WESTERN COUNTRY CLUBS, INC.
1601 WEST EVANS
DENVER, COLORADO 80223
NOTICE TO SHAREHOLDERS PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
THIS DOCUMENT IS PROVIDED TO YOU SOLELY FOR INFORMATIONAL
PURPOSES. YOU ARE NOT BEING ASKED TO VOTE ON THESE MATTERS.
This Notice to Shareholders is provided pursuant to Section 14(f) of the
Securities Exchange Act of 1934 in connection with the change in the Board of
Directors of Western Country Clubs, Inc., a Colorado corporation (the
"Company"). This information is being mailed on or about October 25, 1996 to
shareholders of record on October 10, 1996.
LOWRIE SALE TRANSACTION
Troy H. Lowrie, the then President, a director and a principal shareholder
of the Company entered into a Stock Purchase Agreement dated as of September 20,
1996 (the "Agreement") with Red River Concepts, Inc., a Delaware corporation
("Red River") and its designees, and the Company under which Mr. Lowrie agreed
to sell to Red River 1,300,000 shares of common stock, $.01 par value (the
"Shares"), of the Company which he owned, upon the terms and conditions set
forth in the Agreement (the "Lowrie Sale").
Pursuant to the first closing under the Agreement which occurred on October
10, 1996 (the "First Closing"), Lowrie sold: (i) 200,000 Shares (the "Initial
Shares") for $1.00 per share or $200,000 in cash to certain designees of Red
River; and (ii) 800,000 Shares (the "Second Shares") for $1.00 per share or
$800,000 paid with a one-year promissory note in the principal amount of
$800,000 (the "Note") to Red River. The Note bears interest at the prime rate of
First Interstate Bank of Denver, N.A., to be paid semi-annually, is secured by
the Second Shares, is guaranteed by Red River and is personally guaranteed by
James E. Blacketer and Joe R. Love (officers and directors of Red River). The
failure of Red River to purchase the Third Shares at the second closing (the
"Second Closing") constitutes a default under the Note.
At the Second Closing under the Agreement, Lowrie will sell to Red River
300,000 Shares (the "Third Shares") at $1.00 per share or $300,000 payable in
cash. The Second Closing will occur on or before November 15, 1996.
Under the Agreement, Lowrie and the Company have agreed to cause James E.
Blacketer and Joe R. Love to be appointed as directors of the Company, as well
as a person to be selected by Red River at a future date, which person shall be
subject to the approval of the existing Board. Ten days after the Company has
filed with the Securities and Exchange Commission and mailed to its shareholders
this Statement on Form 14(f) disclosing the new board members, the new Board
members will take office. At such time, the current board members, other than
Lowrie, shall resign. Lowrie has agreed to remain as a director of the Company
for up to one year in order to assist with the transition. New officers of the
Company have been appointed in connection with the Lowrie Sale. See "Directors
and Executive Officers" and "Certain Relationships and Related Transactions"
below.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of October 22, 1996, the ownership of
the Company's Common Stock by (i) each Director of the Company, (ii) all
Executive Officers and Directors of the Company as a group, and (iii) all
persons known by the Company to own more than 5% of the Company's Common Stock.
Beneficial Ownership (1)
------------------------------------
Name Number of Shares Percentage
---- ---------------- ----------
Troy H. Lowrie 456,800 14.64%
7058 Ammons Street
Arvada, Colorado 80004
John E. Nichols -0- -0-%
8618 N. Pennsylvania St.
Indianapolis, Indiana 46240
Michael J. Sullivan -0- -0-%
31001 Haldimand Drive
Conifer, CO 80433
James E. Blacketer* 800,000(2) 25.64%
1236 Westchester
Oklahoma City, OK. 73114
Joe R. Love* 800,000(3) 25.64%
1601 N.W. Expressway, Suite 1910
Oklahoma City, OK 73118
Joe Robert Love, Jr. 800,000(4) 25.64%
2200 N. Lamar, #250
Dallas, TX 75202
Dominic W. Grimmett -0- -0-%
5804 Country Club Drive
Edmond, Oklahoma 73003
Ted W. Strickland -0- -0-%
1209 Larchmont Lane
Oklahoma City, Oklahoma 73116
Red River Concepts, Inc. 800,000(5) 25.64%
1601 N.W. Expressway, Suite 1910
Oklahoma City, Oklahoma 73118
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Beneficial Ownership (1)
---------------------------------
Name Number of Shares Percentage
---- ---------------- ----------
Shane Investments, L.C. 800,000(6) 25.64%
2200 N. Lamar, #250
Dallas, TX 75202
All Directors and Officers 1,256,800 40.28%
as a Group (7 persons)
- ---------
(*) Denotes director nominees to be appointed to the Company's Board of
Directors pursuant to the Lowrie Sale.
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person,
but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
(2) Reflects indirect beneficial ownership of shares owned directly by Red
River Concepts, Inc., a company of which Mr. Blacketer serves as an officer
and a director.
(3) Reflects indirect beneficial ownership of shares owned directly by Red
River Concepts, Inc., a company of which Mr. Love serves as an officer and
a director.
(4) Reflects indirect beneficial ownership of shares owned directly by Red
River Concepts, Inc., a company owned 100% by Shane Investments, L.C. Mr.
Love is the manager and 100% owner of Shane Investments, L.C., is an
officer and director of Red River Concepts, Inc. and is the adult son of
Joe R. Love, a director nominee of the Company.
(5) The shares owned by Red River are subject to a Voting Trust Agreement with
Troy H. Lowrie under which Mr. Lowrie has the right to vote such shares on
all matters submitted to the shareholders of the Company, but only upon the
occurrence of an event of default under the promissory note issued by Red
River to Lowrie in the principal amount of $800,000, and during the
pendency of such default. Does not include an additional 300,000 shares
which Red River or its designees will purchase from Mr. Lowrie pursuant to
the Second Closing under the Stock Purchase Agreement. See "Lowrie Sale
Transaction."
(6) Reflects indirect beneficial ownership of shares owned directly by Red
River Concepts, Inc., a company owned 100% by Shane Investments, L.C.
On October 22, 1996 there were 3,119,921 shares of the Company's Common
Stock issued and outstanding. Each share of Common Stock is entitled to one vote
on all matters submitted to a vote of shareholders.
Changes in Control
Except as described above with respect to the Lowrie Sale, no
understandings, arrangements or agreements are known by management at this time
which would result in a change in control of the Company.
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DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth certain information with respect to the present
officers and directors of the Company.
Name Age Position
---- --- --------
Troy H. Lowrie 31 Director since 1989
John E. Nichols 50 Director since November 1993
Michael J. Sullivan 50 Director since December 1993
James E. Blacketer 54 President since October 1996 and a Director
Nominee*
Joe R. Love 57 Director Nominee*
Dominic W. Grimmett 41 Vice President of Operations and Secretary
since October 1996
Ted W. Strickland 44 Chief Financial Officer and Treasurer since
October 1996
- --------
* Denotes director nominees to be appointed to the Company's Board of
Directors pursuant to the Lowrie Sale. These appointments will be made by
the remaining directors in accordance with Colorado law.
The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Officers of the Company are elected by the Board of
Directors and hold office until their successors are elected and qualified.
In addition to Messrs. Blacketer and Love, Red River has the right to
appoint a third director to the Company's Board. At this time such third
director has not been selected.
Troy H. Lowrie, the founder of the Company, received a B.S. degree from Ft.
Lewis College, Durango, Colorado, in 1986, and a M.B.A. degree from the
University of Denver in 1987. During the past five years, from time to time, Mr.
Lowrie has been an officer and/or director and a shareholder of various business
entities including Tacanco Corporation of Illinois ("Tacanco") (1988-1993);
Palace of Illinois, Inc. ("Palace of Illinois") (1988-1993); Saintco, Inc.
("Saintco") (1988-1993); International Entertainment Consultants, Inc. ("IEC")
(1992-1993); Evans Venture Partnership (1986 to present); Ashton Productions,
Ltd. and Eagle Theatrical Productions, Inc. (1992 to present), both production
companies; Unique Talent, Inc., a placement agency, (1988-1990); Cardinal
Management Corp. (1989 to present); Chicago Restaurant Concepts, Inc. (1991 to
present); San Antonio Club, Inc. (1989 to present) and Century Pawn, Inc. (1990
to present), all privately held corporations. IEC provides consulting services
to nightclub and entertainment establishments in
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Denver, St. Louis and Indianapolis, and to Texas of Indy. Mr. Lowrie has
provided consulting and management services to country-western clubs, including
the Grizzly Rose in Denver, Colorado, and Rodeo Drive in San Antonio, Texas.
John E. Nichols received a B.S. degree in finance from Indiana State
University in 1972. From 1974 to the present, he has owned and operated Nichols
Financial Services, Indianapolis, Indiana, a commercial equipment leasing
business, offering vendor documentation, funding and servicing. Mr. Nichols is
also vice chairman and a principal shareholder in Dulaney National Bank in
Marshall, Indiana, which is included in the top 100 commercial FDIC insured
community banks in the country. See "Certain Relationships and Related
Transactions," below. Mr. Nichols also has interests in and serves as vice
president of a cable television system which services small western Indiana
communities and several currency exchanges in Indianapolis. Mr. Nichols is a
deputy finance officer in the Indiana National Guard and is active in several
local civic organizations.
Michael J. Sullivan was a booking agent for Best Music Agency, Salt Lake
City, Utah from 1975 to 1978. From 1978 to 1983, he was the owner of Roadwork
Productions, also in Salt Lake City, a booking agency for regional touring acts
and producer of events using national acts including Blood, Sweat & Tears,
Charlie Daniels Band, The Nitty Gritty Dirt Band, Lacy J. Dalton and Marshall
Tucker. From 1983 to 1988, he was the road manager, merchandise manager, booking
agent and producer for the Montana Band, Missoula, Montana. From 1988 to
December 1, 1994, when he became an employee of the Company, he was
vice-president of Winterset, Jackson, Wyoming, responsible for booking national
and regional acts and producing shows for major venues, such as fairs,
nightclubs, and conventions, in the Western United States. He has produced
stadium events for Garth Brooks, Clint Black and Lori Morgan and was the
exclusive agency for Chris LeDoux from 1989 to 1992. From December, 1994 through
November, 1995, Mr. Sullivan was an employee of the Company, responsible for
booking entertainment for the Company's Clubs and devoting his full time to the
Company. Since December 1995, Mr. Sullivan has been an independent entertainment
consultant, operating under the name Roadwork Productions.
James E. Blacketer is a 1964 graduate of Oklahoma City University with a
Bachelor of Arts degree in marketing. Mr. Blacketer has over 30 years of
experience in the restaurant and night club business. During the last five years
Mr. Blacketer has served as a consultant to several different entities in the
night club business. During 1991 and 1992 he served as a consultant to several
different partnerships which opened two Yucatan Liquor Stands (in Oklahoma City
and Tulsa), and to Go Western, Ltd., an Oklahoma limited partnership which
opened the country and western night club InCahoots in Oklahoma City. The
Oklahoma City InCahoots night club has become one of the most successful country
and western night clubs in Oklahoma. Since 1993, Mr. Blacketer has served as a
consultant to Red River Grill, Inc., d/b/a Red River Management ("Red River
Grill"), an owner and operator of country and western night clubs. As a
consultant for Red River Grill, he opened two InCahoots night clubs in Wichita,
Kansas and Tulsa, Oklahoma (previously a Yucatan Liquor Stand) in early 1994.
Red River Grill is owned and operated by the adult sons of Mr. Blacketer.
Joe R. Love graduated from the University of Oklahoma in 1960 with a degree
in Finance. Since 1990 he has served as Chairman of C.H. Financial Corporation,
Oklahoma City, Oklahoma, a financial services company. Mr. Love has served as a
director of First Cash, Inc., Arlington,
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Texas, a public company which owns a national chain of pawn shops, since 1991.
Mr. Love also has served since 1989 as a director of Tatonka Energy Corporation,
formerly Sooner Energy Corporation, Dallas, Texas, a public company engaged in
oil and gas exploration and production.
Dominic W. Grimmett began his 18 year career in the restaurant and night
club business in 1977 as the Assistant Manager for Modine Gunch in Atlanta,
Georgia. In 1978, he was employed by Gilbert/Robinson, Inc. (Houlihan's Old
Place, Biba's), receiving his initial restaurant management training in Kansas
City, Missouri. Mr. Grimmett joined the management teams at the Firehouse
Restaurant (Assistant Manager, Kansas City, Missouri), then at Tyler Rose
(General Manager, Houston, Texas) before being hired by Southwest Business
Management of Houston in 1981. As General Manager of Operations through 1986,
Grimmett had hands-on control of three night clubs (Animal House, Suckers,
Ragtops) and two restaurants (Greenstreet, Chiquita's) where he developed menus,
concepts, decor and construction plans. During 1987 and 1988, Mr. Grimmett
became Director of Operations for the nationally recognized Champion Sport,
Inc., of Washington, D.C. With a staff of 60 managers and 600 employees, he
opened ten Champion Sports Bars in one year. In 1989 Mr. Grimmett became
Director of Operations for Garner Food Services, where he opened three
Applebee's Restaurants for a new franchise in Houston. In 1990, Mr. Grimmett
became a Vice President of the Mac Corporation of Kansas City, Missouri where he
was responsible for turning around a Chapter 11 pizza chain, Pyramid Pizza,
within one year, though the closing of three sites and opening five others. From
1990 to 1993, Mr. Grimmett was employed by Go Western, Ltd., an Oklahoma limited
partnership which owned and operated night clubs, including InCahoots in
Oklahoma City, and which provided consulting services to other night clubs
including two Yucatan Liquor Stands, located in Tulsa and Oklahoma City. Since
1993, Mr. Grimmett has served as Director of Operations for Red River Grill
where he implemented the marketing strategies and promotions for the highly
successful InCahoots night clubs, including the hiring and training of its
management and staff. Mr. Grimmett attended Johnson County Community College in
1974 and the University of Kansas in 1975 but did not obtain a degree from
either school.
Ted W. Strickland received a Bachelor of Science degree in Accounting from
Oklahoma State University in 1974 and is a Certified Public Accountant . Mr.
Strickland was employed by KPMG Peat Marwick for seven years, serving as a
Senior Tax Specialist/Staff Accountant in the Oklahoma City, Oklahoma office
from 1974 to 1978; a supervisor in the Professional Development Department and
as the National Recruiter Training Coordinator in the New York City office from
1978 to 1979; and a Senior Tax Manager in the Dallas, Texas office from 1979 to
1981. Mr. Strickland was a co-owner, Chairman and Chief Executive Officer of
Strickland Clothiers, Inc., a retail clothing business located in Oklahoma City,
Oklahoma from 1981 to 1995. From August 1995 to May 1996 Mr. Strickland was
Chief Financial Officer, Secretary and Treasurer of Unico, Inc., a
publicly-owned marketing services company located in Oklahoma City, Oklahoma.
The Company has no audit, nominating or compensation committee.
The Board of Directors took action through 10 sets of written consents
during the 1995 fiscal year.
Family Relationships
There are no family relationships among any of the Company's officers and
directors.
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Involvement in Certain Legal Proceedings
No officer, director, significant employee, promoter or control person of
the Company has been involved in any event of the type described in Item 401(d)
of Regulation S-B during the past five years.
Compliance with Section 16(a) of the Exchange Act
During the fiscal year ended December 31, 1995, Troy H. Lowrie failed to
file three reports on Form 4 on a timely basis reporting four transactions which
occurred during 1995.
EXECUTIVE COMPENSATION
General
From December 1, 1993 through October 10, 1996, pursuant to an oral
agreement with the Company, Troy H. Lowrie was a salaried employee of the
Company, earning $3,000 per month plus 5% of each Club's monthly net income in
excess of $50,000, which override was eliminated effective January 1, 1995.
From December 1, 1994 through November 1995, Michael J. Sullivan was a
salaried employee of the Company, earning $500 per week. Mr. Sullivan was also
entitled to receive 50% of all commissions earned by the Company from booking
non-Company entertainment and a monthly bonus of $500 if all concerts he booked
for the Company's Clubs during that month were profitable.
Effective October 10, 1996, James Blacketer became a salaried officer at
$100,000 per year, Ted Strickland became a salaried officer at $70,000 per year
and Don Grimmett became a salaried officer at $75,000 per year.
Summary Compensation Table
The Company was inactive from 1989 (inception) until 1993. The following
table sets forth certain information regarding the compensation paid or accrued
by the Company to or for the account of the Chief Executive Officer and each of
the Officers of the Company whose total annual compensation exceeded $100,000
during the fiscal years ended December 31, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------------------------- ------------------------------------------------------
Name and
Principal Other Annual Restricted Options/ LTIP All Other
Position Year Salary Bonuses($) Compensation Stock SARS Payouts$ Compensation
-------- ---- ------ ---------- ------------ ----- ---- -------- ------------
Awards
------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Troy H. Lowrie, 1995 $ 36,000 $ -0- $ -0- -0- -0- -0- -0-
President and 1994 $ 50,416 $ -0- $ -0- -0- -0- -0- -0-
Chief Executive 1993 $ 3,250 $ 8,188 $ -0- -0- -0- -0- -0-
Officer
</TABLE>
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Option/SAR Grants
In December 1993, the Company granted a five year stock option to purchase
250,000 shares of the Company's Common Stock at $1.00 per share to a former
employee of the Company in connection with her employment by the Company. The
exercise price of the option was subsequently modified to $2.50. The option
expires December 16, 1998. In July, 1996, 20,000 of such options were exercised
and the balance were transferred to a consultant to the Company. The shares
issuable upon exercise of the options are not registered and are restricted. The
consultant also acquired from a third party options to purchase 10,000 shares of
the Company's Common Stock, the shares issuable upon exercise of which are also
not registered and restricted. In view of the substantial value of the services
performed by the consultant and to provide incentive to him to continue
providing such services, in July 1996 the Company issued the consultant 145,000
options to acquire registered and unrestricted shares of Common Stock at $3.50
per share for three (3) years; and 45,000 registered and unrestricted shares of
Common Stock in exchange for the 240,000 options to purchase unregistered and
restricted stock at $2.50 per share.
In February 1994, in connection with borrowing $250,000 from two
individuals, the Company granted two five year options to purchase a total of
17,000 shares of the Company's Common Stock at $2.50 per share. These options
expire February 15, 1999.
In July 1994, the Company granted Ladenburg Thalmann & Co., Inc.
("Ladenburg") a warrant to purchase 60,000 shares at $6.00 per share,
exercisable through June 1999, in consideration of Ladenburg's agreement to
render financial consulting services to the Company through June 30, 1995. In
lieu of exercising the warrant at $6.00 per share, the Warrant provides that
Ladenburg may surrender the warrant and pay $.01 per share acquired. The number
of shares which may be acquired under the alternative provision is equal to the
product of (x) the excess of the market price of the Company's Common Stock on
the date of surrender over the per share warrant price ($6.00) and (y) the
number of shares subject to issuance on exercise of the warrant divided by the
market price of the Company's Common Stock on that date.
Compensation of Directors
Standard Arrangements. The Company does not pay its employee directors for
their services in that capacity; however, officers and directors receive
reimbursement for out-of-pocket expenses incurred by them in connection with the
business of the Company. Currently, the Company does not pay any directors fees
for attendance at board meetings.
Other Arrangements. The Company has no other arrangements pursuant to which
any director of the Company was compensated during the year ended December 31,
1995, for services as a director.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was founded in December, 1989, but had no operations until
April, 1993, when the Indy Club opened. In December, 1989, the Company issued
1,000 shares of Common Stock to Troy H. Lowrie for $1,000, but payment for such
shares was not made until November, 1993. In November 1993, the Company effected
a 2,650 for one forward stock split.
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Troy H. Lowrie purchased an eight percent (8%) limited partnership interest
in WCC I, Ltd., for $96,000 and a three percent (3%) limited partnership
interest in WCC III, Ltd. for $51,000. Eric R. Peterson purchased a one percent
(1%) limited partnership interest in WCC I, Ltd. for $12,000 and a two percent
(2%) limited partnership interest in WCC III, Ltd. for $34,000. In September,
1994, the Company made an offer to all limited partners of WCC I, Ltd. and WCC
III, Ltd., to purchase limited partners' interests in WCC I, Ltd. for stock or
cash at the limited partner's option and all of the assets of WCC III, Ltd. for
stock. Effective September 30, 1994, Mr. Lowrie received $57,600 and Mr.
Peterson received 3,200 shares, respectively, for their limited partnership
interests in WCC I, Ltd. pursuant to such offer. Mr. Peterson received 6,476
shares pursuant to the Company's offer to purchase the assets of WCC III, Ltd.
for stock; Mr. Lowrie had sold his limited partnership interest in WCC III, Ltd.
and consequently did not receive any shares in the WCC III, Ltd. exchange.
Unique Talent, Inc., a corporation owned by a small shareholder of the
Company, provides waitstaff and cashiers services to Texas of Indy for the Indy
Club. The amounts billed to Texas of Indy represent the actual payroll cost of
such services. For the years ended December 31, 1993, 1994 and 1995, such
expenses amounted to $61,675, $22,935 and none, respectively. Troy H. Lowrie
served as an officer and director of Unique Talent, Inc. from 1988-1990. In
addition, the Company, WCC I, Ltd. and WCC III, Ltd. paid IEC $72,392, $95,362
and $86,043, for payroll and support services, including insurance and office
expenses, for the years ended December 31, 1993, 1994 and 1995, respectively.
Until his resignation as an officer and director of IEC, and the sale of his IEC
shares to his sister, all of which occurred in November, 1993, Troy H. Lowrie
received a monthly salary from IEC of $5,000 plus monthly dividends of $2,400.
The Company's offices have been provided rent-free by Evans Venture
Partnership, a partnership between Troy H. Lowrie and his sister. The Company
intends to move its offices to 5218 Classen Boulevard, Oklahoma City, Oklahoma
73118, phone number (405) 848-0996, at the end of October 1996.
John E. Nichols is an officer and director of Dulaney National Bank from
which WCC I, Ltd. obtained a loan in the amount of $600,000 in 1994 to finance
the purchase of the building in which the Indy Club is located. The loan bears
interest at prime plus 3%, and is due February 1, 2004. The balance of the loan
as of October 1, 1996 was $494,787. Mr. Nichols had advised the other directors
of the Bank of his position on the Board of the Company prior to the Bank's
approval of the loan, and Mr. Nichols abstained from voting on the loan
proposal.
Titello & Associates, Inc., a bookkeeping firm for which Mary E. Bowles, an
officer of the Company up until October 1996, is the office manager, has
performed bookkeeping services for the Company, WCC I, Ltd. and Texas of Indy in
the past and may provide such services in the future. For the fiscal years ended
December 31, 1993, 1994 and 1995, Texas of Indy paid Titello & Associates, Inc.
$24,828, $36,519 and $70,643, respectively, for such services. John T. Titello,
the principal of Titello & Associates, Inc., and his son, own an aggregate of
185,592 shares of the Company's Common Stock. John T. Titello had a five percent
(5%) limited partnership interest in each of WCC I, Ltd. and WCC III, Ltd. for
which he paid $60,000 and $85,000, respectively, for which he received 16,000
and 16,190 shares, respectively, in the Company's offer to limited partners
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of those two partnerships to exchange limited partnership interests and assets
for stock and/or cash. His son had a two percent (2%) interest in WCC I, Ltd.
and a one half percent (.5%) limited partnership interest in WCC III, Ltd., for
which he paid a total of $8,500, and received 6,400 and 1,619 shares,
respectively, pursuant to the Company's offer to limited partners.
Prior to September 30, 1993, the Company borrowed $15,000 from IEC to pay
the legal fees and costs associated with the liquor license application for the
St. Louis Club and $25,000 from John Titello to pay the deposit required by the
lease for the St. Louis Club. These amounts had been repaid as of December 31,
1993.
Prior to December 1, 1994, the Company used the services of Winterset
Agency, a talent booking agency of which Michael J. Sullivan was the
vice-president. The Company paid Winterset a fee equal to 10% of the cost of the
act booked, which was also the fee charged by Winterset to its unrelated
clients. During the fiscal year ended December 31, 1994, the Company paid
Winterset $236,998. From December 1, 1994 through November 1995, Mr. Sullivan
was a full time employee of the Company.
In 1995, the Company borrowed $200,000 from its president, Troy H. Lowrie,
and $100,000 from another company affiliated with Mr. Lowrie, at 12% per annum.
Of the $300,000, the $100,000 due the affiliated entity and $100,000 of the
$200,000 due Mr. Lowrie has been repaid. The Company also borrowed $493,000 from
IEC, of which $100,000 was repaid during 1995, and the remaining $393,000 was
repaid during the first six months of 1996. During 1996, the Company borrowed an
additional $100,000 from a company affiliated with Troy H. Lowrie, which was
repaid during the first six months of 1996.
Presently the Company is negotiating with Entertainment Wichita, Inc.
("Entertainment"), a Kansas corporation controlled by Shane Investments, L.C.,
to acquire Entertainment through a merger transaction. Entertainment is the
general partner of and owns an 80% interest in a partnership which owns the
InCahoots night club located in Wichita. Shane Investments, L.C. is the indirect
beneficial owner of 25.64% of the Company's outstanding Common Stock, which
shares are owned directly by Red River Concepts, Inc. See "Voting Securities and
Principal Holders Thereof." The sole manager and member of Shane Investments,
L.C. is Joe Robert Love, Jr., the adult son of Joe R. Love, a director nominee
of the Company. There can be no assurance that this merger transaction will be
consummated.
Troy H. Lowrie is the only "parent" of the Company.
COMMENCEMENT OF SERVICE
Messrs. Blacketer and Love will not begin serving as directors of the
Company until at least ten days after the date this notice to shareholders is
filed with the Securities and Exchange Commission and mailed to shareholders of
record. This notice is being provided to the shareholders by the Board of
Directors.
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