EX-10.2






“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”



SECURED NOTE




Principal Amount: $300,000.00 Issue Date: December      , 2008



FOR VALUE RECEIVED, STEM CELL INNOVATIONS, INC., a Delaware corporation (hereinafter called
“Borrower”), hereby promises to pay to ALPHA CAPITAL ANSTALT, Pradfant 7, 9490 Furstentums, Vaduz,
Lichtenstein, Fax: 011-42-32323196 (the “Holder”), without demand, the principal sum of Three
Hundred Thousand Dollars ($300,000) (“Principal Amount”) or so much thereof as shall be advanced by
Holder to Borrower pursuant to this Note (each such advance a “Loan” and all advances collectively
the “Loans”), with unpaid interest thereon, on December      , 2009 (the “Maturity Date”), if not
paid sooner.



This Note has been entered into pursuant to the terms of a subscription agreement between the
Borrower and the Holder of promissory notes dated of even date herewith (the “Subscription
Agreement”). Unless otherwise separately defined herein, all capitalized terms used in this Note
shall have the same meaning as is set forth in the Subscription Agreement. The following terms
shall apply to this Note:



ARTICLE I




GENERAL PROVISIONS




1.1 Interest.



(a) Rate of Interest. Except as otherwise provided herein, each Loan under this Note
shall bear interest on the outstanding principal amount thereof, for each day from and including
the day the proceeds of each Loan, respectively, are paid to or as directed by the Borrower, but
excluding the date the principal amount thereof shall be paid in full, at a rate equal to fifteen
percent (15%) per annum. The aggregate amount of accrued interest on each Loan under this Note,
net of the Initial Interest Payment to the extent such Initial Interest Payment shall have been
previously paid to Holder, shall be payable on the Maturity Date, as set forth below.



(b) Computation of Interest. Interest in respect of this Note shall be calculated on
the basis of a 360-day year for the actual days elapsed for each Loan, respectively, the aggregate
amount of which shall be the accrued interest due under this Note. Each determination of an
interest rate or fee by the Holder pursuant to any provision of this Note shall be conclusive and
binding on the Borrower in the absence of manifest error.



1.2 Default Interest Rate. The Borrower shall not have any grace period to pay any
monetary amounts due under this Note. After the Maturity Date, accelerated or otherwise, and
during the pendency of an Event of Default (as defined in Article III) a default interest rate of
eighteen percent (18%) per annum shall apply to the amounts owed hereunder.



ARTICLE II




PREPAYMENT AND EXTENSION




2.1. Prepayment. This Note may be paid prior to the Maturity Date, without penalty,
upon three days written notice to Holder. Interest shall accrue through the actual payment date.



2.2. Loan Procedures.



(a) Drawing Notice. Borrower will give notice to Holder of its request that a Loan be
made to it hereunder before 11:00 A.M., New York City time, at least one (1) Business Day prior to
the date that the Loan is requested to be made, by delivering a notice to the Holder in a form
substantially similar to Exhibit A hereto (“Drawing Notice”), such notice to specify: (i) the
principal amount of the Loan in U.S. dollars (which will be a minimum of $50,000); (ii) the account
to which the Loan proceeds are to be paid; and (iii) that no default and/or Event of Default or an
event which with the passage of time or the giving of notice would be an Event of Default has
occurred or is continuing on such date or after giving effect to the making of the Loan requested
to be made on such date. Borrower may not deliver more than four (4) Drawing Notices.



(b) This Note evidences Loans made by Holder to Borrower, from time to time. The unpaid
principal balance of this Note at any time shall be the aggregate principal amount of the Loans
made by Holder to Borrower, less the total amount of principal payments made hereon by Borrower.
The date and amount of each such Loan and each payment on account of principal thereof may be
endorsed by Holder on the grid attached to and made a part of this Note, and when so endorsed shall
represent evidence thereof binding upon Borrower in the absence of manifest error. Any failure by
Holder to so endorse shall in no way mitigate or discharge the obligation of Borrower to repay any
Loans actually made.



ARTICLE III




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 accrued interest then remaining unpaid
hereon and all other amounts payable hereunder immediately due and payable, upon demand, without
presentment 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 principal,
interest or other sum due under this Note when due.



3.2 Breach of Covenant. The Borrower breaches any material covenant or other material
term or condition of the Subscription Agreement or this Note in any material respect and such
breach, if subject to cure, continues for a period of ten (10) business 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 any Transaction Document, or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith or therewith shall be false
or misleading in any material respect as of the date made and as of the Closing Date.



3.4 Liquidation. Any dissolution, liquidation or winding up of Borrower or any
substantial portion of its business.



3.5 Cessation of Operations. Any cessation of operations by Borrower or Borrower
admits it is otherwise generally unable to pay its debts as such debts become due.



3.6 Maintenance of Assets. The failure by Borrower to maintain any material
intellectual property rights, personal, real property or other assets which are necessary to
conduct its business (whether now or in the future).



3.7 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.



3.8 Judgments. Any money judgment, writ or similar final process shall be entered or
filed against Borrower or any subsidiary of Borrower or any of their property or other assets for
more than $100,000.



3.9 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or against the Borrower.



3.10 Delisting. Failure of the Borrower’s Common Stock to be listed for trading or
quotation on a Principal Market for ten (10) or more consecutive days.



3.11 Non-Payment. A default by the Borrower under any one or more obligations in an
aggregate monetary amount in excess of $100,000 after the due date and any applicable cure period.



3.12 Stop Trade. An SEC or judicial stop trade order or Principal Market trading
suspension with respect to the Borrower’s Common Stock that lasts for ten (10) or more consecutive
trading days.



3.13 Chassman Loan. The failure by Margie Chassman to loan to Borrower an amount
equal to not less than $50,000 on or before thirty-five (35) days after the Closing Date with proof
of receipt of such loan funds required to be provided in a written statement executed by the
Company’s Chief Financial Officer.



3.13 Cross Default. A default by the Borrower of a material term, covenant, warranty
or undertaking of any other agreement to which the Borrower and Holder are parties, or the
occurrence of a material event of default under any such other agreement which is not cured after
any required notice and/or cure period which such default has a Material Adverse Effect, except for
late payments to telecommunication providers.



3.14 Other Note Default. The occurrence of any Event of Default under any Other Note.



ARTICLE IV




SECURITY INTEREST




4. Security Interest/Waiver of Automatic Stay. This Note is secured by a security
interest granted to the Holder pursuant to a Security Agreement, as delivered by Borrower to
Holder. The Borrower acknowledges and agrees that should a proceeding under any bankruptcy or
insolvency law be commenced by or against the Borrower, or if any of the Collateral (as defined in
the Security Agreement) should become the subject of any bankruptcy or insolvency proceeding, then
the Holder should be entitled to, among other relief to which the Holder may be entitled under the
Transaction Documents and any other agreement to which the Borrower and Holder are parties
(collectively, “Loan Documents”) and/or applicable law, an order from the court granting immediate
relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder to exercise
all of its rights and remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE,
THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER
SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C.
SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE
HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.
The Borrower hereby consents to any motion for relief from stay that may be filed by the Holder in
any bankruptcy or insolvency proceeding initiated by or against the Borrower and, further, agrees
not to file any opposition to any motion for relief from stay filed by the Holder. The Borrower
represents, acknowledges and agrees that this provision is a specific and material aspect of the
Loan Documents, and that the Holder would not agree to the terms of the Loan Documents if this
waiver were not a part of this Note. The Borrower further represents, acknowledges and agrees that
this waiver is knowingly, intelligently and voluntarily made, that neither the Holder nor any
person acting on behalf of the Holder has made any representations to induce this waiver, that the
Borrower has been represented (or has had the opportunity to he represented) in the signing of this
Note and the Loan Documents and in the making of this waiver by independent legal counsel selected
by the Borrower and that the Borrower has discussed this waiver with counsel.



ARTICLE V




MISCELLANEOUS




5.1 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.



5.2 Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, 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 addresses for such communications
shall be: (i) if to the Borrower to: Stem Cell Innovations, Inc., Stem Cell Innovations, Inc.,
11222 Richmond Avenue, Suite 180, Houston, TX 77082, Attn: Larry Gordon, Fax: (281) 679-7910, and
(ii) if to the Holder, to the name, address and telecopy number set forth on the front page of this
Note, with a copy by telecopier only to Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New
York, New York 10176, telecopier number: (212) 697-3575.



5.3 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 supplemented.



5.4 Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to the benefit of the Holder and its successors and assigns. The
Borrower may not assign its obligations under this Note.



5.5 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.



5.6 Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws principles that would result
in the application of the substantive laws of another jurisdiction. Any action brought by either
party against the other concerning the transactions contemplated by this Agreement must be brought
only in the civil or state courts of New York or in the federal courts located in the State and
county 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 attorney’s fees and costs. 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 unenforceability
of any other provision of this Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other decision in favor of
the Holder. This Note shall be deemed an unconditional obligation of Borrower for the payment of
money and, without limitation to any other remedies of Holder, may be enforced against Borrower by
summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar
rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or
statute, any other document or agreement to which Holder and Borrower are parties or which Borrower
delivered to Holder, which may be convenient or necessary to determine Holder’s rights hereunder or
Borrower’s obligations to Holder are deemed a part of this Note, whether or not such other document
or agreement was delivered together herewith or was executed apart from this Note.



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



5.8 Non-Business Days. Whenever any payment or any action to be made shall be due on
a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be
due or action shall be required on the next succeeding business day and, for such payment, such
next succeeding day shall be included in the calculation of the amount of accrued interest payable
on such date.



IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized
officer as of the      day of December, 2008.




STEM CELL INNOVATIONS, INC.



By:

Name:

Title:




WITNESS:



1



LOANS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 	 	 
	Date

	 	Loan

No.
	 	Amount of

Loan
	 	Amount of

Principal

Paid
	 	Unpaid

Principal

Balance
	 	

Notation

Made By
	 

	 	 
	 	 
	 	 
	 	 
	 	 






2




EXHIBIT A




DRAWING NOTICE




Date:      



ALPHA CAPITAL ANSTALT


Pradfant 7


9490 Furstentums


Vaduz, Lichtenstein


Fax: 011-42-32323196



Attention:



We hereby refer you to the Promissory Note dated December      , 2008 (as amended, modified,
supplemented and/or restated from time to time, the “Note”) in the original principal
amount of $300,000,000, or such lesser amount as shall equal the outstanding principal amount
thereof, issued by Stem Cell Innovations, Inc. (“Borrower”) to Alpha Capital Anstalt
(“Holder”).



We hereby request that Holder make a Loan to Borrower in the following amount pursuant to the
wire transfer instructions set forth below. We hereby confirm that (a) we accept all of the terms
and conditions set forth in the Note, and (b) there is no default and/or Event of Default that has
occurred and is continuing on the date hereof or after giving effect to the making of the Loan
requested to be pursuant hereto.




Amount of Loan: US$




Wire Transfer Instructions:




Very truly yours,




STEM CELL INNOVATIONS, INC.




By:

Name:

Title:





3