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EXHIBIT 99.3
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 ("THE
ACT") OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE (THE
"LAWS"). THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION AND QUALIFICATION OF THESE SECURITIES
UNDER THE ACT
AND THE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT AND
THE LAWS.
WARRANT AGREEMENT
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THIS
WARRANT AGREEMENT (this "Agreement") is entered into and effective
as
of August 25, 2008 (the "Effective Date"), by and between
MicroIslet, Inc., a
Nevada corporation (the "Company"), and John J. Hagenbuch, Trustee
U/D/T dated
September 13, 1995 ("Warrantholder").
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements
contained in this Agreement, the Company and the Warrantholder
certify and agree
as follows:
1.
GRANT OF
THE RIGHT TO PURCHASE COMMON STOCK. For value received, the
adequacy of which is hereby acknowledged, the Company hereby grants
to
Warrantholder, and Warrantholder is entitled to, upon the terms and
subject to
the conditions set forth in this Agreement, a warrant (the
"Warrant") to
subscribe for and purchase from the Company a number of shares of
the Company's
Common Stock (the "Shares") equal to One Million Five Hundred
Thousand
(1,500,000) Shares of the Company's Common Stock at a purchase
price of thirty
cents ($0.30) per Share (the "Exercise Price"). This Warrant is
being issued
pursuant to an amendment to the Unsecured Subordinated Promissory
Note between
the Holder and the Company dated as of even date herewith (as so
amended, the
"Note"). Notwithstanding anything to the contrary in this
Agreement, the rights
under this Warrant are subject to the limitations stated in the
Note.
2.
EXPIRATION. The Warrant shall expire and cease to be exercisable
at
5:00 p.m. Pacific time on the tenth anniversary of the Effective
Date.
3.
METHOD OF
EXERCISE; PAYMENT; ISSUANCE OF SHARES. Subject to Section
2 hereof, the purchase right represented by the Warrant may be
exercised by the
Warrantholder, in whole or in part, by tendering to the Company a
duly executed
Notice of Exercise in the form attached as Exhibit A at the
principal office of
the Company and by payment to the Company, by check, of an amount
equal to the
then applicable Exercise Price multiplied by the number of shares
then being
purchased. In the event of any exercise of the rights represented
by this
Agreement, certificates for the shares of stock so purchased shall
be in the
name of, and delivered to, Warrantholder, or as Warrantholder may
direct
(subject to the terms of transfer contained herein). Such delivery
shall be made
within thirty (30) days after exercise and at the Company's
expense. The shares
so issued upon exercise of the rights represented by this Agreement
shall be
duly authorized, validly issued, fully paid and non-assessable.
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4.
RESERVATION OF SHARES. The Company shall at all times have
authorized and reserved a sufficient number of shares of its Common
Stock to
provide for the exercise of the rights to purchase the Shares as
provided in
this Agreement.
5.
NO RIGHTS
AS STOCKHOLDER. This Agreement does not entitle
Warrantholder to any voting rights or other rights as a stockholder
of the
Company prior to the purchase of the Shares as provided in this
Agreement.
6.
ADJUSTMENT
RIGHTS. The Exercise Price and the number of Shares
purchasable hereunder are subject to adjustment from time to time
as follows:
6.1 MERGER AND
SALE OF ASSETS. If at any time there shall be (i) a
reorganization of the shares of the Company's Common Stock (other
than a
combination, reclassification, exchange or subdivision of shares
otherwise
provided for herein), or a merger or consolidation of the Company
with or into
another corporation where the Company is not the surviving
corporation, or a
reverse triangular merger in which the Company is the surviving
entity but the
shares of the Company's capital stock outstanding immediately prior
to the
merger are converted by virtue of the merger into other property,
whether in the
form of securities, cash, or otherwise, or (ii) the sale of all or
substantially
all of the Company's properties and assets to any other person,
then, as a part
of such reorganization, merger, consolidation or sale, whether for
stock, cash,
or other consideration, lawful provision shall be made so that
Warrantholder
shall thereafter be entitled to receive upon exercise of its
Warrants the number
of shares of Common Stock or other securities of the successor
corporation
resulting from such merger or consolidation to which Warrantholder
would have
been entitled if the Warrants had been exercised immediately prior
to such
capital reorganization, merger, consolidation or sale. In any such
case,
appropriate adjustment (as determined in good faith by the
Company's Board of
Directors) shall be made in the application of the provisions of
this Warrant
Agreement with respect to the rights and interest of Warrantholder
after such
reorganization, merger, consolidation or sale so that the
provisions of this
Warrant Agreement (including adjustments of the Exercise Price and
the number of
Shares issuable pursuant to the terms and conditions of this
Warrant Agreement)
shall be applicable after such event, as near as reasonably may be,
in relation
to any shares deliverable after that event upon the exercise of the
Warrants.
6.2
RECLASSIFICATION OF SHARES. If the Company at any time shall,
by combination, reclassification, exchange or subdivision of
securities or
otherwise, change all of the outstanding shares of Common Stock
into the same or
a different number of securities of any other class or classes,
this Warrant
Agreement shall thereafter represent the right to acquire such
number and kind
of securities as would have been issuable hereunder had the
Warrantholder
exercised its rights with respect to all of the shares then
represented by this
Warrant Agreement immediately prior to such combination,
reclassification,
exchange, subdivision or other change.
6.3 SUBDIVISION
OF SHARES. If the Company at any time shall
combine or subdivide its Common Stock, the Exercise Price shall
