**Exhibit10.1**

 

**THISWARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE NOTBEEN 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 EFFECTIVEREGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (II) AN OPINION OFCOUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE COMPANY THAT SUCHREGISTRATION IS NOT REQUIRED, (III) RECEIPT OF A NO-ACTION LETTER(S) FROM THEAPPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (IV) UNLESS PURSUANT TO ANEXEMPTION THEREFROM UNDER RULE 144 OF THE ACT.**

 

**TRESTLEHOLDINGS, INC.**

 

WARRANT TO PURCHASE9,300****SHARES OF COMMON STOCK

 
| **Bridge  Warrant No. 1** |   | **Dated March 3, 2004** |
|---------------------------|--------|------------------------------|

 

TRESTLE HOLDINGS, INC., aDelaware corporation (the “Company”), hereby certifies that, for valuereceived,    Zaykowski Partners, LP, or its registered assigns (“Holder”),is entitled, subject to the terms set forth below, to purchase from the Companyup to an aggregate of Nine Thousand Three Hundred (9,300) sharesof Common Stock, par value $0.001 per share (the “Common Stock”), of theCompany (each such share, a “Warrant Share” and all such shares, the “WarrantShares”) at an exercise price equal to $ 4.40  per share (the “Exercise Price”), atany time and from time to time during the Exercise Period, and subject to thefollowing terms and conditions:

 

# 1.             Registration ofWarrant.  The Company shall registerthis Warrant, in the books of the Company to be maintained for that purpose(the “Warrant Register”), in the name of the record Holder hereof fromtime to time.  The Company may deem andtreat the registered Holder of this Warrant as the absolute owner hereof forthe purpose of any exercise hereof or any distribution to the Holder, and forall other purposes, and the Company shall not be affected by notice to thecontrary.

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# 2.             Registration ofTransfers and Exchanges.

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## (a)           No Holder may transferany Warrant without the prior written consent of the Company, which consent maybe granted or denied in the sole discretion of the Company.  Should such consent be granted, the Warrantsso transferred shall continue to be bound by this restriction in the hands of asubsequent Holder, and the Company shall not be required to recognize anyattempted transfer of the Warrants in violation of this Agreement.

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## (b)           Subject to the termshereof, the Warrants shall be transferable only on the Warrant Registermaintained at its principal office upon delivery thereof duly endorsed by

 

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## the Holder or by its dulyauthorized attorney or representative, or accompanied by proper evidence ofsuccession, assignment or authority to transfer.  In all cases of transfer by an attorney, the original power of attorney,duly approved, or a copy thereof, duly certified, shall be deposited and remainwith the Company.  Upon any registrationof transfer, the person to whom such transfer is made shall receive a newWarrant or Warrants as to the portion of the Warrant transferred, and theHolder of such Warrant shall be entitled to receive a new Warrant or Warrantsfrom the Company as to the portion thereof retained.  The Company may require the payment of a sum sufficient to coverany tax or governmental charge that may be imposed in connection with any suchtransfer.

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# 3.             Duration andExercise of Warrants.

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## (a)           The term of thisWarrant (the “Exercise Period”) shall be the period commencingMarch 3, 2004 and ending on March 3, 2009 (the “Expiration Date”).

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## (b)           This Warrant shall be exercisableby the registered Holder on any business day during the Exercise Period before5:00 P.M., Los Angeles time.  At5:00 P.M., Los Angeles time on the Expiration Date, the portion of thisWarrant not exercised prior thereto shall be and become void and of no value.

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## (c)           Subject to Sections2(b), 4 and 7, upon surrender of this Warrant, with the Form of Election toPurchase attached hereto duly completed and executed, to the Company at itsoffice at 11835 W. Olympic Blvd., Suite 550, Los Angeles, CA 90064, Attention:Chief Financial Officer, or at such other address as the Company may specify inwriting to the then registered Holder, and upon payment of the Exercise Pricemultiplied by the number of Warrant Shares that the Holder intends to purchasehereunder, in lawful money of the United States of America, in cash or bycertified or official bank check or checks (subject to the Conversion Right inaccordance with Section 3(d)), all as specified by the Holder in the Formof Election to Purchase, the Company shall promptly (but in no event later thanten (10) business days after the date of exercise) issue or cause to be issuedand cause to be delivered to or upon the written order of the Holder and insuch name or names as the Holder may designate, a certificate for the WarrantShares issuable upon such exercise.

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## (d)           In addition to andwithout limiting the rights of the Holder under the terms of this Warrant,Holder shall have the right to convert this Warrant or any portion thereof (the“Conversion Right”) into Warrant Shares as provided in thisSection 3(d) at any time or from time to time during the Exercise Periodby delivering notice in accordance with Section 3(c).  Upon exercise of the Conversion Right withrespect to all or a specified portion of shares subject to this Warrant (the “Pre-ConvertedWarrant Shares”), the Company shall deliver to Holder that number ofWarrant Shares equal to the quotient obtained by dividing (i) the value of thisWarrant (or the specified portion hereof) on the Exercise Date (as defined inSection 3(e)), which value shall be equal to (A) the aggregate Fair MarketValue (as defined below) of the Pre-Converted Warrant Shares issuable uponexercise of this Warrant on the Exercise Date less (B) the aggregate ExercisePrice of such Pre-Converted Warrant Shares immediately prior to the exercise ofthe Conversion Right by (ii) the fair market value of one (1) Warrant Share onthe Exercise Date.

 

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## Expressed as a formula,such conversion shall be computed as follows:

##  

| X =    |   | (A-B) |   |
|--------|--------|-------|--------|
|   |   | Y     |   |

 
| where  |   | X  = |   | the number of Warrant  Shares to be issued to the Holder pursuant to this Section 3.                                                                                                                                                            |
|--------|--------|-----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |      |   |                                                                                                                                                                                                                                                 |
|   |   | Y  = |   | the Fair Market Value  (as defined below) of one (1) Warrant Share.                                                                                                                                                                                  |
|   |   |      |   |                                                                                                                                                                                                                                                 |
|   |   | A  = |   | the aggregate fair  market value of the Pre-Converted Warrant Shares at the time the Conversion  Right is elected pursuant to this Section 3(d) (i.e., Fair Market Value  (as defined below) per Warrant Share x Pre-Converted Warrant Shares). |
|   |   |      |   |                                                                                                                                                                                                                                                 |
|   |   | B  = |   | aggregate the Exercise  Price of the Pre-Converted Warrant Shares (i.e., Exercise Price x  Pre-Converted Warrant Shares).                                                                                                                            |

 

For purposes of theprovisions of this Warrant requiring a determination in accordance with thisSection 3(d), “Fair Market Value” as of a particular date (the “DeterminationDate”) shall mean (i) for any security if such security is traded on anational securities exchange (an “Exchange”), the weighted average(based on daily trading volume) of the mid-point between the daily high and lowtrading prices of the security on each of the last ten (10) trading days priorto the Determination Date reported on such Exchange, (ii) for any security thatis not traded on an Exchange but which is quoted on the Nasdaq Stock Market (“NASDAQ”)or other electronic quotation system, the weighted average (based on dailytrading volume) of the mid-point between the daily high and low trading pricesreported on NASDAQ on each of the last ten (10) trading days (or if therelevant price or quotation did not exist on any of such days, the relevantprice or quotation on the next preceding business day on which there was such aprice or quotation, for a total of five trading days) prior to theDetermination Date, or (iii) for any security or any other asset, if no pricecan be determined on the basis of the above methods of valuation, then thejudgment of valuation shall be determined in good faith by the Board ofDirectors of the Company, which determination shall be described in a dulyadopted board resolution certified by the Company’s Secretary or AssistantSecretary.

 

## (e)           Any person sodesignated by the Holder to receive Warrant Shares shall be deemed to havebecome holder of record of such Warrant Shares as of the Date of Exercise ofthis Warrant.  For purposes of thisSection 3, a “Date of Exercise” means the date on which the Companyshall have received (i) this Warrant (or any new Warrant, as applicable),with the Form of Election to Purchase attached hereto (or attached to such newWarrant) appropriately completed and duly executed, and (ii) payment ofthe Exercise Price for the number of Warrant Shares so indicated by the holderhereof to be purchased.

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## (f)            This Warrant shall beexercisable, either in its entirety or, from time to time, for a portion of thenumber of Warrant Shares so long as at least One Thousand

 

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## (1,000) WarrantShares are purchased in any one exercise or, if less, all of the Warrant Shareswhich may be purchased under this Warrant. If less than all of the Warrant Shares which may be purchased under thisWarrant are exercised at any time, the Company shall issue or cause to beissued, at its expense, a new Warrant evidencing the right to purchase theremaining number of Warrant Shares for which no exercise has been evidenced bythis Warrant.

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## (g)           This Warrant shall onlybe exercisable if, and shall be only exercisable to the extent, it is legal todo so because, among other things, the Warrant Shares are registered pursuantto a registration statement which has been declared effective by the Securitiesand Exchange Commission, and which is still effective on the applicable date ofexercise, or the issuance of such Warrant Shares is exempt from theregistration requirements of the Securities Act of 1933, as amended.

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# 4.             Payment of Taxes.  The Company will pay all documentary stamptaxes attributable to the issuance of Warrant Shares upon the exercise of thisWarrant; provided, however, that the Company shall not berequired to pay any tax which may be payable in respect of any transferinvolved in the registration of any certificates for Warrant Shares or Warrantsin a name other than that of the Holder, and the Company shall not be requiredto issue or cause to be issued or deliver or cause to be delivered thecertificates for Warrant Shares unless or until the person or personsrequesting the issuance thereof shall have paid to the Company the amount ofsuch tax or shall have established to the satisfaction of the Company that suchtax has been paid.  The Holder shall beresponsible for all other tax liability that may arise as a result of holdingor transferring this Warrant or receiving Warrant Shares upon exercise hereof.

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# 5.             Replacement ofWarrant.  If this Warrant ismutilated, lost, stolen or destroyed, the Company may, in its discretion, issueor cause to be issued in exchange and substitution for and upon cancellationhereof, or in lieu of and substitution for this Warrant, a new Warrant, butonly upon receipt of evidence reasonably satisfactory to the Company of suchloss, theft or destruction and indemnity, if requested, satisfactory toit.  Applicants for a new Warrant undersuch circumstances shall also comply with such other reasonable regulations andprocedures and pay such other reasonable charges as the Company may prescribe.

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# 6.             Adjustments 

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## (a)           For Changes inCommon Stock.  If the Company, atany time and from time to time while this Warrant is outstanding,(i) subdivides its outstanding shares of Common Stock into a larger numberof shares, or (ii) combines its outstanding shares of Common Stock into asmaller number of shares, then, and in each such case, the number of WarrantShares shall be proportionately increased (in the case of a subdivisiondescribed in clause (i) above), or proportionately decreased (in the case of acombination described in clause (ii) above) to become effective immediatelyafter the day upon which such subdivision or combination becomeseffective.  The Company shall givewritten notice of each adjustment or readjustment of the number of WarrantShares or other securities issuable upon exercise of this Warrant; provided,however, that the failure to mail such notice or any defect therein orin the mailing thereof shall not affect the validity of the corporate actionrequired to be specified in such notice. The notice shall describe the adjustment or readjustment and show inreasonable detail the facts on which the adjustment or readjustment is based.

 

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## (b)           Merger, Sale orReclassification.  In case of any(i) consolidation or merger (including a merger in which the Company is thesurviving entity), (ii) sale or other disposition of all or substantially allof the Company’s assets or distribution of property to shareholders (other thandistributions payable out of earnings or retained earnings), or (iii)reclassification, change or conversion of securities of the class issuable uponexercise of this Warrant (other than a change in par value, or from par valueto no par value, or from no par value to par value, or as a result of asubdivision or combination), Holder shall thereafter have the right to receiveupon exercise of this Warrant, the kind and amount of shares of stock, othersecurities, money and property receivable upon such consolidation, merger, saleor other disposition, reclassification, change or conversion by a holder of thenumber of Warrant Shares then purchasable under this Warrant.  The provisions of this Section 6(b)shall similarly apply to successive reclassifications, changes and conversions.

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# 7.             Fractional Shares.  The Company shall not be required to issueor cause to be issued fractional Warrant Shares on the exercise of thisWarrant.  The number of full WarrantShares which shall be issuable upon the exercise of this Warrant shall becomputed on the basis of the aggregate number of Warrant Shares purchasable onexercise of this Warrant so presented. If any fraction of a Warrant Share would be issuable on the exercise ofthis Warrant, such fractional share shall be disregarded and the number ofshares of Common Stock issuable upon exercise shall, on an aggregate basis, berounded down****to the nearest wholenumber of shares.

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# 8.             Notices.  Any and all notices or other communicationsor deliveries hereunder shall be in writing and shall be deemed given andeffective on the earliest of (i) the date of transmission, if such noticeor communication is delivered via facsimile at the facsimile telephone numberspecified in this Section 8 prior to 4:30 P.M. (Los Angeles time) ona business day, (ii) the business day after the date of transmission, ifsuch notice or communication is delivered via facsimile at the facsimiletelephone number specified in this Section 8 later than 4:30 P.M. (LosAngeles time) on any date and earlier than 11:59 P.M. (Los Angeles time) onsuch date, (iii) the business day following the date of mailing, if sentby nationally recognized overnight courier service, or (iv) upon actualreceipt by the party to whom such notice is required to be given.  The addresses for such communications shallbe:  (i) if to the Company, toTrestle Holdings, Inc., 11835 W. Olympic Blvd, Suite 550, Los Angeles, CA90064, Attention: Chief Financial Officer, or to facsimile no.  (310) 444-4101, or (ii) if to theHolder, to the Holder at the address or facsimile number appearing on theWarrant Register or such other address or facsimile number as the Holder mayprovide to the Company in accordance with this Section 8.

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# 9.             Warrant Agent.  The Company shall serve as warrant agentunder this Warrant.  Upon thirty (30)days’ notice to the Holder, the Company may appoint a new warrant agent.  Any new warrant agent shall be a party tothis Warrant without any further act. Any new warrant agent shall promptly cause notice of its succession aswarrant agent to be mailed (by first class mail, postage prepaid) to the Holderat the Holder’s last address as shown on the Warrant Register.

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# 10.           Holder’sRepresentations and Warranties.  Asof the date hereof, Holder hereby makes the representations, warranties andcovenants set forth on Exhibit A hereto as though fully set forthherein.

 

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# 11.           Stockholder Rights.  Until the valid exercise of this Warrant,the Holder shall not be entitled to any of the rights of a stockholder of theCompany.

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# 12.           Miscellaneous.

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## (a)           This Warrant shall bebinding on and inure to the benefit of the parties hereto and their respectivesuccessors and permitted assigns.  ThisWarrant may be amended only in writing signed by the Company and the Holder.

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## (b)           Subject toSection 12(a), nothing in this Warrant shall be construed to give to anyperson or entity other than the Company and the Holder any legal or equitableright, remedy or cause under this Warrant; this Warrant shall be for the soleand exclusive benefit of the Company and the Holder.

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## (c)           This Warrant and theWarrant Shares (and the securities issuable, directly or indirectly, uponconversion of the Warrant Shares, if any) shall be imprinted with one or all ofthe following legends:

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### (i)                                     “THISWARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE NOTBEEN 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 EFFECTIVEREGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (II) AN OPINION OFCOUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE COMPANY THAT SUCHREGISTRATION IS NOT REQUIRED, (III) RECEIPT OF A NO-ACTION LETTER(S) FROM THEAPPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (IV) UNLESS PURSUANT TO ANEXEMPTION THEREFROM UNDER RULE 144 OF THE ACT.”

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### (ii)                                  anylegend required by applicable state securities laws;

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### (iii)                               anylegend required by the Company’s certificate of incorporation or certificate ofdetermination; and/or

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### (iv)                              anylegend required by any applicable shareholders’ agreement.

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## (d)           This Warrant shall begoverned by and construed and enforced in accordance with the internal laws ofthe State of Delaware without regard to the principles of conflicts of lawthereof.

 

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## (e)           The headings herein arefor convenience only, do not constitute a part of this Warrant and shall not bedeemed to limit or affect any of the provisions hereof.

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## (f)            In case any one ormore of the provisions of this Warrant shall be invalid or unenforceable in anyrespect, the validity and enforceability of the remaining terms and provisionsof this Warrant shall not in any way be affected or impaired thereby and theparties will attempt in good faith to agree upon a valid and enforceableprovision which shall be a commercially reasonable substitute therefor, andupon so agreeing, shall incorporate such substitute provision in this Warrant.

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IN WITNESS WHEREOF, theCompany has caused this Warrant to be duly executed by its authorized officeras of the date first written above.

 
|                         | **TRESTLE HOLDINGS, INC.,** |
|------------------------------|-----------------------------|
|                         | **a Delaware corporation**  |
|                         |                        |
|                         |                        |
|                         | By:                         | /s/  GARY FREEMAN |   |
|                         |                        | Gary Freeman |
|                         |                        | Chief Financial Officer |
|                         |                        |
|                         |                        |
| Acknowledged and agreed  to: |                        |
|                         |                        |
| /s/  PAUL ZAYKOWSKI          |                        |   |
|                         |                        |
| By:                          | Paul Zaykowski              |   |   |
| its                          |                        |   |   |
|                              |                             |  |  |  |  |  |  |

 

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FORM OF ELECTION TOPURCHASE

 

(To be executed by theHolder to exercise the right to purchase shares of Common Stock under theforegoing Warrant)

 

To Trestle Holdings,Inc.:

 

[CHECK PARAGRAPH THATAPPLIES]

 

                In accordance with the Warrant enclosed with this Form of Election to Purchase,the undersigned hereby irrevocably elects to purchase                       shares of Common Stock, par value $0.001 per share (the “Common Stock”),of Trestle Holdings, Inc. and encloses herewith$                in cash or certified or official bank check or checks, which sum represents theaggregate Exercise Price (as defined in the Warrant) for the number of sharesof Common Stock to which this Form of Election to Purchase relates, togetherwith any applicable taxes payable by the undersigned pursuant to the Warrant.

 

- OR -

 

                  In accordance with the Warrant enclosed with this Form of Election to Purchase,the undersigned hereby irrevocably elects to convert such Warrant into                     shares of Common Stock by cashless exercise pursuant to Section 3(e) ofthe Warrant.  Also enclosed isdocumentation supporting the calculation of such number of shares of CommonStock to which this Form of Election to Purchase relates.

 

The undersigned requeststhat certificates for the shares of Common Stock issuable upon this exercise beissued in the nameof                                                .

 
| PLEASE INSERT SOCIAL SECURITY  OR TAX IDENTIFICATION NUMBER |
|-------------------------------------------------------------|
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| (Please print  name and address)                            |
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|                                                        |

 

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If the number of sharesof Common Stock issuable upon this exercise shall not be all of the shares ofCommon Stock which the undersigned is entitled to purchase in accordance withthe enclosed Warrant, the undersigned requests that a new Warrant evidencingthe right to purchase the shares of Common Stock not issuable pursuant to theexercise evidenced hereby be issued in the name of and delivered to:

 
|                             |
|----------------------------------|
| (Please print  name and address) |
|                             |
|                             |

 

 
| Dated: |                                                                                                | ,      |   |   | Name of Holder: |
|--------|-----------------------------------------------------------------------------------------------------|--------|--------|--------|-----------------|
|   |                                                                                                |
|   | (Print)                                                                                             |   |   |
|   |                                                                                                |   |
|   | (By:)                                                                                               |   |   |
|   | (Name:)                                                                                             |   |   |
|   | (Title:)                                                                                            |   |   |
|   |                                                                                                |
|   | (Signature must conform  in all respects to name of holder as specified on the face of the Warrant) |
|        |                                                                                                     |        |        |        |                 |  |  |  |  |  |  |

 

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**[To becompleted and executed only upon transfer of Warrant]**

 

FOR VALUE RECEIVED, theundersigned hereby sells, assigns and transfers unto                                                       the right represented by the within Warrant to purchase                         shares of Common Stock, par value $0.001 per share, of Trestle Holdings, Inc.to which the within Warrant relates and appoints                           attorney to transfer said right on the books of Trestle Holdings, Inc. withfull power of substitution in the premises.

 
| Dated:              |
|---------------------|
|                |
|                | , |   |   |
|                |
|                |
|                | (Signature must conform  in all respects to name of holder as specified on the face of the Warrant) |
|                |   |
|                |   |   |
|                | Address  of Transferee |
|                |   |
| In the presence of: |
|                |
|                |   |   |
|                     |  |  |  |  |  |  |

 

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EXHIBIT A

 

Representations, Warranties and Covenants of Holder

 

Holder hereby represents,warrants and covenants to the Company as follows:

 

1.                                       Holderhas full capacity, power and authority to countersign and deliver the Warrant.

 

2.                                       Theexecution and delivery by Holder of the Warrant have been duly and validlyauthorized by all necessary action by Holder, and no other action on the partof Holder is required to authorize the execution, delivery and performance ofthe Warrant.

 

3.                                       Withoutlimiting the terms of the investment representations set forth below, Holderrepresents that Holder has:

 

(a)                                  hadan opportunity to ask questions and receive answers from the Company and itsofficers and directors regarding matters relevant to the Company and aninvestment therein;

 

(b)                                 furtherhad the opportunity to obtain any and all information that Holder deemednecessary or appropriate to evaluate the Company and the investment representedby the Warrant (and the other Securities, as defined below) as well as toverify the accuracy of information otherwise provided to Holder; and

 

(c)                                  receivedand reviewed all information that Holder deemed necessary or appropriate toevaluate the Company and the investment represented by the Warrant (and theother Securities, as defined below).

 

4.                                       Holderis experienced in making investments in the unregistered and restrictedsecurities of development stage companies. Holder understands that such investments (including that represented bythe Securities) involve a high degree of speculation and risk.  Holder has such knowledge and experience infinancial and business matters that Holder is capable of evaluating the meritsand risks of the investment in the Company represented by the Securities and,by reason of Holder’s financial and business experience, Holder has thecapacity to protect Holder’s interest in connection with the investment in theSecurities.  Holder is financially ableto bear the economic risk of the investment represented by the Securities,including a total loss of such investment.

 

5.                                       Either(i) Holder has a preexisting personal or business relationship with theCompany or one or more of its officers, directors or control persons or(ii) by reason of Holder’s business or financial experience, Holder iscapable of evaluating the risks and merits of the investment represented by theSecurities and of protecting Holder’s own interests in connection with suchinvestment.

 

6.                                       Holderis an “accredited investor”as that term is defined in Rule 501 promulgated under the Securities Act of1933, as amended (the “Act”).

 

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7.                                       TheWarrant, any Warrant Shares and any securities issuable, directly orindirectly, upon conversion of the Warrant Shares (collectively the “Securities”) are being and will beacquired by Holder (i) solely for investment purposes, (ii) forHolder’s own account only and (iii) not for sale, transfer or with a viewto any distribution of all or any part of such Securities.  No other person will have any direct orindirect beneficial interest in the Securities.

 

8.                                       Holderunderstands that no public market now exists for any securities of the Companyand that the Company has made no assurances or representations whatsoever thata public market will ever exist for any of the Company’s securities.

 

9.                                       Holderhas not engaged any brokers, finders or agents and has not incurred, and willnot incur, directly or indirectly, any liability for brokerage or finder’s feesor agents’ commissions or any similar charges in connection with the Securitiesand the transactions contemplated hereby.

 

10.                                 Holderacknowledges that the Securities have not been and will not be registered underthe Act or qualified under any state securities or blue sky laws in reliance,in part, on the representations and warranties herein.

 

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

 

12.                                 Withoutin any way limiting the representations set forth above, Holder further agreesnot to make any disposition of all or any portion of the Securities purchasedhereunder unless and until:

 

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

 

(b)                                 Holdershall have (1) notified the Company of the proposed disposition,(2) furnished the Company with a detailed statement of the circumstancessurrounding the proposed disposition and (3) furnished the Company with awritten opinion of counsel, reasonably satisfactory to the Company, that suchdisposition will not require registration of any securities under the Act orthe

 

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consent of (or a permit from) any authority under anyapplicable state securities laws.

 

13.                                 Inthe case of any disposition of any Securities pursuant to Rule 144 under theAct, then in addition to the matters set forth above, Holder shall promptlyforward to the Company a copy of any Form 144 filed with the Securities andExchange Commission (the “SEC”)with respect to such disposition and a letter from the executing brokersatisfactory to the Company evidencing compliance with Rule 144.  If Rule 144 is amended or if the SEC’sinterpretations thereof in effect at the time of any such disposition by Holderhave changed from the SEC’s present interpretations thereof, Holder shallprovide the Company with such additional documents as the Company mayreasonably require.

 

14.                                 Inthe event of an initial public offering relating to any of the Company’ssecurities, or any securities into which such securities may be converted orexchanged, Holder shall enter into a lock-up agreement upon such terms as shallbe requested by the managing underwriter for such offering.

 

15.                                 Atthe request of the Company, Holder agrees to enter into any shareholders’agreement with respect to the Common Stock into which this Warrant is exercisedin the form entered into by the other holders of Common Stock.

 

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