UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
SCHEDULE 14A(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATIONProxy Statement Pursuant to Section 14(a) of theSecurities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant o
Check the appropriate box:
MVP REIT II, INC.(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
MVP REIT II, INC.88809130 West SunsetPost Road, Suite 340
200 Las Vegas, NevadaNV 89148
August 15, 2017
Fellow Stockholders:
The accompanying notice ofwe are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and proxy statement containdetails on how to participate will be set forth in a description of the formal business to be acted upon by the stockholders. It is important that your shares be represented at the meeting regardless of the size of your holdings. ACCORDINGLY, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON, I URGE YOU TO AUTHORIZE YOUR PROXY AS SOON AS POSSIBLE. YOUR VOTE IS VERY IMPORTANT. You may do this by authorizing your proxy via the internet or by completing, signing and dating the enclosed proxy card and returning it promptly by fax or in the postage pre-paid envelope provided. If you attend the meeting, you may, if you wish, revoke your proxy and vote your shares in person.
Merger and Potential Exchange Listing
As we have previously disclosed, the Company, MVP REIT, Inc., a Maryland corporation, or MVP I, MVP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company, or Merger Sub, and MVP Realty Advisors, LLC, a Delaware limited liability company, entered into a definitive merger agreement on May 26, 2017, or the “merger agreement,” pursuant to which MVP I will merge with and into Merger Sub, with Merger Sub continuing as the surviving entity. We refer to this transaction throughout this proxy statement as the “merger” and the organization surviving the merger as the “combined company,” The merger agreement was negotiated on behalf of MVP I by an independent special committee of MVP I’s board of directors and on behalf of the Company by an independent special committee of the Company’s board of directors. Each special committee recommended approval of the merger and merger agreement to its respective board of directors, each of which subsequently approved the merger and merger agreement.
Pursuant to the terms of the merger agreement, subject to the receipt of necessary approvals and satisfaction or waiver of other conditions, the merger consideration payablepress release issued by the Company to each holder of common stock, $0.001 par value per share, of MVP I, would be 0.365 shares of common stock, $0.0001 par value per share, of the Company, plus cash in lieu of fractional shares. The merger and a related amendment to the charter of MVP I are subject to the approval of MVP I’s stockholders but are not subject to the approval of the Company’s stockholders.
One of the reasons the boards of directors of the Company and MVP I approved the merger is that the increased size and scale provided by the merger is expected to enhance the combined company’s ability to list its shares of common stock on a national securities exchange.
Amendment of Our Charter
At this meeting,available at www.TheParkingREIT.com where you are being asked to approve, among other matters, the amendment and restatement of our charter as set forth in the Articles of Amendment and Restatement, or the Amended Charter, a copy of which is attached to the proxy statement as Appendix A. The Amended Charter is primarily intended to accomplish two objectives in connection with the possible listing of our common stock after the closing of the merger: (1) to remove provisions of our charter that we believe may unnecessarily restrict our ability to take advantage of further opportunities for liquidity events or are redundant with or otherwise addressed or permitted to be addressed under Maryland law and (2) to amend certain provisions in a manner that we believe would be more suitable for becoming a publicly-traded REIT. The amendments that we are proposing to accomplish these objectives are described in more detail in the attached proxy statement.
We believe the Amended Charter will also more closely align our charterfind information on how to those of our peers with publicly listed securities. Currently, our charter includes provisions and restrictions that are required by state securities administrators in order for us to publicly offer shares of our stock without having it listed on a national securities
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exchange. Once our common stock is listed on a national securities exchange, these provisions and restrictions will no longer be required and, in some cases, if retained, would place restrictions on our activities that could put us at a competitive disadvantage compared to our peers with publicly listed securities.
We believe thatAt the Amended Charter proposed in the accompanying proxy statement will enhance the opportunity for and impact of strategies designed to improve liquidity for our stockholders, including a listing on a national securities exchange. We believe that it is in the best interests of the Company and its stockholders to approve the amendment and restatement of our charter as set forth in the Amended Charter and Proposals 1 through 7, and that amending and restating our charter as set forth in the Amended Charter is important to our ability to provide liquidity and long-term value to our stockholders.
The Board unanimously (with the exception of the members of the Board who are also members of the MVP I Board, each of whom abstained) recommends that the stockholders vote FOR the approval of the amendment and restatement of our charter as set forth in the Amended Charter by voting FOR each of Proposals 1 through 7.
Approvals Required
The affirmative vote of the holders of at least a majority of all outstanding shares of our common stock, voting either in person or by proxy,Annual Meeting, you will be required to approve each of Proposals 1 through 7. Approval of each of Proposals 1 through 7 is conditioned on approval of every other of Proposals 1 through 7. This means for the Amended Charter to be approved and implemented, holders of a majority of our outstanding shares of common stock must vote “FOR” each of Proposals 1 through 7.
Other Matters
Election of Directors;Ratification of Appointment of Independent Registered Public Accounting Firm;Adjournment
At this meeting, you are also being asked to consider and vote on:
Approvals Required
The affirmative votedetermination of the holders of a majority of the shares of our common stockstockholders entitled to vote who are present in person or by proxy at the Annual Meeting is required to approve Proposal 8 to elect each of the nominees named in this proxy statement as directors. The affirmative vote of a majority of the votes cast by stockholders present in person or by proxy at the Annual Meeting is required to approve Proposal 9 to ratify the appointment of RSM as the Company’s independent public accounting firm for the fiscal year ending December 31, 2017 and Proposal 10 to adjourn the Annual Meeting. Abstentions and broker non-votes, if any, will have the effect of a vote against Proposal 8. Abstentions and broker non-votes, if any will have no effect on Proposal 9 or on Proposal 10.
Conclusion
The accompanying notice of, the annual meeting of stockholders and the proxy statement contain a description of the formal business to be acted upon by the stockholders at the Annual Meeting. At the Annual Meeting, you will be entitled to vote on Proposals 1 through 7 regarding the amendment and restatement of our charter as set forth in the Amended Charter, Proposal 8 on the election of directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualify, Proposal 9 regarding the appointment of RSM as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2017 and
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Proposal 10 to adjourn the Annual Meeting, if necessary. As to any other business that may properly come beforeat, the Annual Meeting or any postponement or adjournment thereof, the persons named as proxythereof. Record holders on your proxy card will vote theof shares of our common stock represented by properly submitted proxies in their discretion.
REGARDLESS OF THE SIZE OF YOUR HOLDINGS, IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. ACCORDINGLY, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON, WE URGE YOU TO AUTHORIZE YOUR PROXY AS SOON AS POSSIBLE.
at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting.
person at the Annual Meeting will be counted. Attendance alone is not sufficient to revoke a previously authorized proxy.
Sincerely, Michael V. Shustek Chairman and Chief Executive Officer IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 28, 2020 THIS PROXY STATEMENT AND OUR 2020 ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AT https://www.proxy-direct.com/tpr-31791. | |
The accompanying notice, proxy statementProxy Statement and form of proxy are first being mailed or otherwise distributed to our stockholders on or about August 21, 2017.
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MVP REIT II, INC.
NOTICE OF 20172020 ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
DECEMBER 28, 2020 TO THE STOCKHOLDERS OF THE PARKING REIT, INC.:
1. | To consider and vote upon the election of four nominees for director, with each to serve on the Board of Directors of the Company (the “Board of Directors”) until the next annual meeting of stockholders and until his successor is duly elected and qualifies; |
2. | To consider and vote upon the ratification of the appointment of RBSM LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2020; and |
3. | To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. |
Stockholders
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A proxy statement and proxy card accompany this notice.
We hopeDirectors (the “Board” or “Board of Directors”) of The Parking REIT, Inc., a Maryland corporation (the “Company”), for exercise at our 2020 Annual Meeting of Stockholders (the “meeting” or “Annual Meeting”) to have the maximum number of shares of common stock present in person or by proxybe held on December 28, 2020 at 9:00 a.m., Eastern Time, at the Annual Meeting. To assure your representationoffices of Venable LLP, located at 750 E. Pratt Street, Suite 900, Baltimore, Maryland 21202, or at any postponement or adjournment thereof, for the purposes set forth herein and in the accompanying Notice of 2020 Annual Meeting pleaseof Stockholders. In this Proxy Statement, unless the context requires otherwise, “we,” “us,” or “our” refer to the Company.
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You may use the enclosed envelope which requires no further postage, if mailed in the United States, to return your proxy. If you attend the meeting, you may revoke your proxy and vote in person, if you desire.
Las Vegas, NevadaAugust 15, 2017
PLEASE VOTE – YOUR VOTE IS IMPORTANT
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MVP REIT II, INC.8880 West Sunset Road, Suite 340Las Vegas, Nevada 89148
PROXY STATEMENTFOR 2017 ANNUAL MEETING OF STOCKHOLDERSTO BE HELD SEPTEMBER 27, 2017
Our Board of Directors, or the Board, is furnishing you this proxy statement to solicit proxies on its behalf to be voted at the 2017 annual meeting of stockholders to be held on September 27, 2017 at 9:00 a.m. local time at Red Rock Casino & Resort, Veranda E, located at 11011 West Charleston Blvd., Las Vegas, Nevada 89135, and at any and all postponements or adjournments thereof, which we refer to as the Annual Meeting. We encourage your participation in the voting at the Annual Meeting and solicit your support on the proposals to be presented.
Proxy Statement. This proxy statement andProxy Statement, the accompanying proxy card and other proxy material are first being mailedmade available to stockholdersyou on or about August 21, 2017.
Unless the context otherwise requires, all references to the “Company,” “MVP II,” “our,” “we” and “us” in this proxy statement relate to MVP REIT II, Inc., a Maryland corporation. The mailing address of our principal executive offices is 8880 West Sunset Road, Suite 340, Las Vegas, Nevada 89148 and our telephone number is (702) 534-5577.
STOCKHOLDERS ARE URGED TO READ AND CONSIDER CAREFULLY THE INFORMATION CONTAINED IN THIS PROXY STATEMENT.
November 17, 2020.
OF STOCKHOLDERS
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A. | You may authorize a proxy to vote your shares in the following manner: |
All stockholders must present a form of personal identification in order to be admitted to the Annual Meeting. NO CAMERAS, RECORDING EQUIPMENT, ELECTRONIC DEVICES, LARGE BAGS, BRIEFCASES OR PACKAGES WILL BE PERMITTED AT THE ANNUAL MEETING.
As Obtaining a legal proxy may take several days.
PLEASE AUTHORIZE A PROXY TO VOTE YOUR SHARES VIA THE INTERNET OR TELEPHONE OR BY COMPLETING, SIGNING AND DATING THE ACCOMPANYING PROXY CARD AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
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A. | At the Annual Meeting, we will be asking you to consider and vote upon the following: |
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There can be no assurance that we will successfully list our common stock on a national securities exchange or that, if we are successfularise in listing, an active trading market for shares of our common stock will develop and be sustained or that the price at which our common stockconnection with this proposal because brokers may trade following the listing will increase.
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The inspector of election appointed by us for the Annual Meeting will determine whether or not
A. |
A. | Yes. You may revoke your proxy or change your vote at any time before your proxy is exercised at the Annual Meeting. If you are a holder of record, you can do this in any of the three following ways: |
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If your shares of common stock are held in an account at a broker or other nominee and you desire to change your vote or vote in person, you should contact your broker or other nominee for instructions on how to do so.
MVP REIT II, Inc.
Washington, DC 20549. You may also request information from Georgeson Inc., the Company’s proxy solicitor, at the following address and telephone number:
Georgeson Inc.480 Washington Blvd., 26th FloorJersey City, NJ 07310All Shareholders Call Toll-Free: 888-666-2580
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INTRODUCTORY NOTE TO PROPOSALS 1 THROUGH 7 RELATING TO THE PROPOSEDAMENDMENT AND RESTATEMENT OF OUR CHARTER
On May 25, 2017, the Board determined that the amendment and restatement of our charter, as set forth in the Amended Charter, is advisable in connection with the potential listing of our common stock on a national securities exchange following the completion of the merger of MVP I into a wholly-owned subsidiarydocuments at prescribed rates by writing to the Public Reference Section of the Company,SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 or the merger. The changes that would be made to our charter by the Amended Charter are primarily intended to accomplish two objectives in connection with the possible exchange listing of our common stock: (1) to remove provisions of our charter that we believe might unnecessarily restrict our ability to take advantage of future opportunities1-202-551-7900 for liquidity events or are redundant with or otherwise addressed or permitted to be addressed under Maryland law and (2) to amend certain provisions in a manner that we believe would be more suitable for becoming a publicly-traded REIT.
The majority of the changes that we are proposing to our charter relate to the removal or revision of provisions and restrictions that were required by state securities administrators in order for us to publicly offer our stock without having it listed on a national securities exchange. If our common stock is listed on a national securities exchange, these provisions and restrictions will no longer be required and, in some cases, if retained, would place restrictions on our activities that could put us at a competitive disadvantage compared to our peers with publicly listed securities.
The principal changes to our charter that would be made in the Amended Charter are summarized below in the following Proposals 1 through 7. The overview of the proposed changes in this Introductory Note and the descriptions provided in each of Proposals 1 through 7 are qualified in their entirety by the complete text of the Amended Charter, which is included as Appendix A to this proxy statement, which has been marked to show the proposed changes from our current charter and which you should read in its entirety.
Approval of the Amended Charter
Approval of each of Proposals 1 through 7 is conditioned on approval of every other of Proposals 1 through 7. This means that, for the proposed Amended Charter to be approved and implemented, our stockholders must vote “FOR” each of Proposals 1 through 7.
Effectiveness of the Amended Charter
If the amendments to our charter as set forth in Proposals 1 through 7 and the Amended Charter are approved by our holders of common stock, the Amended Charter will become effective when filed with, and accepted for record by, the State Department of Assessments and Taxation of Maryland. We intend to file the Amended Charter immediately before our common stock becomes listed for trading on a national securities exchange. This means that the changes to the charter will not be effective unless and until we complete an exchange listing.
Appraisal Rights
Under Maryland law and our charter, you will not be entitled to rights of appraisal with respect to the amendment and restatement of our charter as set forth in the Amended Charter. Accordingly, to the extent that you object to the amendment and restatement of our charter as set forth in the Amended Charter, you will not have the right to have a court judicially determine (and you will not receive) the fair value for your shares of common stock under the provisions of Maryland law governing appraisal rights.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE APPROVAL OF EACH OF PROPOSALS 1 THROUGH 7.
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PROPOSAL 1: APPROVAL OF AMENDMENTS TO OUR CHARTERTO REMOVE OR REVISE CERTAIN PROVISIONS RELATING TOOUR STOCK AND STOCKHOLDERS
In this Proposal 1, we are proposing to remove or revise NASAA REIT Guidelines provisions from our charter that relate to the terms and rights of our classes and series of equity stock, including our common stock, and to offerings of our equity stock, all as more particularly described below:
The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 1. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 1 unless you designate otherwise.
In addition, approval of each of Proposals 1 through 7, including this Proposal 1, is conditioned on approval of each other of Proposals 1 through 7. This means that, if you abstain from voting on or vote against this Proposal 1, it will have the effect of a vote against all of the other proposed amendments to our charter.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO OUR CHARTER TO REMOVE OR REVISE CERTAIN PROVISIONS RELATING TO OUR STOCK AND OUR STOCKHOLDERS.
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PROPOSAL 2: APPROVAL OF AMENDMENTS TO OUR CHARTERTO REMOVE OR REVISE CERTAIN PROVISIONS RELATING TOOUR BOARD OF DIRECTORS
In this Proposal 2, we are proposing to remove or revise NASAA REIT Guidelines provisions from our charter that relate to the number, qualifications and service of our directors, to add certain related provisions that we believe are more suitable for becoming a publicly traded REIT and to add certain director removal limitations to our charter, as more particularly described below:
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The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 2. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 2 unless you designate otherwise.
In addition, approval of each of Proposals 1 through 7, including this Proposal 2, is conditioned on approval of each other of Proposals 1 through 7. This means that if you abstain from voting on or vote against this Proposal 2, it will have the effect of a vote against all of the other proposed amendments to our charter.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO OUR CHARTER TO REMOVE OR REVISE CERTAIN PROVISIONS RELATING TO OUR BOARD OF DIRECTORS.
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PROPOSAL 3: APPROVAL OF AMENDMENTS TO OUR CHARTERTO REMOVE OR REVISE CERTAIN PROVISIONS RELATING TOTHE CONDUCT OF OUR BUSINESS THAT LIMIT OR REGULATECERTAIN OF OUR POWERS
In this Proposal 3, we are proposing to remove or revise NASAA REIT Guidelines provisions that limit or regulate how the Company operates and the process by which it engages in certain transactions, all as more particularly described below:
The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 3. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 3 unless you designate otherwise.
In addition, approval of each of Proposals 1 through 7, including this Proposal 3, is conditioned on approval of each other of Proposals 1 through 7. This means that if you abstain from voting on or vote against this Proposal 3, it will have the effect of a vote against all of the other proposed amendments to our charter.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO OUR CHARTER TO REMOVE OR REVISE CERTAIN PROVISIONS RELATING TO THE CONDUCT OF OUR BUSINESS THAT LIMIT OR REGULATE CERTAIN OF OUR POWERS.
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PROPOSAL 4: APPROVAL OF AMENDMENT TO OUR CHARTER TOREMOVE THE MAJORITY VOTING STANDARD FOR THEELECTION OF DIRECTORS AND IMPLEMENT THE DEFAULTPLURALITY VOTING STANDARD UNDER THE MARYLANDGENERAL CORPORATION LAW
If adopted, this Proposal 4 would delete the NASAA REIT Guidelines requirement that a director receive the affirmative vote of the holders a majority of the shares present, in person or by proxy, at a meeting in order to be elected. We believe it is advisable to delete this provision because it creates a possibility that no nominee would be elected to fill a director seat. If no nominee for a director seat receives the vote of a majority of shares present because, for example, many stockholders abstain, then the previously elected director will continue to serve as a “holdover” director. In addition, there can be significant costs and delays to the Company when soliciting stockholder votes, which may be greater under the current majority voting standard.
If this Proposal 4 is adopted, then we intend to similarly revise the related provision of our bylaws so that, consistent with the default standard under the MGCL, a plurality of all the votes cast at a meeting at which a quorum is present would be sufficient to elect a director. If adopted, this Proposal 4 and the revised bylaws would result in the election of the nominee who receives the most affirmative votes in a director election. This Proposal 4 would change and diminish the effect of an abstention, which currently counts as a vote against a director nominee, so that it will qualify as present for the purposes of a quorum but will have no effect on the outcome of the election. Adoption of this Proposal 4 also may diminish the effect of a vote against a nominee because a nominee who received many against votes would, nevertheless, be elected if there is no opposition candidate.
The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 4. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 4 unless you designate otherwise.
In addition, approval of each of ProposalsNO. 1 through 7, including this Proposal 4, is conditioned on approval of each other of Proposals 1 through 7. This means that if you abstain from voting on or vote against this Proposal 4, it will have the effect of a vote against all of the other proposed amendments to our charter.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO OUR CHARTER TO REMOVE THE MAJORITY VOTING STANDARD FOR THE ELECTION OF DIRECTORS AND IMPLEMENT THE DEFAULT PLURALITY VOTING STANDARD UNDER THE MARYLAND GENERAL CORPORATION LAW.
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PROPOSAL 5: APPROVAL OF AMENDMENTS TO OUR CHARTERTO REMOVE OR REVISE CERTAIN PROVISIONS WITH RESPECTTO STOCKHOLDER MEETING REQUESTS, MEETINGS,INFORMATION AND VOTING RIGHTS
In this Proposal 5, we are proposing to remove or revise certain provisions of the charter that relate to stockholder meetings, stockholder information rights and stockholder voting rights, all as more particularly described below:
The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 5. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 5 unless you designate otherwise.
In addition, approval of each of Proposals 1 through 7, including this Proposal 5, is conditioned on approval of each other of Proposals 1 through 7. This means that if you abstain from voting on or vote against this Proposal 5, it will have the effect of a vote against all of the other proposed amendments to our charter.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO OUR CHARTER TO REMOVE OR REVISE CERTAIN PROVISIONS WITH RESPECT TO STOCKHOLDER MEETING REQUESTS, STOCKHOLDER MEETINGS, INFORMATION AND VOTING RIGHTS.
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PROPOSAL 6: APPROVAL OF AMENDMENTS TO OUR CHARTERTO CONFORM THE TERMS OF THE SERIES A CONVERTIBLEREDEEMABLE PREFERRED STOCK WITH THOSE OF THE SERIES 1CONVERTIBLE REDEEMABLE PREFERRED STOCK
In this Proposal 6, we are proposing to amend the date by which holders of Series A Convertible Redeemable Preferred Stock must provide notice of conversion from the day immediately preceding the first anniversary of the issuance of such share to December 31, 2017. This change will conform the terms of the Series A Convertible Redeemable Preferred Stock with the terms of the Series 1 Convertible Redeemable Preferred Stock with respect to conversions.
The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 6. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 6 unless you designate otherwise. The outstanding shares of Series A Convertible Redeemable Preferred Stock and Series 1 Convertible Redeemable Preferred Stock are not entitled vote on this Proposal 6.
In addition, approval of each of Proposals 1 through 7, including this Proposal 6, is conditioned on approval of each other of Proposals 1 through 7. This means that if you abstain from voting on or vote against this Proposal 6, it will have the effect of a vote against all of the other proposed amendments to our charter.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO OUR CHARTER TO CONFORM THE TERMS OF THE SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK WITH THOSE OF THE SERIES 1 CONVERTIBLE REDEEMABLE PREFERRED STOCK.
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PROPOSAL 7: APPROVAL OF AMENDMENTS TO OUR CHARTERTO EFFECTUATE CERTAIN MINISTERIAL MODIFICATIONS,CLARIFICATIONS AND CONFORMING CHANGES TO, AND THERESTATEMENT OF, OUR CHARTER
In addition to the proposed amendments to the Company’s charter particularly described in Proposals 1 through 6 above, we are proposing in this Proposal 7 to amend the charter to integrate all of the amendments to the charter proposed in Proposals 1 through 7, to conform cross-references and section titles, to make other immaterial typographical and drafting changes throughout the charter and to restate the charter to incorporate all the amendments approved in Proposals 1 through 7 along with all previously approved provisions.
The affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock is required to approve this Proposal 7. If you abstain from voting on the proposal, it will have the effect of a vote against the proposal. Proxies received will be voted FOR approval of this Proposal 7 unless you designate otherwise.
In addition, approval of each of Proposals 1 through 7, including this Proposal 7, is conditioned on approval of each other of Proposals 1 through 7. This means that if you abstain from voting on or vote against this Proposal 7, it will have the effect of a vote against all of the other proposed amendments to our charter. In addition, this means that a vote for Proposal 7 will not count as a vote for Proposals 1 through 6.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE AMENDMENTS TO OUR CHARTER TO EFFECTUATE CERTAIN MINISTERIAL MODIFICATIONS, CLARIFICATIONS AND CONFORMING CHANGES TO, AND THE RESTATEMENT OF, OUR CHARTER.
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PROPOSAL 8 – ELECTION OF DIRECTORS
Information About
General
Our board currently consists of five members, Michael V. Shustek, Allen Wolff, David Chavez, Erik Hart and John E. Dawson. directors. However, Nicholas Nilsen, one of our current directors, will not be standing for re-election at the Annual Meeting. The Board has determined that, concurrently with the conclusion of Mr. Nilsen’s term, the size of the Board shall be decreased to four. Thus, stockholders will be voting on the election of four nominees to serve as directors at the Annual Meeting.
Directors
Name | Age | Title | |||
Michael V. Shustek | |||||
Robert J. Aalberts | 68 | ||||
Independent Director | |||||
John E. Dawson | 62 | Lead Independent Director | |||
Shawn Nelson | Independent Director | ||||
Directors of the Company |
The following table sets forth the names, ages as of March 24, 2017 and positions
There are no familyreal estate industry, and has relationships between any directors or executive officers, or between any directorwith chief executives and executive officer.
Board Leadership Structure
Ourother senior management at numerous real estate companies. Based on the foregoing, the Board of Directors believes that Mr. Shustek will continue to bring a unique and valuable perspective to our Board of Directors.
Board’shis experience as a director.
The
Name | Age | Title |
Michael V. Shustek | 61 | Chairman of the Board and Chief Executive Officer |
Daniel Huberty | 52 | President and Chief Operating Officer |
J. Kevin Bland | 57 | Chief Financial Officer |
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THESE NOMINEES.
Biographical Information for Nominees for Director
Michael V. Shustek, will serve asChief Executive Officer (“CEO”);
Name and Principal Position | Fiscal Year | Salary ($)1 | Bonus ($) | Stock Awards ($) | All Other Compensation ($) (1) | Total ($) | |||||||||||||||
Michael V. Shustek | 2019 | $ | 275,000 | 125,000 | - | - | $ | 400,000 | |||||||||||||
Chief Executive Officer | - | - | - | - | - | ||||||||||||||||
Daniel Huberty | 2019 | $ | 150,000 | - | - | - | $ | 150,000 | |||||||||||||
President and Chief Operating Officer | - | - | - | - | - | ||||||||||||||||
J. Kevin Bland | 2019 | $ | 125,000 | $ | 90,000 | - | - | $ | 215,000 | ||||||||||||
Chief Financial Officer | - | - | - | - | - |
In February 2004, Mr. Shustek became the President of Vestin Group. In 2003, Mr. Shustek became the Chief Executive Officer of Vestin Originations, Inc. In 1995, Mr. Shustek founded Del Mar Mortgage, and has been involved indirector. The Compensation Committee retained FTI Consulting as its independent consultant to provide guidance on various aspects of our independent director compensation program and to assist the real estate industryCompensation Committee in Nevada since 1990. In 1993, he founded Foreclosuresdesigning an executive compensation program.
Name (1) | Fees Earned or Paid in Cash | Total ($) | ||||||
David Chavez (2) | $ | 11,250 | $ | 11,250 | ||||
John E. Dawson (3) | 60,333 | 60,333 | ||||||
Robert J. Aalberts | 56,292 | 56,292 | ||||||
Nicholas Nilsen | 39,167 | 39,167 | ||||||
Shawn Nelson | 63,821 | 63,821 | ||||||
Hilda Delgado (4) | 11,666 | 11,666 | ||||||
John Alderfer (5) | 6,250 | 6,250 | ||||||
William Wells (2) | 11,250 | 11,250 | ||||||
Total | $ | 260,029 | $ | 260,029 |
(1) | Mr. Shustek, the Chairman of the Board and our CEO, did not receive compensation for his services on our Board in 2019. Mr. Shustek’s 2019 compensation is described in the section above, titled “Summary Compensation Table.” |
(2) | The Nominating Committee did not re-nominate Mr. Wells nor Mr. Chavez were in June 2019 at our annual stockholders meeting. Each of these directors served out their terms, which ended on June 5, 2019. The amounts shown in the table above reflect their pro-rated fees for 2019. |
(3) | Mr. Dawson served as our Lead Independent Director for 2019 and as the chair of the Audit Committee for 2019. |
(4) | Ms. Delgado resigned from the Board on August 9, 2019. |
(5) | Mr. Alderfer resigned from the Board on July 16, 2019. |
Mr. Shustek has co-authored two books, entitled “Trust Deed Investments,”based on, the topic of private mortgage lending, and “If I Can Do It, So Can You.” Mr. Shustek is a guest lecturer atCompany’s common stock. The Company does not currently expect to issue awards under the University of Nevada, Las Vegas, where he also has taught a courseCompany’s long- term incentive plan prior to such time as the Company’s stock becomes publicly traded, although it may do so in Real Estate Law and Ethics. Mr. Shustek received a Bachelor of Science degree in Finance at the University of Nevada, Las Vegas. Mr. Shustek is highly knowledgeable with regardfuture, including possible equity grants to the business operationsCompany’s independent directors as a form of MVP Icompensation.
Allen Wolff will serve as onetermination of the combined company’s independentlong-term incentive plan will not, without the participant’s consent, have an adverse impact on any award that is outstanding at the time the long-term incentive plan expires or is terminated. The board of directors may amend the long-term incentive plan at any time, but no amendment will adversely affect any award without the participant’s consent and currently servesno amendment to the long-term incentive plan will be effective without the approval of the Company’s stockholders if such approval is required by any law, regulation or rule applicable to the long-term incentive plan.
David Chavez will serve as oneits subsidiaries during the year ended December 31, 2019. In addition, during the year ended December 31, 2019, none of the combined company’s independent directors and currently serves as an independent director of MVP II. Since 2009, Mr. Chavez hasCompany’s executive officers served as Chief Executive Officer of Assured Strategies, LLC, a strategic consulting, coaching and advisory firm. From 1996 to 2007, Mr. Chavez served as Chief Executive Officer of the Chavez & Koch, a Professional Corporation, Certified Public Accountants (CPA’s), Ltd., certified public accounting firm, and from 1995 to 1996, he was a private business and financial consultant. From 1991 to 1995 Mr. Chavez worked with Arthur Andersen’s Las Vegas office, taking several companies public, and working on auditing as well as consulting. Mr. Chavez received a Bachelor of Science in Business Administration Degree, with a concentration in Accounting, from the University of Nevada, Las Vegas. Mr. Chavez was selected to serve as an independent director of the combined company because of his accounting and financial reporting expertise and his experience in the strategic consulting industry.
Erik A. Hart will serve as one of the combined company’s independent directors and currently serves as an independent director of MVP II. Since May 2012, Mr. Hart has served as Managing Partner for Romandad Partners and the Romandad Trust. Previous to that, from 2001 to July 2013, Mr. Hart practiced law at The Law Offices of
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Erik A. Hart, and from 1998 to 2001, Mr. Hart was a lawyer for the Business Affairs and Business Development Department of the Spelling Entertainment Group, Inc., formerly Republic Entertainment, Inc. Mr. Hart received his Bachelor’s Degree from the University of the Pacific, and his Juris Doctor from McGeorge School of Law. Mr. Hart is a member of the California Bar and reactivated his California bar license and plans to keep it active indefinitely. Mr. Hart was selected to serve as an independent directorCompensation Committee (or other committee of the combined company becauseCompany’s board of his finance experience, including experience analyzing and investingdirectors performing equivalent functions or, in REITs,the absence of any such committee, our entire board of directors) of any entity that has one or more executive officers serving as well as his corporate law experience.
John E. Dawson will serve as onea member of the combined company’s independent directors and currently serves as an independent director of MVP I and MVP II. He has been a director of MVP I since its inception. He was a director of Vestin Group from March 2000 to December 2005, was a director of VRM I, from March 2007 until he resigned in November 2013 and was a director for VRM I from March 2007 until January 2008. Since January of 2015 Mr. Dawson has been a Partner at the International law firm of Dickinson Wright PLLC. Mr. Dawson was a partner of the Las Vegas law firm of Lionel Sawyer & Collins from 2005 until its closing in December of 2014. Previous to that, from 1995 to 2005, Mr. Dawson was a partner at the law firm of Marquis & Aurbach. Mr. Dawson received his Bachelor’s Degree from Weber State and his Juris Doctor from Brigham Young University. Mr. Dawson received his Masters of Law (L.L.M.) in Taxation from the University of San Diego in 1993. Mr. Dawson was admitted to the Nevada Bar in 1988 and the Utah Bar in 1989. Mr. Dawson was selected to serve as an independent director of the combined company due to his legal background and significant experience in the real estate industry and his experience as a public company director.
Biographical Information for Non-Director Nominee Executive Officers
Ed Bentzen was appointed as our Chief Financial Officer (CFO) on June 14, 2016. In addition, Mr. Bentzen was appointed the CFO of MVP I on June 14, 2016. From August 2013, Mr. Bentzen has been the Chief Financial Officer of Western Funding, Inc., a subsidiary of Westlake Financial Services, a company that specializes in sub-prime auto financing. From January 2013 to August 2013, Mr. Bentzen was the Assistant Vice President of Finance for Western Funding and from October 2010 through January 2013, he was the corporate controller of Western Funding. Previous to his experience at Western Funding, Mr. Bentzen served in the capacity of Financial Analyst from January 2006 to April 2007 and then as corporate controller from April 2007 to October 2010 of VRM I and VRM II, which are the owners of the Advisor. Mr. Bentzen received his BS in Hotel Administration from the University of Nevada Las Vegas in 1999 and his Masters of Science in Accountancy from the University of Nevada Las Vegas in 2007. In 2005 he passed the Certified Internal Auditor’s exam and received his CIA Certification from the Institute of Internal Auditors (currently inactive status).
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CORPORATE GOVERNANCE
Board of Directors
We operate or Compensation Committee.
We have a total of five directors, four of whom are independent of us,from the former Advisor, MVP Capital Partners II our sponsor (the “Sponsor”), and ourtheir respective affiliates as determined in accordance with the North American Securities Administrators Association's Statement of Policy Regarding Real Estate Investment Trusts, as revised and adopted on May 7, 2007, or the NASAA REIT Guidelines. The NASAA REIT Guidelines require ourthe Company’s charter to define an independent director as a director who is not and has not for the last two years been associated, directly or indirectly, with ourthe Sponsor or the former Advisor. A director is deemed to be associated with ourthe Sponsor or the former Advisor if he or she owns any interest in, is employed by, is an officer or director of, or has any material business or professional relationship with ourthe Sponsor, the former Advisor or any of their affiliates, performs services (other than as a director) for us,the Company, or serves as a director or trustee for more than three REITs sponsored by ourthe Sponsor or advised by the former Advisor. A business or professional relationship will be deemed material per se if the gross revenue derived by the director from ourthe Sponsor, the former Advisor or any of their affiliates exceeds five percent of (1) the director'sdirector’s annual gross revenue derived from all sources during either of the last two years or (2) the director'sdirector’s net worth on a fair market value basis. An indirect relationship is defined to include circumstances in which the director'sdirector’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-lawsisters-in- law is or has been associated with us, ourthe Company, the Sponsor, the former Advisor or any of its affiliates. OurThe Company’s board of directors has determined that each of Allen Wolff, David Chavez, Erik HartJohn Dawson, Robert J. Aalberts, Nicholas Nilsen and John DawsonShawn Nelson qualifies as an independent director under the NASAA REIT Guidelines.
We refer
Our
Ourdirectors under the charter.
We have
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The directors are accountablehave duties to us and our stockholdersthe Company arising from their capacity as fiduciaries.directors of the Company. This means that the directorseach director must perform theirhis or her duties in good faith and in a manner each director believes to be in ourthe Company's best interests. Further, our directorseach director must act with such care as an ordinarily prudent person in a like position would use under similar circumstances, including exercising reasonable inquiry when taking actions. Our directors and executive officers will serve until their successors are elected and qualify. The directors are not required to devote all of their time to ourthe Company's business and are only required to devote such time to ourthe Company's affairs as their duties require. The directors meet quarterly or more frequently as necessary.
We
Board Committees
Our board of directors may establish committees it deems appropriate to address specific areas in more depth than may be possible at a full board of directors meeting, provided that the majority of the members of each committee are independent directors.
Directors.
Name | Audit | Compensation | Nominating and Corporate Governance | |||
John Dawson | Chair | |||||
Robert J. Aalberts | Chair | |||||
Nicholas Nilsen | X | Chair | X | |||
Shawn Nelson | X | X |
Nominatingderivative claims against the Company, certain of our officers and directors, the Advisor, VRM I, and VRM II in the Circuit Court for Baltimore City, captioned Arthur Magowski v. The Parking REIT, Inc., et. al, No. 24-C-19003125 (filed on May 31, 2019) (the “Magowski Complaint”). On July 16, 2019, the Board established a demand review committee of two independent directors to investigate the allegations of wrongdoing made in the Magowski Complaint and to make a recommendation to the Board regarding a response to the stockholder demand letter. On September 27, 2019, the Board replaced the demand review committee with a special litigation committee comprised of one independent director, Shawn Nelson. The special litigation committee is responsible for investigating the allegations of wrongdoing made in the letter and making a final determination regarding the Company’s response to the demand.
We do not have a separate nominating and corporate governance committee. We believe that our board of directors is qualified to perform the functions typically delegated to a nominating and corporate governance committee and that the formation of a separate committee is not necessary at this time. Instead, our full board of directors performs functions similar to those which might otherwise normally be delegated to such a committee, including, among other things, developing a set of corporate governance principles, adopting a code of ethics, adopting objectives with respect to conflicts of interest, monitoring our compliance with corporate governance requirements of state and federal law, establishing criteria for prospective members of our board of directors, conducting candidate searches and interviews, overseeing and evaluating our board of directors and our management, evaluating from time to time the appropriate size and composition of our board of directors and recommending, as appropriate, increases, decreases and changes to the composition of our board of directors and formally proposing the slate of directors to be elected at each annual meeting of our stockholders.
Compensation Committee
Our board of directors believes that it is appropriate for our board of directors not to have a standing compensation committee based upon the fact that our executive officers and our affiliated directors do not receive compensation directly from us for services rendered to us, and we do not intend to pay compensation directly to our executive officers or our affiliated directors. Our independent directors receive certain compensation from us, which is described in more detail under “Executive Compensation.”
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Code of Ethics
We haveThe Company has adopted a Code of Business Conduct and Ethics or the Code(the “Code of Ethics,Ethics”), which contains general guidelines for conducting ourthe Company's business and is designed to help directors, employees and independent consultants resolve ethical issues in an increasingly complex business environment. The Code of Ethics applies to all of ourthe Company's officers, including ourthe Company's principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions, andas well as all members of our boardthe Board of directors.Directors. The Code of Ethics covers topics including, but not limited to, conflicts of interest, record keeping and reporting, payments to foreign and U.S. government personnel and compliance with laws, rules and regulations. WeThe Company will provide to any person without charge a copy of ourthe Code of Ethics, including any amendments or waivers, upon written request delivered to ourthe Company's principal executive office at the address listed on the frontcover page of this proxy statement.
We have
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RBSM
The dismissal of RSM was approved by a majority of the members of the Audit Committee. RSM was engaged to audit report of RBSM on the consolidatedCompany's financial statements of the Company as of and for the period from May 4, 2015 (DATE OF INCEPTION) through December 31, 2015 and for the year ended December 31, 2016 did not contain an adverse opinion or a disclaimer of opinion, and2017; however, the audit was not qualified or modified ascompleted, and no audit report was ever issued by RSM to uncertainty, audit scope or accounting principles.
the Company. During the two most recent fiscal years and the period from January 1, 2017 through May 19, 2017,term of RSM's engagement, there werewere: (i) no disagreements with RBSMbetween the Company and RSM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
During the Company's two most recent fiscal years ended December 31, 2015 and 2016 and the period from January 1, 2017 through May 19, 2017, the Company didprocedure, which disagreement, if not consult with RSM on (i) the application of accounting principlesresolved to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company's consolidated financial statements, and RSM did not provide either a written report or oral adviceRSM's satisfaction, would have caused it to make reference to the Companysubject matter of the disagreement in connection with its report, and (ii) no reportable events (as that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) any matter that was the subject of any disagreement, asterm is defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
S-K).
the Company.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THIS PROPOSAL.
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Fees Paid to Our Prior Independent Registered Public Accounting Firm
For the yearyears ended December 31, 20162019 and during the period from May 4, 2015 (date of inception) through December 31, 2015,2018 RBSM LLP, our prior independent public accounting firm, billed the Company approximately $405,000 and $520,000, respectively, for their professional services rendered as follows:
December 31, 2016 | For the period May 4, 2015 (date of inception) December 31, 2015 | |||||
Audit Fees | $ | 61,000 | $ | — | ||
Audit Related Fees | $ | 7,500 | $ | 34,000 | ||
Tax Fees | $ | — | $ | — | ||
All Other Fees | $ | — | $ | — |
RBSM did not perform any non-audit services for us during
2019 and 2018, Armanino, LLP (“Armanino”) and HCVT LLP (“HCVT”), additional independent accounting firms providing tax services, billed the Company approximately $98,000 and
RBSM 12/31/2019 | RBSM 12/31/2018 | RSM 12/31/2019 | RSM 12/31/2018 | Armanino 12/31/2019 | HCVT 12/31/2018 | |||||||||||||||||||
Audit Fees | $ | 480,000 | $ | 420,000 | $ | -- | $ | 343,000 | $ | -- | $ | -- | ||||||||||||
Audit Related Fees | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||||||
Tax Fees | $ | -- | $ | -- | $ | -- | $ | -- | $ | 98,000 | $ | 219,000 | ||||||||||||
All Other Fees | $ | -- | $ | 25,000 | $ | -- | $ | 100,000 | $ | -- | $ | -- | ||||||||||||
Total | $ | 480,000 | $ | 445,000 | $ | -- | $ | 443,000 | $ | 98,000 | $ | 219,000 |
Other
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Standards No. 61,1301, Communication with Audit Committees, as amended, (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, which includes, among other items, matters related toissues regarding the conduct of the audit, accounting and auditing principles and practices, and the adequacy of internal controls that could significantly affect the Company's consolidated financial statements.
2019. The Committee has reviewed the original proposed scope of the audit and fees.
The Audit Committee:
John DawsonDavid ChavezAllen Wolff
NO INCORPORATION BY REFERENCE OR DEEMED FILING
Notwithstanding anything to the contrary set forth in any of our previous or future filings made under the Securities Act of 1933, as amended, or the Exchange Act, that might incorporate this Proxy Statement or future filings made2019.
Audit Committee Charter
The Board has established and adopted a written charter for the board’s audit committee. The charter for the audit committee addresses the committee’s purpose, authority, and responsibilities, and contains other provisions relating to, among other matters, membership and meetings. Our Board may from time to time establish other committees to facilitate the management of the Company.
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PROPOSAL 10: PERMIT THE BOARD TOADJOURN THE ANNUAL MEETING
The tenth proposal is to adjourn the Annual Meeting, if necessary, to solicit additional proxies in favor of Proposals 1 through 9 if there are not sufficient votes for any of such proposals.
Vote Required
The affirmative vote of a majority of the votes cast by stockholders present in person or by proxy at the meeting is required to approve this proposal. For purposes of this vote, abstentions and broker-non votes, if any, will not be counted as votes cast and will have no effect on the result of the vote for this proposal, although they will be considered present for the purpose of determining the presence of a quorum. Proxies received will be voted FOR approval of this proposal unless stockholders designate otherwise.
THE BOARD UNANIMOUSLY (WITH THE EXCEPTION OF THE MEMBERS OF THE BOARD WHO ARE ALSO MEMBERS OF THE MVP I BOARD, EACH OF WHOM ABSTAINED) RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THIS PROPOSAL.
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EXECUTIVE COMPENSATION
Executive Officers
We do not currently have any employees nor do we currently intend to hire any employees who will be compensated directly by us. Each of our executive officers, including each executive officer who serves as a director, is employed by our Sponsor and also serves as an executive officer of the Advisor. Each of these individuals receives compensation from our Sponsor for his or her services, including services performed for us and for the Advisor. As executive officers of the Advisor, these individuals manage our day-to-day affairs and carry out the directives of our board of directors in the review and selection of investment opportunities and oversee and monitor our acquired investments to ensure they are consistent with our investment objectives. The duties that these executive officers perform on our behalf also serve to fulfill the corporate governance obligations of these persons as our appointed officers pursuant to our charter and bylaws. As such, these duties involve the performance of corporate governance activities that require the attention of one of our corporate officers, including signing certifications required under the Sarbanes-Oxley Act of 2002, as amended, for filing with our periodic reports. Although we reimburse the Advisor for certain expenses incurred in connection with providing these services to us, we do not pay any compensation directly to our executive officers.
Independent Directors
We pay each of our independent directors an annual retainer of $30,000 (to be prorated for a partial term), plus the audit committee chairperson receives an additional $5,000 annual retainer (to be prorated for a partial term). Each independent director also receives $1,000 for each meeting of the board of directors attended in-person or by telephone.
All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending meetings of the board of directors. If a director is also one of our officers, we do not pay any compensation to such person for services rendered as a director. The following table sets forth information with respect to our independent director compensation during the fiscal year ended December 31, 2016:
Name | Fees Earned or Paid in Cash | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation (1) ($) | Total ($) | ||||||||||||||
Allen Wolff | $ | 48,500 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 48,500 | |||||||
David Chavez | $ | 47,500 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 47,500 | |||||||
Erik Hart | $ | 46,500 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 46,500 | |||||||
John Dawson | $ | 54,750 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 54,750 | |||||||
Total | $ | 197,250 | — | — | — | — | — | $ | 197,250 |
Compensation Committee Interlocks and Insider Participation
Other than Michael V. Shustek, no member
We are
27
respect to the allocation of investment opportunities. OurThe Company's independent directors have an obligation to function on ourthe Company's behalf in all situations in which a conflict of interest may arise and will have a fiduciary obligation to act on behalf of the stockholders.
amends it charter.
Ownership of MVP I
On November 5, 2016, the Company purchased 338,409 shares of MVP I common stock from an unrelated third party for $3.0 million or $8.865 per share. During the year ended December 31, 20162018, VRM II and during the three months ended March 31, 2017, MVPVRM I paid us,received approximately $34,000$33,000 and $52,000$19,000 in distributions respectively, related to our ownership of MVP I common stock.
Houston Preston (Property Transfer)
During April 2017, MVP I reduced its ownership interest in MVP Houston Preston Lot from 80% to 40%,under the Company’s distribution reinvestment program (“DRIP”). No DRIP distributions were received by selling a portion of its ownership to us for $1.12 million. This transaction was completed at par value with no gain or loss recorded by MVP I or us. Our ownership interest in MVP Houston Preston Lot increased from 20% to 60% and, as of May 1, 2017, we are considered the controlling party.
Acquisition Expense
Duringeither entity during the year ended December 31, 2016, JNL Parking, a brokerage and consulting company specializing in2019 due to the parking industry and co-founded bysuspension of the Advisor’s former Chief Investment Officer and former Chief Technology Officer (their employment ended during August 2016), earned fees of approximately $78,000, equal to a 1% commission on purchases. JNL Parking may continue to receive broker fee from the Company, for deals in which John Roy and Lance Miller acted as brokers, after their employment ended with the Company.
DRIP program.
Various affiliates of ours were involved in our initial public offering and are involved in our operations, including MVP American Securities. MVP American Securities is owned by MS MVP Holdings, LLC, which is owned and managed by Mr. Shustek. Additionally, our board of directors, including a majority of our independent directors, may engage an affiliate of the Advisor to perform certain property management services for us. The Sponsor and its affiliates paid selling commissions of up to 6.5% of gross offering proceeds from the sale of shares in the primary offering without any right to seek reimbursement from us.
Our Sponsor and its affiliates were also permitted to pay non-affiliated selling agents a one-time fee separately negotiated with each selling agent for due diligence expenses, subject to the total underwriting compensation limitation set forth below. Such commissions and fees were paid by the Sponsor or its affiliates (other than us) without any right to seek reimbursement from us.
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Fees Paid in Connection with the Offering of the Company’s– Preferred Stock
On March 24, 2017, we closed a private placement of shares of our Series A Convertible Redeemable Preferred Stock.
On April 7, 2017, we commenced a private placement of shares of our Series 1 Convertible Redeemable Preferred Stock. In connection with During the private placement, we may payyear ended December 31, 2018, the Company paid approximately $0.8 in selling commissions, of upwhich $0.2 was paid to 6.0% of gross offering proceeds from the sale of shares in the private placement, including sales by affiliated and non-affiliated selling agents.
We may pay
Fees Paid in Connection with the Operations of the Company
Pursuant to our existing advisory agreement, the Advisor or its affiliates receives an acquisition fee of 2.25% of the purchase price of any real estate. However, the Company does not pay any fees when acquiring loans from affiliates. During the year ended December 31, 2016 and2018, the three months ended March 31, 2017,Company paid approximately $1.2 million and $1.1 million, respectively, in acquisition fees$0.2 to AMS as compensation.
The Advisor or its affiliates may be reimbursed for actual expenses paid or incurred in the investment. Duringsold during the year ended December 31, 2016 and the three months ended March 31, 2017, no acquisition expenses have been reimbursed2019.
Pursuant to our existing advisory agreement,Internalization, the former Advisor or its affiliates receive a monthlyreceived an asset management fee at an annuala rate equal to 1.0%1.1% of the cost of all assets then held by the Company, or the Company’s proportionate share thereof in the case of an investment made through a joint venture or other co-ownership arrangement. AssetPursuant to the Amended and Restated Advisory Agreement, the asset management feesfee could not exceed $2 million per annum until the earlier of such time, if ever, that (i) the Company holds assets with an appraised value equal to or in excess of $500,000,000 or (ii) the Company reports AFFO equal to or greater than $0.3125 per share of common stock (an amount intended to reflect a 5% or greater annualized return on $25.00 per share of common stock) for two consecutive quarters, on a fully diluted basis. All amounts of the yearasset management fee in excess of $2 million per annum, plus interest thereon at a rate of 3.5% per annum, would be due and payable by the Company no later than ninety (90) days after the condition for payment is satisfied. For the years ended December 31, 20162019 and 2018, asset management fees of approximately $0.9 and $2.0 million, respectively, had been earned by the three months ended March 31, 2017 were approximately $197,000former Advisor. From and $237,000, respectively.
after May 29, 2018 (or the Valuation Date), the asset management fee was to be calculated based on the lower of the value of the Company’s assets and their historical cost. The Company reimbursesceased payment of asset management fees effective April 1, 2019, as a result of the Internalization.
Termination During the year ended December 31, 2018, approximately $2.5 million had been reimbursed to the Advisor. During the year ended December 31, 2019, approximately $1.4 million in operating expenses were incurred by the former Advisor, on behalf of the Company, and Feewere reimbursed to the former Advisor.
Concurrently described further below. The Internalization became effective as of April 1, 2019 (the “Effective Date”).
The termination and fee agreement also provides for a waiver of any other contractual fee that the Advisor would have been due under the existing MVP I advisory agreement in connection with the merger. Additionally, all of the shares of convertible stock of MVP I will be cancelled in connection with the merger, and the Advisor will not receive any consideration in connection therewith. In the event that the merger agreement is terminated, the termination and fee agreement will automatically be deemed revoked and void ab initio.
Also concurrently with the execution and delivery of the merger agreement, MVP II, MVP II OP and the Advisor entered into an Amended and Restated Advisory Agreement, or the “MVP II amended and restated advisory agreement,” which will become effective at the effective time of the merger. The existing MVP II advisory agreement provides for the payment to the Advisor of acquisition fees, disposition fees, asset management fees and subordinated performance fees. Pursuant to the MVP II amended and restated advisory agreement, after the merger, the Advisor will only be entitled to an asset management fee as compensation for services rendered pursuant to the MVP II amended and restated advisory agreement in connection with the management of MVP II’s assets. The asset management fee will be calculated and paid monthly and will consist of a monthly fee of one-twelfth of 1.1% of (i) the cost of each asset then held by MVP II, without deduction for depreciation, bad debts or other non-cash reserves, or (ii) MVP II’s proportionate share thereof in the case of an investment made through a joint venture or other co-ownership arrangement excluding (only for clause (ii)) debt financing on the investment. For any month in which an asset is disposed of, MVP II will prorate the portion of the asset management fee related to that specific asset by using a numerator equal to the number of days owned during the month of disposal, divided by a denominator equal to the total number of days in such month and add the resulting amount to the fee due for such month.
The asset management fee will not exceed $2 million per year until the earlier of such time, if ever, that (i) the combined company holds assets with an appraised value equal to or in excess of $500,000,000 or (ii) the combined company reports AFFO (as defined in the MVP II amended and restated advisory agreement) equal to or greater than $0.3125 per share of MVP II common stock for two consecutive quarters on a fully diluted basis. All subordinated asset management fees in excess of $2 million per year will be paid, with interest rate of 3.5% per annum, to the Advisor at such time, if ever, that either of clause (i) or (ii) of the preceding sentence is satisfied.
Fees Paid in Connection with the Liquidation or Listing of the Company’s Real Estate Assets
Pursuant to our existing advisory agreement, for substantial assistance in connection with the sale of investments, as determined by the independent directors, we may pay the Advisor or its affiliate the lesser of (i) 3.0% of the contract sale price of each real estate-related secured loan or other real estate investment or (ii) 50% of the customary commission which would be paid to a third-party broker for the sale of a comparable property. The amount paid, when added to the sums paid to unaffiliated parties, may not exceed either the customary commission or an amount equal to 6.0% of the contract sales price. Any such disposition fee would be paid concurrently with the closing of any such disposition of all or any portion of any asset. During the year ended December 31, 2016 and the three months ended March 31, 2017, no disposition fees were earned by the Advisor.
Pursuant to our existing advisory agreement, after the Company’s stockholders have received a return of their net capital invested and a 6.0% annual cumulative, non-compounded return, then the Company’s Advisor will be entitled to receive 15.0% of the remaining proceeds. We would pay this subordinated performance fee only upon one of the following events: (i) if the Company’s shares are listed on a national securities exchange; (ii) if the Company’s assets are sold or liquidated; (iii) upon a merger, share exchange, reorganization or other transaction pursuant to which the Company’s investors receive cash or publicly-traded securities in exchange for their shares; or (iv) upon termination of the Company’s advisory agreement. During the year ended December 31, 2016 and the three months ended March 31, 2017, no subordinated performance fees have been earned by the Company’s Advisor.
Certain Conflict Mitigation Measures
In order to reduce or mitigate certain potential conflicts of interests, we have adopted the procedures set forth below.
Advisor Compensation
The independent directors evaluate at least annually whether the compensation that we contract to pay to the Advisor and its affiliates is reasonable in relation to the nature and quality of services performed and whether such compensation is within the limits prescribed by our charter. The independent directors supervise the performance of
30
the Advisor and its affiliates and the compensation we pay to them to determine whether the provisions of the advisory agreement are being carried out. This evaluation is based on the following factors as well as any other factors they deem relevant:
Term of Advisory Agreement
Each contract for the services of the Advisor may not exceed one year, although there is no limit on the number of times that we may retain a particular advisor. Our charter provides that a majority of the independent directors may terminate the advisory agreement with MVP Realty Advisors, LLC without cause or penalty on 60 days’ written notice. MVP Realty Advisors, LLC may terminate the advisory agreement with good reason on 60 days’ written notice.
Independent Directors
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Our
We
We
Directors.
Limitation on Operating Expenses
In compliance with the NASAA REIT Guidelines, our Advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. “Average invested assets” means the average of the aggregate monthly book value of our assets during a specified period invested, directly or indirectly in equity interests in and loans secured by real estate, before deducting depreciation, bad debts or other non-cash reserves. “Total operating expenses” means all costs and expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation, including advisory fees, but excluding (i) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock; (ii) interest payments; (iii) taxes; (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves; (v) incentive fees paid in compliance with the NASAA REIT Guidelines; (vi) acquisition fees and expenses; (vii) real estate commissions on the sale of real property; and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).
Notwithstanding the foregoing, to the extent that operating expenses payable or reimbursable by us exceed these limits and the independent directors determine that the excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient, our Advisor may be reimbursed in future periods for the full amount of the excess expenses or any portion thereof. Within 60 days after the end of any fiscal quarter for which our total operating expenses for the four consecutive fiscal quarters then ended exceed these limits, we will send our
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stockholders a written disclosure of such fact, together with an explanation of the factors our independent directors considered in determining that such excess expenses were justified. In addition, our independent directors will review the total fees and expense reimbursements for operating expenses paid to our Advisor to determine if they are reasonable in light of our performance, our net assets and income, and the fees and expenses of other comparable unaffiliated REITs.
Issuance of Options and Warrants to Certain Affiliates
We
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||
Vestin Realty Mortgage II, Inc. 9130 W. Post Rd Suite 130 Las Vegas, NV 89148 | Sole voting and investment power of 854,067(1) shares | 11.65 | % | ||
Sole voting and investment power of 456,834(1) shares | 6.23 | % |
(1) | Beneficial ownership is based on ownership as set forth in the Schedule 13D/A filed by Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc. and Michael V. Shustek with the SEC on June 4, 2020. |
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Unless otherwise noted, the percentage ownership is calculated based on 2,548,7237,327,696 shares of the Company’sour total outstanding common stock and 42,672 shares of our total outstanding preferred stock as of May 31, 2017.
Common Shares Beneficially Owned | Preferred Shares Beneficially Owned | ||||||||||||||||
Beneficial Owner | Address | Number | Percent | Number | Percent | ||||||||||||
Michael V. Shustek(1) | 9130 W. Post Rd Suite 200, Las Vegas, NV 89148 | 1,324,324 | 18.06 | % | -- | -- | |||||||||||
Dan Huberty | 9130 W. Post Rd Suite 200, Las Vegas, NV 89148 | 3,599 | <1% | -- | -- | ||||||||||||
John E. Dawson | 8925 W. Post Rd Suite 210, Las Vegas, NV 89148 | 2,570 | <1% | 54(2 | ) | <1% | |||||||||||
Robert J. Aalberts | 311 Vallarte Dr. Henderson NV 89014 | -- | -- | -- | -- | ||||||||||||
Nicholas Nilsen | 3074 Soft Horizon Way Las Vegas, NV 89135 | 2,141 | <1% | -- | -- | ||||||||||||
Shawn Nelson | Hall of Administration 333 W. Santa Ana Blvd. Santa Ana, CA 92701 | -- | -- | -- | -- | ||||||||||||
All directors and officers | 1,332,634 | 18.18 | % | 54 | <1% |
1. | |||||||
Please see Footnote 1 to the table of Security Ownership of 5% Beneficial | |||||||
Mr. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who beneficially own more than 10% of our outstanding common stock to file with the SEC initial reports of ownership and reports of changes in their ownership of our common stock. Directors, executive officers and greater than 10% stockholders are required by SEC regulations to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us, during the fiscal year ended December 31, 2016, our directors, executive officers and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements.
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