EXHIBIT 10.46

AMERICAN TONERSERV CORP.

PROMISSORY NOTE

 

$1,000,000                                                                                                                                                                                                                                                                      
 March 5, 2010

 

American TonerServ Corp., a Delaware corporation (the "Company"), the principal
office of which is located at 420 Aviation Blvd, Suite 103, Santa Rosa, CA
95403, for value received, hereby promises to pay to the James E. Berger and
Joann E. Berger Trust, or its registered assigns ("Holder"), the sum of One
Million dollars ($1,000,000).  This promissory note ("Note") shall be payable as
set forth in Section 2 below.

Payment of all amounts due hereunder shall be made by mail to the registered
address of the Holder. 

The following is a statement of the rights of the Holder of this Note and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:

1.                  DEFINITIONS.  AS USED IN THIS NOTE, THE FOLLOWING TERMS,
UNLESS THE CONTEXT OTHERWISE REQUIRES, HAVE THE FOLLOWING MEANINGS:

(I)                  "COMPANY" INCLUDES ANY PERSON WHICH SHALL SUCCEED TO OR
ASSUME THE OBLIGATIONS OF THE COMPANY UNDER THIS NOTE.

(II)                "HOLDER," WHEN THE CONTEXT REFERS TO A HOLDER OF THIS NOTE,
SHALL MEAN ANY PERSON WHO SHALL AT THE TIME BE THE REGISTERED HOLDER OF THIS
NOTE.

2.                  INTEREST AND MATURITY. SIMPLE INTEREST SHALL ACCRUE ON THE
OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT THE RATE OF TEN PERCENT (10%) PER
ANNUM, OR THE MAXIMUM RATE PERMITTED BY LAW, WHICHEVER IS LESS, FROM THE DATE OF
ISSUANCE OF THIS NOTE THROUGH THE DATE THIS NOTE IS FULLY REPAID.  ONE-HALF
(1/2) OF THE ACCRUED INTEREST SHALL BE PAID MONTHLY BY THE 15TH DAY FOLLOWING
EACH CALENDAR MONTH END.  THE REMAINING ACCRUED INTEREST SHALL BE PAYABLE,
TOGETHER WITH THE PRINCIPAL, AT THE MATURITY OF THIS NOTE.  THIS NOTE SHALL
MATURE TWELVE (12) MONTHS AFTER IT IS EXECUTED.

3.                  EVENTS OF DEFAULT.  IF ANY OF THE EVENTS SPECIFIED IN THIS
SECTION 3 SHALL OCCUR (HEREIN INDIVIDUALLY REFERRED TO AS AN "EVENT OF
DEFAULT"), THE HOLDER OF THE NOTE MAY, SO LONG AS SUCH CONDITION EXISTS, DECLARE
THE ENTIRE PRINCIPAL AND UNPAID ACCRUED INTEREST HEREON IMMEDIATELY DUE AND
PAYABLE, BY NOTICE IN WRITING TO THE COMPANY:

(I)                  DEFAULT IN THE PAYMENT OF THE PRINCIPAL AND UNPAID ACCRUED
INTEREST OF THIS NOTE WHEN DUE AND PAYABLE IF SUCH DEFAULT IS NOT CURED BY THE
COMPANY WITHIN TEN (10) DAYS AFTER THE HOLDER HAS GIVEN THE COMPANY WRITTEN
NOTICE OF SUCH DEFAULT; OR

 

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(II)                THE INSTITUTION BY THE COMPANY OF PROCEED­INGS TO BE
ADJUDICATED AS BANKRUPT OR INSOLVENT, OR THE CONSENT BY IT TO INSTITUTION OF
BANKRUPTCY OR INSOLVENCY PROCEEDINGS AGAINST IT OR THE FILING BY IT OF A
PETITION OR ANSWER OR CONSENT SEEKING REORGANIZA­TION OR RELEASE UNDER THE
FEDERAL BANKRUPTCY ACT, OR ANY OTHER APPLICABLE FEDERAL OR STATE LAW, OR THE
CONSENT BY IT TO THE FILING OF ANY SUCH PETITION OR THE APPOINTMENT OF A
RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE OR OTHER SIMILAR OFFICIAL OF THE
COMPANY, OR OF ANY SUBSTANTIAL PART OF ITS PROPERTY, OR THE MAKING BY IT OF AN
ASSIGNMENT FOR THE BENEFIT OF CREDITORS, OR THE TAKING OF CORPORATE ACTION BY
THE COMPANY IN FURTHERANCE OF ANY SUCH ACTION; OR

(III)               IF, WITHIN SIXTY (60) DAYS AFTER THE COMMENCEMENT OF AN
ACTION AGAINST THE COMPANY (AND SERVICE OF PROCESS IN CONNECTION THEREWITH ON
THE COMPANY) SEEKING ANY BANKRUPTCY, INSOLVENCY, REORGANIZATION, LIQUIDATION,
DISSOLUTION OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE STATUTE, LAW OR
REGULA­TION, SUCH ACTION SHALL NOT HAVE BEEN RESOLVED IN FAVOR OF THE COMPANY OR
ALL ORDERS OR PROCEEDINGS THEREUNDER AFFECTING THE OPERATIONS OR THE BUSINESS OF
THE COMPANY STAYED, OR IF THE STAY OF ANY SUCH ORDER OR PROCEEDING SHALL
THEREAFTER BE SET ASIDE, OR IF, WITHIN SIXTY (60) DAYS AFTER THE APPOINTMENT
WITHOUT THE CONSENT OR ACQUIESCENCE OF THE COMPANY OF ANY TRUSTEE, RECEIVER OR
LIQUIDATOR OF THE COMPANY OR OF ALL OR ANY SUBSTANTIAL PART OF THE PROPERTIES OF
THE COMPANY, SUCH APPOINTMENT SHALL NOT HAVE BEEN VACATED.

4.                  PREPAYMENT. THE COMPANY MAY PREPAY THE PRINCIPAL OF THIS
NOTE IN WHOLE OR IN PART AT ANY TIME PRIOR TO DUE DATE OF THIS NOTE WITHOUT THE
CONSENT OF THE HOLDER. HOWEVER, ANY PREPAYMENT OF LESS THAN ALL OF THE PRINCIPAL
AND ACCRUED INTEREST SHALL BE APPLIED FIRST TO INTEREST AND THEN TO PRINCIPAL.

5.                  LATE FEE.  IF PAYMENT IS NOT RECEIVED ON THE 15TH DAY OF
EACH MONTH (OR IF THE 15TH FALLS ON A WEEKEND, THE FOLLOWING BUSINESS DAY) THEN
THERE WILL BE A LATE CHARGE OF $50 PER DAY UNTIL PAYMENT IS RECEIVED.

6.                  ASSIGNMENT.  THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND
THE HOLDER OF THIS NOTE SHALL BE BINDING UPON AND BENEFIT THE SUCCESSORS,
ASSIGNS, HEIRS, ADMINISTRATORS AND TRANSFEREES OF THE PARTIES.

7.                  WAIVER AND AMENDMENT.  THIS NOTE MAY ONLY BE AMENDED, WAIVED
OR MODIFIED UPON THE WRITTEN CONSENT OF THE COMPANY AND THE HOLDER.

8.                  NOTICES.  ANY NOTICE OR OTHER COMMUNICATION BETWEEN THE
PARTIES HERETO SHALL BE IN WRITING AND SHALL BE DELIVERED PERSONALLY OR BY
UNITED STATES MAIL AND SHALL BE DEEMED DELIVERED UPON RECEIPT IF SENT BY
PERSONAL DELIVERY, AND THREE (3) BUSINESS DAYS AFTER DEPOSIT IF SENT BY UNITED
STATES MAIL. SUCH NOTICES OR COMMUNICATIONS SHALL BE SENT TO THE FOLLOWING
ADDRESSES:  (A) IF TO THE COMPANY, 420 AVIATION BOULEVARD, SUITE 103, SANTA
ROSA, CA 95403, OR AT SUCH OTHER ADDRESS OR ADDRESSES AS MAY HAVE BEEN FURNISHED
IN WRITING BY THE COMPANY TO THE HOLDER, AND (B) IF TO THE HOLDER, AT THE
ADDRESS SET FORTH IN THE GUARANTY.

9.                  HEADINGS; REFERENCES.  ALL HEADINGS USED HEREIN ARE USED FOR
CONVENIENCE ONLY AND SHALL NOT BE USED TO CONSTRUE OR INTERPRET THIS NOTE. 
EXCEPT AS OTHERWISE INDICATED, ALL REFERENCES HEREIN TO SECTIONS REFER TO
SECTIONS HEREOF.

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10.              DISPUTE RESOLUTION.  IN THE EVENT THAT ANY DISPUTE BETWEEN THE
PARTIES REGARDING THE TERMS OF THIS AGREEMENT IS NOT RESOLVED BY INFORMAL
NEGOTIATION BETWEEN THE PARTIES, THE MATTER SHALL BE REFERRED TO THE NEAREST
OFFICE OF J.A.M.S./ENDISPUTE FOR MEDIATION, THAT IS, AN INFORMAL, NON-BINDING
CONFERENCE OR CONFERENCES BETWEEN THE PARTIES IN WHICH A NEUTRAL PANELIST WILL
SEEK TO GUIDE THE PARTIES TO A RESOLUTION OF THE MATTER.  EACH PARTY AGREES TO
PAY ITS OWN COSTS IN CONNECTION WITH THE MEDIATION AND ITS PROPORTIONATE SHARE
OF THE FEES AND COSTS OF J.A.M.S./ENDISPUTE IN CONNECTION WITH THE MEDIATION. 
EACH PARTY AGREES TO SPEND A MINIMUM OF AT LEAST SIX (6) HOURS IN ATTEMPTING TO
MEDIATE THE DISPUTE (UNLESS IT IS RESOLVED IN LESS THAN SIX (6) HOURS).  IF THE
DISPUTE IS NOT RESOLVED IN SUCH TIME, THE PARTIES MAY ELECT TO CONTINUE
MEDIATION OR EITHER PARTY MAY COMMENCE LITIGATION OR BINDING ARBITRATION.  THE
VENUE FOR ANY LITIGATION OR ARBITRATION SHALL BE SONOMA COUNTY, CALIFORNIA.

11.              ATTORNEY FEES.  IN THE EVENT THAT ANY DISPUTE AMONG ANY PARTIES
HERETO SHOULD RESULT IN LITIGATION OR ARBITRATION, THE PREVAILING PARTY IN SUCH
DISPUTE SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ALL REASONABLE FEES,
COSTS AND EXPENSES OF ENFORCING ANY RIGHT OF THE PREVAILING PARTY, INCLUDING
WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND EXPENSES, ALL OF WHICH SHALL
BE DEEMED TO HAVE ACCRUED UPON THE COMMENCEMENT OF SUCH ACTION AND SHALL BE PAID
WHETHER OR NOT SUCH ACTION IS PROSECUTED TO JUDGMENT.  ANY JUDGMENT OR ORDER
ENTERED IN SUCH ACTION SHALL CONTAIN A SPECIFIC PROVISION PROVIDING FOR THE
RECOVERY OF ATTORNEY FEES AND COSTS INCURRED IN ENFORCING SUCH JUDGMENT AND AN
AWARD OF PREJUDGMENT INTEREST FROM THE DATE OF THE BREACH AT THE MAXIMUM RATE
ALLOWED BY LAW.  THE PREVAILING PARTY SHALL MEAN THE PARTY WHO IS DETERMINED IN
THE PROCEEDING TO HAVE PREVAILED OR WHO PREVAILS BY DISMISSAL, DEFAULT OR
OTHERWISE AND NOT NECESSARILY THE PARTY IN WHOSE FAVOR A JUDGMENT OR OTHER
DECISION IS RENDERED.

           

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date
first set forth above.

 

American TonerServ Corp.

 

 

By: /s/ Ryan Vice

 

Its: CFO

 

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