**Exhibit10.2**

 

**THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTEREDUNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATESECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OROTHERWISE TRANSFERRED UNLESS THERE IS A (I) AN EFFECTIVE REGISTRATION STATEMENTUNDER SUCH ACT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDERREASONABLY SATISFACTORY TO MAKER THAT SUCH REGISTRATION IS NOT REQUIRED, (III)RECEIPT OF A NO-ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTALAUTHORITY(IES), OR (IV) UNLESS PURSUANT TO AN EXEMPTION THEREFROM UNDER RULE144 OF THE ACT.**

 

**CONVERTIBLE PROMISSORY NOTE**

** **
| **$420,000** |   | **Dated  March 3, 2004** |
|--------------|--------|-------------------------------|

 

FOR VALUE RECEIVED,Trestle Holdings, Inc., a Delaware corporation (“Maker”), promises to payto Zaykowski Partners, LP (“Holder”) the principal amount of FourHundred Twenty Thousand Dollars ($420,000), plus interest on theunpaid principal amount at the rate of ten percent (10%) perannum, compounded semi-annually. Interest for each six-month period commencing on the date hereof shallbe fully accrued as of the first day of such six-month period and shall bepayable in arrears on the last day of such six-month period.  **[Interesthereunder shall accrue and be added to the principal amount of this Note and bepayable on (and not before) the date that the principal amount of this Note isdue.]**

 

# 1.             Termsof Payment.

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

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## (b)           Acceleration onLiquidation.  Upon Maker commencingany proceeding or action for liquidation of Maker, whether under any present orfuture California, bankruptcy, insolvency or similar statute, law orregulation, the entire principal amount of this Note plus accrued interestshall be immediately due and payable.

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## (c)           Manner of Payment.  All payments made hereunder shall be paid toHolder at **[address]**, or such otherplace as may be designated in writing by Holder, in immediately availableUnited States funds without any deduction whatsoever, including, but notlimited to, any deduction for any setoff or counterclaim.  Upon the payment in full of the principalamount of this Note and accrued but unpaid interest thereon, this Note shall besurrendered to Maker for cancellation, Holder’s security interest in theCollateral shall automatically terminate and all appropriate UCC terminationstatements and any other filings necessary to reflect the termination ofHolder’s security interest in the Collateral shall be filed in the appropriategovernmental

 

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## offices; and Holder shall take all such actions asMaker reasonably requests from time to time to effect such termination andrelease.

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# 2.             ConversionBy Maker.  The entire principalamount of this Note and all accrued interest may be converted by Maker in itssole discretion at any time prior to the Maturity Date following the issuancein one or more related closings (the “Qualified Financing”) of CommonStock, 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 investorsin the Qualified Financing.

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# 3.             Representationsand Warranties.  Maker herebyrepresents and warrants to Holder as of the date hereof as follows:

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## (a)           Authority Relativeto Note.  Maker has full corporatepower and authority to execute and deliver this Note and to perform itsobligations hereunder.  The executionand delivery by Maker of this Note and the performance by Maker of itsobligations hereunder have been duly and validly authorized by all necessaryaction by the Board of Directors of Maker, and no other action on the part ofthe Board of Directors or shareholders****ofMaker is required to authorize the execution, delivery and performance of thisNote.  This Note has been duly andvalidly executed and delivered by Maker and constitutes a legal, valid andbinding obligation of Maker enforceable against Maker in accordance with itsterms, except as the enforceability thereof may be limited by bankruptcy,insolvency, fraudulent conveyance, reorganization, moratorium or other similarlaws relating to the enforcement of creditors’ rights generally and by generalprinciples of equity.

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

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

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

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### (iii)          (a) conflict with orresult 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 anyfiling with or give any notice to any person or entity as a result or under theterms of, (d) result in or give to any individual or entity any right oftermination, cancellation, acceleration or modification in or with respect to,(e) result in or give to any person or entity any additional rights orentitlement to increased, additional, accelerated or guaranteed payments orperformance under, (f) result in the creation or imposition of (or theobligation to create or impose) any lien upon Maker or any of its assets andproperties under or (g) result in the loss of a material benefit

 

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

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## (c)           Liens.  Schedule A attached hereto is alist 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 propertiesof Maker as of the date hereof.

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# 4.             Presentment,Notice, etc.  Maker and any endorseror other person liable hereunder expressly agree that (a) presentment, noticeof dishonor, protest, notice of protest and any and all demands or notices arehereby waived; (b) this Note shall be binding upon Maker and any endorser andtheir respective successors in interest; and (c) this Note and any paymenthereunder may be extended from time to time without in any way affecting theliability of Maker or any endorser hereunder.

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# 5.             Holder’sRepresentations.  Holder herebymakes the representations, warranties and covenants set forth on Schedule Bhereto as though fully set forth herein.

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# 6.             General.  This Note shall be governed and construed inaccordance with the laws of the State of New York without regard to the choiceof law provisions thereof.  All noticeshereunder shall be in writing.  Noright, power or remedy conferred by this Note upon Maker shall be exclusive ofany other right, power or remedy referred to herein or now or hereafteravailable at law, in equity, by statute or otherwise.  If Maker, prior to completion of a Qualified Financing, issuesone or more convertible promissory notes with terms more favorable than theterms of this Note, this Note shall be deemed to be amended to reflect all ofthe terms and conditions of such other notes.

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

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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 |

 

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| Acknowledged and agreed  to: |                |
|------------------------------|---------------------|
|                         |                |
| Zaykowski Partners, LP       |                |
|                         |                |
|                         |                |
| By:                          | /s/  PAUL ZAYKOWSKI |   |   |
| Name:                        | Paul Zaykowski      |   |   |
| Title:                       |                |   |   |
|                              |                     |  |  |  |  |

 

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SCHEDULE A

 

Liens

 

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SCHEDULE B

 

Representations, Warranties and Covenants of Holder

 

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

 

## (a)           Holder has fullcapacity, power and authority to countersign and deliver the Note.

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## (b)           The execution anddelivery by Holder of the Note have been duly and validly authorized by allnecessary action by Holder, and no other action on the part of Holder isrequired to authorize the execution, delivery and performance of the Note.

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## (c)           Without limiting theterms of the investment representations set forth below, Holder represents thatHolder has:

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### (i)            had an opportunity toask questions and receive answers from Maker and its officers and directorsregarding matters relevant to Maker and an investment therein;

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### (ii)           further had theopportunity to obtain any and all information that Holder deemed necessary orappropriate to evaluate Maker and the investment represented by the Note (andthe other Securities, as defined below) as well as to verify the accuracy ofinformation otherwise provided to Holder; and

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### (iii)          received and reviewedall information that Holder deemed necessary or appropriate to evaluate Makerand the investment represented by the Note (and the other Securities, asdefined below).

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## (d)           Holder is experiencedin making investments in the unregistered and restricted securities ofdevelopment stage companies.  Holderunderstands that such investments (including that represented by theSecurities) 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 Maker represented by the Securities and, byreason of Holder’s financial and business experience, Holder has the capacityto 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.

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## (e)           Either (i) Holder has apreexisting personal or business relationship with Maker or one or more of itsofficers, directors or control persons or (ii) by reason of Holder’sbusiness or financial experience, Holder is capable of evaluating the risks andmerits of the investment represented by the Securities and of protectingHolder’s own interests in connection with such investment.

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

 

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## (g)           The Note, anysecurities acquired upon a conversion of the Note, any warrant issuable inconnection with the Note and any securities issuable upon the exercise of sucha 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 viewto any distribution of all or any part of such Securities.  No other person will have any direct orindirect beneficial interest in the Securities.

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## (h)           Holder understands thatno public market now exists for any securities of Maker and that Maker has madeno assurances or representations whatsoever that a public market will everexist for any of Maker’s securities.

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## (i)            Holder has not engagedany 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 thetransactions contemplated hereby.

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## (j)            Holder acknowledges thatthe Securities have not been and will not be registered under the Act orqualified under the California Corporate Securities Law of 1968, as amended, orany other applicable blue sky laws in reliance, in part, on the representationsand warranties herein.

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

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## (l)            Holder understandsthat any certificates evidencing the Securities may bear one or all of thefollowing legends:

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### (i)            “THIS CONVERTIBLEPROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFEREDFOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THERE IS A (I)AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (II) ANOPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO MAKER 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)           any legend required byapplicable state securities laws.

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### (iii)          any legend required byMaker’s certificate of incorporation or certificate of determination.

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### (iv)          any legend required byany applicable shareholders’ agreement.

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## (m)          Without in any waylimiting the representations set forth above, Holder further agrees not to makeany disposition of all or any portion of the Securities purchased hereunderunless and until:

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### (i)            there is then ineffect 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

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

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## (n)           In the case of anydisposition of any Securities pursuant to Rule 144 under the Act, then inaddition to the matters set forth above, Holder shall promptly forward to Makera copy of any Form 144 filed with the Securities and Exchange Commission (the “SEC”) with respect to suchdisposition and a letter from the executing broker satisfactory to Makerevidencing compliance with Rule 144.  IfRule 144 is amended or if the SEC’s interpretations thereof in effect at thetime of any such disposition by Holder have changed from the SEC’s presentinterpretations thereof, Holder shall provide Maker with such additionaldocuments as Maker may reasonably require.

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

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

 

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SCHEDULE C

 

ESCROW AGENTINSTRUCTIONS

 

The undersignedauthorizes Kellogg & Andelson, acting solely as escrow holder in connectionwith the Trestle Holdings Inc. private placement, to transfer Holder’s existingescrow deposit of $420,000 to the appropriate bank account as instructed by themanagement of Trestle Holdings, Inc.

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |
| Title: |

 

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