| A. | Under our current charter and bylaws, the election of each nominee for director requiresCORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS The Company operates under the direction of the Company’s Board, the members of which are accountable to the Company and the stockholders as fiduciaries. The Board is responsible for directing the management of the Company’s business and affairs. Effective August 25, 2021, pursuant to the Charter and bylaws, and as contemplated the Stockholders’ Agreement dated August 25, 2021 (the “Stockholders’ Agreement”) between the Company and Color Up, LLC, a Delaware limited liability company (“Color Up”), the number of directors was increased from four to seven and Manuel Chavez III, Stephanie Hogue, Jeffrey Osher, Lorrence Kellar and Damon Jones were designated as nominees to the Board (the “Color Up Designated Directors”) by Color Up (and the Board nominated Danica Holley as a nominee to the Board (the “Incumbent Director” and, together with the Color Up Designated Director, “New Directors”) and Messrs. Chavez, Osher, Kellar, Jones, and Meses. Hogue and Holley were elected to the Board, with terms expiring at the Annual Meeting and until their successors are duly elected and qualify. Five of the Company’s directors are independent as determined in accordance with the Charter and the NASAA REIT Guidelines. In accordance with the NASAA REIT Guidelines, the Charter defines an independent director as a director who is not and has not for the last two years been associated, directly or indirectly, with the Sponsor or Advisor of the Company (each as defined therein). A director is deemed to be associated with the Sponsor or the Advisor if the director owns any interest in, is employed by, is an officer or director of, or has any material business or professional relationship with the Sponsor, the Advisor or any of their affiliates, performs services (other than as a director) for the Company, or serves as a director or trustee for more than three (3) real estate investment trusts (“REITs”) sponsored by the Sponsor or advised by the Advisor. A business or professional relationship will be deemed material per se if the gross revenue derived by the director from the Sponsor, the Advisor or any of their affiliates exceeds five percent (5%) of (1) the director’s annual gross revenue derived from all sources during either of the last two years or (2) the director’s net worth on a fair market value basis. An indirect relationship is defined to include circumstances in which the director’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in- law is or has been associated with the Company, the Sponsor, the Advisor or any of its affiliates. On March 29, 2019, Company and our former Advisor entered into definitive agreements to internalize the Company’s management function effective April 1, 2019 and therefore the Company no longer has an Advisor. In addition, in connection with the August 25, 2021 transactions, the Company’s former Sponsor, MVP Capital Partners II, LLC, no longer controls the Company. For more information regarding these transactions, see “Certain Relationships and Related Person Transactions” later in this Proxy Statement. The Charter also provides that, upon the comment commencement of an initial public offering, a majority of the directors must be independent directors and that at least one of the independent directors must have at least three years of relevant real estate experience. The independent directors are required to nominate replacements for vacancies among the independent directors under the Charter. The Board has determined that each of Jeffrey B. Osher, Lorrence T. Kellar, Danica Holley, Damon Jones and Shawn Nelson qualifies as an independent director under the Charter and NASAA REIT Guidelines. The Company refers to the directors who are not independent as the “Affiliated Directors.” Currently, the two Affiliated Directors are Manuel Chavez III, the Company’s Chief Executive Officer and Chairman of the Board, and Stephanie Hogue, the Company’s President. The Company’s directors are elected by the Company’s common stockholders on an annual basis. Any director may resign at any time and may be removed with or without cause by the stockholders upon the affirmative vote of stockholders entitled to cast at least a majority of all the votes entitled to be cast generally in the election of directors. The notice of any special meeting called to remove a director must indicate that the purpose, or one of the purposes, of the meeting is to determine if the director will be removed. The Company has elected, pursuant to an election under Subtitle 8 of Title 3 of the Maryland General Corporation Law, to provide that a vacancy on our Board may be filled only by a vote of the holders of a majority of the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred and, in the case of an independent director, the director must also be nominated by the remaining independent directors. Responsibilities of Directors The responsibilities of the members of the Board include: | • | approving and overseeing our overall investment strategy, which consists of elements such as investment selection criteria, diversification strategies and asset disposition strategies; | | • | approving and overseeing our debt financing strategies; | | • | approving joint ventures and other such relationships with third parties; | | • | approving a potential liquidity transaction; | | • | determining our distribution policy and authorizing distributions from time to time; and | | • | approving amounts available for repurchases of shares of our common stock entitled to vote who are present in person or by proxy at the Annual Meeting. As a result, abstentions and broker non-votes, if any, will have the effect of votes AGAINST each of the nominees in Proposal No. 1.If the listing of our shares of common stock is completed prior to the Annual Meeting date, our charter and bylaws will be amended to provide for the election of directors by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting. Accordingly, the seven director nominees receiving the highest number of votes will be elected. In the event that directors are elected by plurality vote, abstentions and broker non-votes, if any, will not have any effect on the outcome of the election of directors.
Because they are not considered votes cast, abstentions and broker non-votes, if any, will have no effect on the outcome of Proposal No. 2, which only requires the affirmative vote of a majority of the votes cast by stockholders present in person or by proxy at the Annual Meeting.
| | Q. | Who will solicit and pay the cost of soliciting proxies for the Annual Meeting?
| | A. | We will bear all expenses incurred in connection with the solicitation of proxies. Our directors and officers and the Advisor, may solicit proxies by mail, personal contact, letter, telephone, telegram, facsimile or other electronic means. They will not receive any additional compensation for those activities, but they may be reimbursed for their out-of-pocket expenses. The Company has also engaged Georgeson Inc. to assist it in the solicitation of proxies. The Company has agreed to pay Georgeson Inc. an initial fee of $7,500, and will reimburse it for its reasonable expenses, for its services to solicit proxies.
| | Q. | Could other matters be decided at the Annual Meeting?
| | A. | As of the date of this proxy statement, the above-referenced proposals are the only matters of which we are aware that are to be considered and acted upon at the Annual Meeting. As to any other business that may properly come before the Annual Meeting or any postponement or adjournment thereof, the persons named as proxy holders on your proxy card will vote the shares of common stock represented by properly submitted proxies in their discretion.
stock. |
| Q. | Who can help answer my questions?
| | A. | If you have any questions about the Annual Meeting or how to authorize your proxy, or need additional copies of this proxy statement, the enclosed proxy card or voting instructions, you should contact: |
Georgeson Inc.
480 Washington Blvd., 26th Floor
Jersey City, NJ 07310
All Shareholders Call Toll-Free: 888-666-2580
| Q. | Where can I find more information about the Company?
| | A. | We file annual, quarterly and current reports and other information with the Securities and Exchange Commission, or the SEC. You may read and copy any reports or other information we file with the SEC on the web site maintained by the SEC at http://www.sec.gov. Our SEC filings are also available to the public at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 or 1-202-551-7900 for further information regarding the public reference facilities.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSCertain statements includedThe directors have duties to the Company arising from their capacity as directors of the Company. This means that each director must perform his or her duties in this Proxy Statement thatgood faith and in a manner each director believes to be in the Company’s best interests. Further, each 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 historical facts (including any statements concerningrequired to devote all of their time to the Company’s business and are only required to devote such time to the Company’s affairs as their duties require. The directors meet quarterly or more frequently as necessary. The Company will follow investment objectives, other plans and objectives of management for future operations or economic performance, including any plans to list our shares on a national securities exchange, or assumptions or forecasts related thereto) are forward-looking statements. Forward-looking statements are typically identifiedguidelines adopted by the use of terms such as "may," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential" or the negative of such terms and other comparable terminology. The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements.
Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:
· | the fact that we have a limited operating history, as our property operations began in 2016; |
· | the fact that we have experienced net losses since inception and may continue to experience additional losses; |
· | the performance of properties the Company has acquired or may acquire or loans the Company has made or may make that are secured by real property; |
· | changes in economic conditions generally and the real estate and debt markets specifically; |
· | legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts ("REITs"); |
· | potential damage and costs arising from natural disasters, terrorism and other extraordinary events, including extraordinary events affecting parking facilities included in our portfolio; |
· | risks inherent in the real estate business, including ability to secure leases or parking management contracts at favorable terms, tenant defaults, potential liability relating to environmental matters and the lack of liquidity of real estate investments; |
· | competitive factors that may limit our ability to make investments or attract and retain tenants; |
· | our ability to generate sufficient cash flows to pay distributions to our stockholders; |
· | our reliance on our Advisor and its employees to manage our business; |
· | our failure to obtain our status as a REIT and maintain it in the future; |
· | our ability to successfully integrate pending transactions and implement our operating strategy; |
· | our ability to list our shares of common stock on a national securities exchange or complete another liquidity event; |
· | the availability of capital and debt financing generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions, covenants and requirements of that debt; |
· | changes in interest rates; |
· | changes to generally accepted accounting principles, or GAAP; and |
· | potential adverse impacts from the recent changes to the U.S. tax laws. |
Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed upon on any forward-looking statements included herein. All forward-looking statements are made as of the date of this Proxy Statement,Board and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward - looking statements made after the date of this Proxy Statement, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward looking statements included in this Proxy Statement, including, without limitation, the risksinvestment and borrowing policies described under "Risk Factors" in our annual report unless they are modified by our directors. The Board may establish additional written policies on Form 10-K for the year ended December 31, 2017, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other personinvestments and borrowings and will monitor our administrative procedures, investment operations and performance to ensure that the objectivespolicies are fulfilled and plans set forthare in this Proxy Statement will be achieved.
MATTERS TO BE CONSIDERED AT THE 2018 ANNUAL MEETINGThis Proxy Statement contains the following proposal requiring common stockholder action:
Proposal No. 1 - Election of seven (7) nominees for director, with each to serve until the next annual meeting of stockholders and until his successor is duly elected and qualifies.
Proposal No. 2 – Ratificationbest interests of the appointment of RBSM LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018.
We discuss the proposalsCompany. Any change in more detail below.
PROPOSAL NO. 1- ELECTION OF NOMINEES FOR DIRECTORInformation About Our Board of Directors
General
Our Board currently consists of eight directors. Each of our directors, except for Erik Hart, is standing for re-election. Each of the nominees meets the qualifications for directorsinvestment limitations as set forth in the Company's charterCharter must be approved by the stockholders.In order to reduce or eliminate and bylaws. Eachaddress certain potential conflicts of interest, the Charter requires that a majority of the Company's nominees for director elected at the Annual Meeting will serve until the next annual meeting of stockholders following his election and until his successor is duly elected and qualifies. Concurrently with the Annual Meeting, the Board will reduce its size from eight to seven directors.
The following table sets forth certain information with respect to each(including a majority of the persons who are nominated to serve as directorsIndependent Directors) not otherwise interested in the transaction approve any transaction with any of the Company.
Name | Age | Title | Michael V. Shustek | 59 | Chief Executive Officer and Director | Robert J. Aalberts (2)(4) | 66 | Independent Director | David Chavez (1) | 53 | Independent Director | John E. Dawson | 60 | Chairman and Independent Director | Shawn Nelson (2)(3)(4) | 52 | Independent Director | Nicholas Nilsen (1) (2) (3)(4) | 81 | Independent Director | William Wells (1)(5) | 65 | Independent Director |
(1) Member ofCompany’s directors, the Audit Committee.
(2) Member of the Nominating Committee.
(3) Member of the Compensation Committee
(4) These individuals joined the Board of Directors on December 15, 2017 in connection with the Merger.
(5) Mr. Wells joined the Board of Directors on May 31, 2018.
The following table sets forth the names, ages as of August 20, 2018 and positions of the individuals who serve as directors, executive officers and certain significant employees ofSponsor, the Advisor, or our affiliates:
Name | Age | Title | | | | Michael V. Shustek | 59 | Chief Executive Officer | Brandon Welch | 35 | Interim Chief Financial Officer |
Mr. Welch, the Company's Interim Chief Financial Officer, is the son-in-lawany of Mr. Shustek, the Chief Executive Officer and a director of the Company. Except as relates to Brandon Welch and Michael Shustek, there are no family relationships between any directors or executive officers, or between any director and executive officer.
Board Leadership Structure
The Company currently maintains separate positions for the Chair of the Board of Directors and the Chief Executive Officer. Having these positions separate allows our Chief Executive Officer to focus on the daily operations, while allowing the Chair of the Board of Directors to lead the Board in its fundamental role of providing advice to and independent oversight of management.
Though our organizational documents do not require that our Chair of the Board of Directors and Chief Executive Officer positions be separate, the Board believes that this structure is currently serving our Company well, and intends to maintain it where appropriate and practicable in the future. We have had varying Board leadership models over our history, at times separating the positions of Chair and Chief Executive Officer and at times combining the two. The Board of Directors believes that the right structure should be informed by the needs and circumstances of our Company, the Board and our stockholders, and we believe having an independent director lead the Board of Directors currently best serves these interests. Periodically, the Board will reassess the roles and the Board leadership structure to ensure the needs and circumstances of our Company, the Board and our stockholders are best served.
Board'stheir affiliates.Board’s Role in Risk Oversight
The Board provides supervision and oversight of our risk management processes. Management identifies and prioritizes material risks, and each prioritized risk is referred to a Board committee or the full Board for supervision and oversight. For example, financial risks are referred to the Audit Committee. The Board regularly reviews information regarding our properties, loans, operations, liquidity and capital resources. The Board informally reviews the risks associated with these items at each quarterly Board meeting and at other Board meetings as deemed appropriate.
Vote Required
UnderBoard Leadership Structure The Board leadership structure is currently comprised of a combined Chairman of the Board and Chief Executive Officer and an independent Chair for each of our current charterthree standing Board committees described below. We do not have a Lead Independent Director. From time to time, the Nominating and bylaws,Governance Committee and consistentthe entire Board review the Company’s leadership structure, including the positions of Chairman of the Board and Chief Executive Officer and whether the Board should have a Lead Independent Director, to ensure the interests of the Company and its stockholders are best served. The Nominating and Governance Committee and the Board believe that the most effective leadership structure for the Company at this time is for Mr. Chavez to serve as both the Chairman of the Board and Chief Executive Officer. Mr. Chavez’s combined role as Chairman and Chief Executive Officer serves as a bridge between the Board and management and provides unified leadership for developing and implementing our strategic initiatives and business plans. The Board also believes that the combined Chairman and Chief Executive Officer structure provides clearer accountability to our stockholders and allows one person to speak for and lead the Company and the Board. In addition, the Board believes that its information flow, meetings, deliberations, and decision- making processes are more focused, efficient, and effective when the Chairman and Chief Executive Officer roles are combined. The combined role is counterbalanced and enhanced by the effective oversight and independence of the Board and independent committee Chairs. Moreover, the Board believes that the use of executive sessions of the Independent Directors, along with the requirementsBoard’s strong committee system, allow it to maintain effective oversight of management. Code of Ethics The Company has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), which contains general guidelines for conducting the 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 the NASAA REIT Guidelines,Company’s officers, including the affirmative voteCompany’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions, as well as all members of the holdersBoard. 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. The Company will provide to any person without charge a copy of the Code of Ethics, including any amendments or waivers, upon written request delivered to the Company’s principal executive office at the address listed on the cover page of this Proxy Statement. We intend to satisfy the requirements under Item 5.05 of Current Report on Form 8-K regarding disclosure of amendments to, or waivers from, provisions of the Code of Ethics that apply to the principal executive officer, principal financial officer or controller, or persons performing similar functions, by posting such information on our website. Criteria for Selecting Directors In evaluating candidates, our Nominating and Governance Committee will consider an individual’s business and professional experience, the potential contributions they could make to our Board and their familiarity with our business. Our Nominating and Governance Committee will consider candidates recommended by our directors, members of our management team and third parties. Our Nominating and Governance Committee will also consider candidates suggested by our stockholders. We do not have a formal process established for this purpose. However, for so long as the Stockholders’ Agreement is in effect, at each stockholders’ meeting of the Company at which directors are to be elected, (i) Color Up shall be entitled, any time prior to the mailing of the applicable proxy statement of the Company, to designate for nomination five (5) Color Up Designated Directors as members of the Board (or fewer if less than seven (7) members on the Board) and (ii) the Incumbent Directors to be nominated and elected at any such stockholders’ meeting shall be designated by a majority of the sharesIncumbent Directors then in office. The Company agrees, to the fullest extent permitted by applicable law, to include in the slate of nominees recommended by the Board (or the Nominating and Governance Committee of the Board) for election at any annual or special meeting of stockholders of the Company at which directors are to be elected to the Board (or consent in lieu of meeting) the applicable Color Up Designated Directors and Incumbent Directors and to nominate, recommend and use its reasonable best efforts to solicit the vote of stockholders of the Company to elect to the Board such slate of directors (which efforts shall, to the fullest extent permitted by applicable law, include the inclusion in any proxy statement prepared, used, delivered or publicly filed by the Company to solicit the vote of its stockholders in connection with any such meeting the recommendation of the Board that the stockholders of the Company vote in favor of the slate of directors, including the Color Up Designated Directors and Incumbent Directors). For any meeting (or consent in lieu of meeting) of the Company’s stockholders for the election of members of the Board, the Board (or the Nominating and Governance Committee thereof) shall not nominate, in the aggregate, a number of nominees greater than the number of members of the Board. Such nominees shall serve in a manner consistent with the terms of the Charter and Bylaws. The Company believes that the arrangement set forth above is sufficient for the evaluation of future candidates to our Board. We do not have a formal diversity policy with respect to the composition of our common stock entitledBoard. However, our Nominating and Governance Committee seeks to vote who are presentensure that the Board is composed of directors whose diverse backgrounds, experience and expertise will provide the Board with a range of perspectives on matters coming before the Board. Stockholders may contact our Nominating and Governance Committee if they wish the committee to consider a proposed candidate. Stockholders should submit the names of any candidates in personwriting, together with background information about the candidate, and send the materials to the attention of the Company’s Secretary at the following address: 250 E. 5th Street, Suite 2110, Cincinnati, Ohio 45202; or via email at secretary@mobileIT.com. Communication with Directors The Company has established procedures for stockholders or other interested parties to communicate directly with the Board. Such parties can contact the Board by mail at the following address: Board of Directors of Mobile Infrastructure Corporation, c/o Secretary, 250 E. 5th Street, Suite 2110, Cincinnati, Ohio 45202; or by emailing secretary@mobileIT.com. The Secretary will receive all communications made by these means and will distribute such communications to such member or members of the Board as they deem appropriate, depending on the facts and circumstances outlined in the communication received. For example, if any questions regarding accounting, internal controls and auditing matters are received, they will be forwarded by the Secretary to the members of the Audit Committee for review. Stockholder Proposals Under our current bylaws, for a stockholder proposal (including, but not limited to, nominations of candidates for director) to be properly submitted for presentation at the next annual meeting of stockholders, the Company’s secretary must have received written notice of the proposal at its principal executive offices no earlier than the 150th day and no later than 5:00 p.m. Pacific Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as such term is defined in our current bylaws) for the preceding year’s annual meeting (or, for the 2022 annual meeting of stockholders, between June 19, 2022 and 5:00 p.m., Pacific Time, on July 19, 2022, based on November 16, 2021, the date this year’s Proxy Statement is released to stockholders). However, if the date of the 2022 annual meeting of stockholders is more than 30 days before or after December 23, 2022, the proposal must be received no earlier than the 150th day prior to the date of the 2022 annual meeting and no later than 5:00 p.m., Pacific Time, on the later of (i) the 120th day prior to the date of such meeting, as originally convened, or (ii) the tenth day following the day on which public announcement of the date of such meeting is made. Under SEC regulations, any stockholder desiring to make a proposal to be considered for inclusion in the Company’s proxy statement for the next annual meeting of stockholders pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) must have caused such proposal to be received at Company’s principal executive offices no later than July 19, 2022, unless the date of the 2022 annual meeting of stockholders is more than 30 days before or after December 23, 2022, in which case the proposal must be received in a reasonable time before the Company begins to print and send its proxy materials. PROPOSAL NO. 1 - ELECTION OF DIRECTORS Based on the recommendation of the Nominating and Governance Committee of the Board, the Board nominated the seven directors listed below for election to the Board at the Annual Meeting is required to elect eachMeeting. All of the nominees named in this proxy statementare willing to serve as directors but, if any of them should decline or be unable to act as a director.
As previously disclosed, on July 13, 2018, we filed an applicationdirector, the individuals designated in the proxy card as proxies will exercise the discretionary authority provided to listvote for the election of a substitute nominee selected by our shares of common stock on a national securities exchange. During last year's annual meeting,Nominating and Governance Committee or our stockholders approved an amended charterBoard, unless the Board alternatively acts to be filed and become effective immediately prior toreduce the listing of our shares on a national securities exchange. Among other changes, the amended charter would remove the NASAA REIT Guidelines requirement that a director receive the affirmative votesize of the holdersBoard or maintain a majorityvacancy on the Board in accordance with our bylaws. The Board has no reason to believe that any nominee listed below will be unable or unwilling to serve.Each of the shares present, in person or by proxy, at a meeting in order to be elected. In lieu thereof,nominees meets the amended charter would provide 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 required to elect a director. An equivalent amendment would also be made to our bylaws at the time the amended charter becomes effective.
As a result,qualifications for directors as set forth in the event that our common stock is listed on a national securities exchange on or prior toCharter and bylaws and the Annual Meeting date, directorsStockholders’ Agreement. Each of the Company’s nominees for director elected at the Annual Meeting will beserve until the next annual meeting of stockholders following their election and until his or her successor is duly elected by pluralityand qualifies or until his or her earlier resignation, retirement or removal. We believe that all of the votes castdirector nominees possess the professional and personal qualifications necessary for Board service, and have highlighted particularity noteworthy attributes for each director nominee in the individual biographies below.Directors to be Elected at the Annual Meeting which means The following is some important biographical information, including the ages and recent principal occupations, as of November 12, 2021, of the Company’s director nominees. The business address of each director nominee is c/o Mobile Infrastructure Corporation, 250 E. 5th Street, Suite 2110, Cincinnati, Ohio 45202. Included in each director nominee’s biography below are the attributes of that director consistent with the candidates up for election who receivequalifications, attributes, skills and experience the highest numbers of votes cast, up to the number of directorsBoard has determined are important to be elected, are elected. Ifrepresented on the listing is not completed prior to the Annual Meeting date, then directors at the Annual Meeting will be elected by majority vote in accordance with the NASAA REIT Guidelines requirements. Stockholders will not have the right to cumulate the votes in the election of directors.
Recommendation of the Board of Directors
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR, WITH EACH TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS AND UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIES.
Biographical Information for Nominees for Director
Michael V. Shustek Board.Name | | Age | | Title | Manuel Chavez III | | 44 | | Affiliated Director and Chairman of the Board | Stephanie Hogue | | 42 | | Affiliated Director | Jeffrey B. Osher | | 44 | | Independent Director | Lorrence T. Kellar | | 84 | | Independent Director | Danica Holley | | 49 | | Independent Director | Damon Jones | | 46 | | Independent Director | Shawn Nelson | | 55 | | Independent Director | | | | | |
Manuel Chavezhas beenserved as our Chief Executive Officer and Secretary of the Company since its inception and serves as the Chief Executive Officer of our Advisor. He has also served as Chief Executive Officer and a director of MVP REIT, Inc., a Maryland corporation ("MVP I") prior to the merger of MVP I with and into MVP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company ("Merger Sub"), Chairman of the Board of Directors, Chief Executive Officer and a director of Vestin Group since April 1999 and a director and CEO of Vestin Realty Mortgage II, Inc., a Maryland corporation ("VRM II"), and Vestin Realty Mortgage I, Inc., a Maryland corporation ("VRM I"), since January 2006. In July 2012,August 2021. Mr. Shustek became a principal of AMS. During January 2013, Mr. Shustek became the sole owner of AMS.
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 1997, Mr. Shustek was involved in the initial founding of Nevada First Bank, with the largest initial capital base of any new state charter in Nevada's history at that time. In 1995, Mr. Shustek founded Del Mar Mortgage,Chavez is and has been involved inthe chief executive officer and founder of Bombe Asset Management LLC, a Cincinnati, Ohio-based alternative asset management firm affiliated with Color Up (“Bombe”), since 2017. Mr. Chavez held various aspectspositions of increasing responsibility at Parking Company of America, Inc. from 1999 to 2017. Mr. Chavez is also chief executive officer and a manager of Color Up. Mr. Chavez currently holds positions with the real estate industry in Nevada since 1990. In 1993, he founded Foreclosures of Nevada, Inc., a company specializing in non-judicial foreclosures. In 1993, Greater Cincinnati Port Authority, the Cincinnati State Technical and Community College, the Cincinnati Art Museum and the Cincinnati Regional Business Committee.Mr. Shustek also started Shustek Investments, a company that originally specialized in property valuations for third-party lenders or investors.
Mr. Shustek has co-authored two books, entitled "Trust Deed Investments," on the topic of private mortgage lending, and "If I Can Do It, So Can You." Mr. Shustek is a guest lecturer at the University of Nevada, Las Vegas, where he also has taught a course in Real Estate Law and Ethics. Mr. Shustek received a Bachelor of Science degree in Finance at the University of Nevada, Las Vegas. As our founder and CEO, Mr. Shustek is highly knowledgeable with regard to our business operations. In addition, his participation on our Board of Directors is essential to ensure efficient communication between the Board and management.
Mr. ShustekChavez was selected to serve as a director of the Company because he is our Chief Executive Officer, hasof his significant real estate experience and expansive knowledge of the real estate industry, and hashis relationships with chief executives and other senior management at numerous real estate companies. Based on the foregoing, the nominating committee of the Board believes that Mr. ShustekChavez will continue to bring a unique and valuable perspective to our Board of Directors.
David Chavez is one of our independent directors. Since 2009, Mr. Chavez Board.Stephanie Hoguehas served as Chief Executive Officer of Assured Strategies, LLC,our President and a strategic consulting, coaching and advisory firm. From 1996 to 2007, Mr. Chavez served as Chief Executive Officermember of the Chavez & Koch, a Professional Corporation, Certified Public Accountants (CPA's), Ltd., certified public accounting firm,Board since August 2021. Ms. Hogue has been the chief investment officer and managing partner of Bombe since 2020. From 2017 to 2020, Ms. Hogue was managing director and New York branch manager at PricewaterhouseCoopers Corporate Finance LLC, and from 19952010 to 1996, he2017, Ms. Hogue was a private businessdirector at PricewaterhouseCoopers Corporate Finance LLC. Ms. Hogue is also a manager of Color Up. Ms. Hogue currently serves on the board of governors of Public Media Connect, Inc., a non-profit organization that owns southwest Ohio’s largest Public Broadcasting Service member television stations, 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 receivedis a Bachelordirector of Science in Business Administration Degree, with a concentration in Accounting, from the University of Nevada, Las Vegas. Mr. ChavezIndian Hill Club. Ms. Hogue was selected to serve as an independenta director of the Company because of his accounting and financial reporting expertise and hisher significant experience in the strategic consulting industry.
John E. Dawson is one of our independent directors. He had also beenfinance, capital markets and investing in infrastructure and real estate assets.Jeffrey B. Osher has served as a director of MVP I from the beginning of its operations until the datemember of the Merger.Board since August 2021. Mr. Osher founded No Street Capital LLC, an investment management firm, in 2018. Prior to founding No Street Capital, LLC, Mr. Osher served as a portfolio manager at Harvest Capital Strategies, LLC, an SEC-registered investment advisor, from 2005 to 2018, and as an analyst from 2002 to 2005. Prior to his tenure at Harvest Capital Strategies, LLC, Mr. Osher was an analyst at The Dowd Company where he focused on technology and emerging growth companies. He was a directorhas served on the board of Vestin Group from March 2000 to December 2005, was a directordirectors of VRM II from March 2007 until he resigned in November 2013the Seal Family Foundation since 2016. He has also served on the board of directors of Green Dot Corporation since 2020 and was a director for VRM I from March 2007 until January 2008. Since January 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 admittedan advisor to the Nevada Bar in 1988 and the Utah Bar in 1989. Green Dot Corporation’s board of directors from 2017 to 2020. He is also a manager of Color Up. Mr. DawsonOsher was selected to serve as an independenta director of the Company due to his legal backgroundsignificant experience in financial services and investment and his experience as an executive and a public company director. Lorrence T. Kellarhas served as a member of the Board since August 2021. Mr. Kellar has been a trustee of Acadia Realty Trust since November 2003. Mr. Kellar was vice president at Continental Properties, a retail and residential developer, from 2002 until his retirement in 2009, a director of Spar Group, Inc., from 2003 to 2019 and chairman of Multi-Color Corporation from 1995 to 2012. Prior to joining Continental Properties, Mr. Kellar served as vice president of real estate with Kmart Corporation for six years and served with The Kroger Co., the United States’ largest supermarket company, for 31 years where his final position was group vice president of finance and real estate. Mr. Kellar currently serves as an emeritus trustee of Public Media Connect, Inc. a non-profit organization that owns southwest Ohio’s largest Public Broadcasting Service member television stations and an emeritus trustee of the Cincinnati Ballet. Mr. Kellar was selected to serve as a director of the Company due to his significant management and public company experience, including in the real estate industry and as a public company executive and director and member of the audit committee. Danica Holley has served as a member of the Board since August 2021. Ms. Holley has served as the chief operating officer of Global Medical REIT Inc. since March 2016. Ms. Holley’s business development and management experience spans more than 18 years with an emphasis on working in an international environment. She has extensive experience in international program management, government procurement, and global business rollouts and start-ups. As executive director for Safe Blood International Foundation since April 2008, she oversaw national health initiatives in Africa and Asia, including an Ebola response project. Ms. Holley has held management positions as director of strategy, corporate business development for WorldSpace, Inc. from 1997 to 2000, director of marketing for corporate and business at ISI Professional Services from 2000 to 2001 and director of administration at Tanzus Development from 1996 to 1997 and SK&I Architectural Design Group, LLC from 2003 to 2007. Ms. Holley was selected to serve as a director of the Company due to her significant business development and management experience, including as an executive officer at a publicly traded REIT that has had a similar growth trajectory to the Company. Damon Joneshas served as a member of the Board since August 2021. Mr. Jones has served as the chief communications officer of The Procter & Gamble Company (“P&G”) since April 2020. He served as vice president, global communications & advocacy at P&G from July 2018 to April 2020, and prior to that, as director, global company communications from August 2015 to June 2018. Prior to that, Mr. Jones held various other positions with increasing responsibility at P&G since 1997. Mr. Jones was selected to serve as a director of the Company due to his significant communications experience and his experience as a public company director.executive.
Robert J. Aalberts had served as an independent director of MVP I, and was a director of Vestin Group, Inc., from April 1999 to December 2005. He was a director for VRM I from January 2006 until he resigned in January 2008 and for VRM II from January 2006 until he resigned in November 2013. Most recently, Professor Aalberts was Clinical Professor of Business Law in the Smeal College of Business at Pennsylvania State University in University Park, PA from 2014 to June 2017. Prior to his position at Penn State, Professor Aalberts held the Ernst Lied Professor of Legal Studies professorship in the Lee College of Business at the University of Nevada, Las Vegas from 1991 to 2014. Before UNLV, Professor Aalberts was an Associate Professor of Business Law at Louisiana State University in Shreveport, LA from 1984 to 1991. From 1982 through 1984, he served as an attorney for the Gulf Oil Company in its New Orleans office, specializing in contract negotiations and mineral law. Professor Aalberts Shawn Nelson has co-authored books relating to the regulatory environment and the law and business of real estate; including Real Estate Law (2015), now in its 9th edition, published by the Cengage Book Company. He is also the author of numerous legal articles dealing with various aspects of real estate, business and the practice of law. From 1992 to 2016, Professor Aalberts was the Editor-in-chief of the Real Estate Law Journal published by the Thomson-West Publishing Company. Professor Aalberts received his Juris Doctor degree from Loyola University in New Orleans, Louisiana, a Masters of Arts from the University of Missouri, Columbia, and a Bachelor of Arts degree in Social Sciences and Geography from Bemidji State University in Minnesota. He was admitted to the State Bar of Louisiana in 1982 (currently inactive status). Mr. Aalberts was selected to serve as an independent director of the Company because of his significant knowledge of, and experience in, the real estate industry and his experience as a public company director.
Nicholas Nilsen had served as an independent director of MVP I. He has been involved in the financial industry for more than four decades. He has been in retirement during the past five years. Most recently, Mr. Nilsen served as a Senior Vice Presidentmember of PNC Financial, a bank holding company, where he served from 1960 to 2000. He began his long career with PNC Financial as a stock analyst. Later, he managed corporate and Taft-Hartley pension plans for the bank.Board since January 2019. Mr. NilsenNelson has served as an executive investment officer at the timechief assistant district attorney of his retirement from PNC Financial. Mr. Nilsen is a CFA charter holder. Mr. Nilsen received a Bachelor's degree from Denison University and a Master of Business Administration from Northwestern University. Mr. Nilsen was selected to serve as an independent director of the Company because of his significant knowledge of, and experience in, the finance industry and investment management.
Shawn Nelson had served as an independent director of MVP I. Since June 2010,Orange County, California since January 2019. Mr. Nelson hashad served as a member of the Orange County Board of Supervisors in Orange County, California, since June 2010, serving as chairman in 2013 and 2014. Mr. Nelson currently servespreviously served on the board of directors of the Southern California Regional Rail Authority (Metrolink) and was the former Chairman.chairman. He iswas also previously a director of the Orange County Transportation Authority having served as the chair in 2014 and is a director of the South Coast Air Quality Management District, Southern California Association of Governments, Transportation Corridor Agency, Foothill/Eastern, Southern California Water Committee, Orange County Council of Governments and Orange County Housing Authority Board of Commissioners. Mr. Nelson resigned from his positions on the board of the Southern California Regional Rail Authority and the Orange County Transportation Authority effective in January 2019. From 1994 to 2010, Mr. Nelson was the managing partner of the law firm of Rizio & Nelson. From 1992 to 1994, he was the Leasing Director/Project Managerleasing director/project manager of S&P Company. Prior to that, from 1989 to 1992, Mr. Nelson served as the Leasing Director/Acquisitions Analystleasing director/acquisitions analyst for IDM Corp and from 1988 to 1989 he served as a Construction Superintendentconstruction superintendent for Pulte Home.Homes. Mr. Nelson has a Bachelor of Science degree in business with a certificate in real property development from the University of Southern California and a Juris Doctor Degree from Western State University College of Law. Mr. Nelson was selected to serve as an independenta director of the Company due to his legal background and significant experience in the financial services and real estate industries.
William Wellsis one of the Company's independent directors. From 1990 until April 2018 served as the Las Vegas Office Managing Partner an Audit Partner of RSM US LLP, an international audit, taxindustry and consulting firm ("RSM").In his role as an Audit Partner, Mr. Wells has served as a business advisor to clients in a variety of industries including transportation, real estate, retail, wholesale distribution, construction, financial institutions, manufacturing, automotive, professional services and timeshare. He also has experience in business litigation and has testified as an expert witness in court and in arbitration hearings. From 2000 to 2011 (prior to a firm reorganization in 2012) Mr. Wells was the Desert Southwest Managing Partner, which included oversight of the Phoenix office as well as the Las Vegas office. Mr. Wells earned his B.S. in Accounting from Millikin University, where he graduated summa cum laude. He also participated in executive programs at the University of Chicago and the Minneapolis Center for Character-Based Leadership. He is a licensed CPA in Nevada. During his nearly 40 year tenure in Las Vegas, Mr. Wells has participated in a variety of business and philanthropic organizations including: Las Vegas Metro Chamber of Commerce (Chairman), Opportunity Village (Chairman), Young Presidents Organization (Chairman), UNLV Presidents Associates, UNLV Accounting Advisory Council, LVGEA (Board Member), UMC (Board Member), Discovery Children's Museum (Board Member), Boulder Dam Area Boy Scouts (Board Member), Economic Club of LV (Board Member), US Bank (Advisory Board Member), Las Vegas Executives Association, Kiwanis Club of Las Vegas, and the Las Vegas FBI Citizens Academy. He received the H&R Block Outstanding Community Service Award for stewardship to his community. Mr. Wells was elected on May 31, 2018 to serve as an independent director of the Company due to his significant experience in the financial services. Mr. Wells was selected to serve as an independent director of the Company because of his significant knowledge and experience as a certified public accountantdirector.Vote Required Under the Charter and frombylaws, and consistent with the various management positions held during his career at RSM US LLP, including, among others, experience preparing and auditing financial statements for public companies.
Biographical Information for Non-Director Nominee Executive Officer
Brandon Welch was elected as the Interim Chief Financial Officer ("CFO") on May 31, 2018. Mr. Welch has been employed with MVP Realty Advisors since the inception in 2012requirements of MVP I. During his tenure, he has served in various capital markets and operations capacities. From September 2012 to May 2017, he served as Executive Vice President, overseeing marketing and distribution for the Company's and its predecessor's equity raises. In June 2017, Mr. Welch became Managing Director of Capital Markets, taking on additional responsibility for capital markets strategy development and implementation. In October 2017 he became Vice President of Operations, shifting his focus to corporate operations, including acquisitions, asset management, and debt and equity capital markets responsibilities. Prior to his employment with MVP Realty Advisors, LLC, Mr. Welch served as General Manager for a full-service marketing consulting firm, Townsend Advisers (now Townsend Team) from 2009 to 2012, Senior Account Executive for digital marketing agency Jayne Hancock Group, commonly known as JHG, from 2008-2009, and Senior Account Executive for sports marketing agency Integrated Sports Marketing from 2006-2008. Mr. Welch earned his BS in Business Administration from San Diego State University in 2004, and his MBA from San Diego State University in 2006. Mr. Welch is the son-in-law of Michael Shustek, the Company's Chief Executive Officer.
Biographical Information for Other Key Employee
Dan Huberty is currently the President of the Advisor. Prior to joining the Company as Vice President of Parking Operations, Mr. Huberty spent nearly 25 years in various roles in and supporting the parking industry. Most recently, Mr. Huberty served as an Executive Vice President of SP Plus, where he oversaw the southern division of the company. He was named to this position after successfully overseeing the transition of his team through the integration of Central Parking and Standard Parking. SP Plus's clients included some of the nation's largest owners and operators of mixed-use projects, office buildings, hotels, stadiums and arenas, as well as, airports, hospitals and municipalities.
Prior to his role with SP Plus, he served as a Vice President for Clean Energy Fuels, the largest provider of Compressed Natural Gas in the Country focusing on the parking industry, from June 2009 through September 2011. However, the majority of his career was spent with ABM Industries. During his nearly 17 years with ABM, Mr. Huberty served in various roles starting as a Facility Manager, working his way up to Regional Manager, Regional Vice President, and finally Vice President of Sales for ABM's Parking Division. Mr. Huberty earned his BBA from Cleveland State University in 1991, and his MBA from the University of Phoenix in 1998.
Mr. Huberty is active in political affairs, serving as a State Representative for Texas House District 127, representing a constituency of more than 160,000 residents. Elected in 2010, he travels to the Capitol in Austin, Texas, every other year to represent them during the legislative session. Mr. Huberty also served as a Trustee for the Humble Independent School District from 2006 to 2010.
Mr. Huberty serves on the Board for the Be an Angel Fund, which is a non-profit board that supports profoundly deaf and handicapped children in Texas. Mr. Huberty is also a Board Member of the Lake Houston Chamber of Commerce in Harris County Texas, which has over 1,500 members focusing on growing the North East Region of Harris County. Mr. Huberty also served as a Trustee for the Humble Independent School District which has 42,000 student, from 2006 to 2010, serving as its President from 2009-2010.
Board of Directors
We operate under the direction of our Board of Directors, the members of which are accountable to us and our stockholders as fiduciaries pursuant to our current charter, and have duties to the Company under Maryland law. The Board of Directors is responsible for directing the management of our business and affairs. The Board of Directors has retained the Advisor to manage our day-to-day affairs and to implement our investment strategy, subject to the Board of Directors' direction, oversight and approval.
We have a total of eight directors, seven of whom are independent of us, the Advisor, MVP Capital Partners II, our sponsor (the "Sponsor"), and our respective affiliates as determined in accordance with the NASAA REIT Guidelines. Each of our directors, except for Erik Hart, is standing for re-election. Our charter currently defines an independent director as a director who is not and has not for the last two years been associated, directly or indirectly, with our Sponsor or the Advisor. A director is deemed to be associated with our Sponsor or the 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 our Sponsor, the Advisor or any of their affiliates, performs services (other than as a director) for us, or serves as a director or trustee for more than three REITs sponsored by our Sponsor or advised by the Advisor. A business or professional relationship will be deemed material per se if the gross revenue derived by the director from our Sponsor, the Advisor or any of their affiliates exceeds five percent of (1) the director's annual gross revenue derived from all sources during either of the last two years or (2) the director's net worth on a fair market value basis. An indirect relationship is defined to include circumstances in which the director's spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law is or has been associated with us, our Sponsor, the Advisor or any of its affiliates. Our Board of Directors has determined that each of Robert Aalberts, David Chavez, John E. Dawson, Shawn Nelson, Nicholas Nilsen and William Wells qualifies as an independent director under the NASAA REIT Guidelines.
On February 1, 2018, John Dawson was appointed Co-Chair by the Board of Directors. On August 6, 2018, Michael V. Shustek voluntarily stepped down as Co-Chair of the Board, but continues to be the Company's Chief Executive Officer and remains on the Board as a director.
We refer to our directors who are not independent as our "affiliated directors." Currently, our only affiliated director is Michael V. Shustek.
Our current charter provides that the number of directors may be increased or decreased as set forth in the bylaws, but shall not be fewer than five. Our charter also provides that a majority of the directors must be independent directors and that at least one of the independent directors must have at least three years of relevant real estate experience. The independent directors will nominate replacements for vacancies among the independent directors.
Our Board of Directors is elected by our common stockholders on an annual basis. Any director may resign at any time and, subject to the rights of holders of any class or series of preferred stock, any director may be removed with or without cause by the stockholders uponGuidelines, the affirmative vote of stockholders entitled to cast at least a majority of all the votes entitled to be cast generally in the election of directors. The notice of any special meeting called to remove a director will indicate that the purpose, or one of the purposes, of the meeting is to determine if the director will be removed.
We have elected to provide that, except as may be provided in the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a voteholders of a majority of the remaining directors, even if such directors do not constitute a quorum, and for the remainder of the full term of the directorship in which the vacancy occurred and, in the case of an independent director, the director must also be nominated by the remaining independent directors.
As disclosed above and as previously disclosed, our stockholders have approved an amended charter to be filed and become effective immediately prior to the listingshares of our shares oncommon stock entitled to vote who are present in person or by proxy at the Annual Meeting is required to elect the nominees named in this Proxy Statement as a national securities exchange that would remove the charter provisions mandated by the NASAA REIT Guidelines.
Responsibilities of Directors
The responsibilities of the membersdirector.Recommendation of the Board of Directors include: THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” ALL OF THE NOMINEES FOR DIRECTOR, WITH EACH TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS AND UNTIL HIS OR HER RESPECTIVE SUCCESSOR IS DULY ELECTED AND QUALIFIES.
Board Committees The Board has delegated various responsibilities and authority to three standing committees. Each committee regularly reports on its activities to the full Board. The Audit Committee, the Compensation Committee and the Nominating and Governance Committee are composed entirely of independent directors. The table below sets forth the current membership of the three standing committees of the Board: Name | | •Audit | approving | Compensation | | Nominating and overseeing our overall investment strategy, which will consist of elements such as investment selection criteria, diversification strategies and asset disposition strategies;Corporate Governance | Jeffrey B. Osher | • | approving and overseeing our debt financing strategies; | | Chair | | | Lorrence T. Kellar | • | approving joint ventures and other such relationships with third parties;Chair | | | | | Danica Holley | • | approving a potential liquidity transaction;X | | X | | X | Damon Jones | • | determining our distribution policy and authorizing distributions from time to time; and | | | | Chair | Shawn Nelson | • | approving amounts available for repurchases of shares of our common stock.X | | X | | X |
The directors are not required to devote all of their time to our business and are only required to devote such time to our affairs as their duties require. The directors meet quarterly or more frequently as necessary.
We will follow investment guidelines adopted by our Board of Directors and the investment and borrowing policies described in this report unless they are modified by our directors. Our Board of Directors may establish further written policies on investments and borrowings and shall monitor our administrative procedures, investment operations and performance to ensure that the policies are fulfilled and are in our best interests and the best interests of our stockholders. Any change in our investment objectives as set forth in our charter must be approved by the stockholders.
In order to reduce or eliminate and address certain potential conflicts of interest, our charter requires that a majority of our Board of Directors (including a majority of the independent directors) not otherwise interested in the transaction approve any transaction with any of our directors, our Sponsor, the Advisor, or any of their affiliates and determine that such transaction is fair and reasonable to the Company and on terms no less favorable to the Company than those available from unaffiliated third parties. The independent directors will also be responsible for reviewing from time to time but at least annually (1) the performance of the Advisor and determining that the compensation to be paid to the Advisor is reasonable in relation to the nature and quality of services performed and that such compensation is within the limits set forth in our charter; (2) that our total fees and expenses are otherwise reasonable in light of our investment performance, our net assets, our net income, the fees and expenses of other comparable unaffiliated REITs and other factors deemed relevant by our independent directors; and (3) that the provisions of the advisory agreement are being carried out. Each such determination shall be reflected in the applicable Board minutes.
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.
The Audit Committee meets on a regular basis, at least quarterly and more frequently as necessary. The Audit Committee'sCommittee’s primary function is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the stockholders and others, the system of internal controls which management has established and the audit and financial reporting process. The Audit Committee is comprised of three directors, all of whom are independent directors and oneeach of whom is deemed an independent director. The Company’s Audit Committee financial expert. Prior toconsists of Lorrence T. Kellar, Danica Holley and Shawn Nelson. Mr. Kellar serves as chair of the reconstitution, as discussed below, our Audit Committee consisted of John Dawson, David Chavez and Allen Wolff.Committee. The Board of Directors also determined that Mr. Dawson metKellar is the Audit Committee financial expert requirements. For the years ended December 31, 2017 and 2016, theCommittee’s “financial expert”. The Audit Committee held five and four meetings respectively.
On February 1, 2018in the Audit Committee was reconstituted. David Chavez was appointed as the new Audit Committee Chair, Allen Wolff remained a member and Erik Hart was also appointed to the Audit Committee.
At the end of April 2018, following the resignation of Allen Wolff from the Board of Directors, the Board of Directors appointed Nicholas Nilsen, an independent director of the Board, to fill the vacancy on the Audit Committee arising from Mr. Wolff's resignation.
On August 6, 2018, the Board appointed William Wells as Co-Chair of the Audit Committee.
The Board of Directors determined that each of Mr. Chavez and Mr. Nilsen meets the Audit Committee financial expert requirements.
year ended December 31, 2020. The Audit Committee charter is available at http://www.theparkingreit.com.
www.mobileIT.com. Compensation Committee The Compensation Committee establishes and oversees the Company’s compensation programs and arrangements applicable to its executive officers, including, without limitation, salary, incentive compensation, equity compensation and perquisite programs, and amounts to be awarded or paid to individual officers under those programs and arrangements, or makes recommendations to the Board regarding approval of the same. The Company’s Compensation Committee is comprised of three directors, each of whom is an independent director: Jeffrey B. Osher, Danica Holley and Shawn Nelson. Mr. Osher serves as chair of the Compensation Committee. The Compensation Committee held six meetings in the year ended December 31, 2020. The Compensation Committee charter is available at http://www.mobileIT.com. Nominating and Corporate Governance Committee
The Nominating and Governance Committee (formerly, the Nominating Committee) is responsible for establishing the requisite qualifications for directors, identifying and recommending the nomination of individuals qualified to serve as directors and recommending directors for appointment to each Boardboard committee. The Nominating and Governance Committee also establishes corporate governance practices in compliance with applicable regulatory requirements and consistent with the highest standards and recommends to the Board of Directors the corporate governance guidelines applicable to the Company.
On February 1, 2018, the Board of Directors appointed a new The Nominating and Corporate Governance Committee naming Robert Aalberts aswill consider candidates recommended by stockholders. The Company’s Nominating and Corporate Governance Committee Chair, withis comprised of three directors, each of whom is an independent director: Danica Holley, Damon Jones and Shawn NelsonNelson. Mr. Jones serves as chair of the Nominating and Nicholas Nilsen as committee members.
Governance Committee. The Nominating and Governance Committee held three meetings in the year ended December 31, 2020. The Nominating and Governance Committee charter is available at http://www.theparkingreit.com.
Compensation Committee
The Compensation Committee establishes and oversees director compensation. The Company's executive officers and affiliated directors do not receive compensation directly from the Company for services rendered to the Company, and the Company does not intend to pay compensation directly to the executive officers or affiliated directors. The Company's independent directors receive certain compensation from the Company, which is described in more detail under "Director Compensation"
On February 1, 2018, the Board of Directors appointed a new Compensation Committee, naming Nicholas Nilsen as Compensation Committee Chair and Erik Hart and Shawn Nelson as committee members.
The Compensation Committee charter is available at http://www.theparkingreit.com.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics (the "Code of Ethics"), which contains general guidelines for conducting our 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 our officers, including our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions, as well as all members of our Board of 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. The Code of Ethics is available at http://www.theparkingreit.com.
www.mobileIT.com.Board Meetings and Annual Stockholder Meeting
The Board of Directors held nine18 meetings and one meeting during the fiscal yearsyear ended December 31, 2017 and 2016, respectively.2020. Each then director attended at least 75% of his Boardthe board and committee meetings during the period in 2017 and 2016.which they served in 2020. Although we dothe Company does not have a formal policy regarding attendance by members of ourthe Board of Directors at ourthe Company’s Annual Meeting of Stockholders, we encouragethe Company encourages all of our directors to attend. One of our then directors attended the Company’s 2020 Annual Meeting of Stockholders held on December 28, 2020.
CriteriaDIRECTOR COMPENSATION Until November 16, 2021, each independent director received an annual cash retainer of $70,000, pro-rated for Selecting Directors
In evaluating candidates, ourany partial year of service, with an additional $15,000 annual retainer (prorated for a partial term) paid to the Audit Committee chairperson.Effective November 16, 2021, each independent director will receive an annual cash retainer of $70,000, pro-rated for any partial year of service. An additional $15,000 in cash will also be paid to the chair of the Audit Committee and $10,000 in cash will also be paid to the chairs of the Compensation Committee and the Nominating and Corporate Governance Committee. All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending meetings of the Board. Directors who are also employees of the Company are not entitled to any compensation for services rendered as a director. The Compensation Committee will considerpreviously retained FTI Consulting as its independent consultant to provide guidance on various aspects of our independent director compensation program and to assist the Compensation Committee in designing an individual's business and professional experience,executive compensation program. Independent Directors Under the potential contributions they could makeCompany’s independent director compensation program in effect for the year ended December 31, 2020, the Company paid each independent director an annual retainer of $70,000 (prorated for a partial term), with an additional $15,000 annual retainer (prorated for a partial term) paid to the Audit Committee chairperson. The following table sets forth information with respect to our independent director compensation during the year ended December 31, 2020: Name | | Fees Earned or Paid in Cash ($) | | Stock Awards ($)1 | | Total ($) | Michael V. Shustek2 | | $ - | | $ - | | $ - | John E. Dawson3 | | 87,500 | | 23,500 | | 111,000 | Robert J. Aalberts4 | | 61,250 | | 23,500 | | 84,750 | Nicholas Nilsen5 | | 61,250 | | 23,500 | | 84,750 | Shawn Nelson | | 96,250 | | 23,500 | | 119,750 | Total | | $ 306,250 | | $ 94,000 | | $ 400,250 |
____________________ 1 | Each of the Company’s independent directors were awarded 2,000 shares of the Company’s common stock at a price of $11.75 per share during the year ended December 31, 2020. |
2 | Mr. Shustek, the former Chief Executive Officer and Chairman of the Board, did not receive compensation for his services to the Board in 2020. Mr. Shustek’s 2020 compensation is described in the section below, titled “Summary Compensation Table.” Mr. Shustek resigned from all executive positions at the Company and all of the Company’s subsidiaries, including as Chief Executive Officer and Chairman of the Board, on August 25, 2021. |
3 | Mr. Dawson served as our Lead Independent Director for 2020 and as the chair of the Audit Committee for 2020. Mr. Dawson resigned from the Board on August 25, 2021. |
4 | Mr. Aalberts resigned from the Board on August 25, 2021. |
5 | Mr. Nilsen did not stand for re-election at the Company’s 2020 Annual Meeting of Stockholders held on December 28, 2020. |
EXECUTIVE OFFICERS The following is some important biographical information, including the ages and recent principal occupations, as of November 12, 2021, of the Company’s executive officers. The business address of the executive officers is c/o Mobile Infrastructure Corporation, 250 E. 5th Street, Suite 2110, Cincinnati, Ohio 45202. Name | Age | Title | Manuel Chavez III | 44 | Chairman of the Board and Chief Executive Officer | Stephanie Hogue | 42 | President and Secretary | J. Kevin Bland | 58 | Chief Financial Officer and Treasurer |
Please see “Proposal No. 1: Election of Directors — Directors of the Company” for information regarding Mr. Chavez and Ms. Hogue. There are no family relationships among our executive officers and directors. J. Kevin Blandhas served as our Chief Financial Officer and Treasurer since 2018. Mr. Bland is a certified public accountant and has over 25 years of experience as a financial professional and executive. Mr. Bland served as chief financial officer of UMTH General Services, L.P. from June 2008 to November 2018. From 2007 to 2008, Mr. Bland served as vice president, controller and principal accounting officer of Pizza Inn, Inc. Mr. Bland spent three years with Metromedia Restaurant Group as vice president, controller from 2005 to 2007 and accounting manager from 2001 to 2002. From 2003 to 2005, Mr. Bland was company controller of Sendera Investment Group, LLC and controller of a homebuilding and land division with Lennar Corporation in Dallas, Texas from 2002 to 2003. Mr. Bland began his career with Ernst & Young in 1989. Mr. Bland earned a bachelor’s degree in accounting from The University of Texas at Austin in 1985 and an MBA from Texas Christian University in 1989. EXECUTIVE COMPENSATION The following “Summary Compensation Table” and footnotes summarize the total compensation of the Company’s named executive officers for the year ended December 31, 2020. Summary Compensation Table Name and Principal Position | Fiscal Year | Salary ($)1 | Bonus ($) | Stock Awards ($) | All Other Compensation ($)1 | Total ($) | Manuel Chavez III2 Chief Executive Officer | 2020 | - | - | - | - | - | Stephanie Hogue3 President and Secretary
| 2020 | - | - | - | - | - | J. Kevin Bland Chief Financial Officer and Treasurer
| 2020 2019 | $250,000 $125,000 | $50,000 $90,000 | $50,000 - | - - | $350,000 $215,000 | Michael V. Shustek2 Former Chief Executive Officer
| 2020 2019 | $550,000 $275,000 | - $125,000 | - - | - - | $550,000 $400,000 | Daniel Huberty3 Former President and Chief Operating Officer | 2020 2019 | $300,00 $150,000 | - - | - - | - - | $300,000 $150,000 |
____________________________________________________________________ 1 | 2019 Salary reflects the amount that was paid to the named executive officers by the Company commencing on July 1, 2019, subsequent to the termination of a prior employee leasing arrangement. |
2 | Mr. Shustek resigned from all executive positions at the Company and all of the Company’s subsidiaries, including as Chief Executive Officer of the Company, effective August 25, 2021. The Board appointed Manuel Chavez III as Chief Executive Officer, effective August 25, 2021. For additional information with respect to this Mr. Shustek’s resignation, please see the section entitled “Certain Related Person Transactions” and the section entitled “Potential Payments Upon Termination or Change in Control” in this Proxy Statement. |
3 | Mr. Huberty resigned as the Company’s President and Chief Operating Officer, effective August 25, 2021. The Board appointed Stephanie Hogue as President, effective August 25, 2021 and the Board appointed Ms. Hogue as President and Secretary, effective October 5, 2021. Pursuant to the terms of Mr. Huberty’s employment agreement, in connection with his resignation, Mr. Huberty received a severance payment in the amount of $600,000, less applicable taxes and withholding. For additional information with respect to this agreement and Mr. Huberty’s separation, please see the section entitled “Certain Related Person Transactions” and the section entitled “Potential Payments Upon Termination or Change in Control” in this Proxy Statement. |
Compensation Philosophy Our named executive officers receive a base salary to compensate them for services rendered to the Company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. The named executive officer’s base salaries are set forth in employment agreements with the Company described below. Any annual bonus or incentive pay for our named executive officers is discretionary and determined by the Compensation Committee for the Chief Executive Officer and by the Compensation Committee with appropriate input from the Chief Executive Officer for the President and Chief Operating Officer and the Chief Financial Officer. The actual annual cash bonuses awarded to each named executive officer for 2020 performance are set forth above in the Summary Compensation Table in the column entitled “Bonus.” Equity Compensation As described below under “Employment Agreements”, pursuant to the 2019 Employment Agreements (as defined below), certain of our named executive officers were eligible to receive an annual target equity award. In light of the Company’s common stock not being listed on a public exchange during 2020, no equity compensation was awarded to the Company’s named executive officers in 2020. Retirement Plans and Health and Welfare Benefits We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. None of our named executive officers participated in the Company’s 401(k) retirement savings plan in 2020. The Internal Revenue Code (the “Code”) allows eligible employees to defer a portion of their familiaritycompensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. We are permitted to make Safe Harbor matching contributions under the 401(k) plan as follows: 100% of the first 3% of the participant’s compensation and 50% up to the next 2% of the participant’s compensation, with these matching contributions being fully vested as of the date on which the contribution is made. We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our business. Our Nominating and Corporate Governance Committee will consider candidates recommended by our directors, members of our management team and third parties. Our Nominating and Corporate Governance Committee will also consider candidates suggested by our stockholders.compensation policies. We do not have a formal process establishedcurrently provide for this purpose.
pension plans, supplemental retirement plans or deferred compensation plans for our named executive officers.Our named executive officers are eligible to participate in the health insurance, life insurance, disability benefits and other welfare programs that are provided generally to our employees. Perquisites and Other Personal Benefits We do not have a formal diversity policycurrently provide our named executive officers with any material perquisites or other personal benefits. Employment Agreements 2019 Employment Agreements The Company entered into employment agreements (collectively, the “2019 Employment Agreements”) with each of our then serving named executive officers on March 29, 2019. As part of the Company’s transition to self-management, the Compensation Committee retained FTI Consulting as an independent compensation consultant to advise the Compensation Committee with respect to the compositionterms of the 2019 Employment Agreements. The following is a brief summary and discussion of the terms of the 2019 Employment Agreements. Term. Each of the 2019 Employment Agreements provides for a three-year initial term that commenced on July 1, 2019 and ends on the third anniversary of such date. Thereafter, the employment term extends automatically for successive one-year periods unless either the executive or the Company provides notice of non-renewal to the other party at least ninety (90) days before the end of the then-existing term. Duties. The 2019 Employment Agreements provide that the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer will perform duties and provide services to us that are customarily associated with the duties, authorities and responsibilities of persons in similar positions, as well as such other duties as may be assigned from time to time. The 2019 Employment Agreements also provide that the executives generally will devote substantially all of their business time and attention to the business and affairs of the Company, except that the executives may engage in certain outside activities that do not materially interfere with the performance of their duties. Compensation. The 2019 Employment Agreements provide that the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer will receive an annual initial base salary of $550,000, $300,000 and $250,000, respectively. The Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer will be eligible to receive a target annual incentive award of not more than $250,000, $153,000 and $50,000, respectively, and each will be eligible to receive an annual target equity award of not more than $1,000,000, $153,000 and $130,000 in the form of restricted shares of common stock, respectively. Each annual equity award shall vest equally in annual installments over a three-year period. The amounts and conditions for the payment and vesting (as applicable) of each target annual incentive award and each annual target equity award will be determined by the Compensation Committee. The Company, at its discretion, may pay any target annual incentive awards payable to the Chief Operating Officer or the Chief Financial in cash or shares of common stock. Each of the executives will be eligible to participate in employee benefit programs made available to the Company’s employees from time to time and to receive certain other perquisites, each as set forth in their respective 2019 Employment Agreements. Severance Payments. The Chief Executive Officer 2019 Employment Agreement provides that, subject to the execution of a release and other conditions set forth in the Chief Executive Officer 2019 Employment Agreement, upon a “qualifying termination” (as defined in the Chief Executive Officer Employment Agreement), the Chief Executive Officer will be entitled to severance based on a multiple of the total of the Chief Executive Officer’s then-current annual base salary plus the amount of the last annual incentive award earned by the Chief Executive Officer in the year prior to termination (referred to herein as “total cash compensation”). If the qualifying termination results from the death or disability of the Chief Executive Officer, the Chief Executive Officer will be entitled to severance equal to one times (lx) his total cash compensation. If the Chief Executive Officer is terminated by the Company without “cause” (as defined in the Chief Executive Officer 2019 Employment Agreement), or the Chief Executive Officer quits for “good reason” (as defined in the Chief Executive Officer 2019 Employment Agreement) or the Company elects not to renew the term of the Chief Executive Officer 2019 Employment Agreement, then the Chief Executive Officer will be entitled to severance equal to two times (2x) his total cash compensation. In the event that any qualifying termination occurs on or within twelve (12) months after a change in control of the Company, the Chief Executive Officer will be entitled to severance equal to three times (3x) his total cash compensation. The Chief Operating Officer and the Chief Financial Officer 2019 Employment Agreements provide that, subject to the execution of a release and other conditions set forth in the 2019 Employment Agreements, the Chief Operating Officer and the Chief Financial Officer will be entitled to receive severance based on a multiple of the sum of their annual base salary and target annual incentive award (referred to herein as “total cash compensation”). If the Chief Operating Officer is terminated due to his death or disability or if the Chief Operating Officer 2019 Employment Agreement is not renewed by the Company during the first five years of the term of such agreement, then the Chief Operating Officer will be entitled to severance equal to one times (lx) his total cash compensation. Such severance is not payable if the Chief Operating Officer 2019 Employment Agreement is not renewed by the Company after the first five years of the term. If the Chief Operating Officer is terminated without “cause” or the Chief Operating Officer quits for “good reason,” (each as defined in the Chief Operating Officer 2019 Employment Agreement), he will be entitled to severance equal to two times (2x) his total cash compensation. If the Chief Financial Officer is terminated due to his death or disability, he is terminated by the Company without “cause” or he quits for “good reason,” (each as defined in the Chief Financial Officer 2019 Employment Agreement) then the Chief Financial Officer will be entitled to severance equal to one times (lx) his total cash compensation. If the Chief Financial Officer is terminated without “cause” or quits for “good reason”, in each case, on or within twelve (12) months after a change in control of the Company, then the Chief Financial Officer will be entitled to severance equal to one and one- half times (1.5x) his total cash compensation. Upon termination where severance is due and payable, the 2019 Employment Agreements also provide that the executives will be entitled to receive (i) unpaid base salary earned through the termination date; (ii) any restricted shares of common stock that have vested as of the termination date; (iii) all other equity-based awards held by the executive (which, to the extent subject to time-based vesting, will vest in full at the termination date); (iv) health insurance coverage, including through COBRA, for an 18 month period following the termination date (other than, with respect to the Chief Operating Officer and the Chief Financial Officer in the event of a termination due to death, disability or non-renewal); and (v) reimbursements of unpaid business expenses. Non-Competition, Non-Solicitation and Confidentiality. Each 2019 Employment Agreement provides that for a two-year period following the termination of the executive’s employment with us, the executive will not solicit our employees or consultants or any of our Board. However, our Nominating and Corporate Governance Committee seeks to ensure that the Board is composed of directors whose diverse backgrounds, experience and expertise will provide the Board with a range of perspectives on matters coming before the Board.
Stockholders may contact our Nominating and Corporate Governance Committee if they wish the committee to consider a proposed candidate. Stockholders should submit the names of any candidates in writing, together with background information about the candidate, and send the materials to the attention of the Company's secretary at the following address: 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146.
Communication with Directors
We have established procedures for stockholderscustomers, vendors or other interested parties doing business with us. Pursuant to communicate directly with our Boardthat certain Contribution Agreement, effective as of Directors. Such parties can contactApril 1, 2019, by and among the Board by mail at: Chair ofCompany, VRMI, VRMII, MVP Realty Advisors, LLC d/b/a The Parking REIT Audit Committee, c/o Corporate Secretary, 2965 S. Jones #C1-100, Las Vegas, NV 89146.
The chairmanAdvisors and Michael V. Shustek, the Chief Executive Officer has agreed not to compete with us for a period of three years after the effective date of such agreement. Pursuant to the Chief Operating Officer and Chief Financial Officer 2019 Employment Agreements, each of the AuditChief Operating Officer and the Chief Financial Officer has agreed not to compete with us for a period of two years following the termination of their employment with us. Each 2019 Employment Agreement also contains covenants relating to the treatment of confidential information, Company property and certain other matters.On August 25, 2021, Michael V. Shustek resigned from all executive positions he held at the Company and all of the Company’s subsidiaries, including as Chief Executive Officer of the Company, and from the Board of the Company. Also on August 25, 2021, Daniel Huberty resigned from all executive positions he held at the Company, including as President and Chief Operating Officer. The 2019 Employment Agreements with respect to Messrs. Shustek and Huberty terminated on August 25, 2021 in connection with their resignations. The 2019 Employment Agreement with the Company’s Chief Financial Officer, J. Kevin Bland, remains in effect. 2021 Employment Agreements In connection with their employment, the Company entered into employment agreements (collectively, the “2021 Employment Agreements”) with each of Manuel Chavez III and Stephanie Hogue on August 25, 2021. The Compensation Committee retained an independent compensation consultant to assist in determining Mr. Chavez’s and Ms. Hogue’s compensation packages under the 2021 Employment Agreements. The following is a brief summary and discussion of the terms of the 2021 Employment Agreements: Term. Each of the 2021 Employment Agreements provides for a three-year initial term that commences on the Employment Effective Date (as defined in each of the 2021 Employment Agreements) and ends on the third anniversary of such date. Thereafter, the employment term extends automatically for successive one-year periods unless either the executive or the Company provides notice of non-renewal to the other party at least ninety (90) days before the end of the then-existing term. Duties. The 2021 Employment Agreements provide that the Chief Executive Officer and the President will perform duties and provide services to us that are customarily associated with the duties, authorities and responsibilities of persons in similar positions as well as such other duties as may be assigned from time to time. The 2021 Employment Agreements also provide that the executives generally will devote substantially all of their business time and attention to the business and affairs of the Company, except that the executives may engage in certain outside activities that do not materially interfere with the performance of their duties, including serving as an officer and other capacities with respect to Color Up and its affiliates. Compensation. The 2021 Employment Agreements provide that the Chief Executive Officer and President will receive an annual initial base salary of $600,000 and $450,000, respectively. The Chief Executive Officer and President will be eligible to receive a target annual bonus of not more than 33.33% of their base salary, and each will be eligible to receive an annual target equity award of not more than $1,000,000, and $600,000 in restricted shares of common stock, respectively. Each annual equity award shall vest equally in annual installments over a three-year period. The amounts and conditions for the payment and vesting (as applicable) of each target annual incentive award and each annual target equity award will be determined by the Compensation Committee. The Chief Executive Officer and President have the right to elect to receive their base salary and their target annual bonus payments in the form of restricted shares of common stock. Each of the executives will be eligible to participate in employee benefit programs made available to the Company’s employees from time to time and to receive certain other perquisites, each as set forth in their respective 2021 Employment Agreements. In addition, the Chief Executive Officer and the President will receive $2,000,000 and $1,200,000 in unvested restricted shares of common stock, respectively, which shares shall vest only upon the occurrence of a Liquidity Event (as defined in the 2021 Employment Agreements), within three years of the effective date of the 2021 Employment Agreements, provided that the Chief Executive Officer and President, respectively, remain employed with the Company on the date of the Liquidity Event, unless such officer is terminated by the Company without cause or resigns for good reason within 180 days of a Liquidity Event. The Compensation Committee retained an independent compensation consultant to assist in determining the Chief Executive Officer’s and President’s compensation packages. Severance Payments. The 2021 Employment Agreements provide that, subject to the execution of a release and other conditions set forth in the 2021 Employment Agreements, upon a “qualifying termination” (as defined in the 2021 Employment Agreements), the executives will be entitled to severance based on a multiple of the total of each executive’s then-current annual base salary plus the amount of the Target Bonus Amount (as defined in the 2021 Employment Agreements) for the Company’s most recently completed fiscal year prior to termination (referred to herein as “total cash compensation”). If the qualifying termination results from the death or disability of the executive, the executive will be entitled to severance equal to one times (1x) their total cash compensation. If the executive is terminated by the Company without “cause” (as defined in the 2021 Employment Agreements), the executive quits for “good reason” (as defined in the 2021 Employment Agreements) or the Company elects not to renew the term of the 2021 Employment Agreements, then the executive will be entitled to severance equal to two times (2x) their total cash compensation. In the event that any qualifying termination occurs on or within twelve (12) months after a change in control of the Company, the executives will be entitled to severance equal to three times (3x) their total cash compensation. Upon termination where severance is due and payable, the 2021 Employment Agreements also provide that the executives will be entitled to receive (i) unpaid base salary earned through the termination date; (ii) any restricted shares of common stock that have vested as of the termination date; (iii) all communications madeother equity-based awards held by executive, to the extent subject to time-based vesting, will vest in full at the termination date; (iv) health insurance coverage, including through COBRA, for an 18 month period following the termination date; and (v) reimbursements of unpaid business expenses. Non-Competition, Non-Solicitation and Confidentiality. The 2021 Employment Agreements provide that for a two-year period following the termination of an executive’s employment with us, each of the executives will not solicit our employees or consultants or any of our customers, vendors or other parties doing business with us. Pursuant to the 2021 Employment Agreements, each of the executives has agreed not to compete with us for a period of two years following the termination of their employment with us. Each 2021 Employment Agreement also contains covenants relating to the treatment of confidential information, company property and certain other matters. The 2021 Employment Agreements also contain a non-disparagement covenant. Long-Term Incentive Plan The Board adopted the Company’s 2015 Incentive Plan (the “Long-Term Incentive Plan”) which the Company may use to attract and retain qualified directors, officers, employees and consultants. The Long-Term Incentive Plan will offer these means and will distribute such communicationsindividuals an opportunity to participate in the Company’s growth through awards in the form of, or based on, the Company’s common stock. The Company does not currently expect to issue awards under the Long-Term Incentive Plan prior to such membertime as the Company’s stock becomes publicly traded, although it may do so in the future, including possible equity grants to the Company’s independent directors as a form of compensation. The Long-Term Incentive Plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted or membersdeferred stock units, dividend equivalents, other stock-based awards and cash-based awards to directors, officers, employees and consultants of the Company and the Company’s affiliates selected by the Board for participation in the Long-Term Incentive Plan. Stock options granted under the Long-Term Incentive Plan will not exceed an amount equal to 10% of the outstanding shares of the Company’s common stock on the date of grant of any such stock options. Stock options may not have an exercise price that is less than the fair market value of a share of the Company’s common stock on the date of grant. The Board or a committee appointed by its Board will administer the Long-Term Incentive Plan, with sole authority to determine all of the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted under the Long-Term Incentive Plan if the grant or vesting of the awards would jeopardize the Company’s status as a Real Estate Investment Trust under the Code or otherwise violate the ownership and transfer restrictions imposed under its Charter. Unless otherwise determined by the Board, no award granted under the Long-Term Incentive Plan will be transferable except through the laws of descent and distribution. The Company has authorized and reserved an aggregate maximum number of 500,000 common shares for issuance under the Long-Term Incentive Plan. In the event of a transaction between the Company and its stockholders that causes the per-share value of the Company’s common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits under the Long-Term Incentive Plan will be adjusted proportionately and the Board will make such adjustments to the Long-Term Incentive Plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the authorization limits under the Long-Term Incentive Plan will automatically be adjusted proportionately and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price. The Board may, in its sole discretion, at any time, determine that all or a portion of a participant’s awards will become fully vested. The Board may select among participants or among awards in exercising such discretion. The Long-Term Incentive Plan will automatically expire on the tenth anniversary of the date on which it is approved by the Board and stockholders, unless extended or earlier terminated by the Board. The Board may terminate the Long-Term Incentive Plan at any time. The expiration or other termination of the Long-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 may amend the Long-Term Incentive Plan at any time, but no amendment will adversely affect any award without the participant’s consent and no 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. During the years ended December 31, 2020 and 2019, no grants were made under the Long-Term Incentive Plan. 2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END During the years ended December 31, 2020 and 2019, no grants were made under the Long-Term Incentive Plan or otherwise to our then-named executive officers and there were no outstanding equity awards as of either date. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Our 2019 Employment Agreements and 2021 Employment Agreements provide for certain severance payments and vesting of shares of our Boardcommon stock to our named executive officers in certain circumstances in connection with a qualifying termination, including following a change in control of the Company as further described above under “Employment Agreements”. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Directors and Executive Officers The following table sets forth the total number and percentage of common stock beneficially owned as he or she deems appropriate, dependingof November 12, 2021, by: | • | Each director and director nominee; | | • | Each of our named executive officers set forth in the section entitled “Executive Compensation – Summary Compensation Table” in this Proxy Statement; and | | • | All our current executive officers and directors as a group. |
| | | Common Shares Beneficially Owned | Name and Address* | | Number | | Percent | Manuel Chavez III1 | | 2,624,831 | | 33.81% | Stephanie Hogue1 | | 2,624,831 | | 33.81% | Jeffrey B. Osher1 | | 2,624,831 | | 33.81% | J. Kevin Bland | | 4,255 | | ** | Lorrence T. Kellar | | - | | - | Danica Holley | | - | | - | Damon Jones | | - | | - | Shawn Nelson | | 2,000 | | ** | Michael V. Shustek | | - | | - | Dan Huberty | | 3,599 | | ** | John E. Dawson | | 4,570 | | ** | Robert J. Aalberts | | 2,000 | | ** | Nicholas Nilsen | | 4,141 | | ** | | | | | | | All directors and executive officers as a group (eight persons) | | 2,645,396 | | 33.81% | | | | | | |
______________________________________________________ * | Unless otherwise noted, (i) the percentage ownership is calculated based on 7,762,375 shares of our total outstanding common stock as of November 12, 2021, and (ii) the business address of the individuals named above is c/o Mobile Infrastructure Corporation, 250 E. 5th Street, Suite 2110, Cincinnati, Ohio 45202. The business address for Michael V. Shustek, c/o Vestin Realty Mortgage II, Inc., 9130 W. Post Road, Suite 130, Las Vegas, Nevada 89148. The business address for Robert J. Aalberts is 311 Vallarte Drive, Henderson, Nevada 89014. The business address for Nicholas Nilsen is 3074 Soft Horizon Way, Las Vegas, Nevada 89135. |
1 | Based on a Schedule 13D/A filed with the SEC by Mr. Chavez, Ms. Hogue, Mr. Osher, Color Up and HSCP Strategic III, L.P., a Delaware limited partnership and member of Color Up (“HS3”), on November 9, 2021. The shares of common stock are directly owned by Color Up. The amounts included in the above table exclude: (i) the 7,481,623 shares of common stock which may be issued upon redemption of the 7,481,623 Common Units (“OP Units”) of MVP REIT II Operating Partnership, L.P, a Delaware limited partnership (the “Operating Partnership”) of which the Company is the sole general partner owned by Color Up; (ii) the 1,702,128 shares of common stock which may be issued upon redemption of the 1,702,128 OP Units owned by HS3; or (iii) the 425,532 shares of common stock which may be issued upon redemption of the 425,532 OP Units which HS3 may purchase upon exercise of the 425,532 Class A Units it owns, subject to adjustment as provided in the Class A Unit Agreement, all as further described below in “Certain Related Person Transactions”. The Company may elect, at its option, to pay cash in lieu of issuing shares of common stock for all or any redeemed OP Units. The amounts included in the above table also exclude the shares of common stock issuable upon the exercise of warrants held by Color Up. Each identified reporting person in the Schedule 13D/A beneficially owned 2,624,831 shares of Common Stock as of November 9, 2021. Color Up has sole dispositive power over all 2,624,831 shares of Common Stock and sole voting power over all 2,624,831 shares of common stock. Each of Mr. Chavez, Ms. Hogue, Mr. Osher and HS3 has shared dispositive power over all shares of common stock and shared voting power over all shares of common stock. |
2 | The amounts included in the above table exclude 1,750 shares of common stock issuable upon the exercise of warrants held by Mr. Dawson. |
Principal Stockholders Shown below is certain information as of November 9, 2021, with respect to beneficial ownership, as that term is defined in Rule 13d-3 under the facts and circumstances outlined in the communication received. For example, if any questions regarding accounting, internal controls and auditing matters are received, they will be forwardedExchange Act, of shares of common stock by the chairmanonly persons or entities known to us to be a beneficial owner of more than 5% of the Audit Committee tooutstanding shares of common stock. Unless otherwise noted, the memberspercentage ownership is calculated based on 7,762,375 shares of the Audit Committee for review.
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our common stock outstanding as of November 12, 2021.Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | Color Up, LLC1 Manuel Chavez III Stephanie Hogue Jeffrey B. Osher 250 E. 5th Street, Suite 2110 Cincinnati, Ohio 45202 | Sole voting and investment power of 2,624,831 shares1 | 33.81% | | | | HSCP Strategic III, L.P.1 503 Montgomery Street, Suite 1250 San Francisco, California 94111 | Shared investment power of 2,624,831 shares1 | 33.81% |
1 | Based solely on a Schedule 13D/A filed with the SEC by Mr. Chavez, Ms. Hogue, Mr. Osher, Color Up and HS3 on November 9, 2021. The shares of common stock are directly owned by Color Up. The amounts included in the above table exclude: (i) the 7,481,623 shares of common stock which may be issued upon redemption of the 7,481,623 OP Units owned by Color Up; (ii) the 1,702,128 shares of common stock which may be issued upon redemption of the 1,702,128 OP Units owned by HS3; or (iii) the 425,532 shares of common stock which may be issued upon redemption of the 425,532 OP Units which HS3 may purchase upon exercise of the 425,532 Class A Units it owns, subject to adjustment as provided in the Class A Unit Agreement, all as further described below in “Certain Related Person Transactions”. The Company may elect, at its option, to pay cash in lieu of issuing shares of common stock for all or any redeemed OP Units. The amounts included in the above table also exclude the shares of common stock issuable upon the exercise of warrants held by Color Up. Each identified reporting person in the Schedule 13D/A beneficially owned 2,624,831 shares of Common Stock as of November 9, 2021. Color Up has sole dispositive power over all 2,624,831 shares of Common Stock and sole voting power over all 2,624,831 shares of common stock. Each of Mr. Chavez, Ms. Hogue, Mr. Osher and HS3 has shared dispositive power over all shares of common stock and shared voting power over all shares of common stock. |
PROPOSAL NO. 2 – ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION As required by Section 14A of the Exchange Act, the Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its named executive officers as described in the section entitled “Executive Compensation” in this Proxy Statement. Our executive compensation is designed to reward executive performance that contributes to our success and increases stockholder value, while encouraging behavior that is in our and our stockholders’ long-term best interests. Because your vote is advisory, it will not be binding upon our Board or our Compensation Committee; however, our Board values stockholders’ opinions and our Compensation Committee will take into account the outcome of the vote, among other things, when considering future executive compensation decisions. Our Board recommends that stockholders vote for the following resolution: RESOLVED: That the stockholders of the Company approve, on a non-binding, advisory basis, the compensation paid by the Company to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K in this Proxy Statement. Vote Required The affirmative vote of a majority of the votes cast by common stockholders present in person or by proxy at the meeting is required to approve this proposal. Recommendation of the Board of Directors THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT. PROPOSAL NO. 3 – ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION As required by Section 14A of the Exchange Act, the Company seeks a non-binding advisory vote from its stockholders to approve the frequency with which stockholders wish to have a non-binding advisory vote on the compensation of the Company’s named executive officers; in other words, how often a proposal similar to this year's Proposal No. 2 will be included in the matters to be voted on at future annual meetings of stockholders. The choices available under Section 14A of the Exchange Act are every year, every other year or every three years. After consideration, the Board recommends that stockholders select “every three years” as the desired frequency for a non-binding, advisory vote of stockholders on named executive officer compensation. The Board believes this frequency is appropriate because it encourages the Company’s stockholders to evaluate executive compensation arrangements over an extended period of performance and to review the compensation of the Company’s named executive officers over a three-year period as reported in the Summary Compensation Table. Because your vote is advisory, it will not be binding upon the Board or the Compensation Committee; however, the Board values stockholders’ opinions and the Compensation Committee will take into account the outcome of the vote, among other things, when considering the frequency with which the Company will seek future stockholder votes on the Company’s executive compensation. Vote Required The affirmative vote of a majority of the votes cast by common stockholders present in person or by proxy at the meeting is required to approve this proposal. In the event that no option receives a majority of the votes cast, the Board will consider the option that receives the highest number of votes as the recommended choice of the stockholders. Recommendation of the Board of Directors THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR HOLDING THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR EXECUTIVE OFFICERS “EVERY 3 YEARS”. PROPOSAL NO. 4 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of ourthe Board of Directors has appointed the accounting firm of RBSMDeloitte & Touche LLP ("RBSM") to serve as our independent registered public accountantsaccounting firm for the fiscal year ending December 31, 2018.2021, effective as of October 18, 2021. On October 18, 2021, the Audit Committee dismissed RBSM is considered by our management to be qualified.
On April 29, 2018, the Company dismissed RSM US LLP ("RSM"(“RBSM”), as the Company'sCompany’s independent registered public accounting firm. The dismissalreports of RSM was approved by a majorityRBSM on the Company’s financial statements for each of the memberstwo years ended December 31, 2019, and December 31, 2020, did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audits of the Audit Committee. RSM was engaged to audit the Company'sCompany’s financial statements for the yearyears ended December 31, 2017, however,2019 and December 31, 2020, and during the audit was not completed,subsequent interim period through October 18, 2021, there were no “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and no audit report was ever issued by RSM to the Company. During the term of RSM's engagement, there were: (i) no disagreementrelated instructions) between the Company and RSMRBSM on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure,procedures which, disagreement, if not resolved to RSM'sthe satisfaction of RBSM would have caused itRBSM to make reference to the subject matter of the disagreement in connection with its report,their report. During the years ended December 31, 2019 and (ii)December 31, 2020 and the subsequent interim period through October 18, 2021, there were no reportable events“reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
On April 30, 2018,Contemporaneously with the Company re-engagedAudit Committee’s dismissal of RBSM, on October 18, 2021, the Company's priorAudit Committee approved the engagement of Deloitte & Touche LLP to serve as our independent registered public accounting firm, effective immediately. RBSM previously served as the Company's independent registered public accounting firm from its formation until the Company's dismissal of RBSM on May 19, 2017. During the Company's prior engagement of RBSM, RBSM reported on the Company's financial statements for the period from May 4, 2015 (date of inception) through December 31, 2015 and for the yearfiscal years ended December 31, 2016.
2020 and December 31, 2019, and the subsequent interim period through October 18, 2021, we did not, nor did anyone on our behalf, consult with Deloitte & Touche LLP with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and no written report or oral advice was provided to us that Deloitte & Touche LLP concluded was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue or (b) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions), or a disagreement, or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K), or a reportable event. Deloitte & Touche LLP is considered by our management to be qualified.We are asking our common stockholders to ratify the appointment of RBSMDeloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2021. Although the ratification is not required by our charter,the Charter, our bylaws or other governing documents or applicable law, the Board is submitting the appointment of RBSMDeloitte & Touche LLP to our common stockholders for ratification as a matter of good corporate practice. Even if the common stockholders ratify the appointment, ourthe Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it believes that such a change would be in the best interest of the Company.
We expect that a representative of RBSMDeloitte & Touche LLP will be present telephonically at the Annual Meeting, will be given the opportunity to make a statement if he or shethey so desiresdesire and will be available to respond to appropriate questions.
Vote Required
The affirmative vote of a majority of the votes cast by common stockholders present in person or by proxy at the meeting is required to approve this proposal. For purposes of this vote, abstentions will not be counted as votes cast and will have no effect on the result of the vote for this proposal, although they and broker non-votes will be considered present for the purpose of determining the presence of a quorum. Broker non-votes will not arise in connection with this proposal because brokers may vote in their discretion on behalf of clients who have not furnished voting instructions.
Recommendation of the Board of Directors
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF RBSM LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
Principal Accounting Fees and Services
For the yearyears ended December 31, 20162020 and during the period from January 1, 2017 through August 8, 2017,2019, RBSM our independent public accounting firm, billed the Company approximately $69,000$420,000 and $179,000,$480,000, respectively, for their professional services.
For the period of July 1, 2017 through December 31, 2017, RSM, our former independent public accounting firm, billed the Company approximately $120,000 for their professional services.
For the yearyears ended December 31, 2017, HCVT2020 and 2019, Armanino, LLP ("HCVT"(“Armanino”), our independent accounting firm providing tax services, billed the Company approximately $46,000$110,000 and $98,000, respectively, for their professional services.
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| | RBSM 12/31/2020 | | RBSM 12/31/2019 | | Armanino 12/31/2020 | | Armanino 12/31/2019 | Audit Fees | | $ 420,000 | | $ 480,000 | | $ - | | $ - | Audit Related Fees | | $ - | | $ - | | $ - | | $ - | Tax Fees | | $ - | | $ - | | $ 110,000 | | $ 98,000 | All Other Fees | | $ - | | $ - | | $ - | | $ - | Total | | $ 420,000 | | $ 480,000 | | $ 110,000 | | $ 98,000 |
| | | December 31, 2017 | | | December 31, 2016 | | | Audit Fees | | $ | 217,000 | | | $ | 61,000 | | | Audit Related Fees | | $ | 82,000 | | | $ | 7,500 | | | Tax Fees | | $ | 46,000 | | | $ | -- | | | All Other Fees | | $ | -- | | | $ | -- | | | Total | | $ | 345,000 | | | $ | 68,500 | |
RBSM did not perform any non-audit services for us during the years ended December 31, 2017 and 2016.
RSM did not perform any non-audit services for us during the year ended December 31, 2017.
Audit fees. Consists of fees billed for the audit of ourthe Company’s annual financial statements, review of ourthe Company’s Annual Report on Form 10-K, review of ourthe Company’s interim financial statements included in ourthe Company’s Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with year-end statutory and regulatory filings or engagements. Audit-related fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of ourthe Company’s financial statements and are not reported under "Audit“Audit Fees, "” such as acquisition audit, audit of ourthe Company’s financial statements, review of ourthe Company’s Current Reports on Form 8-K, review of ourthe Company’s registration statement on Form S-11 and Form S-4 filings. Tax fees. Consists of professional services rendered by a company aligned with ourthe Company’s principal accountant for tax compliance, tax advice and tax planning. OtherAll other fees. The services provided by ourthe Company’s accountants within this category consisted of advice and other services.
The Audit Committee has direct responsibility to review and approve the engagement of the independent auditors to perform audit services or any permissible non-audit services. All audit and non-audit services to be provided by the independent auditors must be approved in advance by the Audit Committee. The Audit Committee may not engage the independent auditors to perform specific non-audit services proscribed by law or regulation. All services performed by our independent auditors under engagements entered into were approved by ourthe Company’s Audit Committee, pursuant to ourthe Company’s pre-approval policy, and none was approved pursuant to the de minimis exception to the rules and regulations of the Securities Exchange Act, of 1934, as amended (the "Exchange Act"), Section 10A(i)(1)(B), on pre-approval.
Vote Required -19-The affirmative vote of a majority of the votes cast by common stockholders present in person or by proxy at the meeting is required to approve this proposal.
Recommendation of the Board of Directors THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2021. Management of Mobile Infrastructure Corporation (the “Company”) is responsible for the Company’s financial statements, internal controls, accounting and financial reporting processes and compliance with applicable laws and regulations. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCOAB”) and an independent audit of the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the PCAOB, and for expressing their opinions thereon. The responsibility of the Audit Committee of the Board of Directors (the “Board”) is to provide general oversight of the foregoing matters, as well as engaging the Company’s independent registered public accounting firm and establishing the terms of retention. The following is the report of the Audit Committee (the "Audit Committee") of the Board of Directors (the "Board") of The Parking REIT, Inc. (the "Company") with respect to the Company'sCompany’s consolidated audited financial statements for the fiscal year ended December 31, 2017.2020. The information contained in this report shall not be deemed to be "soliciting material"“soliciting material” or to be "filed"“filed” with the U.S. Securities and Exchange Commission (the “SEC”), or subject to Regulation 14A or 14C, other than as provided in this Item, or to the liabilities of sectionSection 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the "Securities Act"“Securities Act”), or the Exchange Act. Such information will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference. The Audit Committee has reviewed and discussed the Company'sCompany’s audited financial statements with management. Review and Discussions with Independent Registered Public Accountants The Audit Committee met and held discussions with management and RBSM LLP, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America and the Committee has reviewed and discussed the audited consolidated financial statements with management and RBSM LLP. The Audit Committee discussed with RBSM LLP, the Company's independent registered public accountants for the fiscal year ending December 31, 2017, the matters required to be discussed by the Statement on Auditing 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'sCompany’s consolidated financial statements. The Audit Committee has also received the written disclosures and the letter from RBSM LLP required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent accountant'saccountant’s communications with the Audit CommitteesCommittee concerning independence and the Audit Committee has discussed with RBSM LLP its independence fromwith respect to the Company for the fiscal year ending December 31, 2017. 2020. The Audit Committee has reviewed the original proposed scope of the audit and fees.Conclusion Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the Company'sCompany’s audited financial statements be included in the Company'sCompany’s Annual Report filed with the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2017. | | 2020, for filing with the SEC. Submitted by the Audit Committee of the Board, Lorrence T. Kellar, Chair* Danica Holley* Shawn Nelson* *The members were appointed to the Audit Committee effective October 15, 2021. The prior members of the Audit Committee took the actions described above. CERTAIN RELATED PERSON TRANSACTIONS The descriptions of agreements in this “Certain Related Person Transactions” section do not purport to be complete and are subject to, and qualified in their entirety by, reference to the actual agreements, copies of certain of which are filed as exhibits to our Annual Report and other filings with the SEC. A “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) or a proposed transaction in which (i) we were, are or will be a participant, (ii) the amount involved exceeds the lesser of $120,000 or 1.0% of the average of the Company’s total assets at year end for the last two completed fiscal years and (iii) any related person had, has or will have a direct or indirect material interest. A “related person” means any person who is, or at any time since January 1, 2019 was: | • | a director, a nominee for director or an executive officer of the Company; | | | | | | • | known to us to be the Boardbeneficial owner of Directors,more than 5.0% of the outstanding shares of common stock when a transaction in which such person had a direct or indirect material interest occurred or existed; | | | | David Chavez, Co-Chair
| | • | an immediate family member of any of the persons referenced in the preceding two bullets, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of any of the persons referenced in the preceding two bullets, and any person (other than a tenant or employee) sharing the household of any of the persons referenced in the preceding two bullets; or | | | | William Wells, Co-Chair
| | | • | Erik Hart | | | Nicholas Nilsena firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. |
Executive Officers
We dohave adopted a written Code of Ethics that describe the consideration and approval of related person transactions. Under the Code of Ethics, we may not currently haveenter into a transaction from which any employees nor do we currently intend to hire any employees who will be compensated directly by us. Each of our executive officers, including eachdirector or executive officer, who serves as aany member of the immediate family of any director is employed by our Sponsor and also serves as anor 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 ofother related person, may derive an improper benefit, unless that transaction has been disclosed or made known to 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 independent director an annual retainer of $30,000 (to be prorated for a partial term), with an additional $5,000 annual retainer (to be prorated for a partial term) paid to the Audit Committee chairperson. Each independent director also will receive $1,000 for each meeting of the Board of Directors attended in-person or by telephone.
Special Committee members were paid $35,000 for the Chair and $30,000 for the remaining members in connection with the Merger.
All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending meetings of the Board of Directors. If a director is also one of our officers, we will not pay any compensation to such person for services rendered as a director. The following table sets forth information with respect to our independent director compensation during the fiscal year ended December 31, 2017:
| Name | | Fees Earned or Paid in Cash | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | | All Other Compensation (1)($) | | | Total ($) | | | | | | | | | | | | | | | | | | | | | | | | | | Allen Wolff (2)(3) | | $ | 72,000 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 600 | | | $ | 72,600 | | | David Chavez (2) | | $ | 77,000 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 77,000 | | | Erik Hart (2)(4) | | $ | 67,000 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 67,000 | | | John Dawson | | $ | 48,000 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 48,000 | | | Robert J. Aalberts | | $ | 8,500 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 8,500 | | | Nicholas Nilsen | | $ | 8,500 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 8,500 | | | Shawn Nelson | | $ | 8,500 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 8,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 289,500 | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | -- | | | $ | 600 | | | $ | 290,100 | |
On May 31, 2018 the Board of Directors voted to change the compensation structure for independent directors. The Board will receive one-half of its $30,000 fee in cash and the other one-half in common stock. The initial issuance price for the common stock will be at the then current NAV. In the event the Company is listed on a national securities exchange, the issuance of common stock will be based on the twenty day trailing closing stock price average. In addition, the chair of the Audit Committee will be entitled to receive his additional $5,000 either in cash or at his option, half in cash and half in common stock. Finally, the Board reduced its per meeting fee to $500 per meeting until such time as stockholder distributions commence.
Compensation Committee Interlocks and Insider Participation
Other than Michael V. Shustek, no member of our Board of Directors served as an officer, and no member of our Board of Directors served as an employee, of the Company or any of its subsidiaries or affiliates during the year ended December 31, 2017. In addition, during the year ended December 31, 2017, none of our executive officers served as a member of a compensation committee (or other committee of performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Conflicts of Interests
We are subject to various conflicts of interest arising out of our relationship with the Advisor and other affiliates, including (1) conflicts related to the compensation arrangements between the Advisor, certain affiliates and us, (2) conflicts with respect to the allocation of the time of the Advisor and its key personnel and (3) conflicts with respect to the allocation of investment opportunities. Our independent directors have an obligation to function on our 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.
The transactions described below were approved by a majority of the Company's Board of Directors (including a majority of the independent directors)Independent Directors) not otherwise interested in suchthe transaction reviews and approves or ratifies the transaction by affirmative vote as fair and reasonable to the Company and on terms and conditions nonot less favorable to the Company than those available from unaffiliated third parties.
The Merger
On May 26, 2017, the Company, MVP I, Merger Sub, and the Advisor entered into an agreement and plan of merger (the "Merger Agreement"), pursuant In determining whether to which MVP I would merge with and into Merger Sub (the "Merger"). On December 15, 2017, the Merger was consummated. Following the Merger, the Company contributed 100% of its equity interests in Merger Sub to the MVP REIT II Operating Partnership, LP,approve or ratify a Delaware limited partnership (the "Operating Partnership"). The Company owns substantially all of its assets and conducts its operations through the Operating Partnership and continues to be advised by the Advisor.
At the effective time of the Merger, and pursuant to the terms of the Merger Agreement, each share of MVP I Common Stock that was issued and outstanding immediately prior to the Merger was converted into the right to receive 0.365 shares of common stock of the Company. A total of approximately 3.9 million shares of common stock of the Company were issued to former MVP I stockholders, and former MVP I stockholders, immediately following the Merger, owned approximately 59.7% of the Company's common stock.
Concurrently with the entry into the Merger Agreement, on May 26, 2017, the Company, MVP I, the Advisor and the Operating Partnership entered into a termination and fee agreement (the "Termination Agreement"). Pursuant to the Termination Agreement, at the effective time of the Merger, the Advisory Agreement, dated September 25, 2012, as amended, among MVP I and the Advisor was terminated, and the Company paid the Advisor an Advisor Acquisition Payment (as such term is defined in the Termination Agreement) of approximately $3.6 million, which was the only fee payable to the Advisor in connection with the Merger.
The Advisor has the option to request reimbursement of certain payroll expenses for salaries and benefits paid to non-executive officers. As of December 31, 2017, the Advisor was due approximately $162,000 in reimbursable expenses, which was paid as of the date of this filing.
The Company was subsequently renamed "The Parking REIT, Inc."
Ownership of Company Stock
During May 2017, VRM II acquired approximately 35,000 shares of the Company's common stock from third party investors in exchange for various trust deed investments. During the year ended December 31, 2017, VRM II received approximately $14,600 in distributions in accordance with the Company's DRIP program.
As of December 31, 2017, transaction, our Sponsor owned 13,269 shares and VRM II owned 359,546 shares of the Company's outstanding shares of common stock.
During November 2017, Corporate Center Sunset Holdings, an entity owned by VRM I and VRM II, acquired 1,039,620 shares of common stock of the Company pursuant to a membership purchase agreement unrelated to the Company.
Ownership of MVP I
Prior to the Merger, the Company held 476,784 shares of MVP I common stock. Upon the consummation of the Merger, these shares were retired, and no consideration was paid in connection therewith. During the years ended December 31, 2017 and 2016, MVP I paid the Company approximately $189,000 and $34,000, respectively, in stock distributions. In addition, the Company received 15,996 and 3,731, respectively, shares of MVP I Common Stock in accordance with its DRIP program.
Ownership of the Advisor
VRM I and VRM II own 40% and 60%, respectively, of the Advisor. Neither VRM I nor VRM II paid any up-front consideration for these ownership interests, but each agreed to be responsible for its proportionate share of future expenses of the Advisor. The operating agreement of the Advisor provides that once VRM I and VRM II have been repaid in full for any capital contributions to the Advisor or for any expenses advanced on the Advisor's behalf, or capital investment, and once they have received an annualized return on their capital investment of 7.5%, then Michael Shustek will receive 40% of the net profits of the Advisor.
Note Payable to the Advisor
On June 29, 2017, the Advisor entered into an agreement with the Company to loan the principal amount of $2.1 million to the Company ("Loan Agreement") for the purchase of MVP Preferred Parking. The terms of this 1-year Loan Agreement includes an annual interest rate of 5% with no penalty for prepayment. As of December 31, 2017, this loan was paid in full.
Fees Paid in Connection with the Offering – Common Stock
Various affiliates of the Company are involved in the offering of common stock of the Company and the Company's operations including MVP American Securities, LLC ("AMS"), which is a broker-dealer and member of the Financial Industry Regulatory Authority, Inc. AMS is owned by MS MVP Holdings, LLC, which is owned and managed by Mr. Shustek. Additionally, the Company may engage an affiliate of the Advisor to perform certain property management services for the Company.
The Sponsor or its affiliates paid selling commissions of up to 6.5% of gross offering proceeds from the sale of shares in the offering of common stock of the Company without any right to seek reimbursement from the Company.
The Sponsor or its affiliates also paid 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 due diligence expenses were approximately 1.25% to 2.00% of total offering proceeds. Such commissions and fees were paid by the Company's sponsor or its affiliates (other than the Company) without any right to seek reimbursement from the Company.
Fees Paid in Connection with the Offering – Preferred Stock
In connection with the private placement of its Series A and Series 1 preferred stock, the Company may pay selling commissions of up to 6.0% of gross offering proceeds from the sale of shares in the private placements, including sales by affiliated and non-affiliated selling agents. During the year ended December 31, 2017, the Company paid approximately $3.2 million in selling commissions, of which $0.6 million were paid to affiliated selling agents.
The Company may pay non-affiliated selling agents a one-time fee separately negotiated with each selling agent for due diligence expenses of up to 2.0% of gross offering proceeds. The Company may also pay a dealer manager fee to AMS of up to 2.0% of gross offering proceeds from the sale of the shares in the private placements as compensation for acting as dealer manager. During the year ended December 31, 2017, the Company paid approximately $0.6 million to AMS as compensation.
The Company paid zero commissions in 2016 as the preferred offerings were not open at that time.
Fees Paid in Connection with the Operations of the Company
Prior to the Merger, the Advisor or its affiliates received an acquisition fee of 2.25% of the purchase price of any real estate provided, however, the Company did not pay any fees when acquiring loans from affiliates. During the years ended December 31, 2017 and 2016, approximately $2.0 million and $1.2 million, respectively, in acquisition fees had been earned by the Advisor.
The Advisor or its affiliates were entitled to be reimbursed for actual expenses paid or incurred in connection with the operation of the Company's business. During the years ended December 31, 2017 and 2016, no acquisition expenses were reimbursed to the Advisor.
The Advisor or its affiliates previously received a monthly asset management fee at an annual rate equal to 1.0% 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. Prior to the Merger, the Company was to determine the Company's NAV on a date not later than May 29, 2018 (the "Valuation Date"). Following the Valuation Date, the asset management fee was based on the value of the Company's assets rather than their historical cost. Asset management fees for the years ended December 31, 2017 and 2016 were approximately $1.3 million and $0.2 million, respectively.
The Company was to reimburse the Advisor or its affiliates for costs of providing administrative services, subject to the limitation that it will not reimburse the Advisor for any amount by which the Company's operating expenses, at the end of the four preceding fiscal quarters (commencing after the quarter in which the Company made its first investment), exceed the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income connection with the selection or acquisition of an investment, whether or not the Company ultimately acquires, unless the excess amount is approved byBoard (including a majority of the Company's independent directors. The Company wasIndependent Directors) not permitted to reimburse the Advisor for personnel costs in connection with services for which the Advisor received a separate fee, such as an acquisition fee, disposition fee or debt financing fee, or for the salaries and benefits paid to the Company's executive officers. In addition, the Company was not permitted to reimburse the Advisor for rent or depreciation, utilities, capital equipment or other costs of its own administrative items. During the years ended December 31, 2017 and 2016, no operating expenses had been reimbursed to the Advisor.
In connection with the Merger, the previous Advisory Agreement with the Advisor was amended effective upon the consummation of the Merger to eliminate all fees except a 1.1% asset management fee, which will be limited to $2.0 million per year until the Company:
| ·holds assets with an Appraised Value equal to or in excess of $500,000,000 or,
| | ·reports AFFO per share of common stock equal to or greater than the $0.3125 per share for two consecutive quarters, on a fully diluted basis.
|
Once either of these criteria is satisfied, all fees subordinated will be paid in full. In connection with the Merger and pursuant to the Termination Agreement, at the effective time of the Merger, the previous Advisory Agreement among MVP I and the Advisor was terminated and the Company paid the Advisor an Advisor Acquisition Payment (as such term is definedotherwise interested in the Termination Agreement)transaction, as the case may be, shall also act in accordance with any applicable provisions of approximately $3.6 million, which was the only fee paid to the Advisor in connection with the Merger.
Fees Paid in Connection with the Liquidation or Listing of the Company's Real Estate Assets
Starting on December 15, 2017, in connection with the Merger,our Charter and Bylaws, consider all of the following feesrelevant facts and circumstances and approve only those transactions that they determine are fair and reasonable to us. All related person transactions described in Annex A to this Proxy Statement were terminated except for a 1.1% asset management fee.
For substantial assistancereviewed and approved or ratified in connectionaccordance with our policies, Code of Ethics, Charter and Bylaws, each as described above, and Maryland law. In the saleevent of investments, as determined by the independent directors, the Company was to pay the Advisordoubt, an officer or its affiliate the lesser of (i) 3.0%director of the contract sale pricecompany must disclose a suspected related person transaction to the Director of each real estate-related secured loan or other real estate investment or (ii) 50%Compliance, who may then engage the Chair of the customary commission which would be paidAudit Committee to a third-party broker for the sale of a comparable property. The amount paid, when added to the sums paid to unaffiliated parties, was not to exceed either the customary commission or an amount equal to 6.0% of the contract sales price. The disposition fee was to be paid concurrently with the closing of any such disposition of all or any portion of any asset. During the years ended December 31, 2017 and 2016, no disposition fees have been earned by the Advisor.
After the Company's stockholders had received a return of their net capital invested and a 6.0% annual cumulative, non-compounded return, then the Advisor was entitled to receive 15.0% of the remaining proceeds. The Company was to pay this subordinated performance fee only upon one of the following events: (i)determine if the Company's shares were listedtransaction requires the approvals set forth in the Code of Ethics. A copy of our Code of Ethics is available on a national securities exchange; (ii) if the Company's assets were 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 years ended December 31, 2017 and 2016, no subordinated performance fees have been earned by the Advisor.
our website, www.mobileIT.com.Certain Conflict Mitigation Measures
In order to reduce or mitigate certain potential conflicts of interests, we havethe Company has adopted the procedures set forth below.
Advisor Compensation
below, which includes procedures imposed by the NASAA REIT Guidelines. The independent directors evaluate at least annually whether the compensation that we contract to payCompany will no longer be subject 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 performancerequirements of 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:
| • | the amount of the fees and any other compensation, including stock-based compensation, paid to our advisor and its affiliates in relation to the size, composition and performance of the assets; | | • | the success of our advisor in generating appropriate investment opportunities; | | • | the rates charged to other companies, including other REITs, by advisors performing similar services; | | • | additional revenues realized by our advisor and its affiliates through their relationship with us, including whether we pay them or they are paid by others with whom we do business; | | • | the quality and extent of service and advice furnished by our advisor and its affiliates; | | • | the performance of our investment portfolio; and | | • | the quality of our portfolio relative to the investments generated by our advisor and its affiliates for their own account and for their other clients. |
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
The NASAA REIT Guidelines require our charterif and when the Company lists its shares on a national securities exchange and amends the Charter.Independent Directors Pursuant to definethe NASAA REIT Guidelines, the Charter defines 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 Advisor. A director is deemed to be associated with ourthe Sponsor or the 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 Advisor or any of their affiliates, performs services (other than as a director) for us, or serves as a director or trustee for more than three (3) REITs organizedsponsored by ourthe Sponsor or advised by the Advisor. A business or professional relationship will be deemed material per se if the aggregate gross revenue derived by the director from ourthe Sponsor, the Advisor or any of their affiliates exceeds five percent (5%) 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- ormothers-or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law is or has been associated with us, ourthe Company, the Sponsor, the Advisor or any of its affiliates.
A majority of ourthe members of the Board, of Directors, including a majority of the independent directors, must determine the method used by the Advisor for the allocation of the acquisition of investments by two or more affiliated programs seeking to acquire similar types of assets is fair and reasonable to us. OurThe Company’s independent directors, acting as a group, will resolve potential conflicts of interest whenever they determine that the exercise of independent judgment by the full Board of Directors or the Advisor or its affiliates could reasonably be compromised. However, the independent directors may not take any action which, under Maryland law, must be taken by the entire Board of Directors or which is otherwise not within their authority. The independent directors, as a group, are authorized to retain their own legal and financial advisors. Among the matters we expect the independent directors to review and act upon are:
| • | the continuation, renewal or enforcement of our agreements with our advisor and its affiliates, including the advisory agreement and the property management agreement; | | | • | transactions with affiliates, including our directors and officers; | | | | | | • | awards under our equity incentive plan; and | | | | | | • | pursuit of a potential liquidity event. |
Those conflict of interest matters that cannot be delegated to the independent directors, as a group, under Maryland law must be acted upon by both the Board of Directors and the independent directors.
OurThe Company’s Acquisitions
WeThe Company will not purchase or lease assets in which our Sponsor, the Advisor, any of ourthe Company’s directors or any of their affiliates has an interest without a determination by a majority of ourthe Company’s directors (including a majority of the independent directors) not otherwise interested in the transaction that such transaction is fair and reasonable to us and at a price to us no greater than the cost of the asset to ourthe Sponsor, the Advisor, the director or the affiliated seller or lessor, unless there is substantial justification for the excess amount and such excess is reasonable. In no event may wethe Company acquire any such asset at an amount in excess of its current appraised value.
The consideration we paythe Company pays for real property will ordinarily be based on the fair market value of the property as determined by a majority of the members of the Board of Directors or the members of a duly authorized committee of the Board.board. In cases in which a majority of ourthe Company’s independent directors so determine, and in all cases in which real property is acquired from our Sponsor, the Advisor, any of ourthe Company’s directors or any of their affiliates, the fair market value shall be determined by an independent expert selected by ourthe Company’s independent directors not otherwise interested in the transaction. Pursuant to the Stockholders’ Agreement described below, until such time as the Stockholders’ Agreement is terminated, the prior approval of one Incumbent Director and a majority of the Color Up Designated Directors shall be required for certain transactions, including without limitation, (i) any merger or sale of the Company or substantially all its assets, (ii) amendments to the Company’s Charter or bylaws, (iii) the authorization or issuance of any equity securities or any securities convertible into or exercisable for equity securities of the Company, (iv) any change in the authorized number of directors of the Board or establishment or abolition of any committee thereof; (v) any incurrence or repayment of indebtedness in an aggregate amount over a certain threshold, (vi) any declaration of dividends, (vii) any appointment or termination of any person as the chief executive officer, president or chief financial officer of the Company, (viii) any related party transactions, (ix) any amendment or waiver, or termination of certain provisions, of the Stockholders’ Agreement or (x) any amendment or waiver of the Tax Matters Agreement or the Warrant Agreement, each as described below.
WeThe Company will not make any loans to our Sponsor, our Advisor or ourthe Company’s directors or officers or any of their affiliates (other than mortgage loans complying with the limitations set forth in Section V.K.3 of the NASAA REIT Guidelines or loans to wholly owned subsidiaries). In addition, wethe Company will not borrow from these affiliates unless a majority of ourthe members of the Board of Directors (including a majority of the independent directors) not otherwise interested in the transaction approves the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties under the circumstances.parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by our Board of Directors.
the Board.Other Transactions Involving Affiliates
A majority of ourthe Company’s directors, including a majority of the independent directors not otherwise interested in the transaction, must conclude that all other transactions between usthe Company and ourthe Sponsor, the Advisor, any of ourthe Company’s directors or any of their affiliates are fair and reasonable to usthe Company and on terms and conditions not less favorable to usthe Company than those available from unaffiliated third parties. To the extent that we contemplatethe Company contemplates any transactions with affiliates, members of ourthe Board who serve on the board of the affiliated entity will be deemed "interested directors"“interested directors” and will not participate in approving or making other substantive decisions with respect to such related party transactions.
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. "Average invested assets" means the average of the aggregate monthly book value of our assets during a specified period invested, directly or indirectly, 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 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 and reimbursable.
Issuance of Options and Warrants to Certain Affiliates
Until ourthe Company’s shares of common stock are listed on a national securities exchange, wethe Company will not issue options or warrants to purchase our common stock to our Advisor, MVP Capital Partners II, our Sponsor, any of ourthe Company’s directors or any of their affiliates, except on the same terms as such options or warrants, if any, are sold to the general public. We may issue options or warrants to persons other than our Advisor, our Sponsor, ourthe Company’s directors and their affiliates prior to listing ourthe Company’s common stock on a national securities exchange, but not at an exercise price less than the fair market value of the underlying securities on the date of grant and not for consideration (which may include services) that in the judgment of ourthe Board of Directors has a market value less than the value of such option or warrant on the date of grant. Any options or warrants we issue to ourthe Advisor, ourthe Sponsor or any of their affiliates shall not exceed an amount equal to 10% of the outstanding shares of ourthe Company’s common stock on the date of grant.
ReportsRelationship with Color Up, Bombe and Affiliates Thereof Prior to Stockholders
We prepare an annual reportAugust 25, 2021, a special committee (the “Special Committee”) of the Board consisting of John E. Dawson, Robert J. Aalberts and deliver itShawn Nelson approved the Equity Purchase and Contribution Agreement (the “Purchase Agreement”) described below. In connection with the Closing of the transactions contemplated by the Purchase Agreement (collectively, the “Transaction”), Messrs. Dawson, Aalberts and Shustek resigned their directorships and Manuel Chavez, III, Stephanie Hogue, Jeffrey B. Osher, Lorrence T. Kellar, Danica Holley and Damon Jones were elected to our common stockholders within 120 days after the endCompany’s Board.Color Up was formed for the purpose of each fiscal year. Our directors are required to take reasonable steps to ensure thatconsummating the annual report complies with our charter provisions. Amongtransactions contemplated by the matters that must be includedPurchase Agreement and investing in the annual report or included inshares of common stock. Mr. Chavez, a proxy statement delivered withManager and the annual report are:
| • | financial statements prepared in accordance with GAAP that are audited and reported on by independent certified public accountants; | | • | the ratio of the costs of raising capital during the year to the capital raised; | | • | the aggregate amount of advisory fees and the aggregate amount of other fees paid to our Advisor and any affiliates of our Advisor by us or third parties doing business with us during the year; | | • | our total operating expenses for the year stated as a percentage of our average invested assets and as a percentage of our net income; | | • | a report from the independent directors that our policies are in the best interests of our stockholders and the basis for such determination; and | | • | a separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving us and our Advisor, a director or any affiliate thereof during the year, which disclosure has been examined and commented upon in the report by the independent directors with regard to the fairness of such transactions. |
The independent directorsChief Executive Officer of Color Up, was elected Chairman of the Board and Chief Executive Officer of the Company, effective August 25, 2021. Ms. Hogue, a Manager and the President of Color Up, was elected President of the Company and a member of the Board, effective August 25, 2021. Both Mr. Chavez and Ms. Hogue are specifically charged withManaging Partners of Bombe. Mr. Osher, also a duty to examine and comment in the report with regardManager of Color Up, was elected to the fairnessBoard, effective August 25, 2021. Mr. Osher is a control person of such transactions.HS3, and is portfolio manager of No Street GP LP, a registered investment adviser. On August 25, 2021, the Company also entered into the 2021 Employment Agreements with each of Mr. Chavez and Ms. Hogue as more fully described in this Proxy Statement.
As disclosed aboveof November 12, 2021, Mr. Chavez, Ms. Hogue and as previously disclosed, our stockholders have approved an amended charter to be filed and become effective immediately prior to the listing of our shares on a national securities exchange that would remove the charter provisions mandated by the NASAA REIT Guidelines.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shown below is certain information as of August 20, 2018, with respect to beneficial ownership, as that term is defined in Rule 13d-3 under the Exchange Act, ofMr. Osher beneficially owned through Color Up, 2,624,831 shares of common stock, or 33.81% of the outstanding common stock as of such date, warrants to purchase 1,702,128 shares of common stock and 7,481,668 OP Units, or approximately 44.2% of the outstanding OP Units as of such date, and Mr. Osher beneficially owned through HS3 an additional 1,702,128 OP Units or approximately 10.1% of the outstanding OP Units as of such date, and 425,532 Class A Units.Equity Purchase and Contribution Agreement On January 8, 2021, the Company entered into the Purchase Agreement by and among the Company, the Operating Partnership, Vestin Realty Mortgage I, Inc., (“VRMI”), Vestin Realty Mortgage II, Inc. (“VRMII”) and Michael V. Shustek (collectively, the “Former Advisor”) and Color Up. The transactions contemplated in the Purchase Agreement closed on August 25, 2021 (the “Closing”) and, pursuant to the Purchase Agreement, at the Closing: (i) the Operating Partnership issued a number of newly-issued common units of limited partnership of the Operating Partnership equal to (a) the sum of (x) $39,000,000 (less the outstanding principal amount of the Loan or the Advance (each as described below), if any), plus (y) the value of all of the issued and outstanding equity interests of certain property owning entities (the “Contributed Interests”), determined in accordance with the Purchase Agreement, divided by (b) $11.75 (the “OP Unit Consideration”), which OP Unit Consideration was subject to adjustment for customary real estate prorations; (ii) Color Up contributed to the Operating Partnership (a) cash consideration of $35,000,000, less principal amounts outstanding under the Loan or the Advance (each as defined below), (b) certain technology and (c) the Contributed Interests; (iii) the Company issued to Color Up Warrants to purchase up to 1,702,128 shares of Common Stock, at an exercise price of $11.75 per share for an aggregate cash purchase price of up to $20,000,000; (iv) the Former Advisor (a) contributed 175,000 shares of Common Stock to a settlement escrow or equivalent vehicle to be established in accordance with a contemplated Settlement (as defined in the Purchase Agreement) (the “Settlement Escrow”) and (b) surrendered its claim to 400,000 shares of Common Stock due to the Former Advisor from the Company on December 31, 2021; and (v) Color Up purchased (a) 1,549,324 shares of common stock from the Former Advisor and its affiliates and (b) 175,000 shares of common stock from the Settlement Escrow, in each case, at a price of $11.75 per share. The Contributed Interests consist of high-quality parking assets totaling approximately 1,201,000 square feet. In exchange for the cash consideration, the transfer of technology and the Contributed Interests, the Operating Partnership issued 7,323,101 newly-issued OP Units to Color Up. The Company and the Operating Partnership also agreed to issue additional OP Units to Color Up for certain costs of the Company that (a) were paid after December 31, 2020 and (b) were required to be paid by the only personsCompany in connection with the Transaction (collectively, the “Restricted Payables”). The Operating Partnership issued to Color Up additional OP Units for no additional consideration in an amount equal to (i) with respect to the portion of any Restricted Payables greater than $10,000,000 but less than or entities knownequal to us$15,000,000, 7.00% of the amount of such portion divided by $11.75, rounded to bethe nearest whole unit and (ii) with respect to any portion of the Restricted Payables in excess of $15,000,000, the amount of such portion, plus 7.00% of such portion, divided by $11.75, rounded to the nearest whole unit. As a beneficial ownerresult of more than 5%the Restricted Payables outstanding at the Closing, Color Up was issued an additional 27,418 OP Units. In addition, in accordance with the terms and conditions of the Purchase Agreement, Color Up advanced, at the written request of the Company, $257,000 in connection with the termination of certain third-party contracts on terms acceptable to Color Up (the “Advance”). At the Closing, Color Up was issued an additional 21,872 OP Units with respect to the Advance. The Purchase Agreement further provided that if the Closing did not occur on or before June 1, 2021, Color Up would, upon written request of the Company, provide an unsecured line of credit to the Company in an aggregate principal amount of up to $400,000 per month, at an interest rate equal to 7.0%, the full amount of which accrued immediately upon funding, with a term extending through the earlier of (i) the closing date and (ii) December 31, 2021; provided that the total principal amount outstanding did not exceed $2,000,000 (collectively, the “Loan”). Pursuant to the Purchase Agreement, at the Closing, the outstanding principal balance and any unpaid accrued interest under the Loan (the “Outstanding Balance”) was automatically converted into OP Units at a conversion price equal to the quotient of the Outstanding Balance divided by $11.75, rounded to the nearest whole unit. At the Closing, the Outstanding Balance was $1,284,000, which was automatically converted into 109,277 OP Units issued to Color Up. After giving effect to the transactions described above, Color Up acquired 7,481,668 OP Units and owned approximately 49.2% of the partnership interest of the Operating Partnership. At the Closing, Mr. Shustek resigned as a director and officer of the Company and its subsidiaries and Mr. Chavez became the Chief Executive Officer of the Company and Ms. Hogue became the President of the Company. Mr. Shustek no longer owns any shares of the Company and is no longer affiliated with the Company or any of its subsidiaries. J. Kevin Bland, the Company’s Chief Financial Officer prior to the Closing continues to serve as the Chief Financial Officer pursuant to his existing 2019 Employment Agreement. Each of Mr. Shustek, Mr. Huberty, Mr. Dawson and Mr. Aalberts entered into an indemnification agreement with the Company. The Chief Executive Officer, President and current directors of the Company have entered into similar indemnification agreements with the Company. Tender Offer
Pursuant to the Purchase Agreement, Color Up agreed that, as promptly as practicable after the Closing, it would commence a tender offer to purchase up to 900,506 of the outstanding shares of common stock. Unless otherwise noted, the percentage ownership is calculated based on 6,549,572 shares of our common stock as of August 20, 2018. Name and Address of
Beneficial Owner
| | Amount and Nature of
Beneficial Ownership
| | Percent of Class | Vestin Realty Mortgage II, Inc.
2965 S. Jones Blvd. # C1-110
Las Vegas, NV 89146(1)
| | Sole voting and investment power of 364,960 shares
| | 5.56% |
(1) Michael V. Shustek is a director and executive officer of Vestin Realty Mortgage II, Inc., and owns 500 shares of Vestin Realty Mortgage II, Inc. common stock as of August 20, 2018, which represents approximately 32.98% of the total outstanding Vestin Realty Mortgage II, Inc.Company, at a purchase price of $11.75 per share, net to the applicable seller in cash, without interest, subject to any required withholding tax (the “Tender Offer”) and the Company agreed (i) that prior to the Closing, the Board would recommend that stockholders accept the Tender Offer and (ii) to take all steps necessary to cause any offering memorandum relating to the Tender Offer to be distributed to the Company’s stockholders. In the event that the Company’s stockholders tender a number of shares as of August 20, 2018. Mr. Shustek disclaims beneficial ownership ofless than the Company's common stock held by Vestin Realty Mortgage II, Inc.
The following table sets forthTender Offer amount, the Company agreed to, at Color Up’s sole discretion, offer to issue and sell to Color Up the Company Backstop such that Color Up may acquire a total number and percentage of our common stock and preferred stock beneficially owned as of August 20, 2018, by: (i) each director; (ii) our chief executive officer, our interim chief financial officershares equal to the Tender Offer amount after giving effect to the Tender Offer and the officersCompany Backstop.On October 5, 2021, Color Up commenced the Tender Offer upon the terms and subject to the conditions set forth in that certain Offer to Purchase, dated October 5, 2021 and in the related Letter of our Advisor who functionTransmittal, copies of which are attached as the equivalent of our executive officers; and (iii) all executive officers and directors as a group.
Unless otherwise noted, the percentage ownership is calculated based on 6,549,572 shares of our total outstanding common stock and 42,672 shares of our total outstanding preferred stock as of August 20, 2018:
| | | Common Shares | | Preferred Shares | | | | Beneficially Owned | | Beneficially Owned | | Beneficial Owner | Address | Number | | Percent | | Number | | Percent | | Michael V. Shustek | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | 13,423 | | <1% | | -- | | -- | | Brandon Welch | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | 250 | | <1% | | -- | | -- | | David Chavez | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | -- | | -- | | -- | | -- | | Erik Hart | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | -- | | -- | | -- | | -- | | John E. Dawson | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | 2,570 | | <1% | | *54 | | <1% | | Robert J. Aalberts | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | -- | | -- | | -- | | -- | | Nicholas Nilsen | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | 2,141 | | <1% | | -- | | -- | | Shawn Nelson | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | -- | | -- | | -- | | -- | | William Wells | 2965 S. Jones Blvd. # C1-100 Las Vegas, NV 89146 | -- | | -- | | -- | | -- | | All directors and officers | 18,384 | | <1% | | 54 | | <1% |
*Mr. Dawson received 1,750 warrants with his purchase of 54 shares. The warrants may be exercised after the 90th day following the occurrence of a Listing Event, at an exercise price, per share, equalexhibits to 110% of the volume weighted average closing price during the 20 trading days ending on the 90th day after the occurrence of such Listing Event; however, in no event shall the exercise price of the warrants be less than $25 per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10% of our outstanding common stock to fileSchedule TO filed with the SEC initial reports of ownershipon October 5, 2021, and reports of changes in their ownership of our common stock. Directors, executive officers and greater than 10%the Board recommended that the stockholders are required by SEC regulations to furnish us with copies of the forms they file. Except as set forth below, to our knowledge, based solely on a reviewCompany accept the offer by Color Up to purchase up to 900,506 of the copies of such reports furnished to us, during the fiscal year ended December 31, 2017, our directors, executive officers and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements.
On June 15, 2017, Mr. Dawson filed a late Form 4 filing with respect to the sale on May 12, 2017 of 4,412.818outstanding shares of common stock of the Company.
Company and tender their shares of common stock pursuant to the Tender Offer. On December 27, 2017,November 8, 2021, Color Up, following the expiration of the Tender Offer on November 5, 2021, accepted for purchase an aggregate of 878,082 shares of common stock that had been validly tendered and not validly withdrawn pursuant to the Tender Offer at $11.75 per share, or an aggregate consideration of $10,317,468. Also on November 8, 2021, the Company and Color Up entered into a late Form 4 filing was filed bysubscription agreement pursuant to which Color Up purchased the remaining 22,424 shares of common stock not tendered in the Tender Offer pursuant to the Company Backstop at $11.75 per share, or an aggregate consideration of $263,482.Stockholders’ Agreement
The Company entered into a Stockholders’ Agreement with Color Up on August 25, 2021, pursuant to which, until such time as the Stockholders’ Agreement is terminated, the prior approval of one Incumbent Director and a majority of the Color Up Designated Directors shall be required for certain transactions, including without limitation, (i) any merger or sale of the Company or substantially all its assets, (ii) amendments to the Company’s Charter or bylaws, (iii) the authorization or issuance of any equity securities or any securities convertible into or exercisable for equity securities of the Company, (iv) any change in the authorized number of directors of the Board or establishment or abolition of any committee thereof; (v) any incurrence or repayment of indebtedness in an aggregate amount over a certain threshold, (vi) any declaration of dividends, (vii) any appointment or termination of any person as the chief executive officer, president or chief financial officer of the Company, (viii) any related party transactions, (ix) any amendment or waiver, or termination of certain provisions, of the Stockholders’ Agreement or (x) any amendment or waiver of the Tax Matters Agreement or the Warrant Agreement, each of Mr. Shustek and Mr. Dawsonas described below. The Stockholders’ Agreement also contains certain standstill provisions restricting, subject to certain customary exclusions, Color Up from, among other things, acquiring (or seeking or making any proposal or offer with respect to acquiring) additional shares of common stock or any security convertible into common stock or any assets of the Company. In addition, the Company has agreed that, in the event the Company proposes to issue additional securities, Color Up will have the right to purchase an amount of securities so that its ownership percentage will not be diluted by the issuance of additional securities. Under the terms of the Stockholders’ Agreement, except for limited circumstances, Color Up is prohibited from selling or transferring its shares of common stock until six months following a Liquidity Event (defined as an initial public offering or a listing of the shares of common stock on a national securities exchange). A transfer of any of Color Up’s shares of common stock to a Permitted Transferee (defined to include any member of Color Up) is permissible under the Stockholders’ Agreement. Except for the transfer restrictions set forth above, the Stockholders’ Agreement terminates upon a Liquidity Event or written agreement of the parties. Until a Liquidity Event and subject to certain limited exceptions, Color Up (and its Permitted Transferees) are prohibited from, directly or indirectly, (i) having an ownership interest in, or permitting such party’s name to be used in connection with, any business in any central business district in North America which is primarily engaged in the business of acquiring, investing in, owning, operating or leasing parking lots or parking garages and (ii) soliciting or attempting to solicit any clients or customers of the Company or any of its subsidiaries for the purpose of diverting their business or service from the Company or any of its subsidiaries. Tax Matters Agreement
On August 25, 2021, the Company, the Operating Partnership and Color Up entered into the Tax Matters Agreement (the “Tax Matters Agreement”), pursuant to which the Operating Partnership agreed to indemnify Color Up and certain affiliates and transferees of Color Up (together, the “Protected Partners”) against certain adverse tax consequences in connection with (1) (i) a taxable disposition of certain specified properties and (ii) certain dispositions of the Protected Partners’ interest in the Operating Partnership, in each case, prior to the tenth anniversary of the completion of the Transaction (or earlier, if certain conditions are satisfied); and (2) the Operating Partnership’s failure to provide the Protected Partners the opportunity to guarantee a specified amount of debt of the Operating Partnership during the period ending on the tenth anniversary of the completion of the Transaction (or earlier, if certain conditions are satisfied). In addition, and for so long as the Protected Partners own at least 20% of the units in the Operating Partnership received in the Transaction, the Company agreed to use commercially reasonable efforts to provide the Protected Partners with similar guarantee opportunities. Warrant Agreement On August 25, 2021, the Company entered into a Warrant Agreement (the “Warrant Agreement”), pursuant to which we issued the Warrants to purchase up to 1,702,128 of the Company’s shares of common stock, at an exercise price of $11.75 per share for an aggregate cash purchase price of up to $20,000,000. Each whole Warrant entitles the registered holder thereof to purchase one whole share of Common Stock at a price of $11.75 per Share (the “Warrant Price”), subject to adjustment as discussed below, at any time following a “Liquidity Event,” which is defined as an initial public offering and/or listing of the common stock on the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (each, a “Trading Market”). The Warrants expire five years after the date of the Warrant Agreement, at 5:00 p.m., New York City time. The Warrant Agreement provides that if the exercise of the Warrants would require the Company to obtain stockholder approval pursuant to any applicable listing standards of the Trading Market on which the common stock is listed, the Company will, at its discretion, either obtain such stockholder approval or deliver cash in lieu of shares of common stock otherwise deliverable upon the exercise of such Warrant. If the number of outstanding shares of common stock is increased by a stock dividend payable in shares of common stock, or by a split of outstanding shares of common stock or other similar event, or decreased by a consolidation, combination, reverse stock split or reclassification of shares of common stock or other similar event, then the number of shares of common stock issuable upon exercise of each Warrant shall be increased or decreased, as applicable, in proportion to such increase or decrease, as applicable, in outstanding shares of common stock. Whenever the number of shares of common stock purchasable upon the exercise of the Warrants is adjusted, as described above, the Warrant Price will be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of common stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of common stock so purchasable immediately thereafter. The Warrant Agreement further provides that, in lieu of issuing fractional shares, the Company will make a cash payment equal to the Fair Market Value (as defined in the Warrant Agreement) of one share of common stock multiplied by such fraction. Securities Purchase Agreement On November 2, 2021, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) by and among the Company, the Operating Partnership, and HS3, pursuant to which, on November 2, 2021 (the “Securities Purchase Closing Date”), the Operating Partnership issued and sold to HS3 (a) 1,702,128 newly-issued OP Units; and (b) 425,532 newly-issued Class A units of limited partnership of the Operating Partnership (“Class A Units”) which entitle HS3 to purchase up to 425,532 additional OP Units (the “Additional OP Units”) at an exercise price equal to $11.75 per Additional OP Unit, subject to adjustment as provided in the Class A Unit Agreement (as defined below), and HS3 paid to the Operating Partnership cash consideration of $20,000,000 (the “Securities Purchase Transaction”). The Securities Purchase Agreement Transaction and the Securities Purchase Agreement and related agreements were evaluated, negotiated and unanimously approved by the members of the Board who were determined by the Board to be disinterested with respect to the Securities Purchase Transaction and the Board. Under the Securities Purchase Agreement, the parties made customary representations and warranties for transactions of this type. Pursuant to the terms of the MergerSecurities Purchase Agreement, the representations and warranties made under the Securities Purchase Agreement will survive for six months after the Securities Purchase Closing Date and the Company and the Operating Partnership, on one hand, and HS3, on the other hand, will indemnify each other party and certain of their respective representatives against losses arising out of certain material breaches of, and certain third party claims related to, the Securities Purchase Agreement and the Securities Purchase Transactions. In connection with the issuance of the OP Units and the Class A Units under the Securities Purchase Agreement, the Board amended and restated the limited exception to the restrictions on ownership and transfer of common stock set forth in the Charter previously granted to Color Up, the HS3 and certain of its affiliates to allow these parties to own, directly or indirectly, in the aggregate, up to 15,200,000 shares of common stock (the “Excepted Holder Limit”) and up to five percent (5%) of any outstanding class of preferred stock of the Company. The grant of this exception is conditioned upon the receipt of various representations and covenants set forth in the Request for Waiver of Ownership Limit, made by Color Up and HS3 to the Company, confirming, among other things, that none of HS3, Color Up, nor certain of their affiliates may own, directly or indirectly, more than 4.9% of the interests in a tenant of the Company (or subsidiary of the Company) that comprises more than three percent (3%) of the gross income of the Company as determined for purposes of Section 856(c)(2) of the Internal Revenue Code of 1986, as amended. The request also includes representations intended to confirm that the Purchaser, Color Up, and certain of their affiliates’ ownership of common stock will not cause the Company to otherwise fail to qualify as a real estate investment trust for federal income tax purposes. Registration Rights Agreement The Company terminated its existing registration rights agreement dated as of March 29, 2019, and on August 25, 2021, entered into a separate Registration Rights Agreement with Color Up (the “Registration Rights Agreement”), pursuant to which the Company granted the Holders (as defined in the Registration Rights Agreement) certain registration rights with respect to the Registrable Securities (as defined below) of the Company. Among other things, the Registration Rights Agreement requires the Company to register (i) the shares of common stock purchased pursuant to the Purchase Agreement, (ii) shares of common stock, if any, issued upon the redemption of OP Units purchased pursuant to the Purchase Agreement, (iii) shares of common stock acquired pursuant to the Tender Offer, (iv) shares of common stock issuable upon redemption of the Warrants, (v) the Warrants and (vi) any additional securities issued or issuable as a dividend or distribution on, in exchange for, or otherwise in respect of, such shares of common stock and OP Units (including as a result of combinations, recapitalizations, mergers, consolidations, reorganizations, stock splits or otherwise) (collectively, the “Registrable Securities”). The Holders are entitled to make a written demand for registration under the Securities Act of all or part of their Registrable Securities; provided, however, that the Company is not required to file a registration statement prior to (x) 180 days after the initial listing of the Registrable Securities on a national securities exchange or (y) the expiration of any other lock-up period imposed with respect to the Registrable Securities pursuant to the Stockholders’ Agreement. In addition, the Holders are entitled to “piggy-back” registration rights to registration statements filed by the Company. The Company will bear all of the expenses incurred in connection with the filing of any such registration statement. On November 2, 2021, the Company entered into an amended and restated registration rights agreement with Color Up and HS3 (the “A&R Registration Rights Agreement”), pursuant to which the Company granted the Holders (as defined in the A&R Registration Rights Agreement) certain registration rights with respect to the shares of common stock issuable upon redemption of Additional OP Units issued upon exercise of the Class A Units in addition to the other Registrable Securities (as defined in the Registration Rights Agreement described above).
Operating Partnership Agreement
On August 25, 2021, the Company entered into an Amended and Restated Agreement of Limited Partnership of the Operating Partnership to facilitate the transactions contemplated by the Purchase Agreement and to admit Color Up as a limited partner. On November 2, 2021, the Company, the Operating Partnership, Color Up and HS3 entered into a Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership to facilitate the Securities Purchase Transaction which, among other things, provided for the issuance by the Operating Partnership of Class A Units having the rights and preferences as may be set forth in a Class A Unit agreement. Class A Unit Agreement The Operating Partnership issued the Class A Units pursuant to a Class A Unit agreement (the “Class A Unit Agreement”) also dated as of the Securities Purchase Closing Date, which provides that each whole Class A Unit entitles the registered holder thereof to purchase one whole OP Unit at a price of $11.75 per share (the “Class A Unit Price”), subject to adjustment as discussed below, at any time following a “Liquidity Event,” which is defined as an initial public offering and/or listing of the common stock of the Company on a Trading Market. The Class A Units expire five years after the date of the Class A Unit Agreement, at the effective time5:00 PM, New York City time. The Class A Units may also be exercised on a cashless basis by surrendering Additional OP Units in lieu of payment of the Mergeraggregate Class A Unit Price at the Purchaser’s election. If the number of outstanding OP Units is increased by a dividend payable in OP Units, or by a split-up of OP Units or other similar event, or decreased by a consolidation, combination, reverse split or reclassification of OP Units or other similar event, then the number of Additional OP Units issuable on exercise of each Class A Unit shall be increased or decreased, as applicable, in proportion to such increase or decrease, as applicable, in outstanding OP Units. Whenever the number of Additional OP Units purchasable upon the exercise of the Class A Units is adjusted, as described above, the Class A Unit Price will be adjusted (to the nearest cent) by multiplying such Class A Unit Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of OP Units redeemable upon the exercise of the Class A Units immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so redeemable immediately thereafter. The Class A Unit Agreement further provides that, in lieu of issuing fractional units, the Operating Partnership will make a cash payment equal to the Fair Market Value (as defined in the Class A Unit Agreement) of one OP Unit multiplied by such fraction. License Agreement
On August 25, 2021, the Company entered into a Software License and Development Agreement (the “License Agreement”) with an affiliate of Bombe (the “Supplier”), pursuant to which the Company granted to the Supplier a limited, non-exclusive, non-transferable, worldwide right and license to access certain software and services for a fee of $5,000 per month. Assignment of Litigation Agreement
On August 25, 2021, the Company also entered into an Assignment of Claims, Causes of Action, and Proceeds Agreement (the “Assignment of Litigation Agreement”) pursuant to which (i) the Company assigned to the Former Advisor all of the Company’s right, title, interest, and benefits, whether legal, equitable, or otherwise, in and to any and all of the claims and causes of action that the Company may have against certain parties and any amounts that may be recovered or awarded to the Former Advisor on such claims and (ii) the Former Advisor agreed to indemnify the Company against all liabilities in connection with the assignment. Internalization Transactions and Related Agreements Prior to the Internalization (as defined below), the Former Advisor or its affiliates received an asset management fee at a rate equal to 1.1% of the cost of all assets 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. Pursuant to the Amended and Restated Advisory Agreement, the asset management fee 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 asset 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 year ended December 31, 2019, asset management fees of approximately $0.9 had been earned by the Former Advisor. From and 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 ceased payment of asset management fees effective April 1, 2019, as a result of the Internalization. The Company was obligated to reimburse the Former Advisor or its affiliates for costs of providing administrative services, subject to the limitation that it would not reimburse the Former Advisor for any amount by which the Company’s operating expenses, at the end of the four preceding fiscal quarters (commencing after the quarter in which the Company made its first investment), exceed the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income in connection with the selection or acquisition of an investment, whether or not the Company ultimately acquires, unless the excess amount was approved by a majority of the Company’s independent directors. The Company was not permitted to reimburse the Former Advisor for personnel costs in connection with services for which the Former Advisor received a separate fee, such as an acquisition fee, disposition fee or debt financing fee, or for the salaries and benefits paid to the Company’s executive officers. In addition, the Company was not entitled to reimburse the Former Advisor for rent or depreciation, utilities, capital equipment or other costs of its own administrative items. 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 were reimbursed to the Former Advisor. On March 29, 2019, Company and the Former Advisor entered into definitive agreements to internalize the Company’s management function effective April 1, 2019 (the “Internalization”). Since its formation, under the supervision of the Board, the Former Advisor had been responsible for managing the operations of the Company. As part of the Internalization, among other things, the Company agreed with the Former Advisor to (i) acquire and assume substantially all of the Former Advisor assets and liabilities; (ii) terminate the Second Advisory Agreement and, for the avoidance of doubt, the Third Advisory Agreement, which by its terms would have become effective only upon a listing of our common stock on the Nasdaq Global Market; (iii) extend employment to the executives and other employees of the Former Advisor (as described above); (iv) arrange for the Former Advisor to continue to provide certain services with respect to outstanding indebtedness of the Company and its subsidiaries; and (v) lease the employees of the Former Advisor for a limited period of time prior to the time that such employees become employed by the Company. As part of those same agreements, the Company agreed to issue to the Former Advisor, over a period of more than two and a half years, 1,600,000 shares of the common stock as the consideration (the “Consideration”) under the terms of the Contribution Agreement described further below. The Internalization became effective as of April 1, 2019 (the “Effective Date”). Contribution Agreement On March 29, 2019, the Company entered into a Contribution Agreement (the “Contribution Agreement”) with the Former Advisor. Pursuant to the Contribution Agreement, effective as of the Effective Date, the Former Advisor sold and contributed all of its assets to the Company, except for certain excluded assets as specified in the Contribution Agreement, and the Company accepted the transferred assets and agreed to assume and discharge when due all of the liabilities of the Former Advisor, except for certain retained liabilities as specified in the Contribution Agreement (the “Contribution”). In exchange for the Contribution, the Company agreed to issue to the Former Advisor 1,600,000 shares of common stock as the Consideration. The Consideration is issuable in four equal installments. The first installment of 400,000 shares of common stock was issued on the Effective Date. The second installment of 400,000 shares of common stock was issued on December 15, 2017
MULTIPLE STOCKHOLDERS SHARING AN ADDRESS
31, 2019. The rulesthird installment of 400,000 shares of common stock was issued on December 31, 2020. On August 25, 2021, the Company entered into an Amendment to the Contribution Agreement pursuant to which, and in connection with the closing of the SEC permit companiestransactions contemplated by the Purchase Agreement and the entry by the Company into the Settlement, the Former Advisor surrendered its claim to 400,000 shares of common stock that would otherwise be due to the Former Advisor from the Company on December 31, 2021.In connection with the Internalization, the Company entered into the 2019 Employment Agreements with certain of its executive officers, as further described herein. At the Closing, the 2019 Employment Agreement was terminated. In connection with his termination, Mr. Shustek received $2,400,000. In connection with the Closing, Daniel Huberty, the Company’s President and Chief Operating Officer, resigned from his positions with the Company Commencing on the Effective Date and ending on the three year anniversary of the Effective Date (the “Non-Competition Period”), the Former Advisor agreed, on the terms set forth in the Contribution Agreement, (i) not to engage in any business in the United States which is primarily engaged in the business of acquiring, investing in, owning, operating, or leasing parking lots, parking garages or other parking facilities, and (ii) not to solicit any of the Company’s customers or employees. Services Agreement In connection with the Contribution Agreement and the Internalization, the Company entered into a Services Agreement, dated as of March 29, 2019 (the “Services Agreement”), with the Former Advisor (collectively, the “Manager Entities”). Pursuant to the Services Agreement, each of the Manager Entities will perform any and all services requested by the Company in connection with any agreement pursuant to which the Company, the Operating Partnership or any of the Company’s subsidiaries borrows funds or is a guarantor with regard to any borrowed funds (such documents, collectively, the “Loan Documents”), including (i) maintaining the ownership and management structure of each Manager Entity in a manner that complies with any requirement set forth in the Loan Documents, (ii) complying with any representations, warranties and covenants in the Loan Documents and (iii) cooperating and taking all actions to comply with any request made by a lender relating to any Loan Document (collectively, the “Services”). The Agreement became effective on March 29, 2019 and will remain in effect until the date on which the Company no longer needs any of the Services. In consideration for the Services, the Manager Entities will be entitled to receive, beginning on the date upon which the Company completes its first capital raise after the Effective Date, $200,000 per year for four years. On August 25, 2021, the Company entered into an Amendment to the Services Agreement providing the Former Advisor a one-time consulting fee in an amount equal to $800,000 in lieu of four annual payments of $200,000 for the services set forth therein. Employee Leasing Agreement In connection with the Contribution Agreement and the Internalization, the Company entered into an Employee Leasing Agreement, dated as of March 29, 2019 and effective as of the Effective Date (the “Employee Leasing Agreement”), with the Manager Entities, pursuant to which the Manager Entities will lease their employees to the Company to continue to provide a single proxy statementservices to households inthe Company as performed by such employees immediately before the Effective Date. The term of the Employee Leasing Agreement commenced on the Effective Date and continued until the earlier of (i) the first date on which more than one stockholder resides. This process is knownall leased employees cease to be employed by the Former Advisor and (ii) June 30, 2019 (the “Employee Leasing Period”). For each payroll period during the Employee Leasing Period, the Company made leased employee payments to the Former Advisor equal to the aggregate amount of all salaries, wages, benefits, and other compensation paid by the Former Advisor to the leased employees, together with all costs and expenses incurred by the Former Advisor with respect to the leased employees during the applicable payroll period. As soon as householding. Stockholders who share an address and whobenefit plans have been previously notifiedestablished by the Company, and the Company is otherwise ready to hire the leased employees, the Company expects to make offers of employment to the leased employees in accordance with the Contribution Agreement; provided that offers of employment must be made no later than ten days prior to the expiration of the Employee Leasing Period. The Company has also agreed to pay directly or reimburse the Former Advisor for any paid time- off days paid to any leased employees in accordance with the Contribution Agreement and Employee Leasing Agreement. Registration Rights Agreement In connection with the Contribution Agreement and the Internalization, the Company entered into a Registration Rights Agreement, dated as of March 29, 2019 and effective as of the Effective Date, with the Former Advisor, VRM I and VRM II. The Company terminated this Registration Rights Agreement, and on August 25, 2021, entered into a separate Registration Rights Agreement with Color Up. Termination Agreement In connection with the Contribution Agreement and Internalization, the Company, the Operating Partnership and the Former Advisor entered into a Termination Agreement, dated as of March 29, 2019 (the “Termination Agreement”), terminating each of the Management Agreements effective as of the Effective Date. Pursuant to the Termination Agreement, except as provided in the Contribution Agreement, effective as of the Effective Date, each of the Management Agreements shall be void and shall have no effect, and no party thereto shall have any liability to the other party or parties thereto or their broker, bankrespective affiliates, or other intermediary will be householding their proxy materials will receiverespective directors, officers or employees; provided that the Termination Agreement does not relieve any party from liability for any fees or expenses accrued through the Effective Date or for any breach of the Management Agreements that arose prior to the Effective Date. Family Relationships Brandon Welch, our former Senior Vice President, Capital Markets, is the son-in-law of Michael V. Shustek, the Company’s former Chief Executive Officer and Chairman of the Board. For the year ended December 31, 2019 and 2020, the Company paid Mr. Welch salary of $200,000 and $200,000, respectively. Mr. Welch’s base annual salary for 2021 was $200,000. Mr. Welch was not awarded any annual bonuses for the years ended December 31, 2019 and 2020. Mr. Welch was also eligible to participate in the Company’s general employee benefit programs (i.e., 401K plan, health insurance, etc.). Mr. Welch resigned as Senior Vice President, Capital Markets, effective August 25, 2021. Other Matters Two of the Company’s Cincinnati assets, 1W7 Carpark and 222W7, are currently operated by PCA, Inc., d/b/a Park Place Parking. Park Place Parking is a private parking operator that is wholly owned by relatives of the Company’s Chief Executive Officer, Manuel Chavez III. Mr. Chavez is neither an owner nor a beneficiary of Park Place Parking. Park Place Parking has been operating these assets for four and three years, respectively. Both assets were acquired with their management agreements in place and at the same terms under which they were operating prior to the Transaction. The Company is an equity method investor in MVP St. Louis Cardinal Lot, DST, a Delaware Statutory Trust (“MVP St. Louis”). Pursuant to the closing of the Transaction, the former Advisor and the former Chief Executive Officer, Michael V. Shustek, were replaced as manager of MVP Parking, DST, LLC by Mr. Chavez. AVAILABILITY OF ANNUAL REPORT ON FORM 10-K The Annual Report is on file with the SEC on the web site maintained by the SEC at http://www.sec.govand is incorporated by reference into this Proxy Statement. HOUSEHOLDING As permitted by the Exchange Act, we may deliver only one copy of our proxy statementthe Notice Regarding the Availability of Proxy Materials, Notice of 2021 Annual Meeting, this Proxy Statement and the Annual Report To Stockholders to shareholders residing at the same address, unless theythe shareholders have affirmatively objectednotified us of their desire to the householding notice.
receive multiple copies of those documents. This practice is known as "householding."Stockholders sharing an address who received only one set of these materials may request a separate copy which will be sent promptly at no cost by contacting our corporate secretary at (702) 534-5577.(513) 834-5110. For future meetings, a stockholder may request separate annual reports or proxy statements,Notice Regarding the Availability of Proxy Materials, Notice of 2021 Annual Meeting, this Proxy Statement and the Annual Report To Stockholders, or may request the householding of such materials, by contacting us as noted above.
2019 Annual Stockholder Meeting and Stockholder Proposals
Under our current bylaws, for a stockholder proposal (including, but not limited to, nominations of candidates for director) to be properly submitted for presentation at the next annual meeting of stockholders, the Company's secretary must have received written notice of the proposal at its principal executive offices no earlier than the 150th day before the date of Company's 2019 annual meeting and no later than 5:00 p.m. Pacific Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as such term is defined in our current Bylaws) for the preceding year's annual meeting (or between March 23, 2019 and 5:00 p.m., Pacific Time, on April 22, 2019, based on the date of this year's Proxy Statement of August 20, 2018). Under SEC regulations, any stockholder desiring to make a proposal to be considered for inclusion in the Company's proxy statement for the next annual meeting of stockholders pursuant to Rule 14a-8 promulgated under the Exchange Act must have caused such proposal to be received at Company's principal executive offices no later than April 22, 2019, unless the date of the 2019 annual meeting of stockholders is more than 30 days before or after October 5, 2019, in which case the proposal must be received in a reasonable time before the Company begins to print and send its proxy materials.
As of the date of this proxy statement,Proxy Statement, we know of no business that will be presented for consideration at the Annual Meeting other than the matters referred to above. As to any other business that may properly come before the Annual Meeting or any postponement or adjournment thereof, the persons named as proxy holders on your proxy card will vote the shares of common stock represented by properly submitted proxies in their discretion.
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN OF PROXIES, INCLUDING YOUR PROXIES AUTHORIZED VIA THE INTERNET AND TELEPHONE, WILL SAVE US THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. WE ENCOURAGE YOU TO COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE, OR AUTHORIZE YOUR PROXY VIA THE INTERNET OR TELEPHONE, BEFORE THE MEETING, SO THAT YOUR SHARES WILL BE REPRESENTED AND VOTED AT THE MEETING.
Dated: August 20, 2018
Las Vegas, Nevada
| By Order of the Board of Directors | | | | Michael V. Shustek | | Chief Executive Officer |
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Stephanie Hogue Secretary Cincinnati, Ohio November 16, 2021  PROXY CARDThank you for being a stockholder of Mobile Infrastructure Corporation.
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