Document:

wmtn_ex101.htm

EXHIBIT 10.1

 

LOAN AGREEMENT

This LOAN Agreement (“Agreement”) is made as of May 7, 2013 (the “Effective Date”) by and between WestMountain Gold, Inc., a Colorado corporation formerly known as WestMountain Index Advisor, Inc. (the “Company”), and BOCO Investments, LLC, a Colorado limited liability company (“Lender”).

 

RECITALS

To provide the Company with additional resources to conduct its business, Lender is willing to loan to Company the principal amount of Five Hundred Thousand Dollars ($500,000.00), subject to the terms and conditions specified herein.

 

AGREEMENT

Now, Therefore, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the Company and Lender, intending to be legally bound, hereby agree as follows:

 

	
1.  

	
Amount and Terms of the Loan

 

1.1 The Loan. Subject to and in accordance with the terms and conditions of this Agreement and the Note (as defined below), Lender agrees to lend to the Company (as hereinafter defined) the principal sum of Five Hundred Thousand Dollars ($500,000.00) (the “Loan Amount”) against the issuance and delivery by the Company of a Promissory Note in the form attached hereto as Exhibit A and incorporated herein (the “Note”).

 

	
2.  

	
The Closing

 

2.1 Closing Date. The closing of the loan (the “Closing”) shall be held as of the date hereof (the “Closing Date”).

 

2.2 Delivery. At the Closing (i) Lender shall execute and deliver to the Company an executed counterpart of the Note; and (ii) the Company shall duly execute and issue and deliver to Lender an original wet-signed counterpart of the Note, an original wet-signed warrant in the form attached hereto as Exhibit B and incorporated herein (the “Warrant”), and an executed counterpart of the Security Agreement in the form attached hereto as Exhibit C and incorporated herein (“Security Agreement”).

 

	
3.  

	
Representations, Warranties and Covenants of the Company

 

As of the Effective Date and until Lender’s receipt of all amounts payable under the Note, the Company hereby represents and warrants to Lender as follows:

 

3.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. The Company has the requisite corporate power to own, lease and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

 

  

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3.2 Subsidiaries. Except as disclosed in the Disclosure Schedule attached as Exhibit D or in the Company’s filings with the Securities and Exchange Commission and publicly available on the EDGAR system as of the Effective Date (“SEC filings”), the Company does not own any equity security or other interest of or control any other corporation, limited partnership or other business entity. Except as disclosed in the Company’s SEC filings, the Company is not a participant in any joint venture, partnership or similar arrangement. Since its inception, the Company has not consolidated or merged with, acquired all or substantially all of the assets of, or acquired the stock of, or any interest in, any corporation, partnership, association, or other business entity.

 

3.3 Corporate Power. The Company has and will have at the Closing all requisite corporate power to execute and deliver this Agreement, the Note, the Warrant, and the Security Agreement (collectively, the “Transaction Agreements”), and to carry out and perform its obligations under the terms of the Transaction Agreements.

 

3.4 Authorization. All corporate action on the part of the Company, its directors and its shareholders necessary for the authorization, execution, delivery by the Company of the Transactions Agreements and the performance of the Company’s obligations hereunder and thereunder, including the issuance and delivery of the Note and the reservation of the capital stock issuable upon exercise of the Warrant. The Transaction Agreements, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms. The capital stock of the Company issuable upon exercise of the Warrant (such capital stock, collectively with the Note, the “Securities”), when issued in compliance with the provisions of the Transaction Agreements, will be validly issued, fully paid and nonassessable and free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws and regulations.

 

3.5 Agreements; Action.

 

(a)           Except as disclosed in the Disclosure Schedule attached as Exhibit D or in the Company’s SEC filings, the Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) other than debt issued to Holder, incurred or guaranteed any indebtedness for money borrowed or any other liabilities in excess of $600,000 in the aggregate (iii) made any loans or advances to any person, other than ordinary course advances for travel or other business expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.

 

  

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(b)           Except as disclosed in the Disclosure Schedule attached as Exhibit D, the Company has not engaged since inception in any discussion (i) with any representative of any corporation or corporations regarding the consolidation or merger of the Company with or into any such corporation or corporations, (ii) with any corporation, partnership, association or other business entity or any individual regarding the sale, conveyance or disposition of all or substantially all of the assets of the Company, or a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of, or (iii) regarding any other form of acquisition, liquidation, dissolution or winding up, of the Company.

 

(c)           The Company expects to issue stock option grants and options in accordance with employment agreements and, subject to the prior written approval of Lender, accounts payable conversion. Further, the Company expects to implement a stock incentive plan in conjunction with the 2013 annual shareholder meeting.

 

3.6 Obligations to Related Parties. Except as disclosed in the Disclosure Schedule attached as Exhibit D or in the Company’s SEC filings, there are no obligations of the Company to officers, directors, stockholders, or employees of the Company other than (a) for payment of salary for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company and (c) for other standard employee benefits made generally available to all employees. None of the officers, directors, key employees or stockholders of the Company, or any members of their immediate families, is indebted to the Company or has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation that competes with the Company, other than (i) passive investments in publicly traded companies (representing less than 1% of such company) that may compete with the Company and (ii) service as a board member of a company due to a person’s affiliation with a venture capital fund or similar institutional investor in such company. No officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company (other than such contracts as relate to any such person’s ownership of capital stock or other securities of the Company).

 

3.7 Title to Properties and Assets; Liens, Etc. Except as disclosed in the Company’s SEC filings, the Company has good and marketable title to, or valid leasehold interests in, its properties and assets, including the properties and assets currently used in its business, in each case subject to no Lien other than (i) the Lien of current taxes not yet due and payable, (b) Liens created in connection with the transactions contemplated hereby and (c) Liens and encumbrances which do not materially detract from the value subject thereto or materially adversely affect the Company or its business as conducted and proposed to be conducted. For the purposes hereof, the term “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. The Company will not, without the Lender’s prior written consent, sell, lease, assign, pledge, hypothecate, or otherwise transfer or encumber all or any portion of its interest in the Collateral, or any portion thereof.

 

  

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(f)           Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as presently conducted or proposed to be conducted, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated.

 

3.8 Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with, any governmental authority, required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or issuance of the Securities, or the consummation of any other transaction contemplated hereby, shall have been obtained and will be effective at the Closing.

 

3.9 Compliance with Laws; Permits. The Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership or operation of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties or financial condition of the Company and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as presently proposed to be conducted.

 

3.10 Compliance with Other Instruments. The Company is not in violation or default of any term of, and the execution and delivery by the Company of the Transaction Agreements will not result in any violation or default with respect to, its articles of incorporation or bylaws, or of any provision of any mortgage, indenture or contract to which it is a party and by which it is bound or of any judgment, decree, order or writ. The execution, delivery and performance of this Agreement and the other Transaction Agreements, and the consummation of the transactions contemplated hereby or thereby will not result in any such violation or be in conflict with, give rise to any acceleration or right to accelerate, or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, decree, order or writ or an event that results in the creation of any Lien upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. Without limiting the foregoing, the Company has obtained all waivers reasonably necessary with respect to any preemptive rights, rights of first refusal or similar rights, including any notice or offering periods provided for as part of any such rights, in order for the Company to consummate the transactions contemplated hereunder without any third party obtaining any rights to cause the Company to offer or issue any securities of the Company as a result of the consummation of the transactions contemplated hereunder.

 

  

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3.11 Litigation. Except as disclosed in the Disclosure Schedule attached as Exhibit D or in the Company’s SEC filings, there is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, threatened against the Company that questions the validity of this Agreement or the other Transaction Agreements or which questions the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, or which would reasonably be expected to result, either individually or in the aggregate, in any material adverse change in the business, assets, liabilities, operations or condition of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for any of the foregoing. The foregoing includes, without limitation, actions pending or, to the Company’s knowledge, threatened (or any basis therefor known by the Company) involving the prior employment of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party to, or to its knowledge subject to, the provisions of any order, writ, injunction, judgment or decree of any arbitration panel or tribunal, court or other government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate.

 

3.12 Obligations of Management. Except as disclosed in the Company’s SEC filings, each officer and key employee of the Company is currently devoting substantially all of his or her business time to the conduct of the business of the Company. The Company is not aware that any officer or key employee of the Company is planning to work less than full time at the Company in the future. No officer or key employee is currently working or, to the Company’s knowledge, plans to work for a competitive enterprise, whether or not such officer or key employee is or will be compensated by such enterprise.

 

3.13 Financial Statements. Except as disclosed in the Disclosure Schedule attached as Exhibit D or in the Company’s SEC filings, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business and (ii) obligations under contracts and commitments incurred in the ordinary course of business, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with generally accepted accounting principles.

 

3.14 Brokers or Finders. The Company has not incurred, and will not incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement, the Transaction Agreements or any of the transactions contemplated hereby or thereby. The Company shall indemnify, protect and hold Lender harmless from all claims for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement, the Transaction Agreements or any of the transactions contemplated hereby or thereby.

3.15 Insurance. The Company has in full force and effect fire and casualty insurance policies in amounts customary for companies in similar businesses similarly situated.

  

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3.16 Tax Returns, Payments and Elections. The Company has filed all tax returns and reports (including information returns and reports) as required by law. These returns and reports are true and correct in all material respects except to the extent that a reserve has been reflected on the Financial Statements in accordance with generally accepted accounting principles. The Company has paid all taxes and other assessments due, except those contested by it in good faith that are listed in the Schedule of Exceptions and except to the extent that a reserve has been reflected on the Financial Statements in accordance with generally accepted accounting principles. The provision for taxes of the Company as shown in the Financial Statements is adequate for taxes due or accrued as of the date thereof. The Company has not elected pursuant to the Internal Revenue Code of 1986, as amended (the “Code”), to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has it made any other elections pursuant to the Code (other than elections that relate solely to methods of accounting, depreciation or amortization) that would have a material effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or material assets. The Company has never had any tax deficiency proposed or assessed against it and has not executed any waiver of any statute of limitations on the assessment or collection of any tax or governmental charge. None of the Company’s federal income tax returns and none of its state income or franchise tax or sales or use tax returns have ever been audited by governmental authorities. Since the Financial Statement Date, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. The Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories.

3.17 Minute Books. The minute books of the Company contain a complete summary of all meetings of directors and shareholders since the time of incorporation and reflect all transactions referred to in such minutes accurately in all material respects.

3.18 Labor Agreements and Actions; Employee Compensation. The Company is not bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the Company’s knowledge, has sought to represent any of the employees, representatives or agents of the Company. There is no strike or other labor dispute involving the Company pending, or to the Company’s knowledge, threatened, that could have a material adverse effect on the assets, properties, financial condition, operating results, or business of the Company (as such business is presently conducted and as it is proposed to be conducted), nor is the Company aware of any labor organization activity involving its employees. The employment of each officer and employee of the Company is terminable at the will of the Company. To its knowledge, the Company has complied in all material respects with all applicable state and federal equal employment opportunity and other laws related to employment. Except as set forth in the Schedule of Exceptions, the Company is not a party to or bound by any currently effective employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement, or other employee compensation agreement and there is no accrued or unpaid compensation due or owing by the Company to any contractor, employee, officer or director of the Company.

  

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3.19 Offering. Assuming the accuracy of the representations and warranties of the Lender contained in this Agreement, the offer, issue, and sale of the Note are and will be exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Act”), and the Note has been registered or qualified (or is exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws and regulations.

3.20 Disclosure. The Company has provided Lender with all the information regarding the Company reasonably available to it that Lender has requested for deciding whether to purchase the Securities. To the Company’s knowledge, neither the Agreement nor any of the Transaction Agreements delivered in connection herewith, when taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. The Company does not represent or warrant that it will achieve any financial projections provided to the Lender and represents only that such projections were prepared in good faith

 

3.21 Covenants. Until repayment in full of the outstanding principal and all accrued and unpaid interest and other amounts payable under the Note, the Company covenants and agrees as follows:

 

(a) The Company shall not transfer, sale, lease, license, exchange, or undertake the disposition (individually and collectively, a “Transfer”) of, or enter into any agreement for the Transfer of, any assets, interests, or rights of Payor or assets, interests, or rights not yet acquired by Payor, in the ordinary course of business or otherwise, for consideration exceeding $50,000 in whole or in the aggregate, without Lender’s prior written consent.

 

(b) The Company shall deliver the Lender (i) unaudited quarterly financial reports within thirty days after the end of each quarter, and (ii) a monthly accounting of the Company’s cash balance. Both shall be in a format reasonably acceptable to the Lender.

 

(c) The Company shall not incur,agree to incur, guarantee or agree to guarantee any indebtedness for borrowed money or financed equipment, or any trade debt in excess of $600,000 (except debt issued to Lender) in whole or in the aggregate without the prior written consent of the Lender. All such indebtedness shall be solely to fund operations of the Terra project in Alaska and payroll, and shall be on terms and conditions no more beneficial to a third-party lender as the terms and conditions set forth in the Transaction Agreements.

 

(d) The Company shall not pledge, encumber or grant any security interest in any assets, interests, or rights of the Company or any of its subsidiaries to any third party without the prior written consent of the Lender, excluding the pledge of assets pursuant to this Agreement or the Note.

 

  

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(e) All loan proceeds shall be used by the Company to pay the Company’s expenses of operation of the Terra project in Alaska incurred in the ordinary course of business, including without limitation, the Company’s payroll and lease obligations.

 

(f) Without the prior written approval of Lender, the Company shall not enter into any agreement or promise whereby the Company issues or agrees to issue shares in the Company, warrants, options (excluding pursuant to an approved employee stock option plan), debt convertible into shares of the Company, or any other agreement, security, or instrument pledging to issue shares in the Company in consideration for property or services furnished or to be furnished to the Company or any third party.

 

3.22 Information and Sophistication. Lender acknowledges that it has prior investment experience such that it is able to evaluate the merits and risks of an investment in the Company, or that it has employed the services of an investment advisor to read the Disclosure Documents (as defined below) and to evaluate the merits and risks of such an investment on its behalf; that it recognizes the speculative nature of this investment; and that it is able to bear the economic risk it hereby assumes. The Company’s (i) Annual Report for the year ended October 31, 2012, as filed with the U.S. Securities and Exchange Commission (“SEC”) on January 22, 2013 ; (ii) Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 as filed with the SEC on March 5, 2013; (iii) Form S-1 and S-1/A, as filed with the SEC; and (iv) other documents as filed with the SEC, are collectively referred to as the “Disclosure Documents.” Lender acknowledges that it or its representative(s) have read the Disclosure Documents. Lender also acknowledges that it and its representative(s) have been afforded the opportunity to make, and has made, all inquiries as it and its representatives deemed appropriate with respect to the Company’s affairs and prospects.

 

	
4.  

	
Miscellaneous

 

4.1 Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

4.2 Registration, Transfer and Replacement of the Note. The Note issuable under this Agreement shall be a registered note. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Note. Prior to presentation of the Note for registration of transfer, the Company shall treat the person in whose name such Note is registered as the owner and holder of the Note for all purposes whatsoever, whether or not the Note shall be overdue, and the Company shall not be affected by notice to the contrary. The holder of the Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s chief executive office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor one or more new Note(s), each in the principal amount requested by such holder, dated the date of the Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of the Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date of such Note.

 

  

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4.3 Successors and Assigns. The rights and obligations of the Company and the Lender shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties. This Agreement and all obligations of the Company hereunder shall survive the Closing and the execution and delivery of the Note, Warrant, and Security Agreement.

 

4.4 Assignment by the Company. The rights, interests or obligations hereunder may not be assigned or delegated, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Lender, which may be withheld in Lender’s sole and absolute discretion.

 

4.5 Severability of this Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

4.6 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Colorado as applied to agreements among Colorado residents, made and to be performed entirely within the State of Colorado, without giving effect to conflicts of laws principles. Exclusive venue for all actions arising out of this Agreement shall be in the district court in and for Larimer County, Colorado, which shall have authority to adjudicate all claims arising out of this Agreement.

 

4.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

4.8 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

4.9 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex, electronic mail or facsimile if sent during normal business hours of the recipient to the address on file in the books and records of the Company, and if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, within the United States, (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt, within the United States, or (e) upon actual delivery if mailed or otherwise delivered in hard copy outside the Unites States. All communications shall be sent to the Company and to Lender at the address(es) set forth on the signature page hereto or at such other address(es) as the Company or Lender may designate by ten (10) days advance written notice to the other party hereto.

 

  

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4.10 Further Assurances. The Company agrees at any time and from time to time at its expense, upon request of Lender, to promptly execute, deliver, or obtain or cause to be executed, delivered or obtained any and all further instruments and documents and to take or cause to be taken all such other action as the Lender may deem reasonably desirable in obtaining the full benefits of, or in preserving the liens and/or security interests of, the Transaction Agreements.

 

4.11 Survival. All representations, warranties, covenants and agreements made by the Company in connection herewith shall survive the disbursement of the loans, the execution and delivery of this Agreement and the Note.

 

4.12 Modification; Waiver. No modification or waiver of any provision of this Agreement or consent to departure therefrom shall be effective unless agreed to in writing by the Company and Lender.

 

4.13 Fees and Expenses. At the Closing, the Company shall pay the reasonable legal and due diligence fees and expenses of counsel to the Lender.

 

4.14 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to Lender, upon any breach or default of the Company under this Agreement or any other Transaction Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by Lender of any breach or default under this Agreement, or any waiver by Lender of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Agreement, or by law or otherwise afforded to the Lender, shall be cumulative and not alternative.

 

4.15 Entire Agreement. This Agreement together with the other Transaction Agreements constitute and contain the entire agreement among the Company and Lenders and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

 

[Remainder of Page Intentionally Left Blank]

 

  

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In Witness Whereof, the parties have executed this Amended and Restated Revolving Credit Loan and Security Agreement as of the Effective Date.

 

The Company:

WestMountain Gold, Inc.,

a Colorado corporation

By: /s/ Gregory Schifrin

Print Name: Gregory Schifrin

Chief Executive Officer

Company Address:

2186 S. Holly Street, Suite 104, Denver, CO 80222

Lender:

BOCO INVESTMENTS, LLC,

a Colorado limited liability company

By: /s/ Joseph C. Zimlich

Print Name: Joseph C. Zimlich

Title: President of Managing Member

 

Lender Address:                                                                       

262 E. Mountain Avenue

Fort Collins, CO 80524

 

  

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Exhibit A

Promissory Note

[See attached]

 

 

 

 

 

 

  

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Exhibit B

The Warrant

[See attached]

 

 

 

 

 

 

  

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Exhibit C

Security Agreement

 

 

 

 

 

  

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Exhibit D

Disclosure Schedule

 

 

 

 

 

 

 

15wmtn_ex103.htm

EXHIBIT 10.3

 

SECURITY AGREEMENT

This Security Agreement (the “Agreement”) is entered into by and between WestMountain Gold, Inc., a Colorado corporation f/k/a WestMountain Index Advisor, Inc. (“Debtor”), and BOCO Investments, LLC, a Colorado limited liability company with offices at 262 East Mountain Avenue, Fort Collins, CO 80524 (“Lender”), as of May 7, 2013.

 

RECITALS

A. This Agreement is entered into in connection with (i) that certain Promissory Note in the principal amount of Five Hundred Thousand Dollars ($500,000.00) dated on or about the date hereof by and between Debtor and Lender (the “Note”), as may be amended from time to time. This Agreement and the Note and any other agreements between Debtor and Lender necessary to effect the transactions contemplated by the Note or this Agreement are collectively referred to herein as the “Transaction Agreements.”

 

B. To induce Lender to make the loan as set forth in the Note, Debtor has agreed to enter into this Agreement and to grant Lender a security interest in the assets of Debtor to secure the performance and timely payment of all obligations under the Transaction Agreements.

 

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Grant of Security Interest. As security for the Obligations (as defined below), Debtor hereby grants to Lender, a security interest in Debtor’s right, title and interest in, to and under the following property of Debtor wherever located and whether now existing or hereafter acquired, arising or coming into existence, (collectively, the “Collateral”):

 

The following assets of Debtor, wherever located, whether now owned or hereafter acquired or arising, and all Proceeds (including but not limited to proceeds from any insurance insuring the same against risk of loss or non-payment), products, accessions, additions, substitutions, rents, profits and replacements thereof, including, without limitation, all Inventory, Equipment, Fixtures, Goods, Accounts, account receivables, contract rights, As-extracted collateral, Commercial Tort Claims, Chattel Paper (tangible and electronic), Deposit Accounts, Documents, General Intangibles, payment intangibles, software, Instruments, Promissory Notes, Investment Property, Letter-of-Credit Rights and letters-of-credit, and Supporting obligations, intellectual property, license rights, distribution rights, and rights to sue for infringement of General Intangible or intellectual property rights.

 

  

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All capitalized terms used in this Section 1 and not otherwise defined, shall have the meanings given to such terms in the Uniform Commercial Code of the State of Colorado as in effect from time to time. The term “Obligations” means all loans, advances, debts, liabilities and obligations, howsoever arising, owed by Debtor to Lender of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), now existing or hereafter arising under or pursuant to the terms of the Transaction Agreements, including, all interest, fees, charges, expenses, attorneys' fees and costs chargeable to and payable by Debtor hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.

 

2. Liabilities Secured. The security interests granted herein shall be security for the performance of and timely payment of all the Obligations.

 

3. Debtor’s Representations and Warranties. Debtor represents and warrants to Lender, now and for so long as any portion of the Obligations remains outstanding, that:

 

(a) Organization; Power. It is duly organized and validly existing under the laws of the State of Colorado; and it has the power and authority to own its property and assets and to carry on its business as it is now being conducted. It has the power and authority to execute, deliver and carry out the terms and provisions of the Transaction Agreements, and it has taken all necessary action to authorize the execution, delivery and performance of the Transaction Agreements; this Agreement and the Note constitute the legally binding obligations of Debtor and are enforceable against Debtor in accordance with their respective terms, subject to bankruptcy and other laws affecting creditors and equitable principles.

 

(b) Ownership. Debtor is the owner of the Collateral (or, in the case of after-acquired Collateral, at the time Debtor acquires rights in the Collateral, will be the owner thereof) and that no other person or entity other than Debtor has (or, in the case of after-acquired Collateral, at the time Debtor acquires rights therein, will have) any right, title, claim or interest (by way of security interest, lien or otherwise) in, against or to the Collateral, other than Permitted Liens (as defined below).

 

(c) No Conflicts; Defaults. Neither the execution nor the delivery of the Transaction Agreements, nor the transactions contemplated hereby or thereby, nor compliance with the terms and conditions hereof or thereof will (i) contravene (A) any provision of Debtor’s organizational documents, or (B) any provision of any law, statute, decree, rule or regulation as to which Debtor or any of its property is bound, or (C) any judgment, decree, franchise, order or permit applicable to the Debtor or any of its property in favor of anyone other than Lender; (ii) conflict with, or result in any breach of any terms, covenants, conditions or provisions of, or constitute a default (with or without the giving of notice or passage of time or both) under or pursuant to the terms of any other agreement or instrument to which the Debtor is a party or by which it is bound; or (iii) result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the property or assets of the Debtor in favor of anyone other than Lender. Debtor is not in default and would not with the giving of notice or passage of time or both be in default under any agreement to which it is a party or by which it or any of its property may be bound; and no litigation, arbitration or administrative proceeding is currently pending or threatened which might have an adverse effect on the business, assets or financial condition of Debtor.

 

  

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(d) Perfection. Upon the filing of a UCC-1 financing statement in the appropriate filing office, Lender shall have (or in the case of after-acquired Collateral, at the time Debtor acquires rights therein, will have) a perfected security interest in the Collateral to the extent that a security interest in the Collateral can be perfected by such filing.

 

4. Debtor’s Covenants. Until such time as the Obligations described herein are satisfied in full and this Agreement has been irrevocably terminated, Debtor hereby agrees that:

 

(a) Security. Debtor shall perform all acts that may be necessary to maintain, preserve, protect and perfect the Collateral, the lien granted to Lender herein and the perfection and priority of such lien including: (i) to procure, execute and deliver from time to time any endorsements, assignments, financing statements, consents, landlord waivers and other writings reasonably necessary for Lender to perfect, maintain and protect its lien hereunder and the priority thereof; (ii) to appear in and defend any action or proceeding which may affect its title to or Lender’ interest in the Collateral; (iii) to permit Lender the right, at any time during normal business hours, upon reasonable prior notice, to visit and inspect the properties of Debtor and its corporate, financial and operating records, and make abstracts therefrom, and to discuss Debtor’s affairs, finances and accounts with its officers and independent public accountants; and (iv) to promptly notify Lender in writing if Debtor a Commercial Tort Claim and to provide a summary description of such claim.

 

(b) Sale of Collateral. Debtor shall not assign, sell, convey, lease, transfer, hypothecate, or dispose of the Collateral or any portion thereof to any third party without Lender’s prior written consent.

 

(c) Insurance. Debtor will at its own expense at all times keep all insurable Collateral insured against loss by damage, fire, theft and other extended coverage hazards. Upon request of Lender, Debtor shall cause Lender to be named as an additional insured on all insurance policies insuring any of the Collateral against risk of loss or non-payment and shall deliver certificates of insurance naming Lender as an additional insured. Lender will be a named insured without liability for premiums and will be the sole loss payee under all such insurance. On request by Lender, the Debtor will furnish Lender with certificates issued by the insurer(s) confirming that the insurance coverage required under this Agreement is maintained and in full force and effect. In addition, at the request of Lender, the original or certified copies of the actual policies showing the existence of insurance in accordance with this Agreement will be delivered to Lender. All insurance will provide for prompt written notice to Lender of any failure to pay a premium and for at least thirty (30) days’ prior written notice to Lender of cancellation or non-renewal of the policy and of any material change in the coverage or in any of the other terms of the insurance.

 

  

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(d) Liens. Debtor will at all times keep the Collateral free from any adverse claims, liens, security interests, or encumbrances (other than Permitted Liens), and in good order and repair and will not waste, destroy or otherwise intentionally impair the value of all or any part of the Collateral. The term “Permitted Liens” means (i) liens for taxes not yet delinquent or liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established; (ii) liens in respect of property or assets imposed by law which were incurred in the ordinary course of business, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings for which adequate reserves have been established; (iii) liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, and other liens to secure the performance of tenders, statutory obligations, contract bids, government contracts, performance and return of money bonds and other similar obligations, incurred in the ordinary course of business, whether pursuant to statutory requirements, common law or consensual arrangements; or (iv) liens in favor of Lender. Debtor shall defend the Collateral against, and take such other action as is necessary to remove, any and all claims, liens, security interests, or encumbrances on the Collateral except Permitted Liens.

 

(e) Taxes. Debtor will pay promptly when due all taxes, assessments, and other charges upon the Collateral.

 

(f) Maintenance. Debtor will provide for all maintenance, repairs and replacements to the Collateral in accordance with standard maintenance and repair procedures and upon request will promptly make available copies of all repairs, maintenance and test reports to Lender.

 

(g) Location of Collateral. Debtor shall not without prior written consent of Lender (i) change Debtor's legal name or legal structure from a corporation, or (ii) change Debtor’s state of registration. Debtor shall immediately notify Lender in writing of any change in the location of its chief executive office or in the location where its books and records are kept.

 

(h) Financial Statements. Upon request of Lender, the Debtor will furnish Lender with quarterly, semiannual and annual profit and loss statements and balance sheets (collectively called the "Financial Statements"). The quarterly and semi-annual Financial Statements will be delivered to Lender within forty-five (45) days after the end of the applicable period; the annual Financial Statements will be delivered to Lender within ninety (90) days after the end of the Debtor's fiscal year and will be reviewed by Debtor's independent certified accountants. In addition, the Debtor will provide Lender with such other information about the Debtor, its financial condition, the Collateral and its other assets and its liabilities as Lender may from time to time request.

 

(i) Intellectual Property. Debtor will perform all acts and execute all documents reasonably requested by Lender, including notices of security interest for each relevant type of intellectual property in forms suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office, that may be necessary or desirable to record, maintain, preserve, protect and perfect Lender's security interest in such intellectual property. With respect to intellectual property, Debtor shall timely file and pay all maintenance fees for patents and renewal fees for trademarks and will promptly notify Lender in writing of any infringement litigation in connection with any of the intellectual property. Debtor shall promptly notify Lender in writing of all newly acquired or created intellectual property.

 

  

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(j) Reorganization.  Debtor shall not, without the prior written consent of Lender, adopt or agree to adopt any plan providing for its reorganization.

 

5. Financing Statement. Debtor authorizes Lender to file, in jurisdictions where this authorization will be given effect, a UCC-1 Financing Statement and continuation statements (including “in lieu” continuation statements) describing the Collateral in the same manner as it is described herein in order to perfect and maintain Lender’s security interest in the Collateral. In addition, Debtor shall execute one or more Financing Statements and continuation statements (including “in lieu” continuation statements) and such other documents (and pay the cost of filing or recording the same) in all public offices deemed necessary or desirable by Lender to establish and maintain a valid security interest in the Collateral (free of all other liens and claims whatsoever) to secure the payment of the Obligations. Debtor shall promptly take all such further actions as reasonably requested by Lender to perfect and maintain its security interest in the Collateral.

 

6. Events of Default. Debtor shall be in default under this Agreement upon breach of any of the terms and conditions set forth in this Agreement or the occurrence of an Event of Default under, and as defined in, the Note.

 

7. Lender’ Remedies Upon Default. Upon the occurrence of any Event of Default and at any time thereafter, Lender may, at its option, declare any and all liabilities secured hereby immediately due and payable without demand or notice of any kind and the same thereupon shall immediately become and be due and payable without demand or notice, in which event (subject to the further provisions of this Agreement) Lender, shall have and may exercise from time to time any and all rights and remedies of a Lender under the Uniform Commercial Code in effect in any and all jurisdictions where UCC-1s or other documents are filed to perfect or maintain Lender’s security interest, as amended from time to time, and any and all rights and remedies available to it under any other applicable law, including but not limited to directing account debtors to make payment directly to Lender, settling, compromising or adjusting any of the Collateral (the same to be binding upon Debtor), commencing, prosecuting, and defending, as the case may be, any proceeding to collect or protect any or all of the Collateral, or any other proceeding with respect to any of the Collateral, selling any of the Collateral at private or public sale on such terms as Lender deems appropriate. Upon request of Lender, Debtor will immediately deliver and endorse or cause to be delivered and endorsed to or in accordance with Debtor’s instructions any of the Collateral. Any proceeds of any disposition of all or any part of the Collateral may be applied by Lender toward payment of such of the Obligations, and in such order of application, as Lender may from time to time elect. All remedies under any of the Transaction Agreements or by law or otherwise afforded to the Lender shall be cumulative and not alternative.

 

8. Collection Costs. If Lender hires an attorney to assist in collecting any amount due or in enforcing any right or remedy under this Agreement or the Transaction Agreements, Debtor agrees to pay such Lender such attorneys’ reasonable fees and collection costs. Debtor will pay Lender interest at the rate of 12% per annum on any amount which the Debtor owes to Lender under this Section: (a) from the date Lender expends the amount in any case where Lender has requested the Debtor to pay the same and Debtor has failed to do so, or (b) from the date Lender requests reimbursement in any case where Lender has not requested the Debtor to pay the same.

 

  

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9. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to Lender, upon any breach or default of the Company under this Agreement or any other Transaction Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by Lender of any breach or default under this Agreement, or any waiver by Lender of any provisions or conditions of this Agreement shall be effective only to the extent specifically set forth in writing executed by Lender.

 

10. Miscellaneous. Time is of the essence of this Agreement. The provisions of this Agreement are cumulative and Lender shall have all the benefits, rights and remedies of and under the Transaction Agreements. All rights of each Lender hereunder shall inure to the benefit of its heirs, legal representatives, successors and permitted assigns; and all liabilities of Debtor shall bind the heirs, legal representatives, successors and assigns of Debtor. The Transaction Agreements constitute the full and complete agreement of the Debtor and Lender with regard to the transactions set forth herein, and supersede and replace any and all other previous or contemporaneous oral agreements. This Agreement may not be amended except by a writing signed by Debtor and Lender. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one instrument. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. This Agreement has been delivered in the State of Colorado and shall be construed in accordance with the laws of Colorado without regard to choice or conflicts of law principles that would result in the application of any law other than Colorado law. Exclusive venue for all actions arising out of this Agreement shall be in the district court in and for Larimer County, Colorado.

 

(Signature Page Follows)

 

  

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 

 

	 	DEBTOR:	 
	 	 	 
	 	WestMountain Gold, Inc.,	 
	 	a Colorado corporation	 
	 	 	 	 
	
 

	
By: 

	/s/ Gregory Schifrin	 
	 	Name:	Gregory Schifrin	 
	 	Title:	Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	LENDER:	 
	 	 	 	 
	 	BOCO INVESTMENTS, LLC,	 
	 	a Colorado limited liability company	 
	 	 	 	 
	 	
By: 

	/s/ Joseph C. Zimlich	 
	 	Name:	Joseph C. Zimlich	 
	 	Title:	President of Managing Member	 

 

 

 

 

 

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