UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec.240.14a-11(c) or Sec.240.14a-12
BELLAVISTA CAPITAL, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
PROPOSED SPECIAL MEETING OF SHAREHOLDERS
OF
BELLAVISTA CAPITAL, INC.
PROXY STATEMENT
OF
BELLAVISTA CAPITAL, INC. (the "Company")
THIS SOLICITATION IS BEING MADE ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY.
The Board of Directors of BellaVista Capital, Inc. (the "Company") is seeking
proxies from its shareholders to oppose the takeover of the Company by MacKenzie
Patterson Fuller, LP and its officers (collectively "MPF"). MPF is seeking to
call a special meeting to hold a shareholder vote to take complete control of
the Company by amending the bylaws to increase the size of the board of
directors to nine members, installing its officers as the nominees for positions
constituting a majority of the new board, and approving an arrangement by which
MPF will assume control of all asset management and administration of the
Company, award itself an annual management fee equal to 2% of the asset value
and award itself a stock option equal to 15% of the shares outstanding.
The Company's current Board of Directors is hereby soliciting your proxy to
OPPOSE MPF's attempt to take over complete control of the Company and its Board
of Directors, pay itself a 2% annual fee and award itself a 15% stock option. We
are urging you to vote (i) AGAINST the expansion of the Board to permit MPF to
secure majority control; (ii) AGAINST the election of the five MPF officers
(four of the five are Patterson family members) to these newly created Board
positions; and (iii) AGAINST appointment of MPF as the Company's exclusive asset
manager and administrator.
If MPF should secure and submit valid proxies from shareholders who own a
majority of the Company's outstanding common stock directing that the Company
call a Special Meeting of the shareholders (the "Special Meeting"), then
pursuant to its Bylaws, the Company's Secretary will call the Special Meeting
for a date that is no earlier than 10 days and no later than 90 days after the
date of the notice of the Special Meeting. The Special Meeting will be held at
the principal office of BellaVista, which is located at 15700 Winchester Blvd,
Los Gatos, California 95030.
You may execute and return the enclosed proxy, even if you have already executed
and submitted a proxy to MPF. The later dated proxy will cancel and invalidate
any earlier dated proxy. See "Voting of Shares - Voting Procedures" and
"Revocability of Proxy" below.
THE BOARD IS SOLICITING YOUR PROXY IN THE EVENT THE PROPOSALS ARE MADE AT A
SHAREHOLDER MEETING, TO VOTE AGAINST (I) AMENDMENT TO THE BYLAWS TO EXPAND THE
BOARD OF DIRECTORS TO NINE MEMBERS, (II) APPOINTMENT OF FIVE MPF OFFICERS AS
NOMINEES TO FILL THE NEW BOARD POSITIONS, AND (III) THE ENGAGEMENT OF MPF AS THE
COMPANY'S SOLE ASSET MANAGER AND ADMINISTRATOR. IF A SPECIAL MEETING OF
SHAREHOLDERS IS CALLED AND A QUORUM IS PRESENT AT THE MEETING, A MAJORITY OF THE
SHARES REPRESENTED AT THE MEETING VOTING IN FAVOR OF THESE PROPOSALS WILL BE
NECESSARY TO ADOPT THE PROPOSALS.
If MPF does not obtain sufficient votes to call a Special Meeting, or if the
meeting is called and the proposals are defeated by shareholder vote, the
current Board of Directors and management will continue to direct the Company's
operations. If no Special Meeting is called and MPF takes the necessary steps to
include its proposals on the agenda of the next Annual Meeting of shareholders,
the Board of Directors will vote the proxies solicited hereby as directed at the
Annual Meeting.
We are mailing each registered shareholder a copy of this Proxy Statement on or
about July 22, 2009, and you can obtain the Proxy Statement, and any other
relevant documents, for free at the SEC's web site or from the Company by
calling Patti Wolf at (480) 563-3351 (Please note: 480 is the correct area
code).
1
MPF PROPOSALS
The Special Meeting
The proposed Special Meeting of shareholders is being sought by MPF for the sole
purpose of a vote on its takeover proposals. The MPF takeover efforts have
already caused the Company to expend substantial amounts of management time and
to incur substantial costs (in excess of $70,000 prior to the publication of
this proxy), and will continue to cause the expenditure of additional time and
cost to oppose the MPF takeover. If the Special Meeting is held, the cost to the
Company of holding the meeting is expected to exceed $5,000.
Expansion of the Board and Appointment of the MPF Nominees
MPF proposes to expand the Board to nine members and to fill the five new
positions on the Board of Directors with MPF officers (four of the five are
Patterson family members) in order to control a majority of the Board. MPF's
nominees are Pat Patterson, Glen Fuller and Christine Simpson as Class III
directors, Robert Dixon as a Class II director and Chip Patterson as a Class I
director. The Class of each director determines the date of the annual meeting
at which the term of office for that Class expires. Class III directors' terms
will expire at the annual meeting in 2010, Class II at the annual meeting in
2011, and Class I at the annual meeting in 2012.
The Board strongly urges:
o a vote AGAINST the expansion of the Board to nine members and
o a vote AGAINST all of the MPF nominees to the BVC Board of Directors.
If no Special Meeting is called, then MPF may seek to vote any executed proxies
they receive in favor of expansion of the Board and election of the MPF nominees
at the Company's next annual meeting following its fiscal year ended September
30, 2009, to be held in 2010. Accordingly, the Board is soliciting your proxy to
vote to oppose such proposals at the next meeting of Shareholders, whether
special or annual.
As discussed in the Board's correspondence with shareholders since the date MPF
commenced its takeover efforts, the Board believes that (i) MPF has
significantly misrepresented the potential benefits of granting it complete and
total control over BellaVista's Board, assets and operations; and (ii) MPF seeks
to obtain such control for its own benefit and that of its many beneficial
owners, and not for the benefit of the majority of BellaVista's shareholders.
MPF is a private equity company owned and controlled by its five nominees for
the Board, and has acquired Company shares for a number of its investor programs
that have their own separate investment objectives and interests. MPF owns less
than 12.5% of the Company's shares, and purchased those shares for prices
ranging from $1.00 to $2.25 per share.
We believe that MPF's interests are not aligned with those of the vast majority
of BellaVista's shareholders. We believe that MPF's primary interest lies in
satisfying the investment and business objectives of its management and
investors, and not in meeting the objectives of the approximately 88% of
BellaVista's shareholders who purchased their shares at $10 per share. We
believe that the majority of BellaVista's shareholders are best served by having
the Company managed in a manner and with the objectives sought by the current
Board who we believe, as long term fellow shareholders, have objectives and
interests in common with the vast majority of shareholders.
Accordingly, we urge you to grant us your proxy to vote AGAINST the expansion of
the BCV Board and AGAINST appointment of the MPF officers to fill the newly
created director positions.
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Appointment of MPF to Manage the Company's Assets and Operations
MPF's proposals include the proposal to appoint MPF as the sole manager of the
Company's assets and administration. As we have addressed in detail in our
correspondence, we believe MPF has made very misleading statements and
misrepresentations in claiming that this management arrangement will result in
significant cost savings and improved Company performance. We refer you to the
detailed responses in our letters to these and other MPF claims. In their proxy
materials, MPF includes only a one paragraph summary inserted near the end of
the statement, describing the proposed management arrangement.
Set forth below is the substance of this single paragraph, with BellaVista's
bullet point comments inserted in boldface type and underlined]:
1. MPF says that the management contract will be "consistent with the
following terms":
o The terms of this contract, given MPF's complete control of the
Board, would be determined in MPF's sole discretion
2. An anticipated commencement date of September 1, 2009
3. A 1-year initial term with automatic 1-year renewals, unless either
party provides 90-day advance notice of termination
o "either party" is somewhat misleading, as MPF will control both
parties
4. A base management fee equal to a fixed percentage fee equal to two
percent (2%) of BellaVista's total assets on an annual basis
o Who will calculate total assets, and who will determine whether
to take actions that might increase or decrease this basis for
the annual fee? MPF, of course
5. Reimbursement to MPF for extraordinary and property level expenses
incurred on behalf of BellaVista, but not for typical administrative
and overhead expenses
o Based on this single loophole, MPF's continued representations of
cost savings are inherently misleading as MPF will not absorb the
property level expenses that they included in Company expenses
when calculating cost savings, and will have full discretion to
determine what expenses are "extraordinary"
6. MPF will provide BellaVista with all corporate services, including
asset management, investment advisory, accounting, legal, investor
relations, investor reporting, printing, mailing, and all other
corporate overhead
o In other words, complete control of any and all aspects of the
Company, as overseen by the MPF controlled board
7. BellaVista will grant MPF an option to acquire up to 15% of the stock
of BellaVista at a strike price of $2.73 per Share, which price will
be reduced by the amount of any dividends paid to shareholders (or
shares repurchased) from and after the date of the management
agreement."
o In other words, "we (MPF) bought at $1 to $2.25 per share, and,
as long as we (MPF) do nothing more than return to you the
estimated current value of your shares, we (MPF) will immediately
get 15% of the Company for $0 and immediately and significantly
dilute the value of your shares." Is this in the best interests
of nearly 88% of the shareholders who purchased at $10 a share?
We would further point out that, even after numerous requests from the
BellaVista Board of Directors, MPF has never provided any detailed business plan
for its management of the Company to either the Bella Vista Board or to you,
BellaVista's shareholders. This is in great contrast to the current BellaVista
Board which has developed such a detailed business plan and updates it annually
for the shareholders. The Company's asset management and administration is
currently provided for under a detailed contract between the Company and
Cupertino Capital. This contract has been publicly disclosed and is available
for all shareholders to review in its entirety. It was negotiated at arm's
length by the Company with Cupertino Capital, an unaffiliated real estate
investment firm, and approved by the independent Board of Directors.
By contrast, MPF proposes that you vote to give MPF control of the Board so that
MPF can itself approve its non-arm's length contract for Company management and
administration. MPF has given you nothing more than a brief outline of an
agreement, copied above, as an indication of the terms and conditions of this
proposed management arrangement. MPF may therefore be free to adopt unilaterally
the terms and conditions it finds most favorable to its interests, once it has
control of the BellaVista Board of Directors.
For the foregoing reasons, we urge you to give us your proxy to vote AGAINST the
MPF proposed arrangement to assume complete control over management of the
Company's assets and administration.
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VOTING OF SHARES
Voting Procedures
BellaVista Capital, Inc.'s only class of voting securities is its common stock,
par value $0.01 per share. Holders of its shares of common stock at the close of
business on the record date will be entitled to notice of, and to vote at, the
proposed Special Meeting, if the Special Meeting is called. The Special Meeting
will be called if requests representing a majority of the outstanding shares are
executed, submitted to the Company and not withdrawn before the Special Meeting
is noticed by the Company. The record date would be established at time the
Company delivers notice of the Special Meeting.
As of June 17, 2009, a total of 11,171,433 shares of the Company's common stock
were outstanding. Each share of common stock outstanding on the record date and
the date of the Special Meeting is entitled to one vote on each matter presented
at the meeting.
The presence, in person or by proxy, of shareholders representing 50% or more of
the issued and outstanding stock entitled to vote constitutes a quorum for the
transaction of business at the meeting. If a quorum is present, the affirmative
vote of the majority of the shares present, in person or by proxy, at the
meeting and entitled to vote is required for approval of all matters properly
before the shareholders at the meeting. All shares present at the meeting, in
person or by proxy, will be included to determine the quorum and to determine
whether the required majority of the quorum has voted to approve any proposal.
The accompanying proxy will be voted in accordance with the shareholder's
instructions on such proxy. Each shareholder may approve a vote against or in
favor of the proposals to amend the bylaws to increase the size of the board,
elect the MPF officer nominees, and approve the MPF exclusive management
agreement. We do not anticipate that any other business will be conducted at the
Special Meeting.
THE COMPANY'S BOARD URGES SHAREHOLDERS TO SIGN THE ENCLOSED BLUE FORM OF PROXY
AND RETURN IT PROMPTLY TO THE COMPANY AS DIRECTED.
If no direction is given on the proxy form, and you return the signed proxy to
us, it will be voted AGAINST each of the proposals to expand the board, elect
the MPF officer nominees, and approve the MPF management agreement.
Revocability of Proxy
The giving of the enclosed proxy does not preclude the right to vote in person
should the shareholder giving the proxy so desire. A proxy may be revoked at any
time prior to its exercise by delivering a written statement to the Company's
Secretary that the proxy is revoked, by presenting a later-dated proxy, or by
attending the Special Meeting and voting in person. In this regard, any
shareholder who has executed and delivered a proxy to MPF may revoke such proxy
by delivering a written statement to the Company's Secretary that the MPF proxy
is revoked, by presenting the attached proxy with a later date than the MPF
proxy to the Board, or by attending the Special Meeting and voting in person.
Additional Materials
A Form of Proxy is included with the mailing of this proxy statement. A copy of
the Company's Form 10-KSB Annual Report for its fiscal year ended September 30,
2008, as filed with the Securities Exchange Commission on January 23, 2009,
which includes the Company's audited financial statements for the fiscal year,
as well as copies of the Company's Quarterly Report on Form 10-QSB for the
quarter ended December 31, 2008, will be furnished without charge to beneficial
shareholders or shareholders of record upon request to BellaVista Capital, c/o
Carmen Palenske, 15700 Winchester Boulevard, Los Gatos, CA 95030; or by calling
Patti Wolf at (480) 563-3351 (Please note: 480 is the correct area code).
SOLICITATION OF PROXIES
This solicitation is being made on behalf of the Company's Board of Directors.
The costs of this solicitation by the Board of Directors will be borne by
BellaVista Capital, Inc. Proxy solicitations will be made by mail or electronic
4
mail. They also may be made by members of Company management by personal
interview, telephone, facsimile transmission, and telegram. BellaVista Capital,
Inc. does not expect to engage an outside firm to solicit votes, but if such a
firm is engaged subsequent to the date of this proxy statement, the cost is
estimated to be less than $5,000, plus reasonable out-of-pocket expenses.
Assuming no such third party solicitation costs are incurred, the total costs to
the Company for this solicitation which will consist primarily of the legal,
printing and mailing costs are expected to be approximately $9,500. Such costs
represent only the costs of soliciting proxies and opposing the solicitation by
MPF. They do not include substantial costs (all of such costs, including proxy
solicitation, have exceeded $70,000 to date) otherwise incurred in responding to
MPF's takeover demands commencing with its demand letter of March 17, 2009.
THE INCUMBENT BOARD OF DIRECTORS; PERSONS MAKING THIS SOLICITATION
The incumbent members of the Board of Directors are identified in the following
table, including the class and expiration of their respective terms. The year of
expiration in each case refers to the annual meeting of shareholders for the
fiscal year ended September 30 of the stated calendar year.
Name Position with the Company Class and Term
- ---- ------------------------- --------------
William Offenberg Chairman of the Board III (term expires at the
and Chief Executive Officer annual meeting of
shareholders for the fiscal
year ended September
30, 2011)
Jeffrey Black Director and II (term expires at the
Chief Financial Officer annual meeting of
shareholders for the fiscal
year ended September 30,
2010)
Patricia Wolf Director and Corporate II (term expires at the
Secretary annual meeting of
shareholders for the fiscal
year ended September 30,
2010)
Robert Puette Director I (term expires at the
annual meeting of
shareholders for the fiscal
year ended September 30,
2009)
The business background and experience of our directors and executive officers
is as follows:
William Offenberg, age 56, has been a member of the Board since July
2005. Prior to joining the Board, Mr. Offenberg acted as a consultant to the
Board since July 2004. From 1998 to 2005, Mr. Offenberg was an Operating Partner
at Morgenthaler Partners, a $2 billion private equity firm, where he specialized
in recapitalizations and leveraged buyouts. In his capacity as Operating
Partner, Mr. Offenberg has served in a variety of executive and board positions
at various Morgenthaler portfolio companies. Between 1993 and 1997, Mr.
Offenberg was President and Chief Executive Officer of Gatan International, a
developer of scientific instrumentation. Prior to joining Gatan, Mr. Offenberg
was President of Spectra-Physics Analytical from 1986 to 1993. Between 1977 and
1986, Mr. Offenberg held various management positions at Perkin-Elmer's
Instrument Group. Mr. Offenberg began his career as a chemist at Atlantic
Richfield. Mr. Offenberg has degree in Chemistry from Bowdoin College and did
graduate work in analytical chemistry at Indiana University.
Robert Puette, age 67, is the President of Puette Capital Management,
Inc., an investment and consulting company that he founded in 2004. He has been
a member of the BellaVista Board since March 1, 2002. Prior to such time, Mr.
Puette served as an advisory director to the Company. Between 2001 and 2004, Mr.
Puette was a partner at the WK Technology venture capital firm. Between 1997 and
2000, Mr. Puette was the President, Chief Executive Officer, and member of the
Board of Directors of Centigram Communications Corporation (NASDAQ), a
communications technology firm. Prior to his position at Centigram, from 1995 to
1997, Mr. Puette served as President, CEO and Chairman of the Board of Directors
at NetFRAME Systems (NASDAQ), a high-availability computer server company, and
from 1990 to 1993; Mr. Puette served as President of Apple USA, Apple
Corporation (NASDAQ). Prior to 1990, Mr. Puette served as a Group General
Manager of Hewlett-Packard Corporation (NYSE). Mr. Puette is also on the Boards
of Bentek Corporation (Private), Fat Spaniel Corporation (Private), Lavante,
5
Inc. (Private), SunModular, Inc. (Private), PureSense Inc. (Private) and Aether
Wire Corporation (Private). He is also a former director of Cisco Systems
(NASDAQ). Mr. Puette holds a BSEE degree from Northwestern University and a MSOR
degree from Stanford University.
Jeffrey Black, age 55, is a Senior Vice President in the Silicon Valley
office of CB Richard Ellis--the largest real estate company in the world. In his
32 years as a real estate broker and corporate real estate advisor, he has
concluded real estate transactions in excess of $2 billion. Notable clients that
Mr. Black has represented include eBay, Netflix, Altera, Amdahl, Thermo Fisher
Scientific, AT&T, Exxon Corporation, Marriott, TRW Corporation, VLSI Technology,
Steelcase, Advanced Micro Devices and Ernst & Young. He has been consistently
been one of the top brokers in Silicon Valley. He was given the Hall of Fame
Award (Association of Silicon Valley Brokers) in 1997. Mr. Black has a
Bachelor's of Science and Commerce degree in Finance from Santa Clara
University.
Patricia Wolf, age 63 served as Chair of the Board of Trustees for
Ottawa University from 2006 through 2008. In February 2009, she was recognized
for outstanding leadership during a period of significant change in University
strategy and direction. From 1986 until 2002 she was employed by Management
Technology America (MTA), the computer software company she founded in 1986. In
1999, Ms. Wolf sold MTA to a company listed on the NYSE. During the period from
1999 to 2002 she continued her employment as the company's president. Prior to
her employment with MTA, she held various executive management positions with
companies listed on the NYSE in the technology industry and created a track
record of growing and developing successful organizations. Ms. Wolf holds a
Bachelor's degree in Business Administration and a Master's degree in
Management, both from Ottawa University.
Terms of Directors and Officers
Our Board of Directors consists of the number of persons as shall be fixed by
the Board of Directors from time to time by resolution to be divided into three
classes, designated Class I, Class II and Class III, with each class to be as
nearly equal in number of directors as possible. Currently there are four
director positions. Mr. Puette is a Class I director and his term expires as of
the annual meeting of shareholders for the fiscal year ended in 2009. Mr. Black
and Ms. Wolf are Class II directors and their terms expire as of the meeting for
the fiscal year ended in 2010. Mr. Offenberg is a Class III director, and his
term expires as of the meeting for the fiscal year ended in 2008/2009. At each
annual meeting, the successors to the class of directors whose term expires at
that time are to be elected to hold office for a term of three years, and until
their successors are elected and qualified, so that the term of one class of
directors expires at each annual meeting. The full Board acts to nominate
candidates for the Board, as there is no separate nominating committee. There
have been no changes during the year covered by this report in the procedures
for nomination or by which shareholders may recommend nominees to the Board.
Upon Mr. Rider's resignation from the Board of Directors as of September 30,
2008, a resolution was passed to decrease the number of directors from five to
four.
For any vacancy on the Board of Directors, including a vacancy created by an
increase in the number of directors, the vacancy may be filled by election of
the Board of Directors or the shareholders, with the director so elected to
serve until the next annual meeting of shareholders, if elected by the Board of
Directors, or for the remainder of the term of the director being replaced, if
elected by the shareholders; any newly-created directorships or decreases in
directorships are to be assigned by the Board of Directors so as to make all
classes as nearly equal in number as possible. Directors may be removed only for
cause and then only by vote of a majority of the combined voting power of
shareholders entitled to vote in the election for directors. Subject to the
voting rights of the holders of the stock, the charter may be amended by the
vote of a majority of the combined voting power of shareholders, provided that
amendments to the article dealing with directors may only be amended if it is
advised by at least two-thirds of the Board of Directors and approved by vote of
at least two-thirds of the combined voting power of shareholders. The effect of
these as well as other provisions of our charter and bylaws may discourage
takeover attempts and make more difficult attempts by shareholders to change
management.
Executive officers are appointed by the Board of Directors, serve at the Board's
pleasure and may be removed from office at any time without cause. There are no
family relationships among any of our directors or executive officers.
Directors' Meetings and Committees
The Board of Directors has not established separate standing audit, nominating
or compensation committees or committees performing similar functions. The full
Board of Directors acts as the audit committee for all purposes relating to
communications with the auditors and responsibility for oversight of the audit.
The Board has not adopted any written charter governing its activity as the de
facto audit committee.
6
The full Board also acts as the nominating committee. The Board has no
nominating committee charter, nor does it have any express policy with respect
to consideration of director candidates recommended by securities holders. The
Board believes that, in consideration of the size of the Company, its limited
shareholder group, the lack of any public trading market for its securities and
the limited resources available to the Board, that maintaining a standing
nominating committee and nominating committee charter is not practical or in the
best interests of the Company and its shareholders. All members of the Board
have participated in the nomination process when in office, and all members of
the sitting Board are expected in the future to participate in the nomination
process.
The full Board also acts as the compensation committee. The Board has no
compensation committee charter, nor does it have any express policy with respect
to executive compensation. The Board believes that, in consideration of the size
of the Company, its limited shareholder group, the lack of any public trading
market for its securities and the limited resources available to the Board, that
maintaining a standing compensation committee and compensation committee charter
is not practical or in the best interests of the Company and its shareholders.
All members of the Board have participated in the process of determining
executive compensation, and all members of the sitting Board are expected in the
future to participate in the process.
During fiscal year ended September 30, 2008, there were four regular meetings of
the Board of Directors and 13 special meetings. Meetings are generally held at
the Company's offices and all Board members attend in person unless that
director cannot be present in person. In such cases, directors attend via a
telephone conference call.
Shareholders may communicate directly with any director. Any shareholder wishing
to communicate with a director may send a written communication addressed to the
director to the Company's Chief Executive Officer, William Offenberg, who will
transmit the communication to the addressed director.
Compensation of Directors
Directors William Offenberg and Jeffrey Black also serve as chief executive
officer and chief financial officer, respectively, of the Company. All directors
are entitled to receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. Set forth below
is a table summarizing compensation paid to directors for service on the Board
during the most recent fiscal year ended September 30, 2008.
- --------------- ------------ ------------ ------------ ---------------- ---------------- --------------- -------------
Name Fees Stock Option Non-Equity Nonqualified All Other Total
Earned Awards Awards Incentive Plan Deferred Compensation ($)
or ($) ($) Compensation Compensation ($)
Paid in ($) Earnings
Cash ($)
($)
- --------------- ------------ ------------ ------------ ---------------- ---------------- --------------- -------------
William $44,500 0 0 0 0 $84,725 $129,225
Offenberg
- --------------- ------------ ------------ ------------ ---------------- ---------------- --------------- -------------
Robert 38,000 0 0 0 0 0 38,000
Puette
- --------------- ------------ ------------ ------------ ---------------- ---------------- --------------- -------------
Patricia 38,000 0 0 0 0 0 38,000
Wolf
- --------------- ------------ ------------ ------------ ---------------- ---------------- --------------- -------------
Jeffrey 46,000 0 0 0 0 0 46,000
Black
- --------------- ------------ ------------ ------------ ---------------- ---------------- --------------- -------------
As Chairman of the Board, Mr. Offenberg received $30,000 while Messrs. Puette,
Black and Ms. Wolf received $25,000 each for their participation in the
Company's regular board meetings. All directors are also compensated $1,000 for
every special board meeting they attend.
On September 25, 2007, the Company entered into an agreement to compensate
William Offenberg on an hourly basis for his consulting services as Executive
Chairman of the Board. In addition, commencing October 1, 2008, the Board
authorized payment to each of Mr. Offenberg and Mr. Black of an additional fee
in the amount of $5,000 per annum as consideration for their services as chief
executive officer and chief financial officer of the Company, respectively,
including their review and certification of the Company's periodic reports and
7
disclosure controls and procedures. These fees are included in the "Fees Earned
or Paid in Cash" column. The additional compensation earned by Mr. Offenberg for
his consulting services during the fiscal year ended September 30, 2008 is shown
under the "All Other Compensation" column in the above table. Mr. Offenberg
invoices the Company in January for his board and consulting services for the
prior calendar year and is then paid for these services.
The Company's charter obligates it to indemnify its directors and officers and
to pay or reimburse expenses for such individuals in advance of the final
disposition of a proceeding to the maximum extent permitted from time to time by
Maryland law. The Maryland General Corporation Law permits a corporation to
indemnify its present and former directors and officers, among others, against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those or other capacities, unless it is
established that (a) the act or omission of the director or officer was material
to the matter giving rise to the proceeding and (1) was committed in bad faith,
or (2) was a result of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in money, property or
services, or (c) in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was unlawful.
Compensation Committee Interlocks
No interlocking relationship exists between the Board of Directors or officers
responsible for compensation decisions and the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
Officers of the Company
Our executive officers and their positions as of the date of this Proxy
Statement are:
Name Position
---- --------
William Offenberg Chief Executive Officer
Jeffrey Black Treasurer, Chief Financial Officer
Executive officers are appointed by the Board of Directors, serve at the Board's
pleasure and may be removed from office at any time without cause. There are no
family relationships among the directors and officers. The Company does not
currently have a stock option or deferred compensation plan.
Executive Compensation
The following table summarizes compensation paid during the two most recent
fiscal years to employee of the Company who held executive officer positions.
Please note that neither of these individuals is now employed by the Company.
The position of chief investment officer was eliminated in fiscal year 2007 and
the full-time position of chief executive officer was eliminated in fiscal year
2008 and is now filled as needed on a consulting basis by the Board Chairman.
- ---------------- ------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Name Fiscal Salary Bonus Stock Option Non-Equity Non- All Other Total
and Year ($) ($) Awards Awards Incentive qualified Compensa- ($)
Principal ($) ($) Plan Deferred tion
Position Compensa- Compensa- ($)
tion tion
($) Earnings
($)
- ---------------- ------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Michael 2008 $250,000 $ 7,500 0 0 0 0 0 $257,500
Rider,
Chief Executive
Officer,
Director
- ---------------- ------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
2007 $250,000 $12,500 0 0 0 0 0 $262,500
- ---------------- ------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Eric 2008 $103,846 0 0 0 0 0 0 $103,846
Hanke,
Chief
Investment
Officer,
Secretary
- ---------------- ------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
2007 $150,000 $20,500 0 0 0 0 0 $170,500
- ---------------- ------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
8
Certain Relationships and Related Transactions
Two out of four of the current members of the Board, William Offenberg and
Jeffrey Black act as an officers of the Company and cannot be considered
independent directors while the other two members of the Board are considered
independent, as that term is defined under New York Stock Exchange Rule Section
303A, the NYSE's Corporate Governance Rules. Under those Rules, no director
qualifies as "independent" unless the Board of Directors affirmatively
determines that the director has no material relationship with the Company
(either directly or as a partner, shareholder or officer of an organization that
has a relationship with the Company). Material relationships can include
commercial, industrial, banking, consulting, legal, accounting, charitable and
familial relationships, among others. However, as the concern is independence
from management, the NYSE does not view ownership of even a significant amount
of stock, by itself, as a bar to an independence finding. Accordingly, while
Mrs. Offenberg, Puette and Black and Ms. Wolf own shares of the Company's common
stock, the Board views these directors/nominees as independent under these
standards. In addition, a director is not independent under the NYSE Rules if:
(i) the director is, or has been within the last three years, an employee of the
Company, or an immediate family member is, or has been within the last three
years, an executive officer, of the Company; (ii) the director has received, or
has an immediate family member who has received, during any twelve-month period
within the last three years, more than $100,000 in direct compensation from the
listed company, other than director and committee fees and pension or other
forms of deferred compensation for prior service (provided such compensation is
not contingent in any way on continued service; (iii) (A) the director or an
immediate family member is a current partner of a firm that is the Company's
internal or external auditor; (B) the director is a current employee of such a
firm; (C) the director has an immediate family member who is a current employee
of such a firm and who participates in the firm's audit, assurance or tax
compliance (but not tax planning) practice; or (D) the director or an immediate
family member was within the last three years (but is no longer) a partner or
employee of such a firm and personally worked on the Company's audit within that
time; (iv) the director or an immediate family member is, or has been within the
last three years, employed as an executive officer of another company where any
of the Company's present executive officers at the same time serves or served on
that company's compensation committee; or (v) the director is a current
employee, or an immediate family member is a current executive officer, of a
company that has made payments to, or received payments from, the Company for
property or services in an amount which, in any of the last three fiscal years,
exceeds the greater of $1 million, or 2% of such other company's consolidated
gross revenues.
As disclosed in the Company's 10-Q filing with the SEC, in order to meet the
Company's short-to-medium term cash requirements arising in the fall of 2008,
for which conventional financing was then not available, the Board authorized
its asset manager, Cupertino Capital, to pursue up to a total of $3 million of
financing lines, that could be accessed as needed on a monthly basis, through a
private placement of debt secured by trust deeds to the Brighton and Pulgas
properties of $1.5 million each. The Board authorized borrowing on what it
deemed, at the time of these placements, to be market rate terms of: 11%
interest to private lenders, a servicing fee of 0.5% per annum, an origination
fee of 1% (if funded from a Company relationship or related party) or 3% (if
funded from an independent third party) payable to Cupertino Capital, and
maturity dates of October 1, 2009 for the line on Brighton and February 1, 2012
for the line on Pulgas. The independent and disinterested members of the Board
approved borrowing from each of Jeffrey Black and William Offenberg, as related
parties, on the foregoing terms. Mr. Black and Mr. Offenberg made funding
commitments and began advancing funds on October 30, 2008.
As of July 1, 2009, the total balance owed on both financing lines was $2.4
million. These funds had been advanced by 2 related parties and 2 independent
third party private lenders. Mr. Offenberg and Mr. Black had advanced totals of
$1,415,000 and $830,000 in principal, respectively. Total interest paid and
payable on amounts advanced by Mr. Offenberg and Mr. Black as of such date were
$107,762.32 and $37,371.35, respectively. On June 30, 2009, BVC received a
partial repayment from a borrower related to the closing of a sale of a condo
unit, and subsequently BVC then made principal repayments in the amount of
$480,000 and $120,000 to Mr. Offenberg and Mr. Black, respectively.
Legal Proceedings
There are no material proceedings to which any director or executive officer of
the Company, or any associate of any such director or executive officer is a
party adverse to the Company or any of its subsidiaries or has a material
interest adverse to the Company or any of its subsidiaries.
Section 16(a) Beneficial Ownership Reporting Compliance
Statements of beneficial ownership on SEC Form 3 respecting ownership of common
stock are required within 10 days of becoming an officer or director, or
beneficial owner of more than 10% of the outstanding common shares, and
statements of changes in beneficial ownership are required within 48 hours of
any such change. Based solely on a review of copies of the Forms 3, 4 and 5 and
9
amendments thereto furnished to the Company with respect to the fiscal year
ended 2008, or written representations that no such reports were required to be
filed with the Securities and Exchange Commission, the Company believes that
during the year ended September 30, 2008 and through the date of dissemination
of this Proxy Statement, all directors and officers of the Company and
beneficial owners of more than 10% of any class of equity securities of the
Company registered pursuant to Section 12 of the Exchange Act filed their
required Forms 3, 4, or 5, as required by Section 16(a) of the Securities
Exchange Act of 1934, as amended.
BENEFICIAL OWNERSHIP OF COMMON SHARES
Beneficial Ownership of Capital Stock by Large Security Holders
The following table presents information regarding the beneficial ownership of
the only known beneficial owners of in excess of 5% of our outstanding common
shares.
Number Percent
Title of Class Name and Address of Beneficial Owner of Shares of Class
- -------------- ------------------------------------ ------------------ ------------------
Common Stock MacKenzie Patterson Fuller, LLC 1,390,046 12.44
1640 School Street
Moraga, California 94556
- -------------- ------------------------------------ ------------------ ------------------
Jay Duncanson
c/o Menlo Advisors
800 Oak Grove Avenue
Menlo Park, CA 94025 658,735 5.90
- -------------- ------------------------------------ ------------------ ------------------
Total 2,048,781 18.34
============== ==================================== ================== ==================
Beneficial Ownership of Capital Stock by Directors and Management
The following table presents information regarding the beneficial ownership of
our capital stock as of June 17, 2009 of: (1) each of our directors and
executive officers; and (2) all of our directors and executive officers as a
group. Unless otherwise indicated in the footnotes to the table, the beneficial
owners named have, to our knowledge, sole voting and investment power with
respect to the shares beneficially owned, subject to community property laws
where applicable.
Number Percent
Title of Class Beneficial Owner of Shares of Class
- -------------- ---------------------------- ------------------ ------------------
Common Stock Robert Puette 405,241 3.50
- -------------- ---------------------------- ------------------ ------------------
Jeffrey Black 250,852 2.16
- -------------- ---------------------------- ------------------ ------------------
Patricia Wolf 167,030 1.44
- -------------- ---------------------------- ------------------ ------------------
William Offenberg 107,404 *
- -------------- ---------------------------- ------------------ ------------------
Total 930,527 8.03
============== ============================ ================== ==================
* Less than one percent of our outstanding capital stock.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No member of the Company's Board is, or was within the past year, a party to any
contract, arrangement or understanding with any person with respect to any
securities of the Company, including, but not limited to joint ventures, loan or
option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies.
As described above, Board members William Offenberg and Jeffrey Black are
engaged by the Company to serve as the Chief Executive Officer and Chief
Financial Officer, respectively, of the Company, on the terms described herein.
Other than their continuing employment in these capacities at the will of the
Board, none of the Board members or any of their associates have any arrangement
or understanding with any person with respect to any future employment by the
Company or its affiliates, or with respect to any future transactions to which
the Company or any of its affiliates will or may be a party.
10
OTHER BUSINESS
The Board of Directors knows of no other matters, which may be presented for
shareholder action at the meeting. However, if other matters do properly come
before the meeting, it is intended that the persons named in the proxies will
vote upon them in accordance with their best judgment.
BY ORDER OF THE BELLAVISTA BOARD OF DIRECTORS
Los Gatos, California
July 22, 2009
11
Proxy to Vote at a Meeting of Shareholders of BellaVista Capital, Inc.
THIS PROXY IS SOLICITED BY THE BELLAVISTA BOARD OF DIRECTORS
The undersigned appoints Patricia Wolf, corporate Secretary of BellaVista
Capital, Inc., with full powers of substitution, to act as attorney and proxy
for the undersigned to vote, as designated on this proxy, all shares of the
Common Stock of BellaVista Capital, Inc. (the "Company") which the undersigned
is entitled to vote at the next shareholder meeting (special or annual,
whichever occurs first) or at any adjournments, postponements or rescheduling
thereof (please check the desired box for each proposal):
1. Proposal No. 1 - Expansion of board of directors to nine members by amending
bylaws
- --------------------------------------------------------------------------------
|_| AGAINST expansion of the board |_| In favor of expansion of |_| Abstain
of directors to nine members the board of directors to
nine members
- --------------------------------------------------------------------------------
THE BELLAVISTA BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
EXPANSION OF THE BOARD OF DIRECTORS.
- --------------------------------------------------------------------------------
2. Proposal No. 2 - Election of five directors to fill vacancies created by the
expansion of the board
- --------------------------------------------------------------------------------
|_| AGAINST all nominees |_| In favor of all nominees |_| Abstain
listed below listed below
(you may strike out the
name of any nominee to
withhold authority to vote)
- --------------------------------------------------------------------------------
C. E. Patterson, as a Class II Director with a term expiring
at the annual meeting in 2011
Glen Fuller, as a Class III Director with a term expiring
at the annual meeting in 2010
Chip Patterson, as a Class I Director with a term expiring
at the annual meeting in 2012
Robert E. Dixon, as a Class II Director with a term expiring
at the annual meeting in 2011
Christine E. Simpson, as a Class III Director with a term expiring
at the annual meeting in 2010
THE BELLAVISTA BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE NOMINEES NAMED ABOVE.
- --------------------------------------------------------------------------------
3. Proposal No. 3 - Engagement of MPF for investment management services for an
annual fee equal to 2% of BellaVista's assets
- --------------------------------------------------------------------------------
|_| AGAINST engagement of MPF |_| In favor of engaging MPF as |_| Abstain
as investment manager investment manager
- --------------------------------------------------------------------------------
THE BELLAVISTA BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE MPF MANAGEMENT PROPOSAL
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF YOU SIGN WITHOUT OTHERWISE MARKING
THE FORM, THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS,
AGAINST ALL OF THE THREE PROPOSALS SET FORTH ABOVE. THIS PROXY WILL BE VOTED BY
THE INDIVIDUAL NAMED IN THIS PROXY IN HER BEST JUDGMENT WITH RESPECT TO ANY
OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING. THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING AS OF THE DATE OF THE PROXY
STATEMENT TO WHICH THIS PROXY IS ATTACHED.
The undersigned hereby acknowledges receipt of the Board of Directors' Proxy
Statement dated July 22, 2009, relating to the proposed Special Meeting. This
proxy will remain valid for a period not to exceed one year from this date.
Dated: ___________, 2009
- ---------------------------------- ----------------------------------
Print Name Signature
- ---------------------------------- ----------------------------------
Print Name Signature
Please date this proxy and sign exactly as name appears on stock certificate.
Where stock is registered jointly, all owners must sign. Corporate owners should
sign full corporate name by an authorized person. Executors, administrators,
trustees or guardians should indicate their status when signing. Return the
executed proxy in the envelope provided. If you have any questions, please
contact Patti Wolf at (480) 563-3351 (Please note: 480 is the correct area
code).
BELLAVISTA
----------
CAPITAL
July 22, 2009
Dear Fellow Shareholders:
Enclosed you will find the BellaVista Proxy Solicitation that the Company's
Board of Directors is submitting to you for your vote AGAINST MPF's proxy to
unilaterally seize complete control of BellaVista. We sincerely appreciate the
overwhelming support and encouragement we have received as we have attempted to
personally contact each of you over the past several weeks.
Despite the continuing drivel in yet another MPF letter filled with false and
misleading statements and half truths, that now stoops to a new level with
sleazy inferences impugning the integrity and intelligence of your individual
board members, the decision on BellaVista's future course is in your hands. In
making your decision, we believe it is important to note the following about
MPF's proxy and takeover of BellaVista.
o MPF is bent on taking complete control of BVC's operations,
management, assets and board of directors.
o MPF has never provided any sort of detailed business plan or timeline
to liquidity.
o MPF's proposal will result in no operating cost savings based on BVC's
ACTUAL (not estimated or manipulated) operating expenses for the first
8 months of this fiscal year.
o MPF will increase the income of MPF's own management company by over
$800,000 this year alone as MPF pays itself a 2% asset management fee
charged.
o MPF will reward themselves with a stock option equal to 15% of the
company shares, thereby diluting all shareholders' ownership.
o MPF claims it will provide liquidity at some future date in the form
of dividends, which even if classified as a return of capital denies
the vast majority of the BVC's individual shareholders a capital loss
which could be deductible either to offset a capital gain or ordinary
income.
o MPF would have little to no accountability to the BVC's individual
shareholders as MPF will function as BVC's asset manager, BVC's
management, BVC's "investment advisor" and control BVC's Board of
Directors, which effectively results in a situation with no
accountability or checks and balances.
o MPF would operate the Company without Directors and Officers (D&O)
insurance as MPF's officers, who would also be BVC's directors, are
likely covered by some form of MPF provided liability insurance. This
would protect MPF and their officers but likely would leave
BellaVista, as a company and its assets, completely exposed, which
puts your share value at risk.
In making your decision it is equally important to note the progress your
current Board has made during this incredibly difficult market, very likely the
worst downturn in the real estate and credit markets since the Great Depression.
1. The Board developed and successfully implemented a major restructuring of
the company:
o Substantially decreased BVC operating expenses over the past 3 years
such that there would be no operating cost savings based from MPF's
proposed takeover based on BVC's ACTUAL operating expenses for the
first 8 months of this fiscal year.
o Outsourced asset management and administration to a highly experienced
management company.
o Began a controlled liquidation of the company's assets with the goals
of
a. Maximizing realized value
b. Paying down existing debt
c. Funding a share repurchase program, the most tax efficient manner
of returning capital to our shareholders as the repurchase of
your shares will creates a capital loss that may be able fully
tax deductible.
BellaVista Capital / 15700 Winchester Blvd. / Los Gatos, CA 95030
Ph: 408-354-8424 / Fax: 408-354-9787
o With no direct employees, the Board and the CEO on an as needed basis
along with Cupertino Capital, our asset manager, perform all of the
operating and management functions in an effective and professional
manner at a cost equal to or less than that proposed by MPF.
2. The Board established specific strategies for each of BVC's REO and
Controlled properties that we believe will maximize and hasten our ability
to begin a share repurchase program
o We continue to make real progress along the path of the controlled
o liquidation
In terms of real, tangible results, BVC has (either directly or, where
applicable, in cooperation with our development partners or borrowers)
a. Sold 67 condo units
b. 15 condo units in escrow
c. Rented 39 units
d. Sold 7,500 s.f. of retail space
e. Converted a 40 unit condo property to apartment operation that is
90%+ leased up and has positive cash flow
f. Repurchased more than 3.8 million shares during the past 3 years,
in addition to the more than 3 million repurchased in early 2005.
g. Paid down over $12 million debt in the past 12 months while only
increasing borrowings in the form of 2 privately placed operating
credit lines by $3 million
h. Made good progress paying down these 2 operating lines with
proceeds from recent sales to $2.4 million and look forward to a
successful conventional refinancing at more favorable rates.
As you can see we have and are making very reasonable progress along the path of
a controlled liquidation. While MPF has its own agenda, your Board, individual
shareholders like the vast majority of you, is focused on continuing with the
controlled liquidation and the return of capital to you through a repurchase of
your shares.
For all the foregoing reasons, we strongly urge you grant us your proxy to vote
AGAINST the MPF proposals to seize complete control of the operations, assets
and board of directors of BellaVista.
The choice is yours:
o A company with a board of directors made up of individual shareholders
like the vast majority of you or
o A company operated, managed and with a board controlled by MPF, a
private equity group, that is accountable to no one but MPF.
Please complete the enclosed Proxy by dating and signing it and returning it in
the enclosed envelop.
Sincerely
William Offenberg Jeff Black Patti Wolf Robert Puette
(408) 396-3971 (408) 499-0352 (480) 563-3351 (408) 309-3710