[ILX LETTERHEAD]


May 15, 1997

VIA FEDERAL EXPRESS AND FACSIMILE
- ---------------------------------
Debbie Reynolds Hotel & Casino, Inc.
Debbie Reynolds Resorts, Inc.
Debbie Reynolds Management Company, Inc.
Todd Fisher
Chief Executive Officer
Debbie Reynolds Hotel & Casino, Inc.
305 Convention Center Drive
Las Vegas, Nevada 89109

Re: Cancellation of Agreement for Purchase and Sale

Dear Todd:

This letter is to serve as the required formal written notice of our election to
cancel and terminate that certain  Agreement for Purchase and Sale dated October
30, 1996, by and between ILX Incorporated (as Buyer) and Debbie Reynolds Hotel &
Casino,  Inc., and Debbie  Reynolds  Resorts,  Inc.,  (collectively  as Seller),
effective  immediately.  Since,  to the  best  of  our  knowledge,  the  subject
Agreement  was never  placed in escrow nor  executed by the Escrow Agent (and no
notice address is provided in the subject  Agreement),  we are not  transmitting
notice to Escrow Agent.

With those  formalities  behind us, and on a personal note, I want to say what a
pleasure it has been working  with  you,  David,  and the other  members of your
staff in connection with this transaction.  We remain hopeful that we will be in
a position to restructure our  relationship  along the lines we discussed in Las
Vegas  last  week,  and we are  looking  forward  to our  continued  association
relative to the Red Rock Collection line of personal care products.

If you have any questions, please don't hesitate to contact me.

Sincerely,


/s/ Joseph P. Matori
Joseph P. Matori
Chairman

Copy to: David Crabtree, Matthew Q. Callister

Copy to: Nancy Stone, Sam Ciatu