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Exhibit 10.2
 
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY SAGE OF AN OPINION
OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO SAGE THAT
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

THIS NOTE AND THE TRANSACTION DOCUMENTS (AS DEFINED BELOW) ARE SUBJECT TO A
SUBORDINATION AGREEMENT, DATED ON OR ABOUT THE DATE HEREOF, BY AND AMONG
PLATINUM LONG TERM GROWTH LLC, LAKEWOOD GROUP LLC, THE MAKERS AND THE HOLDER.

SAGEBRUSH GOLD, LTD.
GOLD ACQUISITION CORP.

Secured Convertible Promissory Note

September 14, 2011
$1,715,604

 
For value received, each of (i) SAGEBRUSH GOLD, LTD., a Nevada corporation with
an address of 1640 Terrace Way, Walnut Creek, CA 94597 (“Sage”), and (ii) GOLD
ACQUISITION CORP., a Nevada corporation with an address of 1640 Terrace Way,
Walnut Creek, CA 94597 (the “Holding Company,” and together with Sage, each a
“Maker” and jointly and severally the “Makers”) hereby promises to pay to the
order of FROST GAMMA INVESTMENTS TRUST (together with its successors,
representatives, and permitted assigns, the “Holder”), in accordance with the
terms hereinafter provided, the principal amount of One Million Seven Hundred
and Fifteen Thousand Six Hundred and Four Dollars ($1,715,604), together with
interest thereon.
 
The outstanding principal balance of this Note shall be due and payable on the
date that is  the later of (i) thirty (30) months from the Issuance Date (as
defined below),  and (ii) ten (10) days following the payment and/or conversion
in full of the senior secured promissory notes dated as of August 30, 2011,
issued to Platinum Long Term Growth LLC (“Platinum”) and Lakewood Group LLC
(“Lakewood”) (collectively, the “Platinum Notes” and the related transaction
agreements, the “Platinum Agreements”) unless this Note is converted or paid in
accordance with the terms herein (the “Maturity Date”).
 
ARTICLE I - GENERAL TERMS
 
Section 1.1 Purchase Agreement
 
This Note has been executed and delivered pursuant to the Note Purchase
Agreement dated as of the date hereof (as amended, restated, supplemented or
otherwise modified, the “Purchase Agreement”), by and among Makers and the
Holder.  Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement.  Certain terms used herein
are defined in Section 5.13 hereof.
 
Section 1.2 Interest
 
Beginning on the issuance date of this Note (the “Issuance Date”), the
outstanding principal balance of this Note shall bear interest, in arrears, at a
rate per annum equal to nine percent (9%), payable in cash on the first Business
Day (as defined below) of each month following the Issuance Date. As used
herein, “Business Day” (whether or not capitalized) means any day banking
transactions can be conducted in New York City, New York, USA, and does not
include any day which is a federal or state holiday in such location.
 
 
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Interest shall be computed on the basis of a 360-day year of twelve (12)
thirty-day months, shall compound monthly and shall accrue commencing on the
Issuance Date.  Furthermore, upon the occurrence of an Event of Default (as
defined in Section 2.1 hereof), the Makers will pay interest to the Holder,
payable on demand, on the outstanding principal balance of the Note and on all
unpaid interest from the date of the Event of Default at a per annum rate equal
to the lesser of (i) eighteen percent (18%) and (ii) the maximum applicable
legal rate per annum, calculated based on a 360-day year.
 
Section 1.3 Qualified Financing; Payment of Principal; Prepayment
 
Upon the occurrence of a Qualified Financing and regardless of whether the
Platinum Notes have been paid in full, Sage shall be required to prepay
principal on this Note in the aggregate sum of $1,715,604 (the “Permitted
Payment”).  On the date the Permitted Payment is made or as soon as practicable
thereafter, Makers and the Holder shall satisfy the Permitted Payment
Conditions.  On or after the date that all obligations of the Makers under the
Platinum Agreements have been satisfied, the Makers may prepay this Note in full
or in part, provided that any partial payment shall be in an amount not less
than $250,000, at a price equal to one hundred and five percent (105%) of such
aggregate principal amount of this Note plus all accrued and unpaid interest at
the time of such request (the “Prepayment Price”);, provided, that, the Makers
shall deliver to the Holder a notice of the Makers’ intent to make such
prepayment at least 10 days prior to the date of prepayment; and, provided,
further, that Sage shall be obligated to honor all conversion requests delivered
by the Holder during such 10-day period.
 
Section 1.4 Security Agreement
 
The obligations of the Makers hereunder are secured by: (i) a Security Agreement
(the “Security Agreement”) dated on or about the date hereof between the Holding
Company and the Holder and (ii) a Pledge Agreement from Sage to the Holder (the
“Pledge Agreement”).  The Pledge Agreement and the Security Agreement are
collectively referred to herein as the “Security Documents.”  The Security
Documents, together with this Note, the Purchase Agreement, and all documents or
instruments in connection herewith or therewith or in furtherance hereof or
thereof are collectively referred to herein as the “Transaction Documents.”
 
Section 1.5 Payment on Non-Business Days
 
Whenever any payment to be made shall be due on a Saturday, Sunday or a public
holiday under the laws of the State of New York, such payment may be due on the
next succeeding Business Day and such next succeeding day shall be included in
the calculation of the amount of accrued interest payable on such date.
 
Section 1.6 Transfer
 
This Note may be transferred or sold, subject to the provisions of Section 5.8
of this Note, or pledged, hypothecated or otherwise granted as security by the
Holder.
 
Section 1.7 Replacement
 
Upon receipt of a duly executed, notarized and unsecured written statement from
the Holder with respect to the loss, theft or destruction of this Note (or any
replacement hereof) and a standard indemnity, or, in the case of a mutilation of
this Note, upon surrender and cancellation of such Note, the Makers shall issue
a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or
mutilated Note.
 
ARTICLE II - EVENTS OF DEFAULT; REMEDIES
 
Section 2.1 Events of Default.
 
The occurrence of any of the following events shall be an “Event of Default”
under this Note:
 
(a) any default in the payment of (1) the principal amount hereunder when due,
or (2) interest on, or any other fees due in connection with, this Note, as and
when the same shall become due and payable (whether on the Maturity Date or by
acceleration or otherwise); or
 
 
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(b) any Makers shall fail to observe or perform any other covenant or agreement
contained in this Note, or any other Transaction Document, which failure is not
cured, if possible to cure, within 3 Business Days after the occurrence thereof;
or
 
(c) the suspension from listing, without subsequent listing on any one of, or
the failure of Sage’s Common Stock (“Common Stock”) to be listed on at least one
of, the OTC Bulletin Board, the OTCQB, the OTCQX, the NYSE Amex, the Nasdaq
Capital Markets, the Nasdaq Global Market, the Nasdaq Global Select Market or
The New York Stock Exchange, Inc. for a period of ten (10) consecutive trading
days; or
 
(d) notice from Sage to the Holder, including by way of public announcement, at
any time, of Sage’s inability to comply (including without limitation for any of
the reasons described in Section 3.7(a) hereof) or its intention not to comply
with proper requests for conversion of this Note into shares of Common Stock; or
 
(e) Sage shall fail to timely deliver the shares of Common Stock pursuant to the
terms hereof upon conversion of the Note; or
 
(f) any Maker shall fail to make the payment of any fees and/or liquidated
damages under this Note, the Purchase Agreement or any other Transaction
Document, which failure is not remedied within five (5) Business Days after the
occurrence thereof; or
 
(g) default shall be made in the performance or observance of (i) any covenant,
condition or agreement contained in this Note and is not fully cured within
three (3) Business Days after the occurrence thereof or (ii) any covenant,
condition or agreement contained in any Transaction Document that is not covered
by any other provisions of this Section 2.1 which results in a Material Adverse
Effect and such default is not fully cured within three (3) Business Days of the
earliest of (A) the date the Makers receive notice from the Holder of the
occurrence thereof, (B) the date any Maker knew of such default, or (C) the date
any Maker should have known of such default; or
 
(h) any representation or warranty made by any Maker herein or in any other
Transaction Document shall prove to have been false or incorrect or breached on
the date as of which made, which breach results in a Material Adverse Effect; or
 
(i) any Maker shall (A) default in any payment of any amount or amounts of
principal of or interest on any Indebtedness (other than the Indebtedness
hereunder) the aggregate principal amount of which Indebtedness is in excess of
$250,000 or (B) default in the observance or performance of any other agreement
or condition relating to any Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders or beneficiary or
beneficiaries of such Indebtedness to cause with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity; or
 
(j) any Maker shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect) or under
the comparable laws of any jurisdiction (foreign or domestic), (iv) file a
petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
(vi) issue a notice of bankruptcy or winding down of its operations or issue a
press release regarding same, or (vii) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; or
 
(k) a proceeding or case shall be commenced in respect of any Maker, without its
application or consent, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of its
assets in connection with the liquidation or dissolution of any Maker or (iii)
similar relief in respect of it under any law providing for the relief of
debtors, and such proceeding or case described in clause (i), (ii) or (iii)
shall continue undismissed, or unstayed and in effect, for a period of thirty
(30) days or any order for relief shall be entered in an involuntary case under
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against any Maker or
action under the laws of any jurisdiction (foreign or domestic) analogous to any
of the foregoing shall be taken with respect to any Maker and shall continue
undismissed, or unstayed and in effect for a period of sixty (60) days; or
 
 
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(l) the failure of Sage to instruct its transfer agent to remove any legends
from shares of Common Stock eligible to be sold under Rule 144 (“Rule 144”) of
the Securities Act of 1933, as amended (the “Securities Act”) and issue such
un-legended certificates to the Holder within three (3) Business Days of the
Holder’s request so long as the Holder has provided reasonable assurances to
Sage that such shares of Common Stock can be sold pursuant to Rule 144; or
 
(m) the occurrence of any default or Event of Default under any other
Transaction Document, or the occurrence of any event, which, with the passage of
time or the giving of notice or both, would constitute a default or an Event of
Default under any other Transaction Document; or
 
(n) any Maker shall cease to intend to actively conduct operations relating to
its mining business for a period of ten (10) or more consecutive Business Days
in a manner consistent with past practices relating to such business; or
 
(o) any material portion of the property or assets of any Maker is seized by any
governmental authority; or
 
(p) the Makers shall fail to pay any Bureau of Land Management fees relating to
any unpatented mining claims now or hereafter held by the Holding Company; or
 
(q) any Maker or any principal executive officer thereof is indicted for the
commission of any criminal activity involving fraud or dishonesty; or
 
(r) closing of a purchase, tender or exchange offer made to the holders of more
than fifty percent (50%) of the outstanding shares of Common Stock in which more
than fifty percent (50%) of the outstanding shares of Common Stock were tendered
and accepted.
 
Section 2.2 ­Remedies Upon An Event of Default
 
 On and after the date that all obligations of the Makers under the Platinum
Agreements have been satisfied, an Event of Default shall have occurred and
shall be continuing, the Holder of this Note may at any time at its option: (a)
declare due and payable, and thereupon, the same shall be accelerated and so due
and payable the following: (i) the entire unpaid principal balance of this Note
multiplied by two (2) and (ii) all interest accrued hereon, which amounts shall
be payable without presentment, demand, protest, or notice, all of which are
hereby expressly unconditionally and irrevocably waived by the Maker; provided,
that, no notice or declaration of acceleration by the Holder shall be required
in case of an Event of Default described in Section 2.1(j) or Section 2.1(k)
above, the occurrence of which shall cause the outstanding principal balance and
all accrued interest to become immediately due and payable (subject to payment
in full of the Platinum Notes) ; or (b) demand immediate prepayment of this Note
at the Prepayment Price.  In addition, on or after the date that all obligations
under the Platinum Agreements have been satisfied, the Holder may exercise or
otherwise enforce any one or more of the Holder’s rights, powers, privileges,
remedies and interests under the Transaction Documents.  No course of delay on
the part of the Holder shall operate as a waiver thereof or otherwise prejudice
the right of the Holder.  No remedy conferred hereby shall be exclusive of any
other remedy referred to herein or now or hereafter available at law, in equity,
by statute or otherwise.
 
Notwithstanding the foregoing, regardless of whether all obligations of the
Makers under the Platinum Agreements have been satisfied or whether the Platinum
Notes have been paid or converted in full , if an Event of Default shall have
occurred and be continuing , the Holder of this Note may at any time at its
option demand that the principal amount of this Note then outstanding and all
accrued and unpaid interest thereon shall be converted into shares of Common
Stock at the Conversion Price per share on the Trading Day immediately preceding
the date the Holder demands conversion pursuant to this clause (subject to
Section 3.4 hereof).
 
ARTICLE III - CONVERSION; ANTI-DILUTION; PREPAYMENT
 
Section 3.1 Conversion Option
 
At any time and from time to time on or after the Issuance Date, this Note shall
be convertible (in whole or in part), at the option of the Holder (the
“Conversion Option”), into such number of fully paid and non-assessable shares
of Common Stock (the “Conversion Rate”) as is determined by dividing (x) that
portion of the outstanding principal balance plus any accrued but unpaid
interest under this Note as of such date that the Holder elects to convert by
(y) the Conversion Price (as defined in Section 3.2 hereof) then in effect on
the date (the “Conversion Date”) on which the Holder faxes a notice of
conversion (the “Conversion Notice”), duly executed, to Sage (facsimile number:
(925) 938-0406, Attn.: David Rector (or current CEO, President or CFO),
provided, however, that the Conversion Price shall be subject to adjustment as
described in Section 3.5 below.  The Holder shall deliver this Note to Sage, on
behalf of the Makers, at the address designated in the Purchase Agreement at
such time that this Note is fully converted.  With respect to partial
conversions of this Note, the Makers shall keep written records of the amount of
this Note converted as of each Conversion Date.
 
 
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Section 3.2 Conversion Price
 
The term “Conversion Price” shall mean $0.50, subject to adjustment under
Section 3.5 hereof.
 
Section 3.3 Mechanics of Conversion
 
(a) Not later than three (3) Trading Days after any Conversion Date, Sage or its
designated transfer agent, as applicable, shall issue and deliver to the
Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit
Withdrawal Agent Commission System (“DWAC”) as specified in the Conversion
Notice, registered in the name of the Holder or its designee, for the number of
shares of Common Stock to which the Holder shall be entitled.  In the
alternative, not later than three (3) Trading Days after any Conversion Date,
Sage shall deliver to the Holder by express courier a certificate or
certificates which shall be free of restrictive legends and trading restrictions
representing the number of shares of Common Stock being acquired upon the
conversion of this Note (the “Delivery Date”).  Notwithstanding the foregoing to
the contrary, Sage or its transfer agent shall only be obligated to issue and
deliver the shares to the DTC on the Holder’s behalf via DWAC (or certificates
free of restrictive legends) if such conversion is in connection with a sale and
the Holder has complied with the applicable prospectus delivery requirements (as
evidenced by documentation furnished to and reasonably satisfactory to Sage) or
such shares may be sold pursuant to Rule 144 or an exemption from the
registration requirements of the Securities Act.  If in the case of any
Conversion Notice such certificate or certificates are not delivered to or as
directed by the Holder by the Delivery Date, the Holder shall be entitled by
written notice to Sage at any time on or before its receipt of such certificate
or certificates thereafter, to rescind such conversion, in which event Sage
shall immediately return this Note tendered for conversion (if applicable), and
whereupon the Makers and the Holder shall each be restored to their respective
positions immediately prior to the delivery of such notice of revocation, except
that any amounts described in Sections 3.3(b) and 3.3(c) shall be payable
through the date notice of rescission is given to Sage.
 
(b) The Makers understand that a delay in the delivery of the shares of Common
Stock upon conversion of this Note beyond the Delivery Date could result in
economic loss to the Holder.  If Sage fails to deliver to the Holder such shares
via DWAC (or, if applicable, certificates) by the Delivery Date, the Makers
shall pay to the Holder, in cash, an amount per Trading Day for each Trading Day
until such shares are delivered via DWAC or certificates are delivered (if
applicable), together with interest on such amount at a rate of 10% per annum,
accruing until such amount and any accrued interest thereon is paid in full,
equal to the greater of: (A) (i) 1% of the aggregate principal amount of the
Note requested to be converted for the first five (5) Trading Days after the
Delivery Date and (ii) 2% of the aggregate principal amount of the Note
requested to be converted for each Trading Day thereafter; and (B) $1,000 per
day (which amount shall be paid as liquidated damages and not as a
penalty).  Nothing herein shall limit the Holder’s right to pursue actual
damages for Sage’s failure to deliver certificates representing shares of Common
Stock upon conversion within the period specified herein and the Holder shall
have the right to pursue all remedies available to it at law or in equity
(including, without limitation, a decree of specific performance and/or
injunctive relief).  Notwithstanding anything to the contrary contained herein,
the Holder shall be entitled to withdraw a Conversion Notice, and upon such
withdrawal the Makers shall only be obligated to pay the liquidated damages
accrued in accordance with this Section 3.3(b) through the date the Conversion
Notice is withdrawn.
 
(c) In addition to any other rights available to the Holder, if Sage fails to
cause its transfer agent to transmit via DWAC or transmit to the Holder a
certificate or certificates representing the shares of Common Stock issuable
upon conversion of this Note on or before the Delivery Date, and if after such
date the Holder is required by its broker to purchase (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the shares of Common Stock issuable upon conversion of
this Note which the Holder anticipated receiving upon such conversion (a
“Buy-In”), then the Makers shall (1) pay in cash to the Holder the amount by
which (x) the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (A) the number of shares of Common Stock issuable upon conversion
of this Note that Sage was required to deliver to the Holder in connection with
the conversion at issue times (B) the price at which the sell order giving rise
to such purchase obligation was executed, and (2) at the option of the Holder,
either reinstate the portion of the Note and equivalent number of shares of
Common Stock for which such conversion was not honored or deliver to the Holder
the number of shares of Common Stock that would have been issued had Sage timely
complied with its conversion and delivery obligations hereunder.  For example,
if the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of shares of Common Stock
with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the Makers shall be
required to pay the Holder $1,000. The Holder shall provide the Makers written
notice indicating the amounts payable to the Holder in respect of the Buy-In,
together with applicable confirmations and other evidence reasonably requested
by the Makers.  Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to Sage’s failure to timely deliver certificates representing shares of
Common Stock upon conversion of this Note as required pursuant to the terms
hereof.
 
 
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Section 3.4 Intentionally Omitted.
 
Section 3.5 Adjustment of Conversion Price
 
(a) Until the Note has been converted and/or paid in full, the Conversion Price
shall be subject to adjustment from time to time as follows (but shall not be
increased, other than pursuant to Section 3.5(a)(i) hereof):
 
(i) Adjustments for Stock Splits and Combinations.  If Sage shall at any time or
from time to time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the applicable Conversion Price in effect immediately
prior to the stock split shall be proportionately decreased.  If Sage shall at
any time or from time to time after the Issuance Date, combine the outstanding
shares of Common Stock, the applicable Conversion Price in effect immediately
prior to the combination shall be proportionately increased.  Any adjustments
under this Section 3.5(a)(i) shall be effective at the close of business on the
date the stock split or combination occurs.
 
(ii) Adjustments for Certain Dividends and Distributions.  If Sage shall at any
time or from time to time after the Issuance Date, make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Conversion Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such
record date shall have been fixed, as of the close of business on such record
date, by multiplying, the applicable Conversion Price then in effect by a
fraction:
 
(1)  
the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date; and

 
(2)  
the denominator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution.

 
(iii) Adjustment for Other Dividends and Distributions.  If Sage shall at any
time or from time to time after the Issuance Date, make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the applicable Conversion
Price shall be made and provision shall be made (by adjustments of the
Conversion Price or otherwise) so that the holders of this Note shall receive
upon conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of Sage which they would have
received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 3.5(a)(iii) with
respect to the rights of the Holder; provided, however, that if such record date
shall have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
shall be adjusted pursuant to this paragraph as of the time of actual payment of
such dividends or distributions.
 
(iv) Adjustments for Reclassification, Exchange or Substitution.  If the Common
Stock issuable upon conversion of this Note at any time or from time to time
after the Issuance Date shall be changed to the same or different number of
shares of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination of
shares or stock dividends provided for in Sections 3.5(a)(i), 3.5(a)(ii) and
3.5(a)(iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 3.5(a)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall be made and provisions shall be made (by
adjustments of the Conversion Price or otherwise) so that the Holder shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
 
 
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(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets.  If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of Sage (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section 3.5(a)(i), 3.5(a)(ii) and 3.5(a)(iii), or a reclassification, exchange
or substitution of shares provided for in Section 3.5(a)(iv)), or a merger or
consolidation of Sage with or into another Person where the holders of
outstanding voting securities prior to such merger or consolidation do not own
over fifty percent (50%) of the outstanding voting securities of the merged or
consolidated entity, immediately after such merger or consolidation, or the sale
of all or substantially all of Sage’s properties or assets to any other Person
(an “Organic Change”), then as a part of such Organic Change, (A) if the
surviving entity in any such Organic Change is a public company that is
registered pursuant to the Exchange Act, and its common stock is listed or
quoted on a national exchange or the OTC Bulletin Board, an appropriate revision
to the Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the Holder shall have
the right thereafter to convert such Note into the kind and amount of shares of
stock and other securities or property of Sage or any successor corporation
resulting from Organic Change, and (B) if the surviving entity in any such
Organic Change is not a public company that is registered pursuant to the
Exchange Act, or its common stock is not listed or quoted on a national exchange
or the OTC Bulletin Board, the Holder shall have the right to demand prepayment
pursuant to Section 3.6(b) hereof.  In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3.5(a)(v)
with respect to the rights of the Holder after the Organic Change to the end
that the provisions of this Section 3.5(a)(v) (including any adjustment in the
applicable Conversion Price then in effect and the number of shares of stock or
other securities deliverable upon conversion of this Note) shall be applied
after that event in as nearly an equivalent manner as may be practicable.
 
(vi) Intentionally Omitted.
 
(vii) Intentionally Omitted.
 
(1)  
Intentionally Omitted.

 
(b) Record Date.  In case Sage shall take record of the holders of its Common
Stock for the purpose of entitling them to subscribe for or purchase Common
Stock or Convertible Securities, then the date of the issue or sale of the
shares of Common Stock shall be deemed to be such record date.
 
(c) Intentionally Omitted.
 
(d) No Impairment.  No Maker shall, by amendment of its Certificate of
Incorporation, Bylaws, Operating Agreement  or other constitutional documents,
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Makers, but will at all times in good faith,
assist in the carrying out of all the provisions of this Section 3.5 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the Holder against impairment.  In the event a Holder
shall elect to convert any portion of the Note as provided herein, Sage cannot
refuse conversion based on any claim that such Holder or anyone associated or
affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever,
unless, an injunction from a court, or notice, restraining and or adjoining
conversion of all or of the Note shall have issued and Sage posts a surety bond
for the benefit of such Holder in an amount equal to one hundred thirty percent
(130%) of the amount of the Note that the Holder has elected to convert, which
bond shall remain in effect until the completion of arbitration/litigation of
the dispute and the proceeds of which shall be payable to such Holder (as
liquidated damages) in the event it obtains judgment.
 
(e) Certificates as to Adjustments.  Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of this Note pursuant to this Section 3.5, Sage at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Holder a certificate setting forth such
adjustment and readjustment, showing in detail the facts upon which such
adjustment or readjustment is based.  Sage shall, upon written request of the
Holder, at any time, furnish or cause to be furnished to the Holder a like
certificate setting forth such adjustments and readjustments, the applicable
Conversion Price in effect at the time, and the number of shares of Common Stock
and the amount, if any, of other securities or property which at the time would
be received upon the conversion of this Note.  Notwithstanding the foregoing,
Sage shall not be obligated to deliver a certificate unless such certificate
would reflect an increase or decrease of at least one percent (1%) of such
adjusted amount.
 
 
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(f) Issue Taxes.  The Makers shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of this Note
pursuant thereto; provided, however, that the Makers shall not be obligated to
pay any transfer taxes resulting from any transfer requested by the Holder in
connection with any such conversion.
 
(g) Fractional Shares.  No fractional shares of Common Stock shall be issued
upon conversion of this Note.  All fractional shares shall be rounded up to the
nearest whole share.
 
(h) Reservation of Common Stock.  Sage shall at all times when this Note shall
be outstanding, reserve and keep available out of its authorized but unissued
Common Stock, such number of shares of Common Stock as shall from time to time
be sufficient to effect the conversion of this Note and all interest accrued
thereon; provided that the number of shares of Common Stock so reserved shall at
no time be less than one hundred twenty percent (120%) of the number of shares
of Common Stock for which this Note and all interest accrued thereon are at any
time convertible.  Sage shall, from time to time in accordance with Nevada law,
increase the authorized number of shares of Common Stock if at any time the
unissued number of authorized shares shall not be sufficient to satisfy Sage’s
obligations under this Section 3.5(h).
 
(i) Regulatory Compliance.  If any shares of Common Stock to be reserved for the
purpose of conversion of this Note or any interest accrued thereon require
registration or listing with or approval of any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon
conversion, Sage shall, at its sole cost and expense, in good faith and as
expeditiously as possible, endeavor to secure such registration, listing or
approval, as the case may be.
 
Section 3.6 Prepayment.
 
(a) Prepayment Upon an Event of Default.  Notwithstanding anything to the
contrary contained herein, on or after the date that all obligations of the
Makers under the Platinum Agreements have been satisfied, and upon the
occurrence of an Event of Default described in Sections 2.1(a)-(i) or 2.1(l)-(s)
hereof, the Holder shall have the right, at such Holder’s option, to require the
Makers to prepay in cash all or a portion of this Note at the Prepayment
Price.  Nothing in this Section 3.6(a) shall limit the Holder’s rights under
Section 2.2 hereof
 
(b) Prepayment Option Upon Major Transaction.  In addition to all other rights
of the Holder contained herein, on or after the date all obligations of the
Makers under the Platinum Agreements have been satisfied and upon the occurrence
of a Major Transaction (as defined below), the Holder shall have the right, at
the Holder’s option, to require the Makers to prepay all or a portion of the
Note in cash at a price equal to the sum of (i) the greater of (A) one hundred
and ten percent (110%) of the aggregate principal amount of this Note plus all
accrued and unpaid interest and (B) in the event at such time the Holder is
unable to obtain the benefit of its conversion rights through the conversion of
this Note and resale of the shares of Common Stock issuable upon conversion
hereof in accordance with the terms of this Note and the other Transaction
Documents or the Equity Conditions are not satisfied with respect to all such
shares of Common Stock, the aggregate principal amount of this Note plus all
accrued but unpaid interest hereon, divided by the Conversion Price on (x) the
date the Major Transaction Prepayment Price (as defined below) is demanded or
otherwise due or (y) the date the Major Transaction Prepayment Price is paid in
full, whichever is less, multiplied by the VWAP on (x) the date the Major
Transaction Prepayment Price is demanded or otherwise due, and (y) the date the
Major Transaction Prepayment Price is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
this Note and the other Transaction Documents (the “Major Transaction Prepayment
Price”).
 
(c) “Major Transaction”  A “Major Transaction” shall be deemed to have occurred
at such time as any of the following events:
 
(i) the consolidation, merger or other business combination of any Maker with or
into another Person (other than (A) pursuant to a migratory merger effected
solely for the purpose of changing the jurisdiction of incorporation of any
Maker or (B) a consolidation, merger or other business combination in which
any  Maker is the surviving entity and the holders of such Maker’s voting power
immediately prior to the transaction continue after the transaction to hold,
directly or indirectly, the voting power of the surviving entity or entities
necessary to elect a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities).
 
 
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(ii) the sale or transfer of more than fifty percent (50%) of any Maker’s assets
(based on the fair market value as determined in good faith by such Maker’s
Board of Directors) other than inventory in the ordinary course of business in
one or a related series of transactions or the sale of all or any portion of
Sage’s entertainment or sports-related business or assets; or
 
(iii) closing of a purchase, tender or exchange offer made to the holders of
more than fifty percent (50%) of the outstanding shares of Common Stock in which
more than fifty percent (50%) of the outstanding shares of Common Stock were
tendered and accepted.
 
(d) Mechanics of Prepayment at Option of Holder Upon Major Transaction.  No
sooner than fifteen (15) days nor later than ten (10) days prior to the
consummation of a Major Transaction, but not prior to the public announcement of
such Major Transaction, and provided that all obligations of the Makers under
the Platinum Agreements have been satisfied the Makers shall deliver written
notice thereof via facsimile and overnight courier (“Notice of Major
Transaction”) to the Holder of this Note.  At any time after receipt of a Notice
of Major Transaction (or, in the event a Notice of Major Transaction is not
delivered at least ten (10) days prior to a Major Transaction, at any time
within ten (10) days prior to a Major Transaction), the Holder may require the
Makers to prepay, effective immediately prior to the consummation of such Major
Transaction, the Note by delivering written notice thereof via facsimile and
overnight courier (“Notice of Prepayment at Option of Holder Upon Major
Transaction”) to the Makers, which Notice of Prepayment at Option of Holder Upon
Major Transaction shall indicate (i) the principal amount of the Note that the
Holder is electing to have prepaid and (ii) the applicable Major Transaction
Prepayment Price, as calculated pursuant to Section 3.6(b) above.
 
(e) Payment of Prepayment Price.  Upon the Makers’ receipt of a Notice(s) of
Prepayment at Option of Holder upon Major Transaction from the Holder, and
provided that all obligations of the Makers under the Platinum Agreements have
been satisfied, the Makers shall deliver the applicable Major Transaction
Prepayment Price immediately prior to the consummation of the Major Transaction;
provided that the Holder’s original Note shall have been so delivered to the
Makers.  If the Makers shall fail to prepay the Note (other than pursuant to a
dispute as to the arithmetic calculation of the Prepayment Price), in addition
to any remedy the Holder may have under the Transaction Documents, the
applicable Prepayment Price payable in respect of the Note shall bear interest
at the rate of two percent (2%) per month (prorated for partial months) until
paid in full.  Until the Makers pay such unpaid applicable Prepayment Price in
full to the Holder, the Holder shall have the option (the “Void Optional
Prepayment Option”) to, in lieu of prepayment, require the Makers to promptly
return the Note to the Holder that was submitted for prepayment under this
Section 3.6 and for which the applicable Prepayment Price has not been paid, by
sending written notice thereof to the Makers via facsimile (the “Void Optional
Prepayment Notice”).  Upon the Makers’ receipt of such Void Optional Prepayment
Notice(s) and prior to payment of the full applicable Prepayment Price to the
Holder, (i) the Notice(s) of Prepayment at Option of Holder Upon Triggering
Event or the Notice(s) of Prepayment at Option of Holder Upon Major Transaction,
as the case may be, shall be null and void with respect to the Note submitted
for prepayment and for which the applicable Prepayment Price has not been paid,
(ii) the Makers shall immediately return any Note submitted to the Makers by the
Holder for prepayment under this Section 3.6(e) and for which the applicable
Prepayment Price has not been paid and (iii) the Conversion Price of such
returned Note shall be adjusted to the lesser of (A) the Conversion Price as in
effect on the date on which the Void Optional Prepayment Notice(s) is delivered
to the Makers and (B) the lowest Closing Bid Price during the period beginning
on the date on which the Notice(s) of Prepayment of Option of Holder Upon Major
Transaction or the Notice(s) of Prepayment at Option of Holder Upon Triggering
Event, as the case may be, is delivered to the Makers and ending on the date on
which the Void Optional Prepayment Notice(s) is delivered to the Makers;
provided that no adjustment shall be made if such adjustment would result in an
increase of the Conversion Price then in effect.  A holder’s delivery of a Void
Optional Prepayment Notice and exercise of its rights following such notice
shall not affect the Makers’ obligations to make any payments which have accrued
prior to the date of such notice.  Payments provided for in this Section 3.6
shall have priority to payments to other stockholders in connection with a Major
Transaction.
 
(f) The Makers acknowledge that, notwithstanding the provisions of this Section
3.6, the occurrence of a Major Transaction without the Holder’s consent may
constitute an Event of Default hereunder and nothing in this Section 3.6 shall
be deemed to limit the Holder’s remedies in respect thereof.
 
Section 3.7 Inability to Fully Convert.

(a) Holder’s Option if Sage Cannot Fully Convert. In addition to the Holder’s
other remedies hereunder, if, upon Sage’s receipt of a Conversion Notice, Sage
cannot issue shares of Common Stock for any reason, including, without
limitation, because Sage (x) does not have a sufficient number of shares of
Common Stock authorized and available, or (y) is otherwise prohibited by
applicable law or by the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
Sage or any of its securities from issuing all of the Common Stock which is to
be issued to the Holder pursuant to a Conversion Notice, then Sage shall issue
as many shares of Common Stock as it is able to issue in accordance with the
Holder’s Conversion Notice and, with respect to the unconverted portion of this
Note, the Holder, solely at Holder’s option, can elect to:
 
 
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(i) If Sage’s inability to honor any conversion fully is pursuant to Section
3.7(a)(x) above,  on and after the date that all obligations of the Makers under
the Platinum Agreements have been fully paid and satisfied, require the Makers
to prepay that portion of this Note that Holder has requested conversion of and
for which Sage is unable to issue Common Stock in accordance with the Holder’s
Conversion Notice (the “Mandatory Prepayment”) at a price per share equal to the
Major Transaction Prepayment Price as of such Conversion Date (the “Mandatory
Prepayment Price”);
 
(ii) if Sage’s inability to fully convert is pursuant to Section 3.7(a)(y)
above, require the Makers to issue restricted shares of Common Stock in
accordance with such holder’s Conversion Notice;
 
(iii) void its Conversion Notice and retain or have returned, as the case may
be, this Note that was to be converted pursuant to the Conversion Notice
(provided that the Holder’s voiding its Conversion Notice shall not affect the
Makers’ obligations to make any payments which have accrued prior to the date of
such notice);
 
(iv) exercise its Buy-In rights pursuant to and in accordance with the terms and
provisions of Section 3.3(c) of this Note.
 
In the event that the Holder shall elect to convert any portion of the Note as
provided herein, Sage cannot refuse conversion based on any claim that the
Holder or anyone associated or affiliated with the Holder has been engaged in
any violation of law, violation of an agreement to which the Holder is a party
or for any reason whatsoever, unless, an injunction from a court, on notice,
restraining and or adjoining conversion of all or of the Note shall have been
issued and Sage posts a surety bond for the benefit of the Holder in an amount
equal to 130% of the principal amount of the Note the Holder has elected to
convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder in the event it obtains judgment.
 
(b) Mechanics of Fulfilling Holder’s Election.  Sage shall immediately send via
facsimile to the Holder, upon receipt of a facsimile copy of a Conversion Notice
from the Holder which cannot be fully satisfied as described in Section 3.7(a)
above, a notice of Sage’s inability to fully satisfy the Conversion Notice (the
“Inability to Fully Convert Notice”).  Such Inability to Fully Convert Notice
shall indicate (i) the reason why Sage is unable to fully satisfy such holder’s
Conversion Notice, (ii) the amount of this Note for which conversion has been
requested and which cannot be converted and (iii) the applicable Mandatory
Prepayment Price.  The Holder shall notify the Makers of its election pursuant
to Section 3.7(a) above by delivering written notice via facsimile to the Makers
(“Notice in Response to Inability to Convert”).
 
(c) Payment of Prepayment Price.  If the Holder shall elect to have its Note
prepaid pursuant to Section 3.7(a)(i) above, the Makers shall pay the Mandatory
Prepayment Price to the Holder within thirty (30) days of the Makers’ receipt of
the Holder’s Notice in Response to Inability to Convert, provided, that, prior
to the Makers’ receipt of the Holder’s Notice in Response to Inability to
Convert the Makers have not delivered a notice to the Holder stating, to the
satisfaction of the Holder, that the event or condition resulting in the
Mandatory Prepayment has been cured and all Conversion Shares issuable to the
Holder can and will be delivered to the Holder in accordance with the terms of
this Note.  If the Makers shall fail to pay the applicable Mandatory Prepayment
Price to the Holder on the date that is five (5) Business Days following the
Makers’ receipt of the Holder’s Notice in Response to Inability to Convert
(other than pursuant to a dispute as to the determination of the arithmetic
calculation of the Prepayment Price), in addition to any remedy the Holder may
have under this Note and the Purchase Agreement, such unpaid amount shall bear
interest at the rate of two percent (2%) per month (prorated for partial months)
until paid in full (or, if less, the highest rate permitted by law).  Until the
full Mandatory Prepayment Price is paid in full to the Holder, the Holder may
(i) void the Mandatory Prepayment with respect to that portion of the Note for
which the full Mandatory Prepayment Price has not been paid, (ii) receive back
such Note, and (iii) require that the Conversion Price of such returned Note be
adjusted to the lesser of (A) the Conversion Price as in effect on the date on
which the Holder voided the Mandatory Prepayment and (B) the lowest Closing Bid
Price during the period beginning on the Conversion Date and ending on the date
the Holder voided the Mandatory Prepayment.
 
Section 3.8 No Rights as Shareholder.
 
Nothing contained in this Note shall be construed as conferring upon the Holder,
prior to the conversion of this Note, the right to vote or to receive dividends
or to consent or to receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of Sage or of any other matter, or
any other rights as a shareholder of Sage.
 
 
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Section 3.9 Shorting
 
By its acceptance of this Note, the Holder agrees that it will not effect any
short sale, or cause its affiliates to effect any short sale of the Common Stock
for so long as the Holder holds this Note or any Common Stock received upon
conversion of this Note; provided, that, it is understood that nothing in this
Section 3.9 shall be deemed to prohibit the Holder from disposing of any shares
of Common Stock held by the Holder.
 
ARTICLE IV - COVENANTS
 
For so long as this Note is outstanding, without the prior written consent of
the holders of at least a majority of the aggregate principal amount of this
Note:
 
Section 4.1 No Liens.
 
Other than Permitted Liens, no Maker shall enter into, create, incur, assume or
suffer to exist any liens, security interests, charges, claims or other
encumbrances of any kind (collectively, “Liens”) on or with respect to any of
its assets now owned or hereafter acquired or any interest therein or any income
or profits therefrom.
 
Section 4.2 No Indebtedness.
 
Other than Permitted Indebtedness or the Indebtedness of Sage existing on the
date hereof and disclosed in the Commission Documents (and any refinancing of
such Indebtedness on or prior to the maturity thereof in like amount) and
Permitted Purchase Money Indebtedness, no Maker shall enter into, create, incur,
guarantee, assume or suffer to exist any Indebtedness.
 
Section 4.3 Compliance with Transaction Documents.
 
Each Maker shall comply with its obligations under this Note and the other
Transaction Documents.
 
Section 4.4 Compliance with Law.
 
Each Maker shall comply with law and duly observe and conform in all respects to
all valid requirements of governmental authorities relating to the conduct of
its business or to its properties or assets, unless such non-compliance,
observance of conformance could not reasonably be expected to cause a Material
Adverse Effect.
 
Section 4.5 Transactions with Affiliates.
 
Without the prior written consent of the Holder, which consent shall not be
unreasonably withheld, no Maker shall engage in any transactions with any
officer, director, employee or any Affiliate of such Maker, including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of such Maker, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, in each case in excess of $50,000, other than (i)
for payment of reasonable salary for services actually rendered, as approved by
the Board of Directors of such Maker as fair in all respects to such Maker, and
(ii) reimbursement for expenses incurred on behalf of such Maker.  The
restrictions set forth in this Section 4.5 shall not apply to (i) the Credit
Facility (as in effect on the date hereof), (ii) any Permitted Subordinated
Indebtedness, or (iii) with respect to the Holding Company, Permitted Preferred
Stock.
 
Section 4.6 No Dividends.
 
For as long as this Note is outstanding, no Maker or any subsidiary thereof
shall (i) declare or pay any dividends or make any distributions to any
holder(s) of Common Stock or other equity security of such Maker or (ii)
purchase or otherwise acquire for value, directly or indirectly, any shares or
other equity security of any Maker or any subsidiary thereof.
 
 
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Section 4.7 No Merger or Sale of Assets.
 
For so long as this Note is outstanding, no Maker or any subsidiary thereof
shall, (i) merge or consolidate or sell or dispose of all its assets or any
substantial portion thereof (other than inventory in the ordinary
course  business);  (ii) change its name or state or organization; (iii)
commence any liquidation or dissolution; or (iv) in any way or manner
alter  its  organizational  structure  or  effect  a  change  of  entity (other
than an increase in the authorized common or preferred stock of Sage as
necessary or the designation of rights and preferences of preferred stock of
Sage).  Notwithstanding the foregoing, this Section 4.7 shall not prohibit the
sale of any assets held by Sage or any subsidiary (other than the Holding
Company or any subsidiary of the Holding Company) or the liquidation,
dissolution or change in organizational structure of any subsidiaries of Sage
(other than the Holding Company or any subsidiary of the Holding Company).
 
Section 4.8 Payment of Taxes, Etc.
 
Each Maker shall promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of such Maker,
except for such failures to pay that, individually or in the aggregate, have not
had and would not reasonably be expected to cause a Material Adverse Effect;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if such Maker shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that such Maker
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor.
 
Section 4.9 Corporate Existence.
 
Each Maker shall maintain in full force and effect its corporate or limited
liability existence, as the case may be, its rights and franchises and all
licenses and other rights to use property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business; provided,
that, the Makers shall not be obligated to maintain any permit or license if the
failure to so maintain such permit or license could not reasonably be expected
to result in a Material Adverse Effect.
 
Section 4.10 Investment Company Act.
 
Each Maker shall conduct its businesses in a manner so that it will not become
subject to the Investment Company Act of 1940, as amended.
 
Section 4.11 Indebtedness to Affiliates.
 
For as long as this Note is outstanding, the Makers shall not make any payment
on any indebtedness owed to officers, directors or Affiliates; provided, that,
payments may be made by made by Sage (but not by Holding Company) in respect of
obligations of Sage under that certain Credit Facility Agreement by and among
The Empire Sports & Entertainment Holdings Co. (n/k/a Sage), the Empire Sports &
Entertainment, Co., EXCX Funding Corp., Barry Honig and Michael Brauser (the
“Credit Facility”) if permitted pursuant to any subordination and intercreditor
agreement then in effect; provided, further, that such payments made by Sage
shall not derive from ownership of, or any interest in, any assets of the
Holding Company or any income generated by the Holding Company.
 
Section 4.12 Securities Compliance
 
Sage shall notify the Securities and Exchange Commission (the “SEC”) in
accordance with the SEC’s rules and regulations, of the transactions
contemplated by any of the Transaction Documents and shall take all other
necessary action and proceedings as may be required and permitted
by  applicable  law,  rule  and  regulation,  for  the  legal  and  valid  issuance  of  the  Note
to the Holder or subsequent holders.
 
 
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Section 4.13 Registration and Listing
 
Sage shall timely file all quarterly and annual reports required of an issuer
with a class of equity registered under the Exchange Act, notwithstanding that
the Common Stock is not so registered. Sage will take all actions necessary to
continue the listing and trading of its Common Stock on the OTC Bulletin Board,
the OTCQB, the OTCQX, the New York Stock Exchange, the Nasdaq Capital Markets,
the Nasdaq Global Markets, the Nasdaq Global Select Market or the NYSE Amex.
Subject to the terms of the Transaction Documents, Sage further covenants that
it will take such further action as the Holder may reasonably request, all to
the extent required from time to time to enable the Holder to sell the Common
Stock without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act pursuant to
Rule 144(c)(1) and 144(d)(1)(i).  Upon the request of the Holder, Sage shall
deliver to the Holder a written certification of a duly authorized officer as to
whether it has complied with such requirements.
 
Section 4.14 Reporting Requirements
 
If Sage ceases to file its periodic reports with the SEC, or if the SEC ceases
making these periodic reports available via the Internet without charge, then
Sage shall furnish the following to the Holder so long as the Holder shall
beneficially own the Note:
 
(a)       Quarterly Reports filed with the SEC on Form 10-Q as soon as practical
after the document is or would have been required to be filed with the SEC;
 
(b)       Annual Reports filed with the SEC on Form 10-K as soon as practical
after the document is or would have been required to be filed with the SEC;
 
(c)       Current Reports filed with the SEC on Form 8-K as soon as practical
after the document is or would have been required to be filed with the SEC; and
 
(d)       Copies of all notices, information and proxy statements in connection
with any meetings that are, in each case, provided to holders of shares of
Common Stock, contemporaneously with the delivery of such notices or information
to such holders of Common Stock.
 
Section 4.15 Other Agreements
 
No Maker shall enter into any agreement in which the terms of such agreement
would restrict or impair the right or ability of such Maker to perform its
obligations under any Transaction Document.
 
Section 4.16 Reporting Status
 
For so long as the Holder beneficially owns this Note, Sage shall timely file
all quarterly and annual reports on Form 10-Q and 10-K, respectively, required
to be filed with the SEC pursuant to the Exchange Act by an issuer of equity
securities registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
 
Section 4.17 Disclosure of Material Information
 
For so long as the Holder beneficially owns this Note, Sage covenants
and  agrees that neither it nor any other person acting on its behalf has
provided or will provide the Holder or its agents or counsel with any
information that Sage believes constitutes material non-public information,
unless prior thereto, the Holder shall have executed a written agreement
regarding the confidentiality and use of such information.  Sage understands and
confirms that the Holder shall be relying on the foregoing representations in
effecting transactions in securities of Sage.
 
Section 4.18 Amendments
 
Sage shall not amend or waive any provision of its Articles of Incorporation or
Bylaws in any way that would adversely affect exercise or other rights of the
Holder.
 
 
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Section 4.19 Compliance with Law
 
Each Maker shall, and shall cause each of its subsidiaries to, comply with all
applicable laws, rules and regulations of all federal, state and local
governmental and administrative authorities (including without limitation
environmental laws, rules and regulations), duly observe and conform in all
material respects to all valid requirements of all governmental authorities
relating to the conduct of its business or to its properties or assets, and
obtain and maintain in full force and effect all licenses and permits required
by all applicable governmental authorities to conduct its business and own its
properties and assets.  If any Maker fails to pay all or any portion of any fee
required to maintain in full force and effect all licenses and permits required
by all applicable governmental authorities to conduct its business and own its
properties and assets, the Holder may elect to pay all or any portion of such
fees, which shall be reimbursed within 10 days by the Makers and shall be (i)
deemed Indebtedness to the Holder owed under this Note and (ii) secured by the
Security Documents.
 
Section 4.20 Maintenance of Assets
 
Each Maker shall, and shall cause the Holding Company (and any subsidiary of the
Holding Company), to keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, expect as would not reasonably be
expected to cause a Material Adverse Effect, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto. The Holding Company shall at all times hold exclusive and valid mining
property rights consisting of the unpatented mill site and mining lode claims at
the Relief Canyon Mine in Pershing County, Nevada, (subject to a certain Deed of
Trust), not subject to any challenge by  any Person.  The Holding Company shall
pay all annual maintenance fees required with respect thereto at least thirty
(30) days prior to the due date thereof and shall provide written evidence of
such payment to the Holder at least fifteen (15) days prior to each respective
due date thereof.
 
Section 4.21 Opinions
 
For so long as either the Holder owns this Note or any Common Stock, Sage will
provide, at Sage’s expense, such legal opinions in the future as are reasonably
necessary for the issuance and resale of the Common Stock issuable upon
conversion of this Note pursuant to an effective registration statement, Rule
144 or an exemption from registration under the Securities Act. In the event
that Common Stock is sold in a manner that complies with an exemption from
registration under the Securities Act, Sage will promptly instruct its counsel
(at Sage’s expense) to issue to Sage’s transfer agent an opinion permitting
removal of the legend (indefinitely, if more than one year has elapsed from the
date hereof) or to permit sale of the shares if pursuant to the other provisions
of Rule 144.
 
ARTICLE V - MISCELLANEOUS
 
Section 5.1 Notices.
 
Any notice, demand, request, waiver or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, electronic mail, telecopy or facsimile at the address or number
designated in the Purchase Agreement (if delivered on a Business Day during
normal business hours where such notice is to be received), or the first
Business Day following such delivery (if delivered other than on a Business Day
during normal business hours where such notice is to be received) or (b) on the
second Business Day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur.  Sage will give written notice to the
Holder at least ten (10) days prior to the date on which Sage takes a record (x)
with respect to any dividend or distribution upon the Common Stock, (y) with
respect to any pro rata subscription offer to holders of Common Stock or (z) for
determining rights to vote with respect to any Organic Change, dissolution,
liquidation or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public.  The Makers
will also give written notice to the Holder at least ten (10) days prior to the
date on which any Organic Change, dissolution, liquidation or winding-up will
take place and in no event shall such notice be provided to the Holder prior to
such information being made known to the public. The Makers shall promptly
notify the Holder of this Note of any notices sent or received.
 
Section 5.2 Governing Law.
 
This Note shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction.  This Note shall not be interpreted or construed with any
presumption against the party causing this Note to be drafted.  All payment
obligations arising under this Note are subject to the express condition that at
no time shall the Makers be obligated or required to pay interest at a rate
which could subject the Holder to either civil or criminal liability as a result
of being in excess of the maximum rate which the Makers are permitted by law to
contract or agree to pay. If by the terms of this Note, the Makers are at any
time required or obligated to pay interest at a rate in excess of such maximum
rate, the applicable rate of interest shall be deemed to be immediately reduced
to such maximum rate, and interest thus payable shall be computed at such
maximum rate, and the portion of all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of principal.
 
 
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Section 5.3 Headings.
 
Article and section headings in this Note are included herein for purposes of
convenience of reference only and shall not constitute a part of this Note for
any other purpose.
 
Section 5.4 Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief.
 
The remedies provided in this Note shall be cumulative and in addition to all
other remedies available under this Note, at law or in equity (including,
without limitation, a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit a
holder’s right to pursue actual damages for any failure by any Maker to comply
with the terms of this Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the holder thereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Makers (or
the performance thereof).  Each Maker acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Holder and
that the remedy at law for any such breach may be inadequate. Therefore each
Maker agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available rights and
remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.
 
Section 5.5 Enforcement Expenses
 
Each Maker agrees (i) to pay all costs and expenses of the Holder in the
collection and enforcement of this Note, including, without limitation,
reasonable attorneys’ fees and expenses, and (ii) that such costs shall be
deemed Indebtedness hereunder.
 
Section 5.6 Binding Effect.
 
The obligations of each Maker and the Holder set forth herein shall be binding
upon the successors and assigns of each such party, whether or not such
successors or assigns are permitted by the terms hereof.
 
Section 5.7 Amendments.
 
This Note may not be modified or amended in any manner except in writing
executed by each Maker and the Holder.  Notwithstanding the foregoing, until all
obligations of the Makers under the Platinum Agreements have been satisfied,
this Note may not be modified or amended in any matter that would have an
adverse impact on the Platinum Agreements without the written consent of
Platinum.
 
Section 5.8 Compliance with Securities Laws.
 
The Holder of this Note acknowledges that this Note is being acquired solely for
the Holder’s own account and not as a nominee for any other party, and for
investment, and that the Holder shall not offer, sell or otherwise dispose of
this Note except in compliance with applicable securities laws.  This Note and
any Note issued in substitution or replacement therefor shall be stamped or
imprinted with a legend in substantially the following form:
 
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY SAGE OF AN OPINION
OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO SAGE THAT
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
 
 
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Section 5.9 Consent to Jurisdiction.
 
Each Maker and the Holder (i) hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New York
county for the purposes of any suit, action or proceeding arising out of or
relating to this Note and (ii) hereby waives, and agrees not to assert in any
such suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such court, that the suit, action or proceeding is brought
in an inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Each Maker and the Holder consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under the Purchase Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing in this Section 5.9 shall affect or limit any right to serve
process in any other manner permitted by law.
 
Section 5.10 Parties in Interest.
 
This Note shall be binding upon, inure to the benefit of and be enforceable by
the Makers, the Holder and their respective successors and permitted assigns.
 
Section 5.11 Failure or Indulgence Not Waiver.
 
No failure or delay on the part of the Holder in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.
 
Section 5.12 Waivers; Dispute Resolution.
 
Except as otherwise specifically provided herein, each Maker and all others that
may become liable for all or any part of the obligations evidenced by this Note,
hereby waive presentment, demand, notice of nonpayment, protest and all other
demands’ and notices in connection with the delivery, acceptance, performance
and enforcement of this Note, and do hereby consent to any number of renewals of
extensions of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and without affecting
their liability herein and do further consent to the release of any person
liable hereon, all without affecting the liability of the other persons, firms
or any Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY
JURY.
 
(a) No delay or omission on the part of the Holder in exercising its rights
under this Note, or course of conduct relating hereto, shall operate as a waiver
of such rights or any other right of the Holder, nor shall any waiver by the
Holder of any such right or rights on any one occasion be deemed a waiver of the
same right or rights on any future occasion.
 
(b) EACH MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS
A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY
WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.
 
(c) In the case of a dispute as to the determination of the Closing Bid Price or
the VWAP or the arithmetic calculation of the Conversion Price, any adjustment
to the Conversion Price, liquidated damages amount, interest or dividend
calculation, or any redemption price, redemption amount, adjusted Conversion
Price, or similar calculation, or as to whether a subsequent issuance of
securities is prohibited hereunder or would lead to an adjustment to the
Conversion Price, Sage shall submit the disputed determinations or arithmetic
calculations via facsimile within two (2) Business Days of receipt, or deemed
receipt, of the Conversion Notice, any redemption notice, default notice or
other event giving rise to such dispute, as the case may be, to the Holder. If
the Holder and Sage are unable to agree upon such determination or calculation
within two (2) Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then Sage shall, within two (2)
Business Days submit via facsimile (a) the disputed determination of the Closing
Price or the VWAP to an independent, reputable investment bank selected by Sage
and approved by the Holder, which approval shall not be unreasonably withheld,
(b) the disputed arithmetic calculation of the Conversion Price, adjusted
Conversion Price or any redemption price, redemption amount or default amount to
Sage’s independent, outside accountant or (c) the disputed facts regarding
whether a subsequent issuance of securities is prohibited hereunder or would
lead to an adjustment to the Conversion Price (or any of the other above
described facts not expressly designated to the investment bank or accountant),
to an expert attorney from a nationally recognized outside law firm selected by
Sage and approved by Holder).  Sage, at Sage’s expense, shall cause the
investment bank, the accountant, the law firm, or other expert, as the case may
be, to perform the determinations or calculations and notify Sage and the Holder
of the results no later than five (5) Business Days from the time it receives
the disputed determinations or calculations. Such investment bank’s,
accountant’s or attorney’s determination or calculation, as the case may be,
shall be binding upon all parties absent demonstrable error.
 
 
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Section 5.13 Definitions.
 
Terms used herein and not defined shall have the meanings set forth in the
Purchase Agreement.  For the purposes hereof, the following terms shall have the
following meanings:
 
“Additional Bond” means that certain reclamation bond posted with the Bureau of
Land Management on or about the date hereof in the aggregate amount of
approximately $1,715,604.
 
“Closing Bid Price” shall mean, on any particular date (i) the last trading
price per share of the Common Stock on such date on the OTC Bulletin Board or
another registered national stock exchange on which the Common Stock is then
listed, or if there is no such price on such date, then the last trading price
on such exchange or quotation system on the date nearest preceding such date, or
(ii) if the Common Stock is not then listed or traded on a registered national
securities exchange or quoted on the OTC Bulletin Board, then the average of the
“Pink Sheet” quotes for the relevant conversion period, as determined in good
faith by the Holder, or (iii) if the Common Stock is not then publicly traded
the fair market value of a share of Common Stock as determined by the Holder and
reasonably acceptable to Sage.
 
“Equity Conditions” shall mean, during the period in question, (i) Sage shall
have duly honored all conversions and redemptions scheduled to occur or
occurring by virtue of one or more Conversion Notices of the Holder, if any,
(ii) all liquidated damages and other amounts owing to the Holder in respect of
this Note shall have been paid; (iii) following six (6) months after the date
hereof, (A) there is an effective registration statement pursuant to which the
Holder is permitted to utilize the prospectus thereunder to resell all of the
shares issuable pursuant to this Note as a payment of interest or principal, or
(B) such shares may be sold by the Holder pursuant to Rule 144 under the
Securities Act without regards to volume limitations and Sage and its counsel
shall have delivered all legal opinions and other documents necessary to effect
such sale, (iv) the Common Stock is trading on the Trading Market and all of the
shares issuable pursuant to the Transaction Documents are listed for trading on
a Trading Market (and Sage believes, in good faith, that trading of the Common
Stock on a Trading Market will continue uninterrupted for the foreseeable
future), (v) there is a sufficient number of authorized but unissued and
otherwise unreserved shares of Common Stock for the issuance of all of the
shares issuable pursuant to the Transaction Documents, (vi) there is then
existing no Event of Default or event which, with the passage of time or the
giving of notice, would constitute an Event of Default, (vii) the issuance of
the shares in question to the Holder would not violate the limitations set forth
in Section 3.4(a) or 3.4(b) hereof and (viii) no public announcement of a
pending or proposed Major Transaction has occurred.
 
“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, current swap agreements, interest rate hedging agreements, interest
rate swaps, or other financial products, (c) all capital lease obligations that
exceed $100,000 in the aggregate in any fiscal year, (d) all obligations or
liabilities secured by a lien or encumbrance on any asset of any Maker,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets, together with trade debt
and other accounts payable that exceed $100,000 in the aggregate in any fiscal
year, (f) all synthetic leases, and (g) any obligation guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted or sold with recourse) any of the foregoing obligations of any other
person; provided, however, Indebtedness shall not include (a) usual and
customary trade debt incurred in the ordinary course of business and (b)
endorsements for collection or deposit in the ordinary course of business.
 
“Material Adverse Effect” means any material adverse effect on or to any of (a)
the business, assets, operations, prospects or condition (financial or
otherwise) of any Maker, (b) the ability of any Maker to perform any of its
obligations hereunder or under the Transaction Documents, or (c) the rights and
benefits available to the Holder hereunder and the Transaction Documents.
 
“Permitted Indebtedness” means
 
(i) Indebtedness of Sage under the Credit Facility in an aggregate amount not to
exceed $4.5 million, provided such Indebtedness shall be subordinate in payment
and security to the obligations under the Note by the Holding Company;
 
(ii) Unsecured Indebtedness which may, from time to time be incurred or
guaranteed by the Maker which in the aggregate principal amount does not exceed
$250,000;
 
 
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(iii) Indebtedness relating to loans from Sage to the Holding Company (provided
that neither interest nor principal on such loans shall be payable until
obligations under the Platinum Agreements have been satisfied by the Makers);
 
(iv) Indebtedness relating to capital leases in an aggregate amount not to
exceed $250,000 (secured only by the equipment subject to such leases);
 
(v) accounts or notes payable arising out of the purchase of merchandise,
supplies, equipment, software, computer programs or services in the ordinary
course of business;
 
(vi) Permitted Subordinated Indebtedness; or
 
(vii) Indebtedness outstanding on the date hereof.
 
“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Maker contesting
the same) have been established in accordance with GAAP; (b) Liens imposed by
law which were incurred in the ordinary course of a Maker’s business, such as
carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and
other similar Liens arising in the ordinary course of a Maker’s business, and
which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of any Maker and its consolidated subsidiaries or (y)
are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale
of the property or asset subject to such Lien; (c) Liens securing the Permitted
Purchase Money Indebtedness to the extent that such Liens are secured only by
the inventory, equipment or machinery so financed; (d) following execution of a
Subordination and Intercreditor Agreement in form and substance satisfactory to
the Collateral Agent in its sole and absolute discretion with respect to the
same, a Lien securing the obligations under the Credit Facility; (e) any
Permitted Subordinated Indebtedness; (f) and any Liens outstanding on the date
hereof.
 
“Permitted Payment Conditions” means the Holder and the Makers shall have taken
such actions and executed delivered such documents and instruments as are
necessary to grant to Platinum, as collateral agent for itself and Lakewood, a
perfected, first priority security interest in the Additional Bond.
 
“Permitted Preferred Stock” means preferred stock of Holding Company that (i)
permits the holder thereof no voting, participation or similar rights (other
than as required by law) and (ii) is redeemable at the par value thereof.
 
“Permitted Purchase Money Indebtedness” means Indebtedness incurred after the
date hereof for the purchase of inventory, equipment or machinery in connection
with the Relief Canyon Mine; provided, that, such Indebtedness may be secured
only by the inventory, equipment or machinery so financed.
 
“Permitted Subordinated Indebtedness” means Indebtedness that (i) is expressly
subordinate in right of payment and security to this Note and the security
therefor, (ii) shall not mature prior to the maturity of this Note, (iii) shall
not permit any payment of principal thereof or interest thereon prior to the
payment in full of this Note, (iv) shall not be secured by any asset, agreement
or other collateral, other than, in each case and on a subordinated basis, the
collateral securing this Note, and (v) is subject to a subordination and
intercreditor agreement among the Makers, the Collateral Agent and the holder of
such Permitted Subordinated Indebtedness in form and substance satisfactory to
the Collateral Agent in its sole and absolute discretion.
 
“Person” means any individual, sole proprietorship, joint venture, partnership,
corporation, limited liability company, association, joint-stock company,
unincorporated organization, cooperative, trust, estate, governmental entity or
any other entity of any kind or nature whatsoever.
 
“Qualified Financing” means the closing of an equity investment in Sage’s
capital stock (or any equity-linked financing) occurring after the date hereof
in which Sage receives from one or more investors  net proceeds to Sage of at
least $1,715,604 (not including any outstanding debt conversion or investments
made by the Holder). 
 
 
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“Trading Day” means (a) a day on which the Common Stock is traded on the OTC
Bulletin Board or a registered national securities exchange, or (b) if the
Common Stock is not traded on the OTC Bulletin Board or a registered national
securities exchange, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.
 
“Trading Market” means the Over the Counter Bulletin Board, the OTCQB, the
OTCQX, the New York Stock Exchange, the Nasdaq Capital Markets, the Nasdaq
Global Markets, the Nasdaq Global Select Market or the NYSE Amex.
 
“VWAP” means, for any date, (i) the daily volume weighted average price of the
Common Stock for such date on the OTC Bulletin Board as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (ii) if the Common Stock is not then listed or quoted on the OTC
Bulletin Board and if prices for the Common Stock are then reported in the “Pink
Sheets” published by the Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (iii) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holder and reasonably acceptable to
Sage.
 

[Signature Page Follows]

 
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IN WITNESS WHEREOF, each Maker has caused this Note to be duly executed by its
duly authorized officer as of the date first above indicated.
 

 
SAGEBRUSH GOLD, LTD.
    By:         Name:       Title:  

 
GOLD ACQUISITION CORP.
    By:         Name:       Title:  

 
 
 
 
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FORM OF
 
NOTICE OF CONVERSION
 
(To be Executed by the Registered Holder in order to Convert the Note)
 
The undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount [and accrued interest thereon] of the above Note into shares of
Common Stock of Sagebrush Gold, Ltd. according to the conditions hereof, as of
the date written below.
 
Date of Conversion _________________________________________________________
 
Applicable Conversion Price __________________________________________________
 
Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion: _________________________
 
Signature___________________________________________________________________
 
[Name]
 
Address:__________________________________________________________________
 
_______________________________________________________________________
 
 
 
 
 
 
 
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