Document:

Exhibit 4.1

 

 

	
 
    	
WARRANT
    	
 
    
	
NO. [  ]
    	
PERSHING GOLD CORPORATION
    	
[  ] Shares 
    
	
 
    	
 
    	
July [  ],   2014
    

 

WARRANT TO PURCHASE COMMON STOCK

 

VOID ON THE EXPIRATION DATE

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS, AND MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO PERSHING GOLD CORPORATION (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (D) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND, IN THE CASE OF (C) OR (E), ONLY IF THE HOLDER HAS PRIOR TO SUCH TRANSFER FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN CUSTOMARY FORM AND SUBSTANCE AND IN THE CASE OF (D), THE HOLDER HAS PROVIDED TO THE COMPANY CUSTOMARY DOCUMENTATION OF THE HOLDER AND ITS BROKER.

 

FOR VALUE RECEIVED, PERSHING GOLD CORPORATION, a Nevada corporation (the “Company”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, but no later than January [  ], 2017 (the “Expiration Date”) (as defined in Section 1(a) below) to                                          , whose address is                                   , or registered assigns (the “Holder”), under the terms as hereinafter set forth, from and after the issue date hereof (“Initial Issue Date”)                               (              ) 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 $0.45 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 property at the time receivable upon the exercise of this Warrant.

 

This Warrant has been issued pursuant to the terms of the Subscription Agreement between the Company and the Holder dated the same date as this Warrant (the “Subscription Agreement”).  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Subscription Agreement.

 

 

1.                                      Exercise of Warrant.

 

a.                                      Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Issue Date and on or before the Expiration Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within two (2) “Trading Days” (a day on which the OTCQB or stock exchange on which the Company’s stock is listed is open for business) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Warrant Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 1(b) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Stock available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total amount of Warrant Stock available hereunder shall have the effect of lowering the outstanding amount of Warrant Stock purchasable hereunder in an amount equal to the applicable amount of Warrant Stock purchased.  The Holder and the Company shall maintain records showing the amount of Warrant Stock purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Trading Day of delivery of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Stock hereunder, the amount of Warrant Stock available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

Cashless Exercise.  This Warrant may be exercised, in whole or in part, at any time the Warrant Stock is not registered for resale pursuant to an effective registration statement under the U.S. Securities Act, by means of a “cashless exercise” (in lieu of making a payment upon such exercise) in which the Holder shall 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) = the closing price of the Warrant Stock on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Warrant Price, as adjusted hereunder; and

 

(X) = the number of shares of Warrant Stock that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

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b.                                      If exercised in part, the Company shall, as soon as practicable and in no event later than five (5) Trading Days after receipt of this Warrant (and the purchase price if applicable) and at its own expense, 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.

 

c.                                       No fractional shares of Common Stock will be issuable upon any exercise of this Warrant and the Holder will not be entitled to any cash payment or compensation in lieu of a fractional share of Common Stock.

 

d.                                      Reserved.

 

e.                                       Mechanics of Exercise.

 

(i)                                     Delivery of Certificates Upon Exercise.  Not later than five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Purchase Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Stock Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the exercising Holder a certificate or certificates (bearing the restrictive legend set forth below) representing the number of shares of Warrant Stock being acquired upon the exercise of such Warrant; provided however, if the Company is then a participant in the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares have been resold by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, then Certificates for shares purchased hereunder shall be transmitted by the Company’s transfer agent (the “Transfer Agent”) to the Holder by crediting the account of the Holder’s prime broker with DTC through its DWAC system.  The Company shall use commercially reasonable efforts to deliver such shares as promptly as practicable but in any event prior to the Warrant Stock Delivery Date.  The Warrant Stock shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the aggregate Purchase Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, prior to the issuance of such shares, having been paid.  The Company understands that a delay in the delivery of the Warrant Stock after the Warrant Stock Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Stock upon exercise of this Warrant the proportionate amount of $100 per “Business Day” (any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the City of New York are authorized or required by law or

 

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other governmental action to close) (increasing to $200 per Business Day after the tenth Trading Day) commencing after the second Trading Day following the Warrant Stock Delivery Date for each $10,000 of Exercise Price of Warrant Stock for which this Warrant is exercised which are not timely delivered.  The Company shall pay any payments incurred under this Section in immediately available funds upon demand.  Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Stock by the Warrant Stock Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

(ii)                                  Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

(iii)                               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 the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Stock pursuant to an exercise on or before the Warrant Stock Delivery Date, 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

 

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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; provided however that the Holder shall not be entitled to recover more than once for the same damages and that the Company shall not be liable for any consequential, or punitive damages.

 

(iv)                              Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

f.                                        Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 1(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 1(g) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) 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 Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above

 

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shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 1(g), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days 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 or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 1(g), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 1(g) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(g) 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. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.  Notwithstanding the foregoing, the Beneficial Ownership Limitation shall not apply if the Holder beneficially owns, as of the Initial Issue Date, in excess of 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant held by such Holder.

 

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 under the Securities Act of 1933, as amended (the “U.S. Securities Act”) or under any applicable state securities law; and that the Company’s reliance on certain exemptions under the U.S. Securities Act and applicable state securities laws is predicated in part on the representations made by the Holder in Article IV of the Subscription Agreement.

 

b.                                      Any certificate representing Common Stock issued upon the exercise of this Warrant will bear a legend substantially similar to the following:

 

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION. AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER MAY BE REQUIRED BY THE ISSUER OR THE TRANSFER AGENT.

 

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, state or other applicable securities laws.

 

4.                                      Exchange, Transfer or Assignment of Warrant.  Subject to compliance with any applicable securities laws, 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.

 

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

 

a.                                      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.  Any adjustment under this Section 5(a) shall become effective at the close of business on the date the subdivision or combination becomes effective or, if earlier, the record date with respect to the subdivision or combination.

 

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b.                                      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(e) 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.

 

c.                                       Stock and Rights Offering to Stockholders.  If the Company shall at any time while this Warrant is outstanding 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) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in the immediately preceding paragraph), or securities convertible or exchangeable into Common Stock (any of the foregoing, the “Securities”), then in each such case, the Company shall without regard to any Beneficial Ownership Limitation 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.

 

d.                                      Organic Change.  Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another person or entity or other transaction that is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change.”

 

(i)                                     In connection with any (x) bona fide sale of all or substantially all of the Company’s assets to an acquiring person or entity or (y) other Organic Change involving an arm’s length third party or parties following which the Company is not the surviving entity and as a result of which the then current stockholders of the Company will not, directly or indirectly own 50% or more of the surviving entity, the Company shall elect in its sole discretion: (A) to require that the Holder exercise this Warrant prior to the consummation of such Organic Change, and if not so exercised, that this Warrant shall terminate upon consummation of such Organic Change, or (B) to secure from the person or entity purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance reasonably satisfactory to the Holder) to deliver to the Holder, in exchange for this Warrant, a warrant of the Acquiring Entity (the “Replacement Warrant”) evidenced by a written instrument substantially similar in form and substance to this Warrant and reasonably satisfactory to the Holder reflecting the adjustments required so as to preserve the value of the Warrant applicable at the Closing of the transaction, by the terms of the Replacement Warrant.  The Replacement Warrant shall be

 

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exercisable for such number of shares of common stock or other securities of the Acquiring Entity as the Holder would have had the right to receive upon such Organic Change by a holder of the number of shares of Warrant Stock that such Holder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately prior to the effective date of such Organic Change without regard to any Beneficial Ownership Limitation.  The Company shall give the Holder written notice of such Organic Change at least twenty (20) days prior to the closing and consummation of such Organic Change (and shall give notice of record date pursuant to section 6(a)).

 

(ii)                                  Prior to the consummation of any Organic Change unless not required as contemplated in subsection (i) above, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the Holder) to ensure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of this Warrant, such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable upon the exercise of this Warrant as of the date of such Organic Change without regard to any Beneficial Ownership Limitation.

 

e.                                       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.

 

f.                                        Par Value.  Notwithstanding anything to the contrary contained in Section 5, if, as a result of an adjustment pursuant to Section 5, the par value per share of Common Stock would be greater than the Warrant Price, then the Warrant Price shall be an amount equal to the par value per share of the Common Stock but the number of shares the holder of this Warrant shall be entitled to purchase shall be such greater number of shares of Common Stock as would have resulted from the Warrant Price that, absent such limitation, would have been in effect pursuant to this Section 5.

 

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

 

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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.

 

6.                                      Notice to Holders.

 

a.                                      Notice of Record Date.  In case:

 

(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) 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 Organic Change; 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 Organic Change, 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 ten (10) days prior to the record date therein specified, or if no record date shall have been specified therein, at least ten (10) 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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7.                                      Loss, Theft, Destruction or Mutilation.  If this Warrant is lost, stolen, mutilated or destroyed, upon receipt by the Company, in the case of loss, theft or destruction, of an indemnity in customary form or, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu thereof, without expense to the Holder, a new Warrant of like denomination and tenor dated the date hereof.

 

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

 

9.                                      Notices.  All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or email, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first business day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

 

(1)                                 if to the Company, to:

 

Pershing Gold Corporation
 1658 Cole Boulevard
 Building 6, Suite 210
 Lakewood, CO 80401
 Attention:  Stephen Alfers
 Email:  SAlfers@pershinggold.com
 Facsimile:  720-974-7249

 

with a copy (which shall not constitute notice) to:

 

Davis Graham & Stubbs LLP
 1550 17th Street, Suite 500
 Denver, Colorado 80202
 Attention:  Deborah J. Friedman
 Email:  Deborah.friedman@dgslaw.com
 Facsimile:  303-893-1379

 

(2)                                 if to Holder to the address, email and facsimile number(s), and with such copies as indicated in the warrant register maintained by the Company.

 

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10.                               Choice of Law.  This Warrant and all disputes or controversies arising out of or relating to this Warrant or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York.

 

11.                               Jurisdiction and Venue.  Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Warrant brought by the other party or its successors or assigns shall be brought and determined in any New York State or federal court sitting in The City of New York (or, if such court lacks subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Warrant and the transactions contemplated hereby.  Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in New York, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein.  Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient.  Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Warrant or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Warrant, or the subject matter hereof, may not be enforced in or by such courts.

 

12.                               Amendment and Waiver.  Except as otherwise provided herein, the provisions of this Warrant and the other Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

13.                               Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

14.                               Non-waiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.  Without limiting any other provision of this Warrant or the Subscription Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages

 

12

 

to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

15.                               Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Stock, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

16.                               Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

17.                               Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Stock.

 

18.                               Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

19.                               Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

[signature page follows]

 

13

 

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 the date first written above.

 

	
 
    	
PERSHING   GOLD CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  Eric   Alexander
    
	
 
    	
Title:   Vice President of Finance and Controller
    

 

[Signature Page — Warrant Agreement]

 

14

 

NOTICE OF EXERCISE

 

	
TO:
    	
Pershing   Gold Corporation
    
	
 
    	
1658   Cole Boulevard
    
	
 
    	
Building   6 – Suite 210
    
	
 
    	
Lakewood,   Colorado 80401
    
	
 
    	
Attn:   Chief Executive Officer
    

 

(1)                                 The undersigned hereby elects to purchase                       shares of Warrant Stock of the Company pursuant to the terms of the Warrant to Purchase Common Stock (the “Warrant”), and tenders herewith or will tender payment of the exercise price in full, together with all applicable transfer taxes, if any, as required by the Warrant.

 

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

 

o                                    the Aggregate Exercise Price in the sum of $                              in lawful money of the United States in accordance with the terms of the Warrant; or

 

o                                    cashless exercise pursuant to Section 1(b) of the Warrant Agreement.

 

(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:

 

DWAC Account Number:

 

Address and phone number:

 

(4)                                 Accredited Investor. By executing this exercise form, the undersigned represents and warrants that the undersigned:

 

(a)                                 (i) purchased the Warrant directly from the Company for its own account or the account of another “accredited investor”, as that term is defined in Rule 501(a) (a “U.S. Accredited Investor”) of Regulation D promulgated under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”); (ii) will acquire the shares of Warrant Stock upon the exercise of the Warrant contemplated hereby solely for its own account or the account of such other U.S. Accredited Investor; (iii) was a U.S. Accredited Investor on the date the Warrant was purchased from the Company and continues to be a U.S. Accredited Investor on the date of the exercise of the Warrant; and (iv) if the Warrant is being exercised

 

 

on behalf of another person, represents, warrants and certifies such person was a U.S. Accredited Investor, on the date the Warrant was purchased from the Company and continues to be a U.S. Accredited Investor on the date of the exercise of the Warrant; or

 

(b)                                 (i) is outside the United States (as defined in Regulation S promulgated by the United States Securities Exchange Commission under the U.S. Securities Act) and not a U.S. person (as defined in Regulation S (a “U.S. Person”), at the time of execution and delivery of this notice; (ii) is not exercising the right provided for herein for the account or benefit of a person in the United States or a U.S. Person; (iii) is not exercising the Warrant with the intent to distribute either directly or indirectly any of the securities acquirable upon exercise in the United States, except in compliance with the U.S. Securities Act; and (iv) has in all other respects complied with the terms of Regulation S of the U.S. Securities Act.

 

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

	
Name   of Registered Holder of the Warrant:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature   of Authorized Signatory of Registered Holder:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name   and Title of Authorized Signatory:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

2

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                               (include name and address of the transferee) a Warrant exercisable for                         shares of common stock, represented by warrant certificate number                   , of Pershing Gold Corporation (the “Company”) registered in the name of the undersigned on the register of the Company maintained therefor, and hereby irrevocably appoints the attorney of the undersigned to transfer the said securities on the books maintained by the Company with full power of substitution.

 

DATED this               day of                               , 20       .

 

	
 
    	
Signature of Transferor
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address   of Transferor
    	
 
    

 

The undersigned transferee hereby certifies that:

(check one)

 

o said transferee was not offered the Warrants in the United States and is not in the United States or a “U.S. Person” (as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”)), and is not acquiring the Warrants for the account or benefit of a person in the United States or a U.S. Person; or

 

o enclosed herewith is an opinion of counsel of recognized standing in a customary form to the effect that no violation of the U.S. Securities Act or applicable securities laws will result from transfer, exercise or deemed exercise of the Warrants.

 

 

It is understood that the Company may require additional evidence necessary to verify the foregoing.

 

	
DATED:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address   of Transferee:
    	
 
    	
X
    	
 
    
	
 
    	
 
    	
Signature   of individual (if Transferee is an   individual)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
X 
    	
 
    
	
 
    	
 
    	
Authorized   signatory (if Transferee is not   an individual)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name   of Transferee (please print)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name   of authorized signatory (please print)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Official   capacity of authorized signatory (please   print)
    

 

2Exhibit 10.1

 

EXECUTION COPY

 

To subscribe for Units

in the private offering of

PERSHING GOLD CORPORATION

 

1.                    Date and Fill in the number of units (the “Units”) (each Unit consisting of (a) one (1) share (a “Unit Share”) of the Company’s common stock par value $0.0001 per share (the “Common Stock”) and (b) one (1) thirty month warrant (collectively, the “Warrants” and together with the Units, the Unit Shares and the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”), the “Securities”) to purchase 0.40 of a share of Common Stock of the Company at an exercise price equal to $0.45 per share, subject to equitable adjustment thereunder (the “Exercise Price”) at a negotiated price of $0.34 per Unit being subscribed for and Complete and Sign the Signature Page included in the Subscription Agreement.

 

2.                    Initial the Accredited Investor Certification attached to this Subscription Agreement.

 

3.                    Complete and Sign (i) the Signature Page attached to this Subscription Agreement and (ii) the Selling Stockholder Notice and Questionnaire (attached hereto as Exhibit A).

 

NOTICE: Please note that by executing the attached Subscription Agreement, you will deemed to have executed the Unit Purchase Agreement (Exhibit D to the Memorandum, as defined below) and the Registration Rights Agreement (Exhibit C to the Memorandum), and agreed to the terms of the Warrant (Exhibit B to the Memorandum) and all exhibits, supplements and schedules thereto, as such may be amended from time to time (collectively the “Transaction Documents”), each of which are attached to the Memorandum, and will be treated for all purposes as if you did review, approve and execute, if required, each such Transaction Document even though you may not have physically signed the signature pages to such documents.

 

4.                    Complete and Return the attached Purchaser Questionnaire and, if applicable, Wire Transfer Authorization attached to this Subscription Agreement.

 

5.                    Return all forms to Laidlaw & Co. (UK) Ltd. (the “Placement Agent”), attention to your Account Executive, and then send all signed original documents with a check (if applicable) to the Placement Agent at:

 

Laidlaw & Co. (UK) Ltd.

546 Fifth Avenue

5th Floor

New York, NY 10036

 

 

6.                 The escrow agent is Signature Bank, a New York State chartered bank, having an office at 261 Madison Ave, New York, NY 10016 (the “Escrow Agent”).   Please make your subscription payment payable to the order of “Signature Bank, as Escrow Agent for Pershing Gold Corporation” Account No. 1502332844

 

For wiring funds directly to the escrow account,

use the following instructions:

 

Signature Bank

261 Madison Avenue

New York, NY 10016

	
Acct. Name:
    	
Signature Bank as Escrow   Agent for
    
	
 
    	
Pershing Gold Corporation
    

 

	
ABA Number:
    	
026013576
    
	
SWIFT Code:
    	
SIGNUS33
    
	
A/C Number:
    	
1502332844
    

 

	
FBO:
    	
Purchaser Name
    
	
 
    	
Social Security Number
    
	
 
    	
Address
    

 

ALL SUBSCRIPTION DOCUMENTS MUST BE FILLED IN AND SIGNED EXACTLY AS SET FORTH WITHIN.

 

ii

 

SUBSCRIPTION AGREEMENT

 

PERSHING GOLD CORPORATION

 

Pershing Gold Corporation

1658 Cole Boulevard

Building 6, Suite 200

Lakewood, Colorado 80401

Attn:  Stephen Alfers, President & CEO

 

Ladies and Gentlemen:

 

1.  Subscription.  The undersigned (the “Purchaser”) will purchase the number of units (collectively, the “Units”) of securities of Pershing Gold Corporation, a Nevada corporation (the “Company”), set forth on the signature page to this Subscription Agreement, at a purchase price of $0.34 per Unit, with each Unit consisting of (a) one (1) share (a “Unit Share”) of the Company’s common stock par value $0.0001 per share (the “Common Stock”) and (b) one (1) thirty month warrant (collectively, the “Warrants” and together with the Units, the Unit Shares and the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”), the “Securities”) to purchase 0.40 of a share of Common Stock of the Company at an exercise price equal to $0.45 per share, subject to adjustment thereunder (the “Exercise Price”).  The Units are being offered (the “Offering”) by the Company pursuant to the offering terms set forth in the Company’s Confidential Private Placement Memorandum, dated July 18, 2014, as may be amended and/or supplemented, from time to time (collectively, the “Memorandum”).

 

The Units are being offered on a “reasonable efforts, all or none” basis with respect to the minimum of $1,000,000 purchase price for the Units (the “Minimum Offering”) and thereafter on a “reasonable efforts” basis up to the maximum of $5,000,000 purchase price for the Units (the “Maximum Offering”). The Units will be offered for sale until the earlier of (i) the date upon which subscriptions for the Maximum Offering offered hereunder have been accepted, (ii) August 1, 2014 (subject to the right of the Company and the Placement Agent to extend the offering until September 15, 2014 without further notice to investors) or (iii) the date upon which the Company and the Placement Agent elect to terminate the Offering (the “Termination Date”).

 

The Company may hold an initial closing (“Initial Closing”) at any time after the receipt of accepted subscriptions for the Minimum Offering.  After the Initial Closing, subsequent closings with respect to additional Securities may take place at any time prior to the Termination Date as determined by the Company, with respect to subscriptions accepted prior to the Termination Date (each such closing, together with the Initial Closing, being referred to as a “Closing”).  The last Closing of the Offering, occurring on or prior to the Termination Date, shall be referred to as the “Final Closing”.  Any subscription documents or funds received after the Final Closing will be returned, without interest or deduction.  In the event that any Closing does not occur prior to the

 

 

Termination Date, all amounts paid by the Purchaser shall be returned to the Purchaser, without interest or deduction.

 

Subscriptions for investment below the minimum investment may be accepted at the discretion of the Placement Agent and the Company.  The Company reserves the right (but is not obligated) to have its employees, agents, officers, directors and affiliates purchase Units in the Offering and all such purchases will be counted towards the Minimum Offering and the Maximum Offering.

 

The terms of the Offering are more completely described in the Memorandum and such terms are incorporated herein in their entirety.  Certain capitalized terms used, but not otherwise defined herein, will have the respective meanings provided in the Memorandum.

 

2.                                      Payment.  The Purchaser encloses herewith a check payable to, or will immediately make a wire transfer payment to the Escrow Agent pursuant to the wire instructions as provided herein in the full amount of the purchase price of the Units being subscribed for.  Together with the check for, or wire transfer of, the full purchase price, the Purchaser is delivering a completed and executed Signature Page to this Subscription Agreement along with a completed and executed Accredited Investor Certification, which are annexed hereto.  By executing this Subscription Agreement, you will be deemed to have executed the Unit Purchase Agreement (Exhibit D to the Memorandum) and the Registration Rights Agreement (Exhibit C to the Memorandum), and agreed to the terms of the Warrant (Exhibit B to the Memorandum) and all exhibits, supplements and schedules thereto, as such may be amended from time to time (collectively the “Transaction Documents”), each of which are attached to the Memorandum, and will be treated for all purposes as if you did review, approve and execute, if required, each such Transaction Document even though you may not have physically signed the signature pages to such documents.

 

3.                                      Deposit of Funds.  All payments made as provided in Section 2 hereof will be deposited by the Purchaser as soon as practicable with the Escrow Agent in a non-interest bearing escrow account (the “Escrow Account”).  In the event that the Company does not effect a Closing during the Offering Period, the Escrow Agent will refund all subscription funds, without deduction and/or interest accrued thereon, and will return the subscription documents to each Purchaser.  If the Company or the Placement Agent rejects a subscription, either in whole or in part (at the sole discretion of the Company or the Placement Agent), the rejected subscription funds or the rejected portion thereof will be returned promptly to such Purchaser without interest, penalty, expense or deduction.

 

4.                                      Acceptance of Subscription.  The Purchaser understands and agrees that the Company or the Placement Agent, each in its sole discretion, reserves the right to accept this or any other subscription for the Units, in whole or in part, notwithstanding prior receipt by the Purchaser of notice of acceptance of this or any other subscription.  The Company will have no obligation hereunder until the Company executes and delivers to the Purchaser an executed copy of the Purchase Agreement.  If Purchaser’s subscription is rejected in whole (at the sole discretion of the Company or the Placement Agent), the Offering is terminated or the Minimum Offering is not subscribed for and accepted prior to the Termination Date, all funds received from the Purchaser will be

 

 

returned without interest, penalty, expense or deduction, and this Subscription Agreement will thereafter be of no further force or effect.  If Purchaser’s subscription is rejected in part (at the sole discretion of the Company or the Placement Agent) and the Company accepts the portion not so rejected, the funds for the rejected portion of such subscription will be returned without interest, penalty, expense or deduction, and this Subscription Agreement will continue in full force and effect to the extent such subscription was accepted. The Purchaser may revoke its subscription and obtain a return of the subscription amount paid to the Escrow Account at any time before the date of the Initial Closing.  The Purchaser may not revoke this subscription or obtain a return of the subscription amount paid to the Escrow Agent on or after the date of the Initial Closing.  Any subscription received after the Initial Closing but prior to the Termination Date shall be irrevocable.

 

5.                                      Representations and Warranties of the Purchaser.  The Purchaser hereby acknowledges, represents, warrants, and agrees as follows:

 

(a)                                 None of the Securities are registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws.  The Purchaser understands that the offering and sale of the Securities is intended to be exempt from registration under the Securities Act, by virtue of Section 4(a)(2) thereof and the provisions of Regulation D promulgated thereunder, based, in part, upon the representations, warranties and agreements of the Purchaser contained in this Subscription Agreement and the Purchase Agreement;

 

(b)                                 The Purchaser and the Purchaser’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, “Advisors”), have received and have carefully reviewed the Memorandum, this Subscription Agreement, and each of the Transaction Documents and all other documents requested by the Purchaser or its Advisors, if any, and understand the information contained therein, prior to the execution of this Subscription Agreement;

 

(c)                                  Neither the United States Securities and Exchange Commission (the “Commission”) nor any state securities commission has approved or disapproved of the Securities or passed upon or endorsed the merits of the Offering or confirmed the accuracy or determined the adequacy of the Memorandum.  The Memorandum has not been reviewed by any Federal, state or other regulatory authority.  Any representation to the contrary may be a criminal offense;

 

(d)                                 All documents, records, and books pertaining to the investment in the Securities including, but not limited to, all information regarding the Company and the Securities, have been made available for inspection and reviewed by the Purchaser and its Advisors, if any;

 

(e)                                  The Purchaser and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from the Company’s officers and any other persons authorized by the Company to answer such questions, concerning, among other related matters, the Offering, the Securities, the Transaction Documents and the business, financial condition, results of operations and prospects of the Company and all

 

 

such questions have been answered by the Company to the full satisfaction of the Purchaser and its Advisors, if any;

 

(f)                                   In evaluating the suitability of an investment in the Company, the Purchaser has not relied upon any representation or other information (oral or written) other than as stated in the Memorandum;

 

(g)                                  The Purchaser is unaware of, is in no way relying on, and did not become aware of the offering of the Securities through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or over the Internet, in connection with the offering and sale of the Securities and is not subscribing for the Securities and did not become aware of the Offering through or as a result of any seminar or meeting to which the Purchaser was invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser in connection with investments in securities generally;

 

(h)                                 The Purchaser has taken no action which would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Subscription Agreement or the transactions contemplated hereby (other than fees to be paid by the Company to the Placement Agent, as described in the Memorandum);

 

(i)                                     The Purchaser, either alone or together with its Advisors, if any, has such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with the Offering to evaluate the merits and risks of an investment in the Securities and the Company and to make an informed investment decision with respect thereto;

 

(j)                                    The Purchaser is not relying on the Company, the Placement Agent or any of their respective employees or agents with respect to the legal, tax, economic and related considerations of an investment in any of the Securities and the Purchaser has relied on the advice of, or has consulted with, only its own Advisors;

 

(k)                                 The Purchaser is acquiring the Securities solely for such Purchaser’s own account for investment and not with a view to resale or distribution thereof, in whole or in part.  The Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of any of the Securities and the Purchaser has no plans to enter into any such agreement or arrangement;

 

(l)                                     The Purchaser understands and agrees that purchase of the Securities is a high risk investment and the Purchaser is able to afford an investment in a speculative venture having the risks and objectives of the Company.  The Purchaser must bear the substantial economic risks of the investment in the Securities indefinitely because none of the Securities may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available.  Legends will be placed on the certificates representing the Unit Shares, the Warrants, and the Warrant Shares to the effect that such

 

 

securities have not been registered under the Securities Act or applicable state securities laws and appropriate notations thereof will be made in the Company’s books;

 

(m)                             The Purchaser has adequate means of providing for such Purchaser’s current financial needs and foreseeable contingencies and has no need for liquidity from its investment in the Securities for an indefinite period of time;

 

(n)                                 The Purchaser is aware that an investment in the Securities involves a number of very significant risks and has carefully read and considered the Company’s periodic filings with the Commission, and the matters set forth in the Memorandum and, in particular, the matters under the caption “Risk Factors” therein and understands any of such risk may materially adversely affect the Company’s operations and future prospects;

 

(o)                                 At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Commission under the Securities Act and has truthfully and accurately completed the Purchaser Questionnaire attached to this Subscription Agreement and will submit to the Company such further assurances of such status as may be reasonably requested by the Company;

 

(p)                                 The Purchaser: (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation, partnership, or limited liability company, or association, joint stock company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Securities, such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational documents, such entity has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the Securities, the execution and delivery of this Subscription Agreement has been duly authorized by all necessary action, this Subscription Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii) if executing this Subscription Agreement in a representative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Subscription Agreement in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom the Purchaser is executing this Subscription Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company, and represents that this Subscription Agreement constitutes a legal, valid and binding obligation of such entity.  The execution and delivery of this Subscription Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Purchaser is a party or by which it is bound;

 

 

(q)                                 The Purchaer hereby acknowledges receipt and careful review of this Agreement, the Memorandum, the Unit Purchase Agreement, the Registration Rights Agreement, the Warrant and all other exhibits, annexes and appendices thereto (collectively referred to as the “Offering Materials”), and has had access to the Company’s Annual Report on Form 10-K and the exhibits thereto for the fiscal year ended December 31, 2013 (the “Form 10-K”) and all subsequent periodic and current reports filed with the Commission as publicly filed with and available at the website of the Commission which can be accessed at www.sec.gov, and hereby represents that the Purchaser has been furnished by the Company during the course of the Offering with all information regarding the Company, the terms and conditions of the Offering and any additional information that the Purchaser has requested or desired to know, has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the Company and has been provided any such additional information by the Company in writing to the full satisfaction of the Purchaser, if any;

 

(r)                                    The Purchaser represents to the Company that any information which the undersigned has heretofore furnished or is furnishing herewith to the Company is complete and accurate and may be relied upon by the Company in determining the availability of an exemption from registration under Federal and state securities laws in connection with the offering of securities as described in the Memorandum;

 

(s)                                   The Purchaser has significant prior investment experience, including investment in non-listed and unregistered securities.  The Purchaser has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur.  The Purchaser’s overall commitment to investments which are not readily marketable is not excessive in view of the Purchaser’s net worth and financial circumstances and the purchase of the Securities will not cause such commitment to become excessive.  This investment is a suitable one for the Purchaser;

 

(t)                                    The Purchaser is satisfied that it has received adequate information with respect to all matters which it or its Advisors, if any, consider material to its decision to make this investment;

 

(u)                                 The Purchaser acknowledges that any and all estimates or forward-looking statements or projections included in the Memorandum were prepared by the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed, will not be updated by the Company and should not be relied upon;

 

(v)                                 No oral or written representations have been made, or oral or written information furnished, to the Purchaser or its Advisors, if any, in connection with the offering of the Securities which are in any way inconsistent with the information contained in the Memorandum;

 

(w)                               Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject;

 

 

(x)                                 THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS.  THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL;

 

(y)                                 In making an investment decision, investors must rely on their own examination of Company and the terms of the Offering, including the merits and risks involved.  Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time;

 

(z)                                  (For ERISA plans only)    The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities.  The Purchaser or Plan fiduciary (a) is responsible for the decision to invest in the Company; (b) is independent of the Company and any of its affiliates; (c) is qualified to make such investment decision; and (d) in making such decision, the Purchaser or Plan fiduciary has not relied on any advice or recommendation of the Company or any of its affiliates; and

 

(aa)                          The Purchaser has read in its entirety the Memorandum and all exhibits and annexes thereto, including, but not limited to, all information relating to the Company,  and the Securities, and understands fully to its full satisfaction all information included in the Memorandum including, but not limited to, the Section entitled “Risk Factors”.

 

(bb)                          The Purchaser represents that (i) the Purchaser was contacted regarding the sale of the Securities by the Company or the Placement Agent (or another person whom the Purchaser believed to be an authorized agent or representative thereof) with whom the Purchaser had a prior substantial pre-existing relationship and (ii) it did not learn of the offering of the Securities by means of any form of general solicitation or general advertising, and in connection therewith, the Purchaser did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

 

 

(cc)         The Purchaser consents to the placement of a legend on any certificate or other document evidencing the Securities and, when issued, the Warrant Shares, that such securities have not been registered under the Securities Act or any state securities or “blue sky” laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement.  The Purchaser is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of such Securities. The legend to be placed on each certificate shall be in form substantially similar to the following:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A MAY 2014 PRIVATE PLACEMENT ANDHAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(dd)         The Purchaser acknowledges that if he or she is a Registered Representative of a Financial Industry Regulatory Authority (“FINRA”) member firm, he or she must give such firm the notice required by the FINRA’s Rules of Fair Practice, receipt of which must be acknowledged by such firm prior to an investment in the Securities.

 

(ee)         To effectuate the terms and provisions hereof, the Purchaser hereby appoint the Placement Agent as its attorney-in-fact (and the Placement Agent hereby accepts such appointment) for the purpose of carrying out the provisions of the Escrow Agreement by and between the Company, the Placement Agent and the Escrow Agent (the “Escrow Agreement”) including, without limitation, taking any action on behalf of, or at the instruction of, the Purchaser and executing any release notices required under the Escrow Agreement and taking any action and executing any instrument that the Placement Agent may deem necessary or advisable (and lawful) to accomplish the purposes hereof.  All acts done under the foregoing authorization are hereby ratified and approved and neither the Placement Agent nor any designee nor agent thereof shall be liable for any acts of commission or omission, for any error of judgment, for any mistake of fact or law except for acts of gross negligence or willful misconduct.  This power of attorney, being coupled with an interest, is irrevocable while the Escrow Agreement remains in effect.

 

(ff)          The Purchaser agrees not to issue any public statement with respect to the Offering, Purchaser’s investment or proposed investment in the Company or the terms of any agreement or covenant between them and the Company without the

 

 

Company’s prior written consent, except such disclosures as may be required under applicable law.

 

(gg)         The Purchaser understands, acknowledges and agrees with the Company that this subscription may be rejected, in whole or in part, by the Company, in the sole and absolute discretion of the Company, at any time before any Closing notwithstanding prior receipt by the Purchaser of notice of acceptance of the Purchaser’s subscription.

 

(hh)         The Purchaser acknowledges that the information contained in the Offering Materials or otherwise made available to the Purchaser is confidential and non-public and agrees that all such information shall be kept in confidence by the Purchaser and neither used by the Purchaser for the Purchaser’s personal benefit (other than in connection with this subscription) nor disclosed to any third party for any reason, notwithstanding that a Purchaser’s subscription may not be accepted by the Company; provided, however, that (a) the Purchaser may disclose such information to its affiliates and advisors who may have a need for such information in connection with providing advice to the Purchaser with respect to its investment in the Company so long as such affiliates and advisors have an obligation of confidentiality, and (b) this obligation shall not apply to any such information that (i) is part of the public knowledge or literature and readily accessible at the date hereof, (ii) becomes part of the public knowledge or literature and readily accessible by publication (except as a result of a breach of this provision) or (iii) is received from third parties without an obligation of confidentiality (except third parties who disclose such information in violation of any confidentiality agreements or obligations, including, without limitation, any subscription or other similar agreement entered into with the Company).

 

(ii)           The Purchaser understands that Rule 144 promulgated under the Act (“Rule 144”) requires, among other conditions, a minimum holding period of six-months prior to the resale of securities acquired in a non-public offering without having to satisfy the registration requirements under the Act. The Purchaser understands and hereby acknowledges that the Company is under no obligation to register the Securities under the Act or any state securities or “blue sky” laws or to assist the Purchaser in obtaining an exemption from various registration requirements, other than as set forth herein.

 

6.             Representations and Warranties of the Company.

 

7.             Indemnification.  The Purchaser agrees to indemnify and hold harmless the Company, the Placement Agent and each of their respective officers, directors,  managers, employees, agents, attorneys, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation or omission to state a material fact, or breach by the Purchaser of any covenant or agreement made by the Purchaser herein or in any other document delivered in connection with this Subscription Agreement or any other Transaction Document.

 

 

8.                                      Binding Effect.  This Subscription Agreement will survive the death or disability of the Purchaser and will be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives, and permitted assigns.  If the Purchaser is more than one person, the obligations of the Purchaser hereunder will be joint and several and the agreements, representations, warranties and acknowledgments herein will be deemed to be made by and be binding upon each such person and such person’s heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

9.                                      Modification.  This Subscription Agreement will not be modified or waived except by an instrument in writing signed by the party against whom any such modification or waiver is sought.

 

10.                               Notices.  Any notice or other communication required or permitted to be given hereunder will be in writing and will be mailed by certified mail, return receipt requested, or delivered by reputable overnight courier such as FedEx against receipt to the party to whom it is to be given (a) if to the Company, at the address set forth in the Purchase Agreement or (b) if to the Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other address as the party will have furnished in writing in accordance with the provisions of this Section 10).  Any notice or other communication given by certified mail will be deemed given at the time of certification thereof, except for a notice changing a party’s address which will be deemed given at the time of receipt thereof.  Any notice or other communication given by overnight courier will be deemed given at the time of delivery.

 

11.                               Assignability.  This Subscription Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Purchaser and the transfer or assignment of any of the Securities will be made only in accordance with all applicable laws.

 

12.                               Applicable Law.  This Subscription Agreement will be governed by and construed under the laws of the State of New York as applied to agreements among New York residents entered into and to be performed entirely within New York.  The parties hereto (1) agree that any legal suit, action or proceeding arising out of or relating to this Subscription Agreement will be instituted exclusively in New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (2) waive any objection which the parties may have now or hereafter to the venue of any such suit, action or proceeding, and (3) irrevocably consent to the jurisdiction of the New York State Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding.  Each of the parties hereto further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agrees that service of process upon it mailed by certified mail to its address will be deemed in every respect effective service of process upon it, in any such suit, action or proceeding.  THE PARTIES HERETO AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION

 

 

AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

13.          Blue Sky Qualification.  The purchase of Securities pursuant to this Subscription Agreement is expressly conditioned upon the exemption from qualification of the offer and sale of the Securities from applicable federal and state securities laws.

 

14.          Use of Pronouns.  All pronouns and any variations thereof used herein will be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.

 

15.          Confidentiality.  The Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about the Company not otherwise properly in the public domain, was received in confidence.  The Purchaser agrees not to divulge, communicate or disclose, except as may be required by law or for the performance of this Subscription Agreement, or use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any confidential information of the Company, including any trade or business secrets of the Company and any business materials that are treated by the Company as confidential or proprietary, including, without limitation, confidential information obtained by or given to the Company about or belonging to third parties.

 

16.          Miscellaneous.

 

(a)           This Subscription Agreement, together with the other Transaction Documents, constitute the entire agreement between the Purchaser and the Company with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof.  The terms and provisions of this Subscription Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.

 

(b)           Each of the Purchaser’s and the Company’s representations and warranties made in this Subscription Agreement will survive the execution and delivery hereof and delivery of the Securities.

 

(c)           Each of the parties hereto will pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated.

 

(d)           This Subscription Agreement may be executed in one or more counterparts each of which will be deemed an original, but all of which will together constitute one and the same instrument.

 

(e)           Each provision of this Subscription Agreement will be considered separable and, if for any reason any provision or provisions hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality will not impair the operation of or affect the remaining portions of this Subscription Agreement.

 

 

(f)            Paragraph titles are for descriptive purposes only and will not control or alter the meaning of this Subscription Agreement as set forth in the text.

 

17.          Signature Page.  It is hereby agreed by the parties hereto that the execution by the Purchaser of this Subscription Agreement, in the place set forth hereinbelow, will be deemed and constitute the agreement by the Purchaser to be bound by all of the terms and conditions hereof as well as by the Unit Purchase Agreement and each of the other Transaction Documents, and will be deemed and constitute the execution by the Purchaser of all such Transaction Documents without requiring the Purchaser’s separate signature on any of such Transaction Documents.

 

[Remainder of page intentionally left blank.]

 

 

ANTI-MONEY LAUNDERING REQUIREMENTS

 

	
The USA PATRIOT Act
    	
 
    	
What is money 
   laundering?
    	
 
    	
How big is the problem 
   and why is it important?
    
	
The USA PATRIOT Act is designed to detect,   deter, and punish terrorists in the United States and abroad. The Act imposes   new anti-money laundering requirements on brokerage firms and financial   institutions. Since April 24, 2002 all brokerage firms have been   required to have new, comprehensive anti-money laundering programs. 

 

To help you understand theses efforts, we   want to provide you with some information about money laundering and our   steps to implement the USA PATRIOT Act.
    	
 
    	
Money laundering is the process of disguising   illegally obtained money so that the funds appear to come from legitimate   sources or activities. Money laundering occurs in connection with a wide   variety of crimes, including illegal arms sales, drug trafficking, robbery,   fraud, racketeering, and terrorism.
    	
 
    	
The use of the U.S. financial system by   criminals to facilitate terrorism or other crimes could well taint our   financial markets. According to the U.S. State Department, one recent   estimate puts the amount of worldwide money laundering activity at $1   trillion a year.
    

 

What are we required to do to eliminate money laundering?

 

Under new rules required by the USA PATRIOT Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with the new laws.

 

As part of our required program, we may ask you to provide various identification documents or other information. Until you provide the information or documents we need, we may not be able to effect any transactions for you.

 

 

PERSHING GOLD CORPORATION

SIGNATURE PAGE TO

SUBSCRIPTION AGREEMENT

 

Purchaser hereby elects to purchase a total of             Unit(s) at a purchase price of $0.34 per Unit (NOTE: to be completed by the Purchaser).

 

Date (NOTE: To be completed by the Purchaser):                                     , 2014

 

	
 
    

If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Print   Name(s)
    	
 
    	
Social   Security Number(s)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Signature(s) of   Purchaser(s)
    	
 
    	
Signature
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Date
    	
 
    	
Address
    	
 
    

 

If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or TRUST:

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name of   Partnership,
    	
 
    	
Federal   Taxpayer
    	
 
    
	
 
    	
Corporation,   Limited
    	
 
    	
Identification   Number
    	
 
    
	
 
    	
Liability   Company or Trust
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    	
State of   Organization
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Date
    	
 
    	
Address
    	
 
    

 

AGREED AND ACCEPTED:

 

PERSHING GOLD CORPORATION

 

	
By:
    	
/s/ Stephen Alfers
    	
 
    	
July 30, 2014
    
	
 
    	
Name: Stephen Alfers
    	
 
    	
Date
    
	
 
    	
Title: President and Chief   Executive Officer
    	
 
    	
 
    

 

 

PERSHING GOLD CORPORATION

ACCREDITED INVESTOR CERTIFICATION

 

For Individual Investors Only

(All individual investors must INITIAL where appropriate.  Where there are joint investors both parties must INITIAL):

 

	
Initial                  
    	
I certify that I have a “net worth” of at   least $1 million either individually or through aggregating my individual   holdings and those in which I have a joint, community property or other   similar shared ownership interest with my spouse. For purposes of calculating   net worth under this paragraph, (i) the primary residence shall not be   included as an asset, (ii) to the extent that the indebtedness that is   secured by the primary residence is in excess of the fair market value of the   primary residence, the excess amount shall be included as a liability, and   (iii) if the amount of outstanding indebtedness that is secured by the   primary residence exceeds the amount outstanding 60 days prior to the   execution of this Subscription Agreement, other than as a result of the   acquisition of the primary residence, the amount of such excess shall be   included as a liability.
    
	
 
    	
 
    
	
Initial                  
    	
I certify that I have had an annual gross   income for the past two years of at least $200,000 (or $300,000 jointly with   my spouse) and expect my income (or joint income, as appropriate) to reach   the same level in the current year.
    

 

For Non-Individual Investors

(all Non-Individual Investors must INITIAL where appropriate):

 

	
Initial                  
    	
The undersigned certifies that it is a   partnership, corporation, limited liability company or business trust that is   100% owned by persons who meet either of the criteria for Individual   Investors, above.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is a   partnership, corporation, limited liability company or business trust that   has total assets of at least $5 million and was not formed for the purpose of   investing in Company.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is an   employee benefit plan whose investment decision is made by a plan fiduciary   (as defined in ERISA §3(21)) that is a bank, savings and loan association,   insurance company or registered investment adviser.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is an   employee benefit plan whose total assets exceed $5,000,000 as of the date of   the Subscription Agreement.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is a   self-directed employee benefit plan whose investment decisions are made   solely by persons who meet either of the criteria for Individual Investors,   above.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is a U.S.   bank, U.S. savings and loan association or other similar U.S. institution   acting in its individual or fiduciary capacity.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is a   broker-dealer registered pursuant to §15 of the Securities Exchange Act of   1934.
    

 

 

	
Initial                  
    	
The undersigned certifies that it is an   organization described in §501(c)(3) of the Internal Revenue Code with   total assets exceeding $5,000,000 and not formed for the specific purpose of   investing in Company.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is a trust   with total assets of at least $5,000,000, not formed for the specific purpose   of investing in Company, and whose purchase is directed by a person with such   knowledge and experience in financial and business matters that he is capable   of evaluating the merits and risks of the prospective investment.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is a plan   established and maintained by a state or its political subdivisions, or any   agency or instrumentality thereof, for the benefit of its employees, and   which has total assets in excess of $5,000,000.
    
	
 
    	
 
    
	
Initial                  
    	
The undersigned certifies that it is an   insurance company as defined in §2(a)(13) of the Securities Act of 1933, as   amended, or a registered investment company.
    

 

 

PERSHING GOLD CORPORATION

Purchaser Questionnaire

(Must be completed by Purchaser)

 

Section A - Individual Purchaser Information

 

Purchaser Name(s):

 

	
 
    	
 
    

 

Individual executing Profile or Trustee:

 

	
 
    	
 
    

 

Social Security Numbers / Federal I.D. Number:

 

	
 
    	
 
    

 

	
Date of Birth:
    	
 
    	
 
    	
Marital Status:
    	
 
    	
 
    

 

	
Joint Party Date of Birth:
    	
 
    	
 
    
	
Investment Experience (Years):
    	
 
    	
 
    

 

	
Annual Income:
    	
 
    	
 
    
	
Liquid Net Worth:
    	
 
    	
 
    

 

	
Net Worth:
    	
 
    	
 
    

 

	
Investment Objectives (circle one or more):
    	
Long Term Capital Appreciation, Short Term   Trading, Businessman’s Risk, Income, Safety of Principal, Tax Exempt   Income or other
    

 

Home Street Address:

 

	
 
    	
 
    

 

Home City, State & Zip Code:

 

	
 
    	
 
    

 

	
Home Phone:
    	
 
    	
 
    	
Home Fax:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Home Email:
    	
 
    	
 
    

 

Employer:

 

	
 
    	
 
    

 

Employer Street Address:

 

	
 
    	
 
    

 

Employer City, State & Zip Code:

 

	
 
    	
 
    

 

	
Bus. Phone:
    	
 
    	
 
    	
Bus. Fax:
    	
 
    	
 
    
	
 
    
	
Bus. Email:
    	
 
    	
 
    
							

 

Type of Business:

 

	
 
    	
 
    

 

LAIDLAW Account Executive / Outside Broker/Dealer:

 

	
 
    	
 
    

 

	
Please   check if you are a FINRA member or affiliate of a FINRA member firm:
    	
 
    	
 
    

 

 

PERSHING GOLD CORPORATION

Purchaser Questionnaire

(Must be completed by Purchaser)

 

Section B — Entity Purchaser Information

 

Purchaser Name(s):

 

	
 
    	
 
    

 

Authorized Individual executing Profile or Trustee:

 

	
 
    	
 
    

 

Social Security Numbers / Federal I.D. Number:

 

	
 
    	
 
    

 

	
Investment Experience (Years):
    	
 
    	
 
    
	
 
    
	
Annual Income:
    	
 
    	
 
    
	
 
    
	
Net Worth:
    	
 
    	
 
    
							

 

Was the Entity formed for the specific purpose of purchasing the Common Stock and Warrants?

o Yes  o No

 

	
Principal Purpose (Trust)
    	
 
    	
 
    
	
 
    
	
Type of Business:
    	
 
    	
 
    
					

 

	
Investment Objectives (circle one or more):
    	
 
    	
Long Term Capital Appreciation, Short Term   Trading, Businessman’s Risk, Income, Safety of Principal, Tax Exempt   Income or other
    

 

Street Address:

 

	
 
    	
 
    

 

City, State & Zip Code:

 

	
 
    	
 
    

 

	
Phone:
    	
 
    	
 
    	
Fax:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Email:
    	
 
    	
 
    	
 
    
							

 

Laidlaw Account Executive / Outside Broker/Dealer:

 

	
 
    	
 
    

 

	
Please   check if you are a FINRA member or affiliate of a FINRA member firm:
    	
 
    	
 
    

 

 

Section C — Form of Payment — Check or Wire Transfer

 

o Check payable to “SIGNATURE BANK, AS ESCROW AGENT FOR PERSHING GOLD CORPORATION

 

o Wire funds from my outside account according to the “To subscribe for Units of Common Stock and Warrants to Purchase Shares of Common Stock in the private offering of PERSHING GOLD CORPORATION”

 

o Wire funds from my LAIDLAW & COMPANY (UK) LTD. Account — See following page

 

o The funds for this investment are rolled over, tax deferred from                                           within the Allowed 60-day window

 

Section D — Purchaser Instructions for Payments of any Dividends

 

	
 
    	
o
    	
Please make any dividend and any other   payment checks pursuant to the Units to “Sterne Agee & Leach Inc. c/f [Insert   Client Name]” and   deliver such checks to the Placement   Agent so that they may deposit them into my   Laidlaw & Company (UK) Ltd. brokerage account
    
	
 
    	
 
    	
 
    
	
 
    	
o
    	
Please make out any dividend and any other   payment checks pursuant to the Units in the registered name of the Purchaser   set forth in the signature page to the Subscription Agreement for the   Units and mail such checks to me at the address specified in such signature   page
    

 

Section E — Securities Delivery Instructions (check one)

 

o Please deliver my securities to the Placement Agent for deposit into my brokerage account.

 

o Please deliver my securities to the address listed in the above Purchaser Questionnaire.

 

o Please deliver my securities to the below address:

 

 

 

	
Purchaser Signature(s):
    	
 
    	
 
    	
Date:
    	
 
    

 

 

Wire Transfer Authorization

 

TO:                           OPERATIONS MANAGER

LAIDLAW & CO. (UK) LTD.

 

RE:                           Client Wire Transfer Authorization

PERSHING GOLD CORPORATION

 

	
DATE:
    	
 
    	
 
    

 

This memorandum authorizes the transfer of the following listed funds from my LAIDLAW Brokerage Account as follows:

 

	
LAIDLAW Brokerage Account #
    	
                                                      
    	
 
    
	
 
    	
 
    	
 
    
	
Wire Amount
    	
$
    	
                                                        
    	
 
    
				

 

SIGNATURE BANK

261 Madison Avenue

New York, NY 10016

 

ABA Number: 026013576

For Credit to Signature Bank, as Escrow Agent for

Pershing Gold Corporation

Account No.: 1502332844

 

	
 
    	
REFERENCE:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PURCHASER’S LEGAL NAME
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TAX ID NUMBER
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PURCHASER’S ADDRESS
    	
 
    
	
 
    	
 
    	
 
    

 

	
FBO:
    	
 
    	
 
    

 

	
Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature:
    	
 
    	
 
    
	
 
    	
(Joint Signature)
    	
 
    

 

 

Exhibit A

 

Selling Stockholder Notice and Questionnaire

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