EXHIBIT 99.2
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
THIS WARRANT AGREEMENT (this "Agreement") is entered into and effective
as of September 20, 2007 (the "Effective Date"), by and between MicroIslet,
Inc., a Nevada corporation (the "Company"), and Xxxxx Xxxxxx, an individual
("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 Four Hundred Thousand (400,000) Shares of
the Company's Common Stock at a purchase price of forty cents ($0.40) per Share
(the "Exercise Price"). This Warrant is being issued pursuant to the Unsecured
Subordinated Convertible Promissory Note between the Holder and the Company of
even date herewith (the "Note"). The Company has agreed to grant certain
registration rights with respect to the Shares pursuant to a Registration Rights
Agreement of even date herewith (the "Registration Rights Agreement"). The
Warrantholder's right to exercise this Warrant shall be subject to the purchase
and sale of Shares upon exercise being in compliance with the Act and the Laws,
but shall not be affected by the effectiveness or availability of a registration
statement under the Act for the resale of the Shares. Any Shares issuable upon
exercise of this Warrant while such a registration statement is not effective or
is unavailable for the resale of the Shares shall bear the legend described in
Section 8.8. 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 fifth 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, on or after the earlier of (i) the
one year anniversary of the Effective Date or (ii) the occurrence of an event
described in Section 6.1, 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
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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.
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 (iii) 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 be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
6.4 STOCK DIVIDENDS. If the Company at any time shall pay
a dividend payable in the Company's Common Stock, then the Exercise Price shall
be adjusted, from and after the date of determination of shareholders entitled
to receive such dividend, to a price determined by
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multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the total number
of all shares of the Company's Common Stock outstanding immediately prior to
such dividend (assuming all convertible securities are then converted into
Common Stock) and (ii) the denominator of which shall be the total number of all
shares of the Company's Common Stock outstanding immediately after such dividend
(assuming all convertible securities are then converted into Common Stock).
Warrantholder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Common Stock (calculated
to the nearest whole share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
7. WARRANT NONTRANSFERABLE. The Warrant may not be sold, pledged,
assigned or transferred in any manner without the written consent of the
Company.
8. SECURITIES ISSUES. Warrantholder, intending that the Company
rely upon the following representations and covenants of Warrantholder, which by
execution of this Agreement, Warrantholder hereby confirms:
8.1 ACCREDITED INVESTOR. Warrantholder is familiar with
the definition of "accredited investor" set forth in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended. Warrantholder is an
accredited investor as so defined.
8.2 ACQUISITION FOR OWN ACCOUNT. Warrantholder is entering
into this Agreement for Warrantholder's own account and not with a view to or
for sale in connection with any distribution of securities.
8.3 NO TRANSFERS CONTEMPLATED. Warrantholder does not presently
have any contracts, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any securities of the Company.
8.4 TRUE INVESTMENT PURPOSE. Warrantholder has not been
organized for the purpose of entering into this Agreement.
8.5 RESTRICTIONS ON ACQUIRED SECURITIES. Warrantholder
acknowledges that any securities acquired pursuant to this Agreement may not be
sold, pledged, assigned or transferred in any manner, except pursuant to
registration and qualification under applicable securities laws, or if an
exemption from such registration or qualification is applicable.
8.6 INVESTMENT EXPERIENCE. Warrantholder is able to fend
for itself, bear the economic risk of its investment and evaluate the merits and
risks of the transactions provided in this Agreement.
8.7 ACCESS TO INFORMATION. Warrantholder has had access
to, and has reviewed as it sees fit, all of the Company's public reports filed
with the Securities and Exchange Commission. Warrantholder acknowledges that it
has not received any material information in connection with this investment
which is not contained in, or which is contrary to, the information in such
public reports, and Warrantholder has relied only on such public reports in
connection with its investment decision.
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8.8 RESTRICTED SHARES/LEGEND. Warrantholder understands
that the Shares issuable upon the exercise of the Warrant under this Agreement
shall be "restricted securities" as that term is defined in Rule 144 promulgated
under the Securities Act of 1933, as amended, and shall bear a legend in the
form substantially as follows:
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.
8.9 NO GENERAL SOLICITATION. Warrantholder has not seen or
received any advertisement or general solicitation in connection with this
Agreement or the Warrant.
9. MISCELLANEOUS.
9.1 GOVERNING LAW. This Agreement is entered into in San
Diego, California, shall be performed in California, and shall be interpreted,
enforced and adjudicated in San Diego, California under the internal laws of the
State of California without regard to California's conflict-of-law provisions.
9.2 ENTIRE AGREEMENT. This Agreement and the Note
constitutes the final, complete and exclusive agreement between the parties
pertaining to the subject of this Agreement, and supersedes all prior and
contemporaneous agreements. This Agreement represents the warrant required to be
delivered pursuant to the Note. None of the provisions of this Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver. Any changes
or supplements to this Agreement must be in writing and signed by both of the
parties.
9.3 ASSIGNMENT. Not in derogation of Section 7 hereof,
this Agreement shall be binding on, and shall inure to the benefit of, the
parties and their respective heirs, legal representatives, successors and
assigns.
9.4 NOTICES, ETC. All notices, requests, demands or other
communications that are required or permitted under this Agreement shall be
given in the manner set forth in the Note.
9.5 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other document referenced in
this Agreement, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
document.
9.6 TIME IS OF THE ESSENCE. Time is absolutely of the
essence in construing each provision of this Agreement.
9.7 INTERPRETATION. The headings set forth in this
Agreement are for convenience only and shall not be used in interpreting this
Agreement.
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9.8 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. A faxed signature
shall be as valid as an originally executed signature.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the Effective Date.
"Company"
MICROISLET, INC.,
a Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: CEO
"Warrantholder"
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, an individual
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EXHIBIT A
NOTICE OF EXERCISE
To: Chief Financial Officer
MicroIslet, Inc.
1. The undersigned Warrantholder ("Warrantholder") elects to acquire
shares of the Common Stock of MicroIslet, Inc., a Nevada corporation
(the "Company"), pursuant to the terms of the Warrant Agreement dated
as of September _____, 2007 (the "Warrant").
2. The Warrantholder elects to purchase _____________ shares of Common
Stock as provided in Section 3 and tenders herewith a check in the
amount of $___________ as payment of the purchase price.
3. In exercising its rights to purchase the Common Stock of the Company,
the undersigned hereby confirms and acknowledges the representations
made in Section 8 of the Warrant.
4. Please issue a certificate representing the shares of the Common Stock
in the name of the undersigned or in such other name as is specified
below:
Name: __________________________________________________
Address: __________________________________________________
Taxpayer I.D. No.:__________________________________________
WARRANTHOLDER
By:______________________________
Name:_________________________
Title:________________________
Date:___________________________
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