Exhibit
10.2


 


THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON
STOCK ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH
SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SEC
RULE 144.


 


WARRANT
TO PURCHASE COMMON STOCK

OF

TRESTLE HOLDINGS, INC.


 


September 26,
2003


 


THIS CERTIFIES THAT,
for value received by Trestle Holdings,
Inc., a Delaware
corporation (the “Company”), Michael Doherty, or his permitted
registered assigns (“Holder”), is entitled, subject to the terms and
conditions of this Warrant, at any time or from time to time after the Exercise
Date of this Warrant, and before the Expiration Date, to purchase from the
Company the Warrant Shares, at an exercise price per share equal to the
Purchase Price.  Both the number of
shares of Common Stock purchasable upon exercise of this Warrant and the
Purchase Price are subject to adjustment and change as provided herein.


 


1.             CERTAIN
DEFINITIONS.  As used in this
Warrant the following terms shall have the following respective meanings:


 


1.1           “Common Stock”
means the Common Stock of the Company and any other securities at any time
receivable or issuable upon exercise of this Warrant.


 


1.2           “Effective Date”
means September 26, 2003.


 


1.3           “Exercise Date”
means 6:30 a.m. Pacific Time on May 5, 2004.


 


1.4           “Expiration Date”
means 5:00 p.m. Pacific Time on the fifth (5th) anniversary of the
Effective Date.


 


1.5           “Fair Market Value”
of a share of Common Stock as of a particular date means:


 


(a)           If traded on a
securities exchange or the Nasdaq National Market, the Fair Market Value shall
be deemed to be the average of the closing prices of the Common Stock of the
Company on such exchange or market over the five (5) trading days ending
immediately prior to the applicable date of valuation;


 


(b)           If actively traded
over-the-counter, the Fair Market Value shall be deemed to be the average of
the closing bid prices over the thirty (30)-day period ending immediately prior
to the applicable date of valuation; and


 


(c)           If there is no active
public market, the Fair Market Value shall be the value thereof, as agreed upon
by the Company and the Holder; provided, however, that if the


 

















 


Company and the Holder
cannot agree on such value, such value shall be determined by an independent
valuation firm experienced in valuing businesses such as the Company and
jointly selected in good faith by the Company and the Holder.  Fees and expenses of the valuation firm
shall be paid for by the Company.


 


1.6           “Fully Diluted Basis”
means all of the Company’s issued and outstanding shares of common stock of the
Company, all common stock issued or issuable under or pursuant to all
convertible and derivative securities then outstanding.


 


1.7           “Purchase Price”
means $    , being the average price of a share of the
Common Stock on the Over-The-Counter Bulletin Board over the fifteen (15)
consecutive trading days immediately preceding the Effective Date, to be paid
by Holder upon exercise of this Warrant.


 


1.8           “Registered Holder”
means any Holder in whose name this Warrant is registered upon the books and
records maintained by the Company.


 


1.9           “Warrant” as
used herein, shall include this Warrant and any warrant delivered in
substitution or exchange therefor as provided herein.


 


1.10         “Warrant Shares”
means that number of shares of Common Stock of the Company that is equal to ten percent (10%) of that number of the
issued and outstanding shares of capital stock of the Company, determined on a
Fully Diluted Basis, as of the Effective Date, as may be adjusted from time to
time pursuant to the terms hereof.


 


2.             EXERCISE OF WARRANT.


 


2.1           Payment.  Subject to compliance with the terms and
conditions of this Warrant and applicable securities laws, this Warrant may be
exercised, in whole or in part at any time or from time to time, from and after
the Exercise Date and on or before the Expiration Date by the delivery
(including, without limitation, delivery by facsimile) of the form of Notice of
Exercise attached hereto as  Exhibit A
(the “Notice of Exercise”), duly executed by the Holder, at the
principal office of the Company, and as soon as practicable after such date,
surrendering


 


(a)           this Warrant at the
principal office of the Company, and


 


(b)           payment, (i) in
cash (by check) or by wire transfer, (ii) by cancellation by the Holder of
indebtedness of the Company to the Holder; or (iii) by a combination of
(i) and (ii), of an amount equal to the product obtained by multiplying the
number of shares of Common Stock being purchased upon such exercise by the then
effective Purchase Price (the “Exercise Amount”).


 


2.2           Net Issue Exercise.
In lieu of the payment methods set forth in Section 2.1(b) above,
the Holder may elect to exchange all or some of this Warrant for shares of
Common Stock equal to the value of the amount of the Warrant being exchanged on
the date of exchange.  If Holder elects
to exchange this Warrant as provided in this Section 2.2, Holder
shall tender to the Company the Warrant for the amount being exchanged, along
with written notice of Holder’s election to exchange some or all of the
Warrant, and the Company shall issue to Holder the number of shares of the
Common Stock computed using the following formula:


 


	
  X =

  	
   

  	
  Y (A-B)

  
	
   

  	
   

  	
  A

  



 


	
  Where:   X =

  	
   

  	
  the number of shares of
  Common Stock to be issued to Holder.

  



 


2

















 


	
  Y =

  	
   

  	
  the number of shares of
  Common Stock purchasable under the amount of the Warrant being exchanged (as
  adjusted to the date of such calculation).

  
	
   

  	
   

  	
   

  
	
  A =

  	
   

  	
  the Fair Market Value
  of one share of the Common Stock.

  
	
   

  	
   

  	
   

  
	
  B =

  	
   

  	
  Purchase Price (as
  adjusted to the date of such calculation).

  



 


2.3           “Easy Sale” Exercise.  In lieu of the payment methods set forth in Section 2.1(b)
above, when permitted by law and applicable regulations (including Nasdaq and
NASD rules), the Holder may pay the Purchase Price through a “same day sale”
commitment from the Holder (and if applicable a broker-dealer that is a member
of the National Association of Securities Dealers (an “NASD Dealer”)),
whereby the Holder irrevocably elects to exercise this Warrant and to sell a
portion of the shares so purchased to pay the Purchase Price and the Holder
(or, if applicable, the NASD Dealer) commits upon sale (or, in the case of the
NASD Dealer, upon receipt) of such shares to forward the Purchase Price
directly to the Company.


 


2.4           Stock Certificates;
Fractional Shares.  As soon as
practicable on or after the date of any exercise of this Warrant, the Company
shall issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of whole shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share equal to such fraction of the current Fair Market Value of one whole
share of Common Stock as of such date of exercise.  No fractional shares or scrip representing fractional shares
shall be issued upon an exercise of this Warrant.


 


2.5           Partial Exercise;
Effective Date of Exercise.  In case
of any partial exercise of this Warrant, the Company shall cancel this Warrant
upon surrender hereof and shall execute and deliver a new Warrant of like tenor
and date for the balance of the shares of Common Stock purchasable
hereunder.  This Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date
of its surrender for exercise as provided above.  The person entitled to receive the shares of Common Stock issuable
upon exercise of this Warrant shall be treated for all purposes as the holder
of record of such shares as of the close of business on the date the Holder is
deemed to have exercised this Warrant.


 


2.6           Vesting.  Notwithstanding any portion of this Warrant
to the contrary, (a) Fifty Percent (50%) of the Warrants Shares shall vest on
the Exercise Date and the remaining Warrant Shares shall vest in equal monthly
installments at the end of each month following the Exercise Date over a period
of twelve (12) months, and (b) in the event that (i) Holder voluntarily ceases
providing services to the Company in the absence of the Company’s material
breach of that certain Non-Exclusive Consulting Agreement dated as of the
Effective Date (the “Consulting Agreement”), by and between Holder and the
Company, or (ii) the Company terminates Holder’s engagement under the
Consulting Agreement for Cause, then any and all outstanding Warrant Shares
that are not vested and exercisable at the time of such cessation or termination,
as applicable, shall expire at the close of business on the date of such
cessation or termination, and Holder shall thereafter have no right to exercise
or otherwise acquire such portion of the Warrant Shares.


 


3.             VALID
ISSUANCE; TAXES.  All shares
of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and non-assessable, and the Company shall pay all taxes and
other governmental charges that may be imposed in respect of the issue or
delivery thereof.  The Company shall not
be required to pay any tax or other charge imposed in connection with any
transfer involved in the issuance of any certificate for shares of Common Stock
in any name other than that of the Registered Holder of this Warrant, and in
such case the Company shall not be required to issue or deliver any stock
certificate or security until such tax or other charge has


 


3

















 


been paid, or it has been
established to the Company’s reasonable satisfaction that no tax or other
charge is due.


 


4.             ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.  The number of shares of Common Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities or property receivable or issuable upon exercise of this Warrant)
and the Purchase Price are subject to adjustment upon occurrence of the
following events:


 


4.1           Adjustment for Stock
Splits, Stock Subdivisions or Combinations of Shares.  The Purchase Price of this Warrant shall be
proportionally decreased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the
time issuable upon exercise of this Warrant) shall be proportionally increased
to reflect any stock split or subdivision of the Company’s Common Stock.  The Purchase Price of this Warrant shall be
proportionally increased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the
time issuable upon exercise of this Warrant) shall be proportionally decreased
to reflect any combination of the Company’s Common Stock.


 


4.2           Adjustment for
Dividends or Distributions of Stock or Other Securities or Property.  In case the Company shall make or issue, or
shall fix a record date for the determination of eligible holders entitled to
receive, a dividend or other distribution with respect to the Common Stock (or
any shares of stock or other securities at the time issuable upon exercise of
the Warrant) payable in (a) securities of the Company or (b) assets (excluding
cash dividends paid or payable solely out of retained earnings), then, in each
such case, the Holder of this Warrant on exercise hereof at any time after the
consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Common Stock (or such
other stock or securities) issuable on such exercise prior to such date, and
without the payment of additional consideration therefor, the securities or such
other assets of the Company to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and all such additional securities or other
assets distributed with respect to such shares as aforesaid during such period
giving effect to all adjustments called for by this Section 4.


 


4.3           Reclassification.  If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which
purchase rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to
such reclassification or other change, and the Purchase Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this Section 4.  No adjustment shall be made pursuant to this
Section 4.3 upon any conversion or redemption of the Common Stock
which is the subject of Section 4.5.


 


4.4           Adjustment for
Capital Reorganization, Merger or Consolidation.  In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for herein), or any merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all the assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger,


 


4

















 


consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 4.  The foregoing provisions of this Section 4.4
shall similarly apply to successive reorganizations, consolidations, mergers,
sales and transfers and to the stock or securities of any other corporation
that are at the time receivable upon the exercise of this Warrant.  If the per-share consideration payable to
the Holder hereof for shares in connection with any such transaction is in a
form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company’s Board of
Directors.  In all events, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end
that the provisions of this Warrant shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.


 


4.5           Conversion of Common
Stock.  In case all or any portion
of the authorized and outstanding shares of Common Stock of the Company are
redeemed or converted or reclassified into other securities or property
pursuant to the Company’s Certificate of Incorporation or otherwise, or the
Common Stock otherwise ceases to exist, then, in such case, the Holder of this
Warrant, upon exercise hereof at any time after the date on which the Common
Stock is so redeemed or converted, reclassified or ceases to exist (the “Termination
Date”), shall receive, in lieu of the number of shares of Common Stock that
would have been issuable upon such exercise immediately prior to the
Termination Date, the securities or property that would have been received if
this Warrant had been exercised in full and the Common Stock received thereupon
had been simultaneously converted immediately prior to the Termination Date,
all subject to further adjustment as provided in this Warrant.  Additionally, the Purchase Price shall be
immediately adjusted to equal the quotient obtained by dividing (x) the
aggregate Purchase Price of the maximum number of shares of Common Stock for
which this Warrant was exercisable immediately prior to the Termination Date by
(y) the number of shares of Common Stock of the Company for which this Warrant
is exercisable immediately after the Termination Date, all subject to further
adjustment as provided herein.


 


5.             CERTIFICATE AS TO ADJUSTMENTS.  In each case of any adjustment in the Purchase
Price, or number or type of shares issuable upon exercise of this Warrant, the
Chief Financial Officer or Controller of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price.  The Company shall promptly send
(by facsimile and by either first class mail, postage prepaid or overnight
delivery) a copy of each such certificate to the Holder.


 


6.             LOSS OR MUTILATION.  Upon receipt of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory
to it, and (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will execute and deliver in lieu thereof a new Warrant of
like tenor as the lost, stolen, destroyed or mutilated Warrant.


 


7.             RESERVATION OF COMMON STOCK.  The Company hereby covenants that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of shares of Common Stock or other shares of capital stock
of the Company as are from time to time issuable upon exercise of this Warrant
and, from time to time, will take all steps necessary to amend its Certificate
of Incorporation to provide sufficient reserves of shares of Common Stock
issuable upon exercise of this Warrant. 
All such shares shall be duly authorized, and when issued upon such
exercise, shall be validly issued, fully paid and non-assessable, free and
clear


 


5

















 


of all liens, security
interests, charges and other encumbrances or restrictions on sale and free and
clear of all preemptive rights, except encumbrances or restrictions arising
under federal or state securities laws. Issuance of this Warrant shall
constitute full authority to the Company’s Officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of this Warrant.


 


8.             TRANSFER AND EXCHANGE.  Subject to the terms and conditions of this
Warrant and compliance with all applicable securities laws, this Warrant and
all rights hereunder may be transferred to any Registered Holder’s parent,
subsidiary or affiliate, or, if the Registered Holder is a partnership, to any
partner of such Registered Holder, in whole or in part, on the books of the
Company maintained for such purpose at the principal office of the Company
referred to above, by the Registered Holder hereof in person, or by duly
authorized attorney, upon surrender of this Warrant properly endorsed and upon
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer.  Upon any permitted
partial transfer, the Company will issue and deliver to the Registered Holder a
new Warrant or Warrants with respect to the shares of Common Stock not so
transferred.  Each taker and holder of
this Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant,
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is
duly registered on the books of the Company, the Company may treat the
Registered Holder hereof as the owner for all purposes.


 


9.             RESTRICTIONS ON TRANSFER.  The Holder, by acceptance hereof, agrees
that, absent an effective registration statement filed with the Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as
amended (the “Securities Act”) covering the disposition or sale of this
Warrant or the Common Stock issued or issuable upon exercise hereof, as the
case may be, and registration or qualification under applicable state
securities laws, such Holder will not sell, transfer, pledge, or hypothecate
any or all of this Warrant or such Common Stock, as the case may be, unless
either (A)(i) the Company has received an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that such
registration is not required in connection with such disposition or (ii) the
sale of such securities is made pursuant to SEC Rule 144, and (B) the transfer
is not being made to a party that the Board of Directors of the Company
reasonably determines to be a competitor of the Company.


 


10.           COMPLIANCE WITH SECURITIES LAWS.  By acceptance of this Warrant, the Holder
hereby represents, warrants and covenants that (a) the Holder is an “accredited
investor” within the meaning of Rule 501 of Regulation D, promulgated under the
Securities Act; (b) any shares of stock purchased upon exercise of this Warrant
shall be acquired for investment only and not with a view to, or for sale in
connection with, any distribution thereof; (c) the Holder has had such
opportunity as such Holder has deemed adequate to obtain from representatives
of the Company such information as is necessary to permit the Holder to
evaluate the merits and risks of his investment in the Company; (d) the Holder
is able to bear the economic risk of holding such shares as may be acquired
pursuant to the exercise of this Warrant for an indefinite period; (e) the
Holder understands that the shares of stock acquired pursuant to the exercise
of this Warrant will not be registered under the Securities Act (unless
otherwise required pursuant to exercise by the Holder of the registration
rights, if any, granted to the Registered Holder) and will be “restricted
securities” within the meaning of Rule 144 under the Securities Act and that
the exemption from registration under Rule 144 will not be available for at
least one (1) year from the date of exercise of this Warrant, subject to any
special treatment by the SEC for exercise of this Warrant pursuant to Section 2.2,
and even then will not be available unless a public market then exists for the
stock, adequate information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are complied with; and (f)
all stock certificates representing shares of stock


 


6

















 


issued to the Holder upon
exercise of this Warrant or upon conversion of such shares may have affixed
thereto a legend substantially in the following form:


 


THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATE.  THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.  INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.  THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.


 


11.           NO RIGHTS OR LIABILITIES AS STOCKHOLDER.  This Warrant shall not entitle the Holder to
any voting rights or other rights as a stockholder of the Company.  In the absence of affirmative action by such
Holder to purchase Common Stock by exercise of this Warrant or Common Stock
upon conversion thereof, no provisions of this Warrant, and no enumeration
herein of the rights or privileges of the Holder hereof shall cause such Holder
hereof to be a stockholder of the Company for any purpose.


 


12.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company hereby represents and warrants
to Holder that:


 


12.1         Due Authorization;
Consents.  All corporate action on
the part of the Company, its officers, directors and shareholders necessary for
(a) the authorization, execution and delivery of, and the performance of all
obligations of the Company under, this Warrant, and (b) the authorization,
issuance, reservation for issuance and delivery of all of the Common Stock
issuable upon exercise of this Warrant, has been duly taken.  This Warrant constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms, subject, as
to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors’ rights generally and to
general equitable principles.  All
consents, approvals and authorizations of, and registrations, qualifications
and filings with, any federal or state governmental agency, authority or body,
or any third party, required in connection with the execution, delivery and
performance of this Warrant and the consummation of the transactions
contemplated hereby and thereby have been obtained.


 


12.2         Organization.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware and has all requisite
corporate power to own, lease and operate its property and to carry on its
business as now being conducted and as currently proposed to be conducted.


 


12.3         Valid Issuance of
Stock.  The outstanding shares of
the capital stock of the Company are duly and validly issued, fully paid and
non-assessable, and such shares, and all outstanding options and other
securities of the Company, have been issued in full compliance with the
registration and prospectus delivery requirements of the Securities Act and the
registration and qualification requirements of all applicable state securities
laws, or in compliance with applicable


 


7

















 


exemptions therefrom, and all
other provisions of applicable federal and state securities laws, including
without limitation, anti-fraud provisions.


 


12.4         Governmental Consents.  All consents, approvals, orders,
authorizations or registrations, qualifications, declarations or filings with
any federal or state governmental authority on the part of the Company required
in connection with the consummation of the transactions contemplated herein
shall have been obtained prior to and be effective as of the Effective Date.


 


13.           NOTICES. 
Except as may be otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Agreement shall be in
writing and shall be conclusively deemed to have been duly given (a) when hand
delivered to the other party; (b) when received when sent by facsimile at the
address and number set forth below; (c) three business days after deposit in
the U.S. mail with first class or certified mail receipt requested postage
prepaid and addressed to the other party as set forth below; or (d) the next
business day after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.


 


	
  To Holder:

  	
   

  	
  To the Company:

  
	
  Michael Doherty

  	
   

  	
  Trestle Holdings, Inc.

  
	
   

  	
   

  	
  11835 West Olympic Blvd., Suite 550

  
	
   

  	
   

  	
  Los Angeles, California  90064

  
	
   

  	
   

  	
  Attn:  President

  
	
  Fax Number:

  	
   

  	
  Fax Number:

  



 


Each person making a communication hereunder by facsimile shall
promptly confirm by telephone to the person to whom such communication was
addressed each communication made by it by facsimile pursuant hereto but the
absence of such confirmation shall not affect the validity of any such
communication.  A party may change or
supplement the addresses given above, or designate additional addresses, for
purposes of this Section 13 by giving the other party written
notice of the new address in the manner set forth above.


 


14.           HEADINGS. 
The headings in this Warrant are for purposes of convenience in
reference only, and shall not be deemed to constitute a part hereof.


 


15.           LAW GOVERNING.  This Warrant shall be construed and enforced in accordance with,
and governed by, the laws of the State of California, without regard to the
conflict of law principles thereof.


 


16.           NO IMPAIRMENT.  The Company will not, by amendment of its Certificate of
Incorporation or bylaws, or through reorganization, consolidation, merger, dissolution,
issue or sale of securities, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Registered Holder of this
Warrant against impairment.  Without
limiting the generality of the foregoing, the Company (a) will not increase the
par value of any shares of stock issuable upon the exercise of this Warrant
above the amount payable therefor upon such exercise, and (b) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable shares of Common Stock
upon exercise of this Warrant.


 


8

















 


17.           NOTICES OF
RECORD DATE.  In case:


 


17.1         the Company shall take a
record of the holders of its Common Stock (or other stock or securities at the
time receivable upon the exercise of this Warrant), for the purpose of
entitling them to receive any dividend or other distribution, or any right to
subscribe for or purchase any shares of stock of any class or any other
securities or to receive any other right; or


 


17.2         of any consolidation or
merger of the Company with or into another corporation, any capital
reorganization of the Company, any reclassification of the capital stock of the
Company, or any conveyance of all or substantially all of the assets of the
Company to another corporation in which holders of the Company’s stock are to
receive stock, securities or property of another corporation; or


 


17.3         of any voluntary
dissolution, liquidation or winding-up of the Company; or


 


17.4         of any redemption or
conversion of all outstanding Common Stock;


 


then, and in each such case, the Company will mail or cause to be
mailed to the Registered Holder of this Warrant a notice specifying, as the
case may be, (a) the date on which a record is to be taken for the purpose of
such dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation, winding-up, redemption or conversion is to take
place, and the time, if any is to be fixed, as of which the holders of record
of Common Stock or (such stock or securities as at the time are receivable upon
the exercise of this Warrant), shall be entitled to exchange their shares of
Common Stock (or such other stock or securities), for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up.  The Company shall use all reasonable efforts
to ensure such notice shall be delivered at least thirty (30) days prior to the
date therein specified.


 


18.           SEVERABILITY.  If any term, provision, covenant or restriction of this Warrant
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.


 


19.           COUNTERPARTS.  For the convenience of the parties, any number of counterparts of
this Warrant may be executed by the parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.


 


20.           NO INCONSISTENT AGREEMENTS.  The Company will not on or after the date of
this Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holder of this Warrant or otherwise
conflicts with the provisions hereof. 
The rights granted to the Holder hereunder do not in any way conflict
with and are not inconsistent with the rights granted to holders of the
Company’s securities under any other agreements, except rights that have been
waived.


 


21.           SATURDAYS, SUNDAYS AND HOLIDAYS.  If the Expiration Date falls on a Saturday,
Sunday or legal holiday, the Expiration Date shall automatically be extended
until 5:00 p.m. the next business day.


 


22.           ENTIRE AGREEMENT.  This Warrant contains the sole and entire agreement and
understanding of the parties with respect to the entire subject matter of this
Warrant, and any and all prior discussions, negotiations, commitments and
understandings, whether oral or otherwise, related to the subject matter of
this Warrant are hereby merged herein.


 


9

















 


23.           PIGGYBACK REGISTRATION RIGHTS.


 


23.1         Right to Piggyback.  Whenever the Company proposes to register
any of its securities under the Securities Act (other than on a registration on
Form S-4 or any successor form or a registration of non-convertible debt
securities) on a registration form which may be used for the registration of
any Warrant Shares (a “Piggyback Registration”), the Company will give prompt
written notice to Holder of its intention to effect such a registration and
will include in such registration all Warrant Shares (in accordance with the
priorities set forth in Sections 23.2 and 23.3 below) with respect to which the
Company has received written requests for inclusion within fifteen (15) days
after the delivery of the Company’s notice.


 


23.2         Priority on Primary Registrations.  If a Piggyback Registration is an
underwritten primary registration on behalf of the Company and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can reasonably be sold in such offering, the Company will include in such
registration first, the securities that the Company proposes to sell; second,
the securities that any holder of registration rights issued prior to the Effective
Date proposes to sell; and third, the Warrant Shares requested to be included
in such registration.


 


23.3         Priority on Secondary Registrations.  If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company’s
securities other than a demand registration and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can
reasonably be sold in such offering, the Company will include in such
registration first, the securities that any holder of registration rights
issued prior to the Effective Date proposes to sell; and second, the Warrant
Shares requested to be included therein by the Holder.


 


23.4         Other Registrations.  If the Company has previously filed a
registration statement with respect to Warrant Shares pursuant to this
Section 23, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-4 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of at
least 90 days has elapsed from the effective date of such previous
registration.


 


23.5         Selection of Underwriters.  In connection with any Piggyback
Registration in which Holder has elected to include Warrant Shares, the Company
shall have the right to select the managing underwriters to administer any
offering of the Company’s securities in which the Company participates.


 


10

















 


IN WITNESS WHEREOF,
the parties hereto have executed this Warrant as of the Effective Date.


 


 


	
   

  	
  TRESTLE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Michael Doherty

  	
   

  	
  By:

  	
   /s/ Gary Freeman

  
	
  Michael Doherty

  	
  Name:

  	
    Gary Freeman

  
	
   

  	
  Its:

  	
    Chief Financial Officer

  
							



 


 


SIGNATURE PAGE TO WARRANT
TO PURCHASE COMMON STOCK


 


11

















 


EXHIBIT
A


 


NOTICE
OF EXERCISE


 


(To be executed upon exercise of Warrant)


 


Trestle Holdings, Inc.


 


The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, the securities of Trestle
Holdings, Inc., as provided for therein, and (check the applicable box):


 


	
  o

  	
   

  	
  tenders herewith payment of the exercise price in full in the form of
  cash or a certified or official bank check in same-day funds in the amount of
  $
                  for
                  
  such securities.

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Elects the [Net Issue Exercise][Easy Sale Exercise] option pursuant
  to Section 2.2 or 2.3 of the Warrant, and accordingly requests delivery
  of a net of
                          
  of such securities.

  



 


Please issue a certificate or certificates for such securities in the
name of, and pay any cash for any fractional share to (please print name,
address and social security number):


 


	
  Name:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  



 


Note:  The above signature
should correspond exactly with the name on the first page of this Warrant
Certificate or with the name of the assignee appearing in the assignment form
below.


 


If said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in
the name of said undersigned for the balance remaining of the shares
purchasable thereunder rounded up to the next higher whole number of shares.


 

















 


EXHIBIT
B


 


ASSIGNMENT


 


(To be executed only upon assignment of
Warrant Certificate)


 


For value received, the undersigned hereby sells, assigns and transfers
unto
                                                     
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
                                                             
attorney, to transfer said Warrant Certificate on the books of the within-named
Company with respect to the number of Warrants set forth below, with full power
of substitution in the premises:


 


	
  Name(s) of Assignee(s)

  	
   

  	
  Address

  	
   

  	
  # of
  Warrants

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


And if said number of Warrants shall not be all the Warrants
represented by the Warrant Certificate, a new Warrant Certificate is to be
issued in the name of said undersigned for the balance remaining of the
Warrants registered by said Warrant Certificate.


 


	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  



 


Notice:  The signature to the
foregoing Assignment must correspond to the name as written upon the face of
this security in every particular, without alteration or any change whatsoever;
signature(s) must be guaranteed by an eligible guarantor institution (banks,
stock brokers, savings and loan associations and credit unions with membership
in an approved signature guarantee medallion program) pursuant to Securities
and Exchange Commission Rule 17Ad-15.