Document:

EXHIBIT 10.1

 

WAIVER AND SECOND AMENDMENT TO AMENDED AND
RESTATED
MXN$557,415,000 CREDIT AGREEMENT

     THIS WAIVER
AND SECOND
AMENDMENT TO AMENDED AND RESTATED MXN$557,415,000 CREDIT
AGREEMENT (the “Agreement”) is made and entered into
as of this 28th day of June, 2012 (the “Effective Date”), by and among AVÍCOLA
PILGRIM’S PRIDE DE MÉXICO, S.A. de C.V., a sociedad anónima de capital variable
organized under the laws of the United Mexican States and PILGRIM’S PRIDE, S. de
R.L. de C.V., a sociedad de responsabilidad
limitada de capital variable organized under
the laws of the United Mexican States (collectively, the “Borrower”), THE
SUBSIDIARIES OF THE BORROWER PARTY HERETO, as Guarantors, the several banks and
other financial institutions parties hereto which constitute all of the Lenders,
and ING CAPITAL LLC, as lead arranger and as administrative agent (the
“Administrative Agent”) for the Lenders party to the Credit Agreement (as defined
below) (collectively, the “Lenders”). 

RECITALS 

     A.
Borrower, Guarantors, certain Lenders and the
Administrative Agent are parties to that certain Amended and Restated
MXN$557,415,000 Credit Agreement dated as of October 19, 2011 (as amended,
modified or supplemented from time to time, the “Credit Agreement”), pursuant to which
Lenders agreed to make loans to Borrower from time to time subject to the terms
and conditions set forth therein. Capitalized terms not otherwise defined herein
shall have the meanings given such terms in the Credit Agreement. 

     B. Borrowers have advised the
Administrative Agent and the Lenders that (i) HSBC México, S.A., Institución de
Banca Múltiple, Grupo Financiero (“HSBC”) desires to become the Issuing
Lender under the Credit Agreement and (ii) Borrower anticipates that it will be
unable to provide the audited financial statements as of the fiscal year ending
December 31, 2011 within the time period provided for in Section 5.2(a) of the
Credit Agreement (the “Potential
Default”). 

     C. Borrower, Guarantors, Lenders and the
Administrative Agent wish to modify the Credit Agreement in certain respects
pursuant to this Agreement, effective as of the Effective Date. 

AGREEMENT 

     In consideration of the Recitals and of
the mutual promises and covenants contained herein, Administrative Agent,
Lenders, Borrower and Guarantors agree as follows: 

     1.
Amendments to Credit Agreement. To induce Administrative Agent and the Lenders to enter into
this Agreement, and as separately bargained-for consideration, each of Borrower
and the Guarantors agree to the following amendments to the Credit Agreement:

     (a) Amendment to the Definition of “Issuing Lender” contained in Section 1.1
of the Credit Agreement. The definition of “Issuing
Lender” is hereby amended and restated to read in its entirety as follows:

     “‘Issuing Lender’ shall mean as of June
28, 2012, HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero,
HSBC, together with its successors and assigns in such capacity.” 

     2. Amendment to Section 2.6 to the Credit Agreement. Section
2.6 of the Credit Agreement is hereby amended
and restated to read as follows: 

          “Section
2.6 Letters of Credit. Subject to the terms and conditions of this Agreement, the
Revolving Loan Commitments may be utilized, upon request of the Borrowers, in
addition to the Revolving Loans provided for in Section 2.1(b) hereof, for the
issuance by the Issuing Lender of letters of credit denominated in Pesos
(collectively, “Letters of
Credit”) for account of any Borrower,
provided that the maximum face amount of the Letters of Credit to be issued or
modified does not exceed the lesser of (i) MXN$150,000,000
minus the
sum of (1) the aggregate undrawn amount of all outstanding Letters of Credit at
such time plus, without duplication, (2) the aggregate unpaid Reimbursement Obligations
with respect to all Letters of Credit outstanding at such time and (ii) the
Borrowers’ Availability. In no event shall the expiration date of any Letter of
Credit extend beyond the earlier of the Final Maturity Date and the date 12
months following the issuance of such Letter of Credit. The following additional
provisions shall apply to Letters of Credit: 

     (a) The Borrowers
shall give the Administrative Agent at least three Business Days’ irrevocable
prior notice (effective upon receipt) specifying the Business Day (which shall
be no later than thirty days preceding the Final Maturity Date) each Letter of
Credit is to be issued and the account party or parties therefor and describing
in reasonable detail the proposed terms of such Letter of Credit (including the
beneficiary thereof) and the nature of the transactions or obligations proposed
to be supported thereby (including whether such Letter of Credit is to be a
commercial letter of credit or a standby letter of credit). Upon receipt of any
such notice, the Administrative Agent shall advise the Issuing Lender of the
contents thereof. 

     (b) On each day during the period
commencing with the issuance by the Issuing Lender of any Letter of Credit and
until such Letter of Credit shall have expired or been terminated, the Revolving
Loan Commitment of each Lender shall be deemed to be utilized for all purposes
of this Agreement in an amount equal to such Lender’s pro rata percentage based
upon its share of the Revolving Loan Commitments then in effect (each a
“Pro Rata Share”) of the then undrawn face amount of such Letter of Credit. Each Lender
(other than the Issuing Lender) agrees that, upon the issuance of any Letter of
Credit hereunder, it shall automatically acquire a participation in the Issuing
Lender’s liability under such Letter of Credit in an amount equal to such
Lender’s Pro Rata Share of such liability, and each Lender (other than the
Issuing Lender) thereby shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and shall be unconditionally
obligated to the Issuing Lender to pay and discharge when due, its Pro Rata
Share of the Issuing Lender’s liability under such Letter of Credit. 

     (c) Upon receipt from
the beneficiary of any Letter of Credit of any demand for payment under such
Letter of Credit, the Issuing Lender shall promptly notify the Borrowers
(through the Administrative Agent) of the amount to be paid by the Issuing
Lender as a result of such demand and the date on which payment is to be made by
the Issuing Lender to such beneficiary in respect of such demand.
Notwithstanding the identity of the account party of any Letter of Credit, each
Borrower hereby unconditionally agrees, jointly and severally, to pay and
reimburse the Administrative Agent for account of the Issuing Lender for the
amount of each demand for payment under such Letter of Credit at or prior to the
date on which payment is to be made by the Issuing Lender to the beneficiary
thereunder, without presentment, demand, protest or other formalities of any
kind; provided, the Borrowers may make a request to borrow pursuant to subsection (d)
below in lieu of making such payment and reimbursement in cash to the
Administrative Agent for account of the Issuing Lender. 

     (d) Forthwith upon
its receipt of a notice referred to in clause (c) of this Section 2.6, the Borrowers
shall advise the Administrative Agent whether or not the Borrowers intend to
borrow hereunder to finance its obligation to reimburse the Issuing Lender for
the amount of the related demand for payment and, if it does, submit a notice of
such borrowing in accordance with the terms of this Agreement. In the event that
the Borrowers fail to so advise the Administrative Agent, or if the Borrowers
fail to reimburse the Issuing Lender for a demand for payment under a Letter of
Credit by the date of such payment, the Administrative Agent shall give each
Lender prompt notice of the amount of the demand for payment, specifying such
Lender’s Pro Rata Share of the amount of the related demand for
payment.

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     (e) Each Lender
(other than the Issuing Lender) shall pay to the Administrative Agent for
account of the Issuing Lender at the Administrative Agent’s offices and in the
accounts set forth in Schedule 10.6, in Pesos (at the New York office and
account of the Administrative Agent) and in immediately available funds, the
amount of such Lender’s Pro Rata Share of any payment under a Letter of Credit
upon notice by the Issuing Lender (through the Administrative Agent) to such
Lender requesting such payment and specifying such amount. Each such Lender’s
obligation to make such payments to the Administrative Agent for account of the
Issuing Lender under this clause (e), and the Issuing Lender’s right to receive
the same, shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, (i) the failure of any
other Lender to make its payment under this clause (e), (ii) the financial
condition of the Borrowers (or any other account party), (iii) the existence of
any Default or Event of Default or (iv) the termination of the Revolving Loan
Commitments. Each such payment to the Issuing Lender shall be made without any
offset, abatement, withholding or reduction whatsoever. 

     (f) Upon the making
of each payment by a Lender to the Issuing Lender pursuant to clause (e) above
in respect of any Letter of Credit, such Lender shall, automatically and without
any further action on the part of the Administrative Agent, the Issuing Lender
or such Lender, acquire (i) a participation in an amount equal to such payment
in the Reimbursement Obligation owing to the Issuing Lender by the Borrowers
hereunder and under the Letter of Credit Documents relating to such Letter of
Credit and (ii) a participation in a percentage equal to such Lender’s Pro Rata
Share in any interest or other amounts payable by the Borrowers hereunder and
under such Letter of Credit Documents in respect of such Reimbursement
Obligation (other than the commissions, charges, costs and expenses payable to
the Issuing Lender pursuant to clause (g) of this Section 2.6). Upon receipt by the
Issuing Lender from or for account of the Borrowers of any payment in respect of
any Reimbursement Obligation or any such interest or other amount (including by
way of setoff or application of proceeds of any collateral security) the Issuing
Lender shall promptly pay to the Administrative Agent for account of each Lender
entitled thereto, such Lender’s Pro Rata Share of such payment, each such
payment by the Issuing Lender to be made in the same money and funds in which
received by the Issuing Lender. In the event any payment received by the Issuing
Lender and so paid to the Lenders hereunder is rescinded or must otherwise be
returned by the Issuing Lender, each Lender shall, upon the request of the
Issuing Lender (through the Administrative Agent), repay to the Issuing Lender
(through the Administrative Agent) the amount of such payment paid to such
Lender, with interest at the rate specified in clause (j) of this
Section 2.6. 

3 

     (g) The Borrowers
shall pay to the Administrative Agent for account of the Issuing Lender in
respect of each Letter of Credit an issuance fee payable in Pesos in an amount
equal to (A) 2.25% per annum of the daily average undrawn face amount of such
Letter of Credit for the period from and including the date of issuance of such
Letter of Credit to and including the date such Letter of Credit is drawn in
full, expires or is terminated (such fee to be non-refundable, to be paid in
arrears payable quarterly in arrears on the last Business Day of each December,
March, June and September and on the Final Maturity Date or such earlier date as
the Revolving Loan Commitments shall terminate as provided herein, commencing on
the date such Letter of Credit is issued and to be calculated, for any day,
after giving effect to any payments made under such Letter of Credit on such day
or any expiration or termination thereof) or (B) if such Letter of Credit is
issued by Administrative Agent to a commercial bank at the request of Borrowers
to backstop a letter of credit issued by such commercial bank, the fee charge by
such commercial bank for the issuance of such letter of credit, computed on the
daily amount available to be drawn under such Letter of Credit and on a
quarterly basis in arrears. The Issuing Lender shall pay to the Administrative
Agent for account of each Lender (other than the Issuing Lender), from time to
time at reasonable intervals (but in any event at least monthly), but only to
the extent actually received from the Borrowers, an amount equal to such
Lender’s Pro Rata Share of all such fees in respect of each Letter of Credit
(including any such fee in respect of any period of any renewal or extension
thereof). In addition, the Borrowers shall pay to the Administrative Agent for
account of the Issuing Lender a fronting fee payable in Dollars in respect of
each Letter of Credit in an amount equal to the greater of (i) US$2,500 and (ii)
0.20% per annum of the daily average undrawn face amount of such Letter of
Credit for the period from and including the date of issuance of such Letter of
Credit to and including the date such Letter of Credit is drawn in full, expires
or is terminated (such fee to be non-refundable, payable quarterly in arrears on
the last Business Day of each December, March, June and September and on the
Final Maturity Date or such earlier date as the Revolving Loan Commitments shall
terminate as provided herein, commencing on the date such Letter of Credit is
issued) and to be calculated, for any day, after giving effect to any payments
made under such Letter of Credit on such day or any expiration or termination
thereof) plus all commissions, charges, costs and expenses in the amounts
customarily charged by the Issuing Lender from time to time in like
circumstances with respect to the issuance of each Letter of Credit. In
addition, the Borrower shall pay directly to the Issuing Lender for its own
account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the Issuing Lender relating to
letters of credit as from time to time in effect. Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.

     (h) Promptly following the end of each
calendar month, the Issuing Lender shall deliver (through the Administrative
Agent) to each Lender and the Borrowers a notice describing the aggregate amount
of all Letters of Credit outstanding at the end of such month, which notice
shall list the Letters of Credit by number and by beneficiary. Upon the request
of any Lender from time to time, the Issuing Lender shall deliver any other
information reasonably requested by such Lender with respect to each Letter of
Credit then outstanding. 

     (i) The issuance by the Issuing Lender of
each Letter of Credit shall, in addition to the conditions precedent set forth
in Section 3.2 hereof, be subject to the applicable conditions precedent that (i) such
Letter of Credit shall be in such form and contain such terms as shall be
reasonably satisfactory to the Issuing Lender consistent with its then current
practices and procedures with respect to letters of credit of the same type and
(ii) the Borrowers shall have executed and delivered such applications,
agreements and other instruments relating to such Letter of Credit as the
Issuing Lender shall have reasonably requested consistent with its then current
practices and procedures with respect to letters of credit of the same type,
provided that in the event of any conflict between any such application,
agreement or other instrument and the provisions of this Agreement or any
Collateral Document, the provisions of this Agreement and the Collateral
Documents shall control.

4 

     (j) To the extent that any Lender fails to pay any amount
required to be paid pursuant to clause (e) or (f) of this Section 2.6 on the due date
therefor, such Lender shall pay interest to the Issuing Lender (through the
Administrative Agent) on such amount from and including such due date to but
excluding the date such payment is made (i) during the period from and including
such due date to but excluding the date three Business Days thereafter, at a
rate per annum equal to the Federal Funds Rate (as in effect from time to time)
and (ii) thereafter, at a rate per annum equal to the TIIE Rate (as in effect
from time to time) plus 2%. 

     (k) The issuance by the Issuing Lender of
any modification or supplement to any Letter of Credit hereunder shall be
subject to the same conditions applicable under this Section 2.6 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (x) the respective Letter of Credit affected thereby
would have complied with such conditions had it originally been issued hereunder
in such modified or supplemented form or (y) each Lender shall have consented
thereto. 

     Each Borrower hereby indemnifies and
holds harmless each Lender and the Administrative Agent from and against any and
all claims and damages, losses, liabilities, costs or expenses which such Lender
or the Administrative Agent may incur (or which may be claimed against such
Lender or the Administrative Agent by any Person whatsoever) by reason of or in
connection with the execution and delivery or transfer of or payment or refusal
to pay by the Issuing Lender under any Letter of Credit; provided that the Borrowers
shall not be required to indemnify any Lender or the Administrative Agent for
any claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (w) a breach by a Lender of its obligations under
Section 2.6
hereof, (x) the willful misconduct or gross negligence of the Issuing Lender in
determining whether a request presented under any Letter of Credit complied with
the terms of such Letter of Credit, (y) in the case of the Issuing Lender, such
Lender’s failure to pay under any Letter of Credit after the presentation to it
of a request strictly complying with the terms and conditions of such Letter of
Credit, or (z) the breach by the Issuing Lender of its obligations under this
Section 2.6. Nothing in this Section
2.6 is intended to limit the other
obligations of the Borrowers, any Lender or the Administrative Agent under this
Agreement.” 

    
3. Amendment to Section 10.4 of the
Credit Agreement. Subsection (iii) of the
second full paragraph of Section
10.4 of the Credit Agreement is hereby
amended by deleting the reference to “(but in no event later than thirty (30)
days following the Closing Date)” which amendment shall be effective 30 days
following the Closing Date.

    
4. Covenants of
Borrowers. Borrowers and Guarantors covenant
and agree until such time as all of the Obligations have been paid in full in
cash and all Commitments have been terminated: 

     (a) No
Commencement of Proceeding. Borrowers and
Guarantors will not (i) file any petition for an order for relief under the
Bankruptcy Code, (ii) make an assignment for the benefit of creditors, (iii)
make any offer or agreement of settlement, extension or compromise to or with
Borrowers’ and Guarantors’ unsecured creditors generally or (iv) suffer the
appointment of a receiver, trustee, custodian or similar fiduciary.

     (b) Compliance with Credit Agreement, Collateral Documents and Loan
Documents. Each of Borrowers and Guarantors
will continue to comply with all covenants and other obligations under this
Agreement, the Credit Agreement and the Loan Documents, subject to the
applicable cure or grace periods, if any, provided therein. 

5 

    
5. Conditions Precedent to
Effectiveness of Agreement. This Agreement
shall not be effective unless and until each of the following conditions shall
have occurred: 

     (a) Administrative Agent shall have
received this Agreement, duly executed by the Borrowers and the Lenders, in form
and substance satisfactory to Administrative Agent; and 

     (b) Borrowers shall have paid the
Administrative Agent all of Administrative Agent’s costs and expenses (including
Administrative Agent’s reasonable attorney’s fees) incurred prior to or in
connection with the preparation of this Agreement.

    
6. Representations and
Warranties. Each Borrower hereby represents
and warrants to Administrative Agent, for the
benefit of the Lenders, as follows: 

     (a) Recitals. The Recitals in this
Agreement are true and correct with respect to the Loan Parties in all material
respects. 

     (b) Incorporation of Representations. All
representations and warranties of Borrowers and the Guarantors in the Credit
Agreement are incorporated herein in full by this reference and are true and
correct, in all material respects, as of the date hereof, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date.

     (c) Power; Authorization. Each of the
Borrowers and Guarantors has the corporate power, and has been duly authorized
by all requisite corporate action, to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement has been duly executed and
delivered by Borrowers and Guarantors. 

     (d) Enforceability. This Agreement is the
legal, valid and binding obligation of Borrowers and each Guarantor, enforceable
against Borrowers and each Guarantor in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors’ rights generally and general principles of equity.

     (e) No
Violation. Each Borrower’s and each
Guarantors’ execution, delivery and performance of this Agreement does not and
will not (i) violate any law, rule, regulation or court order to which such
Borrower or such Guarantor is subject; (ii) conflict with or result in a breach
of such Borrower’s or such Guarantors’ organizational documents or any agreement
or instrument to which any Borrower or any Guarantor is party or by which it or
its properties are bound, or (iii) result in the creation or imposition of any
lien, security interest or encumbrance on any property of such Borrower or such
Guarantor, whether now owned or hereafter acquired, other than liens in favor of
Administrative Agent, for the benefit of the Lenders, or as permitted by the
Credit Agreement. 

     (f) Obligations Absolute. The obligation
of Borrowers to repay the Loans and the other Obligations, together with all
interest accrued thereon, is absolute and unconditional, and there exists no
right of set off or recoupment, counterclaim or defense of any nature whatsoever
to payment of the Obligations. 

     (g) Full Opportunity for Review; No Undue Influence. This Agreement was reviewed by each of Borrowers and
Guarantors which acknowledges and agrees that each of Borrowers and Guarantors
(i) understands fully the terms of this Agreement and the consequences of the
issuance hereof; (ii) has been afforded an opportunity to have this Agreement
reviewed by, and to discuss this Agreement with, such attorneys and other
persons as Borrowers may wish; and (iii) has entered into this Agreement of its
own free will and accord and without threat or duress. This Agreement and all
information furnished to Administrative Agent and the Lenders is made and
furnished in good faith, for value and valuable consideration. This Agreement
has not been made or induced by any fraud, duress or undue influence exercised
by Lenders or Administrative Agent or any other person. 

6 

     (h) No Other
Defaults. As of the date hereof, no Event of
Default exists under the Credit Agreement, or any of the Loan Documents and each
of Borrowers and the Guarantors is in full compliance with all covenants and
agreements contained therein, as amended hereby. 

    
7. Limited Waiver. Subject to the terms and conditions set forth herein,
Administrative Agent and Lenders hereby waive in
advance any Default or Event of Default that may arise from the Potential
Default; provided, however, Borrower hereby agrees that Borrower’s failure to deliver the financial
statements required to be delivered for the fiscal year ending December 31, 2011
pursuant to Section 5.2(a) of the Credit Agreement on or before July 31, 2012 in
form and substance as required by Section
5.2(a) of the Credit Agreement shall
constitute an Event of Default. Except as expressly provided herein, the Credit
Agreement and the Loan Documents are hereby ratified and confirmed and shall be
and shall remain in full force and effect in accordance with their respective
terms, and this Agreement shall not be construed to: (i) impair the validity,
perfection or priority of any lien or security interest securing the
Obligations; (ii) waive or impair any rights, powers or remedies of
Administrative Agent or the Lenders under the Credit Agreement or the Loan
Documents; or (iii) constitute an agreement by Administrative Agent or the
Lenders or require Administrative Agent or the Lenders to extend the term of the
Credit Agreement or the time for payment of any of the Obligations. This
Agreement shall not be deemed to evidence or result in a novation of the Credit
Agreement. In the event of any inconsistency between the terms of this Agreement
and the Credit Agreement or the Loan Documents, this Agreement shall
govern.

    
The limited waiver set forth above shall not apply to any other past,
present or future deviation from the referenced portions of the Credit Agreement
or any other provision of the Credit Agreement or any other Loan Documents.
Administrative Agent’s and Lenders’ waiver of any Default or Event of Default
arising from the Potential Default and its right to exercise any right,
privilege or remedy as a result thereof shall not directly or indirectly in any
way whatsoever either: (a) impair, prejudice or otherwise adversely affect
Administrative Agent’s and Lenders’ right at any time to exercise any other
right, privilege, or remedy in connection with the Credit Agreement, the other
Loan Documents, any other agreement, or any other contract or instrument, or (b)
amend or alter any provision of the Credit Agreement, the other Loan Documents,
any other agreement, or any other contract or instrument, or (c) constitute any
course of dealing or other basis for altering any obligation of any Loan Party
or any right, privilege, or remedy of Administrative Agent and Lenders under the
Credit Agreement, the other Loan Documents, any other agreement, or any other
contract or instrument. 

    
8. Expenses. Borrowers and Guarantors agree to pay reasonable out-of-pocket costs,
fees and expenses of Administrative Agent and Administrative Agent’s attorneys
incurred in connection with the negotiation, preparation, administration and
enforcement of, and the preservation of any rights under, this Agreement and/or
the Loan Documents, and the transactions and other matters contemplated hereby
and thereby. 

    
9. Miscellaneous. 

     (a) Further Assurances. Borrowers and
Guarantors agree to execute such other and further documents and instruments as
Administrative Agent may request to implement the provisions of this Agreement
and to perfect and protect the liens and security interests created by the
Credit Agreement and the Loan Documents. 

     (b) Benefit of Agreement. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto, their respective successors and assigns. No other person or
entity shall be entitled to claim any right or benefit hereunder, including,
without limitation, the status of a third-party beneficiary of this Agreement.

     (c) Integration. This Agreement, together
with the Credit Agreement and the Loan Documents, constitutes the entire
agreement and understanding among the parties relating to the subject matter
hereof, and supersedes all prior proposals, negotiations, agreements and
understandings relating to such subject matter. In entering into this Agreement,
each of Borrowers and Guarantors acknowledges that it is relying on no
statement, representation, warranty, covenant or agreement of any kind made by
the Administrative Agent or any Lender or any employee or agent of the
Administrative Agent or any Lender, except for the agreements of Administrative
Agent or any Lender set forth herein.

7 

     (d) Severability. The provisions of this
Agreement are intended to be severable. If any provisions of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or enforceability without in any manner affecting the validity
or enforceability of such provision in any other jurisdiction or the remaining
provisions of this Agreement in any jurisdiction. 

     (e) Governing Law. This Agreement shall be
governed by and construed in accordance with the internal substantive laws of
the State of New York, without regard to the choice of law principles of such
state that would require the application of the laws of another state.

     (f) Counterparts; Telecopied Signatures.
This Agreement may be executed in any number of counterparts and by different
parties to this Agreement on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile or other electronic transmission shall be deemed to be an original
signature hereto. 

     (g) Notices. Any notices with respect to
this Agreement shall be given in the manner provided for in Section 10.6 of the Credit
Agreement. 

     (h) Survival. All representations,
warranties, covenants, agreements, undertakings, waivers and releases of
Borrowers and Guarantors contained herein shall survive the payment in full of
the Obligations. 

     (i) Amendment. No amendment, modification,
rescission, waiver or release of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by the parties hereto.

     (j) No
Limitation on Administrative Agent. Nothing
in this Agreement shall be deemed in any way to limit or restrict any of
Administrative Agent’s and Lenders’ rights to seek in a bankruptcy court or any
other court of competent jurisdiction, any relief Administrative Agent may deem
appropriate in the event that a voluntary or involuntary petition under any
Bankruptcy Law is filed by or against any Borrower. 

    
10. Ratification of Liens and Security
Interest. Before and after giving effect to
this Agreement, each Borrower and each Guarantor hereby ratify, acknowledge and
agree that the liens and security interests of the Credit Agreement and the Loan
Documents are valid, subsisting, perfected and enforceable liens and security
interests and are superior to all liens and security interests other than Liens
permitted under Section 6.7 of the Credit Agreement. 

    
11. Certifications of Issuing
Lender. On the Date hereof, HSBC agrees to
become the Issuing Lender under the Agreement. 

    
12. No Commitment. Borrowers and Guarantors agree that Administrative Agent and
Lenders have made no commitment or other agreement regarding the Credit
Agreement or the Loan Documents, except as expressly set forth in the Credit
Agreement, as amended hereby. Borrowers and Guarantors warrant and represent
that Borrowers and Guarantors will not rely on any commitment, further agreement
to waive or other agreement on the part of Administrative Agent or Lenders
unless such commitment or agreement is in writing and signed by Administrative
Agent and Lenders. 

8 

    
13. RELEASE. FOR VALUE RECEIVED, INCLUDING WITHOUT LIMITATION, THE AGREEMENTS OF THE
AGENT AND LENDERS IN THIS AGREEMENT, THE BORROWERS AND GUARANTORS HEREBY RELEASE
THE ADMINISTRATIVE AGENT AND EACH LENDER, THEIR RESPECTIVE CURRENT AND FORMER
SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, ATTORNEYS,
CONSULTANTS, AND PROFESSIONAL ADVISORS (COLLECTIVELY, THE “RELEASED PARTIES”) OF AND
FROM ANY AND ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES, ACTS
AND OMISSIONS, LIABILITIES, AND OTHER CLAIMS OF EVERY KIND OR NATURE WHATSOEVER,
BOTH IN LAW AND IN EQUITY, KNOWN OR UNKNOWN, WHICH SUCH BORROWER OR GUARANTOR
HAS OR EVER HAD AGAINST THE RELEASED PARTIES FROM THE BEGINNING OF THE WORLD TO
THIS DATE ARISING IN ANY WAY OUT OF THE EXISTING FINANCING ARRANGEMENTS AMONG
THE BORROWERS, THE GUARANTORS, THE ADMINISTRATIVE AGENT AND/OR THE LENDERS
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS, OR THE NEGOTIATION FOR AND EXECUTION OF THIS
AGREEMENT. THE BORROWERS AND GUARANTORS FURTHER ACKNOWLEDGE THAT, AS OF THE DATE
HEREOF, THEY, JOINTLY OR SEVERALLY, DO NOT HAVE ANY COUNTERCLAIM,
SET-OFF, OR
DEFENSE AGAINST THE RELEASED PARTIES, EACH OF WHICH SUCH BORROWER OR GUARANTOR
HEREBY EXPRESSLY WAIVES. 

     14.
Consent of Guarantors. Each of the undersigned Guarantors hereby (a) consents to
the transactions contemplated by this Agreement; (b) acknowledges and reaffirms
its obligations owing to the Administrative Agent, the Collateral Agent, and
each Lender under any Loan Document (as amended or modified); and (c) agrees
that each of the Loan Documents (as amended or modified) is and shall remain in
full force and effect. Although each of the undersigned Guarantors has been
informed of the matters set forth herein and has acknowledged and agreed to
same, it understands that the Administrative Agent, the Collateral Agent, and
Lenders have no obligation to inform it of such matters in the future or to seek
its acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty. 

[Signature Pages
Follow] 

9 

     IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written. 

	BORROWERS:
	 
	AVÍCOLA PILGRIM’S PRIDE DE MÉXICO, S.A. de C.V.
	a
      Sociedad Anónima de Capital
      Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	 
	Name: 
      	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	PILGRIM’S PRIDE, S. de R.L. de C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	 
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	GUARANTORS:
	 
	INCUBADORA HIDALGO, S. de R.L. de C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	 
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	INMOBILIARIA AVÍCOLA PILGRIM’S PRIDE, S. de R.L. de
    C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	 
	Name:
      Héctor Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	SERVICIOS ADMINISTRATIVOS PILGRIM’S PRIDE, S. de R.L. de
      C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	 
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact

	GRUPO PILGRIM’S PRIDE FUNDING HOLDINGS, S. de R.L. de
      C.V.
a Sociedad de
      Responsabilidad Limitada de Capital Variable
	 	
	 	 
	By:	/s/ Héctor Réne Durán
    Mantilla	
	Name: 
      	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	  
	 
	COMERCIALIZADORA DE CARNES DE MÉXICO, S. de R.L. de
    C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	GRUPO PILGRIM’S PRIDE FUNDING, S. de R.L. de C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	OPERADORA DE PRODUCTOS AVÍCOLAS, S. de R.L. de
C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	CARNES Y PRODUCTOS AVÍCOLAS de MÉXICO, S. de R.L. de
    C.V.
	a
      Sociedad de Responsabilidad Limitada de
      Capital Variable
	 
	 
	By:	/s/ Héctor Réne Durán
    Mantilla	
	Name:	Héctor
      Réne Durán Mantilla
	Title:	Attorney-in-Fact
	 
	 
	POPPSA 3, LLC
	a
      Delaware limited liability company
	 
	 
	By:	/s/ Fabio Sandri	
	Name:	Fabio
      Sandri	
	Title:	Manager	

	POPPSA 4, LLC
	a
      Delaware limited liability company
	 
	 
	By:	/s/ Fabio Sandri	 
	Name: 
      	Fabio
      Sandri
	Title:	Manager
	 
	 
	PILGRIM’S PRIDE, LLC
	a
      Delaware limited liability company
	 
	 
	By:	/s/ Fabio Sandri	 
	Name:	Fabio
      Sandri
	Title:	Manager
	 
	 
	ING
      CAPITAL LLC,
	as
      Administrative Agent and Sole Lead Arranger
	 
	 
	By:	/s/ William B. Redmond	 
	Name:	William B. Redmond
	Title:	Managing Director
	 
	 
	ING BANK (MÉXICO), S.A. INSTITUCIÓN DE BANCA MÚLTIPLE, ING
      GRUPO FINANCIERO,

as
    Lender
	 
	 
	By:	/s/ Miguel Estrada	 
	Name:	Miguel
      Estrada
	Title:	Attorney-in-Fact
	 
	 
	By:	/s/ Javier Bernus	 
	Name:	Javier
      Bernus
	Title:	Director
		 
		 
	
      HSBC MÉXICO S.A., INSTITUCIÓN
      DE BANCA MÚLTIPLE, GRUPO FINANCIERO HSBC,

as Lender and Issuing Lender 

	 
	 
	By:	/s/ Jorge Arturo Gómez Treviño	 
	Name:	Jorge Arturo Gómez
      Treviño	
	Title:	Attorney-in-Factf8k102212ex4i_southern.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: $	Issue Date: October ___, 2012
	Purchase Price: $	 

 

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 October __, 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.

 

  

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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.

 

  

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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.

 

  

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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.

 

  

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(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.

 

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

 

  

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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.

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.

 

  

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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.

 

  

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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.

 

  

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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.

 

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

	 	
SOUTHERN USA RESOURCES INC.

	 
	 	 	 	 
	
 

	
By: 

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

 

  

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 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 October ___, 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: 	 
	 	
 

 

 

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