FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
                 ----------------------------------------------


         This  First  Amendment  to Loan  and  Security  Agreement  (hereinafter
referred to as the "First Modification  Agreement") is made as of the 7th day of
September,  1996 by and among TAMMAC  FINANCIAL  CORP., a Delaware  Corporation,
having its principal  office  located at 100 Commerce  Boulevard,  Wilkes-Barre,
Pennsylvania  18702  (hereinafter   referred  to  as  the  "Lender"),   and  ILX
INCORPORATED (f/k/a International Leisure Enterprises Incorporated),  an Arizona
Corporation,  having  its  principal  place of  business  located  at 2777  East
Camelback  Road,  Phoenix,   Arizona  85016  (hereinafter  referred  to  as  the
"Borrower").

                                R E C I T A L S:
                                ----------------

         A. On or about September 7, 1994,  Borrower entered into a certain Loan
and Security  Agreement  dated as of that date  providing  for Lender to advance
certain sums to Borrower on a secured basis up to a maximum principal sum of Two
Million ($2,000,000) Dollars (the "Loan Agreement").

         B. The  obligations of the Borrower as more  particularly  set forth in
the Loan  Agreement,  are  evidenced  by,  among other  documents,  that certain
Promissory  Note dated  September 7, 1994  executed and delivered by Borrower to
TAMMAC in the  principal  sum of up to TWO  MILLION  ($2,000,000)  DOLLARS  (the
"Note").

         C. To secure the payment and performance of the Borrower's  obligations
pursuant to the Loan Agreement and the Note, the Borrower executed and delivered
to TAMMAC:  (i) that certain Deed of Trust,  Security  Agreement  and  Financing
Statement made as of September 7, 1994,  designating  the Borrower as "Grantor",
the Public Trustee of Larimer County, Colorado as "Trustee",  for the benefit of
TAMMAC, as "Beneficiary" (the "Deed of Trust"), which Deed of Trust was recorded
in the Larimer  County  recording  office on September  13,  1994,  as Reception
Number 94075818,  covering the "Premises" and "Trust Property" more particularly
described  therein;  and (ii) that  certain  Collateral  Assignment  of Lease or
Leases dated September 7, 1994 executed and delivered by Borrower, as "Assignor"
in favor of Lender (the "Assignment of Leases"),  which Assignment of Leases was
recorded  in the  Larimer  County  recording  office on  September  13,  1994 as
Reception Number 94075819,  covering the Premises as more particularly described
therein.

         D. In conjunction  with the Loan, and to perfect the security  interest
granted by the Borrower to Lender in and to the Collateral described in the Loan
Agreement,  the  Borrower  executed  and  delivered  to TAMMAC  certain  Uniform
Commercial Code Financing Statements ("UCCs"), which UCCs were filed or recorded
in the Offices of the  Secretary  of State of Arizona  and the  Larimer  County,
Colorado recording office.

         E. In conjunction with the Loan, the Borrower executed and delivered or
caused  to be  executed  and  delivered  to TAMMAC  an  Environmental  Indemnity
Agreement  with  respect to the  Premises,  Incumbency  Certificates,  Corporate
Resolutions,  an Estoppel  Certificate,  a  
<PAGE>
Governmental  Regulation  Compliance Affidavit and related documents (the "Other
Loan Documents").

         F. The Loan Agreement,  the Note, the Deed of Trust,  the Assignment of
Leases,  the UCC's and the  Other  Loan  Documents,  all as  amended,  modified,
renewed,  substituted or replaced,  whether contemporaneously herewith or at any
time hereafter,  are hereinafter sometimes collectively referred to as the "Loan
Documents."

         G.  Contemporaneously  with  the  execution  and  delivery  of the Loan
Documents, the Borrower amended that certain Financing Agreement dated September
11, 1991 (the  "Financing  Agreement")  entered  into by and among  Borrower and
Lender,  setting forth the terms and conditions  regarding  Borrower's  sale and
Lender's purchase of certain consumer installment  obligations  generated at the
Premises.

         H. Pursuant to the term of the Loan Agreement,  the Draw Period expires
on September 7, 1996.

         I. The Borrower has requested that Lender extend the Draw Period for an
additional eighteen (18) months, increase the Advance Limit and amend and modify
certain additional terms and conditions of the Loan Agreement.

         J.  The  Lender  has  agreed,  subject  to  the  terms  and  conditions
hereinafter provided, to enter into this First Modification Agreement.

         NOW,  THEREFORE,  in  consideration  of Lender's  present  agreement to
modify the Loan  Documents as set forth  herein,  Borrower has agreed to execute
and deliver this First Modification Agreement and in consideration of the mutual
covenants, promises and agreements herein contained, it is agreed as follows:

1.       Definitions:
         ------------

         Unless otherwise defined herein, all capitalized and defined terms used
herein shall have the same meaning set forth in the Loan Documents.

2.       Recitals:
         ---------

         The recitals set forth above are hereby  incorporated  herein as if set
forth  at  length.  The  Borrower  acknowledges  and  confirms  that  all of the
aforesaid recitals are true, accurate and correct in all respects.

3.       Estoppel with Regard to Present Principal Balance Due.
         ------------------------------------------------------

         Borrower  acknowledges and agrees that the outstanding unpaid principal
balance  remaining  due to TAMMAC  under the Loan,  without  offset,  defense or
counterclaim, as of the date of this First Modification Agreement, is:
$1,193,627.46.
                                      -2-
<PAGE>
4.       Continued Validity of Loan Documents:
         -------------------------------------

         Borrower hereby acknowledges,  ratifies,  confirms and affirms: (i) the
extent and validity of the Loan Documents; (ii) that said Loan Documents are and
remain valid,  enforceable in accordance with their respective terms and are and
remain in full  force  and  effect as of the date  hereof;  (iii)  that the Loan
Documents are not subject to any real or personal defenses whatsoever; (iv) that
pursuant  to the  security  interests  granted  to Lender  pursuant  to the Loan
Documents,  the Loan Documents  constitute a valid second mortgage lien upon the
Premises and a continuing valid first perfected lien upon the property described
in the  UCC's,  which  security  interest  and  liens  secure  the  payment  and
performance  of the  Obligations  due and owing  under the Loan  Documents.  The
Borrower warrants and represents that all representations  contained in the Loan
Documents  are true and  complete as of the date  hereof,  no  warranty  therein
contained has been  breached as of the date hereof and it is in full  compliance
with all the terms and conditions  thereof and has performed all  obligations on
its part to be performed therein.

5.       Representations, Warrants and Covenants:
         ----------------------------------------

         The Borrower hereby represents, warrants and covenants as follows:

         A. The Borrower  has  disclosed  its current  financial  condition  and
circumstances  to Lender.  Any and all  substantial  and/or  material or adverse
changes in its financial condition and circumstances which shall occur after the
date of the disclosure of its financial  condition shall be immediately  brought
to the attention of Lender by Borrower and Lender shall be promptly  notified in
writing of same by Borrower.

         B. To the best of  Borrower's  knowledge,  information  and  reasonable
belief, its execution,  delivery and performance in accordance with the terms of
this First  Modification  Agreement does not violate any  applicable  law, rule,
regulation or order of any governmental authority or in any way conflict with or
result in a breach of any of the terms,  conditions  or  provisions of any other
agreement or instrument to which it may be bound.

         C. The financial disclosures made by the Borrower accurately and fairly
presents its financial  condition and circumstances as of the date of this First
Modification Agreement and there had been no further substantial and/or material
adverse changes in its financial  condition and  circumstances as of the date of
this First Modification Agreement.

         D.  There are no  actions,  suits or  proceedings  pending  (nor to the
Borrower's knowledge any actions, suits or proceedings threatened,  nor is there
any basis therefore), against or in any way relating adversely to its properties
in any court or before any arbitrator of any kind or before any  governmental or
non-government body which, if adversely  determined,  would singularly or in the
aggregate have a material adverse affect on its financial condition.

         E. The Borrower has no knowledge of any material  violations of and has
not received  written  notice from any  governmental  authority  concerning  any
environmental,  health, fire, safety, building,  engineering,  or zoning or code
violations with respect to the Premises or any portion thereof.
                                      -3-
<PAGE>
6.       Modification to All of the Loan Documents:

         A. Wherever the sum of TWO MILLION  ($2,000,000.00)  DOLLARS appears in
the Loan Documents,  same shall be deleted and the sum of $2,193,627.46 shall be
inserted in lieu thereof.

         B. Wherever the word or words "Note" or "Promissory Note" shall appear,
said term or terms shall be deemed to mean the Amended and  Restated  Promissory
Note executed contemporaneously with this First Modification Agreement.

7.       Modification  to the Loan  Agreement.  From and  after the date of this
First Modification Agreement, the Loan Agreement is hereby modified as follows:

         A. Section I.1 is deleted and replaced with the following:

                  1. Acceptable  Contract.:  For purposes of this Agreement,  an
"Acceptable  Contract" shall be a consumer contract or agreement and all related
documents  entered  into  between  the  Borrower as seller  and/or  lender and a
Consumer  as the  purchaser  and/or  borrower  of (or  relating  to) a timeshare
interest  defined in and created by the  Project  Documents,  which  satisfy the
following  requirements,  and  which  are in all other  respects  acceptable  to
Lender: (i) Borrower is the seller of a Unit Week under a Contract to a Consumer
who is a United States  resident,  which  Contract shall have a term of at least
four years, except for non-interest  bearing Contracts,  which shall have a term
of at least one year; (ii) the purchase price under the terms of the Contract is
payable in not more than 84 equal monthly  installments in U.S. currency;  (iii)
no monthly  installment is more than 30 days contractually  delinquent under the
original terms of the Contract, and neither the Borrower nor the Consumer is (in
the sole  discretion  of Lender)  materially  in default  under the terms of the
Contract;  (iv) all  documents  relating to the  Contract  and Project have been
executed and delivered  and copies are readily  available to Lender in the files
of Borrower;  (v) none of the  Contracts are or shall be subject to any defense,
offset, counterclaim,  discount or allowance except as otherwise consented to in
writing by Lender;  (vi) the terms of any  Contract  and all  related  documents
shall  comply  in  all  respects  with  all  applicable   laws  and  regulations
promulgated  thereunder,  including  without  limitation,  the provisions of the
Federal Consumer Credit Protection Act of 1968, the Federal Consumer Leasing Act
of  1976,  the  Real  Estate  Settlement   Procedures  Act,  Regulation  X,  the
Truth-in-Lending  Act and  Regulation  Z;  (vii) a cash  down  payment  has been
received  in an amount  equal to at least 10% of the  purchase  price  under the
Contract or, if the Consumer is upgrading his Unit Week, the 10% requirement may
be met by  aggregating  the cash down payment and principal  payments  under the
prior and current Contracts,  prior to any discount; (viii) the rate of interest
thereon applied to the unpaid balance (if said Contract provides for the payment
of interest) is at least five (5) percentage points above the highest prime rate
as  announced  in The Wall Street  Journal on the  business  day  preceding  the
closing of the Loan; (ix) the Consumer has immediate access to a Unit Week which
has been  developed  to the  specifications  provided in the Project  Documents,
approvals and Contract;  (x) at least one monthly  payment has been made thereon
and any applicable statutory or contractual "cooling off" or recision period has
expired;  (xi) under  which no single  Consumer  has a balance  due
                                      -4-
<PAGE>
Borrower in excess of  $15,000.00,  unless  specifically  approved in writing by
Lender;  (xii)  Borrower  is the sole  owner of the  Contract  and has not sold,
assigned,  mortgaged, pledged or hypothecated all or any portion thereof, nor is
the Contract  subject to any claim,  lien or security  interest of any person or
entity,  including  without  limitation,  the United States,  or any agencies or
instrumentality's thereof; and (xiii) an Acceptable Contract shall not include a
contract where the Consumer shall have filed for protection under any bankruptcy
or  insolvency  laws or shall  have  been  the  subject  of a prior or  existing
judgment, repossession or foreclosure or any charge-off relating to any account;
(xiv) the  Contract  shall be valid,  enforceable  and legally  binding upon the
Consumer.

         B.       Section I.4 is deleted and replaced with the following:

                  4.  Advance  Limit:  The term  "Advance  Limit" shall mean the
loans or Advances  which the Lender  may,  from time to time when  requested  by
Borrower  make to  Borrower,  and which shall not in the  aggregate  at any time
exceed the lesser: (i)  $2,193,627.46;  or (ii) the product of eighty-five (85%)
percent  multiplied  by  the  aggregate   remaining  principal  balance  of  the
Acceptable Contracts in which Lender is granted a security interest hereunder.

         C.       Section I.26 is deleted and replaced with the following:

                  26.  Related   Documents:   "Related   Documents"   means,  as
applicable to each Contract, the credit package, which shall include, but not be
limited to, a credit  report  relating to each of the Consumers  executing  said
Contract issued by a nationally  recognized  credit reporting agency or service,
security  agreements,  mortgages,  mortgage  deeds,  deeds of trust securing the
Contracts  and  encumbering  the Unit Weeks,  guaranty  agreements,  all records
pertaining to the Contracts,  including,  but not limited to, all files, closing
or settlement statements, title insurance reports and policies, copies of deeds,
contracts,  prospectuses  delivered to Consumers,  public  offering  statements,
receipt of said  prospectuses and public offering  statements,  truth-in-lending
disclosure  statements,  information,  documents,  records and other writings or
documents of every kind and nature  submitted and/or executed by or on behalf of
a Consumer and relating to the Contracts and the Consumer's financing thereof.

         D.       Section 2.2(a) is deleted and replaced with the following:

                  2.       Advance

                           (a)      At Borrower's request, Advances will be made
by Lender during the period commencing from the date of this First  Modification
Agreement  and ending  eighteen  (18)  months  thereafter  (the "Draw  Period"),
provided,  however,  that no  Advances  will be made to  Borrower if an Event of
Default  exists,  or if the  aggregate  amount of all  Advances  (including  the
Advance requested), exceeds or would exceed the Advance Limit.

         E.       Section II.9 is deleted and replaced with the following:

                  9.       Mandatory  Payments:  Unless accelerated  pursuant to
the terms  and  conditions  of this  Agreement,  or paid  before  the  scheduled
Maturity  Date of the Loan,  the  
                                      -5-
<PAGE>
Borrower shall pay to Lender sixty-six (66) consecutive minimum monthly payments
each in an amount equal to ninety-two  (92%)  percent of the  scheduled  monthly
payments of principal and interest due on the  Acceptable  Contracts  comprising
the Collateral for the Loan ("Mandatory  Payments").  All Mandatory  Payments as
herein  above  provided  shall be applied  first to the  payment of accrued  and
unpaid interest and the balance,  if any, shall be applied to the payment of the
installments of principal then remaining unpaid. The aforesaid payments shall be
payable in arrears on the first day of each  calendar  month  commencing  on the
first  day of  October,  1996 and  shall  continue  until  such time as the full
principal  sum,  together with all amounts owing under the Loan had been paid in
full. The aforesaid payment shall be made payable out of the monthly collections
received under the Acceptable  Contracts.  In the event the monthly  collections
are in excess of the applicable  monthly Mandatory  Payments as aforesaid,  said
excess shall be applied as a prepayment of the principal  balance  remaining due
under  the  Loan.  In the  event the  monthly  collections  from the  Acceptable
Contracts  are  insufficient  to pay  the  aforesaid  monthly  principal  and/or
interest  on the Loan the  Borrower  shall  pay the  interest  and/or  principal
insufficiency on the first of each month as aforesaid.

         F.       The  following  Affirmative  Covenant  is  added at the end of
Section V:

                  24. Conversion of Contracts:  Borrower agrees to pay to Lender
a conversion fee equal to one hundred and twenty-five dollars ($125.00) for each
Contract  constituting an Acceptable Contract hereunder and pledged to Lender as
security  for  the   Borrower's   Obligations,   which  Contract  is  converted,
transferred or exchanged to, for, or with an interest in that certain  timeshare
condominium  project,  commonly known as Los Abrigados  Resort & Spa, located at
160 Portal Lane,  Sedona,  Arizona,  being  developed by Los Abrigados  Partners
Limited  Partnership,  an Arizona Limited  Partnership  ("LAP"), an affiliate of
Borrower  (a  "Conversion  Contract").   Said  fee  shall  be  due  and  payable
contemporaneously with LAP's acceptance of the Conversion Contract

8.       Documentation  to be furnished to Lender:  Lender's  Agreement to enter
into  this  First  Modification  Agreement  as  herein  set  forth is  expressly
conditioned  upon Lender's and its  counsel's  receipt,  review and  acceptance,
prior to the execution and delivery of this First Modification Agreement (unless
otherwise noted), of the following documentation and information:

         A.       True copies of the existing  Consumer  documentation,  if same
differs from the Consumer  documentation  previously  approved by Lender and its
counsel or a statement  to the effect that the existing  Consumer  Documentation
has not changed.

         B.       The  filed   Certificate  or  Articles  of  Incorporation  and
By-Laws, as amended to date for the Borrower.  This requirement may be satisfied
by a written certification that the Certificate or Articles of Incorporation and
By-Laws of the Borrower,  which are currently in Lender's  possession,  have not
been amended or modified in any respect.

         C.       The names and  titles of all  officers  and  directors  of the
Borrower.
                                      -6-
<PAGE>
         D.       A certificate of good standing for the Borrower, or such other
documentation as is reasonably  satisfactory to Lender,  in all jurisdictions in
which Borrower is authorized or licensed to do business,

         E.       Corporate  franchise tax searches and/or  certificate from the
Director of Revenue, or such other  documentation as is reasonably  satisfactory
to Lender,  that no taxes are due to the taxing authorities having  jurisdiction
over the Borrower.

         F  Continuation  Uniform  Commercial  Code  financing  searches for the
Borrower  in all  applicable  jurisdictions  where the  Borrower  is  conducting
business.

         G.       An updated,  completed and signed Environmental  Questionnaire
relating to the Resort.

         H.       Federal tax lien,  state tax lien,  and judgment  searches for
the Borrower.

         I.       Evidence of continuing compliance with all applicable federal,
state and local environmental  laws, rules,  regulations and ordinances relating
to the Resort and the Borrower.

         J.       An updated listing and copy of all  certificates,  permits and
licenses required in connection with the use and operation of the Resort and the
sale and financing of Timeshare Estates.

         K.       A listing and  description of all pending  lawsuits or similar
proceedings  involving the Borrower or the Resort,  in which the Borrower or the
Resort is a defendant or otherwise defending any claim which is in excess of ten
thousand ($10,000.00) dollars.

         L.       An opinion letter from Borrower's counsel.

         M.       An endorsement to the title insurance policy previously issued
to lender  increasing  the amount of the coverage of title  insurance  policy to
$2,193,627.46, and which confirms that the modification to the Deed of Trust has
been properly  indexed and recorded in the Larimer County  recording  office and
that there are no exceptions,  liens, mortgages,  encumbrances,  restrictions or
similar  or  dissimilar  clouds on title,  except for  Permitted  Liens or other
exceptions that are approved by its Lender and its counsel.

         N.       All other documentation and information provided for herein or
which Lender may request or require.

9.       Further  Assurances:  Borrower  agrees  that it  shall  execute  and/or
deliver to Lender any documents,  information or agreements as may be reasonably
requested  by  Lender  or its  counsel  at any  time so long as any  sums due or
obligations  to  be  performed  under  the  Loan  Documents   remain  unpaid  or
unperformed.

10.      Release  and  Discharge  of  Lender:   Borrower   hereby  releases  and
discharges Lender of and from all claims, causes of action, demands,  damages or
suits,  at law or in  equity,  which  it  may,  as of the  date  of  this  First
Modification  Agreement,  have or claim to have against the
                                      -7-
<PAGE>
Lender  relating to,  rising out of or resulting  from its lending  relationship
with the Lender,  or with respect to the  Obligations due to Lender as evidenced
by the Loan Documents or the Premises or the other Collateral.

11.      Governing Law: This First  Modification  Agreement shall be governed by
and construed in accordance with the laws of the  Commonwealth of  Pennsylvania,
without regard to the principles of conflicts of laws.

12.      Binding  Effect:  This First  Modification  Agreement is binding  upon,
inures to the benefit of and is  enforceable by the successor and assigns of the
parties hereto. This First Modification Agreement is not assignable by Borrower.

13.      Non-Waiver:  No  failure  or  delay  on  the  part  of  Lender,  or its
successors  and  assigns,  in the  exercise  of any  right,  power or  privilege
pursuant to the Loan  Documents  or this First  Modification  Agreement is to be
construed to be or operate as a waiver.  Partial exercise of any right, power or
privilege by Lender is not to preclude any further right,  or power or privilege
nor be deemed a waiver.  Any waiver or modification  of this First  Modification
Agreement or any other document, instrument or agreement executed by Borrower is
to be in writing  signed by the  Borrower  and  Lender.  Lender may, in its sole
discretion,  release,  impair or surrender  all or any of the  interest  granted
hereunder  or any other  agreement  executed by the  Borrower  without  waiving,
exhausting or impairing any of Lender's rights and remedies  available  pursuant
to the Loan Documents, including this First Modification Agreement.

14.      Inconsistent  Rights or  Remedies:  In the  event  that any of the Loan
Documents, including this First Modification Agreement, contain any inconsistent
rights or remedies  otherwise  available to Lender,  the rights and/or  remedies
accorded to Lender giving the Lender the greatest  protection  and/or  affording
Lender the greater rights and remedies shall control, the determination of which
shall be left to the sole and exclusive discretion of Lender.

15.      Representation by Counsel; Drafting of Agreement: Borrower acknowledges
that  it has had the  opportunity  to  consult  independent  counsel  of its own
selection  in  connection  with the matters  covered by this First  Modification
Agreement  and  that it has  executed  and  delivered  this  First  Modification
Agreement (and any other documents referred to herein or in connection herewith)
with the benefit of counsel and of its own free will and volition. Borrower also
acknowledges and agrees that the terms of this First Modification  Agreement had
been  negotiated  in good  faith by the  parties  and that said  terms  shall be
construed in a neutral fashion without regard to the draftsmanship of this First
Modification Agreement.

16.      Severability:  In the event that any portion of this First Modification
Agreement is deemed  unenforceable  by a court of competent  jurisdiction,  such
provision declared to be unenforceable is to be deemed to have been omitted from
this First Modification Agreement and all such remaining terms and conditions of
this First Modification Agreement are to continue in full force and affect.

17.      Continued  Effectiveness  of Loan  Documents:  Except  as  specifically
modified  herein,  all of the other terms and  conditions of the Loan  Documents
shall remain in full force and effect and 
                                      -8-
<PAGE>
the  parties  hereto  expressly  confirm  and  ratify  all of  their  respective
liabilities, obligations, duties and responsibilities under and pursuant to said
Loan Documents, as modified. It is the intention of the parties hereto that this
First Modification Agreement shall not constitute a novation and shall in no way
adversely  affect or impair the lien priority of the Deed of Trust, as modified,
and the security interests granted pursuant to the Loan Documents.

         IN WITNESS WHEREOF,  the parties have executed and delivered this First
Modification  Agreement or caused this First  Modification  Agreement to be duly
executed  and  delivered  by  their  proper  and  duly  authorized  officers  or
representatives as of the day and year first above written.


ATTEST:                                     ILX INCORPORATED,
                                            an Arizona Corporation, Borrower



/s/ Stephanie Castronova                    By:/s/ Nancy J. Stone 
------------------------------------           ---------------------------------
Stephanie Castronova, Secretary                Nancy J. Stone, President



WITNESS/ATTEST:                             TAMMAC FINANCIAL CORP.,
                                             a Delaware corporation, Lender



/s/ Joseph J. Lombardi                      By:/s/ Andy G. Roosa
-------------------------------------          ---------------------------------
Joseph J. Lombardi, Asst. Secretary            Andy G. Roosa, President
                                      -9-