SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.1)
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ILX Incorporated
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Joseph P. Martori, President and Chairman of the Board and
Nancy J. Stone, Chief Financial Officer, Executive Vice President and Director
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
ILX INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1995
First Mailed to Shareholders on or About
May 22,1995
To the Shareholders:
Notice is hereby given that the Annual Meeting of ILX
Incorporated, an Arizona corporation (the "Company"), will be held at its
corporate headquarters, 2777 East Camelback Road, Phoenix, Arizona 85016, on the
26th day of June, 1995 at 9:30 a.m., local time, to consider and act upon the
following proposals:
(a) To elect five (5) directors to serve terms of one year, or
until their successors are duly elected and qualified.
(b) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing matters are more fully explained in the
accompanying Proxy Statement which is hereby made a part of this notice. All
common shareholders of record at the close of business on May 15, 1995, will be
entitled to vote at the meeting. All shareholders are cordially invited to
attend the meeting in person.
By order of the Board of Directors,
Stephanie D. Castronova
Secretary
Phoenix, Arizona
April 21, 1995
ILX INCORPORATED
2777 East Camelback Road
Phoenix, Arizona 85016
AMENDED PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 26, 1995
First Mailed to Shareholders on or About
May 22, 1995
The holders of the Company's common stock of record at the
close of business May 15, 1995, are entitled to vote at the Annual Meeting of
Shareholders of ILX Incorporated (the "Company"), which will be held on June 26,
1995. A Form of Proxy is enclosed for use at this meeting if you are unable to
attend in person. The persons named therein as proxies were selected by the
Board of Directors of the Company. The Proxy is solicited by the Board of
Directors of the Company and is revocable at any time before it is exercised.
The Proxy may be revoked by written instruction addressed to the Secretary of
the Company, or if a shareholder attends the meeting and wishes to vote his/her
shares in person, such shareholder may so direct the proxy judges either in
writing or orally. If a Proxy in the accompanying form is duly executed and
returned, it will be voted as specified therein. If no specification is made, it
will be voted in accordance with recommendations made by the Board of Directors.
The Proxy may, nevertheless, be revoked prior to exercise by delivering written
notice of revocation to the Secretary of the Company or by attending the meeting
and voting in person.
The cost of preparing, assembling and mailing the Notice of
Annual Meeting, Proxy Statement and Form of Proxy and the cost of further
solicitation hereinafter referred to is to be borne by the Company and is
estimated to be nominal. In addition to the use of the mails, it may be
necessary to conduct some solicitation by telephone, telegraph or personal
interview. Any such solicitation will be done by the directors, officers and
regular employees of the Company; and, in addition, banks, brokerage houses and
other custodians, nominees or fiduciaries will be requested to forward proxy
soliciting material to their principals to obtain authorization for the
execution of proxies on their behalf. The Company will not pay such persons any
compensation for soliciting proxies, but such persons will be reimbursed by the
Company for their out-of-pocket expenses incurred in connection therewith.
OUTSTANDING VOTING SECURITIES OF THE COMPANY
At the close of business on February 28, 1995, the Company had
issued and outstanding 12,406,215 shares of common stock, each share being
entitled to one vote. No other voting class of stock was then or is now
outstanding.
With respect to the election of directors, a shareholder shall
be entitled to cast a number of votes equal to the number of shares held
multiplied by the number of directorships to be filled. A shareholder may then
cast the votes for one candidate or distribute the votes among two or more
candidates. The 5 nominees receiving the most votes shall be deemed elected to
the Company's Board of Directors.
PRINCIPAL SHAREHOLDERS
The following persons own more than five percent of the
outstanding voting securities of the Company as of February 28, 1995:
Amount and
Nature of
Title Name and Address of Beneficial Percentage
of Class Beneficial Owner(1) Ownership of Class
- ------- ------------------- --------- --------
Common Edward J. Martori 6,006,632 (4) 48.42%
Common Joseph P. Martori 6,054,292 (2) (3) 48.80%
Common Martori Enterprises 6,056,474 (5) 48.82%
Incorporated
Common Alan R. Mishkin 2,551,845 20.57%
Common All Officers/Directors 6,697,101 (6) 53.18%(6)(7)
(1) Unless otherwise indicated, the business address for all listed
shareholders is c/o the Company, 2777 East Camelback Road, Phoenix, Arizona
85016.
(2) Including 5,010 shares owned by Christina Ann Martori, daughter of
Joseph P. Martori, under trust dated February 20, 1978, and 4,000 shares held by
Joseph P. Martori as custodian for his daughter, Arianne Terres Martori.
(3) Including 40,832 shares of Common Stock owned by Wedbush Securities
Inc., Custodian of IRA Contributory Plan for Joseph P. Martori, and 6,004,450
shares owned by Martori Enterprises Incorporated. Joseph P. Martori is a
shareholder in Martori Enterprises Incorporated and a cousin of Edward J.
Martori.
(4) Including 6,004,450 shares owned by Martori Enterprises
Incorporated. Edward J. Martori is a shareholder in Martori Enterprises
Incorporated and a cousin of Joseph P. Martori.
(5) Including 2,182 shares of Common Stock owned by Edward J. Martori,
49,842 shares owned by Joseph P. Martori (notes (2) and (3)) and 6,004,450 owned
by Martori Enterprises Incorporated.
(6) Shares deemed to be beneficially owned by more than one officer
and/or director were only counted once.
(7) Options for 187,500 shares held by directors and officers are
treated as exercised and are included in both the numerator and the denominator.
Effective December 31, 1994, Martori Enterprises Incorporated
acquired 1,144,546 shares held by Wm. Robert Burns and Paige Burns. The
management of the Company is not aware of any other change in control of the
Company which has taken place since the beginning of the last fiscal year, nor
of any contractual arrangements or pledges of securities the operation of the
terms of which may at a subsequent date result in a change in control of the
Company. Except as set forth above, management is not aware of any other person
or group of persons that owns in excess of 5% of the Company's outstanding
common stock.
ELECTION OF DIRECTORS
The entire Board of Directors is to be elected annually, with
each Director to hold office until the next annual meeting or until his
successor is elected and qualified. The persons named as proxies in the enclosed
proxy have been designated by the Board of Directors and intend to vote for the
election to the Board of Directors of the persons named below, except where
authority is withheld by a shareholder.
Each of the nominees has consented to be named herein and to
serve if elected. However, if any nominee at the time of election is unable or
unwilling to serve as a Director or is otherwise unavailable for election, the
shares represented by proxies will be voted for the election of such other
person as the Board of Directors may designate or, in the absence of such
designation, for a nominee selected by the proxy agents named in the enclosed
form of proxy.
Certain information concerning the Director nominees as of
February 28, 1995, is set forth below. Except as set forth herein, none of the
nominees are officers or directors of any other publicly-owned corporation or
entity.
Director Number Percentage
Name Age Since of Shares of Total
- ---- --- ---- --------- --------
Edward J. Martori 42 1993 6,006,632 (1) 48.42%
Joseph P. Martori 53 1986 6,054,292 (1) 48.80%
Ronald D. Nitzberg 63 1986 213,031 (2) 1.71%(2)(5)
Nancy J. Stone 37 1989 289,586 (3)(4) 2.30%(3)(4)(5)
Alan J. Tucker 48 1992 197,000 (3) 1.58%(3)(5)
(1) See notes to principal shareholders listing.
(2) Including options to purchase 20,000 shares from the Company
at $1.625 per share.
(3) Including options to purchase 25,000 shares from the Company
and 50,000 shares from Martori Enterprises Incorporated at
$1.625 per share.
(4) Including options of Michael W. Stone, her husband, to
purchase 87,500 shares from the Company at $1.625 per share.
(5) The nominee's options to purchase shares are treated as
exercised with respect to that nominee and are included in
both the numerator and denominator.
Edward J. Martori has been a director of the Company since
December 1993. He has been employed as President of Martori Enterprises
Incorporated, a principal shareholder of the Company, since 1987. He is a cousin
of Joseph P. Martori.
Joseph P. Martori is a founder of the Company and has been a
director since its inception. He has been Chairman of the Board of Directors
since September 1991, and President since January 1, 1994. From 1985 until
January 1994, he was a member of the Phoenix, Arizona law firm of Brown & Bain,
P.A., where he was the Chairman of the Corporate, Real Estate and Banking
Department. Brown & Bain, P.A. currently serves as legal counsel for the
Company. He is a cousin of Edward J. Martori.
Ronald D. Nitzberg is a founder of the Company and has been a
director since its inception. He was the Company's President and chief executive
officer from inception until May 1988. He was Chairman of the Board of Directors
of the Company from June 1988 through March 1989. Since May 1988, Mr. Nitzberg
has been a consultant to the timeshare industry and was Executive Vice President
of Debbie Reynolds Resort, Inc., a Nevada corporation, from 1993 until March
1995.
Nancy J. Stone has been a director of the Company since April
1989, Executive Vice President since July 1993, and was President of the Company
from January 1990 until April 1992. From 1992 until June 1993 she was on the
faculty of North Central College in Naperville, Illinois. From April 1987 until
December 1989, she served as the Company's Vice President of Finance and
Secretary. She is certified as a public accountant in the States of Arizona and
Illinois.
Alan J. Tucker has been a director of the Company since
February 1992, and Executive Vice President since September 1991. He was Vice
President from January 1990 until August 1991, and has been Project Director of
Sedona Vacation Club timeshare sales since March 1989.
Board of Directors and Committee Meetings
The Board of Directors of the Company met four times during
the fiscal year ending December 31, 1994. All incumbent directors attended each
of the meetings of the Board of Directors and the Committees, if any, upon which
such director served during the 1994 fiscal year.
The Company's Board of Directors maintains an Audit and
Finance Committee, a Stock Option Committee, a Compensation Committee and an
Executive Committee. There is no nominating committee or any committee
performing that function.
Audit and Finance Committee
The Audit and Finance Committee is comprised of Mr. Ronald D.
Nitzberg and Ms. Nancy J. Stone. The Audit and Finance Committee met once during
fiscal year 1994. The functions of the Audit and Finance Committee are to make
recommendations to the Board of Directors as to the selection of the firm of
independent public accountants, review the results of the audit for each fiscal
year, and oversee the Company's policies concerning any sensitive payments or
conflicts of interest.
Stock Option Committee
The Stock Option Committee is comprised of Messrs. Joseph P.
Martori and Edward J. Martori and Ms. Nancy J. Stone. The Committee met twice
during fiscal year 1994. The function of the Committee is to provide
recommendations to the Board of Directors regarding the granting of stock
options to key employees and directors of the Company.
Compensation Committee
The Compensation Committee is comprised of Messrs. Joseph P.
Martori, Edward J. Martori, and Ronald Nitzberg. The Committee met once during
fiscal year 1994. The function of the Committee is to provide recommendations to
the Board of Directors regarding compensation changes for executive officers of
the Company and regarding compensation policies and practices of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of transactions entered into on
behalf of the Company or its subsidiaries since January 1, 1994, in which the
amount involved exceeded $60,000 and in which officers, directors, nominees
and/or greater than 5% beneficial owners of the Company's common stock had, or
will have, a direct or indirect material interest.
On September 9, 1991, the Company entered into a guarantee fee
agreement with Arthur J. Martori, then an affiliate, and Alan R. Mishkin, who
guaranteed a loan to Los Abrigados Limited Partnership ("LAP") in the amount of
$5,000,000 from The Valley National Bank of Arizona. The affiliates earned a
guarantee fee of $780,000, payable quarterly at the rate of $100 for each Los
Abrigados timeshare interest sold. During 1994, LAP paid $93,564 related to this
fee. Also, in conjunction with the September 9, 1991 transaction, the affiliates
were assigned $185,000 of amounts held back by financial institutions as
collateral on the sale of consumer notes receivable. During 1994, the Company
paid $48,760 related to these holdbacks. Effective November 11, 1993, Martori
Enterprises Incorporated acquired all of Arthur J. Martori's interest in ILX and
its subsidiaries, including his interests in guarantee fees and holdbacks, and
his interests in notes receivable, described below. Joseph P. Martori and Edward
J. Martori are shareholders of Martori Enterprises Incorporated.
Certain affiliates of the Company held a 6% interest in LAP as
Class A limited partners (Edward J. Martori 5%, Martori Enterprises Incorporated
.5%, Wedbush Morgan Securities IRA for Joseph P. Martori .25% and Joseph P.
Martori, Trustee .25%). Class A partners Edward J. Martori and Martori
Enterprises Incorporated were entitled to receive a 13.5% preferred return and
Class A partners Joseph P. Martori as Trustee and Wedbush Morgan Securities for
the benefit of Joseph P. Martori were entitled to receive a 22% preferred
return. During fiscal 1994, payments of $103,000 were made to the above
described Class A partners.
In October 1994, the Company acquired all of the Class A
partnership interests in LAP for $1,587,000, effective July 1, 1994. The
interests held by Martori Enterprises Incorporated, Edward J. Martori, Joseph P.
Martori as Trustee and Wedbush Morgan Securities for the benefit of Joseph P.
Martori were acquired in exchange for notes totaling $1,215,750 and cash of
$6,000. During fiscal year 1994, no principal or interest payments were made on
the notes to the affiliated Class A partners.
Martori Enterprises Incorporated and Alan R. Mishkin hold a
21.5% interest in LAP as Class B limited partners. The Class B Partners are
entitled to 13.5% interest on their original Class B LAP capital contributions
of $250,000 each. During fiscal year 1994, payments of $36,259 were made to the
Class B partners.
The Company leases from affiliates 41 timeshare interests in
the Stonehouse at the Los Abrigados resort under a September 1, 1991, license
agreement which provides for a payment of $250 per calendar quarter per
Stonehouse interval for the five year period commencing October 1, 1991. During
1994, lease payments totaling $41,000 were made to Martori Enterprises
Incorporated, Alan R. Mishkin, Wm. Robert Burns and certain affiliates of Wm.
Robert Burns.
On September 10, 1991, the Company entered into a management
agreement with LAP whereby the Company was appointed the exclusive managing and
operating agent for the resort and for the timeshare sales office located at the
resort. The Company was also appointed as the exclusive agent for the marketing
of timeshare interests of LAP. The agreement provides for fees of $25,000 per
month for a term of five years with automatically renewable five-year terms.
Management fees in the amount of $300,000 were earned by the Company during the
1994 fiscal year.
In August 1992, the Company issued to Martori Enterprises
Incorporated, as agent for Edward J. Martori, Martori Enterprises Incorporated,
Arthur J. Martori and Alan R. Mishkin, a $770,000 promissory note bearing
interest at 14%, collateralized by $810,630 in notes receivable. The promissory
note was issued to reduce Class A limited partners' capital contributions by
$500,000, Class A priority returns by $149,954, Class B accrued interest by
$73,772 and loan guarantee fees by $46,274. Principal payments of $188,381 and
interest payments of $61,046 were made during the 1994 fiscal year.
In May 1993, the Company borrowed $150,000 from Martori
Enterprises Incorporated. The note bears interest at 16%, has a term of four
years and was collateralized by approximately $199,000 in notes receivable.
During fiscal 1994, principal payments of $30,512 and interest payments of
$18,439 were paid on the note.
In June 1993, the Company borrowed $100,000 form Martori
Enterprises Incorporated. The note bears interest at 16%, has a term of three
years and was collateralized by furniture and equipment. Principal payments of
$50,008 and interest payments of $8,749 were made on the note during fiscal year
1994.
In July 1993, the Company issued 102,000 shares of restricted
common stock, valued at $1 per share, to Alan R. Mishkin in consideration for
accrued and future guarantee fees and Class B interest. The $102,000 was
initially reflected as payment of accrued Class B interest ($11,016) and accrued
and future guarantee fees ($90,984). During 1994, $36,259 originally applied to
future guarantee fees was reclassified as payment of Class B interest.
During fiscal 1994, the Company leased a condominium adjacent
to the Golden Eagle Resort from Martori Enterprises Incorporated, Edward J.
Martori and Joseph P. Martori. The Company paid the debt service, property taxes
and operating expenses in exchange for use of the unit. The debt service paid by
the Company in 1994 was $11,126. On December 31, 1994, the Company purchased the
condominium for $104,915, the approximate assessed value as determined by the
county assessor's most recent assessment. The Company paid cash of $32,643 and
assumed the existing mortgage.
In February 1994, the Company acquired the minority interests
in Red Rock Collection Incorporated, an Arizona corporation ("RRC"), held by
Alan R. Mishkin and Martori Enterprises Incorporated for consideration of
123,000 shares of restricted ILX common stock and $300,000 in promissory notes
which bear interest at 10% and are payable over a thirty six month period.
During fiscal year 1994, principal payments of $74,574 and interest payments of
$22,228 were made on the notes.
In September 1994, the Company, through Genesis Investment
Group, Inc., assumed from Martori Enterprises Incorporated an existing option
agreement between Martori Enterprises Incorporated and a non-affiliated company
which owns 667 weeks at Los Abrigados resort. The option agreement provides that
the Company must, if requested, purchase at $2,100 per interval, 25 intervals
per month commencing July 1994, and one-half of the intervals remaining on an
annual basis. The agreement also provides the Company the right to acquire the
intervals for $2100 each, commencing July 1995. No intervals have been acquired
by the Company to date.
The law firm of Brown & Bain, P.A. has served as legal counsel to the
Company since the Company's inception. Joseph P. Martori, Chairman of the
Company's Board of Directors since September 1991, President since November 1,
1993, and director since inception, was the Chairman of the Corporate, Real
Estate and Banking Department of Brown & Bain, P.A. until January 1994. George
C. Wallach, Executive Vice President of the Company since February 1995, was a
partner in Brown & Bain, P.A. until he joined the Company. The Company paid
Brown & Bain, P.A. $159,305 during 1994 for legal services provided in 1994 and
prior years. The Company anticipates that it will retain Brown & Bain, P.A. to
provide legal services during the 1995 fiscal year.
The above-described transactions are believed to be on terms no less
favorable to the Company than those available in arms' length transactions with
unaffiliated third parties. Each transaction has been approved by independent
directors of the Company who are not parties to the transaction.
<TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as to the
securities of the Company beneficially owned by (i) each director and nominee,
(ii) each named executive officer and (iii) all directors and officers as a
group.
<CAPTION>
Amount and Nature
Title of Name of Beneficial of Beneficial Ownership Percentage
Class Owner of Common Shares of Class
- -------- ------------------ ----------------------- ----------
<S> <C> <C> <C>
Common Edward J. Martori 6,006,631(1) 48.42%
Common Joseph P. Martori 6,054,292(1)(2)(3) 48.80%
Common Ronald J. Nitzberg 213,031(4) 1.71%(9)
Common Nancy J. Stone 289,586(5)(6) 2.30%(9)
Common Alan J. Tucker 197,000(5) 1.58%(9)
Common Luis C. Acosta 9,900 .08%
Common Michael W. Stone 289,586(7) 2.30%(9)
Common George C. Wallach 1,000 .01%
Common Edward S. Zielinski 20,110(8) .16%(9)
Common Directors and Officers as a group 6,697,101(11) 53.18%(10)(11)
(1) Including 6,004,450 shares owned by Martori Enterprises Incorporated.
Edward J. Martori is a shareholder in Martori Enterprises Incorporated
and a cousin of Joseph P. Martori.
(2) Including 5,010 shares owned by Christina Ann Martori, daughter of
Joseph P. Martori, under trust dated February 20, 1978, and 4,000
shares held by Joseph P. Martori custodian for his daughter, Arianne
Terres Martori.
(3) Including 40,832 shares of common stock owned by Wedbush Morgan
Securities Inc., Custodian of IRA Contributory Plan for Joseph P.
Martori, and 6,004,450 shares owned by Martori Enterprises
Incorporated and a cousin of Edward J. Martori.
(4) Including options to purchase 20,000 shares from the Company at $1.625
per share.
(5) Including options to purchase 25,000 shares from the Company and
50,000 shares from Martori Enterprises Incorporated at $1.625 per
share.
(6) Including options of Michael W. Stone, her husband, to purchase 87,500
shares from the Company at $1.625 per share.
(7) Including options to purchase 87,500 shares from the Company at $1.625
per share and shares held beneficially by his wife, Nancy J. Stone.
(8) Including options to purchase 30,000 shares from the Company at $1.625
per share.
(9) The officers' and directors' options to purchase shares from the
Company are treated as exercised with respect to that officer or
director and are included in both the numerator and the denominator.
(10) Options to purchase from the Company 187,500 shares by directors and
officers are treated as exercised and are included in both the
numerator and the denominator.
(11) Shares deemed to be beneficially owned by more than one officer and/or
director were only counted once.
</TABLE>
EXECUTIVE MANAGEMENT
The following table sets forth certain information concerning the
Company's executive officers. None of the executive officers are directors or
officers of any other publicly owned corporation or entity.
Name Age Postion/Term
- ---- --- ------------
Joseph P. Martori 53 President November 1993 to Present
Nancy J. Stone 37 Executive Vice President July 1993 to
Present
Alan J. Tucker 48 Executive Vice President September 1991
to Present, Vice President January 1990
to August 1991
Luis C. Acosta 43 President of Varsity Clubs of America
Incorporated November 1993 to Present
Michael W. Stone 40 President of Red Rock Collection
Incorporated July 1993 to Present
George C. Wallach 58 Executive Vice President February 1995
to Present
Edward S. Zielinski 43 Senior Vice President Janauary 1994 to
Present, Vice President December 1992 to
December 1993
Joseph P. Martori is a founder of the Company and has been a
director since its inception. He has been Chairman of the Board of Directors
since September 1991, and President since January 1, 1994. From 1985 until
January 1994, he was a member of the Phoenix, Arizona law firm of Brown & Bain,
P.A., where he was the Chairman of the Corporate, Real Estate and Banking
Department. Brown & Bain, P.A. currently serves as legal counsel for the
Company.
Nancy J. Stone has been a director of the Company since April
1989, Executive Vice President and Chief Financial Officer since July 1993, and
was President of the Company from January 1990 until April 1992. From 1992 until
June 1993, she was on the faculty of North Central College in Naperville,
Illinois. From April 1987 until December 1989, she served as the Company's Vice
President of Finance and Secretary. She is certified as a public accountant in
the States of Arizona and Illinois. Ms. Stone is the wife of Michael W. Stone,
President of Red Rock Collection Incorporated.
Alan J. Tucker has been a director of the Company since
February 1992, and Executive Vice President since September 1991. He was Vice
President from January 1990 until August 1991, and has been Project Director of
Sedona Vacation Club timeshare sales since March 1989.
Luis C. Acosta has been President and Chief Operating Officer
of Varsity Clubs of America Incorporated since November 1993. From January 1993
until November 1993, he was President of Destination Guild, a Nebraska
corporation, which develops and manages resort hotels. From 1990 to 1993, he was
Vice President of Development for Hilton Hotels Corporation, which develops,
owns and operates hotels, resorts and casinos. From 1985 to 1990, he was Vice
President of Development and Senior Vice President of Development for Ramada,
Inc., a Delaware corporation engaged in the development and management of
hotels, resorts and casinos.
Michael W. Stone has been President of Red Rock Collection
Incorporated since July 1993. From 1992 to 1993, he was Vice President of S.L.
Cooper and Associates, a Virginia based company, engaged in distribution of
filing and material handling equipment, and was responsible for new product
development and introduction, distribution and sales. From 1987 to 1992, he was
National Sales Manager of Richards-Wilcox, an Aurora, Illinois division of White
Consolidated Industries, engaged in manufacturing and sales of office and
material handling equipment. Mr. Stone is the husband of Nancy J. Stone,
Executive Vice President and Chief Financial Officer of ILX Incorporated.
George C. Wallach has been Executive Vice President since
February 1995. From February 1986 until January 1995, he was a member and
director of the Phoenix, Arizona law firm of Brown and Bain, P.A., specializing
in real estate and business transactions.
Edward S. Zielinski has been Senior Vice President since
January 1994, Vice President and General Manager of Los Abrigados resort since
December 1992, and Executive Assistant Manager of Los Abrigados resort since
November 1988.
<TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation paid by the
Company for the years 1992-1994 to the principal executive officer and executive
officers that received compensation in excess of $100,000.
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation Compensation(2)
Annual Compensation Awards All Other
-------------------------------- ---------------------- ---------------
Securities Underlying
Year Salary Bonus Stock Options (#)
---- ------ ----- ----------------------
<S> <C> <C> <C> <C> <C>
Joseph P. Martori
President and Principal 1994 $200,875 - - -
Executive Officer 1993 $ 30,709 - - -
1992 - - - -
Alan J. Tucker
Executive Vice President 1994 $148,667 $ 30,000 25,000 (1) -
1993 $ 75,000 $105,737 - -
1992 $ 75,000 $100,468 - -
Luis C. Acosta
President of Varsity 1994 $114,231 - - -
Clubs of America 1993 $ 9,615 - -
Incorporated 1992 - - -
(1) Excludes options to purchase 50,000 shares from Martori
Enterprises Incorporated for $1.625 per share.
(2) Excludes Profit Sharing Plan contributions on behalf of the
executive officer. During 1994 the Company adopted a Profit
Sharing Plan and declared a 1994 contribution which will be
funded in 1995. The allocation of the 1994 contribution among
participants has not yet been made. No executive officer is
expected to be allocated more than $2,500 for the 1994 plan
year.
</TABLE>
<TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information on stock option
grants to executive officers of the Company during 1994 under the Company's 1992
Incentive Stock Option Plan. No stock appreciation rights were granted in 1994.
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term
- --------------------------------------------------------------------------------------------- ----------------------
Number of
Securities % of Total
Underlying Options Market Price
Options Granted to Exercise on Date of
Granted Employees Price Grant Expiration 5% 10%
Name (#) in FiscalYear ($/Share) ($/Share) Date ($) ($)
- -------------- --- -------------- --------- --------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Alan J.
Tucker 25,000 8.12% $1.625 $1.375 3/28/2004 $15,368 $48,535
</TABLE>
<TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END
OPTION VALUES
The following table sets forth information regarding option exercises by
executive officers during 1994 and unexercised options held by executive
officers at December 31, 1994.
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Fiscal
Year-End (#) Year-End ($)
----------------- -----------------
Shares
Acquired on Value Exercisable (E) Exercisable (E)
Name Exercise (#) Realized ($) Unexercisable (U) Unexercisable (U)
---- ------------ ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Alan J. Tucker 0 $0 0(E) $0
25,000(U) $0
</TABLE>
OTHER COMPENSATION
The Company's policy is to pay a fee per Board of Directors
meeting attended by directors who are not employees of the Company, and
reimburse all directors for actual expenses incurred in connection with
attending meetings of the Board of Directors. The 1994 directors' fees were $250
per meeting. The Directors agreed to waive all meeting fees earned in 1994.
Commencing in 1995, the fee per Board of Directors meeting attended by a
non-employee director will be $1,000.
During 1994, non-employee director Ronald Nitzberg was granted
an option to purchase 20,000 shares of common stock at the price of $1.625 per
share. The market price on the date of grant was $1.375 and the options will
expire in 2004 or six months from the date Mr. Nitzberg ceases to be a director,
whichever is earlier. The options were granted as compensation for consulting
services provided in 1993 and 1994
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee and the Stock Option Committee of the Board
of Directors has furnished the following report on executive compensation:
It is the Company's policy to compensate its executives in a
manner which aligns their interests with the long-term interests of the
Company's shareholders. Through its compensation policies the Company
also seeks to attract and retain senior executives and reward
executives for their collective and individual contribution to the
leadership and short-term and long-term growth and profitability of the
Company. The Company compensates its executives through a mixture of
base salary, discretionary bonuses, and discretionary stock option
grants. The principal component of executive compensation to date has
been base salary.
Base Salary. Each Company executive receives a base salary which is
intended to be competitive with similarly situated executives in
companies of a similar size and nature. In setting base salaries for
1994, the Compensation Committee considered the executive's position
relative to other executives, overall responsibility, the achievement
of past performance objectives, and compensation information gleaned
informally with respect to similar companies.
The salary of the Company's Chief Executive Officer was set
through negotiations with the Board of Directors at an annual rate of
$200,000 plus annual cost of living increases. Accordingly, in November
1994, Mr. Martori's salary was increased to $205,000. Mr. Martori's
future salary will be subject to review by and negotiation with the
Company's Board of Directors based upon achievement of subjective and
objective performance factors, with the final salary determination to
reflect a subjective judgement of the Board of Directors.
Discretionary Options. From time to time, the Company has granted stock
options to executives to recognize significant performance and to
encourage them to take an equity stake in the Company. In making past
option awards, the Compensation Committee has reviewed the overall
performance of the executives and the Company has awarded options on a
discretionary basis, based upon a largely subjective determination.
During 1994, 167,500 stock options were granted to Executive Officers.
Bonuses. From time to time, the Company has granted bonuses to
executive officers who, in the discretion of the Company's Compensation
Committee, have performed in a manner meriting recognition above and
beyond their base salary. In addition, during 1993, the Company
instituted a performance bonus for one of its principal executives with
responsibility for the Company's Varsity Clubs Program, which
performance bonus will be tied to the achievement of certain defined
key objectives. Specifically, a bonus of between $30,000 and $50,000
will be granted upon the opening of each Varsity Clubs site and, in
addition, on an annual basis, a bonus of ten percent of the net income
of Varsity Clubs of America Incorporated will be granted and payable in
cash or, at the employee's option, in common stock at a price tied to
the price of the stock on the first business day of the preceding
calendar year. No such bonus has been earned or paid to date. The
Compensation committee may, in the future, consider the use of similar
performance-based bonuses for other executives.
Profit Sharing Plan. In 1994 the Company adopted a Profit Sharing Plan
for the benefit of all employees, including executive officers. A
contribution of $75,000 was declared for the 1994 fiscal year and will
be funded in 1995. Allocation among the participants of the amount to
be contributed has not yet occurred. The allocation is not expected to
exceed $2,500 for any executive officer.
Compliance with Section 162(m) of Internal Revenue Code. Section 162(m)
of the Internal Revenue Code limits the corporate deduction for
compensation paid to the Named Officers identified in the Company's
proxy statement to $1,000,000 per year, unless certain requirements are
met. The Compensation Committee has reviewed the impact of this new Tax
Code provision on the current compensation package for executives. No
executives will exceed the applicable limit. The Compensation Committee
will continue to review the impact of this Tax Code Section and make
appropriate recommendations to shareholders in the future.
Compensation Committee Interlocks and Insider Participation
Mr. Joseph P. Martori is a member of the Compensation Committee and
Stock Option Committee and Ms. Nancy J. Stone is a member of the Stock
Option Committee. Mr. Martori and Ms. Stone are officers of the
Company.
This report is made by Edward J. Martori, Joseph P. Martori, Ronald D. Nitzberg,
and Nancy J. Stone.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
NASDAQ MARKET INDEX AND SIC CODE INDEX
The data below compares the cumulative total return of the Company's
common stock with the NASDAQ market index and the SIC code 701 index (hotels and
motels) from January 1, 1990 to December 31, 1994. The Company has selected SIC
code 701 based on its belief that it is the most applicable comparison, based
upon the absence of data regarding publicly owned timeshare companies which
derive substantial revenues from hotel/motel operations.
Comparison of Five Year Cumulative Total Return
of Company, Industry Index and Broad Market
Company 1989 1990 1991 1992 1993 1994
------- ---- ---- ---- ---- ---- ----
ILX Incorporated 100 11.76 117.64 129.40 288.22 211.74
Industry Index 100 51.25 59.50 84.85 165.78 145.48
Broad Market 100 81.12 104.14 105.16 126.14 132.44
FINANCIAL INFORMATION
The Company's financial statements and management's discussion
and analysis of the Company's financial condition and results of operation are
set forth in the Company's Annual Report, which is hereby incorporated by
reference. An Annual Report will be mailed to all common shareholders of record
at the close of business on May 15, 1995.
STOCKHOLDER PROPOSALS
In order for proposals to be considered for inclusion in the
Proxy Statement and Proxy for the 1996 Annual Meeting of Shareholders, such
proposals must have been received by the Secretary of the Company no later than
December 31, 1995.
OTHER MATTERS
The Company knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it is the
intention of the persons named on the enclosed proxy card to vote the shares
they represent as the Board of Directors may recommend.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than ten percent
of the Company's common stock are required to report their initial ownership of
the Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Based solely upon the written
representations of the Company's directors, executive officers and ten percent
holders (except for Alan Mishkin who did not provide the Company with written
representation) and review of Forms 3, 4, and 5 and amendments thereto furnished
to the Company, the Company is aware of the following late filings for the year
ended December 31, 1994:
Total
Number of Late Transactions
Individual Reports Covered
- --------- ------- -------
Luis C. Acosta 1 1
Alan R. Mishkin 1 1
Ronald D. Nitzberg 1 1
Michael W. Stone 1 1
Nancy J. Stone 1 3
Alan J. Tucker 1 2
George C. Wallach 1 1
Edward S. Zielinski 1 1
All of the above individuals have made their appropriate Form 5 filings
at the time of the mailing of the proxy.
The Board of Directors
Phoenix, Arizona
As of April 28, 1994
ILX Incorporated
2777 East Camelback Road
Phoenix, Arizona 85016
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Nancy J. Stone and Alan J.
Tucker as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of ILX Incorporated held of record by the undersigned on May 15,
1995 at the Annual Meeting of Shareholders to be held June 26, 1995 or any
adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked below)
-------
WITHHOLD AUTHORITY to vote for all nominees
--------
NOMINEES FOR TERM ENDING IN 1996: Edward J. Martori, Joseph P. Martori,
Ronald D. Nitzberg, Nancy J. Stone, Alan J. Tucker.
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name above.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
------ ------ ------
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted for Proposal 1 and in the Proxies' discretion on matters arising under 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
----------------------------------------------------
Signature
----------------------------------------------------
Signature if held jointly
DATED , 1995
-------
