Document:

sagebrush104.htm

Exhibit 10.4

STOCK PLEDGE AGREEMENT

Dated as of September __, 2011

By and Among

 

SAGEBRUSH GOLD, LTD.,

GOLD ACQUISITION CORP.

and

FROST GAMMA INVESTMENTS TRUST

 

  

  

  

 

 

	

ARTICLE 1 - DEFINITIONS 

	 1
	

ARTICLE 2 - PLEDGE; GRANT OF SECURITY; COLLATERAL AGENT; VOTING 

	 3
	 	Section 2.1 Pledge of Stock Collateral	 3
	 	Section 2.2 Pledge of Additional Stock	 3
	 	Section 2.3 Pledged Indebtedness	 3
	 	Section 2.4 Intentionally Omitted	 3
	 	Section 2.5 Voting	 3
	

ARTICLE 3 - SECURITY FOR OBLIGATIONS 

	 3
	ARTICLE 4 - LIQUID, RECAPITALIZATION, ETC	 3
	

ARTICLE 5 - WARRANTY OF TITLE; AUTHORITY 

	 3
	

ARTICLE 6 - REMEDIES

	 4
	 	Section 6.1 In General	 4
	 	
Section 6.2 Sale of Pledged Collateral

	 5
	 	Section 6.3 Registration of Pledged Shares	 5
	 	Section 6.4 Private Sales	 6
	 	Section 6.5 Pledgor's Agreements	 6
	

ARTICLE 7 - EXPENSES; APPLICATION OF PROCEEDS OF COLLATERAL

	 6
	

ARTICLE 8 - MARSHALLING 

	 6
	

ARTICLE 9 - PLEDGOR’S OBLIGATIONS NOT AFFECTED 

	 7
	
ARTICLE 10 - TRANSFER BY PLEDGOR

	 7
	
ARTICLE 11 - FURTHER ASSURANCES

	 7
	

ARTICLE 12 - EXONERATION 

	 7
	
ARTICLE 13 - WAIVERS

	 8
	
ARTICLE 14 - NOTICES

	 8
	ARTICLE 15 - TERMINATION	 8
	
ARTICLE 16 - GOVERNING LAW; CONSENT TO FORUM

	 8
	
ARTICLE 17 - ADDITIONAL WAIVERS BY THE PLEDGOR

	 11
	
ARTICLE 18 - MISCELLANEOUS 

	 11
	ARTICLE 19 - SUBORDINATION	 11
	ARTICLE 20- AMENDMENTS 	 11

 

 

  

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THIS STOCK PLEDGE AGREEMENT AND THE SECURITY INTERESTS CREATED HEREUNDER ARE SUBJECT TO A SUBORDINATION AGREEMENT (“SUBORDINATION AGREEMENT”), DATED ON OR ABOUT THE DATE HEREOF, BY AND AMONG PLATINUM LONG TERM GROWTH LLC (“PLATINUM”), LAKEWOOD GROUP LLC (“LAKEWOOD”), THE PLEDGOR, THE HOLDING COMPANY AND THE SECURED PARTY.

STOCK PLEDGE AGREEMENT

 

This STOCK PLEDGE AGREEMENT (this “Agreement”) dated as of September __, 2011, is entered into by and between SAGEBRUSH GOLD, LTD., a Nevada corporation with a business address of 1640 Terrace Way, Walnut Creek, California 85120 (the “Pledgor”) and FROST GAMMA INVESTMENTS TRUST (the “Secured Party”), and is consented and agreed to by Gold Acquisition Corp. (the “Holding Company”).

 

 WHEREAS, the Secured Party is the holder of a Secured Convertible Promissory Note issued by the Pledgor and the Holding Company bearing even date herewith in the aggregate principal amount of $1,715,604 (the “Note”) pursuant to the terms of that certain Note Purchase Agreement dated as of the date hereof by and among the Pledgor, Holding Company and the Secured Party (the “Purchase Agreement”);

 

WHEREAS, in order to induce the Secured Party to purchase the Note pursuant to the Purchase Agreement, the Pledgor has agreed to execute and deliver to the Secured Party this Agreement and other collateral documents and to grant the Secured Party, a security interest in the Pledged Collateral (as defined below) to secure the prompt payment, performance and discharge in full of the Obligations (as defined below);

 

WHEREAS, the Pledgor is the direct legal and beneficial owner of (i) all issued and outstanding shares of each class of the Stock Collateral (defined in Article 1 below) in the Holding Company as indicated on Schedule A attached hereto (as such schedule may be amended from time to time pursuant to this Agreement) and (ii) the general partnership, limited partnership, and limited liability company interests as indicated on Schedule A;

 

WHEREAS, the Secured Party is not willing to purchase the Note unless the Obligations (as defined below) are secured by a pledge of and perfected security interest in the Pledged Collateral (as defined herein);

 

WHEREAS, the Pledgor wishes to expressly pledge and grant a security interest in the Pledged Collateral in favor of the Secured Party to secure the Obligations; and

 

WHEREAS, the Pledgor and the Holding Company are indebted to Platinum and Lakewood pursuant to the Senior Secured Convertible Promissory Notes (the “Platinum Notes”) issued to Platinum Long Term Growth LLC and Lakewood Group LLC on or about August 30, 2011 and related agreements, instruments and documents (together with the Platinum Notes, and including the Transaction Documents (as defined in the Platinum Notes), as the same may be amended, restated or supplemented, the “Platinum Agreements”).

 

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

 

ARTICLE 1 - DEFINITIONS

 

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Annexes, Articles and Sections shall be construed to refer to Annexes to, and Articles and Sections of, this Agreement.

 

  

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All capitalized terms not otherwise specifically defined in this Agreement shall have the meanings given thereto in the Note or if not expressly defined in the Note, then in the Purchase Agreement.  The following terms shall have the following meanings:

 

“Additional Stock” means any and all entity ownership interests that (a) are not Pledged Stock and (b) are acquired by the Pledgor after the date of this Agreement.

 

“Event of Default” has the meaning assigned to such term in the Note.

 

 “Note” is defined in the recitals hereof.

 

“Obligation(s)” means any obligation(s) of the Pledgor and/or the Holding Company to the Secured Party of every kind and description, whether direct or indirect, absolute or contingent, primary or secondary, joint or several, due or to become due, or now existing or hereafter arising or acquired and whether by way of loan, discount, letter of credit, lease, guaranty, or otherwise, including, without limitation, all Obligations under the Note.

 

“Person” means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated) or any governmental authority.

 

“Pledged Collateral” means all of the property at any time pledged to the Secured Party hereunder (whether described herein or not) and all income therefrom, increases therein, and proceeds thereof, including without limitation, the Pledged Ownership Interests.

 

“Pledged Indebtedness” means all promissory notes and other debt instruments and indebtedness issued or owed, now or in the future, by the Holding Company to the Pledgor.

 

“Pledged Ownership Interests” means the Stock Collateral and the Additional Stock pledged under this Agreement.

 

“Pledged Stock” means all issued and outstanding Stock in the Holding Company now owned or hereafter acquired by the Pledgor, together with all certificates evidencing the same.

 

“Pledgor” has the meaning assigned to such term in the recitals hereof.

 

“Secured Party” is defined in the recitals hereof.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

 “Stock” means all shares of stock or other equity interests, including but not limited to options, warrants, and convertible securities, of an incorporated entity, and all membership interest in and to any limited liability company or similar organized entity.

 

“Stock Collateral” means the Pledged Stock, together with any securities exchangeable for or convertible into shares of such Pledged Stock of any class acquired by the Pledgor by purchase, stock dividend, distribution of capital, or otherwise, together with all income therefrom, increases therein, and proceeds thereof, whether now owned or hereafter acquired by the Pledgor.

 

“Transaction Documents” has the meaning assigned to such term in the Note.

 

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect in the State of New York.

 

  

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ARTICLE 2 - PLEDGE; GRANT OF SECURITY; COLLATERAL AGENT; VOTING

 

Section 2.1 Pledge of Stock Collateral

 

As collateral security for the payment and performance in full of the Obligations, the Pledgor hereby expressly pledges, assigns, and grants a security interest in, and delivers (upon satisfaction of all obligations under the Platinum Agreements) to the Secured Party the Stock Collateral.  The certificates for such Stock Collateral listed in Schedule A, to the extent represented by certificates, are accompanied by stock powers or other appropriate instruments of assignment thereof duly executed in blank by the Pledgor, and have been delivered to the Secured Party (such delivery occurring subsequent to satisfaction of all obligations under the Platinum Agreements).

 

Section 2.2 Pledge of Additional Stock

 

In case the Pledgor shall acquire any Additional Stock in the Holding Company, or any securities exchangeable for or convertible into Stock of any class of the Holding Company, whether by purchase, stock dividend, stock split, or otherwise, then such Additional Stock shall be subject to the pledge, assignment, and security interest granted to the Secured Party under this Agreement, and the Pledgor shall deliver to the Secured Party promptly (subsequent to satisfaction of all obligations under the Platinum Agreements) any certificates therefor, accompanied by stock powers or other appropriate instruments of assignment duly executed by the Pledgor in blank.  The Pledgor agrees that the Secured Party may from time to time attach as Schedule A hereto an updated list of the Stock Collateral at the time pledged to the Secured Party hereunder.

 

Section 2.3 Pledged Indebtedness

 

The Pledgor hereby pledges, bargains, sells, assigns, sets over, mortgages, hypothecates, transfers and grants to the Secured Party a valid security interest in the Pledgor’s right, title and interest in the Pledged Indebtedness and all interest, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of the Pledged Indebtedness, and all promissory Note or other instruments evidencing additional indebtedness arising after the date hereof and owing to the Pledgor and all interest, cash, instruments an other property and assets from time to time received, receivable or otherwise distributed in respect of such Pledged Indebtedness.  The Pledgor shall deliver to the Secured Party (subsequent to satisfaction of all obligations under the Platinum Agreements) the original of all currently existing and hereafter acquired Pledged Indebtedness.  The Pledgor agrees that the Secured Party may from time to time attach as Schedule A hereto an updated list of any after-acquired Pledged Indebtedness at the time pledged to the Secured Party hereunder.

 

Notwithstanding anything to the contrary herein, it is understood that neither the Pledgor nor the Holding Company may issue, incur, or cause to exist any Indebtedness (as defined in the Note), including without limitation any Pledged Indebtedness, without the express written consent of the Secured Party (as set forth in the Note).

 

Section 2.4 Intentionally Omitted

 

Section 2.5 Voting

 

So long as any Obligations are outstanding, without the prior written consent of the Secured Party, the Pledgor shall not exercise any voting rights with respect to the Pledged Collateral to the extent that such exercise would result in an amendment, alteration, restatement, supplement or any other modification whatsoever to or of the Articles of Incorporation and/or the Bylaws of the Holding Company.

 

ARTICLE 3 - SECURITY FOR OBLIGATIONS

 

This Agreement and the security interests in and pledge of the Pledged Collateral are made with and granted to the Secured Party as security for the payment and performance in full of all Obligations.

 

ARTICLE 4 - LIQUID, RECAPITALIZATION, ETC

 

Section 4.1 Distributions Paid to the Secured Party.

 

Upon and after an Event of Default, and subsequent to satisfaction of all obligations under the Platinum Agreements, any cash or other property paid or distributed upon or with respect to any of the Pledged Collateral, whether by dividend, redemption, loan repayment, or otherwise, shall be paid over and delivered to the Secured Party as security for the payment and performance in full of all of the Obligations.

 

  

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On or after an Event of Default, and subsequent to satisfaction of all obligations under the Platinum Agreements, if pursuant to the recapitalization or reclassification of the capital of the issuer of any Pledged Ownership Interests or pursuant to the reorganization of any such issuer, any distribution of capital shall be made on or in respect to any of the Pledged Ownership Interests, the property so distributed shall be delivered to the Secured Party, to be held by the Secured Party as security for the Obligations.  After an Event of Default, all cash and property paid or distributed in respect of the Pledged Collateral, whether as a loan payment, dividend or distribution or upon a liquidation, dissolution, recapitalization, or reclassification, or otherwise, that are received by the Pledgor shall, until paid or delivered to the Secured Party, be held in trust for the Secured Party, as security for the payment and performance in full of all Obligations.

 

ARTICLE 5 - WARRANTY OF TITLE; AUTHORITY

 

The Pledgor and the Holding Company, jointly and severally, hereby represent and warrant to the Secured Party, that: (a) the Pledgor has good and marketable title to and is the sole record and beneficial owner of, its respective Pledged Collateral, subject to no pledges, liens, security interests, charges, options, restrictions, or other encumbrances except the pledge and security interest created by (i) that certain Credit Facility Agreement dated as of February 23, 2011 by and among the Pledgor, the Empire Sports & Entertainment Co, EXCX Funding Corp., Barry Honig and Michael Brauser, (ii) the Platinum Agreements and (iii) this Agreement; (b) all of the Pledged Ownership Interests are validly issued, fully paid, and non-assessable; (c) the information set forth on Schedule A hereto relating to the Pledged Collateral is true, correct, and complete in all respects; and (d) all of the Pledged Indebtedness have been duly authorized, authenticated or issued and delivered by, and are the legal, valid and binding obligation of, the issuer thereof, and no such issuer is in default thereunder.  With regard to Pledged Collateral acquired after the date of this Agreement, the Pledgor and the Holding Company hereby covenant that the representations and warranties above will be equally applicable to any such after-acquired Pledged Collateral on and after the date such Pledged Collateral is acquired.  The Pledgor and the Holding Company covenant that they will defend the rights and security interest of the Secured Party in the Pledged Collateral against the claims and demands of all other Persons, it being understood and agreed that Platinum’s rights in the Pledged Collateral are senior to the rights of the Secured Party in the Pledged Collateral.

 

ARTICLE 6 - REMEDIES

 

Section 6.1 In General.

 

On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, if an Event of Default has occurred and is continuing, the Secured Party shall have the following rights and remedies in addition to the rights and remedies of a secured party under the UCC and any rights and remedies it may have under the Transaction Documents, all such rights and remedies being cumulative, not exclusive, and enforceable alternatively, successively, or concurrently, at such time or times as the Secured Party deems expedient:

 

(a)           If the Secured Party so elects, on and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Secured Party may exercise all rights associated with the Pledged Indebtedness and may exercise all voting rights associated with the Pledged Collateral (whether or not the same shall have been transferred into the Secured Party’s name or the name of its nominee or nominees) for any lawful purpose, including, without limitation, if the Secured Party so elects, for the liquidation of the assets of the issuer thereof, or for the amendment or modification of any of the charter, bylaws, partnership agreements, or other governing documents, and give all consents, waivers, and ratifications in respect of the Pledged Collateral and otherwise act with respect thereto as though it were the outright owner thereof.  The Pledgor hereby irrevocably constitutes and appoints the Secured Party the proxy and attorney-in-fact of the Pledgor (with full power of substitution) to take or cause to be taken all actions described in this Agreement, and such power of attorney and proxy are hereby coupled with an interest.  The proxy and power of attorney provisions contained in this Section shall survive the termination of this Agreement;

 

(b)           On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Secured Party may demand, sue for, collect, or make any compromise or settlement the Secured Party deems suitable in respect of any Pledged Collateral;

 

  

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(c)           On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Secured Party may sell, resell, assign, and deliver, or otherwise dispose of any or all of the Pledged Collateral, for cash or credit or both and upon such terms at such place or places, at such time or times, and to such entities or other persons as the Secured Party thinks expedient, all without demand for performance by the Pledgor or any notice or advertisement whatsoever except as expressly provided herein or as may otherwise be required by law;

 

(d)           On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Secured Party may cause all or any part of the Pledged Collateral held by it to be transferred into its name or the name of its nominee or nominees; and

 

(e)           On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Secured Party may set off or otherwise apply or credit against the Obligations any and all sums deposited with the Secured Party.

 

Section 6.2 Sale of Pledged Collateral.

 

In the event of any sale or other disposition of the Pledged Collateral as provided in Section 5.1 above and to the extent that any notice thereof is required to be given by law, the Secured Party shall give to the Pledgor at least ten (10) days’ prior authenticated (as defined in the UCC) notice of the time and place of any public sale or other disposition of the Pledged Collateral or of the time after which any private sale or any other intended disposition is to be made.  The Pledgor hereby acknowledges that ten (10) days’ prior authenticated notice of such sale or other disposition or sales or other dispositions shall be reasonable notice.  On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Secured Party may enforce its rights hereunder without any other notice and without compliance with any other condition precedent now or hereunder imposed by statute, rule of law, or otherwise (all of which are hereby expressly waived by the Pledgor, to the fullest extent permitted by law).  The Secured Party may buy or otherwise acquire any part or all of the Pledged Collateral at any public sale or other disposition, and if any part or all of the Pledged Collateral is of a type customarily sold or otherwise disposed of in a recognized market or is of the type which is the subject of widely-distributed standard price quotations, the Secured Party may buy or otherwise acquire at private sale or other disposition and may make payments thereof by any means.  The Secured Party may apply the cash proceeds actually received from any sale or other disposition to the reasonable expenses of retaking, holding, preparing for sale, selling, and the like, to reasonable attorney’s fees, travel, and all other expenses which may be incurred by the Secured Party in attempting to collect the Obligations or to enforce this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement, and then to the Obligations.

 

Section 6.3 Registration of Pledged Shares.

 

If the Secured Party shall determine to exercise its right to sell or otherwise dispose of any or all of the Pledged Ownership Interests pursuant to this Article 6, and if in the opinion of counsel for the Secured Party it is necessary, or if in the reasonable opinion of the Secured Party it is advisable, to have the Pledged Ownership Interests, or that portion thereof be sold, registered under the provisions of the Securities Act, the Pledgor agrees to use its best efforts to cause the Holding Company, and the Holding Company hereby agrees, to execute and deliver, and cause the directors and officers (or other analogous Persons) of the Holding Company to execute and deliver, all at the Pledgor’s expense, all such instruments and documents, and to do or cause to be done all such other acts and things as may be necessary or, in the reasonable opinion of the Secured Party, advisable to register such Pledged Ownership Interests under the provisions of the Securities Act and to cause the registration statement relating thereto to become effective and to remain effective for a period of at least nine (9) months from the date such registration statement became effective, and to make all amendments thereto or to the related prospectus or both that, in the reasonable opinion of the Secured Party, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto.  The Pledgor agrees to use its best efforts to cause the Holding Company, and the Holding Company hereby agrees, to comply with the provisions of the securities or “Blue Sky” laws of any jurisdiction which the Secured Party shall designate and to cause such issuer or issuers to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of the Securities Act.  If the Pledgor is or becomes an issuer of Pledged Ownership Interests, the Pledgor shall take all of the actions the Secured Party desires an issuer to take, as described in this Section 6.3.

 

  

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Section 6.4 Private Sales.

 

The Pledgor recognizes that the Secured Party may be unable to effect a public sale or other disposition of the Pledged Ownership Interests by reason of certain prohibitions contained in the Securities Act, federal banking laws, and other applicable laws, or may decide in its sole discretion that a public sale is not appropriate or practicable, and therefore may resort to none or more private sales thereof to a restricted group of purchasers.  The Pledgor agrees that any such  private sales may be at prices and others terms less favorable to the seller than if sold at public sales and that such private sales shall not by reason thereof be deemed not to have been made in a commercially reasonable manner.  The Secured Party shall be under no obligation to delay a sale of any of the Pledged Ownership Interests for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act, or such other federal banking or other applicable laws, even if the issuer would agree to do so.  The Pledgor agrees to use its best efforts to cause the Holding Company, and the Holding Company hereby agrees, to execute and deliver, and cause the directors and officers (or other analogous Persons) of the Holding Company to execute and deliver, all at the Pledgor’s expense, all such instruments and documents, and to do or cause to be done all such other acts and things as may be necessary or, in the reasonable opinion of the Secured Party, advisable to exempt such Pledged Ownership Interests from registration under the provisions of the Securities Act, and to make all amendments to such instruments and documents which, in the opinion of the Secured Party, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto.  The Pledgor further agrees to use its best efforts to cause the Holding Company, and the Holding Company hereby agrees, to comply with the provisions of the securities or “Blue Sky” laws of any jurisdiction which the Secured Party shall designate and, if required, to cause the Holding Company to, and the Holding Company hereby agrees to, make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of the Securities Act.  If the Pledgor is or becomes an issuer of Pledged Ownership Interests, the Pledgor shall take all of the actions the Secured Party desires an issuer to take, as described in this Section 6.4.

 

Section 6.5 Pledgor’s Agreements.

 

The Pledgor further agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make any sales of any portion or all of the Pledged Ownership Interests pursuant to this Article 5 valid and binding and in compliance with any and all applicable laws (including, without limitation, the Securities Act, the Securities Exchange Act of 1934, as amended, the rules and regulations of the Securities Exchange Commission applicable thereto, and all applicable state securities or “Blue Sky” laws), regulations, orders, writs, injunctions, decrees, or awards of any and all  courts, arbitrators, or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at the Pledgor’s expense.  The Pledgor further agrees that a breach of any of the covenants contained in this Article 5 will cause irreparable injury to the Secured Party, that the Secured Party has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenants contained in this Article 5 shall be specifically enforceable against the Pledgor by the Secured Party, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.

 

ARTICLE 7 - EXPENSES; APPLICATION OF PROCEEDS OF COLLATERAL

 

 

On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, the Pledgor and the Holding Company shall pay to the Secured Party on demand any and all expenses, including reasonable attorney’s fees and disbursements, incurred or paid by the Secured Party in protecting, preserving, or enforcing the Secured Party’s rights and remedies under or in respect of any of the Obligations, or any of the Pledged Collateral.  Upon any realizations upon the Pledged Collateral by the Secured Party, whether upon foreclosure and sale of all or part of the Pledged Collateral pursuant to Article 5 or otherwise, the Pledgor agrees that the proceeds thereof shall be applied to the Obligations.  The Pledgor agrees that all amounts received with respect to any of the Obligations, whether by realization on the Pledged Collateral or otherwise, shall be applied to the payment of the Obligations in accordance with the provisions of this Article.

 

ARTICLE 8 - MARSHALLING

 

The Secured Party shall not be required to marshal any present or future collateral security (including, but not limited to, the Pledged Collateral), for, or other assurances of payment of, the Obligations, or to resort to such collateral security or other assurances of payment in any particular order.  All of the Secured Party’s rights hereunder in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.  To the extent that it lawfully may, the Pledgor hereby agrees that it will not invoke any law relating to the marshalling of collateral that might cause delay in or impeded the enforcement of the Secured Party’s rights under this Agreement, any other Transaction Document, or under any other instrument evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations are secured or payment thereof is otherwise assured, and to the extent that it lawfully may, the Pledgor hereby irrevocably waives the benefits of all such laws.

 

  

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ARTICLE 9 - PLEDGOR’S OBLIGATIONS NOT AFFECTED

 

The obligations of the Pledgor and the Holding Company hereunder shall remain in full force and effect without regard to, and shall not be impaired by (whether or not the Pledgor shall have notice or knowledge of any of the following): (a) any exercise or nonexercise, or any waiver, by the Secured Party of any right, remedy, power, or privilege under or in respect of any of the Obligations, or any security thereof (including this Agreement); (b) any amendment to or modification of the Transaction Documents or any of the Obligations; (c) any amendment to or modification of any instrument (other than this Agreement) securing any of the Obligations; or (d) the taking of additional security for, or any other assurances of payment of, any of the Obligations or the release or discharge of termination of any security or other assurances of payment or performance for any of the Obligations.  The Pledgor hereby waives all suretyship defenses to the extent applicable.  Under no circumstances shall the Secured Party be deemed to be a shareholder, member, partner, or other equity holder of the Holding Company or the Pledgor by virtue of the provisions of this Agreement.

 

ARTICLE 10 - TRANSFER BY PLEDGOR

 

Without the prior written consent of the Secured Party, the Pledgor shall not sell, assign, transfer, or otherwise dispose of, grant any option with respect to, or pledge or grant any security interest in or otherwise encumber or restrict any of the Pledged Collateral or any interest therein, except for the pledge thereof and security interest provided for in this Agreement.

 

ARTICLE 11 - FURTHER ASSURANCES

 

The Pledgor will do all such acts, and will furnish to the Secured Party all such financing statements, certificates, legal opinions, and other documents and will obtain all such governmental consents and corporate approvals and will do or cause to be done all such other things as the Secured Party may reasonably request from time to time in order to give full effect to this Agreement and to secure the rights of the Secured Party hereunder, all without any cost or expense to the Secured Party.  The Pledgor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any filing office in any jurisdiction any initial financing statements and amendments thereto that (a) indicate the collateral as the Pledged Collateral or words of similar effect, or as being of equal or lesser scope or in greater detail, and (b) contain any other information required or permitted by the UCC.  The Pledgor agrees to furnish any such information to the Secured Party promptly upon request.  The Pledgor also ratifies its authorization for the Secured Party to have filed in any jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.  The Pledgor shall not permit to be effected any amendment or modification of the charter, bylaws, operating agreements, partnership agreements, or other applicable organization documents of it which would (or would be reasonably likely to) adversely affect the rights or remedies of the Secured Party hereunder or the value of the Pledged Collateral.  The Pledgor shall not permit, and the Holding Company hereby agrees not to cause, the issuance of any ownership interests of the Holding Company or any debt instruments, warrants, or options, or other offering convertible into ownership interests of the Holding Company without the prior written consent of the Secured Party.

 

ARTICLE 12 - EXONERATION

 

Under no circumstances shall the Secured Party be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Pledged Collateral of any nature or kind or any matter or proceedings arising out of or relating thereto, other than (a) to exercise reasonable care in the physical custody of the Pledged Collateral and (b) after an Event of Default shall have occurred and be continuing to act in a commercially reasonable manner.  The Secured Party shall not be required to take any action of any kind to collect, preserve, or protect its or the Pledgor’s rights in the Pledged Collateral or against other parties thereto.  The Secured Party’s prior recourse to any part or all of the Pledged Collateral shall not constitute a condition of any demand, suit, or proceeding for payment or collection of any of the Obligations.  This Agreement constitutes a pledge of the Pledged Collateral and any other applicable collateral hereunder only, and not an assignment of any duties or obligations of the Pledgor with respect thereto, and by its acceptance hereof and whether or not the Secured Party shall have exercised any of its or their respective rights or remedies hereunder, the Secured Party does not undertake to perform or discharge, and the Secured Party shall not be responsible or liable, other than for gross negligence or willful misconduct, for the performance or discharge of any such duties or responsibilities, including, without limitation, for any capital calls.  The Pledgor agrees that, notwithstanding the exercise by the Secured Party of any of its rights hereunder, the Pledgor shall remain liable nonetheless for the full and prompt performance of all of the Pledgor’s obligations and liabilities under any partnership agreement, limited partnership agreement, operating agreement, or similar document evidencing or governing any general or limited partnership interest or membership interest in any partnership, limited partnership, or limited liability company included in the Pledged Collateral.  Without limiting the generality of the foregoing, the Secured Party shall not have any fiduciary duty as such to the Pledgor or any other equity owner of the Holding Company by reason of this Agreement, whether by virtue of the security interests and liens hereunder, or any enforcement action in respect of such security interests and liens.

 

  

7

  

ARTICLE 13 - WAIVERS

 

No act, failure, or delay by the Secured Party shall constitute a waiver of its respective rights and remedies hereunder or otherwise.  No single or partial waiver by the Secured Party of any default or right or remedy that it or they may have shall operate as a waiver of any other default, right, or remedy or of the same default, right, or remedy on a future occasion.  The Pledgor hereby waives presentment, notice of dishonor, and protest of all instruments, included in or evidencing any of the Obligations or the Pledged Collateral, and any and all other notices and demands whatsoever.  All rights and remedies of the Secured Party with respect to the Obligations or the Pledged Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively, or concurrently at such time or at such times as the Secured Party deems expedient in its sole discretion.  The Pledgor irrevocably waives any and all rights under those provisions of the partnership agreements, limited partnership agreements, and operating agreements to which the Pledgor is a party that (a) prohibit, restrict, condition, or otherwise affect the grant hereunder of any lien or security interest on any of the Ownership Interest Collateral or any enforcement action that may be taken with respect to any such lien or security interest or (b) otherwise conflict with the terms of this Agreement.

 

ARTICLE 14 - NOTICES

 

All notices, requests, and other communications hereunder shall be made in the manner set forth in the Note.

 

ARTICLE 15 - TERMINATION

 

This Agreement shall terminate on the date on which all payments under the Note have been indefeasibly paid or otherwise satisfied in full (including by way of conversion of the Note) and all other Obligations have been indefeasibly paid or discharged (other than contingent indemnification obligations).  Upon such termination, the Secured Party shall, at the Pledgor’s request and expense, return the Pledged Collateral in the possession or control of the Secured Party as has not theretofore been disposed of pursuant to the provisions hereof, together with any moneys and other property at the time held by the Secured Party hereunder.

 

ARTICLE 16 - GOVERNING LAW; CONSENT TO FORUM

 

This agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflict of law provisions.

 

The Pledgor agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement, the Transaction Documents and the Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. The Pledgor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing party in such proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such proceeding.

 

  

8

  

ARTICLE 17 - ADDITIONAL WAIVERS BY THE PLEDGOR

 

THE PLEDGOR WAIVES:  (a) THE RIGHT TO TRIAL BY JURY (WHICH THE SECURED PARTY HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE TRANSACTION DOCUMENTS, THE OBLIGATIONS OR THE PLEDGED COLLATERAL; (b) PRESENTMENT, DEMAND, AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION, OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER, AND GUARANTIES AT ANY TIME HELD BY THE SECURED PARTY ON WHICH THE PLEDGOR MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER THE SECURED PARTY MAY DO IN THIS REGARD; (c) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE PLEDGED COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING THE SECURED PARTY TO EXERCISE ANY REMEDIES; (d) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, AND EXEMPTION LAWS; (e) NOTICE OF ACCEPTANCE HEREOF; AND (f) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO THE SECURED PARTY ENTERING INTO THIS AGREEMENT AND THE SECURED PARTY ENTERING INTO THE TRANSACTION DOCUMENTS AND THAT THE SECURED PARTY AND THE SECURED PARTY ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH THE PLEDGOR.  THE PLEDGOR WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

ARTICLE 18 - MISCELLANEOUS

 

The headings of each Article and Section of this Agreement and the table of contents are for convenience only and shall not define or limit the provisions thereof.  This Agreement and all rights and obligations hereunder shall be binding upon the Pledgor and its respective successors and assigns, and shall inure to the benefit of the Secured Party and the Secured Party’s successors and assigns.  Neither the Pledgor nor the Holding Company may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Party. The Secured Party may assign its rights or obligations hereunder, in whole or in part, without the consent of the Holding Company or the Pledgor. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction or prohibited or unenforceable as to any Person shall, as to such jurisdiction, Person, or circumstance be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction or as to any other Person or circumstance.

 

ARTICLE 19 - SUBORDINATION

 

This Agreement and the security interests created hereunder are subject to the  Subordination Agreement.  Notwithstanding anything to the contrary contained herein, the Secured Party may not exercise any rights or remedies hereunder unless and until all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied.

 

In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of the Subordination Agreement, the terms and conditions of the Subordination Agreement shall control.

 

On and after the date that all obligations of the Pledgor and the Holding Company under the Platinum Agreements have been fully paid and satisfied, Platinum shall deliver the stock certificate representing the Stock Collateral to the Secured Party.

 

ARTICLE 20 - AMENDMENTS

 

This Agreement may not be modified or amended in any manner except in writing executed by each of the parties hereto; provided, that, for so long as the Pledgor and the Holding Company have any obligations under the Platinum Agreements, this Agreement may not be modified or amended in any manner whatsoever without the express written consent of Platinum and Lakewood, it being understood and agreed that Platinum and Lakewood are express intended third-party beneficiaries of this Article.

 

[Signature Page Follows]

 

  

9

  

 

 

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

                                      

 

	 	

PLEDGOR:

 

SAGEBRUSH GOLD, LTD.

	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

                                  

 

	 	

SECURED PARTY

 

FROST GAMMA INVESTMENTS TRUST

	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

	 	

Acknowledged and agreed:

 

GOLD ACQUISITION CORP.

 

	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

  

10

  

 

SCHEDULE A

Pledged Ownership Interests

	
 

Issuer

	
 

Class of Stock

	
 

Stock Certificate Number

	
 

Number of Shares/Units

	
 

Percentage of Issued Equity Outstanding

	
Gold Acquisition Corp.

	
Common

	
1

	
100,000

	
100%

 

 

 

 

 

 11sagebrush105.htm

Exhibit 10.5

 

SUBSCRIPTION AGREEMENT

 

 

THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is dated as of September 29, 2011, by and between Sagebrush Gold Ltd., a Nevada corporation (the “Company”), and Frost Gamma Investments Trust (“Subscriber”).

WHEREAS, the Company and the Subscriber are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”).

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Subscriber, as provided herein, and the Subscriber shall purchase (i) for $3,284,396 (the “Purchase Price”) 3,284,396 shares of the Company’s Series C Convertible Preferred Stock (the “Preferred Stock”), with such rights and designations as set forth in the Certificate of Designation (the “Certificate of Designation”), the form of which is annexed hereto as Exhibit A, convertible into shares of the Company’s Common Stock, $0.0001 par value (the “Common Stock”) at a per share conversion price set forth in the Certificate of Designation (“Conversion Price”); and (ii) share purchase warrants (the “Warrants” and collectively with the Certificate of Designation and this Agreement, the “Transaction Documents”) in the form attached hereto as Exhibit B, to purchase 9,853,188 shares of the Company’s Common Stock (the “Warrant Shares”) (the “Offering”).  The Preferred Stock, shares of Common Stock issuable upon conversion of the Preferred Stock (the “Shares” or “Conversion Shares”), the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”; and

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Subscriber hereby agree as follows:

 

1.           Closing Date.   The “Closing Date” shall be the date that the Purchase Price is transmitted by wire transfer or otherwise credited to or for the benefit of the Company. The consummation of the transactions contemplated herein shall take place at the offices of Sichenzia Ross Friedman Ference LLP, upon the satisfaction or waiver of all conditions to closing set forth in this Agreement.   Subject to the satisfaction or waiver of the terms and conditions of this Agreement, on the Closing Date, Subscriber shall purchase and the Company shall sell to Subscriber the Preferred Stock and Warrants as described in Section 2 of this Agreement.

2.           Preferred Stock, Shares and Warrants.

(a)           Preferred Stock.   Subject to the satisfaction or waiver of the terms and conditions of this Agreement, on the Closing Date, the Subscriber shall purchase and the Company shall sell to the Subscriber 3,284,396 shares of the Company’s Preferred Stock.

(b)           Warrants.  On the Closing Date, the Company will issue and deliver the Warrants to the Subscriber.  The exercise price to acquire a Warrant Share upon exercise of a Warrant shall be equal $0.60.  The Warrants shall be exercisable until two years after the issue date of the Warrants.

(c)           Allocation of Purchase Price.   The Purchase Price will be allocated among the components of the Securities so that each component of the Securities will be fully paid and non-assessable.

3.           Intentionally Omitted.

  

1

  

                              4.           Subscriber Representations and Warranties.  Subscriber hereby represents and warrants to and agrees with the Company that:

(a)           Organization of Standing of the Subscriber.  Subscriber is a trust validly existing under the laws of the jurisdiction of its formation.

(b)           Authorization of Power.  Subscriber has the requisite power and authority to enter into and perform this Agreement and the other Transaction Documents and to purchase the Preferred Stock being sold to it hereunder.  The execution, delivery and performance of this Agreement and the other Transaction Documents by Subscriber and the Consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action, and no further consent or authorization of Subscriber is required.  This Agreement and the other Transaction Documents have been duly authorized, executed and when delivered by Subscriber shall constitute a valid and binding obligation of Subscriber enforceable against Subscriber in accordance with the terms thereof.

(c)           No Conflicts.  The execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation by Subscriber of the transactions contemplated hereby and thereby or relating hereto do not and wil lnot (i) result in a violation of Subscriber's organizational documents, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become a default) under, nor (iii) result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to Subscriber or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on Subscriber).  Subscriber is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement and the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided that for purposes of the representation made in this sentence, Subscriber is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

(d)           Information on Company.   Subscriber has been furnished with or has had access at the EDGAR Website of the Commission to the Company's Form 10-K filed on March 15, 2011 for the fiscal year ended December 31, 2010, and the financial statements included therein for the year ended December 31, 2010, together with all subsequent filings made with the Commission available at the EDGAR website until five days before the Closing Date (hereinafter referred to collectively as the "Reports").  In addition, Subscriber may have received in writing from the Company such other information concerning its operations, financial condition and other matters as Subscriber has requested in writing, identified thereon as OTHER WRITTEN INFORMATION (such other information is collectively, the "Other Written Information"), and considered all factors Subscriber deems material in deciding on the advisability of investing in the Securities.

(e)           Information on Subscriber.   Subscriber is, and will be at the time of the conversion of the Preferred Stock and exercise of the Warrants, an "accredited investor", as such term is defined in Regulation D promulgated by the Commission under the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable Subscriber to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment.  Subscriber is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.  The information set forth on the signature page hereto regarding Subscriber is accurate.

(f)           Purchase of Preferred Stock and Warrants.  On the Closing Date, Subscriber will purchase the Preferred Stock and Warrant as principal for its own account for investment only and not with a view toward, or for resale in connection with, the public sale or any distribution thereof.

(g)           Compliance with Securities Act.   Subscriber understands and agrees that the Securities have not been registered under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the 1933 Act (based in part on the accuracy of the representations and warranties of the Subscriber contained herein), and that such Securities must be held indefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state securities laws or is exempt from such registration.  In any event, and subject to compliance with applicable securities laws, the Subscriber may enter into lawful hedging transactions in the course of hedging the position they assume and the Subscriber may also enter into lawful short positions or other derivative transactions relating to the Securities, or interests in the Securities, and deliver the Securities, or interests in the Securities, to close out their short or other positions or otherwise settle other transactions, or loan or pledge the Securities, or interests in the Securities, to third parties who in turn may dispose of these Securities.

  

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(h)           Conversion Shares and Warrant Shares Legend.  The Conversion Shares and Warrant Shares shall bear the following or similar legend:

"THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

(i)           Preferred Stock and Warrant Legend.  The Preferred Stock and Warrant shall bear the following legend:

 

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE –OR-EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

 

(j)           Communication of Offer.  The offer to sell the Securities was directly communicated to Subscriber by the Company.  At no time was Subscriber presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

(k)           Restricted Securities.   Subscriber understands that the Securities have not been registered under the 1933 Act and Subscriber will not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities unless pursuant to an effective registration statement under the 1933 Act, or unless an exemption from registration is available.  Notwithstanding anything to the contrary contained in this Agreement, Subscriber may transfer (without restriction and without the need for an opinion of counsel) the Securities to its Affiliates (as defined below) provided that each such Affiliate is an “accredited investor” under Regulation D and such Affiliate agrees to be bound by the terms and conditions of this Agreement. For the purposes of this Agreement, an “Affiliate” of any person or entity means any other person or entity directly or indirectly controlling, controlled by or under direct or indirect common control with such person or entity.  Affiliate includes each Subsidiary of the Subscriber.  For purposes of this definition, “control” means the power to direct the management and policies of such person or firm, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

(l)           No Governmental Review.  Subscriber understands that no United States federal or state agency or any other governmental or state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

(m)           Correctness of Representations.  Subscriber represents that the foregoing representations and warranties are true and correct as of the date hereof and, unless Subscriber otherwise notifies the Company prior to the Closing Date shall be true and correct as of the Closing Date.

(n)           Survival.  The foregoing representations and warranties shall survive the Closing Date.

 

  

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5.           Company Representations and Warranties.  The Company represents and warrants to and agrees with each Subscriber that:

 

(a)           Due Incorporation.  The Company is a corporation or other entity duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the requisite corporate power to own its properties and to carry on its business as presently conducted.  The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect.  For purposes of this Agreement, a “Material Adverse Effect” shall mean a material adverse effect on the financial condition, results of operations, prospects, properties or business of the Company and its Subsidiaries taken as a whole.  For purposes of this Agreement, “Subsidiary” means, with respect to any entity at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity of which more than 30% of (i) the outstanding capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such entity.

 

(b)           Outstanding Stock.  All issued and outstanding shares of capital stock and equity interests in the Company have been duly authorized and validly issued and are fully paid and non-assessable.

 

(c)           Authority; Enforceability.  This Agreement, the Certificate of Designation, Shares, Warrants, Warrant Shares and any other agreements delivered together with this Agreement or in connection herewith (collectively “Transaction Documents”) have been duly authorized, executed and delivered by the Company and/or Subsidiaries and are valid and binding agreements of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights generally and to general principles of equity.  The Company has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder.

 

(d)           Capitalization and Additional Issuances.   The authorized and outstanding capital stock of the Company and Subsidiaries is set forth in the Company’s filings with the Securities and Exchange Commission (the “SEC Filings”).  The only officer, director, employee and consultant stock option or stock incentive plan or similar plan currently in effect or contemplated by the Company is in the SEC Filings.  There are no outstanding agreements or preemptive or similar rights affecting the Company's Common Stock.

 

(e)           Consents.  No consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the Company, or any of its Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the Company's shareholders is required for the execution by the Company of the Transaction Documents and compliance and performance by the Company of its obligations under the Transaction Documents, including, without limitation, the issuance and sale of the Securities.  The Transaction Documents and the Company’s performance of its obligations thereunder has been unanimously approved by the Company’s Board of Directors.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority in the world, including without limitation, the United States, or elsewhere is required by the Company or any Affiliate of the Company in connection with the consummation of the transactions contemplated by this Agreement, except as would not otherwise have a Material Adverse Effect or affect the consummation of any of the other agreements, covenants or commitments of the Company or any Subsidiary contemplated by the other Transaction Documents. Any such qualifications and filings will, in the case of qualifications, be effective on the Closing and will, in the case of filings, be made within the time prescribed by law.

 

(f)           No Violation or Conflict.  Assuming the representations and warranties of the Subscriber in Section 4 are true and correct, neither the issuance and sale of the Securities nor the performance of the Company’s obligations under this Agreement and all other agreements entered into by the Company relating thereto by the Company will:

 

  

4

  

(i)           violate, conflict with, result in a breach of, or constitute a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) under (A) the articles or certificate of incorporation, charter or bylaws of the Company, (B) to the Company's knowledge, any decree, judgment, order, law, treaty, rule, regulation or determination applicable to the Company of any court, governmental agency or body, or arbitrator having jurisdiction over the Company or over the properties or assets of the Company or any of its Affiliates, (C) the terms of any bond, debenture, note or any other evidence of indebtedness, or any agreement, stock option or other similar plan, indenture, lease, mortgage, deed of trust or other instrument to which the Company or any of its Affiliates is a party, by which the Company or any of its Affiliates is bound, or to which any of the properties of the Company or any of its Affiliates is subject, or (D) the terms of any "lock-up" or similar provision of any underwriting or similar agreement to which the Company, or any of its Affiliates is a party except the violation, conflict, breach, or default of which would not have a Material Adverse Effect; or

 

(ii)           result in the creation or imposition of any lien, charge or encumbrance upon the Securities or any of the assets of the Company or any of its Affiliates except in favor of Subscriber as described herein; or

 

 (g)           The Securities.  The Securities upon issuance:

 

(i)           are, or will be, free and clear of any security interests, liens, claims or other encumbrances, subject only to restrictions upon transfer under the 1933 Act and any applicable state securities laws;

(ii)           have been, or will be, duly and validly authorized and on the dates of issuance of the Conversion Shares upon conversion of the Preferred Stock, and the Warrant Shares upon exercise of the Warrants, such Shares and Warrant Shares will be duly and validly issued, fully paid and non-assessable and if registered pursuant to the 1933 Act and resold pursuant to an effective registration statement or exempt from registration will be free trading, unrestricted and unlegended;

 

(iii)           will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company or rights to acquire securities of the Company;

 

(iv)           will not subject the holders thereof to personal liability by reason of being such holders; and

 

                (v)           assuming the representations warranties of the Subscribers as set forth in Section 4 hereof are true and correct, will not result in a violation of Section 5 under the 1933 Act.

 

 (h)           No Market Manipulation.  The Company and its Affiliates have not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Securities or affect the price at which the Securities may be issued or resold.

 

(i)           No General Solicitation.  Neither the Company, nor any of its Affiliates, nor to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Securities.

 

(j)           Listing.  The Company's Common Stock is quoted on the Bulletin Board under the symbol “SAGE”.  The Company has not received any oral or written notice that its Common Stock is not eligible nor will become ineligible for quotation on the Bulletin Board nor that its Common Stock does not meet all requirements for the continuation of such quotation.  The Company satisfies all the requirements for the continued quotation of its Common Stock on the Bulletin Board.

  

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 (k)           Correctness of Representations.  The Company represents that the foregoing representations and warranties are true and correct as of the date hereof in all material respects, and, unless the Company otherwise notifies the Subscribers prior to the Closing Date, shall be true and correct in all material respects as of the Closing Date; provided, that, if such representation or warranty is made as of a different date, in which case such representation or warranty shall be true as of such date.

 

(l)           Survival.  The foregoing representations and warranties shall survive the Closing Date.

 

6.           Regulation D Offering/.  The offer and issuance of the Securities to the Subscribers is being made pursuant to the exemption from the registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation D promulgated thereunder.

                             7.1.          Conversion of the Preferred Stock.

(a)           Upon the conversion of the Preferred Stock or part thereof, the Company shall, at its own cost and expense, take all necessary action, including obtaining and delivering, an opinion of counsel to assure that the Company's transfer agent shall issue stock certificates in the name of Subscriber (or its permitted nominee) or such other persons as designated by Subscriber and in such denominations to be specified at conversion representing the number of shares of Common Stock issuable upon such conversion.  The Company warrants that no instructions other than these instructions have been or will be given to the transfer agent of the Company's Common Stock and that the certificates representing such shares shall contain no legend other than the legend set forth in Section 4(h).  If and when Subscriber sells the Shares, assuming (i) a registration statement including such Shares for registration, filed with the Commission is effective and the prospectus, as supplemented or amended, contained therein is current and (ii) Subscriber or its agent confirms in writing to the transfer agent that Subscriber has complied with the prospectus delivery requirements, the Company will reissue the Shares without restrictive legend and the Shares will be free-trading, and freely transferable.  In the event that the Shares are sold in a manner that complies with an exemption from registration, the Company will promptly instruct its counsel to issue to the transfer agent an opinion permitting removal of the legend indefinitely, if pursuant to Rule 144(b)(1)(i) of the 1933 Act, or for 90 days if pursuant to the other provisions of Rule 144 of the 1933 Act, provided that Subscriber delivers all reasonably requested representations in support of such opinion.

(b)           Subscriber will give notice of its decision to exercise its right to convert the Preferred Stock, or part thereof by telecopying, or otherwise delivering a completed Notice of Conversion (a form of which is annexed as Exhibit A to the Certificate of Designation) to the Company via confirmed telecopier transmission or otherwise pursuant to Section 11(a) of this Agreement.  Each date on which a Notice of Conversion is telecopied to the Company in accordance with the provisions hereof by 6 PM Eastern Time (“ET”) (or if received by the Company after 6 PM ET, then the next business day) shall be deemed a “Conversion Date.”  The Company will itself or cause the Company’s transfer agent to transmit the Company's Common Stock certificates representing the Conversion Shares issuable upon conversion of the Preferred Stock to Subscriber via express courier for receipt by Subscriber within three (3) business days after the Conversion Date (such third day being the "Delivery Date").  In the event the Conversion Shares are electronically transferable, then delivery of the Shares must be made by electronic transfer provided request for such electronic transfer has been made by the Subscriber.   A certificate representing the balance of the Preferred Stock not so converted will be provided by the Company to Subscriber if requested by Subscriber, provided Subscriber delivers the original certificate representing the Preferred Stock to the Company.

                               8.           Intentionally Omitted.

 

 9.           Covenants of the Company.  The Company covenants and agrees with the Subscribers as follows:

 

(a)           Stop Orders.  Subject to any  prior notice requirements described elsewhere herein, the Company will advise the Subscriber, within twenty-four hours after it receives notice of issuance by the Commission, any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose.  The Company will not issue any stop transfer order or other order impeding the sale, resale or delivery of any of the Securities, except as may be required by any applicable federal or state securities laws and unless contemporaneous notice of such instruction is given to the Subscriber.

 

  

6

  

(b)           Market Regulations.  If required, the Company shall notify the Commission, the Principal Market and applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Subscriber and promptly provide copies thereof to the Subscriber.

 

(c)           Use of Proceeds.   The proceeds of the Offering will be employed by the Company for expenses of the Offering and general working capital.  The Purchase Price may not and will not be used for accrued and unpaid officer and director salaries, payment of financing related debt, redemption of outstanding notes or equity instruments of the Company nor non-trade obligations outstanding on a Closing Date.

 

(d)           Reservation.   Prior to the Closing, the Company undertakes to reserve on behalf of Subscriber from its authorized but unissued Common Stock, a number of shares of Common Stock equal to 100% of the amount of Common Stock necessary to allow Subscriber to be able to convert the Preferred Stock and 100% of the amount of Warrant Shares issuable upon exercise of the Warrants (“Required Reservation”).     If at any time the Preferred Stock and Warrants are outstanding the Company has insufficient Common Stock reserved on behalf of the Subscriber in an amount less than 100% of the amount necessary for full conversion of the outstanding Preferred Stock at the conversion price that would be in effect on every such date and 100% of the Warrant Shares (“Minimum Required Reservation”), the Company will promptly reserve the Minimum Required Reservation, or if there are insufficient authorized and available shares of Common Stock to do so, the Company will take all action necessary to increase its authorized capital to be able to fully satisfy its reservation requirements hereunder.  The Company agrees to provide notice to the Subscriber not later than three days after the date the Company has less than the Minimum Required Reservation reserved on behalf of the Subscriber.

 

(e)           DTC Program.  At all times that Preferred Stock or Warrants are outstanding, the Company will employ as the transfer agent for the Common Stock, Shares and Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program.

 

(f)           Taxes.  As long as the Preferred Stock and the Warrants are outstanding, the Company will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Company shall have set aside on its books adequate reserves with respect thereto, and provided, further, that the Company will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefore.

 

(g)           Insurance.  As long as the Preferred Stock and the Warrants are outstanding, the Company will keep its assets which are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, explosion and other risks customarily insured against by companies in the Company’s line of business and location, in amounts and to the extent and in the manner customary for companies in similar businesses similarly situated and located and to the extent available on commercially reasonable terms.

 

(j)           Books and Records.  As long as the Preferred Stock and the Warrants are outstanding, the Company will keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs in accordance with generally accepted accounting principles applied on a consistent basis.

 

(k)           Governmental Authorities.   As long as the Preferred Stock and the Warrants are outstanding, the Company shall duly observe and conform in all material respects to all valid requirements of governmental authorities relating to the conduct of its business or to its properties or assets.

 

 (l)           Confidentiality.  The Parties agree that the terms and conditions of this Agreement are strictly confidential and will not be disclosed or discussed to or with any person whomsoever, with the exception only of disclosure required by court order, and disclosure to the Parties’ respective attorneys, tax consultant(s) or accountant(s), and/or the duly designated taxing authorities of the government of the United States of America and/or the government of any state to which either of the Parties may owe any taxes.

 

  

7

  

10.           Covenants of the Company Regarding Indemnification.

 

(a)           The Company agrees to indemnify, hold harmless, reimburse and defend the Subscriber, the Subscriber’s trustees, beneficiaries, officers, directors, agents, representatives, Affiliates, members, managers, and control persons against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Subscriber or any such person which results, arises out of or is based upon (i) any material misrepresentation by Company or breach of any representation or warranty by Company in this Agreement or in any Exhibits or Schedules attached hereto in any Transaction Document, or other agreement delivered pursuant hereto or in connection herewith, now or after the date hereof; or (ii) after any applicable notice and/or cure periods, any breach or default in performance by the Company of any covenant or undertaking to be performed by the Company hereunder, or any other agreement entered into by the Company and Subscriber relating hereto.

 

(b)           In no event shall the liability of the Subscriber or permitted successor hereunder or under any Transaction Document or other agreement delivered in connection herewith be greater in amount than the dollar amount of the net proceeds actually received by such Subscriber or successor upon the sale of Registrable Securities (as defined herein).

 

11.           Miscellaneous.

 

(a)           Notices.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Company, to: Sagebrush Gold Ltd., 1640 Terrace Way, Walnut Creek, CA 94597, and (ii) if to the Subscriber, to: the address and fax number indicated on the signature page hereto.

 

 (b)           Entire Agreement; Assignment.  This Agreement and other documents delivered in connection herewith represent the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by both parties.  Neither the Company nor the Subscriber has relied on any representations not contained or referred to in this Agreement and the documents delivered herewith.   No right or obligation of the Company shall be assigned without prior notice to and the written consent of the Subscriber.

 

(c)           Counterparts/Execution.  This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.  This Agreement may be executed by facsimile signature and delivered by electronic transmission.

 

(d)           Law Governing this Agreement.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York.  The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury.  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.  Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

  

8

  

(e)           Specific Enforcement, Consent to Jurisdiction.  The Company and Subscriber acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.  Subject to Section 11(d) hereof, the Company hereby irrevocably waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction in New York of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

 

(f)           Damages.   In the event the Subscriber is entitled to receive any liquidated damages pursuant to the Transactions Documents, the Subscriber may elect to receive the greater of actual damages or such liquidated damages.

 

(g)           Maximum Payments.   Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Subscriber and thus refunded to the Company.

 

(h)           Calendar Days.   All references to “days” in the Transaction Documents shall mean calendar days unless otherwise stated.  The terms “business days” and “trading days” shall mean days that the New York Stock Exchange is open for trading for three or more hours.  Time periods shall be determined as if the relevant action, calculation or time period were occurring in New York City.  Any deadline that falls on a non-business day in any of the Transaction Documents shall be automatically extended to the next business day and interest, if any, shall be calculated and payable through such extended period.

 

(i)           Captions: Certain Definitions.  The captions of the various sections and paragraphs of this Agreement have been inserted only for the purposes of convenience; such captions are not a part of this Agreement and shall not be deemed in any manner to modify, explain, enlarge or restrict any of the provisions of this Agreement.  As used in this Agreement the term “person” shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof.

 

(j)           Severability.  In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by an authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability: (i) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (ii) by or before any other authority of any of the terms and provisions of this Agreement.

 

(k)           Successor Laws.  References in the Transaction Documents to laws, rules, regulations and forms shall also include successors to and functionally equivalent replacements of such laws, rules, regulations and forms.  A successor rule to Rule 144(b)(1)(i) shall include any rule that would be available to a non-Affiliate of the Company for the sale of Common Stock not subject to volume restrictions and after a six month holding period.

  

9

  

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

 

Please acknowledge your acceptance of the foregoing Subscription Agreement by signing and returning a copy to the undersigned whereupon it shall become a binding agreement between us.

 

 

	 	 
SAGEBRUSH GOLD LTD.

a Nevada corporation

 

	 
	 	By:	 	 
	 	 	 
Name: Barry Honig

Title: Chairman

	 
	 	 	 	 
	 	 
Dated: September __, 2011

	 

 

	
SUBSCRIBER

	
PURCHASE PRICE

	
PREFERRED STOCK

	
WARRANTS

	
Frost Gamma Investments Trust

4400 Biscayne Boulevard

Miami, FL 33137

 

 

 

 

 

___________________________________

By:

 

	
$3,284,396

	
3,284,396

	
9,853,188

 

 

 10

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