Document:

Unassociated Document

 

NOTE MODIFICATION AGREEMENT

 

This Note Modification Agreement (this “Agreement”) dated this 23rd day of February, 2012 is executed by and among SAGEBRUSH GOLD, LTD., a Nevada corporation with an address of 1640 Terrace Way, Walnut Creek, CA 94597 (“Sage”), 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”), Frost Gamma Investments Trust, a Florida Trust (“FGIT”) with an address of 4400 Biscayne Blvd., Miami, Florida 33137, and Michael Brauser, a Florida resident with an address of c/o Law Office of Benjamin S. Brauser, P.A., 4400 Biscayne Blvd, Ste 850, Miami, FL  33137 (“Brauser” and, together with FGIT, each and “Assignee” and collectively the “Assignees”).

 

WHEREAS, pursuant to a letter agreement dated as of July 18, 2011, the Makers issued (i) that certain senior secured convertible promissory note dated August 30, 2011 in the original principal amount of $6,400,000 (the “Platinum Note”) to Platinum Long Term Growth LLC (“Platinum”) and that certain senior secured convertible promissory note dated August 30, 2011 in the original principal amount of $1,600,000 to Lakewood Group LLC (“Lakewood” and, together with Platinum, collectively the “Assignors”) (the “Lakewood Note,” and together with the Platinum Note, collectively the “Notes”);

 

WHEREAS, pursuant to a Note Assignment and Assumption Agreement dated the date hereof (the “Assignment and Assumption Agreement”), the Assignees acquired from the Assignors $4.0 million of the outstanding principal amount of the Notes as set forth therein (the “Acquired Notes”);

 

WHEREAS, pursuant to a subscription agreement dated on or about the date hereof by and among Sage and the Assignees (the “Purchase Agreement”), the Assignees acquired Series D Preferred Stock of Sage (the “Preferred Stock”) for an aggregate purchase price of $1,000,000 (the “Preferred Stock Purchase Price”);

 

WHEREAS, the Makers shall pay one hundred percent (100%) of the Preferred Stock Purchase Price to Assignors by wire transfer, such sum to be applied to pro-rata prepayment of the Notes;

 

WHEREAS, after giving effect to the transactions contemplated in the Assignment and Assumption Agreement, the tender of the Preferred Stock Purchase Price by the Makers to the Assignors and the application of such sum to the pro-rata payment of the Notes, the Assignors will continue to hold $2,960,228.81 of the outstanding principal amount of the Notes (the “Remaining Notes”);

 

WHEREAS, the Makers have requested that the Assignees modify certain terms of the Acquired Notes and to waive certain rights with respect to the Acquired Notes as contemplated pursuant to this Agreement; and

 

WHEREAS, the Assignees are amenable to modifying certain terms contained in the Acquired Notes in accordance with the agreements and obligations as expressed herein.

 

NOW THEREFORE, the Parties agree as follows:

 

  

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1.           Reaffirmation of Obligations; Definitions.  The Makers acknowledge and reaffirm the loans and other obligations of the Makers to the Assignees with respect to the Acquired Notes and acknowledge the assignment of $4,000,000 of the principal amount of the Acquired Notes by the Assignors to the Assignees. The Makers acknowledge that, as of the date hereof, and giving effect to the purchase of the Acquired Notes, the aggregate outstanding principal amount of the Acquired Notes held by FGIT is $2,400,000 and the aggregate outstanding principal amount of the Acquired Notes held by Brauser is $1,600,000.   Capitalized terms used herein and not otherwise defined have the meanings assigned to such terms in the Acquired Notes.

 

2.           Effect of this Agreement.  Except to the extent explicitly modified by this Agreement and the Assignment and Assumption Agreement, the Notes and any and all security agreements and other agreements, documents and instruments executed in connection therewith or the obligations evidenced or secured thereby (all such agreements, including the “Transaction Documents” defined in the Acquired Notes, collectively, the “Loan Documents”) shall remain in full force and effect, including, without limitation, all representations, warranties, negative covenants, affirmative covenants, liens, security interests and events of default.  Except as expressly modified herein, this Agreement shall not be construed as a waiver of any default presently existing under the Loan Documents.

 

3.           Modification of the Maturity Date and the Definition of Commencement Date; Cross Default; Volume Limitation; Payment of Interest in cash or in Shares.  In consideration for the Assignees executing and delivering the Purchase Agreement and acquiring the Preferred Stock and the Warrants (as defined in the Purchase Agreement), the parties hereto agree that:

 

(a)           The Maturity Date (as defined in the Acquired Notes) of the Acquired Notes shall be extended to February 23, 2014.

 

(b)           The definition of “Commencement Date” in Section 1.2 of the Acquired Notes is hereby amended in its entirety to read:

 

“February 23, 2013”

 

(c)           The parties hereto also agree that the Remaining Notes and the Acquired Notes to be issued by the Makers to each Assignor and Assignee pursuant to Section 2(d) of Assignment and Assumption Agreement shall contain a “cross default” provision that will constitute an “Event of Default” under such Note, as a result of an “Event of Default pursuant to any Remaining Note or any Acquired Note, as applicable, issued to any Assignor or Assignee, as applicable.

 

  

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(d)           At the option of the Makers, interest on the Acquired Notes shall be payable in cash or in shares of common stock of Sage, par value $0.0001 per share (the “Common Stock”) based on the average Interest Payment Share Price (as defined below) for the ten (10) Trading Days preceding any Interest Payment Date (as defined in Section 1.2 of the Acquired Notes). “Interest Payment Share Price” means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for the ten (10) Trading Days prior to such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); or (ii) if the Common Stock is not then listed or quoted on a Trading Market for which the daily volume weighted average price of the Common Stock is available on Bloomberg L.P., the average closing price of the Common Stock for the ten (10) Trading Days immediately prior to such date.  For purposes of the Acquired Notes, “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq National Market, or the OTC Bulletin Board.  Notwithstanding the foregoing, interest on the Acquired Notes shall be payable only in cash in the event that, as of any Interest Payment Date, (A) any Event of Default under the Acquired Notes has occurred and is continuing, (B) the Common Stock is not then listed or traded on a Trading Market, and/or (C) with respect to an Assignee, the payment of interest in shares of Common Stock would cause such Assignee and its affiliates to beneficially own (as defined in accordance with Section 13(d) of the Securities Exchange Act of 1934) in excess of 4.99% of the Common Stock of Sage then outstanding.  Notwithstanding the foregoing, in the event that the Makers elect to exercise this option, the Holder shall have the right to require the Makers to pay fifty percent (50%) of the interest payable on any Interest Payment Date in cash and fifty percent (50%) in shares of Sage’s Common Stock as contemplated in this Section 3(d).

 

4.           Acknowledgement of the Current Conversion Price. The parties hereto acknowledge that as of the date hereof the Conversion Price of the Acquired Notes (as defined in Section 3.2 of the Acquired Notes) shall mean $0.40, subject to adjustment under Section 3.5 thereof; provided, however, that the Assignees do not hereby waive (and reserve all rights relating to) any adjustment to the Conversion Price that may have been triggered on or prior to the date hereof to the extent the Makers have failed to deliver a Notice of Adjustment pursuant to Section 3.5(e) of the Acquired Notes with respect thereto.

 

5.           Elimination of Prepayment Penalty. Upon and as of the Effective Date, the Assignees agree that prepayment penalty at the Prepayment Price (as defined in Section 1.3 of the Acquired Notes) is hereby eliminated with respect to any prepayment that does not involve or is not made in connection with an Event of Default in connection with a failure of Sage to fully honor any conversion request pursuant to Section 2.1(e) or Section 2.1(l) of the Acquired Notes (the “Excluded Prepayments”).  The Assignees shall not be entitled to any Prepayment Price with respect to the Acquired Notes in connection with any prepayment by the Makers of the Acquired Notes, in full or in part; provided, however, that the Makers shall not prepay or cause to be prepaid all or any portion of the Acquired Notes or the Remaining Notes without the written consent of the Assignors and the Assignees; and provided, further, that the Makers shall pay the prepayment penalty at the Prepayment Price in connection with any Excluded Prepayment.

 

6.          Representations and Warranties of the Makers.  Each Maker hereby represents and warrants to the Assignees as of the date hereof as follows:

 

(a)           Organization and Standing. Each Maker is a corporation duly incorporated and validly existing under, and by virtue of, the laws of the State of Nevada and is in good standing under such laws.  Each Maker has requisite corporate power and authority to own and operate its properties and assets, and to carry on its business as presently conducted.

 

(b)           Corporate Power. Each Maker has the power to enter into this Agreement and has taken all necessary action to authorize such execution, delivery and performance.

 

  

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(c)           SEC Reports; Financial Statements. Sage has filed all reports required to be filed by it under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (the foregoing materials (together with any materials filed by Sage under the Exchange Act, whether or not required), collectively referred to herein as the “SEC Reports”). Sage has made available to each  Assignor or its representatives true, correct and complete copies of the SEC Reports including, without limitation, the registration statement filed by Sage with the SEC on January 18, 2012 (the “Registration Statement,” and together with the SEC Reports, collectively, the “Information Package”). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act and the rules and regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Sage contained in the Information Package comply in all materials respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted principles of good accounting practice in the United States, consistently applied during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all materials respects the financial position of Sage and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the period then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments.

 

(d)           Capitalization. The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock or equity interests, options and other securities of  Sage and each of its subsidiaries (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock or equity interests of Sage or such subsidiaries) is disclosed in Information Package.  All outstanding shares of capital stock and equity interests are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws.  Except as disclosed in Information Package, neither Sage  nor any of its Subsidiaries has issued any other options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or entered into any agreement giving any person any right to subscribe for or acquire, any shares of common stock or equity interests, or securities or rights convertible or exchangeable into shares of common stock or equity interests.  Except as disclosed in Information Package, and except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by Sage (or in any agreement of Sage providing rights to security holders) and the issuance of the Warrants pursuant to the Purchase Agreement will not obligate Sage  to issue shares of common stock or other securities to any person (other than to the Assignors) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities.  To the knowledge of Sage, except as specifically disclosed in Information Package, no person or group of related persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon Sage, beneficial ownership of in excess of 5% of the outstanding common stock of Sage.

 

  

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(e)           Absence of Required Consents; No Violations.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any third party or federal, state, local or other governmental department, commission, board, bureau, agency or other instrumentality or authority, domestic or foreign, exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government on the Governmental Authority on the part of Sage or any of its Subsidiaries is required in connection with the consummation of the transactions contemplated by this Agreement, except for the filing with the SEC of a one or more Current Reports on Form 8-K and such filing(s) pursuant to applicable state securities laws as may be necessary, which filings will be timely effected after the date hereof.  Neither Maker nor any subsidiary thereof is in violation or default (i) of any provision of its certificate of incorporation or by-laws, or (ii) of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound (including, with limitation the Acquired Notes or any of the Loan Documents), (iii) or any provision of any federal or  state statute, rule or regulation applicable to Sage, except in the cases of clause (ii) and (iii) above, for such violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a (i) a material and adverse effect on the legality, validity or enforceability of  the Acquired Notes or any Loan Document, (ii) a material adverse effect on the results of operations, assets, business, condition (financial or otherwise) or prospects of  Sage and its direct or indirect subsidiaries, taken as a whole on a consolidated basis, or (iii) a material and adverse impairment of Sage’s ability to perform fully on a timely basis its obligations under this Agreement, the Note or  any of the Loan Documents to which it is a party (each, a “Material Adverse Effect”). The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien upon any material assets of Sage, any of its subsidiaries or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to Sage or any of its subsidiaries, their business or operations or any of their assets or properties and which would result in a Material Adverse Effect.

 

(f)           Subsidiaries. Except as disclosed in the Information Package, each Maker has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any equity interest in any corporation, association or business entity.

 

(g)           Issuance of Securities. All necessary corporate action on the part of Sage, its officers, directors and stockholders for the sale and issuance of the Acquired Notes, the shares of common stock upon the conversion of the Acquired Notes (the “Conversion Shares” or the “Underlying Securities”) has been taken prior to the date hereof and the Underlying Securities have been duly reserved for issuance by all necessary corporate action on the part of Sage prior to the date hereof.  The Underlying Securities, when issued upon (conversion of the Acquired Notes in accordance with the terms thereof, will be duly and validly issued, fully paid and nonassessable.  The Underlying Securities will be free of restrictions on transfer, other than restrictions on transfer under this Agreement, the Acquired Notes and applicable state and federal securities laws.

 

(h)           Offering. Subject to the truth and accuracy of the Assignees’ representations set forth in Section 7 of this Agreement, the issuance of the Underlying Securities as contemplated by this Agreement and the Acquired Notes are exempt from the registration requirements of the Securities Act, and applicable state securities laws.

 

(i)           Brokers or Finders; Other Offers. Neither Maker  has incurred, and will not incur, directly or indirectly, as a result of any action taken by such Maker, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.

 

  

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(j)           Exchange.  Other than the modification of the Notes and the exchange of the Notes for the Acquired Notes and the Remaining Notes, Sage has not received any consideration for the Acquired Notes since August 30, 2011.  By virtue of such exchange, the holding period for purposes of Rule 144 under the Securities Act of 1933 (“Rule 144”) for the Acquired Notes, shall begin no later than August 30, 2011.  Pursuant to Rule 144, the Assignees will be able to sell the shares of Sage’s common stock issuable upon conversion of the Acquired Notes, on March 1, 2012 and at any time thereafter, without volume or manner of sale restrictions under Rule 144 (other than such contractual volume restrictions as are set forth in Section 3(d) hereof); provided, that, at the time of such sales, the Assignees are not “affiliates” of Sage within the meaning of Rule 144.  Sage will, at Sage’s expense, at the time of such sales, provide one or more legal opinions in form and substance satisfactory to the Assignees and Sage’s transfer agent.

 

7.          Representations and Warranties of the  Assignees.  Each Assignee hereby represents and warrants (individually and not jointly) to the Makers as of the date hereof as follows:

 

(a)           Binding Obligation. Such Assignee has full power and authority to enter this Agreement and this Agreement is a valid, binding and enforceable obligation of such Assignee, subject to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditor’s rights generally and subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(b)           Investment Experience. Such Assignee is an accredited investor within the meaning of Regulation D prescribed by the SEC pursuant to the Securities Act and is capable of evaluating the merits and risks of its investment in Sage and has the capacity to protect its own interests.

 

(c)           Investment Intent. Such Assignee is acquiring the Acquired Notes for investment for such Assignee’s own account and not with a view to, or for resale in connection with, any distribution thereof.  Such Assignee understands that the Acquired Notes have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

 

(d)           Rule 144. Such Assignee acknowledges that the Underlying Securities must be held indefinitely unless subsequently registered under the Securities Act, or unless an exemption from such registration is available.  Notwithstanding the foregoing, no Assignor is agreeing to hold the Underlying Securities for any minimum period of time except as may be required by law.  Such Assignee is aware of the provisions of Rule 144 promulgated under the Securities Act of 1933 that permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions.

 

(e)           Disclosure of Information.  Such Assignee believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Acquired Notes.  Such Assignee acknowledges that it has received and reviewed the Information Package and has reviewed the “Risk Factors” section of the Registration Statement. Such Assignee further represents that it is relying solely on its own expertise and that of its consultants, and not on any representation of Sage not expressly contained herein and that it has had an opportunity to ask questions and receive answers from Sage regarding the terms and conditions related to the acquisition of the Acquired Notes and the business, properties, prospects and financial condition of Sage and it has exercised reasonable diligence in requesting such information.

 

  

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(f)           Legends. Such Assignee understands that any stock certificates issued by Sage upon conversion of the Acquired Notes will bear legends in substantially the following form:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

 

8. Miscellaneous.

 

(a)           Entire Agreement.  This Agreement constitutes the entire agreement of the parties, superseding and terminating any and all prior or contemporaneous oral and written agreements, understandings or letters of intent between or among the parties with respect to the subject matter of this Agreement.  No part of this Agreement may be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is a modification or amendment of this Agreement and is signed by the parties to this Agreement, or, in the case of waiver, by the party granting the waiver.  No course of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this Agreement, it being acknowledged by the parties to this Agreement that this Agreement is intended to be, and is, the complete and exclusive statement of the Agreement with respect to its subject matter.  Any waiver shall be limited to the express terms thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances.

 

(b)           Severability.  If any section, term or provision of this Agreement shall to any extent be held or determined to be invalid or unenforceable, the remaining sections, terms and provisions shall nevertheless continue in full force and effect.

 

(c)           Notices.  All notices provided for in this Agreement shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier, mail or messenger against receipt thereof or sent by registered or certified mail, return receipt requested, or by facsimile transmission or similar means of communication if receipt is confirmed or if transmission of such notice is confirmed by mail as provided in this Section 8 (c).  Notices shall be deemed to have been received on the date of personal delivery or other receipt.

 

(d)           Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law.  Each of the parties hereby  irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement shall be brought in the federal or state courts located in the County of New York in the State of New York, by execution and delivery of this Agreement, irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent to any service of process made either (x) in the manner set forth in Section 8 (c) of this Agreement (other than by telecopier), or (y) any other method of service permitted by law.

 

  

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(e)           Waiver of Jury Trial.  EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY SUIT, ACTION OR PROCEEDING TO ENFORCE THIS AGREEMENT OR ANY OTHER ACTION OR PROCEEDING WHICH MAY ARISE OUT OF OR IN ANY WAY BE CONNECTED WITH THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS.

 

(f)           Parties to Pay Own Expenses.  Each of the parties to this Agreement shall be responsible and liable for its own expenses incurred in connection with the preparation of this Agreement, the consummation of the transactions contemplated by this Agreement and related expenses.

 

(g)           Successors.  This Agreement shall be binding upon the parties and their respective heirs, executors, administrators, legal representatives, successors and assigns; provided, however, that neither party may assign this Agreement or any of its rights under this Agreement without the prior written consent of the other party.

 

(h)           Further Assurances.  Each party to this Agreement agrees, without cost or expense to any other party, to deliver or cause to be delivered such other documents and instruments as may be reasonably requested by any other party to this Agreement in order to carry out more fully the provisions of, and to consummate the transaction contemplated by, this Agreement.

 

(i)           Counterparts.  This Agreement may be executed simultaneously 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.

 

(j)           No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties with the advice of counsel to express their mutual intent, and no rules of strict construction will be applied against any party.

 

(k)           Headings.  The headings in the Sections of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement.

 

(l)           Legal Representation.  Each party hereto acknowledges that it has been represented by independent legal counsel in the preparation of the Agreement.  Each party recognizes and acknowledges that counsel to the Makers has represented other shareholders of the Makers and may, in the future, represent others in connection with various legal matters and each party waives any conflicts of interest and other allegations that it has not been represented by its own counsel.

 

[SIGNATURE PAGE FOLLOWS]

 

  

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

 

MAKERS:

SAGEBRUSH GOLD, LTD.

By:                                                               

Name:                                                                          

Title:                                                                          

GOLD ACQUISITION CORP.

By:                                                               

Name:                                                                          

Title:                                                                          

ASSIGNEES:

 

FROST GAMMA INVESTMENT TRUST                                                                                                

 

By:                                                     

 

     Name:

 

     Title:

 

______________________________

Michael Brauser                                                                           

 

 

[Note Modification Agreement]Unassociated Document

 

	  	
WARRANT

	  
	 	 	 
	
NO. SGL Q1 #1

	
SAGEBRUSH GOLD LTD.

	
5,250,000 Shares

	  	  	  

WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:30 P.M., EASTERN

TIME, ON THE EXPIRATION DATE

 

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

 

FOR VALUE RECEIVED,  SAGEBRUSH GOLD LTD., a  Nevada corporation (the “Company”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on the Expiration Date (as hereinafter defined) to FROST GAMMA INVESTMENTS TRUST or registered assigns (the “Holder”), under the terms as hereinafter set forth, Five Million Two Hundred Fifty Thousand (5,250,000) fully paid and non-assessable shares of the Company’s Common Stock, par value $0.0001 per share (the “Warrant Stock”), at a purchase price of  $0.40 per share (the “Warrant Price”), pursuant to this warrant (this “Warrant”).  The number of shares of Warrant Stock to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter set forth.  The term “Common Stock” shall mean, when used herein, unless the context otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant.

 

1.           Exercise of Warrant.

 

a.           The Holder may exercise this Warrant according to its terms by surrendering this Warrant to the Company at the address set forth in Section 8, the Notice of Exercise attached hereto having then been duly executed by the Holder, accompanied by cash, certified check or bank draft in payment of the purchase price, in lawful money of the United States of America, for the number of shares of the Warrant Stock specified in the Notice of Exercise, or as otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Time, on  February 23, 2017 (the “Expiration Date”).

 

b.           Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, exercise this Warrant in whole or in part by means of a “cashless exercise” in lieu of making a cash payment, and the Holder shall then be entitled to receive a certificate for the number of shares of Warrant Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

  

 

  

 

	 	
(A)= 

	
VWAP (as defined below) on the business day immediately preceding the date of such election;

	 	
(B) =

	
the Warrant Price of this Warrant, as adjusted; and

	 	
(X) =

	
the number of shares of Warrant Stock issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

For purposes of this Warrant, “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market that is a national securities exchange (as defined below), the daily volume weighted average price of the Common Stock for the ten (10) trading days prior to such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); (b)  if the Common Stock is not then listed or quoted on a Trading Market that is a national securities exchange, the closing price per share of the Common Stock so reported for the Trading Day immediately prior to such date; or (d) in all other cases, the fair market value of a share of Common Stock as determined in good faith by the Company’s board of directors. For purposes of this Warrant, “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq National Market, The OTC Bulletin Board, or OTCQB, OTCQX, or “Pink Sheets,” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices).

c.           This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional shares of Warrant Stock.  If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of shares of Warrant Stock as to which this Warrant has not been exercised, which new Warrant shall be signed by the Chairman, Chief Executive Officer or President and the Secretary or Assistant Secretary of the Company.  The term Warrant as used herein shall include any subsequent Warrant issued as provided herein.

 

d.           No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. The Company shall pay cash in lieu of fractions with respect to the Warrants based upon the fair market value of such fractional shares of Common Stock (which shall be the closing price of such shares on the exchange or market on which the Common Stock is then traded) at the time of exercise of this Warrant.

 

e.           In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the Warrant Stock so purchased, registered in the name of the Holder, shall be delivered to the Holder within a reasonable time after such rights shall have been so exercised. The person or entity in whose name any certificate for the Warrant Stock is issued upon exercise of the rights represented by this Warrant shall for all purposes be deemed to have become the holder of record of such shares immediately prior to the close of business on the date on which the Warrant was surrendered and payment of the Warrant Price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the opening of business on the next succeeding date on which the stock transfer books are open. The Company shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on exercise of this Warrant.

 

  

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f.           Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or the certificates representing the Warrant Stock pursuant to an exercise within three trading days from the date of such exercise, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, 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 (1) the number of shares of Warrant Stock that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise 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 exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  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 the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

2.           Disposition of Warrant Stock and Warrant.

 

a.           The Holder hereby acknowledges that this Warrant and any Warrant Stock purchased pursuant hereto are, as of the date hereof, not registered: (i) under the Securities Act of 1933, as amended (the “Act”), on the ground that the issuance of this Warrant is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of this Warrant does not involve any public offering; and that the Company’s reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Holder that it is acquiring this Warrant and will acquire the Warrant Stock for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control.

 

  

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The Holder hereby agrees that it will not sell or transfer all or any part of this Warrant and/or Warrant Stock unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company either (i) an opinion, reasonably satisfactory to counsel for the Company, of counsel (skilled in securities matters, selected by the Holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state law, or (ii) an interpretative letter from the Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under the Act.

 

b.           If, at the time of issuance of the shares issuable upon exercise of this Warrant, no registration statement is in effect with respect to such shares under applicable provisions of the Act, the Company may at its election require that the Holder provide the Company with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a surrendered Warrant shall bear legends reading substantially as follows:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

 

In addition, so long as the foregoing legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.

 

3.           Reservation of Shares.  The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant.  The Company further agrees that all shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorized and will, upon issuance and against payment of the exercise price, be validly issued, fully paid and non-assessable, free from all taxes, liens, charges and preemptive rights with respect to the issuance thereof, other than taxes, if any, in respect of any transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal and state securities laws.

 

  

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4.           Exchange, Transfer or Assignment of Warrant.  This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations, entitling the Holder or Holders thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder.  Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants that carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof.

 

5.           Capital Adjustments.  This Warrant is subject to the following further provisions:

 

a.           Intentionally Omitted.

 

b.           Recapitalization, Reclassification and Succession.  If any recapitalization of the Company or reclassification of its Common Stock or any merger or consolidation of the Company into or with a corporation or other business entity, or the sale or transfer of all or substantially all of the Company’s assets or of any successor corporation’s assets to any other corporation or business entity (any such corporation or other business entity being included within the meaning of the term “successor corporation”) shall be effected, at any time while this Warrant remains outstanding and unexpired, then, as a condition of such recapitalization, reclassification, merger, consolidation, sale or transfer, lawful and adequate provision shall be made whereby the Holder of this Warrant thereafter shall have the right to receive upon the exercise hereof as provided in Section 1 and in lieu of the shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant, such shares of capital stock, securities or other property as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant had such recapitalization, reclassification, merger, consolidation, sale or transfer not taken place, and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

 

c.           Subdivision or Combination of Shares.  If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of shares of Warrant Stock purchasable upon exercise of this Warrant and the Warrant Price shall be proportionately adjusted.

 

d.           Stock Dividends and Distributions.  If the Company at any time while this Warrant is outstanding and unexpired shall issue or pay the holders of its Common Stock, or take a record of the holders of its Common Stock for the purpose of entitling them to receive, a dividend payable in, or other distribution of, Common Stock, then (i) the Warrant Price shall be adjusted in accordance with Section 5(f) and (ii) the number of shares of Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock that the Holder would have owned immediately following such action had this Warrant been exercised immediately prior thereto.

 

  

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e.           Stock and Rights Offering to Shareholders.  If the Company shall at any time after the date of issuance of this Warrant distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings or current year’s or prior year’s earnings of the Company) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in the immediately preceding paragraph) (any of the foregoing being hereinafter in this paragraph called the “Securities”), then in each such case, the Company shall reserve shares or other units of such Securities for distribution to the Holder upon exercise of this Warrant so that, in addition to the shares of the Common Stock to which such Holder is entitled, such Holder will receive upon such exercise the amount and kind of such Securities which such Holder would have received if the Holder had, immediately prior to the record date for the distribution of the Securities, exercised this Warrant.

 

f.           Warrant Price Adjustment.  Except as otherwise provided herein, whenever the number of shares of Warrant Stock purchasable upon exercise of this Warrant is adjusted, as herein provided, the Warrant Price payable upon the exercise of this Warrant shall be adjusted to that price determined by multiplying the Warrant Price immediately prior to such adjustment by a fraction (i) the numerator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately thereafter.

 

g.          Certain Shares Excluded.  The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

 

h.           Deferral and Cumulation of De Minimis Adjustments.  The Company shall not be required to make any adjustment pursuant to this Section 5 if the amount of such adjustment would be less than one percent (1%) of the Warrant Price in effect immediately before the event that would otherwise have given rise to such adjustment.  In such case, however, any adjustment that would otherwise have been required to be made shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than one percent (1%) of the Warrant Price in effect immediately before the event giving rise to such next subsequent adjustment.

 

i.           Duration of Adjustment.  Following each computation or readjustment as provided in this Section 5, the new adjusted Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant shall remain in effect until a further computation or readjustment thereof is required.

 

  

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6.           Limitation on Exercises.  The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, the Holder (together with such Holder’s affiliates) would beneficially own in excess of 4.99% of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Holder and its affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.  To the extent that the limitation contained in this Section 6 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliate) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliate) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of the determination.  For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, , Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company setting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) business day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The restriction described in this Section 6 may be waived, in whole or in part, upon sixty-one (61) days prior notice from the Holder to the Company to increase such percentage up to 9.99%, but not in excess of 9.99%.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

7.           Notice to Holders.

 

a.           Notice of Record Date.  In case:

 

  

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(i)           the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right;

 

(ii)           of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or merger of the Company into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or

 

(iii)           of any voluntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any, is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution or winding-up.  Such notice shall be mailed at least thirty (30) days prior to the record date therein specified, or if no record date shall have been specified therein, at least thirty (30) days prior to such specified date, provided, however, failure to provide any such notice shall not affect the validity of such transaction.

 

b.           Certificate of Adjustment. Whenever any adjustment shall be made pursuant to Section 5 hereof, the Company shall promptly make a certificate signed by its Chairman, Chief Executive Officer, President, Vice President, Chief Financial Officer or Treasurer, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant after giving effect to such adjustment, and shall promptly cause copies of such certificates to be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

 

  

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8.           Loss, Theft, Destruction or Mutilation.  Upon receipt by the Company of evidence satisfactory to it, in the exercise of its reasonable discretion, of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof, without expense to the Holder, a new Warrant of like tenor dated the date hereof.

 

9.           Warrant Holder Not a Stockholder.  The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights whatsoever as a stockholder of the Company.

 

10.           Notices.  Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified mail, return receipt requested, or nationally recognized overnight delivery service, to the Company at its principal executive offices located at 1640 terrace Way, Walnut Creek, CA 94597, Attention: David Rector, President, or to the Holder at the name and address set forth in the Warrant Register maintained by the Company.

 

11.           Choice of Law.  THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

 

12.           Jurisdiction and Venue.  The Company and Holder hereby agree that any dispute which may arise between them arising out of or in connection with this Warrant shall be adjudicated before a court located in New York County, New York and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of York located in New York County with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Warrant or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

 

  

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IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its behalf, in its corporate name and by its duly authorized officers, as of this 23rd day of February, 2012.

 

 

SAGEBRUSH GOLD LTD.

 

 

By:_______________________________

       Name:  David Rector

       Title:   President

 

  

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NOTICE OF EXERCISE

 

	
TO:

	
Sagebrush Gold Ltd.

	
  

	
1640 Terrace Way Walnut Creek, California 94597

	
  

	
Attn:  President

	
  

	
Tel: (___) ___-____

	
  

	
Fax: (___) ___-____

 

(1)           The undersigned hereby elects to purchase ______________ shares of Warrant Stock of the Company pursuant to the terms of the attached Warrant to Purchase Common Stock, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)           Payment shall take the form of (check applicable box):

 

o            in lawful money of the United States; or

 

o            if permitted, the cancellation of __________  shares of Warrant Stock in order to exercise this Warrant with respect to ____________ shares of Warrant Stock (using a VWAP of $______ for this calculation), in accordance with the formula and procedure set forth in subsection 1(b).

 

o            if permitted, the cancellation of such number of shares of Warrant Stock as is necessary, in accordance with the formula and procedure set forth in subsection 1(b), to exercise this Warrant with respect to the maximum number of shares of Warrant Stock purchasable pursuant to a cashless exercise.

 

(3)           Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below:

 

 

 The shares of Warrant Stock shall be delivered to the following DWAC Account Number, if permitted, or by physical delivery of a certificate to:

 

  

  

  

(4)           Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

  

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[SIGNATURE OF HOLDER]

 

Name of Investing Entity:                                                                                                                                                                        

 

Signature of Authorized Signatory of Investing Entity:                                                                                                                   

 

Name and Title of Authorized Signatory:                                                                                                                                         

 

Date:                                                                                                                                                                                                       

 

  

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

     FOR VALUE RECEIVED, all of or                 shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

                                                                       whose address is

                                                                                         

 

                                                                                         

  Dated:                               ,         

 

Holder’s Name:                                                                                                                                                                                       

   

Holder’s Signature:                                                                                                                                                                                   

 

Name and Title of Signatory:                                                                                                                                                                 

 

Holder’s Address:                                                                                                                                                                                       

 

Signature Guaranteed:                                                                                                                                                                              

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

- 13 -

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