ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On April 8, 2009, American TonerServ Corp. (the "Company") entered into an Independent Sales Partner Agreement and an Asset Purchase Option Agreement that would give the Company an option to acquire certain assets and assume certain liabilities of Mid-America Environmental, LLC ("MAE"), doing business as Alpha Laser Services and Alpha Imaging Solutions of Evansville, Indiana. MAE provides printer and copier supplies, equipment and service to the greater Evansville area.

The independent sales partner agreement is for a term of five years, and provides, among other things, that the Company will pay MAE a monthly commission at the rate of 40% of the Adjusted EBITDA (as defined in the Asset Purchase Option Agreement) of MAE.

The Asset Purchase Option Agreement provides that the Company will have the option to purchase certain assets, and assume certain liabilities, of MAE during a period of five years. The Company paid MAE $495,000, of which $445,000 was paid in the form of two promissory notes, and the remaining $50,000 was paid in the form of 200,000 shares of the Company's common stock. In the event that the Company exercises its option to purchase the covered assets and assume the covered liabilities of MAE, the consideration for the assets will be the amount paid for the option, subject to the adjustments described below.

One of the promissory notes, in the amount of $333,200, bears interest at the rate of 7% per annum and is payable in equal monthly installments over a 60 month period. The other promissory note (the "Contingent Note"), in the amount of $111,800 bears interest at 5% per annum and be payable in fifty-eight (58) monthly installments beginning in June 2009. The principal amount of the Contingent Note shall be increased or decreased on a quarterly basis by the amount which Adjusted EBITDA is above or below a targeted amount. The Contingent Note will also be reduced by the amounts paid as commissions under the independent sales agreement.

The Asset Purchase Option Agreement also provides that three employees of MAE will be offered an opportunity to serve on the Company's advisory board and receive options to purchase an aggregate of 500,000 shares of the Company's common stock for serving on that board.