Unassociated Document


    SECURED
      PROMISSORY NOTE

    
      	
               

               

              Dated
                as of: June 30, 2006

            	
               

               

              $1,100,000

            


    

    


    FOR
      VALUE RECEIVED,
      the
      undersigned, AeroGroup
      Incorporated,
      a Utah
      corporation (the “Maker”),
      hereby promises to pay to the order of Mark
      T. Daniels
      (“Payee”),
      in
      lawful money of the United States of America, the sum of ONE MILLION ONE HUNDRED
      THOUSAND AND 00/100 ($1,100,000.00) DOLLARS, plus any accrued interest owed
      to
      Payee prior to the date hereof, based on the date of cash advances made by
      Payee, together with interest thereon at the rate of Twelve (12%) Percent per
      annum, until paid in full, at the times and installments set forth below. All
      capitalized terms not defined herein shall have the meanings set forth in the
      Asset Purchase Agreement (as hereinafter defined).

    


    Beginning
      on July 1st
      2008 and
      monthly thereafter, (the first date thereof being referred to as the
“Maturity
      Date”),
      Maker
      shall pay to Payee a total of Thirty Six (36) monthly installments of principal,
      each in the amount of THIRTY THOUSAND FIVE HUNDRED AND FIFTY FIVE AND 55/100
      ($30,555.55) DOLLARS, each such installment of principle to be accompanied
      by
      payment of accrued and unpaid interest on the then unpaid principal balance
      of
      this Note. 

    


    Notwithstanding
      any provision contained herein, the total liability of Maker for payment of
      interest pursuant hereto, including late charges, shall not exceed the maximum
      amount of such interest permitted by law to be charged, collected, or received
      from Maker, and if any payments by Maker include interest in excess of such
      a
      maximum amount, Payee shall apply such excess to the reduction of the unpaid
      principal amount due pursuant hereto, or if none is due, such excess shall
      be
      refunded to Maker.

    


    This
      Note
      is secured by all of the assets of Maker and of each of its Subsidiaries
      pursuant to Security Agreements signed by such entity (the “Security
      Agreement”),
      delivered to the Payee by the Maker and its Subsidiaries pursuant to an Asset
      Purchase Agreement among the parties hereto, entered into contemporaneously
      herewith (the “Asset
      Purchase Agreement”).
      This
      Note is entitled to the benefit of any and all collateral and security interests
      now or hereafter pledged and/or assigned by Maker to Payee, including, without
      limitation, the collateral pledged pursuant to the Security Agreements, and
      any
      and all guaranties by third parties with respect to the Maker’s obligations to
      Payee, including, but not limited to the Guaranty executed by the Subsidiaries
      on an even date herewith (the “Guaranty”),
      and
      any collateral for such guaranties (the documents with respect to all such
      collateral, including the Security Agreement and the Guaranty are collectively
      referred to as the “Collateral
      Documents”).

    


    Maker
      waives presentment for payment, demand, notice of non-payment, notice of
      protest, and protest of this Note, and all other notices in connection with
      the
      delivery, acceptance, performance, default, dishonor, or enforcement of the
      payment of this Note except as otherwise provided herein.
      All
      rights and remedies available to the Payee pursuant to the provisions of
      applicable law, the Collateral Documents and
      otherwise, are cumulative and not exclusive of any thereof or of any other
      rights or remedies available to Payee, and no course of dealing between Maker
      and Payee, or any delay or omission in exercising any right or remedy shall
      operate as a waiver of any right or remedy, and every right and remedy may
      be
      exercised from time to time and as often as shall be deemed appropriate by
      Payee.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Upon
      the
      happening, with respect to the Maker, the Subsidiaries, or any assets of the
      Maker or of any of the Subsidiaries, of any of the following events: (i)
      dissolution; (ii) default in the payment of principal, interest or other amounts
      due with respect to this Note; (iii) the filing of a petition in bankruptcy
      whether voluntary or involuntary; (iv) the filing of an application, whether
      voluntary or involuntary, for reorganization or any arrangement or readjustment
      of indebtedness; (v) the appointment or the filing of an application for the
      appointment of any receiver, trustee, liquidator or any committee; or (vi)
      an
      assignment for the benefit of creditors, or upon sale or transfers of any
      securities of ay Subsidiary (or of any rights to above securities of any
      Subsidiary) then this Note, if not then due or payable on demand, shall become
      due and payable, with respect to any of the events set forth in (i), and (iii)
      through (vi), immediately without demand or notice to the Payee, and with
      respect to the event set forth in (ii), thirty (30) days following such event;
      provided, however, that the default set forth therein has not been cured within
      such thirty (30) day period.

    


    The
      Maker
      may prepay all or any part of the remaining principal balance of this Note
      at
      any time prior to the Maturity Date without penalty or premium. All payments
      on
      this Note shall be applied first to all accrued interest and then to principal.
      To the extent any prepayment is to be applied to principal hereunder, such
      amount shall be applied to the reduction of the monthly installments of
      principal payable hereunder in the inverse order of their maturity.

    


    At
      any
      time and from time to time, this note and all of the outstanding principal
      and
      interest may be converted, in whole or in part, from time to time, into shares
      of the Company’s common stock at a conversion price per share of $.01. This note
      shall automatically become a promissory note convertible into securities of
      any
      successor corporation, by merger or acquisition of assets without consent of
      Maker, and Maker shall require, as a condition to such transaction that this
      note be assumed as such, provided however that the conversion price shall be
      adjusted by multiplying the same by the exchange ratio offered to existing
      stockholders of the Maker for shares of Common Stock. The conversion Price
      shall
      be adjusted from time to time to reflect any adjustments to the Common Stock
      of
      the Maker generally resulting from stock splits, stock dividends, combinations,
      merger or similar actions. 

    


    This
      Note
      shall be governed, interpreted, and enforceable in accordance with the Laws
      of
      the State of New York. This note is an unconditional obligation of Maker for
      the
      payment of the above set forth amounts. 

    


    This
      Note
      may not be altered, modified, amended, terminated or discharged orally. This
      Note is non-negotiable and may not be sold, assigned, pledged, hypothecated,
      or
      transferred in any manner, in whole or in part, nor shall any interest herein
      be
      granted to any third party. 

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    IN
      WITNESS WHEREOF,
      the
      undersigned has executed this Note on the date first above written

     

    
      	 	 	 
	 	AEROGROUP
              INCORPORATED
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
Name:
	 	Title 




    
      
         

      

      
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