Contract
Exhibit
A
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), UNDER ANY STATE SECURITIES LAW, OR UNDER ANY "BLUE SKY" LAWS, AND
THIS SECURITY MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, OR
OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE ACT
AND OF THE "BLUE SKY" LAWS, OR UNLESS AN EXEMPTION THEREFROM IS AVAILABLE, AS
ESTABLISHED BY A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO DATAMEG
CORPORATION.
$4,000,000 The
Effective Time: _______, 2007
FOR VALUE
RECEIVED, the undersigned, AMERICAN MARKETING AND SALES, INC., a Massachusetts
corporation and any surviving entity (“Company Maker”), and Datameg Corporation,
a Delaware Corporation (“Parent Maker”), both of whom hereinafter
referred to as Maker, hereby jointly and severally promises to pay to the order
of XXXXXXX X. XXXXX ("Holder") for the benefit of the Principal Shareholders
below identified, the principal sum of FOUR MILLION AND 00/100 DOLLARS
($4,000,000) (the "Initial Principal") and any additions to the Initial
Principal (“Additional Principal”) made from time to time as provided herein,
together with Interest thereon. Interest shall accrue on the Principal as
adjusted from time to time at a rate of six percent (6%) per annum computed on
the basis of the actual number of days elapsed without compounding until the
date of payment in full.
This
Secured Promissory Note ("Note") evidences indebtedness of The Company and
Parent Maker to Holder with respect to the AGREEMENT AND PLAN OF
MERGER (the "Merger Agreement") made and entered into as of August
14, 2007 by and among Datameg Corporation, a Delaware corporation ("Parent"), AM Acquisition
Corporation, a Massachusetts corporation that is a wholly-owned subsidiary of
Parent ("Sub"), and
American Marketing & Sales, Inc., a Massachusetts corporation ("Company"), Xxxxxxx X. Xxxxx,
Xxxxx X. Xxxxx, Xxxxxx X. Xxxxxxx, and Xxxxxx X. Xxxxx (collectively, the "Principal Shareholders"). The
following is a statement of the rights of Xxxxxx and conditions to which this
Note is subject, and to which Xxxxxx, by the written acceptance of this Note
below made, agrees:
Term and Maturity Date. The
date on which the Principal Balance and all Interest and other amounts shall be
due and payable (the “Maturity Date”) shall be on the date of the second
anniversary of the EFFECTIVE TIME as identified in the Merger Agreement and
above written.
Additional
Principal. From time to time, the Company shall have the right
to make cash loans from its operating cash in excess of the Company’s operating
needs to the Parent and/or one more of its other subsidiaries which loan
agreement between the Company and debtor(s) shall be in writing with interest as
provided herein and secured, as further provided by the terms of this
Note. A copy of each loan agreement shall be consecutively number and
delivered to the Holder and appended to this Note. Each loan
agreement’s amount shall become Additional Principal of this Note and bear
interest from the date of the loan. The Additional Principal of this Note may be
prepaid in whole or in part at any time prior to the Maturity Date. It is
specifically understood that the Company shall be under no obligation to make
cash loans totaling more than Five Hundred Thousand Dollars ($500,000) during
the term of this Note.
Xxxxxx’s and Maker’s Election re
Fifteen Millions Shares of Datameg Common
Stock. The Principal Shareholders shall be issued, pro rata,
fifteen million shares of Datameg Corporation’s unregistered common stock (the
“Shares”) as provided in the Merger Agreement. The Shares are to be
held in escrow by Datameg Corporation without restrictive legends other than as
required by law. The Holder may at any time during the term of this
Note, upon sixty (60) day written notice, deliver its election to the Maker and
Datameg Corporation to return the Shares to Datameg Corporation and the
principal amount of the of this Note shall upon return of the Shares be
increased by Five Hundred Thousand Dollars ($500,000), at which time this Note
and any additional loans of the Company shall become immediately due and payable
(the Election Period”). During the Election Period, Holder may, in
writing, waive its right to elect to return the Shares and upon delivery of the
waiver to Maker and Datameg Corporation the amounts due under the Note shall
thereupon be deemed satisfied in full upon delivery of the Shares to
Holder.
Payment of Principal and
Interest. Unless otherwise provided herein, Maker shall pay
Holder the entire principal sum then due plus all accrued and unpaid interest on
or before the Maturity Date.
Security. To secure the timely
payment of the Principal Balance and the Interest under this Note and the
performance by Parent Maker and Company Maker of all of its commitments and
obligations under the Agreement, the Company hereby pledges and grants to the
Holder a security interest in all of the right, title and interest of the
Company in and to all of the assets, interests and undertakings of the Company,
including, without limitation, all equipment, molds, tooling, accounts
receivables, inventory and accounts, whether now owned or hereafter acquired,
existing or arising, tangible or intangible, including, without limitation, all
general intangible property, wherever located, together with all renewals
thereof, substitutions therefor and proceeds thereof and all interest,
dividends, income and revenue therefrom (the "Collateral"); and Company Maker
hereby grants to Holder a security interest in the Collateral and acknowledges
and agrees to take all steps necessary to perfect such security interest in
accordance with the applicable laws of the Commonwealth of Massachusetts,
including, without limitation, the Uniform Commercial Code of the Commonwealth
of Massachusetts as it may be amended from time to time (the
"UCC"). This instrument shall constitute a security agreement to the
extent the Collateral constitutes personal property, and Holder shall have all
of the rights of a "Secured Party" under the UCC. Maker shall not
further pledge or otherwise further encumber, in whole or in part, the
Collateral without the written consent of the Holder.
2
As of the
date hereof, Maker represents and warrants that there are no liens, mortgages or
other encumbrances affecting or otherwise limiting or restricting the
transferability of any or all of the Collateral other than those existing under
any capital leases or similar arrangements with respect to property or equipment
leased by Maker. Maker waives any right to require Holder to proceed against
another person or to exhaust the Collateral or to pursue any other remedy which
Holder may have. Maker waives presentment, demand for performance, notice of
nonperformance, protest, notice of protest and dishonor with respect to the
Collateral. Maker waives the right to require Holder to preserve rights against
prior parties to instruments or chattel paper.
Except in
an Event of Default, Maker shall retain all of its rights to, and use of, the
Collateral and to the use of the profits or proceeds from the
Collateral.
Despite
anything to the contrary in this Note, and without in any manner affecting its
validity, in the event of any default under the terms of this Note, Xxxxxx’s
sole recourse shall be to the security for this Note.
As
additional security, to secure the timely payments of all of the principal
balances and interest under this Note and the additional loans by the Maker
Company, the Parent hereby pledges and grants to the Holder all of the common
capital stock of the Company.
Amendments. No amendment,
modification or waiver of any provision of this Note, nor consent to any
departure by the Maker from the terms hereof, shall be effective unless the same
shall be in a writing signed by the Holder, and then only in the specific
instance and for the purpose for which given. No failure to exercise, and no
delay in exercising, any right under the Merger Agreement or this Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right under the Merger Agreement or this Note preclude any other or further
exercise thereof or the exercise of any other right. Each and every right
granted hereunder or by law or at equity shall be deemed cumulative, and such
remedies may be exercised from time to time concurrently or
consecutively.
Controlling
Document. To the extent that this Note conflicts with or is in
any way incompatible with any other document related specifically to the loan
evidenced by this Note, this Note shall control over any other such document,
and if this Note does not address an issue, then each other such document shall
control to the extent that it deals most specifically with an
issue.
Defaults; Acceleration. Maker
shall be in default under this Note upon the occurrence of any of the following
events:(a) There is any default (i) in the full payment and timely receipt by
Holder of any installment hereunder or (ii) in the full repayment of the unpaid
principal or accrued and unpaid interest due under this Note or any and all
amounts owed to Holder when due hereunder.(b) Maker fails to perform any
covenant or observe any condition contained in this Note or Parent or Maker
breaches any representation, warranty, covenant, term or condition of this Note
or the Merger Agreement (c) The Maker is subject to or affected by: (i) the
appointment of a receiver, liquidator, or trustee; (ii) the filing of any
voluntary or involuntary petition for bankruptcy or reorganization by Maker or
Datameg Corporation; (iii) the insolvency or business failure of Maker; (iv) the
inability of Maker to pay its debts when due or the admission in writing by
Maker that its debts cannot be paid when due;(v) the removal of Maker’s
operations from Leominster, Massachusetts; (vi) the dissolution, termination of
existence, other than by merger, acquisition or other surviving existence;(vii)
any assignment for the benefit of creditors;(viii) the making or suffering of a
fraudulent transfer under applicable federal or state law;(ix) the concealment
of any of its property in fraud of creditors;(x) the making or suffering of a
preference within the meaning of the federal bankruptcy law. In the event of a
default by Maker, and subject to any applicable right expressly granted to Maker
to cure such a default, the entire principal sum, with accrued interest thereon
and all other sums due under this Note, shall at the option of Holder, become
immediately due and payable, and Holder shall been entitled to collect all such
amounts and to enforce any and all remedies provided in any other instrument or
document executed in connection with this Note.
3
Voluntary
Surrender. Upon the occurrence of any event of default, the
Maker will immediately and voluntarily surrender to the Holder, all of the
assets pledged to secure this Note without further notice or demand by the
Holder, free and clear of any encumbrances.
Return of Note. This Note
shall be returned to Maker upon the payment in full of the amount of this
Note.
Non-Negotiable. This Note is
non-negotiable and may not otherwise be transferred.
Non Assignment. The Maker's
rights and obligations under this Note are not assignable or delegable without
the prior written consent of the Holder.
Successors and Assigns;
Participation. Subject to the prohibitions against Maker's assignment
herein, this Note shall inure to the benefit of Xxxxxx and bind Maker and all of
its respective successors (including by merger, acquisition or other surviving
existence), estates, heirs, personal representatives and assigns.
Waivers. Maker hereby waives
presentment, demand of payment, notice of dishonor, protest, notice of
nonpayment and any and all other notices and demands whatsoever. No covenant,
condition, right or remedy in this Note may be waived or modified orally, by
course of conduct or previous acceptance or otherwise unless such waiver or
modification is specifically agreed to in a writing executed by Xxxxxx. Without
limiting the foregoing, no previous waiver and no failure or delay by Holder in
acting pursuant to the terms of this Note shall constitute a waiver of any
breach, default or failure of a condition under this Note or any obligations
contained therein or secured thereby. Maker further waives exhaustion of legal
remedies and the right to plead any and all statutes of limitation as a defense
to any demand on this Note, or to any agreement to pay the same.
4
Costs of Collection. Maker
promises to pay all costs, expenses and attorneys' fees incurred by Xxxxxx in
the exercise of any remedy (with or without litigation), in any proceeding for
the collection of this Note, or in any litigation or controversy arising from or
connected with this Note. Such proceedings shall include, without limitation,
any probate, bankruptcy, receivership, injunction, arbitration, mediation or
other proceeding, or any appeal from or petition for review of any of the
foregoing, in which Xxxxxx appears to enforce this Note. Maker shall also pay
all of Holder's costs and attorneys' fees incurred in connection with any
demand, workout, settlement, compromise or other activity in which Holder
engages to collect any portion of this Note not paid when due or as a result of
any other default of Maker. If a judgment is obtained by Holder which includes
an award of attorneys' fees, such fees shall be in whatever amount the court
shall deem reasonable and the judgment shall bear interest at the maximum legal
rate.
Governing Law and
Interpretation. This Note shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts, except
to the extent that federal law preempts the laws of the Commonwealth of
Massachusetts. All sums referred to herein shall be calculated by reference to
and payable in the lawful currency of the United States. Time is of the essence
in the performance by Maker of all of Maker's duties and obligations under this
Note.
Partial Invalidity. If any
section or provision of this Note is declared invalid or unenforceable by an
court of competent jurisdiction, such section or provision shall be enforceable
to the fullest extent permitted by law, and such a determination shall not
affect the validity or enforceability of the remaining terms hereof; by way of
example and not limitation, if any fee exceeds the maximum such fee permitted by
law, such fee shall be reduced so as to equal the maximum permitted by law, or
if any time period is shorter than required by law, such time period shall be
deemed increased to the minimum time period permitted by law. No such
determination in one jurisdiction shall affect any provision of this Note to the
extent it is otherwise enforceable under the laws of any other applicable
jurisdiction.
Notices. Any notice required
or permitted to be delivered under this Note shall be in writing and shall be
served personally, or facsimile transmission, or electronic transmission
(email),or delivered or sent by a recognized private courier company or by
registered or certified United States mail, postage prepaid, return receipt
requested, and addressed to a recipient as provided in the Merger
Agreement.
Notices
shall be deemed delivered upon delivery or refusal to accept delivery as
indicated by the person attempting to make personal service, in the U.S. Postal
Service return receipt or by similar advice from the courier company; provided,
however, that if any notice shall be delivered by electronic transmission
device, such as Telex, telecopy, fax machine or computer, such notice shall be
deemed delivered at the time and on the date of machine transmittal if the
sending party receives a written send verification on its machine and forwards a
copy thereof with its personally served, mailed or courier delivered notice. Any
party to whom notices are to be sent pursuant to this Note may from time to time
change its address or fax number for future communication hereunder by giving
notice in the manner prescribed herein to the other party, provided that any
change shall not be effective until five (5) business days after giving notice
of the change.
5
Consent to Jurisdiction. Maker
hereto agrees that all actions or proceedings arising in connection with this
Note shall be tried and litigated exclusively in the state and federal courts
located in the Commonwealth of Massachusetts. This choice of venue is intended
by Maker and Holder to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between or among the parties with
respect to or arising out of this Note in any jurisdiction other than that
specified in this section. Maker waives any right that it may have to assert the
doctrine forum non conveniens
or similar doctrine or to object to venue with respect to any proceeding
brought in accordance with this section, and stipulates that the state and
federal courts located in the Commonwealth of Massachusetts, shall have in
personam jurisdiction and venue over it for the purpose of litigating any
dispute, controversy or proceeding arising out of this Note. Nothing in this
Note shall be deemed or operate to preclude the parties from bringing suit or
taking other legal action in any other jurisdiction to obtain specific
performance to the extent allowed herein, or to enforce a judgment or other
court order in favor of any of the parties.
Full Power and Authority.
Maker and each individual executing this Note on behalf of Maker have the full
power and authority to execute and deliver this Note, and this Note constitutes
the valid and binding obligation of Maker and is enforceable in accordance with
its terms.
Captions; Certain Terms. The
various captions and headings contained in this Note are for reference only and
shall not be considered or referred to in resolving questions of interpretation
of this Note. No provision in this Note is to be interpreted for or against any
party because that party or that party's legal representative drafted such
provision, it being recognized that all parties have contributed substantially
and materially to the preparation of this Note. As used in this Note, the term
"including" means "including but not limited to" unless otherwise specified; the
word "or" means "and/or," the word "person" means and refers to any individual,
corporation, trust, estate, partnership, joint venture, government or
governmental authority or other entity and the word "affiliate" means and refers
to any entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, another entity. All
pronouns and any variations thereof, shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person, persons,
entity or entities may require. Whenever in this Note locative adverbs such as
"herein" and "hereunder" are used, the same shall be made in reference to this
Note in its entirety and not any specific article, section, subsection, subpart,
paragraph or subparagraph.
SIGNATURE
PAGE FOLLOWS:
6
"Maker"
DATAMEG
CORPORATION, a Delaware corporation
By: /s/ Xxxxx Xxxxxx
Xxxxx
Xxxxxx, President
AMERICAN
MARKETING AND SALES, INC., a Massachusetts corporation
By: /s/ Xxxxx Xxxxxx
Xxxxx
Xxxxxx, President
AGREED
AND ACCEPTED:
“Holder”
/s/
Xxxxxxx X. Xxxxx
XXXXXXX
X. XXXXX
