Document:

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                                                                    EXHIBIT 10.5

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

                               SERVICES AGREEMENT
                      FOR PRODUCTION AND RELEASE TESTING OF
                  ENCAPSULATED PORCINE XENOTRANSPLANT PRODUCTS

         This Services Agreement for cGMP Manufacturing production and release
testing of encapsulated porcine xenotransplant product for MicroIslet, Inc. (the
"Agreement"), dated this 1st day of September 2007, is entered into by and
between Progenitor Cell Therapy, LLC, having an address at 21 Main Street, Court
Plaza South, East Wing, Suite 304, Hackensack, New Jersey 07601 (hereinafter
called "PCT") and MicroIslet, Inc, having an address at 6370 Nancy Ridge Drive,
Suite 112 San Diego, CA 92121 (hereinafter called "MICROISLET").

WHEREAS, MICROISLET ((MI) WWW.MICROISLET.COM) is a public biotechnology company
engaged in the research, development and commercialization of patented
technologies in the field of transplantation therapy for patients with diabetes;
MICROISLET has licensed several technologies from Duke University Medical Center
developed over the last decade for the isolation, culture, storage and
encapsulation of insulin-producing porcine islet cells; MICROISLET believes that
these proprietary methods are among the most important advances in the field of
transplantation that may enable diabetic patients to become free from insulin
injections; MICROISLET's ultimate goal is to offer a solution towards a cure for
diabetes worldwide;

         WHEREAS, PCT is a contract manufacturing organization dedicated to the
manufacture, testing and delivery of cellular therapeutics, with facilities in
Mountain View, California and Hackensack, New Jersey, holds a California Drug
Manufacturing License for the conduct of clinical trial manufacture and
distribution of cells products, is registered with the FDA as an HCT/P facility,
and maintains cGMP Quality Systems compliant with applicable United States
regulations;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each Party to the other, the
Parties, intending to be legally bound, hereby covenant and agree as follows:

TERMS
-----

         As used in this Agreement the following terms shall have the following
meanings:

         AGREEMENT                  This Agreement including its attachments and
                                    as the Agreement or its attachments,
                                    including the Quality Agreement, may be
                                    amended through Program Amendment Order.

         APPLICABLE                 LAWS All laws, ordinances, rules, orders and
                                    regulations of any state, federal or local
                                    governmental or regulatory authority that
                                    govern the Services or Product including,
                                    without limitation, the United States
                                    Federal Food, Drug and Cosmetic Act, HIPAA
                                    and the regulations and guidelines of the
                                    FDA and other Regulatory Agencies.

                                      -1-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

         FDA                        Means the United States Food and Drug
                                    Administration, or any successor agency
                                    thereto.

         FORCE MAJEURE              Any cause beyond the reasonable control of
                                    the Party in question which for the
                                    avoidance of doubt and without prejudice to
                                    the generality of the foregoing includes
                                    governmental actions, war, riots, terrorism,
                                    civil commotion, fire, flood, epidemic,
                                    labor disputes (excluding labor disputes
                                    involving the work force or any part thereof
                                    of the Party in question), restraints or
                                    delays affecting shipping or carriers, and
                                    act of God.

         CGMP                       Current Good Manufacturing Practice
                                    regulations, as set forth in the United
                                    States Code of Federal Regulations Title 21
                                    (21 C.F.R. ss.ss. 210 and 211), as amended
                                    from time to time, and subject to the
                                    requirements set forth in the Quality
                                    Agreement.

         CGTP                       Current Good Tissue Practice regulations, as
                                    set forth in the United States Code of
                                    Federal Regulations Title 21 (21 C.F.R. ss.
                                    1271 subpart 2), as amended from time to
                                    time, and subject to the requirements set
                                    forth in the Quality Agreement.

         MANUFACTURE                Means manufacture of the Product in
                                    accordance with this Agreement, including
                                    any amendments made thereto in accordance
                                    with this Agreement.

         POINT                      OF CONTACT Each Party shall appoint a Point
                                    of Contact which will serve as that Party's
                                    point of contact for the other Party, as
                                    further detailed in Section 1 of this
                                    Agreement.

         PRODUCT                    Encapsulated porcine islet cell product or
                                    any batch or unit thereof

         PROGRAM                    Stages 1 through 5 of the Scope of Work as
                                    outlined in Attachment A of this Agreement.

         PROGRAM                    A document detailing changes to the Program,
         AMENDMENT ORDER            which has been agreed to and signed by both
                                    Parties and is in the form attached to and
                                    made a part of this Agreement as "Attachment
                                    B". The elements and conditions of a Program
                                    Amendment Order are described in Section 2,
                                    Attachment B, and elsewhere in this
                                    Agreement.

         PROPOSAL                   The "Proposal by Progenitor Cell Therapy,
                                    LLC to "Provide Contract Manufacturing
                                    Support Services for MicroIslet, Inc. Ver 2"
                                    dated August 3, 2007

         QUALITY AGREEMENT          The document agreed to by the Parties which
                                    sets forth and governs the roles and
                                    responsibilities of each Party's personnel
                                    in relation to quality assurance matters
                                    relating to the transactions contemplated

                                      -2-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

                                    under this Agreement, a copy of which is
                                    attached to and made a part of this
                                    Agreement as Attachment C (the "Quality
                                    Agreement").

         REGULATORY AGENCY          Any relevant state, federal or local
                                    governmental regulatory authority, within or
                                    outside of the United States, involved in
                                    regulating any aspect of the conduct,
                                    development, manufacture, storage,
                                    distribution, export, import, market
                                    approval, sale, packaging or use of the
                                    Services, the Program or the Product,
                                    including the FDA.

         SERVICES                   Those services, products, and reports to be
                                    provided by PCT as expressly set forth and
                                    more particularly described in Stages 1
                                    through 5 of Attachment A to this Agreement
                                    in accordance with the terms and conditions
                                    set forth in this Agreement and all its
                                    Attachments and in compliance with
                                    Applicable Laws.

         STAGE                      Each distinct step or stage of the Program
                                    as described in Attachment A to this
                                    Agreement.

         TERMINATION                This Agreement will terminate upon
                                    completion of the Program by satisfactory
                                    performance of the Service or upon
                                    termination affected pursuant to section 7.

         THIRD PARTY                Any person other than the Parties or their
                                    respective Affiliates.

1.       SERVICES TO BE PERFORMED
         ------------------------

         A. PCT shall furnish to MICROISLET the Services set forth in Attachment
A which is attached hereto and incorporated herein by reference.

         B. PCT shall provide the required personnel and support necessary to
perform the Services which shall be carried out primarily at PCT's Mountain
View, California facility, located at 291 North Bernardo Avenue, Mountain View,
California 94043.

         C. PCT's point of contact at MICROISLET, with respect to the Services
to be provided herein is Michael Andrews or any other party designated in
writing by MICROISLET (hereinafter called "Point of Contact").

         D. MICROISLET's point of contact at PCT with respect to the Services to
be provided herein is Stewart Craig, PhD, or another party designated in writing
by PCT.

         E. If there is any conflict between the terms of the Proposal, the
Quality Agreement or this Agreement, the terms of this Agreement shall control
and govern.

         F. MICROISLET agrees to fulfill its responsibilities as set forth in
the Quality Agreement and acknowledges and agrees that in order for PCT to carry
out the Program, MICROISLET must satisfy its obligations under this Agreement,

                                      -3-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

including the Quality Agreement. PCT agrees to fulfill its responsibilities as
set forth in the Quality Agreement and acknowledges and agrees that in order for
MICROISLET carry out its obligations, PCT must satisfy its obligations under
this Agreement, including the Quality Agreement.

         G. It shall not be considered a breach of this Agreement by either
Party if a Party is unable to fulfill its obligation due to action or inaction
by the other Party. The Parties hereby acknowledge and agree that because the
work to be performed hereunder is by its nature developmental, PCT can only
assure compliance with MICROISLET's specifications as outlined in this Agreement
and makes no warranty or guaranty whatsoever regarding the achievement of a
successful outcome for the Program.

2.       PAYMENT FOR SERVICES
         --------------------

         A. MICROISLET shall pay to PCT, for Services as specified in Stages 1
through 4 set forth in Attachment A, a total of [***] on the following schedule:

DATE                                                                      AMOUNT
[***]                                                                     [***]
[***]                                                                     [***]
[***]                                                                     [***]
[***]                                                                     [***]
                                                               [***]      [***]

         B. MICROISLET agrees that all payments of the Program Charges are due
thirty (30) days after the invoice dates as set forth above and that any
payments which remains unpaid forty-five (45) calendar days after the date when
due shall then begin to accrue interest at the annual rate of [***] until paid
in full (the "Default Rate").

         C. Any change in Program is subject to agreement in advance through a
Program Amendment Order (PAO) in the form attached in Attachment B. Regulatory
consulting, writing services, and attendance at meetings between the FDA and
MICROISLET, other than those Services outlined in Stage 3 of the Program, are
not included in the Services but are offered at the consulting rates outlined in
Attachment A

         D. PCT shall invoice MICROISLET in accordance with the payment schedule
set forth in this section. Such invoices shall be forwarded to the attention of
the Point of Contact, in paper form at the aforementioned address or electronic
form by email.

         E. MICROISLET shall reimburse PCT for all reasonable and necessary
travel expenses to such places as PCT may travel in the performance of such
Services as requested by MICROISLET. All travel is to be approved in advance by
the MICROISLET Point of Contact. PCT shall provide an itemized expense
statement, along with itemized receipts for such expenses on a monthly basis.
Such itemized expense statements shall be forwarded to the attention of the
Point of Contact, in paper form at the aforementioned address or electronic form
by email.

                                      -4-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

         F. MICROISLET shall reimburse PCT for reasonable and necessary
materials and supplies required to perform the Services set forth in Attachment
A and for such other services for and requested by MICROISLET. PCT shall obtain
the prior approval of MICROISLET for any single purchase of supplies or reagents
in excess of [***]. PCT shall provide an itemized expense statement for such
expenses on a monthly basis. Such itemized expense statement shall be forwarded
to the attention of the Point of Contact, in paper form at the aforementioned
address or electronic form by email. Any materials or supplies for which
MICROISLET has reimbursed PCT will be delivered to MICROISLET upon completion of
the Services or termination of this Agreement, if so requested by MICROISLET. A
[***] percent ([***]%) fee will be added to the total of each monthly expense
reimbursement statement and a [***]% handling fee added to the cost of any
shipment made by PCT to or at the request of MICROISLET. MICROISLET shall pay
PCT for Services performed by PCT and expenses incurred by PCT which are
properly documented and invoiced in accordance with this Section 2 and
Attachment A, within thirty calendar (30) days following receipt of the
applicable invoice and/or itemized expense statement submitted by PCT.

         G. The Parties agree that any changes to this Agreement, including a
change in the scope of work set forth in Attachment A, including election of
additional work under Stage 5, must be made in writing in the form of a Program
Amendment Order. The Parties recognize that changes to the scope of work,
whether by way of increasing or decreasing the services to be provided, may
result in corresponding changes to the timing or amount of the payments that are
due to PCT.

         H. [***] will be responsible for the costs of any Product disposal as
may be required by the provisions of the Quality Agreement attached hereto.

         I. [***].

3.       CONFIDENTIAL INFORMATION
         ------------------------

         The Parties entered into a confidentiality agreement signed by he last
of the Parties on 6 October 2007 (the "Confidentiality Agreement"), attached
hereto as Attachment D, which governs the handling of confidential information
between the Parties. PCT and MICROISLET ratify and affirm the terms and
conditions contained in the Confidentiality Agreement and its applicability to
this Agreement and hereby extend the term of the Confidentiality Agreement to a
period of three (3) years following the termination or expiration of this
Agreement.

Notwithstanding the foregoing or anything contained in the Confidentiality
Agreement, nothing shall prohibit either Party from summarizing the terms of
this Agreement, or from filing this Agreement as an exhibit, in documents such
Party is required to file with any government agency, including the Securities
and Exchange Commission; provided that such disclosure shall be only to the
extent required to comply with applicable laws, and further provided that the
Party proposing to make such disclosure shall provide a copy of the proposed
disclosure to the other Party in advance of such disclosure, and the Parties
shall mutually agree to the content of such disclosure. Except as set forth in
this Section 3, to the extent that there is any discrepancy between this
Agreement and the Confidentiality Agreement, the Parties agree that the
provisions contained in the Confidentiality Agreement shall prevail.

                                      -5-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

4.       DISCLOSURE AND ASSIGNMENT OF INTELLECTUAL PROPERTY
         --------------------------------------------------

         A. PCT shall promptly disclose, in writing to MICROISLET all patentable
and un-patentable inventions, ideas, discoveries, improvements, design rights,
semiconductor mask works, works of authorship, copyrights, trade secrets,
know-how and any equivalents thereof (hereinafter called "INTELLECTUAL
PROPERTY") made, developed or conceived which arises out of the Services
rendered pursuant to this Agreement or out of CONFIDENTIAL INFORMATION of
MICROISLET provided to and/or acquired by PCT in connection with this Agreement,
regardless of whether such information ceases to be Confidential Information.
All such INTELLECTUAL PROPERTY shall be owned solely and exclusively by and vest
entirely in MICROISLET.

         B. PCT shall and does hereby irrevocably grant and assign to MICROISLET
the entire assignable right, title and interest, without further compensation,
in and to any and all of the INTELLECTUAL PROPERTY referred to in Section 4(A)
above, together with: (i) the right to apply for patents and/or copyright
registrations thereon in any and all countries of the world, and (ii) the entire
right, title and interest in and to any and all applications for patents and
copyright registrations which may be prepared or filed thereon at MICROISLET's
discretion and expense, and in and to any and all of the eventuating patents and
copyright registrations.

         C. PCT agrees that all works of authorship shall be deemed "works made
for hire" for MICROISLET within the meaning of the U.S. Copyright Law, and if
they are held to not so qualify, all ownership rights thereto will be
transferred to MICROISLET.

         D. PCT, at MICROISLET's request, shall execute and deliver to
MICROISLET all descriptions, applications, assignments and other documents and
instruments in its possession necessary or proper to carry out the provisions of
this Agreement; PCT shall be reimbursed at its then current consulting rates or
at a mutually agreeable negotiated price plus out-of-pocket expenses, and will
make best commercial business efforts to cooperate with and assist MICROISLET or
its nominees in all reasonable ways and at all reasonable times, including, but
not limited to, testifying in all legal proceedings, signing all lawful papers
and in general performing all lawful acts reasonable, necessary or proper, to
aid MICROISLET in obtaining, maintaining, defending and enforcing all lawful
patent, copyright, trade secret, know-how and the like in the United States and
elsewhere; and PCT shall maintain such information and communications in
confidence as Confidential Information.

         E. Nothing contained herein shall be construed to grant to PCT any
rights to technology or any license under any patent, copyright or trademark now
or hereinafter in existence except for the limited purposes set forth herein.

5.       RELATIONSHIP OF PARTIES
         -----------------------

         This Agreement does not create an employer-employee relationship
between MICROISLET and PCT. PCT shall not hold itself out as an agent or
representative of MICROISLET. PCT agrees that all services herein shall be
rendered by it as an independent contractor, and PCT shall have no authority to
negotiate or execute agreements on behalf of MICROISLET or otherwise bind or
obligate MICROISLET in any manner. In addition, PCT shall not be eligible to
participate in any employee benefit program of MICROISLET.

                                      -6-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

6.       REPRESENTATIONS AND WARRANTIES
         ------------------------------

         A. General Representations and Warranties. Each Party represents and
warrants to the other that it has the necessary right and authority to enter
into this Agreement and that to the best of its knowledge as of the Effective
Date it is the rightful owner of all Intellectual Property it purports to own.
Neither Party makes any representation or warranty to the other except as
specified in this Agreement.

         B. Representations and Warranties of PCT.
            1)  PCT hereby represents and warrants to MICROISLET that PCT and
                its employees, agents, sub-contractors and representatives
                providing the services hereunder shall have reasonable expertise
                in the relevant subject matter, and shall perform its
                obligations under this Agreement in a professional and
                workman-like manner with due care.
            2)  Compliance by PCT. PCT's Mountain View, California facility
                shall operate in compliance with Applicable Laws and the Quality
                Agreement.
            3)  Permits. PCT shall obtain and maintain necessary permits,
                licenses and authorizations as required under this Agreement and
                Applicable Laws with respect to the Services.
            4)  Personnel. Neither PCT, its subcontractors, agents nor any
                members of their respective staffs involved in providing the
                Services shall be, at the time of performance of any Services:
                (i) disqualified or debarred by the FDA or any other Regulatory
                Agency for any purpose pursuant to 21 U.S.C. ss. 335a or any
                foreign counterpart thereof; or (ii) convicted under United
                States federal law or foreign counterpart thereof, for conduct
                relating to the development or approval, or otherwise relating
                to the regulation of, any drug under the Generic Drug
                Enforcement Act of 1992 or any other relevant statute, law or
                regulation.
            5)  PCT represents and warrants that it is under no obligation to
                any third party that would interfere with its rendering to
                MICROISLET consulting and product development services as herein
                defined or which would be inconsistent with any of its
                representations or obligations during the terms of this
                Agreement.
            6)  PCT represents and warrants that the Product will meet the
                specifications set out in this Agreement and the Attachments and
                amendments hereto.
            7)  Patents. In performing any of its work or carrying out its
                obligations under this Agreement, PCT shall not knowingly
                infringe upon any United States or foreign copyright, patent,
                trademark, trade secret or other proprietary right, or
                misappropriate any trade secret, of any third Party in any
                manner that would cause any liability, loss or damage to
                MICROISLET, and PCT represents and warrants that it has neither
                assigned nor otherwise entered into any agreement by which it
                purports to assign or transfer any right, title or interest to
                any technology or intellectual property right that would
                conflict with its obligations under this Agreement.

                                      -7-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

         C. Representations and Warranties of MICROISLET.
            1)  Compliance with Obligations. MICROISLET hereby represents and
                warrants to PCT that it shall perform its obligations under this
                Agreement in a professional manner with due care.
            2)  Compliance. MICROISLET shall obtain and maintain all necessary
                permits, licenses and authorizations as required under this
                Agreement and by all Applicable Laws with respect to the
                Manufacture and human clinical use of the Product.
            3)  Personnel. Neither MICROISLET, its subcontractors, agents nor
                any members of their respective staffs involved in the
                Manufacture, package or storage of the Product shall be, at the
                time of performance of any such activity hereunder: (i)
                disqualified or debarred by the FDA or any other Regulatory
                Agency for any purpose pursuant to 21 U.S.C. ss. 335a or any
                foreign counterpart thereof; or (ii) charged with or convicted
                under United States Federal law or foreign counterpart thereof,
                for conduct relating to the development or approval, or
                otherwise relating to the regulation of, any drug under the
                Generic Drug Enforcement Act of 1992 or any other relevant
                statute, law or regulation.
            4)  Patents. In performing any of its work or carrying out its
                obligations under this Agreement, MICROISLET shall not knowingly
                infringe upon any United States or foreign copyright, patent,
                trademark, trade secret or other proprietary right, or
                misappropriate any trade secret, of any third Party in any
                manner that would cause any liability, loss or damage to PCT,
                and MICROISLET represents and warrants that it has neither
                assigned nor otherwise entered into any agreement by which it
                purports to assign or transfer any right, title or interest to
                any technology or intellectual property right that would
                conflict with its obligations under this Agreement.
            5)  Materials. All materials, reagents, and porcine islets required
                for the process can be sourced and are of a grade/nature/origin
                acceptable for cGMP use and for human administration according
                to all Applicable Laws and PCT's standards.

         D. DISCLAIMER of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO THE PRODUCT,
SERVICES AND PROGRAM TO BE SUPPLIED BY SUCH PARTY HEREUNDER AND BOTH PARTIES
SPECIFICALLY DISCLAIM ALL EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WITH
RESPECT TO THE PRODUCT, SERVICES AND/OR PROGRAM, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR NONINFRINGEMENT, OR ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE.

7.       DURATION AND TERMINATION
         ------------------------

         A. Except for the obligations described in Sections 3, 4, 5 and 6
above, which shall survive termination of this Agreement, this Agreement shall
be in effect for the period defined in Attachment A from the Effective Date.

                                      -8-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

         B. MICROISLET, at its option, may terminate this Agreement with or
without cause upon submitting written notice to PCT. In the event of termination
without cause, MICROISLET shall pay [***].

         C. Should either party hereto fail to perform any non-monetary material
term, condition or covenant of this Agreement or if either party shall breach
any representation or warranty contained in this Agreement, then upon written
notice of such failure from the other party, the party in breach or default
shall have thirty (30) days from the date of notice to correct the breach or
default, and upon failure to do so, this Agreement shall automatically terminate
for cause.

                It is understood that the Parties intend to discuss, pursuant to
the provisions of this section, any alleged breach and its remediation as soon
as it is known, and that such discussion shall not be a waiver of the right to
terminate pursuant to this Agreement. For purposes of this Agreement: (i) a
Substantial Breach shall be defined as a breach by a Party that directly caused
a significant delay or obstacle that prevented the Non-Breaching Party from
achieving a material goal or objective as contemplated under this Agreement, and
shall also include a breach by MICROISLET for failure to pay PCT any fees or
charges owed when due; and (ii) no breach that is caused or contributed to by
the Non-Breaching Party or Force Majeure shall constitute a Substantial Breach.

                Upon termination for cause, the non-breaching Party shall be
entitled to pursue any and all remedies available to it at law or in equity. In
addition, if MICROISLET is the non-breaching Party, in addition to any other
available remedy, all obligations to make any payments pursuant to this
Agreement shall cease with the exception of [***].

         D. This Agreement may be automatically and immediately terminated by
either Party, upon providing written notice to the other Party, if the other
Party has a liquidator, receiver, manager receiver or administrator appointed,
or ceases to continue trading or is unable to pay debts.

         E. Termination under this Section 7 shall not relieve PCT's obligations
under Sections 3, 4, 5 and 6 hereof, nor shall it relieve PCT from any liability
arising from any breach of this Agreement.

8.       INDEMNIFICATION & LIMITATION OF LIABILITY
         -----------------------------------------

         PCT shall indemnify, defend and hold harmless MICROISLET, MICROISLET's
agents, servants and employees, from and against all claims, damages, losses and
expenses, and liabilities of any nature whatsoever, including reasonable
attorney's fees and disbursements (collectively, "Claims"), incurred, caused,
based upon, arising out of or resulting from or failure to perform, or
misrepresentation with respect to, any of the terms, covenants or conditions of
this Agreement, except to the extent incurred, caused or occasioned by, in
connection with or arising out of the acts or omissions of MICROISLET and/or
MICROISLET's Agents including MICROISLET's violation or failure to perform, or
misrepresentation with respect to, any of the terms, covenants or conditions of
this Agreement.

         Nothing in this Agreement shall be deemed to require PCT to indemnify
MICROISLET for or with respect to any bodily injury caused by the Product.
MICROISLET hereby acknowledges that it has exclusive control and decision making
authority with respect to: (i) the specifications that govern the Manufacture
and use of the Product, and (ii) specifications that govern the Manufacture,

                                      -9-

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CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

packaging and distribution of the Product. MICROISLET further acknowledges that
PCT has no control over the "use" of the Product after being shipped by PCT in
accordance with this Agreement.

         MICROISLET shall defend, indemnify and hold PCT and PCT's agents
harmless from and against any and all Claims incurred, caused or occasioned by,
in connection with or arising out of (i) the Products, including their use in
the treatment of human subjects; and (ii) any acts or omissions of MICROISLET
and/or MICROISLET's agents, including MICROISLET's violation or failure to
perform, or misrepresentation with respect to, any of the terms, covenants or
conditions of this Agreement, except to the extent incurred, caused or
occasioned by, in connection with or arising out of the acts or omissions of PCT
and/or PCT's Agents including PCT's violation or failure to perform, or
misrepresentation with respect to, any of the terms, covenants or conditions of
this Agreement.

Each Party's indemnification obligations to the other Party shall survive the
expiration or earlier termination of this Agreement.

NEITHER PARTY'S LIABILITY TO THE OTHER SHALL EXCEED AN AMOUNT [***] UNDER THIS
AGREEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL
DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, NO LIABILITY
FOR SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING
DAMAGES RELATING TO LOST PROFITS, LOST BUSINESS OR LOST SAVINGS), EVEN IF A
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF AND/OR INCURRED SUCH DAMAGES.

9.       PROSPECTIVE EVENTS.
         -------------------

         A. For purposes of this section, the following terms shall have the
meanings given to them as set forth below:

                  "PROSPECTIVE ILLEGALITY" means any state or federal statute or
         common law, or state or federal administrative agency rule, guidance or
         directive now existing or enacted or promulgated or re-interpreted
         after the Effective Date of this Agreement that is interpreted by
         judicial decision, a regulatory agency or legal counsel in such manner
         as to result in the conclusion that any act or service required of PCT
         or MICROISLET under this Agreement is in violation of such law, rule,
         guidance or directive.

                  "PROSPECTIVE COST INCREASE" means the enactment of a state or
         federal statute, common law, state or federal administrative agency
         rule, guidance or directive or amendment thereof after the Effective
         Date of this Agreement and not contemplated before the Effective Date
         as to which compliance by PCT imposes an extraordinary and
         unanticipated financial burden that is generally applicable to all
         providers of cell processing services.

         B. Effect of a Prospective Illegality. In the event of a Prospective
Illegality, MICROISLET and PCT shall promptly negotiate in good faith amendments
to this Agreement as necessary to address such Prospective Illegality. Pending
agreement on the appropriate amendment, either MICROISLET or PCT, on fourteen
(14) days written notice to the other, may cease to perform a questioned act;
provided, however, that this Agreement will nevertheless be performed by both
MICROISLET and PCT to the extent possible.

                                      -10-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

         C. Effect of a Prospective Cost Increase. In the event of a Prospective
Cost Increase, MICROISLET and PCT shall negotiate in good faith amendments to
the payment terms of this Agreement to address such cost increase. To the
maximum extent possible, any such amendment agreed to under this Clause shall
preserve the primary benefits sought to be achieved by this Agreement and the
underlying economic and financial arrangements between the Parties. If
MICROISLET and PCT agree that the primary benefits sought to be achieved by this
Agreement cannot be achieved through an appropriate amendment, then this
Agreement will be automatically terminated one hundred twenty (120) days
thereafter, or on a sooner date as may be mutually agreed upon by the Parties,
as "without cause" pursuant to Section 7.C of this Agreement..

10.      REGULATORY ASSISTANCE
         ---------------------

         A. Regulatory Actions. PCT shall permit the FDA and other Regulatory
Agencies to conduct inspections of PCT's Mountain View, California Facility (the
"MV Facility") as they may request, including pre-approval inspections, and
shall cooperate with such Regulatory Agencies with respect to the inspections
related to the Services or the Product. PCT shall give MICROISLET prior notice,
to the extent practicable, of any such inspections, and keep MICROISLET informed
about the results and conclusions of each regulatory inspection, including
actions taken by PCT to remedy any conditions cited in the inspections. If prior
notice is not possible, PCT shall promptly (i.e., within one day of the said
inspection) inform MICROISLET in the event that a regulatory inspection affects
work carried out at PCT's facilities on behalf of MICROISLET. In addition, PCT
shall permit MICROISLET or its representative to assist in the preparation for
and be present at inspections relating to the Services or the Product. Within
five (5) days of receipt by PCT, PCT shall provide MICROISLET with copies of any
written inspection reports issued by the Regulatory Agency and all
correspondence between PCT and the Regulatory Agency which relate to the
Services or the Product, including FDA Form 483, "Notice of Observation," and
all related correspondence, in each case relating to the Services or the
Product; provided, however, PCT may exclude from such copies any references to
the name and any identifying information specific to other non-MICROISLET
products. Similarly, PCT agrees to promptly (i.e., within five (5) days of
receipt by PCT) notify and provide MICROISLET copies of any request, directive
or other communication of the FDA or other Regulatory Agency relating to the
Services or the Product and to cooperate with MICROISLET in responding to such
requests, directives and communications.

         B. Information. PCT shall as soon as it reasonably can and upon
reasonable request by MICROISLET, provide MICROISLET with the development
reports, qualification reports and testing data related to the Services or the
Product, for use by MICROISLET in compiling regulatory submissions. Upon
reasonable request by MICROISLET, PCT shall also provide summary reports and
information regarding the facility, systems, utilities and equipment
construction, commissioning and qualification as these specifically pertain and
are limited to MICROISLET's Program.

         C. Regulatory support. In addition to the documentation requirements
under this Section, and if requested by MICROISLET, regulatory support (i.e.,
writing of regulatory submissions, annual or periodic reports, adverse drug
reporting, product recalls, correspondence and responses to requests, directives
and agency communications etc.) will be provided by PCT at the rate detailed in
this Agreement.

                                      -11-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

11.      FACILITY OBLIGATIONS
         --------------------

         A. Audits. MICROISLET may conduct a GMP compliance audit at the MV
Facility once every calendar year upon providing PCT with a minimum of thirty
(30) calendar days' prior written notice.

         B. On site meetings. Project team and technical meetings may be held on
site at the MV Facility as required by the project progression. Such meetings
will review the progress of the project, including issues arising out of, and
the follow-up with regard to, actions, investigations and deviations.

12.      INSURANCE
         ---------

         A. Each Party shall, at all times during the period of this Agreement,
obtain and maintain insurance coverage with limits no less than:

                  Comprehensive General Liability (including coverage for bodily
                  injury an property damage) - [***]aggregate, per occurrence;

                  Workers Compensation - the minimum statutory amounts under
                  applicable laws; and

         B. PCT shall, at all times during the period of this Agreement, obtain
and maintain Professional Liability insurance coverage with limits no less than
[***] dollars.

         C. MICROISLET shall, immediately prior to the initiation of human
clinical trials, and at all times afterward for the duration of this Agreement,
and for a period of ten (10) years following the termination or earlier
expiration of this Agreement, obtain and maintain Product Liability insurance
coverage with limits no less than [***] dollars per occurrence.

         D. Certificates and Changes. Each Party shall furnish to the other a
certificate of such insurance evidencing the required policies of insurance set
forth above, which certificate shall provide that no such policy shall be
materially altered, amended or cancelled without providing the other Party with
at least thirty (30) calendar days prior written notice of such change.

         E. Waivers of Subrogation. Each Party hereby waives any and all rights
it may have against the other and its respective subcontractors, agents and
employees for damages caused by fire or other causes of loss to the extent
covered by insurance required to be provided under this Agreement (the "Amount
of Coverage") except such rights it may have to proceeds of such insurance held
by it as a fiduciary. Each Party shall require of its sub-subcontractors, agents
and employees, by appropriate agreements, written where legally required for
validity, similar waivers in favor of the other Party and its respective
subcontractors, agents and employees. The insurance policies shall provide such
waivers of subrogation by endorsement or otherwise. A waiver of subrogation
shall be effective up to the Amount of Coverage as to a person or entity even
though that person or entity would otherwise have a duty of indemnification,
contractual or otherwise, did not pay the insurance premium directly or
indirectly, and whether or not the person or entity had an insurable interest in
the property damaged.

                                      -12-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

13.      MISCELLANEOUS
         -------------

         A. Any notice or other communication required or permitted by this
Agreement shall be deemed to have been validly given if the same shall be mailed
by registered or certified mail, postage prepaid, and addressed to the proper
party at the address provided at the outset of this Agreement.

         B. This Agreement may not be assigned by PCT without the written prior
consent of MICROISLET.

         C. PCT shall not use MICROISLET's name or any adaptation of it in any
advertising, promotional or sales literature without the prior written approval
of MICROISLET. `

         D. MICROISLET shall not use PCT's name or any adaptation of it in any
advertising, promotional or sales literature without the prior written approval
of PCT. PCT shall permit MICROISLET to issue a press release in connection with
this Agreement in a form approved by PCT.

         E. All Services described herein are to be performed and supervised by
PCT. Any ancillary support services which MICROISLET agrees in writing may
performed by others shall comply with all the conditions prescribed by this
Agreement.

         F. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of MICROISLET to which this Agreement relates and shall
be binding upon and inure to the benefit of the successors and assigns of PCT.

         G. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. No modification of this
Agreement shall be effective unless it is in writing and is signed by each
party. There are no understandings, representations, or warranties except as
herein expressly set forth.

         H. This Agreement shall be governed by the laws of the State of
Delaware, without reference to choice or conflict of law principles, otherwise
applicable. The parties consent and agree that the State and/or United States
Federal District Court for the District of Delaware shall have sole and
exclusive jurisdiction over any controversy arising out of, connected with or
associated with this Agreement.

         I. PCT hereby acknowledges that its breach of this Agreement would
cause irreparable harm and significant injury to MICROISLET that may be
difficult to ascertain and that a remedy at law would be inadequate.
Accordingly, PCT agrees that MICROISLET shall have the right to seek and obtain
immediate injunctive relief to enforce obligations under the Agreement in
addition to any other rights and remedies it may have.

         J. Prior to any dispute, difference, or disagreement concerning this
Agreement proceeding to litigation or arbitration, the Parties shall seek to
resolve the matter within thirty (30) calendar days of this section of the
Agreement being cited in a written communication to the other Party's Chief
Executive Officer.

                                      -13-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.
___________________
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION

         K. If any provision of this Agreement is declared void or
unenforceable, such provision will be severed from this Agreement, and the
balance of the Agreement will remain in full force and effect.

         L. In case of discrepancy between any appendices and/or attachments and
this Agreement, the terms and conditions of this Agreement shall prevail.

         M. This Agreement may be executed by facsimile signature and/or in
counterparts, with each such facsimile signature being deemed an original and
both counterparts, when taken together, constituting one instrument.

         Each person executing this Agreement represents and warrants that they
are acting on behalf of a party, as identified in the first paragraph of this
Agreement, and not in an individual capacity. Each person executing this
Agreement further represents and warrants that they are authorized to enter into
such Agreements for and on behalf of their respective party.

PROGENITOR CELL THERAPY, LLC             MICROISLET INC

By: /s/ Robert A. Preti, PhD             By: /s/ Ron Katz
    --------------------------------         ----------------------------------
Robert A. Preti, PhD                     Ron Katz
President & Chief Scientific Officer     Chairman, Board of Directors

Date:                                    Date:

                                      -14-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

                                  ATTACHMENT A
                         PROJECT SCOPE, STAGES, AND FEES

SUMMARY OF THE MANUFACTURING PROCESS AND OVERALL REQUIREMENTS FOR THE PROJECT

MICROISLET is developing encapsulated islet technologies for the treatment of
insulin dependent diabetes. MICROISLET is currently conducting preclinical
efficacy and safety studies in various rodent and non-human primate models using
encapsulated porcine islets. MICROISLET intends to develop an encapsulated
porcine islet product (xenotransplantation program).

By way of this Agreement, MICROISLET is contracting to PCT the entire process
for production and release testing of the encapsulated porcine xenotransplant
product. MICROISLET will transfer the technology of the manufacturing process
and associated test methods commencing such that the process can be GMP
qualified in a suitable GMP facility ready to conduct a 10 - 15 patient phase I
clinical trial. MICROISLET also requires assay development services and will
require PCT to provide regulatory support services. It is likely that this
clinical trial will initiate with ex-US sites and patient enrollment.

The xenotransplant product is a combination biologic and device product in which
the pharmacologically active agent, insulin, is released from encapsulated,
functional porcine islet cells by natural means in response to blood glucose
concentrations. The device component is an average [***] um diameter
microcapsule of calcium alginate containing up to an average of [***] islet
equivalents (IEQ).

The Parties agree that this Agreement is based on an understanding that the
process for the manufacture, testing and delivery of MICROISLET's xenotransplant
product is comprised as follows:

     1.  Pancreas Procurement - The pancreata will be procured from an
         accredited herd of pigs reared and maintained by a facility in
         Minnesota. The organs will be shipped immediately to the PCT facility
         for processing.

     2.  Islet Isolation - The organs will be processed at the PCT facility
         using procedures provided by MI. Upon completion of the isolation, the
         islets will be [***] and QC analysis conducted. Upon QC approval, the
         next day, islets will be encapsulated.

         It is projected that [***] staff using [***] can process [***]
         pancreata in a [***] to provide sufficient islets for onward
         encapsulation of a [***] dose for a human subject. A verifier and QC
         staff will be available for this operation.

     3.  Encapsulation - In this process, islets are [***] in [***] and [***]
         by [***]. The islets are then [***] in an [***] solution and [***] and
         the procedure will be done in a Class 100 laminar airflow hood using
         aseptic techniques to ensure sterility. QC analysis on the
         encapsulated islets will be required. The encapsulated islets will
         either be tested and prepared (See (5) below) for [***] transplant
         center.

         It is projected that [***] staff using [***] can produce sufficient
         encapsulated islets in a [***] a single dose for a human subject. A
         verifier and QC staff will be available for this operation.

                                      -15-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

     4.  Analytical Methods and Controls - The [***] of the isolated islets
         prior to encapsulation will be monitored using assay methods provided
         by MI. After encapsulation of the islets, [***] will likely be
         performed on the encapsulated islets.

         Additional assays [***] to evaluate the microcapsules may also be
         required. However, such assays may need to be developed and release
         specifications set. Upon election by MICROISLET, PCT may be contracted
         to develop and or qualify additional assays as detailed in Stage 5
         below.

     5.  Preparation of the final product for the patient - Encapsulated islets
         may be [***] at the contract GMP facility for up to [***] prior to
         transplantation (See (3) above). The quantity of encapsulated islets
         will be dispensed by PCT personnel using methods based on [***]. The
         encapsulated islets will be placed in [***] and transported to the
         transplantation locations.

Isolation, processing and encapsulation of the porcine microislet cells will
occur in an [***] in a fully segregated operational space at PCT's Mountain View
facility containing:

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

NOTE: Production will be staged such that a single dose for a human subject
would be prepared [***].

In-process islet and final encapsulated islet product testing provided by PCT
will comprise:

         o        [***]

         o        [***]

         o        [***]

                                      -16-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

         o        [***]

         o        [***]

In-process islet and final product encapsulated islet testing to be outsourced
will comprise:

         o        [***]

         o        [***]

Additional assays may need to be developed for product characterization in
support of regulatory submissions, clinical trials and/or final product release.
For the latter, such assays will require qualification to a level suitable for
use in Phase I clinical trials. See further details in the Scope of Work Stage 5
below.

Controlled materials storage outside of the CER requires:

         o        [***]

         o        [***]

         o        [***]

         o        [***]

Other services required outside of the CER include:

         o        [***]

         o        [***]

SCOPE OF WORK

INCLUSIONS

PCT shall perform the following services:

     1.  Provision of a qualified [***] containing the following qualified
         equipment:

         a.       [***]

         b.       [***]

         c.       [***]

         d.       [***]

         e.       [***]

                                      -17-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

         f.       [***]

         g.       [***]

     2.  [***] space for performance of QC testing and small parts preparation

     3.  Provision of the following equipment for [***]. Such [***] will have
         been [***]:

         a.       [***]

         b.       [***]

         c.       [***]

     4.  Dedicated use of the above [***].

     5.  Preparation/adaptation of part number specifications for MICROISLET
         materials, reagents and final Products.

     6.  Receive all materials, reagents and products required for the
         Manufacture and testing of the Product and accept them in accordance
         with MICROISLET's specifications and in compliance with MICROISLET's
         instructions.

     7.  Controlled materials GMP warehouse storage including quarantined,
         rejected and released ambient storage and controlled refrigerated and
         frozen storage.

     8.  Routine environmental monitoring and cleaning of the CER area and
         equipment therein according to current PCT practice.

     9.  In-process and final product QC testing as detailed above.

     10. QC line clearance.

     11. Packaging of quality control test samples for sterility and mycoplasma
         testing at an external contract testing site.

     12. Packaging of final product.

     13. Compilation of batch production record.

     14. Compilation of a GMP process qualification protocol and report.

     15. GMP qualification of the current manufacturing process.

     16. Waste disposal services according to current PCT procedures.

     17. Gowning supplies according to current PCT gowning procedures.

     18. Sanitization supplies for materials entering CER.

                                      -18-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

EXCLUSIONS:

The Services do NOT include the following:

     1.  The purchase, delivery and any associated vendor installation cost of
         MICROISLET provided equipment to be located in the [***]. Equipment to
         be provided by MICROISLET comprises:

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

         o        [***]

     2.  Maintenance and/or maintenance contracts for MICROISLET provided
         equipment

     3.  The cost of reagents and materials and outside testing costs

     4.  [***]. These tests will be carried out [***].

     5.  [***].

     6.  Shipping costs for final product and sterility test samples. Such
         costs will be invoiced separately by PCT to MICROISLET

     7.  Stage related travel costs incurred by PCT

     8.  Provision of assay test methods beyond those detailed above

     9.  Process or assay development, qualification or validation activities
         beyond those detailed above

     10. Equipment validation/qualification activities beyond those above

     11. Environmental monitoring or facility cleaning beyond that currently
         executed by PCT

     12. Additional qualification and or validation activities to address
         specific requests received from regulatory agencies following
         submission of regulatory documentation

     13. Receiving QC services beyond the review of MICROISLET provided audited
         vendor documentation and certificates of analysis/conformance

     14. Overall slow accrual or delays in the start/accrual that occur as a
         result of clinical hold or other delays being applied by a regulatory
         authority, clinical site institutional review boards (IRB) or another
         party, and that result in the extension of the manufacturing campaign
         for the clinical trial beyond the projected duration of Stage 4.
         Should an extension of Stage 4 occur, then additional manufacturing
         facility suite operations and other costs will be incurred under a
         Program Amendment Order (PAO)

                                      -19-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

     15. Extension of the manufacturing campaign for the clinical trial beyond
         the projected duration of Stage 4 (e.g. additional patients, dose
         cohorts). Should an extension of Stage 4 occur, then additional
         manufacturing facility suite operations and other costs will be
         incurred under a PAO

ADDITIONAL STEPS

     A CER operations fee of [***] Stage 4 (the clinical trial manufacturing
     campaign) beyond the projected duration stated below for such Stage..

     Process development/validation and assay development/validation services
     can be provided in a separate negotiated package.

     Additional protocol compilation, execution and reporting of
     installation/operational/performance qualifications (IOPQ) for equipment,
     systems and utilities can be provided in a separate negotiated package.

     Regulatory consulting and writing services beyond the scope of Stage 3
     below, including attendance at meetings between regulatory agents and
     client and conversion of the CMC in Stage 3 into other English language
     regulatory submission formats can be provided in a negotiated package, or
     at the standard daily consulting rate

     Additional activities outside of the scope of this program requested by the
     client would be subject to written pre-approval by the client in a formal
     Program Amendment and charged at the standard PCT daily rate of the table
     below plus direct, out-of-pocket costs associated with travel expenses, or
     in a negotiated package.

     PCT STAFF CONSULTING RATES
                         RATE /HOUR          DAILY MAXIMUM
          [***]            [***]                 [***]
          [***]            [***]                 [***]
          [***]            [***]                 [***]

PROJECT STAGES

The project will be comprised of the following stages (NOTE: Due to the nature
of the activities, some stages may occur in parallel):

STAGE 1 - PROJECT IMPLEMENTATION AND TECHNOLOGY TRANSFER
In this stage:

     o    PCT will compile a Master Project File (MPF) for the project

     o    MICROISLET will transfer appropriate documentation in the form of
          SOPs, development/qualification/audit reports and part number
          specifications

     o    PCT will convert and/or write relevant documentation required for
          implementation in the GMP systems for which support is being provided

                                      -20-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

     o    MICROISLET staff will train PCT staff on processing and test methods.
          Such training will initiate at the San Diego MICROISLET facility and
          then relocate to PCT Mountain View facility

     o    PCT will implement appropriate CER, services and utilities for the
          program

Deliverables for this phase shall include acknowledged receipt of relevant
materials, an MPF and technology transfer reports.

ESTIMATED DURATION:        [***] Months

STAGE 2 - PROCESS QUALIFICATION
In this stage under cGMP conditions in an ISO 7 CER at PCT's Mountain View
facility, PCT will qualify the manufacturing process and carry out any required
aseptic fill studies. PCT shall maintain the GMP compliance of the CER,
utilities, systems and equipment during this time and also provide environmental
monitoring, cleaning and QC testing services as detailed above.

It is projected that sufficient pancreata for process qualification activities
will be available at a minimum of every two (2) weeks.

Deliverables for this phase include a final report for the GMP process
qualification.

ESTIMATED DURATION:  [***] Months

STAGE 3 - COMPILATION OF CHEMISTRY MANUFACTURING & CONTROLS SECTION FOR A
REGULATORY SUBMISSION In this stage, PCT will prepare a US FDA Investigational
New Drug (IND) format Chemistry Manufacturing and Controls (CMC) section.
MICROISLET can use this CMC section directly in support of US filings and/or
adapt such information into the format required for EX-US regulatory
submissions.

Conversion of the CMC into other English language regulatory submission formats
can be provided in a negotiated package, or at the standard daily consulting
rate.

Under this Stage, PCT will provide one (1) experienced individual from the
senior management team to attend a one (1) meeting/ or one (1) teleconference
with one (1) regulatory agency. Attendance at additional regulatory meetings
and/or teleconferences can be provided in a negotiated package, or at the
standard daily consulting rate

ESTIMATED DURATION:        [***] Months

STAGE 4 - GMP MANUFACTURE OF ENCAPSULATED ISLET CELLS TO SUPPORT A PHASE I
CLINICAL TRIAL In this stage under cGMP conditions in an [***] at PCT's
facility, and for a period of up to [***] months, PCT will manufacture
encapsulated human microislet cell products to support a Phase I
xenotransplantation clinical trial.

Manufacturing inventories, production schedules and product shipments to
clinical sites will be coordinated with MICROISLET.

Production will be scheduled such that a single dose for a human subject would
be prepared [***] Deliverables for this phase include all data related to the
manufacturing, testing release and storage of the product, and the maintenance
of the corresponding equipment, materials and facility.

                                      -21-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

DURATION: [[***] Months

STAGE 5 - UPON ELECTION BY MICROISLET: DEVELOPMENT AND/OR VALIDATION OF SELECTED
ANALYTICAL TEST AND BIOLOGICAL CHARACTERIZATION METHODS During this stage,
MICROISLET may elect to have PCT develop and or validate selected analytical or
characterization methods related to the testing of porcine islets and
encapsulated porcine islets.

PCT will work with MICROISLET on an individual election basis for such
additional assays that may comprise:

    o  [***]
    o  [***]
    o  [***]
    o  [***]
    o  [***]
    o  [***]
    o  [***]

Deliverables for this phase would include a final report and data package for
each protocol executed.

ESTIMATED DURATION:        [***] months per protocol

COST: The work in Stage 5 will be provided on an elected protocol basis with
price, terms and conditions provided in a proposal for each protocol. Estimated
[***] per protocol + any stage- or process-related out-of-pocket costs incurred
by PCT, including reagents/materials, travel and outside testing costs. Scope
and costs will be determined and mutually agreed upon by the parties by PAOs as
required.

                                      -22-

<Page>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

                                                 ATTACHMENT B

                                            PROGRAM AMENDMENT ORDER
                                            -----------------------

=========================================== ======================================== ==================================

(1)      PROJECT TITLE & NUMBER:            (2)      DATE PROJECT STARTED:           (3)      P.A.O. NUMBER:
------------------------------------------- ---------------------------------------- ----------------------------------

(4)      REASON FOR P.A.O.

-----------------------------------------------------------------------------------------------------------------------

(5)      AMENDMENT REQUIRED AND NEW MILESTONES

-----------------------------------------------------------------------------------------------------------------------

(6)      IMPACT ON PRICE, TIME FRAME, RESOURCES:

-----------------------------------------------------------------------------------------------------------------------

(7) AMENDED PAYMENT SCHEDULE (IF REQUIRED):

-----------------------------------------------------------------------------------------------------------------------

Authorization

.................. Date:............                      .................................... Date: ..........

for PCT                                                           for CLIENT
=======================================================================================================================
</TABLE>

                                                     -23-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

                                  ATTACHMENT C

                                QUALITY AGREEMENT

         Subject to the results of a MICROISLET-directed quality audit of PCT to
be conducted no later than September 15, 2007 and any subsequent amendments
arising there from, this Quality Agreement defines the responsibilities of
Progenitor Cell Therapy LLC (PCT) and MICROISLET for compliance to current good
manufacturing practices (CGMP) and applicable current Good Tissue Practices
(CGTP) for manufacturing, storage and shipping services for the production of
Product for clinical or commercial purposes. PCT is responsible for compliance
to all applicable requirements while the Product is under the direct control of
PCT. MICROISLET is responsible for compliance to all applicable requirements
while the Product is under the direct control of the MICROISLET.

Definitions:
         PCT:                               Progenitor Cell Therapy Company or
                                            its authorized employees

         MICROISLET:                        MICROISLET or its authorized
                                            employees

         PRODUCT SPECIFICATIONS:            The assay methods and specifications
                                            upon which the Product will be
                                            tested and released

         PRODUCT FAILURE:                   The failure of any Product
                                            unit or batch to meet the Product
                                            Specifications and/or any Product
                                            unit or batch produced in a manner
                                            which failed to comply with the
                                            provisions of the Quality Agreement,
                                            cGMP or cGTP.

         Unless otherwise set forth herein, all other capitalized terms used
         herein shall have the meaning given to them in the Services Agreement
         entered into by and between the Parties on or around September 1, 2007
         to which this Quality Agreement is an attachment.

Terms:

1. PCT shall provide contract Manufacturing and quality control testing of
Product as defined in Attachment A.

2. MICROISLET will responsibly ensure that the methods and materials prescribed
in the process will support the use of the Product for the proposed clinical
use.

3. If necessary, applicable process and/or test methods must be successfully
transferred from MICROISLET to PCT and appropriate training documented per PCT
procedures before implementation.

4. PCT will provide QC testing for Product per Attachment A, the results of
which will promptly be communicated to MICROISLET following PCT's quality
assurance review.

5. MICROISLET must accept each Product unit or batch which meets the Product
Specifications. The Parties agree such acceptance will be deemed to occur upon
the Product meeting the Product Specifications.

                                      -24-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

6. [***] will be responsible for the disposal of any Product that is the subject
of Product Failure. [***] is responsible to lead an investigation of the cause
of any Product Failure and to provide [***] with a written report including the
results and conclusions of such investigation. [***] shall comply with all
reasonable requests for data, cooperation, and assistance in the conduct of any
such investigation.

7. PCT and MICROISLET will agree on those reagents and materials to be provided
directly by MICROISLET and those, if any, to be purchased by PCT, and on a
schedule for purchase and for the activities described below:

     o    Materials provided by MICROISLET directly to PCT will be identified as
          approved and accompanied by a Certificate of Compliance (CoC) or
          Certificate of Analysis (CoA) or other document as appropriate. PCT
          will receive such materials according to agreed procedures with
          MICROISLET and will confirm that the material received has a CoC or
          CoA or appropriate documentation.
     o    Materials purchased by MICROISLET and shipped to the MV Facility will
          be held in quarantine until MICROISLET has approved them for release
          and provides PCT with documentation as above.
     o    Materials purchased by PCT will be sampled and/or tested and/or
          inspected according to PCT procedures.
     o    PCT will test and inspect according to PCT procedures unless use of
          MICROISLET specified procedures are mutually agreed upon and provision
          is made for assay transfer and implementation under a Program
          Amendment Order.
     o    PCT will notify MICROISLET as soon as practical, but no later than 5
          days after such test and inspection, if any materials, product or
          packaging do not meet requirements.

8. Any materials purchased by PCT will be from PCT approved manufacturers. If
the materials are provided by MICROISLET, it is MICROISLET's responsibility to
assure that the materials are from approved/qualified manufacturers.

9. Information as to labeling and other packaging will be provided by
MICROISLET.

10. PCT will notify MICROISLET and gain written agreement for any planned
deviations from the agreed upon procedures prior to implementation if determined
by PCT QA that such changes may affect the Product.

11. PCT will notify MICROISLET in writing of any unplanned deviations that
affect the Product as soon as possible. Unplanned deviations will be
investigated according to PCT procedures and documented by PCT, with
notification and a copy of such documentation provided to MICROISLET.

12. PCT will notify MICROISLET in writing of any proposed major changes to
equipment, location and/or changes in material suppliers that affect MICROISLET
as soon as possible in order for MICROISLET to review, assess impact and comment
on changes and to be able to implement changes in a timely manner.

13. MICROISLET will notify PCT in writing of any planned changes to equipment,
materials, process, testing (to the extent performed or to be performed by PCT)
or shipping requirements as soon as possible in order for PCT to review, assess
impact and comment on changes and to be able to implement agreed upon changes in
a timely manner.

                                      -25-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

14. PCT will capture any agreed upon changes to the Quality Agreement and
documents related to PCT's provision of services through a Program Amendment
Order and where applicable PCT's change control system.

15. PCT is responsible for ensuring that equipment is properly cleaned/sanitized
and documented in compliance with PCT's cleaning/sanitizing procedures.

16. PCT will conduct testing for release of product according to Attachment A.

17. MICROISLET is responsible for stability testing; MICROISLET will advise PCT
regarding the storage and shipment of stability samples.

18. Written authorization to ship the Product to MICROISLET or another
MICROISLET designated location will be provided by MICROISLET to PCT.

19. A copy of the packaging record will be provided to MICROISLET as soon as
practical after shipment.

20. MICROISLET will inform PCT as soon as possible of any customer complaints or
any adverse event. PCT will perform any internal investigations as appropriate
and assist MICROISLET with a response to the customer or appropriate agency
unless otherwise requested.

21. Annual product review will be the responsibility of MICROISLET unless
otherwise requested.

22. MICROISLET may conduct a compliance audit of PCT related to CGMP/GTP systems
and those areas impacting on Product for MICROISLET once a year and with a
minimum thirty (30) calendar day written notification period.

23. PCT will accommodate any Regulatory Agency inspection required or specified
by MICROISLET and shall notify MICROISLET of such inspection so that a
representative of MICROISLET may be present at such inspection if so desired.
PCT shall provide MICROISLET with a summary of any deficiencies cited by the
inspecting Regulatory Agency as result of such inspection which are directly or
reasonably related to the Services and copies of any relevant excerpts of any
related communications between PCT and the Regulatory Agency with respect to
such deficiencies.

24. Any changes to the Quality Agreement and to product specifications or
product testing (to the extent performed or to be performed by PCT) must be
mutually agreed in the form of a Program Amendment that is approved by
appropriate management including QA from PCT and MICROISLET.

25. Day-to-day QA activities and communications between PCT and MICROISLET shall
be handled by their respective personnel. PCT and MICROISLET shall direct all
other communications to the Senior QA Communication Contacts listed below:

[SIGNATURE PAGE TO FOLLOW]

                                      -26-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

------------------------- --------------------------------- --------------------
                                           PCT                    MICROISLET
------------------------- --------------------------------- --------------------

                           Marie A. DeVito
QUALITY ASSURANCE          Sr. Director QA/QC
 (SENIOR CONTACT)          Tel: (201) 883-5311
                           mdevito@progenitorcell.net

                           Robert Preti, Ph.D
QUALITY ASSURANCE          President & CSO
(ALTERNATE SENIOR          Tel:  (201) 883-5316
CONTACT)                   rpreti@progenitorcell.net
------------------------- --------------------------------- --------------------

____________________________                         Date: _____________________
Robert A. Preti
Progenitor Cell Therapy LLC, President & Chief Scientific Officer

____________________________                         Date: _____________________
Marie DeVito
Progenitor Cell Therapy LLC, Senior Director of Quality Assurance and Quality
Control

____________________________                         Date: _____________________
Michael J. Andrews
MICROISLET Inc.
MICROISLET Inc., CEO

____________________________                         Date: _____________________
Michael J. Andrews
MICROISLET Inc.
MICROISLET Inc., CEO

                                      -27-

<Page>

CONFIDENTIAL TREATMENT REQUESTED BY MICROISLET, INC.

                            CONFIDENTIALITY AGREEMENT
                            -------------------------

       THIS AGREEMENT is made between MicroIslet, Inc., 6370 Nancy Ridge Drive,
       Suite 112, San Diego, California, 92121 ("MicroIslet") and Progenitor
       Cell Therapy, LLC (the "Recipient).

1.     DISCLOSURE. Microislet may disclose or may have disclosed to the
       Recipient, or Recipient may be given access to, certain proprietary,
       confidential information, materials, know-how, samples or other data
       (technical and non-technical), both written and unwritten, regarding the
       proprietary technology or business plan of MicroIslet (collectively, the
       "MicroIslet Information"), to the Recipient.

2.     CONFIDENTIALITY. In consideration of such disclosure, the Recipient shall
       hold all of the information received from MicroIslet in confidence and
       shall refrain from using the same or disclosing any part thereof to any
       third party. In the regard and as applicable, the Recipient shall limit
       dissemination of the access to Information received from MicroIslet only
       to such of its directors, officers, employees, subsidiaries, affiliates
       and/or other authorized representatives as are directly concerned with
       such information and who have signed appropriate secrecy agreements with
       the Recipient in connection with their employment or before receipt of
       the Information. The recipient shall advise such persons of the
       confidential nature of the Information, and shall use its best efforts to
       prevent disclosure of the same in violation of this Agreement. For
       purposes of this Agreement, Information is defined to include, but is not
       limited to, notes, records, reports, sketches, plans, photographs
       (including negatives), memoranda or other documents, and all
       developments, concepts, studies, improvements and compilations (whether
       patentable or not) developed by MicroIslet.

3.     RETURN OF MATERIALS. Upon completion of the discussion hereby, or upon
       the earlier request of MicroIslet, Recipient shall immediately return to
       MicroIslet any Information in written or other tangible form, and shall
       not retain any copies or summaries of such Information unless expressly
       approved in writing by MicroIslet.

4.     EXCEPTIONS TO RESTRICTIONS. The confidentiality and non-use obligations
       shall not apply to Information which:

       (a)    is in or hereafter enters the public domain through no fault of
              the Recipient;

       (b)    is obtained from a third party having the legal rights to use and
              disclose the same;

       (c)    is in the possession of the Recipient prior to receipt from
              MicroIslet, as evidenced by written records predating such
              receipt; or

       (d)    is independently developed by the Recipient as evidenced by
              written record proving such independence.

       Specific information shall not be deemed to be within the exceptions
       merely because it is incorporated within more general Information within
       the exceptions. Further, any combination of Information shall not be
       deemed to be within the exceptions merely because individual items are
       within the exceptions.

5.     NO GRANT OF RIGHTS. No rights or license to any patent or other
       intellectual property right is granted to either party by this Agreement.

6.     CONFIDENTIALITY. The confidentiality and non-use obligations of the
       Recipient hereunder shall continue in force for three years, and shall
       survive the term or termination of this Agreement.

<Page>

7.     GOVERNING LAW. This Agreement shall be governed by and construed in
       accordance with the laws of the State of California, U.S.A. and the
       parties hereby submit to the jurisdiction of the California courts, both
       state and federal.

8.     ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
       the parties with respect to the subject matter hereof and supersedes all
       prior agreements and understandings between the parties (whether written
       or oral) relating thereto. No modification shall be effective unless made
       in writing and signed by a duly authorized representative of each party

9.     INJUNCTIVE RELIEF. The Recipient recognizes that MicroIslet's Information
       is the sole property of MicroIslet, shall remain solely MicroIslet's and
       constitutes valuable trade secrets of MicroIslet. The Recipient
       acknowledges that failure to comply with the terms of this Agreement
       would cause irreparable damage. Therefore, the Recipient agrees that in
       addition to any other remedies at law or in equity available for breach
       of this Agreement, MicroIslet may seek specific performance or injunctive
       relief to prevent such damage or further damage regarding its
       Information.

       IN WITNESS WHEREOF, the parties have executed this Agreement as of the
       dates set forth below.

<TABLE>
<S>                                          <C>
MICROISLET, INC.                             PROGENITOR CELL THERAPY, LLC

By:  Kevin A. Hainley                        By: /s/ George S. Goldberger
     -------------------------------             -------------------------------
     Title: Interim CFO                          Title: CFO
     Signature: /s/ Kevin A. Hainley             Signature: /s/ George S. Goldberger
     Date: 09/29/2006                            Date: 10/06/2006
</TABLE><PAGE>
EXHIBIT 4.1

                             NOTE PURCHASE AGREEMENT

       This Note Purchase Agreement (the "AGREEMENT") is made and entered into
on this _____ day of _________ 2007, by and between _____________________, an
individual residing in Canada ("LENDER"), and RECLAMATION CONSULTING AND
APPLICATIONS, INC., a corporation duly organized and validly existing under the
laws of the State of Colorado ("BORROWER").

       In consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:

                                    ARTICLE I

                                 PROMISSORY NOTE

1.1    ESTABLISHMENT OF THE LOAN. Lender agrees, on the terms and conditions set
       forth in this Agreement, to lend to the Borrower U.S. $____________ (the
       "PRINCIPAL") as the "LOAN". Immediately upon the execution of this
       Agreement, Lender shall wire the Principal into Borrower's escrow
       account, using instructions to be provided by the Borrower.

1.2    EVIDENCE OF INDEBTEDNESS. Indebtedness of Borrower to Lender in respect
       of the Loan will be evidenced by a promissory note (the "NOTE")
       substantially in the form of Schedule A attached hereto, which will be
       provided by the Borrower to the Lender within five business days
       following the date the Loan is advanced under subsection 1.1. The Note
       shall be dated as of the date that the Loan is received by Borrower (the
       "ISSUE DATE").

1.3    MATURITY DATE. All principal, plus all accrued but unpaid interest on
       Note, shall be due and payable on the date that is one year from the
       Issue Date (the "MATURITY DATE").

1.4    INTEREST. Borrower will pay simple interest to Lender on the unpaid
       Principal from the issue date of the Note at a rate of 12% per annum
       until the Loan is repaid in full. In the event that the Loan is not
       repaid on or before the Maturity Date, interest shall continue to accrue
       on the unpaid Principal until the Loan repaid in full.

1.5    REPAYMENT OF THE LOAN. Borrower will repay the Principal and any accrued
       but unpaid interest to the Borrower on or before the Maturity Date. All
       payments shall be made to Lender at such place as Lender may, from time
       to time, designate. All payments received hereunder shall be applied,
       first to accrued interest; and second, to principal.

1.6    PREPAYMENT OF THE LOAN. Borrower may prepay the Principal and interest
       outstanding under the Loan without penalty, bonus or charges.

                                      -1-
<PAGE>

                                   ARTICLE II

                                    WARRANTS

2.1    ISSUANCE OF WARRANTS. Within five business days following the date the
       Loan is advanced under subsection 1.1, Borrower shall issue Lender a
       warrant to purchase one share of the Borrower's common stock for each
       dollar of Principal Lender advanced Borrower under the Loan (the
       "WARRANTS"). The Warrants shall be exercisable until 5:00 PM Pacific Time
       on the third year anniversary of its issuance date. The Warrants for the
       purchase of shares of Borrower's common stock shall be evidenced by one
       or more warrant certificates substantially in the form of Schedule B
       attached hereto, with an exercise price of $0.25 per share.

2.2    RESTRICTIVE LEGEND. The Note, the Warrants, and the shares of common
       stock underlying the Warrants (collectively, the "SECURITIES") shall bear
       such form of restrictive legends as may be necessary, as determined by
       Borrower in Borrower's reasonable discretion, to comply with applicable
       laws or regulations of any stock exchange or other applicable authority,
       including but not limited to the following legend:

              THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
              REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
              AMENDED (THE "ACT"). THESE SECURITIES MAY BE OFFERED, SOLD,
              PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER, (B)
              OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER
              THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE
              REGISTRATION REQUIREMENTS UNDER THE ACT PROVIDED BY RULE 144
              THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE
              SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
              REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE
              HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION
              OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE
              REASONABLY SATISFACTORY TO THE ISSUER. DELIVERY OF THIS
              CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
              TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL
              NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION
              WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT.

                                      -2-
<PAGE>

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

3.1    REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce Lender to
       enter into this Agreement and to make the advances provided for herein,
       Borrower represents and warrants to Lender as follows:

       (a)    Borrower is a duly organized, validly existing, and in good
              standing under the laws of the State of Colorado with the power to
              own its assets and to transact business in California, and in such
              other states where its business is conducted.

       (b)    Borrower has the authority and power to execute and deliver any
              document required hereunder and to perform any condition or
              obligation imposed under the terms of such documents.

3.2    REPRESENTATIONS AND WARRANTIES OF LENDER. Lender hereby represents and
       warrants to Borrower, as of the date hereof, the following:

       (a)    Lender has full power and capacity to enter into, execute and
              perform this Agreement, which Agreement, once executed by Lender,
              shall be the valid and binding obligation of such party,
              enforceable against such party by any court of competent
              jurisdiction in accordance with its terms;

       (b)    Lender is not bound by or subject to any contract, agreement, law,
              court order or judgment, administrative ruling, regulation or any
              other item which prohibits or restricts such party from entering
              into and performing this Agreement in accordance with its terms,
              or requiring the consent of any third party prior to the entry
              into or performance of this Agreement in accordance with its terms
              by such party;

       (c)    Lender acknowledges that it is acquiring the Securities for its
              own account, and not with a view toward the subdivision, resale,
              distribution, or fractionalization thereof; Lender has no
              contract, undertaking, or arrangement with any person to sell,
              transfer, or otherwise dispose of the Securities (or any portion
              thereof hereby subscribed for), and has no present intention to
              enter into any such contract, undertaking, agreement or
              arrangement;

       (d)    the execution of this Agreement by Lender is not the result of any
              form of General Solicitation or General Advertising (as used under
              Rule 502(c) promulgated under the Securities Act of 1933, as
              amended (the "ACT"));

                                      -3-
<PAGE>

       (e)    Lender hereby acknowledges that: (A) the offering of the
              Securities was made only through direct, personal communication
              between Lender and Borrower; (B) Lender has had full access to
              material concerning Borrower's planned business and operations,
              which material was furnished or made available to Lender by
              officers or representatives of Borrower, including Borrower's
              filings with the U.S. Securities Exchange Commission (the "SEC")
              available on the SEC web site at www.sec.gov; (C) Borrower has
              given Lender the opportunity to ask any questions and obtain all
              additional information desired in order to verify or supplement
              the material so furnished; and (D) Lender understands and
              acknowledges that purchasers of the Securities must be prepared to
              bear the economic risk of such investment for an indefinite period
              because of: (i) the heightened nature of the risks associated with
              an investment in Borrower due to its status as a development stage
              company; (ii) illiquidity of the Securities due to the fact that
              (1) the Securities have not been registered under the Act or any
              state securities act (nor passed upon by the SEC or any state
              securities commission), and (2) the Securities may not be
              registered or qualified by Lender under federal or state
              securities laws solely in reliance upon an available exemption
              from such registration or qualification, and hence such Securities
              cannot be sold unless they are subsequently so registered or
              qualified, or are otherwise subject to any applicable exemption
              from such registration requirements; and (3) substantial
              restrictions on transfer of the Securities, as may set forth by
              legend on the face or reverse side of every certificate evidencing
              the ownership of the Securities;

       (f)    Lender is an "Accredited Investor" as such term is defined in Rule
              501 of Regulation D promulgated by the SEC under the Act and as
              such term is defined under Canadian securities laws;

       (g)    Lender is not a "U.S. Person" as such term is defined in Rule 902
              of Regulation S promulgated by the SEC ("REGULATION S");

       (h)    Lender understands that Borrower is the seller of the Securities
              and that, for purposes of Regulation S, a "distributor" is any
              underwriter, dealer or other person who participates, pursuant to
              a contractual arrangement in the distribution of securities sold
              in reliance on Regulation S and that an "affiliate" is any
              partner, officer, director or any person directly or indirectly
              controlling, controlled by or under common control with any
              persons in question;

       (i)    Lender agrees that it will not, during the one-year distribution
              compliance period for the Securities, act as a distributor, either
              directly or through any affiliate, or sell, transfer, hypothecate
              or otherwise convey the Securities other than to a non-U.S.
              Person;

       (j)    Lender acknowledges and understands that in the event the
              Securities are offered, sold or otherwise transferred by Lender to
              a non-U.S. Person prior to the expiration of the applicable
              distribution compliance period, the purchaser or transferee must
              agree not to resell such securities except in accordance with the
              provisions of Regulation S, pursuant to registration under the
              Act, or pursuant to an available exemption from registration; and
              must further agree not to engage in hedging transactions with
              regard to such securities unless in compliance with the Act;

                                      -4-
<PAGE>

       (k)    Lender shall not offer, sell or otherwise dispose of the
              Securities in the United States or to a U.S. Person unless (A)
              Borrower has consented to such offer, sale or disposition and such
              offer, sale or disposition is made in accordance with an exemption
              from the registration requirements under the Act and the
              securities laws of all applicable states of the United States or
              (B) such securities have been registered with the SEC; and

       (l)    Lender has been advised to consult with an attorney regarding
              legal matters concerning the purchase and ownership of the
              Securities, and with a tax advisor regarding the tax consequences
              of purchasing such Securities.

                                   ARTICLE IV

                         EVENTS OF DEFAULT AND REMEDIES

4.1    EVENTS OF DEFAULT. Borrower shall be in default under this Agreement on
       the occurrence of any of the following events or conditions and the
       failure of Borrower to cure such events or conditions within 10 business
       days following the receipt of a written notice from Lender describing
       with particularity the event or condition giving rise to an event of
       default:

       (a)    Failure to pay any principal or interest hereunder after the same
              becomes due.

       (b)    Any representation or warranty made by Borrower in this Agreement
              or in connection with any borrowing or request for an Advance
              hereunder, or in any certificate, financial statement, or other
              statement furnished by Borrower to Lender is untrue in any
              material respect at the time when made.

       (c)    Filing by Borrower of a voluntary petition in bankruptcy seeking
              reorganization, arrangement or readjustment of debts, or any other
              relief under the Bankruptcy Code as amended or under any other
              insolvency act or law, state or federal, now or hereafter
              existing.

       (d)    Filing of an involuntary petition against Borrower in bankruptcy
              seeking reorganization, arrangement or readjustment of debts, or
              any other relief under the Bankruptcy Code as amended, or under
              any other insolvency act or law, state or federal, now or
              hereafter existing, and the continuance thereof for 60 days
              undismissed, unbonded, or undischarged.

4.2    REMEDIES. Upon the occurrence of an event of default as defined above,
       the Lender may declare the entire unpaid principal balance, together with
       accrued interest thereon, to be immediately due and payable by providing
       a written notice to Borrower specifying the nature of the default and its
       intention to accelerate the repayment of the Loan. No failure or delay on
       the part of the Lender in exercising any right, power, or privilege
       hereunder will preclude any other or further exercise thereof or the
       exercise of any other right, power, or privilege. The rights and remedies
       provided herein are cumulative and not exclusive of any other rights or
       remedies provided at law or in equity.

                                      -5-
<PAGE>

                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

5.1    NOTICES. All notices, requests, demands and other communications to be
       given hereunder shall be in writing and shall be deemed to have been duly
       given on the date of personal service or transmission by fax if such
       transmission is received during the normal business hours of the
       addressee, or on the first business day after sending the same by
       overnight courier service or by telegram, or on the third business day
       after mailing the same by first class mail, or on the day of receipt if
       sent by certified or registered mail, addressed as set forth below, or at
       such other address as any party may hereafter indicate by notice
       delivered as set forth in this Section 5.1:

       If to the Borrower:               Reclamation Consulting &
                                         Applications, Inc.
                                         940 Calle Amanecer, Suite E
                                         San Clemente, CA 92673
                                         Attn: Mr. Gordon W. Davies
                                               President

       With a copy (which shall
       not constitute notice) to:        August Law Group, P.C.
                                         19200 Von Karman, Suite 900
                                         Irvine, California  92614
                                         Attn: Kenneth S. August, Esquire
                                               President

       If to the Lender:                 __________________________
                                         __________________________
                                         Attn: ____________________
                                         __________________________

       With a copy (which shall
       not constitute notice) to:        __________________________
                                         __________________________
                                         Attn: ____________________
                                         __________________________

                                      -6-
<PAGE>

5.2    ENTIRE AGREEMENT. This Agreement constitutes the entire and final
       agreement and understanding between the parties with respect to the
       subject matter hereof and the transactions contemplated hereby, and
       supersedes any and all prior oral or written agreements, statements,
       representations, warranties or understandings between the parties, all of
       which are merged herein and superseded hereby.

5.3    BINDING AGREEMENT; ASSIGNMENT. This Agreement shall constitute the
       binding agreement of the parties hereto, enforceable against each of them
       in accordance with its terms. This Agreement, the Note, and the Warrants
       (the "LOAN DOCUMENTS") shall inure to the benefit of each of the parties
       hereto, and their respective successors and permitted assigns; provided,
       however, that the Loan Documents may not be assigned (whether by contract
       or by operation of law) by Lender without the prior written consent of
       Borrower, which consent may be given or withheld in the sole discretion
       of Borrower, provided however, that any such permitted assignee of any of
       the Loan Documents, executes an assignment agreement or such other
       document as Borrower may reasonably request containing all the
       representations, warranties and covenants contained in this Agreement and
       certifying to Borrower that such permitted assignee is an "Accredited
       Investor" as such term is defined in Rule 501 of Regulation D promulgated
       by the SEC under the Act and as such term is defined under Canadian
       securities laws and that such permitted assignee is not a "U.S. Person"
       as such term is defined in Rule 902 of Regulation S.

5.4    WAIVER. No waiver of any provision of this Agreement shall be deemed to
       be 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.

5.5    HEADINGS. The headings provided herein are for convenience only and shall
       have no force or effect upon the construction or interpretation of any
       provision hereof.

5.6    COUNTERPARTS; FACSIMILES. This Agreement may be executed in one or more
       counterparts, each of which shall be deemed an original, but all of which
       together shall constitute one and the same instrument. Facsimiles
       containing original signatures shall be deemed for all purposes to be
       originally-signed copies of the documents which are the subject of such
       facsimiles.

5.7    FURTHER DOCUMENTS AND ACTS. Each party agrees to execute such other and
       further documents and to perform such other and further acts as may be
       reasonably necessary to carry out the purposes and provisions of this
       Agreement.

5.8    GOVERNING LAW; VENUE. This Agreement shall be governed by and construed
       in accordance with the internal laws of the State of California
       applicable to the performance and enforcement of contracts made within
       such state, without giving effect to the law of conflicts of laws applied
       thereby. In the event that any dispute shall occur between the parties
       arising out of or resulting from the construction, interpretation,
       enforcement or any other aspect of this Agreement, the parties hereby
       agree to accept the exclusive jurisdiction of the Courts of the State of
       California sitting in and for the County of Orange. In the event either
       party shall be forced to bring any legal action to protect or defend its
       rights hereunder, then the prevailing party in such proceeding shall be
       entitled to reimbursement from the non-prevailing party of all fees,
       costs and other expenses (including, without limitation, the reasonable
       expenses of its attorneys) in bringing or defending against such action.

                                      -7-
<PAGE>

5.9    SEVERABLE PROVISIONS. The provisions of this Agreement are severable, and
       if any one or more provisions is determined to be illegal, indefinite,
       invalid or otherwise unenforceable, in whole or in part, by any court of
       competent jurisdiction, then the remaining provisions of this Agreement
       and any partially unenforceable provisions to the extent enforceable in
       the pertinent jurisdiction, shall continue in full force and effect and
       shall be binding and enforceable on the parties.

       IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

RECLAMATION CONSULTING
AND APPLICATIONS, INC.

By: _________________________
    Michael C. Davies
    Chief Executive Officer

_____________________________

_____________________________

                                      -8-
<PAGE>

                                   SCHEDULE A
                                   ----------

                           to Note Purchase Agreement

--------------------------------------------------------------------------------

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER
THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER
EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT, DIRECTLY
OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY,
EXCEPT AS PERMITTED BY THE ACT.

                                 PROMISSORY NOTE

U.S. $[_______]                                                    JUNE __, 2007

This Promissory Note is being issued pursuant to a Note Purchase Agreement dated
as of June __, 2007 between [LENDER'S NAME] and Reclamation Consulting and
Applications, Inc. (the "AGREEMENT")

FOR VALUE RECEIVED, Reclamation Consulting and Applications, Inc. (the
"BORROWER"), of 940 Calle Amanecer, Suite E, San Clemente, CA 92673, PROMISES TO
PAY on June __, 2008, or on demand in accordance with the terms of the
Agreement, to the order of [LENDER'S NAME] (the "LENDER"), [ADDRESS], the sum of
U.S. $[________] (the "PRINCIPAL") with simple interest at the rate of 12% per
annum, calculated and accrued monthly in arrears, both before and after the time
payment is due and until actual payment, and payable in accordance with the
Agreement.

The Borrower may prepay the Principal and interest outstanding under the
Agreement without penalty, bonus or charges.

                                  Reclamation Consulting and Applications, Inc.,
                                  a Colorado corporation

                                  ----------------------------------------------
                                  By: Michael C. Davies
                                  Its: Chief Executive Officer

<PAGE>

                                   SCHEDULE B
                                   ----------

                           to Note Purchase Agreement

--------------------------------------------------------------------------------

                               WARRANT CERTIFICATE

No. ________                                           _______________ Warrants

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER
THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER
EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT, DIRECTLY
OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY,
EXCEPT AS PERMITTED BY THE ACT.

                                WARRANTS FOR THE
                            PURCHASE OF COMMON STOCK

THIS CERTIFIES THAT, FOR VALUE RECEIVED, ____________________________, (the
"HOLDER"), is the owner of warrants (the "WARRANTS") for the purchase of up to
an aggregate of ___________________________ shares of validly-issued, fully-paid
and non-assessable common stock of RECLAMATION CONSULTING AND APPLICATIONS,
INC., a corporation organized and existing under the laws of the State of
Colorado (the "CORPORATION"). Such purchase may be made at any time, and from
time to time, prior to 5:00 p.m. Pacific Time on the Expiration Date (as
hereinafter defined) upon the presentation and surrender of this Warrant
Certificate with a written notice in the form of Attachment 1, attached hereto,
signed by the Holder stating the number of shares of Common Stock with respect
to which such exercise is being made, at the principal corporate address of the
Corporation, accompanied by payment of the Exercise Price (as hereinafter
defined) for each Warrant exercised (the "PURCHASE PRICE") in lawful money of
the United States of America in cash or by official bank or certified check made
payable to RECLAMATION CONSULTING AND APPLICATIONS, INC. The Purchase Price and
the number of shares of Common Stock subject to purchase upon the exercise of
the Warrants are subject to modification or adjustment as set forth herein. The
Warrants represented by this Warrant Certificate have been issued by the
Corporation in connection with the Note Purchase Agreement, dated ______ __,
2007, by and between the Corporation and the Holder.

SECTION 1.    DEFINITIONS. As used herein, the following terms shall have the
              following meanings, unless the context shall otherwise require:

              (a)    "ADJUSTED PURCHASE PRICE" shall have the meaning given to
                     it in Section 5 of this Certificate.

              (b)    "CHANGE OF SHARES" shall have the meaning given to it in
                     Section 5 of this Certificate.

              (c)    "CORPORATE OFFICE" shall mean the office of the Corporation
                     at which, at any particular time, its principal business
                     shall be administered, which office is currently located at
                     940 Calle Amanecer, Suite E, San Clemente, CA 92673.

              (d)    "EXERCISE DATE" shall mean, as to any Warrant, the date on
                     which the Corporation shall have received both (i) this
                     Warrant Certificate, together with a written notice of
                     exercise in accordance herewith, duly executed by the
                     Holder hereof, or his attorney duly authorized in writing,
                     and indicating that the Holder is thereby exercising such
                     Warrant(s), and (ii) payment by wire transfer, or by
                     official bank or certified check made payable to the
                     Corporation, of an amount in lawful money of the United
                     States of America equal to the applicable Purchase Price
                     for such Warrant(s).

              (e)    "EXERCISE PERIOD" shall mean the period commencing on
                     [DATE], and shall expire at 5:00 P.M. (Pacific Time), on
                     [DATE PRIOR TO THIRD YEAR ANNIVERSARY].

              (f)    "EXERCISE PRICE" shall mean, as to any Warrant, the price
                     at which a Warrant may be exercised for the purchase of
                     Warrant Shares, which shall be $0.25.

              (g)    "EXPIRATION DATE" shall mean 5:00 P.M. (Pacific Time) on
                     last day of the Exercise Period. If such date shall be a
                     holiday or a day on which banks are authorized to be closed
                     in the State of California, then the Expiration Date shall
                     mean 5:00 P.M. (Pacific Time) of the next consecutive day
                     which does not fall on a holiday or a day on which banks
                     are authorized to be closed in the State of California.

                                       2
<PAGE>

              (h)    "HOLDER" shall mean, as to any Warrant and as of any
                     particular date, the person in whose name the Warrant
                     Certificate representing such Warrant is registered as of
                     that date on the Warrant Register maintained by the
                     Corporation.

              (i)    "COMMON STOCK" shall mean the common stock of the
                     Corporation, which has the right to participate in the
                     distribution of earnings and assets of the Corporation
                     without limit as to amount or percentage.

              (J)    "PURCHASE PRICE" shall mean the purchase price to be paid
                     upon exercise of each Warrant hereunder in accordance with
                     the terms hereof, which price shall be the Exercise Price,
                     subject to adjustment from time to time pursuant to the
                     provisions of Section 5 hereof.

              (k)    "SECURITIES ACT" shall mean the Securities Act of 1933, and
                     any amendments or modifications, or successor legislation,
                     thereto adopted, and all regulations, rules or other laws
                     enacted or adopted pursuant thereto.

              (l)    "WARRANTS" shall mean the Warrants represented by this
                     Warrant Certificate.

              (m)    "WARRANT CERTIFICATE" shall mean any certificate
                     representing Warrants, and "THIS CERTIFICATE" shall mean
                     they warrant Certificate issued to the Holder
                     identification on the first page hereof.

              (n)    "WARRANT REGISTRY" means the official record maintained by
                     the Corporation in which are recorded, with respect to each
                     Warrant Certificate issued by the Corporation: the date of
                     issuance, the name and address of the original Holder, the
                     name and address of each subsequent transferee of such
                     original Holder, and the number identifying, such Warrant
                     Certificate.

              (o)    "WARRANT SHARES" shall have the meaning given to it in
                     Section 2 of this Certificate.

SECTION 2. EXERCISE OF WARRANTS.

              (a)    Each Warrant evidenced hereby may be exercised by the
                     Holder upon the terms and subject to the conditions set
                     forth herein prior to the sooner of 5:00 p.m. Pacific Time
                     on the Expiration Date (as hereinafter defined). A Warrant
                     shall be deemed to have been exercised immediately prior to
                     the close of business on the Exercise Date and the person
                     entitled to receive shares of restricted common stock of
                     the Corporation deliverable upon such exercise shall be

                                       3
<PAGE>

                     treated for all purposes as the Holder of a Warrant Share
                     upon the exercise of the applicable Warrant as of the close
                     of business on the Exercise Date. Promptly following, and
                     in any event within ten (10) business days after, the date
                     on which the Corporation first receives clearance of all
                     funds received in payment of the Purchase Price pursuant to
                     this Warrant Certificate, the Corporation shall cause to be
                     issued and delivered to the person or persons entitled to
                     receive the same, a certificate or certificates evidencing
                     the issuance to such Holder of the applicable number of
                     Warrant Shares (plus a Warrant Certificate for any
                     remaining issued but unexercised Warrants of the Holder).
                     Notwithstanding the foregoing sentence, in the event that
                     any registration or qualification (or filing for exemption
                     from any such requirements) is required prior to the
                     issuance of such Warrant Shares by the Corporation in
                     accordance with Section 3(b) below, then the obligation to
                     deliver any such certificates shall arise only upon
                     completion of such requirements and at such time as the
                     Corporation may lawfully do so.

              (b)    Upon the exercise of the Warrants represented hereby, if
                     the Corporation so requests, the Holder shall certify to
                     the Corporation that it is not exercising such Warrants
                     with a view to distribute the Warrant Shares in violation
                     of the Securities Act, and shall provide such other
                     investor representations as the Corporation may require to
                     confirm the ability of the Corporation to rely upon the
                     exemption from registration under the Securities Act which
                     applies to the distribution of Warrant Shares at the time
                     of such distribution.

SECTION 3. ISSUANCE OF COMMON STOCK PURSUANT TO EXERCISE.

              (a)    The Corporation shall not be obligated to deliver any
                     Warrant Shares pursuant to the exercise of the Warrants
                     represented hereby unless and until a registration
                     statement under the Securities Act and/or under any
                     applicable state securities laws and regulations, with
                     respect to such securities is effective, or an exemption
                     from such registration is available to the Corporation at
                     the time of such exercise. However, in the event that this
                     Warrant Certificate represents Warrants which have been
                     transferred by an initial holder thereof, the Warrants
                     represented hereby may not be exercised by, nor shares of
                     Common Stock issued to, the Holder hereof in any state in
                     which such exercise and issuance would be unlawful.

              (b)    The Corporation shall pay all documentary, stamp or similar
                     taxes and other governmental charges that may be imposed
                     with respect to the issuance of the Warrants, or the
                     issuance or delivery of any shares of Common Stock upon
                     exercise of the Warrants; provided, however, that if the
                     shares of Common Stock are to be delivered in a name other
                     than the name of the Holder hereof, then no such delivery
                     shall be made unless the person requesting the same has
                     paid to the Corporation the amount of transfer taxes or
                     charges incident thereto, if any.

                                       4
<PAGE>

SECTION 4.    LOSS OR MUTILATION. Upon receipt by the Corporation of evidence
              satisfactory to it of the ownership of, and loss, theft,
              destruction or mutilation of, this Warrant Certificate and (in
              case of loss, theft or destruction) of indemnity satisfactory to
              the Corporation, and (in the case of mutilation) upon surrender
              and cancellation thereof, the Corporation shall execute and
              deliver to the Holder in lieu thereof a new Warrant Certificate of
              like tenor representing an equal aggregate number of Warrants as
              was indicated to be outstanding on the prior lost or mutilated
              Warrant Certificate (provided, however, that to the extent that
              any discrepancy may exist between the number of Warrants purported
              to be outstanding in respect of any Holder as evidenced by a
              Warrant Certificate that has been lost or mutilated and the number
              attributable to such Holder in the Warrant Registry, then the
              Warrant Registry shall control for all purposes, absent a showing
              of manifest error. Each Holder requesting a substitute Warrant
              Certificate due to loss, theft or destruction shall, prior to
              receiving such substitute certificate, provide an affidavit to the
              Corporation in the form prescribed thereby and signed by (and
              notarized on behalf of) such Holder. Applicants for a substitute
              Warrant Certificate shall comply with such other reasonable
              regulations and pay such other reasonable charges as the
              Corporation may prescribe.

SECTION 5.    ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF WARRANT SHARES OR
              WARRANTS.

              (a)    Subject to the provisions of this Warrant Certificate and
                     applicable law, in the event the Corporation shall, at any
                     time or from time to time after the date hereof, issue any
                     shares of Common Stock as a stock dividend to the holders
                     of Common Stock, or subdivide or combine the outstanding
                     shares of Common Stock into a greater or lesser number of
                     shares (any such sale, issuance, subdivision or combination
                     being herein called a "CHANGE OF SHARES"), then, and
                     thereafter upon each further Change of Shares, the Purchase
                     Price in effect immediately prior to such Change of Shares
                     shall be correspondingly adjusted to give the Holder of the
                     Warrant, on exercise for the same aggregate Exercise Price,
                     the total number, class, and kind of shares as the Holder
                     would have owned had the Warrant been exercised prior to
                     the Change of Shares and had the Holder continued to hold
                     such shares until after the Change of Shares requiring
                     adjustment (the "ADJUSTED PURCHASE Price"). The form of
                     this Warrant need not be changed because of any adjustment
                     in the number of Warrant Shares subject to this Warrant. No
                     fractional shares shall be issued or called for as a result
                     of any adjustment made hereunder.

              (b)    The Corporation may elect, at its sole discretion, upon any
                     adjustment of the Purchase Price hereunder, to adjust the
                     number of Warrants outstanding, in lieu of adjustment of
                     the number of Warrant Shares purchasable upon the exercise
                     of each Warrant as hereinabove provided, so that each
                     Warrant outstanding after such adjustment shall represent
                     the right to purchase one Warrant Share. Upon each

                                       5
<PAGE>

                     adjustment of the number of Warrants pursuant to this
                     Section 5(b), the Corporation shall, as promptly as
                     practicable, cause to be distributed to each Holder of
                     Warrant Certificates, on the date of such adjustment,
                     Warrant Certificates evidencing the adjusted number of
                     Warrants to which such Holder shall be entitled as a result
                     of such adjustment or, at the sole option of the
                     Corporation, cause to be distributed to such Holder in
                     substitution and replacement for the Warrant Certificates
                     held by him prior to the date of adjustment, and upon
                     surrender thereof, (if required by the Corporation) new
                     Warrant Certificates evidencing the aggregate number of
                     Warrants to which such Holder shall be entitled after such
                     adjustment.

              (c)    Irrespective of any adjustments or changes in the Purchase
                     Price or the number of Warrant Shares purchasable upon
                     exercise of the Warrants, all Warrant Certificates issued
                     (whether prior to or subsequent to any event causing an
                     adjustment thereof) shall continue to express the Purchase
                     Price per share, and the number of shares purchasable
                     thereunder as originally expressed in the Warrant
                     Certificate initially issued to any Holder.

              (d)    After each adjustment of the Purchase Price pursuant to
                     this Section 5, the Corporation will promptly prepare a
                     certificate signed by the Chairman or Chief Executive
                     Officer, and attested by the Secretary or an Assistant
                     Secretary, of the Corporation setting forth: (i) the
                     Purchase Price as so adjusted, (ii) the number of shares of
                     Common Stock purchasable upon exercise of each Warrant
                     after such adjustment or, if the Corporation shall have
                     elected to adjust the number of Warrants, the number of
                     Warrants to which the Holder of each Warrant shall then be
                     entitled, and (iii) a brief statement of the facts
                     accounting for such adjustment. The Corporation will
                     promptly cause a brief summary thereof to be sent by
                     ordinary first class mail to each Holder of Warrants at his
                     or her last address as it shall appear on the registry
                     books of the Corporation. No failure to mail such notice
                     nor any defect therein nor in the mailing thereof shall
                     affect the validity thereof. The affidavit of the Secretary
                     or an Assistant Secretary of the Corporation that such
                     notice has been mailed shall, in the absence of fraud, be
                     prima facie evidence of the facts stated therein.

              (e)    As used in this Section 5, references to "Common Stock"
                     shall mean and include all of the Corporation's Common
                     Stock authorized on the date hereof and shall also include
                     any capital stock of any class of the Corporation
                     thereafter authorized which shall not be limited to a fixed
                     sum or percentage in respect of the rights of the holders
                     thereof to participate in dividends and in the distribution
                     of assets upon the voluntary liquidation, dissolution or
                     winding up of the Corporation; provided, however, that
                     "Warrant Shares" shall include only shares of such class
                     designated in the Corporation's Certificate of
                     Incorporation as Common Stock on the date hereof or in the
                     case of any reclassification or change in the outstanding
                     shares of Common Stock issuable upon exercise of the
                     Warrants as a result of a subdivision or combination or
                     consisting of a change in par value, or from par value to
                     no par value, or from no par value to par value, such
                     shares of Common Stock as so reclassified or changed.

                                       6
<PAGE>

              (f)    Any determination as to whether an adjustment in the
                     Purchase Price in effect hereunder is required pursuant to
                     this Section 5, or as to the amount of any such adjustment,
                     if required, shall be binding upon all holders of Warrants
                     and the Corporation if made in good faith by the Board of
                     Directors of the Corporation. For purposes of this Section
                     5(f), the Corporation's Board of Directors shall be deemed
                     to have acted in good faith if it makes any such decision
                     in reliance upon advice of its legal counsel and/or another
                     independent professional hired to advise the Board on such
                     matters.

SECTION 6. RESTRICTIVE LEGEND.

              (a)    Except as otherwise provided in this Section 6, each
                     Warrant Certificate and each certificate evidencing the
                     issuance of Warrant Shares (whether issued in the name of
                     the original Holder of this Certificate or of any
                     subsequent transferee thereof), shall be stamped or
                     otherwise imprinted with a legend in substantially the
                     following form:

                     "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
                     NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
                     1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY BE
                     OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
                     THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
                     WITH REGULATION S UNDER THE ACT, (C) IN COMPLIANCE WITH THE
                     EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT
                     PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN
                     ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN
                     A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
                     ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR
                     TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL
                     OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY
                     SATISFACTORY TO THE ISSUER. DELIVERY OF THIS CERTIFICATE
                     MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
                     TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER
                     HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY
                     HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS
                     PERMITTED BY THE ACT. "

                                       7
<PAGE>

              (b)    Each certificate evidencing the issuance of Warrant Shares
                     and each Warrant Certificate, Warrant Shares may also bear
                     such other restrictive legends as may be necessary to apply
                     with applicable law in the Corporation's reasonable
                     discretion. The legend requirements of Sections 6(a) above
                     shall terminate as to any particular Warrant or Warrant
                     Share: (i) when and so long as such security shall have
                     been effectively registered under the Securities Act and is
                     disposed of pursuant thereto; or (ii) when the Company
                     shall have received an opinion of counsel reasonably
                     satisfactory to it that such shares may be sold to the
                     public without registration thereof under the Securities
                     Act. Whenever the legend requirements imposed by this
                     Section 6 shall terminate as to any Warrant Share, as
                     hereinabove provided, the Holder hereof shall be entitled
                     to receive from the Corporation, at the Corporation's
                     expense, a new certificate representing such Warrant Shares
                     and not bearing the restrictive legend set forth in Section
                     6(a).

SECTION 7.    RIGHTS OF ACTION. All rights of action with respect to the
              Warrants are vested in the Holders of the Warrants, and any Holder
              of a Warrant, without consent of the holder of any other Warrant,
              may, in such Holder's own behalf and for his own benefit, enforce
              against the Company his right to exercise his Warrants for the
              purchase of Warrant Shares in the manner provided in this Warrant
              Certificate.

SECTION 8.    AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by his or
              her acceptance thereof, consents and agrees with the Corporation
              and every other holder of a Warrant that:

              (a)    The Warrant Registry shall be maintained by the
                     Corporation's Secretary, and shall be the official register
                     of all Warrants issued to any person in the Offering. The
                     Warrant Registry shall be dispositive as to the issuance,
                     ownership, transfer and other aspects of each Warrant
                     issued by the Corporation which are recorded therein and,
                     absent manifest error, such records shall control for all
                     purposes.

              (b)    The Warrants are transferable only on the Warrant Registry
                     by the Holder thereof in person or by his attorney duly
                     authorized in writing and only if the Warrant Certificates
                     representing such Warrants are surrendered at the Corporate
                     Office of the Corporation, duly endorsed or accompanied by
                     a proper instrument of transfer satisfactory to the
                     Corporation in its sole discretion, together with payment
                     of the amount of any applicable transfer taxes; and

                                       8
<PAGE>

              (c)    The Corporation may deem and treat the person in whose name
                     the Warrant Certificate is registered on the Warrant
                     Registry as the holder and as the absolute, true and lawful
                     owner of the Warrants represented thereby for all purposes,
                     and the Corporation shall not be affected by any notice or
                     knowledge to the contrary, except as otherwise expressly
                     provided in this Certificate.

SECTION 9.    NOTICES. All notices, requests, consents and other communications
              hereunder shall be in writing and shall be deemed to have been
              made when delivered or mailed first class registered or certified
              mail, postage prepaid as follows: if to the Holder of a Warrant
              Certificate, at the address of such Holder as shown on the Warrant
              Registry maintained by the Corporation; and if to the Corporation,
              addressed as set forth below, or at such other address as may be
              designated by the Corporation from time to time in accordance with
              this Section 9.

              If to the Corporation:            Reclamation Consulting &
                                                Applications, Inc.
                                                940 Calle Amanecer, Suite E
                                                San Clemente, CA 92673
                                                Attn: Mr. Gordon W. Davies
                                                      President

              With a copy (which shall
              not constitute notice) to:        August Law Group, P.C.
                                                19200 Von Karman, Suite 900
                                                Irvine, California  92614
                                                Attn: Kenneth S. August, Esquire
                                                      President

SECTION 10.   GOVERNING LAW; VENUE. This Agreement shall be governed by and
              construed in accordance with the internal laws of the State of
              California applicable to the performance and enforcement of
              contracts made within such state, without giving effect to the law
              of conflicts of laws applied thereby. In the event that any
              dispute shall occur between the parties arising out of or
              resulting from the construction, interpretation, enforcement or
              any other aspect of this Agreement, the parties hereby agree to
              accept the exclusive jurisdiction of the Courts of the State of
              California sitting in and for the County of Orange.

SECTION 11.   ENTIRE UNDERSTANDING. This Certificate contains the entire
              understanding among the Corporation and the Holder relating to the
              subject matter covered herein, and merges all prior discussions,
              negotiations and agreements, if any between them. Neither of the
              parties to this agreement shall be bound by any representations,
              warranties, covenants, or other understandings relating to such
              subject matter, other than as expressly provided for or referred
              to herein.

                                       9
<PAGE>

       IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate
to be duly executed, manually or in facsimile, by two of its officers thereunto
duly authorized, as of the date set forth below.

Date:    June __, 2007

RECLAMATION CONSULTING AND APPLICATIONS, INC.
A Colorado corporation

------------------------------------
By:  Michael C. Davies
Its:  Chief Executive Officer

                                       10
<PAGE>

                                  ATTACHMENT 1
                                  ------------

                               TO WARRANTS FOR THE
                            PURCHASE OF COMMON STOCK

                               NOTICE OF EXERCISE

TO: RECLAMATION CONSULTING AND APPLICATIONS, INC. (the "Company")

1. The undersigned hereby elects to purchase ____________ shares of Company
common stock, pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price in full, together with all applicable
transfer taxes, if any.

2. The undersigned hereby certifies that it is not a U.S. Person (as defined by
Rule 902 of the Securities Act of 1933, as amended) and that the warrant is not
being exercised for the account or benefit of or on behalf of a U.S. Person.

3. Please issue a certificate or certificates representing said shares of
Company common stock in the name of the undersigned or in such other name as is
specified below:

                       ----------------------------------
                                     (Name)

                       ----------------------------------
                                    (Address)

---------------------------------       ----------------------------------------
(Date)                                  (Name of Warrant Holder)

                                        By:
                                            ------------------------------------

                                        Title:
                                               ---------------------------------
                                               (Name of purchaser, and title and
                                               signature of authorized person)

                                       11

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