Convertible Note

Convertible Note

                                                                    EXHIBIT 10.2



                                CONVERTIBLE NOTE

corporation (the "Borrower"), hereby promises to pay to __________________ (the
"Holder") or order, without demand, the sum of ________________ ($_________),
with simple interest accruing at the annual rate of eight percent (8%), on March
____, 2005 (the "Maturity Date").

         The following terms shall apply to this Note:

                                    ARTICLE 1
                           PAYMENT RELATED PROVISIONS

1.1.    Payment Grace Period. The Borrower shall have a ten (10) day grace
        period to pay any monetary amounts due under this Note, after which
        grace period a default interest rate of fifteen percent (15%) per annum
        shall apply to the amounts owed hereunder from the date of the
        expiration of the ten (10) day grace period until such default is cured
        by payment of all amounts then past due, provided that from and after
        the date of cure of the default, the annual rate specified in Section
        1.3 again shall be applied.

1.2.    Conversion Rights. The Conversion Rights set forth in Article 2 shall
        remain in full force and effect commencing from the date hereof and
        until the Note is paid in full.

1.3.    Interest Rate. Subject to the Holder's right to convert, interest
        payable on this Note shall accrue at the annual rate of eight percent
        (8%) and be payable September 30, 2002 and semi-annually thereafter, and
        on the Maturity Date, accelerated or otherwise, when the principal and
        remaining accrued but unpaid interest shall be due and payable, or
        sooner as described below.

                                   ARTICLE 2
                                CONVERSION RIGHTS

         The Holder shall have the right to convert the principal amount and
interest due under this Note into Shares of the Borrower's Common Stock as set
forth below.


2.1     Conversion into the Borrower's Common Stock.

        (a)     The Holder shall have the right from and after the issuance of
                this Note and then at any time until this Note is fully paid, to
                convert any outstanding and unpaid principal portion of this
                Note, and/or at the Holder's election, the interest accrued on
                the Note, (the date of giving of such notice of conversion being
                a "Conversion Date") into fully paid and nonassessable shares of
                common stock of Borrower as such stock exists on the date of
                issuance of this Note, or any shares of capital stock of
                Borrower into which such stock shall hereafter be changed or
                reclassified (the "Common Stock") at the conversion price, as
                defined in Section 2.1(b) hereof (the "Conversion Price"),
                determined as provided herein. Upon delivery to the Company of a
                Notice of Conversion, attached hereto as Exhibit A, as described
                in the subscription agreement entered into between the Company
                and Holder relating to this Note (the "Subscription Agreement"),
                REFERENCE, of the Holder's written request for conversion,
                Borrower shall issue and deliver to the Holder within five (5)
                business days from the Conversion Date that number of shares of
                Common Stock for the portion of the Note converted in accordance
                with the foregoing. At the election of the Holder, the Company
                will deliver accrued but unpaid interest on the Note through the
                Conversion Date directly to the Holder on or before the Delivery
                Date (as defined in the Subscription Agreement). The number of
                shares of Common Stock to be issued upon each conversion of this
                Note shall be determined by dividing that portion of the
                principal (and interest, at the election of the Holder) of the
                Note to be converted, by the Conversion Price.

        (b)     Subject to adjustment as provided in Section 2.1(c) hereof, the
                Conversion Price per share shall be at the election of the
                Holder: (i) $____ (80% of the average of the closing bid prices
                of the Common Stock of the last five trading days prior to the
                Closing Date) (the "Conversion Base Price"); or (ii) eighty
                percent (80%) of the average of the closing bid prices on the
                last five trading days of any consecutive twenty trading day
                period after the issuance of this Note if the closing bid price
                of the Common Stock is below the Conversion Base Price for each
                of the twenty (20) trading days during such consecutive twenty
                trading day period (the new "Conversion Base Price"), as
                reported by the Principal Market. "Principal Market" with
                respect to the Borrower's Common Stock shall mean the NASD OTC
                Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market
                System, American Stock Exchange or New York Stock Exchange
                (whichever of the foregoing is at the time the principal trading
                exchange or market for the Common Stock, the "Principal
                Market"), or if not then trading on a Principal Market, such
                other principal market or exchange where the Common Stock is
                listed or traded. If the Principal Market does not report bid
                prices, then the closing price shall be substituted for the bid
                price referred to in this Section 2.1(b)(ii) when determining
                the Conversion Price.

        (c)     The Conversion Base Price described in Section 2.1(b)(i) above
                and number and kind of shares or other securities to be issued
                upon conversion determined pursuant to Section 2.1(a) and
                2.1(b), shall be subject to adjustment from time to time upon
                the happening of certain events while this conversion right
                remains outstanding, as follows:

                (A)     Merger, Sale of Assets, etc. If the Borrower at any time
                        shall consolidate with or merge into or sell or convey
                        all or substantially all its assets to any other
                        corporation, this Note, as to the unpaid principal
                        portion thereof and accrued interest thereon, shall
                        thereafter be deemed to evidence the right to purchase
                        such number and kind of shares or other securities and


                                property as would have been issuable or
                                distributable on account of such consolidation,
                                merger, sale or conveyance, upon or with respect
                                to the securities subject to the conversion or
                                purchase right immediately prior to such
                                consolidation, merger, sale or conveyance. The
                                foregoing provision shall similarly apply to
                                successive transactions of a similar nature by
                                any such successor or purchaser. Without
                                limiting the generality of the foregoing, the
                                anti-dilution provisions of this Section shall
                                apply to such securities of such successor or
                                purchaser after any such consolidation, merger,
                                sale or conveyance.

                        (B)     Reclassification, etc. If the Borrower at any
                                time shall, by reclassification or otherwise,
                                change the Common Stock into the same or a
                                different number of securities of any class or
                                classes, this Note, as to the unpaid principal
                                portion thereof and accrued interest thereon,
                                shall thereafter be deemed to evidence the right
                                to purchase such number and kind of securities
                                as would have been issuable as the result of
                                such change with respect to the Common Stock
                                immediately prior to such reclassification or
                                other change.

                        (C)     Stock Splits, Combinations and Dividends. If the
                                shares of Common Stock are subdivided or
                                combined into a greater or smaller number of
                                shares of Common Stock, or if a dividend is paid
                                on the Common Stock in shares of Common Stock,
                                the Conversion Base Price shall be
                                proportionately reduced in case of subdivision
                                of shares or stock dividend or proportionately
                                increased in the case of combination of shares,
                                in each such case by the ratio which the total
                                number of shares of Common Stock outstanding
                                immediately after such event bears to the total
                                number of shares of Common Stock outstanding
                                immediately prior to such event.

                        (D)     Share Issuance. Subject to the provisions of
                                this Section, if the Borrower at any time shall
                                issue any shares of Common Stock prior to the
                                conversion of the entire principal amount of the
                                Note (otherwise than as: (i) provided in
                                Sections 2.1(c)A, 2.1(c)B or 2.1(c)C or this
                                subparagraph D; and (ii) the Excepted Issuances
                                (as defined in the Subscription Agreement) [(i)
                                and (ii) above are hereinafter referred to as
                                the "Existing Option Obligations"]) for a
                                consideration less than the Conversion Base
                                Price that would be in effect at the time of
                                such issue, then, and thereafter successively
                                upon each such issue, the Conversion Base Price
                                shall be reduced as follows: (i) the number of
                                shares of Common Stock outstanding immediately
                                prior to such issue shall be multiplied by the
                                Conversion Base Price in effect at the time of
                                such issue and the product shall be added to the
                                aggregate consideration, if any, received by the
                                Borrower upon such issue of additional shares of
                                Common Stock; and (ii) the sum so obtained shall
                                be divided by the number of shares of Common
                                Stock outstanding immediately after such issue.
                                The resulting quotient shall be the adjusted
                                Conversion Base Price. Except for the Existing
                                Option Obligations, for purposes of this
                                adjustment, the issuance of any security of the
                                Borrower carrying the right to convert such
                                security into shares of Common Stock or of any
                                warrant, right or option to purchase Common
                                Stock shall result in an adjustment to the
                                Conversion Base Price upon the issuance of
                                shares of Common Stock upon exercise of such
                                conversion or purchase rights.

                (d)     From and after the issuance date of this Note and for
                        the remaining period during which the conversion right
                        exists, Borrower will reserve from its authorized and
                        unissued Common Stock a sufficient number of shares to
                        provide for the issuance of Common Stock upon the full


                        conversion of this Note. Borrower represents that upon
                        issuance, such shares will be duly and validly issued,
                        fully paid and non-assessable. Borrower agrees that its
                        issuance of this Note shall constitute full authority to
                        its officers, agents and transfer agents who are charged
                        with the duty of executing and issuing stock
                        certificates to execute and issue the necessary
                        certificates for shares of Common Stock upon the
                        conversion of this Note.

2.2.    Method of Conversion. This Note may be converted by the Holder in whole
        or in part as described in Section 2.1(a) hereof and the Subscription
        Agreement. Upon partial conversion of this Note, if requested by the
        Holder, a new Note containing the same date and provisions of this Note
        shall be issued by the Borrower to the Holder for the remaining
        principal balance of this Note and interest which shall not have been
        converted or paid.

2.3.    Maximum Conversion. The Holder shall not be entitled to convert on a
        Conversion Date that amount of the Note in connection with that number
        of shares of Common Stock which would be in excess of the sum of (i) the
        number of shares of Common Stock beneficially owned by the Holder and
        its affiliates on a Conversion Date, and (ii) the number of shares of
        Common Stock issuable upon the conversion of the Note with respect to
        which the determination of this provision is being made on a Conversion
        Date, which would result in beneficial ownership by the Holder and its
        affiliates of more than 4.99% of the outstanding shares of Common Stock
        of the Company on such Conversion Date. For the purposes of the
        provision to the immediately preceding sentence, beneficial ownership
        shall be determined in accordance with Section 13(d) of the Securities
        Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
        Subject to the foregoing, the Holder shall not be limited to aggregate
        conversions of only 4.99% and aggregate conversion by the Holder may
        exceed 4.99%. The Holder shall have the authority and obligation to
        determine whether the restriction contained in this Section 2.3 will
        limit any conversion hereunder and to the extent that the Holder
        determines that the limitation contained in this Section applies, the
        determination of which portion of the Notes are convertible shall be the
        responsibility and obligation of the Holder. The Holder may void the
        conversion limitation described in this Section 2.3 upon 75 days prior
        written notice to the Company. The Holder may allocate which of the
        equity of the Borrower deemed beneficially owned by the Holder shall be
        included in the 4.99% amount described above and which shall be
        allocated to the excess above 4.99%.

                                   ARTICLE 3
                                EVENT OF DEFAULT

         The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, all without demand, presentment or
notice, or grace period, all of which hereby are expressly waived, except as set
forth below:

3.1.    Failure to Pay Principal or Interest. The Borrower fails to pay any
        installment of principal or interest hereon when due and such failure
        continues for a period of ten (10) days after the due date. The ten (10)
        day period described in this Section 3.1 is the same ten (10) day period
        described in Section 1.1 hereof.

3.2.    Breach of Covenant. The Borrower breaches any material covenant or other
        term or condition of this Note in any material respect and such breach,
        if subject to cure, continues for a period of seven (7) days after
        written notice to the Borrower from the Holder.


3.3.    Breach of Representations and Warranties. Any material representation or
        warranty of the Borrower made herein, in the Subscription Agreement
        entered into by the Holder and Borrower in connection with this Note, or
        in any agreement, statement or certificate given in writing pursuant
        hereto or in connection therewith shall be false or misleading in any
        material respect.

3.4.    Receiver or Trustee. The Borrower shall make an assignment for the
        benefit of creditors, or apply for or consent to the appointment of a
        receiver or trustee for it or for a substantial part of its property or
        business; or such a receiver or trustee shall otherwise be appointed.

3.5.    Judgments. Any money judgment, writ or similar final process shall be
        entered or filed against Borrower or any of its property or other assets
        for more than $100,000, and shall remain unpaid, unvacated, unbonded or
        unstayed for a period of forty-five (45) days.

3.6.    Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
        proceedings or other proceedings or relief under any bankruptcy law or
        any law for the relief of debtors shall be instituted by or against the
        Borrower and if instituted against Borrower are not dismissed within
        forty-five (45) days of initiation.

3.7.    Default. A default by the Borrower, after applicable notice and cure
        periods, under any one or more obligations in an aggregate monetary
        amount in excess of $100,000.

3.8.    Stop Trade. A Securities and Exchange Commission stop trade order or
        Principal Market trading suspension for longer than five (5) trading

3.9.    Failure to Deliver Common Stock or Replacement Note. Borrower's failure
        to timely deliver Common Stock to the Holder pursuant to and in the form
        required by this Note and Section 9 of the Subscription Agreement, or if
        required, a replacement Note.

3.10.   Non-Registration Event. The occurrence of a Non-Registration Event as
        described in Section 10.4 of the Subscription Agreement.

3.11.   Approval Default. The occurrence of an Approval Default as described in
        Section 7 of the Subscription Agreement.

3.12.   Delisting. Delisting of the Common Stock from the Nasdaq SmallCap Market
        or such other principal exchange on which the Common stock is listed for
        trading; failure to comply with the requirements for continued listing
        on the Nasdaq SmallCap Market for a period of seven (7) consecutive
        trading days; or notification from the Nasdaq SmallCap Market or any
        Principal Market that the Borrower is not in compliance with the
        conditions for such continued listing on the Nasdaq SmallCap Market or
        other Principal Market.

                                   ARTICLE 4

4.1.    Failure or Indulgence Not Waiver. No failure or delay on the part of
        Holder hereof in the exercise of any power, right or privilege hereunder
        shall operate as a waiver thereof, nor shall any single or partial
        exercise of any such power, right or privilege preclude other or further
        exercise thereof or of any other right, power or privilege. All rights
        and remedies existing hereunder are cumulative to, and not exclusive of,
        any rights or remedies otherwise available.


4.2.    Notices. Any notice herein required or permitted to be given shall be in
        writing and may be personally served or sent by facsimile transmission
        (with copy sent by regular, certified or registered mail or by overnight
        courier). For the purposes hereof, the address and facsimile number of
        the Holder is as set forth on the first page hereof. The address and
        facsimile number of the Borrower shall be Hypertension Diagnostics,
        Inc., 2915 Waters Road, Suite 108, Eagan, MN 55121-1562, facsimile
        number: (651) 687-0485. Both the Holder and the Borrower may change the
        address and facsimile number for notice by service of notice to the
        other as herein provided. Notice of Conversion shall be deemed given
        when made to the Borrower pursuant to the Subscription Agreement.

4.3.    Amendment Provision. The term "Note" and all reference thereto, as used
        throughout this instrument, shall mean this instrument as originally
        executed, or if later amended or supplemented, then as so amended or

4.4.    Assignability. This Note shall be binding upon the Borrower and its
        successors and permitted assigns, and shall inure to the benefit of the
        Holder and its successors and assigns, and may be assigned by the

4.5.    Cost of Collection. If default is made in the payment of this Note,
        Borrower shall pay the Holder hereof reasonable costs of collection,
        including reasonable attorneys' fees.

4.6.    Governing Law. This Note shall be governed by and construed in
        accordance with the laws of the State of New York. Any action brought by
        either party against the other concerning the transactions contemplated
        by this Agreement shall be brought only in the state courts of New York
        or in the federal courts located in New York County in the State of New
        York. Both parties and the individual signing this Agreement on behalf
        of the Borrower agree to submit to the jurisdiction of such courts. The
        prevailing party shall be entitled to recover from the other party its
        reasonable attorneys' fees and costs.

4.7.    Maximum Payments. Nothing contained herein shall be deemed to establish
        or require the payment of a rate of interest or other charges in excess
        of the maximum permitted by applicable law. In the event that the rate
        of interest required to be paid or other charges hereunder exceed the
        maximum permitted by such law, any payments in excess of such maximum
        shall be credited against amounts owed by the Borrower to the Holder and
        thus refunded to the Borrower.

4.8.    Redemption. This Note is subject to certain mandatory redemption rights
        described in the Subscription Agreement.


         IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its
name by its President on this ____ day of March, 2002.

                                         HYPERTENSION DIAGNOSTICS, INC.

                                               Greg H. Guettler, President


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                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

         The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Note issued by HYPERTENSION
DIAGNOSTICS, INC. on March ___, 2002 into Shares of Common Stock of HYPERTENSION
DIAGNOSTICS, INC. according to the conditions set forth in such Note, as of the
date written below.

Date of Conversion:

Conversion Price:

Shares To Be Delivered:


Print Name:


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