Exhibit 10.2

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO VITALITY SYSTEMS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

TERM NOTE

 

FOR VALUE RECEIVED, VITALITY SYSTEMS, INC., a Florida corporation (the
“Company”) promises to pay to Vertical Health Solution, Inc., a Florida
corporation (the “Holder”) or its registered assigns or successors in interest,
the sum of Three Hundred Thousand Dollars ($300,000), together with any accrued
and unpaid interest hereon, on December 18, 2008 (the “Maturity Date”) if not
sooner paid.

 

ARTICLE I

INTEREST RATE AND AMORTIZATION

 

1.1 Interest Rate. Subject to Sections 4.2 and 5.10, interest payable on the
outstanding principal amount of this Note (the “Principal Amount”) shall accrue
at a rate per annum equal to 7%. Interest shall be (i) calculated on the basis
of a 360 day year, and (ii) payable monthly, in arrears, commencing on the first
business day of each consecutive calendar month hereafter through and including
the Maturity Date, and on the Maturity Date, whether by acceleration or
otherwise.

 

1.2 Principal Payments. Amortizing payments of the aggregate principal amount
outstanding under this Note at any time (the “Principal Amount”) shall be made
by the Company commencing on the first business day of each consecutive calendar
month hereafter through and including the Maturity Date, and on the Maturity
Date, whether by acceleration or otherwise (each, an “Amortization Date”).
Subject to Article III below, commencing on the first Amortization Date, the
Company shall make monthly payments to the Holder on each Amortization Date,
each such payment in the amount of $9,263.13 together with any accrued and
unpaid interest on such portion of the Principal Amount plus any and all other
unpaid amounts which are then owing under this Note (collectively, the “Monthly
Amount”). Any outstanding Principal Amount together with any accrued and unpaid
interest and any and all other unpaid amounts which are then owing by the
Company to the Holder under this Note shall be due and payable on the Maturity
Date.

 

ARTICLE II

OPTIONAL REDEMPTION; ISSUANCE OF NEW NOTE

 

2.1 Optional Redemption in Cash. The Company may prepay this Note (“Optional
Redemption”) by paying to the Holder a sum of money equal to one hundred percent
(100%) of the Principal Amount outstanding at such time together with accrued
but unpaid interest thereon and any and all other sums due, accrued or payable
to the Holder arising under this Note (the “Redemption Amount”) outstanding on
the Redemption Payment Date (as

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defined below). In the event the Company fails to pay the Redemption Amount on
the Redemption Payment Date as set forth herein, then such Redemption Notice
will be null and void.

 

2.2 Issuance of New Note. Upon any repayment of a portion of this Note, a new
Note containing the same date and provisions of this Note shall, at the request
of the Holder, be issued by the Company to the Holder for the principal balance
of this Note and interest which shall not have been paid.

 

ARTICLE III

[INTENTIONALLY OMITTED]

 

ARTICLE IV

EVENTS OF DEFAULT

 

4.1 Events of Default. The occurrence of any of the following events set forth
in this Section 4.1 shall constitute an event of default (“Event of Default”)
hereunder, after which the holder may demand payment in full of all amounts due
hereunder:

 

(a) Failure to Pay. The Company fails to pay when due any installment of
principal, interest or other fees hereon in accordance herewith, or the Company
fails to pay any of the other obligations when due, and, in any such case, such
failure shall continue for a period of ten (10) days following the date upon
which any such payment was due.

 

(b) Breach of Covenant. The Company breaches any covenant or any other term or
condition of this Note in any material respect and such breach, if subject to
cure, continues for a period of fifteen (15) days after the occurrence thereof.

 

(c) Breach of Representations and Warranties. Any representation, warranty or
statement made or furnished by the Company in this Note shall at any time be
false or misleading in any material respect on the date as of which made or
deemed made.

 

(d) Bankruptcy. The Company or any of its Subsidiaries shall (i) apply for,
consent to or suffer to exist 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, (ii) make a general assignment for the benefit
of creditors, (iii) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent,
(v) file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vi) acquiesce to, without challenge within ten (10) days of
the filing thereof, or failure to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

 

(e) Judgments. Attachments or levies in excess of $100,000 in the aggregate are
made upon the Company or any of its Subsidiary’s assets or a judgment is
rendered against the Company’s property involving a liability of more than
$100,000 which shall not have been vacated, discharged, stayed or bonded within
sixty (60) days from the entry thereof;

 

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(f) Insolvency. The Company or any of its Subsidiaries shall admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business;

 

ARTICLE V

MISCELLANEOUS

 

5.1 Cumulative Remedies. The remedies under this Note shall be cumulative.

 

5.2 Failure or Indulgence Not Waiver. No failure or delay on the part of the
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.

 

5.3 Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given:

 

(a) upon personal delivery to the party to be notified;

 

(b) when sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next business day;

 

(c) three (3) business days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or

 

(d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt.

 

All communications shall be sent to the last registered address of the other
party hereto, or at such other address as the Company or the Purchaser may
designate by written notice to the other parties hereto given in accordance
herewith.

 

5.4 Amendment Provision. The term “Note” and all references thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented, and any
successor instrument as such successor instrument may be amended or
supplemented.

 

5.5 Assignability. This Note shall be binding upon the Company and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns. The Company may not assign any of its obligations under
this Note without the prior written consent of the Holder, any such purported
assignment without such consent being null and void.

 

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5.6 Cost of Collection. In case of any Event of Default under this Note, the
Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys’ fees.

 

5.7 Governing Law, Jurisdiction and Waiver of Jury Trial.

 

(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

 

(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN FLORIDA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE
OTHER HAND, PERTAINING TO THIS NOTE OR TO ANY MATTER ARISING OUT OF OR RELATED
TO THIS NOTE; PROVIDED, THAT THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF FLORIDA. THE
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH
IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

 

(c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND THE
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, OR THE
TRANSACTIONS RELATED HERETO OR THERETO.

 

5.8 Severability. In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of this Note.

 

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5.9 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 rate permitted
by such law, any payments in excess of such maximum rate shall be credited
against amounts owed by the Company to the Holder and thus refunded to the
Company.

 

5.10 Construction. Each party acknowledges that its legal counsel participated
in the preparation of this Note and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Note to favor any party
against the other.

 

[Balance of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Term Note to be signed in its
name effective as of this 18th day of January 2006.

 

VITALITY SYSTEMS, INC.

By:

 

/s/ BRIAN T. NUGENT

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Name:

 

Brian T. Nugent

Title:

 

President

 

WITNESS:

 

 

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ANNEX A

 

DEFINITIONS

 

“Person” means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person’s successors and assigns.

 

“Subsidiary” means, with respect to any Person, (i) any other Person whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors or other
governing body of such other Person, are owned, directly or indirectly, by such
Person or (ii) any other Person in which such Person owns, directly or
indirectly, more than 50% of the equity interests at such time.

 

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