Exhibit 10.11

PROMISSORY NOTE

 

$6,000,000.00    January 24, 2007

FOR VALUE RECEIVED, API Nanotronics Corp., a Delaware corporation (the “Payor”),
hereby promises to pay to the order of Can-Med Technology, Inc. d/b/a Green
Diamond Oil Corp., an Ontario corporation (the “Lender”), at such place as the
Lender may designate, in lawful money of the United States, the principal amount
of Six Million and 00/100 Dollars ($6,000,000.00) (or such lesser amounts as may
be outstanding from time to time under this Note), together with interest
thereon calculated from the date hereof in accordance with the provisions of
this Note.

1. Definitions.

1.1 “Financing Documents” means this Note, any Security Agreement, and all
related documents contemplated thereby.

1.2 “Note” means this Note as originally executed or if later amended, modified,
supplemented or replaced then, as so amended, modified, supplemented or
replaced.

1.3 “Note Obligations” means all principal, interest (including interest which
accrues after the commencement of any case or proceeding in bankruptcy of the
Payor), fees, charges, expenses, counsel fees and any other sum chargeable to
the Payor pursuant to the terms of this Note.

1.4 “Security Agreement” means any security agreement that may be entered into
between Lender and Payor or Lender and any of Payor’s Subsidiaries from time to
time pursuant to the terms of this Note.

1.5 “Subsidiaries” means any direct or indirect subsidiaries of the Payor
including without limitation API Nanotronics Sub, Inc., API Electronics Group
Corp., API Electronics, Inc., Filtran Limited, Filtran, Inc., Keytronics Inc.,
TM Systems II, Inc., National Hybrid, Inc. and Pace Technology, Inc.

2. Payments; Prepayments.

2.1 Interest. Interest shall accrue at a rate equal to 12% per annum (the “Base
Rate”) on the unpaid principal amount of this Note outstanding from time to time
from the date hereof until the principal amount of this Note is paid in full.
Interest shall accrue on the basis of a 365 day year.

2.2 Payment Dates. Unless otherwise sooner paid, the principal obligation
evidenced by this Note shall be payable on the five years and one month after
the date

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hereof (the “Due Date”). Accrued and unpaid interest shall be due and payable on
the last day of June and December, commencing June 30, 2007 with a final payment
of accrued and unpaid interest on the Due Date. During such period, the Note
Obligations shall continue to accrue interest until paid in full. All payments
hereunder shall be made in lawful money of the United States at such address as
the Lender shall specify from time to time in writing.

2.3 Pre-Payments. The principal indebtedness of this Note may be prepaid at any
time in whole or in part (together with all interest accrued on such prepaid
amount), from time to time without penalty or premium.

 

3. Default.

3.1 Definition. For purposes of this Note, a “Default” shall be deemed to have
occurred if:

(a) the Payor defaults on the payment of any of the Note Obligations when due
and such default remains in effect for ten (10) days after the Payor receives
written notice thereof;

(b) the Payor or any of its Subsidiaries becomes insolvent or generally fails to
pay, or admits in writing its inability or refusal to pay, debts generally as
they become due; or the Payor or any of its Subsidiaries applies for, consents
to, or acquiesces in the appointment of a trustee, receiver, manager,
receiver-manager, other custodian, assignee or other similar official for the
Payor or any Subsidiary or any property thereof, or makes a general assignment
for the benefit of creditors; or, in the absence of such application, consents
or acquiesces thereto, or a trustee, receiver, manager, receiver-manager, other
custodian, assignee or other similar official is appointed for the Payor or any
Subsidiary for a substantial part of the property thereof and is not discharged
within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is commenced in respect of the Payor or
any Subsidiary, and if such case or proceeding is not commenced by the Payor or
a Subsidiary, it is consented to or acquiesced in by the Payor or any
Subsidiary, or remains for sixty (60) days undismissed; or the Payor or any
Subsidiary takes any action to authorize, or in furtherance of, any of the
foregoing; or

(c) a Default shall occur under and as defined in any other Financing Document.

 

3.2 Consequences of Event of Default.

(a) If a Default of the type described in Subsection 3.1(a) or (c) of this Note
has occurred, the Lender may declare all or any portion of the outstanding
principal amount of the Note (together with all accrued but unpaid interest
thereon and any other Note Obligations) to be immediately due and payable.

 

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(b) If a Default of the type described in Subsection 3.1(b) of this Note has
occurred, the aggregate principal amount of this Note (together with all accrued
but unpaid interest thereon and any other Note Obligations) shall become
immediately due and payable without any action on the part of the Lender.

(c) If a Default of the type described in Subsection 3.1(a), (b) or (c) of this
Note has occurred, upon the occurrence and during the continuance of such
Default, interest shall accrue at the Base Rate plus 3% per annum, on the unpaid
principal amount of the Note and accrued and unpaid interest shall be added to
the principal balance of this Note on the last date of each month while a
Default shall remain in effect.

Payor shall pay to Lender on demand any reasonable attorneys’ fees and other out
of pocket costs incurred by Lender during the continuance of a Default in
collecting or attempting to collect the amounts due under this Note. In
addition, Lender shall be entitled to exercise all additional remedies available
at law or in equity during the continuance of such Default.

 

4. Security Pledge.

If the Note is not paid within 90 days of the date here, then upon written
demand by Lender, Payor shall grant to Lender, and shall cause its Subsidiaries
to grant to Lender, as collateral security for the unpaid balance of the Note
Obligations, a security interest in any and all of the assets of Payor and/or
such Subsidiaries, including, without limitation, Payor’s and its Subsidiaries,
stock in their subsidiaries, and their respective (a) Accounts; (b) Certificated
Securities; (c) Chattel Paper, including Electronic Chattel Paper; (d) computer
hardware and software and all rights with respect thereto, including, without
limitation, any and all licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the foregoing;
(e) Commercial Tort Claims; (f) Deposit Accounts; (g) Documents; (h) Investment
Property; (i) General Intangibles including Payment Intangibles; (j) Goods
(including all of its Equipment, Fixtures and Inventory), and all embedded
software, accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor; (k) Instruments; (l) intellectual property
including patents, trademarks and copyrights and applications therefor;
(m) Investment Property; (n) Letter of Credit Rights; (o) money (of every
jurisdiction whatsoever); (p) Security Entitlements; (q) Supporting Obligations;
(r) Uncertificated Securities; (s) all books and records and recorded data
relating to any of the foregoing (regardless of the medium of recording or
storage); and (t) to the extent not included in the foregoing, other personal
property of any kind or description, together with all tangible or intangible
property relating thereto, used or useful in connection with any of the
foregoing, together with addition and accessions thereto, and all proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing, and all insurance policies and proceeds insuring the foregoing
property or any part thereof, including unearned premiums. If Payor or its
Subsidiaries is required to grant Lender a security interest in all or some of
its property pursuant to this Section 4, Payor and its Subsidiaries shall
execute

 

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such security agreements and other documents as Lender may reasonably request.
(Capitalized terms used in this Section 4 and not defined elsewhere in this Note
shall have the meaning provided in the uniform commercial code as in effect in
the State of Delaware.)

 

5. Miscellaneous.

5.1 Lost or Destroyed Note. Upon receipt by the Payor of evidence reasonably
satisfactory to the Payor of the loss, theft, destruction or mutilation of this
Note, and in the case of any such loss, theft or destruction, upon delivery of
an indemnity reasonably satisfactory to the Payor or, in case of any such
mutilation, upon surrender and cancellation of this Note, the Payor will issue a
replacement Note of like tenor in lieu of this Note.

5.2 Severability. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.

5.3 Waiver. The Payor hereby waives presentment, demand, protest, notice of
dishonor, diligence and all other notices, any release or discharge arising from
any extension of time, discharge of a prior party, or other cause of release or
discharge other than actual payment in full hereof.

5.4 Rights. Lender shall not be deemed, by any act or omission, to have waived
any of its rights or remedies hereunder unless such waiver is in writing and
signed by Lender and then only to the extent specifically set forth in such
writing. A waiver with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a subsequent
event. No delay or omission of Lender to exercise any right, whether before or
after a Default hereunder, shall impair any such right or shall be construed to
be a waiver of any right or Default, and the acceptance at any time by Lender of
any past-due amount shall not be deemed to be a waiver of the right to require
prompt payment when due of any other amounts then or thereafter due and payable.

5.5 Time. Time is of the essence hereof. Upon any Default hereunder, Lender may
exercise all rights and remedies provided for herein or in any Financing
Document and by law or equity, including, but not limited to, the right to
immediate payment in full of the Note Obligations.

5.6 Remedies. The remedies of Lender as provided herein or in any Financing
Document, or any one or more of them, in law or at equity, shall be cumulative
and concurrent, and may be pursued singularly, successively or together at
Lender’s sole discretion, and may be exercised as often as occasion therefor
shall occur.

 

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5.7 Interest. If any provisions of this Note would require the Payor to pay
interest hereon at a rate exceeding the highest rate allowed by applicable law,
the Payor shall instead pay interest under this Note at the highest rate
permitted by applicable law.

5.8 Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to any choice or
conflict of law provision or law that would cause the application of the laws of
any other jurisdiction other than the State of Delaware.

5.9 ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF DELAWARE OR IN THE U.S. DISTRICT COURT—DISTRICT OF DELAWARE. PAYOR HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF DELAWARE AND OF THE U.S. DISTRICT COURT—DISTRICT OF DELAWARE FOR THE PURPOSE
OF ANY SUCH LITIGATION AS SET FORTH ABOVE. PAYOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

5.10 PAYOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the Payor has caused this Note to be executed on its behalf
by one of its duly authorized officers.

 

API NANOTRONICS CORP. By:   /s/ Phillip DeZwirek  

Name: Phillip DeZwirek

Title: Chief Executive Officer

 

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