All American Pet Company Inc (AAPT)

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http://agreements.realdealdocs.com/Promissory-Note/CONVERTIBLE-REVOLVING-CREDIT-GRID-NOTE-2989944/


THIS CONVERTIBLE REVOLVING CREDIT GRID NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IT MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED EXCEPT RELATED TO AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

ALL AMERICAN PET COMPANY, INC.

CONVERTIBLE REVOLVING CREDIT GRID NOTE


$1,000,000.00 USD March 6, 2012

FOR VALUE RECEIVED (as recorded on the grid attached hereto as Schedule A or any additional pages thereof), ALL AMERICAN PET COMPANY, INC., a Maryland corporation (the “Company” and “Maker”), promises to pay to the order of Lisa Bershan and Barry Schwartz (collectively the “Holders”), on the Maturity Date (as defined below), unless sooner paid or converted as provided below, the principal sum of up to One Million USD ($1,000,000.00 USD), or the aggregate amount of all unpaid revolving credit loans (“Advances”) made to the Maker by the Holder from time to time hereinafter, whichever is less. The principal balance of this Note shall be due and payable upon demand to the Holder. All payments under this Note shall be made to the order of the Holder at the address Holder may designate in writing to the Company.


1.
Interest Rate . The outstanding principal balance of this Note shall bear interest at a fixed rate equal to ten percent (10%) per annum. All Interest payments shall be in the form of the Company’s equity securities (the "Equity Securities").

2.
Endorsement . All Advances made to the Maker by the Holder under this Note and all payments of principal amounts in respect of such Advances may be endorsed by the Holder on Schedule A attached to this Note, which endorsements shall, in the absence of manifest error, be conclusive as to the outstanding principal amount of all Advances; provided, however, that the failure to make such notation with respect to any Advance or payment shall not limit or otherwise affect the obligations of the Maker under this Note.

2.
Maturity Date . The date that this Note shall mature, and the principal amount outstanding hereunder, plus accrued unpaid interest thereon and any charges pertaining thereto, shall become due and payable at any time 3 years from the original issue date (the “ Maturity Date ”).

3.
Prepayments . The Company may voluntarily prepay this Note either in whole or in part without penalty or premium.

4.
Conversion .

(a)
Conversion Rate . The outstanding principal balance and unpaid accrued interest on this Note shall, at Holder’s sole option, convert into equity of the Company at the Conversion Price, on or before March 6, 2013, by providing five (5) days notice to the Company. The “Conversion Price” shall be $0.0022 per share of common stock of the Company.


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(b)
Manner of Conversion . The Holders shall be deemed to be the holders of the common stock into which this Note converts as of the date of the conversion described above, and shall have all of the rights to which Holders are entitled as holders of common stock. To receive a certificate representing the common stock, Holders shall surrender this Note to the Company. As soon as practicable after the surrender of this Note, the Company shall (i) issue and deliver to Holders a certificate for the number of common stock issuable upon conversion, (ii) pay to the Holders cash as provided in Section 4(d) below for any fractional shares which would otherwise be issuable upon conversion, and (iii) if less than the entire amount owing under the Note is being converted, a new promissory note in substantially the same form as this Note in a principal amount equal to the amount due and owing and unconverted hereunder.

(c)
Conversion Adjustment. If, at any time until this Note is paid in full, the Company issues a Conversion price to any other lender that is less than the Conversion price included herein, the Conversion price as described above, shall be adjusted to be equal to the lower Conversion price offered to any other lender.

(d)
Fractional Shares . No fractional shares shall be issued upon conversion of this Note. In place of a fractional share, the Company shall pay Holders an amount equal to the product obtained by multiplying the fractional share by the Conversion Price per share for the applicable common stock.

5.
Waivers . The Company hereby waives diligence, presentment for payment, demand, protest, notice of non-payment, notice of dishonor, notice of protest, and any and all other notices and demands whatsoever. The Company shall remain bound under this Note until all principal and interest and any other amounts that are payable hereunder have been paid or converted in full, notwithstanding any extensions or renewals granted with respect to this Note or the release of any party liable hereunder. The Company and any and all endorsers hereof, also waive the right to plead any and all statutes of limitations as a defense to any demand on this Note or any and all obligations or liabilities arising out of or in connection with this Note, to the fullest extent permitted by law.

6.
Events of Default . Any of the following events shall constitute an event of default by the Company under this Note (an “ Event of Default ”):


(a)
the failure of the Company to pay to Holders, on the Maturity Date, any and all amounts due and owing under this Note; or


(b)
the failure of the Company to convert this Note as set forth herein when requested by Holders.

Upon the occurrence of any Event of Default, as defined hereinabove, at Holders option, Holders may declare immediately due and payable, and on any such declaration there shall become immediately due and payable, the entire unpaid principal balance of this Note, together with all accrued and unpaid interest under this Note and any other sums owing at the time of such declaration pursuant to this Note, and Holders shall be entitled to exercise all rights and remedies available to Holders hereunder and under applicable law, all of which rights and remedies shall be cumulative. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default, the interest rate at which interest shall accrue on the principal sum and any other amounts that are due under this Note shall be at a fixed rate equal to ten percent (10%) per annum, from the date of such Event of Default until all such amounts have been paid in full.


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7.
No Waiver by Holders . Any delay or omission on the part of Holders to exercise any of Holder’s rights or remedies hereunder or under applicable law, including, without limitation, the right to accelerate amounts owing under this Note, shall not be deemed a waiver of that right or remedy or of any other right or remedy of Holder in respect thereof. The acceptance by Holder of any payment pursuant to the terms of this Note which is less than payment in full of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the Holder’s rights or remedies under this Note or under applicable law at that time or at any subsequent time or nullify any prior exercise of any such rights or remedies without the express written consent of Holders, except as and to the extent provided to the contrary by applicable law.

8. Adjustments .


(a)
In the event that the Company shall at any time after March 6, 2012: (i) declare a dividend or make a distribution on the outstanding common stock payable in shares of its capital stock, (ii) subdivide the outstanding common stock into a greater number of shares of common stock, (iii) combine the outstanding common stock into a smaller number of shares, or (iv) issue any shares of its capital stock by reclassification of the common stock (including any such reclassification in connection with a consolidation, redomicile, or merger in which the Company is the continuing corporation), then, in each case, the Conver