CRITICAL HOME CARE INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-2.txt
<TEXT>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                            CRITICAL HOME CARE, INC.

                                 PROMISSORY NOTE

U.S. $5,000,000                                            SOUTHFIELD, MICHIGAN
NO.: PN-2004-1                                             SEPTEMBER 21, 2004

         FOR VALUE RECEIVED, the undersigned, Critical Home Care, Inc., a Nevada
corporation (the "COMPANY"), hereby promises to pay to the order of BayStar
Capital II, L.P. or any future holder of this promissory note (the "PAYEE"), at
the principal office of the Payee set forth herein, or at such other place as
the holder may designate in writing to the Company, the principal sum of up to
Five Million Dollars (U.S. $5,000,000), or such other amount as may be
outstanding hereunder, together with all accrued but unpaid interest, in such
coin or currency of the United States of America as at the time shall be legal
tender for the payment of public and private debts and in immediately available
funds, as provided in this promissory note (the "NOTE").

         1.       PRINCIPAL AND INTEREST PAYMENTS.

                  (a) The Company shall repay in full the entire principal
balance then outstanding under this Note on the first to occur (the "MATURITY
DATE") of: (i) the Payment Date; or (ii) the acceleration of the obligations as
contemplated by this Note. The "Payment Date" shall be June 21, 2005, or if the
Company extends such date in accordance with Section 1(d) (an "EXTENSION"), then
September 21, 2005.

                  (b) Interest on the outstanding principal balance of this Note
shall accrue at a rate of six percent (6%) per annum, compounded quarterly;
provided that, in case of an Extension, such rate shall be twelve percent (12%)
per annum during the Extension Period (as defined below) or any part thereof.
Interest on the outstanding principal balance of the Note shall be computed on
the basis of the actual number of days elapsed and a year of three hundred and
sixty (360) days and shall be payable on the Maturity Date or upon earlier
prepayment of this Note. Furthermore, upon the occurrence of an Event of
Default, then to the extent permitted




<PAGE>

by law, the Company will pay interest to the Payee, payable on demand, on the
outstanding principal balance of the Note from the date of the Event of Default
until payment in full at the rate of twelve percent (12%) per annum.

                  (c) At the Company's sole option, the Company may prepay in
full the outstanding principal amount of this Note plus all accrued and unpaid
interest at any time without penalty in cash.

                  (d) If no Event of Default has occurred, the Company may, at
its option, extend the Payment Date to September 21, 2005 upon written notice to
the Payee delivered not less than ten business days prior to June 21, 2005.
During the period beginning on June 21, 2005 and ending on September 21, 2005
(the "EXTENSION PERIOD"), the Company and the Payee shall negotiate in good
faith with a view toward closing an equity financing transaction pursuant to
which the Payee would purchase capital stock of the Company in exchange for the
cancellation of this Note (and credit to the Payee for the purchase of such
capital stock in the amount of the principal and accrued interest on this Note
at the time of the closing of such transaction).

         2.       NON-BUSINESS DAYS. Whenever any payment to be made shall be
due on a Saturday, Sunday or a public holiday under the laws of the State of
Michigan, such payment may be due on the next succeeding business day and such
next succeeding day shall be included in the calculation of the amount of
accrued interest payable on such date.

         3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Payee as follows:

                  (a) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the state of Nevada, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted.

                  (b) This Note has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and the
Company has full power and authority to execute and deliver this Note and to
perform its obligations hereunder.

                  (c) The execution, delivery and performance of this Note will
not (i) conflict with or result in a breach of or a default under any of the
terms or provisions of, (A) the Company's articles of incorporation or by-laws,
or (B) any material provision of any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by which it
or any of its material properties or assets is bound, (ii) result in a violation
of any material provision of any law, statute, rule, regulation, or any existing
applicable decree, judgment or order by any court, Federal or state regulatory
body, administrative agency, or other



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governmental body having jurisdiction over the Company, or any of its material
properties or assets or (iii) result in the creation or imposition of any
material lien, charge or encumbrance upon any material property or assets of the
Company or any of its subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of their property or any of them is subject.

                  (d) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this Note.

         4.       EVENTS OF DEFAULT. The occurrence of any of the following
events shall be an "EVENT OF DEFAULT" under this Note:

                  (a) the Company shall fail to make the payment of any amount
of any principal outstanding for a period of three (3) business days after the
date such payment shall become due and payable hereunder; or

                  (b) the Company shall fail to make any payment of interest for
a period of three (3) business days after the date such interest shall become
due and payable hereunder; or

                  (c) any representation, warranty or certification made by the
Company herein or in the Note and Warrant Purchase Agreement of even date
herewith (the "PURCHASE AGREEMENT") shall prove to have been false or incorrect
or breached in a material respect on the date as of which made; or

                  (d) the holder of any indebtedness of the Company or any of
its subsidiaries shall accelerate any payment of any amount or amounts of
principal or interest on any indebtedness ("INDEBTEDNESS") (other than the
Indebtedness hereunder) prior to its stated maturity or payment date on account
of a default by the Company or any of its subsidiaries under the documents or
agreements evidencing such Indebtedness, the aggregate principal amount of which
Indebtedness of all such persons is in excess of $1,000,000, whether such
Indebtedness now exists or shall hereinafter be created, and such accelerated
payment entitles the holder thereof to immediate payment of such Indebtedness
which is due and owing and such indebtedness has not been discharged in full or
such acceleration has not been stayed, rescinded or annulled within five (5)
business days of such acceleration; or

                  (e) A judgment or order for the payment of money shall be
rendered against the Company or any of its subsidiaries in excess of $1,000,000
in the aggregate (net of any applicable insurance coverage) for all such
judgments or orders against all such persons (treating any deductibles, self
insurance or retention as not so covered) that shall not be discharged, and all
such judgments and orders remain outstanding, and there shall be any period of
sixty (60) consecutive days following entry of the judgment or order in excess
of $1,000,000 or the judgment or order which causes the aggregate amount
described above to exceed



                                       3
<PAGE>

$1,000,000 during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or

                  (f) the Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or
assets, (ii) make a general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the United States Bankruptcy Code (the
"BANKRUPTCY CODE") or under the comparable laws of any jurisdiction (foreign or
domestic), (iv) file a petition seeking to take advantage of any bankruptcy,
insolvency, moratorium, reorganization or other similar law affecting the
enforcement of creditors' rights generally, (v) acquiesce in writing to any
petition filed against it in an involuntary case under the Bankruptcy Code or
under the comparable laws of any jurisdiction (foreign or domestic), or (vi)
take any action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing; or

                  (g) a proceeding or case shall be commenced in respect of the
Company or any of its subsidiaries without its application or consent, in any
court of competent jurisdiction, seeking (i) the liquidation, reorganization,
moratorium, dissolution, winding up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of it or of all or any substantial part of its assets or (iii) similar
relief in respect of it under any law providing for the relief of debtors, and
such proceeding or case described in clause (i), (ii) or (iii) shall continue
undismissed, or unstayed and in effect, for a period of thirty (30) consecutive
days or any order for relief shall be entered in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic) against the Company or any of its subsidiaries or action under the
laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing
shall be taken with respect to the Company or any of its subsidiaries and shall
continue undismissed, or unstayed and in effect for a period of thirty (30)
consecutive days; or

                  (h) the suspension from listing or the failure of the
Company's common stock to be listed on any of the OTC Bulletin Board, American
Stock Exchange, Nasdaq National Market or Nasdaq SmallCap Market for a period of
five (5) consecutive trading days.

         5.       REMEDIES UPON AN EVENT OF DEFAULT. If an Event of Default
shall have occurred and shall be continuing, the Payee of this Note may at any
time at its option, (a) declare the entire unpaid principal balance of this
Note, together with all interest accrued hereon, due and payable, and thereupon,
the same shall be accelerated and so due and payable; PROVIDED, HOWEVER, that
upon the occurrence of an Event of Default described in (i) Sections 4(f) and
(g), without presentment, demand, protest, or notice, all of which are hereby
expressly unconditionally and irrevocably waived by the Company, the outstanding
principal balance and accrued interest hereunder shall be automatically due and
payable, and (ii) Sections 4(a) through (e) and Section 4(h), the Payee may
exercise or otherwise enforce any one or more of the Payee's rights, powers,
privileges, remedies and interests under this Note or applicable law. No course
of delay on the part of the Payee shall operate as a waiver thereof or otherwise
prejudice the right of



                                       4
<PAGE>

the Payee. No remedy conferred hereby shall be exclusive of any other remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.

         6.       REPLACEMENT. Upon receipt of a duly executed, notarized and
unsecured written statement from the Payee with respect to the loss, theft or
destruction of this Note (or any replacement hereof) and upon receipt of a
written agreement of indemnification reasonably acceptable to the Company signed
by the Payee (or holder at the time thereof) or, in the case of a mutilation of
this Note, upon surrender and cancellation of such Note, the Company shall issue
a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or
mutilated Note.

         7.       PARTIES IN INTEREST, TRANSFERABILITY. This Note shall be
binding upon the Company and its successors and permitted assigns and the terms
hereof shall inure to the benefit of the Payee and its successors and assigns.
This Note may be transferred or sold, subject to the provisions of Section 15 of
this Note, or pledged, hypothecated or otherwise granted as security by the
Payee.

         8.       AMENDMENTS. This Note may not be modified or amended in any
manner except in writing executed by the Company and the Payee.

         9.       NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The Company will give written notice to the Payee
at least twenty (20) days prior to the date on which dissolution, liquidation or
winding-up will take place and in no event shall such notice be provided to the
Payee prior to such information being made known to the public. Notices to the
Payee shall be made to the address set forth in the Purchase Agreement. Notices
to the Company shall be made to the following:

         Address of the Company:    Critical Home Care, Inc.
                                    26777 Central Park Boulevard, Suite 200
                                    Southfield, Michigan 48076
                                    Attention: Chief Financial Officer
                                    Tel. No.: (248) 352-7530
                                    Fax No.: (248) __________

         with a copy to:            Kerr, Russell & Weber, PLC
                                    500 Woodward Ave, Suite 2500
                                    Detroit, Michigan 48226
                                    Attention: Michael D. Gibson
                                    Tel. No.: (313) 961-0200
                                    Fax No.: (313) 961-0388


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<PAGE>

         10.      GOVERNING LAW. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions. This Note shall not be interpreted or
construed with any presumption against the party causing this Note to be
drafted.

         11.      HEADINGS. Article and section headings in this Note are
included herein for purposes of convenience of reference only and shall not
constitute a part of this Note for any other purpose.

         12.      REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Payee's right to pursue actual damages for any failure by the
Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments and the like (and the computation thereof) shall
be the amounts to be received by the Payee and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Payee and
that the remedy at law for any such breach may be inadequate. Therefore the
Company agrees that, in the event of any such breach or threatened breach, the
Payee shall be entitled, in addition to all other available rights and remedies,
at law or in equity, to seek and obtain such equitable relief, including but not
limited to an injunction restraining any such breach or threatened breach,
without the necessity of showing economic loss and without any bond or other
security being required.

         13.      FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of the Payee 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.

         14.      ENFORCEMENT EXPENSES. The Company agrees to pay all costs and
expenses of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.

         15.      COMPLIANCE WITH SECURITIES LAWS. The Payee of this Note
acknowledges that this Note is being acquired solely for the Payee's own account
and not as a nominee for any other party, and for investment, and that the Payee
shall not offer, sell or otherwise dispose of this Note other than in compliance
with the laws of the United States of America and as guided by the rules of the
Securities and Exchange Commission. This Note and any Note issued in
substitution or replacement therefore shall be stamped or imprinted with a
legend in substantially the following form:


                                       6
<PAGE>

                  "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
                  ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE
                  SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
                  REGISTERED UNDER THE SECURITIES ACT AND UNDER
                  APPLICABLE STATE SECURITIES LAWS OR THE COMPANY
                  SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
                  REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
                  ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
                  SECURITIES LAWS IS NOT REQUIRED."

         16.      SEVERABILITY. The provisions of this Note are severable, and
if any provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall not in any
manner affect such provision in any other jurisdiction or any other provision of
this Note in any jurisdiction.

         17.      CONSENT TO JURISDICTION. Each of the Company and the Payee (i)
hereby irrevocably submits to the jurisdiction of the United States District
Court sitting in the Southern District of New York and the courts of the State
of New York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Note and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Payee
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address set forth in Section 9
hereof and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing in this Section 17 shall affect or limit
any right to serve process in any other manner permitted by law.

         18.      COMPANY WAIVERS. Except as otherwise specifically provided
herein, the Company and all others that may become liable for all or any part of
the obligations evidenced by this Note, hereby waive presentment, demand, notice
of nonpayment, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and do hereby
consent to any number of renewals of extensions of the time or payment hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon, all without affecting the liability
of the other persons, firms or Company liable for the payment of this Note, AND
DO HEREBY WAIVE TRIAL BY JURY.

                  (a)      No delay or omission on the part of the Payee in
exercising its rights under this Note, or course of conduct relating hereto,
shall operate as a waiver of such rights or any other right of the Payee, nor
shall any waiver by the Payee of any such right or rights on any one occasion be
deemed a waiver of the same right or rights on any future occasion.


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<PAGE>

                  (b)      THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED
BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO
ANY PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE
TO USE.

         19.      ACKNOWLEDGMENT OF SECURITY INTEREST AND SUBORDINATION. The
Company and the Payee acknowledge that Jana Master Fund, Ltd. has a security
interest in certain assets of the Company in connection with that certain
Amended and Restated 12% Subordinated Convertible Promissory Note, $1,500,000
principal amount, issued by the Company on June 12, 2004 (the "JANA NOTE"). This
Note shall be and hereby is subordinate to and junior in right of payment to the
Jana Note. Notwithstanding the foregoing, the Company may make and the Payee may
receive payments of principal and interest pursuant to this Note so long as, at
the time of such payment, all sums then due and payable under the Jana Note
shall have been paid in full (or provision for the payment thereof shall have
been made to the satisfaction of Jana Master Fund, Ltd.).

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<PAGE>




                  IN WITNESS WHEREOF, the Company has executed and delivered
this Promissory Note as of the date first written above.

                                                 CRITICAL HOME CARE, INC.



                                                 By:   /s/ Lawrence Kuhnert
                                                     ---------------------------
                                                       Name: Lawrence Kuhnert
                                                       Title:   President

















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