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EXHIBIT 4.2
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NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN
THE SUBJECT OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH
RESPECT TO THE SECURITIES ISSUABLE UPON CONVERSION HEREOF) ISSUED IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED
UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

              NONNEGOTIABLE 2% SECURED CONVERTIBLE PROMISSORY NOTE

$175,000                                                 Ridgefield, Connecticut
March 2, 2005

     FOR VALUE RECEIVED, the undersigned, Global Matrechs, Inc., a Delaware
corporation (the "Maker"), hereby promises to pay to Southridge Partners LP (the
"Payee") the principal sum of one hundred seventy five thousand dollars
($175,000) in one installment due on March 2, 2007 (the "Maturity Date")
together with interest from and after the date hereof at the rate of two percent
(2%) per annum computed on the unpaid principal balance on the basis of a
360-day year. All payments made hereunder shall be made in immediately available
funds. By acceptance of this Note, the Payee represents, warrants, covenants and
agrees that it will abide by and be bound by its terms. Capitalized terms not
otherwise defined herein shall have the meaning set forth in that certain
Securities Purchase Agreement dated January 31, 2005 by and between the Maker
and the Payee.

     1. Conversion. The Payee shall have the option at any time to convert all
or a portion of the outstanding principal and interest on this Note into a
number of shares of common stock, $0.001 par value per share (the "Common
Stock") equal to a fraction, the numerator of which shall be the amount of
principal and interest being so converted and the denominator of which shall be
equal to the Conversion Price (the "Conversion Shares"). The "Conversion Price"
shall be $0.02.

     2. Restrictions on Conversion. Notwithstanding anything to the contrary
contained herein, the number of Conversion Shares that may be acquired by the
Payee upon any conversion of this Note (or otherwise in respect hereof) shall be
limited to the extent necessary to insure that, following such conversion, the
total number of shares of Common Stock then beneficially owned by such Payee and
its affiliates and any other persons whose beneficial ownership of Common Stock
would be aggregated with the Payee's for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), does not
exceed 4.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
conversion). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.

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     3. Prepayment. If at any time the Market Price (as defined below) of the
Maker's Common Stock remains less than $0.03 cents for ten (10) consecutive
trading days, then at the written election of the Payee provided not later than
the 10th calendar day following the last day of such 10 trading day period, the
Maker shall within 60 days of the receipt of such election prepay the principal
amount outstanding at the time of such prepayment plus a premium (a "Prepayment
Premium") equal to 40% of the principal amount being prepaid plus accrued
interest. For the purposes of this Section 3, the "Market Price" shall equal the
closing price per share of the Common Stock on such date as reported by a
nationally recognized stock exchange price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on the New York Stock Exchange, the American Stock Exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market or the OTC Bulletin Board, the bid price per
share of the Common Stock on the primary market or exchange on which the Common
Stock is then listed or quoted; (b) if prices for the Common Stock are then
reported in the "Pink Sheets" published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported; or (c) in all other cases, the fair market value of a share of Common
Stock as determined by an independent qualified appraiser selected in good faith
and paid for by the Payee.

     4. Adjustment for Dividends, Distributions, Subdivisions, Combinations,
Mergers, Consolidations or Sale of Assets.

          (a) Manner of Adjustment.

               (i) Stock Dividends, Distributions or Subdivisions. In the event
the Maker shall issue shares of Common Stock in a stock dividend, stock
distribution or subdivision, the Conversion Price in effect immediately before
such stock dividend, stock distribution or subdivision shall, concurrently with
the effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased and the number of shares of Common Stock issuable upon
conversion of this Note shall be proportionately increased.

               (ii) Combinations or Consolidations. In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Conversion Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common Stock issuable upon
conversion of this Note shall be proportionately decreased.

               (iii) Adjustment for Reclassification, Exchange or Substitution.
In the event that the class of securities issuable upon the conversion of this
Note shall be changed into the same or a different number of shares of any class
or classes of stock, whether by capital reorganization, reclassification or
otherwise, then and in each such event the Payee shall have the right thereafter
to convert this Note for the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by Payees of the number of shares of the class of securities
into which such Note might have been

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convertible for immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.

               (iv) Adjustment for Merger, Consolidation or Sale of Assets. In
the event that the Maker shall merge or consolidate with or into another entity
or sell all or substantially all of its assets, this Note shall thereafter be
convertible for the kind and amount of shares of stock or other securities or
property to which a Payee of the number of shares of Common Stock of the Maker
deliverable upon conversion of this Note would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment (as
determined in good faith by the Maker's Board of Directors) shall be made in the
application of the provisions set forth in this Section 4 with respect to the
rights and interest thereafter of the Payee of this Note, to the end that the
provisions set forth in this Section 4 shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of this Note.

          (b) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Maker at its expense shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and furnish to the Payee a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.

          (c) Closing of Books. The Maker shall at no time close its transfer
books against the transfer of any shares of Common Stock issued or issuable upon
the conversion of this Note in any manner which interferes with the timely and
proper issuance of such shares.

     5. Miscellaneous.

          (a) Restricted Securities. By acceptance hereof, the Payee understands
and agrees that this Note is a "restricted security" under the federal
securities laws inasmuch as it is being acquired from the Maker in a transaction
not involving a public offering and has not been the subject of registration
under the Securities Act and that under such laws and applicable regulations
such securities may be resold in the absence of registration under the
Securities Act only in certain limited circumstances. The Payee hereby
represents that it is familiar with Rule 144, as promulgated by the Securities
and Exchange Commission under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.

          (b) Legends. It is understood that this Note shall bear the legend (in
addition to any legends which may be required, in the opinion of the Maker's
counsel, by the securities laws of the state where the Payee is located) set
forth on the first page of this Note.

         6. The following shall constitute an "Event of Default":

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          a.   The Maker shall default in the payment of principal or interest
               on this Note and same shall continue for a period of twenty (20)
               days; or

          b.   The Maker shall (1) make an assignment for the benefit of
               creditors or commence proceedings for its dissolution; or (2)
               apply for or consent to the appointment of a trustee, liquidator
               or receiver for its or for a substantial part of its property or
               business; or

          c.   A trustee, liquidator or receiver shall be appointed for the
               Maker or for a substantial part of its property or business
               without its consent and shall not be discharged within sixty (60)
               days after such appointment; or

          d.   Any governmental agency or any court of competent jurisdiction at
               the instance of any governmental agency shall assume custody or
               control of the whole or any substantial portion of the properties
               or assets of the Maker and shall not be dismissed within sixty
               (60) days thereafter; or

          e.   Except for any judgments, settlements or related litigations or
               actions disclosed in the Maker's Annual Report on Form 10-K for
               the year ended December 31, 2003, any money judgment, writ or
               warrant of attachment, or similar process in excess of One
               Hundred Fifty Thousand ($150,000) Dollars in the aggregate shall
               be entered or filed against the Maker or any of its properties or
               other assets and shall remain unpaid, unvacated, unbonded or
               unstayed for a period of sixty (60) days; or

          f.   Bankruptcy, reorganization, insolvency or liquidation proceedings
               or other proceedings for relief under any bankruptcy law or any
               law for the relief of debtors shall be instituted by or against
               the Maker and, if instituted against the Maker, shall not be
               dismissed within sixty (60) days after such institution or the
               Maker shall by any action or answer approve of, consent to, or
               acquiesce in any such proceedings or admit the material
               allegations of, or default in answering a petition filed in any
               such proceeding;

Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Payee (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Payee and in the Payee's sole discretion, the Payee may consider all
obligations under this Note immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Company, anything herein or in any note or other instruments contained to
the contrary notwithstanding, and the Payee may immediately enforce any and all
of the Payee's rights and remedies provided herein or any other rights or
remedies afforded by law. Upon the occurrence of any Event of Default as set
forth herein and during any period that the Company shall have failed to make
payment of any principal or Interest due hereunder, at the option of Payee and
without notice to the Company, the Interest shall be added to the outstanding
principal balance hereof, and the

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entire outstanding principal balance, as so adjusted, shall bear interest
thereafter until paid at an annual rate of eighteen percent (18%) (the "Default
Rate").

     7. Presentment. Except as set forth herein, the Maker waives presentment,
demand and presentation for payment, notice of nonpayment and dishonor, protest
and notice of protest and expressly agrees that this Note or any payment
hereunder may be extended from time to time by the Payee without in any way
affecting the liability of the Maker.

     8 . All provisions herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the amount paid or
agreed to be paid to Payee for the use of the money advanced or to be advanced
hereunder exceed the maximum rate of interest allowed to be charged under
applicable law (the "Maximum Rate"), regardless of whether or not there has been
an acceleration of the payment of principal as set forth herein. If, from any
circumstances whatsoever, the fulfillment of any provision of this Note or any
other agreement or instrument now or hereafter evidencing, securing or in any
way relating to the indebtedness evidenced hereby shall involve the payment of
interest in excess of the Maximum Rate, then, ipso facto, the obligation to pay
interest hereunder shall be reduced to the Maximum Rate; and if from any
circumstance whatsoever, Payee shall ever receive interest, the amount of which
would exceed the amount collectible at the Maximum Rate, such amount as would be
excessive interest shall be applied to the reduction of the principal balance
remaining unpaid hereunder and not to the payment of interest. This provision
shall control every other provision in any and all other agreements and
instruments existing or hereafter arising between the Maker and Payee with
respect to the indebtedness evidenced hereby.

     9. In the event this Note is placed in the hands of an attorney for
collection, or if Payee incurs any costs incident to the collection of the
indebtedness evidenced hereby, the Maker agrees to pay to Payee an amount equal
to all such costs, including without limitation all reasonable attorneys' fees
and all court costs.

     10. Notices.

          (c) Notices to the Payee. Whenever any provision of this Note requires
a notice to be given or a request to be made to the Payee by the Maker, then and
in each such case, any such notice or request shall be in writing and shall be
sent by registered or certified mail, return receipt requested with postage
thereon fully prepaid to the Payee at its address set forth on the first page of
this Note or at such other address as the Payee may from time to time designate
in writing.

          (d) Notices to the Maker. Whenever any provision of this Note requires
a notice to be given or a request to be made to the Maker by the Payee, any such
notice or request shall be in writing and shall be sent by registered or
certified mail, return receipt requested with postage thereon fully prepaid to
the Maker at its address set forth on the signature page or at such other
address as the Maker may from time to time designate in writing.

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     11. Construction; Governing Law. The validity and construction of this Note
and all matters pertaining hereto are to be determined in accordance with the
laws of the state of New York without regard to the conflicts of law principles
thereof.

     12. Amendments. Neither this Note nor any of its provisions may be changed,
waived or modified without the written consent of both the Maker and the Payee.

     13. Successors. This Note shall be a binding obligation of any successor of
the Maker.

     IN WITNESS WHEREOF, the Maker, by its appropriate officers thereunto duly
authorized, has executed this Note as of this 2nd day of March, 2005.

                                       GLOBAL MATRECHS, INC.

                                       By: /s/ Michael Sheppard
                                           ------------------------
                                       Name:  Michael Sheppard
                                       Title: President

                                       Address: 90 Grove Street, Suite 201
                                                Ridgefield, CT 06877

                                        6Exhibit 10.1

 

SUMMARY OF DIRECTORS’
COMPENSATION

 

DIGIRAD CORPORATION

 

Compensation for members of the board of directors
(the “Board”) of Digirad Corporation (the “Company”) will include an annual
retainer of $10,000 for serving on the Board, an annual retainer of $17,000 for
attending meetings of the Board, an annual retainer of $6,000 for serving on
the audit committee (with an additional $10,000 retainer to be paid to the
chairman), and an annual retainer of $4,000 for serving on the compensation or
corporate governance committee.  The
annual retainer payments will be made quarterly.

 

                Pursuant to the
Company’s 2004 Non-Employee Directors’ Stock Option Program, non-employee
directors who join the Board will automatically receive grants of options to
purchase 10,000 shares of common stock, and non-employee directors will
automatically receive annual grants of 5,000 shares of common stock.  Directors are also eligible to participate in
the Company’s 2004 Stock Incentive Plan. 
The Company will reimburse directors for reasonable out-of-pocket
expenses incurred in connection with their attending meetings of the Board and
its committees.

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