SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

SAGEBRUSH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
2

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Sagebrush, Inc., a North Carolina corporation (the "Company"), will be held at
J&W Cafeteria, 800 Highway 70 S.W., Hickory, North Carolina, on Thursday, May 8,
1997, at 10:00 a.m., local time, for the purpose of considering and acting upon
the following:

1. Election of five Directors.

2. Ratification of the selection of Deloitte & Touche, LLP as
independent public accountants for the fiscal year ending
January 2, 1998.

3. Any and all other matters that may properly come before the
meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on Monday, March
31, 1997 as the record date for determining the shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof, and only holders of
Common Stock of the Company of record on such date will be entitled to notice of
or to vote at the meeting.

THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE
ENCLOSED PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME
BEFORE IT IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND
VOTE IN PERSON.

By Order of the Board of Directors

L. Dent Miller
President, Chief Executive Officer
and Secretary

Claremont, North Carolina
April 8, 1997

SAGEBRUSH, INC.
3238 WEST MAIN STREET
CLAREMONT, NORTH CAROLINA 28610

PROXY STATEMENT

GENERAL

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of proxies to be used at the Annual Meeting of
Shareholders of Sagebrush, Inc., a North Carolina corporation (the "Company"),
to be held at J&W Cafeteria, 800 Highway 70 S.W., Hickory, North Carolina, on
Thursday, May 8, 1997, at 10:00 a.m., local time, and at any adjournment
thereof. This Proxy Statement and accompanying proxy are first being sent to the
shareholders of the Company on or about April 8, 1997.

Solicitation other than by mail may be made personally and by telephone
by regularly employed officers and employees of the Company who will not be
additionally compensated therefor. The Company will request brokers, dealers,
banks or voting trustees, or their nominees, who hold stock in their names for
others or hold stock for others who have the right to give voting instructions,
to forward proxy materials to their principals and request authority for the
execution of the proxy and will reimburse such institutions for their reasonable
expenses in so doing. The total cost of soliciting proxies will be borne by the
Company.

Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to Secretary, Sagebrush, Inc., 3238 West
Main Street, Claremont, North Carolina 28610 or by attending the meeting and
voting in person. Proxies received in such form will be voted as therein set
forth at the meeting or any adjournment thereof.

The only matters to be considered at the meeting, so far as known to
the Board of Directors, are the matters set forth in the Notice of Annual
Meeting of Shareholders, and routine matters incidental to the conduct of the
meeting. However, if any other matters should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote the proxy in
accordance with their judgment on such matters.

Shareholders present or represented and entitled to vote on a matter at
the meeting or any adjournment thereof will be entitled to one vote on such
matter for each share of the Common Stock of the Company held by them of record
at the close of business on March 31, 1997, the record date for determining the
shareholders entitled to notice of and to vote at the meeting or any adjournment
thereof. Voting on all matters, including the election of Directors, will be by
voice vote or by show of hands, unless the holders of at least 25% of the shares
represented at the meeting and entitled to vote on such matter demand a vote by
ballot prior to the vote. The number of shares of Common Stock of the Company
outstanding on March 31, 1997 was 6,300,000.

PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT

At March 1, 1997, the only persons known to the Company to be the
beneficial owners of more than 5% of the Common Stock of the Company were as
follows:

NUMBER OF SHARES AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENTAGE OF COMMON
BENEFICIAL OWNER OWNERSHIP(1) STOCK OUTSTANDING
---------------- ------------ -----------------

Charles F. Connor, Jr. 1,517,241(2) 24.1%
3238 West Main Street
Claremont, NC 28610

L. Dent Miller 1,360,140 21.6%
3238 West Main Street
Claremont, NC 28610

Michael A. Shubert 350,295(3) 5.6%
3238 West Main Street
Claremont, NC 28610

- --------------------

(1) Unless otherwise indicated, each shareholder has sole voting and sole
investment power with respect to all shares beneficially owned.

(2) Includes 50,000 shares held by County-Wide Insurance Agency, Inc., a
corporation of which Mr. Connor is the majority shareholder. Also
includes 57,218 shares held by Mr. Connor's wife, as to which shares
Mr. Connor disclaims beneficial ownership.

(3) Includes 10,000 shares held by Mr. Shubert's wife, as to which shares
Mr. Shubert disclaims beneficial ownership.

The Company has been verbally advised that the Lutheran Brotherhood,
625 Fourth Avenue, Minneapolis, Minnesota 55415 owns approximately 502,000
shares of Common Stock, or approximately 8.0% of the total outstanding shares of
Common Stock. As of April 4, 1997, the Company did not believe that the Lutheran
Brotherhood had filed any reports pursuant to Sections 13(d) or 13(g) of the
Securities Exchange Act of 1934 relating to the ownership of these shares. As a
result, the information contained herein is based solely on such verbal advice.

The following table sets forth, as of March 1, 1997, information as to
the beneficial ownership of the Common Stock by all Directors and executive
officers of the Company as a group. Information with respect to the beneficial
ownership of the Common Stock by each of the executive officers of the Company
named in the Summary Compensation Table (Messrs. Connor, Miller and Shubert) and
each of the Directors is contained in the table under "Election of Directors."

NUMBER OF SHARES AND
BENEFICIAL NATURE OF BENEFICIAL PERCENTAGE OF COMMON
OWNERS OWNERSHIP STOCK OUTSTANDING
------ --------- -----------------

Directors and executive 3,434,182 54.5%
officers as a group
(7 persons)

ELECTION OF DIRECTORS

The Bylaws of the Company provide for not less than three nor more than
nine Directors, as determined from time to time by resolution of the
shareholders or the Board of Directors. The Board of Directors has fixed the
number of Directors of the Company at five.

At the meeting, five Directors will be elected to serve, subject to the
provisions of the Bylaws, until the 1998 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. Directors are elected by
a plurality of the votes cast by the holders of the shares entitled to vote in
the election of Directors at a meeting at which a quorum is present. Provided a
quorum is present, abstentions and shares not voted are not taken into account
in determining a plurality. A quorum consists of a majority of votes entitled to
be cast. It is the intention of the persons named in the accompanying proxy to
vote all proxies solicited by the Board of Directors FOR the five nominees
listed below unless authority to vote for the nominees or any individual nominee
is withheld by a shareholder in such shareholder's proxy. If for any reason any
nominee shall not become a candidate for election as a Director at the meeting,
an event not now anticipated, the proxies will be voted for five nominees
including such substitutes as shall be designated by the Board of Directors.

The five nominees for election as Director, all of whom are currently
members of the Board of Directors, are listed below. Messrs. Connor and Miller
were first elected as Directors of the Company in 1992 in connection with its
incorporation. Mr. Shubert was elected Director in November 1995. Messrs.
Whisnant and Wilcox were elected as Directors following the completion of the
Company's initial public offering in January 1996.

NUMBER OF
SHARES AND PERCENTAGE OF
NATURE OF COMMON
NAME AND ADDRESS PRINCIPAL BENEFICIAL STOCK
OF DIRECTOR(1) AGE OCCUPATION OWNERSHIP(2) OUTSTANDING
-------------- --- ---------- ------------ -----------

Charles F. Connor, Jr. 57 Chairman of the Board of 1,517,241(3) 24.1%
3238 West Main Street the Company since 1995;
Claremont, NC 28610 President of Connor Man-
agement, Inc., a restaurant
management company
which was a predecessor
to the Company ("Connor
Management"), from 1988
through 1995

L. Dent Miller 63 President, Chief Executive 1,360,140 21.6%
3238 West Main Street Officer and Secretary of
Claremont, NC 28610 the Company since 1995;
Executive Vice President of
Connor Management from
1988 through 1995

Michael A. Shubert 40 Executive Vice President 350,295(4) 5.6%
3238 West Main Street and Chief Operating Officer
Claremont, NC 28610 of the Company since
1995; Vice President of
Operations of Connor Man-
agement from 1988
through 1995

Barry W. Whisnant 53 Managing Partner of 7,000 (5)
P.O. Box 1473 Whisnant & Company, an
Hickory, NC 28603 accounting firm, since
1974

C. Kenneth Wilcox 60 Private Investor since May 113,400 1.8%
P.O. Box 1758 1994; President of Wilcox
Boone, NC 28607 Drug Co., Inc., a supplier
of botanical and other
natural products, from
1959 until May 1994

- --------------

(1) The information about the Directors was furnished by them to the
Company.

(2) Unless otherwise indicated, each shareholder has sole voting and sole
investment power with respect to all shares beneficially owned. Common
Stock ownership information is as of March 1, 1997.

(3) Includes 50,000 shares held by County-Wide Insurance Agency, Inc., a
corporation of which Mr. Connor is the majority shareholder. Also
includes 57,218 shares held by Mr. Connor's wife, as to which shares
Mr. Connor disclaims beneficial ownership.

(4) Includes 10,000 shares held by Mr. Shubert's wife, as to which shares
Mr. Shubert disclaims beneficial ownership.

(5) Less than 1%.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors met four times during the fiscal year ended
January 3, 1997. Each director attended all of the meetings of the Board of
Directors and any Committees on which such director served during the last
fiscal year. The Board of Directors has established Executive, Audit and
Compensation Committees. The Board of Directors has not established a Nominating
Committee.

The Executive Committee is composed of Messrs. Miller and Connor and is
authorized to exercise all authority of the Board of Directors that can be
delegated to a committee under the North Carolina Business Corporation Act. The
Executive Committee did not meet during the past fiscal year, although from time
to time it meets informally and acts by unanimous written consent.

The Audit Committee is composed of Messrs. Whisnant and Wilcox and is
responsible for reviewing the Company's financial statements, audit reports,
internal financial controls, internal audit procedures, and the services
performed by the Company's independent auditors, and for making recommendations
with respect to those matters to the Board of Directors. The Audit Committee did
not meet during the past fiscal year.

The Compensation Committee is composed of Messrs. Whisnant and Wilcox
and is responsible for making recommendations with respect to compensation of
executive officers and other compensation matters and for administering the
Company's 1995 Stock Option Plan. The Compensation Committee met twice during
the past fiscal year.

EXECUTIVE OFFICERS

Mr. Connor, Chairman of the Board, Mr. Miller, President, Chief
Executive Officer and Secretary, and Mr. Shubert, Executive Vice President and
Chief Operating Officer of the Company, are all nominees for election as
Directors. Information about the Company's executive officers who are not also
nominees for election as Directors follows:

Noland M. Mewborn, age 37, has been Vice President, Chief Financial
Officer and Treasurer of the Company since November 1995. Mr. Mewborn was
employed by Lowe's Companies, Inc., a building supply retailer, from 1981 until
November 1995, serving as Senior Manager - Financial Reporting from 1990 until
November 1995 and as Manager - Corporate Accounting from 1986 to 1990.

Gary E. Abernethy, age 50, has been Controller of the Company since
November 1995. Mr. Abernethy, who has 27 years of management and accounting
experience, served as Controller of Connor Management from 1988 through 1995.

EXECUTIVE COMPENSATION

The table below shows the compensation paid or accrued by the Company
for the two fiscal years ended January 3, 1997 to or for the account of the
Company's Chief Executive Officer and its only other executive officers whose
total salary and bonus exceeded $100,000 during the last fiscal year (together,
the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ AWARDS
OTHER ANNUAL ------------
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS
POSITION YEAR ($) ($) ($) (#)
- ------------------- ------ ---- ----- ----- ----

Charles F. Connor, Jr. 1996 169,515 -- (1) --
Chairman of the Board 1995 -- (2) -- (1) --

L. Dent Miller 1996 200,000 -- (1) --
President and Chief 1995(3) 44,720 -- (1) --
Executive Officer

Michael A. Shubert 1996 125,000 -- (1) 33,900
Executive Vice President 1995(3) 52,000 60,000 (1) --
and Chief Operating Officer

- --------------------

(1) The Named Executive Officers did not receive personal benefits during
such year (valued at the incremental cost to the Company) in excess of
10% of their respective annual salaries and bonuses.

(2) Mr. Connor did not receive a salary prior to the Company's initial
public offering in January 1996.

(3) Such amounts were paid to such individuals in their capacities as
officers of Connor Management during such year.

The table below sets forth information relating to option grants during
the fiscal year ended January 3, 1997 to each Named Executive Officer and the
potential realizable value of each grant of options assuming annualized
appreciation in the Company's Common Stock at the rate of 5% and 10% over the
term of the option.

OPTION GRANTS IN FISCAL 1996

POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------------- ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SHARES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM($)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR $/SHARE DATE 5% 10%
- ---- --------- ------------- ------- ---- ----- ------

Charles F. Connor, Jr. -- -- -- -- -- --
L. Dent Miller -- -- -- -- -- --
Michael A. Shubert 33,900(1) 8.7 8.875 7/3/06 189,211 479,497

- ------------------

(1) Such options become exercisable, subject to continuing employment, with
respect to 10,170 shares on July 3, 1998, with respect to 10,170 shares
on July 3, 1999, with respect to 6,780 shares on July 3, 2000, and with
respect to the remaining 6,780 shares on July 3, 2001.

No stock options were exercised by any Named Executive Officer during the
fiscal year ended January 3, 1997. The table below sets forth information
relating to the fiscal year-end value of unexercised stock options.

AGGREGATED OPTION EXERCISES IN
FISCAL 1996 AND FY-END OPTION VALUES

VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END(#) AT FY-END($)
SHARES ------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------

Charles F. Connor, Jr. -- -- 0/0 0/0
L. Dent Miller -- -- 0/0 0/0
Michael A. Shubert -- -- 0/33,900 0/0

No tables showing awards under long-term incentive plans are presented
because no Named Executive Officer received any such compensation during the
listed years.

DIRECTOR COMPENSATION

Directors who are officers or employees of the Company receive no
additional compensation for serving as Directors. Directors who are not
compensated as officers or employees of the Company receive an annual retainer
of $1,000 and a fee of $250 for each meeting of the Board of Directors or any
committee thereof attended (other than any such committee meeting held in
conjunction with a full meeting of the Board). All Directors are reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board of Directors
and any of its Committees.

BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION

In connection with the Company's initial public offering in January
1996 and the reorganization of the group of related corporations that had
previously conducted the Company's business, the Company agreed with Messrs.
Connor, Miller and Shubert, respectively, that Mr. Connor's direct compensation
as Chairman of the Board would be a salary at the rate of $175,000 per year, Mr.
Miller's direct compensation as President and Chief Executive Officer would be a
salary at the rate of $200,000 per year, and Mr. Shubert's direct compensation
as Executive Vice President and Chief Operating Officer would be a salary at the
rate of $125,000 per year. The Board of Directors established these base
salaries for Messrs. Connor, Miller and Shubert after consultation with the
managing underwriter for the initial public offering and a review of the
compensation of executive officers at other companies similar to the Company.
Messrs. Mewborn and Abernethy are paid base salaries in such amounts as have
been set by the Board of Directors. No particular factors relating to the
performance of the Company were used in establishing any of these base salaries.
These salary arrangements are not set forth in any employment contracts and do
not preclude Mr. Miller or any of the Company's other executive officers from
participating in any other compensation or benefit plans or arrangements that
may be established by the Company or that are made available to its officers or
employees generally, including any incentive bonus awards that may be
recommended by the Compensation Committee and approved by the Board of
Directors, nor do they establish any employment terms for Mr. Miller or any of
the Company's other executive officers. During 1997, the Compensation Committee
intends to review these salaries and to develop policies and procedures for
determining the compensation of executive officers.

The foregoing report is presented by the Board of Directors of the
Company: Charles F. Connor, Jr., L. Dent Miller, Michael A. Shubert, Barry W.
Whisnant and C. Kenneth Wilcox.

SHAREHOLDER RETURN PERFORMANCE GRAPH

Presented below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return on the Standard & Poor's Restaurant Index (the "S&P
Restaurant Index") and the Total Return Index for the Nasdaq Stock Market (U.S.
Companies) (the "Nasdaq Composite Index") for the period commencing January 11,
1996 (the date the Company's Common Stock began trading on the Nasdaq National
Market) and ending January 3, 1997.

[graph here]

January 11, 1996 January 3, 1997
---------------- ---------------
Sagebrush, Inc. 100 107.14
S & P Restaurant Index 100 101.26
NASDAQ Composite Index 100 123.01

The graph assumes that $100 was invested in the Company's Common Stock,
on the S&P Restaurant Index and on the Nasdaq Composite Index on January 11,
1996, and that dividends were reinvested.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended January 3, 1997, the following Directors
served on the Compensation Committee: Barry W. Whisnant and C. Kenneth Wilcox.
Neither Mr. Whisnant nor Mr. Wilcox is an officer or employee of the Company.
During such fiscal year, no executive officer of the Company served as a
director or member of the compensation committee (or committee performing
similar functions) of any other entity of which an executive officer served on
the Board of Directors or Compensation Committee of the Company.

The following sets forth certain information regarding transactions
between the Company and its Directors and executive officers.

Reorganization; Accounting Fees

Prior to the Company's initial public offering on January 17, 1996, the
Company's business was conducted by a group of other corporations (the "Related
Corporations") affiliated by substantially common management and control. One of
such Related Corporations, Connor Management, owned the SAGEBRUSH STEAKHOUSE &
SALOON(R) service mark, the Sagebrush concept and certain related rights, and
provided development, management and administrative services to the other
Related

Corporations in exchange for management fees charged to each of them. Each of
the other Related Corporations (the "Restaurant Corporations") operated a
particular Sagebrush restaurant. The operations of the Related Corporations were
integrated through the management and administrative services provided by Connor
Management.

Pursuant to a Share Exchange Agreement dated as of November 1, 1995
(the "Share Exchange Agreement") by and among the Company and the shareholders
of the Related Corporations, immediately prior to completion of the Company's
initial public offering, the shareholders of all of the Related Corporations,
other than those formed to operate the Company's Gatlinburg, Kernersville and
Gaffney restaurants, transferred all of the capital stock of such Related
Corporations to the Company in exchange for an aggregate of (i) 4,500,000 shares
of Common Stock and (ii) $3,500,000 in cash (such exchange together with the
other transactions consummated contemporaneously therewith are referred to as
the "Reorganization"). On January 17, 1996, the Company also acquired the
assets, and assumed the liabilities, of the Related Corporations that operated
the Company's Gatlinburg, Kernersville and Gaffney restaurants, all of which
commenced operations during 1995, for a total cash consideration of
approximately $1.7 million, representing approximately the amount invested in
those restaurants by their shareholders. As a result of the Reorganization,
shareholders of the Related Corporations became the shareholders of the Company,
owning all of the 4,500,000 shares of Common Stock outstanding immediately prior
to completion of the Company's initial public offering. In connection with the
Reorganization, these shareholders were granted certain demand registration
rights covering all of the 4,500,000 shares of Common Stock issued in the
Reorganization.

In connection with the Reorganization, the Company also agreed to
indemnify the shareholders of the Related Corporations who had previously
guaranteed obligations of such Related Corporations from and against any and all
losses or damages any of them may sustain as a result of such guarantees. These
guaranteed obligations included approximately $1.3 million of indebtedness
(which was repaid with proceeds of the Company's initial public offering) and
amounts owed under three real property leases (which guaranteed amounts covered
minimum rental payments aggregating approximately $1.3 million over the
remainder of the original terms of the leases).

Connor Management historically provided certain management and
administrative services to certain other restaurant corporations owned or
controlled by Messrs. Connor and Miller which operate non-Sagebrush restaurant
concepts in consideration for fees calculated as a percentage of each such
restaurant corporation's revenues. Since the Reorganization, the Company has had
no operations relating to these non-Sagebrush restaurant corporations, except
that the Company continues to perform certain accounting services for each of
these restaurant corporations in exchange for a fee per restaurant corporation
which is presently $500 per four week accounting period. The Company received
fees for such accounting services aggregating approximately $80,900 in 1996.
Such accounting fees, as well as the operations and accounts of Connor
Management attributable to the Sagebrush restaurant business, are included in
the Consolidated Financial Statements contained in both the Company's Annual
Report on Form 10-K and its Annual Report to Shareholders; Connor Management's
other operations with respect to these non-Sagebrush restaurant corporations are
not reflected in such Consolidated Financial Statements. Additionally, prior to
the Reorganization, certain assets, including certain insurance policies and
non-Sagebrush restaurant concepts and related trademarks (none of which are
included in the Company's Consolidated Financial Statements), were transferred
from Connor Management to a corporation owned by Messrs. Connor and Miller who
continue to provide management oversight from time to time with respect to the
operations of this corporation. Such corporation has no ongoing relationships
with the Company, and Messrs. Connor and Miller do not believe their management
oversight of such corporation involves any significant amount of their time or
affects the performance of their duties to the Company. The Company does not
believe that the interests of Messrs. Connor and Miller in the non-Sagebrush
restaurants conflict with the interests of the Company since it does not view
these restaurants as direct competitors, and their only relationship with the
Company since the Reorganization is the arrangement for the accounting services.

After completion of the Reorganization, Connor Management continued its
Sagebrush-related business as a wholly-owned subsidiary of the Company. In
September 1996, Connor Management was liquidated into Sagebrush, Inc. Since
Connor Management's accounting personnel became part of the Company, the Company
believes that it has not incurred any material incremental personnel costs by
providing the accounting services to the non-Sagebrush restaurant corporations
and that the fee arrangement for such services, which is terminable at any time
by either party, is profitable for the Company. The Company monitors the
arrangement and intends to report at least annually to the Board of Directors as
to its costs and benefits to the Company. If the arrangement does not appear to
be satisfactory from the Company's standpoint, the Board (by action of the
directors who have no personal interest in the arrangement) can terminate or
seek to renegotiate the arrangement.

Leases

The Company's executive offices and 15 of its restaurants are located
on properties owned directly or indirectly by certain shareholders of the
Company and are leased to operating subsidiaries of the Company. The current
terms of these leases expire at various times between April 1997 and September
2004 and the renewal terms of such leases expire from October 1998 to September
2019. The leases relating to four of these restaurant locations were amended as
of January 1, 1995 to provide for an additional rental payment to be made based
on a percentage of the applicable restaurant's gross sales. Total rent paid by
the Company to related parties was $1,133,900 in 1996. Mr. Connor has an
ownership interest in all of these affiliated lessors. The 13 lessors in which
Mr. Miller has a greater than 10% ownership interest received total rent
payments of $1,030,700 in 1996. The three lessors in which Mr. Shubert has a
greater than 10% ownership interest received total rent payments of $172,500 in
1996. The three lessors in which Mr. Wilcox has a greater than 10% ownership
interest received total rent payments of $285,400 in 1996. The Company believes
that the terms of such arrangements are no less favorable to it than those that
could have been obtained from unrelated parties on an arms-length basis.

Insurance

The Company purchases its insurance coverage from County-Wide Insurance
Agency, Inc., a corporation of which Mr. Connor in the majority shareholder.
County-Wide Insurance Agency, Inc. received premiums from the Company of
approximately $708,800 in 1996 and retained applicable commissions. The Company
believes that the terms of such arrangements are no less favorable to it than
those that could have been obtained from unrelated parties on an arms-length
basis.

Equipment Purchases

The Company purchases most of its restaurant furniture and equipment
from Denver Equipment, Inc., a corporation in which Mr. Connor has a 10%
ownership interest. Denver Equipment, Inc. received payments of approximately
$1,083,300 from the Company in 1996. The Company believes that the terms of such
arrangements are no less favorable to it than those that could have been
obtained from unrelated parties on an arms-length basis.

Store Decorating

Shub, Inc., a corporation owned by Mr. Shubert and his wife that does
business as "Unique Interiors," decorated certain of the Company's restaurants
in 1996 and received payments of approximately $96,500 for these services. The
Company believes that the terms of such arrangements are no less favorable to it
than those that could have been obtained from unrelated parties on an
arms-length basis.

Related Transactions Policy

The Company has a policy that all transactions with its affiliates be
on terms no less favorable to the Company than could be obtained from unrelated
parties, and that all material transactions with its affiliates that are outside
the ordinary course of business, if any, be presented for the approval of the
Company's disinterested directors (i.e., those directors, if any, having no
direct or indirect personal interest in the transaction in question).

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers and persons who own more than 10% of
the Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of the Common
Stock. Executive officers, Directors and greater than 10% shareholders are
required to furnish the Company with copies of all such reports they file. To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended January 3, 1997, all Section 16(a) filing
requirements applicable to its executive officers, Directors and greater than
10% shareholders were complied with on a timely basis.

RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has selected Deloitte & Touche, LLP as
independent public accountants to audit the financial statements of the Company
for the fiscal year ending January 2, 1998. This selection is being presented to
the shareholders for their ratification at the Annual Meeting of Shareholders.
Deloitte & Touche, LLP audited the Company's financial statements for the fiscal
year ended January 3, 1997 and prior years and is considered well qualified.

Representatives of Deloitte & Touche, LLP are expected to be present at
the Annual Meeting of Shareholders with an opportunity to make a statement if
they desire to do so, and they are expected to be available to respond to
appropriate questions.

The Board of Directors recommends a vote FOR the ratification of the
selection of Deloitte & Touche, LLP as independent public accountants to audit
the financial statements of the Company for the fiscal year ending January 2,
1998, and proxies solicited by the Board of Directors will be so voted unless
shareholders specify a different choice.

If the shareholders do not ratify the selection of Deloitte & Touche,
LLP, the selection of independent public accountants will be reconsidered by the
Board of Directors.

SHAREHOLDER PROPOSALS

Any proposal that a shareholder intends to present for action at the
1998 Annual Meeting of Shareholders, currently scheduled for May 7, 1998, must
be received by the Company no later than December 8, 1997, in order for the
proposal to be included in the proxy statement and form of proxy for the 1998
Annual Meeting of Shareholders. The proposal should be sent to Secretary,
Sagebrush, Inc., 3238 West Main Street, Claremont, North Carolina 28610.

Appendix A

SAGEBRUSH, INC. PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD MAY 8, 1997

The undersigned hereby appoints Charles F. Connor, Jr. and L. Dent Miller,
and each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated below, all shares of the Common Stock of the undersigned in
Sagebrush, Inc. at the Annual Meeting of Shareholders to be held on May 8, 1997,
and at any adjournment thereof.

THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR THE
SELECTION OF DELOITTE & TOUCHE, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS. The Board
of Directors recommends voting FOR each item.

1. ELECTION OF DIRECTORS: Nominees are Charles F. Connor, Jr., L. Dent Miller,
Michael A. Shubert, Barry W. Whisnant and C. Kenneth
Wilcox.

[ ] FOR all listed nominees (except do not vote for [ ] WITHHOLD AUTHORITY to vote for the listed
the nominee(s) whose name(s) I have written nominees
below)

- --------------------------------------------------------------------------------

2. RATIFICATION OF SELECTION OF DELOITTE & TOUCHE, LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(Continued and to be signed on the reverse)

(Continued from other side)

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.

Receipt of Notice of Annual Meeting of Shareholders and accompanying Proxy
Statement is hereby acknowledged.

PLEASE DATE AND SIGN EXACTLY AS PRINTED BELOW AND RETURN PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.

Dated , 1997.
--------------------

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(When signing as attorney,
executor, administrator, trustee,
guardian, etc., give title as
such. If joint account, each joint
owner should sign.)