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.
SECURED PROMISSORY NOTE
$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 LEONARD J. TOCCI ("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 "), Leonard J. Tocci,
Lynel J. Tocci, Leanne J. Whitney, and Linnea J. Clary
(collectively, the " Principal Shareholders "). The
following is a statement of the rights of Holder and conditions to
which this Note is subject, and to which Holder, 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.
Holder’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.
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, Holder’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 depa
