def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
INCOME OPPORTUNITY REALTY INVESTORS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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TABLE OF CONTENTS
INCOME OPPORTUNITY REALTY INVESTORS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 11, 2007
Income Opportunity Realty Investors, Inc. will hold its Annual Meeting of Stockholders on
Tuesday, December 11, 2007, at 1:30 p.m., local Dallas, Texas time, at 1800 Valley View Lane, Suite
300, Dallas, Texas 75234. The purpose of the meeting is to consider and act upon:
Election of a Board of five directors to serve until the next Annual Meeting
of Stockholders and until their successors are duly-elected and qualified.
Ratification of the selection of Swalm & Associates, P.C. as the independent
registered public accounting firm.
Such other matters as may properly be presented at the Annual Meeting.
Only Stockholders of record at the close of business on November 2, 2007, will be entitled to
vote at the meeting.
Your vote is important. Whether or not you plan to attend the meeting, please complete, sign,
date and return the enclosed proxy card in the accompanying envelope provided. Your completed
proxy will not prevent you from attending the meeting and voting in person should you choose.
Dated: November 5, 2007.
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By order of the Board of Directors,
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/s/ Louis J. Corna
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Louis J. Corna |
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Executive Vice President, General Counsel,
Tax Counsel and Secretary |
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INCOME OPPORTUNITY REALTY INVESTORS, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 11, 2007
The Board of Directors of Income Opportunity Realty Investors, Inc. (the Companyor we or
us) is soliciting proxies to be used at the Annual Meeting of Stockholders following the fiscal
year ended December 31, 2006 (the Annual Meeting). Distribution of this Proxy Statement and a
Proxy Form is scheduled to begin on November 5, 2007. The mailing address of the Companys
principal executive offices is 1755 Wittington Place, Suite 340, Dallas, Texas 75234.
About the Meeting
Who Can Vote
Record holders of Common Stock of the Company at the close of business on Friday, November 2,
2007 (the Record Date) may vote at the Annual Meeting. On that date, 4,168,035 shares of Common
Stock were outstanding. Each share is entitled to cast one vote.
How Can You Vote
If you return your signed proxy before the Annual Meeting, we will vote your shares as you
direct. You can specify whether your shares should be voted for all, some or none of the nominees
for director. You can also specify whether you approve, disapprove or abstain from the other
proposal to ratify the selection of auditors.
If a proxy is executed and returned but no instructions are given, the shares will be voted
according to the recommendations of the Board of Directors. The Board of Directors recommends a
vote FOR Proposals 1 and 2.
Revocation of Proxies
You may revoke your proxy at any time before it is exercised by (a) delivering a written
notice of revocation to the Corporate Secretary, (b) delivering another proxy that is dated later
than the original proxy, or (c) casting your vote in person at the Annual Meeting. Your last vote
will be the vote that is counted.
Vote Required
The holders of a majority of the shares entitled to vote who are either present in
person or represented by a proxy at the Annual Meeting will constitute a quorum for the transaction
of business at the Annual Meeting. As of November 2, 2007, there were 4,168,035 shares of Common
Stock issued and outstanding. The presence, in person or by proxy, of stockholders entitled to
cast at least 2,084,018 votes constitutes a quorum for adopting the proposals at the Annual
Meeting. If you have properly
-1-
signed and returned your proxy card by mail, you will be considered
part of the quorum, and the persons named on
the proxy card will vote your shares as you have instructed. If the broker holding your
shares in street name indicates to us on a proxy card that the broker lacks discretionary
authority to vote your shares, we will not consider your shares as present or entitled to vote for
any purpose.
A plurality of the votes cast is required for the election of directors. This means that the
director nominee with the most votes for a particular slot is elected to that slot. A proxy that
has properly withheld authority with respect to the election of one or more directors will not be
voted with respect to the director or directors indicated, although it will be counted for purposes
of determining whether there is a quorum.
For the other proposal, the affirmative vote of the holders of a majority of the shares
represented in person or by proxy entitled to vote on the proposal will be required for approval.
An abstention with respect to such proposal will not be voted, although it will be counted for
purposes of determining whether there is a quorum. Accordingly, an abstention will have the effect
of a negative vote.
As of the Record Date, two affiliates held 3,419,853 shares representing approximately 82.05%
of the shares outstanding. These two affiliates have advised the Company that they currently
intend to vote all of their shares in favor of the approval of all proposals.
If you received multiple proxy cards, this indicates that your shares are held in more than
one account, such as two brokerage accounts, and are registered in different names. You should
vote each of the proxy cards to ensure that all your shares are voted.
Other Matters to be Acted Upon at the Annual Meeting
We do not know of any other matters to be validly presented or acted upon at the Annual
Meeting. Under our Bylaws, no business besides that stated in the Annual Meeting Notice may be
transacted at any meeting of stockholders. If any other matter is presented at the Annual Meeting
on which a vote may be properly taken, the shares represented by proxies will be voted in
accordance with the judgment of the person or persons voting those shares.
Expenses of Solicitation
The Company is making this solicitation and will pay the entire cost of preparing, assembling,
printing, mailing and distributing these proxy materials and soliciting votes. Some of our
directors, officers and employees may solicit proxies personally, without any additional
compensation, by telephone or mail. Proxy materials will also be furnished without cost to brokers
and other nominees to forward to the beneficial owners of shares held in their names.
Available Information
Our internet website address is www.incomeopp-realty.com. We make available
free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, reports filed pursuant to Section 16 and amendments to those reports
as soon as reasonably practicable after we electronically file or furnish such materials to the
Securities and Exchange Commission. In addition, we have posted the Charters of our Audit
Committee, Compensation Committee, and our Governance and Nominating Committee, as well as our Code
of
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Business Conduct and Ethics, Code of
Ethics for Senior Financial Officers, Corporate Governance
Guidelines and Director Independence Standards, all under separate headings. These charters and
principles are not incorporated
in this instrument by reference. We will also provide a copy of these documents free of
charge to stockholders upon written request. The Company issues Annual Reports containing audited
financial statements to its common stockholders.
Questions
You may call our Investor Relations Department at 800-400-6407 if you have any questions.
PLEASE VOTE YOUR VOTE IS IMPORTANT
-3-
Corporate Governance and Board Matters
The affairs of the Company are managed by the Board of Directors. The Directors are elected
at the annual meeting of stockholders each year or appointed by the incumbent Board of Directors
and serve until the next annual meeting of stockholders or until a successor has been elected or
approved.
After December 31, 2003, a number of changes occurred in the composition of the Board of
Directors of the Company, the creation of certain Board Committees, the adoption of Committee
charters, the adoption of a Code of Ethics for Senior Financial Officers and the adoption of
Guidelines for Director Independence. Also, the composition of the members of the Board of
Directors changed with the resignations of Henry A. Butler (July 1, 2003), Earl D. Cecil (February
29, 2004) and Martin L. White (March 15, 2004), as well as the election of Ken L. Joines as a
Director on July 1, 2003, and independent Directors, David E. Allard and Peter L. Larsen on
February 20, 2004, and Robert A. Jakuszewski on March 16, 2004. Additionally, on June 2, 2003,
Basic Capital Management, Inc. (BCM) sold a total of 781,773 shares of Common Stock of the
Company (approximately 54.3% of the outstanding) as a block to Syntek West, Inc. (SWI). SWI
also purchased 12,600 shares of Common Stock of the Company in open market purchase transactions
which increased SWIs ownership to 794,223 shares (approximately 57.17% of the outstanding shares).
On June 30, 2003, SWI replaced BCM as the contractual advisor to the Company. On June 10, 2005,
the Companys Common Stock was the subject of a 3-for-1 forward split of the stock which increased
SWIs ownership to 2,382,669 shares.
On July 31, 2006, Ken L. Joines, resigned as a director to pursue other opportunities. On
August 1, 2006, the members of the Board elected R. Neil Crouch to fill the vacancy created by Ken
L. Joines resignation. On February 22, 2007, Ted P. Stokely (a director since April 1990 and
Chairman since January 1995) resigned as a Director and Chairman of the Board. On the same date,
but effective February 23, 2007, the Board elected R. Neil Crouch as Chairman of the Board and
Martha C. Stephens as a director to replace Mr. Stokely.
Current members of the Board
The members of the Board of Directors (all of whom except Martha C. Stephens were elected by
the stockholders and the last Annual Meeting held on December 14, 2006) on the date of this proxy
statement, and the committees of the Board on which they serve, are identified below:
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Governance |
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Audit |
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Compensation |
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Nominating |
Director |
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Committee |
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Committee |
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Committee |
David E. Allard
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Chair
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R. Neil Crouch |
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Robert A. Jakuszewski
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Peter L. Larsen
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Chair
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Chair |
Martha C. Stephens |
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Role of the Boards Committees
The Board of Directors has standing Audit, Compensation and Governance and Nominating
Committees.
Audit Committee. The functions of the Audit Committee are described below under the heading
Report of the Audit Committee. The charter of the Audit Committee was adopted on February 19,
2004, and is available on the Companys Investor Relations website
(www.incomeopp-realty.com). The Audit Committee was formed on February 19, 2004, and the
Board selected the current members of the Audit Committee for 2004. The Board reappointed the
members of the Audit Committee on September 16, 2004, December 15, 2005 and December 14, 2006. All
of the members of the Audit Committee are independent within the meaning of the Securities and
Exchange Commission (the SEC) regulations, the listing standards of the American Stock Exchange
and the Companys Corporate Governance Guidelines. Mr. Allard, a member of the Committee, is
qualified as an audit committee financial expert within the meaning of SEC regulations and the
Board has determined that he has accounting and related financial management expertise within the
meaning of the listing standards of the American Stock Exchange. All of the members of the Audit
Committee meet the independence and experience requirements of the listing standards of the
American Stock Exchange. The Audit Committee met eight times in 2006.
Governance and Nominating Committee. The Governance and Nominating Committee is responsible
for developing and implementing policies and practices relating to corporate governance, including
reviewing and monitoring implementation of the Companys Corporate Governance Guidelines. In
addition, the Committee develops and reviews background information on candidates for the Board and
makes recommendations to the Board regarding such candidates. The Committee also prepares and
supervises the Boards annual review of director independence and the Boards performance
self-evaluation. The charter of the Governance and Nominating Committee was adopted on March 22,
2004, and is available on the Companys Investor Relations website (www.incomeopp-realty.com). On
March 22, 2004, the Board selected the members of the Governance and Nominating Committee for 2004.
The Board reappointed the members of the Governance and Nominating Committee on September 16,
2004, December 15, 2005 and December 14, 2006. All of the members of the Committee are independent
within the meaning of the listing standards of the American Stock Exchange and the Companys
Corporate Governance Guidelines. The Governance and Nominating Committee met two times in 2006.
Compensation Committee. The Compensation Committee is responsible for overseeing the
policies of the Company relating to compensation to be paid by the Company to the Companys
principal executive officer and any other officers designated by the Board and make recommendations
to the Board with respect to such policies, produce necessary reports on executive compensation for
inclusion in the Companys proxy statement in accordance with applicable rules and regulations and
to monitor the development and implementation of succession plans for the principal executive
officer and other key executives and make recommendations to the Board with respect to such plans.
The charter of the Compensation Committee was adopted on March 22, 2004, and is available on the
Companys Investor Relations website (www.incomeopp-realty.com). On March 22, 2004, the
Board selected the members of the Compensation Committee for the coming year. The Board
reappointed the members of the Compensation Committee on September 16, 2004, December 15, 2005 and
December 14, 2006. All of the members of the Committee are independent within the meaning of the
listing standards of the American Stock Exchange and the Companys Corporate Governance Guidelines.
The Compensation
-5-
Committee is to be comprised of at least two directors who are independent of
management and the Company. The Compensation Committee met two times in 2006.
Presiding Director
On June 17, 2004, the Board created a new position of presiding director, whose primary
responsibility is to preside over periodic executive sessions of the Board in which management
directors and other members of management do not participate. The presiding director also advises
the Chairman of the Board and, as appropriate, Committee chairs with respect to agendas and
information needs relating to Board and Committee meetings, provides advice with respect to the
selection of Committee chairs and performs other duties that the Board may from time to time
delegate to assist the Board in the fulfillment of its responsibilities.
Director Peter L. Larsen has served in such position since June 17, 2004. On December 14,
2006, the non-management members of the Board designated him to serve in this position until the
Companys annual meeting of stockholders to be held following the fiscal year ended December 31,
2006.
Selection of Nominees for the Board
The Governance and Nominating Committee will consider candidates for Board membership
suggested by its members and other Board members, as well as management and stockholders. The
Committee may also retain a third-party executive search firm to identify candidates upon request
of the Committee from time to time. A stockholder who wishes to recommend a prospective nominee for
the Board should notify the Companys Corporate Secretary or any member of the Governance and
Nominating Committee in writing with whatever supporting material the stockholder considers
appropriate. The Governance and Nominating Committee will also consider whether to nominate any
person nominated by a stockholder pursuant to the provisions of the Companys bylaws relating to
stockholder nominations.
Once the Governance and Nominating Committee has identified a prospective nominee, the
Committee will make an initial determination as to whether to conduct a full evaluation of the
candidate. This initial determination will be based on whatever information is provided to the
Committee with the recommendation of the prospective candidate, as well as the Committees own
knowledge of the prospective candidate, which may be supplemented by inquiries to the person making
the recommendation or others. The preliminary determination will be based primarily on the need for
additional Board members to fill vacancies or expand the size of the Board and the likelihood that
the prospective nominee can satisfy the evaluation factors described below. If the Committee
determines, in consultation with the Chairman of the Board and other Board members as appropriate,
that additional consideration is warranted, it may request the third-party search firm to gather
additional information about the prospective nominees background and experience and to report its
findings to the Committee. The Committee will then evaluate the prospective nominee against the
standards and qualifications set out in the Companys Corporate Governance Guidelines, including:
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the ability of the prospective nominee to represent the interests of
the stockholders of the Company; |
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the prospective nominees standards of integrity, commitment and
independence of thought and judgment; |
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the prospective nominees ability to dedicate sufficient time, energy
and, attention to the diligent performance of his or her duties, including the
prospective
nominees service on other public company boards, as specifically set out in
the Companys Corporate Governance Guidelines; |
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the extent to which the prospective nominee contributes to the range of
talent, skill and expertise appropriate for the Board; |
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the extent to which the prospective nominee helps the Board reflect the
diversity of the Companys stockholders, employees, customers, guests and
communities; and |
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the willingness of the prospective nominee to meet any minimum equity
interest holding guideline. |
The Committee also considers such other relevant factors as it deems appropriate, including the
current composition of the Board, the balance of management and independent directors, the need for
Audit Committee expertise and the evaluations of other prospective nominees. In connection with
this evaluation, the Committee determines whether to interview the prospective nominee, and if
warranted, one or more members of the Committee, and others as appropriate, interview prospective
nominees in person or by telephone. After completing this evaluation and interview, the Committee
makes a recommendation to the full Board as to the persons who should be nominated by the Board,
and the Board determines the nominees after considering the recommendation and report of the
Committee.
The Bylaws of the Company provide that any stockholder entitled to vote in the election of
directors generally may nominate one or more persons for election as directors at a meeting only if
written notice of such stockholders intention to make such nomination has been delivered
personally to, or has been mailed to and received by the Secretary at the principal office of the
Company not later than 35 nor more than 60 days prior to the date of the meeting. If a stockholder
has a suggestion for candidates for election, the stockholder should follow this procedure. Each
notice from a stockholder must set forth (i) the name and address of the stockholder who intends to
make the nomination and the name of the person to be nominated, (ii) the class and number of shares
of stock held of record, owned beneficially and represented by proxy by such stockholder as of the
record date for the meeting and as of the date of such notice, (iii) a representation that the
stockholder intends to appear in person or by proxy at the meeting to nominate the person specified
in the notice, (iv) a description of all arrangements or understandings between such stockholder
and each nominee and any other person (naming those persons) pursuant to which the nomination is to
be made by such stockholder, (v) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed pursuant to the proxy
rules, and (vi) the consent of each nominee to serve as a director of the Company if so elected.
The chairman of the Annual Meeting may refuse to acknowledge the nomination of any person not made
in compliance with this procedure.
-7-
Determinations of Director Independence
In February 2004, the Board enhanced its Corporate Governance Guidelines. The Guidelines
adopted by the Board meet or exceed the new listing standards adopted during the year by the
American Stock Exchange. The full text of the Guidelines can be found in the Investor Relations
section of the Companys website (www.incomeopp-realty.com). A copy may also be obtained
upon request from the Companys Corporate Secretary.
Pursuant to the Guidelines, the Board undertook its annual review of director independence in
March 2007. During this review, the Board considered transactions and relationships between each
director or any member of his or her immediate family and the Company and its subsidiaries and
affiliates, including those reported under Certain Relationships and Related Transactions below.
The Board also examined transactions and relationships between directors or their affiliates and
members of the Companys senior management or their affiliates. As provided in the Guidelines, the
purpose of this review was to determine whether any such relationships or transactions were
inconsistent with a determination that the director is independent.
As a result of this review, the Board affirmatively determined of the then directors, Messrs.
Allard, Jakuszewski and Larsen are each independent of the Company and its management under the
standards set forth in the Corporate Governance Guidelines.
Board Meetings During Fiscal 2006
The Board met nine times during fiscal 2006. Each director attended 75% or more of the
meetings of the Board and Committees on which he served. Under the Companys Corporate Governance
Guidelines, each Director is expected to dedicate sufficient time, energy an attention to ensure
the diligent performance of his or her duties, including by attending meetings of the stockholders
of the Company, the Board and Committees of which he is a member. In addition, the independent
directors met in executive session two times during fiscal 2006.
Directors Compensation
Each non-employee director receives an annual retainer of $15,000 plus reimbursement for
expenses. The Chairman of the Board receives an additional fee of $1,500 per year. The members of
the Audit Committee receive a fee of $250 for each Committee meeting attended. In addition, each
independent director receives an additional fee of $1,000 per day for any special services rendered
by him to the Company outside of his or ordinary duties as a director plus reimbursement of
expenses. The Company also reimburses directors for travel expenses incurred in connection with
attending Board, committee and stockholder meetings and for other Company-business related
expenses. Directors who are also employees of the Company or its Advisor receive no additional
compensation for service as a director.
During 2006, $69,500 was paid to the non-employee directors in total directors fees for all
services, including the annual fee for service during the period from January 1, 2006 through
December 31, 2006. Those fees received by directors were Ted P. Stokely ($16,500), David E. Allard
($17,750), Robert A. Jakuszewski ($17,750) and Peter L. Larsen ($17,500).
-8-
Stockholders Communication with the Board
Stockholders and other parties interested in communicating directly with the presiding
director or with the non-Management directors as a group may do so by writing to David E. Allard,
Director, 1525 N. Stemmons Freeway, Dallas, Texas 75207-3410. Effective March 22, 2004, the
Governance and Nominating Committee of the Board also approved a process for handling letters
received by the Company and addressed to members of the Board but received at the Company. Under
that process, the Corporate Secretary of the Company reviews all such correspondence and regularly
forwards to the Board a summary of all such correspondence and copies of all correspondence that,
in the opinion of the
Corporate Secretary, deals with the functions of the Board or committees thereof or that he
otherwise determines requires their attention. Directors may at any time review a log of all
correspondence received by the Company that is addressed to members of the Board and received by
the Company and request copies of any such correspondence. Concerns relating to accounting,
internal controls or auditing matters are immediately brought to the attention of the Chairman of
the Audit Committee and handled in accordance with procedures established by the Audit Committee
with respect to such matters.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics, which applies to all directors,
officers and employees (including those of the contractual advisor). In addition, on February 19,
2004, the Company adopted a code of ethics entitled Code of Ethics for Senior Financial Officers
that applies to the principal executive officer, president, principal financial officer, chief
financial officer, the principal accounting officer and controller. The text of both documents is
available on the Companys Investor Relations website
(www.incomeopp-realty.com). The
Company intends to post amendments to or waivers from its Code of Ethics for Senior Financial
Officers (to the extent applicable to the Companys chief executive officer, principal financial
officer or principal accounting officer) at this location on its website.
Compliance With Section 16(a) of Reporting Requirements
Section 16(a) under the Securities Exchange Act of 1934 requires the Companys directors,
executive officers and any persons holding 10% or more of the Companys shares of Common Stock are
required to report their ownership of the Companys shares of Common Stock and any changes in that
ownership to the SEC on specified report forms. Specific due dates for these reports have been
established, and the Company is required to report any failure to file by these dates during each
fiscal year. All of these filing requirements were satisfied by the Companys directors and
executive officers and holders of more than 10% of the Companys Common Stock during the fiscal
year ended December 31, 2006. In making these statements, the Company has relied upon the written
representations of its directors and executive officers and the holders of 10% or more of the
Companys Common Stock and copies of the reports that each has filed with the SEC.
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth the ownership of the Companys Common Stock, both beneficially
and of record, both individually and in the aggregate, for those persons or entities known by the
Company to be the beneficial owners of more than 5% of its outstanding Common Stock as of the close
of business on November 2, 2007.
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Amount and Nature of |
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Approximate |
Name and Address of Beneficial Owner |
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Beneficial Ownership* |
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Percent of Class** |
Syntek West, Inc.
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2,382,669 |
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57.17 |
% |
1755 Wittington Place, Suite 340
Dallas, Texas 75234 |
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Transcontinental Realty Investors, Inc.
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1,037,184 |
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24.88 |
% |
1800 Valley View Lane, Suite 300
Dallas, Texas 75234 |
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Security Ownership of Management
The following table sets forth the ownership of the Companys Common Stock, both beneficially
and of record, both individually and in the aggregate for the directors and executive officers of
the Company as of the close of business on November 2, 2007:
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Amount and Nature of |
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Approximate |
Name and Address of Beneficial Owner |
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Beneficial Ownership* |
Percent of Class** |
Steven A. Abney |
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1,037,184 |
(1) |
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24.88 |
% |
David E. Allard |
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Henry A. Butler |
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1,037,184 |
(1) |
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24.88 |
% |
Louis J. Corna |
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1,037,184 |
(1) |
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24.88 |
% |
R. Neil Crouch |
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2,382,669 |
(2) |
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57.17 |
% |
Alfred Crozier |
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1,037,184 |
(1) |
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24.88 |
% |
Sharon Hunt |
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1,037,184 |
(1) |
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24.88 |
% |
Robert A. Jakuszewski |
|
|
1,037,184 |
(1) |
|
|
24.88 |
% |
Peter L. Larsen |
|
|
-0- |
|
|
|
|
|
Daniel J. Moos |
|
|
1,037,184 |
(1) |
|
|
24.88 |
% |
Ted R. Munselle |
|
|
1,037,184 |
(1) |
|
|
24.88 |
% |
Gene E. Phillips |
|
|
2,382,669 |
(2) |
|
|
57.17 |
% |
Martha C. Stephens |
|
|
-0- |
|
|
|
|
|
Reagan K. Vidal |
|
|
1,037,184 |
(1) |
|
|
24.88 |
% |
All directors and executive |
|
|
3,419,853 |
(1)(2) |
|
|
82.05 |
% |
officers as a group (twelve people) |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Beneficial Ownership means the sole or shared power to vote, or to direct
the voting of, a security or investment power with respect to a security, or
any combination thereof. |
|
** |
|
Percentages are based upon 4,168,035 shares of Common Stock outstanding at
November 2, 2007. |
-10-
(1) Includes 1,037,184 shares owned by Transcontinental Realty Investors, Inc. (TCI),
of which the directors and executive officers of TCI may be deemed to be the beneficial owners by
virtue of their positions as directors and executive officers. Each of the current directors
(Messrs. Butler, Jakuszewski, Munselle and Stokely and Ms. Hunt) and executive officers (Messrs.
Moos, Abney, Corna, Crozier and Vidal) of TCI disclaim beneficial ownership of such shares.
(2) Includes 2,382,669 shares owned by Syntek Acquisition Corp (SAC), a wholly owned
subsidiary of SWI, of which the directors and executive officers of SWI and SAC (Messrs. Crouch and
Phillips) may be deemed to be the beneficial owners by virtue of their positions as directors
and executive officers of SWI and SAC.
PROPOSAL 1
ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting. Each director elected will hold
office until the Annual Meeting following the fiscal year ending December 31, 2007. All of the
nominees for director are now serving as directors. Each of the nominees has consented to being
named in this proxy statement as a nominee and has agreed to serve as a director if elected. The
persons named on the proxy card will vote for all of the nominees for director listed unless you
withhold authority to vote for one or more of the nominees. The nominees receiving a plurality of
votes cast at the Annual Meeting will be elected as directors. Abstentions and broker non-votes
will not be treated as a vote for or against any particular nominee and will not affect the outcome
of the election of directors. Cumulative voting for the election of directors is not permitted.
If any director is unable to stand for re-election, the Board will designate a substitute. If a
substitute nominee is named, the persons named on the proxy card will vote for the election of the
substitute director.
The nominees for directors are listed below, together with their ages, terms of service, all
positions and offices with the Company or the Companys contractual advisor, SWI, other principal
occupations, business experience and directorships with other companies during the last five years
or more. The designation affiliated when used below with respect to a director means that the
director is an officer, director or employee of the Company or the contractual advisor.
David E. Allard, 48
Chief Financial Officer (since February 2005) of Digital Witness Surveillance, a Dallas,
Texas-based development stage software provider; Executive Vice President and Secretary (April 2003
to February 2, 2005) of Internet America, Inc. Mr. Allard was Chief Operating Officer (2000-2002)
of Primedia Workplace Learning, a workplace training business; Executive Vice President and Chief
Financial Officer (1999-2000) of E-Train, Inc., a provider of online job training and seminars;
Special Advisor (1998-1999) of Thayer Capital Partners; Chief Operating Officer (1997-1998) of
Career Track, Inc. (a TCI subsidiary); Senior Vice President and Vice President Business
Development (1992-1996) of Westcott Communications, Inc.; Partner (1985-1992) of Farmer and Allard,
P.C. (a CPA firm); Audit Manager/CPA (1983-1985) of Grant Thornton LLP (a CPA firm). Mr. Allard
has been a director of the Company since February 20, 2004.
-11-
R. Neil Crouch, 55 (Affiliated)
Chairman of the Board (since February 23, 2007) and a Director (since August 2006) of the
Company. President Eurgenergy Resources, Inc., a Nevada corporation (ERI) engaged in the
exploration and development of oil, gas and mineral interests since January 2005, ERI is a
subsidiary of SWI, Mr. Crouch is also a director Vice President, Secretary and Treasurer of SWI
since August 1, 2006. Mr. Crouch was elected as a director of the company on August, 2006. He was
Executive Vice President and Chief Financial Officer of of the Company from September 17, 2004 to
December 16, 2005. Mr. Crouch was Corporate Controller (from September 2002 to September 15, 2004)
of Apptricity
Corporation, a small Dallas, Texas-based software development company; prior thereto (from
January 1999 to September 2002) he was Corporate Controller of Attenza, Inc.., a Dallas, Texas
web-based computer self-help company. Mr. Crouch has been a Certified Public Accountant since
1981.
Robert A. Jakuszewski, 44
Vice President Sales and Marketing (since September 1998) of New Horizons Communications,
Inc. Mr. Jakuszewski was a Consultant (01/1998-09/1998) for New Horizon Communications, Inc.;
Regional Sales Manager (1996-1998) of Continental Funding; Territory Manager (1992-1996) of
Sigvaris, Inc.; Senior Sales Representative (1988-1992) of Mead Johnson Nutritional Division,
USPNG; Sales Representative (1986-1987) of Muro Pharmaceutical, Inc. Mr. Jakuszewski was elected a
director of the Company on March 16, 2004.
Peter L. Larsen, 65
Mr. Larsen has been involved in the commercial real estate industry since 1972. From 1996
through 2002, he was Senior Vice President of Acquisitions of Tarragon Corporation (formerly
Tarragon Realty Investors, Inc.), and its predecessors, a publicly-held real estate entity, the
common stock of which is traded on the NASDAQ National Market. Since 1992, Mr. Larsen has also
been a director of four Texas non-profit corporations which own 545 apartment units and are
overseeing the development of a multi-million dollar retirement center in Coppell, Texas. Mr.
Larsen has been a director of the Company since February 20, 2004, and the Presiding Director since
March 2004.
Martha C. Stephens, 60 (Affiliated)
Ms. Stephens is retired. Until January 2007 and for more than five years prior thereto, she
was employed in various administrative capacities by Prime Income Asset Management, LLC (Prime),
which is a contractual advisor to ARI and TCI. She was elected to the Board of Directors effective
February 23, 2007 to fill the vacancy on the Board of Directors created by the resignation of Ted
P. Stokely.
The Board of Directors unanimously recommends a vote FOR
the election of all of the Nominees named above.
-12-
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Swalm & Associates, P.C. as the independent registered
public accounting firm for Income Opportunity Realty Investors, Inc. for the 2007 fiscal year and
to conduct quarterly reviews through September 30, 2007. The Companys Bylaws do not require that
stockholders ratify the appointment of Swalm & Associates, P.C. as the Companys independent
registered public accounting firm. Swalm & Associates, P.C. has served as the Companys
independent registered public accounting firm for each of the three fiscal years ended December 31,
2004, 2005 and 2006. The Audit Committee will consider the outcome of this vote in its decision to
appoint an independent registered public accounting firm next year, however, it is not bound by the
stockholders decision. Even if the selection is ratified, the Audit Committee, in its sole
discretion, may change the appointment at any time during the year if it determines that such a
change would be in the best interest of the Company and its stockholders.
A representative of Swalm & Associates, P.C. will attend the Annual Meeting. The
representative will have an opportunity to make a statement if he or she desires to do so and will
be available to respond to appropriate questions from the stockholders.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Swalm & Associates, P.C. as the Companys
independent registered public accounting firm.
Fiscal Years 2005 and 2006 Audit Firm Fee Summary
The following table sets forth the aggregate fees for professional services rendered to the
Company for the years 2005 and 2006 by the Companys principal accounting firm, Swalm & Associates,
P.C.:
|
|
|
|
|
|
|
|
|
Type of Fees |
|
2005 |
|
|
2004 |
|
Audit Fees |
|
$ |
42,262 |
|
|
$ |
55,755 |
|
Audit-Related Fees |
|
|
|
|
|
|
0 |
|
Tax Fees |
|
|
2,000 |
|
|
|
2,500 |
|
All Other Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees: |
|
$ |
44,262 |
|
|
$ |
58,255 |
|
|
|
|
|
|
|
|
All services rendered by the principal auditors are permissible under applicable laws and
regulations and were pre-approved by either the Board of Directors or the Audit Committee, as
required by law. The fees paid the principal auditors for services as described in the above table
fall under the categories listed below:
Audit Fees. These are fees for professional services performed by the
principal auditor for the audit of the Companys annual financial statements and
review of
-13-
financial
statements included in the Companys 10-Q filings and services that are
normally provided in connection with statutory and regulatory filing or engagements.
Audit-Related Fees. These are fees for assurance and related services
performed by the principal auditor that are reasonably related to the performance of
the audit or review of the Companys financial statements. These services include
attestations by the principal auditor that are not required by statute or regulation
and consulting on financial accounting/reporting standards.
Tax Fees. These are fees for professional services performed by the principal
auditor with respect to tax compliance, tax planning, tax consultation, returns
preparation and review of returns. The review of tax returns includes the Company
and its consolidated subsidiaries.
All Other Fees. These are fees for other permissible work performed by the
principal auditor that do not meet the above category descriptions.
These services are actively monitored (as to both spending level and work content) by the
Audit Committee to maintain the appropriate objectivity and independence in the principal auditors
core work, which is the audit of the Companys consolidated financial statements.
Report of the Audit Committee
Of the Board of Directors
The Audit Committee of the Board of Directors is composed of three directors, each of whom
satisfies the requirements of independence, experience and financial literacy under the
requirements of the American Stock Exchange and the SEC. The Audit Committee has directed the
preparation of this report and has approved its content and submission to the stockholders.
The Audit Committee is responsible for, among other things:
|
|
|
retaining and overseeing the independent registered public accounting firm that
serves as our independent auditor and evaluating their performance and independence; |
|
|
|
|
reviewing the annual audit plan with management and the independent registered
public accounting firm; |
|
|
|
|
pre-approving any permitted non-audit services provided by our independent
registered public accounting firm; |
|
|
|
|
approving the fees to be paid to our independent registered public accounting
firm; |
|
|
|
|
reviewing the adequacy and effectiveness of our internal controls with
management, internal auditors and the independent registered public accounting firm; |
|
|
|
|
reviewing and discussing the annual audited financial statements and the
interim unaudited financial statements with management and the registered public
accounting firm; and |
-14-
|
|
|
approving our internal audit plan and reviewing reports of our internal auditors. |
The Audit Committee operates under a written charter adopted by the Board of Directors. The
Committees responsibilities are set forth in this charter which is available on our website at
www.incomeopprealty-invest.com and is attached as Appendix A.
The Audit Committee assists the Board in fulfilling its responsibilities for general oversight
of the integrity of the Companys financial statements, the adequacy of the Companys system of
internal controls, the Companys risk management, the Companys compliance with legal and
regulatory requirements, the independent auditors qualifications and independence, and the
performance of the Companys independent auditors. The Committee has sole authority over the
selection of the Companys independent auditors and manages the Companys relationship with its
independent auditors. The Committee has the authority to obtain advice and assistance from outside
legal, accounting or other advisors as the Committee deems necessary to carry out its duties and
receive appropriate funding, as determined by the Committee, from the Company for such advice and
assistance.
The Committee met eight times during 2006. The Committee schedules its meetings with a view
to ensuring that it devotes appropriate attention to all of its tasks. The Committees meetings
include private sessions with the Companys independent auditors without the presence of the
Companys management, as well as executive sessions consisting of only Committee members. The
Committee also meets senior management from time to time.
Management has the primary responsibility for the Companys financial reporting process,
including its system of internal control over financial reporting and for the preparation of
consolidated financial statements in accordance with accounting principles generally accepted in
the United States of America. The Companys independent auditors are responsible for auditing
those financial statements in accordance with professional standards and expressing an opinion as
to their material conformity with U.S. generally accepted accounting principles and for auditing
managements assessment of, and the effective operation of, internal control over financial
reporting. The Committees responsibility is to monitor and review the Companys financial
reporting process and discuss managements report on the Companys internal control over financial
reporting. It is not the Committees duty or responsibility to conduct audits or accounting
reviews or procedures. The Committee has relied, without independent verification, on managements
representation that the financial statements have been prepared with integrity and objectivity and
in conformity with accounting principles generally accepted in the United States of America and on
the opinion of the independent registered public accountants included in their report on the
Committees financial statements.
As part of its oversight of the Companys financial statements, the Committee reviews
and discusses with both management and the Companys independent registered public accountants all
annual and quarterly financial statements prior to their issuance. During 2006, management advised
the Committee that each set of financial statements reviewed had been prepared in accordance with
accounting principles generally accepted in the United States of America, and reviewed significant
accounting and disclosure issues with the Committee. These reviews include discussions with the
independent accountants of the matters required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Codification of Statements on Auditing Standards), including the quality (not
merely the acceptability) of the Companys accounting principles, the reasonableness of significant
judgments, the clarity of disclosures in the financial statements and disclosures related to
critical accounting practices. The Committee has also discussed with Swalm & Associates, P.C.
matters relating to its
-15-
independence, including a review of audit and non-audit fees, and written
disclosures from Swalm & Associates, P.C. to the Company pursuant to Independence Standards Board
Standard No. 1 (Independence Discussions with
Audit Committees). The Committee also considered whether non-audit services, provided by the
independent accountants are compatible with the independent accountants independence. The Company
also received regular updates on the amount of fees and scope of audit, audit-related and tax
services provided.
In addition, the Committee reviewed key initiatives and programs aimed at strengthening the
effectiveness of the Companys internal and disclosure control structure. As part of this process,
the Committee continued to monitor the scope and adequacy of the Companys internal controls,
reviewed staffing levels and steps taken to implement recommended improvements in any internal
procedures and controls.
Based on the Committees discussion with management and the independent accountants and the
Committees review of the representation of management and the report of the independent
accountants to the Board of Directors, the Audit Committee recommended to the Board of Directors,
and the Board of Directors has approved, that the audited consolidated financial statements be
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2006, filed
with the SEC. The Audit Committee and the Board of Directors have also selected Swalm &
Associates, P.C. as the Companys independent registered public accountants and auditors for the
fiscal year ending December 31, 2007.
AUDIT COMMITTEE
|
|
|
|
|
|
|
|
|
|
Peter L. Larsen
|
|
David E. Allard
|
|
Robert A. Jakuszewski |
Pre-Approval Policy for Audit and Non-Audit Services
Under the Sarbanes-Oxley Act of 2002 (the SO Act), and the rules of the SEC, the
Audit Committee of the Board of Directors is responsible for the appointment, compensation and
oversight of the work of the independent auditor. The purpose of the provisions of the SO Act and
the SEC rules for the Audit Committee role in retaining the independent auditor is two-fold.
First, the authority and responsibility for the appointment, compensation and oversight of the
auditors should be with directors who are independent of management. Second, any non-audit work
performed by the auditors should be reviewed and approved by these same independent directors to
ensure that any non-audit services performed by the auditor do not impair the independence of the
independent auditor. To implement the provisions of the SO Act, the SEC issued rules specifying
the types of services that an independent auditor may not provide to its audit client, and
governing the Audit Committees administration of the engagement of the independent auditor. As
part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit
services performed by the independent auditor in order to assure that they do not impair the
auditors independence. Accordingly, the Audit Committee adopted on March 22, 2004 a written
pre-approval policy of audit and non-audit services (the Policy), which sets forth the procedures
and conditions pursuant to which services to be performed by the independent auditor are to be
pre-approved. Consistent with the SEC rules establishing two different approaches to approving
non-prohibited services, the policy of the Audit Committee covers pre-approval of audit services,
audit-related services, international administration tax services, non-U.S. income tax compliance
services, pension and benefit plan consulting and compliance services, and U.S. tax compliance and
planning. At the beginning of each fiscal year, the Audit Committee will evaluate other
-16-
known
potential engagements of the independent auditor, including the scope of work proposed to be
performed and the proposed fees, and approve or reject each service, taking into account whether
services are permissible under applicable law and the possible impact of each non-audit service on
the independent auditors independence from management. Typically, in addition to the generally
pre-approved services, other services would include
due diligence for an acquisition that may or may not have been known at the beginning of the
year. The Audit Committee has also delegated to any member of the Audit Committee designated by
the Board or the financial expert member of the Audit Committee responsibilities to pre-approve
services to be performed by the independent auditor not exceeding $25,000 in value or cost per
engagement of audit and non-audit services, and such authority may only be exercised when the Audit
Committee is not in session.
Executive Compensation
The Company has no employees, payroll or benefit plans and pays no compensation to its
executive officers. The executive officers of the Company who are also officers or employees of
Prime are compensated by Prime. Prime has an arrangement with SWI to provide certain services to
the Company on behalf of, and as a sub-advisor to, SWI. Such executive officers perform a variety
of services for Prime and the amount of their compensation is determined solely by Prime. Prime
does not allocate the cash compensation of its officers among the various entities for which it
serves as advisor. See The Advisor for a discussion of the compensation payable to SWI under the
Advisory Agreement.
Compensation Committee Report
The Compensation Committee of the Board of Directors is comprised of at least two directors
who are independent of management and the Company. Each member of the Compensation Committee must
be determined to be independent by the Board under the Corporate Governance Guidelines on Director
Independence adopted by the Board and under the American Stock Exchange LLC (the AMEX) standards
for non-employee directors and Rule 16b-3(b)(3)(i) of the rules and regulations promulgated under
the Securities Exchange Act of 1934 and the requirements for outside directors set forth in
Treasury Regulations, Section 27(e)(3). Each member of the Committee is to be free of any
relationship that in the judgment of the Board from time to time may interfere with the exercise of
his or her independent judgment. Each Committee member is appointed annually subject to removal at
any time by the Board and serves until his or her Committee appointment is terminated by the Board.
The Compensation Committee is composed of three directors, each of whom meets the standards
described above.
The purposes of the Compensation Committee are to oversee the policies of the Company relating
to compensation to be paid by the Company to the Companys principal executive officer (CEO) and
any other officers designated by the Board and make recommendations to the Board with respect to
such policies, produce necessary reports and executive compensation for inclusion in the Companys
proxy statement, in accordance with applicable rules and regulations, and monitor the development
and implementation of succession plans for the CEO and other key executives and make
recommendations to the Board with respect to such plans.
The Company has no employees, payroll or benefit plans and pays no compensation to its
executive officers. The executive officers of the Company, who are also officers or employees of
Prime Income Asset Management LLC (Prime), are compensated by Prime. Such executive officers
perform a variety of services for Prime, and the amount of their compensation is determined solely
by Prime.
-17-
Prime does not allocate the cash compensation of its officers among the various entities
for which it may serve as advisor or sub-advisor.
The only remuneration paid by the Company is to directors who are not officers or directors of
Prime or the Advisor. These independent directors (i) review the business plan of the Company to
determine that it is the best interest of the stockholders, (ii) review the advisory contract and
recommend
any appropriate changes thereto, (iii) supervise the performance of the Companys contractual
advisor, and review the reasonableness of the compensation paid to the contractual advisor in terms
of the nature and quality of services performed, (iv) review the reasonableness of the total fees
and expenses of the Company, and (v) select, when necessary, a qualified, independent real estate
appraiser to appraise properties acquired. See the sub caption Directors Compensation in the
Proxy Statement for a description of the compensation paid.
The charter of the Compensation Committee was adopted on March 22, 2004, and the members of
the Compensation Committee, all of whom are independent within the meaning of the listing standards
of the AMEX and the Companys Corporate Governance Guidelines, are listed below. Since its
formation on March 22, 2004, the Compensation Committee has annually reviewed its existing charter
and regularly performed the tasks described above relating to the business plan, advisory contract,
reasonableness of compensation paid to the advisor, and the reasonableness of the total fees and
expenses of the Company.
COMPENSATION COMMITTEE
|
|
|
|
|
|
|
|
|
|
David E. Allard
|
|
Peter L. Larsen
|
|
Robert A. Jakuszewski |
Compensation Committee Interlocks and Insider Participation
The Companys Compensation Committee is made up of non-employee directors who have never
served as officers of, or been employed by the Company. None of the Companys executive officers
serve on a board of directors of any entity that has a director or officer serving on this
Committee.
Executive Officers
Executive officers of the Company are Daniel J. Moos, President and Chief Operating Officer,
Steven A. Abney, Executive Vice President and Chief Financial Officer, Louis J. Corna, Executive
Vice President General Counsel/Tax Counsel and Secretary, Alfred Crozier, Executive Vice
President-Residential Construction and Reagan K. Vidal, Executive Vice President, Managing Director
of Capital Markets. Messrs. Moos, Abney, Corna, Crozier and Vidal are employed by Prime. None of
the executive officers receive any direct remuneration from the Company, nor do any hold any
options granted by the Company. Their positions with the Company are not subject to a vote of
stockholders. The ages, terms of service and all positions and offices with the Company, Prime,
SWI, other affiliated entities, other principal occupations, business experience and directorships
with other publicly-held companies during the last five years or more are set forth below.
-18-
Daniel J. Moos, 56
President and Chief Operating Officer (effective April 5, 2007) of the Company, American
Realty Investors, Inc. (ARL) and TCI and (effective March 2007) of Prime; Senior Vice President
and Business Line Manager for U.S. Bancorp (NYSE;USB) working out of their officers in Houston,
Texas from 2003 to April 2007; Executive Vice President and Chief Financial Officer, Fleetcor
Technologies a privately held transaction processing company that was headquartered in New Orleans,
Louisiana from 1998 to 2003; Senior Vice President and Chief Financial Officer, ICSA a privately
held internet security and information company headquartered in Carlilse, Pennsylvania from 1996 to
1998; and for more than
ten years prior thereto was employed in various financial and operating roles for PhoneTel
Technologies, Inc. which was a publicly traded telecommunication company on the American Stock
Exchange headquartered in Cleveland, Ohio (1992-1996) and LDI Corporation which was a publicly
traded computer equipment sales/service and asset leasing company listed on the NASDAQ and
headquartered in Cleveland, Ohio.
Steven A. Abney, 52
Executive Vice President and Chief Financial Officer (since December 2005) of the Company and
(since September 29, 2005) of ARL and TCI. Mr. Abney was Vice PresidentFinance and Chief
Accounting Officer/Principal Financial Officer (November 2001 to February 2005) of and was employed
(November 2001 to August 2005) by CRT Properties, Inc. (f/k/a Koger Equity, Inc.), a Boca Raton,
Florida-based real estate enterprise which had securities listed on the New York Stock Exchange
until September 27, 2005. For more than four years prior thereto, Mr. Abney was the Executive Vice
President and Chief Financial Officer of Konover and Associates, Inc., a privately-held real estate
developer based in Farmington, Connecticut. Mr. Abney has been a Certified Public Accountant since
1980.
Louis J. Corna, 59
Executive Vice President, General Counsel/Tax Counsel and Secretary (since February 2004),
Executive Vice President (October 2001 to February 2004), Executive Vice President and Chief
Financial Officer (June 2001 to October 2001) and Senior Vice PresidentTax (December 2000 to June
2001) of the Company, TCI, ARL and BCM; Executive Vice President, General Counsel/Tax Counsel and
Secretary (since February 2004), Executive Vice PresidentTax (July 2003 to February 2004) of Prime
and PIAMI; Private Attorney (January 2000 to December 2000); Vice PresidentTaxes and Assistant
Treasurer (March 1998 to January 2000) of IMC Global, Inc.; Vice PresidentTaxes (July 1991 to
February 1998) of Whitman Corporation.
Alfred Crozier, 54
Executive Vice President-Residential Construction (since November 15, 2006) of the
Company and of ARL and TCI. Prior to his selection as an officer of the Company, Mr. Crozier was
Managing Director of Development (November 2005 to November 2006) for Woodmont Investment Company
GP, LLC, a Dallas, Texas based developer of commercial properties and residential units. Prior
thereto (from October 2003 to November 2005) he was President of Sterling Builders, Inc., a Spring,
Texas construction and consulting company. Prior thereto (from August 2001 through September 2003)
he was Vice President of Westchase Construction, LTD, a Houston, Texas based construction firm and
for more than five years prior thereto, he was employed by various firms engaged in the
construction industry
-19-
including Trammel Crow Residential (February 1995 through February 2000) and
The Finger Companies (August 1991 through February 1995). Mr. Crozier is also an architect.
Reagan K. Vidal, 46
Executive Vice President, Managing Director of Capital Markets (since February 1, 2007) of
the
Company, ARL and TCI. Mr. Vidal was employed (from 1996 to January 2007) by Guaranty Bank, a Texas
based financial institution which provides commercial and residential development financing and
mortgage banking credit, where his last position was as Senior Vice President, California Division
Manager establishing and implementing the Banks market presence and southern California beginning
in 2001. Prior thereto (from 1993 to 1996) he was Vice President, US Real Estate Group of Societé
Généralé, a French based multi-national financial institution with US Real Estate Operations based
in Dallas, Texas; for more than five years prior thereto, he was Vice President of Western Region
Commercial of Lomas Management, Inc., Advisor and Manager to Lomas & Nettleton Mortgage Investors
and Lomas Financial Corporation, then two publicly traded real estate investment trusts.
The Advisor
Although the Board of Directors is directly responsible for managing the affairs of the
Company and for setting the policies which guide it, day-to-day operations are performed by a
contractual advisor under the supervision of the Board of Directors. The duties of the advisor
include, among other things, locating, investigating, evaluating and recommending real estate and
mortgage note investment and sales opportunities, as well as financing and refinancing sources.
The advisor also serves as a consultant to the Board of Directors in connection with the business
plan and investment decisions made by the Board.
SWI has served as the Companys advisor since June 30, 2003. Prior to June 30, 2003, from
1989, BCM served as the advisor to the Company and its predecessors. SWI is 100% owned by Gene E.
Phillips. Mr. Phillips is chairman, president, chief executive officer and a director of SWI, is
involved in daily consultation with the officers of SWI and has significant influence over the
conduct of SWIs business, including the rendering of advisory services and the making of
investment decisions for itself and the Company. Mr. Crouch, a director of the Company (since
August 2006) and Chairman of the Board since February 23, 2007, is an officer and a director of
SWI.
Under the Advisory Agreement, SWI is required to annually formulate and submit for Board
approval a budget and business plan containing a twelve-month forecast of operations and cash flow,
a general plan for asset sales and purchases, borrowing activity and other investments. SWI is
required to report quarterly to the Board on the Companys performance against the business plan.
In addition, all transactions require prior Board approval, unless they are explicitly provided for
in the approved plan or are made pursuant to authority expressly delegated to SWI by the Board.
The Advisory Agreement also requires prior approval of the Board for the retention of all
consultants and third party professionals, other than legal counsel. The Advisory Agreement
provides that SWI shall be deemed to be in a fiduciary relationship to the stockholders; contains a
broad standard governing SWIs liability for losses by the Company; and contains guidelines for
SWIs allocation of investment opportunities as among itself, the Company and other entities it
advises.
The Advisory Agreement provides for SWI to be responsible for the day-to-day operations
of the Company and to receive an advisory fee comprised of a gross asset fee of 0.0625% per month
(0.75%
-20-
per annum) of the average of the gross asset value (total assets less allowance for
amortization, depreciation or depletion and valuation reserves) and an annual net income fee equal
to 7.5% of the Companys net income.
The Advisory Agreement also provides for SWI to receive an annual incentive sales fee equal to
10% of the amount, if any, by which the aggregate sales consideration for all real estate sold by
the Company during the fiscal year exceeds the sum of (1) the cost of each property as originally
recorded in the Companys books for tax purposes (without deduction for depreciation, amortization
or reserve for losses), (2) capital improvements made to such assets during the period owned, and
(3) all closing costs (including real estate commissions) incurred in the sale of such real estate.
However, no incentive fee shall be paid unless (a) such real estate sold in such fiscal year, in
the aggregate, has produced an 8% simple annual return on the net investment, including capital
improvements, calculated over the holding period before depreciation and inclusive of operating
income and sales consideration, and (b) the aggregate net operating income from all real estate
owned for each of the prior and current fiscal years shall be at least 5% higher in the current
fiscal year than in the prior fiscal year.
Additionally, pursuant to the Advisory Agreement, SWI or an affiliate of SWI is to receive an
acquisition commission for supervising the acquisition, purchase or long-term lease of real estate
equal to the lesser of (i) up to 1% of the cost of acquisition, inclusive of commissions, if any,
paid to non-affiliated brokers, or (ii) the compensation customarily charged in arms-length
transactions by others rendering similar property acquisition services as an ongoing public
activity in the same geographical location and for comparable property, provided that the aggregate
purchase price of each property (including acquisition fees and real estate brokerage commissions)
may not exceed such propertys appraised value at acquisition.
The Advisory Agreement requires SWI or any affiliate of SWI to pay the Company one-half of any
compensation received from third parties with respect to the origination, placement or brokerage of
any loan made by the Company. However, the compensation retained by SWI or any affiliate of SWI
shall not exceed the lesser of (i) 2% of the amount of the loan commitment, or (ii) a loan
brokerage and commitment fee which is reasonable and fair under the circumstances.
The Advisory Agreement also provides that SWI or an affiliate of SWI is to receive a mortgage
or loan acquisition fee with respect to the purchase of any existing mortgage loan equal to the
lesser of (i) 1% of the amount of the loan purchased, or (ii) a brokerage or commitment fee which
is reasonable and fair under the circumstances. Such fee will not be paid in connection with the
origination or funding of any mortgage loan by the Company.
Under the Advisory Agreement, SWI or an affiliate of SWI also is to receive a mortgage
brokerage and equity refinancing fee for obtaining loans or refinancing on properties equal to the
lesser of (i) 1% of the amount of the loan or the amount refinanced, or (ii) a brokerage or
refinancing fee which is reasonable and fair under the circumstances. However, no such fee shall
be paid on loans from SWI or an affiliate of SWI without the approval of the Board of Directors.
No fee shall be paid on loan extensions.
The Advisory Agreement also provides for all activities in connection with or related
to construction for the Company and its subsidiaries, SWI shall receive a fee equal to 6% of the
so-called hard costs only of any costs of construction on a completed basis, based upon amounts
set forth as approved on any architect certificate issued in connection with such construction,
which fee is payable
-21-
at such time as the applicable architect certifies other costs for payment to
third parties. The phrase hard costs means all actual costs of construction paid to contractors,
subcontractors and third parties for materials or labor performed as a part of the construction but
does not include items generally regarded as soft costs which are consulting fees, attorneys
fees, architectural fees, permit fees and fees of other professionals.
Under the Advisory Agreement, SWI is to receive reimbursement of certain expenses incurred by
it in the performance of advisory services to the Company.
Under the Advisory Agreement, all or a portion of the annual advisory fee must be refunded by
SWI if the Operating Expenses of the Company (as defined in the Advisory Agreement) exceed certain
limits specified in the Advisory Agreement based on the book value, net asset value and net income
of the Company during the fiscal year.
Additionally, if management were to request that SWI render services other than those required
by the Advisory Agreement, SWI or an affiliate of SWI is to be separately compensated for such
additional services on terms to be agreed upon from time to time. As discussed below, under
Property Management, the Company hired Triad Realty Services LP (Triad), an affiliate of Prime,
to provide management for the Companys properties and, as discussed below, under Real Estate
Brokerage, the Company has engaged Regis Realty I LLC (Regis I), a related party, on a
non-exclusive basis to provide brokerage services for the Company. SWI may assign the Advisory
Agreement only with the prior consent of the Company.
Effective July 1, 2005, the Company and SWI entered into a Cash Management Agreement to
further define the administration of the Companys day-to-day investment operations, relationship
contracts, flow of funds and deposit and borrowing of funds. Under the Cash Management Agreement,
all funds of the Company are delivered to SWI which has a deposit liability to the Company and is
responsible for payment of all payables and investment of all excess funds which earn interest at
the Wall Street Journal Prime Rate plus 1% per annum, as set quarterly on the first day of each
calendar quarter. Borrowings for the benefit of the Company bear the same interest rate. The term
of the Cash Management Agreement is coterminous with the Advisory Agreement, and it is
automatically renewed each year unless terminated with the Advisory Agreement.
SWI may assign the Advisory Agreement only with the prior consent of the Company.
The directors and principal executive officers of SWI are set forth below:
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Name |
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Office(s) |
Gene E. Phillips
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Director, Chairman, President and Chief Executive Officer |
R. Neil Crouch
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Director, Vice President, Treasurer and Secretary |
Property Management
Triad, an affiliate of Prime, provides property management services to the Company for
a fee of 6% or less of the monthly gross rents collected on residential properties and 3% or less
of the monthly gross rents collected on commercial properties under its management. Triad
subcontracts with other entities for the provision of the property-level management services to the
Company at various rates. The general partner of Triad is Prime Income Asset Management, Inc., a
Nevada corporation (PIAMI)
-22-
which is the sole member of Prime. The limited partner of Triad is
Highland Realty Services, Inc. (Highland), a related party. Triad subcontracts the
property-level management and leasing of five of the Companys commercial properties to Regis I, a
related party, which is a company owned by Highland. Regis I also received property and
construction management fees and leasing commissions in accordance with its property-level
management agreement with Triad.
Real Estate Brokerage
Since January 1, 2003, Regis I provided real estate brokerage services to the Company (on a
non-exclusive basis). Regis I is entitled to receive a real estate commission for property
purchases and sales in accordance with a sliding scale of total fees to be paid (i) maximum fee of
4.5% on the first $2 million of any purchase or sale transaction of which no more than 3.5% would
be paid to Regis I or affiliates; (ii) maximum fee of 3.5% on transaction amounts between $2
million and $5 million, of which no more than 3% would be paid to Regis I or affiliates;
(iii) maximum fee of 2.5% on transaction amounts between $5 million and $10 million, of which no
more than 2% would be paid to Regis I; and (iv) maximum fee of 2% on transaction amounts in excess
of $10 million, of which no more than 1.5% would be paid to Regis I or affiliates.
Certain Relationships and Related Transactions
Certain Business Relationships
In February 1989, the Board of Directors of the predecessor of the Company voted to retain BCM
as the predecessors advisor. BCM is a company of which Messrs. Daniel J. Moos, Steven A. Abney
and Louis J. Corna serve as executive officers. BCM is indirectly owned by a trust for the
children of Gene E. Phillips. Mr. Phillips is not an officer or director of BCM but serves as a
representative of the trust, is involved in daily consultation with the officers of BCM and has
significant influence over the conduct of BCMs business, including the rendering of advisory
services and the making of investment decisions for itself and for the Company. On June 30, 2003,
BCM ended its advisory agreement with the Company. SWI has served as the Companys advisor since
July 1, 2003. SWI is owned by Gene E. Phillips. Mr. Phillips is Chairman, President, Chief
Executive Officer and a director, is involved in daily consultation with the officers of SWI and
has significant influence over the conduct of SWIs business, including the rendering of advisory
services and the making of investment decisions for itself and for the Company.
Triad provides property management services. The general partner of Triad is PIAMI, which 20%
is owned by SWI. The limited partner is Highland. Triad subcontracts the property-level
management and leasing of five of the Companys commercial properties to Regis I, a limited
liability company, the sole member of which is Highland.
Regis I also provides brokerage services, on a non-exclusive basis, for the Company and
received brokerage commissions in accordance with a brokerage agreement.
Messrs. Daniel J. Moos, Steven A. Abney, Louis J. Corna, Alfred Crozier and Reagan K.
Vidal are employed by Prime, the sole member of which is PIAMI, which is owned by Realty Advisors,
LLC, a Nevada limited liability company (80%) and SWI (20%). The sole member of Realty Advisors
LLC is Realty Advisors, Inc., a Nevada corporation. Messrs. Moos, Abney, Corna, Crozier and Vidal,
executive officers of the Company, also serve as executive officers of ARL and TCI, and accordingly
-23-
owe fiduciary duties to those entities as well as the Company. Mr. Crouch is an officer and
director of SWI and owes fiduciary duties to SWI. Mr. Stokely (Chairman of the Board and a
director of the Company until February 22, 2007) is the General Manager of Unified Housing
Foundation, Inc. (UHF), and owes duties to this entity as well as to the Company. Messrs.
Jakuszewski and Stokely, serve as directors of ARL and TCI and owe fiduciary duties to TCI and ARL,
as well as the Company under applicable law.
Related Party Transactions
Historically, the Company has engaged in and may continue to engage in business transactions,
including real estate partnerships, with related parties. Management believes that all of the
related party transactions represented the best investments available at the time and were at least
as advantageous to the Company as could have been obtained from unrelated third parties.
In connection with the resolution in April 2005 of certain litigation filed August 10, 2004 by
the Company, ARI and TCI, the Company owns 19.9% of Midland Odessa Properties, Inc. (formerly
Innovo Realty, Inc.) (MOPI), the balance of which is owned by ARI and TCI. MOPI in turn is a 30%
limited partner in several Metra partnerships formed in 2002 when the Company sold all of its
then owned residential properties to partnerships controlled by Metra Capital LLC. The original
sale transactions were accounted for as refinancing transactions with the Company continuing to
report the assets and new debt incurred by the Metra partnerships on the Companys financial
statements. As properties are sold to independent third parties, the transactions are reported as
sales.
On August 22, 2005, the Company purchased 10.08 acres of land located in Dallas County, Texas,
from TCI (a related party) for $13 million. The purchase price was paid with cash of $7 million
and the conveyance to the seller of $6 million in notes receivable held by the Company. The cash
was obtained from financing the land acquired in the transaction. The agreement includes a put
option whereby for the period of fifteen months after the closing, the Company has the right to
resell the property to the seller for a price of $13 million plus a preferred return of 9% per
annum accruing from the closing date. Due to the related-party nature of the transaction,
including the likelihood that the Company will exercise its put option, this transaction has been
treated as a financing transaction. The Company continues to carry the $6 million of notes as a
receivable and has recorded the $7 million as a receivable from TCI. TCI pays the Company interest
in an amount equal to what the Company pays for its loan on the property.
The Company is a partner with TCI in Nakash Income Associates nd TCI Eton Square, L.P. TCI
owns 345,728 shares of Common Stock of the Company (approximately 24%).
In 2006, the Company paid SWI and its affiliates and related parties $784,000 in advisory
fees, $9,000 in net income fees and $338,000 in mortgage brokerage and equity refinancing fees. In
addition, from time to time, the Company has made advances to SWI which generally have not had
specific repayment terms, did not bear interest until July 1, 2005, and have been reflected in the
Companys financial statements as receivables from or payables to affiliates. At December 31,
2006, the Company was owed $16.3 million from SWI. Effective July 1, 2005, such advances bear
interest at 1% above the prime rate per annum. For the period July 1, 2005 through December 31,
2005, the Company received interest of $626,000.
-24-
Restrictions on Related Party Transactions
Article FOURTEENTH of the Companys Articles of Incorporation provides that the Company shall
not, directly or indirectly, contract or engage in any transaction with (1) any director, officer
or employee of the Company, (2) any director, officer or employee of the advisor, (3) the advisor,
or (4) any affiliate or associate (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended) of any of the aforementioned persons, unless (a) the material
facts as to the relationship among or financial interest of the relevant individuals or persons and
as to the contract or transaction are
disclosed to or are known by the Companys Board of Directors or the appropriate committee
thereof, and (b) the Companys Board of Directors or appropriate committee thereof determines that
such contract or transaction is fair to the Company and simultaneously authorizes or ratifies such
contract or transaction by the affirmative vote of a majority of independent directors of the
Company entitled to vote thereon. Article FOURTEENTH defines an Independent Director as one who
is neither an officer or an employee of the Company, nor a director, officer or employee of the
Companys advisor.
PERFORMANCE GRAPH
The following performance graph compares the cumulative total stockholder return on shares of
Common Stock of the Company with the Dow Jones US Total Market Index (Total Market Index) and the
Dow Jones Real Estate Investment Index (Real Estate Index). The comparison assumes that $100 was
invested on December 31, 2001, in shares of Common Stock of the Company, and in each of the indices
and further assumes the reinvestment of all distributions. Past performance is not necessarily an
indicator of future performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Income
Opportunity Realty Investors, Inc. The Dow Jones US Total Market
Index
And The Dow
Jones US Real Estate Index
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12/01
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12/02
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12/03
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12/04
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12/05
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12/06
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Income Opportunity Realty Investors, Inc
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100.00
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104.50
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85.67
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88.89
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105.00
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110.83
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Dow Jones US Total Market
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100.00
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77.92
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101.88
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114.12
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121.34
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140.23
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Dow Jones US Real Estate
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100.00
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103.63
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141.87
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186.15
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204.09
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276.53
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* |
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$100 invested on 12/31/01 in stock or index-including
reinvestment of dividends. Fiscal year ending December 31. |
-25-
OTHER MATTERS
The Board of Directors knows of no other matters that may be properly or should be brought
before the Annual Meeting. However, if any other matters are properly brought before the Annual
Meeting, the persons named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters.
FINANCIAL STATEMENTS
The audited financial statements of the Company, in comparative form for the years ended
December 31, 2005 and 2006 are contained in the 2006 Annual Report to Stockholders, which preceded
the delivery of this proxy statement in April 2007. However, such report and the financial
statements contained therein are not to be considered part of this solicitation.
SOLICITATION OF PROXIES
THIS PROXY STATEMENT IS FURNISHED TO STOCKHOLDERS TO SOLICIT PROXIES ON BEHALF OF THE BOARD OF
DIRECTORS OF INCOME OPPORTUNITY REALTY INVESTORS, INC. The cost of soliciting proxies will be born
by the Company. Directors and officers of the Company may, without additional compensation,
solicit by mail, in person or by telecommunication.
FUTURE PROPOSALS OF STOCKHOLDERS
Stockholder proposals for our Annual Meeting to be held in 2008 must be received by us by
December 31, 2007, and must otherwise comply with the rules promulgated by the Securities and
Exchange Commission to be considered for inclusion in our proxy statement for that year. Any
stockholder proposal, whether or not to be included in our proxy materials, must be sent to our
Corporate Secretary at 1800 Valley View Lane, Suite 300, Dallas, Texas 75234.
COPIES OF INCOME OPPORTUNITY REALTY INVESTORS, INC.S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2006 TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K AS FILED WITH THE
SECURITIES AND
EXCHANGE COMMISSION (WITHOUT EXHIBITS) ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE THROUGH
OUR WEBSITE AT WWW.INCOMEOPP-REALTY.COM OR UPON WRITTEN REQUEST TO INCOME OPPORTUNITY
REALTY INVESTORS, INC., 1800 VALLEY VIEW LANE, SUITE 300, DALLAS, TEXAS 75234, ATTN: DIRECTOR OF
INVESTOR RELATIONS.
Dated: November 5, 2007.
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By order of the Board of Directors,
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/s/ Louis J. Corna
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Louis J. Corna, Executive Vice President, |
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General Counsel, Tax Counsel and Secretary |
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-26-
APPENDIX
A
INCOME OPPORTUNITY REALTY INVESTORS, INC.
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee of the Board of Directors shall be comprised of at least three directors
who are independent of management and the Company. Each member of the Audit Committee must be
determined to be independent under the New York Stock Exchanges (NYSE) standards and must meet
the additional requirements under the Exchange Act. Under these requirements, an Audit Committee
member may not accept, directly or indirectly, any consulting, advisory or other compensatory fee
from the Company, other than director fees. Also, an Audit Committee member may not be an
affiliated person of the Company. Members of the Audit Committee shall be considered independent
if they have no relationship to the Company that may interfere with the exercise of their
independent from management and the Company. All Audit Committee members will be financially
literate, and at least one member shall be an audit committee financial expert, as defined by the
SEC.
Statement of Policy
The Audit Committee shall provide assistance to directors in fulfilling their oversight
responsibility to the shareholders, potential shareholders, and investment community relating to:
the integrity of the Companys financial statements, the Companys compliance with legal and
regulatory requirements, the independent auditors qualifications and independence, and the
performance of the Companys internal audit function and the independent auditors. In so doing, it
is the responsibility of the audit committee to maintain free and open communication among the
directors, the independent auditors and the financial management of the Company. It is the
expectation of the Audit Committee that the financial management will fulfill its responsibility of
bringing any significant items to the attention of the Audit Committee.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its policies and
procedures
should remain flexible, in order to best react to changing conditions and to ensure to the
directors and shareholders that the corporate accounting and reporting practices of the Company are
in accordance with pertinent requirements.
The following is a listing of the Audit Committee responsibilities:
General
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1. |
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Obtain annually the full Board of Directors approval of this Charter and
review and reassess this Charter as conditions dictate. |
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2. |
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Submit the minutes of all meetings of the Audit Committee to, or discuss the
matters discussed at each Committee meeting, with the Board of Directors. |
A-1
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3. |
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Report the results of the annual audit to the Board of
Directors. |
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4. |
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Investigate any matter brought to its attention within the scope of its duties,
with the power to retain outside legal, accounting or other advisors for this purpose
if, in its judgment, that is appropriate. |
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5. |
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Review, consider and authorize any proposal to hire employees or former
employees of the independent auditors. |
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6. |
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Monitor procedures for the receipt, retention and treatment of complaints
received from employees regarding accounting, internal control or auditing matters,
including the confidential and anonymous submission by employees regarding questionable
accounting or auditing practices. |
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7. |
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Include a report of the Audit Committee in the proxy statement. |
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8. |
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On an annual basis, conduct a self evaluation. |
Meetings and Communications
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9. |
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Hold regularly scheduled meeting. |
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10. |
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Periodically, the Committee will meet privately with the independent auditors,
with the Companys Chief Financial Officer and with the Companys internal auditor to
discuss issues and concerns warranting Committee attention. |
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11. |
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Review the financial statements contained in the annual report to the
shareholders. Discuss such annual report with management and the independent auditors,
including the Companys disclosures under Managements Discussion and Analysis of
Financial Condition and Results of Operations. Determine that the independent auditors
are satisfied with the disclosure and content of the financial statements to be
presented to the shareholders. Review with financial management and the independent
auditors the results of their timely analysis of significant financial reporting issues
and practices, including changes in, or adoptions of, accounting principals and
disclosure practices, and discuss other matters required to be communicated to the
Committee by the auditors. |
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12. |
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Review with the independent auditors, the Companys internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the accounting
and financial controls of the Company, and elicit recommendations for the improvement
of such internal controls or particular areas where new or more detailed controls or
procedures are desirable. |
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13. |
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Review, in general, earnings press releases, quarterly filings, and financial
information and earnings guidance provided to analysts and rating agencies. |
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14. |
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Discuss policies with respect to risk assessment and risk management. |
A-2
Independent Auditors
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15. |
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The Committee shall be directly responsible for the appointment, termination,
compensation and oversight of the independent auditors, including resolution of any
disagreements between management and the independent auditors. The Committee will have
a clear understanding with the independent auditors that they are ultimately
accountable to the Audit Committee, as the shareholders representatives, who have the
ultimate authority in deciding to engage, evaluate, and if appropriate, terminate their
services. |
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16. |
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Preapprove all audit and non-audit services provided by the independent
auditors, with appropriate pre-approval authority delegated to the Audit Committee
Chairperson. Any decisions of the Audit Committee Chairperson will be presented to the
full Audit Committee at its next regularly scheduled meeting. |
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17. |
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Meet with the independent auditors and financial management of the Company to
review the scope of the proposed audit and quarterly reviews for the current year and
the procedures to be utilized. At the conclusion thereof, the results of such audit or
reviews, including any audit problems or difficulties, any comments or recommendations
of the independent auditors, along with managementss responses to these issues, shall
be communicated to the Committee. |
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18. |
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On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional services as required
by Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees. Additionally, such annual written communication will describe any issue
that would materially affect the independent auditors ability to effectively provide
services to the Company and render an audit opinion. Obtain and review at least
annually a report from the independent auditors describing that firms internal
quality-control procedures; any material issues raised by the most recent
quality-control review, or peer review of the firm, or by any inquiry or investigation
by governmental or professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the firm, and steps taken to
deal with any such issues. |
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19. |
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On an annual basis, evaluate the independent auditors qualifications,
performance and independence, including the review and evaluation of the lead partner
of the independent auditor. Assure the regular rotation of the lead audit partner as
required by law. Periodically consider and evaluate the prudence of rotation of the
independent auditor. Present conclusions to the Board of Directors. |
A-3
ANNUAL MEETING OF STOCKHOLDERS OF |
INCOME OPPORTUNITY REALTY INVESTORS, INC |
Please date, sign and mail
your proxy card in the |
envelope provided as soon |
Please detach along perforated line and mail in the envelope provided |
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE H |
1. Election of Directors: |
WITHHOLD AUTHORITY FOR ALL NOMINEES |
NOMINEES:
O David E. Allard |
O R. Neil Crouch
O Peter L Larsen |
2. Ratification of the Appointment of Swalm & Associates, P.C. as the independent registered
public accounting firm |
3. In their discretion on any other matters which may property come before the meeting or any
adjoumment(s) thereof. |
The Board of Directors of Income Opportunity Realty Investors, Inc. recommends approval of all
nominees for election as directors, and a vote FOR ratification of the appointment of Swalm &
Associates, P.C. as the independent registered public accounting firm. |
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NO DIRECTION IS INDICATED, IT WILL BE VOTED FOR ALL
NOMINEES AND FOR RATIFICATION OF THE APPOINTMENT OF SWALM & ASSOCIATES, P.C. AS INDEPENDENT
AUDITORS. ON OTHER MATTERS THAT MAY COME BEFORE SAID MEETING, THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE ABOVE-NAMED PERSONS. |
INSTRUCTION: To withhold
authority to vote for any individual
nominees), mark FOR ALL EXCEPT and till
in the circle next to each nominee you
wish to withhold, as shown here: ^ |
To change the address on your account, please check the box at right and indicate your new
address in the address space above. Please note that changes to the registered name{s) on the
account may not be submitted via this method. |
Note: Please sign exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duty authorized officer, giving full
title as such. If signer is a partnership, please sign in partnership name by authorized
person. |
INCOME OPPORTUNITY REALTY INVESTORS, INC. |
This Proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held December 11, 2007. |
The undersigned stockholder of INCOME OPPORTUNITY REALTY INVESTORS, INC. hereby appoints R.
NEIL CROUCH and LOUIS J. CORNA, and each of them proxies with full power of substitution in each of
them, in the name, place and stead of the undersigned, as attorneys and proxies to vote all shares
of Common Stock, par value $0.01 per share, of INCOME OPPORTUNITY REALTY INVESTORS, INC. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on Tuesday,
December 11, 2007, at 1:30 p.m., local Dallas, Texas time, at 1800 Valley View Lane, Suite 300,
Dallas, Texas 75234, or any adjournment(s) thereof, with all powers the undersigned would possess
if personally present, as indicated on the reverse side, for the transaction of such business as
may properly come before said meeting or any adjournment(s) thereof, all as set forth in the
November 5, 2007 Proxy Statement for said meeting. |
(Continued and to be signed on the reverse side) |