EXHIBIT 10.34
THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO MAKER THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
CONVERTIBLE PROMISSORY NOTE
$450,000 November 30, 2007
THIS CONVERTIBLE PROMISSORY NOTE ("Note") is issued pursuant to the
terms and conditions of that certain Termination of Amended and Restated
Management Agreement, dated December 26, 2007 but effective for all purposes
as of November 30, 2007, by and among AMERICAN TONERSERV CORP., a Delaware
corporation ("ATS"), OPTIMA TECHNOLOGIES, LLC, a Delaware limited liability
company ("Maker"), AZARIA MANAGEMENT GROUP, LLC (fka OPTIMA TECHNOLOGIES,
L.L.C.), a Nevada limited liability company ("Payee"), and certain other
parties (the "Termination Agreement"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Termination Agreement.
1. Obligation. For value received, Maker hereby promises to pay to the
order of Payee the principal sum of Four Hundred Fifty Thousand Dollars
($450,000).
2. Maturity Date. The term of this Note shall be three (3) months,
beginning with the date of this Note and ending on March 1, 2008 (the
"Maturity Date").
3. Interest Rate. No interest shall accrue on the principal of this Note
during the term of this Note.
4. Conversion.
(a) Automatic Conversion. At any time prior to the Maturity Date,
upon the earlier to occur of (i) the closing of at least Three Million Five
Hundred Thousand Dollars ($3,500,000) of Units (excluding conversion of this
Note) offered by that certain Private Placement Memorandum of ATS dated
October 12, 2007 (the "PPM"); (ii) the closing of the purchase of the assets
of Tonertype of Florida, LLC; or (iii) the Maturity Date, the outstanding
aggregate principal amount of this Note shall be automatically converted into
nine (9) Units. As used herein and as defined in the PPM, each "Unit"
consists of Two Hundred Thousand (200,000) shares of Common Stock of ATS and
Two Hundred Thousand (200,000) redeemable warrants, each to purchase one (1)
share of Common Stock of ATS.
(b) Mechanics and Effect of Conversion. Upon surrender of this Note
to Maker, ATS shall issue and deliver to Payee a certificate or certificates
for the number of shares of Common Stock to which Payee shall be entitled. No
fractional shares of Common Stock shall be issued upon conversion of this
Note. In lieu of Maker issuing any fractional shares to Payee upon the
conversion of this Note, Maker shall pay to Payee the amount of outstanding
principal and accrued interest that is not so converted. Upon conversion of
this Note, with the proper issuance of the number of shares of Common Stock
to which Payee shall be entitled and full payment of any principal and
interest not converted in lieu of issuing fractional shares, Maker shall be
forever released from all its obligations and liabilities under this Note.
(c) No Stockholder Rights. Nothing contained in this Note shall be
construed as conferring upon Payee or any other person any rights whatsoever
as a stockholder of ATS; and no dividends shall be payable or accrued in
respect of this Note or the interest represented hereby or the Common Stock
obtainable hereunder until, and only to the extent that, this Note shall have
been converted.
5. Miscellaneous.
(a) Notice. Any notice required or permitted under this Note shall be
given in writing and delivered as described herein. A notice shall be deemed
effectively given as follows: (i) upon personal delivery; (ii) one (1)
business day after transmission by electronic means, provided such
transmission is electronically confirmed as having been successfully
transmitted and a copy of such notice is deposited within 24 hours for either
overnight delivery or for registered or certified mail, in accordance with
clause (iii) or (iv) below, respectively; (iii) one (1) business day after
deposit with a reputable overnight courier service, prepaid for overnight
delivery; or (iv) three (3) business days after deposit with the United
States Postal Service, postage prepaid, registered or certified with return
receipt requested. Addresses for notice shall be as follows, or at such other
address as such party may designate by ten (10) days' advance written notice
to the other parties:
If to Maker or ATS:
American TonerServ Corp.
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, President and CEO
With a copy, which shall not constitute notice, to:
Xxxxxxxxx XxXxxxxxxx & Xxxxxx LLP
00 Xxxxx X Xxxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. XxXxxxxxxx or Xxxxxxx X. (DJ) Xxxxxxx
If to Payee:
Azaria Management Group, LLC
(fka Optima Technologies, L.L.C.)
0000 Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
With a copy, which shall not constitute notice, to:
Johnson, Pope, Xxxxx, Xxxxxx and Xxxxx, LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
(b) Time of Essence. Time is of the essence with respect to the
terms, covenants, and conditions contained herein.
(c) Entire Agreement. This Note constitutes and embodies the entire
understanding and agreement of the parties hereto relating to the subject
matter hereof and supersedes all prior agreements or understandings of the
parties hereto, whether written or oral.
(d) Amendments and Waivers. Any term of this Note may be amended and
the observance of any term of this Note may be waived (either generally or in
a particular instance and either retroactively or prospectively), but only
with the written consent of the party or parties to be bound thereby. No
delay in the exercise of any right or remedy under this Note shall constitute
a waiver thereof and the waiver by any party of any right or remedy under
this Note on any one occasion shall not be deemed a waiver of such right or
remedy on any subsequent occasion.
(e) Assignment. This Note shall not be transferred or assigned,
whether by operation of law or otherwise, without the prior written consent
of the other party.
(f) No Third Party Beneficiaries. Except as expressly provided
herein, nothing in this Note, express or implied, is intended to confer upon
any party other than the parties hereto, or their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason
of this Note.
(g) Headings. The titles and subtitles used in this Note are used for
convenience only and shall not be considered in construing or interpreting
this Note.
(h) Governing Law. This Note shall be governed by and construed under
the laws of the State of Delaware without regard to the conflict of laws
rules of such state.
(i) Venue. Jurisdiction and venue shall exclusively lie in the Sixth
Judicial Circuit of the State of Florida, in and for Pinellas County,
Florida, or in the United States District Court for the Middle District of
Florida (Tampa Division), with respect to any legal proceedings arising from
this Note.
(j) Severability. Whenever possible, each provision of this Note
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Note shall be or become
prohibited 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.
(k) Specific Performance. Each party's obligation under this Note is
unique. If any party should default in such party's obligations under this
Note, each party acknowledges that it would be extremely impracticable to
measure the resulting damages; accordingly, the nondefaulting party or
parties, in addition to damages and any other available rights or remedies,
may xxx in equity for specific performance, and the parties hereby expressly
waive the defense that a remedy in damages shall be adequate. The parties
also hereby expressly waive any requirement that the nondefaulting party or
parties post a bond or similar security prior to obtaining and enforcing any
specific performance.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Maker has executed this Convertible Promissory Note
as of the date first set forth above.
MAKER:
OPTIMA TECHNOLOGIES, LLC,
a Delaware limited liability company
By: AMERICAN TONERSERV CORP.,
a Delaware corporation
Its: Managing Member
By:/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, President & CEO
Acknowledged and Agreed:
ATS:
AMERICAN TONERSERV CORP.,
a Delaware corporation
By:/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, President & CEO
