UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
report (date of earliest event reported): March 31, 2010
WESTERN
CAPITAL RESOURCES, INC.
(Exact
name of registrant as specified in its charter)
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Minnesota
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000-52015
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47-0848102
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(State
or other jurisdiction of
\incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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11550 “I”
Street, Suite 150
Omaha,
Nebraska 68137
(Address
of principal executive offices) (Zip Code)
(712)
322-4020
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry
Into a Material Definitive
Agreement.
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On April 2, 2010, Wyoming Financial
Lenders, Inc. (“WFL”), the wholly owned payday lending operating subsidiary of
Western Capital Resources, Inc. (the “Company”), refinanced its outstanding
credit facility. On that date, WERCS, a Wyoming corporation and the
former holder of the Company’s Series A Convertible Preferred Stock, satisfied
all of WFL’s financial obligations owing to Banco Popular North America and
entered into a Business Loan Agreement and associated $2,000,000 promissory note
with WFL. The loan from WERCS extinguished the $1,637,341 that WFL
owed to Banco Popular, and the remaining $362,659 will be used for general
working capital.
The Business Loan Agreement and
associated promissory note contained terms that were substantially similar to
those contained in the original loan documents with Banco Popular. To
secure the obligations of WFL under the new Business Loan Agreement and
promissory note, the Company entered into (i) a Commercial Pledge Agreement with
WERCS pursuant to which the Company pledged its share ownership in WFL, and (ii)
a Commercial Security Agreement pursuant to which the Company granted WERCS a
security interest in substantially all of the Company’s assets. The
Company also entered into a Commercial Guaranty relating to the repayment of
WFL’s obligations under the Business Loan Agreement and promissory
note.
The payment terms under the promissory
note require the Company to make monthly payments of accrued interest only for
11 months, followed by an April 1, 2011 balloon payment of any remaining accrued
but unpaid interest and all $2,000,000 of principal under the promissory
note. Interest accrues on the unpaid principal balance of the
promissory note at the rate of 12.0% per annum.
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Item
1.02
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Termination
of a Material Definitive Agreement.
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On April
2, 2010, as part of the transactions described in Item 1.01 above, the Company
and WFL satisfied their obligations to Banco Popular North America under a
Business Loan Agreement and related promissory note, the outstanding principal
amount of which was $1,637,341.
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
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The disclosures set forth in Item 1.01
above are hereby incorporated by reference into this Item 2.03.
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Item
5.01
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Change
in Control of Registrant.
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Effective
March 31, 2010, WCR, LLC, a Delaware limited liability company, purchased
1,125,000 shares of common stock and 10,000,000 shares of Series A Convertible
Preferred Stock from WERCS, a Wyoming corporation. The purchase was
effected pursuant to that certain Stock Purchase and Sale Agreement by and
between WERCS and WCR, LLC, dated as of February 23, 2010. Since the
10,000,000 shares of Series A Convertible Preferred Stock vote on an
as-converted basis (presently one-for-one) with shares of the Company’s common
stock, the purchase and sale transaction effects a change in the voting control
of the Company, with WCR, LLC possessing approximately 61.8% of the voting power
of the Company’s shareholders.
1
WCR, LLC
purchased the common and preferred shares for aggregate consideration (prior to
any post-closing adjustments contemplated by the Stock Purchase and Sale
Agreement) of approximately $4,781,581. WCR, LLC paid for the shares
in cash obtained from various private sources affiliated with Blackstreet
Capital Partners II. In connection with the transaction, certain
directors of the Company resigned, in series, from their positions on the
Company’s board of directors, and John Quandahl, the Company’s Chief Executive
Officer, Chief Operating Officer, interim Chief Financial Officer and a director
of the Company, agreed to appoint the two designees of WCR, LLC to fill the
vacancies created by such resignations.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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Resignation
of Directors and Appointments to Vacancies
On March 31, 2010, Mark Houlton and
Robert W. Moberly resigned from their positions on the Company’s board of
directors. Their resignations were not the result of any disagreement
with the Company.
On the same date, the board of
directors of the Company appointed each of Angel Donchev and Aldus Chapin as
directors of the Company, to serve until the Company’s 2010 annual shareholder
meeting. The Company does not have any compensation agreement in
place with either of Mr. Donchev or Mr. Chapin at this time. Neither
Mr. Donchev nor Mr. Chapin are appointed to any committees of the board of
directors of the Company, although the Company expects that they will later be
appointed to positions on committees. Messrs. Donchev and Chapin were
appointed as directors based upon an arrangement between John Quandahl, a
director of the Company, and WCR, LLC, pursuant to which Mr. Quandahl agreed to
appoint two designees of WCR, LLC to fill the vacancies created by the
resignations of Messr. Moberly and Houlton.
Employment
Agreement
On March 31, 2010, the Company entered
into a Employment Agreement with John Quandahl, its Chief Executive Officer,
Chief Operating Officer, and interim Chief Financial Officer. The
Employment Agreement provides Mr. Quandahl with an annual base salary of
$246,000 (which salary is the same as that which Mr. Quandahl received during
2009) and eligibility for an annual performance-based cash bonus. The
performance-based bonus provisions permit Mr. Quandahl to receive annual bonus
payments in cash based on EBITDA targets established by the board of directors
annually. The Employment Agreement sets the 2010 EBITDA target at $4
million. If the Company’s actual EBITDA performance for a particular
annual period ranges from 85-100% of the established EBITDA target, Mr. Quandahl
will be entitled to receive a cash bonus based on his share of a bonus pool
consisting of 7.5% of the actual EBITDA. In this regard, Mr.
Quandahl’s share of the bonus pool for any particular year is expected to be
10-50%; and the remaining bonus pool will be payable to other management-level
participants in the bonus pool selected from time to time by the board of
directors. If the Company’s actual EBITDA performance for a
particular annual period is less than 85% of the established EBITDA target, no
bonus will be payable; and if such performance exceeds 100% of the established
EBITDA target, the bonus pool participants will receive their proportionate
share of 15% of the amount by which such performance exceeds the
target.
The Employment Agreement contains
customary provisions prohibiting Mr. Quandahl from soliciting customers and
employees of the Company for three years after any termination of his employment
with the Company, and from competing with the Company for either three years (if
he is terminated for good cause or if he resigns without good reason) or two
years (if the Company terminates his employment for without good cause or if he
resigns with good reason).
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Item
5.07
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Submission
to a Vote of Security Holders.
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Final
voting results from the special meeting of the shareholders of the Company held
on March 29, 2010, called and held upon the demand of WERCS and relating to a
proposal to amend the Company’s Amended and Restated Articles of Incorporation,
as amended, to make the Minnesota Control Share Acquisition Act inapplicable to
the Company, are as follows:
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Vote
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Shares
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FOR:
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11,426,440
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AGAINST:
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2,302,146
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ABSTAIN:
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2,214
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Of the
shares voted at the special meeting, 10,000,000 such shares were Series A
Convertible Preferred Stock.
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Item
8.01
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Other
Events.
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In
connection with the payment in full of WFL’s and the Company obligations to
Banco Popular North America, the guaranty of such obligations that were earlier
delivered by Mr. Chris Larson, the former Chief Executive Officer of the
Company, was terminated. As a result, the Company has obtained and
cancelled all 550,000 shares of common stock of Mr. Larson held in escrow since
May 1, 2009 pursuant to the terms of an escrow agreement with Mr. Larson dated
as of May 1, 2009.
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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WESTERN
CAPITAL RESOURCES, INC.:
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(Registrant)
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Date: April
6, 2010
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By:
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/s/ John
Quandahl
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John
Quandahl
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Chief
Executive Officer
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