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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-1(c) or Rule 14a-12

ILX INCORPORATED
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(Name of Registrant as Specified In Its Charter)

NANCY STONE
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(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)((1) 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:

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4) Proposed maximum aggregate value of transaction:

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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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ILX INCORPORATED

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 24, 1996

To the Shareholders of ILX Incorporated:

Notice is hereby given that the 1996 Annual Meeting of
shareholders of ILX Incorporated, an Arizona corporation (the "Company"), will
be held at its corporate headquarters at 2777 East Camelback Road, Phoenix,
Arizona 85016 on the 24th day of June, 1996 at 9:30 a.m., local time, to
consider and act upon the following proposals:

(a) To elect seven (7) 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
common shareholders of record at the close of business on May 13, 1996, 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 19, 1996

ILX INCORPORATED

2777 East Camelback Road
Phoenix, Arizona 85016

PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS

To Be Held on June 24, 1996

This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of ILX Incorporated, an
Arizona corporation (the "Company"), for use at the Company's 1996 Annual
Meeting of Shareholders (the "Meeting") to be held on June 24, 1996, at 9:30
a.m., local time, and at any and all adjournments and postponements of the
Meeting. The Meeting will be held at the Company's corporate headquarters at
2777 East Camelback Road, Phoenix, Arizona 85016. This Proxy Statement and the
accompanying form of Proxy will be first mailed to shareholders on or about May
20, 1996.

The holders of the Company's common stock of record at the
close of business May 13, 1996, are entitled to vote at the Meeting. 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. 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 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.

VOTING

At the close of business on March 31, 1996, the Company had
issued and outstanding 12,738,021 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. With cumulative voting, a shareholder is 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 cast the votes for one candidate
or distribute the votes among two or more candidates. Abstentions and broker
non-votes are counted for the purposes of determining the presence or absence of
a quorum for the transaction of business.
2

Abstentions are counted in 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 seven nominees receiving
the most votes shall be deemed elected to the Company's Board of Directors.

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of March 31, 1996, certain
information regarding the beneficial ownership of the common stock of the
Company by each person who is known by the Company to own beneficially 5% or
more of the common stock:

Amount and
Nature of
Title Name and Address of Beneficial Percentage
of Class Beneficial Owner(1) Ownership of Class
- -------- ------------------- --------- --------
Common Edward J. Martori 5,705,086 (3) 44.79%
Common Joseph P. Martori 5,681,323 (2) (3) 44.60%
Common Martori Enterprises 5,727,155 (4) 44.96%
Incorporated
Common Alan R. Mishkin 2,012,045 15.80%
Common All Executive 6,334,372 (5) 48.87% (5)(6)
Officers/Directors

(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 11,010 shares owned by Christina Ann Martori, daughter of
Joseph P. Martori, under trust dated February 20, 1978, 10,000 shares
held by Joseph P. Martori as custodian for his daughter, Arianne
Terres Martori, and 1,059 shares held by Joseph P. Martori as trustee
under trust dated January 30, 1976.

(3) Including 5,658,547 shares owned by Martori Enterprises Incorporated
and 707 shares owned by the Estate of Edward Joseph Martori of which
Edward J. Martori is beneficiary and Joseph P. Martori is trustee.
Edward J. Martori and Joseph P. Martori are cousins and are
shareholders in Martori Enterprises Incorporated.

(4) Including 45,832 shares of common stock owned by Edward J. Martori,
22,069 shares owned by Joseph P. Martori [note (2)], 707 shares owned
by the Estate of Edward Joseph Martori [Note(3)] and 5,658,547 owned
by Martori Enterprises Incorporated.

(5) Shares deemed to be beneficially owned by more than one officer
and/or director were only counted once.

(6) Options for 222,500 shares held by directors and executive officers
are treated as exercised and are included in both the numerator and
the denominator.

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.
3

ELECTION OF DIRECTORS

The entire Board of Directors is to be elected annually, with
each director to hold office until the next annual meeting of shareholders 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 they
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
March 31, 1996, 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
-----
Luis C. Acosta 44 1995
Steven R. Chanen 42 1995
Edward J. Martori 43 1993
Joseph P. Martori 54 1986
James W. Myers 61 1995
Ronald D. Nitzberg 64 1986
Nancy J. Stone 38 1989

Luis C. Acosta has been a director of the Company since July 1995 and
has been President and Chief Operating Officer of Varsity Clubs of America
Incorporated, a wholly owned subsidiary of the Company, 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.

Steven R. Chanen has been a director of the Company since July 1995.
Since 1987 he has been President and Chief Operating Officer of Chanen
Construction Company, Inc., an Arizona corporation.

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 Chief Executive Officer since January 1994,
Chairman of the Board of Directors since September 1991, and was President from
January 1994 through December 1995. 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.

James W. Myers has been a director of the Company since July 1995.
Since January 1996, he has been President and founder of Myers Management and
Capital Group, an Arizona based company engaged in management consulting and
financial advisory services. From 1986 to December 1995 he was President and CEO
of Myers Craig Vallone Francoise, Inc., an Arizona corporation engaged in
investment banking and management consulting.
4

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 January 1994 until June
1995.

Nancy J. Stone has been a director of the Company since April 1989,
Executive Vice President and Chief Financial Officer from July 1993 to December
1995, and President and Chief Financial Officer of the Company since January
1996 as well as 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.

Board of Directors and Committee Meetings

The Board of Directors of the Company met three times during
the fiscal year ending December 31, 1995. All incumbent directors attended each
of the meetings of the Board of Directors, during the period they were
directors, and the Committees, if any, upon which such director served during
the 1995 fiscal year, except for Edward J. Martori and Ronald D. Nitzberg who
each missed one meeting.

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 1995. 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, Edward J. Martori and Ronald D. Nitzberg. The Committee met once during
fiscal year 1995. 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 Mr. Edward J.
Martori and Ms. Nancy J. Stone. The Committee met once during fiscal year 1995.
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, 1995, 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 (or any
immediate family members of the foregoing) had, or will have, a direct or
indirect material interest.
5

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 Partners 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 1995, LAP paid $145,500
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 1995, the Company paid $4,376 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. In December 1995, Martori Enterprises Incorporated
agreed to accept as payment $60,000 cash and $100,000 in a promissory note
bearing interest at 10%, interest payable quarterly, principal due in full in
December 1999, in full satisfaction of a remaining obligation (following payment
of $22,250 in guarantee fees and $4,410 in holdbacks in January 1996) of
$173,225 in guarantee fees and $44,073 in holdbacks.

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. 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 1995, $277,682 in principal and $96,949 in interest payments were
made on the notes to the affiliated Class A partners and principal of $10,200
was forgiven in exchange for early payoff of the Joseph P. Martori as Trustee
and Wedbush Morgan Securities for the benefit of Joseph P. Martori notes. In
December 1995, the terms of the note to Edward J. Martori were modified, to be
effective in January 1996. The new terms extend the maturity date, and allow the
holder at maturity (1999) to exchange the note balance for shares of ILX common
stock at $2 per share, provided the exercise does not cause Edward J. Martori's
ownership, direct or indirect, of the Company to exceed 50%.

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 1995, payments of $67,500 were made to the
Class B partners. In February 1996, the LAP partnership agreement was amended to
provide the Class B Partners, pro rata, a $200 capital distribution per Los
Abrigados timeshare week sold commencing October 1996.

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 $25,000 were made to Martori Enterprises
Incorporated and Alan R. Mishkin.

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
1995 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
6

returns by $149,954, Class B accrued interest by $73,772 and loan guarantee fees
by $46,274. Principal payments of $66,506 and interest payments of $42,202 were
made during the 1995 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 1995, principal payments of $104,719 and interest payments of
$12,140 were paid on the note.

In June 1993, the Company borrowed $100,000 from 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
$27,965 and interest payments of $1,413 were made on the note during fiscal year
1995.

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 1995, principal payments of $154,284 and interest payments of
$18,217 were made on the notes and $7,316 in principal was forgiven in exchange
for early payoff of the Martori Enterprises Incorporated note.

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 owned 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 $2,100 each, commencing July 1995. 150 intervals
had been acquired by the Company for $315,000 as of December 31, 1995.

In July 1995, the Company borrowed $900,000 from Edward J.
Martori and from Joseph P. Martori as Trustee for Cynthia J. Polich (Cynthia J.
Polich is not an affiliate). The note bore interest at 13.5%, was collateralized
by 320 timeshare interests in the Los Abrigados resort, and had a maturity date
of July 1998. In December 1995, the terms were modified to extend the maturity
date to December 31, 1999, to reduce the interest rate to 10%, to reduce the
collateral by 100 timeshare interests, to separate the note into two separate
notes, one in the amount of $350,000 and the other in the amount of $550,000,
and to provide, at the holder's option, the ability to convert all or a portion
of the note balance at maturity into ILX common stock at a price of $2.00 per
share, provided, in the case of Edward J. Martori, that the excercise does not
cause his ownership, direct or indirect, of the Company to exceed 50%. Also in
December 1995, the principal balance on the $550,000 note was reduced to
$230,000 as a result of the purchase by Edward J. Martori of the Red Rock
Collection building further described below. Interest payments of $42,656 were
made on the note during fiscal year 1995.

In December 1995, the Company sold the Red Rock Collection
building to Edward J. Martori for $500,000, payable by reduction in an existing
note of $320,000 in December 1995 and payment of the $180,000 mortgage on the
building in January 1996. Red Rock Collection has leased back the building for a
monthly rental of $4,000 through December 1996, and has the option to renew the
lease for four additional one year periods.

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 from November 1,
1993 to December 31, 1995, 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 from
February 1995 to December 1995 and Senior Vice President since January 1, 1996,
was a partner in Brown & Bain, P.A. until he joined the Company. The Company
paid Brown & Bain, P.A. during 1995 for legal services provided in 1995 and
prior years. The Company anticipates that it will retain Brown & Bain, P.A. to
provide legal services during the 1996 fiscal year.
7

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.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information as to the
securities of the Company beneficially owned at March 31, 1996, by (i) each
director and nominee, (ii) each named executive officer and (iii) all directors
and executive officers as a group.

Amount and Nature of
Title of Beneficial Ownership of Percentage
Class Name of Beneficial Owner Common Shares of Class
- ----- ------------------------ ------------- --------

Common Edward J. Martori 5,705,086(1) 44.79%
Common Joseph P. Martori 5,681,323(1)(2) 44.60%
Common Nancy J. Stone 302,086(5)(6) 2.35%(14)
Common Ronald D. Nitzberg 213,031(4) 1.67%(14)
Common Steven R. Chanen 25,000(9) *(14)
Common James W. Myers 25,000(9) *(14)
Common Luis C. Acosta 24,900 *
Common Michael W. Stone 302,086(7) 2.35%(14)
Common George C. Wallach 101,000(3) *(14)
Common Edward S. Zielinski 38,100(8) *(14)
Common Donald D. Denton 12,100(10)(11) *(14)
Common Samuel L. Ciatu 16,000(10)(12) *(14)
Common Kenneth W. Cates 0 *
Common Directors and Officers as a group 6,334,372(13) 48.87%(13)(14)
(13 persons)

* Less than 1%.
(1) Including 5,658,547 shares owned by Martori Enterprises Incorporated and
707 shares owned by the Estate of Edward Joseph Martori of which Edward J.
Martori is beneficiary and Joseph P. Martori is trustee. Edward J. Martori
is a shareholder in Martori Enterprises Incorporated and a cousin of Joseph
P. Martori.
(2) Including 11,010 shares owned by Christina Ann Martori, daughter of Joseph
P. Martori, under trust dated February 20, 1978, 10,000 shares held by
Joseph P. Martori as custodian for his daughter, Arianne Terres Martori,
and 1059 shares held by Joseph P. Martori as trustee under trust dated
January 30, 1976.
(3) Including options to purchase 100,000 shares from Martori Enterprises
Incorporated at $1.625 per share.
(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, and 500 shares held by his wife, Nancy Zielinski.
(9) Including options to purchase 25,000 shares from the Company at $1.50 per
share.
(10) Including options to purchase 5,000 shares from the Company at $1.625 per
share.
(11) Including 100 shares held by his wife, Linda Denton.
(12) Including 5,000 shares held by his mother, Phyllis J. Ciatu.
(13) Shares deemed to be beneficially owned by more than one officer and/or
director were only counted once.
(14) Options held by directors and officers are treated as exercised and are
included in both the numerator and denominator.
8

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 Position/Term
- ---- --- -------------
Joseph P. Martori 54 Chairman of the Board September 1991 to
Present, President November 1993 to December
1995.

Nancy J. Stone 38 President January 1996 to Present, Executive
Vice President July 1993 to December 1995.

Luis C. Acosta 44 President of Varsity Clubs of America
Incorporated November 1993 to Present.

Michael W. Stone 41 President of Red Rock Collection
Incorporated July 1993 to Present.

Edward S. Zielinski 44 Executive Vice President January 1996 to
Present, Senior Vice President January 1994
to December 1995, Vice President December
1992 to December 1993.

Kenneth W. Cates 41 Senior Vice President January 1996 to
Present, Vice President October 1995 to
December 1995.

Samuel L. Ciatu 40 Senior Vice President January 1996 to
Present, Vice President December 1993 to
December 1995.

Donald D. Denton 35 Senior Vice President January 1996 to
Present.

George C. Wallach 59 Senior Vice President January 1996 to
Present, Executive Vice President February
1995 to December 1995.
9

Joseph P. Martori is a founder of the Company and has been a director
since its inception. He has been Chief Executive Officer since January 1994,
Chairman of the Board of Directors since September 1991, and President from
January 1994 to December 1995. 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.

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.

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, President and Chief
Financial Officer of ILX Incorporated.

George C. Wallach has been Senior Vice President since January 1996 and
was Executive Vice President from February 1995 until December 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 Executive Vice President since January
1996, Senior Vice President from January 1994 to December 1995, Vice President
and General Manager of Los Abrigados resort since December 1992, and Executive
Assistant Manager of Los Abrigados resort from November 1988 until November
1992.

Samuel L. Ciatu has been Senior Vice President since January 1996, and
Vice President from December 1993 to December 1995. From November 1990 to
October 1993 he was Director of Marketing for Rawhide Operating Company, Inc.,
an Arizona corporation which operates Rawhide, the western-theme attraction in
Scottsdale, Arizona.

Donald D. Denton has been Senior Vice President since January 1996 and
Timeshare Sales Manager at Los Abrigados resort since February 1993. From
January 1990 to January 1993, he was Timeshare General Sales Manager of Success
Marketing, an Arizona company engaged in timeshare sales.

Kenneth M. Cates has been Senior Vice President since January 1996 and
Vice President from October 1995 until December 1995. From May 1995 to October
1995, he was Facility Manager, responsible for telemarketing operations for
Somar, a North Carolina based company. From June 1994 to May 1995, he was
Regional Marketing Manager for Peppertree Resorts, a North Carolina timeshare
developer. From 1993 to 1994, he was self employed offering marketing services
to the timeshare industry in Oregon and North Carolina. From 1988 to 1993, he
was Marketing Director for Eagle Crest Resort, a timeshare resort in Oregon.
10

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows, for the fiscal years ended December
31, 1993, 1994, 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 receiving compensation in excess of $100,000 in all capacities in which
they serve.

SUMMARY COMPENSATION TABLE

Long Term
Compensation All Other
Annual Compensation Awards Compensation(2)
------------------- ------ ---------------
Securities Underlying
Year Salary Bonus Stock Options (#)
---- ------ ----- -----------------

Joseph P. Martori
President and Chief 1995 $204,877 - - -
Executive Officer(4) 1994 $200,875 - - -
1993 $ 30,709 - - -

Nancy J. Stone
Executive 1995 $125,489 $ 1,953(3) - -
Vice President(4) 1994 $ 95,646 - 25,000(1) -
1993 $ 44,373 - - -

Luis C. Acosta
President of Varsity 1995 $125,000 -(6) - -
Clubs of America 1994 $114,231 - - -
Incorporated 1993 $ 9,615 - - -

Alan J. Tucker
Executive Vice 1995 $116,351 $ 22,500 - -
President(5) 1994 $148,667 $ 30,000 25,000(1) -
1993 $ 75,000 $105,737 - -

Donald D. Denton (7)
1995 $ 36,000 $135,311 (8)(9) - -
1994 $ 36,000 $151,777 (8) 5,000 -
1993 $ 27,000 $ 61,015 (8) - -

(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 has
since declared 1994 and 1995 contributions. No executive officer was
allocated more than $3,800 for the 1994 plan year. The allocation of the
1995 contribution among participants has not yet been made. No executive
officer is expected to be allocated more than $4,000 for the 1995 plan
year.
(3) Represents 2,500 shares of restricted ILX common stock at $.78125 per
share.
11

(4) Nancy J. Stone was appointed President and Chief Operating Officer January
1, 1996. Mr. Martori remains Chairman and Chief Executive Officer.
(5) Alan J. Tucker terminated employment with the Company on October 19, 1995.
(6) Excludes bonus payable in 1996 based on services provided in 1995 in the
amount of $10,000 cash, 15,000 shares of unregistered ILX common stock and
$13,990 cancellation of indebtedness.
(7) Donald D. Denton was appointed Senior Vice President January 1, 1996. Mr.
Denton was not an executive officer of the Company on December 31, 1995.
(8) Including commissions on sales of timeshare interests.
(9) Including $1,563 representing 2,000 shares of restricted ILX Common Stock
at $.78125 per share.

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 1995.

OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END
OPTION VALUES

The following table sets forth information regarding option
exercises by named executive officers during 1995 and unexercised options held
by named executive officers at December 31, 1995.

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)
---- ------------ ------------ ----------------- -----------------

Alan J. Tucker 0 $0 25,000(E)(1) $0
0(U) $0
Nancy J. Stone 0 $0 25,000(E)(2) $0
0(U) $0
Donald D. Denton(3) 0 $0 5,000(E) $0
0(U) $0

(1) Alan J. Tucker terminated employment with the Company on October 19, 1995.
The 25,000 options outstanding at December 31, 1995 expired without
exercise on January 19, 1996.
(2) Excludes options of Michael W. Stone, her husband, to purchase 87,500
shares at $1.625 per share. Such options were not in-the-money at December
31, 1995.
(3) Donald D. Denton was appointed Senior Vice President January 1, 1996. Mr.
Denton was not an executive officer of the Company on December 31, 1995.

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
12

connection with attending meetings of the Board of Directors. The fee per Board
of Directors meeting attended by a non-employee director is $1,000.

In July 1995, non-employee directors James W. Myers and Steven
R. Chanen were granted options to purchase 25,000 shares each of common stock at
the price of $2.00 per share which was the market price on the date of grant.
The exercise price was reduced to $1.50 per share in December 1995. The options
will expire in 2000 or six months from the date the individual ceases to be a
director, whichever is earlier. The options were granted as compensation for
services provided in 1995.

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'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 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
1995, 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.

In 1994, 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
1995, Mr. Martori's salary was increased to $215,000. 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 judgment of the Board of Directors. Effective
January 1, 1996, Mr. Martori elected to decrease his salary to
$135,000.

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 1995.

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 (net of cumulative prior
period net losses) will be granted and paid in cash or, at the
employee's option, in common stock at a price tied to the price of the
13

stock on the first business day of the preceding calendar year. During
1995, the first Varsity Clubs site was opened and a bonus payable in
restricted stock (15,000 shares), cash ($10,000) and forgiveness of
debt ($13,990) was paid to the executive in February 1996. No bonus
based on net income has been earned or paid to date.

The Company has established a plan for the Senior Vice President
responsible for the Kohl's Ranch Lodge timeshare and resort operations
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
charges, of the 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 $75,000 was declared for the 1995 fiscal year and will
be funded in 1996. Allocation among the participants of the amount to
be contributed has not yet occurred. The allocation is not expected to
exceed $4,000 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 shares on the date of grant and
employee and director holders must be 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 1995.

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 compensation paid to the named executive
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 the 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 Stock Option Committee and Ms.
Nancy J. Stone is a member of the Compensation Committee. Mr. Martori
and Ms. Stone are officers of the Company.

April 19, 1996 Edward J. Martori
Nancy J. Stone
14

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, 1991 to December 31, 1995. 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
among investments in the Company's Common Stock, the
NASDAQ National Market Index and the SIC Code 701 Index

Company 1990 1991 1992 1993 1994 1995
- ------- ---- ---- ---- ---- ---- ----

ILX Incorporated 100.00 1,000.00 1,100.00 2,450.08 1,800.00 2,300.00

Industry Index 100.00 116.10 165.57 323.48 283.86 294.83

Broad Market 100.00 128.38 129.64 155.50 163.26 211.77

INDEPENDENT PUBLIC ACCOUNTANTS

At the determination of the Board of Directors, the accounting
firm of Deloitte & Touche LLP, certified public accountants, has served as the
Company's auditors for the fiscal years ending December 31, 1990 through
December 31, 1995. The Board of Directors has again selected Deloitte & Touche
LLP to serve as the Company's independent accountants for the fiscal year ending
December 31, 1996. One or more representatives of Deloitte & Touche LLP are
expected to be present at the Meeting and will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.

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 13, 1996, 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, 1995, WITHOUT EXHIBITS, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED IN WRITING
TO THE COMPANY AT 2777 EAST CAMELBACK ROAD, PHOENIX, ARIZONA 85016, ATTENTION:
SECRETARY.

STOCKHOLDER PROPOSALS

In order for proposals to be considered for inclusion in the
Proxy Statement and Proxy for the 1997 Annual Meeting of Shareholders, such
proposals must have been received by the Secretary of the Company no later than
January 22, 1997, and must comply with certain rules and regulations promulgated
by the Securities and Exchange Commission.

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.
15

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, 1995:

Total
Number of Late Transactions
Individual Reports Covered
- ---------- ------- -------

Steven R. Chanen 2 1
Samuel L. Ciatu 1 1
James W. Myers 2 1
Nancy J. Stone 1 1
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
April 19, 1996

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 Samuel L.
Ciatu 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 13,
1996, at the Annual Meeting of Shareholders to be held June 24, 1996, 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 1997: Luis C. Acosta, Steven R. Chanen,
Edward J. Martori, Joseph P. Martori, James W. Myers, Ronald D.
Nitzberg, Nancy J. Stone.

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 _________________, 1996