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Exhibit 10.2

 
FORM OF
 
SECURED PROMISSORY NOTE

 

$_________________
_______, 20__
 
Salt Lake City, Utah

 
For value received GROEN BROTHERS AVIATION, INC., a Utah corporation having an
address at 2640 West California Avenue, Suite A, Salt Lake City, Utah 84104 (the
"Company"). promises to pay to ______________________, a
________________________, or its assigns (the "Lender"), the principal sum of
_____________________DOLLARS and NO/100 ($________), together with interest on
the unpaid principal balance hereof at the rate and at the times set forth
herein.
 
This Secured Promissory Note (the "Note") is issued pursuant to that certain
Note Purchase Agreement (the "Purchase Agreement") dated as of October 9, 2008
by and among the Company and the Lender, and is subject to the terms and
conditions contained therein. The obligations hereunder arc secured by that
certain Security Agreement and Intellectual Property Security Agreement, each
entered into as of October 9, 2008 by and among the Company and the Lender.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Purchase Agreement.
 
1.          Payment of Interest. Interest shall accrue on the unpaid principal
balance of this Note at the rate of fifteen percent (15.0%) per annum, simple
interest. All accrued and unpaid interest shall be payable on the Maturity Date
(as defined below). Upon and during the occurrence of and during the continuance
of an Event of Default (as defined below), the unpaid principal balance of this
Note shall bear interest, from the dale of the occurrence of such Event of
Default until such Event of Default is cured or waived, payable on demand in
immediately available funds, at a rate equal to eighteen percent (18.0%) per
annum.
 
2.          Payment of Principal. The entire outstanding principal balance of
this Note, together with all accrued and unpaid interest and all other amounts
due hereunder, shall be due and payable on April 9, 2009 (the "Maturity Date'").
 
3.          Manner of Payment. All sums payable under this Note shall be paid in
lawful money of the United States of America and in immediately available funds.
Payments shall be made to the Lender at ___
_____________________________________(or at such other address or by wire
transfer to such account as shall, in either case, be specified by the Lender to
the Company at least five (5) days prior to the relevant payment date). If any
payment under this Note shall become due on a Saturday, Sunday or a bank or
legal holiday, such payment shall be due on the next succeeding business day.
 
4.          Prepayment. Company may, at its option, prepay this Note, in whole
or in part, at any time and from time to time, without premium or penalty upon
one (1) day prior written notice to Lender.
 
5.          Late Charges. If any sum of money required to be paid by the terms
of this Note is not paid within ten (10) days after the same becomes due, then
the Company will pay a late fee equal to five percent (5%) of the overdue
payment. The Company will pay this late fee promptly, but only once on each late
payment.
 
6.          Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Note:

 
 

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i.              failure to pay when due any payment of principal, interest or
other amount due and owing under this Note on or before the date such payment is
due;
 
ii.             Borrower becomes the subject of any Bankruptcy proceeding, or is
declared Bankrupt, while this Note is still outstanding. "Bankruptcy" shall mean
(i) the adjudication of Borrower as bankrupt or insolvent, (ii) the institution
by or against Borrower of a petition for arrangement or of any other type of
insolvency proceeding under the United States Bankruptcy Code, as amended (but,
with respect to an involuntary proceeding, only if such proceeding is not
discharged within 60 days), (iii) the making by Borrower of a general assignment
for the benefit of creditors, (iv) the appointment of a liquidator,
administrator, receiver or trustee in bankruptcy of Borrower or its assets or
(v) the taking, making or institution of any like or similar act or proceeding
involving Borrower;
 
iii.             the Lender determines that there has been a material adverse
change in Borrower, Borrower's financial condition or Borrower's business
prospects;
 
iv.             Borrower breaches any of the material covenants, conditions,
promises or agreements contained in this Note or the Purchase Agreement;
 
v.             the occurrence of any breach, default or "event of default" as
defined or described in any other now existing or future promissory note or
other instrument, or any guaranty, mortgage or security agreement, representing
or securing indebtedness of Borrower (or any of its Affiliates) to Lender (or
any of its Affiliates).
 
"Affiliate" means, with respect to any person or entity, any person or entity
controlling, controlled by or under common control with the specified person or
entity. "Control." for the foregoing purposes, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through the ownership of
voting securities or voting interests, by contract or otherwise.
 
7.          Remedies. Upon the maturity of this Note (whether at the stated
Maturity Date, by acceleration or otherwise), all amounts due under this Note,
including the unpaid balance of principal and interest hereof, shall, at the
option of the Lender (but automatically with respect to an Event of Default
described in Section 6(ii)), become immediately due and payable, and the Lender
may exercise any of its rights and remedies granted herein, under applicable law
or that the Lender may otherwise have against Borrower. Such remedies shall be
cumulative and concurrent and may be pursued singly, successively or together,
in Lender's sole and absolute discretion and as often as occasion therefor shall
arise. Failure by the Lender to exercise any of its remedies shall not
constitute a waiver of the right to exercise the same at any subsequent time.
 
8.          Cross Collateralization: Obligations Recourse to Borrower.
 
i.            All property mortgaged, pledged or otherwise provided as security
(collectively, "Collateral'") for repayment of any other note, liability or
obligation of any kind or nature, whether now or hereafter in existence and
whether now or hereafter held by Lender, or any of its Affiliates, that is
signed, cosigned, guaranteed or endorsed by any party who has signed, cosigned,
guaranteed or endorsed this Note (or by any Affiliate of any such party) ("Other
Indebtedness"') shall stand as collateral for repayment of tins Note and for
performance of all obligations hereunder. In addition, all Collateral provided
as security for the Borrowers' obligations under this Note shall stand as
collateral for repayment of all Other Indebtedness and for performance of all
obligations thereunder.

 
 

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ii.             Notwithstanding any security and/or guarantees that may be
provided for this Note, this Note shall be recourse to the Borrower such that
the Lender may seek to enforce against the Borrower any monetary judgment with
respect to the sums due under this Note.

 
9.          Collection Costs. Borrower hereby agrees to pay all costs and
expenses of collection of this Note that are paid or incurred by the Lender
(including, without limitation, the fees and all disbursements of the Lender's
attorneys) (collectively, "Collection Costs"! irrespective of whether an action
has been commenced against Borrower.
 
10.          No Usury. In no contingency or event whatsoever, whether by reason
of advancement of the proceeds hereof or otherwise, shall the amount paid or
agreed to be paid to Lender for the use, forbearance or detention of money
advanced hereunder exceed the highest lawful rate permissible under any law
which a court of competent jurisdiction may deem applicable hereto; and, in the
event of any such payment inadvertently paid by the Company or inadvertently
received by Lender, such excess sum shall be, at the Company's option, returned
to Company forthwith or credited as a payment of principal, but shall not be
applied to the payment of interest. It is the intent hereof that the Company not
pay or contract to pay, and that Lender not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by the Company under applicable law.
 
11.          Miscellaneous.

 
i.              This Note may be amended or modified only by an instrument in
writing signed by the Company and the Lender.
 
ii.             All payments under this Note shall be applied first to
Collection Costs, next to accrued interest and thereafter to principal.
 
iii.             Presentment, demand, protest and other notice of any kind are
hereby expressly waived by the Company.
 
i v.            No delay or omission on the part of the Lender in the exercise
of any right or remedy hereunder shall operate as a waiver thereof, and no
partial exercise of any right or remedy precludes other or further exercise
thereof or the exercise of any other rights or remedy.
 
v.             If any provision of this Note is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Lender in order to carry out the
purposes of this Note as nearly as may be possible and (b) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
 
vi.             This Note shall be jointly and severally binding upon the
Company and its successors and assigns.
 
vii.           THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND/OR ANY
DOCUMENT EXECUTED IN CONJUNCTION HEREWITH AND/OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (WIIETHER ORAL OR WRITTEN) OR ACTIONS OF OR BY THE COMPANY
OR THE LENDER.

 
 

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This Note shall be construed in accordance with, and be governed by, the
internal laws of the State of New York, without giving effect to the choice of
law principles thereof.

 
[Signature appears on following page]
 
 

 
 

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IN WITNESS WHEREOF, the Company has caused this Note to be executed the day and
year first above written.
 

 
GROEN BROTHERS AVIATION, INC.
             
By ___________________________________
 
Name: David Groen
 
Title: President & CEO

 

 
 

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Exhibit 10.2 Cont’d

Groen Brothers Aviation, Inc.
Schedule of Promissory Notes Issued Under the Note Purchase Agreement Dated
October 9, 2008

Date
Lender
Principal Amount
October 9, 2008
Westford Special Situations Master Fund L.P.
$482,460.00
October 9, 2008
Westford Special Situations Fund II, L.P.
17,415.00
October 9, 2008
Westford Special Situations Fund II Ltd.
145,125.00
November 5, 2008
Westford Special Situations Master Fund L.P.
194,480.00
November 5, 2008
Westford Special Situations Fund II, L.P.
7,020.00
November 5, 2008
Westford Special Situations Fund II Ltd.
58,500.00
December 4, 2008
Westford Special Situations Master Fund L.P.
201,960.00
December 4, 2008
Westford Special Situations Fund II, L.P.
7,290.00
December 4, 2008
Westford Special Situations Fund II Ltd.
60,750.00
February 2, 2009
Westford Special Situations Master Fund L.P.
181,260.00
February 2, 2009
Westford Special Situations Fund II, L.P.
6,615.00
February 2, 2009
Westford Special Situations Fund II Ltd.
55,125.00
February 24, 2009
Westford Special Situations Master Fund L.P.
22,440.00
February 24, 2009
Westford Special Situations Fund II, L.P.
810.00
February 24, 2009
Westford Special Situations Fund II Ltd.
6,750.00
March 25, 2009
Westford Special Situations Master Fund L.P.
325,380.00
March 25, 2009
Westford Special Situations Fund II, L.P.
11,745.00
March 25, 2009
Westford Special Situations Fund II Ltd.
97,875.00
April 22, 2009
Westford Special Situations Master Fund L.P.
160,072.00
April 22, 2009
Westford Special Situations Fund II, L.P.
5,778.00
April 22, 2009
Westford Special Situations Fund II Ltd.
48,150.00
June 1, 2009
Westford Special Situations Master Fund L.P.
163,064.00
June 1, 2009
Westford Special Situations Fund II, L.P.
5,886.00
June 1, 2009
Westford Special Situations Fund II Ltd.
49,050.00
July 21, 2009
Westford Special Situations Master Fund L.P.
165,000.00
August 6, 2009
Westford Special Situations Master Fund L.P.
220,000.00
September 15, 2009
Westford Special Situations Master Fund L.P.
170,000.00
October 13, 2009
Westford Special Situations Master Fund L.P.
180,000.00
November 10, 2009
Westford Special Situations Master Fund L.P.
280,000.00
December 22, 2009
Westford Special Situations Master Fund L.P.
210,000.00
February 15, 2010
Westford Special Situations Master Fund L.P.
390,000.00
April 6, 2010
Westford Special Situations Master Fund L.P.
200,000.00
May 10, 2010
Westford Special Situations Master Fund L.P.
190,000.00
June 14, 2010
Westford Special Situations Fund II, L.P.
180,000.00
June 28, 2010
New Holdborn LTD
4,000,000.00

 

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