Document:

Exhibit 10.1

                           PURCHASE AND SALE AGREEMENT
                                       FOR
                                 121 PORTAL LANE
                                 SEDONA, ARIZONA
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                                LIST OF EXHIBITS

EXHIBIT        DESCRIPTION
-------        -----------

A              Property Legal Description

B              Existing Title Policy

C              New Lease
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                                TABLE OF CONTENTS

PURCHASE AND SALE AGREEMENT....................................................1

PRICE AND TERMS................................................................1

SECTION 1.  SALE AND PURCHASE..................................................2

SECTION 2.  PURCHASE PRICE: EARNEST MONEY......................................2

SECTION 3.  TITLE INSURANCE....................................................3

SECTION 4.  LOAN...............................................................3

SECTION 5.  DUE DILIGENCE......................................................4

SECTION 6.  PRORATIONS.........................................................4

SECTION 7.  REPRESENTATIONS AND WARRANTIES.....................................4

SECTION 8.  CLOSE OF ESCROW....................................................7

SECTION 9.  "AS IS CONDITION.".................................................8

SECTION 10. NOTICES............................................................8

SECTION 11. COMMISSIONS........................................................8

SECTION 12. SUCCESSORS AND ASSIGNS.............................................9

SECTION 13. REMEDIES...........................................................9

SECTION 14. CONDEMNATION/CASUALTY.............................................10

SECTION 15. INSPECTIONS AND DOCUMENTS.........................................11

SECTION 16. LEASEBACK.........................................................11

SECTION 17. MISCELLANEOUS.....................................................11

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                           PURCHASE AND SALE AGREEMENT

         This Purchase and Sale Agreement  ("Agreement")  is made with reference
to the following  definitions and terms, subject to such further  qualifications
as are expressly hereinafter set forth:

Name & Address     121 Portal Lane
of Property:       Sedona, Arizona

Agreement Date:    March 15, 2002

Seller Notice Address:        Name:  ILX Resorts Incorporated,
                                     an Arizona corporation
                           Address:  2111 E. Highland, Suite 210
                                     Phoenix, AZ 85016
                         Telephone:  (602) 957-2777
                         Facsimile:  (602) 957-2290

Buyer Notice Address:         Name:  Edward John Martori, a married man
                                     dealing with his sole and separate property
                                     c/o Joseph P. Martori
                           Address:  2111 E. Highland, Suite 210
                                     Phoenix, AZ 85016
                         Telephone:  (602) 957-2777
                         Facsimile:  (602) 957-2290

                                 PRICE AND TERMS

A.   PURCHASE  PRICE:  $1,650,000.00  ("Purchase  Price")  payable  by  Buyer at
     closing.

B.   OPENING OF ESCROW:  That date on which Buyer deposits with Escrow Agent all
     originals of this Agreement fully executed by Buyer and Seller ("Opening of
     Escrow Date")

C.   CLOSING DATE (SEE ALSO SECTION 8.1): On or before March 25, 2002.

D.   PERSONAL  PROPERTY:  This Agreement  includes none of the personal property
     owned by Seller  located on the Property  and used in the  operation of the
     Property as of the Agreement Date.

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E.   ESCROW AGENT:

     Jeannie Larson
     Pioneer Title
     112 N. Elden Street
     Flagstaff, AZ 86001
     Phone: (928) 779-0371
     Facsimile: (928) 779-4112

F.   TITLE COMPANY: Pioneer Title Agency, Inc. as agent for Stewart Title.

G.   BROKERS (SEE SECTION 11).

SECTION 1. SALE AND PURCHASE.

     1.1 PROPERTY.  Seller agrees to sell,  convey and assign to Buyer and Buyer
agrees to purchase and accept from Seller, for the Purchase Price and subject to
the terms and  conditions  herein set forth,  Seller's  entire right,  title and
interest in and to the real  Property  legally  described  in Exhibit A attached
hereto and further described below  (collectively the "PROPERTY").  The Property
includes no Personal Property.

     1.2 TITLE COMMITMENT.  Attached as Exhibit B is a copy of the Stewart Title
policy of Title Insurance (Title Policy) issued to Seller and dated December 21,
2000. The sale of this Property is subject to the matters shown in Schedule B of
the  Title  Policy  plus  the Loan (as  defined  in  Section  4);  zoning  laws,
restrictions,   stipulations,   subdivision   regulations  and  other  laws  and
ordinances regulating the use of or improvements to the Property.

SECTION 2. PURCHASE  PRICE:  EARNEST MONEY.  The Purchase Price shall be paid as
follows:

     2.1 EARNEST MONEY. There shall be no earnest money.

     2.2 ESCROW AGENT. The parties hereby  designate  Jeannie Larson and Pioneer
Title  Agency,  Inc.  (as agent for Stewart  Title) as the Escrow  Agent and the
Title Company, respectively.

     2.3 CLOSING FUNDS.  The cash funds necessary to close escrow (plus or minus
prorations  and credits as  expressly  provided for in Section 6 below) shall be
paid at Closing by Buyer in immediately  available  funds, by cashier's check or
federal wire transfer to the Escrow Agent  pursuant to  instructions  consistent
with this Agreement. The Closing Funds shall be adjusted for the following:

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     (a.) The outstanding balance,  including principal and interest, due on the
Loan as of the Close of Escrow.

     (b.) The amount of  $700,000  which is an amount  Seller owes Buyer under a
separate and distinct existing  Promissory Note (Note). Upon the Close of Escrow
the Note shall be marked "Paid in Full" and returned by Buyer to Seller.

     2.4 ESCROW AGENT DUTIES.  The parties  acknowledge that the Escrow Agent is
acting solely as a stakesholder at their request and for their convenience; that
the Escrow  Agent shall not be deemed to be the agent of either of the  parties;
and that the Escrow  Agent  shall not be liable to either of the parties for any
action or omission on its part taken or made in good faith, and not in disregard
of this Agreement,  but shall be liable for its negligent acts and for any loss,
cost or expense  incurred by Seller or Buyer  resulting  from the Escrow Agent's
mistake  of law  respecting  the  scope  or  nature  of  Escrow  Agent's  duties
hereunder.  Seller and Buyer shall jointly and severally  indemnify and hold the
Escrow Agent harmless from and against all costs, claims and expenses, including
reasonable  attorneys' fees,  incurred in connection with the performance of the
Escrow  Agent's  duties  hereunder,  except with respect to actions or omissions
taken or made by the Escrow Agent in bad faith,  in disregard of this  Agreement
or involving negligence on the part of the Escrow Agent.

SECTION 3. TITLE INSURANCE.

     3.1 TITLE  COMMITMENT.  Buyer accepts that it will receive the Title Policy
with the  Exceptions  reflected in Exhibit B to this Agreement plus an exception
reflecting the Loan.

     3.2 NO ADDITIONAL  LIENS.  Seller shall not place,  permit,  or cause to be
placed any liens or  encumbrances  on the title to the Property from the date of
this Agreement through Close of Escrow. If Seller places,  permits,  or causes a
lien or  encumbrance  on the Real  Property,  contrary to the provisions of this
Agreement,  which can be removed by the payment of money, Escrow Agent is hereby
expressly  authorized,  directed,  and instructed to pay such monies in order to
remove the lien or encumbrance at Close of Escrow from monies otherwise  payable
to Seller at Close of Escrow, and the net proceeds otherwise available to Seller
at Close of Escrow shall be reduced accordingly.

SECTION 4. LOAN.  The  property is subject to an existing  Loan in the amount of
approximately  $808,000 with Firstar Bank (Lender) as the holder of a first deed

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of trust on the  Property.  Buyer  will take  title  subject  to the Loan of the
Lender.  The  approximately  balance of the Loan at the Close of Escrow  will be
$795,000.  The Loan is due and payable on February 15, 2011.  At that time Buyer
shall make  arrangements  on its own to secure a new loan to pay off any balance
owed on the Loan.  Any new lender will enter into a Recognition  and  Attornment
Agreement with Seller (as Tenant) in a form reasonably acceptable to Buyer.

SECTION 5. DUE DILIGENCE. Buyer has performed its Due Diligence on the Property.

SECTION 6. PRORATIONS.

     6.1 SETTLEMENT STATEMENT. Escrow Agent shall prepare a pro forma settlement
statement and circulate same to the parties at least two (2) business days prior
to the Closing Date reflecting all proposed  prorations for mutual review by the
parties.

     6.2  TAXES  AND  ASSESSMENTS.  There  shall be no  proration  of taxes  and
assessments  since the  Seller,  as the tenant  under the Lease  referred  to in
Section 16, is responsible for payment of all taxes and assessments.

     6.3  ESCROW/TITLE/RECORDING  FEES. All escrow fees and recording fees shall
be shared equally by Buyer and Seller  provided,  however,  Seller shall pay for
the cost of recording the Warranty Deed.  Seller shall pay all fees and premiums
with  respect  to  issuance  of  preliminary  title  reports,   title  insurance
commitments and standard coverage owner's title insurance policy to be issued to
Buyer. Subject to compliance at Buyer's expense with all additional requirements
of Escrow Agent (subject to the good faith  cooperation of Seller regarding such
additional  requirements),  Buyer may request the issuance at Close of Escrow of
an extended  coverage  owner's  policy of title  insurance in lieu of that to be
provided by Seller hereunder.  Buyer shall be responsible for any excess premium
over standard coverage  required for extended coverage title insurance,  for the
cost of all endorsements, and for any lender's policy of title insurance.

     6.4  DEDUCTIONS AND DEPOSITS.  All closing costs and  prorations  otherwise
payable by Seller shall be deducted from  Seller's  proceeds at Close of Escrow.
Buyer  agrees to deposit with Escrow Agent an amount in addition to the Purchase
Price  sufficient  to pay all  closing  costs and  prorations  payable  by Buyer
hereunder.  Seller shall be responsible to pay, and there shall be deducted from
Seller's  proceeds at the Close of Escrow,  any and all prepayment  penalties or
other charges to pay off any existing loans on the Property.

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SECTION 7. REPRESENTATIONS AND WARRANTIES.

     7.1 BY BUYER.

     (a) This Agreement  constitutes a valid and legally  binding  obligation of
Buyer,  enforceable in accordance  with its terms.  Buyer will provide to Escrow
Agent and seller any  documents  reasonably  required by Escrow Agent  regarding
Buyer's  authority to enter into and close the transaction  contemplated by this
Agreement.

     (b) There are no legal or  administrative  proceedings  pending  or, to the
best of Buyer's  knowledge,  threatened  against or  affecting  Buyer that would
affect  Buyer's  legal  authority  or  financial  ability  to  comply  with this
Agreement and close the  transaction  described  herein in  accordance  with the
terms hereof.

     7.2 BY SELLER. Seller represents and warrants to Buyer as follows:

          (a) Seller, and each of the persons executing this Agreement on behalf
of Seller,  represent  and warrant that this  Agreement  constitutes a valid and
legally binding obligation of Seller,  enforceable in accordance with its terms.
Seller will provide to Escrow Agent and Buyer any documents  reasonably required
by  Escrow  Agent  regarding  Seller's  authority  to enter  into and  close the
transaction contemplated by this Agreement.

          (b)  Seller,  to the  best  of its  actual  knowledge  represents  and
warrants to Buyer as follows:

               (i) Seller has received no notice of  litigation,  including  any
action of condemnation  or eminent domain,  or violations of law, that would run
with the Property as of the Closing Date.

               (ii) There are no legal or administrative proceedings pending or,
to the best of Seller's  knowledge,  threatened against or affecting Seller that
would affect Seller's legal  authority or financial  ability to comply with this
Agreement and close the  transaction  described  herein in  accordance  with the
terms hereof.

               (iii) Seller has not disposed of or stored on the Property or any
part thereof any  "hazardous  material" as defined  below.  For purposes of this
Agreement, "hazardous material" means and includes any petroleum product and any
hazardous  substance or any pollutant or contaminant  defined as such in (or for
purposes  of)  the  Comprehensive   Environmental  Response,   Compensation  and

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Liability  Act,  any  so-called   "Superfund"  or  "Superlien"  law,  the  Toxic
Substances  Control  Act, or any other  federal,  state or local  statute,  law,
ordinance, code, rule, regulation,  order or decree regulating,  relating to, or
imposing  liability or standards of conduct  concerning any hazardous,  toxic or
dangerous waste,  substance or material, or any substance or compound containing
PCB's, or any other hazardous,  toxic or dangerous waste, substance or material.
Seller is not aware of any  environmental  issues which are not disclosed in the
Property condition report.

               Seller hereby  indemnifies  Buyer and agrees to pay, defend,  and
hold Buyer harmless from and against any and all losses,  liabilities,  damages,
injuries,  costs,  expenses,  and  claims  of any  and  every  kind  whatsoever,
including reasonable  attorneys' fees paid, incurred or suffered by, or asserted
against,  Buyer for, with respect to, or as a direct or indirect  result of, the
presence  on or under the  Property,  as of Close of  Escrow,  of any  hazardous
material, or the escape, seepage,  leakage,  spillage,  discharge,  emission, or
release  from  the  Property  into or upon  any  land,  the  atmosphere,  or any
watercourse,  body of water, or wetland of any hazardous material present on the
Property  as of Close of Escrow,  including,  without  limitation,  any  losses,
liabilities,  damages,  injuries, costs, expenses, or claims asserted or arising
under the Comprehensive Environmental Response,  Compensation and Liability Act,
any so-called  "Superfund" or "Superlien"  law, or any other federal,  state, or
local  statute,  law,  ordinance,  code,  rule,  regulation,   order  or  decree
regulating,   relating  to,  or  imposing  liability  or  standards  of  conduct
concerning any hazardous material.

          (c) Through the Close of Escrow,  Seller shall  maintain  property and
casualty  insurance in force on the Property  with policy limits of at least One
Million Dollars ($1,000,000.00).

          (d) Except as  disclosed  to Buyer in  writing,  Seller  does not have
knowledge  of  any  condemnation,   environmental,   zoning  or  other  land-use
regulation proceedings,  either instituted,  or planned to be instituted,  which
would  materially  affect the use and operation of the Property for its intended
purpose  or the value of the  Property,  nor has Seller  received  notice of any
special assessment proceedings affecting the Property.

          (e) At the time of  Close  of  Escrow,  there  will be no  outstanding
contracts  made by Seller for any  improvements  to the Property  which have not
been fully paid for and Seller shall cause to be  discharged  all  mechanics' or
materialmens'  liens  arising  from any  labor  or  materials  furnished  to the
Property  prior to the time of Close of Escrow  other  than  those  relating  to
obligations of Buyer hereunder.

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          (f) Seller will make available to Buyer at Seller's address  indicated
on page 1 hereof all of Seller's files and records relating to the Property.

          (g) There are no sites of historical or  archaeological  importance on
the  Property  that in any way would  impede,  curtail,  limit,  or restrict the
development of the Property.

          (h) There are no  leases  on the  Property  and will be none as of the
Close of Escrow, except a lease between Buyer as landlord and Seller as tenant.

     7.3. SURVIVAL.  All representations,  warranties and indemnifications given
by either party hereto  under this  Agreement  are true on and as of the date so
made, will be true in all material  respects as of the Close of Escrow and shall
survive  the Close of Escrow and  execution,  delivery  and  recordation  of the
Warranty Deed. In the event that any  representation or warranty is untrue,  the
other party shall have all rights and remedies available at law, in equity or as
provided in this Agreement.

SECTION 8. CLOSE OF ESCROW.

     8.1 DOCUMENTS.  Buyer and Seller shall pay all monies,  execute and deposit
all documents, and complete all other obligations required hereunder in order to
consummate  the purchase and sale of the Property on or before the Closing Date.
On the Closing  Date, as a condition of Closing,  Escrow Agent shall record,  or
cause to be  recorded,  all  necessary  documents,  issue  its  policy  of title
insurance,  and otherwise  accomplish the  provisions  hereof so as to close the
transaction  contemplated  hereby (herein sometimes referred to alternatively as
the  "Closing," or "Close of Escrow").  At the Closing,  Seller shall deliver or
cause to be delivered  the  following  properly  executed  and (where  required)
acknowledged documents:

          8.1.1 A Warranty Deed for the Property in the Arizona  statutory form,
subject only to (i) the title exceptions reflected in Schedule B of Exhibit B to
this to this Agreement and the Loan in the approximate amount of $795,000.

          8.1.2 A Certification of Non-Foreign Status stating,  under penalty of
perjury,  that  Seller is not a  "foreign  person"  as that term is  defined  in
Section 1445 of the Internal Revenue Code of 1986, as amended.

     8.2 FUNDS.  At the  Closing,  Buyer shall  deliver or cause to be delivered
funds  sufficient to close the  transaction  contemplated  hereby,  by cashier's
check or federal wire transfer of funds to Escrow Agent pursuant to instructions
given by Escrow Agent.

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     8.3 OTHER  DOCUMENTS.  The parties  shall  tender at the Closing such other
documents as may be reasonably necessary or appropriate to complete the Closing.

     8.4  RECORDATION.  All of the above  documents  will be delivered to Escrow
Agent as closing agent, which shall record the documents to be recorded, deliver
to Seller by cashier's check or wire transfer Seller's proceeds of Closing,  and
deliver the documents which are not to be recorded,  only when the Title Company
is prepared  to issue to Buyer the  Owner's  Title  Policy  subject  only to the
Permitted Exceptions.

     8.5 POSSESSION.  Upon recording of the Warranty Deed,  Seller shall deliver
to Buyer possession of the Property, subject only to the Permitted Exceptions.

     8.6  FURTHER  ACTS.  In addition  to the acts and  agreements  of Buyer and
Seller described herein, Buyer and Seller shall perform,  execute and deliver or
cause to be  performed,  executed  and  delivered  any and all further  acts and
agreements as Escrow Agent may reasonably  request to consummate the transaction
contemplated herein. This provision shall survive the Closing.

SECTION 9. "AS IS  CONDITION."  Buyer  shall  accept the  Property in an "AS IS"
condition as long as the Property is in the same  condition at the Closing as at
the end of the Due Diligence Period.

SECTION 10.  NOTICES.  Any notice  required or  permitted to be given under this
Agreement  must be in  writing  and  given by (a)  facsimile  transmission;  (b)
depositing  same  in the  United  States  mail,  addressed  to the  party  to be
notified,  postage  prepaid and  registered  or  certified  with return  receipt
requested;  (c) delivering  same in person to such party; or (d) depositing same
into the custody of a nationally recognized overnight delivery service addressed
to the party to be notified.  In the event of mailing,  notices  shall be deemed
effective  three (3) days after  posting;  in the event of  overnight  delivery,
notices shall be deemed  effective on the next  business day  following  deposit
with the delivery  service;  in the event of personal  service,  notice shall be
deemed effective when delivered;  in the event of facsimile  transmission,  upon
receipt (a written confirmation of successful transmission from the transmitting
facsimile  machine being prima facie evidence of such receipt).  For purposes of
notice, the addresses of the parties shall be as follows:

     If to Buyer, to:                   The address shown on Page 1 hereof

     If to Seller, to:                  The address shown on Page 1 hereof

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     With a copy to:                    Al Spector, Esq.
                                        Spector Law Offices, P.C.
                                        4020 N. Scottsdale Road, Suite 300
                                        Scottsdale, AZ 85251
                                        Telephone: (480) 941-0221
                                        Facsimile: (480) 990-9093

From time to time,  either party may designate  another or additional  addresses
for all purposes of this  Agreement by giving the other party no less than three
(3) business days' advance  notice of such change of address in accordance  with
the notice provisions hereof.

SECTION 11. COMMISSIONS.  Buyer and Seller each represent to the other that each
has not retained any real estate broker or any party entitled to a commission or
broker's fee in connection with the sale of the Property by Seller to Buyer, and
Buyer and Seller  each agree to  indemnify,  protect,  defend and hold the other
harmless  for,  from and against any  expense,  including,  without  limitation,
attorneys' and accountants' fees, claims,  actions, suits or demands for payment
of any commission, finder's fee or other sum initiated by any broker, commission
agent or other  person  which such party or its  representatives  has engaged or
retained.  Notwithstanding  anything  in this  Agreement  to the  contrary,  the
representations  and  indemnities  set forth in this paragraph shall survive any
termination of this Agreement.

SECTION 12. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be  binding  on  the  parties  hereto  and  their  respective  heirs,  legal
representatives,  successors and assigns.  Notwithstanding the foregoing,  Buyer
shall have the right,  without the consent of Seller, to assign its rights under
this  Agreement  to  any  corporation,   partnership,   or  entity  controlling,
controlled  by, or under  common  control  with  Buyer,  or in which  Buyer is a
partner or member (which right shall  include,  but not be limited to, the right
to designate any such corporation,  partnership,  or entity as the party to take
title to the  Property  upon  Close of  Escrow).  Upon  any such  assignment  or
designation, the corporation,  partnership, or other entity to which such rights
are  assigned  (or which is  designated  to take  title to the  Property)  shall
succeed to all of Buyer's rights and  obligations,  and from the date of Buyer's
written notice to Seller of such  assignment or  designation,  all references in
this  Agreement to Buyer shall be deemed  thereafter  to be  references  to such
corporation,  partnership,  or other  entity.  Any other  assignment  of Buyer's
interest herein shall be subject to the prior written approval of Seller,  which
approval shall not be unreasonably withheld.

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SECTION 13. REMEDIES.

     13.1 BUYER DEFAULT.  If Buyer fails for any reason to close the transaction
described  herein or  otherwise  defaults in the payment or  performance  of any
obligation  set forth  herein,  Seller  shall give Buyer  written  notice of the
default.  If Buyer has not completely cured the default within five (5) business
days after the date of  Seller's  notice,  then  Seller  shall have the right to
terminate  this  Agreement by giving Buyer and the Escrow Agent  written  notice
thereof, in which event Seller shall be entitled to retain, as Seller's sole and
exclusive remedy, as liquidated damages, and not as a penalty, the Earnest Money
and all interest earned thereon;  such amounts shall be released from escrow and
delivered  immediately to Seller by the Escrow Agent without further instruction
from  Seller or Buyer,  and  neither  party  shall have any  further  obligation
whatsoever to the other.  Seller and Buyer  acknowledge  and agree that Seller's
damages in the event of any such  default or breach by Buyer would be  difficult
or  impossible  to determine  and that under the  circumstances  existing on the
Contract Date, the amount of the Earnest Money and interest  thereon is the best
and most  accurate  estimate  by the parties of the  damages  that Seller  would
suffer in the event of any such default or breach.

     13.2 SELLER  DEFAULT.  If Seller fails to perform any of its obligations or
agreements hereunder,  Buyer shall give Seller written notice of the default. If
Seller has not completely  cured the default within five (5) business days after
the date of Buyer's  notice,  then Buyer may (i)  terminate  this  Agreement  by
notifying  Seller  thereof,  in which event the Earnest  Money and all  interest
earned thereon shall be returned to Buyer; or (ii) bring legal action to enforce
specific performance of this Agreement.

     13.3 NO FURTHER DUTIES.  If Buyer  terminates this Agreement  pursuant to a
right granted to Buyer under this Agreement, neither party hereto shall have any
further rights,  duties or obligations  hereunder (except as otherwise expressly
provided  in this  Agreement)  and the  Earnest  Money and all  interest  earned
thereon shall be returned by Escrow Agent to Buyer.

     13.4  POST  CLOSING  DEFAULT.  In the  event  that  after  Closing  a party
("Defaulting  Party") breaches an obligation hereunder which is expressly stated
herein to survive  Closing,  the  Defaulting  Party shall be liable to the other
party  ("Non-Defaulting  Party") for the damages incurred by the  Non-Defaulting
Party as a result of such breach.

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SECTION 14. CONDEMNATION/CASUALTY.

     14.1  CONDEMNATION.  In the event that all or any  Substantial  Portion (as
defined in Section  14.3 below) of the Property is condemned or taken by eminent
domain  prior to Closing or conveyed in lieu  thereof,  Seller  shall give Buyer
written notice  thereof and Buyer may, at its option,  either (i) terminate this
Agreement by written  notice  thereof to Seller  within five (5)  business  days
after Seller notifies Buyer of such condemnation or conveyance;  or (ii) proceed
to close the purchase of the  Property  pursuant to the terms  hereof.  If Buyer
elects option (i) above,  Buyer shall receive an immediate refund of the Earnest
Money and all interest earned thereon.  If Buyer elects option (ii) above, Buyer
shall receive the condemnation  proceeds or a reduction in the Purchase Price of
an equal amount.  In the event Buyer fails to timely  deliver  written notice of
termination  as  described  in option (i) above,  Buyer  shall be deemed to have
elected option (ii) above.

     14.2  CASUALTY.  In the event  that all or any  Substantial  Portion of the
Property is damaged or  destroyed  by fire or other  casualty  prior to Closing,
Buyer may, at its option,  either (i) terminate this Agreement by written notice
thereof to Seller within five (5) business days after Seller  notifies  Buyer of
the casualty;  or (ii) proceed to close the purchase of the Property pursuant to
the terms hereof. If Buyer elects option (i) above, Buyer shall receive a refund
of the Earnest  Money and all interest  earned  thereon.  If Buyer elects option
(ii) above,  Seller shall deliver to Buyer at the Closing all insurance proceeds
actually  received by Seller arising from such casualty and  attributable to the
Property and/or assign to Buyer all of Seller's right, title and interest in any
claim under any  applicable  insurance  policies with respect to such  casualty,
there shall be no  reduction in the  Purchase  Price and Seller shall  cooperate
with Buyer in its  efforts to be paid  insurance  proceeds.  In the event  Buyer
fails to timely deliver written notice of termination as described in option (i)
above, Buyer shall be deemed to have elected option (ii) above.

     14.3  SUBSTANTIAL  PORTION.  For purposes of this Section 14, a Substantial
Portion of the Property  shall mean any taking or casualty loss which  decreases
the  value  of the  Property  by Fifty  Thousand  Dollars  ($50,000.00)  or more
("Substantial Portion"). If, within ten (10) business days after Seller's notice
to Buyer described above,  Seller and Buyer are unable to reasonably agree after
good  faith  efforts  upon  whether  the  taking or  casualty  loss  involves  a
Substantial  Portion of the Property,  then this Agreement  shall be deemed null
and void and the Earnest  Money and all  interest  thereon  shall be refunded to
Buyer.

SECTION 15. INSPECTIONS AND DOCUMENTS.

     15.1.  ACCESS.  Buyer has had and shall continue to have, during the entire
term of this  Agreement,  access to (i) all  information  Buyer is  entitled  to

                                       11
<PAGE>
hereunder;  and (ii) the Property for purposes of inspections and investigations
of the Property. Seller agrees it will not make or cause to be made any material
changes to the Property after such  inspection.  Notwithstanding  the foregoing,
Buyer and its agents  shall not disrupt the  operation  of the  Property.  Buyer
shall  defend and  indemnify  Seller from,  for,  and against any loss,  cost or
liability  which may arise or result from any  activities of Buyer or its agents
on or with  respect to the  Property,  except to the extent  caused by  Seller's
negligence or willful misconduct.

     15.2. INFORMATION.  Seller shall deliver the original and all copies of the
information,  data, documents,  and materials in Seller's possession relating to
the  Property  to Buyer at Close of Escrow and  Seller's  interest in them shall
pass to Buyer as of Close of Escrow.

SECTION  16.  LEASEBACK.  Contemporaneous  with the  signing of this  Agreement,
Seller and Buyer shall enter into a leaseback of the  Property  where the Seller
shall be the Tenant and the Buyer shall be the  Landlord.  The lease shall be in
the form  attached  as  Exhibit C. The Close of Escrow is  conditioned  upon the
Seller and Buyer having signed this Lease Agreement.

SECTION 17. MISCELLANEOUS.

     17.1.  ENTIRE  AGREEMENT.  This Agreement is the entire  agreement  between
Seller and Buyer concerning the sale of the Property and no modification  hereof
or subsequent  agreement  relating to the subject matter hereof shall be binding
on either  party  unless in  writing  and  signed by the party or  parties to be
bound.

     17.2 CONTINUING VALIDITY. If any one or more of the provisions contained in
this Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect,  such invalidity,  illegality or unenforceability  shall not affect
any other  provisions  hereof,  and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein.

     17.3 ATTORNEYS FEES.  Should either party employ an attorney to enforce any
of the provisions hereof or to recover damages for the breach of this Agreement,
the  non-prevailing  party in any final judgment agrees to pay the other party's
reasonable  expenses,  including  attorneys'  fees  and  expenses,  expended  or
incurred  in  connection  therewith,  as  determined  by a  court  of  competent
jurisdiction.

     17.4 LAW AND VENUE.  This  Agreement  shall be governed  and  construed  in
accordance with the laws of the State of Arizona.  Exclusive  jurisdiction shall
be the Coconino County Superior Court.

                                       12
<PAGE>
     17.5 TIME OF  ESSENCE.  Time is of the essence in the  performance  of each
party's obligations hereunder.

SELLER:                                 BUYER:

ILX RESORTS INCORPORATED

----------------------------------      ----------------------------------------
By: Nancy J. Stone                      Edward John Martori
Its: President

Date: March ____, 2002                  Date:  March ____, 2002

                                       13
<PAGE>
ESCROW AGENT:

Received  this _______ day of March 2002 Escrow Agent hereby  agrees to be bound
by the  provisions  hereof  applicable  to Escrow Agent,  and to perform  Escrow
Agent's obligations as set forth herein.

     PIONEER TITLE AGENCY, INC.

     ___________________________________
     By: Jeannie Larson
     Title:  ___________________________

                                       14Exhibit 10.2

                              SEDONA STATION LEASE
                                 121 PORTAL LANE

                                      LEASE

                                 SEDONA, ARIZONA

                          LANDLORD: EDWARD JOHN MARTORI

                        TENANT: ILX RESORTS INCORPORATED

                         EFFECTIVE DATE: MARCH ___, 2002
<PAGE>
LIST OF EXHIBITS

A.        Legal Description of the Property

B.        Memorandum of Lease
<PAGE>
                                TABLE OF CONTENTS

SECTION 1 -  FUNDAMENTAL LEASE PROVISIONS AND DEFINITIONS......................1

SECTION 2 -  PREMISES..........................................................2

SECTION 3 -  OPTION............................................................2

SECTION 4 -  LEASE TERM........................................................2
     4.1     TERM..............................................................2
     4.2     HOLDING OVER......................................................2
     4.3     ABANDONMENT.......................................................3
     4.4     SURRENDER OF PREMISES.............................................3

SECTION 5 -  RENT, SECURITY DEPOSIT............................................3
     5.1     BASE RENT.........................................................3
     5.2     DEDUCTION FOR PAYMENT ON THE LOAN.................................3
     5.3     RENT DURING OPTION PERIODS........................................3
     5.4     SECURITY DEPOSIT..................................................4

SECTION 6 -  NO COUNTERCLAIM OR ABATEMENT OF RENT..............................4
     6.1     NO NOTICE.........................................................4
     6.2     NO CONDITIONAL PAYMENT............................................4

SECTION 7 -  USE OF PREMISES...................................................5
     7.1     USE...............................................................5
     7.2     PROHIBITED CONDUCT................................................5
     7.3     PROSCRIBED CONDUCT................................................5

SECTION 8 -  CONSTRUCTION OF IMPROVEMENTS......................................5
     8.1     CONSTRUCTION BY TENANT............................................5
     8.2     REPRESENTATIONS AND WARRANTIES OF LANDLORD........................6

SECTION 9 -  TENANT OBLIGATIONS................................................6
     9.1     PAYMENT BY TENANT.................................................6
     9.2     PAYMENT BY LANDLORD...............................................7
     9.3     PROOF OF PAYMENT..................................................7
     9.4     REAL AND PERSONAL PROPERTY TAXES..................................7
     9.5     PREMISES UTILITIES................................................7

SECTION 10 - TRIPLE NET LEASE .................................................7

SECTION 11 - MAINTENANCE AND REPAIRS BY TENANT.................................8
     11.1    TENANT'S OBLIGATION...............................................8
     11.2    PROHIBITED ACTS...................................................8
     11.3    RIGHTS OF LANDLORD................................................8
<PAGE>
SECTION 12 - REPAIR BY LANDLORD................................................8
     12.1    REPAIR BY LANDLORD................................................8
     12.2    HAZARDOUS MATERIALS...............................................9

SECTION 13 - LIENS............................................................10
     13.1    NO LIENS.........................................................10
     13.2    TENANT'S OBLIGATIONS.............................................10
     13.3    REMOVAL OF LIENS BY TENANT.......................................10
     13.4    REMOVAL OF LIEN BY LANDLORD......................................10

SECTION 14 - INSURANCE........................................................11
     14.1    PREMISES INSURANCE...............................................11
     14.2    TENANT'S PROPERTY................................................11
     14.3    TENANT'S OPERATIONS..............................................11
     14.4    CERTIFICATE OF INSURANCE.........................................11
     14.5    INSURANCE COMPANIES..............................................12
     14.6    FAILURE TO PROCURE INSURANCE.....................................12
     14.7    REPAIR OF TENANT.................................................12
     14.8    REPAIR BY LANDLORD...............................................13

SECTION 15 - DAMAGE OR DESTRUCTION............................................13
     15.1    TENANT OBLIGATIONS...............................................13
     15.2    LEASE TERMINATION................................................13

SECTION 16 - DELETED..........................................................13

SECTION 17 - INDEMNIFICATION..................................................14
     17.1    BY TENANT........................................................14
     17.2    BY LANDLORD......................................................14
     17.3    WAIVER OF CLAIMS.................................................14

SECTION 18 - ASSIGNMENT AND SUBLETTING........................................15
     18.1    LANDLORD CONSENT.................................................15
     18.2    IN WRITING.......................................................15

SECTION 19 - DEFAULTS BY TENANT...............................................16
     19.1    EVENT OF DEFAULT.................................................16
     19.2    RE-ENTER OF PREMISES.............................................17
     19.3    LEASE TERMINATION................................................17
     19.4    RELETTING........................................................17
     19.5    SURVIVAL OF LIABILITY............................................18
     19.6    CUMULATIVE REMEDIES..............................................18
     19.7    SUBLESSEE DEFAULTS...............................................19
     19.8    CURE PERIOD......................................................19
     19.9    LATE CHARGES.....................................................19
<PAGE>
SECTION 20 - CONDEMNATION.....................................................19

SECTION 21 - WAIVER OF PERFORMANCE............................................20

SECTION 22 - REMEDIES CUMULATIVE..............................................20

SECTION 23 - CONVEYANCE BY LANDLORD...........................................20

SECTION 24 - NO PERSONAL LIABILITY TO LANDLORD................................20

SECTION 25 - ATTORNEYS' FEES..................................................21

SECTION 26 - PROVISIONS SUBJECT TO APPLICABLE LAW.............................21

SECTION 27 - RIGHT TO CURE....................................................21
     27.1    RIGHT TO CURE TENANT'S DEFAULTS..................................21
     27.2    RIGHT TO CURE LANDLORD'S DEFAULTS................................21

SECTION 28 - NOTICES..........................................................22

SECTION 29 - SIGNS............................................................22

SECTION 30 - INSPECTION AND PRESENTING FOR SALE OR LEASE......................22

SECTION 31 - ESTOPPEL CERTIFICATE.............................................22

SECTION 32 - RECORDING........................................................23

SECTION 33 - SUBORDINATION AND NON-DISTURBANCE................................23

SECTION 34 - MISCELLANEOUS....................................................24
     34.1    DEFINITION OF TENANT.............................................24
     34.2    TENANT...........................................................24
     34.3    GENDER AND NUMBER................................................24
     34.4    MODIFICATIONS AND WAIVERS........................................24
     34.5    BINDING EFFECT...................................................24
     34.6    SEVERABILITY.....................................................24
     34.7    GOVERNING LAW AND JURISDICTION...................................24
     34.8    ENTIRE AGREEMENT.................................................25
     34.9    TIME IS OF THE ESSENCE...........................................25
     34.10   BROKERS..........................................................25
<PAGE>
                                 SEDONA STATION

                                      LEASE

SECTION 1 - FUNDAMENTAL LEASE PROVISIONS AND DEFINITIONS.

Landlord:           Edward John Martori, a married man dealing with his sole and
                    separate property.

Tenant:             ILX Resorts Incorporated, an Arizona corporation

Lease Term:         Commencement Date:  The  Commencement  Date  is  conditioned
                                        upon the  close of  escrow  wherein  the
                                        Landlord,  as Buyer,  is purchasing  the
                                        Property  from  Tenant,  as Seller.  The
                                        Commencement  Date of the Lease shall be
                                        the date of the close of escrow.

                    Termination Date:   February  15,  2011 (or as  extended  by
                                        Section 3)

Premises:           The real property  described in Exhibit A and located at 121
                    Portal Lane, Sedona, Arizona.

Minimum Annual Base Rental:   The Minimum  Annual Base Rent ("Rent") shall be as
                              set forth in Sections 5.1of this Lease.

Address of Landlord:  Edward John Martori
                      c/o Joseph P. Martori
                      ILX Resorts Incorporated
                      2111 E. Highland
                      Suite 210
                      Phoenix, AZ 85016
                      Telephone: (602) 957-2777
                      Fax: (602) 957-2290

Address of Tenant:    ILX Resorts Incorporated
                      Attn: Nancy J. Stone
                      President
                      2111 E. Highland, Suite 210
                      Phoenix, AZ 85016
                      Telephone: (602)957-2777
                      Fax: (602) 957-2290
<PAGE>
with a copy to:       Al Spector
                      Spector Law Offices, P.C.
                      4020 N. Scottsdale Road, Suite 300
                      Scottsdale, AZ 85251
                      Telephone: (480) 941-0221
                      Fax: (480) 990-9093

     The foregoing  Fundamental  Lease  Provisions  are an integral part of this
Lease,  and each  reference  in the body of the Lease to any  Fundamental  Lease
Provision  shall be  construed to  incorporate  all of the terms set forth above
with respect to such Provisions.

SECTION 2 - PREMISES.

     The real property and buildings  currently  existing on the legal  property
described in Exhibit A and known as the Sedona Station.

SECTION 3 - OPTION. The Lease Term will be automatically  extended for up to two
separate five-year periods commencing February 16, 2011 and terminating February
15, 2016 for the first five year extension and commencing  February 16, 2016 and
terminating  February  15,  2021 for the second  five-year  extension;  provided
however that Tenant may give Landlord  written  notice at least six months prior
to the termination of the  then-existing  term of the Lease that Tenant will not
continue  the Lease in full  force  and  effect.  In such  case the  Lease  will
terminate as of February 15th of the year such notice is given.

SECTION 4 - LEASE TERM

     4.1 TERM.  The term of this Lease  (herein  called the "Lease  Term" or the
"Term") is set forth in Section 1 as it may be extended by Section  3.1,  unless
the Term is sooner terminated as provided in this Lease.

     4.2 HOLDING OVER. If Tenant,  upon expiration or termination of this Lease,
either by lapse of time or otherwise, remains in possession of the Premises with
Landlord's written consent,  but without a new lease reduced to writing and duly
executed,  Tenant shall be deemed to be occupying  the Premises as a tenant from
month to month,  subject to all  covenants,  conditions  and  provisions of this
Lease.  If Tenant  remains in possession  without  Landlord's  written  consent,
Tenant  shall be deemed to be in wrongful  hold over and shall be subject to all
the  rights  and  remedies  provided  to  Landlord  under this Lease and by law,
including  but not  limited  to  forcible  entry and  detainer  actions or other
eviction processes.  During any hold over period,  without a reasonable claim of
right by Tenant,  the monthly  Rent shall be one  hundred ten percent  (110%) of
Tenant's monthly Rent payable during the last month of the Term of this Lease.

                                       2
<PAGE>
     4.3  ABANDONMENT.  If  Tenant,  prior  to the  expiration  of  this  Lease,
relinquishes possession of the Premises without Landlord's written consent, such
relinquishment shall be deemed to be an abandonment of the Premises and an Event
of Default under this Lease.

     4.4  SURRENDER  OF  PREMISES.  Upon any  termination  of this Lease for any
reason,  Tenant  shall  immediately  surrender  possession  of the  Premises  to
Landlord in good and tenantable repair,  reasonable wear and tear excepted,  and
shall  surrender  all keys and all  copies  of such  keys  for the  Premises  to
Landlord  at the place then fixed for the  payment of Rent or other  agreed upon
location.

SECTION 5 - RENT, SECURITY DEPOSIT

     5.1 BASE RENT.  The Base Rent shall be $13,750 per month paid in advance on
or  before  the  tenth  (10th)  day of  each  month  for  the  period  from  the
Commencement  Date of the Lease through February 15, 2011. This Base Rent should
be paid to Landlord  each month subject to the  adjustment  set forth in Section
5.2 below.

     5.2  DEDUCTION  FOR PAYMENT ON THE LOAN.  There is an existing  Loan on the
Property with Firstar Bank in the  approximate  amount of $795,000.  The monthly
payment on the Loan is $7,076  although  such Loan Payment may be adjusted  from
time to time (Monthly Loan Payment).  Tenant shall directly pay to the Lender on
the Loan  (Lender)  the Monthly Loan Payment and shall deduct the amount of such
Monthly Loan  Payment  from the Base Rent which  Tenant  sends to Landlord.  For
example,  if the Monthly  Loan Payment is $7,076,  then the monthly  amount that
Tenant shall send to Landlord will be $6,674  ($13,750 - $7,076 = $6,674).  When
Tenant  sends  rent  payments  to  Landlord,  Tenant  shall  also send a written
certification  to Landlord that the Tenant has made all payments due on the Loan
and that the Loan is current and not in default.

     5.3 RENT DURING OPTION PERIODS.  The Base Rent provided for in this Section
5 shall be subject to adjustment for each five-year option period  commencing on
February  16, 2011 and February  16, 2016  respectively.  The Base Rent shall be
mutually agreed upon by the Landlord and Tenant after taking into  consideration
the Rents for comparable properties in the Sedona, Arizona area. Notwithstanding
any other  provision  of this  Lease,  the Base Rent shall not be  increased  in
excess of the Consumer Price Index for all Urban Consumers, United States Cities
Average,  published by the United States  Department  of Labor,  Bureau of Labor
Statistics (the Index). The date of January, 2002 shall be used as the Beginning
Index.  The date of January  2011 shall be used as the  Extension  Index for the
determination  of the maximum Base Rent for the first Option Period and the date
January,  2016 shall be used as the Extension Index for the determination of the

                                       3
<PAGE>
maximum Base Rent for the Second Option Period.  The maximum Base Rent, shall be
determined by multiplying the amount of $13,750 by a fraction,  the numerator of
which is the  applicable  Extension  Index and the  denominator  of which is the
Beginning Index.

     If the Index is changed so that the base year  differs  from that in effect
when the Term  commences,  the Index shall be converted in  accordance  with the
conversion factor published by the United States Department of Labor,  Bureau of
Labor Statistics.  If the Index is discontinued or revised during the Term, such
other government index or computation with which it is replaced shall be used in
order to obtain  substantially the same result as would be obtained if the Index
had not been discontinued or revised.

     All rental amounts are "net" rent to Landlord. All Additional Charges ( all
other charges to Tenant described in this Lease) shall be deemed Rent whether or
not expressly  designated as such,  and shall be paid in addition to the Rent at
the times and in the manner provided for in this Lease.

     5.4 SECURITY DEPOSIT. No Security Deposit is required under this Lease.

SECTION 6 - NO COUNTERCLAIM OR ABATEMENT OF RENT.

     6.1 NO NOTICE.  Except as expressly  provided  herein,  Rent and Additional
Charges  and all other sums  payable  by Tenant  shall be paid  without  notice,
demand,  counterclaim,  setoff, recoupment,  deduction or defense of any kind or
nature and without abatement, suspension, deferment, diminution or reduction.

     6.2 NO CONDITIONAL  PAYMENT. NO PAYMENT BY TENANT OR RECEIPT BY LANDLORD OF
A LESSER AMOUNT THAN THE TOTAL OF ALL SUMS DUE  HEREUNDER  SHALL BE DEEMED TO BE
OTHER THAN AN ACCOUNT OF THE EARLIEST STIPULATED RENT, NOR SHALL ANY ENDORSEMENT
OR STATEMENT ON ANY CHECK,  OTHER PAYMENTS OR ANY ACCOMPANYING  LETTER BE DEEMED
AS ACCORD AND/OR SATISFACTION AND LANDLORD MAY ACCEPT SUCH CASH AND/OR NEGOTIATE
SUCH CHECK OR PAYMENT  WITHOUT  PREJUDICE  TO  LANDLORD'S  RIGHT TO RECOVER  THE
BALANCE  OF SUCH  RENT OR PURSUE  ANY OTHER  REMEDY  PROVIDED  IN THIS  LEASE OR
OTHERWISE,  REGARDLESS OF WHETHER LANDLORD MAKES ANY NOTATION ON SUCH INSTRUMENT
OF  PAYMENT  OR  OTHERWISE  NOTIFIES  TENANT  THAT SUCH  ACCEPTANCE,  CASHING OR
NEGOTIATION  OF SUCH PAYMENT IS WITHOUT  PREJUDICE TO ANY OF LANDLORD'S  RIGHTS.
TENANT SPECIFICALLY WAIVES THE PROVISIONS OF A.R.S. 47-1207.

                                       4
<PAGE>
SECTION 7 - USE OF PREMISES.

     7.1  USE.  Tenant  shall  not  use or  permit  the  Premises  to be used in
violation of the laws,  ordinances,  regulations and  requirements of the United
States,  the  State of  Arizona,  Coconino  County,  the City of  Sedona  or any
subdivision  or  department  thereof  or any other  authority  or agency  having
jurisdiction over the Premises or the Project.

     7.2 PROHIBITED CONDUCT. Except by prior written consent of Landlord, Tenant
shall not:

          A. Use or operate  any  machinery  that,  in  Landlord's  opinion,  is
harmful to the Premises.

          B. Do or suffer to be done any act, matter or thing  objectionable  to
the fire,  casualty or liability insurance carriers whereby any insurance now in
force or  hereafter  to be placed on the  Premises or the  Project,  or any part
thereof, shall become void or suspended, or whereby the same shall be rated as a
more  hazardous  risk than at the date when Tenant  receives  possession  of the
Premises.  In case of a  breach  of this  covenant,  in  addition  to all  other
remedies of Landlord  hereunder,  Tenant agrees to pay to Landlord as additional
rent any and all  increase or  increases  of premiums  on  insurance  carried by
Landlord on the Premises or the Project.

          C. Do or cause to be done any act, matter or thing in violation of any
federal, state, county or local law, statute, regulation, rule or ordinance.

     7.3 PROSCRIBED  CONDUCT.  At all times  throughout  the Lease Term,  Tenant
shall:

          A.  Comply  with any and all  requirements  of any of the  constituted
public  authorities  and with the terms of any state or federal statute or local
ordinance or regulation applicable to Tenant or its use, safety,  cleanliness or
occupation of the Premises,  and save Landlord  harmless from penalties,  fines,
costs, expenses or damages resulting from Tenant's failure to do so.

          B. Give Landlord  prompt  written notice of any accident,  fire,  pest
infestation, or damage occurring on or to the Premises.

SECTION 8 - CONSTRUCTION OF IMPROVEMENTS.

     8.1.  CONSTRUCTION BY TENANT. Tenant shall not make or cause to be made any
structural  alterations,  additions or improvements to the Premises in excess of
$200,000,  without first obtaining Landlord's written approval,  which shall not

                                       5
<PAGE>
be   unreasonably   withheld.   Tenant  shall  present  to  Landlord  plans  and
specifications  for such  work at the time  approval  is  sought.  Landlord  may
condition  its approval upon the  requirement  that Tenant,  or its  contractor,
secure and bear the cost of a labor and  materials  payment  bond for any single
improvement  costing  in  excess of  $200,000.  All  alterations,  improvements,
additions  and  fixtures  made or  installed  by Tenant  shall  remain  upon the
Premises at the expiration or earlier termination of this Lease and shall become
the property of Landlord.

     8.2  REPRESENTATIONS  AND  WARRANTIES  OF  LANDLORD.   Landlord  makes  the
following representations and warranties:

          A. This Lease has been duly  authorized  and  executed by Landlord and
constitutes  the  valid  and  binding  obligation  of  Landlord  enforceable  in
accordance  with its  terms.  The  execution  and  performance  of this Lease by
Landlord does not conflict  with or  constitute a default  under any  agreement,
mortgage, lease or other instrument by which Landlord is or may be bound.

          B. Landlord has no actual  knowledge and has received no notice of any
pending or  threatened  claim,  action,  suit,  proceeding  or other  litigation
affecting  the  Premises  or any  portion  thereof,  or  under  any  outstanding
contract, if any, to which Landlord is a party, in any court or before or by any
governmental authority having jurisdiction.

          C. The Premises are free from liens of mechanics and materialmen.

          D. To Landlord's  actual  knowledge,  there exist no current  material
violations of any federal, state, county or municipal laws, ordinances, building
codes,  orders,  regulations  or  requirements  affecting  any  portion  of  the
Premises.

          E. Landlord has no actual knowledge of any agreements,  commitments or
understandings  pursuant to which  Landlord is required to dedicate  any part of
the Premises or to grant any  easement,  water  rights,  rights-of-way,  road or
license  for  ingress  and  egress  or other use in  respect  to any part of the
Premises  whether on account  of the  development  of  adjacent  or nearby  real
property or otherwise.

          F. To Landlord's actual knowledge, it is not in material default or in
material breach of any written covenant, condition,  restriction,  right-of-way,
easement or other written agreement affecting the Premises.

SECTION 9 - TENANT OBLIGATIONS.

     9.1 PAYMENT BY TENANT.  Tenant shall pay and discharge  punctually,  as and
when the same shall  become due and  payable,  each and every cost,  expense and
obligation of every kind and nature,  foreseen or unforseen,  arising out of the
possession,  operation,  maintenance,  alteration,  repair,  rebuilding,  use or
occupancy  of the  Premises  by  Tenant.  Tenant  shall  also pay and  discharge
punctually,  as and when the same shall become due and payable without  penalty,
personal property,  business,  occupation and occupational license taxes, water,
sewer, electricity,  telephone charges and fees and all sales and use taxes owed
to  governmental  entities  arising out of the motel rental to its customers and
guests.

                                       6
<PAGE>
     9.2 PAYMENT BY  LANDLORD.  Tenant shall not be required to pay or reimburse
Landlord  for: (i) any local,  state or federal  capital  levy,  franchise  tax,
revenue  tax,  income tax,  or profits tax of Landlord  unless and to the extent
such levy,  tax or imposition is in lieu of or a substitute  for any other levy,
tax or imposition now or later in existence upon or with respect to the Premises
which, if such other levy, tax or imposition were in effect, would be payable by
Tenant under the provisions hereof; of (ii) any lien arising from the unilateral
acts or omissions  of Landlord  and  unrelated to a default of Tenant under this
Lease.

     9.3 PROOF OF PAYMENT.  Tenant,  upon Landlord's  request,  shall furnish to
Landlord  within  thirty  (30)  days  thereafter  proof  of the  payment  of any
obligation to be paid by Tenant.

     9.4 REAL AND PERSONAL  PROPERTY TAXES.  Tenant shall be responsible for and
shall pay before  delinquency  all real and  personal  taxes  levied or assessed
against the Premises  and any personal  property of any kind owned or placed in,
upon or about the Premises by Tenant.  Tenant  hereby agrees to protect and hold
harmless  Landlord and the Premises from any liability for Tenant's share of any
and all  such  taxes,  assessments  and  charges  together  with  any  interest,
penalties  or  other  charges  thereby  imposed,  and  from  any  sale or  other
proceedings to enforce payment thereof,  and to pay all such taxes,  assessments
and charges before delinquency and before same become a lien.

     9.5 PREMISES  UTILITIES.  Tenant shall be responsible for any and shall pay
for all  utilities  used or  consumed  in or upon the  Premises  as and when the
charges  shall  become due and payable  during the Term.  Tenant  shall make all
appropriate  applications  to  local  utility  companies  and pay  all  required
deposits.  In no event shall Landlord be liable for any  interruption or failure
in the supply of any utilities to the Premises.

SECTION 10 - TRIPLE NET LEASE.

     It is the  intent of the  Landlord  and  Tenant for this Lease to be triple
net, so that Tenant pays all costs of operation and  maintenance of the Premises
including  all  utilities;  all real estate and  assessment  taxes and  personal
property taxes levied and assessed against the Property;  all insurance coverage
on the Premises and any and all other expenses  associated with the operation of
the Premises.

                                       7
<PAGE>
SECTION 11 - MAINTENANCE AND REPAIRS BY TENANT.

     11.1  TENANT'S  OBLIGATION.  Tenant  shall keep and maintain in good order,
condition  and repair,  reasonable  wear and tear excepted  (including  any such
replacement, periodic painting and restoration as is required for that purpose),
the  Premises  and every  part  thereof  and any and all  appurtenances  thereto
wherever  located,  including  but not limited  to, the  exterior  and  interior
portion of all doors,  door checks,  door locks,  windows,  plate  glass,  store
front, all plumbing and sewage facilities within the Premises,  all alterations,
improvements  and  installations  made by Tenant and any repairs  required to be
made due to burglary or other  illegal  entry into the  Premises.  Tenant  shall
maintain and bear the expense of the light fixtures and bulbs,  air-conditioning
units and filters, heating units or furnace,  janitorial services, interior pest
control, and the like.

     11.2 PROHIBITED ACTS. Tenant shall not cause or permit  accumulation of any
debris or extraneous  matter on the roof of the Premises and will be responsible
for any  damage  caused  thereto by any acts of Tenant,  its  agents,  servants,
employees or  contractors.  Tenant  shall place any rubbish,  broken down boxes,
trash or other excess matter only in such containers as are authorized from time
to time by Landlord; keep the Premises (including all exterior surfaces and both
sides of all glass) clean,  orderly,  sanitary and free from objectionable odors
and from  insects,  vermin,  and other  pests;  and keep the  outside  areas and
sidewalks  immediately  adjoining the Premises  clean and free from empty boxes,
trash of any kind, ice and any other obstructions or safety hazards.

     11.3  RIGHTS  OF  LANDLORD.  If Tenant  refuses  or fails to  commence  and
complete  repairs  or  maintenance  required  herein  promptly  and  adequately,
Landlord  may,  but shall not be required  to, make and  complete the repairs or
perform the maintenance.  The cost of such repairs or maintenance  shall be paid
immediately by Tenant to Landlord as additional Rent upon demand.

                                       8
<PAGE>
SECTION 12 - REPAIR BY LANDLORD.

     12.1 REPAIR BY  LANDLORD.  Landlord  shall keep and maintain in good repair
the  foundation,  exterior  walls,  floors and roof of the building in which the
Premises are located exclusive of doors, door frames,  door checks,  door locks,
windows and window frames  located in exterior  building  walls.  Landlord shall
not,  however,  be required to make any such  repairs  when such repairs are the
result of  misuse  or  neglect  by  Tenant,  its  agents,  employees,  invitees,
licensees or  contractors,  except to the extent covered by Premises  insurance.
Any repairs required to be made by reason of such Tenant misuse or neglect shall
be  the   responsibility  of  Tenant,  the  above  provisions  to  the  contrary
notwithstanding,  except to the extent covered by Premises insurance.  Except as
provided  herein,  Landlord  shall  have no  obligation  to alter or modify  the
Premises, or any part thereof, or to repair and maintain any plumbing,  heating,
electrical,  air-conditioning or other mechanical  installation in the Premises.
Under no  circumstances  shall  Landlord  be  obligated  to  repair,  replace or
maintain  any plate  glass or door or window  glass no  matter  what the  cause,
except to the extent covered by Premises insurance.

     12.2  HAZARDOUS  MATERIALS.   Exclusive  of  Hazardous  Materials  normally
associated with Tenant's  permitted use, if any, Tenant covenants and agrees not
to use, generate, release, manage, treat, manufacture, store, or dispose of, on,
under or about,  or transport  to or from (any of the  foregoing  hereinafter  a
"Use") the Premises any Hazardous Materials (other than "De Minimis" amounts (as
defined  below)).  Tenant  further  covenants  and  agrees  to pay all costs and
expenses associated with enforcement, removal, remedial or other governmental or
regulatory  actions,  agreements  or order  threatened,  instituted or completed
pursuant to any Hazardous Materials Laws, and all audits, tests, investigations,
cleanup, reports and other such items incurred in connection with any efforts to
complete,   satisfy  or  resolve  any  matters,  issues  or  concerns,   whether
governmental  or  otherwise,  arising out of or in any way related to the Use of
Hazardous  Materials in any amount by Tenant, its employees,  agents,  invitees,
subtenants,  licensees, assignees or contractors. For purposes of this Lease (i)
the term  "Hazardous  Materials"  shall  include but not be limited to asbestos,
urea formaldehyde,  polychlorinated biphenyls, automotive and petroleum products
and byproducts (including, without limitation, gasoline, diesel and other fuels,
new,  used  and  recycled  oil,  grease,  brake  fluid,  antifreeze,  and  other
automotive  fluids installed in or recovered from service vehicles or otherwise,
and any other fuel  additive,  derivative,  lubricant  or  byproduct  generated,
stored  or  used  in  Tenant's  business  operation  or  otherwise   occurring),
pesticides,  radioactive  materials,  hazardous wastes, toxic substances and any
other related or dangerous  toxic or hazardous  chemical,  material or substance
defined as hazardous or  regulated or as a pollutant or  contaminant  in, or the
use of or exposure to which is  prohibited,  limited,  governed or regulated by,
any Hazardous  Materials  Laws;  (ii) the term "De Minimis"  amounts shall mean,
with  respect  to any given  level of  Hazardous  Materials,  that such level or
quantity of Hazardous Materials in any form or combination of forms (a) does not

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<PAGE>
constitute a violation of any Hazardous  Materials  Laws; and (b) is customarily
employed in, or associated  with,  similar  retail or motel projects in Coconino
County,  Arizona;  and (iii) the term "Hazardous  Materials Laws" shall mean any
federal,  state, county,  municipal,  local or other statute,  law, ordinance or
regulation now or hereafter enacted which may relate or legislate the protection
of  human  health  or  the  environment,   including  but  not  limited  to  the
Comprehensive  Environment Response,  Compensation and Liability Act of 1980, 42
U.S.C.  Section 9601, ET SEQ.; the Hazardous  Materials  Transportation  Act, 49
U.S.C.  Section 1801, ET SEQ.;  the Resource  Conservation  and Recovery Act, 42
U.S.C. Section 6901, ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C.
Section  1251,  ET SEQ.;  the Toxic  Substances  Control Act of 1976,  15 U.S.C.
Section  2601,  ET  SEQ.;   Ariz.   Rev.  Stat.  Ann.  Title  49  (The  "Arizona
Environmental  Quality Act of 1986");  and any rules,  regulations or guidelines
adopted or promulgated  pursuant to any of the foregoing as they may be adopted,
amended or replaced from time to time.

SECTION 13 - LIENS.

     13.1 NO LIENS.  Tenant  shall have no  authority  to do any act or make any
contract  which may  create or be the  basis  for any  lien,  mortgage  or other
encumbrance  upon any  interest of Landlord in the Premises or which would cause
any  document  to be recorded  against the  Premises.  Should  Tenant  cause any
construction,  alterations,  rebuildings,  restorations,  replacements, changes,
additions,  improvements  or  repairs to be made on the  Premises,  or cause any
labor to be performed or material to be furnished  thereon,  therein or thereto,
neither  Landlord nor the Premises shall under any  circumstances  be liable for
the  payment  of any  expense  incurred  or for the  value of any  work  done or
material  furnished,  and  Tenant  shall be solely  and  wholly  responsible  to
contractors,  laborers and  materialmen for performing such labor and furnishing
such  material.  Tenant shall have the right to subject its  Tenant's  leasehold
interest to a lien that is limited solely to Tenant's leasehold estate.

     13.2 TENANT'S  OBLIGATIONS.  Any alterations or improvements made by Tenant
to the Premises must be paid for by Tenant when such alterations or improvements
are made.  Nothing in this Lease shall be construed to authorize  Tenant, or any
person dealing with or under Tenant, to charge the Rents of the Premises, or the
property and  buildings of which the  Premises  form a part,  or the interest of
Landlord in the state of the Premises,  with a mechanics' lien or encumbrance of
any kind, and under no circumstances  shall Tenant be construed to be the agent,
employee  or   representative  of  the  Landlord  in  the  making  of  any  such
improvements or alterations to the Premises.

     13.3  REMOVAL OF LIENS BY TENANT.  If,  because of any act or omission  (or
alleged act or  omission) of Tenant,  any  mechanic's,  materialman's,  or other
lien,  charge  or order  for the  payment  of money  shall be filed or  recorded
against the Premises or against  Landlord  (whether or not such lien,  charge or

                                       10
<PAGE>
order is valid or enforceable as such), Tenant shall, at its own expense, either
cause the same to be  discharged  of record  pursuant  to A.R.S.  ss.33-1004  or
otherwise cause such discharge,  within thirty (30) days after Tenant shall have
received  notice of the filing  thereof,  or Tenant  may,  within  such  period,
furnish to Landlord a bond satisfactory to Landlord against such lien, charge or
order,  in which case  Tenant  shall have the right in good faith to contest the
validity or amount thereof.

     13.4  REMOVAL OF LIEN BY LANDLORD.  If,  because of any act or omission (or
alleged act or omission) of Landlord,  any mechanic's,  materialman's,  or other
lien,  charge  or order  for the  payment  of money  shall be filed or  recorded
against the  Premises  or against  Tenant  (whether or not such lien,  charge or
order is valid or  enforceable  as such),  Landlord  shall,  at its own expense,
either cause the same to be discharged of record pursuant to A.R.S.  ss.33-1004,
or otherwise cause such discharge,  within thirty (30) days after Landlord shall
have received notice of the filing thereof, or Landlord may, within such period,
furnish to Tenant a bond  satisfactory  to Tenant  against such lien,  charge or
order,  in which case Landlord shall have the right in good faith to contest the
validity or amount thereof.

SECTION 14 - INSURANCE.

     14.1  PREMISES  INSURANCE.  Tenant  bears the risk of and shall  insure the
operation of the Premises as a whole.  Such insurance shall include,  but is not
limited to, general liability and umbrella excess liability (with coverage of at
least $3,000,000),  bodily injury, public liability,  property damage liability,
fire and extended  coverage in amounts not less than eighty percent (80%) of the
replacement cost of the Premises, sign insurance and the like in coverage limits
reasonably selected by Landlord.

     14.2 TENANT'S PROPERTY. Tenant agrees that all property owned by it in, on,
or about the Project shall be at the sole risk and hazard of the Tenant,  except
for  matters  covered by Project  insurance  and  subject to the  provisions  of
Paragraph  17.2 of this Lease.  Subject to the  provisions of Paragraph  17.2 of
this Lease,  Landlord shall not be liable or responsible  for any loss or damage
to Tenant,  or anyone  claiming under or through Tenant,  or otherwise,  whether
caused by or resulting  from a peril required to be insured  hereunder,  or from
water,  gas leakage,  plumbing,  electricity  or electrical  apparatus,  pipe or
apparatus of any kind, the elements or other similar or dissimilar  causes,  and
whether or not  originating  in the Premises or elsewhere.  Tenant shall require
all policies of risk insurance  carried by it on its property in the Premises to
name Landlord as an additional  named insured and to contain or be endorsed with
the  provision in and by which the insurer  designated  therein  shall waive its
right of subrogation against Landlord.

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<PAGE>
     14.3  TENANT'S  OPERATIONS.  Except as may be  provided  otherwise  in this
Lease,  all  operations  conducted by Tenant shall be at Tenant's  sole risk. In
addition,  Tenant  shall  keep in  force  at its own  expense  public  liability
insurance and comprehensive  general liability insurance,  including contractual
liability insurance  sufficient to cover all phases and aspects of the operation
and conduct of its business,  with minimum limits of $2,000,000.00 on account of
bodily injuries to or death of one person and $3,000,000.00 on account of bodily
injuries to or death of more than one person as a result of any one  accident or
disaster,  and  $2,000,000.00  as a result of damage to  property.  Such  dollar
amounts  shall be  adjusted  each  five-year  period by a cost of  living  index
factor.

     14.4 CERTIFICATE OF INSURANCE.  Tenant shall provide annually to Landlord a
Certificate of Insurance  listing  Landlord as an additional named insured under
the  Tenant's  policies of  insurance  required by this  Lease.  Landlord  shall
provide  annually to Tenant a  Certificate  of  Insurance  listing  Tenant as an
additional named insured under the Landlord's  policies of insurance required by
this Lease.

     14.5 INSURANCE COMPANIES.  The policies affording the insurance required by
this Lease shall be with companies (rated A-[minus] VII or better,  A. M. Best's
Key Rating Guide) authorized to do business in the State of Arizona and shall be
in a form reasonably  satisfactory to Landlord,  shall provide  replacement cost
coverage,  shall name Landlord as an additional  insured,  and shall provide for
payment of loss thereunder to Landlord and Tenant as their interests may appear.
The policies or  certificates  evidencing  such insurance  shall be delivered to
Landlord  on or before  the  Commencement  Date and  renewals  thereof  shall be
delivered to Landlord at least thirty (30) days prior to the expiration dates of
the respective policies.  Alternatively,  the insurance required by this Section
14 may be provided  under a blanket  policy to the Tenant's  existing  insurance
policy.

     14.6 FAILURE TO PROCURE  INSURANCE.  In the event either Tenant or Landlord
shall fail to procure  insurance  required of Tenant under this Lease or fail to
maintain  the same in force  continuously  during  the  Term,  or any  extension
thereof,  the other party shall be entitled to procure such  insurance  and such
party shall, upon demand,  immediately be reimbursed by the defaulting party for
such premium expense,  failing which, the  non-defaulting  party may declare the
other party in default under this Lease.

     14.7  REPAIR  OF  TENANT.  In the event of loss  under  any such  policy or
policies,  required to be provided by Tenant, Tenant shall promptly proceed with
the  repair  and  restoration  of  the  damaged  or  destroyed  improvements  in
accordance with Section 15 of this Lease. The insurance  proceeds,  if less than
$300,000.00, shall be paid to Tenant for application to such repair, restoration
or  remediation,  so long as (a) Tenant is not then in default under this Lease,
and (b) Tenant expressly covenants in writing with Landlord to expend such funds
for the repair,  restoration or remediation of the Premises and the improvements
therein, and to furnish Landlord with documentation  evidencing such expenditure
of funds for work and  improvements  incorporated  in the Premises within thirty
(30) days following  completion of such repair,  restoration or remediation.  If
the insurance proceeds exceed $300,000.00, the same shall be paid to and held in

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<PAGE>
trust by the  Landlord  pursuant  to Section  15 of this  Lease.  All  insurance
proceeds  described  in  this  Section  14.7  shall  be  paid  upon  architects'
certificates and contractors', subcontractors' and materialmen's waivers of lien
for the cost and expense of repair, restoration or remediation of the damage. If
at any time such insurance  proceeds shall be insufficient to pay fully the cost
of  completion of such repair,  restoration  or  remediation,  Tenant shall upon
demand of Landlord pay a sufficient portion of such cost so that it shall appear
to the reasonable satisfaction of Landlord that the amount of insurance money in
the hands of Tenant or Landlord, as applicable, shall at all times be sufficient
to pay for the completion of the repairs,  restoration  or remediation  free and
clear  of all  liens.  Upon  the  completion  of  the  repairs,  restoration  or
remediation,  free and clear of all liens, any surplus of insurance monies shall
be paid to Tenant, provided that Tenant is not then in default hereunder. In the
event that this Lease shall have been  terminated  for any  material  default of
Tenant  under any of the terms  and  provisions  contained  in this  Lease,  all
proceeds of insurance in the hands of Tenant or Landlord and all claims  against
insurers shall be and become the absolute property of Landlord.

     14.8 REPAIR BY LANDLORD.  If all or any part of the Premises are damaged by
fire or other  catastrophe  covered by any insurance policy carried by Landlord,
Landlord  shall  repair or  replace  the  damaged  part of the  Premises  to its
condition  immediately prior to the occurrence.  The repair or replacement shall
be  commenced  and  completed  within a  reasonable  time after the  occurrence.
Landlord's  liability  with respect to the obligation to repair or replace shall
be limited to the extent of the  proceeds  of any  insurance  policy  carried by
Landlord, which policy shall have minimum limits required by this Lease.

SECTION 15 - DAMAGE OR DESTRUCTION.

     15.1 TENANT OBLIGATIONS. In the event of damage to or destruction of any of
the  improvements on the Premises by fire or other  casualty,  Tenant shall give
Landlord immediate notice thereof and shall, at Tenant's own expense and whether
or not the insurance proceeds are sufficient for the purpose,  promptly commence
and  thereafter  diligently  pursue  completion  of the repair,  restoration  or
rebuilding of the same so that upon  completion of such repairs,  restoration or
rebuilding,   the  value  and  rental  value  of  the   improvements   shall  be
substantially  equal to the value and rental value thereof  immediately prior to
the occurrence of such fire or other casualty.  Tenant hereby  expressly  waives
any  statutory  right  to  terminate  this  Lease  in the  event  of  damage  or
destruction  of  the  Premises  or  all  or any  portion  of  the  buildings  or
improvements thereon.

     15.2 LEASE TERMINATION.  Notwithstanding anything to the contrary contained
herein,  if the  Premises  should  be  rendered  untenantable  by fire or  other
casualty  during  the last two (2)  years  of the  Term to the  extent  of fifty
percent (50%) or more of the replacement cost of the Premises, Tenant shall have
the option to terminate this Lease by notice to Landlord  within sixty (60) days

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<PAGE>
after the occurrence of such damage or destruction. Upon termination, this Lease
and the Term hereof shall cease and come to an end as of the  effective  date of
such notice  (which shall be not less than thirty (30) nor more than ninety (90)
days after the notice and shall be specified in the notice).  Any unearned  Rent
or other charges shall be  apportioned as of the effective date and Tenant shall
assign to Landlord all of its rights to the  insurance  proceeds  arising out of
damage or  destruction  to the  improvements  and shall pay  Landlord  (when the
information is  ascertained)  the  difference  between the value of the property
damaged or destroyed,  prior to the damage or  destruction,  and the amount,  if
any, of the insurance proceeds.

SECTION 16 - DELETED.

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<PAGE>
SECTION 17 - INDEMNIFICATION.

     17.1 BY TENANT.  Excepting  any  responsibility  allocated  to  Landlord by
reason of its  negligence  or by the terms of this  Lease  (excluding  from this
exception,  however,  any responsibility  allocated to Landlord by reason of its
failure  to  enforce  the terms of this  Lease  against  Tenant),  Tenant  shall
indemnify,  defend  and  hold  Landlord  harmless  for,  from  and  against  all
liabilities,  obligations,  claims, suits, damages, penalties, causes of action,
costs and expenses (including without limitation, reasonable attorneys' fees and
expenses)  imposed  upon or asserted  against  Landlord by reason of the acts or
omissions of Tenant, its agents, employees,  contractors,  suppliers, licensees,
invitees and guests and/or the  occurrence  of any of the  following  during the
Term except for conditions  existing at the  commencement  of the Lease Term, or
conditions or events caused during the Lease Term by Landlord,  its contractors,
employees,  agents or invitees: (i) any use, nonuse or condition of the Premises
or any part thereof; (ii) any accident, injury to or death of persons (including
workmen) or loss of or damage to property  occurring on or about the Premises or
any part  thereof;  (iii) any failure on the part of Tenant to perform or comply
with any of the provisions of this Lease; (iv) by or at the direction of Tenant,
performance  of any labor or services or the  furnishings  of any  materials  or
other  property in respect of the  Premises or any part thereof  (excluding  any
such  matters  performed  or  furnished  by or at the  request of  Landlord  and
unrelated to a default of Tenant  under this  Lease);  or (v) any failure on the
part of  Tenant  to clean up  and/or  dispose  of any  Hazardous  Materials,  as
described in Section 12.2 above,  in accordance  with the  requirements  of this
Lease and applicable  law. In the event  Landlord  should be made a defendant in
any action,  suit or  proceeding  brought by reason of any such  occurrence  for
which  Tenant is  primarily  responsible  and  except to the  extent  Landlord's
insurance is also  applicable,  Tenant  shall,  at its own  expense,  resist and
defend such  action,  suit or  proceeding  or cause the same to be resisted  and
defended  by legal  counsel  designated  by Tenant but  reasonably  approved  by
Landlord.  If any such  action,  suit or  proceeding  should  result  in a final
judgment  against  Landlord,  Tenant shall  promptly  satisfy and discharge such
judgment or shall cause such judgment to be promptly  satisfied and  discharged.
The  obligations  of Tenant  under this Section 17 arising by reason of any such
occurrence  taking  place  while  this  Lease is in  effect  shall  survive  the
termination of this Lease.

     17.2 BY LANDLORD.  Landlord shall save, defend, hold harmless and indemnify
Tenant for,  from and  against  all  liabilities,  obligations,  claims,  suits,
damages,  penalties,  causes of action, costs and expenses  (including,  without
limitation,  reasonable  attorneys' fees and expenses)  imposed upon or asserted
against  Tenant by reason of the  negligence  or wrongful act of Landlord or its
agents, contractors, servants or employees.

     17.3 WAIVER OF CLAIMS.  Except to the extent of (i) coverage by  Landlord's
insurance;  (ii)  any  warranty  by  Landlord  herein;  or (iii)  warranties  or
liabilities  on  the  part  of  Landlord  or  its  contractors  responsible  for

                                       15
<PAGE>
construction   or  remodeling   of  the  Premises,   Landlord  and  its  agents,
contractors,  servants or employees  shall not be liable for, and Tenant  hereby
releases all claims for,  damage to persons and property  sustained by Tenant or
any person claiming  through Tenant  resulting from any theft,  fire,  accident,
occurrence  or condition  in, on or about the Premises or building of which they
are a part, including, but not limited to, such claims for damage resulting from
(i) any defect in or failure of plumbing, heating or air-conditioning equipment,
electric wiring or installation thereof, water pipes, stairs, railings or walks;
(ii) any equipment or appurtenances needing repair; (iii) the bursting,  leaking
or running of any tank, wash stand, water closet, waste pipe, drain or any other
pipe or tank in or about the Premises;  (iv) the backing up of any sewer pipe or
down spout; (v) the escape of steam or hot water;  (vi) water, snow or ice being
upon or coming  through the roof or any other place upon or near the Premises or
otherwise;  (vii) the  falling of any  fixture,  plaster  or stucco;  and (viii)
broken glass.  Landlord  hereby assigns to Tenant a  non-exclusive  right to the
benefits and  enforcement of all warranties by contractors,  subcontractors  and
suppliers  arising out of the work by Landlord in the construction or renovation
of the Premises.

SECTION 18 - ASSIGNMENT AND SUBLETTING.

     18.1 LANDLORD  CONSENT.  Tenant shall not transfer or assign this Lease, or
any  interest in this  Lease,  or sublet the  Premises  or any  portion  thereof
without first obtaining the written consent of Landlord, which consent shall not
be unreasonably  withheld  subject to performance of the terms and conditions of
this  Section 18.  Consent  shall be given if the transfer is to an affiliate or
subsidiary  of  Tenant  as long as Tenant  is not  released  from  post-transfer
obligations under the Lease. Any attempted  transfer,  assignment or subletting,
including any involuntary  transfers or assignments by operation of law, without
such consent  shall be void and confer no rights upon any third  person,  and at
the option of Landlord,  shall cause a termination of this Lease, in which event
such third  person  shall  occupy the  Premises as a tenant at  sufferance.  The
acceptance of any Rent payments by Landlord from any such alleged assignee shall
not  constitute  approval  of the  assignment  or  subletting  of this  Lease by
Landlord.  No transfer,  assignment  or subletting  shall relieve  Tenant of its
liability  for  the  full  performance  of all of  the  provisions,  agreements,
covenants and  conditions of this Lease.  A consent by Landlord to one transfer,
assignment or subletting shall not operate as a waiver of this Section as to any
future  transfer,  assignment or subletting,  and this Section 18 shall apply to
any transferee, assignee or subtenant.

     18.2 IN WRITING. Each transfer,  assignment,  and subletting to which there
has been  consent  shall be by an  instrument  in writing  in a form  reasonably
satisfactory to Landlord,  and shall be executed by the transferor,  assignor or
sublessor; and the transferee, assignee, or sublessee shall agree in writing for
the  benefit  of  Landlord  to  assume,  to be  bound  by,  and to  perform  the
provisions,  covenants  and  conditions  of this  Lease  to be  done,  kept  and

                                       16
<PAGE>
performed by Tenant.  One  executed  copy of such  written  instrument  shall be
delivered to Landlord. A consent to any transfer, assignment or subletting shall
not  constitute  waiver or discharge of the  provisions of this  paragraph  with
respect to a subsequent  transfer,  assignment or subletting.  The acceptance of
Rent  from any  other  person  shall  not be deemed to be a waiver of any of the
provisions of this Lease or a consent to the transfer,  assignment or subletting
of the Premises.

SECTION 19 - DEFAULTS BY TENANT.

     19.1 EVENT OF DEFAULT.  Each of the following occurrences shall be an Event
of Default hereunder:

          A. If Tenant fails to pay any Rent when due and such failure continues
for ten (10) days after  written  notice  following  the payment due date or the
date the bill is received by Tenant from Landlord, whichever is later.

          B. If Tenant  fails to pay any  monies  due  Landlord  for  Additional
Charges  or for any other  sums due  under  this  Lease or any  other  agreement
between  Landlord  and  Tenant  ("Other  Payments")  within  ten (10) days after
written  notice to Tenant that Tenant is in default of such payment.  Such Other
Payments  shall be due within ten (10) days after  Landlord sends its invoice to
Tenant unless otherwise provided in this Lease.

          C.  Except as  otherwise  provided in Section  19.8 of this Lease,  if
Tenant  defaults  or  breaches  any  of  the  other  (non-monetary)   covenants,
agreements, conditions or undertakings herein to be kept, observed and performed
by Tenant and such default  continues for twenty (20) days after notice  thereof
in writing to Tenant.

          D. If Tenant  files any  petition  under any chapter or section of the
Federal  Bankruptcy  Code or any similar law,  state or federal,  whether now or
hereafter existing, or shall file an answer admitting insolvency or inability to
pay its debts.

          E. If  Tenant  fails to obtain a stay of any  involuntary  proceedings
under any chapter or section of the Federal  Bankruptcy  Code within  sixty (60)
days after the institution thereof.

          F. If a trustee or  receiver  is  appointed  for Tenant or for a major
portion of its property or for any portion of the Premises and such  appointment
is not vacated and dismissed  within sixty (60) days thereafter and in any event
prior to any action  adverse to the  interest of Tenant or Landlord  having been
taken by such trustee or receiver.

                                       17
<PAGE>
          G. If any court takes  jurisdiction of a major portion of the property
of  Tenant  or any  part  of the  Premises  in any  involuntary  proceeding  for
dissolution,  liquidation or winding up of Tenant and such  jurisdiction  is not
relinquished or vacated within sixty (60) days.

          H. If Tenant makes an assignment for the benefit of its creditors.

          I. If Tenant  fails to occupy and operate the business in the Premises
for ten (10) consecutive  days,  unless  operation is impracticable  for reasons
beyond control of Tenant.

     19.2  RE-ENTER OF PREMISES.  Upon the  occurrence  of any such  Event(s) of
Default  and at any time  thereafter,  Landlord  shall  have the  right,  at its
election, to re-enter the Premises, or any part thereof,  either with or without
process of law, and to expel,  remove and evict Tenant and all persons occupying
or upon the same under  Tenant,  using such force as may be lawful and necessary
in so doing,  and to possess the  Premises and enjoy the same as in their former
estate and to take full  possession  of and control  over the  Premises  and the
buildings and  improvements  thereon and to have, hold and enjoy the same and to
receive all rental income of and from the same. No reentry by Landlord  shall be
deemed an  acceptance  of a  surrender  of this  Lease,  nor shall it absolve or
discharge  Tenant from any liability  under this Lease.  Upon such reentry,  all
rights of Tenant to occupy or possess the Premises shall cease and terminate.

     19.3 LEASE TERMINATION. Upon the occurrence of any such Event(s) of Default
and at any time thereafter, Landlord shall have the right, at its election, with
or without  re-entry as  provided in Section  19.2,  to give  written  notice to
Tenant  stating that this Lease shall  terminate  on the date  specified by such
notice,  and upon the date  specified  in such  notice  this  Lease and the Term
hereby demised and all rights of Tenant  hereunder  shall  terminate.  Upon such
termination, Tenant shall quit and peacefully surrender to Landlord the Premises
and the buildings and improvements then situated thereon.

     19.4  RELETTING.  At any time and from time to time  after  such  re-entry,
Landlord may relet the Premises and the buildings and improvements  thereon,  or
any part thereof,  in the name of Landlord or otherwise,  for such term or terms
(which  may be  greater  or less than the  period  which  would  otherwise  have
constituted  the  balance  of the Term of this  Lease),  and on such  conditions
(which may include  concessions  or free rental) as Landlord,  in its reasonable
discretion,  may  determine  and may collect  and receive the rental  therefore.
However,  in no event  shall  Landlord  be under  any  obligation  to relet  the
Premises and the buildings and improvements  thereon,  or any part thereof,  and
Landlord  shall in no way be  responsible  or liable for any failure to relet or
for any failure to collect any rental due upon any such  reletting.  Even though
it may relet the Premises, Landlord shall have the right thereafter to terminate

                                       18
<PAGE>
this  Lease  and all of the  rights of  Tenant  in or to the  Premises.  Nothing
contained in the foregoing shall be deemed a waiver or  relinquishment by Tenant
of any duty imposed by law on Landlord to mitigate its damages.

     19.5 SURVIVAL OF LIABILITY.  Unless  Landlord shall have notified Tenant in
writing that it has elected to terminate this Lease,  no such re-entry or action
in lawful  detainer or otherwise  to obtain  possession  of the  Premises  shall
relieve Tenant of its liability and obligations  under this Lease;  and all such
liability and  obligations  shall survive any such reentry.  In the event of any
such reentry,  whether or not the Premises and the  buildings  and  improvements
thereon,  or any part  thereof,  shall  have  been  relet,  Tenant  shall pay to
Landlord the entire rental and all other  charges  required to be paid by Tenant
up to the time of such reentry of this Lease, and thereafter  Tenant,  until the
end of what  would  have  been the Term of this  Lease  in the  absence  of such
reentry,  shall be liable to Landlord, and shall pay to Landlord, as damages for
Tenant's default:

          A. The amount of Rent and  Additional  Charges  which would be payable
under this Lease by Tenant if this Lease were still in effect, less

          B.  The  net  proceeds  of  any  reletting,  after  deducting  all  of
Landlord's  expenses  in  connection  with  such  reletting,  including  without
limitation  all  repossession  costs,  brokerage  commissions,  legal  expenses,
attorneys'  fees,   alteration  costs  and  expenses  of  preparation  for  such
reletting.

          Tenant  shall be liable  for and pay such  damages  to  Landlord  on a
monthly  basis on the first day of each month and Landlord  shall be entitled to
recover from Tenant monthly as the same shall arise. The excess,  if any, in any
month or months, of the net proceeds described in this subparagraph (B) actually
received  by  Landlord  over the  Rental and  Additional  Charges  described  in
subparagraph (A) above shall belong to Landlord, provided that such excess shall
be credited and applied against Tenant's future  obligations  arising under this
Section  19.5 as the same become due and payable by Tenant  hereunder,  and that
Tenant   shall   remain   liable  for  future   deficiencies,   as   applicable.
Notwithstanding any such reentry without  termination,  Landlord may at any time
thereafter,  by written  notice to  Tenant,  elect to  terminate  this Lease for
Tenant's previous breach.

     19.6  CUMULATIVE  REMEDIES.  Each  right and remedy of  Landlord  or Tenant
provided  for in this Lease shall be  cumulative  and in addition to every other
right or remedy  provided for in this Lease or now or hereafter  existing at law
or in equity or by statute or  otherwise;  and the  exercise or beginning of the
exercise  by  Landlord  or Tenant of any one or more of such  rights or remedies
shall not preclude the  simultaneous  or later exercise by Landlord or Tenant of
any or all other rights or remedies  provided for in this Lease now or hereafter
existing at law or in equity or by statute or otherwise.

                                       19
<PAGE>
     19.7 SUBLESSEE DEFAULTS. Any violation of any covenant or provision of this
Lease,  whether  by act or  omission,  by any  sublessee  or any  other  persons
occupying any portion of the Premises under the rights of Tenant shall be deemed
a violation of such provision by Tenant and a default under this Lease. Any such
violation shall not be deemed to be a default hereunder if and so long as Tenant
in good faith and at its own expense  takes and  diligently  pursues any and all
steps it is  entitled  to take and  which  steps if  completed  will  cure  said
default.

     19.8 CURE PERIOD.  Notwithstanding  any other  provision  of this  Section,
Landlord agrees that if the default complained of, other than for the payment of
monies, is of such a nature that the same cannot be cured within the twenty (20)
day period for curing as specified in the written notice relating thereto,  then
such default  shall be deemed to be cured if Tenant within such period of twenty
(20) days shall have commenced  thereof and shall continue  thereafter  with all
due  diligence to effect such cure and does so complete the same with the use of
such diligence as aforesaid.

     19.9 LATE CHARGES.  A late charge of Three Hundred Dollars  ($300.00) shall
be assessed to any payment  required to be made by Tenant to Landlord  under the
terms of this Lease not received by Landlord  within ten (10) days after its due
date  (regardless  of whether  Tenant has been given  notice of such  failure of
payment). If Tenant tenders to Landlord a check that is returned marked "NSF" or
its equivalent,  Tenant shall pay Landlord a charge in the amount of Two Hundred
Dollars ($200.00).  Tenant's failure to pay any such late charge within ten (10)
days after  Landlord's  written  demand  therefor  shall  constitute an Event of
Default  hereunder.  In addition to the payments set forth in the  preceding two
sentences,  Tenant shall pay Landlord  interest at the rate of eighteen  percent
(18%) per annum from the date any payment is due until the date such  payment is
actually received by Landlord.

                                       20
<PAGE>
SECTION 20 - CONDEMNATION.

     If title to all or any  portion  of the  Premises  is taken by a public  or
quasi-public  authority  under any statute or by right of eminent  domain of any
governmental body, whether such loss or damage results from condemnation of part
or all of the Premises,  Tenant shall not be entitled to  participate or receive
any part of the  damages  or award  except  where  the same  shall  provide  for
Tenant's moving or other reimbursable expenses, the portion thereof allocated to
the taking of Tenant's trade fixtures,  equipment and personal  property or to a
loss of  business  by Tenant.  Should any power of eminent  domain be  exercised
after Tenant is in possession, such exercise shall not void or impair this Lease
unless the amount of the Premises so taken  substantially and materially impairs
the  usefulness  of the  Premises  for the purposes for which they are leased in
which case,  either  party may cancel  this Lease by notice to the other  within
sixty (60) days after such possession.  Should only a portion of the Premises be
taken and the Premises continue to be reasonably  suitable for Tenant's use, the
Rent shall be reduced from the date of such  possession in direct  proportion to
the reduction in the square footage of the Premises.

SECTION 21 - WAIVER OF PERFORMANCE.

     No failure by Landlord or Tenant to insist upon the strict  performance  of
any  term or  condition  hereof  or to  exercise  any  right,  power  or  remedy
consequent  upon a breach  thereof and no  submission by Tenant or acceptance by
Landlord of full or partial Rent during the continuance of any such breach shall
constitute  a waiver of any such  breach or of any such  term.  No waiver of any
breach shall affect or alter this Lease (which shall  continue in full force and
effect),  or the  respective  rights of Landlord  or Tenant with  respect to any
other then-existing or subsequent breach.

SECTION 22 - REMEDIES CUMULATIVE.

     Each right,  power and remedy  provided  for in this Lease now or hereafter
existing at law, in equity or otherwise  shall be cumulative  and concurrent and
shall be in addition to every other right,  power or remedy provided for in this
Lease now or hereafter existing at law, in equity or otherwise; and the exercise
or  beginning  of the  exercise  of any  one or more of the  rights,  powers  or
remedies provided for in this Lease shall not preclude the simultaneous or later
exercise of any or all such other rights, powers or remedies.

                                       21
<PAGE>
SECTION 23 - CONVEYANCE BY LANDLORD.

     In the event  Landlord or any successor  Landlord shall convey or otherwise
dispose of the Premises, it shall thereupon be released from all liabilities and
obligations  imposed upon Landlord under this Lease (except those accruing prior
to such conveyance or other  disposition)  and such  liabilities and obligations
shall be binding  solely on the then owner of the  Premises.  This release shall
not be  applicable to any monies owed by Landlord to Tenant under any loans made
by Tenant to Landlord.

SECTION 24 - NO PERSONAL LIABILITY TO LANDLORD.

     Tenant  shall look  solely to  Landlord's  interest  in the Project for the
satisfaction  of any  judgment  or  decree  requiring  the  payment  of money by
Landlord  based upon any  default  under this  Lease,  and no other  property or
assets of Landlord,  or any partner or member of, or shareholder  in,  Landlord,
shall  be  subject  to  levy,  execution  or other  enforcement  procedures  for
satisfaction of any such judgment or decree.

SECTION 25 - ATTORNEYS' FEES.

     In the event  Landlord  brings an action to enforce  its rights  under this
Lease or to bring suit for  possession of the Premises,  for the recovery of any
sum due  hereunder,  or for any other  relief  against  Tenant,  declaratory  or
otherwise,  arising out of a breach of any term of this  Lease,  or in the event
Tenant should bring any action for any relief against  Landlord,  declaratory or
otherwise,  arising out of this Lease, the prevailing party shall be entitled to
receive from the other party reasonable attorneys' fees and reasonable costs and
expenses,  which shall be deemed to have accrued due to the commencement of such
action, such sums to be determined by the court sitting without a jury.

SECTION 26 - PROVISIONS SUBJECT TO APPLICABLE LAW.

     All rights,  powers and remedies provided herein shall be exercised only to
the extent that the exercise  thereof shall not violate any  applicable  law and
are intended to be limited to the extent necessary so that they shall not render
this Lease invalid or  unenforceable  under any  applicable  law. If any term of
this Lease shall be held to be invalid,  illegal or unenforceable,  the validity
of the other terms of this Lease shall in no way be affected thereby.

                                       22
<PAGE>
SECTION 27 - RIGHT TO CURE.

     27.1 RIGHT TO CURE TENANT'S DEFAULTS.  In the event Tenant shall breach any
term,  covenant or  provision of this Lease,  Landlord may at any time,  without
notice,  cure such  breach for the  account  and at the  expense  of Tenant.  If
Landlord at any time, by reason of such breach, is compelled to pay or elects to
pay any sum of money or to do any act that will  require  the payment of any sum
of money, or is compelled to incur any expense,  including reasonable attorneys'
fees,  incurred  in  instituting,   prosecuting  or  defending  any  actions  or
proceedings to enforce Landlord's rights under this Lease or otherwise,  the sum
or sums so paid by Landlord,  with all  interest,  costs and  damages,  shall be
deemed to be  Additional  Charges and shall be paid by Tenant to Landlord on the
first day of the month  following  the incurring of such expenses of the payment
of such sums and shall  include  interest at the rate of eighteen  percent (18%)
per  annum  from the date  Landlord  makes a  payment  until  Tenant  pays  such
Additional Charges in full.

     27.2 RIGHT TO CURE LANDLORD'S DEFAULTS.  In the event Landlord shall breach
any term,  covenant or provision of this Lease,  Tenant may at any time, without
notice,  cure such breach for the account  and at the  expense of  Landlord.  If
Tenant at any time,  by reason of such breach,  is compelled to pay or elects to
pay any sum of money or to do any act that will  require  the payment of any sum
of money, or is compelled to incur any expense,  including reasonable attorneys'
fees,  incurred  in  instituting,   prosecuting  or  defending  any  actions  or
proceedings to enforce Landlord's rights under this Lease or otherwise,  the sum
or sums so paid by Tenant, with all interest,  costs and damages,  shall be paid
by Landlord to Tenant on the first day of the month  following  the incurring of
such expenses of the payment of such sums and shall include interest at the rate
of eighteen percent (18%) per annum from the date Landlord makes a payment until
Landlord pays such additional charges in full.

SECTION 28 - NOTICES.

     Any notice to be given by Landlord or Tenant  shall be given in writing and
delivered  in person  or by  overnight  mail  service  to  Landlord  or  Tenant,
forwarded  by  certified  or  registered  mail,  postage  prepaid,  or sent  via
facsimile  transmission,  to the  address  indicated  in the  Fundamental  Lease
Provisions,  unless the party  giving  any such  notice  has been  notified,  in
writing,  of a change of address.  Any such notice shall be deemed effective (a)
upon receipt or refusal to accept delivery, if personally delivered;  (b) on the
next business day following delivery by the overnight  courier;  (c) in the case
of certified mailing, on the date of actual delivery as shown by the addressee's
receipt; or (d) in the case of facsimile  transmission,  upon receipt (a written
confirmation of successful  transmission from the transmitting facsimile machine
being prima facie evidence of such receipt). Burden of proof of delivery is upon
the sender.

                                       23
<PAGE>
SECTION 29 - SIGNS.

     Tenant shall not place, alter, exhibit,  inscribe, paint or affix any sign,
awning,  canopy,  advertisement,  notice or other  lettering  on any part of the
Premises,  or of the building of which the Premises is a part, unless such signs
comply with applicable ordinances or other governmental restrictions and rules.

SECTION 30 - INSPECTION AND PRESENTING FOR SALE OR LEASE.

     Upon not less than two (2)  business  days notice to Tenant,  Landlord  may
inspect the  Premises  so that  Landlord  or its lender can  determine  that the
Premises is being  maintained  in good  repair and  condition.  Landlord  hereby
reserves the right during usual business hours to enter the Premises and to show
the same for purposes of sale,  lease or  mortgage,  and during the last six (6)
months of the term of this Lease, or the extension thereof,  to exhibit the same
to any prospective tenant, and to display appropriate signage during the six (6)
month  period  for  such  sale or lease  which  signage  does  not  unreasonably
interfere with Tenant's business.  Prospective  purchasers or tenants authorized
by Landlord may inspect the Premises during reasonable hours at any time.

SECTION 31 - ESTOPPEL CERTIFICATE.

     Tenant will execute,  acknowledge and deliver to Landlord,  within five (5)
business days following request therefor, a certificate certifying (a) that this
Lease is  unmodified  and in full force (or,  if there have been  modifications,
that the  Lease is in full  force and  effect,  as  modified,  and  stating  the
modifications);  (b) the dates,  if any, to which Rent,  Additional  Charges and
other  sums  payable  hereunder  have been  paid;  (c) that no  notice  has been
received  by  Tenant  of any  default  which  has not been  cured,  except as to
defaults  specified  in such  certificate;  and (d) subject to Section 33 below,
this Lease is and shall be  subordinate to any existing or future deed of trust,
mortgage or security  agreement  placed upon the  Premises or the Project by the
Landlord or owner of the Property.  Any claim of Tenant in  contradiction of any
of the foregoing  matters must be set forth with specificity in the certificate.
Any  such  certificate  may be  relied  upon  by any  prospective  purchaser  or
encumbrancer  of the Premises or any part thereof.  Tenant's  failure to deliver
such  certificate  within the time  permitted  hereby shall be  conclusive  upon
Tenant  that this  Lease is in full force and  effect,  except to the extent any
modification has been represented by Landlord, and there are no uncured defaults
in Landlord's performance, and that not more than one month's Rent has been paid
in advance.  In  addition,  at  Landlord's  option,  after  notice to Tenant and
expiration of applicable  grace period under this Lease,  such failure of Tenant
to  deliver  such  certificate  shall  constitute  an Event of  Default.  Tenant
acknowledges  and agrees  that the  promise to issue  such  statements  pursuant
hereto are a material  consideration  inducing Landlord to enter into this Lease
and that the breach of such  promise  shall be deemed a material  breach of this
Lease.

                                       24
<PAGE>
SECTION 32 - RECORDING.

     This Lease may not be  recorded by any means,  without the express  written
consent of  Landlord  and Tenant.  However,  a  Memorandum  of Lease in the form
attached as Exhibit B shall be executed and recorded.

SECTION 33 - SUBORDINATION AND NON-DISTURBANCE.

     This Lease is hereby  declared to be subject and subordinate to the lien of
any present or future encumbrance or encumbrances upon the Premises irrespective
of the time of execution or the time of  recording  of any such  encumbrance  or
encumbrances.  Landlord shall obtain for Tenant a  non-disturbance  agreement in
recordable form from (i) any lender which has a lien on the Premises,  now or in
the  future.  This  subordination  is  subject  to the  right of  Tenant  upon a
foreclosure  or other action taken under any mortgage by the holders  thereof to
have this  Lease and the  rights of Tenant  hereunder  not be  disturbed  but to
continue  in full  force and  effect so long as Tenant  shall not be in  default
hereunder.  The word "encumbrance" as used herein includes  mortgages,  deeds of
trust or other similar instruments, and modifications,  extensions, renewals and
replacements  thereof,  and any and all advances  thereunder.  Tenant may record
such subordination and non-disturbance agreement.

SECTION 34 - MISCELLANEOUS.

     34.1   DEFINITION  OF  TENANT.   The  Term  "Tenant"  shall  include  legal
representatives, successors and permitted assigns. All covenants herein shall be
made binding upon Tenant and  construed to be equally  applicable to and binding
upon its agents,  employees and others  claiming the right to be in the Premises
or in the building or in the building through, under or above Tenant.

     34.2 TENANT.  If more than one individual,  firm, or corporation shall join
as Tenant,  singular context shall be construed to be plural wherever  necessary
and the covenants of Tenant shall be the joint and several  obligations  of each
party signing as Tenant and when the parties signing as Tenant are partners,  it
shall be the obligation of the firm and of the individual members thereof.

     34.3 GENDER AND NUMBER.  Whenever from the context it appears  appropriate,
each item stated in the singular shall include the plural and vice versa and the
masculine,  feminine, or neuter form shall included the masculine,  feminine and
neuter forms.

     34.4 MODIFICATIONS AND WAIVERS. No change,  modification,  or waiver of any
provision of this Lease shall be valid or binding  unless it is in writing dated
after the date hereof and signed by the parties  intended to be bound. No waiver
of any breach, term, or condition of this Lease by either party shall constitute
a subsequent waiver of the same or any other breach, term, or condition.

                                       25
<PAGE>
     34.5  BINDING  EFFECT.  This Lease shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.  This provision  shall not be deemed to grant Tenant any
right to assign this Lease or sublet the Premises or any part thereof other than
as provided in this Lease.

     34.6  SEVERABILITY.  To the fullest extent  possible each provision of this
agreement  shall be  interpreted  in such fashion as to be  effective  and valid
under  applicable  law.  If any  provision  of this  Lease is  declared  void or
unenforceable  with respect to particular  circumstances,  such provision  shall
remain in full force and effect in all other circumstances.  If any provision of
this Lease is declared void or  unenforceable,  such  provision  shall be deemed
severed from this Lease, which shall otherwise remain in full force and effect.

     34.7 GOVERNING LAW AND JURISDICTION.  Except where preempted by the laws of
the United States or the rules or regulations  of any agency or  instrumentality
thereof, this Lease is to be interpreted,  construed and governed by the laws of
the State of Arizona. The parties irrevocably and unconditionally  submit to the
exclusive  jurisdiction  of the  Superior  Court of the State of Arizona for the
County of Coconino in connection with any legal action or proceeding arising out
of or relating to this Lease and the parties waive any objection relating to the
basis  for  personal  or in rem  jurisdiction  or to  venue  which it may now or
hereafter have in any such suit, action or proceeding.

     34.8  ENTIRE  AGREEMENT.  This  instrument  constitutes  the  sole and only
agreement  between Landlord and Tenant  respecting the Premises,  the leasing of
the Premises to the Tenant,  or the Lease term herein  specified,  and correctly
sets forth the  obligations  of the  Landlord and Tenant to each other as of its
date.  Any  agreements  or  representations  by the  Landlord  to the Tenant not
expressly set forth in this  instrument  are void and  unenforceable.  All prior
agreements and  understanding of the parties with respect to such subject matter
are  hereby   superseded.   No   representations,   promises,   agreements,   or
understandings contained in this Lease regarding the subject matter hereof shall
be of any force or effect unless in writing,  executed by the party to be bound,
and dated on or  subsequent  to the date  hereof.  Captions and headings are for
convenience  only  and  shall  not  alter  any  provision  or  be  used  in  the
interpretation of this Lease.

                                       26
<PAGE>
     34.9 TIME IS OF THE ESSENCE.  Time is of the essence of this Lease and each
and every provision hereof. Any extension of time granted for the performance of
any duty under this Lease shall not be  considered  an extension of time for the
performance of any other duty under this Lease.

     34.10 BROKERS.  Each party  represents and warrants to the other party that
it has not entered into any agreement with, nor otherwise had any dealings with,
any broker or agent in  connection  or  execution of this Lease which could form
the  basis of any  claim by any such  broker  or agent  for a  brokerage  fee or
commission,  finder's  fee,  or any  other  compensation  of any kind or  nature
against the other in connection with this Leasehold.

LANDLORD:                                    TENANT:

                                             ILX RESORTS INCORPORATED,
-----------------------------------          an Arizona corporation
By: Edward John Martori

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

                                             Date:
                                                   -----------------------------

                                       27

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