Exhibit
10.2


 


THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS THERE IS A (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER
REASONABLY SATISFACTORY TO MAKER THAT SUCH REGISTRATION IS NOT REQUIRED, (III)
RECEIPT OF A NO-ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITY(IES), OR (IV) UNLESS PURSUANT TO AN EXEMPTION THEREFROM UNDER RULE
144 OF THE ACT.


 


CONVERTIBLE PROMISSORY NOTE


 


	
  $420,000

  	
   

  	
  Dated
  March 3, 2004

  



 


FOR VALUE RECEIVED,
Trestle Holdings, Inc., a Delaware corporation (“Maker”), promises to pay
to Zaykowski Partners, LP (“Holder”) the principal amount of Four
Hundred Twenty Thousand Dollars ($420,000), plus interest on the
unpaid principal amount at the rate of ten percent (10%) per
annum, compounded semi-annually. 
Interest for each six-month period commencing on the date hereof shall
be fully accrued as of the first day of such six-month period and shall be
payable in arrears on the last day of such six-month period.  [Interest
hereunder shall accrue and be added to the principal amount of this Note and be
payable on (and not before) the date that the principal amount of this Note is
due.]


 


1.             Terms
of Payment.


 


(a)           Mandatory Payment.  Unless converted earlier as provided herein,
the entire principal amount of this Note and all accrued and unpaid interest
shall be payable in full on March 3, 2005 or earlier if accelerated in
accordance with Section 1(b) of this Note (the “Maturity Date”).


 


(b)           Acceleration on
Liquidation.  Upon Maker commencing
any proceeding or action for liquidation of Maker, whether under any present or
future California, bankruptcy, insolvency or similar statute, law or
regulation, the entire principal amount of this Note plus accrued interest
shall be immediately due and payable.


 


(c)           Manner of Payment.  All payments made hereunder shall be paid to
Holder at [address], or such other
place as may be designated in writing by Holder, in immediately available
United States funds without any deduction whatsoever, including, but not
limited to, any deduction for any setoff or counterclaim.  Upon the payment in full of the principal
amount of this Note and accrued but unpaid interest thereon, this Note shall be
surrendered to Maker for cancellation, Holder’s security interest in the
Collateral shall automatically terminate and all appropriate UCC termination
statements and any other filings necessary to reflect the termination of
Holder’s security interest in the Collateral shall be filed in the appropriate
governmental


 

















 


offices; and Holder shall take all such actions as
Maker reasonably requests from time to time to effect such termination and
release.


 


2.             Conversion
By Maker.  The entire principal
amount of this Note and all accrued interest may be converted by Maker in its
sole discretion at any time prior to the Maturity Date following the issuance
in one or more related closings (the “Qualified Financing”) of Common
Stock, par value $0.001 per share, of Maker (the “Financing Stock”)
generating gross proceeds to Maker of at least One Million Dollars ($1,000,000),
into the number of shares of Financing Stock which is determined by dividing
(x) the aggregate dollar amount of principal and accrued interest of this Note,
by (y) the per share purchase price of Financing Stock paid by investors
in the Qualified Financing.


 


3.             Representations
and Warranties.  Maker hereby
represents and warrants to Holder as of the date hereof as follows:


 


(a)           Authority Relative
to Note.  Maker has full corporate
power and authority to execute and deliver this Note and to perform its
obligations hereunder.  The execution
and delivery by Maker of this Note and the performance by Maker of its
obligations hereunder have been duly and validly authorized by all necessary
action by the Board of Directors of Maker, and no other action on the part of
the Board of Directors or shareholders  of
Maker is required to authorize the execution, delivery and performance of this
Note.  This Note has been duly and
validly executed and delivered by Maker and constitutes a legal, valid and
binding obligation of Maker enforceable against Maker in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to the enforcement of creditors’ rights generally and by general
principles of equity.


 


(b)           No Conflicts.  The execution and delivery by Maker of this
Note does not, and the performance by Maker of its obligations under this Note
does not and will not:


 


(i)            conflict with or
result in a violation or breach of any of the terms, conditions or provisions
of the charter or bylaws of Maker;


 


(ii)           conflict with or result
in a violation or breach of any law, statute, order, decree, consent decree,
judgment, rule, regulation, ordinance or other pronouncement having the effect
of law, whether in the United States or any state or of any governmental or
regulatory authority, applicable to Maker or any of its assets and properties;
or


 


(iii)          (a) conflict with or
result in a violation or breach of, (b) constitute a default (or an event that,
with or without notice or lapse of time or both, would constitute a default)
under, (c) require Maker to obtain any consent, approval or action of, make any
filing with or give any notice to any person or entity as a result or under the
terms of, (d) result in or give to any individual or entity any right of
termination, cancellation, acceleration or modification in or with respect to,
(e) result in or give to any person or entity any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, (f) result in the creation or imposition of (or the
obligation to create or impose) any lien upon Maker or any of its assets and
properties under or (g) result in the loss of a material benefit


 


2

















 


under, any of the terms,
conditions or provisions of any contract or license to which Maker is a party
or by which any of Maker’s assets and properties is bound.


 


(c)           Liens.  Schedule A attached hereto is a
list of all outstanding liens, encumbrances or other security interests
(collectively, the “Liens”) of Maker as of the date hereof.  Except as listed on Schedule A,
there are no Liens of any kind or nature whatsoever in the assets or properties
of Maker as of the date hereof.


 


4.             Presentment,
Notice, etc.  Maker and any endorser
or other person liable hereunder expressly agree that (a) presentment, notice
of dishonor, protest, notice of protest and any and all demands or notices are
hereby waived; (b) this Note shall be binding upon Maker and any endorser and
their respective successors in interest; and (c) this Note and any payment
hereunder may be extended from time to time without in any way affecting the
liability of Maker or any endorser hereunder.


 


5.             Holder’s
Representations.  Holder hereby
makes the representations, warranties and covenants set forth on Schedule B
hereto as though fully set forth herein.


 


6.             General.  This Note shall be governed and construed in
accordance with the laws of the State of New York without regard to the choice
of law provisions thereof.  All notices
hereunder shall be in writing.  No
right, power or remedy conferred by this Note upon Maker shall be exclusive of
any other right, power or remedy referred to herein or now or hereafter
available at law, in equity, by statute or otherwise.  If Maker, prior to completion of a Qualified Financing, issues
one or more convertible promissory notes with terms more favorable than the
terms of this Note, this Note shall be deemed to be amended to reflect all of
the terms and conditions of such other notes.


 


7.             Costs;
Attorney’s Fees.  Maker shall pay on
demand all costs and expenses of collection incurred or paid by Holder in
enforcing the terms hereof or in protecting Holder’s interest hereunder.  If any action at law or in equity is
necessary to enforce or interpret the terms of this Note, the prevailing party
shall be entitled to reasonable attorneys’ fees, costs and disbursements in
addition to any other relief to which such party may be entitled.


 


Executed at Los Angeles,
California, as of this 3rd day of March 2004.


 


	
   

  	
  TRESTLE HOLDINGS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  GARY FREEMAN

  	
   

  
	
   

  	
   

  	
  Gary Freeman

  
	
   

  	
   

  	
  Chief Financial Officer

  



 


3

















 


	
  Acknowledged and agreed
  to:

  	
   

  
	
   

  	
   

  
	
  Zaykowski Partners, LP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  PAUL ZAYKOWSKI

  	
   

  	
   

  
	
  Name:

  	
  Paul Zaykowski

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
						



 


4

















SCHEDULE A


 


Liens


 

















 


SCHEDULE B


 


Representations, Warranties and Covenants of Holder


 


Holder hereby represents,
warrants and covenants to Maker as follows:


 


(a)           Holder has full
capacity, power and authority to countersign and deliver the Note.


 


(b)           The execution and
delivery by Holder of the Note have been duly and validly authorized by all
necessary action by Holder, and no other action on the part of Holder is
required to authorize the execution, delivery and performance of the Note.


 


(c)           Without limiting the
terms of the investment representations set forth below, Holder represents that
Holder has:


 


(i)            had an opportunity to
ask questions and receive answers from Maker and its officers and directors
regarding matters relevant to Maker and an investment therein;


 


(ii)           further had the
opportunity to obtain any and all information that Holder deemed necessary or
appropriate to evaluate Maker and the investment represented by the Note (and
the other Securities, as defined below) as well as to verify the accuracy of
information otherwise provided to Holder; and


 


(iii)          received and reviewed
all information that Holder deemed necessary or appropriate to evaluate Maker
and the investment represented by the Note (and the other Securities, as
defined below).


 


(d)           Holder is experienced
in making investments in the unregistered and restricted securities of
development stage companies.  Holder
understands that such investments (including that represented by the
Securities) involve a high degree of speculation and risk.  Holder has such knowledge and experience in
financial and business matters that Holder is capable of evaluating the merits
and risks of the investment in Maker represented by the Securities and, by
reason of Holder’s financial and business experience, Holder has the capacity
to protect Holder’s interest in connection with the investment in the
Securities.  Holder is financially able
to bear the economic risk of the investment represented by the Securities,
including a total loss of such investment.


 


(e)           Either (i) Holder has a
preexisting personal or business relationship with Maker or one or more of its
officers, directors or control persons or (ii) by reason of Holder’s
business or financial experience, Holder is capable of evaluating the risks and
merits of the investment represented by the Securities and of protecting
Holder’s own interests in connection with such investment.


 


(f)            Holder is an “accredited investor” as that term
is defined in Rule 501 promulgated under the Securities Act of 1933, as amended
(the “Act”).


 

















 


(g)           The Note, any
securities acquired upon a conversion of the Note, any warrant issuable in
connection with the Note and any securities issuable upon the exercise of such
a warrant (collectively the “Securities”)
are being and will be acquired by Holder (i) solely for investment purposes, (ii)
for Holder’s own account only and (iii) not for sale, transfer or with a view
to any distribution of all or any part of such Securities.  No other person will have any direct or
indirect beneficial interest in the Securities.


 


(h)           Holder understands that
no public market now exists for any securities of Maker and that Maker has made
no assurances or representations whatsoever that a public market will ever
exist for any of Maker’s securities.


 


(i)            Holder has not engaged
any brokers, finders or agents and has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finder’s fees or agents’
commissions or any similar charges in connection with the Securities and the
transactions contemplated hereby.


 


(j)            Holder acknowledges that
the Securities have not been and will not be registered under the Act or
qualified under the California Corporate Securities Law of 1968, as amended, or
any other applicable blue sky laws in reliance, in part, on the representations
and warranties herein.


 


(k)           Holder understands that
(i) the Securities are “restricted
securities” under the federal securities laws (e.g., the Act)
insofar as the Securities will be acquired from Maker in a transaction not
involving a public offering, (ii) under such laws and applicable regulations,
the Securities may be resold without registration under the Act only in certain
limited circumstances and (iii) in the absence of registration under the Act
(which is not presently contemplated and with respect to which Maker has no
obligation) the Securities must be held indefinitely.  Holder understands the resale limitations imposed by the Act and
is familiar with Rule 144 under the Act, as presently in effect, and the
conditions that must be met in order for Rule 144 to be available with respect
to the resale of “restricted securities.” 
Holder understands that Maker does not presently meet conditions for the
availability of Rule 144 under certain circumstances (e.g., the provision of current
“public company” information) and that Maker has no present plans ever to do
so.


 


(l)            Holder understands
that any certificates evidencing the Securities may bear one or all of the
following legends:


 


(i)            “THIS CONVERTIBLE
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THERE IS A (I)
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (II) AN
OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO MAKER THAT SUCH
REGISTRATION IS NOT REQUIRED, (III) RECEIPT OF A NO-ACTION LETTER(S) FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (IV) UNLESS PURSUANT TO AN
EXEMPTION THEREFROM UNDER RULE 144 OF THE ACT.”


 

















 


(ii)           any legend required by
applicable state securities laws.


 


(iii)          any legend required by
Maker’s certificate of incorporation or certificate of determination.


 


(iv)          any legend required by
any applicable shareholders’ agreement.


 


(m)          Without in any way
limiting the representations set forth above, Holder further agrees not to make
any disposition of all or any portion of the Securities purchased hereunder
unless and until:


 


(i)            there is then in
effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement and any applicable requirements of state securities laws; or


 


(ii)           Holder shall have (1)
notified Maker of the proposed disposition, (2) furnished Maker with a detailed
statement of the circumstances surrounding the proposed disposition and
(3) furnished Maker with a written opinion of counsel, reasonably
satisfactory to Maker, that such disposition will not require registration of
any securities under the Act or the consent of (or a permit from) any authority
under any applicable state securities laws.


 


(n)           In the case of any
disposition of any Securities pursuant to Rule 144 under the Act, then in
addition to the matters set forth above, Holder shall promptly forward to Maker
a copy of any Form 144 filed with the Securities and Exchange Commission (the “SEC”) with respect to such
disposition and a letter from the executing broker satisfactory to Maker
evidencing compliance with Rule 144.  If
Rule 144 is amended or if the SEC’s interpretations thereof in effect at the
time of any such disposition by Holder have changed from the SEC’s present
interpretations thereof, Holder shall provide Maker with such additional
documents as Maker may reasonably require.


 


(o)           In the event of an
initial public offering relating to any of Maker’s securities, or any
securities into which such securities may be converted or exchanged, Holder
shall enter into a lock-up agreement upon such terms as shall be requested by
the managing underwriter for such offering.


 


(p)           At the request of
Maker, Holder agrees to enter into any shareholders’ agreement with respect to
the Securities into which this Note is converted in the form entered into by
the other holders of such Securities.


 

















 


SCHEDULE C


 


ESCROW AGENT
INSTRUCTIONS


 


The undersigned
authorizes Kellogg & Andelson, acting solely as escrow holder in connection
with the Trestle Holdings Inc. private placement, to transfer Holder’s existing
escrow deposit of $420,000 to the appropriate bank account as instructed by the
management of Trestle Holdings, Inc.


 


	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title: