SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 14, 2001
--------------------------------
Income Opportunity Realty Investors, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 1-14784 75-2615944
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1800 Valley View Lane, Suite 300, Dallas, Texas 75234
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 469-522-4200
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
-1-
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
The affairs of Income Opportunity Realty Investors, Inc. ("IOT") are
managed by a Board of Directors who are elected at the Annual Meeting of
Stockholders or appointed by the Incumbent Board and serve until the next Annual
Meeting of Stockholders or until a successor has been elected or approved. Until
December 14, 2001, the Board of Directors of IOT consisted of four individuals.
On December 14, 2001, R. Douglas Leonhard and Edward G. Zampa resigned
as Directors of IOT. Neither of Messrs. Leonhard nor Zampa resigned because of
any disagreement with the Registrant on any matter relating to Registrant's
operations, policies or practices, and neither of Messrs. Leonhard nor Zampa
furnished the Registrant with a letter describing any disagreement or requesting
that the matter be disclosed.
On December 17, 2001, Henry Butler was elected as a Director of IOT by
the remaining members of the Board of Directors. The Board of Directors of IOT,
after giving effect to the resignations of Messrs. Leonhard and Zampa consists
of three individuals (Ted P. Stokely, Martin L. White and Henry Butler).
On December 18, 2001, the Court in the case styled Jack Olive, et al.
v. Gene E. Phillips, et al., Case No. C 89 4331 MHP pending in the United States
District Court for the Northern District of California (the "Olive Litigation"),
signed an Order preliminarily approving a Second Amendment to the Modification
of Stipulation and Settlement dated October 17, 2001 (the "Settlement
Agreement"). IOT is one of the parties to the Olive Litigation, as is
Transcontinental Realty Investors, Inc. ("TCI"). The Settlement Agreement
requires through the mechanism of freeze-out mergers that IOT and TCI become
subsidiaries of American Realty Investors, Inc. ("ARL") which is the parent
corporation of American Realty Trust, Inc. ("ART"), also a party to the Olive
Litigation. Under the Settlement Agreement, persons not affiliated with Gene E.
Phillips, Basic Capital Management, Inc. ("BCM"), ARL or ART (the "Entities")
are to receive $19 per share in cash for IOT Common Stock, or $17.50 per share
in cash for TCI Common Stock. In the freeze-out mergers, the non-affiliated
stockholders will have the opportunity (but no obligation) to affirmatively
elect to receive shares of Preferred Stock of ARL having a liquidation value of
$21.50 per share in cash in exchange for IOT Common Stock or $20 per share in
cash for TCI Common Stock. In the freeze- out mergers, the Entities and
affiliated parties will receive shares of the ARL Preferred Stock for shares of
Common Stock of IOT and/or TCI held by them. The purchase prices and liquidation
values have been established under the Settlement Agreement. The cash
consideration to be paid to the non-affiliated persons is to be guaranteed by
and becomes an obligation of the Entities. The freeze-out mergers are to occur
only after satisfaction of certain conditions, including the approval of each
freeze-out merger by a majority of the shares held by stockholders of TCI and/or
IOT who are not affiliated with the Entities who vote in person or by proxy at
meetings of stockholders called for that purpose.
In order to proceed to the freeze-out mergers under the Settlement
Agreement, the Entities have been required to perform certain matters which are
to be described in a proxy statement, including the filing of materials with the
Securities and Exchange Commission ("SEC") and completion of that process prior
to a specified date. If the SEC process is not completed by a specified date,
unless extended by the consent of settlement counsel, the Entities would be in
default under the Settlement Agreement and liable for liquidated damages equal
to $5 per each share of TCI and IOT Common Stock. The Entities may cure that
default by filing tender offers for all of the shares of IOT and TCI Common
Stock held by non-affiliated stockholders, with respect to the cash option, at a
cash price equal to or better than the amounts specified under the freeze-
-2-
out mergers ($19 per share for IOT Common Stock and $17.50 per share for TCI
Common Stock). If the tender offers are substantially completed within 120 days
following the making of such tender offers, the Entities will be deemed to have
fully complied with the Settlement Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits. The following are filed herewith as exhibits or are
incorporated by reference as indicated below:
Exhibit Designation Description of Exhibit
10.1 Second Amendment to Modification of Stipulation of
Settlement dated October 17, 2001
-3-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf of the
undersigned hereunto duly authorized.
Date: January 28, 2002 INCOME OPPORTUNITY REALTY INVESTORS, INC.
By: /s/ Ronald E. Kimbrough
--------------------------------------
Ronald E. Kimbrough, Executive Vice
President and Chief Financial Officer
-4-
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.1 Second Amendment to Modification of Stipulation of
Settlement dated October 17, 2001
</Table>