SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ILX RESORTS INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
- --------------------------------------------------------------------------------
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 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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 No.
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3) Filing party:
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4) Date filed:
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ILX RESORTS INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 22, 1998
To the Shareholders of ILX Resorts Incorporated:
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
ILX Resorts Incorporated, an Arizona corporation (the "Company"), will be held
at the Varsity Clubs of America Hotel, at 3855 East Speedway Boulevard, Tucson,
Arizona 85716 on the 22nd day of June, 1998 at 11:00 a.m., local time, to
consider and act upon the following proposals:
(a) To elect six (6) directors to serve until the next annual
meeting of shareholders of the Company, 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 holders of
record of Common Stock at the close of business on May 13, 1998 will be entitled
to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
You are urged to sign, date and otherwise complete the enclosed proxy card and
return it promptly in the enclosed envelope whether or not you plan to attend
the meeting. If you attend the meeting, you may vote your shares in person even
if you have signed and returned your proxy card.
By order of the Board of Directors,
Stephanie D. Castronova
Secretary
Phoenix, Arizona
April 24, 1998
<PAGE>
ILX RESORTS INCORPORATED
2111 East Highland Avenue, Suite 210
Phoenix, Arizona 85016
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 22, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of ILX Resorts Incorporated, an Arizona
corporation (the "Company"), for use at the Company's 1998 Annual Meeting of
Shareholders (the "Meeting"), to be held on June 22, 1998, at 11:00 a.m., local
time, and at any and all adjournments and postponements of the Meeting. The
Meeting will be held at the Varsity Clubs of America Hotel at 3855 East Speedway
Boulevard, Tucson, Arizona 85716. This Proxy Statement and the accompanying form
of proxy (the "Proxy") will be first mailed to shareholders on or about May 20,
1998.
Only holders of record of the Company's no par value common stock (the
"Common Stock") at the close of business on May 13, 1998 (the "Record Date") are
entitled to vote at the Meeting. The Proxy is enclosed for use at the 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. 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 at any time
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 the 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 materials
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.
VOTING
At the close of business on April 16, 1998, the Company had issued and
outstanding 4,035,402 shares of Common Stock, each share being entitled to one
vote. No other voting class of stock was then or is now outstanding.
The holders of the majority of the shares of the Company's Common Stock
outstanding on the Record Date and entitled to be voted at the Meeting, whether
present in person or by proxy, will constitute a quorum for the transaction of
business at the Meeting and any adjournments and postponements thereof.
Shareholders have cumulative voting rights with respect to the election
of directors. Cumulative voting entitles each shareholder to cast a number of
votes equal to the number of shares of Common Stock held multiplied by the
number of directorships to be filled. A shareholder may cast all of its votes
for one candidate or
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distribute the votes among two or more candidates. Abstentions and broker
non-votes are counted for the purpose of determining the presence or absence of
a quorum for the transaction of business. Abstentions are counted in the
tabulation of the votes cast on proposals presented to shareholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved. The six nominees receiving the most votes shall be deemed
elected to the Company's Board of Directors.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of April 16, 1998, certain
information regarding the beneficial ownership of the Common Stock of the
Company by (i) each person known by the Company to have beneficial ownership of
5% or more of the outstanding Common Stock, (ii) each director, (iii) each Named
Executive Officer (hereinafter defined) and (iv) all executive officers and
directors as a group.
Name and Address of Number of Percentage
Beneficial Owner (+) Shares (l) of Class
- -------------------- ---------- --------
Joseph P. Martori 922,724 (2) 22.9%
Nancy J. Stone 90,418 (3) 2.2%
Edward S. Zielinski 18,320 (4) *
John P. Brooks 4,800 (5) *
James W. Myers 9,800 (6) *
Steven R. Chanen 5,000 (7) *
Patrick J. McGroder III 17,015 (8) *
Edward J. Martori 957,219 (9) 23.7%
Martori Enterprises Incorporated ("MEI") 898,910 22.3%
All Directors and Officers as a Group (9 persons) 1,058,277 26.0%
- ------------------
* Less than 1%.
(+) Unless otherwise indicated, each holder has the address: c/o ILX Resorts
Incorporated, 2111 E. Highland Ave., Suite 210, Phoenix, Arizona 85016.
(1) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares of Common Stock which such
person has the right to acquire within 60 days after the date set forth
in the introductory paragraph above. However, for purposes of computing
the percentage of outstanding shares of Common Stock held by each person
or group of persons named above, any security which such person or group
of persons has or have the right to acquire from the Company within 60
days from the date set forth in the introductory paragraph above is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Includes 898,910 shares owned by MEI, of which Joseph P. Martori is a
director and owner of 40% of the voting capital stock; 7,002 shares owned
by a daughter of Joseph P. Martori, under trust dated February 20, 1978;
2,200 shares owned by Joseph P. Martori, as custodian for his other
daughter; and 212 shares held by a trust, of which Joseph P. Martori is
trustee.
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(3) Includes 5,000 shares issuable by the Company pursuant to options and
10,000 shares subject to options granted from MEI at $8.125 per share;
and 2,000 shares and options to purchase 17,500 shares from the Company
at $8.125 per share held by her husband, Michael W. Stone.
(4) Includes 200 shares held by Edward S. Zielinski as custodian for his son,
Stefan Edward Zielinski; options to purchase 6,000 shares from the
Company at $8.125 per share; and 100 shares held by his wife, Nancy
Zielinski.
(5) Includes options to purchase 4,000 shares from the Company at $8.125 per
share.
(6) Includes 4,800 shares owned by Myers Capital Management, of which James
W. Myers has sole voting and dispositive power; and options to purchase
5,000 shares from the Company at $6.25 per share.
(7) Includes 5,000 shares issuable by the Company pursuant to options at
$6.25 per share.
(8) Includes 1,500 shares held by the Patrick J. McGroder and Susan McGroder
Revocable Trust; 2,000 shares held by the McGroder Family Limited
Partnership, in which Patrick J. McGroder and Susan McGroder have a 99%
interest; 5 shares held by Shamrock Consultants, which is wholly owned by
Patrick J. McGroder; 19 shares held by Patrick J. McGroder II, P.C., an
Arizona professional corporation, wholly owned by Patrick J. McGroder;
128 shares held by Patrick J. McGroder II, P.C. Profit Sharing Trust, of
which Patrick J. McGroder is the sole beneficiary; 10,000 shares held by
McMac, L.L.C., an Arizona limited liability company of which Patrick J.
McGroder is one-third owner; 150 shares held by Mr. McGroder's children's
irrevocable trusts as follows: 50 shares held by the Caroline E. McGroder
1992 Trust; 50 shares held by the Elizabeth McGroder 1992 Trust; and 50
shares held by the Patrick J. McGroder IV 1992 Trust.
(9) Includes 898,910 shares owned by MEI, 56% of the capital stock of which
is owned by Edward J. Martori; and 142 shares owned by the Estate of
Edward Joseph Martori, of which Edward J. Martori is beneficiary.
The management of the Company is not aware of any change in control of
the Company that 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.
ELECTION OF DIRECTORS
The entire Board of Directors is elected annually, with each director to
hold office until the next annual meeting of shareholders or until his or her
successor is elected and qualified. The persons named as proxy holders in the
enclosed Proxy have been designated by the Board of Directors and they intend to
vote "FOR" the election to the Board of Directors of each 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 holders named in the enclosed Proxy.
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Certain information concerning the director nominees as of April 16,
1998 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.
Name Age Director
---- --- Since
-----
Steven R. Chanen 44 1995
Joseph P. Martori 56 1986
Patrick J. McGroder 52 1997
James W. Myers 63 1995
Nancy J. Stone 40 1989
Edward S. Zielinski 46 1996
Director Nominees
Joseph P. Martori has served as a director of the Company since its
inception and as Chairman of the Board since 1991. Mr. Martori served as
President from November 1993 through 1995 and has served as Chief Executive
Officer since 1994. Prior thereto, Mr. Martori was engaged in the private
practice of law since 1967 with the New York City law firm of Sullivan &
Cromwell; the Phoenix law firms of Snell & Wilmer; Martori, Meyer, Hendricks &
Victor, P.A. (of which he was a founding member); and Brown & Bain, P.A. (of
which he was the Chairman of the Corporate, Real Estate and Banking Department).
Mr. Martori was a founder of Firstar Metropolitan Bank & Trust in Phoenix and
has served on its Board of Directors since 1983. Mr. Martori is also Chairman of
the Board of MEI, an investment company which holds 22.3% of the Company's
outstanding Common Stock. Mr. Martori is also a member of the Board of Trustees
of The Lawyers' Committee for Civil Rights under Law. Mr. Martori received a
B.S. degree, summa cum laude, and an M.B.A. degree in finance from New York
University and a J.D. degree, cum laude, from the University of Notre Dame Law
School.
Nancy J. Stone has served as a director of the Company since April
1989, and as President and Chief Operating Officer since January 1996. Ms. Stone
served as Chief Financial Officer of the Company from July 1993 to December 29,
1997, as well as from January 1990 to April 1992, and as Executive Vice
President from July 1993 to December 1995. Ms. Stone served on the faculty of
North Central College, Naperville, Illinois from 1992 to 1993. Ms. Stone also
served as Vice President of Finance and Secretary of the Company from April 1987
to December 1989. Ms. Stone is a Certified Public Accountant in the States of
Arizona and Illinois. Ms. Stone received a B.A. degree in accounting and finance
from Michigan State University magna cum laude, and an M.B.A. degree from
Arizona State University summa cum laude.
Edward S. Zielinski has served as a director and Executive Vice
President of the Company since January 1996, and as President and Chief
Operating Officer of Varsity Clubs of America Incorporated since July 1997. Mr.
Zielinski served as Senior Vice President of the Company from January 1994 to
December 1995 and as General Manager of Los Abrigados Resort & Spa from December
1992 until January 1994, and in various other executive positions with the
Company since November 1988. Mr. Zielinski has twenty years of resort management
and marketing experience in both the domestic and international markets. Prior
to joining the Company, Mr. Zielinski served as General Manager of Oceania
Resorts, Ltd., a New Zealand-Australian company, from August 1985 through
October 1988, based in Auckland, New Zealand. Prior thereto, Mr. Zielinski held
senior management positions with Hyatt International Hotels and Continental
Airlines Hotel Division.
Steven R. Chanen has served as a director of the Company since July
1995. Mr. Chanen has served as President and Chief Operating Officer of Chanen
Construction Company, Inc., Phoenix, Arizona, since 1989, as Chairman of the
Board of Media Technology Capital Corporation (doing business as S.R. Chanen &
Co., Inc.) since 1986, and as President of United Property Investments
Corporation, a subsidiary of United Properties, Ltd.
5
<PAGE>
of Vancouver, Canada since 1987. Prior thereto, Mr. Chanen served as Vice
President of FMR Capital Corporation from 1981 to 1986 and as a shareholder and
director of Wentworth and Lundin law firm from 1980 to 1986. Mr. Chanen received
B.S. and J.D. degrees from Arizona State University.
Patrick J. McGroder III has served as a director of the Company since
June 1997. Mr. McGroder has been a trial lawyer engaged in the practice of law
since 1970, and has served since 1990 as a member of the law firm of Goldstein &
McGroder, Ltd. of Phoenix, Arizona (which he co-founded). Mr. McGroder received
a B.A. degree from the University of Notre Dame and a J.D. degree from the
University of Arizona School of Law.
James W. Myers has served as a director of the Company since July 1995.
Mr. Myers has served as President of Myers Management and Capital Group, Inc., a
management consulting firm he founded, since December 1995. From 1986 to 1995,
Mr. Myers was President and Chief Executive Officer of Myers Craig Vallone
Francois, Inc., an investment banking and management advisory firm he also
founded. Prior thereto, Mr. Myers held executive positions with a variety of
public and private companies from 1956 to 1986. Mr. Myers also serves as a
director of Chambers Belt, Inc., China Mist Tea, Landiscor, Inc., Solar Cells,
Inc. and Nanomics, Inc. Mr. Myers received a B.S. degree from Northwestern
University and an M.B.A. degree from the University of Chicago.
Board of Directors and Committees of the Board of Directors Meetings
The Board of Directors of the Company met two times during the fiscal
year ended December 31, 1997. All directors attended each of the meetings of the
Board of Directors, during the period they served as a director, and the
Committees of the Board of Directors, if any, upon which such director served
during the 1997 fiscal year, except for Steven R. Chanen, who missed one
meeting.
The Board of Directors maintains an audit committee ("Audit
Committee"), a stock option committee ("Stock Option Committee"), a compensation
committee ("Compensation Committee") and an executive committee. There is no
nominating committee or any committee performing that function.
Audit Committee
The Audit Committee, which consists of Messrs. Myers and McGroder, met
once during fiscal year 1997. The Audit Committee is responsible for
recommending the Company's independent auditors, reviewing with the independent
auditors the scope and results of the audit engagement, establishing and
monitoring the Company's financial policies and control procedures, and
reviewing and monitoring the provision of non-audit services by the Company's
auditors.
Stock Option Committee
The Stock Option Committee, which consists of Messrs. Myers and
McGroder, met once during fiscal year 1997. The function of the Stock Option
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, which consists of Messrs. Myers and
McGroder, met once during fiscal year 1997. The function of the Committee is to
provide recommendations to the Board of Directors regarding the compensation of
executive officers of the Company and regarding the compensation policies and
practices of the Company.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of transactions to which the Company or its
subsidiaries is a party in which the amount involved since January 1, 1997
exceeded $60,000 and in which officers, directors, nominees and/or greater than
5% beneficial owners of the Company's Common Stock (or any immediate family
members of the foregoing) had, or will have, a direct or indirect material
interest.
In August 1992, Los Abrigados Partners Limited Partnership, a
subsidiary of the Company ("LAP") issued to MEI, as agent for Edward J. Martori
("EJM"), MEI, Arthur J. Martori and Alan R. Mishkin ("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 certain loan guarantee fees by $46,274.
Principal payments of $52,181 and interest payments of $13,548 were made during
1997.
In December 1995, LAP issued 10% promissory notes to EJM and Joseph P.
Martori, a trustee for the Cynthia J. Polich Irrevocable Trust ("Polich") (not
an affiliate of the Company), in the original principal amounts of $550,000 and
$350,000, respectively. In 1997, 36,800 shares of the Company's Common Stock
were issued in satisfaction of the remaining $230,000 principal amount of the
note payable to EJM. The note payable for the benefit of Polich matures on
December 31, 1999, is secured by 122 vacation ownership interests in Kohl's
Ranch and is convertible into Common Stock at a price of $7.50 per share. In
1997, LAP paid $68,792 in principal and interest on the note payable for the
benefit of Polich and $17,203 in interest on the note payable to EJM.
In January 1996, the Company paid to MEI $60,000 cash and issued a
promissory note in the principal amount of $100,000 as satisfaction for $173,225
of unpaid guarantee fees and $44,073 in holdbacks previously payable by LAP to
MEI. The note was repaid in full in January 1997.
In August 1997, the Company acquired the Class B Limited Partnership
Interests in LAP from MEI and Mishkin for (i) $820,000 cash, consisting of
$720,000 to Mishkin (no longer a related party) and $100,000 to MEI, (ii) the
issuance of 20,000 shares of Common Stock, with a value of $125,000 at the time
of issuance, and (iii) the issuance of 8% promissory notes in the original
principal amounts of $1.3 million payable to MEI and $675,000 payable to
Mishkin. Both of these notes mature in 2002, and their repayment is secured by
interests in LAP.
During 1997, the Company made payments of interest in the aggregate
amount of $72,726 to EJM on an 8% promissory note in the principal amount of
$909,078, due December 31, 1999. The note was issued by the Company as
consideration for all of the Class A Limited Partnership Interests in LAP, which
the Company acquired in 1994.
During 1997, LAP made a capital distribution of $140,000 to MEI, a
Class B Limited Partner at the time of distribution.
Effective as of January 1, 1998, the Company entered into four-year
employment agreements with each of Messrs. Martori and Zielinski and Ms. Stone.
Pursuant to these agreements, the Company shall provide an annual base salary of
$200,000 to Mr. Martori, $150,000 to Ms. Stone and $130,000 to Mr. Zielinski, in
addition to additional compensation payable at the discretion of the Board of
Directors. Ms. Stone and Mr. Zielinski are entitled to receive 15,000 and 7,000
restricted shares of Common Stock on January 1st of each year during the term of
their respective employment
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Joseph P. Martori, Chairman of the Board and Chief Executive Officer of
the Company, is also the Chairman of the Board of MEI, which owned 22.3% of the
Common Stock outstanding as of April 16, 1998. The voting stock of MEI is
controlled by EJM, who is a cousin of Joseph P. Martori. EJM served as a
director of the Company from December 1993 to November 1997.
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.
EXECUTIVE MANAGEMENT
The following table sets forth certain information concerning the
Company's executive officers and certain key employees. Except as otherwise
noted, none of the executive officers are directors or officers of any other
publicly owned corporation or entity.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Joseph P. Martori 56 Chairman of the Board and Chief Executive Officer
Nancy J. Stone 40 President, Chief Operating Officer and Director
Edward S. Zielinski 46 Executive Vice President, President and Chief Operating
Officer of Varsity Clubs of America Incorporated and
Director
Jay R. Hoffman 43 Senior Vice President and Chief Financial Officer
John P. Brooks 52 Senior Vice President, Sales and Marketing
George C. Wallach 61 Senior Vice President and General Counsel
</TABLE>
Executive Officers
Joseph P. Martori has served as a director of the Company since its
inception and as Chairman of the Board since 1991. Mr. Martori served as
President from November 1993 through 1995 and has served as Chief Executive
Officer since 1994. Prior thereto, Mr. Martori was engaged in the private
practice of law since 1967 with the New York City law firm of Sullivan &
Cromwell; the Phoenix law firms of Snell & Wilmer; Martori, Meyer, Hendricks &
Victor, P.A. (of which he was a founding member); and Brown & Bain, P.A. (of
which he was the Chairman of the Corporate, Real Estate and Banking Department).
Mr. Martori was a founder of Firstar Metropolitan Bank & Trust in Phoenix and
has served on its Board of Directors since 1983. Mr. Martori is also Chairman of
the Board of MEI, an investment company which holds 22.3% of the Company's
outstanding Common Stock. Mr. Martori is also a member of the Board of Trustees
of The Lawyers' Committee for Civil Rights under Law. Mr. Martori received a
B.S. degree, summa cum laude, and an M.B.A. degree in finance from New York
University and a J.D. degree, cum laude, from the University of Notre Dame Law
School.
Nancy J. Stone has served as a director of the Company since April
1989, and as President and Chief Operating Officer since January 1996. Ms. Stone
served as Chief Financial Officer of the Company from July 1993 to December 29,
1997, as well as from January 1990 to April 1992, and as Executive Vice
President from July 1993 to December 1995. Ms. Stone served on the faculty of
North Central College, Naperville, Illinois from 1992 to 1993. Ms. Stone also
served as Vice President of Finance and Secretary of the Company from April 1987
to December 1989. Ms. Stone is a Certified Public Accountant in the States of
Arizona and Illinois. Ms. Stone received a B.A. degree in accounting and finance
from Michigan State University magna cum laude, and an M.B.A. degree from
Arizona State University summa cum laude.
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Edward S. Zielinski has served as a director and Executive Vice
President of the Company since January 1996, and as President and Chief
Operating Officer of Varsity Clubs of America Incorporated since July 1997. Mr.
Zielinski served as Senior Vice President of the Company from January 1994 to
December 1995 and as General Manager of Los Abrigados Resort & Spa from December
1992 until January 1994, and in various other executive positions with the
Company since November 1988. Mr. Zielinski has twenty years of resort management
and marketing experience in both the domestic and international markets. Prior
to joining the Company, Mr. Zielinski served as General Manager of Oceania
Resorts, Ltd., a New Zealand-Australian company, from August 1985 through
October 1988, based in Auckland, New Zealand. Prior thereto, Mr. Zielinski held
senior management positions with Hyatt International Hotels and Continental
Airlines Hotel Division.
Jay R. Hoffman has served as Senior Vice President and Chief Financial
Officer of the Company since December 1997. Prior thereto, Mr. Hoffman served as
Chief Financial Officer of Homeplex Mortgage Investments Corporation (now
Monterey Homes Corporation), a mortgage company in Phoenix, Arizona from 1988 to
1997; as Senior Audit Manager with Kenneth Leventhal & Company (now Ernst &
Young) in Phoenix, Arizona from 1987 to 1988; and with Arthur Andersen L.L.P. in
Kansas City, Missouri and Phoenix, Arizona from 1976 to 1987. Mr. Hoffman is a
Certified Public Accountant in the States of Arizona and Missouri. Mr. Hoffman
received a B.B.A. degree from the University of Missouri.
John P. Brooks has served as Senior Vice President, Sales and
Marketing, of the Company since October 1997. Mr. Brooks has also served as
Senior Vice President and General Sales Manager of the Sedona Vacation Club at
Los Abrigados since October 1997 and served as Vice President and Director of
Operations at Los Abrigados from 1994 to October 1997. Mr. Brooks has served in
various sales management positions for the Company since March 1989. Mr. Brooks
served in similar positions with Arroyo Robles Resort in Sedona, Arizona and
Fairfield Resort in Flagstaff, Arizona prior to joining the Company. Mr. Brooks
co-owned and managed Century 21 Plaza II Realty in Phoenix, Arizona from 1977 to
1986. Mr. Brooks is a licensed real estate broker and received a B.S. degree in
marketing and management from Arizona State University.
George C. Wallach has served as General Counsel since May 1997 and as
Senior Vice President of the Company since January 1996. He joined the Company
in 1995 and served as Executive Vice President from February to December 1995
and resident Project Director for Kohl's Ranch Lodge from June 1995 to May 1997.
Prior to joining the Company, Mr. Wallach was a partner in the Phoenix, Arizona
law firm of Brown & Bain, P.A. from 1986 to 1995, specializing in real estate
and business law. Mr. Wallach currently serves on the Board of Directors of The
University of Arizona Law College Association (past President) and the Board of
Directors of The University of Arizona Alumni Association. Mr. Wallach received
B.A. and M.A. degrees from the University of Arizona. Mr. Wallach earned a J.D.
degree at the University of Arizona "with distinction."
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Compensation of Executive Officers
The following table shows, for each of the fiscal years ended December
31, 1997, 1996 and 1995, the cash compensation paid by the Company, as well as
certain other compensation paid or accrued for those years, to each of the
Company's Chief Executive Officer and other most highly compensated executive
officers (collectively, the "Named Executive Officers") receiving compensation
in excess of $100,000 in all capacities in which they served during the last
completed fiscal year.
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
Long-Term
Annual Compensation (2) Compensation Awards
----------------------------------------------- --------------------------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Title Year Salary Bonus Compensation Awards Options/SARs Compensation
- -------------- ---- ------ ----- ------------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph P. Martori (l) 1997 $149,606 $ 50,000 $-- -- -- $--
Chairman and Chief 1996 136,500 20,000 -- -- -- --
Executive Officer 1995 204,877 -- -- -- -- --
Nancy J. Stone (l) 1997 129,659 102,896 (3) -- -- -- --
President and Chief 1996 115,193 17,500 -- -- -- --
Operating Officer 1995 125,489 1,953 (4) -- -- -- --
Edward S. Zielinski (l) 1997 115,012 34,689 (5) -- -- -- --
Executive Vice President 1996 110,388 19,968 (6) -- -- -- --
1995 90,837 1,953 (4) -- -- -- --
John P. Brooks 1997 36,000 117,832 (7) -- -- -- --
Senior Vice President 1996 36,000 95,518 (7) -- -- -- --
1995 36,000 83,348 (7) -- -- -- --
</TABLE>
- ------------------
(1) Effective as of January 1, 1998, each of Mr. Martori, Ms. Stone and Mr.
Zielinski entered into an employment agreement with the Company which
establishes the rates of annual base and incentive compensation to be
received by him or her commencing on such date.
(2) Excludes Profit Sharing Plan contributions on behalf of the respective
Named Executive Officer. During 1994, the Company adopted a Profit
Sharing Plan and has since declared 1995, 1996 and 1997 contributions.
None of the Named Executive Officers was allocated more than $4,100 for
the 1995 and 1996 plan years nor are they expected to be allocated more
than $4,500 for the 1997 plan year.
(3) Includes 7,500 shares of unrestricted Common Stock at $5.625 per share
and 7,500 shares of restricted Common Stock at $2.8125 per share.
(4) Represents 500 shares of restricted Common Stock at $3.90625 per share.
(5) Includes 3,500 shares of unrestricted Common Stock at $5.625 per share.
(6) Includes 1,000 shares of restricted Common Stock at $3.75 per share.
(7) Includes commissions on sales of vacation ownership interests.
10
<PAGE>
Option Grants in the Last Fiscal Year
No stock options or stock appreciation rights were granted to Named
Executive Officers or to other employees in 1997.
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END
OPTION VALUES
The following table sets forth information regarding option exercises
by the Named Executive Officers during 1997 and unexercised options held by
Named Executive Officers at December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year-End Fiscal Year-End
Acquired on Value ---------------------------- ----------------------------
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Martori 0 $0 0 0 $0 $0
Nancy J. Stone 0 0 5,000 0 0 0
Edward S. Zielinski 0 0 6,000 0 0 0
John P. Brooks 0 0 4,000 0 0 0
</TABLE>
Director Compensation
The Company's policy is to pay a fee for each 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 fee for each Board of
Directors' meeting attended by a non-employee director is $1,000. In addition,
all non-employee directors receive a grant of options to purchase 5,000 shares
of Common Stock following their election to the Board of Directors. The options
are fully exercisable on the first anniversary of the date of grant.
Stock Option Plans
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors, which selects the persons to whom stock
options are granted and determines the terms and conditions of each grant,
including the number of shares of Common Stock covered by the option, its
exercise price or purchase price, and its expiration date.
1995 Stock Option Plan. The Company's 1995 Stock Option Plan was
adopted by the Board of Directors in July 1995 (the "1995 Stock Option Plan").
The 1995 Stock Option Plan authorizes the Board of Directors of the Company to
grant options to purchase the Company's authorized but unissued or reacquired
Common Stock to the key employees of the Company or its subsidiaries. The
aggregate number of shares of Common Stock which may be issued under the Stock
Option Plan is 100,000 shares, all of which were available for future grants as
of December 31, 1997. Stock options entitle the optionee to purchase Common
Stock from the Company for a specified exercise price as determined by the Board
of Directors, during a period specified in the applicable option agreement.
Under the 1995 Stock Option Plan, the Company may grant options that
are intended to qualify as incentive stock options within the meaning of Section
422 of the Code ("Incentive Stock Options"), or options not intended to qualify
as Incentive Stock Options ("Nonstatutory Options"). The options are granted for
investment purposes only and are not transferable except by the laws of descent
and devise.
11
<PAGE>
Incentive Stock Options may only be granted to employees of the
Company. They are exercisable one year after the grant of the options and expire
on the earlier of (i) five years after the date of grant as to any optionee who
immediately before the granting of the options owned more than ten percent of
the total combined voting power of all classes of stock of the Company or any of
its subsidiaries or (ii) ten years after the date of grant of the option as to
any optionee whose stock ownership represented less than ten percent of the
Company or any of its subsidiaries' combined voting power immediately before the
date of grant. Nonstatutory Stock Options are exercisable at any time after they
are granted and their durations are determined by the Board of Directors. All
options granted pursuant to the 1995 Stock Option Plan are subject to earlier
termination in the event of the termination of the optionee's employment with
the Company.
1992 Stock Option Plan. The Company's 1992 Stock Option Plan was
adopted by the Board of Directors in May 1992 (the "1992 Stock Option Plan").
The 1992 Stock Option Plan authorizes the Board of Directors of the Company to
grant options to purchase the Company's authorized but unissued or reacquired
Common Stock to the key employees of the Company or its subsidiaries. The
aggregate number of shares of Common Stock which may be issued under the 1992
Stock Option Plan is 100,000 shares, of which 39,600 were available for future
grants as of December 31, 1997. Stock options entitle the optionee to purchase
Common Stock from the Company for a specified exercise price as determined by
the Board of Directors, during a period specified in the applicable option
agreement.
Under the 1992 Stock Option Plan, the Company may grant Incentive Stock
Options or Nonstatutory Options. All options granted pursuant to the 1992 Stock
Option Plan are granted for investment purposes only and neither type of options
are transferable except by laws of descent and devise.
Incentive Stock Options may only be granted to employees of the
Company. They are exercisable one year after the grant of the options and expire
on the earlier of (i) five years after the grant of the options for any optionee
who immediately before the granting of the options owned more than ten percent
of the total combined voting power of all classes of stock of the Corporation or
any of its subsidiaries or (ii) ten years after the grant of the options for any
optionee whose stock ownership represented less than ten percent of the Company
or any of its subsidiaries' combined voting power immediately before the
granting of the options. Nonstatutory Stock Options are exercisable at any time
after they are granted and their durations are determined by the Board of
Directors. However, both types of options are subject to earlier termination in
the event of the termination of the optionee's employment with the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation 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 and its 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 and stock
option grants. The principal component of executive compensation to
date has been base salary and, in the case of the executive responsible
for the Company's vacation ownership interest sales, commission.
Effective January 1, 1998, the Company entered into employment
agreements with each of Mr. Joseph Martori, Ms. Nancy Stone and Mr.
Edward Zielinski to serve as Chairman and Chief
12
<PAGE>
Executive Officer of the Company; President of the Company; and
Executive Vice President of the Company and President of the Company's
wholly-owned subsidiary, Varsity Clubs of America Incorporated,
respectively. Each of these agreements has a four-year term which
expires in December 2001. These agreements provide for an annual base
salary of $200,000 to Mr. Martori, $150,000 to Ms. Stone and $130,000
to Mr. Zielinski. In addition, each employee may receive certain
incentive compensation at the discretion of the Board of Directors. Ms.
Stone and Mr. Zielinski are also entitled to receive awards of 15,000
and 7,000 shares of restricted Common Stock, respectively, on January
1, 1998 and each anniversary thereof provided that she or he is
employed by the Company on the date of grant.
Under each employment agreement, the respective employee's employment
may be terminated prior to its expiration (i) by the Company for Good
Cause (defined as his or her willful breach or habitual neglect of his
or her duties under the employment agreement, willful violation of
reasonable and substantial rules governing employee performance,
willful refusal to obey reasonable orders in a manner amounting to
gross insubordination or commission of dishonest acts), (ii) upon the
employee's disability or death or (iii) upon thirty days notice of
either party. If the employee is terminated without "Good Cause" prior
to the expiration of the term of the employment agreement, they are
entitled to receive their base salary for the twelve-month period
following such termination. The employment agreements generally
prohibit each employee from competing with the Company during his or
her respective term of employment by the Company and for a period of
twelve months following the respective employee's termination for Good
Cause. In addition, each employment agreement contains customary
confidentiality provisions in favor of the Company.
Base Salary. Each executive of the Company 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
1997, 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.
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. No
stock options were granted to executive officers during 1997.
Bonuses. From time to time, the Company has granted bonuses, either in
cash, stock, or a combination of both, 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.
The Company has established a program for its President (Ms. Stone) and
certain other executive officers whereby they may be granted shares of
Common Stock based on achievement of certain performance criteria. In
1998, 15,000 and 7,000 shares of unregistered Common Stock have been
issued under the program to Ms. Stone and Mr. Zielinski, respectively,
for 1997 performance.
The Company has established a plan for the Senior Vice President
responsible for Kohl's Ranch Lodge timeshare and resort operations (Mr.
Wallach) whereby the executive will be granted, on an annual basis, a
bonus equal to ten percent of the net income, subject to direct and
indirect
13
<PAGE>
charges, of Kohl's Ranch Lodge. Prior year (cumulative) losses are
offset against cumulative net income in determining the bonus payable.
The Compensation Committee is contemplating the use of similar
performance-based bonuses for other executives. Such bonuses are likely
to be paid in unregistered shares of the Company's Common Stock.
Profit Sharing Plan. In 1994, the Company adopted a Profit Sharing Plan
for the benefit of all employees, including executive officers. A
contribution of $100,000 was declared for the 1997 fiscal year and will
be funded in 1998. Allocation among the participants of the amount to
be contributed has not yet occurred. The allocation is not expected to
exceed $4,500 for any executive officer.
Stock Option Plans
The Company has adopted 1987, 1992 and 1995 Stock Option Plans pursuant
to which options (which terms as used herein includes both incentive
stock options and non-statutory stock options) may be granted to key
employees, including executive officers, directors and consultants, who
are determined by the Stock Option Committee to have contributed in the
past, or who may be expected to contribute materially in the future, to
the success of the Company. The exercise price of the options granted
pursuant to the Plan shall be not less than the fair market value of
the Common Stock on the date of grant and employee and director holders
must serve as employees or directors of the Company for at least one
year before exercising the option. Options are exercisable over a
five-year period from date of grant if the optionee was a ten- percent
or more shareholder immediately prior to the granting of the option and
over a ten-year period if the optionee was not a ten- percent
shareholder. No options were granted to executive officers or other
employees during fiscal year 1997.
Compliance with Section 162(m) of Internal Revenue Code. Section 162(m)
of the Internal Revenue Code of 1986, as amended ("Tax Code"), limits
the corporate deduction for aggregate compensation paid to the Named
Executive Officers identified herein to $1,000,000 per year, unless
certain requirements are met. The Compensation Committee has reviewed
the impact of the Tax Code provision on the current compensation
package for its Named Executive Officers. None of the Named Executive
Officers 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. Martori and Ms. Stone served on the Compensation Committee of the
Board of Directors until November 1997. Each of Ms. Stone and Mr. Martori also
served as an executive officer of the Company during that same period. In
November 1997, the Compensation Committee was changed to consist solely of
non-employee directors.
Effective as of January 1, 1998, the Company entered into four-year
employment agreements with each of Mr. Martori and Ms. Stone. These agreements
provide for an annual base salary of $200,000 for Mr. Martori and $150,000 for
Ms. Stone. In addition, Ms. Stone is to receive an award of 15,000 restricted
shares of Common Stock on January 1st of each year during the term of the
agreement commencing January 1, 1998, provided Ms. Stone is employed by the
Company on the date of grant.
14
<PAGE>
Mr. Martori is the Chairman of the Board of MEI, a holder of 22.3% of
the Company's outstanding Common Stock.
In August 1992, LAP issued to MEI, as agent for EJM, MEI, Arthur J.
Martori and 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 certain
loan guarantee fees by $46,274. Principal payments of $52,181 and interest
payments of $13,548 were made during 1997.
In December 1995, LAP issued 10% promissory notes to EJM and Joseph P.
Martori, a trustee for Polich (not an affiliate of the Company), in the original
principal amounts of $550,000 and $350,000. In 1997, 36,800 shares of Common
Stock were issued in satisfaction of the remaining $230,000 principal amount of
the note payable to EJM. The note payable for the benefit of Polich matures on
December 31, 1999, is secured by 122 Vacation Ownership Interests in Kohl's
Ranch and is convertible into Common Stock at a price of $7.50 per share. In
1997, LAP paid $68,792 in principal and interest on the note payable for the
benefit of Polich and $17,203 in interest on the note payable to EJM.
In January 1996, the Company paid to MEI $60,000 cash and issued a
promissory note in the principal amount of $100,000 as satisfaction for $173,225
of unpaid guarantee fees and $44,073 in holdbacks previously payable by LAP to
MEI. The note was repaid in full in January 1997.
In August 1997, the Company acquired the Class B Limited Partnership
Interests in LAP from MEI and Mishkin for (i) $820,000 cash, consisting of
$720,000 to Mishkin (no longer a related party) and $100,000 to MEI, (ii) the
issuance of 20,000 shares of Common Stock, with a value of $125,000 at the time
of issuance, and (iii) the issuance of 8% promissory notes in the original
principal amounts of $1.3 million payable to MEI and $675,000 payable to
Mishkin. Both of these notes mature in 2002, and their repayment is secured by
interests in LAP.
Phoenix, Arizona Patrick J. McGroder III
April 24, 1998 James W. Myers
15
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY, NASDAQ
MARKET INDEX AND SIC CODE INDEX
The data below compares the cumulative total return, assuming
reinvestment of dividends, of the Company's Common Stock with the Nasdaq
National Market Index and the SIC Code 701 Index (hotels and motels) from
January 1, 1993 to December 31, 1997. The Company has selected SIC Code 701
based on its belief that it is the most applicable comparison, based upon the
absence of 5-year historical data regarding publicly owned timeshare companies
which derive substantial revenues from hotel/motel operations.
Comparison of Five Year Cumulative Total Return
among investments in the Company's Common Stock, the
Nasdaq National Market Index and the SIC Code 701 Index
<TABLE>
<CAPTION>
Company 1992 1993 1994 1995 1996 1997
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ILX Resorts Incorporated 100 222.73 163.64 209.09 145.45 159.10
Industry Index 100 195.37 171.45 178.07 215.89 233.40
Broad Market 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
Assumes $100 invested on January 1, 1993 in the Company's common stock, the
Nasdaq National Market Index, and the SIC Code 701 index, with dividends being
reinvested through December 31, 1997.
INDEPENDENT PUBLIC ACCOUNTANTS
At the determination of the Board of Directors, the accounting firm of
Deloitte & Touche LLP, certified public accountants, served as the Company's
principal accountants for each of the fiscal years ended December 31, 1990
through December 31, 1997. Representatives of Deloitte & Touche LLP are expected
to be present at the Meeting. Such representatives will have an opportunity to
make a statement if they desire to do so, and are expected to be available to
respond to appropriate questions. The Board of Directors has not yet selected
independent accountants for the fiscal year ending December 31, 1998.
FINANCIAL INFORMATION
The Company's financial statements and "Management's Discussion and
Analysis of 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 shareholders Common Stock of record at the close of
business on May 13, 1998, concurrently with the mailing of this Proxy Statement.
Upon the written request of any shareholder, the Company will provide to such
shareholder, without charge, a copy of the Company's Annual Report for the year
ended December 31, 1997, without exhibits, as filed with the Securities and
Exchange Commission. Such requests should be directed in writing to the Company
at 2111 East Highland Avenue, Suite 210, Phoenix, Arizona 85016, Attention:
Secretary, Telephone: 602.957.2777.
STOCKHOLDER PROPOSALS
In order for proposals to be considered for inclusion in the Proxy
Statement and Proxy for the 1999 Annual Meeting of Shareholders, such proposals
must be received by the Secretary of the Company no later than January 20, 1999,
and must comply with certain rules and regulations promulgated by the Securities
and Exchange Commission.
16
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to shareholders
for their consideration at the Meeting. If any other matters properly come
before the Meeting, it is the intention of the persons named on the enclosed
Proxy 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 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, 1997:
Number of Total Transactions
Individual or Company Late Reports Covered
- --------------------- ------------ -------
Martori Enterprises Incorporated 1 1
Edward J. Martori 1 2
Joseph P. Martori 1 4
Joseph P. Martori II 1 1
Patrick J. McGroder III 1 1
James W. Myers 1 1
All of the above individuals have made their appropriate Form 3, Form 4
or Form 5 filings at the time of the mailing of this Proxy Statement.
Phoenix, Arizona
April 24, 1998 The Board of Directors
17
<PAGE>
ILX Resorts Incorporated
2111 East Highland Avenue, Suite 210
Phoenix, Arizona 85016
PROXY
This Proxy is solicited on Behalf of the Board of Directors
The undersigned hereby appoints Joseph P. Martori and Nancy J.
Stone as proxies, each with the power to appoint his or her substitute, and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of Common Stock of ILX Resorts Incorporated held of record by the
undersigned on May 13, 1998, at the Annual Meeting of Shareholders to be held
June 22, 1998, or any adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below equally among all such nominees,
or as indicated below
Steven R. Chanen shares
--------------------------
Joseph P. Martori shares
--------------------------
Patrick J. McGroder III shares
--------------------------
James W. Myers shares
--------------------------
Nancy J. Stone shares
--------------------------
Edward S. Zielinski shares
--------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees
IN THE EVENT THE SHAREHOLDER DOES NOT INDICATE A PREFERENCE ON PROPOSAL NO. 1,
MANAGEMENT INTENDS TO VOTE FOR PROPOSAL NO. 1.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH
THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS FOR WHICH THE SHAREHOLDER HAS NOT INDICATED A
PREFERENCE OR IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
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.
The undersigned revokes any proxies heretofore given by the undersigned and
acknowledges receipt of the Notice of Annual meeting of Shareholders and Proxy
Statement furnished herewith and the Annual Report to Shareholders also
delivered herewith.
- ---------------------------------------
Signature
- ---------------------------------------
Signature if held jointly
DATED , 1998
--------------
