Document:

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EXHIBIT 4.2

                    ADVANCED REFRIGERATION TECHNOLOGIES, INC.
                             2002 STOCK OPTION PLAN

         1. PURPOSES OF THE PLAN. There of this Stock Option Plan (the "Plan")
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.

         2. DEFINITIONS. As used herein, the following definitions shall apply:

                  (a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan in accordance with Section 4 hereof.

                  (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.

                  (c) "Board" means the Board of Directors of the Company.

                  (d) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (e) "Committee" means a committee of Directors appointed by
the Board in accordance with Section 4 hereof.

                  (f) "Common Stock" means the Common Stock of the Company.

                  (g) "Company" means Advanced Refrigeration Technologies, Inc.,
a California corporation.

                  (h) "Consultant" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services to
such entity.

                  (i) "Director" means a member of the Board of Directors of the
Company.

                  (j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.

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                  (k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider (defined below) shall not cease to be an Employee in the case
of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. For purposes of Incentive Stock Options, no such leave may exceed
three months, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.

                  (l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  (m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                           (i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

                           (ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination;
or

                           (iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.

                  (n) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

                  (o) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

                  (p) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

                  (q) "Option" means a stock option granted pursuant to the
Plan.

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                  (r) "Option Grant" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Grant is subject to the terms and conditions of the
Plan.

                  (s) "Option Exchange Program" means a program whereby
outstanding Options are exchanged for Options with a lower exercise price.

                  (t) "Optioned Stock" means the Common Stock subject to an
Option.

                  (u) "Optionee" means the holder of an outstanding Option
granted under the Plan.

                  (v) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (w) "Plan" means this Advanced Refrigeration Technologies,
Inc. 2002 Stock Option Plan.

                  (x) "Section 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.

                  (y) "Service Provider" means an Employee, Director or
Consultant.

                  (z) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.

                  (aa) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.

         3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 480,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock. If an Option expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of an Option, shall not be returned to the Plan and shall not
become available for future distribution under the Plan.

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         4. ADMINISTRATION OF THE PLAN.

                  (a) Administrator. The Plan shall be administered by the Board
or a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.

                  (b) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:

                           (i) to determine the Fair Market Value;

                           (ii) to select the Service Providers to whom Options
may from time to time be granted hereunder;

                           (iii) to determine the number of Shares to be covered
by each such award granted hereunder;

                           (iv) to approve forms of Option Grants for use under
the Plan;

                           (v) to determine the terms and conditions, of any
Option granted hereunder. Such terms and conditions include, but are not limited
to, the exercise price, the time or times when Options may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

                           (vi) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(e) instead of
Common Stock;

                           (vii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option has declined since the date the Option was granted;

                           (viii) to initiate an Option Exchange Program;

                           (ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

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                           (x) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;

                           (xi) to construe and interpret the terms of the Plan
and awards granted and pursuant to the Plan.

                  (c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.

         5. ELIGIBILITY.

                  (a) Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

                  (b) Each Option shall be designated in the Option Grant as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

                  (c) Neither the Plan nor any Option shall confer upon any
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate such relationship at any time,
with or without cause.

         6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.

         7. TERM OF OPTION. The term of each Option shall be stated in the
Option Grant; provided, however, that the term shall be no more than ten (10)
years from the date of grant thereof. In the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Grant.

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         8. OPTION EXERCISE PRICE AND CONSIDERATION.

                  (a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

                           (i) In the case of an Incentive Stock Option

                                    (A) granted to an Employee who, at the time
of grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.

                                    (B) granted to any other Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.

                           (ii) In the case of a Nonstatutory Stock Option

                                    (A) granted to a Service Provider who, at
the time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.

                                    (B) granted to any other Service Provider,
the per Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.

                           (iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant to
a merger or other corporate transaction.

                  (b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (l) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

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         9. EXERCISE OF OPTION.

                  (a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Grant. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be tolled during any unpaid leave of absence. An Option may not
be exercised for a fraction of a Share.

                  An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Grant) from the person entitled to exercise the Option, and (ii) full payment
for the Shares with respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Grant and the Plan. Shares issued upon
exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 11 of the Plan.

                  Exercise of an Option in any manner shall result in a decrease
in the number of Shares thereafter available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.

                  (b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Grant (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Grant). In the absence of a specified time in the
Option Grant, the Option shall remain exercisable for three (3) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

                  (c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Grant (of at least six (6) months) to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term
of such Option as set forth in the Option Grant). In the absence of a specified

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time in the Option Grant, the Option shall remain exercisable for twelve (12)
months following the Optionee's termination. If on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

                  (d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Grant (or at least six (6) months) to the extent that the Option
is vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Grant) by the Optionee's estate
or by a person who acquires the right to exercise the Option by bequest or
inheritance. In the absence of a specified time in the Option Grant, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

                  (e) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

         10. NON-TRANSFERABILITY OF OPTIONS. The Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
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.

         11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.

                  (a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no

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adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.

                  (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.

                  (c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option shall 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 shall
fully vest in and have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option shall be fully exercisable for a period of fifteen (15) days from the
date of such notice, and the Option shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option or right confers
the right to purchase or receive, for each Share of Optioned Stock subject to
the Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.

         12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee to whom an Option is
so granted within a reasonable time after the date of such grant.

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         13. AMENDMENT AND TERMINATION OF THE PLAN.

                  (a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.

                  (b) Shareholder Approval. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

                  (c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

         14. CONDITIONS UPON ISSUANCE OF SHARES.

                  (a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

                  (b) Investment Representations. As a condition to the exercise
of an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

         15. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

         16. RESERVATION OF SHARES. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

         17. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.

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         18. INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options outstanding, and, in the case of an individual
who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.

                                       11<PAGE>

                                                                    EXHIBIT 10.1
                                  120 DAY NOTE

AMOUNT $200,000                                                     MAY 12, 2003

                  For value received, MicroIslet, Inc., a Nevada corporation,
promises to pay to John J. Hagenbuch, Trustee U/D/T dated September 13, 1995
("Lender") at 353 Sacramento Street, 21st Floor, San Francisco, California
94111, the sum of $200,000, on September 9, 2003; together with interest on the
unpaid principal amount at a fixed annual rate of 4.25%. This note may be repaid
at par at any time prior to maturity in whole or in part in multiples of not
less than $25,000. Accrued interest shall be paid, with respect to any principal
amount prepaid, upon such prepayment, and with respect to the balance, upon
maturity.

                  As additional consideration for making this advance,
MicroIslet, Inc. shall issue Lender a 10-year warrant to purchase 50,000 shares
of MicroIslet, Inc. common stock at a price equal to the closing price of
MicroIslet, Inc. common stock as reported on the OTC Bulletin Board on the day
that the Lender first makes the loan.

                  This Note evidences an advance that Lender made to MicroIslet,
Inc. related to its need for additional working capital.

                  This Note may not be assigned.

                  This Note and all agreements (included the warrant referred to
above) which either are now or which shall become agreements between Lender and
MicroIslet, Inc. are hereby expressly limited so that in no contingency or event
whatever, whether by reason of deferment or advancement of the indebtedness
represented by this Note, acceleration of the maturity date of this Note, or
otherwise, shall the amount paid or agreed to be paid to Lender for the use,
forbearance or detention of the indebtedness evidenced hereby exceed the maximum
amount of interest permissible under applicable law. If at any time, from any
circumstance whatsoever, fulfillment of any provision of this Note or any other
agreement between Lender and MicroIslet, Inc. shall result in or involve
payments or performance which would exceed the maximum legal interest rate,
then, ipso facto, the obligation to be fulfilled shall be reduced so as not to
exceed said maximum legal interest rate.

                           Upon the occurrence of any of the events set forth
below, all principal, interest and any other obligation or amounts due pursuant
to this note (the "Obligations") shall automatically, become immediately due and
payable to the Lender, in each case, without presentment, demand, protest, or
other notice of any kind, all of which are expressly waived by MicroIslet, Inc.:

     MicroIslet, Inc. fails to pay the Obligations when the Obligations become
     due and payable.

     The entry of a decree or order by a court of competent jurisdiction
     adjudging MicroIslet, Inc. a bankrupt or insolvent, or approving as
     properly filed a petition seeking a reorganization arrangement, adjustment,
     or composition of or in respect of MicroIslet, Inc. under the federal
     Bankruptcy Act or any other applicable federal or state law, or appointing
     a receiver, liquidator, assignee, or trustee of MicroIslet, Inc., or any
     substantial part of its property, or ordering the winding up or liquidation
     of its affairs, and the continuance of the decree or order unstayed and in
     effect for a period of 45 consecutive days.

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     The institution by MicroIslet, Inc. of proceedings to be adjudicated a
     bankrupt or insolvent, or the consent by MicroIslet, Inc. to the
     institution of bankruptcy or insolvency proceedings against it, or the
     filing by MicroIslet, Inc. of a petition or answer or consent seeking
     reorganization or relief under the federal Bankruptcy Act or any other
     applicable federal or state law, or the consent by MicroIslet, Inc. to the
     filing of any petition or to the appointment of a receiver, liquidator,
     assignee, or trustee of MicroIslet, Inc., or of any substantial part of its
     property, or the making by MicroIslet, Inc. of an assignment for the
     benefit of creditors, or the admission by MicroIslet, Inc. in writing of
     its inability to pay its debts generally as they become due, or the taking
     of corporate action by MicroIslet, Inc. in furtherance of any of the
     foregoing actions.

                           The principal of and interest on this Note shall be
payable in lawful money of the United States of America in immediately available
funds and without set-off or counterclaim, free and clear of and without
deduction for any present or future taxes, restrictions or conditions of any
nature.

                           MicroIslet, Inc. waives diligence, presentment,
protest and notice of protest, dishonor and nonpayment of this Note, and
expressly agrees that this Note, or any payment under it, may be extended and
any security may be accepted, released or substituted by the Lender from time to
time without in any way affecting the liability of MicroIslet, Inc.

                           If the indebtedness represented hereby or any part
hereof is collected at law or in equity or in bankruptcy, receivership or other
judicial proceeding, or if this Note is placed in the hands of attorneys for
collection after default, MicroIslet, Inc. agrees to pay, in addition to the
principal and interest payable hereon, attorneys' and collection fees incurred
by the Lender.

                           This Note shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts to
be performed wholly within California.

                                       John J. Hagenbuch, Trustee U/D/T dated
                                       September 13, 1995

                                       By:     /s/ John J. Hagenbuch
                                               ---------------------------------
                                               John J. Hagenbuch, Trustee

                                       MicroIslet, Inc., a Nevada corporation

                                       By:     /s/ John F. Steel IV
                                               ---------------------------------
                                               John F. Steel IV, Chief Executive
                                               Officer

                                       2

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