Document:

f8k112912ex4i_southernusa.htm

Exhibit 4.1

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE 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.

 

	
Principal Amount: $

Purchase Price: $

	Issue Date: November  ___, 2012

 

SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, SOUTHERN USA RESOURCES INC. (formerly Atlantic Green Power Holding Company), a Delaware corporation (hereinafter called “Borrower”), hereby promises to pay to the order of               (the “Holder”), address at _________________________________________________,  without demand, the sum of                          Dollars ($              ) (“Principal Amount”), on November  __, 2014 (the “Maturity Date”), if not sooner paid or modified as permitted herein.

This Note has been entered into pursuant to the terms of a subscription agreement by and among the Borrower, the Holder and certain other holders (the “Other Holders”) of convertible promissory notes (the “Other Notes”), dated of even date herewith (the “Subscription Agreement”) for an aggregate Principal Amount of up to $ 200,000.  Unless otherwise separately defined herein, each capitalized term used in this Note shall have the same meaning as set forth in the Subscription Agreement.  The following terms shall apply to this Note:

ARTICLE I

GENERAL PROVISIONS

1.1           Payment Grace Period.  The Borrower shall not have any grace period to pay any monetary amounts due under this Note.  After the Maturity Date and during the pendency of an Event of Default, (as defined in Article IV) this Note shall convert as set forth below.

1.2           Conversion Privileges.  The Conversion Rights set forth in Article II shall remain in full force and effect immediately from the date hereof and until the Note is paid in full or converted regardless of the occurrence of an Event of Default.  This Note shall be payable in full on the Maturity Date, unless previously converted into Common Stock in accordance with Article II hereof.

1.3           Pari Passu.   All payments made on this Note and the Other Notes and except as otherwise set forth herein all actions taken by the Borrower with respect to this Note and the Other Notes, including but not limited to Optional Redemption, shall be made and taken pari passu with respect to this Note and the Other Notes.

 

  

1

  

 

ARTICLE II

CONVERSION RIGHTS

The Holder shall have the right to convert the principal due under this Note into Shares of the Borrower’s Common Stock, $0.000001 par value per share (“Common Stock”) as set forth below.

2.1.           Conversion into the Borrower’s Common Stock.

(a)           The Holder shall have the right from and after the date of the issuance of this Note and then at any time until this Note is fully paid, to convert any outstanding and unpaid principal portion of this Note, at the election of the Holder (the date of giving of such notice of conversion being a “Conversion Date”) into fully paid and non-assessable shares of Common Stock as such stock exists on the date of issuance of this Note, or any shares of capital stock of Borrower into which such Common Stock shall hereafter be changed or reclassified, at the conversion price as defined in Section 2.1(b) hereof.  Upon delivery to the Borrower of a completed Notice of Conversion, a form of which is annexed hereto as Exhibit A, Borrower shall issue and deliver to the Holder within three (3) business days after the Conversion Date (such third day being the “Delivery Date”) that number of shares of Common Stock for the portion of the Note converted in accordance with the foregoing.  The Holder will not be required to surrender the Note to the Borrower until the Note has been fully converted or satisfied.  The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal of the Note, if any, to be converted, by the Conversion Price.

(b)           Subject to adjustment as provided in Section 2.1(c) and Section 4 hereof, the conversion price (“Conversion Price”) per share shall be $0.20.

(c)            The Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant to Section 2.1(a), shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:

A.           Merger, Sale of Assets, etc.  If (A) the Borrower effects any merger or  consolidation of the Borrower with or into another entity, (B) the Borrower effects any sale of all or substantially all of its assets in one or a series of related transactions,  (C) any tender offer or exchange offer (whether by the Borrower or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Borrower consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), (E) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of the Borrower), (F) a Change in Control (as defined in the Subscription Agreement) occurs, or (G) the Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than a reverse merger)  (in any such case, a “Fundamental  Transaction”), this Note, as to the unpaid principal portion thereof, if any, shall thereafter be deemed to evidence the right to convert into such number and kind of shares or other securities and property as would have been issuable or distributable on account of such Fundamental Transaction, upon or with respect to the securities subject to the conversion right immediately prior to such Fundamental Transaction.  The foregoing provision shall similarly apply to successive Fundamental Transactions of a similar nature by any such successor or purchaser.  Without limiting the generality of the foregoing, the anti-dilution provisions of this Section shall apply to such securities of such successor or purchaser after any such Fundamental Transaction.

 

  

2

  

 

B.           Reclassification, etc.  If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

C.           Stock Splits, Combinations and Dividends.   If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.  In the event of a reverse stock split, the Conversion Price will be reduced (but not increased) to the lesser of (i) the Conversion Price in effect prior to the effective date of the reverse stock split (adjusted as described above), or (ii) the average of the volume weighted price of the Common Stock as reported by Bloomberg LP for the ten (10) trading day period commencing on the effective day of the reverse split.

 

D.           Share Issuance.   So long as this Note is outstanding, if the Borrower shall issue any Common Stock except for the Excepted Issuances (as defined in Section 12(a) of the Subscription Agreement), prior to the complete conversion or payment of this Note, for a consideration per share that is less than the Conversion Price in effect at the time of such issue, then, and thereafter successively upon each such issuance, the Conversion Price shall be reduced to such other lower issue price. For purposes of this adjustment, the issuance of any security or debt instrument of the Borrower carrying the right to convert such security or debt instrument into Common Stock or of any warrant, right or option to purchase Common Stock shall result in an adjustment to the Conversion Price upon the issuance of the above-described security, debt instrument, warrant, right, or option and again upon the issuance of shares of Common Stock upon exercise of such conversion or purchase rights if such issuance is at a price lower than the then applicable Conversion Price. Common Stock issued or issuable by the Borrower for no consideration will be deemed issuable or to have been issued for $0.000001 per share of Common Stock. The reduction of the Conversion Price described in this paragraph is in addition to the other rights of the Holder described in the Subscription Agreement.

(d)           Whenever the Conversion Price is adjusted pursuant to Section 2.1(c) above, the Borrower shall promptly, but not later than the second (2nd) business day after the effectiveness of the adjustment, provide notice to the Holder setting forth the Conversion Price after such adjustment and setting forth a statement of the facts requiring such adjustment.  Failure to provide the foregoing notice is an Event of Default under this Note.  The Holder is entitled to the benefit of a lower Conversion Price whether or not the required notice is given.

(e)           During the period the conversion right exists, Borrower will reserve from its authorized and unissued Common Stock not less than an amount of Common Stock equal to 175% of the amount of shares of Common Stock issuable upon the full conversion of this Note.  Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.  Borrower agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

 

  

3

  

 

2.2           Method of Conversion.  This Note may be converted by the Holder in whole or in part as described in Section 2.1(a) hereof and the Subscription Agreement.  Upon partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Note which shall not have been converted or paid, upon surrender of the existing Note.

2.3.           Maximum Conversion.  The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Borrower on such Conversion Date.  For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.  Subject to the foregoing, the Holder shall not be limited to aggregate conversions of 4.99%.  To the extent that the limitation contained in this Section 2.3 applies, the determination of whether a Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which a portion of a Note is convertible shall be in the sole discretion of the Holder, and the submission of a Conversion Notice shall be deemed to be the Holder’s determination of whether a Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of a Note is exercisable, in each case subject to such aggregate percentage limitation, and the Borrower shall have no obligation to verify or confirm the accuracy of such determination.  The Holder may modify the conversion limitation described in this Section 2.3, in whole or in part, upon and effective after 61 days prior written notice to the Borrower.

ARTICLE III

PREPAYMENT AND ACCELERATION

 

3.1            Optional Prepayment.  (a) At any time during the period which commences on the date hereof and ends on the Maturity Date (the “Optional Prepayment Date”), provided that all conditions set forth in this Section 3.1 have been met (the “Optional Prepayment Period”), the Company shall have the right to prepay at any one time all of the outstanding principal amount of this Note at the Optional Prepayment Price pursuant to this Section 3.1, so long as on the date the Company gives the notice of optional prepayment (the “Optional Prepayment Notice”) and at all times to and including the Optional Prepayment Date, no Event of Default and no event which, with notice or passage of time, or both, would become an Event of Default has occurred and is continuing. “Optional Prepayment Price” shall mean (1) the Purchase Price of this Note, plus (2) interest on the Purchase Price of this Note at the rate of 8% per annum.

In order to exercise its right of prepayment under this Section 3.1, the Company shall give the Optional Prepayment Notice to the Holder not less than ten (10) days or more than thirty (30) days prior to the Optional Prepayment Date stating: (1) that the Company is exercising its right to prepay this Note in accordance with this Section 3.1, (2) the Optional Prepayment Price, (3) the Optional Prepayment Date and (4) that all of the conditions of this Section 3.1 entitling the Company to call this Note for prepayment have been met. On the Optional Prepayment Date the Company shall pay to or upon the order of the Holder, by wire transfer of immediately available funds to such account as shall be specified for such purpose by the Holder at least three Business Day prior to the Optional Prepayment Date, an amount equal to the Optional Prepayment Price of this Note.

 

  

4

  

 

(b) In order that the Company shall not discriminate among the Holder and the holders of the Other Notes, the Company agrees that it shall not prepay any of the Other Notes pursuant to the provisions thereof similar to this Section 3.1 or repurchase or otherwise acquire any of the Other Notes unless the Company offers simultaneously to prepay, repurchase or otherwise acquire this Note.

(c) The Company shall not be entitled to give an Optional Prepayment Notice or to prepay any portion of this Note with respect to which the Holder has given a Conversion Notice on or prior to the date the Company gives such Optional Prepayment Notice.

3.2            No Other Prepayment. Except as specifically provided in Section 3.1, this Note may not be prepaid, redeemed or repurchased at the option of the Company prior to the applicable Maturity Date, as the case may be.

3.3           Fundamental Transaction.  Upon the occurrence of a Fundamental Transaction, then in addition to the Holder’s rights described in the Subscription Agreement and Section 2.1(c)(A) of this Note, until twenty (20) business days after the Borrower notifies the Holder of the occurrence of the Fundamental Transaction, the Holder may elect to accelerate the Maturity Date as of the date of the Fundamental Transaction and receive payment for the then outstanding Principal Amount, and any other amount owed to the Holder pursuant to the Transaction Documents.

ARTICLE IV

EVENT OF DEFAULT

The occurrence of any of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of principal then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment or grace period, all of which hereby are expressly waived, except as set forth below; provided, however, that the Event of Default set forth in Section 4.1 below shall result in a reduction of the Conversion Price to seventy five percent (75%) of its then-current amount:

4.1           Failure to Pay Principal; Production Target.  The Borrower (i) fails to pay the principal under this Note when due or (ii) fails to pay any interest or other sums due under this Note when due or (iii) between the Issue Date and December 31, 2012, fails to deliver for refining at least 700 ounces of gold.

4.2           Breach of Covenant.  The Borrower or any Subsidiary breaches any material covenant or other term or condition of the Subscription Agreement, Transaction Documents or this Note, except for a breach of payment, in any material respect and such breach, if subject to cure, continues for a period of ten (10) business days.

4.3           Breach of Representations and Warranties.  Any material representation or warranty of the Borrower made herein, in the Subscription Agreement, or the Transaction Documents shall be false or misleading in any material respect as of the date made and the Closing Date.

4.4           Liquidation.   Any dissolution, liquidation or winding up by Borrower or a significant Subsidiary of a substantial portion of their business that results in a Material Adverse Effect.

 

  

5

  

 

4.5           Cessation of Operations.   Any cessation of operations by Borrower or a significant Subsidiary that results in a Material Adverse Effect.

 

4.6           Maintenance of Assets.   The failure by Borrower or any significant Subsidiary to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and that results in a Material Adverse Effect.

4.7           Receiver or Trustee.  The Borrower or any Subsidiary shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

4.8           Judgments.  Any money judgment, writ or similar final process shall be entered or made in a non-appealable adjudication against Borrower or any Subsidiary or any of its property or other assets for more than $50,000 in excess of the Borrower’s insurance coverage, unless stayed vacated or satisfied within thirty (30) days.

4.9           Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower or any Subsidiary.

4.10           Delisting.   An event resulting in the Common Stock no longer being quoted on the Bulletin Board or other Principal Market; failure to comply with the requirements for continued quotation on the Bulletin Board or other Principal Market for a period of thirty (30) consecutive trading days; or notification from the Bulletin Board or other Principal Market that the Borrower is not in compliance with the conditions for such continued quotation and such non-compliance continues for thirty (30) days following such notification.

4.11          Non-Payment.   A default by the Borrower or any Subsidiary under any one or more obligations in an aggregate monetary amount in excess of $50,000 for more than thirty (30) days after the due date, unless the Borrower or such Subsidiary is contesting the validity of such obligation in good faith and has reserved not less than one-half such amount in cash.

4.12          Stop Trade.  An SEC or judicial stop trade order or OTCBB suspension that lasts for ten (10) or more consecutive trading days.

4.13          Failure to Deliver Common Stock or Replacement Note.  Borrower’s failures to timely deliver Common Stock to the Holder pursuant to and in the form required by this Note, Sections 7 and 11 of the Subscription Agreement, or if required, a replacement Note following a partial conversion, and in each case, such failure continues for a period of ten business days.

4.14          Reservation Default.   Failure by the Borrower to have reserved for issuance upon conversion of the Note, the number of shares of Common Stock as required in the Subscription Agreement and this Note.

4.15          Financial Statement Restatement.  The restatement after the date hereof of any financial statements filed by the Borrower with the Securities and Exchange Commission for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statements, have constituted a Material Adverse Effect.  For the avoidance of doubt, any restatement related to new accounting pronouncements shall not constitute a default under this Section 4.15.

 

  

6

  

 

4.16          Non-Registration Event.  The Borrower’s failure to materially comply with the registration obligations set forth in Section 11 of the Subscription Agreement.

4.17          Reverse Splits.   The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

4.18          Event Described in Subscription Agreement.  The occurrence of an Event of Default as described in the Subscription Agreement or any other Transaction Document that, if susceptible to cure, is not cured during any designated cure period.

4.19          Notification Failure.   A failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms of this Note or any other Transaction Document.

4.20          Cross Default.  A default by the Borrower of a material term, covenant, warranty or undertaking of any other material agreement to which the Borrower and Holder are parties, or the occurrence of an event of default under any such other agreement to which Borrower and Holder are parties which is not cured after any required notice and/or cure period which, in either case, results in a Material Adverse Effect.

4.21          Other Note Default.   The occurrence of an Event of Default under any Other Note.

ARTICLE V

SECURITY INTEREST

5.           Security Interest/Waiver of Automatic Stay.   This Note is secured by a security interest granted to the Holder pursuant to one or more security agreements, mortgages, and related documents, as delivered by Borrower to Holder.  The Borrower acknowledges and agrees that should a proceeding under any bankruptcy or insolvency law be commenced by or against the Borrower or a Subsidiary, or if any of the Collateral (as defined in the Security Agreement) should become the subject of any bankruptcy or insolvency proceeding, then the Holder should be entitled to, among other relief to which the Holder may be entitled under the Transaction Documents and any other agreement to which the Borrower or a Subsidiary and Holder are parties (collectively, “Loan Documents”) and/or applicable law, an order from the court granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder to exercise all of its rights and remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.  The Borrower hereby consents to any motion for relief from stay that may be filed by the Holder in any bankruptcy or insolvency proceeding initiated by or against the Borrower and, further, agrees not to file any opposition to any motion for relief from stay filed by the Holder.  The Borrower represents, acknowledges and agrees that this provision is a specific and material aspect of the Loan Documents, and that the Holder would not agree to the terms of the Loan Documents if this waiver were not a part of this Note. The Borrower further represents, acknowledges and agrees that this waiver is knowingly, intelligently and voluntarily made, that neither the Holder nor any person acting on behalf of the Holder has made any representations to induce this waiver, that the Borrower has been represented (or has had the opportunity to he represented) in the signing of this Note and the Loan Documents and in the making of this waiver by independent legal counsel selected by the Borrower and that the Borrower has discussed this waiver with counsel.

 

  

7

  

 

ARTICLE VI

MISCELLANEOUS

6.1           Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

6.2           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 first 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 Borrower to: Southern USA Resources Inc. (formerly Atlantic Green Power Holding Company), c/o Ofsink, LLC, 900 Third Avenue, 5th Floor, New York, NY 10022, Attn: [REQUIRES COMPLETION], facsimile: (212) 688-7273, with a copy by telecopier only to: Ofsink, LLC, 900 Third Avenue, 5th Floor, New York, NY 10022, Attn: Darren L. Ofsink, Esq., facsimile: (212) 688-7273, and (ii) if to the Holder, to the name, address and facsimile number set forth on the front page of this Note, with a copy (which shall not constitute notice) by fax only to Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.

 

6.3           Amendment Provision.  The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

6.4           Assignability.  This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.  The Borrower may not assign its obligations under this Note.

 

6.5           Cost of Collection.  If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.

 

  

8

  

 

6.6           Governing Law.  This Note shall be governed by and construed in accordance with the laws of the state of New York without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement must be brought only in the civil or state courts of New York or in the federal courts located in the state and county of New York.  Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts.  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 Note 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 unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other decision in favor of the Holder.  This Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without limitation to any other remedies of Holder, may be enforced against Borrower by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar rule or statute in the jurisdiction where enforcement is sought.  For purposes of such rule or statute, any other document or agreement to which Holder and Borrower are parties or which Borrower delivered to Holder, which may be convenient or necessary to determine Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part of this Note, whether or not such other document or agreement was delivered together herewith or was executed apart from this Note.

 

6.7           Maximum Payments.  Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum rate permitted by applicable law.  In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum rate permitted by applicable law, any payments in excess of such maximum rate shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

6.8           Non-Business Days.   Whenever any payment or any action to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the state of New York, such payment may be due or action shall be required on the next succeeding business day and, for such payment, such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

 

6.9           Facsimile Signature.  In the event that the Borrower’s signature is delivered by facsimile transmission, PDF, electronic signature or other similar electronic means, such signature shall create a valid and binding obligation of the Borrower with the same force and effect as if such signature page were an original thereof.

 

6.10         Shareholder Status.  The Holder shall not have rights as a shareholder of the Borrower with respect to unconverted portions of this Note.  However, the Holder will have the rights of a shareholder of the Borrower with respect to the Shares of Common Stock to be received after delivery by the Holder of a Conversion Notice to the Borrower, unless such Conversion Notice is subsequently revoked.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

  

9

  

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the _____ day of November, 2012.

	 	
SOUTHERN USA RESOURCES INC.

	 
	 	 	 	 
	 	By:	 	 
	 	Name: 	Charles H. Merchant, Sr.	 
	 	Title: 	President and CEO	 

 

  

10

  

 

 EXHIBIT A - NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

The undersigned hereby elects to convert $_________ of the principal and $_________ of the regular interest and $_________ of Additional Interest due on the Note issued by SOUTHERN USA RESOURCES INC. on November  ___, 2012 into Shares of Common Stock of SOUTHERN USA RESOURCES INC. (the “Borrower”) according to the conditions set forth in such Note, as of the date written below.

 

	Date of Conversion: 	 

 

	Conversion Price: 	 

 

Number of Shares of Common Stock Beneficially Owned on the Conversion Date: Less than 5% of the outstanding Common Stock of SOUTHERN USA RESOURCES INC.

 

	Shares To Be Delivered:  	 

 

	Signature: 	 

 

	Print Name:  	 

 

	Address: 	 
	 	
 

 

 

 

11f8k112912ex4ii_southernusa.htm

Exhibit 4.2

 

FIFTH CONSENT AND WAIVER AGREEMENT

This Fourth Consent and Waiver Agreement (this “Agreement”) is made and entered into as of November  __, 2012, by and among Southern USA Resources Inc., a Delaware corporation (the “Company”), and the parties identified on the signature page hereto.  Capitalized terms used but not defined herein will have the meanings assigned to them in the Subscription Agreements (as defined below).

WHEREAS, the Company, Alpha Capital Anstalt (“Alpha”) and Adventure Ventures LLC (“Adventure”) entered into a Subscription Agreement dated as of October 12, 2010 (the “2010 Agreement”), pursuant to which the Company issued to Alpha and Adventure convertible promissory notes in the aggregate principal amount of $500,000 (the “2010 Notes”) and warrants to purchase 535,714 shares of the Company’s common stock (the “Warrants”); and

WHEREAS, on April 26, 2012, Alpha and Adventure sold a portion of their 2010 Notes in the aggregate principal amount of $420,000 to DPIT 5 LLC (“DPIT”); and

WHEREAS, on February 4, 2011, the Company sold to Whalehaven Capital Fund Limited (“Whalehaven”), a promissory note in the principal amount of $250,000 (the “2011 Note”) and 300,000 shares of the Company’s common stock, par value $0.000001 per share, for an aggregate purchase price of $250,000, pursuant to a Subscription Agreement (the “2011 Agreement”); and

WHEREAS, on April 26, 2012, Whalehaven sold portions of its 2011 Note in the principal amount of $100,000 and $30,000 to Oja LLC (“OJA”) and DPIT, respectively.

WHEREAS, on April 27, 2012 the Company sold $1,920,000 in senior secured convertible notes (the “2012 Notes”) at an original issue discount of twenty percent (20%) to Alpha, Adventure, DPIT, Whalehaven and OJA (each, the “Subscriber” and collectively, the “Subscribers”) pursuant to a Subscription Agreement (the “2012 Agreement”); and

WHEREAS, the Company sold to DPIT, Whalehaven and Alpha $200,000 in senior secured convertible notes (the “October 2012 Notes”) at an original issue discount of twenty percent (20%) pursuant to a Subscription Agreement (the “October 2012 Agreement”); and

WHEREAS, the Company proposes to sell to DPIT, Whalehaven and Alpha up to $200,000 in additional senior secured convertible notes (the “New Notes”) at an original issue discount of twenty percent (20%) (the “Proposed Offering”); and

WHEREAS, in connection with the Proposed Offering, under the 2010 Agreements, Alpha, Adventure and DPIT possess a right of first refusal with respect to such sale pursuant to Section 12(a) of the 2010 Agreement; and

WHEREAS, in connection with the Proposed Offering, the Company is prohibited from granting a security interest in the assets of the Company and its Subsidiaries, prohibited from issuing or incurring any debt not in the ordinary course of business and prohibited from issuing variable equity linked instruments [pursuant to Sections 9(o), 9(p) and 9(r) of the 2010 Agreements, Sections 9(o), 9(p) and 9(r) of the 2011 Agreements, and Sections 9(p), 9(q) and 9(r) of the 2012 Agreement] unless consent has been obtained; and

 

  

1

  

 

WHEREAS, in connection with the Proposed Offering, Alpha and Adventure intend not to exercise their right of first refusal under Section 12(a) of the 2010 Agreement.  The Subscribers intend to (i) release the Company from the restrictions of Sections 9(o), 9(p) and 9(r) of the 2010 Agreements, Sections 9(o), 9(p) and 9(r) of the 2011 Agreement and Sections 9(p), 9(q) and 9(r) of the 2012 Agreement and October 2012 Agreement, (ii) consent to the Proposed Offering and the issuance of the New Notes, (iii) consent to the Company granting a security interest to the subscribers to the Proposed Offering which shall rank pari passu with the security interest granted to the Subscribers under the 2012 Agreement; and

NOW, THEREFORE, the parties hereby agree as follows:

 

1.            Acknowledgement, Waiver and Consent.

 

(a)          Each of Alpha and Adventure hereby acknowledges receipt of notice of the Proposed Offering in satisfaction of Sections 12(a) of the 2010 Agreement and, in connection with the Proposed Sale, has elected not to exercise their right of first refusal.

(b)          The undersigned Subscribers hereby (i) consent to the Company granting a security interest to the subscribers to the Proposed Offering which shall rank pari passu with the security interest granted to the Subscribers under the 2012 Agreement and 2012 Notes, and the October 2012 Agreement and October 2012 Notes, and (ii) release the Company from the restrictions of Sections 9(o), 9(p) and 9(r) of the 2010 Agreements, Sections 9(o), 9(p) and 9(r) of the 2011 Agreements and Sections 9(p), 9(q) and 9(r) of the 2012 Agreement and October 2012 Agreement.

(c)          Each of Alpha and Adventure waive the refill provision contained in Section 3.3 of the Warrants issued on October 12, 2010.

2.   Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

3.   Governing Law.  This Agreement will be governed by and interpreted in accordance with the laws of the state of New York without giving effect to the rules governing the conflicts of law.

4.   Amendments.  This Agreement and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.   Severability.   The invalidity or unenforceability of any provision hereof will in no way affect the validity or enforceability of any other provision.

6.   Full Force and Effect.  Except as expressly set forth herein, this Agreement shall not be deemed to be a waiver, amendment or modification by any party of any provisions of the Transaction Documents or of any right, power or remedy of Alpha, Adventure, Whalehaven, DPIT or OJA, or constitute a waiver of any provision of the Transaction Documents.

[Signature Page To Follow]

 

  

2

  

 

IN WITNESS WHEREOF, the Company and each of Alpha, Adventure, Whalehaven, DPIT and OJA have caused this Agreement to be executed as of the date first written above.

 

	 	
SOUTHERN USA RESOURCES INC.

the “Company”

	 
	 	 	 	 
	
 

	By:	 	 
	 	Name: 	Charles H. Merchant, Sr.	 
	 	Title:	President and CEO	 
	 	 	 	 
	ALPHA CAPITAL ANSTALT	ADVENTURE VENTURES LLC	 

	By:	
 

	 	By:	 	 
	 	     Name: 	 	 	
     Name:

	 
	 	
     Title:   

	 	 	     Title:	 
	 	 	 	 	 	 
	WHALEHAVEN CAPITAL FUND LIMITED	 	DPIT 5 LLC	 
	 	 	 	 	 	 
	By:	 	 	By:	 	 
	 	     Name: 	 	 	      Name: 	 
	 	

     Title:   

	 	 	      Title:   	 
	 	 	 	 	 	 
	
OJA LLC

	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	 	 	 
	 	     Name: 	 	 	 	 
	 	

     Title:   

	 	 	 	 

 

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}]]