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 May 15, 2007 (the "Effective Date"), by and between MicroIslet,
Inc., a Nevada corporation (the "Company"), and Xxxx X. Xxxxxxxxx, 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 Two Hundred Fifty Thousand
(250,000) Shares of the Company's Common Stock at a purchase price of
seventy-five cents ($0.75) per Share (the "Exercise Price"). This Warrant is
being issued pursuant to the Unsecured Subordinated Promissory Note between the
Holder and the Company of even date herewith (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.
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.
-1-
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 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.
-2-
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.
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.
-3-
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. MARKET STAND-OFF. If Warrantholder's Shares are not
registered, then in connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended, Warrantholder shall not
sell, make any short sale of, loan, hypothecate, pledge, grant any option for
the purchase of, or otherwise dispose of or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to any of the
Shares without the prior written consent of the Company and its underwriters,
for such period of time from and after the effective date of such registration
statement as may be requested by the Company or such underwriters, up to a
maximum of one hundred eighty (180) days, so long as such stand-off provisions
are no more onerous than those applicable to any securities held by any officer
or director of the Company.
10. MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement is entered into in
San Diego, California, shall be performed in California, and shall be
interpreted, enforced and adjudicated in Carlsbad, California under the internal
laws of the State of California without regard to California's conflict-of-law
provisions.
10.2 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.
-4-
10.3 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.
10.4 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.
10.5 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.
10.6 TIME IS OF THE ESSENCE. Time is absolutely of
the essence in construing each provision of this Agreement.
10.7 INTERPRETATION. The headings set forth in this
Agreement are for convenience only and shall not be used in interpreting this
Agreement.
10.8 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.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-5-
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/ Xxxxx X. Xxxxx III
-------------------------------------
Xxxxx X. Xxxxx III, M.D., Ph.D.,
Chief Executive Officer
"Warrantholder"
XXXX X. XXXXXXXXX, TRUSTEE U/D/T
DATED SEPTEMBER 13, 1995
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxx, Trustee
-6-
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 May 15, 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:__________________________________
-7-
