Exhibit 10.3

 

CONSENT AND SECOND LOAN MODIFICATION AGREEMENT

 

THIS CONSENT AND SECOND LOAN MODIFICATION AGREEMENT (this “Agreement”), is made
and entered into as of July 18, 2017 but effective as of July 1, 2017, by and
among WESTERN CAPITAL RESOURCES, INC., a Delaware corporation (the “Borrower”),
EACH OF THE UNDERSIGNED SUBSIDIARIES OF THE BORROWER (together with the
Borrower, collectively, the “Loan Parties”, and each, individually, a “Loan
Party”), and FIFTH THIRD BANK, an Ohio corporation (together with its successors
and assigns, the “Lender”).

 

RECITALS:

 

A.       Pursuant to that certain Credit Agreement dated as of April 21, 2016 by
and between Borrower and Lender (as amended, modified, restated or supplemented
from time to time, the “Credit Agreement”), Lender agreed to make available to
Borrower one or more extensions of credit in such amounts as may be set forth in
the Credit Agreement. Unless the context otherwise requires, all terms used
herein without definition shall have the respective definitions provided
therefor in the Credit Agreement.

 

B.       The Loan and Borrower’s obligations under the Credit Agreement, the
Note and the other Loan Documents are secured by, among other things, the
Security Documents.

 

C.       PQH and New PQH Subsidiary have entered into an Amended and Restated
Asset Purchase and Contribution Agreement, dated effective as of July 1, 2017,
with the Cricket Sellers, Swathi Anne and Vishal Anne, each a resident of the
state of Texas, pursuant to which (a) Cricket Sellers have assigned to Global
Vibe, LLC, a Texas limited liability company (“Global”), their right to receive
payment of the purchase price payable thereunder, including the portion of the
purchase price payable by New PQH Subsidiary executing a promissory note to
Cricket Sellers, and their right to receive equity in New PQH Subsidiary in
exchange for contributing certain assets to New PQH Subsidiary and (b) Cricket
Sellers have agreed to (i) sell to PQH, for $1,800,000 in cash, a 25% undivided
interest in substantially all of the assets of Cricket Seller relating to the
operation of 58 retail stores selling Cricket branded products and services
(which undivided interest PQH will thereupon contribute to New PQH Subsidiary),
(ii) sell to New PQH Subsidiary a 45% undivided interest in substantially all of
the assets of Cricket Sellers relating to the operation of 58 retail stores
selling Cricket branded products and services (in exchange for New PQH
Subsidiary’s delivery to Global of a $789,216 promissory note), and
(iii) contribute to New PQH Subsidiary the remaining 30% undivided interest in
substantially all of the assets of Cricket Sellers relating to the operation of
58 retail stores selling Cricket branded products and services, in exchange for
which contribution New PQH Subsidiary will issue to Global a 30% Equity Interest
in New PQH Subsidiary (such purchases, sales and contribution being herein
called the “Cricket Acquisition”).

 

D.       Borrower has requested that Lender consent to the consummation by PQH
and New PQH Subsidiary of the Cricket Acquisition (specifically including the
issuance by New PQH Subsidiary of a 30% interest therein to Cricket Sellers or
their assigns), the incurring by New PQH Subsidiary of the Indebtedness
contemplated thereby and to be evidenced by the Cricket Seller Subordinated
Debt, and the guaranty of such Indebtedness by PQH.

 

E.       Borrower has also requested Lender’s waiver of the restrictions in
Section 8.06(e)(i) of the Credit Agreement so that Borrower may pay its ordinary
quarterly $0.025 per share dividend declared by Borrower’s Board of Directors on
March 1, 2017 for the holders of record as of March 15, 2017 (and to be payable
on or about March 20, 2017) (the “Quarterly Dividend”). Upon the terms and
subject to the conditions contained herein, Lender has agreed to grant its
consent to the transactions described in the foregoing Recital paragraph C and
to accomplish the foregoing, Borrower and Lender desire to amend the Loan
Documents as provided for in this Agreement.

 

 

 

 

IN CONSIDERATION of the foregoing Recitals and the agreements, representations
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:

 

SECTION 1. Amendments to Loan Documents. Subject to the conditions hereof, the
Loan Documents are hereby amended as follows:

 

(a)         New defined terms “Cricket Acquisition”, “Cricket Purchase
Agreement”, “Cricket Seller Subordinated Debt”, “Cricket Seller Subordination
Agreement”, “Global” and “Second Amendment” are added to Section 1.01 of the
Credit Agreement in their proper alphabetical order as follows:

 

“Cricket Acquisition” means the sales and contribution by Cricket Sellers to PQH
and New PQH Subsidiary, and the purchase by PQH and New PQH Subsidiary of, and
issuance of 30% of the Equity Interests in New PQH Subsidiary to Cricket
Sellers’ assignee, Global, in exchange for, substantially all of the assets
relating to Seller’s operation of 54 retail stores selling Cricket branded
products and services, all as set forth in the Cricket Purchase Agreement.

 

“Cricket Purchase Agreement” means that certain Amended and Restated Asset
Purchase and Contribution Agreement, dated effective as of July 1, 2017, among
Cricket Sellers, Vishal Anne and Swathi Anne, each residents of the State of
Texas, PQH and New PQH Subsidiary.

 

“Cricket Seller Subordinated Debt” means the Indebtedness of New PQH Subsidiary
owing to Global evidenced by, and owing pursuant to, the Cricket Seller
Subordinated Note, the payment of which is subordinated to the payment of the
Obligations pursuant to the Cricket Seller Subordination Agreement.

 

“Cricket Seller Subordinated Note” means that certain $789,216 Subordinated
Promissory Note, dated on or about the date of the Second Amendment, executed by
New PQH Subsidiary to the order of Global, as from time to time amended,
modified, supplemented or restated in accordance with the terms of the Cricket
Seller Subordination Agreement.

 

“Cricket Seller Subordination Agreement” means the Subordination Agreement,
dated on or about the date of the Second Amendment, among Lender, Global, PQH
and New PQH Subsidiary, as from time to time amended, modified, supplemented or
restated, subordinating the payment of Cricket Seller Subordinated Debt and the
PQH guaranty thereof to the payment of the Obligations.

 

“Global” means Global Vibe, LLC, a Texas limited liability company.

 

“Second Amendment” means the Consent and Second Loan Modification Agreement,
dated effective as of July 1, 2017, between Borrower, Lender and other Loan
Parties.

 

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(b)         The first sentence of Section 5.12 of the Credit Agreement is
amended in its entirety to read as follows:

 

No Loan Party has any Subsidiaries other than those specifically disclosed in
Part (a) of Schedule 5.12 (and if such Subsidiary is also an Unrestricted MSB
Subsidiary, it is designated as such on such Schedule) and all of the
outstanding Equity Interests in such Persons have been validly issued, are fully
paid and non-assessable and are owned by a Loan Party or, in the case of New PQH
Subsidiary, by PQH and Cricket Sellers, in the amounts specified on Part (a) of
Schedule 5.12 free and clear of all Liens except those created under the
Security Documents.

 

(c)         A new Section 5.18 of the Credit Agreement is added in its proper
numerical order as follows:

 

5.18       Cricket Acquisition. The Cricket Acquisition Agreement is in full
force and effect as of the date of the Second Amendment and has not been amended
or waived by any party thereto in any material respect. All representations and
warranties of the parties to the Cricket Acquisition Agreement are, to the best
of Borrower’s knowledge, true and correct in all material respects as of the
date of the Second Amendment with the same effect as though made on and as of
the such date. All requisite approvals by governmental authorities and
regulatory bodies having jurisdiction over Borrower, PQH and New PQH Subsidiary
in connection with the Cricket Acquisition have been duly obtained and no such
approvals impose any conditions to the consummation of the transactions
contemplated by the Cricket Acquisition Agreement or to the conduct of the
business of any of Borrower, PQH or New PQH Subsidiary in the same manner as
heretofore conducted. None of Borrower, PQH or New PQH Subsidiary has been
notified that legal proceedings adverse to the transaction contemplated by the
Cricket Acquisition Agreement are contemplated by any Person, including any
governmental body or agency.

 

(d)         Section 8.02 of the Credit Agreement is amended by (i) deleting the
word “and” from the end of clause (d) thereof, (ii) deleting the period at the
end of clause (e) thereof and inserting “; and” in lieu thereof; and (iii)
adding a new clause (f) in its proper alphabetical sequence as follows: “(f) the
Cricket Seller Subordinated Debt.”

 

(e)         Clause (a) of Section 8.06 is amended in its entirety to read as
follows:

 

(a)         (i) each Non-MSB Subsidiary other than New PQH Subsidiary may make
Restricted Payments to its shareholders or unit holders (including Borrower),
any Non-MSB Subsidiaries of the Borrower that are Guarantors and any other
Person that owns a direct Equity Interest in such Non-MSB Subsidiary, ratably
according to their respective holdings of the type of Equity Interest in respect
of which such Restricted Payment is being made, and (ii) New PQH Subsidiary may
make Restricted Payments to PQH and the Cricket Sellers, provided, that (x)
immediately before and immediately after giving pro forma effect to such
Restricted Payments to the Cricket Sellers, no Default shall have occurred and
be continuing and (y) such Restricted Payments to the Cricket Sellers do not
exceed (A) amounts necessary for the Cricket Sellers to pay federal and state
income taxes (based on the highest rates applicable to the Cricket Sellers for
the applicable year) with respect to the taxable income of New PQH Subsidiary
and otherwise payable by the Cricket Sellers as a direct result of their
respective ownership interests in New PQH Subsidiary and (B) additional amounts,
if any, such that immediately after giving effect to the payment thereof, the
Borrower and its Non-MSB Subsidiaries shall be in pro forma compliance with all
of the covenants set forth in Article VII, such compliance to be determined on
the basis of the financial information most recently delivered to the Lender
pursuant to Section 6.01(a) or (b);

 

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(f)          Schedule 5.12 to the Credit Agreement is amended in its entirety to
read as Schedule 5.12 attached to this Agreement.

 

SECTION 2. Consent to Cricket Acquisition and Related Matters. Subject to the
conditions set forth in this Section 2 and in Section 3 of this Agreement,
Lender does hereby (a) consent to the Cricket Acquisition and the related
incurring by New PQH Subsidiary of the Cricket Seller Subordinated Debt and the
guaranty by PQH thereof, it being understood and agreed that such consent
includes Lender’s consent to New PQH Subsidiary not being a wholly-owned
Subsidiary; and (b) consent (and reaffirm its earlier provided consent) to the
declaration and payment of the Quarterly Dividend (such consent to be effective
as of March 1, 2017), provided, that the conditions to such payment contained in
clauses (ii) and (iii) of Section 8.06(e) of the Credit Agreement are satisfied,
it being understood and agreed that the condition to such payment contained in
clause (i) of Section 8.06(e) of the Credit Agreement is hereby waived by the
Lender solely with respect to the payment of the Quarterly Dividend.

 

SECTION 3. Conditions to Actions Set Forth Herein. It is a condition precedent
to the obligations of Lender to take the actions on its part contemplated by
this Agreement that Borrower shall have delivered to Lender, in form
satisfactory to Lender, the following:

 

(a)         the executed original of this Agreement and the Cricket Seller
Subordination Agreement;

 

(b)         all documents and instruments, including UCC financing statements
and certificates of title, required by law or reasonably requested by Lender to
be filed, registered or recorded to create or perfect the Liens intended to be
created under the Security Documents;

 

(c)         the results of a search of the UCC (or equivalent) filings made with
respect to each Cricket Seller in jurisdictions satisfactory to Lender, copies
of the financing statements (or similar documents) disclosed by such search and
evidence satisfactory to Lender that the Liens indicated by such financing
statements (or similar documents) are permitted by Section 8.02 of the Credit
Agreement or have been released;

 

(d)         evidence that all other action that Lender may deem necessary or
desirable in order to perfect the Liens created under the Security Documents has
been taken (including receipt of duly executed payoff letters, UCC-3 termination
statements and Waivers and consent agreements);

 

(e)         such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as Lender may require evidencing the identity, authority and capacity of
each Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement, the other Loan Documents to be executed in
connection with this Agreement and, as applicable, the Cricket Purchase
Agreement;

 

(f)          a favorable opinion of Maslon LLP, counsel to Loan Parties,
addressed to Lender, as to such matters concerning Loan Parties, this Agreement
and the other Loan Documents to be executed in connection therewith as Lender
may reasonably request;

 

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(g)         true and correct fully-executed copies of the Cricket Acquisition
Agreement, including all schedules and exhibits thereto, the Cricket Seller
Subordinated Note and all documentation relating to the issuance by New PQH
Subsidiary of Equity Interests to Cricket Seller;

 

(h)         a good standing certificate of Cricket Seller issued by the
Secretary of State of Texas not more than 30 days prior to the date of this
Agreement;

 

(i)          evidence satisfactory to Lender of the consummation of the Cricket
Acquisition upon the terms of the Cricket Acquisition Agreement;

 

(j)          evidence satisfactory to Lender that immediately after giving
effect to the consummation of the Cricket Acquisition and the incurring of the
Cricket Seller Subordinated Debt, the Borrower and its Non-MSB Subsidiaries
(including New PQH Subsidiary) shall be in pro forma compliance with all of the
covenants set forth in Article VII of the Credit Agreement, such compliance to
be determined on the basis of the financial information most recently delivered
to the Lender pursuant to Section 6.01(a) or (b) of the Credit Agreement as
though the consummation of the Cricket Acquisition and the incurring of the
Cricket Seller Subordinated Debt had been consummated as of the first day of the
fiscal period covered thereby; and

 

(k)         such other documents, instruments, opinions, certifications,
undertakings, further assurances and other matters as Lender shall reasonably
request.

 

SECTION 4. Consent of Guarantors. Loan Parties other than Borrower, in their
capacity as “Guarantors” under their Guaranty Agreement in favor of Lender dated
April 21, 2016 (as any may be amended, modified, restated or supplemented from
time to time, the “Guaranty”), consent to the terms and provisions of the
Agreement and the transactions contemplated thereby and confirm and agree that:
(a) their obligations under the Guaranty relating to the Guaranteed Obligations
(as defined therein) shall be unimpaired by the Agreement; (b) none of them have
any defenses, set offs, counterclaims, discounts or charges of any kind against
Lender with respect to the Guaranty; and (c) all of the terms and conditions of
the Guaranty remain unaltered and in full force and effect and are hereby
ratified and confirmed and apply to the Guaranteed Obligations, as modified by
the Agreement.

 

SECTION 5. Miscellaneous.

 

(a)         Any and all references to any Loan Document in any other Loan
Document shall be deemed to refer to such Loan Document as amended by this
Agreement. This Agreement is deemed incorporated into each of the Loan
Documents. To the extent that any term or provision of this Agreement is or may
be inconsistent with any term or provision in any Loan Document, the terms and
provisions of this Agreement shall control.

 

(b)         Each Loan Party hereby reconfirms and reaffirms all representations
and warranties, agreements and covenants made by it pursuant to the terms and
conditions of the Loan Documents to which it is a party after giving effect to
the closing of the transactions contemplated hereby, except as such
representations and warranties, agreements and covenants may have heretofore
been amended, modified or waived in writing in accordance with such Loan
Documents.

 

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(c)         Each Loan Party hereby represents and warrants to Lender that (i) it
has the legal power and authority to execute and deliver this Agreement; (ii)
its officers/members/managers have been duly authorized to execute and deliver
this Agreement and all other Loan Documents to which it is a party and bind it
with respect to the provisions hereof and thereof; (iii) no consent, approval,
order or authorization of, or registration or filing with, any third party is
required in connection with the execution, delivery and carrying out of this
Agreement or, if required, has been obtained; and (iv) this Agreement
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms.

  

(d)         Each Loan Party acknowledges and agrees that each and every
document, instrument or agreement, if any, which at any time has secured payment
of the Loan including, but not limited to, the Security Documents executed in
connection therewith, hereby continue to secure prompt payment when due of the
Loan.

 

(e)         Each Loan Party represents and warrants that (i) no Event of Default
exists under the Loan Documents to which it is a party, nor will any occur as a
result of the execution and delivery of this Agreement or the performance or
observance of any provision hereof or contemplated hereby and (ii) it presently
has no claims or actions of any kind at law or in equity against Lender arising
out of or in any way relating to the Loan Documents to which it is a party. Each
Loan Party hereby expressly waives, releases and relinquishes any and all such
defenses, setoffs, claims, counterclaims and causes of action, known or unknown,
which may exist at this time.

 

(f)          This Agreement embodies the entire agreement and understanding
among the parties relating to the subject matter hereof and supersedes all prior
proposals, negotiations, agreements, and understandings relating to such subject
matter. Except as amended or modified hereby, the terms and provisions of the
Loan Documents remain unchanged, are and shall remain in full force and effect
unless and until modified or amended in writing in accordance with their terms,
and are hereby ratified and confirmed. Except as expressly provided in Section
2, this Agreement shall not constitute a waiver, release or consent with respect
to any provision of any Loan Document, a waiver or forbearance of any default or
Event of Default under any Loan Document, or a waiver or release of any of
Lender’s rights and remedies (all of which are hereby reserved).

 

(g)         This Agreement may be signed in any number of counterpart copies and
by the parties to this Agreement on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission or
electronic mail in “.pdf” format shall be effective as delivery of a manually
executed counterpart. Any party so executing this Agreement by facsimile
transmission or electronic mail shall promptly deliver a manually executed
counterpart, provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile transmission or electronic mail.

 

(h)         This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, excluding its conflict of laws rules.

 

[signatures on next page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

                  WESTERN CAPITAL, INC.     J&P REAL ESTATE, LLC   By:  /s/ John
Quandahl (SEAL)         Name: John Quandahl           Title: CEO     By:  /s/
Steve Irlbeck (SEAL)         Name: Steve Irlbeck           Title: Manager      
          RESTORERS ACQUISITION, INC.     PQH WIRELESS, INC.           By:  /s/
John Quandahl (SEAL)         Name: John Quandahl   By:  /s/ Bill Powers (SEAL)  
Title: CEO   Name: Bill Powers           Title: President                      
  GREEN COMMUNICATIONS LLC, an Arizona limited liability company   GREEN
COMMUNICATIONS, LLC, a Washington limited liability company               By: 
/s/ John Quandahl (SEAL)   By:  /s/ John Quandahl (SEAL) Name: John Quandahl    
Name: John Quandahl   Title: Manager     Title: Manager                 GREEN
COMMUNICATIONS, LLC, an Oregon limited liability company   GO GREEN LLC        
        By:  /s/ John Quandahl (SEAL)   By:  /s/ John Quandahl (SEAL) Name: John
Quandahl     Name: John Quandahl   Title: Manager     Title: Manager            
    BC ALPHA HOLDINGS II, LLC     BC ALPHA, LLC                 By:  /s/ Gay
Burke (SEAL)   By:  /s/ John Quandahl (SEAL) Name: Gay Burke     Name: John
Quandahl   Title: Manager     Title: Manager  

 

[signatures continued on next page]

 

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ALPHAGRAPHICS, INC.     J&P PARK ACQUISITIONS, INC.                 By:  /s/
Tommy Auger (SEAL)   By:  /s/ Paul Ambrose (SEAL) Name: Tommy Auger     Name:
Paul Ambrose   Title: CFO     Title: President                    

PQH SOUTH LLC                     By: By:  /s/ John Quandahl (SEAL)       Name:
John Quandahl         Title: CEO        

                  FIFTH THIRD BANK                     By:  /s/ Charles Arndt  
      Name: Charles Arndt         Title: Senior Vice President                

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