EXHIBIT 10-2
         FOURTH MODIFICATION AGREEMENT


                          FOURTH MODIFICATION AGREEMENT
                          -----------------------------



DATE:                    September 3, 1997
-----

PARTIES:  Borrower:      LOS ABRIGADOS PARTNERS LIMITED PARTNERSHIP,
--------                 an Arizona limited partnership
          Borrower       2111 East Highland Avenue, Suite 210
          Address:       Phoenix, Arizona 85016

          Bank:          BANK ONE, ARIZONA, NA, a national banking association
          Bank           Western Region Real Estate (AZ1-1328)
          Address:       P.0. Box 29542
                         Phoenix, Arizona 85038

RECITALS:
---------

                  A.  Bank has  extended  to  Borrower  credit  ("Loan")  in the
original  principal  amount of Five Million and No/100  Dollars  ($5,000,000.00)
pursuant  to  that  certain  Loan  Agreement  dated  September  9,  1991  ("Loan
Agreement"),  and  evidenced  by that certain  Secured  Promissory  Note,  dated
September 9, 1991, which Note was subsequently amended and restated by the terms
of that certain Secured Promissory Note, dated October 4, 1994, and that certain
Secured Promissory Note, dated January 25, 1996 (collectively,  the "Note"). The
unpaid principal of the Loan as of the date hereof is $908,166.67.

                  B. The Loan is secured by, among other things, (i) the Deed of
Trust (With Assignment of Rents and Security  Agreement  (Variable Rate),  dated
September 9, 1991 ("Deed of Trust"), by Borrower, as trustor, for the benefit of
Bank, as beneficiary,  recorded on September 10, 1991, in Docket 1421, Page 705,
as Instrument Number 91-19146,  records of Coconino County,  Arizona, as amended
by that  certain  First  Amendment to Deed of Trust and  Collateral  Assignment,
dated October 4, 1994, recorded on October 7, 1994, at Docket 1714, Page 561, as
Instrument No. 94-33675,  and that certain Second Amendment to Deed of Trust and
Collateral Assignment, dated January 25, 1996, recorded on February 12, 1996, at
Docket 1846, Page 091, as Instrument No.  96-04225,  records of Coconino County,
Arizona,  (ii)  the  Collateral   Assignment,   dated  September  9,  1991  (the
"Collateral  Assignment"),  by  Borrower  for the  benefit of Bank,  recorded on
September  10,  1991,  in Docket 1421,  Page 758, as  Instrument  No.  91-19147,
records of Coconino County,  Arizona, as amended by that certain First Amendment
to Deed of Trust and Collateral  Assignment,  dated October 4, 1994, recorded on
October 7, 1994, at Docket 1714, Page 561, as Instrument No. 94-33675,  and that
certain  Second  Amendment  to Deed of Trust and  Collateral  Assignment,  dated
January 25, 1996,  recorded on February 12,
                                       1
<PAGE>
1996, at Docket 1846, Page 091, as Instrument No. 96-04225,  records of Coconino
County,  Arizona,  (iii) the Repayment Guaranty of ILX Incorporated,  an Arizona
corporation,  dated January 25, 1996 (the  "Repayment  Guaranty"),  and (iv) the
Security Agreement, dated September 9, 1991, by Borrower for the benefit of Bank
(the "Security Agreement") (the agreements,  documents, and instruments securing
the Loan and the Note are  referred  to  individually  and  collectively  as the
"Security Documents").

                  C. Bank and Borrower have  executed and  delivered  previously
the following agreements  ("Modifications") modifying the terms of the Loan, the
Note, the Loan Agreement,  and/or the Security  Documents:  (i) the Modification
Agreement  dated  October 22, 1993,  (ii) the Letter  Agreement  dated April 18,
1994,  (iii) the  Modification  Agreement  dated June 28, 1994,  (iv) the Second
Modification  Agreement  dated October 4, 1994,  pursuant to which Bank advanced
additional Loan funds to Borrower,  thereby  increasing the  outstanding  unpaid
principal balance of the Loan to  $2,000,000.00,  (v) the Letter Agreement dated
December 30, 1994, and (vi) the Third  Modification  Agreement dated January 25,
1996, pursuant to which Bank advanced additional Loan funds to Borrower, thereby
increasing   the   outstanding   unpaid   principal   balance  of  the  Loan  to
$2,485,000.00.  (The Note,  the Loan  Agreement,  the  Security  Documents,  any
arbitration resolution, any environmental certification and indemnity agreement,
and all other agreements,  documents,  and instruments evidencing,  securing, or
otherwise relating to the Loan, as modified in the Modifications,  are sometimes
referred to individually and collectively as the "Loan Documents".  Hereinafter,
"Note", "Loan Agreement",  "Deed of Trust",  "Repayment  Guaranty",  "Collateral
Assignment",  "Security  Agreement",  and "Security  Documents"  shall mean such
documents as modified in the Modifications.)

                  D.  Borrower has  requested  that Bank modify the Loan and the
Loan Documents as provided herein. Bank is willing to so modify the Loan and the
Loan Documents, subject to the terms and conditions herein.

AGREEMENT:
----------

For good and valuable  consideration,  the receipt and  sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:

1.        ACCURACY OF RECITALS.
          ---------------------

Borrower acknowledges the accuracy of the Recitals.

2.       MODIFICATION OF LOAN DOCUMENTS.
         -------------------------------

         2.1      The Loan Documents are modified as follows:

                  2.1.1 Upon the  execution of this  Agreement  and the full and
complete  satisfaction by Borrower of all conditions precedent required by Bank,
Borrower  may obtain and Bank shall be  obligated  to make,  one (1)  additional
advance to Borrower in the amount of Eight Hundred  Thousand and No/100  Dollars
($800,000.00),  which  funds  shall be used for the  purpose
                                       2
<PAGE>
of  acquiring  Alan  Mishkin's   ownership   interest  in  Borrower.   Upon  the
disbursement  of the  additional  Eight  Hundred  Thousand  and  No/100  Dollars
($800,000.00) to Borrower,  the outstanding unpaid principal balance of the Loan
shall be One Million  Seven  Hundred  Eight  Thousand One Hundred  Sixty-Six and
67/100 Dollars ($1,708,166.67).

                  2.1.2 The  maturity  date of the Loan and the Note is  changed
from June 5, 1998, to April 5, 1999. On the maturity date Borrower  shall pay to
Bank the unpaid  principal,  accrued and unpaid interest,  and all other amounts
payable by Borrower under the Loan Documents as modified herein.

                  2.1.3  The  term  "Timeshare  Documents"  as used in the  Loan
Documents shall include all amendments,  modifications,  renewals,  restatements
and  supplements  with respect to such  Timeshare  Documents.  Borrower and Bank
acknowledge that the definition of "Timeshare  Interval"  currently contained in
the Loan Agreement refers to a "1/9325  fractional  interest in the fee title of
the Premises" and that as a result of certain  amendments and  modifications  of
the  Timeshare  Documents,  the  fractional  interest  in the fee  title  to the
Premises with respect to Timeshare  Intervals  sold on and after August 31, 1997
is a 1/9325  interest in and to the  Premises  with  respect to each "Every Year
Membership"  (as defined in the Timeshare  Documents) and a 1/18650  interest in
and to the  Premises  with  respect to each "Every  Other Year  Membership"  (as
defined in the Timeshare Documents).

                  2.1.4 Section 2.7 of the Loan  Agreement is hereby  deleted in
its entirety and replaced with the following:

                  " 2.7 Servicing Fee. On September 1, 1997,  Borrower shall pay
         to  Lender  the  sum of  $12,000  for  the  Servicing  Fee  due for the
         succeeding year. On September 1, 1998, Borrower shall pay to Lender the
         sum of $7,000 for the Servicing Fee due for the succeeding  year (which
         fee  represents the full annual  Servicing Fee of $12,000  prorated for
         the number of months,  or portions  thereof,  from September 1, 1998 to
         the Maturity Date). The Servicing Fee represents compensation to Lender
         for its  administration and servicing of the Loan,  including,  without
         limitation,  preparation of Releases pursuant to Article VIII below. If
         the Loan is fully paid prior to the Maturity Date (other than by reason
         of  Lender's  exercise  of any  rights  and  remedies  upon an Event of
         Default),  any Servicing Fee paid by Borrower for the then current year
         will be prorated and the portion of the Servicing Fee for the remainder
         of such year will be refunded to Borrower."

                  2.1.5 Section 5.16 of the Loan  Agreement is hereby deleted in
its entirety and replaced with the following:

                  " 5.16  Loan-to-Value.  At all  times  during  the term of the
         Loan, the unpaid  principal  balance of the Loan shall not exceed sixty
         percent  (60%) of the value of the Project,  as determined by Lender in
         its sole discretion  based on (i) the Appraisals  obtained  pursuant to
         Section  5.15  hereof or (ii)  evaluations  of the value of the Project
         prepared or obtained by Lender's  appraisal  department  in  connection
         with any  modifications  of the Loan  Documents.  If for any reason the
         loan-to-value  ratio  exceeds said  percentage,  then
                                       3
<PAGE>
         Borrower shall,  within thirty (30) days of receiving written notice of
         such noncompliance from Lender,  reduce the unpaid principal balance of
         the  Loan,  or  deposit  sufficient  sums with  Lender  to  reduce  the
         loan-to-value ratio to at or below said percentage. For the purposes of
         determining  the  loan-to-value  ratio,  the  value of the  Project  as
         determined  pursuant to any Appraisal or evaluation shall represent the
         fractional  interest  in the  Project  encumbered  by the Deed of Trust
         (which  may be  adjusted  by  Lender  from  time to  time  in its  sole
         discretion as fractional  interests are sold and released) and,  unless
         otherwise  agreed  or  elected  by  Lender  in its  sole  and  absolute
         discretion,  shall not include the value of  Timeshare  Intervals  that
         have been sold or any amounts received,  or to be received with respect
         to the sale of such Timeshare Intervals.  Borrower acknowledges that in
         connection  with  the  Fourth  Modification  Agreement,   dated  as  of
         September 3, 1997, Lender, through its appraisal department has ordered
         and will obtain an Appraisal or  evaluation of the value of the Project
         and Borrower  agrees,  without  limiting this Section 5.16, that if the
         results of such Appraisal/  evaluation reflect a loan-to-value ratio of
         greater  than sixty  percent  (60%),  Borrower  will  comply  with this
         Section 5.16."

                  2.1.6 Section 5.6 of the Loan  Agreement is hereby  amended to
include the following subsections 5.6(vi) and 5.6(vii):

                  " (vi) as soon as the same  are  available,  and in any  event
         within one hundred  twenty (120) days after the end of each fiscal year
         of  Guarantor,  Borrower  shall  furnish  to  Lender  a copy of (A) the
         balance  sheet of  Guarantor  as of the end of such  fiscal  year,  (B)
         statements  of income and expenses of  Guarantor  for such fiscal year,
         and a statement of changes in financial  position of Guarantor from the
         previous fiscal year (together with comparable figures for the previous
         fiscal year), and (C) a cash flow statement of Guarantor,  all of which
         shall have been audited by an independent  Certified Public Accountant,
         satisfactory  to Lender in its sole  discretion,  who shall  deliver an
         unqualified opinion as to such financial statements to Lender. Borrower
         shall also provide Lender with such other  information  with respect to
         the  condition of Guarantor as Lender may from time to time  reasonably
         request; and

                  " (vii) as soon as the same are  available,  and in any  event
         within  sixty  (60)  days  after  the end of  each  fiscal  quarter  of
         Guarantor,  Borrower  shall furnish to Lender a copy of all 1OQ reports
         of Guarantor filed with the Securities and Exchange Commission."

                  2.1.7  Paragraph  17(b) of the  Repayment  Guaranty  is hereby
deleted in its entirety and replaced with the following:

                  " (b) As of the end of each fiscal  quarter,  a Debt to Equity
         Percentage  equal  to or  less  than  4.25 to  1.00.  "Debt  to  Equity
         Percentage" means the result obtained by dividing (i) Debt of Guarantor
         by (ii) Tangible Net Worth. "Debt" means,  without limitation,  (a) any
         indebtedness  for borrowed  money,  (b) all  indebtedness  evidenced by
         bonds,  debentures,   notes,  letters  of  credit,  drafts  or  similar
         instruments, (c) all indebtedness to pay the deferred purchase price of
         property or services,  but not including  accounts  payable and accrued
         expenses   arising  in  the  ordinary  course  of  business,   (d)  all
                                       4
<PAGE>
         capitalized lease obligations, (e) all Debt of others secured by a lien
         on any  asset,  whether or not such Debt is  assumed  by  Guarantor  or
         guaranteed  by  Guarantor,  and (f) all Debt of  others  guaranteed  by
         Guarantor and all other  indebtedness  that would appear as a liability
         upon a balance sheet of Guarantor prepared in accordance with GAAP."

         2.2 Each of the Loan  Documents is modified to provide that it shall be
a default or an event of default  thereunder  if  Borrower  shall fail to comply
with  any of the  covenants  of  Borrower  herein  or if any  representation  or
warranty  by Borrower  herein or by any  guarantor  in any  related  Consent and
Agreement of Guarantors is materially incomplete, incorrect, or misleading as of
the date hereof.

         2.3 Each  reference in the Loan  Documents to any of the Loan Documents
shall be a reference to such document as modified herein.

3.          RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
            ----------------------------------------------

The Loan  Documents  are  ratified  and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property  granted as security in the Loan Documents  shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.

4.          BORROWER REPRESENTATIONS AND WARRANTIES.
            ----------------------------------------

Borrower represents and warrants to Bank:

         4.1 No default or event of default  under any of the Loan  Documents as
modified herein,  nor any event,  that, with the giving of notice or the passage
of time or both,  would be a  default  or an event  of  default  under  the Loan
Documents as modified herein has occurred and is continuing.

         4.2  There  has  been  no  material  adverse  change  in the  financial
condition  of Borrower or any other person whose  financial  statement  has been
delivered  to Bank in  connection  with the Loan from the most recent  financial
statement received by Bank.

         4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.

         4.4 Borrower has no claims,  counterclaims,  defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.

         4.5 The Loan  Documents as modified  herein are the legal,  valid,  and
binding obligation of Borrower,  enforceable against Borrower in accordance with
their terms.

         4.6  Borrower  is validly  existing  under the laws of the State of its
formation or  organization  and has the requisite power and authority to execute
and deliver this Agreement and 
                                       5
<PAGE>
to perform the Loan Documents as modified herein.  The execution and delivery of
this Agreement and the performance of the Loan Documents as modified herein have
been duly authorized by all requisite  action by or on behalf of Borrower.  This
Agreement has been duly executed and delivered on behalf of Borrower.

         4.7 All Timeshare  Documents (as defined in the Loan Agreement)  remain
in full force and  effect  and no  amendments,  modifications,  restatements  or
supplements  have been entered into since the  execution of the Loan  Agreement,
except as disclosed to Bank in writing concurrently herewith.

         4.8 The  Fractional  Interest  in the  Project  owned by  Borrower  and
encumbered  by the  Deed  of  Trust  as of the  date  hereof  is not  less  than
1800/9325.

5.          BORROWER COVENANTS.
            -------------------

Borrower covenants with Bank:

         5.1  Borrower  shall  execute,   deliver,  and  provide  to  Bank  such
additional agreements, documents, and instruments as reasonably required by Bank
to effectuate the intent of this Agreement.

         5.2 Borrower fully,  finally,  and forever releases and discharges Bank
and  its  successors,  assigns,  directors,  officers,  employees,  agents,  and
representatives  from any and all  actions,  causes of  action,  claims,  debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or  equity,  that  Borrower  has or in the  future  may have,  whether  known or
unknown,  (i) in  respect of the Loan,  the Loan  Documents,  or the  actions or
omissions of Bank in respect of the Loan or the Loan  Documents and (ii) arising
from events occurring prior to the date of this Agreement.

         5.3   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement, Borrower has paid to Bank:

                  5.3.1 All accrued and unpaid  interest  under the Note and all
amounts,  other than interest and  principal,  due and payable by Borrower under
the Loan Documents as of the date hereof,

                  5.3.2 All internal and external costs and expenses incurred by
Bank in connection with this Agreement  (including,  without limitation,  inside
and outside attorneys,  appraisal,  appraisal review, processing, title, filing,
recording and costs, expenses, and fees); and

                  5.3.3 A  Modification  Fee in the amount of Eight Thousand and
No/100 Dollars ($8,000.00).

         5.4   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement,  Borrower  has  caused  to be  executed  and  delivered  to Bank  the
Memorandum of  Modification,  dated of even
                                       6
<PAGE>
date herewith,  amending the Deed of Trust to secure repayment of the promissory
note as amended hereunder.

         5.5   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement,  Bank  shall  obtain at  Borrower's  sole cost and  expense,  an LTAA
Endorsement Number 10 (Bringdown) and Endorsement Number 7 (Coverage  Increase),
to the title insurance policy insuring the Deed of Trust, which policy is policy
number  65025782-M1  dated  September  10, 1991,  issued by  Transamerica  Title
Insurance  Company.  Such  endorsement  recognizes the  modification of the Loan
Documents herein and is subject only to the exceptions in Schedule B, Part I, of
such policy.

         5.6   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement,  Borrower  has  delivered  to  Bank  all  amendments,  modifications,
restatements,  or  supplements  to any or all  of the  Timeshare  Documents  (as
defined in the Loan Agreement).  All such amendments or supplements  shall be in
form satisfactory to Bank in its sole discretion.

         5.7   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement,  Borrower has delivered to Bank a partnership certificate authorizing
Borrower's  execution of this Agreement and all other  documents and instruments
referred  to herein and  required  by Bank in  connection  with the  transaction
contemplated hereby.

         5.8   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement,  Borrower has caused  Guarantor  to deliver to Bank a  resolution  of
Guarantor's Board of Directors authorizing  Guarantor's execution of the Consent
and Agreement of Guarantors attached hereto.

6.          EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
            --------------------------------------------

Bank shall not be bound by this Agreement until each of the following shall have
occurred: (i) Bank has executed and delivered this Agreement,  (ii) Borrower has
performed  all of  the  obligations  of  Borrower  under  this  Agreement  to be
performed  contemporaneously  with the execution and delivery of this Agreement,
(iii) each  guarantor of the Loan,  if any, has executed and delivered to Bank a
Consent and Agreement of Guarantors,  and (iv) if required by Bank, Borrower and
any guarantors have executed and delivered to Bank an arbitration resolution, an
environmental  questionnaire,  and an environmental  certification and indemnity
agreement.

7.          ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
            ------------------------------------------------------------

The Loan  Documents  as modified  herein  contain the entire  understanding  and
agreement  of Borrower and Bank in respect of the Loan and  supersede  all prior
representations,  warranties,  agreements,  arrangements, and understandings. No
provision of the Loan Documents as modified  herein may be changed,  discharged,
supplemented,  terminated,  or waived  except  in a  writing  signed by Bank and
Borrower.

8.          BINDING EFFECT.
            ---------------
                                       7
<PAGE>
The Loan  Documents as modified  herein shall be binding upon,  and inure to the
benefit of, Borrower and Bank and their respective successors and assigns.

9.          CHOICE OF LAW.
            --------------

This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.

10.         COUNTERPART EXECUTION.
            ----------------------

This Agreement may be executed in one or more counterparts,  each of which shall
be deemed an original and all of which  together  shall  constitute  one and the
same  document.  Signature  pages  may be  detached  from the  counterparts  and
attached to a single copy of this Agreement to physically form one document.

11.         ARBITRATION.
            ------------

         11.1 Binding Arbitration. Bank, Borrower and each guarantor executing a
consent and Agreement of Guarantors with respect to this Agreement  hereby agree
that all  controversies  and claims  arising  directly or indirectly out of this
Agreement and the Loan  Documents,  shall at the written request of any party be
arbitrated  pursuant  to  the  applicable  rules  of  the  American  Arbitration
Association.  The arbitration shall occur in the State of Arizona. Judgment upon
any award  rendered  by the  arbitrator(s)  may be entered  in any court  having
jurisdiction.  The Federal  Arbitration Act shall apply to the  construction and
interpretation of this arbitration agreement.

         11.2  Arbitration  Panel. A single  arbitrator  shall have the power to
render a maximum award of one hundred thousand  dollars.  When any party files a
claim in excess of this amount,  the  arbitration  decision shall be made by the
majority  vote of three  arbitrators.  No  arbitrator  shall  have the  power to
restrain any act of any party.

         11.3 Provisional Remedies; Self Help; and Foreclosure.  No provision of
Section 11.1 shall limit the right of any party to exercise self help  remedies,
to foreclose against any real or personal property collateral,  or to obtain any
provisional  or  ancillary  remedies  (including  but not limited to  injunctive
relief or the appointment of a receiver) from a court of competent jurisdiction.
At  Bank's  option,  it may  enforce  its right  under a  mortgage  by  judicial
foreclosure, and under a deed of trust either by exercise of power of sale or by
judicial  foreclosure.  The institution and maintenance of any remedy  permitted
above shall not  constitute a waiver of the rights to submit any  controversy or
claim to arbitration. The statute of limitations,  estoppel, waiver, laches, and
similar  doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding.

DATED as of the date first above stated.
                                       8
<PAGE>
                                        LOS ABRIGADOS PARTNERS LIMITED
                                        PARTNERSHIP, an Arizona limited 
                                        partnership

                                        By: ILE Sedona Incorporated, an Arizona 
                                            corporation, General Partner



                                            By:
                                                --------------------------------
                                                       Nancy J. Stone
                                                       Vice President


                                                                      "BORROWER"


                                        BANK ONE, ARIZONA, NA, a national 
                                        banking association


                                            By:
                                                --------------------------------
                                                       Donna Morris
                                                   Assistant Vice President


                                                                          "BANK"
                                       9
<PAGE>
                          MODIFICATION OF GUARANTY AND
                          ----------------------------
                       CONSENT AND AGREEMENT OF GUARANTORS
                       -----------------------------------

With  respect to the Fourth  Modification  Agreement,  dated  September  3, 1997
("Agreement"),  between LOS ABRIGADOS PARTNERS LIMITED  PARTNERSHIP,  an Arizona
limited partnership  ("Borrower") and BANK ONE, ARIZONA,  NA, a national banking
association  ("Bank"),  the  undersigned  (individually  and,  if more than one,
collectively "Guarantor") agrees for the benefit of Bank as follows:

                  1. Guarantor  acknowledges (i) receiving a copy of and reading
the Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness   of  (A)  the   Repayment   Guaranty,   dated  January  25,  1996
("Guaranty"),  by the undersigned  for the benefit of Bank, as modified  herein,
and (B) any other agreements,  documents,  or instruments  securing or otherwise
relating  to  the  Guaranty  (including,  without  limitation,  any  arbitration
resolution  and  any  environmental   certification   and  indemnity   agreement
previously  executed and delivered by the undersigned),  as modified herein. The
Guaranty and such other  agreements,  documents,  and  instruments,  as modified
herein,  are  referred  to  individually  and  collectively  as  the  "Guarantor
Documents".  All capitalized  terms used herein and not otherwise  defined shall
have the meaning given to such terms in the Agreement.

                  2.  Guarantor   consents  to  the  modification  of  the  Loan
Documents  and all  other  matters  in the  Agreement.  Guarantor  agrees to the
arbitration provisions set forth in Section 11.1 of the Agreement.

                  3.  Guarantor  fully,   finally,   and  forever  releases  and
discharges Bank and its successors,  assigns,  directors,  officers,  employees,
agents, and representatives from any and all actions,  causes of action, claims,
debts, demands, liabilities,  obligations, and suits of whatever kind or nature,
in law or equity, that Guarantor has or in the future may have, whether known or
unknown,  (i)  in  respect  of the  Loan,  the  Loan  Documents,  the  Guarantor
Documents,  or the actions or omissions of Bank in respect of the Loan, the Loan
Documents,  or the Guarantor  Documents  and (ii) arising from events  occurring
prior to the date hereof.

                  4. Guarantor agrees that all references,  if any, to the Note,
the Loan Agreement,  the Deed of Trust, the Collateral Assignment,  the Security
Agreement,  the Security  Documents,  and the Loan  Documents  in the  Guarantor
Documents  shall  be  deemed  to  refer  to  such  agreements,   documents,  and
instruments as modified by the Agreement.  Accordingly,  the Guarantor Documents
are modified  to,  among other  things,  (i)  increase  the  outstanding  unpaid
principal  amount  of  indebtedness  of  Borrower  to Bank from  $908,166.67  to
$1,708,166.67,  (ii)  amend  the  Financial  Statement  provisions  set forth in
Section 5.6 of the Loan Agreement,  and (iii) amend the Financial  Covenants set
forth in Paragraph 17(b) and 18 of the Guaranty.
                                       1
<PAGE>
                  5. Guarantor reaffirms the Guarantor Documents and agrees that
the Guarantor  Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantors. Any
property  or rights to or  interests  in  property  granted as  security  in the
Guarantor   Documents  shall  remain  as  security  for  the  Guaranty  and  the
obligations of Guarantor in the Guaranty.

                  6. Guarantor  represents and warrants that the Loan Documents,
as modified by the Agreement,  and the Guarantor Documents,  as modified by this
Consent  and  Agreement  of  Guarantors,  are  the  legal,  valid,  and  binding
obligations  of  Borrower  and the  undersigned,  respectively,  enforceable  in
accordance with their terms against Borrower and the undersigned, respectively.

                  7.  Guarantor  represents  and warrants that  Guarantor has no
claims,  counterclaims,  defenses,  or off sets with respect to the  enforcement
against Guarantor of the Guarantor Documents.

                  8.  Guarantor  represents  and warrants that there has been no
material  adverse  change in the financial  condition of any Guarantor  from the
most recent financial statement received by Bank.

                  9.  Guarantor  agrees  that  this  Consent  and  Agreement  of
Guarantors may be executed in one or more  counterparts,  each of which shall be
deemed an original and all of which together  shall  constitute one and the same
document.   Signature  and  acknowledgment   pages  may  be  detached  from  the
counterparts  and  attached to a single copy of this  Consent and  Agreement  of
Guarantors to physically form one document.

DATED as of the date of the Agreement.



                                        ILX INCORPORATED, an Arizona corporation



                                        By:
                                           -------------------------------------
                                                       Nancy J. Stone
                                                       President


                                                                     "GUARANTOR"
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