Document:

Exhibit
4.1

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN
WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

 

McCORMICK & COMPANY, INCORPORATED

MEDIUM-TERM NOTE

(Fixed Rate)

 

	
  REGISTERED

  No. FXR - 001

  	
   

  	
  CUSIP No.: 57978X AC 9     

  

 

Aggregate Principal Amount:  $50,000,000

 

Interest Rate: 3.350%

 

Original Issue Date: April 1, 2004

 

Stated Maturity Date: April 15, 2009

 

Interest Payment Dates: April 15 and October 15,
commencing on October 15, 2004

 

Original Issue Price: 99.971%

 

Net Proceeds to Issuer after Underwriting
Discount:  $49,685,500

 

Specified Currency: U.S. Dollars

 

Exchange Rate Agent: None

 

Option to Receive Payments in Specified Currency other
than U.S. Dollars: None

 

Minimum Denomination (Applicable if Specified Currency
is other than U.S. Dollars): N/A

 

 

Optional Redemption: 
ý  Yes  o  No

•      Initial Redemption
Date:  *

•      Initial Redemption
Percentage:

•      Annual Redemption Percentage
Reduction:

 

Optional Repayment: o  Yes  ý  No

•      Optional Repayment Date(s):

•      Optional Repayment Price:
          %

 

Original Issue
Discount:  o  Yes  ý  No

•      Total Amount of OID:

•      Yield to Maturity:

•      Initial Accrual Period:

 

Form: ý  Book-Entry 
o 
Certificated

 

Defeasance:  ý  Yes  o  No

 

Covenant Defeasance : ýYes  o  No

 

Sinking Fund: o  Yes  ý  No

 

Other Provisions:  *See the redemption provisions on the reverse
hereof.

 

 

McCORMICK & COMPANY,
INCORPORATED, a Maryland corporation (herein referred to as the “Company”,
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of FIFTY MILLION DOLLARS on the Stated
Maturity Date shown above (except to the extent redeemed or repaid prior to the
Stated Maturity Date) and to pay interest, if any, thereon at the Interest Rate
shown above from the Original Issue Date shown above or from the most recent
Interest Payment Date to which interest, if any, has been paid or duly provided
for, semiannually on April 15 and October 15 of each year (unless other
Interest Payment Dates are shown on the face hereof) (each, an “Interest
Payment Date”) until the principal hereof is paid or made available for payment
and on the Stated Maturity Date, any Redemption Date or Repayment Date (such
terms are together hereinafter referred to as the “Maturity Date” with respect
to the principal repayable on such date); provided, however, that any payment
of principal (or premium, if any) or interest, if any, to be made on any
Interest Payment Date or on the Maturity Date that is not a Business Day (as
defined below) shall be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date or the Maturity Date,
as the case may be, and no additional interest, if any, shall accrue on the
amount so payable as a result of such delayed payment.  For purposes of this Security, unless
otherwise specified on the face hereof, “Business Day” means any day that is
not a Saturday or Sunday and that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York; provided, however, that, if the
Specified Currency shown above is a foreign currency, such day is also not a
day on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below)
of the country issuing the Specified Currency (or, if the Specified Currency is
the euro, such day is also a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open).  “Principal Financial Center” means the
capital city of the country issuing the Specified Currency except that with
respect to United States dollars, Australian dollars, Canadian dollars,
Deutsche marks, Dutch guilders, South African rand and Swiss francs, the
“Principal Financial Center” shall be The City of New York, Sydney and (solely
in the case of the Specified Currency) Melbourne, Toronto, Frankfurt,
Amsterdam, Johannesburg and Zurich, respectively.

 

Any interest hereon will
accrue from, and including, the immediately preceding Interest Payment Date in
respect of which interest, if any, has been paid or duly provided for (or from,
and including, the Original Issue Date if no interest has been paid or duly
provided for) to, but excluding, the succeeding Interest Payment Date or the
Maturity Date, as the case may be.  The
interest, if any, so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture (as referred to on the
reverse hereof) and subject to certain exceptions described herein (referred to
on the reverse hereof), be paid to the person (the “Holder”) in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the March 31 or September 30 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date (unless other
Regular Record Dates are specified on the face hereof) (each, a “Regular Record
Date”); provided, however, that, if this Security was issued between a Regular
Record Date and the initial Interest Payment Date relating to such Regular 

 

 

Record Date,
interest, if any, for the period beginning on the Original Issue Date and
ending on such initial Interest Payment Date shall be paid on the Interest
Payment Date following the next succeeding Regular Record Date to the Holder
hereof on such next succeeding Regular Record Date; and provided further that
interest, if any, payable on the Maturity Date will be payable to the person to
whom the principal hereof shall be payable. 
Any such interest not so punctually paid or duly provided for on any
Interest Payment Date other than the Maturity Date (“Defaulted Interest”) will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a special
record date (the “Special Record Date”) for the payment of such Defaulted
Interest to be fixed by the Trustee (referred to on the reverse hereof), notice
whereof shall be given to the Holder of this Security not less than ten days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more fully provided in the Indenture.

 

Unless otherwise
specified above, all payments in respect of this Security will be made in U.S.
dollars regardless of the Specified Currency shown above unless the Holder
hereof makes the election described below. 
If the Specified Currency shown above is other than U.S. dollars, the
Exchange Rate Agent (referred to on the reverse hereof) will arrange to convert
any such amounts so payable in respect hereof into U.S. dollars in the manner
described on the reverse hereof; provided, however, that the Holder hereof may,
if so indicated above, elect to receive all or any specified portion of any
payment of principal, premium, if any, and/or interest, if any, in respect of
this Security in such Specified Currency by delivery of a written request to
the corporate trust office of the Trustee in The City of New York, currently
the office of the Trustee located at c/o Harris Trust Bank of New York, Wall
Street Plaza, 88 Pine Street, 19th Floor, New York, New York 10005, or
at such other office in The City of New York, as the Company may determine, on
or prior to the applicable Regular Record Date or at least fifteen days prior
to the Maturity Date, as the case may be. 
Such request may be in writing (mailed or hand delivered) or by
facsimile transmission.  The Holder
hereof may elect to receive payment in such Specified Currency for all
principal, premium, if any, and interest payments, if any, and need not file a
separate election for each payment. 
Such election will remain in effect until revoked by written notice to
the Trustee, but written notice of any such revocation must be received by the
Trustee on or prior to the applicable Regular Record Date or at least fifteen
days prior to the Maturity Date, as the case may be.

 

Notwithstanding the
foregoing, if the Company determines that the Specified Currency is not
available for making payments in respect hereof due to the imposition of
exchange controls or other circumstances beyond the Company’s control, or is no
longer used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the
international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency and any such outstanding election
shall be automatically suspended, until the Company determines that the
Specified Currency is again available for making such payments.  Any payment made under such circumstances in
U.S. dollars where the required payment is in a Specified Currency will not
constitute a default under the Indenture.

 

 

In the event of an
official redenomination of the Specified Currency, the obligations of the
Company with respect to payments on this Security, in all cases, shall be deemed
immediately following such redenomination to provide for payment of that amount
of redenominated currency representing the amount of such obligations
immediately before such redenomination. 
In no event shall any adjustment be made to any amount payable hereunder
as a result of any change in the value of the Specified Currency shown above
relative to any other currency due solely to fluctuations in exchange rates.

 

Until this Security is
paid in full or payment therefor in full is duly provided for, the Company will
at all times maintain a Paying Agent (which Paying Agent may be the Trustee) in
The City of New York, currently the office of the Trustee located at c/o Harris
Trust Bank of New York, Wall Street Plaza, 88 Pine Street, 19th
Floor, New York, New York 10005, or at such other office in The City of New
York, as the Company may determine (which, unless otherwise specified above,
shall be the “Place of Payment”).  The
Company has initially appointed SunTrust Bank, at its office in The City of New
York, currently the office of the Trustee located at c/o Harris Trust Bank of
New York, Wall Street Plaza, 88 Pine Street, 19th Floor, New York,
New York 10005.

 

Unless otherwise shown
above, payment of interest on this Security (other than on the Maturity Date)
will be made by check mailed to the registered address of the Holder hereof as
of the Regular Record Date; provided, however, that, if (i) the Specified
Currency is U.S. dollars and this is a Global Security (as defined on the
reverse hereof) or (ii) the Specified Currency is a foreign currency, and the
Holder has elected to receive payments in such Specified Currency as provided
for above, such interest payments will be made by transfer of immediately
available funds, but only if appropriate wire transfer instructions have been
received in writing by the Trustee on or prior to the applicable Regular Record
Date.  Simultaneously with any election
by the Holder hereof to receive payments in respect hereof in the Specified
Currency (if other than U.S. dollars), such Holder may provide appropriate wire
transfer instructions to the Trustee, and all such payments will be made in
immediately available funds to an account maintained by the payee with a bank,
but only if such bank has appropriate facilities therefor.  Unless otherwise specified above, the
principal hereof (and premium, if any) and interest, if any, hereon payable on
the Maturity Date will be paid in immediately available funds upon surrender of
this Security at the office of the Trustee maintained for that purpose in The
City of New York, currently the office of the Trustee located at c/o Harris
Trust Bank of New York, Wall Street Plaza, 88 Pine Street, 19th
Floor, New York, New York 10005, or at such other office in The City of New
York, as the Company may determine.  The
Company will pay any administrative costs imposed by banks in making payments
in immediately available funds, but any tax, assessment or governmental charge
imposed upon payments will be borne by the Holders of the Securities in respect
of which such payments are made.

 

Interest on this
Security, if any, will be computed on the basis of a 360-day year of twelve
30-day months.

 

REFERENCE IS HEREBY MADE
TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF,
WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET
FORTH AT THIS PLACE.

 

 

Unless the certificate of
authentication hereon has been executed by the Trustee by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.

 

 

IN WITNESS WHEREOF, the
Company has caused this instrument to be duly executed.

 

	
  Dated:  April 1, 2004

  	
   

  
	
   

  	
   

  
	
   

  	
  McCORMICK &
  COMPANY, INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Francis Contino

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Francis A. Contino

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President, Chief

  Financial Officer and Supply Chain

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Paul C. Beard

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paul C. Beard

  
	
   

  	
   

  	
  Title:

  	
  Vice President and
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRUSTEE’S CERTIFICATE
  OF AUTHENTICATION

  
	
   

  	
   

  
	
   

  	
  This is one of the
  Securities referred to in the within-

  mentioned Indenture.

  
	
   

  	
   

  
	
  Dated:  April 1, 2004

  	
   

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Craig A. Robinson

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  
									

 

 

McCORMICK &
COMPANY, INCORPORATED

MEDIUM-TERM NOTE

 

Section 1.  General. 
This Security is one of a duly authorized issue of securities (herein
called the “Securities”) of the Company, issued and to be issued in one or more
series under an Indenture, dated as of December  5, 2000, as it may be supplemented from time
to time (herein called the “Indenture”), between the Company and SunTrust Bank,
as Trustee (herein called the “Trustee”, which term includes any successor
trustee under the Indenture with respect to a series of which this Security is
a part), to which Indenture and all indentures supplemental thereto, reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.  This
Security is one of the series of Securities designated as “Medium-Term Notes”,
limited in aggregate principal amount to U.S. $375,000,000 (or the equivalent
thereof in one or more foreign currencies) or such other principal amount as
shall be provided pursuant to the Indenture.

 

Section 2.  Payments. 
If the Specified Currency is other than U.S. dollars and the Holder
hereof fails to elect payment in such Specified Currency in accordance with the
procedures set forth on the face hereof, the amount of U.S. dollar payments to
be made in respect hereof will be determined by the Exchange Rate Agent
specified on the face hereof or a successor thereto (the “Exchange Rate Agent”)
based on the highest bid quotation in The City of New York at approximately
11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date received by the Exchange Rate Agent from three
recognized foreign exchange dealers (one of whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for U.S. dollars for
settlement on such payment date in the aggregate amount of the Specified
Currency payable to all holders of Securities scheduled to receive U.S. dollar
payments and at which the applicable dealer commits to execute a contract.  If three such bid quotations are not
available, payments will be made in the Specified Currency.

 

If the Specified Currency
is other than U.S. dollars and the Holder hereof has elected payment in such
Specified Currency in accordance with the procedures set forth on the face
hereof and the Specified Currency is not available due to the imposition of
exchange controls or to other circumstances beyond the Company’s control, the
Company will be entitled to satisfy its obligations to the Holder of this
Security by making such payment in U.S. dollars on the basis of the noon buying
rate in The City of New York for cable transfers of such Specified Currency as
certified for customs purposes (or, if not so certified, as otherwise
determined) by the Federal Reserve Bank of New York (the “Market Exchange
Rate”) as computed by the Exchange Rate Agent on the second Business Day prior
to the applicable payment date or, if the Market Exchange Rate is then not
available, on the basis of the most recently available Market Exchange Rate or
as otherwise indicated above.  Any
payment made under such circumstances in U.S. dollars where the required
payment is in a Specified Currency will not constitute a default under the
Indenture.

 

All determinations
referred to above made by the Exchange Rate Agent shall be at its sole
discretion (except to the extent expressly provided that any determination is
subject to approval by the Company) and, in the absence of manifest error,
shall be conclusive for all 

 

 

purposes and
binding on the Holder of this Security, and the Exchange Rate Agent shall have
no liability therefor.

 

All currency exchange
costs will be borne by the Company.

 

References herein to
“U.S. dollars” or “U.S. $” or “$” are to the currency of the United States of
America.

 

Section 3.  Redemption.  The Company may at its option redeem this
Security in whole or from time to time in part, at the Make-Whole Price (as
defined below).  The Company may
exercise such option by causing the Trustee to mail a notice of such redemption
at least 30 but not more than 60 days prior to the Redemption Date.  In the event of redemption of this Security
in part only, a new Security or Securities for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the cancellation
hereof.  If less than all of the
Securities with like tenor and terms to this Security are to be redeemed, the
Securities to be redeemed shall be selected by the Trustee by such method as
the Trustee shall deem fair and appropriate. 
However, if less than all the Securities of the series with differing
tenor and terms to this Security are to be redeemed, then the Company in its
sole discretion shall select the particular Securities to be redeemed and shall
notify the Trustee in writing thereof at least 60 days prior to the relevant
Redemption Date.  Notwithstanding Section
11.4 of the Indenture, the notice of redemption with respect to the foregoing
redemption need not set forth the Make-Whole Price but only the manner of
calculation thereof.  The Company shall
notify the Trustee of the Make-Whole Price with respect to any redemption
promptly after the calculation thereof, and the Trustee shall not be
responsible for such calculation.

 

“Make-Whole Price” means an amount equal to the greater of (i) 100% of
the principal amount of this Security to be redeemed and (ii) as determined by
an Independent Investment Banker (as defined below), the sum of the present
values of the remaining scheduled payments of principal and interest thereon
(not including any portion of such payments of interest accrued as of the date
of redemption) discounted to the date of redemption on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate (as defined below) plus 10 basis points, plus, in the case of both (i) and
(ii), accrued and unpaid interest to the date of redemption.  Unless the Company defaults in payment of
the Make-Whole Price, on and after the date of redemption, interest will cease
to accrue on this Security to be redeemed.

 

“Comparable Treasury Issue” means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of this Security to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of this Security.

 

“Comparable Treasury Price”
means, with respect to any date of redemption, (i) the average of five
Reference Treasury Dealer Quotations for such date of redemption, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (ii) if the Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.

 

 

“Independent Investment Banker” means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.

 

“Reference Treasury Dealer”
means (i) Goldman, Sachs & Co., Banc of America Securities LLC and their
respective successors; provided, however, that if any of the foregoing shall
not be a primary U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another
Primary Treasury Dealer; and (ii) any two other Primary Treasury Dealers the
Company selects.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any date of
redemption, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such date of
redemption.

 

“Treasury Rate” means, with
respect to any date of redemption, (i) the yield, under the heading which
represents the average for the immediately preceding week, appearing in the
most recently published statistical release designated “H.15 (519)” or any successor publication that is published weekly by the Board of
Governors of the Federal Reserve System and that establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under
the caption “Treasury Constant
Maturities”, for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the stated maturity, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue shall be
determined, and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month) or (ii) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price
for such date of redemption. The Treasury Rate shall be calculated on the third
Business Day preceding the date of redemption.

 

Section 4.  Repayment.  If so specified on the face hereof, this
Security shall be repayable prior to the Stated Maturity Date at the option of
the Holder on each applicable Optional Repayment Date shown on the face hereof
at a repayment price equal to 100% of the principal amount to be repaid,
together with accrued interest, if any, to the Repayment Date.  In order for this Security to be repaid, the
Trustee must receive at least 30 but not more than 60 days prior to an Optional
Repayment Date, this Security with the form attached hereto entitled “Option to
Elect Repayment” duly completed.  Any
tender of this Security for repayment shall be irrevocable.  The repayment option may be exercised by the
Holder of this Security in whole or in part in increments of $1,000 (provided
that any remaining principal amount of this Security shall not be less than the
Minimum Denomination specified on the face hereof).  Upon any partial repayment, this Security shall be canceled and a
new Security or Securities for the remaining principal amount hereof shall be
issued in the name of the Holder of this Security.

 

 

Section 5.  Discount Securities.  If this Security (such a Security being referred
to as a “Discount Security”) (a) has been issued at an Original Issue Price
lower, by more than a de minimis amount (as determined under United States
federal income tax rules applicable to original issue discount instruments),
than the stated redemption price at maturity (as defined below) hereof and (b)
would be considered an original issue discount security for United States
federal income tax purposes, then the amount payable on this Security in the
event of redemption by the Company, repayment at the option of the Holder or
acceleration of the maturity hereof, in lieu of the principal amount due at the
Stated Maturity Date hereof, shall be the Amortized Face Amount (as defined
below) of this Security as of the date of such redemption, repayment or
acceleration.  The “Amortized Face
Amount” of this Security shall be the amount equal to the sum of (a) the
Original Issue Price (as set forth on the face hereof) plus (b) the aggregate
of the portions of the original issue discount (the excess of the amounts
considered as part of the “stated redemption price at maturity” of this
Security within the meaning of Section 1273(a)(2) of the Internal Revenue Code
of 1986, as amended (the “Code”), whether denominated as principal or interest,
over the Original Issue Price of this Security) which shall theretofore have
accrued pursuant to Section 1272 of the Code (without regard to Section
1272(a)(7) of the Code) from the date of issue of this Security to the date of
determination, minus (c) any amount considered as part of the “stated
redemption price at maturity” of this Security which has been paid on this
Security from the date of issue to the date of determination.

 

Section 6.  Modification and Waivers; Obligation of the
Company Absolute.  The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities of each series. 
Such amendment may be effected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of Outstanding Securities of each series affected
thereby.  The Indenture also contains
provisions permitting the Holders of not less than a majority in principal
amount of the Outstanding Securities of any series, on behalf of the Holders of
all Outstanding Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture. 
Provisions in the Indenture also permit the Holders of not less than a
majority in principal amount of all Outstanding Securities of any series to
waive on behalf of all of the Holders of Securities of such series certain past
defaults under the Indenture and their consequences.  Any such consent or waiver shall be conclusive and binding upon
the Holder of this Security and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

 

The Securities are
unsecured and rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company.

 

No reference herein to
the Indenture and no provision of this Security or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest, if any, on this
Security at the times, place and rate, and in the Specified Currency herein
prescribed, except as set forth in Section 2.

 

Section 7.  Defeasance and Covenant Defeasance.  The Indenture contains provisions for
defeasance at any time of (a) the entire indebtedness of the Company on this
Security 

 

 

and (b) certain restrictive
covenants and the related defaults and Events of Default, upon compliance by
the Company with certain conditions set forth therein, which provisions apply
to this Security, unless otherwise specified on the face hereof.

 

Section 8.  Minimum Denomination;  Authorized Denominations.  Unless otherwise provided on the face
hereof, this Security is issuable only in registered form without coupons in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.  If this Security is
denominated in a Specified Currency other than U.S. dollars or is a Discount
Security, this Security shall be issuable in the denominations set forth on the
face hereof.

 

Section 9.  Registration of Transfer.  As provided in the Indenture and subject to
certain limitations herein and therein set forth, the transfer of this Security
is registrable in the Security Register upon surrender of this Security for
registration of transfer at a Place of Payment for the series of Securities of
which this Security forms a part, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Securities of this series, of like
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

 

If the registered owner
of this Security is the Depository (such a Security being referred to as a
“Global Security”), and (i) the Depository is at any time unwilling or unable
to continue as depository and a successor depository is not appointed by the
Company within 90 days following notice to the Company or (ii) an Event of Default
occurs, the Company will issue Securities in certificated form in exchange for
this Global Security.  In addition, the
Company may at any time, and in its sole discretion, determine not to have
Securities represented by a Global Security and, in such event, will issue
Securities in certificated form in exchange in whole for this Global
Security.  In any exchange pursuant to
this paragraph, the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of individual Securities of
this series in exchange for this Global Security, will authenticate and deliver
individual Securities of this series in certificated form in an aggregate
principal amount equal to the principal amount of this Global Security in exchange
herefor.  Securities issued in exchange
for this Global Security pursuant to this paragraph shall be registered in such
names and in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee.  None of the
Company, the Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in this Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. 
For purposes of the Indenture, this Global Security constitutes a
Security issued in permanent global form. 
Securities so issued in certificated form will be issued in
denominations of $1,000 (or such other denomination as shall be specified on
the face hereof) or any amount in excess thereof which is an integral multiple
of $1,000 and will be issued in registered form only, without coupons.

 

As provided in the
Indenture and subject to certain limitations therein and herein set forth, this
Security is exchangeable for a like aggregate principal amount of Securities of
this series of different authorized denominations but otherwise having the same
terms and conditions, as requested by the Holder hereof surrendering the same.

 

 

No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.

 

Prior to due presentment
of this Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Holder as the owner hereof
for all purposes, whether or not this Security be overdue, and none of the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

 

Section 10.  Events of Default.  If an Event of Default with respect to the Securities of the series
of which this Security forms a part shall have occurred and be continuing, the
principal of this Security may be declared due and payable in the manner and
with the effect provided in the Indenture.

 

Section 11.  Defined Terms.  All terms used in this Security which are defined in the
Indenture and are not otherwise defined herein shall have the meanings assigned
to them in the Indenture.

 

Section 12.  Governing Law.  Unless otherwise specified on the face hereof, this Security
shall be governed by and construed in accordance with the law of the State of
New York.

 

*     *     *     *     *

 

 

OPTION TO ELECT
REPAYMENT

 

The undersigned hereby
irrevocably requests and instructs the Company to repay this Security (or the
portion thereof specified below), pursuant to its terms, on the “Optional
Repayment Date” first occurring after the date of receipt of this Security as
specified below (the “Repayment Date”), at a Repayment Price equal to 100% of
the principal amount thereof, together with interest thereon accrued to the
Repayment Date, to the undersigned at:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Please Print or Type
  Name and Address of the Undersigned.)

  

 

For this Option to Elect
Repayment to be effective, this Security with the Option to Elect Repayment
duly completed must be received at least 30 but not more than 60 days prior to
the Optional Repayment Date (or, if such Repayment Date is not a Business Day,
the next succeeding Business Day) by the Company at the office of the Trustee
maintained for that purpose in The City of New York, currently the office of
the Trustee located at c/o Harris Trust Bank of New York, Wall Street Plaza, 88
Pine Street, 19th Floor, New York, New York 10005.

 

If less than the entire
principal amount of this Security is to be repaid, specify the portion thereof
(which shall be $1,000 or an integral multiple thereof) which is to be repaid:
$                      .

 

If less than the entire
principal amount of the within Security is to be repaid, specify the
denomination(s) of the Security(ies) to be issued for the unpaid amount ($1,000
or any integral multiple of $1,000; provided that any remaining principal
amount of this Security shall not be less than the Minimum Denomination):
$                      .

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Note:  The signature to this Option to Elect
  Repayment must correspond with the name as written upon the face of this
  Security in every particular without alteration or enlargement or any change
  whatsoever.

  

 

 

ABBREVIATIONS

 

The following
abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to
applicable laws or regulations:

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEN COM

  	
  -

  	
  as tenants in common

  
	
   

  	
  TEN ENT

  	
  -

  	
  as tenants by the
  entireties

  
	
   

  	
  JT TEN

  	
  -

  	
  as joint tenants with
  right of survivorship and not as tenants in common

  
	
   

  	
   

  
	
   

  	
  UNIF GIFT MIN ACT  -

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
  (Cust.)

  	
   

  	
  (Minor)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Under Uniform
  Gifts to Minors Act

  	
   

  
	
   

  	
   

  	
  (State)

  	
   

  
										

 

Additional abbreviations may also be used though not
in the above list.

 

FOR VALUE
RECEIVED, the undersigned

hereby sell(s), assign(s) and transfer(s) unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER
     IDENTIFYING NUMBER OF ASSIGNEE

 

	
   

  	
   

  

Please print or
type name and address, including zip code of assignee

 

 

the within Security of McCORMICK & COMPANY, INCORPORATED
and all rights thereunder and does hereby irrevocably constitute and appoint

 

                                                                     Attorney
to transfer the said Security on the books of the within-named Company, with
full power of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  SIGNATURE GUARANTEED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  The signature to this assignment must
  correspond with the name as it appears upon the face of the Security in every
  particular, without alteration or enlargement or any change whatsoever.Exhibit
10.1

 

THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE 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 THE COMPANY 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.

 

TRESTLE
HOLDINGS, INC.

 

WARRANT TO PURCHASE

9,300  SHARES OF COMMON STOCK

 

	
  Bridge
  Warrant No. 1

  	
   

  	
  Dated March 3, 2004

  

 

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

 

1.             Registration of
Warrant.  The Company shall register
this Warrant, in the books of the Company to be maintained for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from
time to time.  The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the Holder, and for
all other purposes, and the Company shall not be affected by notice to the
contrary.

 

2.             Registration of
Transfers and Exchanges.

 

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

 

(b)           Subject to the terms
hereof, the Warrants shall be transferable only on the Warrant Register
maintained at its principal office upon delivery thereof duly endorsed by

 

 

the Holder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, 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 remain
with the Company.  Upon any registration
of transfer, the person to whom such transfer is made shall receive a new
Warrant or Warrants as to the portion of the Warrant transferred, and the
Holder of such Warrant shall be entitled to receive a new Warrant or Warrants
from the Company as to the portion thereof retained.  The Company may require the payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any such
transfer.

 

3.             Duration and
Exercise of Warrants.

 

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

 

(b)           This Warrant shall be exercisable
by the registered Holder on any business day during the Exercise Period before
5:00 P.M., Los Angeles time.  At
5:00 P.M., Los Angeles time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.

 

(c)           Subject to Sections
2(b), 4 and 7, upon surrender of this Warrant, with the Form of Election to
Purchase attached hereto duly completed and executed, to the Company at its
office 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 in
writing to the then registered Holder, and upon payment of the Exercise Price
multiplied by the number of Warrant Shares that the Holder intends to purchase
hereunder, in lawful money of the United States of America, in cash or by
certified or official bank check or checks (subject to the Conversion Right in
accordance with Section 3(d)), all as specified by the Holder in the Form
of Election to Purchase, the Company shall promptly (but in no event later than
ten (10) business days after the date of exercise) issue or cause to be issued
and cause to be delivered to or upon the written order of the Holder and in
such name or names as the Holder may designate, a certificate for the Warrant
Shares issuable upon such exercise.

 

(d)           In addition to and
without 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 this
Section 3(d) at any time or from time to time during the Exercise Period
by delivering notice in accordance with Section 3(c).  Upon exercise of the Conversion Right with
respect to all or a specified portion of shares subject to this Warrant (the “Pre-Converted
Warrant Shares”), the Company shall deliver to Holder that number of
Warrant Shares equal to the quotient obtained by dividing (i) the value of this
Warrant (or the specified portion hereof) on the Exercise Date (as defined in
Section 3(e)), which value shall be equal to (A) the aggregate Fair Market
Value (as defined below) of the Pre-Converted Warrant Shares issuable upon
exercise of this Warrant on the Exercise Date less (B) the aggregate Exercise
Price of such Pre-Converted Warrant Shares immediately prior to the exercise of
the Conversion Right by (ii) the fair market value of one (1) Warrant Share on
the Exercise Date.

 

2

 

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 the
provisions of this Warrant requiring a determination in accordance with this
Section 3(d), “Fair Market Value” as of a particular date (the “Determination
Date”) shall mean (i) for any security if such security is traded on a
national securities exchange (an “Exchange”), the weighted average
(based on daily trading volume) of the mid-point between the daily high and low
trading prices of the security on each of the last ten (10) trading days prior
to the Determination Date reported on such Exchange, (ii) for any security that
is 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 daily
trading volume) of the mid-point between the daily high and low trading prices
reported on NASDAQ on each of the last ten (10) trading days (or if the
relevant price or quotation did not exist on any of such days, the relevant
price or quotation on the next preceding business day on which there was such a
price or quotation, for a total of five trading days) prior to the
Determination Date, or (iii) for any security or any other asset, if no price
can be determined on the basis of the above methods of valuation, then the
judgment of valuation shall be determined in good faith by the Board of
Directors of the Company, which determination shall be described in a duly
adopted board resolution certified by the Company’s Secretary or Assistant
Secretary.

 

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

 

(f)            This Warrant shall be
exercisable, either in its entirety or, from time to time, for a portion of the
number of Warrant Shares so long as at least One Thousand

 

3

 

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

 

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

 

4.             Payment of Taxes.  The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder, and the Company shall not be required
to issue or cause to be issued or deliver or cause to be delivered the
certificates for Warrant Shares unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.  The Holder shall be
responsible for all other tax liability that may arise as a result of holding
or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

5.             Replacement of
Warrant.  If this Warrant is
mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue
or cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a new Warrant, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction and indemnity, if requested, satisfactory to
it.  Applicants for a new Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

 

6.             Adjustments 

 

(a)           For Changes in
Common Stock.  If the Company, at
any time and from time to time while this Warrant is outstanding,
(i) subdivides its outstanding shares of Common Stock into a larger number
of shares, or (ii) combines its outstanding shares of Common Stock into a
smaller number of shares, then, and in each such case, the number of Warrant
Shares shall be proportionately increased (in the case of a subdivision
described in clause (i) above), or proportionately decreased (in the case of a
combination described in clause (ii) above) to become effective immediately
after the day upon which such subdivision or combination becomes
effective.  The Company shall give
written notice of each adjustment or readjustment of the number of Warrant
Shares or other securities issuable upon exercise of this Warrant; provided,
however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. 
The notice shall describe the adjustment or readjustment and show in
reasonable detail the facts on which the adjustment or readjustment is based.

 

4

 

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

 

7.             Fractional Shares.  The Company shall not be required to issue
or cause to be issued fractional Warrant Shares on the exercise of this
Warrant.  The number of full Warrant
Shares which shall be issuable upon the exercise of this Warrant shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of this Warrant so presented. 
If any fraction of a Warrant Share would be issuable on the exercise of
this Warrant, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon exercise shall, on an aggregate basis, be
rounded down  to the nearest whole
number of shares.

 

8.             Notices.  Any and all notices or other communications
or deliveries hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified in this Section 8 prior to 4:30 P.M. (Los Angeles time) on
a business day, (ii) the business day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section 8 later than 4:30 P.M. (Los
Angeles time) on any date and earlier than 11:59 P.M. (Los Angeles time) on
such date, (iii) the business day following the date of mailing, if sent
by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.  The addresses for such communications shall
be:  (i) if to the Company, to
Trestle Holdings, Inc., 11835 W. Olympic Blvd, Suite 550, Los Angeles, CA
90064, Attention: Chief Financial Officer, or to facsimile no.  (310) 444-4101, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 8.

 

9.             Warrant Agent.  The Company shall serve as warrant agent
under 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 to
this Warrant without any further act. 
Any new warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder’s last address as shown on the Warrant Register.

 

10.           Holder’s
Representations and Warranties.  As
of the date hereof, Holder hereby makes the representations, warranties and
covenants set forth on Exhibit A hereto as though fully set forth
herein.

 

5

 

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 the
Company.

 

12.           Miscellaneous.

 

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

 

(b)           Subject to
Section 12(a), nothing in this Warrant shall be construed to give to any
person or entity other than the Company and the Holder any legal or equitable
right, remedy or cause under this Warrant; this Warrant shall be for the sole
and exclusive benefit of the Company and the Holder.

 

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

 

(i)                                     “THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE 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 THE COMPANY 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 the Company’s certificate of incorporation or certificate of
determination; and/or

 

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

 

(d)           This Warrant shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware without regard to the principles of conflicts of law
thereof.

 

6

 

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

 

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

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by its authorized officer
as 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

  	
   

  	
   

  	
   

  
								

 

7

 

FORM OF ELECTION TO
PURCHASE

 

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

 

To Trestle Holdings,
Inc.:

 

[CHECK PARAGRAPH THAT
APPLIES]

 

                
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 the
aggregate Exercise Price (as defined in the Warrant) for the number of shares
of Common Stock to which this Form of Election to Purchase relates, together
with 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) of
the Warrant.  Also enclosed is
documentation supporting the calculation of such number of shares of Common
Stock to which this Form of Election to Purchase relates.

 

The undersigned requests
that certificates for the shares of Common Stock issuable upon this exercise be
issued in the name
of                                                .

 

	
  PLEASE INSERT SOCIAL SECURITY

  OR TAX IDENTIFICATION NUMBER

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Please print
  name and address)

  
	
   

  
	
   

  

 

 

If the number of shares
of Common Stock issuable upon this exercise shall not be all of the shares of
Common Stock which the undersigned is entitled to purchase in accordance with
the enclosed Warrant, the undersigned requests that a new Warrant evidencing
the right to purchase the shares of Common Stock not issuable pursuant to the
exercise 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)

  
												

 

A-2

 

[To be
completed and executed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the
undersigned 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. with
full 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:

  
	
   

  
	
   

  	
   

  	
   

  
							

 

A-3

 

EXHIBIT A

 

Representations, Warranties and Covenants of Holder

 

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

 

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

 

2.                                       The
execution and delivery by Holder of the Warrant 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 Warrant.

 

3.                                       Without
limiting the terms of the investment representations set forth below, Holder
represents that Holder has:

 

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

 

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

 

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

 

4.                                       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 the Company 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.

 

5.                                       Either
(i) Holder has a preexisting personal or business relationship with the
Company 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.

 

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

 

A-1

 

7.                                       The
Warrant, any Warrant Shares and any securities issuable, directly or
indirectly, upon conversion of the Warrant Shares (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.

 

8.                                       Holder
understands that no public market now exists for any securities of the Company
and that the Company has made no assurances or representations whatsoever that
a public market will ever exist for any of the Company’s securities.

 

9.                                       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.

 

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

 

11.                                 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 the Company 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 the Company 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
the Company 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 the Company has no present plans ever to do so.

 

12.                                 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:

 

(a)                                  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

 

(b)                                 Holder
shall have (1) notified the Company of the proposed disposition,
(2) furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition and (3) furnished the Company with a
written opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of any securities under the Act or
the

 

A-2

 

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

 

13.                                 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 the Company 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 the Company 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 the Company with such additional documents as the Company may
reasonably require.

 

14.                                 In
the event of an initial public offering relating to any of the Company’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.

 

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

 

A-3

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