Installment Promissory Note

INSTALLMENT PROMISSORY NOTE
(AMENDED AND RESTATED)


$909,078 January 1, 1996
Phoenix, Arizona


FOR VALUE RECEIVED, the undersigned, ILX INCORPORATED, an Arizona corporation (the "undersigned"), promises to pay to the order of Edward J. Martori ("Payee"), at Phoenix, Arizona, or at such other place as the holder hereof may from time to time designate, the principal sum of Nine Hundred Nine Thousand and Seventy-Eight Dollars ($909,078), together with interest thereon as computed below, as follows:


Installments of interest only shall be payable quarterly on the first
day of January, April, July, and October of each year commencing April
1, 1996. The entire unpaid principal balance, together with all accrued
and unpaid interest thereon and other costs payable hereunder, shall be
paid in full on December 31, 1999.


Interest shall be charged on the unpaid principal balance of this Note to the date of maturity on a daily basis for the actual number of days any portion of the principal is outstanding, computed on the basis of a 360-day year, at a per annum rate (the "Note Rate") equal to eight percent (8%).


Upon maturity of this Note, Payee shall have the option to convert all or any portion of the balance outstanding hereunder into ILX Incorporated common stock at a price of $2.00 per share; provided, however, that any such exercise shall not cause Payee's interest, direct or indirect, in ILX Incorporated to exceed 50%.


The undersigned acknowledges that the undersigned has agreed to the rate of interest represented by the Note Rate, and any additional charges, costs and fees arising out of or related to the transaction of which this Note is a part, to the extent deemed to be interest under applicable law.


Each and every payment due under this Note shall be made in lawful money of the United States of America and in immediately available funds, and when made shall be fir ...