants or conditions set forth in this Agreement
by Premiere or the Club.

PIT, TSC, IHLA and ICP jointly and severally agree to indemnify, defend and hold
harmless  each of ILX,  Premiere  and the Club and  their  respective  officers,
directors,  employees  and  agents  from and  against  any and all  liabilities,
obligations, losses, damages, claims, actions or expenses (including court costs
and  attorneys'  fees) of any nature  whatsoever,  imposed  on,  incurred  by or
asserted  against  any of ILX,  Premiere or the Club,  occasioned  or caused by,
resulting  from or  arising  out of any  inaccuracy  in or  breach of any of the
representations, warranties, covenants or conditions set forth in this Agreement
by any of PIT, TSC, IHLA or ICP.

13. Mandatory Dispute  Resolution  Mechanism.  Every dispute whatsoever that may
arise  between the parties to this  Agreement  or their  nominees,  designees or
other representatives with respect to the subject matter of this Agreement shall
be resolved as follows:

         a. Notice of Breach and Opportunity to Cure. If any party in good faith
concludes that another party has committed a breach of this Agreement, the party
so concluding  shall notify the offending  party in writing that it is in breach
hereof. Any party receiving notice under this
<PAGE>
                                                                              14

Section 10 shall have thirty (30) calendar days to cure its breach,  if any, and
to notify  the party  sending  such  notice  that such  breach  has been  cured.
Following the applicable cure period, if the notifying party rejects the cure or
otherwise  maintains  that an  uncured  breach  of this  Agreement  exists,  the
disputed matter shall be thereupon subject to arbitration in accordance with the
terms and conditions of this Section 13.

         b. Arbitration of Disputes. Any and all disputes, controversies, claims
and  differences  arising out of or relating  to this  Agreement,  or any breach
thereof,  shall  be  finally  settled  by  arbitration  in  accordance  with the
procedural  rules  established  under the  International  Chamber of Commerce in
effect on the date of this  Agreement,  by one or more  arbitrators  selected in
accordance  with such rules.  If any conflict  between the accepted rules of the
International  Chamber of Commerce and the provisions of this Section 13 exists,
the rules shall govern.

         c. Appointment of Arbitrator.  Upon the written demand of either of the
parties concerned, the parties shall attempt to appoint a single arbitrator.  If
they are unable to agree within ten (10)  calendar  days from such demand,  then
each  of the  parties  shall  appoint  one  arbitrator  and  the  two  nominated
arbitrators  shall in turn  choose a third  arbitrator.  If the two  arbitrators
chosen by the parties cannot agree on the choice of the third arbitrator  within
a period  of ten (10)  calendar  days  after  their  nomination,  then the third
arbitrator  immediately  shall be appointed in accordance  with the rules of the
International Chamber of Commerce.  The arbitrator or arbitrators shall commence
the  arbitration  proceeding  within  thirty (30) calendar days after his/her or
their  appointment,  as the  case may be,  (the  "Commencement  Date")  and such
arbitration  proceeding shall be concluded and a final and binding determination
shall be rendered by such  arbitrator  or  arbitrators  within  forty-five  (45)
calendar days after the Commencement Date.

         d. Forum and Enforcement of Judgment.  If Premiere or the Club initiate
an  arbitration   proceeding,   then  such  proceeding  shall  be  conducted  in
Hermosillo,  Sonora,  Mexico.  If  TSC,  IHLA  or PIT  initiate  an  arbitration
proceeding,  then such proceeding  shall be conducted in Phoenix,  Arizona.  The
decision  of the  arbitrator(s)  shall be final  and  binding  upon the  parties
hereto,  not subject to appeal and shall deal with the questions of costs of the
arbitration and all matters related  thereto.  The  proceedings,  all pleadings,
documents,  correspondence and the arbitration award shall be written in English
if the  arbitration  is conducted in Phoenix,  Arizona.  If the  arbitration  is
conducted in Hermosillo,  Sonora,  Mexico, the proceedings shall be conducted in
Spanish, and all pleadings, documents,  correspondence and the arbitration award
shall be written in Spanish. Judgment upon the award or decision rendered by the
arbitrator(s)  may be  entered  in any court  having  jurisdiction  thereof,  or
application may be made to such court for a judicial recognition of the Award or
an order of  enforcement  thereof,  as the case may be. TSC,  PIT,  IHLA and ICP
jointly and severally  represent that an arbitration  award reached  pursuant to
this  Agreement  with respect to any dispute,  controversy,  claim or difference
arising out of or relating to this  Agreement is  enforceable  under the laws of
Mexico,  and Premiere and the Club represent  that an arbitration  award reached
pursuant to this  Agreement with respect to any dispute,  controversy,  claim or
difference arising out of or relating to this Agreement is
<PAGE>
                                                                              15

enforceable under the laws of the State of Arizona.

14. Miscellaneous.

         a. Entire  Agreement.  This Agreement  represents the entire  agreement
between the parties and supersedes all prior  negotiations  and agreements among
them, whether written or oral.

         b.  Amendments.  This  Agreement  may only be amended or  modified in a
written agreement that is signed by each and every party to this Agreement.

         c. Successors and Assignees.  This Agreement shall be binding upon each
party to it and each of such party's successors and assigns.

         d.  Severability.  If any  provision of this  Agreement is deemed to be
invalid or unenforceable by a court or arbitral body of competent  jurisdiction,
such  provision  of this  Agreement  shall be deemed  deleted and the  remaining
provisions shall be enforced to the fullest extent possible.

         e. Remedies. A party may pursue any and all remedies that are available
to it in law and equity. If a party pursues one or more remedies and not others,
the party shall not be deemed to have  elected its remedy or  remedies,  and the
party may,  thereafter  pursue other or different  remedies.  In addition to all
other  rights and remedies  available  to Premiere and the Club,  if any of TSC,
PIT,  IHLA or ICP shall be in default of its  obligations  hereunder,  and shall
have failed to cure such default within a period of ten (10) days after Premiere
or the Club's  delivery of written notice to the defaulting  party in accordance
with  Section  14(f) of this  Agreement,  then  Premiere  and the Club  shall be
entitled to suspend  any  Distributions  otherwise  due and owing to TSC and PIT
under this Agreement  until such time as the  defaulting  party shall have cured
such default to Premiere's and the Club's reasonable  satisfaction,  and TSC and
PIT shall forfeit any Distributions  that would have been made during the period
of such default.  Premiere's and the Club's election not to pay Distributions to
TSC and PIT as a result of TSC's,  PIT's,  IHLA's or ICP's failure to perform in
accordance  with the terms  and  conditions  of this  Agreement  shall  under no
conditions  be deemed a  default  or  breach  of this  Agreement  on the part of
Premiere or the Club.

         f. Notices.  All notices and other communications which are required or
permitted  under this Agreement  shall be in writing and shall be deemed to have
been duly given (i) when delivered personally, or (ii) when sent if by facsimile
transmitted  on a  business  day prior to 5:00 p.m.  local  time at the place of
receipt,  or on the following  business day if sent after 5:00 p.m., or (iii) on
the day following delivery to a courier service if sent by next day delivery via
a recognized  international  courier service. All such notices of communications
shall be addressed to the parties as follows,  or at such other address as shall
be specified by like notice:
<PAGE>
                                                                              16

If to PIT, IHLA            same as below
or ICP:




if to TSC:                 Treasures of the Sea of Cortez, LLC
                           4643 East Thomas Road
                           Suites 11 - 12
                           Phoenix, Arizona 85018


If to the Club             Premiere Development Incorporated
or Premiere:               2111 E. Highland, Suite 210
                           Phoenix, AZ 85016

         g. Governing Language. PIT shall obtain a certified translation of this
Agreement  into Spanish and the parties  hereto shall execute both a Spanish and
English  language  version of this  Agreement.  If an arbitration  proceeding is
conducted  in Mexico,  the  Spanish  language  version of this  Agreement  shall
control the interpretation of this Agreement,  provided,  however, that if there
is any  ambiguity  between  the Spanish  and  English  language  version of this
Agreement,  the  English  language  version  of the  ambiguous  provision  shall
control.  If an arbitration is conducted in the United States,  then the English
language  version of this  Agreement  shall control the  interpretation  of this
Agreement.

         h.  Counterparts.  This  Agreement  may be  executed  in any  number of
counterparts  and may be  executed  in both a Spanish  and an  English  language
version,  each of which  shall be  deemed  to be an  original,  and all of which
together shall constitute one and the same Agreement.

         i. Governing Law. This Agreement  shall be deemed to be a contract made
under,  and for all purposes shall be construed in accordance  with and governed
by, the laws of the Country of Mexico.

         j. Construction.  Wherever possible, this Agreement,  and all documents
contemplated hereunder, shall be construed and interpreted so as to be effective
and valid under  applicable  law. If any  provision  of this  Agreement,  or any
document  contemplated  hereunder,  for any  reason  shall be deemed  invalid or
prohibited  under  applicable law, such provision shall be invalid or prohibited
only to the extent of such invalidity or prohibition, which shall not invalidate
the remainder of such provision or the remaining provisions of this Agreement.

In Witness Whereof,  the undersigned  parties have executed this Agreement as of
this 8th day of June, 1998.
<PAGE>
Premiere Development Incorporated          Premiere Vacation Club,
an Arizona corporation                     an Arizona non-profit corporation


By: /s/ Joseph P. Martori                  By: /s/ Joseph P. Martori
    ---------------------------------         ----------------------------------
Its: Chairman                              Its: Chairman
    ---------------------------------          ---------------------------------

Treasures of the Sea of Cortez,            Promotora de Inversion Turistica,
an Arizona Corporation                       S.A. de C.V.,
                                           a Mexican Corporation


By: /s/ Alberto Astiazaran Aguilar         By: /s/ John R. Payne
    ---------------------------------         ----------------------------------
Its: Statutory Agent                       Its: Administrator
    ---------------------------------          ---------------------------------


Immobiliaria y Hotelera Los Algodones,     Immobiliaria Cerro Pelon,
S.A. de C.V., a Mexican Corporation        S.A. de C.V., a Mexican Corporation


By: /s/ Gerardo Valenzuela                 By: /s/ Alberto Astiazaran Aguilar
    ---------------------------------         ----------------------------------
Its: Apoderado Legal                       Its: Apoderado Legal
    ---------------------------------          ---------------------------------


ILX Resorts Incorporated,
an Arizona Corporation


By: /s/ Joseph P. Martori
    ---------------------------------
Its: Chairman
    ---------------------------------
<PAGE>
- - - EL LICENCIADO JOSE GUILLERMO YEPIZ ROSAS, NOTARIO PUBLICO NUMERO TRECE, EN
EJERCICIO Y DE ESTA DEMARCACION  NOTARIAL, C E R T I F I C A: QUE LAS FIRMAS QUE
APARECEN  AL CALCE DEL  PRESENTE  ESCRITO,  OUE  CONSTA DE 17 FOJAS  UTILES Y 10
ANEXOS,  FUERON  PUESTAS  EN MI  PRESENCIA  DE SU PUNO Y LETRA POR LOS  SENORES:
ALBERTO ASTIAZARAN AGUILAR,  JOHN R. PAYNE Y GERARDO VALENZUELA PARADA, BAJO SUS
RESPECTIVOS NOMBRES, QUIENES MANIFESTARON SER: MEXICANOS EL PRIMERO Y EL ULTIMO,
NORTEAMERICANO EL SEGUNDO,  CASADOS, MAYORES DE EDAD, VECINOS DE ESTA CIUDAD, DE
MI PERSONAL  CONOCIMIENTO  Y HABILES A MI JUICIO PARA  CONTRATAR Y OBLIGARSE.- Y
MANIFIESTAN QUE SON LAS MISMAS FIRMAS QUE ACOSTUMBRAN  USAR EN TODOS SUS ACTOS Y
RATIFICAN EN TODO EL CONTENIDO Y TERMINO DEL MISMO.- EL SENOR JOHN R. PAYNE,  SE
IDENTIFICO  CON  PASAPORTE  NUMERO  054229241  EXPEDIDO  EN  ESTADOS  UNIDOS  DE
NORTEAMERICA  Y ACREDITA SU LEGAL  ESTANCIA EN EL PAIS CON VISA NUMERO  37734545
EXPEDIDA POR 180 DIAS CON FECHA 4 DE MARZO DE 1998 EN NOGALES, SONORA DOCUMENTOS
QUE DOY FE TENER A LA VISTA.- LOS COMPARECIENTES MANIFIESTAN QUE NO REQUIEREN DE
INTERPRETE  POR  CONOCER EL IDIOMA DEL  PRESENTE  DOCUMENTO.-  EL SENOR  ALBERTO
ASTIAZARAN  AGUILAR  ACREDITA SU  PERSONALIDAD  DE APODERADO LEGAL DE LA EMPRESA
"TREASURES  OF THE SEA OF CORTEZ",  L.L.C.,  CON LOS  ARTICULOS DE  ORGANIZACION
EXPEDIDO  EN EL ESTADO  DE ARIZON DE LA  OFICINA  ENCARGADA  DE LA  COMISION  DE
CORPORACIONES, CON FECHA JUNIO 6 DE 1994, CON FECHA DE EXPIRACION EN JUNIO 6 DEL
ANO 2046; EL SENOR JOHN R. PAYNE, ACREDITA SU PERSONALIDAD DE APODERADO LEGAL DE
LA SOCIEDAD MERCANTIL  DENOMINADA  "PROMOTORA DE INVERSION  TURISTICA",  S.A. DE
C.V.,  CON ESCRITURA  PUBLICA  NUMERO 7413,  VOLUMEN 228, DE FECHA 9 DE JULIO DE
1997, PASADA ANTE LA FE DEL SUSCRITO NOTARIO,  E INSCRITA EN EL REGISTRO PUBLICO
DE ESTA CIUDAD,  BAJO EL NUMERO 1657, SECCION COMERCIO,  LIBRO I VOLUMEN 32, CON
FECHA 15 DE JULIO DE 1997;  EL SENOR  GERARDO  VALENZUELA  PARADA,  ACREDITA  SU
PERSONALIDAD  DE  APODERADO  LEGAL  DE LAS  SOCIEDADES  MERCANTILES  DENOMINADAS
"INMOBILIARIA  Y HOTELERA LOS  ALGODONES",  S.A. DE C.V. E  "INMOBILIARIA  CERRO
PELON", S.A. DE C.V., CON ESCRITURA PUBLICA NUMERO 8,861,  VOLUMEN 233, DE FECHA
PRIMERO DE AGOSTO DE 1994,  PASADA ANTE LA FE DEL SENOR LICENCIADO  CARLOS GAMEZ
FIMBRES,  NOTARIO  PUBLICO NUMERO 43, CON RESIDENCIA EN  HERMOSILLO,  SONORA,  E
INSCRITA EN EL REGISTRO  PUBLICO DE LA  PROPIEDAD Y DE COMERCIO DE ESTA  CIUDAD,
BAJO EL NUMERO  1559,  SECCION  COMERCIO,  LIBRO 1,  VOLUMEN 27, CON FECHA 24 DE
MARZO  DE  1997;  DOCUMENTOS  QUE  DOY FE  TENER  A LA  VISTA  Y  DEVOLVI  A SUS
PRESENTANTES.- DOY FE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
                                      GUAYMAS, SONORA., A 5 DE JUNIO DE 1998.


                                      /s/ Lic. Jose Guillermo Yepiz Rosas
                                      LIC. JOSE GUILLERMO YEPIZ ROSAS,
                                             NOTARIO PUBLICO NUMERO 13.-
<PAGE>
STATE Of ARIZONA                       )
                                       )    ss.
County of Maricopa                     )

         On June 8, 1998, before me, the undersigned  Notary Public,  personally
appeared  Joseph P.  Martori  who  acknowledged  him/herself  to be  Chairman of
Premiere  Development  Inc.,  an Arizona  corporation,  and that  he/she,  being
authorized so to do, executed the foregoing  instrument for the purposes therein
contained, on behalf of such corporation.

         IN WITNESS WHEREOF I hereunto set my hand and official seal.



                                             /s/ Dorinne R. .Dobson
                                             ---------------------------------
                                             Notary Public

My Commission Expires:                   OFFICIAL SEAL
August 31, 1999                        DORINNE R. DOBSON
                                Notary Public - State of Arizona
                                         MARICOPA COUNTY
                                 My Comm. Expires Aug. 31, 1999



STATE OF ARIZONA                        )
                                        )   ss.
County of Maricopa                      )


         On June 8, 1998, before me, the undersigned  Notary Public,  personally
appeared Joseph P. Martori,  who acknowledged  him/herself to be Chairman of ILX
Resorts Incorporated,  an Arizona corporation, and that he/she, being authorized
so to do, executed  instrument for the purposes therein contained,  on behalf of
such corporation.

         IN WITNESS WHEREOF I hereunto set my hand and official seal.


                                             /s/ Dorinne R. .Dobson
                                             ---------------------------------
                                             Notary Public


My Commission Expires:                          OFFICIAL SEAL          
August 31, 1999                               DORINNE R. DOBSON        
                                       Notary Public - State of Arizona
                                                MARICOPA COUNTY        
                                        My Comm. Expires Aug. 31, 1999 
<PAGE>
28-May-98                    PREMIERE VACATION CLUB                  Exhibit B
                         PRO FORMA FINANCIAL STATEMENTS
                                INCOME STATEMENT
<TABLE>
<CAPTION>
                                                   YEAR I        YEAR 2        YEAR 3        TOTAL
                                                 -----------   -----------   -----------   -----------
<S>                                              <C>           <C>           <C>           <C>        
TIMESHARE REVENUE
     TIMESHARE SALES                             $19,687,500   $22,500,000   $22,500,000   $64,687,500
     INTEREST INCOME                               1,126,913     3,450,445     5,746,759    10,324,117
                                                 -----------   -----------   -----------   -----------
TOTAL TIMESHARE REVENUE                           20,814,413    25,950,445    28,246,759    75,011,617
                                                 -----------   -----------   -----------   -----------
COST OF TIMESHARE SALES
     PRODUCT COST                                  3,803,625     4,347,000     4,347,000    12,497,625
     SALES AND MARKETING                52.00%    10,237,500    11,700,000    11,700,000    33,637,500
     LOAN PROCESSING/G&A                 2.50%       492,188       562,500       562,500     1,617,188
     BAD DEBT                            3.00%       590,625       675,000       675,000     1,940,625
     CLOSING COSTS                       3.00%       590,625       675,000       675,000     1,940,625
                                                 -----------   -----------   -----------   -----------
                                                  15,714,563    17,959,500    17,959,500    51,633,563
                                                 -----------   -----------   -----------   -----------
OPERATING EXPENSES
     LEGAL/ACCOUNTING/PROF FEES                      100,000       100,000       100,000       300,000
                                                                                                     0
                                                 -----------   -----------   -----------   -----------
                                                     100,000       100,000       100,000       300,000
                                                 -----------   -----------   -----------   -----------
INTEREST EXPENSE                                     542,321     1,544,329     2,293,686     4,380,336
                                                 -----------   -----------   -----------   -----------
NET INCOME BEFORE TAXES                          $ 4,457,529   $ 6,346,617   $ 7,893,573   $18,697,718
                                                 ===========   ===========   ===========   ===========
</TABLE>

NOTE 1: MODEL DOES NOT INCLUDE THE INTEREST INCOME ARBITRAGE IN YEARS 4-10 WHICH
WILL BE  GENERATED  FROM SALES MADE  DURING THE THREE YEAR SALES  PERIOD  SHOWN.
EXAMPLE:  ARBITRAGE FOR YEAR 3 IS: $3,453,073 ARBITRAGE WILL CONTINUE IN FACT TO
BE EARNED FOR SEVEN  YEARS  FROM THE LAST YEAR OF SALES  (IE.  YEAR 10 FOR SALES
MADE IN YEAR

NOTE 2: MODEL  ASSUMES  ONLY THREE  YEARS OF  TIMESHARE  SALES.  AT END OF MODEL
PERIOD 1325  INTERVALS  REMAIN  AVAILABLE  FOR SALE OF THE 6500 WEEKS OF INITIAL
INVENTORY, MEANING 20% REMAINS AVAILABLE TO SELL.
<PAGE>
28-May-98                    PREMIERE VACATION CLUB                  Exhibit B
                         PRO FORMA FINANCIAL STATEMENTS
                                 BALANCE SHEET

                                       YEAR 1       YEAR 2        YEAR 3
                                    -----------   -----------   -----------
CASH                                $ 1,632,881   $ 4,922,907   $ 6,381,408
NOTES RECEIVABLE                     13,600,913    28,043,139    41,315,544
PROPERTY HELD FOR SALE               11,893,875     7,546,875     3,199,875
OTHER ASSETS
                                    -----------   -----------   -----------
                                    $27,127,669   $40,512,920   $50,896,828
                                    ===========   ===========   ===========


NOTES PAYABLE - CONSTRUCTION DEBT             0             0             0
NOTES PAYABLE - HYPO BORROWINGS       9,950,850    18,385,453    23,700,535
                                    -----------   -----------   -----------
                                      9,950,850    18,385,453    23,700,535

EQUITY                               17,176,819    22,127,468    27,196,293
                                    -----------   -----------   -----------
                                    $27,127,669   $40,512,920   $50,896,828
                                    ===========   ===========   ===========
<PAGE>
28-May-98                    PREMIERE VACATION CLUB                  Exhibit B
                         PRO FORMA FINANCIAL STATEMENTS
                                NOTES RECEIVABLE
<TABLE>
<CAPTION>
                                  YEAR 1          YEAR 2        YEAR 3
                                -----------    -----------    -----------
<S>                             <C>           <C>            <C>             <C>       
BEGINNING BALANCE                         0     13,600,913     28,043,139
NOTES GENERATED (A)              14,175,000     16,200,000     16,200,000
PRINCIPAL COLLECTIONS              (574,088)    (1,757,774)    (2,927,594)
                                -----------    -----------    -----------
ENDING BALANCE                   13,600,913     28,043,139     41,315,544
                                ===========    ===========    ===========

COLLECTIONS                       1,701,000      5,208,219      8,674,353
LESS: INTEREST INCOME PORTION     1,126,913      3,450,445      5,746,759
                        15.90%
PRINCIPAL COLLECTIONS               574,088      1,757,774      2,927,594
                                ===========    ===========    ===========

      (A) ASSUMES 20% CASH SALES, 80% FINANCED SALES WITH 10% DOWN PAYMENT

INTEREST EXPENSE

NOTES RECEIVABLE BEG BALANCE              0     13,600,913     28,043,139               0
NOTES RECEIVABLE ENDING BALANCE  13,600,913     28,043,139     41,315,544               0
                                -----------    -----------    -----------     -----------
                                 13,600,913     41,644,051     69,358,683               0
                                          2              2              2               2
                                -----------    -----------    -----------     -----------
AVERAGE BALANCE                   6,800,456     20,822,026     34,679,341               0
PORTION BORROWED AGAINST              90.00%         90.00%         90.00%          90.00%
ADVANCE RATE                          90.00%         90.00%         90.00%          90.00%
                                -----------    -----------    -----------     -----------
AVERAGE ADVANCE AMOUNT            5,508,370     16,865,841     28,090,267               0

BEGINNING BORROWING BALANCE               0      9,950,850     18,385,453      23,700,535
CURRENT YEAR ADVANCES            11,481,750     13,122,000     13,122,000               0
CUSTOMER REPAYMENTS              (1,530,900)    (4,687,397)    (7,806,918)              0
       (EXCLUDES IN HOUSE) 10%
                                -----------    -----------    -----------     -----------

ENDING BALANCE                    9,950,850     18,385,453     23,700,535      23,700,535
INTEREST RATE                         10.90%         10.90%         10.90%          10.90%
                                -----------    -----------    -----------     -----------
INTEREST EXPENSE                    542,321      1,544,329      2,293,686       2,583,358
                                ===========    ===========    ===========     ===========
</TABLE>
<PAGE>
28-May-98                    PREMIERE VACATION CLUB                  Exhibit B
                         PRO FORMA FINANCIAL STATEMENTS
                                    FINANCING
<TABLE>
<CAPTION>
                                                          YEAR 1         YEAR 2         YEAR 3
                                                        ----------     ----------     ----------
<S>                                                    <C>            <C>            <C>            <C>      
PARTNER DISTRIBUTIONS

SAN CARLOS PARTNERS:
ANNUAL EQUIVALENTS SOLD (TOTAL)                              1,575          1,800          1,800
SAN CARLOS PERCENTAGE INTEREST                               23.00%         23.08%         23.08%
PRODUCT COST                                                 2,415          2,415          2,415
NET INCOME                                               4,457,529      6,346,617      7,893,573

PRODUCT COST DISTRIBUTION (ANNUAL)                         877,760      1,003,154      1,003,154
PRODUCT COST DISTRIBUTION X2                             1,755,519      2,006,308      2,006,308
PRODUCT COST DISTRIBUTION x l/2                            438,880        501,577        501,577
PRODUCT COST DIST/INTERVAL                                     557            557            557
PRODUCT COST DIST/INTERVAL X2                                1,115          1,113          1,115
PRODUCT COST DIST/INTERVAL X1/2                                279            279            279

PROFIT DISTRIBUTION (ANNUAL)                             1,026,660      1,464,604      1,821,594
PROFIT DISTRIBUTION X 2                                  2,057,321      2,929,208      3,643,187
PROFIT DISTRIBUTION X l/2                                  514,330        732,302        910,707

BEGINNING CUMULATIVE DISTRIBUTION                                0      2,978,210      4,374,178              0

CURRENT YEAR DISTRIBUTIONS (ASSUMES SALES AND PROFITS
EARNED RATABLY OVER YEAR):
     PRODUCT COST DISTRIBUTION X 2                       1,243,142              0              0      1,243,142
     PROFIT DISTRIBUTION X 2                             1,456,858              0              0      1,456,858
                                                        ----------     ----------     ----------     ----------
                                                         2,700,000              0              0      2,700,000

                                                             70.81%          0.00%          0.00%

     PRODUCT COST DISTRIBUTION X l/2                       128,094        435,687              0        563,781
     PROFIT DISTRIBUTION X 1/2                             150,116        636,103              0        786,219
                                                        ----------     ----------     ----------     ----------
                                                           278,210      1,071,790              0      1,350,000

                                                                            86.86%          0.00%

     PRODUCT COST DISTRIBUTION                                   0        131,780      1,003,154      1,134,933
     PROFIT DISTRIBUTION                                         0        192,398      1,821,594      2,013,992
                                                        ----------     ----------     ----------     ----------
                                                                 0        324,178      2,824,748      3,148,925
                                                        ----------     ----------     ----------     ----------
     ENDING CUMULATIVE DISTRIBUTIONS                     2,978,210      4,374,178      7,198,925      7,198,925
                                                        ----------     ----------     ----------     ----------

NOTE 1: MODEL DOES NOT REFLECT THE INTEREST PAYABLE BY SAN CARLOS PARTNERS ON OUTSTANDING ADVANCES.
NOTE 2: MODEL DOES NOT REFLECT INTEREST ARBITRAGE OR SALES BEYOND THE THREE YEAR MODEL PERIOD.
NOTE 3: MODEL DOES NOT REFLECT THE MAINTENANCE FEE DISTRIBUTIONS PAYABLE TO SAN CARLOS PARTNERS.


PROOF:
STRAIGHT PERCENTAGE DISTRIBUTION                         1,906,420      2,467,758      2,824,748      7,198,925
OVER (UNDER) ADVANCED                                    1,071,790     (1,071,790)             0              0

BEGINNING ADVANCES                                               0      1,071,790              0              0

CURRENT YEAR ADVANCES
     PRODUCT COST DISTRIBUTION X 2                         621,571                                      621,571
     PROFIT DISTRIBUTION X 2                               726,429                                      726,429

CURRENT YEAR REPAYMENTS
     PRODUCT COST DISTRIBUTION X 1/2                      (126,094)      (435,687)                     (563,781)
     PROFIT DISTRIBUTION X 1/2                            (150,116)      (636,103)                     (786,219)
                                                        ----------     ----------     ----------     ----------
ENDING ADVANCES                                          1,071,790              0              0              0
                                                        ==========     ==========     ==========     ==========
</TABLE>
<PAGE>
28-May-98                    PREMIERE VACATION CLUB                  Exhibit B
                         PRO FORMA FINANCIAL STATEMENTS
                               TIMESHARE INVENTORY

                                                                     TOTAL
                                                                  ------------

                                    NUMBER           VALUE

ILX RESORTS INTERVALS                   5,000     $      2,415    $ 12,075,000
SAN CARLOS INTERVALS                    1,500     $      2,415       3,622,500
                                 ------------
                                        6,500
                                                                  ------------
TOTAL INVENTORY (PRODUCT) COST                                      15,697,500
                                                                  ------------

PROPERTY HELD FOR SALE
                                                                  ------------
BEG BALANCE                                 0       11,893,875       7,546,875
ACQUISITIONS                       15,697,500
COST OF SALES TIMESHARE            (3,803,625)      (4,347,000)     (4,347,000)
                                 ------------     ------------    ------------
ENDING BALANCE                     11,893,875        7,546,875       3,199,875
                                 ============     ============    ============
COST OF SALES
-------------
TOTAL COST                       $ 15,697,500

COS AS % OF REVENUE                    19.32%
<PAGE>
28-May-98                    PREMIERE VACATION CLUB                  Exhibit B
                         PRO FORMA FINANCIAL STATEMENTS
                       TIMESHARE REVENUE AND PRODUCT COST


                                        YEAR 1        YEAR 2        YEAR 3
                                     -----------   -----------   -----------
TIMESHARE SALES - PRICES

      ANNUAL EQUIVALENTS             $    12,500   $    12,500   $    12,500
                                     ===========   ===========   ===========
NUMBER OF SALES PER MONTH
      MONTH 1                                100           150           150
      MONTH 2                                100           150           150
      MONTH 3                                100           150           150
      MONTH 4                                125           150           150
      MONTH 5                                125           150           150
      MONTH 6                                125           150           150
      MONTH 7                                150           150           150
      MONTH 8                                150           150           150
      MONTH 9                                150           150           150
      MONTH 10                               150           150           150
      MONTH 11                               150           150           150
      MONTH 12                               150           150           150
                                     -----------   -----------   -----------
                                           1,575         1,800         1,800
                                     ===========   ===========   ===========

TIMESHARE REVENUE                    $19,687,500   $22,500,000   $22,500,000
    (PRICE TIMES NUMBER OF SALES)    ===========   ===========   ===========

PRODUCT COST                         $ 3,803,626   $ 4,347,000   $ 4,347,000
                    2,415 PER WEEK   ===========   ===========   ===========

INVENTORY AVAILABLE END OF YEAR            4,925         3,125         1,325
                                     ===========   ===========   ===========
<PAGE>
                                    Exhibit C
                             PREMIERE VACATION CLUB


                                   Prime Season             High Season
Program          Unit Type     Annual $   Biennial $    Annual $   Biennial $
-------          ---------     --------   ----------    --------   ----------

Platinum       Penthouse         24,900      16,400

Gold          Two Bedroom        18,900      12,900      15,900      10,400

Silver        One Bedroom        12,900       8,400       9,900       6,900

Copper          Studio            9,900       6,400       7,900       5,400



Maintenance fees
----------------

Platinum                        $525.00          $262.50

Gold                            $425.00          $212.50

Silver                          $375.00          $187.50

Copper                          $325.00          $162.50
<PAGE>
                                    Exhibit D
                             PREMIERE VACATION CLUB
                                   1996 BUDGET
<TABLE>
<CAPTION>
                                       TOTAL                                 BY MEMBERSHIP TYPE
                                   -------------      -------------------------------------------------------------
              SALARY RELATED EXPENSES                 COPPER          SILVER          GOLD            PLATINUM
              -----------------------                 -------------   -------------   -------------   -------------
<S>                                <C>                <C>             <C>             <C>             <C>  
HOUSEKEEPING/MAIDS/LAUNDRY              $215,000              33.89           42.36           50.64           63.55
FRONT DESK/RESERVATIONS/PBX              112,500              22.50           22.50           22.50           22.50
REPAIRS AND MAINTENANCE                  125,000              19.70           24.63           29.56           36.95
MANAGEMENT/ACCOUNTING/HUMAN RESOURCES    250,000              50.00           50.00           50.00           50.00
PAYROLL TAXES AND BENEFITS               112,400              22.70           25.11           27.52           31.14
                                   -------------      -------------   -------------   -------------   -------------
TOTAL SALARY RELATED EXPENSE             814,900             148.79          164.60          180.42          204.13
                                   -------------      -------------   -------------   -------------   -------------
     GENERAL EXPENSES
     ----------------
UTILITIES/TELEPHONE                      250,000              39.41           49.26           59.11           73.89
REPAIRS AND MAINTENANCE                  125,000              19.70           24.63           29.56           36.95
INSURANCE                                 55,000               8.67           10.84           13.00           16.26
PROPERTY TAXES                           125,000              19.70           24.63           29.56           35.95
OPERATING SUPPLIES                        90,000              14.19           17.73           21.28           26.60
GUEST SUPPLIES/LINENS                    100,000              15.76           19.70           23.65           29.56
ALL OTHER                                145,000              22.86           28.57           34.29           42.86
                                   -------------      -------------   -------------   -------------   -------------
     TOTAL GENERAL EXPENSES              890,000             140.30          175.37          210.44          263.05
                                   -------------      -------------   -------------   -------------   -------------
RESERVES                                 225,000              35.47           44.33           53.20           66.50
                                   -------------      -------------   -------------   -------------   -------------
MANAGEMENT FEE                           214,433              36.06           42.70           49.34           59.30
                                   -------------      -------------   -------------   -------------   -------------
                                   $   2,144,333
                                   =============
TOTAL PER INTERVAL                                           360.62          427.01          493.40          592.99
DEVELOPER SUBSIDY                                             35.62           52.01           68.40           67.99
                                                      -------------   -------------   -------------   -------------
EVERY YEAR OWNER DUES                                 $      325.00   $      375.00   $      425.00   $      525.00
                                                      =============   =============   =============   =============
ALTERNATE YEAR OWNER DUES (i)                         $      187.50   $      212.50   $      237.50   $      287.50
                                                      =============   =============   =============   =============
</TABLE>

(1) Alternate year owners pay this amount every year.  Thus,  when their year of
use arrives, they will have paid the full dues amount for their year of use.
<PAGE>
28-May-98                    PREMIERE VACATION CLUB
                         PRO FORMA FINANCIAL STATEMENTS
                               CASH FLOW STATEMENT
<TABLE>
<CAPTION>
                                            YEAR 1          YEAR 2          YEAR 3          TOTAL
                                         ------------    ------------    ------------    ------------

CASH FLOW FROM OPERATIONS
<S>                                      <C>             <C>             <C>             <C>         
       NET INCOME                        $  4,457,529    $  6,346,617    $  7,893,573    $ 18,697,718
       ADD NON CASH:
         COST OF SALES - TIMESHARE          3,803,625       4,347,000       4,347,000      12,497,625
                                         ------------    ------------    ------------    ------------
CASH FLOW FROM OPERATIONS                   8,261,154      10,693,617      12,240,573      31,195,343
                                         ------------    ------------    ------------    ------------
CASH FLOW FROM FINANCING

       CONSTRUCTION BORROWING                       0               0               0               0
       RELEASE PAYMENTS                             0               0               0               0
       TIMESHARE PAPER GENERATED          (14,175,000)    (16,200,000)    (16,200,000)    (46,575,000)
       BORROWING AGAINST TIMESHARE PAP     11,481,750      13,122,000      13,122,000      37,725,750
       PRINC COLL ON CUST NOTES               574,088       1,757,774       2,927,594       5,259,456
       APP OF CUSTOMER PYMTS               (1,530,900)     (4,687,397)     (7,806,918)    (14,025,215)
                                         ------------    ------------    ------------    ------------
       CASH FLOW FROM FINANCING            (3,650,063)     (6,007,623)     (7,957,324)    (17,615,009)
                                         ------------    ------------    ------------    ------------
CASH FLOW FROM INVESTING

       DISTRIBUTIONS TO SAN CARLOS         (2,978,210)     (1,395,968)     (2,824,748)     (7,198,925)
          PARTNERS                                                                                  0
                                                                                                    0
                                                                                                    0
                                                                                                    0
                                         ------------    ------------    ------------    ------------
       CASH FLOW FROM INVESTING            (2,978,210)     (1,395,968)     (2,824,748)     (7,198,925)
                                         ------------    ------------    ------------    ------------
NET CASH FLOW                               1,632,881       3,290,026       1,458,501       6,381,408
                                         ------------    ------------    ------------    ------------
BEGINNING CASH                                      0       1,632,881       4,922,907               0
                                         ------------    ------------    ------------    ------------
ENDING CASH AVAILABLE TO OTHER PARTN     $  1,632,881    $  4,922,907    $  6,381,408    $  6,381,408
                                         ============    ============    ============    ============
</TABLE>