EXHIBIT 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED. IT 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.
SECURED CONTINGENT PROMISSORY NOTE NO. 1
$575,000
October 31, 2008
THIS
SECURED CONTINGENT PROMISSORY NOTE NO. 1 ("Note") is issued
pursuant to the terms and conditions of that certain Asset
Purchase
Agreement, dated as of October 31, 2008, by and among iPRINT
TECHNOLOGIES,
LLC, a Delaware limited liability company ("Maker"), iPRINT
TECHNOLOGIES,
INC., a California corporation ("Payee"), AMERICAN TONERSERV CORP.,
a
Delaware corporation ("ATS"), and certain other parties (the
"Purchase
Agreement").
Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
1.
Obligation. For value
received, and subject to the terms and
conditions set forth in this Note, Maker hereby promises to pay to
the order
of Payee the principal sum of Five Hundred Seventy-five Thousand
Dollars
($575,000), together with interest (at the rate set forth below) on
the
unpaid principal balance of this Note.
2.
Maturity Date. The
term of this Note shall be one hundred twenty
(120) days, beginning on the date of this Note and ending on March
2, 2009
(the "Maturity Date").
3.
Interest Rate.
(a)
Standard Rate. The
interest rate on the unpaid principal
during the term of this Note shall be five percent (5%).
(b)
Default Rate.
Notwithstanding Section 3(a) hereof, while
an Event of Default (as defined below) exists or after
acceleration, Maker
shall pay interest on the principal amount of all outstanding
obligations of
Maker under this Note, at the lower of (i) ten percent (10%) per
annum, or
(ii) the highest rate permitted by law.
(c)
Computations. All
computations of interest shall be made
on the basis of a year of three hundred and sixty-five (365).
Interest shall
accrue during each period during which interest is computed from
the first
day thereof to the last day thereof and shall compound on a monthly
basis.
(d)
Usury. If performance
of or compliance with any provision
of this Note or in any instrument now or hereafter securing or
guaranteeing
this Note results in Payee receiving interest in an amount which
would exceed
the maximum rate allowed by law, the amount of such interest which
exceeds
such lawful limits shall be applied to the reduction of the unpaid
principal
balance and not to the payment of interest. In determining whether or not
the interest paid or payable, under any specific contingency,
exceeds the
highest rate of interest permitted under applicable law, Payee and
Maker
shall, to the maximum extent permitted under applicable law, (i)
characterize
any nonprincipal payment as an expense, fee or premium rather than
as
interest, (ii) exclude voluntary prepayments and the effects
thereof, and
(iii) allocate and "spread" the total amount of interest throughout
the
entire term of this Note so that the interest rate is uniform
throughout the
entire term hereof.
4.
Payment.
(a)
Lump-sum Payment. This
Note shall be payable in a single
lump-sum payment on the Maturity Date. Upon full payment of all amounts
due
under this Note, Maker shall be forever released from all of its
obligations
and liabilities under this Note.
(b)
General. All payments
due hereunder shall be made in
lawful money of the United States of America to Payee via
electronic funds
transfer directly to the account specified by Payee, or such other
person or
at such other place as Payee may from time to time designate in
writing to
Maker. All payments
shall be made no later than 5:00 p.m. (Pacific Time) on
the date specified herein. Any payment received by Payee
later than 5:00
p.m. (Pacific Time) shall be deemed to have been received on the
following
business day and any applicable interest or fee shall continue to
accrue.
Whenever any payment is due on a day other than a business day,
such payment
shall be made on either (i) the previous business day, or (ii) the
following
business day, and such extension of time shall in such case be
included in
the computation of interest.
(c)
Prepayments. There
shall be no penalty for prepayment;
provided, however, that any prepayment of less than all of the
outstanding
principal and unpaid accrued interest shall shorten the term of
this Note and
not reduce the amount of any installment payment otherwise becoming
due after
the prepayment date.
Any prepayment made shall be applied first to interest
and then to principal.
(d)
Attorneys Fees. In the
event suit is instituted by Payee
to collect this Note or any portion thereof, Maker promises to pay
such
additional sums as the court may adjudge reasonable as attorney's
fees in
such suit.
5.
Late
Charge. If any payment
of principal or interest under this
Note shall not be made within ten (10) business days (the "Grace
Period")
after the issuance of written notice that such payment is due, a
late charge
of five percent (5%) of the overdue amount will be charged by
Payee. Such
late charge is in addition to the interest that shall continue to
accrue
during the Grace Period which additional interest shall be paid
with the late
charge. The late
charge represents a reasonable sum considering all of the
circumstances existing on the date of this Note and represents a
fair and
reasonable estimate of the costs sustained and the frustration
suffered by
Payee due to the failure of Maker to make timely payments.
Maker further
agrees that proof of actual damages would be costly or
inconvenient. Such
late charge shall be immediately due and payable and shall be paid
without
prejudice to the right of Payee to collect any other amounts to be
paid or to
declare a default under this Note, or from exercising any of the
other rights
and remedies of Payee.
6.
Security. Maker's
obligations hereunder are secured by that
certain Security Agreement of even date herewith by and between
Maker and
Payee (the "Security Agreement"), pursuant to which Maker grants
Payee a
security interest in the Secured Assets (as defined in the
Purchase
Agreement).
7.
Adjustment. The
principal amount of this Note may be adjusted in
accordance with the terms and conditions of Section 7.3 of the
Purchase
Agreement. In the
event of such adjustment, the amount of any payments due
hereunder shall be recalculated accordingly but the term of this
Note shall
not be shortened or le
