Document:

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                                                                   EXHIBIT 10.52

                                MICROISLET, INC.
                           2005 EQUITY INCENTIVE PLAN
                             STOCK OPTION AGREEMENT
                             ----------------------

         Unless otherwise defined herein, the terms defined in the MicroIslet,
Inc. 2005 Equity Incentive Plan (the "Plan") shall have the same defined
meanings in this Option Agreement.

I.       NOTICE OF STOCK OPTION GRANT.
         -----------------------------

         You have been granted an option to purchase Common Stock, subject to
the terms and conditions of the Plan and this Option Agreement, as follows:

         Name of Optionee:                  James R. Gavin, M.D., Ph.D.

         Total Number of Shares Granted:    1,750,000

         Type of Option:                          Incentive Stock Option
                                            -----

                                              X   Nonstatutory Stock Option
                                            -----

         Exercise Price per Share:          $2.20

         Grant Date:                        January 20, 2006

         Vesting Commencement Date:         January 20, 2006

         Vesting Schedule:                  This option may be exercised, in
                                            whole or in part, in accordance with
                                            the following schedule:

                                            1/4 of the Shares subject to the
                                            option shall vest on the Vesting
                                            Commencement Date, and 1/4 of the
                                            Shares subject to the option shall
                                            vest on each of the first, second
                                            and third anniversaries of the
                                            Vesting Commencement Date, subject
                                            to your continuing service as the
                                            Company's principal executive
                                            officer on each such vesting date.

         Termination Period:                This option may be exercised for
                                            three months after the optionee
                                            ceases to be a Service Provider. The
                                            Administrator determines when the
                                            optionee incurs a Termination of
                                            Service for this purpose. Upon the

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                                            death or Total and Permanent
                                            Disability of the optionee, this
                                            option may be exercised for 12
                                            months after the optionee ceases to
                                            be a Service Provider. In no event
                                            shall this option be exercised later
                                            than the Term/Expiration Date
                                            provided for below. These time
                                            periods may be extended as set forth
                                            in Section II.I and Section II.J
                                            below.

         Term/Expiration Date:              10 years after Grant Date

II.      AGREEMENT.
         ----------

         A. GRANT OF OPTION. The Administrator hereby grants to the optionee
named in the Notice of Stock Option Grant attached as Part I of this Option
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Stock Option Grant, at the exercise price
per Share set forth in the Notice of Stock Option Grant (the "Exercise Price"),
subject to the terms and conditions of this Option Agreement and the Plan. This
Option is intended to be an Incentive Stock Option ("ISO") or a Nonstatutory
Stock Option ("NSO"), as provided in the Notice of Stock Option Grant.

         B. EXERCISE OF OPTION.

                  1. VESTING/RIGHT TO EXERCISE. This Option is exercisable
during its term in accordance with the Vesting Schedule set forth in the Notice
of Stock Option Grant, this Option Agreement and the applicable provisions of
the Plan. This Option will in no event become exercisable for additional Shares
after a Termination of Service for any reason. Notwithstanding the foregoing,
this Option becomes exercisable in full if the Company is subject to a Change in
Control before the Optionee's Termination of Service. For purposes of this
Option, the term "Change in Control" shall not include any underwritten public
offering of Shares registered under the Securities Act of 1933, as amended (the
"Act"). This Option may also become exercisable in accordance with Section II.J.
below.

                  2. METHOD OF EXERCISE. This Option is exercisable by
delivering to the Administrator a fully executed "Exercise Notice" or by any
other method approved by the Administrator. The Exercise Notice shall provide
that the Optionee is electing to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the
Administrator. The Exercise Notice shall be accompanied by payment of the full
aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Administrator of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price. The Optionee is
responsible for filing any reports of remittance or other foreign exchange
filings required in order to pay the Exercise Price.

         C. LIMITATION ON EXERCISE. The grant of this Option and the issuance of
Shares upon exercise of this Option is subject to compliance with all Applicable
Laws. This Option may not be exercised if the issuance of Shares upon exercise
would constitute a violation of any Applicable Laws. In addition, this Option
may not be exercised unless (i) a registration statement under the Act is in
effect at the time of exercise of this Option with respect to the Shares or (ii)
in the opinion of legal counsel to the Company, the Shares issuable upon

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exercise of this Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Act. THE OPTIONEE
IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING
CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE
THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. As a condition to the
exercise of this Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company. Any shares which are issued
pursuant to an exemption from the registration requirements of the Act will be
"restricted securities" as that term is defined in Rule 144 under the Act, and
will bear an appropriate restrictive legend, unless they are registered under
the Act. The Company is under no obligation to register the Shares issuable upon
exercise of this Option.

         D. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following methods; provided, however, the payment shall be in
strict compliance with all procedures established by the Administrator:

                  1. cash;

                  2. check or wire transfer;

                  3. consideration received by the Company under a
broker-assisted sale and remittance program acceptable to the Administrator,
also known as a "cashless exercise" (provided that Officers and Directors shall
not be permitted to use this procedure if this procedure would violate Section
402 of the Sarbanes-Oxley Act of 2002, as amended); or

                  4. any combination of the foregoing methods of payment.

         E. LEAVE OF ABSENCE. The Optionee shall not incur a Termination of
Service when the Optionee goes on a military leave, a sick leave or another bona
fide leave of absence, if the leave was approved by the Company (or Affiliate
employing him or her) in writing and if continued crediting of service is
required by the terms of the leave or by applicable law. However, the Optionee
incurs a Termination of Service when the approved leave ends, unless the
Optionee immediately returns to active work.

            For purposes of ISOs, no leave of absence may exceed three months,
unless reemployment upon expiration of such leave is provided by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company (or Affiliate employing him or her) is not so provided by statute or
contract, the Optionee shall be deemed to have incurred a Termination of Service
on the first day immediately following such three month period of leave for ISO
purposes and this Option shall cease to be treated as an ISO and shall terminate
upon the expiration of the three month period following the date the employment
relationship is deemed terminated.

         F. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of the Optionee only by the Optionee. The
terms of this Option Agreement and the Plan shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee. This Option may
not be assigned, pledged or hypothecated by the Optionee whether by operation of

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law or otherwise, and is not subject to execution, attachment or similar
process. Notwithstanding the foregoing, if this Option is designated as a
Nonstatutory Stock Option, the Administrator may, in its sole discretion, allow
the Optionee to transfer this Option as a gift to one or more family members.
For purposes of this Option Agreement, "family member" means a child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law (including adoptive relationships), any
individual sharing the Optionee's household (other than a tenant or employee), a
trust in which one or more of these individuals have more than 50% of the
beneficial interest, a foundation in which the Optionee or one or more of these
persons control the management of assets, and any entity in which the Optionee
or one or more of these persons own more than 50% of the voting interest.

         G. TERM OF OPTION. This Option may be exercised only within the term
set out in the Notice of Stock Option Grant, and may be exercised during such
term only in accordance with this Option Agreement and the Plan.

         H. TAX OBLIGATIONS.

                  1. WITHHOLDING TAXES. The Optionee agrees to make appropriate
arrangements with the Administrator for the satisfaction of all applicable
Federal, state, local, and foreign income taxes, employment tax, and any other
taxes that are due as a result of the Option exercise. With the Administrator's
consent, these arrangements may include withholding Shares that otherwise would
be issued to the Optionee pursuant to the exercise of this Option. The Optionee
acknowledges and agrees that the Company may refuse to honor the exercise and
refuse to deliver Shares if such withholding amounts are not delivered at the
time of exercise.

                  2. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Option is an ISO, and if the Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the exercise of the ISO on or before the later of
(i) the date two years after the Grant Date, or (ii) the date one year after the
date of exercise, the Optionee shall immediately notify the Administrator in
writing of such disposition. The Optionee agrees that the Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

         I. EXTENSION IF THE OPTIONEE SUBJECT TO SECTION 16(b). If a sale within
the applicable Termination Period set forth in Section I of Shares acquired upon
the exercise of this Option would subject the Optionee to suit under Section
16(b) of the Exchange Act, this Option shall remain exercisable until the
earliest to occur of (i) the tenth (10th) day following the date on which a sale
of such shares by the Optionee would no longer be subject to such suit, (ii) the
one hundred and ninetieth (190th) day after the Optionee's Termination of
Service, or (iii) the Expiration Date.

         J. SPECIAL TERMINATION PERIOD. The Company has established an Insider
Trading Policy (as such policy shall be amended from time to time, the "Policy")
relative to trading while in possession of material, undisclosed information.
Under the Policy, officers, directors, employees and consultants of the Company
and its subsidiaries are prohibited from trading in securities of the Company
during certain "Blackout Periods" as described in the Policy. If (i) the last
day of the Termination Period set forth in Section I is during such a Blackout

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Period, or (ii) exercise of the Option on the last day of the Termination Period
set forth in Section I is prevented by operation of Section II.C above, then
this Option shall automatically remain exercisable until fourteen (14) days
after (x) the first date on which such Blackout Period is no longer applicable
to the Optionee (if sale of Shares was prevented by clause (i) above) and/or (y)
the first date after the last day of the Termination Period that the Option
becomes exercisable (if exercise was prevented by clause (ii) above).
Notwithstanding the provisions of this Section II.J, in no event may this Option
by exercised after the Expiration Date.

         K. CHANGE IN CONTROL. In the event of a Change in Control prior to the
Optionee's Termination of Service, the Option will be assumed or an equivalent
option or right substituted by the successor corporation or a parent or
subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee will
fully vest in and have the right to exercise the Option. In addition, if the
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a Change in Control, the Administrator will notify
the Optionee in writing or electronically that the Option will be fully vested
and exercisable for a period of time determined by the Administrator in its sole
discretion, and the Option will terminate upon the expiration of such period.

         L. RESTRICTIONS ON RESALE. The Optionee agrees not to sell any Shares
at a time when Applicable Law, Company policies or an agreement between the
Company and its underwriters prohibit a sale. This restriction shall apply as
long as the Optionee is a Service Provider and for such period of time after the
Optionee's Termination of Service as the Administrator may specify.

         M. LOCK-UP AGREEMENT. The Optionee hereby agrees that in connection
with any underwritten public offering of Shares made by the Company pursuant to
a registration statement filed under the Act, the Optionee shall not offer,
sell, contract to sell, pledge, hypothecate, grant any option to purchase or
make any short sale of, or otherwise dispose of any Shares (including but not
limited to Shares subject to this Option) or any rights to acquire Shares of the
Company for such period of time beginning on the date of filing of such
registration statement with the Securities and Exchange Commission and ending at
the time as may be established by the underwriters for such public offering;
provided, however, that such period of time shall end not later than one hundred
eighty (180) days from the effective date of such registration statement. The
foregoing limitation shall not apply to shares registered for sale in such
public offering.

         N. ENTIRE AGREEMENT; GOVERNING LAW. This Option Agreement and the Plan
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This Option Agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.

         O. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF THE OPTION PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES

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HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

                  By the Optionee's signature and the signature of the Company's
representative below, the Optionee and the Company agree that this Option is
granted under and governed by the terms and conditions of this Option Agreement
and the Plan. The Optionee has reviewed this Option Agreement and the Plan in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option Agreement and fully understands all provisions of this
Option Agreement and the Plan. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions relating to this Option Agreement and the Plan.

                  The Optionee further agrees that the Company may deliver by
email all documents relating to the Plan or this Option (including, without
limitation, prospectuses required by the Securities and Exchange Commission) and
all other documents that the Company is required to deliver to its security
holders (including, without limitation, annual reports and proxy statements).
The Optionee also agrees that the Company may deliver these documents by posting
them on a web site maintained by the Company or by a third party under contract
with the Company.

OPTIONEE:                                   MICROISLET, INC.

_________________________                   By _________________________________
Signature

_________________________                   Title ______________________________
Print Name

_________________________
Residence Address
________________________

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                                                                   Exhibit 10.53

                                January 20, 2006

James R. Gavin III, M.D., Ph.D.
6370 Nancy Ridge Drive, Suite 112
San Diego, CA 92121

                  Re:  Employment Agreement (this "AGREEMENT")

Dear Dr. Gavin:

         MicroIslet Inc., a Nevada corporation (the "COMPANY"), is pleased to
offer you employment as interim President and Chief Executive Officer of the
Company ("INTERIM CEO") on the following terms:

         1. POSITION; EFFECTIVE DATE. As Interim CEO, you will report to the
Company's Board of Directors (the "BOARD"), and will perform the duties
customarily associated with this position and such other duties assigned by the
Board. The Company acknowledges that you currently live in Atlanta, Georgia, and
you and the Company agree that you will work from the Company's facilities in
San Diego, California at least sixty per cent (60%) of the business days of each
month during the term of this Agreement. So long as you serve as Interim CEO,
the Company will recommend to the Board's Nominating and Governance Committee,
and to the Board, that you be included on management's slate of directors at
each meeting of the stockholders of the Company at which directors are elected,
and that you continue to serve as a member of the Board's Executive Committee.
Subject to the "Approved Commitments" set forth in paragraph 3.1 below, you
agree to devote substantially all of your business time and attention to the
business of the Company. This Agreement shall be effective as of January 20,
2006 (the "START DATE").

         2. COMPENSATION.

                  2.1 BASE SALARY AND ADJUSTMENTS. Your base salary will be at a
rate of $600,000 per year (the "BASE SALARY"), less payroll deductions and
required withholdings, paid according to the Company's regular payroll schedule
and procedures.

                  2.2 EMPLOYEE BENEFITS. You shall be entitled to all benefits,
including vacation, health and disability benefits, for which you are eligible
under the terms and conditions of the standard Company benefit plans, which may
be in effect from time to time and are provided by the Company to its senior
executive level employees generally.

                  2.3 EXPENSES. The Company shall reimburse you for reasonable
travel and other out-of-pocket expenses (including telephone, lodging and meals)
upon submission of receipts, including by way of example your airline travel
between San Diego and Atlanta. The Company will also reimburse you for your
housing expenses of up to $1,700 in any calendar month for maintaining a

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residence in San Diego away from your permanent residence in Atlanta. The
Company will also reimburse your automobile expenses for a vehicle in San Diego
of up to $1,000 in any calendar month. The Company shall deduct any required
withholdings associated with such benefits from your regular payroll amounts in
accordance with the applicable regulations of the Internal Revenue Service.

                  2.4 STOCK OPTION. You have been granted an option to purchase
1,750,000 shares of Common Stock of the Company (the "OPTION") under the
Company's 2005 Equity Incentive Plan (the "EQUITY PLAN") pursuant to a Stock
Option Agreement of even date herewith.

         3. NON-COMPETITION AND NON-SOLICITATION.

                  3.1 NON-COMPETITION. Except as permitted by the last sentence
of this Paragraph 3, during the term of your employment by the Company and for a
period of one year thereafter, you will not directly or indirectly, whether as
an officer, director, stockholder, employee, advisor, manager, partner,
proprietor, associate, representative, consultant, or in any capacity whatsoever
engage in, become financially interested in, be employed by or have any business
connection with any other person, corporation, firm, partnership or other entity
whatsoever that is engaged anywhere in the world, in any line of business
engaged in (or planned to be engaged in) by the Company without the prior
consent of the Board; provided, however, that anything above to the contrary
notwithstanding, you may own, as a passive investor, securities of any
publicly-traded entity, so long as your holdings in any one such entity do not
in the aggregate constitute more than one percent (1%) of the voting stock of
such entity and securities of any non-publicly traded entity, so long as your
holdings in any one such entity do not in the aggregate constitute more than
five percent (5%) of the voting stock of such entity; and further provided, that
the restrictions in this Paragraph 3 shall apply after your term of employment
only to the extent the restricted actions would involve the use of the Company's
trade secrets. For such purpose, the term "trade secrets" includes "Confidential
Information" as that term is defined in your Confidentiality and Intellectual
Property Agreement. If any restriction set forth in this paragraph is held to be
unreasonable, then you agree, and hereby submit, to the reduction and limitation
of such prohibition to such area or period as shall be deemed reasonable under
the law. Notwithstanding the above, the Company through the Board hereby gives
its consent to allow you to remain on the Boards of Directors of Amylin
Pharmaceuticals, Inc., Baxter International Inc., Anastasia Marie Laboratories,
Inc. and dLife, Inc. (collectively, the "Approved Commitments"), in all cases
subject to your continued fiduciary obligations to the Company and its
stockholders. The Approved Commitments shall also include other civic, academic
or not-for-profit activities you many engage in so long as such activities do
not interfere with the performance of your job duties.

                  3.2 NON-SOLICITATION. You will not, at any time during the
term of this Agreement, or during the 24 months following termination of this
Agreement, in any manner, directly or indirectly, alone or jointly, with or as
an agent for, or as an employee of, any person, firm or corporation, employ,
solicit or induce to leave any employee or independent consultant of the
Company, or any former employee or independent consultant who was employed or
retained by the Company within 24 months preceding such attempt to employ or
solicit; provided, however, that this non-solicitation provision shall not
prevent you from hiring any employee or independent consultant of the Company
that you can demonstrate either (i) approached you independently without any
prior direct or indirect solicitation or encouragement by you or on your part,
or (ii) replied to a solicitation made to the general public without any direct
or indirect solicitation or encouragement by you or on your part.

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         4. COMPANY POLICIES; CONFIDENTIALITY AND INTELLECTUAL PROPERTY
AGREEMENT; STOCKHOLDERS AGREEMENT. You agree to execute the Company's
Confidentiality and Intellectual Property Agreement (the "CONFIDENTIALITY
AGREEMENT") and to abide by the Company's rules, policies and procedures.

         5. TERM AND TERMINATION OF EMPLOYMENT.

                  5.1 AT-WILL EMPLOYMENT RELATIONSHIP. You and the Company each
acknowledge that your employment with the Company is "at-will," as defined under
applicable law, and that either party may terminate your employment with the
Company at any time for any reason, and with or without Cause (as defined below)
or notice. If your employment terminates for any reason, you will not be
entitled to any payments, benefits, damages, award or compensation other than as
expressly provided in this Agreement.

                  5.2 ACCEPTANCE AND TERMS OF EMPLOYMENT. The Company agrees to
employ you and you agree to serve the Company on the terms and conditions set
forth herein. Unless sooner terminated as provided in Section 5.3 hereof, the
term of your employment shall commence on the Start Date and continue for one
year from the Start Date. Subject to Section 5.3 hereof, your term of employment
shall be extended automatically without further action by either party for
additional one year periods, unless, not later than ninety (90) days prior to
the end of any such term (including any prior extension thereof), you or the
Company provides to the other notice in writing of an intention not to renew
this Agreement. Upon notice of non-extension, your employment hereunder shall
terminate on the close of business on the last day of the applicable one year
term.

                  5.3 TERMINATION. The term of your employment shall terminate
earlier than as provided in Section 5.2 hereof upon the earliest to occur of:
(i) your voluntary resignation; (ii) termination by reason of your disability or
death, or (iii) a termination by the Company with or without Cause.

                  5.4 VOLUNTARY TERMINATION. If you terminate your employment at
any time you shall not be entitled to severance pay, pay in lieu of notice or
any other such compensation other than payment of accrued salary and vacation
through the date of termination and such other benefits as expressly required in
such event by applicable law or the terms of applicable benefit plans. The
continued vesting of the Option shall cease on the termination date, and your
right to exercise any vested portion of the Option shall be governed by the
terms of the Equity Plan and the corresponding stock option agreement.

                  5.5 TERMINATION FOR CAUSE, DEATH OR DISABILITY. If the Company
terminates your employment at any time for Cause (as defined below) or if your
employment is terminated by reason of your death or disability (defined as the
inability, in the opinion of a qualified physician acceptable to the Company, to
perform the requirements of your position with the Company because of any
disease or condition for a continuous period of more than 90 days) your salary
shall cease on the date of termination and you shall not be entitled to

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severance pay, pay in lieu of notice or any other such compensation other than
payment of accrued salary and vacation through the date of termination and such
other benefits as expressly required in such event by applicable law or the
terms of applicable benefit plans. In the event of your death, payment of
accrued salary and vacation, if any exists at time of termination, will be paid
to your estate. The continued vesting of the Option shall cease on the
termination date, and your right to exercise any vested portion of Option shall
be governed by the terms of the Equity Plan and the corresponding stock option
agreement.

                  5.6 SEVERANCE BENEFITS FOR TERMINATION WITHOUT CAUSE. If the
Company terminates your employment without Cause (as defined below) before the
termination of this Agreement pursuant to Section 5.2 of this Agreement, you
will receive a lump sum severance payment (the "SEVERANCE PAYMENT") equal your
Base Salary in effect as of such termination date multiplied by the greater of
(i) a fraction, the numerator of which shall be the number of days remaining
until the expiration of the then-current term of this Agreement under Section
5.2 (without giving effect to any automatic extension thereof which has not
commenced on the date of notice), and the denominator of which shall be 365; and
(ii) one-fourth (1/4). The Severance Payment shall be paid within sixty (60)
calendar days following any such termination; provided, however, that the
Company's obligation to make the Severance Payment is expressly conditioned upon
your execution and timely delivery, without revocation, of a full general
release of claims (excluding claims for amounts payable under this Agreement),
in form and substance reasonably satisfactory to the Company, against the
Company and its officers, directors, employees and agents. Delivery of such
general release shall not be considered timely, and the Severance Payment shall
be extinguished, if not made by the later of (A) thirty (30) calendar days after
your termination, or (B) twenty-one (21) days after your receipt of a form such
general release to be executed.

                  5.7 TERMINATION FOR CAUSE. Notwithstanding any other provision
contained in this Agreement, the Company may terminate this Agreement
immediately, at any time, for Cause. For purposes of this Agreement, "CAUSE"
shall mean:

                           (i) any willful breach or habitual neglect of your
                  material duties (other than due to a disability or death) that
                  you are required to perform under the terms of this Agreement
                  or the Confidentiality Agreement;

                           (ii) your conviction for committing (A) a felony, (B)
                  a fraud or act of dishonesty that results in material harm to
                  the Company, (C) financial impropriety, or (D) an act of moral
                  turpitude;

                           (iii) your knowing or deliberate violation of any
                  requirement of the Sarbanes-Oxley Act of 2002 or other
                  material provisions of the federal securities laws; or

                           (iv) your failure to obey the lawful and reasonable
                  direction of the Board, or breach of any fiduciary duty owed
                  by you to the Company or its shareholders, in such a way that
                  has had or will have a direct, substantial and adverse effect
                  on the business, finances or reputation of the Company.

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                  Notwithstanding the foregoing, if there exist (without regard
to this and the next succeeding sentence) events or conditions that constitute
Cause under subsection (i) or (iv) above, the Board shall promptly notify you in
writing of such events or conditions, in reasonable detail, including, where
applicable and to the extent practicable, specific examples of acts, omissions,
conduct, performance or other events or conditions which constitute Cause;
provided that no notice shall be required with respect to events that constitute
Cause under subsection (iv) above unless both a cure is reasonably probable and
no substantial and adverse effect has resulted. If such notice is required, you
shall have 30 days from the date such written notice is given to cure such
events or conditions and, if cured, such events or conditions shall not
constitute Cause hereunder. The Board shall make the final determination
regarding the existence of Cause and whether you have effectively cured the
events or conditions constituting Cause, subject to your right to dispute such
determinations in accordance with Section 7.5 hereof. The Company shall be
entitled to suspend your duties pending determination of the existence of Cause,
provided that any period of suspension shall not count toward the 30-day cure
period set forth above, and provided further, that the compensation and other
benefits provided herein shall continue to be paid and afforded to you during
such period.

                  5.8 POST-TERMINATION COOPERATION. During the period of your
employment (including periods of employment following the Employment Term) and
thereafter, you shall cooperate with the Company or any of its affiliates in any
internal investigation or administrative, regulatory or judicial proceeding as
reasonably requested by the Company (including, without limitation, your being
available to the Company upon reasonable notice for interviews and factual
investigations, appearing at the Company's request to give testimony without
requiring service of a subpoena or other legal process, volunteering to the
Company all pertinent information and turning over to the Company all relevant
documents which are or may come into your possession, all at times and on
schedules that are reasonably consistent with your other permitted activities
and commitments). In the event the Company requires your cooperation in
accordance with this Paragraph 5.8 after the period of your employment with the
Company, the Company shall, at your election, pay you at a daily rate equal to
0.4 percent of your Base Salary, and shall reimburse you for reasonable travel
and other out-of-pocket expenses (including lodging and meals), upon submission
of receipts, provided, however, that a reasonable number of days of said
post-termination consultation shall be unpaid to facilitate any necessary
transitions, but shall include reimbursement of all reasonable expenses as noted
herein.

         6. PARACHUTE PAYMENTS.

                  If any payment or benefit you would receive from the Company
or otherwise ("PAYMENT") would (i) constitute a "parachute payment" within the
meaning of Paragraph 280G of the Internal Revenue Code (the "Code"), and (ii)
but for this sentence, be subject to the excise tax imposed by Paragraph 4999 of
the Code (the "EXCISE TAX"), then such Payment shall be equal to the largest
portion of the Payment that would result in no portion of the Payment being
subject to the Excise Tax. An accounting firm engaged by the Company for general
audit purposes and reasonably acceptable to you shall perform the foregoing
calculation. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder.

                                      -5-

<PAGE>

                  The accounting firm engaged to make the determinations
hereunder shall provide its calculations, together with detailed supporting
documentation, to you and the Company at least thirty (30) calendar days prior
to the date on which your right to a Payment is triggered or such other time as
requested by you or the Company. If the accounting firm determines that no
Excise Tax is payable with respect to a Payment, either before or after the
application of the Reduced Amount, it shall furnish you and the Company with a
letter with its conclusions as to why no Excise Tax will be imposed with respect
to such Payment. Any good faith determinations of the accounting firm made
hereunder shall be final, binding and conclusive upon you and the Company.

         7. GENERAL PROVISIONS.

                  7.1 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
the validity of any other provision or the validity of such provision in any
other jurisdiction, and such invalid, illegal or unenforceable provision will be
reformed, construed and enforced in such jurisdiction so as to render it valid,
legal, and enforceable consistent with the intent of the parties insofar as
possible.

                  7.2 ENTIRE AGREEMENT. This Agreement, its exhibits, together
with any agreement entered into between you and the Company in connection with
the grant of the Option constitutes the entire and exclusive agreement between
you and the Company, and it supersedes any prior agreement, promise,
representation, or statement, written or otherwise, between you and the Company
with regard to this subject matter. It is entered into without reliance on any
promise, representation, statement or agreement other than those expressly
contained or incorporated herein, and it cannot be modified or amended except in
a writing signed by you and a duly authorized officer of the Company.

                  7.3 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind
and inure to the benefit of and be enforceable by you, the Company and your and
its respective successors, assigns, heirs, executors and administrators, except
that you may not assign any of your duties hereunder and you may not assign any
of your rights hereunder without the written consent of the Company.

                  7.4 GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of California as applied to contracts made and to be performed entirely
within California, without regard to its conflicts of law principles.

                  7.5 DISPUTE RESOLUTION. Except as the parties may otherwise
agree in writing, all claims, demands, causes of action or controversies - past,
present or future - that you may have against the Company, its officers,
directors, employees, independent contractors or agents - past, present or
future - or that the Company may have against you, shall be resolved by final
and binding arbitration pursuant to the provisions of EXHIBIT A hereto. PLEASE
READ CAREFULLY. BY SIGNING THIS AGREEMENT, YOU ARE GIVING UP YOUR RIGHT TO FILE
A LAWSUIT IN A COURT OF LAW AND TO HAVE YOUR CASE HEARD BY A JUDGE AND/OR JURY.

                                      -6-

<PAGE>

                  7.6 NOTICE. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by overnight courier, U.S.
registered mail or certified mail, return receipt requested and postage prepaid.
Mailed notices shall be addressed to you at the home address you most recently
communicated in writing to the Company. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

                  7.7 MODIFICATIONS AND WAIVERS. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed both by you and by an authorized
officer of the Company (other than you).

                  7.8 IRC SECTION 409A. To the extent that this Agreement or any
part thereof is deemed to be a nonqualified deferred compensation plan subject
to Section 409A of the Code and the regulations and guidance promulgated
thereunder, (i) the provisions of this Agreement shall be interpreted in a
manner to comply in good faith with Section 409A of the Code, and (ii) the
parties hereto agree to amend this Agreement, if necessary, for the purposes of
complying with Section 409A of the Code promptly upon issuance of any
regulations or guidance thereunder.

                                  [END OF TEXT]

                                      -7-

<PAGE>

To indicate your acceptance of the Company's offer of continued employment,
please sign and date this Agreement in the space provided below and return it to
me.

                                           Sincerely,

                                           MICROISLET, INC.

                                          By:    /S/ KEVIN A. HAINLEY
                                                 -------------------------------

                                          Title: INTERIM CHIEF FINANCIAL OFFICER
                                                 -------------------------------

                                          Date:  MARCH 28, 2006
                                                 -------------------------------

ACKNOWLEDGED AND AGREED:

/s/ James R. Gavin III, M.D., PH.D.
-----------------------------------
James R. Gavin III, M.D., Ph.D.

Date:  MARCH 28, 2006
       --------------

EXHIBIT A - Arbitration

                                      -8-

<PAGE>

                                    EXHIBIT A

                                   ARBITRATION

         The provisions of this Exhibit A are incorporated into and made a part
of the Employment Agreement dated January 20, 2006 by and between MicroIslet,
Inc. and James R. Gavin M.D., PhD. (the "Agreement") Capitalized terms used and
not defined herein have the same meaning as set forth in the Agreement.

                           (a) WAIVER OF RIGHT TO TRIAL. The Company and you
(the "PARTIES") understand that they are waiving any right they may have to file
a lawsuit or other civil action or proceeding against each other, and are
voluntarily waiving any right they may have to resolve disputes between the
parties through trial by judge or jury. Any and all claims or disputes arising
out of or relating to the employment relationship and/or the termination of the
employment relationship between the parties that are not resolved by their
mutual agreement shall be resolved exclusively by confidential, final and
binding arbitration. The parties have the right to be represented by counsel in
any arbitration proceeding commenced pursuant to the Agreement.

                           (b) CLAIMS SUBJECT TO ARBITRATION. Except as the
parties may otherwise agree in writing, all claims, demands, causes of action or
controversies - past, present or future - that you may have against the Company,
its officers, directors, employees, independent contractors or agents - past,
present or future - or that the Company may have against you (collectively the
"CLAIMS") shall be resolved by final and binding arbitration. The Claims include
but are not limited to any claims or disputes in connection with: (1) the
recruiting and hiring process; (2) the employment relationship between the
parties; (3) the termination of the employment relationship; (4) any contracts
between the parties; or (5) any and all Claims arising under any federal, state
or local law or regulation, including, but not limited to, those relating to
employment, compensation, wages, stock options, benefits (except where an
employee benefit or pension plan specifies that its claims procedure shall
culminate in a dispute resolution procedure different from this one),
discrimination, harassment, wrongful termination, wrongful demotion, breach of
contract, breach of the implied covenant of good faith and fair dealing,
interference with contract or prospective economic advantage, intentional or
negligent infliction of emotional distress, violation of public policy,
retaliation, fraud, promissory estoppel, defamation, unfair business practices,
invasion of privacy, negligence, assault or battery. (The Claims for
discrimination and harassment include but are not limited to those based on
race, color, sex, sexual orientation, religion, national origin, ancestry,
citizenship, age, marital status, registered domestic partner status, physical
disability, pregnancy, mental disability, medical condition, veteran status, and
any claims arising under the California Fair Employment and Housing Act, the
California Family Rights Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Equal Pay Act, the Civil Rights Act, the
Family and Medical Leave Act, the Employee Retirement Income Security Act of
1974, Title VII of the Civil Rights Act of 1964 as amended, the California Labor
Code, and any other local, state, federal or common law concerning employment or
employment discrimination or harassment.)

                  This Exhibit A does not affect your right to seek
administrative relief from the United States Equal Employment Opportunity
Commission or the California Department of Fair Employment and Housing. Further,
this Exhibit A does not cover claims you may have for workers' compensation,

                                      -9-

<PAGE>

state disability benefits, unemployment compensation benefits or disputes
covered by a collective bargaining agreement. Nothing in this Exhibit A shall
prohibit or limit the parties from seeking provisional relief pursuant to
California Code of Civil Procedure ss. 1281.8 or any similar statute of an
applicable jurisdiction.

                           (c) THE ARBITRATION PROCESS. Either you or the
Company may commence the arbitration process by filing a written demand for
arbitration with the American Arbitration Association ("AAA"), and sending a
copy by personal delivery or certified mail to the other party. If the Company
initiates arbitration, it will send the notice to your last known home address
as reflected in the Company's personnel records. If you initiate arbitration,
you will send notice to the Company's Human Resources department. Demands for
arbitration must be made within the applicable statute of limitations.

                  Any arbitration between the parties shall be conducted
pursuant to the AAA procedures for the arbitration of employment disputes that
are in effect at the time of the commencement of arbitration, except as
otherwise agreed in writing by the parties. The arbitration shall be conducted
in the County of San Diego, California, unless the parties mutually agree to
conduct the arbitration elsewhere. The arbitration shall be conducted by a
neutral Arbitrator (the "ARBITRATOR") selected by mutual agreement of the
parties, or if no mutual agreement can be reached, selected from a list of
arbitrators provided by AAA, as specified in the AAA's procedures. The parties
will cooperate in scheduling the arbitration proceedings. Absent a subsequent
contrary written agreement between the parties, the arbitration hearing shall be
scheduled for a date that is within 180 days after the commencement of the
arbitration. As for discovery, the parties will comply with California Code of
Civil Procedure ss. 1283.05 or any other discovery required by California law.
Should a non-party witness refuse to comply with a subpoena issued by the
Arbitrator and the Arbitrator is unable to enforce compliance with the subpoena,
the parties agree to submit the subpoena to a court of competent jurisdiction
for enforcement of the subpoena.

                  The Arbitrator shall apply the applicable substantive law, and
the applicable law of remedies, for the State of California, or federal law, or
both. The Arbitrator is without jurisdiction to apply any different substantive
law or law of remedies. The Arbitrator is authorized to award any remedies
allowed by applicable law. The Arbitrator cannot modify any of the provisions of
the Agreement. The Arbitrator shall issue a written and signed statement of the
basis of its decision, including findings of fact and conclusions of law. The
statement and award, if any, shall be based on the terms of the Agreement, the
findings of fact and the statutory and decisional case law applicable to this
dispute. Proceedings to confirm, correct or vacate an award or decision rendered
by the Arbitrator will be controlled by and conducted in conformity with
applicable state law, including California Code of Civil Procedure ss. 1285.8,
et seq. The arbitration shall be final and binding upon the parties, except as
provided in this Exhibit A. Neither the parties nor the Arbitrator may disclose
the existence, content, or results of any arbitration without the prior written
consent of both parties.

                                      -10-

<PAGE>

                           (d) ARBITRATION FEES, COSTS AND AWARDS. If you
initiate arbitration against the Company, you must pay a filing fee to AAA equal
to the current filing fee in the appropriate court had your claim been brought
there, and the Company shall bear the remaining costs of the arbitration forum,
including Arbitrator fees. If the Company initiates arbitration against you, the
Company shall bear the entire cost of the arbitration forum, including
Arbitrator fees. (Such costs do not include costs of attorneys, discovery,
expert witnesses, or other costs which you would have been required to bear had
the matter been filed in a court.) The Arbitrator may award attorneys' fees and
costs to the prevailing party as authorized by law. If there is any dispute as
to whether the Company or you is the prevailing party, the Arbitrator will
decide that issue. Any postponement or cancellation fee imposed by the
arbitration service will be paid by the party requesting the postponement or
cancellation, unless the Arbitrator determines that such fee would cause undue
hardship on the party. At the conclusion of the arbitration, each party agrees
to promptly pay any arbitration award imposed against that party.

                           (e) FAILURE TO USE ARBITRATION PROCESS. Should either
party pursue any dispute subject to this Exhibit A by any method other than set
forth herein, the responding party shall be entitled to recover from the
initiating party all damages, costs, expenses and attorneys' fees incurred as a
result of appearing in, dismissing, staying or litigating such action.

                           (f) COMPLETE AGREEMENT. This Exhibit A is the
complete agreement of the parties on the subject of arbitration of claims or
disputes. This Exhibit A supersedes any prior or contemporaneous oral or written
understanding on the subject. No party is relying on any representations, oral
or written, on the subject of the effect, enforceability or meaning of this
Exhibit A, except as specifically set forth in this Exhibit A.

PLEASE READ CAREFULLY. BY SIGNING THE AGREEMENT, YOU ARE GIVING UP YOUR RIGHT TO
FILE A LAWSUIT IN A COURT OF LAW AND TO HAVE YOUR CASE HEARD BY A JUDGE AND/OR
JURY.

                                      -11-

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