WESTERN
CAPITAL RESOURCES, INC.
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
March 29,
2010
On February 24, 2010, WERCS, a Wyoming
corporation (“WERCS”), in conformity with the requirements of Section 302A.433
of the Minnesota Statutes, delivered to Western Capital Resources, Inc. (the
“Company”) a demand for a special shareholder meeting together with a
shareholder proposal, described below, conforming to the requirements of Section
3.3 of the Company’s Amended and Restated Bylaws. Under Minnesota law, the
Company is required to convene a special meeting to consider the proposal
contained in the demand notice.
Notice is hereby given that a special
meeting of the shareholders of the Company will be held at the principal
executive offices of the Company located at 11550 “I” Street, Suite 150, Omaha,
Nebraska, on March 29, 2010, at 8:30 a.m., local time, for the purpose of
considering and voting on a proposal to amend the Amended and Restated Articles
of Incorporation of the Company, as amended, to make the Minnesota Control Share
Acquisition Act inapplicable to the Company.
Shareholders of record at the close of
business on March 4, 2010 are entitled to notice of and to vote at the meeting.
Under Minnesota law, approval of the shareholder proposal at the meeting
requires the affirmative vote of the holders of a majority of the voting power
of:
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all
shares entitled to vote,
and
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all
shares entitled to vote, excluding all “interested
shares.”
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Minnesota law defines “interested
shares” as any common or preferred shares beneficially owned by any of the
following persons: (1) the acquiring person, (2) any officer of the Company, or
(3) any employee of the Company who is also a director of the Company. The
accompanying Proxy Statement contains more information relating to the special
meeting and provides you with a summary of the sections of the Minnesota
Statutes relating to shareholder approval of the above-described proposal, as
well as additional information about the parties involved.
By
Order of the Board of Directors,
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John
Quandahl
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Chief
Executive Officer and
President
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Approximate
Date of Mailing of Proxy Materials:
,
2010
Important Notice Regarding the
Availability of Proxy Materials for the Special Shareholder Meeting to be
held on March 29, 2010:
the Proxy Statement for the special meeting
is available
at
.
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TABLE
OF CONTENTS
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Page
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Purpose
of the Special Meeting
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1
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Important
Information
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3
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Questions
and Answers
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3
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Voting
at the Special Meeting
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8
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Common
Stock and Series A Stock Outstanding and Eligible To Be
Voted
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10
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Voting
Procedures at the Special Meeting
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11
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Background
of Stock Purchase and Sale Agreement
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14
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Change
of Control Implications
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17
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Recommendation
by the Board of Directors
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18
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Potential
Factors Weighing in Against the Proposed Amendment
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18
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Potential
Factors Weighing in Favor of the Proposed Amendment
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Business
Combination Transactions
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Minnesota
Control Share Acquisition Act
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Certification
of Interested Shares
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23
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Admittance
to Special Meeting
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Voting,
Solicitation and Certain Other Information
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No
Dissenters’ Rights
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25
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No
Other Matters at the Special Meeting
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25
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Beneficial
Ownership of Securities
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26
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Interest
of Certain Persons in Matters to be Acted Upon
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28
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Information
About Western Capital Resources, Inc.
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29
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Information
About WCR, LLC
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Cautionary
Statement Regarding Forward-Looking Information
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31
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Exhibits
Exhibit A
– Proposed
Amendment to Articles of Incorporation
Exhibit B
– Voting
Presumptions and Procedures
Exhibit C
– Section 302A.671
and other pertinent provisions of the Minnesota Statutes
Exhibit D
– Information
Provided by WCR, LLC
Important
Note
: A proxy card and accompanying certification for voting at the
special meeting is also enclosed with this Proxy Statement. Your vote is
important. Please timely complete, execute and mail the enclosed proxy
card and certification.
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PROXY
STATEMENT
OF
WESTERN
CAPITAL RESOURCES, INC.
For a
Special Meeting of Shareholders
to be
held on March 29, 2010
This Proxy Statement is being furnished
by Western Capital Resources, Inc., a Minnesota corporation, in connection with
the solicitation by the Company of proxies for the purpose described in this
Proxy Statement at a special meeting of shareholders to be held on Monday, March
29, 2010, and at any and all adjournments or postponements thereof. This Proxy
Statement and the accompanying proxy card are expected to be mailed to Company
shareholders on or about
,
2010. Throughout this Proxy Statement, the terms “the Company,
”
“Western
Capital,” “we,” “our,” and “us” refer to Western Capital Resources, Inc. and its
subsidiaries.
As required by Minnesota law, the
special meeting will be held at the principal executive office of the Company at
11550 “I” Street, Suite 150, Omaha, Nebraska, on Monday, March 29, 2010, at 8:30
a.m., local time. The Board of Directors of the Company (the “Board”) has fixed
the close of business on March 4, 2010 as the record date for determining
shareholders entitled to notice of and to vote at the special
meeting.
Purpose
of the Special Meeting
The purpose of the special meeting is
to consider and vote on whether to amend the Amended and Restated Articles of
Incorporation of the Company, as amended (the “Articles of Incorporation”), to
make the Minnesota Control Share Acquisition Act, codified at Minnesota
Statutes, Section 302A.671, inapplicable to the Company. Such an amendment to
the articles of incorporation of a Minnesota corporation is expressly permitted
under subdivision 1 of the Minnesota Control Share Acquisition Act.
Under Minnesota law, the Company is
required to hold the special meeting because WERCS, a Wyoming corporation, which
is the holder of 10,000,000 shares of the Company’s Series A Convertible
Preferred Stock (the “Series A Stock”) and 1,125,000 shares of the Company’s
common stock (the “Common Stock”), has submitted a shareholder demand for the
special meeting that conforms to the requirements set forth in Minnesota
Statutes, Section 302A.433, and the requirements of Section 3.3 of the Company’s
Amended and Restated Bylaws. In connection with the requirements for shareholder
proposals set out in Section 3.3 of the Amended and Restated Bylaws, WERCS has
advised us in writing that:
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The
business address of WERCS is 400 East 1st Street, PO Box 130, Casper,
Wyoming 82601, attention: Mr. Lee
Karavitis.
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The
“Shareholder Associated Persons” of WERCS (as defined in the Company’s
Amended and Restated Bylaws) are: Robert Moberly, a resident of the State
of Wyoming with a business address at 400 East 1st Street, PO Box 130,
Casper, Wyoming 82601; and Mr. Lee Karavitis, a resident of the State of
Wyoming with a business address at 400 East 1st Street, PO Box 130,
Casper, Wyoming 82601. Messrs. Moberly and Karavitis are officers of
WERCS.
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WERCS
owns, both beneficially and of record, 1,125,000 shares of Common Stock
and 10,000,000 shares of Series A Stock;
and
no Shareholder Associated Person owns, beneficially or of record, any
other shares of Company
stock
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Neither
WERCS nor any Shareholder Associated Person has entered into any hedging
or other transactions or series of related transactions to mitigate risk
of loss to and manage risk of stock price changes for, or to increase the
voting power of, WERCS or any other Shareholder Associated Person,
including but not limited to any short position or any borrowing or
lending of shares of Company stock.
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In
connection with the proposal submitted for consideration at the special
meeting, WERCS has entered into a Stock Purchase and Sale Agreement (as
amended, the “Stock Purchase and Sale Agreement”) with WCR, LLC, a
Delaware limited liability company, and for the limited purpose set forth
in the Stock Purchase and Sale Agreement, Blackstreet Capital Partners
(AI) II, L.P., a Delaware limited partnership, and Blackstreet Capital
Partners (QP) II, L.P., a Delaware limited partnership (collectively, “BCP
II”). WCR, LLC is a subsidiary of BCP II. Under the Stock Purchase and
Sale Agreement, WERCS will sell to WCR, LLC all of the Common Stock and
Series A Stock held by WERCS in consideration for a gross purchase price
of $7,400,000 (less certain outstanding debt of the Company, and subject
to a working capital adjustment), resulting in an anticipated net purchase
price of approximately $5,600,000. A condition to the obligation of WCR,
LLC to purchase the Company stock held by WERCS is an amendment to the
Company’s Articles of Incorporation to make the Minnesota Control Share
Acquisition Act inapplicable to the
Company.
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WERCS
has provided the Company with a copy of the definitive Stock Purchase and
Sale Agreement and has agreed to provide the Company with such additional
information as may be required to ensure that disclosure to the Company’s
shareholders, within this Proxy Statement, is compliant with Minnesota law
and the rules of the United States Securities and Exchange Commission (the
“SEC”).
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WERCS
intends to appear in person or by proxy at the special meeting to bring
the proposed business before the
meeting.
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As more fully described below in the
section entitled “Minnesota Control Share Acquisition Act,” shareholder approval
for the proposal at the special meeting is a condition to WCR, LLC’s obligation
to purchase Series A Stock and Common Stock from WERCS under the Stock Purchase
and Sale Agreement.
Important
Information
Any proxies returned, or ballots
submitted at the meeting itself, without a certification specifying that the
subject shares are not “interested shares” will be presumed to be “interested
shares.” See “Voting Procedures at the Special Meeting” below.
The Board has determined to express no
opinion and remain neutral with respect to the proposed amendment. The events
preceding this determination are described below under the section titled
“Background of Stock Purchase and Sale Agreement,” and the factors considered by
the Board in reaching this determination are described below under the section
titled “Recommendation by the Board of Directors.”
Questions
and Answers
Why
am I receiving this Proxy Statement?
This Proxy Statement contains
information related to the solicitation of proxies for use at our special
meeting to be held at 8:30 a.m., local time, on Monday, March 29, 2010 at the
Company’s principal executive offices located at 11550 “I” Street, Suite 150,
Omaha, Nebraska, for the purpose stated in the Notice of Special Meeting of
Shareholders. This solicitation is made by the Company.
Why
is the Company holding this special meeting?
To vote on an amendment to the
Company’s Articles of Incorporation that will make the Minnesota Control Share
Acquisition Act inapplicable to the Company. The text of the proposed amendment
to the Company’s Articles of Incorporation is set forth in
Exhibit A
attached to this
Proxy Statement. Under Minnesota law, WCR, LLC would not be allowed to vote the
shares of Series A Stock and Common Stock that it proposes to acquire from WERCS
unless the Articles of Incorporation are amended in this manner.
Who
is entitled to vote at the special meeting?
Only holders of record of our Common
Stock and Series A Stock at the close of business on March 4, 2010, the record
date for the special meeting, are entitled to receive notice of and to vote at
the special meeting or any adjournment or postponement of the special meeting.
As of the record date, our Series A Stock and our Common Stock are the only
classes of capital stock entitled to vote at the special meeting. The Series A
Stock and the Common Stock will vote together as a single class at the special
meeting.
What
are the voting rights of shareholders?
Each share of Series A Stock and each
share of Common Stock outstanding on the record date entitles its holder to cast
one vote on the matter voted upon.
Who
can attend the special meeting?
Only holders of our Common Stock and
Series A Stock at the close of business on March 4, 2010, the record date for
the special meeting, or their duly appointed proxies, are authorized to attend
the special meeting. Cameras, recording devices, and other electronic devices
will not be permitted at the special meeting. If you hold your shares in “street
name” (that is, through a bank, broker or other nominee), you will need to bring
either a copy of the brokerage statement reflecting your stock ownership as of
the record date or a legal proxy from your bank or broker.
What
will constitute a quorum at the special meeting?
The presence at the special meeting, in
person or by proxy, of the holders of one-third of the voting power of the
shares of Series A Stock and Common Stock outstanding at the close of business
on March 4, 2010 will constitute a quorum permitting our shareholders to conduct
business at the special meeting. We will include abstentions in the number of
shares of Series A Stock and Common Stock present at the special meeting for
purposes of determining a quorum. We will not include broker non-votes in the
number of shares present at the meeting. A broker non-vote occurs when a bank,
broker or other nominee holding shares for a beneficial owner has not received
instructions from the beneficial owner and does not have discretionary authority
to vote the shares. As of the record date, there were 10,000,000 shares of
Series A Stock and 7,996,007 shares of Common Stock outstanding, totaling
17,996,007 voting shares.
How
do I vote my shares of Common Stock that are held by my bank, broker or other
nominee?
If you hold any or all of your shares
of Common Stock through a bank, broker or other nominee, you should follow the
voting instructions provided to you by the bank, broker or nominee. Specific
voting procedures relating to your shares of Common Stock held through a bank,
broker or other nominee will depend on their particular voting
arrangements.
How
do I vote?
You or your duly authorized agent may
vote by completing and returning the accompanying proxy card, or you may attend
the special meeting and vote in person.
May
I change my vote after I return my proxy card?
Yes. You may revoke a previously
granted proxy at any time before it is exercised by submitting to our attorneys,
Maslon Edelman Borman & Brand, LLP, at 3300 Wells Fargo Center, 90 South
Seventh Street, Minneapolis, Minnesota 55402, a notice of revocation or a duly
executed proxy (bearing a later date) on or prior to March 26, 2010; after that
date (but prior to the date of the meeting), your notice of revocation or duly
executed proxy (bearing a later date) must be delivered to our President at our
principal executive office located at 11550 “I” Street, Suite 150, Omaha,
Nebraska 68137. You may also revoke a previously granted proxy by attending the
special meeting and voting in person.
How
are votes counted?
If the accompanying proxy card is
properly signed and returned to us, and not revoked, it will be voted AS
DIRECTED BY YOU. If you return a proxy card but do not indicate how your shares
are to be voted, your proxy card will be voted as ABSTAINING from the vote at
the special meeting.
How
does the Board of Directors recommend that shareholders vote on the proposed
amendment?
After careful consideration, including
a thorough review with the Company’s legal advisors of the proposed purchase by
WCR, LLC of all shares owned by WERCS, and consultation with the Company’s
management, the Board has determined to express no opinion and remain neutral
with respect to the amendment. The events preceding this determination are
described below under the section titled “Background of Stock Purchase and Sale
Agreement,” and the factors considered by the Board in reaching this
determination are described below under the section titled “Recommendation by
the Board of Directors.”
Since
the Board has determined to remain neutral regarding the proposed amendment, why
is the Company soliciting proxies from shareholders?
Although our Board has determined to
remain neutral, the Board desires to provide shareholders with information
concerning the proposed transaction involving WCR, LLC and WERCS. The Board also
believes that it is important that shareholders be assured that the voting
process for the special meeting will be handled fairly and
properly.
Why
is WERCS seeking approval of the proposed amendment?
WERCS has entered into a Stock Purchase
and Sale Agreement with WCR, LLC in order to sell all of the Series A Stock and
Common Stock owned by WERCS. As a condition to the closing of the purchase and
sale of the shares of Series A Stock and Common Stock owned by WERCS, the Stock
Purchase and Sale Agreement requires that the Company’s Articles of
Incorporation be amended to exclude the application of the Minnesota Control
Share Acquisition Act to the Company.
Why
is the Company responsible for obtaining shareholder approval so that WERCS can
sell its shares of Series A Stock and Common Stock under the Stock Purchase and
Sale Agreement?
Minnesota law requires the Company to
call a special meeting of its shareholders whenever a written demand for such a
meeting is submitted to the Company by a shareholder holding 10% or more of the
voting power of all shares entitled to vote, and 25% or more of the voting power
of all shares entitled to vote when the purpose for calling the meeting includes
the direct or indirect facilitation of a change in the composition of our Board
of Directors. As a holder of 10,000,000 shares of Series A Stock and 1,125,000
shares of Common Stock, WERCS is the holder of over 61% of the voting power of
all shares entitled to vote.
On February 24, 2010, WERCS delivered
to the Company a demand for a special shareholder meeting together with a
proposal to amend the Company’s Articles of Incorporation. WERCS’ demand letter
and proposal comply with Section 302A.433 of the Minnesota Statutes (relating to
the right of shareholders to demand the convocation of a special meeting) and
Section 3.3 of the Company’s Amended and Restated Bylaws (relating to
shareholder proposals at special meetings). Under these circumstances, the
Company is required to convene a special meeting to consider the proposal
accompanying WERCS’ demand notice.
If
shareholders approve the proposed amendment, will I be asked to tender my Common
Stock to WCR, LLC?
Neither the proposed amendment you will
be voting on nor the Stock Purchase and Sale Agreement involves or contemplates
any tender offer, and you are not being asked to tender any shares of Common
Stock. Furthermore, WCR, LLC has advised the Company that it does not presently
intend to consummate a tender offer for shares of Common Stock. Nevertheless,
WCR, LLC may in the future determine to make a tender offer for shares of Common
Stock.
What
if the proposed amendment is not approved?
If the proposed amendment is not
approved, it is possible that the purchase and sale transaction contemplated by
the Stock Purchase and Sale Agreement may not be consummated. If WCR, LLC
determines to consummate the transaction without having obtained shareholder
approval of the amendment, it will not be allowed to vote any shares of capital
stock to the extent that such shares constitute 20% or more of the voting power
of all shares entitled to vote. Nevertheless, because (i) WERCS holds in excess
of 61% of the voting power of all shares entitled, (ii) the shares held by WERCS
are not “interested shares” under Minnesota law, and (iii) WERCS has agreed in
the Stock Purchase and Sale Agreement to use its best efforts to vote in favor
of the proposed amendment at the special meeting, the Company believes it is
unlikely that the proposed amendment will not be approved.
If
the Minnesota Control Share Acquisition Act limits the voting power of acquirers
in a control share acquisition, and the shareholders of the Company have not
previously approved the acquisition by WERCS of its controlling position in the
Company, how can WERCS vote all of its shares of Series A Stock and Common Stock
at the meeting?
Since the Minnesota Control Share
Acquisition Act is an anti-takeover law, it deals with and relates only to
acquisitions of voting shares from other shareholders. WERCS acquired all of its
presently held shares of Series A Stock and Common Stock directly from the
Company on December 31, 2007. Therefore, neither WERCS nor any of its voting
shares are subject to the limitations on the voting of shares that would
otherwise be imposed by the Minnesota Control Share Acquisition
Act.
Why
does the proxy card for the special meeting include a certification that has not
been included on any prior annual or special meeting proxy cards?
Under the Minnesota Control Share
Acquisition Act, the affirmative vote of the holders of a majority of the voting
power entitled to vote at the meeting in person or by proxy, excluding the
voting power of “interested shares,” is required for approval of the proposed
amendment. The certification on the proxy card will be used for determining
which shares of Company stock are “interested shares” under Minnesota
law.
How
do I know if I own “interested shares?”
Minnesota law defines “interested
shares” as any shares of voting stock of an issuing public corporation that are
beneficially owned by:
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any
officer of the issuing public corporation,
or
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any
employee of the issuing public corporation who is also a director of the
issuing public corporation.
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With respect to the above, the Company
has presently determined that any of the following shares of Company voting
stock will constitute “interested shares” for purposes of the shareholder vote
on the proposed amendment at the meeting: (i) any shares beneficially owned by
WCR, LLC; (ii) any shares beneficially owned by John Quandahl, a director of the
Company and our President, Chief Executive and Operating Officer, and Chief
Financial Officer, and (iii) any shares held by Mark Houlton, a director of the
Company and an employee of our Cricket wireless retailing business conducted
through our subsidiary PQH Wireless, Inc. The certifications on our form of
proxy will further assist the Company to identify any other shares that might be
considered “interested shares” under Minnesota law.
Why
are you including “interested shares” in one component of the vote required for
approval of the proposed amendment, and not in the second component of the vote
required for approval of the proposed amendment?
The Minnesota Control Share Acquisition
Act requires us to conduct the vote in this manner. For more information, please
refer to “Minnesota Control Share Acquisition Act” below.
Who
pays the costs of soliciting proxies?
We will pay the costs of soliciting
proxies. Presently, we do not anticipate that we will solicit proxies by any
means other than mail. We expect that banks, brokers, fiduciaries, custodians
and nominees will forward proxy soliciting materials to their principals, and
that we will reimburse such persons’ out-of-pocket expenses.
How
can I determine the results of the voting at the special meeting?
Preliminary voting results will be
announced at the special meeting, if available. Preliminary results, if
necessary, and final results will be reported on a Form 8-K filed with the SEC
within four days of the date of the meeting.
Whom
should I contact if I have any questions?
If you have any questions about the
special meeting, the proxy materials or your ownership of our Common Stock,
please contact Paul D. Chestovich of Maslon Edelman Borman & Brand, LLP,
counsel to the Company, at (612) 672-8305.
Voting
at the Special Meeting
Any shares of voting stock subject to
proxies that are returned without a certification specifying that such shares
are not “interested shares” will be presumed to be “interested shares.” See
“Voting Procedures at the Special Meeting” below.
At the meeting, the shareholders of
Western Capital will be asked to approve a proposed amendment to our Articles of
Incorporation that would exclude the application of the Minnesota Control Share
Acquisition Act to the Company. For our shareholders to approve this proposed
amendment, Minnesota law—specifically, Section 302A.671 subdivisions 1 and
4a—requires the affirmative vote of the holders of a majority of the voting
power of:
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all
shares entitled to vote (the “First Approval”),
and
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all
shares entitled to vote, excluding all “interested shares” (the “Second
Approval”).
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The Board has authorized, and the
Company will institute, presumptions and procedures to implement the legislative
mandate to exclude the voting power of interested shares in that component of
the required vote described above and defined as the “Second Approval,”
specifically including a requirement that each shareholder certify the number of
such shareholder’s shares being voted that are eligible to vote in respect of
the Second Approval. These presumptions and procedures are set forth in
Exhibit B
to this Proxy
Statement. In the event that some but not all of a shareholder’s shares are
interested shares, the shareholder should indicate the number of such
shareholder’s shares being voted that are not interested shares and are
therefore eligible to vote in respect of the Second Approval.
It is the Company’s position that all
shares voted without a certification will be presumed to be interested shares
and therefore ineligible to vote in respect of the Second Approval.
If the proposed amendment is not
approved by both of the majority votes described above as the First Approval and
the Second Approval, it is possible that the purchase and sale transaction
contemplated by the Stock Purchase and Sale Agreement may not be consummated. If
WCR, LLC nonetheless determines to consummate the transaction without having
obtained shareholder approval of the amendment, it will not be allowed to vote
any shares of capital stock to the extent that such shares constitute 20% or
more of the voting power of all shares entitled to vote. If both the required
majority votes are obtained, then the Company’s Articles of Incorporation will
be amended to effect the amendment by a filing with the Minnesota Secretary of
State. Because the amendment of the Company’s Articles of Incorporation is a
condition to the obligation of WCR, LLC to close on the purchase of Company
stock held by WERCS, we anticipate that the closing of such purchase and sale
would promptly follow any adoption of the proposed amendment and corresponding
filing with the Minnesota Secretary of State. Furthermore, because (i) WERCS
holds in excess of 61% of the voting power of all shares entitled to vote, (ii)
the shares held by WERCS are not “interested shares” under Minnesota law, and
(iii) WERCS has agreed in the Stock Purchase and Sale Agreement to use its best
efforts to vote in favor of the proposed amendment at the special meeting, the
Company believes it is substantially likely that the proposed amendment will be
approved.
A quorum for the conduct of business at
the special meeting will exist if at least one-third of the voting power
entitled to vote at the meeting is represented at the meeting, either in person
or by proxy. The holders of a majority of the voting power represented at the
meeting, whether in person or by proxy, and regardless of whether a quorum is
present, may adjourn the special meeting from time to time. The Company has been
advised by WERCS that it currently has no plans to move for a postponement or
adjournment of the special meeting. In the event that the special meeting is not
duly called to order because of the absence of a quorum, the proposed amendment
would not be approved.
As of March 4, 2010, the record date
for the special meeting, there were 10,000,000 shares of Series A Stock and
7,996,007 shares of Common Stock issued and outstanding. Each share of Series A
Stock and Common Stock is a voting share that entitles the holder thereof to one
vote on the proposal for consideration at the special meeting (provided,
however, that pursuant to Minnesota law all interested shares will be excluded
for purposes of determining the Second Approval). Under the Company’s Articles
of Incorporation and the Certificate of Designation for the Series A Stock that
comprises a portion of such articles, the Series A Stock votes together with our
Common Stock as a single class.
Whether or not you plan to attend the
special meeting, the Board urges you to vote your shares on the accompanying
proxy card, complete the accompanying certification and return it in the
enclosed envelope. The Board is expressing no opinion and is remaining neutral
on the proposed amendment. You may revoke a previously granted proxy at any time
before it is exercised by submitting to our attorneys, Maslon Edelman Borman
& Brand, LLP, at 3300 Wells Fargo Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, a notice of revocation or a duly executed proxy
(bearing a later date) on or prior to March 26, 2010; after that date (but prior
to the date of the meeting), your notice of revocation or duly executed proxy
(bearing a later date) must be delivered to our President at our principal
executive office located at 11550 “I” Street, Suite 150, Omaha, Nebraska
68137.
You may also revoke a previously
submitted proxy by voting in person at the meeting, although attendance at the
meeting will not, by itself, revoke a proxy. Unless revoked in the manner set
forth above, proxies received by the Company on the accompanying form will be
voted at the special meeting only in accordance with the written instructions
set forth on the proxy card. In the absence of written instructions, proxies in
the form accompanying this Proxy Statement will be voted as ABSTAINING from
voting on the proposed amendment to the Company’s Articles of
Incorporation.
Any abstention from voting on a proxy
that has not been revoked will be included in computing the number of voting
shares present for purposes of determining whether a quorum is present at the
special meeting and will have the same effect as a vote “AGAINST” the proposal.
When brokers do not receive voting instructions from a customer, they are
permitted to, and generally do, exercise discretionary voting authority with
respect to the customer’s shares on “routine” matters being voted on at a
meeting. The special meeting does not involve any “routine matters.” As a
result, brokers will not be permitted to exercise discretionary voting authority
on the proposed amendment and there will be no “broker non-votes” involved in
the special meeting.
Common
Stock and Series A Stock Outstanding and Eligible to be Voted
All outstanding Common Stock and Series
A Stock will be entitled to be voted at the special meeting, with each such
share being entitled to one vote per share and to vote together as a single
class. As of March 4, 2010, the record date for the meeting, there were issued
and outstanding 7,996,007 shares of Common Stock and 10,000,000 shares of Series
A Stock, all of which are eligible to be voted on the proposed amendment to the
Company’s Articles of Incorporation for purposes of the First Approval required
under the Minnesota Control Share Acquisition Act.
The number of shares of Common Stock
and Series A Stock eligible to be voted on the proposed amendment to the
Company’s Articles of Incorporation for purposes of the Second Approval required
under the Minnesota Control Share Acquisition Act, will be determined as of the
time of the special meeting in the manner described in this Proxy Statement. The
categories of “interested shares” that will not be eligible to be voted in the
Second Approval are as follows:
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1.
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All
shares beneficially held by the “acquiring person,” which Section 302A.011
of the Minnesota Statutes defines (in pertinent part) as “a person that
makes or proposes to make a control share acquisition.” For purposes of
the special meeting, we expect that WCR, LLC, and BCP II, together with
any other affiliates of those entities, will be considered an “acquiring
person” and therefore ineligible to have any of their shares voted for
purposes of the Second Approval. Based solely on information obtained from
WCR, LLC and BCP II, neither those entities nor their affiliates
beneficially hold any shares of Common Stock or Series A
Stock.
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2.
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All
shares beneficially owned by any officer of the Company, which for
purposes of the special meeting will prohibit the voting of any shares by
John Quandahl, our President, Chief Executive and Operating Officer, and
Chief Financial Officer. As of the record date, Mr. Quandahl does not
beneficially own any shares of Company
stock.
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3.
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All
shares beneficially owned by any employee of the Company who is also a
director of the Company. Presently, the Company has four directors, only
two of which are also employees:
Messrs.
John
Quandahl and Mark Houlton. Of these two directors, Mr. Quandahl does not
beneficially own any shares of Company stock. Mr. Houlton, who is an
employee of our Cricket wireless retailing business conducted through our
subsidiary PQH Wireless, Inc., beneficially owns 316,667 shares of Common
Stock as of the record date. At the special meeting, these 316,667 shares
are “interested shares” and therefore ineligible to be voted for purposes
of the Second Approval.
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The certifications on our form of proxy
card will further assist the Company to identify any other shares that might be
considered “interested shares” under Minnesota law. For purposes of the above,
Minnesota law provides that a person is a “beneficial owner” of shares if that
person directly, or indirectly through any written or oral agreement,
arrangement, relationship, understanding or otherwise, (i) has or shares the
power to vote, or (ii) directs or has or shares the power to direct the voting,
or (iii) has or shares the power to dispose of, or direct the disposition of,
the shares.
All shares of Common Stock as to which
a signed certification of eligibility, as described below under the section
titled “Certification of Interested Shares,” has been provided on the proxy card
or ballot (provided at the special meeting for voting in person) indicating that
such shares are not interested shares will be presumed by the Company to be
eligible to be voted for purposes of the Second Approval. This presumption may
be rebutted if a shareholder signing the proxy card or ballot provides
subsequent information indicating that some or all of the shares represented by
the original proxy card or ballot are, or have become as of the special meeting,
interested shares or a successful challenge is made to such certification on the
basis of information available to the challenging party. It is the Company’s
position that shares of Common Stock subject to a proxy card or ballot without a
certification of eligibility completed by the shareholder shall be presumed to
be interested shares and not eligible to be voted for purposes of the Second
Approval.
Important
Note
: It is also the Company’s position that all shares of Common Stock
which are voted on any proxy card that may be distributed by, or on behalf of,
any shareholder of the Company, which do not contain a certification of
eligibility similar to the one authorized on the Company’s proxy card, shall
also be presumed to be interested shares unless the shareholder signing the
proxy card signs and presents either (1) a proxy card bearing a later date with
a signed certification of eligibility or (2) a separate certification of
eligibility in substantially the form contained on the Company’s proxy
card.
Voting
Procedures at The Special Meeting
The Board has authorized, and the
Company will institute, presumptions and procedures to govern the conduct of the
special meeting as well as to implement the Minnesota legislative mandate to
exclude the voting power of interested shares for purposes of the Second
Approval. The material presumptions and procedures are described below and are
qualified by reference to
Exhibit B
, which sets forth
the presumptions and procedures authorized by the Board with respect to the
special meeting.
The required votes needed to pass the
proposed amendment are described above (see Voting at the Special Meeting) as
the First Approval and the Second Approval. All shareholders will be asked on
the proxy card to certify whether or not they hold “interested shares,” which
are not eligible to be voted in the Second Approval.
As of March 4, 2010, there were issued
and outstanding 10,000,000 shares of Series A Stock and 7,996,007 shares of
Common Stock, with each share entitled to one vote and all such shares voting
together as a single class. Assuming all of the issued and outstanding voting
shares are represented at the special meeting in person or by proxy, the
affirmative vote of a majority of the outstanding voting shares, or 8,998,004
shares, in favor of the proposed amendment would be needed to satisfy the voting
requirements for the First Approval.
As of March 4, 2010, 316,667 of the
17,996,007 issued and outstanding shares of Common Stock were known to the
Company to be interested shares and therefore ineligible to vote for purposes of
the Second Approval. Assuming all of the issued and outstanding voting shares
are represented at the special meeting in person or by proxy, and that no
additional shares are determined to be interested shares, the affirmative vote
of a majority of the remaining outstanding voting shares, or 8,839,670 shares,
in favor of the proposed amendment would be needed to satisfy the voting
requirements for the Second Approval.
As described herein, each shareholder
must certify on the proxy card or a separate certification of eligibility the
number of shares of Common Stock being voted that are eligible to vote in
respect of the Second Approval. It is presumed that every share of Common Stock
that is certified as eligible to vote in the Second Approval is eligible to vote
in the Second Approval. It is presumed that every share of Common Stock not
certified as eligible to vote in the Second Approval, or every share of Common
Stock as to which there is no certification of eligibility, is not eligible to
vote in the Second Approval.
UNDER THE PROCEDURES ADOPTED FOR THE
SPECIAL MEETING, ALL SHARES OF COMMON STOCK THAT ARE VOTED WITHOUT SUCH A
CERTIFICATION SHALL BE PRESUMED TO BE INELIGIBLE TO VOTE IN RESPECT OF THE
SECOND APPROVAL.
Banks, brokerage houses, other
institutions, nominees and fiduciaries holding shares of Common Stock
beneficially owned by other parties will be requested to include this
certification on all materials distributed to such beneficial owners seeking
instructions from the beneficial owners as to how to vote such
shares.
The Board has appointed Maslon Edelman
Borman & Brand, LLP, our legal counsel and the registrar of our shares of
Series A Stock, to serve as the Inspector of Election. The Board may, if it
deems it appropriate, appoint a presiding inspector to oversee the Inspector of
Election. The Inspector of Election will, among other things, determine whether
a quorum is present, tabulate votes at the special meeting and resolve disputes,
including disputes as to whether any capital shares are “interested shares.” The
Company will submit, and WCR, LLC may also submit, to the Inspector of Election
information that may assist in identifying which shares of Common Stock are
interested shares for purposes of challenging any certification of eligibility
or lack thereof made on a proxy card or ballot that the Company or WCR, LLC, on
the basis of such information, may believe to be incorrect or invalid. Under
procedures approved by the Board, such challenges are to be made on a timely
basis prior to the certification of the vote at the special meeting. All such
challenges will be resolved by the Inspector of Election. The Inspector of
Election will be instructed to conduct its review and tabulation of proxies as
expeditiously as possible.
All capital shares as to which a signed
certification of eligibility, as described below under the section titled
“Certification of Interested Shares,” has been provided on the proxy card or
ballot indicating that such shares are not interested shares will be presumed by
the Inspector of Election to be eligible to be voted in determining whether the
proposed amendment has obtained the Second Approval.
If the Inspector of Election cannot
definitively determine whether a quorum is present, the business of the special
meeting will go forward, even though the final determination as to whether the
quorum is present may not be completed for a number of days. If the quorum
requirement is not met, the proposed amendment shall not be considered to have
been approved. No other business is expected to be conducted at the special
meeting.
In addition to the presumptions and
procedures described above, the following customary presumptions, among others,
will be applicable in connection with the special meeting:
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proxies
regular on their face are valid
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undated
but otherwise regular proxies are
valid
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ambiguities
shall be resolved in favor of enfranchising shareholders and affirming the
eligibility of their shares to vote
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signatures
are valid, and signatures on behalf of entities or made by mechanical
device are authorized
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in
the case of shareholders who submit more than one proxy, the most recent
one is valid
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a
legibly signed proxy is valid, notwithstanding discrepancies or incorrect
information
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a
proxy is intended to vote all shares of the record owner, unless expressly
stated to the contrary, and
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nominees
will comply with all applicable
laws.
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Background
of Stock Purchase and Sale Agreement
In the fall of 2009, the Company
retained B&L Capital, LLC, a financial-advisory and consulting firm, to make
certain suggestions about the capital needs of the Company and, if possible and
appropriate, make introductions to parties that might be interested in
furnishing the Company with capital or engaging in a transaction. In late
November 2009, B&L Capital received a draft non-binding letter of intent
from Blackstreet Capital Management, LLC, on behalf of BCP II, proposing terms
for a potential purchase of substantially all of the Company’s assets,
consisting primarily of the Company’s ownership interest in Wyoming Financial
Lenders, Inc. (the Company’s payday-lending business) and PQH Wireless, Inc.
(the Company’s Cricket wireless retail business) by an affiliate of BCP II.
B&L Capital promptly forwarded the draft letter to the Company.
Through the month of December, the
Company’s Chief Executive Officer had occasional telephonic discussions with
representatives of Blackstreet Capital Management relating to the draft
non-binding letter of intent. In addition, the Company had Maslon Edelman Borman
& Brand, LLP, its legal counsel, review the draft letter in late December
and, following that review, the Company furnished its comments to the letter to
Blackstreet Capital Management. On January 6, 2010, Blackstreet Capital
Management furnished the Company with a revised draft non-binding letter of
intent in response to the Company’s prior comments. Like the initial draft
letter, the revised letter contemplated a purchase by an affiliate of BCP II of
substantially all of the operating assets of the Company. Shortly after receipt,
the Company furnished the revised letter of non-binding intent to legal counsel
for review, and John Quandahl, the Company’s President, Chief Executive and
Operating Officer, and Chief Financial Officer, discussed the potential
transaction with legal counsel.
Mr. Quandahl then called a special
meeting of the Company’s Board of Directors to discuss the revised draft
non-binding letter of intent with Blackstreet Capital Management and the
potential transaction. The special meeting of the Board was held on
January 10, 2010, and the Board approved the execution and delivery by the
Company of the letter of intent with Blackstreet Capital
Management. As a consequence, on January 13, 2010, Western Capital
executed the non-binding letter of intent with Blackstreet Capital Management to
sell substantially all of its assets to an affiliate of BCP II. The
definitive non-binding letter of intent contained a customary due-diligence
period, and a requirement that the parties use good faith to negotiate and
approve any definitive acquisition agreement. On January 19, 2010,
the Company filed with the SEC a Current Report on Form 8-K disclosing, among
other things, the fact that the Company had entered into the non-binding letter
of intent with Blackstreet Capital Management.
From and after January 13, 2010,
representatives of Blackstreet Capital Management conducted a due-diligence
examination of the Company and its business. This due diligence
examination was conducted pursuant to the terms of a binding Non-Disclosure
Agreement that Western Capital and Blackstreet Capital Management entered into
shortly after the signing of the January 13, 2010 non-binding letter of
intent. The Non-Disclosure Agreement contained customary covenants
respecting the disclosure and use of confidential and proprietary information of
the Company collected by Blackstreet Capital Management during the course of the
due-diligence examination. During this same time frame, legal counsel
to the Company began the process of drafting a proposed definitive agreement for
the purchase and sale of substantially all of the assets of the
Company.
Beginning
on January 20, 2010, representatives of the Company, including its legal
counsel, received several phone calls and engaged in several discussions with
significant holders of the Company’s Common Stock or persons reporting
discussions with holders of the Company’s Common Stock. The holders
of the Common Stock expressed concern about the value of their Common Stock and
the value of the Company in the event that substantially all of the assets of
the Company were sold to an affiliate of BCP II. It became apparent
in the course of those conversations that at least some of the significant
holders of Common Stock would likely exercise their statutory dissenters’ rights
available to them under Minnesota law. This prospect resulted in
several conversations between the Company’s Chief Executive Officer and legal
counsel respecting the process of the assertion of dissenters’ rights, the
determination of fair value of a dissenting shareholder’s shares, and the manner
in which payment on dissenting shares would be made. Because the
“fair value” of dissenting shares is often determined through a lengthy process
in the state courts, it was concluded that spending considerable time and money
on a dissenters’ rights process was not in the best interest of the
Company.
On January 26, 2010, the Company’s
Chief Executive Officer and legal counsel to the Company engaged in a telephone
conference with representatives from Blackstreet Capital Management and Patton
Boggs LLP, legal counsel to Blackstreet Capital Management. In that
telephone conference, the Company explained its desire to avoid a lengthy and
costly dissenters’ rights process in the state courts and expressed uncertainty,
given that desire, about its willingness and ability to engage in further
negotiation with Blackstreet Capital Management for the sale of substantially
all of the Company’s assets.
Shortly after the January 26, 2010
telephone conference, representatives of Blackstreet Capital Management
contacted Mr. Lee Karavitis, an officer and representative of WERCS, to discuss
the possibility of purchasing directly from WERCS all of its capital stock in
the Company (both Common Stock and Series A Stock) as opposed to purchasing any
assets or securities directly from the Company. This contact resulted in
Blackstreet Capital Management undertaking to prepare a modified draft
non-binding letter of intent that Blackstreet Capital Management would enter
into with WERCS, and which would speak directly to the proposed structure of a
purchase and sale of all of WERCS’ capital stock in the Company. An initial
draft of this letter of intent was delivered to WERCS in the evening of January
26, 2010. Contemporaneously, representatives of Blackstreet Capital Management
informed representatives of the Company that they would not insist that
negotiations for the purchase and sale of the Company’s assets
continue.
Within a day or two of the delivery of
the draft letter of intent to WERCS, WERCS provided Blackstreet Capital
Management with comments to the draft letter of intent. Negotiation between the
parties culminated in the execution and delivery of a definitive non-binding
letter of intent on January 29, 2010. Promptly thereafter, representatives of
Kutak Rock, LLP, legal counsel to WERCS, began the process of preparing a draft
definitive Stock Purchase and Sale Agreement that would govern the purchase and
sale by WCR, LLC of WERCS’ capital stock in the Company.
On February 1, 2010, legal counsel to
the Company requested that the Company be released from the non-binding letter
of intent that the Company had entered into with Blackstreet Capital Management,
or that the executed non-binding letter of intent be terminated, in light of the
fact that representatives of Blackstreet Capital Management had indicated to
representatives of the Company that Blackstreet Capital Management would not
insist that negotiations for the purchase of substantially all of the assets of
the Company continue. This release and termination was memorialized
in writing on February 1, 2010. On February 3, 2010, the
Company prepared and filed with the SEC a Current Report on Form 8-K that
announced the termination of the non-binding letter of intent with Blackstreet
Capital Management. Contemporaneously, and in consideration the
agreement to terminate the letter of intent obtained from Blackstreet Capital
Management, the Company entered into a revised Non-Disclosure Agreement that
expressly permitted Blackstreet Capital Management to use the due-diligence
materials provided to them by the Company for the assessment of a potential
transaction with WERCS since, under the terms of the prior Non-Disclosure
Agreement, the use of information provided to Blackstreet Capital Management and
BCP II had been expressly limited to the assessment of a transaction with the
Company.
Over the course of the next several
weeks, WERCS and Blackstreet Capital Management, and their respective legal
counsel, negotiated the terms and conditions of the Stock Purchase and Sale
Agreement. This effort culminated in the execution and delivery by
WERCS, WCR Acquisition, Inc. (an affiliate of BCP II), and BCP II of the
definitive Stock Purchase and Sale Agreement on February 23,
2010. The definitive Stock Purchase and Sale Agreement was
subsequently filed by WERCS as an attachment to its Schedule 13D/A filed with
the SEC on February 25, 2010. Thereafter on March 3, 2010, WERCS, WCR
Acquisition, WCR, LLC and BCP II entered into a First Amendment to Stock
Purchase and Sale Agreement pursuant to which WCR Acquisition transferred and
assigned to WCR, LLC all of its rights and obligations under the Stock Purchase
and Sale Agreement and WCR, LLC was substituted as the “Buyer.”
In the evening of February 24, 2010,
WERCS delivered to the Company’s Chief Executive Officer and legal counsel a
letter containing a demand for a special shareholder meeting pursuant to
Minnesota Statutes, Section 302A.433. The demand letter contained a
proposal for an amendment to the Company’s Articles of Incorporation to make the
Minnesota Control Share Acquisition Act inapplicable to the
Company. The shareholder proposal was made pursuant to Section 3.3 of
the Company’s Amended and Restated Bylaws.
On February 25, 2010, the Company
forwarded the demand letter and proposal to members of its Board and noticed a
special meeting of the Board to be held on March 1, 2010. On March 1,
2010, the special meeting of the Board was duly held and, after discussion
relating to the demand letter, the transactions contemplated by the Stock
Purchase and Sale Agreement, the issue of whether or not to solicit proxies for
the special meeting, and the issue of whether or not to make a recommendation to
the shareholders with respect to voting at the special meeting, the Board
unanimously set the record date and meeting date for the special
meeting. Also on February 25, 2010, representatives of WCR, LLC
provided the Company with summary information about WCR, LLC and BCP II, and
their intentions, which information is substantially similar to the information
that would be required in an information statement delivered pursuant to the
Minnesota Control Share Acquisition Act. A summary of the information
provided by WCR, LLC can be found below under “Information About WCR, LLC” and a
copy of the letter provided to the Company by WCR, LLC is attached to this Proxy
Statement as
Exhibit
D
.
Change
of Control Implications
The Stock Purchase and Sale Agreement
contains several conditions to the closing of which our shareholders should be
aware. First, the Stock Purchase and Sale Agreement conditions WCR,
LLC’s obligation to purchase WERCS’ shares on the resignations from our Board of
each of Messrs. Robert Moberly, Mark Houlton and James Mandel, to be effective
as of the closing date of the purchase and sale transaction. In the
case of Messrs. Moberly and Houlton, it is anticipated that such individuals
will likely submit their resignations to the Company as
contemplated. The Company anticipates this will be the case since
Messrs. Moberly and Houlton are stockholders of WERCS.
Each of
Messrs. Moberly, Houlton and Quandahl possess an interest in WERCS. In the case
of Messrs. Moberly and Houlton, each possess a greater than 10% interest in
WERCS. In the case of Mr. Quandahl, he possesses approximately a 7% interest in
WERCS.
As a result, each of Messrs. Moberly, Houlton and Quandahl have an
indirect and material financial interest in the consummation of the transactions
contemplated by the Stock Purchase and Sale Agreement. In the case of
Mr. Mandel, it is presently uncertain whether Mr. Mandel will tender his
resignation to the Company as contemplated under the Stock Purchase and Sale
Agreement. No director of the Company is under any obligation to
tender his resignation, and the Company does not intend to take any steps to
obtain any resignations from any one or more directors of the
Company. If any of the three aforementioned directors determines not
to resign, WCR, LLC could in its discretion determine either to not close or to
waive such condition.
In the event that any director
presently serving on the Board resigns his seat in connection with the
transactions contemplated by the Stock Purchase and Sale Agreement, the Company
believes that the resulting vacancy may be filled by appointment of the
then-remaining directors on the Board. Nonetheless, the Company has
not obtained any information from WCR, LLC about any potential persons that WCR,
LLC may wish to have seated as a director on the Board. In any event,
if the transactions contemplated by the Stock Purchase and Sale Agreement are
consummated, WCR, LLC will have effective voting control over all seats on the
Company’s Board of Directors. This means that WCR, LLC will have the
power and the right to call (or cause the Company to call) an annual meeting of
the shareholders (or a special meeting in lieu of an annual meeting) for the
purpose of electing persons to serve on the Board. Furthermore, WCR,
LLC’s effective voting control will permit it to cast the deciding vote on each
nominee to a seat on the Board.
A second condition to the obligation of
WCR, LLC to consummate the purchase of WERCS’ shares is that the Company must
enter into an employment agreement with John Quandahl, the Company’s President,
Chief Executive and Operating Officer, and Chief Financial Officer, on terms and
conditions that are substantially similar to Mr. Quandahl’s current employment
arrangement with the Company. The Company is not a party to the Stock
Purchase and Sale Agreement and is not bound by any of the provisions of such
agreement. Furthermore, the Company presently has no plans to submit
any proposed agreement to its current Board of Directors. As a
result, WCR, LLC may in its discretion elect to not close as a result of the
non-satisfaction of this condition, or to waive this condition.
A third
condition to the closing (a condition to the obligation of WERCS to sell its
shares to WCR, LLC) is the release of Robert Moberly from a personal guarantee
that he delivered to Banco Popular North America for the benefit of the Company,
relating to an amendment to a promissory note and related business loan
agreement by and between Banco Popular and Wyoming Financial Lenders, Inc., the
Company’s payday-lending subsidiary. Therefore, if the condition is
satisfied prior to the closing, Mr. Moberly will benefit by relieved of his
current obligation to guarantee the payment by Wyoming Financial Lenders of the
debt it owes to Banco Popular.
Other than as set forth above, no
member of management of the Company and no director will benefit from any change
in control of the Company as a result of any contract, agreement or arrangement
with the Company, such as a severance agreement, change-in-control agreement,
change-in-control provisions contained within any agreement, or
otherwise.
Recommendation
by the Board of Directors
After careful consideration, including
a thorough review of the facts and circumstances surrounding the proposed
amendment with the Company’s legal advisors, and consultation with the Company’s
management, the Board has determined to express no opinion and remain neutral
with respect to the proposed amendment.
In evaluating the proposed amendment
and determining to express no opinion and remain neutral with respect to it, the
Board considered each of the factors set forth below, some of which may weigh
against the proposed amendment and some of which may weigh in favor of the
proposed amendment. The Board has determined that an individual
shareholder’s decision on the question is likely to depend primarily on how the
shareholder weighs these factors in addition to any other factors that the
shareholder may consider relevant. Accordingly, the Board urges each
shareholder to make its own decision regarding the proposed amendment based on
all available information.
The Board did not find it practicable,
and did not attempt, to quantify, rank or otherwise assign relative weight to
these factors, and different members of the Board may have given different
weight to the different factors.
Potential
Factors Weighing Against the Proposed Amendment
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Influence and Control Over the
Company
. If the proposed amendment is approved, and the
transactions contemplated by the Stock Purchase and Sale Agreement are
consummated, WCR, LLC would be able to take action in response to a
particular decision of the Board, including replacing all of the directors
serving on the Board, thereby controlling all of the major decisions of
the Company.
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Possible Impact on Future
Strategic Transactions
. If the proposed amendment is
approved, and the transactions contemplated by the Stock Purchase and Sale
Agreement are consummated, WCR, LLC would have a level of control that
would enable it to effectively block future strategic transactions, such
as a merger, consolidation, share exchange or sale of all or substantially
all of the Company’s assets, each of which requires approval by a majority
of the outstanding voting power of Company stock. WCR, LLC
would also be able to initiate or substantially assist any such
transaction. Although, to the knowledge of the Company, no such
transaction is pending or contemplated at this time, the Company cannot
predict if or when any such transaction may result or be available in the
future or what WCR, LLC’s position in relation to such a transaction might
be.
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Uncertainty of WCR, LLC’s
Disposition of Shares
. WCR, LLC is not entering into any
agreement with the Company regarding the disposition of any Common Stock
it owns or will acquire in the future. As a result, WCR, LLC
could dispose of a significant percentage of its Common Stock over a
period of time (but in any event in compliance with Rule 144 and the
restrictions on resale imposed by the federal Securities Act of 1933), and
such disposition could negatively impact the trading price of the Common
Stock.
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All Future Control Share
Acquisitions Will Be Exempt From The Minnesota Control Share Acquisition
Act.
The effect of the proposed amendment to the
Company’s Articles of Incorporation is not limited to WCR, LLC’s proposed
acquisition of Company shares from WERCS. If the amendment is
adopted, the Minnesota Control Share Acquisition Act will not apply to any
subsequent acquisition of shares of the Company’s
stock. Accordingly, the protections against a takeover that the
Minnesota Control Share Acquisition Act were designed to provide will no
longer be available to the Company or its
shareholders.
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Potential
Factors Weighing in Favor of the Amendment
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Increased Access to Growth
Capital
. Based on information provided to the Company by
WCR, LLC (see “Information About WCR, LLC” below), WCR, LLC and its
affiliates have access to significant capital, some of which could be
deployed for the purpose of growing the Company’s business geographically,
diversifying its services, or otherwise. Overall, WCR, LLC’s
access to capital appears to surpass the ability of WERCS to access
capital. Nevertheless, shareholders should understand that WCR,
LLC has not committed to provide any growth capital at all to the
Company.
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Strategic Transactions in the
Future
. While WCR, LLC will have the ability to block
certain types of strategic transactions in the future, as noted above, the
considerable experience of WCR, LLC’s affiliates as a private equity fund
may indicate that a strategic transaction in the future is more
likely. It is typical for private equity funds to make
investments with certain prescribed time horizons and exit strategies that
are either identified prior to investment, or identified subsequent to
investment. Furthermore, the ability of a strategic acquirer to
obtain effective control over the Company by dealing with just one party
may encourage offers for strategic acquisitions that ordinarily would be
cost-prohibitive for a buyer.
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Business
Combination Transactions
Under Minnesota Statutes, Section
302A.673, a shareholder who controls more than 10% of the voting power of an
issuing public corporation (such as the Company), defined as an “interested
shareholder,” is prohibited from engaging in certain transactions, such as
mergers, dispositions and asset acquisitions (defined under the Minnesota
Statutes as “business combination transaction”), with the issuing public
corporation for four years following the date the 10% threshold was crossed;
subject, however, to the power of a committee of the Board to approve any
proposed business combination transaction, as discussed in detail
below. Presently, we are advised that WCR, LLC does not beneficially
own any shares of the Company’s capital stock.
Under Minnesota law, if, after the
closing of the transactions contemplated by the Stock Purchase and Sale
Agreement, WCR, LLC later desires to enter into a business combination
transaction with the Company, a committee of the Board composed solely of
“disinterested directors” will be required to consider and either approve or
disapprove of the proposed transaction. For this purpose, Minnesota
law defines “disinterested directors” as a person that is neither an officer nor
an employee, nor has been an officer or employee within the prior five years, of
the issuing public corporation, of either the Company or of any related
organization. A “related organization” is: (1) a parent or
subsidiary of the Company; (2) another subsidiary of a parent of the Company;
(3) a limited liability company owning, directly or indirectly, more than 50% of
the voting power of the shares entitled to vote for directors of the Company;
(4) a limited liability company having more than 50% of the voting power of its
membership interests entitled to vote for members of its governing body owned
directly or indirectly by the Company; (5) a limited liability company having
more than 50% of the voting power of its membership interests entitled to vote
for members of its governing body owned directly or indirectly either (i) by a
parent of the Company or (ii) a limited liability company owning, directly or
indirectly, more than 50% of the voting power of the shares entitled to vote for
directors of the Company; or (6) a corporation having more than 50% of the
voting power of its shares entitled to vote for directors owned directly or
indirectly by a limited liability company owning, directly or indirectly, more
than 50% of the voting power of the shares entitled to vote for directors of the
Company. For this purpose, Minnesota law defines a “parent” as an
organization that directly, or indirectly through related organizations, owns
more than 50% of the voting power of the shares or other ownership interests
entitled to vote for directors or other members of the governing body of the
Company. If, at the time a business combination transaction is
proposed by WCR, LLC, the Board has no disinterested directors, then the Board
may appoint three persons to serve on a committee, all of whom would qualify as
“disinterested directors,” for purposes of approving or disapproving the
transaction.
As a result of the above-described
prohibition, the approval of the proposed amendment and the subsequent closing
of the transactions contemplated by the Stock Purchase and Sale Agreement would
not likely facilitate in the near future any potential value-creating
transaction for Company shareholders between Western Capital and WCR, LLC since
WCR, LLC will be subject to the above-described prohibition from the date the
10% threshold is crossed. In any event, WCR, LLC has given no
indication that it intends to propose any such a transaction with Western
Capital.
The foregoing summary does not purport
to be a complete statement of the provisions of the Minnesota Business
Combination Act. The foregoing summary is qualified in its entirety
by reference to the Minnesota Business Combination Act (codified at Minnesota
Statutes, Section 302A.673) and other pertinent provisions of Chapter 302A of
the Minnesota Statutes.
Minnesota
Control Share Acquisition Act
The Minnesota Control Share Acquisition
Act provides that, unless the articles of incorporation or bylaws of an issuing
public corporation provide otherwise, any control share acquisition of such
corporation shall be made only with the prior authorization of the
shareholders. An “issuing public corporation” is defined in Chapter
302A of the Minnesota Statutes as a corporation organized for profit under the
laws of Minnesota, with at least 50 or more shareholders and that has a class of
equity securities registered pursuant to §12, or that is subject to §15(d), of
the Securities Exchange Act of 1934. Western Capital is an “issuing
public corporation” as defined in the Minnesota Statutes.
A “control share acquisition” is
defined in the Minnesota Statutes as the acquisition, directly or indirectly, by
any person of shares of an issuing public corporation that, when added to all
other shares of the issuing public corporation in respect of which such person
may exercise or direct the exercise of voting power or the power to dispose of
such shares, would entitle such acquiring person, immediately after such
acquisition, directly or indirectly, to control any of the following ranges of
voting power of such issuing public corporation in the election of
directors:
|
·
|
at
least 20% but less than one-third of such voting
power;
|
|
·
|
one-third
or more but less than or equal to 50% of such voting power;
or
|
|
·
|
over
50% of such voting power.
|
Any person who proposes to make a
control share acquisition must deliver an “information statement” to the issuing
public corporation, which statement must include:
|
·
|
the
identity and background of the acquiring
person;
|
|
·
|
a
reference that the information statement is being delivered under the
Minnesota Control Share Acquisition
Act;
|
|
·
|
the
number of shares of the issuing public corporation owned, directly or
indirectly, by such acquiring person before the control share
acquisition;
|
|
·
|
the
range of voting power in the election of directors under which the
proposed control share acquisition would fall, if consummated (i.e., in
excess of 20%, one-third or
50%);
|
|
·
|
a
description of the terms of the proposed control share acquisition,
including but not limited to the source of funds or other consideration
and the material financial arrangements relating to the control share
acquisition; and
|
|
·
|
the
acquiring person’s plans or proposals (including plans or proposals under
consideration) to: (1) liquidate or dissolve the issuing public
corporation; (2) sell all or a substantial part of its assets, or merge it
or exchange its shares with any other person; (3) change the location of
its principal place of business or its principal executive office or of a
material portion of its business activities; (4) change materially its
management or policies of employment; (5) change materially its charitable
or community contributions or its policies, programs, or practices
relating thereto; (6) change materially its relationship with suppliers or
customers or the communities in which it operates; or (7) make any other
material change in its business, corporate structure, management or
personnel; and other objective facts as would be substantially likely to
affect the decision of a shareholder with respect to voting on the control
share acquisition.
|
After an information statement has been
delivered by an acquiring person who requests a meeting of the shareholders,
Minnesota law requires that the corporation call and hold a meeting of the
shareholders to approve the control share acquisition. Shares
acquired in a control share acquisition have the same voting rights as other
shares of the same class or series only if the shareholders of the issuing
public corporation approve the control share acquisition as described
below.
Because the proposal for consideration
at the special meeting is an amendment to the Articles of Incorporation to make
the Minnesota Control Share Acquisition Act inapplicable to the Company, and
because the proposed acquisition of shares by WCR, LLC pursuant to the Stock
Purchase and Sale Agreement is contingent upon the approval and effectuation of
such amendment (such that, at the time of any closing, the acquisition will not
constitute a “control share acquisition” under Minnesota law), WCR, LLC has not
delivered any information statement under the Minnesota Control Share
Acquisition Act. Nonetheless, to facilitate the Company’s disclosure to its
shareholders in this Proxy Statement, WCR, LLC has provided the Company with
information substantially similar to that which would be required under an
information statement delivered pursuant to the Minnesota Control Share
Acquisition Act. This information was provided to the Company on March 1, 2010
and is attached hereto as
Exhibit D
.
Subdivision 1(a) of the Minnesota
Control Share Acquisition Act expressly permits the articles of incorporation of
a Minnesota corporation to be amended to make the Act inapplicable to the
corporation. For any such amendment to be effective (and, where applicable, for
any shareholder approval of a control share acquisition), subdivision 4a(b) of
the Minnesota Control Share Acquisition Act requires the affirmative vote
of:
|
·
|
the
holders of a majority of the voting power of all shares entitled to vote,
including all shares held by the acquiring person,
and
|
|
·
|
the
holders of a majority of the voting power of all shares entitled to vote,
excluding all interested shares.
|
Elsewhere in this Proxy Statement, the
two components of the required vote described above are defined respectively as
the “First Approval” and the “Second Approval.” Minnesota law defines
“interested shares” as any shares of voting stock of an issuing public
corporation that are beneficially owned by:
|
·
|
any
officer of the issuing public corporation,
or
|
|
·
|
any
employee of the issuing public corporation who is also a director of the
issuing public corporation.
|
Dissenters’ rights are not available to
shareholders of an issuing public corporation in connection with the
authorization of a control share acquisition or any proposed amendment to the
articles of incorporation of a Minnesota corporation for the purpose of making
the Minnesota Control Share Acquisition Act inapplicable to the
Company. See Minnesota Statutes, Section 302A.471, subdivision
1(a)(4).
The foregoing summary does not purport
to be a complete statement of the provisions of the Minnesota Control Share
Acquisition Act. The foregoing summary is qualified in its entirety
by reference to the Minnesota Control Share Acquisition Act and other pertinent
provisions of Chapter 302A of the Minnesota Statutes. A copy of the
Minnesota Control Share Acquisition Act and other pertinent provisions of the
Minnesota Statutes are included as
Exhibit C
to this Proxy
Statement.
Certification
of Interested Shares
As described above, in order to comply
with Minnesota law, approval of the proposed amendment to the Company’s Articles
of Incorporation requires both the First Approval and the Second
Approval. In determining whether shareholders have granted the First
Approval, any interested shares will be included in the tabulation of
votes. In determining whether shareholders have granted the Second
Approval, any interested shares will be excluded from the tabulation of
votes.
The enclosed proxy card contains a
certification as to whether any shares of Common Stock to be voted by you
constitute interested shares. If you believe that some but not all of
your shares of Common Stock are interested shares, you should indicate the
number of your shares that you believe are not interested shares. If
you do not make a certification on the proxy card, then all of your Common Stock
will be presumed to be interested shares. In the event that some but
not all of your Common Stock are interested shares but you do not indicate the
number of shares of your Common Stock that are not interested shares, then all
of your Common Stock will be presumed to be interested shares.
For purposes of the special meeting and
the Second Approval, interested shares means Common Stock in respect of which
any of the following persons may (i) exercise or direct the exercise of the
voting power of such shares (or share such power) or (ii) exercise or direct the
exercise of the power to dispose of such shares (or share such
power):
|
(1)
|
the
acquiring person or its affiliates (i.e., WCR, LLC or its
affiliates);
|
|
|
any
officer of Western Capital elected or appointed by the Board;
or
|
|
|
any
employee of Western Capital who is also a director on the
Board.
|
With
respect to the above, the Company has already determined that any of the
following shares of Company voting stock will constitute “interested shares” for
purposes of the Second Approval component of the shareholder vote on the
proposed amendment at the meeting: (i) any shares beneficially owned
by WCR, LLC or its affiliates; (ii) any shares beneficially owned by John
Quandahl, a director of the Company and our President, Chief Executive and
Operating Officer, and Chief Financial Officer, and (iii) any shares held by
Mark Houlton, a director of the Company and an employee of our Cricket wireless
retailing business conducted through our subsidiary PQH Wireless,
Inc.
If you have any questions as to whether
your shares of Common Stock are interested shares, you should contact Paul D.
Chestovich of Maslon Edelman Borman & Brand, LLP, counsel to the Company, at
(612) 672-8305.
Admittance
to Special Meeting
You are entitled to attend the special
meeting only if you were a Western Capital shareholder as of the close of
business on March 4, 2010 (the record date) or hold a valid proxy for the
special meeting. You should be prepared to present photo
identification for admittance. In addition, if you are a record
holder, your name will be verified against the list of record holders on the
record date prior to being admitted to the special meeting. If you
are not a record holder but hold Common Stock through a broker or nominee (i.e.,
in street name), you must provide proof of beneficial ownership on the record
date, such as your most recent account statement prior to the record date, or
other similar evidence of ownership. If you do not provide photo
identification or comply with the other procedures outlined above upon request,
you will not be admitted to the special meeting.
Voting,
Solicitation and Certain Other Information
Proxies may be solicited by
mail. Presently, we do not anticipate that we will solicit proxies by
any other means. No person will receive additional compensation for
any proxy solicitations. Western Capital has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
of its solicitation materials to the beneficial owners of the Common Stock they
hold of record. Western Capital will reimburse these record holders
for customary clerical and mailing expenses incurred by them in forwarding these
materials to their customers.
The entire expense of the solicitation
of proxies on behalf of the Company for the special meeting is being borne by
the Company. The Company’s costs incidental to this proxy
solicitation include expenditures for printing, postage, legal and related
expenses, and are expected to be approximately
$ .
No
Dissenters’ Rights
Dissenters’ rights are not available to
the shareholders of an “issuing public corporation” in connection with any
amendment to a Minnesota corporation’s articles of incorporation to opt out of
the Minnesota Control Share Acquisition Act. Similarly, dissenters’
rights are not available to the shareholders of an “issuing public corporation”
in connection with the authorization of any control share acquisition under
Minnesota law.
No
Other Matters at the Special Meeting
Other than the proposed amendment to
our Articles of Incorporation, the Company is not aware of any other matters to
be submitted at the special meeting and no other business is expected to be
brought before the meeting. However, if any other matter properly
comes before the meeting, the named proxies will vote all proxies granted to
them in their sole discretion.
Beneficial
Ownership of Securities
The following table shows the number of
shares of Common Stock beneficially owned as of March 1, 2010, unless otherwise
indicated, by:
|
·
|
each
current director of the Company;
|
|
·
|
the
sole individual who served as the Chief Executive Officer and Chief
Financial Officer for the Company during the fiscal year ended December
31, 2009;
|
|
·
|
all
directors and our executive officers as a group;
and
|
|
·
|
each
person who is known by us to beneficially own more than 5% of our Common
Stock.
|
Name
and Address
(1)
|
|
Common
Shares
Beneficially
Owned
(#)
(2)
|
|
|
Percentage
of
Common
Shares
(%)
(2)
|
|
John
Quandahl
(3)
|
|
|
0
|
|
|
|
*
|
|
James
Mandel
(4)
|
|
|
58,640
|
|
|
|
*
|
|
Robert
W. Moberly
(5)
|
|
|
11,125,000
|
|
|
|
61.8
|
%
|
Mark
Houlton
(6)
|
|
|
316,667
|
|
|
|
3.9
|
%
|
All
current executive officers and directors as a group
(7)
|
|
|
11,500,307
|
|
|
|
63.9
|
%
|
Steven
Staehr
(8)
7778
Barbican Ct.
Las
Vegas, NV 89147
|
|
|
966,667
|
|
|
|
12.1
|
%
|
Christopher
Larson
(9)
8912
East Pinnacle Peak Rd.
Scottsdale,
AZ 85255
|
|
|
550,000
|
|
|
|
6.9
|
%
|
WERCS
Inc.
(10)
400
East First St.
PO
Box 130
Casper,
WY 82602
|
|
|
11,125,000
|
|
|
|
61.8
|
%
|
Lantern
Advisers, LLC
(11)
80
South Eighth St., Suite 900
Minneapolis,
MN 55402
|
|
|
520,963
|
|
|
|
6.5
|
%
|
Mill
City Ventures, LP
(12)
80
South Eighth St., Suite 900
Minneapolis,
MN 55402
|
|
|
800,000
|
|
|
|
10.0
|
%
|
Joseph
A. Geraci, II
(13)
80
South Eighth St., Suite 900
Minneapolis,
MN 55402
|
|
|
800,000
|
|
|
|
10.0
|
%
|
* Less
than 1%
(1)
|
Unless
otherwise indicated, the business address of all persons indicated in the
table is the business address of the Company: 11550 “I” Street,
Suite 150, Omaha, Nebraska 68137.
|
(2)
|
Beneficial
ownership is determined in accordance with the rules of the SEC, and
includes general voting power and/or investment power with respect to
securities. Shares of common stock issuable upon exercise of
options or warrants that are currently exercisable or exercisable within
60 days of the record rate, and shares of common stock issuable upon
conversion of other securities currently convertible or convertible within
60 days, are deemed outstanding for computing the beneficial ownership
percentage of the person holding such securities but are not deemed
outstanding for computing the beneficial ownership percentage of any other
person. Under the applicable SEC rules, each person’s
beneficial ownership is calculated by dividing the total number of shares
with respect to which they possess beneficial ownership by the total
number of outstanding shares of the Company. In any case where
an individual has beneficial ownership over securities that are not
outstanding, but are issuable upon the exercise of options or warrants or
similar rights within the next 60 days, that same number of shares is
added to the denominator in the calculation described above. Because the
calculation of each person’s beneficial ownership set forth in the
“Percentage of Common Shares” column of the table may include shares that
are not presently outstanding, the sum total of the percentages set forth
in such column may exceed 100%.
|
(3)
|
Mr.
Quandahl is the Company’s Chief Executive Officer, Chief Operating Officer
and Chief Financial Officer.
|
(4)
|
Mr.
Mandel is a director of the Company. 479 of these shares are
registered in Mr. Mandel’s name. The remaining 58,161 shares
are held by Multiband Corporation (a Minnesota corporation), of which Mr.
Mandel is the Chief Executive Officer and by virtue of which position Mr.
Mandel has beneficial ownership.
|
(5)
|
Mr.
Moberly is a director of the Company. Consists of 1,125,000
shares of Common Stock and 10,000,000 shares of Series A Stock held of
record by WERCS. See fn 10 below. Mr. Moberly
exercises the power to vote and dispose of these shares in his capacity as
the Chief Operating Officer of
WERCS.
|
(6)
|
Mr.
Houlton is a director and employee of the
Company.
|
(7)
|
Consists
of Messrs. Quandahl, Mandel, Houlton and
Moberly.
|
(8)
|
Share
figures reflected in the table are based on a January 10, 2008 Schedule
13/G filing with the SEC, which is the Company’s best available
information relating to Mr. Staehr’s ownership of Company
stock.
|
(9)
|
Share
figures reflected in the table are based on the Company’s best available
information relating to the ownership of Mr. Larson. To the
knowledge of the Company, Mr. Larson has not made any filings with the SEC
under §13 of the Securities Exchange Act of 1934 upon which the Company
may rely for purposes of presenting on the table Mr. Larson’s beneficial
ownership in the Company. All of Mr. Larson’s shares reflected
in the table are subject to cancellation upon the expiration of a
guarantee Mr. Larson delivered for the benefit of the Company during his
tenure as the Company’s Chief Executive Officer (which tenure ended on
December 31, 2008), and certain other
events.
|
(10)
|
Consists
of 1,125,000 shares of Common Stock and 10,000,000 shares of Series A
Stock which are convertible into an equal number of shares of Common
Stock. Share figures contained in the table are taken from
WERCS’ most recent filing under §13 of the Securities Exchange Act of 1934
on Schedule 13D/A, filed on February 25, 2010, and from the registered
shareholder list of the Company for holders of its Common Stock and Series
A Stock.
|
(11)
|
Lantern
Advisers, LLC is a Minnesota limited liability company owned equally by
Messrs. Douglas Polinsky and Joseph A. Geraci, II. As to shares
of Western Capital, only Mr. Polinsky possesses investment and voting
control. As a consequence, Mr. Geraci disclaims beneficial
ownership of any shares held by Lantern Advisers. Share figures
contained in the table are taken from Lantern Advisers’ most recent filing
under §13 of the Securities Exchange Act of 1934 on Schedule 13G/A, filed
on February 16, 2010.
|
(12)
|
Mill
City Ventures, LP is a Minnesota limited partnership the securities of
which are beneficially held by Mill City Advisers LLC, a Minnesota limited
liability company that serves as the general partner to Mill City
Ventures, LP. Mr. Joseph A. Geraci, II, the sole member and
manager of Mill City Advisors, holds investment and voting control over
the shares beneficially owned by Mill City Ventures. Share
figures contained in the table are taken from Mill City Ventures’ most
recent filing under §13 of the Securities Exchange Act of 1934 on Schedule
13G/A, filed with the SEC on February 17,
2009.
|
(13)
|
Joseph
A. Geraci, II, possesses beneficial ownership of securities held by Mill
City Ventures, LP. See fn 12 above. Mr. Geraci
disclaims beneficial ownership of any beneficial ownership of shares of
Western Capital held by Lantern Advisers, LLC. See fn 11
above.
|
Interest
of Certain Persons in Matters to be Acted Upon
The interests of certain persons in the
proposed amendment are set forth above in the section titled “Change of Control
Implications.”
Information
About Western Capital Resources, Inc.
Western Capital was organized as a
Minnesota corporation in November 2001. When originally incorporated,
its legal name was “URON Inc.” and its business consisted of the provision of
dial-up internet service to residential and commercial customers, principally in
the midwestern United States, Texas, South Carolina and Florida. URON’s
customers paid a monthly recurring fee for such services.
From its incorporation until August
2006, the Company was wholly owned by Multiband Corporation, a Minnesota
corporation. Multiband spun-off approximately 49% of the common stock
of URON to Multiband’s shareholders in August 2006. In connection
with this spin-off transaction, URON filed a Form 10-SB registration with the
SEC and Multiband distributed an information statement to its
shareholders. In the spin-off transaction, Multiband retained for
itself ownership of approximately 51% of the issued and outstanding shares of
URON common stock. The spin-off was effected on August 10, 2006 in the form of a
stock dividend for shareholders of record of Multiband common stock as of May 1,
2006. On August 11, 2006, Multiband sold its entire ownership
interest in URON to Lantern Advisers, LLC for $75,000 in cash.
In December 2007, the Company engaged
in a reverse merger transaction with Wyoming Financial Lenders, Inc., a Wyoming
corporation, pursuant to an Agreement and Plan of Merger and Reorganization
dated December 13, 2007 (the “Merger Agreement”). In the
reverse merger transaction, WFL Acquisition Corp. (a wholly owned subsidiary of
the Company) merged with and into Wyoming Financial Lenders, Inc., a Wyoming
corporation, with Wyoming Financial Lenders remaining as the surviving entity
and our wholly owned operating subsidiary. After the reverse merger,
we changed our corporate name from URON Inc. to “Western Capital Resources,
Inc.”
Now headquartered in Omaha, Nebraska,
Western Capital operates extensively throughout the Midwestern United States,
providing cash advance (payday) loans, check-cashing and related services
through our Wyoming Financial Lenders, Inc. subsidiary, and operating Cricket
wireless phone retail stores through our PQH Wireless, Inc.
subsidiary. We presently operate our cash advance and related
activities at 55 locations spread across ten states (Colorado, Iowa, Kansas,
Montana, Nebraska, North Dakota, South Dakota, Utah, Wisconsin and Wyoming), and
our Cricket wireless retail operations in 35 locations spread across seven
states (Illinois, Indiana, Kansas, Maryland, Missouri, Nebraska and
Texas). The Company’s principal executive offices are located at
11550 “I” Street, Suite 150, Omaha, Nebraska 68137, and its telephone number is
(402) 551-8888.
Information
About WCR, LLC
WCR, LLC is a Delaware limited
liability company formed to consummate the acquisition of the Common Stock and
Series A Stock held by WERCS pursuant to the Stock Purchase and Sale
Agreement.
WCR, LLC has three owners—Blackstreet
Capital Partners (AI) II, L.P., and Blackstreet Capital Partners (QP) II, L.P.,
both of which are Delaware limited partnerships, and Blackstreet Capital
Advisors II, LLC, a Delaware limited liability company. In addition
to being a direct equity interest holder in WCR, LLC, Blackstreet Capital
Advisors II is the general partner of each BCP II entity. The
managing member of Blackstreet Capital Advisors II is Murry
Gunty. After the closing of the transactions contemplated by the
Stock Purchase and Sale Agreement, BCP II will exercise voting and investment
control over WCR, LLC. The principal address of each of WCR, LLC and
its owners is: 5425 Wisconsin Avenue, Suite 701, Chevy Chase, MD
20815.
WCR, LLC has advised the Company that
BCP II has approximately $105 million in capital and/or firm capital commitments
and a $15 million credit facility. WCR, LLC has advised that, in
light of these financial resources, it presently has access to sufficient funds
with which to consummate the contemplated purchase of the Common Stock and
Series A Stock from WERCS in accordance with the terms and conditions of the
Stock Purchase and Sale Agreement. In this regard, WCR, LLC
anticipates that it will purchase such shares from WERCS in cash.
Finally, WCR, LLC has advised the
Company that is presently has no plans or proposals (or any plans or proposals
under consideration) to: (1) liquidate or dissolve the Company; (2)
sell all or a substantial part of its assets, or merge the Company or exchange
its shares with any other person; (3) change the location of the Company’s
principal place of business or its principal executive office or of a material
portion of its business activities; (4) change materially the Company’s
management or policies of employment; (5) change materially its charitable or
community contributions or its policies, programs, or practices relating
thereto; (6) change materially the Company’s relationship with suppliers or
customers or the communities in which it operates; or (7) make any other
material change in the Company’s business, corporate structure, management or
personnel, except for the expected changes to the Board of Directors discuss
above under “Change of Control Implications.”
The information concerning WCR, LLC
contained in this Proxy Statement has been taken from, or is based upon,
publicly available information and information provided to the Company directly
from WCR, LLC. Although Western Capital has no knowledge that would indicate
that statements relating to WCR, LLC contained in this Proxy Statement are
inaccurate or incomplete, it has not had access to the books and records of WCR,
LLC or BCP II, was not involved in the preparation of such information and
statements and is not in a position to verify any such information or
statements. Accordingly, Western Capital does not take any responsibility for
the accuracy or completeness of such information or for any failure by WCR, LLC
or BCP II to disclose any events that may have occurred or that may affect the
significance or accuracy of any such information. A copy of the written
information provided to the Company by WCR, LLC is included as
Exhibit D
to this Proxy
Statement.
Cautionary
Statement Regarding Forward-Looking Information
This Proxy Statement contains certain
management expectations that may constitute forward-looking information within
the meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act
of 1995. Forward-looking information speaks only as to the date of this Proxy
Statement and may be identified by use of words such as “may,” “will,”
“believes,” “anticipates,” “plans,” “expects,” “estimates,” “projects,”
“targets,” “forecasts,” “continues,” “seeks,” or the negative of those terms or
similar expressions. Many important factors could cause actual results to be
materially different from those in forward-looking information, including
without limitation competitive factors, disruption of markets, changes in market
or economic conditions, pending or future claims or litigation, technology
advances, federal or state regulation or legislation. No assurances can be
provided as to the outcome of such risks or the consequences if the shareholders
either approve or fail to approve the proposed amendment. The Company does not
undertake to update or revise any forward-looking information even if events
make it clear that any projected results, actions, or impact, express or
implied, will not be realized.
Other potential risks and uncertainties
that may cause actual results or outcomes to be materially different from those
in forward-looking information are described in the Company’s most recent Annual
Report on Form 10-K filed with the SEC. Copies are available from the SEC
at
http:www.sec.gov
.
PLEASE
TIMELY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AND
CERTIFICATION.
|