hmgproxy.htm
HMG/COURTLAND
PROPERTIES, INC.
1870
South Bayshore Drive
Coconut
Grove, Florida 33133
(305)
854-6803
NOTICE
OF
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD AUGUST 16, 2007
| TO
THE SHAREHOLDERS: |
July
21, 2007
|
The
annual meeting of shareholders of HMG/Courtland Properties, Inc. (the "Company")
will be held at 10:30 A.M., on Thursday, August 16, 2007, at the Grove Isle
Club
and Resort, 4 Grove Isle Drive, Coconut Grove, Florida for the following
purposes:
|
I.
|
To
elect a Board of Directors;
|
|
II.
|
To
act upon the renewal and amendment of the Advisory Agreement between
the
Company and HMG Advisory Corp.; and
|
|
III.
|
To
transact such other business as may properly come before the
meeting.
|
The
record date for determining shareholders entitled to notice of and to vote
at
the annual meeting is July 21, 2007.
Enclosed
is a copy of the Company's Annual Report to Shareholders (Form 10-KSB) for
the
fiscal year ended December 31, 2006.
It
is
important, whether or not you plan to attend the meeting in person, that you
fill in, sign and date the accompanying proxy and return it promptly in the
postage prepaid envelope which is enclosed for your convenience. The signing
and
mailing of the proxy will not affect your right to vote your shares in person
if
you attend the meeting and desire to do so.
By
Order
of the Board of Directors
Lawrence
I. Rothstein
President
and Secretary
PROXY
STATEMENT
OF
HMG/COURTLAND
PROPERTIES, INC.
The
accompanying proxy is solicited by the Board of Directors for use at the annual
meeting of shareholders and is being mailed with this Proxy Statement to all
shareholders on or about July 23, 2007. If a proxy card is properly
signed and is not revoked by the shareholder, the shares of common stock of
the
Company (the "Shares") represented thereby will be voted at the meeting in
accordance with the instructions, if any, of the shareholder. If no
instructions are given, they will be voted for the election of directors
nominated by the Board of Directors and for approval of the renewal and
amendment of the advisory agreement (the "Advisory Agreement") between the
Company and HMG Advisory Corp. (the "Adviser"). Any shareholder may
revoke his proxy at any time before it is voted by giving written notice of
revocation to the Secretary of the Company.
Holders
of Shares of record at the close of business on July 21, 2007 are entitled
to
notice of and to vote at the meeting. On that date, there were 1,023,955 Shares
outstanding. Each Share is entitled to one vote on all business of the
meeting. The holders of a majority of the outstanding Shares, present
in person or represented by proxy, will constitute a quorum at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved. As
of July 21, 2007, Transco Realty Trust ("Transco"), 1870 South Bayshore Drive,
Coconut Grove, Florida 33133, was the beneficial owner of 477,300 Shares, or
47%
of the outstanding Shares, and Emanuel Metz, CIBC Oppenheimer Corp., One World
Financial Center, 200 Liberty Street, New York, New York 10281, was the
beneficial owner of 59,500 Shares, or 6% of the outstanding
Shares. Beneficial ownership is based on sole voting and investment
power.
The
Company has been advised by its officers and nominees for directors, and their
affiliated shareholders, Transco, Courtland Group, Inc. ("CGI") and T.G.I.F.
Texas, Inc. ("T.G.I.F.") that they intend to vote for the election of each
of
the nominees and for the approval of the Advisory Agreement. Such
shareholders own in the aggregate 607,230 shares, or 54% of the outstanding
Shares. As a result, each of the nominees is expected to be elected
as a director and the renewal and amendment of the Advisory Agreement is
expected to be approved. As noted below, certain directors of the
Company are affiliated with principal shareholders of the Company and are
principal shareholders, directors and officers of the Adviser. See
"Election of Directors" below for information concerning holders who may be
deemed to own beneficially more than 5% of the outstanding Shares.
ELECTION
OF DIRECTORS
The
entire Board of Directors will be elected at the annual meeting of shareholders
to serve until the next annual meeting of shareholders and until the election
and qualification of their successors. In the event any nominee
should not continue to be available for election, proxies may be voted for
the
election of a substitute nominee or the Board of Directors may elect to reduce
the number of directors. The Board of Directors has no reason to
anticipate that any nominee will not be available for election. All of the
nominees have been elected previously by the shareholders.
An
affirmative vote by the holders of a majority of the Shares
present-in-person-or-by proxy at the Annual Meeting of Shareholders is required
for the election of each director.
Set
forth
below is certain information about each current director, each nominee for
director and the Shares held by all directors and executive
officers.
Shares
Held as of July 21, 2007
|
Name,
Age, Year First
Became
a Director or Officer of the Company
|
|
Principal
Occupation or Employment
During
the Past Five Years Other than
with
the Company and Other Information
|
|
Shares
Owned by the Nominee or Members of His Family1
|
|
Additional
Shares in which the Nominee has, or Participates in, the Voting or
Investment Power2
|
|
Total
Shares and
Percent
of Class6
|
|
|
|
|
|
|
|
|
|
|
|
Maurice
Wiener
65-1974
Chairman of the Board of Directors, and Chief Executive
Officer
|
|
Chairman
of the Board and Chief Executive Officer of the Adviser; Executive
Trustee, Transco Realty Trust; Director, T.G.I.F. Texas, Inc.; Chairman
of
the Board and Chief Executive Officer of CGI.
|
|
52,1004
|
|
541,8303
|
|
593,930
53%
|
|
Lawrence
I. Rothstein 54-1983 Director, President, Treasurer and
Secretary
|
|
Director,
President, Treasurer and Secretary of Adviser; Trustee and Vice-President
of Transco; Director, President, and Secretary of CGI; Vice-President
of
T.G.I.F. Texas, Inc.
|
|
50,0004
|
|
541,8303
|
|
591,830
52%
|
|
Walter
G. Arader
88-1977
Director
|
|
President,
Walter Arader and Associates, inc. (financial and management
consultants).
|
|
15,4004
|
|
0
|
|
15,400
1%
|
|
Clinton
Stuntebeck
68-2004
Director
|
|
Partner
Emeritus, Schnader Harrison Segal & Lewis, LLP (2004); Chairman,
Concordia Holdings, Ltd. (investment and business consulting) Senior
Partner, Schnader Harrison Segal & Lewis, LLP.
|
|
5,0004
|
|
0
|
|
5,000
*
|
|
Harvey
Comita 77-1992 Director
|
|
Business
Consultant; Trustee, Transco Realty Trust.
|
|
10,0004
|
|
477,3005
|
|
487,300
43%
|
|
All
Directors and
Executive
Officers as a Group
|
|
|
|
160,2004
|
|
541,8303
|
|
702,030
62%
|
____________________________
|
(1)
|
Unless
otherwise indicated, beneficial ownership is based on sole voting
and
investment power with respect to the
Shares.
|
|
(2)
|
Shares
listed in this column represent Shares held by entities with which
the
directors or officers are associated. The directors, officers
and members of their families have no ownership rights in the Shares
listed in this column. See note 3
below.
|
|
(3)
|
This
number includes the number of Shares held by Transco (477,300 Shares),
CGI
(54,530 shares) and T.G.I.F. Texas, Inc. ("T.G.I.F.") (10,000 shares).
Several of the directors of the Company are directors, trustees,
officers
or shareholders of Transco, CGI and
T.G.I.F.
|
|
(4)
|
This
number includes Shares subject to options granted under the 2000
Stock
Option Plan as follows: Mr. Wiener, 40,500; Mr. Rothstein, 29,900;
5,000
each to Mr. Arader, Mr. Comita and Mr. Stuntebeck; and 16,700 to
two
officers. Reference is made to "Compensation of Directors and
Executive Officers and Other Transactions" for further information
about
the 2000 Stock Option Plan.
|
|
(5)
|
This
number represents the number of Shares held by Transco, of which
Mr.
Comita is a trustee.
|
|
(6)
|
This
percentage assumes the exercise of all outstanding
options.
|
For
information concerning relationships of certain directors and officers of the
Company to the Adviser, see "Approval of Renewal and Amendment of the Advisory
Agreement."
As
a
result of these relationships, the persons named above may be deemed to share
investment power and voting power of Shares held by each firm with which they
are associated in conjunction with a number of other persons, including in
several cases, persons who are neither directors nor officers of the
Company.
Meetings
of the Board of Directors
The
Board
of Directors held four meetings during 2006. During this period all
of the directors of the Company attended at least 75% of the total number of
meetings of the Board and any committee of which they were a
member. The Board of Directors encourages director attendance at the
Annual Meeting of the Shareholders. All of the members of the Board
of Directors attended the 2006 Annual Meeting of the Shareholders.
Committees
of the Board of Directors
The
Board
of Directors has an Audit Committee and a Stock Option Committee. The
Company does not have a Compensation Committee. Messrs. Arader and Comita serve
as members of the Audit Committee. The Audit Committee met six times
during 2006.
Messrs. Arader and Comita serve as members of the Stock Option
Committee. The committee is authorized to grant options to officers
and key employees of the Company. The Stock Option Committee did not
meet during 2006.
Nominating
Committee
The
Board
of Directors does not have a standing Nominating Committee due to the size
of
the Board; however, the Company's three independent directors review and make
recommendations to the Board regarding the size and composition of the Board,
consider and recruit candidates for director nominees based upon recommendations
from current outside directors, members of management, outside consultants
or
search firms, and shareholders; recommends on an annual basis a slate of
director nominees for approval by the Board and the shareholders and reviews
our
committee structure and membership. The independent directors are
Messrs. Arader, Comita and Stuntebeck.
All
three
independent directors are "independent" directors as defined by the current
American Stock Exchange listing standards. The Company does not have
a Nominating Committee charter.
In
evaluating and determining whether to recommend a person as a candidate for
election as a director, the three independent directors' criteria reflects
the
requirements of the recently adopted American Stock Exchange rules with respect
to independence and the following factors: the needs of the Company with respect
to the particular talents and experience of its directors, personal and
professional integrity of the candidate, level of education and/or business
experience, broad-based business acumen, the level of understanding of the
Company's business and the income-producing commercial properties industry,
strategic thinking and a willingness to share ideas, and diversity of
experiences, expertise and background. These directors will use these
and other criteria that they deem appropriate to evaluate potential nominees
and
will not evaluate proposed nominees differently depending upon who has made
the
recommendation.
The
three
independent directors will consider proposed nominees whose names are submitted
to them by shareholders. They have not adopted a formal process for that
consideration because they believe that this informal consideration process
will
be adequate. The three independent directors intend to review
periodically whether a more formal policy should be adopted.
Any
shareholder who desires to recommend a nominee for director must submit a
letter, addressed to Secretary, HMG/Courtland Properties, Inc., 1870 South
Bayshore Drive, Coconut Grove, Florida 33133, and which is clearly identified
as
a "Director Nominee Recommendation." All recommendation letters must
identify the author as a shareholder and provide a brief summary of the
candidate's qualifications, as well as contact information for both the
candidate and the shareholder. Shareholders who wish to make a
recommendation for a nominee to be elected at the Company's 2008 Annual Meeting
must submit their recommendation by March 9, 2008, to allow for meaningful
consideration and evaluation of the nominees by the three independent
directors.
REPORT
OF THE AUDIT COMMITTEE
The
primary purpose of the Audit Committee is to assist the Board of Directors
in
monitoring the integrity of our financial statements, our independent auditor's
qualifications and independence, the performance of our independent auditors,
and our compliance with legal and regulatory requirements. The Audit
Committee was established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Board of Directors has determined that each member of the Audit Committee,
Messrs. Arader and Comita, is (1) an "audit committee financial expert," as
that
term is defined in Item 401(e) of Regulation S-B of the Exchange Act, and (2)
"independent" as defined by the listing standards of the American Stock Exchange
and Section 10A(m)(3) of the Exchange Act. The committee operates
pursuant to a charter that was last amended by the Board on June 16,
2003. A copy of the charter is attached hereto as an appendix to the
proxy statement.
Management
is responsible for the preparation, presentation and integrity of the Company's
financial statements, accounting and financial reporting principles and internal
controls and procedures designed to assure compliance with accounting standards
and applicable laws and regulations. The independent auditors for the
Company's 2006 fiscal year, Berenfeld, Spritzer, Schecter & Sheer ("BSSS"),
were responsible for performing an independent audit of the consolidated
financial statements in accordance with generally accepted auditing
standards.
In
performing its oversight role, the Audit Committee has, among other things
covered in its charter, reviewed and discussed the audited financial statements
with management and the independent auditors. The committee has also
discussed with the independent auditors the matters required to be discussed
by
Statement on Auditing Standards No. 61, Communicationwith Audit
Committees, as currently in effect. The committee has received
the written disclosures and the letter from the independent auditors required
by
Independence Standards Board Standard No.1, Independence Discussions with
Audit Committees, as currently in effect. The committee has also
considered whether the provision of non-audit services by the independent
auditors is compatible with maintaining the auditors' independence and has
discussed with the auditors the auditors' independence.
Based
on
the reviews, reports and discussions described in this Report, and subject
to
the limitations on the role and responsibilities of the committee referred
to in
this Report and in the charter, the Audit Committee recommended to the Board
of
Directors that the audited financial statements be included in the Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2006.
The
members of the Audit Committee are not professionally engaged in the practice
of
auditing or accounting and are not necessarily experts in the fields of
accounting or auditing, nor with respect to auditor
independence. Members of the committee rely without independent
verification on the information provided to them and on the representations
made
by management and the independent auditors. Accordingly, the Audit
Committee's oversight does not provide an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or appropriate internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations,
efforts and discussions referred to above do
not
assure that the audit of the Company's financial statements has been carried
out
in accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that BSSS is in fact "independent."
Members
of the Audit Committee:
Walter
G.
Arader
Harvey
Comita
INDEPENDENT
PUBLIC ACCOUNTANTS
BSSS
serves as our independent accountants. In performing its oversight role, the
Audit Committee reviewed whether to retain BSSS as our independent accounting
firm for the 2007 fiscal year as part of its regular process of recommending
an
independent auditor to the Board of Directors. The committee has
recommended to the Board of Directors the selection of BSSS as the Company's
independent auditors for 2007, and the Board of Directors has concurred in
its
recommendation. A representative of BSSS is not expected to be
present at the Annual Meeting. The Audit Committee pre-approved all
services rendered to the Company by its independent accountants.
The
aggregate fees billed by the Company's accounting firm for the years ended
December 31, 2006 and December 31, 2005 are as follows:
Fees
of Accountants
| |
|
Aggregate
Amount Billed
|
|
|
Share
of Total
|
|
| |
|
December
31, 2006
|
|
|
December
31, 2005
|
|
|
December
31, 2006
|
|
|
December
31, 2005
|
|
|
Audit
Fees, including review of
quarterly
financial statements
|
|
$ |
86,000
|
|
|
$ |
79,000
|
|
|
|
78 |
% |
|
|
77 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
Fees (consists of fees
related
to tax compliance and
planning)
|
|
|
24,000
|
|
|
|
24,000
|
|
|
|
22 |
% |
|
|
23 |
% |
|
Total
Fees
|
|
$ |
110,000
|
|
|
$ |
103,000
|
|
|
|
100 |
% |
|
|
100 |
% |
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Executive
officers receive no cash compensation from the Company in their capacity as
executive officers. Executive officers are eligible to receive stock options
pursuant to the 2000 Stock Option Plan.
Compensation
of Directors. The following table summarizes director's
compensation for the year ended December 31, 2006:
|
Director
|
|
Annual
Fee
|
|
|
Board
Meeting Fee
|
|
|
Committee
Meeting
Fee
|
|
|
Total
Compensation
|
|
|
Maurice
Wiener
|
|
$ |
11,600
|
|
|
$ |
2,000
|
|
|
$ |
-
|
|
|
$ |
13,600
|
|
|
Larry
Rothstein
|
|
|
11,600
|
|
|
|
2,000
|
|
|
|
3,000
|
|
|
|
16,600
|
|
|
Walter
Arader
|
|
|
8,000
|
|
|
|
2,000
|
|
|
|
3,000
|
|
|
|
13,000
|
|
|
Harvey
Comita
|
|
|
8,000
|
|
|
|
2,000
|
|
|
|
3,000
|
|
|
|
13,000
|
|
|
Clinton
Stuntebeck
|
|
|
8,000
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
12,000
|
|
|
Totals
|
|
$ |
47,200
|
|
|
$ |
10,000
|
|
|
$ |
11,000
|
|
|
$ |
68,200
|
|
Annual
director's fees are paid at the beginning of each quarter and board and
committee meeting fees are paid for each meeting a director
attends. Effective April 1, 2007, the annual fee for outside
directors was increased from $8,000 per year to $12,000 per year and all meeting
fees were increased from $500 per meeting to $750 per meeting.
Outstanding
Equity Awards to Executive Officers.
The
following table summarizes all outstanding equity awards to the Company's
executive officers as of December 31, 2006. These options are all
exercisable and there are no unearned options outstanding.
|
Executive
Officer
|
|
Number
of Options
|
|
Exercise
Price
|
Expiration
Date
|
|
Maurice
Wiener
|
|
|
28,500
|
|
$8.33
per share
|
June
25, 2011
|
|
Maurice
Wiener
|
|
|
12,000
|
|
$12.25
per share
|
June
25, 2011
|
|
Larry
Rothstein
|
|
|
24,900
|
|
$7.57
per share
|
June
25, 2011
|
|
Larry
Rothstein
|
|
|
5,000
|
|
$12.10
per share
|
June
25, 2011
|
Stock
Options. In November 2000, the Company's Board of Directors
authorized the 2000 Stock Option Plan (the "Plan"), which was approved by the
shareholders in June 2001. The Plan, which permits the grant of
qualified and non-qualified options expires in 2010, and is intended to provide
incentives to the directors and employees (the "employees") of the Company,
as
well as to enable the Company to obtain and retain the services of such
employees. The Plan is administered by a Stock Option Committee (the
"Committee") appointed by the Board of Directors. The Committee
selects those key officers and employees of the Company to whom options for
shares of common stock of the Company shall be granted. The Committee
determines the purchase price of shares deliverable upon exercise of an option;
such price may not, however, be less than 100% of the fair market value of
a
share on the date the option is granted. Payment of the purchase
price may be made in cash, Company stock, or by delivery of a promissory note,
except that the par value of the stock must be paid in cash or Company stock.
Shares purchased by delivery of a note must be pledged to the
Company. Shares subject to an option may be purchased by the optionee
within ten years from the date of the grant of the option. However,
options automatically terminate if the optionee's employment with the Company
terminates other than by reason of death, disability or
retirement. Further, if, within one year following exercise of any
option, an optionee terminates his employment other than by reason of death,
disability or retirement, the shares acquired upon exercise of such option
must
be sold to the Company at a price equal to the lesser of the purchase price
of
the shares or their fair market value.
On
June
25, 2001, options were granted to all officers and directors to purchase an
aggregate of 86,000 common shares at no less than 100% of the fair market value
at the date of grant. The average exercise price of the options
granted in 2001 is $7.84 per share. The Company's stock price on the
date of grant was $7.57 per share.
There
were no options granted or exercised in 2006.
On
August
16, 2005, two officers of the Company exercised options to purchase a total
of
400 shares which had been previously granted. The total exercise
price of $3,026 and existing promissory notes due to the Company from these
officers totaling $70,000 were satisfied by delivery to the Company a total
of
6,000 shares of the Company's stock at the then market value of $12.10 per
share
and $428, all in accordance with the Plan. Pursuant to the reload
feature of the Plan these officers received options to purchase 6,000 shares
at
$12.10 per share.
On
April
1, 2005 an officer of the Company exercised options to purchase 1,500 shares
which had been previously granted. The exercise price of $12,495 and
an existing promissory note due to the Company of $135,000 were satisfied by
delivery by of 12,000 shares of the Company's stock at the then market value
of
$12.25 per share and $495, all in accordance with the Plan. Pursuant
to the reload feature of the Plan the officer received an option to purchase
12,000 shares at $12.25 per share.
On
March
31, 2005 a director of the Company was granted options to purchase 5,000 shares
of the Company's stock at $12.25 per share (market value). The
options are not restricted, fully vested and expire in March 2015.
Section
16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the
Exchange Act requires the Company's directors and executive officers to file
with the Securities and Exchange Commission initial reports of beneficial
ownership and reports of change in beneficial ownership of the Company's
Shares. Such officers and directors are required by SEC regulations
to furnish to the Company copies of all Section 16(a) reports that they
file. Based solely on a review of the copies of such forms furnished
to the Company, or written representations that no other reports were required,
the Company believes that during 2006, its officers and directors complied
with
all applicable Section 16(a) filing requirements, except Mr. Wiener filed a
Form
4 ten days late in December, 2006.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
following discussion describes the organizational structure of the Company's
subsidiaries and affiliates.
Transco
Realty Trust ("Transco")
Transco
is a publicly-held 47% shareholder of the Company. Mr. Wiener is the
executive trustee and an officer of Transco and holds approximately 27% of
Transco's stock. Mr. Rothstein serves as a trustee and an officer of
Transco. Mr. Comita serves as a trustee of Transco.
Courtland
Group, Inc. ("CGI")
CGI
served as the Company's investment adviser until January 1, 1998 and owns
approximately 35% of Transco's stock and owns approximately 5% of the Company's
Shares. CGI is majority owned by Mr. Wiener, its Chairman and
CEO.
HMG
Advisory Corp. (the "Adviser")
The
day-to-day operations of the Company are handled by the Adviser. Reference
is
made to "Approval of Advisory Agreement" below for further information about
the
duties and remuneration of the Adviser. The Adviser is majority-owned
by Maurice Wiener, its Chairman and CEO.
Courtland
Investments, Inc. ("CII")
The
Company holds a 95% non-voting interest and Masscap Investment Company
("Masscap") holds a 5% voting interest in CII. In May 1998, the
Company and Masscap entered into a written agreement in order to confirm and
clarify the terms of their previous continuing arrangement with regard to the
ongoing operations of CII, all of which provide the Company with complete
authority over all decision making relating to the business, operation, and
financing of CII consistent with the Company's status as a real estate
investment trust.
CII
and
its wholly-owned subsidiary own 100% of Grove Isle Club, Inc., Grove Isle Yacht
Club Associates, Grove Isle Marina, Inc., CII Spa, LLC, Courtland Bayshore
Rawbar, LLC and it also owns 15% of Grove Isle Associates, Ltd., (the Company
owns the other 85%).
T.G.I.F.
Texas, Inc. (“T.G.I.F.”)
CII
owns
approximately 49% of the outstanding shares of T.G.I.F. Mr. Wiener is
a director and Chairman of T.G.I.F. and owns, directly and indirectly,
approximately 18% of the outstanding shares of T.G.I.F. T.G.I.F. also
owns 10,000 Shares.
The
following discussion describes all material transactions, receivables and
payables involving related parties. The Company believes that all of
the transactions described below were on terms as favorable to the Company
as
comparable transactions with unaffiliated third parties.
The
Adviser.
As
of
December 31, 2006 and 2005, the Adviser owed the Company approximately $184,000
and $234,000, respectively. Amounts due from the Adviser bear
interest at the prime rate plus 1% payable monthly, with principal due on
demand.
The
Adviser leases its executive offices from CII pursuant to a lease agreement.
This lease agreement is at the going market rate for similar property and calls
for base rent of $48,000 per year payable in equal monthly
installments. Additionally, the Adviser is responsible for all
utilities, maintenance, and security expenses relating to the leased
premises. The lease term is five years expiring in November
2009.
In
August
2004, the HMG Advisory Bayshore, Inc. ("HMGABS") (a wholly owned subsidiary
of
the Adviser) was formed for the purposes of overseeing the Monty's restaurant
operations acquired in August 2004. HMGABS receives a management fee
$25,000 per year from Bayshore Rawbar, LLC. For the years ended
December 31, 2006 and 2005, HMGBS earned approximately $25,000 in such
management fees.
South
Bayshore Associates ("SBA").
SBA
is a
joint venture in which Transco and the Company hold interests of 25% and 75%,
respectively. The sole major asset of SBA is a demand note from
Transco, bearing interest at the prime rate, with an outstanding balance of
approximately $331,000 in principal and interest as of December 31, 2006 and
2005.
The
Company also holds a demand note from SBA bearing interest at the prime rate
plus 1% with an outstanding balance as of December 31, 2006 and 2005, of
approximately $1,049,000 and $1,048,000, in principal and accrued interest,
respectively. Interest payments of $55,000 and $120,000 were made in
2006 and 2005, respectively. Accrued and unpaid interest is not added
to the principal. Because the Company consolidates SBA, the note
payable and related interest income is eliminated in consolidation.
CGI. As
of December 31, 2006 and 2005, CGI owed the Company approximately
$253,000. Amounts due from CGI bear interest at the prime rate plus
1% payable monthly, with principal due on demand.
CII. The
Company holds a demand note due from its 95%-owned consolidated subsidiary,
CII,
bearing interest at the prime rate plus 1% with an outstanding balance of
$5,175,000 and $5,220,000 as of December 31, 2006 and 2005,
respectively. During 2006 and 2005, advances from the Company to CII
totaled $460,000 and $1.4 million, respectively. Repayments from CII
to the Company during 2006 and 2005, were $505,000 and $673,000, respectively.
Accrued and unpaid interest is capitalized and included in
advances. Because CII is a consolidated subsidiary of the Company,
the note payable and related interest is eliminated in
consolidation.
In
1986,
CII acquired from the Company the rights to develop the marina at Grove Isle
for
a promissory note of $620,000 payable at an annual rate equal to the prime
rate. The principal is due on demand. Interest payments
are due annually in January. Because the Company consolidates CII,
the note payable and related interest income is eliminated in
consolidation.
CII
compensates one employee directly in his capacity as project manager for the
Company's Texas property. This employee is Mr. Bernard Lerner who is
a Vice President of Courtland Investments, Inc. and is also a cousin of the
Company's Chairman and CEO Mr. Maurice Wiener. For the years ended
December 31, 2006 and 2005, CII paid Mr. Lerner $85,000.
CII
Spa, LLC.
In
September 2004, the Company entered into an agreement with Noble House
Associates, LLC ("NHA"), an affiliate of the Westgroup, for the purpose of
developing and operating on the Grove Isle property, a commercial project
consisting of a first class spa, together with related improvements and
amenities (the "Grove Isle Spa"). A subsidiary of the Company, CII
Spa, LLC ("CIISPA") and NHA formed a Delaware limited liability company, Grove
Spa, LLC ("GS") which is owned 50% by CIISPA and 50% by NHA. Construction of
Grove Isle Spa was completed in the first quarter of 2005 and operations
commenced in March 2005. GS sub-leases the Grove Isle Spa property
from Westgroup. The initial term of the sublease commenced on
September 15, 2004 and ends on November 30, 2016, with the GS having the right
to extend the term for two additional consecutive 20 year terms on the same
terms as the original sublease. Annual base rent of the sublease is
$10,000, plus GS shall pay real estate taxes, insurance, utilities and all
other
costs relating to Grove Isle Spa.
In
December 2004, the loan which secured by the Grove Isle property was renewed
and
extended with an additional $1 million borrowed. The additional $1
million (less loan costs) was loaned to GS to partially fund the construction
of
the spa. The Company received a promissory note from GS under the
same terms as the renewed and extended bank loan. Since this loan is
between two consolidated entities (i.e. Grove Isle Associates, Ltd and Grove
Spa, LLC) it is eliminated in consolidation.
T.G.I.F.
As
of
December 31, 2006 and 2005, CII owed approximately $3,661,000 to T.G.I.F. All
advances between CII and T.G.I.F. are due on demand and bear interest at the
prime rate plus 1%. All interest due has been paid. As of December
31, 2006 and 2005, T.G.I.F. had amounts due from Mr. Wiener of approximately
$707,000. These amounts are due on demand and bear interest at the
prime rate. All interest due has been paid. Mr. Wiener received
consulting and director's fees from T.G.I.F of approximately $45,000 and $37,000
for the years ended December 31, 2006 and 2005, respectively.
APPROVAL
OF RENEWAL AND AMENDMENT
OF
THE ADVISORY AGREEMENT
The
Advisory Agreement. At the 2006 Annual Meeting of
Shareholders, the advisory agreement (the "Advisory Agreement") between the
Company and HMG Advisory Corp. (the "Adviser") was renewed for a one-year
term expiring on December 31, 2007. On March 22, 2007, the Board of Directors
approved, subject to shareholder approval, the amendment and renewal of the
Advisory Agreement between the Company and the Adviser for a term commencing
January 1, 2008, and expiring December 31, 2008.
The
sole
amendment to the Advisory Agreement that is being proposed at the Annual
Meeting
is the increase in the remuneration of the Advisor to increase the Advisor's
current regular compensation monthly fee from $75,000 to $85,000, or $900,000
to
$1,0200,000 annually. All other terms of the existing Advisory Agreement
will
remain the same. The increase in remuneration of the Advisor is being proposed
by the Board after taking into account the increased costs of the Advisor
in
managing the affairs of the Company, the economic factors impacting the real
estate industry and competitive conditions in today's market place. The
amendment and renewal was approved unanimously by the Directors unaffiliated
with the Advisor.
Under
the
terms of the Advisory Agreement, the renewal and amendment must be approved
by
the holders of a majority of the Shares. If the shareholders approve
the Advisory Agreement, it will be amended and renewed for a one-year
term.
The
Adviser is majority owned by Mr. Wiener with the remaining shares owned by
Mr.
Rothstein and others. The officers and directors of the Adviser are
as follows: Maurice Wiener, Chairman of the Board and Chief Executive officer;
Lawrence I. Rothstein, President, Treasurer, Secretary and Director; and Carlos
Camarotti, Vice President Finance and Assistant Secretary.
The
following description of the Advisory Agreement contains a summary of its
material terms.
General
Provisions. The Advisory Agreement is not assignable
without the consent of the unaffiliated directors of the Company and the
Adviser. The Advisory Agreement provides that officers, directors,
employees and agents of the Adviser or of its affiliates may serve as directors,
officers or agents of the Company.
Duties
of Adviser. The Adviser in performing its duties under
the Advisory Agreement is at all times subject to the supervision of the
directors of the Company and has only such authority as the directors delegate
to it as their agent. The Adviser counsels and presents to the
Company investments consistent with the objectives of the Company and performs
such research and investigation as the directors may request in connection
with
the policy decisions as to the type and nature of investments to be made by
the
Company. Such functions include evaluation of the desirability of
acquisition, retention and disposition of specific Company assets. The Adviser
also is responsible for the day-to-day investment operations of the Company
and
conducts relations with mortgage loan brokers, originators and servicers, and
determines whether investments offered to the Company meet the requirements
of
the Company. The Adviser provides executive and administrative personnel, office
space and services required in rendering such services to the
Company. To the extent required to perform its duties under the
Agreement, the Adviser may deposit into and disburse from bank accounts opened
in its own name any money on behalf of the Company under such terms and
conditions as the Company may approve.
Allocation
of Expenses. Under the Advisory Agreement, the Adviser pays: all
salary and employment expenses of its own personnel and of the officers and
employees of the Company who are affiliates of the Adviser; all of the
administrative, rent and other office expenses (except those relating to a
separate office, if any, maintained by the Company) relating to its
services as Adviser; and travel (to the extent not paid by any party other
than
the Company or the Adviser) and advertising expenses incurred in seeking
investments for the Company.
The
Company is required to pay all expenses of the Company not assumed by the
Adviser, including, without limitation, the following: (a) the cost of borrowed
money; (b) taxes on income, real property and all other taxes applicable to
the
Company; (c) legal, accounting, underwriting, brokerage, transfer agent's,
registrar's, indenture trustee's, listing, registration and other fees,
printing, engraving, and other expenses and taxes incurred in connection with
the issuance, distribution, transfer, registration and stock exchange listing
of
the Company's securities; (d) fees and expenses of advisors and independent
contractors, consultants, managers and other agents employed directly by the
Company; (e) expenses connected with the acquisition, disposition or ownership
of mortgages or real property or other investment assets, including, to the
extent not paid by any party other than the Company or the Adviser, but not
limited to, costs of foreclosure, costs of appraisal, legal fees and other
expenses for professional services, maintenance, repairs and improvement of
property, and brokerage and sales commissions, and expenses of maintaining
and
managing real property equity interests; (f) the expenses of organizing or
terminating the Company; (g) all insurance costs (including the cost of
directors' liability insurance) incurred in connection with the protection
of
the Company's property as required by the directors; (h) expenses connected
with
payment of dividends or interest or distributions in cash or any other form
made
or caused to be made by the directors to holders of securities of the Company,
including a dividend reinvestment plan, if any; (i) all expenses connected
with
communications to holders of securities of the Company and the other bookkeeping
and clerical work necessary in maintaining relations with holders of securities,
including the cost of printing and mailing checks, certificates for securities
and proxy solicitation materials and reports to holders of the Company's
securities; (j) to the extent not paid by borrowers from the Company, the
expenses of administering, processing and servicing mortgage, development,
construction and other loans; (k) the cost of any accounting, statistical,
or
bookkeeping equipment necessary for the maintenance of the books and records
of
the Company; (1) general legal, accounting and auditing fees and expenses;
(m)
salaries and other employment expenses of the personnel employed by the Company
who are not affiliates of the Adviser, fees and expenses incurred by the
directors, officers and employees in attending directors' meetings, and fees
and
travel and other expenses incurred by the directors and officers and employees
of the Company who are not affiliates of the Adviser. Expenses
relating to the grant of options to all directors, officers and key employees
of
the Company under a plan approved by the shareholders of the Company are borne
by the Company.
Remuneration
of the Adviser. For services rendered under the Advisory Agreement that
was in effect during 2006, the Adviser was entitled to receive as regular
compensation a monthly fee equal to the sum of (a) $75,000 (equivalent to
$900,000 per year) and (b) 20% of the amount of any unrefunded commitment fees
received by the Company with respect to mortgage loans and other commitments
which the Company was not required to fund and which expired within the next
preceding calendar month. In 2006 and 2005, the Adviser's annual
compensation under the Advisory Agreement amounted to approximately $965,000
and
$974,000 in fees, respectively, of which $900,000 represented regular
compensation and approximately $65,000 and $74,000 represented incentive
compensation for 2006 and 2005, respectively. The Adviser continues
to receive the incentive compensation outlined below.
If
the
shareholders approve the amendment and renewal of the Advisory Agreements,
the
Advisor's regular compensation will be increased to $85,000 per month, or
$1,020,000 per year, and will continue to receive the other additional fee
of
20% of the amount of any unrefunded commitment fees received by the Company
as
outlined above. The Advisor will also continue to receive the incentive
compensation outlined below.
The
Advisory Agreement also provides that the Adviser shall receive incentive
compensation for compensation for each fiscal year of the Company equal to
the
sum of (a) 10% of the realized capital gains (net of accumulated net realized
capital losses) and extraordinary nonrecurring items of income of the Company
for such year, and (b) 10% of the amount, if any, by which Net Profits of the
Company exceed 8% per annum of the Average Net Worth of the
Company. "Net Profits" is defined as the gross earned income of the
Company for such period (exclusive of gains and losses from the disposition
of
assets), minus all expenses other than non-cash charges for depreciation,
depletion and amortization and the incentive compensation payable to the
Adviser, and minus all amounts expended for mortgage amortization on long-term
mortgage indebtedness, excluding extraordinary and balloon
payments. "Average Net Worth" is defined as the average of the amount
in the shareholders' equity accounts on the books of the Company, plus the
accumulated non-cash reserves for depreciation, depletion and amortization
shown
on the books of the Company, determined at the close of the last day of each
month for the computation period.
If
and to
the extent that the Company requests the Adviser, or any of its directors,
officers, or employees, to render services for the Company, other than those
required to be rendered by the Adviser under the Advisory Agreement, such
additional services are to be compensated separately on terms to be agreed
upon
between such party and the Company from time to time, which terms must be fair
and reasonable and at least as favorable to the Company as similar arrangements
for comparable transactions of which the Company is aware with organizations
unaffiliated with the Adviser. The Adviser received $33,000 in 2006
and 2005 for managing certain of the Company's affiliates. Included
in fees for 2006 and 2005 was approximately $25,000 of management fees earned
relating to management of the Monty’s restaurant operations.
Set
forth
below is the aggregate compensation paid to the Adviser during the two fiscal
years ended December 31, 2006 and 2005.
|
Form
of Compensation
|
|
Amount
|
|
| |
|
2006
|
|
|
2005
|
|
|
Regular
Compensation
|
|
$ |
900,000
|
|
|
$ |
900,000
|
|
|
20%
of Unrefunded Commitment Fees
|
|
|
-0-
|
|
|
|
-0-
|
|
|
Incentive
Compensation
|
|
|
65,000
|
|
|
|
74,000
|
|
|
Management
Fees
|
|
|
33,000
|
|
|
|
33,000
|
|
|
Total
|
|
$ |
995,000
|
|
|
$ |
1,007,000
|
|
Brokerage
Fees Paid the Adviser. Under the Advisory Agreement, the
Adviser and its affiliates are prohibited from receiving from the Company any
brokerage or similar fees for the placement of mortgages or other investments
with the Company. However, the Adviser and its affiliates can receive normal
brokerage commissions from borrowers in connection with transactions involving
the Company, provided that such commissions are fully disclosed to all directors
of the Company and the directors approve of the transaction and that such
commissions (which to the extent paid by the borrower and retained by the
Adviser or its affiliates may reduce the yield to the Company) are fair and
reasonable and in accord with the prevailing rates in the locality in which
the
transaction is consummated for the type of conditions, receive normal brokerage
commissions from sellers, buyers, lessees and other parties with whom the
Company engages in transactions.
Management
of the Adviser. Set forth below are the names, offices with
the Adviser and principal occupations of the current executive officers and
directors of the Adviser.
|
Name
and Offices
with
the Adviser
|
Principal
Occupation
|
|
Maurice
Wiener
Chairman
of the Board
of
Directors
and Chief Executive
Officer
|
See
"Election of Directors."
|
|
Lawrence
Rothstein
President,
Treasurer,
Secretary
and
Director
|
See
"Election of Directors."
|
|
Carlos
Camarotti
Vice
President-Finance
and
Assistant
Secretary
|
Vice
President and Assistant
Secretary
of the Adviser
|
The
Directors recommend that the shareholders approve the renewal and amendment
of
the Advisory Agreement. An affirmative vote by the holders of a majority of
the
Shares present in person or by proxy at the Annual Meeting of Shareholders
is
required for approval of the Advisory Agreement.
SOLICITATION
OF PROXIES
The
cost
of soliciting proxies will be borne by the Company. In addition to the use
of
the mails, proxies may be solicited by directors, officers and employees of
the
Company personally, by telephone or by telegraph.
OTHER
BUSINESS
The
Board
of Directors is not aware of any business other than those items referred to
above to be presented for action at the meeting. However, should any other
matters requiring a vote of the shareholders arise, the agents named in the
accompanying proxy will vote in accordance with their own best
judgment.
PROPOSALS
FOR NEXT YEAR'S MEETING
Shareholder
proposals intended to be presented in the Company's proxy materials for the
next
Annual Meeting of Shareholders must be received by March 9, 2008, and must
satisfy the requirements of the proxy rules promulgated by the Securities and
Exchange Commission. A shareholder who wishes to make a proposal at the next
Annual Meeting of Shareholders without including the proposal in the Company's
proxy statement must notify the Company by May 22, 2008. If a
shareholder fails to give notice by this date, then the persons named as proxies
in the proxies the Company solicits for the next Annual Meeting of Shareholders
will have discretionary authority to vote on the proposal.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
Shareholders
may communicate with the Board of Directors by sending correspondence, in care
of the Company's Secretary, HMG/Courtland Properties, Inc., 1870 South Bayshore
Drive, Coconut Grove, Florida 33131, with an instruction to forward the
communication to the particular director. The Company's Secretary will promptly
forward all such shareholder communications to that director.
HOUSEHOLDING
INFORMATION
The
Commission adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements and annual
reports with respect to two or more shareholders sharing the same address by
delivering a single proxy statement and annual report addressed to those
shareholders. This process, which is commonly referred to as
"householding," potentially means extra convenience for shareholders and cost
savings for companies.
The
Company and a number of brokers with accountholders who are shareholders of
the
Company will be "householding" the Company's proxy materials and annual
report. As indicated in the notice previously provided by the Company
and these brokers to the Company's shareholders, a single proxy statement and
annual report will be delivered to multiple shareholders sharing an address
unless contrary instructions have been received from an affected
shareholder. Once you have received notice from the Company or your
broker that it or they will be "householding" communications to your address,
"householding" will continue until you are notified otherwise or until you
revoke your consent. If, at any time, you no longer wish to participate in
"householding" and would prefer to receive a separate proxy statement or annual
report, please contact the Company at the address or telephone number appearing
on the first page of this proxy statement, directing your request to the
attention of the Secretary, or notify your broker.
Shareholders
who currently receive multiple copies of the proxy statement or annual report at
their address and would like to request "householding" of their communications
should contact the Company at the address appearing on the first page of this
proxy statement, directing the request to the attention of the Secretary, or
should contact their broker.
_________________________________________________
A
copy of the Annual Report on Form 10-KSB for the year ended December 31, 2006
including financial statements and schedules thereto, filed with the Securities
and Exchange Commission, may be obtained by shareholders without charge upon
written request to: Secretary, HMG/Courtland Properties, Inc., 1870 South
Bayshore Drive,
Coconut
Grove, Florida 33133
YOU
CAN SAVE YOUR COMPANY ADDITIONAL EXPENSE BY SIGNING AND
RETURNING
YOUR PROXY AS PROMPTLY AS POSSIBLE
_________________________________________________
Appendix
A
HMG/COURTLAND
PROPERTIES, INC.
AUDIT
COMMITTEE CHARTER
(Amended
and Restated June 16, 2003)
The
Board
of Directors ("Board") of HMG/Courtland Properties, Inc. ("Corporation") has
established an Audit Committee with the purposes, authority, responsibilities
and specific duties described below.
I.
Purpose
The
Audit
Committee is appointed by the Board to assist the Board in monitoring (1) the
integrity of the financial statements of the Corporation, (2) the independent
auditor's qualifications and independence, (3) the performance of the
Corporation's independent auditors, and (4) the compliance by the Corporation
with legal and regulatory requirements.
The
Audit
Committee shall prepare the report required by the rules of the Securities
and
Exchange Commission ("Commission") to be included in the Corporation's annual
proxy statement.
II. CommitteeMembership
The
Audit
Committee shall consist of no fewer than two members. The members of
the Audit Committee shall meet the independence and experience requirements
of
the American Stock Exchange, Section 10A(m)(3) of the Securities Exchange Act
of
1934 ("Exchange Act") and the rules and regulations of the
Commission. At least one member of the Audit Committee shall be a
financial expert as defined by the Commission. Audit Committee
members shall not simultaneously serve on the audit committees of more than
two
other public companies unless the Board has determined that such service would
not impair the ability of such member to effectively serve on the Audit
Committee.
The
members of the Audit Committee shall be appointed, and may be removed, by the
Board.
III. Meetings
The
Audit
Committee shall meet as often as it determines, but not less frequently than
quarterly. The Audit Committee shall periodically meet with
management and the independent auditor in separate executive
sessions. The Audit Committee may request any officer or employee of
the Corporation or the Corporation's outside counsel or independent auditor
to
attend a meeting of the Committee or to meet with any members of, or consultants
to, the Committee.
IV. CommitteeAuthority
and Responsibilities
The
Audit
Committee shall have the sole authority to appoint or replace the independent
auditor. The Audit Committee shall be directly responsible for the
compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly
to the Audit Committee.
The
Audit
Committee shall preapprove all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed for the
Corporation by its independent auditor, subject to the de minimus exceptions
for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which
are approved by the Audit Committee prior to the completion of the
audit. The Audit Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including
the
authority to grant preapprovals of audit and permitted non-audit services,
provided that decisions of such subcommittee to grant preapprovals shall be
presented to the full Audit Committee at its next scheduled
meeting.
The
Audit
Committee shall have the authority, to the extent it deems necessary or
appropriate, to retain independent legal, accounting or other
advisors. The Corporation shall provide for appropriate funding, as
determined by the Audit committee, for payment of compensation to the
independent auditor for the purpose of rendering or issuing an audit report
and
to any advisors employed by the Audit Committee.
The
Audit
Committee shall make regular reports to the Board, review and reassess the
adequacy of this Charter annually and recommend any proposed changes to the
Board for approval and annually review the Audit Committee's own
performance.
The
Audit
Committee shall also:
Financial
Statement and Disclosure Matters
A. Review
and discuss with management and the independent auditor the annual audited
financial statements, including disclosures made in management's discussion
and
analysis, and recommend to the Board whether the audited financial statements
should be included in the Corporation's Form 10-KSB.
B. Review
and discuss with management and the independent auditor the Corporation's
quarterly financial statements prior to the filing of its Form 10-QSB, including
the results of the independent auditor's review of the quarterly financial
statements and disclosures made in management's discussion and
analysis.
C. Discuss
with management and the independent auditor any significant financial reporting
issues and judgments made in connection with the preparation of the
Corporation's financial statements, including any significant changes in the
Corporation's selection or application of accounting principles, any major
issues as to the adequacy of the Corporation's internal controls and any special
steps adopted in light of material control deficiencies.
D. Review
and discuss reports from the independent auditors on:
1. All
critical accounting policies and practices to be used.
2. All
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, ramifications
of
the use of such alternative disclosures and treatments, and the treatment
preferred by the independent auditor.
3. Other
material written communications between the independent auditor and management,
such as any management letter or schedule of past adjustments.
E. Discuss
with management the Corporation's earnings press releases, including the use
of
"pro forma" or "adjusted" non-GAAP information, as well as financial information
and earnings guidance provided to analysts and rating agencies. Such
discussion may be done generally (consisting of discussing the types of
information to be disclosed and the types of presentations to be
made).
F. Discuss
with management and the independent auditor the effect of regulatory and
accounting initiatives as well as off-balance sheet structures on the
Corporation's financial statements.
G. Discuss
with management the Corporation's major financial risk exposures and the steps
management has taken to monitor and control such exposures, including the
Corporation's risk assessment and risk management policies.
H. Discuss
with the independent auditor the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the audit, including
any
difficulties encountered in the course of the audit work, any restrictions
on
the scope of activities or access to requested information, and any significant
disagreements with management.
I. Discuss
with management and the independent auditor whether there were any accounting
adjustments that were proposed by the independent auditor but were determined
by
management as being immaterial or otherwise not necessary.
J. Review
any disclosures made to the Audit Committee by the Corporation's CEO and CFO
during their certification process for the Form 10-KSB and Form 10-QSB about
any
significant deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Corporation's internal
controls.
Oversight
of the Corporation's Relationship with the Independent Auditor
K. Reviw
and
evaluate the lead partner of the independent auditor team.
L. Obtain
and review a report from the independent auditor at least annually regarding
(a)
the independent auditor's internal quality-control review procedures, (b) any
material issues raised by the most recent internal 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, (c) any steps taken to deal with
any
such issues, and (d) all relationships between the independent auditor and
the
Corporation. Evaluate the qualifications, performance and
independence of the independent auditor, including considering whether the
auditor's quality controls are adequate and the provision of permitted non-audit
services is compatible with maintaining the auditor's independence, and taking
into account the opinions of management. The Audit Committee shall
present its conclusions with respect to the independent auditor to the
Board.
M. Ensure
the rotation of the lead (or coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for reviewing
the
audit as required by law. Consider whether, in order to assure
continuing auditor independence, it is appropriate to adopt a policy of rotating
the independent auditing firm on a regular basis.
N. Establish
policies for the Corporation's hiring of employees or former employees of the
independent auditor who participated in any capacity in the audit of the
Corporation.
O. Discuss
with the independent auditor any issues on which the auditor's national office
was consulted by the Corporation's audit team.
P. Meet
with
the independent auditor prior to the audit to discuss the planning and staffing
of the audit.
Compliance
Oversight Responsibilities
Q. Obtain
from the independent auditor assurance that the audit:
1. contains
procedures designed to provide reasonable assurances of detecting illegal acts
that would have a direct and material effect on the financial
statements;
2. contains
procedures designed to identify related party transactions that are material
to
the financial statements or otherwise require financial statement disclosure;
and
3. includes
an evaluation of the Corporation's ability to continue as a going concern during
the ensuing fiscal year.
R. Obtain
reports from management and the independent auditor relating to the conformity
by the Corporation and its subsidiary/foreign affiliated entities with
applicable legal requirements and the Corporation's Code of Business Conduct
and
Ethics. Review reports and disclosures of affiliated party
transactions. Advise the Board with respect to the Corporation's
policies and procedures regarding compliance with applicable laws and
regulations and with the Corporation's Code of Business Conduct and
Ethics.
S. Establish
procedures for the receipt, retention and treatment of complaints received
by
the Corporation regarding accounting, internal accounting controls or auditing
matters, and the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters.
T. Discuss
with management and the independent auditor any correspondence with regulators
or governmental agencies, any employee complaints and any published reports
which raise material issues regarding the Corporation's financial statements
or
accounting policies.
U. Discuss
with the Corporation's General Counsel or outside counsel legal matters that
may
have a material impact on the financial statements or the Corporation's
compliance policies.
V. Limitations
of Audit Committee's Role
While
the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Corporation's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. Nor is it the duty of the
Audit
Committee to conduct investigations or to assure compliance with laws and
regulations and the Corporation's internal policies. These are the
responsibilities of management and the independent auditor.
FORM
OF PROXY
Please
date, sign and mail your
proxy
card back as soon as possible!
Annual
Meeting of Shareholders
HMG/COURTLAND
PROPERTIES, INC.
August
16, 2007
Please
Detach and Mail in the Envelope Provided
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For
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Withheld
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Nominees:
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M.
Wiener
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For
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Against
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Abstain
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1.
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Election
of Directors
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o
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L.
Rothstein
W.
Arader
C.
Stuntebeck
H.
Comita
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2.
Approval of renewal and amendment
of the Advisory Agreement between Company and HMG Advisory
Corp.
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o
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FOR
except vote withheld from the following nominees:
___________________________
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3. In
their discretion, upon such other matters as may properly come
before the
meeting or any adjournment thereof, all in accordance withthe Company's
Proxy Statement, receipt of which is hereby acknowledged.
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This
proxy when properly executed will be voted in accordance with the
above
instructions. In the absence of such specifications this proxy
will be voted FOR Proposals 1 and
2.
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PLEASE
MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
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Signature(s)
__________________________________________________
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Date
__________________________________
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Note: (Please
sign exactly as your name appears. Persons signing as
executors, trustees, guardians, etc. please so indicate when
signing.)
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