-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I/I0EZcTbXBJnZy0HbMVFNctGsRCbp5IrZ4svRX/SgJ2lLCgConhXitT5rxMaS1y RVn3AGRycaYy890/ounSPw== 0001104659-04-021300.txt : 20040729 0001104659-04-021300.hdr.sgml : 20040729 20040728174317 ACCESSION NUMBER: 0001104659-04-021300 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20040729 GROUP MEMBERS: EMERSON PARTNERS FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EMERSON J STEVEN CENTRAL INDEX KEY: 0001203863 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: C/O NESTOR TRAFFIC SYSTEMS INC STREET 2: 400 MASSASOIT AVE STE 200 CITY: E PROVIDENCE RI STATE: RI ZIP: 02914 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRESTLE HOLDINGS INC CENTRAL INDEX KEY: 0000904350 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 954217605 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-53359 FILM NUMBER: 04936911 BUSINESS ADDRESS: STREET 1: 11835 W OLYMPIC BLVD STREET 2: SUITE 550E CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 3107891990 MAIL ADDRESS: STREET 1: 11835 W OLYMPIC BLVD STREET 2: SUITE 550E CITY: LOS ANGELES STATE: CA ZIP: 90064 FORMER COMPANY: FORMER CONFORMED NAME: SUNLAND ENTERTAINMENT CO INC DATE OF NAME CHANGE: 20010706 FORMER COMPANY: FORMER CONFORMED NAME: HARVEY ENTERTAINMENT CO DATE OF NAME CHANGE: 19940616 FORMER COMPANY: FORMER CONFORMED NAME: HARVEY COMICS ENTERTAINMENT INC DATE OF NAME CHANGE: 19930512 SC 13D 1 a04-7740_1sc13d.htm SC 13D

 

 

UNITED STATES

OMB APPROVAL

 

SECURITIES AND EXCHANGE
COMMISSION

OMB Number:
3235-0145

 

Washington, D.C. 20549

Expires: December 31, 2005

 

SCHEDULE 13D

Estimated average burden hours per response. . 11

Under the Securities Exchange Act of 1934
(Amendment No.     )*

Trestle Holdings, Inc.

(Name of Issuer)

 

Common Stock, $.001 par value

(Title of Class of Securities)

 

89530U105

(CUSIP Number)

 

J. Steven Emerson

1522 Ensley Avenue

Los Angeles, CA  90024

(310) 553-4151

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

June 30, 2004

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 



 

CUSIP No.   89530U105

 

 

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
J. Steven Emerson

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 ý

 

 

(b)

 

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
PF, OO

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
California, United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
455,750

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
455,750

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
455,750

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
9.99%

 

 

14.

Type of Reporting Person (See Instructions)
IN

 

 

2



 

CUSIP No.   89530U105

 

 

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Emerson Partners

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 ý

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
OO

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
California, United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
47,250

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
47,250

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
47,250

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

 

13.

Percent of Class Represented by Amount in Row (11)
1.04%

 

 

14.

Type of Reporting Person (See Instructions)
PN

 

3



 

Item 1.

Security and Issuer

 

This Statement on Schedule 13D (this “Statement”) relates to the common stock, $.001 par value, (the "Shares") and warrants (the “Warrants”) of Trestle Holdings, Inc., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 199 Technology Dr, Suite 105, Irvine, California 92618.

 

 

Item 2.

Identity and Background

 

This Statement is filed by and on behalf of J. Steven Emerson and Emerson Partners (“Reporting Persons”).  J. Steven Emerson personally invests in the Company through three accounts, including; Bear Stearns Securities Corp. Custodian, Steven J Emerson Investment Account; Bear Stearns Securities Corp. Custodian, J Steven Emerson Roth IRA; and Bear Stearns Securities Corp. Custodian, Steven J Emerson IRA Roth II.  J. Steven Emerson has sole power over the Emerson Partners investment fund.  J. Steven Emerson’s son is the principal of Emerson Partners, but J. Steven Emerson has sole voting control and dispositive power over the securities covered by this Statement. Mr. Emerson, therefore, may be deemed to have shared indirect beneficial ownership of such securities. The present principal occupation of Mr. Emerson is professional investor.

During the last five years, neither J. Steven Emerson nor Emerson Partners has been (i) convicted in a criminal proceeding or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

The business address of J. Steven Emerson and Emerson Partners is 1522 Ensley Avenue, Los Angeles, CA 90024.

J. Steven Emerson is a citizen of California, United States of America.

 

 

Item 3.

Source and Amount of Funds or Other Consideration

 

From October, 2003 through June, 2004 J. Steven Emerson purchased 111,500 Shares for a total consideration of $544,988 in open market transactions through accounts at Bear Stearns Securities Corp.  In Trestle Holdings, Inc.’s June 2004 private placement, Mr. Emerson purchased an additional 198,000 Shares for a total consideration of $396,000 and as part of the private placement transaction holds a warrant to purchase an additional 99,000 Shares for a total consideration of $198,000 (a strike price of $2.00 per share).

 

From October, 2003 through June, 2004 Emerson Partners purchased 15,000 Shares for a total consideration of $74,214 in open market transactions through an account at Bear Stearns Securities Corp.  In Trestle Holdings, Inc.’s June 2004 private placement, Emerson Partners purchased an additional 21,500 Shares for a total consideration of $43,000 and as part of the private placement transaction has a warrant to purchase an additional 10,750 Shares for a total consideration of $21,500 (a strike price of $2.00 per share).

 

 

Item 4.

Purpose of Transaction

 

The Reporting Person acquired the securities described in Item 3 for investment purposes.

Except as disclosed in this Item 4, the Reporting Person does not have any current plans or proposals which relate to or would result in any of the events described in clauses (a) through (j) of the instructions to Item 4 of Schedule 13D. The Reporting Person expects to evaluate on an ongoing basis the Issuer's financial condition, business operations and prospects, the market price of the Issuer Common Stock, conditions in the securities markets generally, general economic and industry conditions and other factors. Accordingly, the Reporting Person reserves the right to change his plans and intentions at any time, as he deems appropriate. In particular, the Reporting Person may, subject to the restrictions discussed in Item 6 below and the restrictions contained in the securities laws, at any time and from time to time acquire additional Shares of the Issuer Common Stock or securities convertible or exchangeable for the Issuer Common Stock in public or private transactions; dispose of Shares of the Issuer Common Stock or other securities in public or private transactions; and/or enter into privately negotiated derivative transactions with institutional counterparties to hedge the market risk of some or all of its positions in the Issuer Common Stock or other securities. Any such transactions may be effected at any time and from time to time.

 

 

Item 5.

Interest in Securities of the Issuer

 

(a) As of the date of this Statement, the Reporting Persons beneficially owned in the aggregate 455,750 Shares constituting 9.99% of the outstanding Shares (the percentage of Shares owned being based upon 4,563,000 Shares outstanding at June 30, 2004 as set forth in the Company’s 10-Q for the period ended March 31, 2004 and the Company’s press release dated July 9, 2004 siting the completion of the Company’s 1.5 million share offering as described in the Private Placement Memorandum, Common Stock Purchase Agreement and Amendment to Private Placement Memorandum and Common Stock Purchase Agreement).


The Reporting Persons may be deemed to have beneficial ownership of the Shares as follows:

 


Name                                   Number of Shares              % of Outstanding Shares

J. Steven Emerson                              408,500                                                      8.95%

Emerson Partners                                 47,250                                                      1.04%

Total                                                     455,750                                                      9.99%



(b) J. Steven Emerson has the sole power to vote or direct the vote of 455,750 Shares and sole power to dispose or direct the disposition of such Shares.

 

Emerson Partners has the sole power to vote or direct the vote of 47,250 Shares and the sole power to dispose or direct the disposition of such Shares.

 

(c) Information concerning transactions in the Shares by the Reporting Persons during the past 60 days is set forth Item 3 of this Statement.

(d) No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares covered by this Statement.

(e) Not applicable.

 

 

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

Under the terms of the Company’s June, 2004 private placement offering, Trestle proposed to sell up to 1.5 million Units at an offering price of $2.00 per Unit.  Trestle proposed to sell up to 1.5 million Units to accredited investors, with each Unit defined as and consisting of (a) one share (a “Share”) of Common Stock of the Company, par value $.001 per share (the “Common Stock”), and (b) the right to purchase one-half share of Common Stock (each right to purchase a full share of Common Stock, a “Warrant Share”) at an exercise price of $2.00 per Warrant Share which is exercisable for a period of three years from issuance.  The Warrants associated with the aforementioned offering are subject to certain piggy-back registration rights.

Except as disclosed in this Item 6, the Reporting Person is not a party to any contracts, arrangements, understandings or relationships with respect to any securities of the Issuer, including but not limited to the transfer or voting of any of the securities, finder's fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.

 

 

Item 7.

Material to Be Filed as Exhibits

 

1.        Private Placement Memorandum

2.        Common Stock Purchase Agreement

3.        Amendment to Private Placement Memorandum and Common Stock Purchase Agreement

 

4



 

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

July 12, 2004

 

Date

 


/s/ J. Steven Emerson

 

Signature

 


J. Steven Emerson - Professional Investor

 

Name/Title

 

5


EX-1 2 a04-7740_1ex1.htm EX-1

 

Exhibit 1

 

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

 

Private Placement Memorandum #                   

 

Recipient:                                                                

 

 

TRESTLE HOLDINGS, INC.

 

Up to 1,500,000 Units

 

Of

 

Common Stock,

 

$.001 Par Value Per Share

 

 

June 1, 2004

 

THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM IS NOT TO BE SHOWN OR GIVEN TO ANY PERSON OTHER THAN THE PERSON WHOSE NAME APPEARS ABOVE AND IS NOT TO BE PRINTED OR REPRODUCED IN ANY MANNER WHATSOEVER.  FAILURE TO COMPLY WITH THIS DIRECTIVE CAN RESULT IN A VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED.  ANY FURTHER DISTRIBUTION OR REPRODUCTION OF THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF ITS CONTENTS BY AN OFFEREE IS UNAUTHORIZED.

 



 

Table of Contents

 

Overview

 

 

 

Market Overview

 

 

 

Trestle Acquisition

 

 

 

Use of Proceeds

 

 

 

Company Information

 

 

 

Risk Factors

 

 

 

Risks related to the Company and our business

 

 

 

Risks related to the industry

 

 

 

Risks related to the transaction

 

 

 

Capitalization

 

 

 

Industry Overview

 

 

 

Digital Imaging

 

 

 

Telemedicine

 

 

 

Products and Technology

 

 

 

Digital Imaging Products

 

 

 

Telemedicine Products

 

 

 

Competition

 

 

 

Regulatory Issues

 

 

 

Intellectual Property

 

 

 

Management Team

 

 

 

Executive Team

 

 

 

List of Exhibits

 

 

 

Exhibit A:

Form of Purchase Agreement

 

 

 

 

 

 

Exhibit A

Form of Warrant

 

 

Exhibit B

Company’s Wiring Instructions

 

 

Appendix I

Accredited Investor Questionnaire

 

 

Appendix II

Registration Statement Questionnaire

 

 

Appendix III

Investor’s Officer’s Certificate

 

 

 

Exhibit B:

Annual Report on Form 10-KSB for the year ended December 31, 2003 (Incorporated by Reference)

 

 

 

 

Exhibit C:

Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2004 (Incorporated by Reference)

 

 

 

 

Exhibit D:

Company’s Proxy Statement dated August 1, 2003 for a Special Meeting of Shareholders (Incorporated by Reference)

 

 



 

Exhibit E:

Company’s 8-K Filing dated May 19, 2004 announcing retention of Synthetica as counsultant and Maurizio Vecchione and Barry Hall employment contracts (Incorporated by Reference)

 

 

 

 

Exhibit F:

Company’s SB-2 Filing dated May 20, 2004 (Incorporated by Reference)

 

 

2



 

This confidential private placement memorandum (the “Memorandum”) has been prepared by Trestle Holdings, Inc. (“Trestle” or the “Company”) solely for information purposes in connection with the private placement of up to 1,500,000 Units (as defined below) as described in this Memorandum and its Exhibits to selected “accredited investors” (as defined below), subject to the conditions described herein.  Each Unit consists of (a) one share (a “Share”) of Common Stock of the Company, par value $.001 per share (the “Common Stock”), and (b) a warrant (a “Warrant”) to purchase one-half share of Common Stock (a “Warrant Share”) at an exercise price of $2.00 per Warrant Share which is exercisable for a period of three years from issuance.  The aggregate price to purchase each Unit is $2.00.  The Shares, the Warrants and the Warrant Shares are, collectively, referred to as “Securities.”

 

The offering period will continue until July 15, 2004 unless it is extended by the Company for an additional period not to exceed 60 days.  There may be more than one closing in connection with the sale of the Securities by the Company.  There is no minimum number of Units which must be sold for a closing to occur.  If for any reason the closing of the sale of the Securities does not take place prior to such time, all subscription documents and payments will be returned to the subscribers.

 

An “accredited investor,” as used herein, is an institution defined as an “accredited investor” in Rule 501(a) under the Securities Act of 1933, as amended (the “Act”).  The offering described in this Memorandum is intended only for accredited investors purchasing in the ordinary course of their business for their own account for investment and not with a view to, or any arrangements or understandings regarding, any subsequent distributions.

 

The Company may withdraw, cancel or modify the offering of the Securities at any time without notice.  The Company reserves the right to reject any offer to purchase the Securities, in whole or in part, for any reason without notice.

 

An investment in the Securities described in this Memorandum is speculative and involves a high degree of risk.  Only investors who can bear the risk of loss of their entire investment in the Securities should invest and investors should understand that they will be required to bear the financial risk of any investment in the Securities for an indefinite period of time.

 

The Securities described in this Memorandum have not been registered under the Act or any applicable state or foreign securities laws, nor has the U.S. Securities and Exchange Commission (the “SEC”) or any state or foreign regulatory authority passed upon the accuracy or adequacy of this Memorandum or endorsed the merits of this offering, and any representation to the contrary is a criminal offense.  The Securities are offered in reliance on an exemption from the registration requirements of the Act, certain state securities laws pursuant to certain rules and regulations promulgated pursuant thereto.  The Securities may not be resold or otherwise transferred in the absence of an effective registration statement under the Act and any applicable state or foreign securities laws or an applicable exemption therefrom.

 

In recognition of the fact that investors, even though purchasing Securities for investment, may wish to be legally permitted to sell their Securities when they deem appropriate, the Company has agreed to prepare and file with the SEC a registration statement with respect to

 

2



 

the resale of the Securities (the “Registration Statement”) from time to time through the over-the-counter market or in privately negotiated transactions, and prepare and file such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective until the earlier of: (i) one year after the purchase of the Securities, or (ii) the date on which the Securities have been sold pursuant thereto or pursuant to Rule 144 under the Act.  The Company has agreed to use its reasonable efforts, subject to receipt of necessary information from the investors, to cause such Registration Statement to become effective within 90 days after the date such Registration Statement is filed by the Company.  Notwithstanding the filing of such Registration Statement, investors may not be able to sell Securities during certain periods until the Company has amended such Registration Statement.  By executing the purchase agreement attached as Exhibit A (the “Purchase Agreement”), investors are also agreeing to indemnify the Company against certain liabilities.

 

The completion of the purchase and sale of the Securities (the “Closing”) will be at a place and time specified by the Company and of which the investor has been notified by fax or otherwise.  The full amount of the investor’s subscription must be tendered by each investor as set forth in the Purchase Agreement and the warrant agreement attached as Exhibit A to the Purchase Agreement (the “Warrant Agreement”).  The Company has prepared two questionnaires for each investor to complete requesting certain details regarding such investor.  The questionnaires are attached as Appendices I and II to the Purchase Agreement.  Each questionnaire must be completed by the investor when such investor executes the Purchase Agreement.  The Company will utilize the questionnaires completed by the investor as part of its own procedures to confirm the accuracy of the statements as to such investor, including the information in the section to be entitled “Selling Stockholders” and “Plan of Distribution” in the prospectus.  The investor may be deemed an “underwriter” as that term is defined in the Act.  Underwriters have statutory responsibilities as to the accuracy of any prospectus used by them.

 

The investor undertakes in the Purchase Agreement and the Warrant Agreement that, if Securities are sold by such investor, they will be sold in accordance with the Registration Statement, and each investor acknowledges and agrees that the transfer of the Securities will not be transferable on the books of the Company unless the certificate evidencing such Securities, when submitted to the transfer agent, is accompanied by a separate certificate executed by an officer of, or other person duly authorized by, the investor to the effect that such Securities have been sold in accordance with the Registration Statement and that a current prospectus has been delivered in connection with such sale.  The wording of such separate certificate is specified in Appendix III to the Purchase Agreement.  The prospectus delivery requirement can normally be satisfied by an investor by disclosing to a selling broker the existence of the requirement to sell the Securities in accordance with the Registration Statement covering the Securities and making arrangements with such broker to deliver a current prospectus in connection with any such sale.  Upon receipt of a written request therefor, the Company has agreed to provide a reasonable number of current prospectuses to the investor and to supply a reasonable number of copies to any other parties requiring such prospectuses.  Securities sold pursuant to the Registration Statement will be unlegended.

 

This Memorandum is not an offer to sell to, or solicitation of any offer to buy from, nor shall any Securities be offered or sold to, any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful.  The Company makes no representation to any

 

3



 

investor regarding the legality of an investment in the Securities under any securities or similar laws or regulations.  Prospective investors should not construe the contents of this Memorandum, or any prior or subsequent communication from the Company or any of its agents, officers or representatives as legal, business or tax advice regarding an investment in the Securities. Prospective investors should consult their own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the Securities.

 

The Company expressly disclaims any and all liability for express or implied representations or warranties contained in, or for omissions from, this Memorandum or any other written or oral communications transmitted or made available to a prospective investor; and nothing contained in the Memorandum is, or shall be relied upon as a promise or representation, whether as to the past or future.  The Company has not authorized any person to provide information or make any representations with respect to the Securities other than as set forth herein and if any such information or representations are given or made, they must not be relied upon.  Statements in this Memorandum are made as of March 31, 2004, unless stated otherwise and nothing herein should be construed to imply that the information herein is accurate as of any other date.  The Company’s business, financial condition, results of operations and prospects may have changed since that date.

 

This Memorandum contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are “forward-looking statements”.  All statements other than statements of historical fact included in this Memorandum, including statements regarding future performance of events, are forward-looking statements.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe” or “continue” or the negatives thereof or variations thereon or similar terminology.  All such forward-looking statements are based on various underlying assumptions and expectations and are subject to risks and uncertainties which could cause actual events to differ materially from those expressed in the forward-looking statements.  As a result, there can be no assurance that the forward-looking statements included in this Memorandum will prove to be accurate or correct.  In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this Memorandum might not occur.  Accordingly, investors should not rely upon forward-looking statements as a prediction of actual results.  The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

The rights and obligations of investors in the Securities and the other parties to the transactions described herein are set forth in and will be governed by certain documents described herein.  This Memorandum contains summaries of those documents; however, reference is hereby made to the actual documents for a complete description of the rights and obligations of the parties thereto.  All such summaries included in this Memorandum are qualified in their entirety by this reference.

 

Certain information in this Memorandum is confidential and proprietary to the Company and is being submitted confidentially to prospective investors solely for the purpose of a prospective investor’s evaluation of a potential investment in the Securities.  The Company has not authorized its use for any other purpose.  This Memorandum may not be copied or

 

4



 

reproduced in whole or in part.  Recipients of this Memorandum may not distribute, disclose or discuss the contents of this Memorandum other than to or with legal and financial advisors who agree to keep such information in confidence; provided that, to the extent not inconsistent with applicable securities laws, you (and each of your employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the “tax treatment” and “tax structure” (as such terms are defined in Treasury Regulation Section 1.6011-4(c)(8) and (9), respectively) of the transaction described herein and all materials of any kind (including opinions and tax analyses) that have been provided to you relating to the transaction.  This Memorandum is also submitted on the understanding that upon request it will be returned with all other documents provided by the Company if the recipient does not purchase any Securities or this offering is terminated.

 

Laws in certain jurisdictions may restrict the distribution of this Memorandum and the offer and sale of the Securities. It is the responsibility of any person wishing to purchase Securities to satisfy themselves about, and observe, any such restrictions. Each prospective purchaser of the Securities must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers or sells Securities or possesses or distributes this Memorandum and must obtain any consent, approval or permission required under any regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and the Company shall have no responsibility therefore.

 

THESE SECURITIES ARE SUBJECTED TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY ISSUING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.  THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.  FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

FOR NON UNITED STATES RESIDENTS ONLY:

 

Investment in the Securities offered pursuant to this Memorandum may be subject to a number of local jurisdictional restrictions. Investors should consult with their legal advisors with respect to any such restrictions prior to investing in the Company.

 

It is the responsibility of any person wishing to purchase the Securities to satisfy himself as to full observance of the laws of any relevant territory outside the U.S. in connection with any

 

5



 

such purchase, including obtaining any required governmental or other consents or observing any other applicable formalities.

 

References in this Memorandum to “Trestle,” “Company,” “we,” “our” and “us” collectively refer to Trestle Holdings, Inc., a Delaware corporation, and its predecessors and subsidiaries, and not to any of the existing shareholders.

 

Overview

 

Trestle Holdings, Inc. develops and sells digital imaging and telemedicine applications linking dispersed users and data primarily in the healthcare and pharmaceutical markets.

 

Trestle’s digital imaging products - MedMicroä and MedScanä - provide a digital platform to share, store, and analyze tissue images.

 

Trestle’s MedReachä product provides healthcare organizations with a cost effective platform for remote examination, diagnosis, and treatment of patients.

 

Our customers include some of the world’s leading pharmaceutical, research and healthcare organizations; our top twenty-five customers are Pfizer, Aventis, Merck, GlaxoSmithKline, the Kingdom of Saudi Arabia, Walter Reed Army Medical Center, Addus Healthcare, Hawaii Health Systems, Scott & White Hospitals, Louisiana Telemedicine Consortium, Shriners Hospitals, Texas A&M, National Cancer Institute, Baystate Medical Center, Health Network Laboratories, Longview Medical Laboratories, MobilePath, Newark Beth Israel, Saint Joseph Healthcare, University of Maryland, University of Louisville, Columbia Presbyterian University, Ohio State University, University of California at San Francisco, and University of Southern California.  We have only sold a limited amount of our products to customers and have not generated significant revenues to date.

 

Digital Imaging

 

Trestle’s digital imaging products, MedMicroä and MedScanä, have the potential to transform the pathologist’s work environment by capturing digital images of tissue samples and enabling the sharing, archiving, and analysis of these images.  The Company’s first product, MedMicro, is a remote controlled, digital microscope that enables pathologists in dispersed locations to simultaneously review the same tissue sample at sub-micron (1/1,000,000 of a meter) resolution in real time.  By enabling multiple pathologists to view the same tissue sample concurrently from remote locations, MedMicro can save time, reduce expenses and increase quality of service.

 

MedMicro was introduced commercially in 1999 and now represents over 100 microscope sites in eight countries serving over 450 installed viewing stations.

 

The Company is leveraging its position in shared microscopy through the introduction of high productivity tissue scanners to further digitize the pathologist workflow under the name MedScan.  By digitizing whole glass slides, MedScan transforms the pathologist work

 

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environment, enabling efficient image archiving, management and analysis.  For pharmaceutical and biotechnology companies, MedScan enables improvements to both the pre-clinical and clinical phases of research and development through better capture, database management and analysis of tissue sample information. We shipped our first MedScan beta system to a pharmaceutical user in the fourth quarter of 2003.

 

Telemedicine

 

Telemedicine enables the remote delivery of patient care using integrated health information systems and telecommunications technologies.  The Company’s telemedicine product, MedReach, consists of proprietary client-server software that integrates videoconferencing, clinical devices, medical images and patient data.  MedReach allows healthcare organizations to remotely examine, diagnose, and treat patients and enables improved service, increased patient traffic and improved patient access to specialists.  MedReach was first released commercially in 1998 and is now installed in over 60 medical facilities.

 

Through collaboration with our key customers, we plan to improve integration with healthcare information systems and introduce new MedReach products tailored to specific clinical applications.

 

Market Overview

 

Digital Imaging Market

 

The Company estimates the potential market opportunity for digital tissue imaging is approximately $700 million per year worldwide.  This is based on an estimated 350,000 installed microscopes in healthcare and pharmaceutical markets at historical replacement rates and costs.

 

Telemedicine Market

 

According to Business and Communications Company, Inc. (“BCC”), the current domestic market for telemedicine software is approximately $1.2 billion.  Management estimates that software designed to allow remote viewing of x-rays represents the majority of this market.  While growth of the telemedicine market has historically been hindered by telecommunications infrastructure and hardware cost limitations, more cost-effective telecommunications technologies and lower hardware costs are facilitating the expansion of this market.  BCC projects the total software market will grow 13% annually to approximately $2 billion in 2007.  The Company believes MedReach has the potential to serve a portion of this market.  In addition, the hardware bundled with a MedReach sale provides additional revenue opportunities.

 

Applicability of Trestle’s Products in the Healthcare and Pharmaceutical Industries

 

Both the healthcare and pharmaceutical industries share common requirements, including: increased productivity; accelerated time to diagnosis; improved access to information; and automation of repetitive tasks.

 

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We provide technologically advanced imaging and telemedicine products to the healthcare and pharmaceutical markets.  Our products can be used to remotely examine, diagnose and treat patients.  As a result, our customers are able to reduce response times, hospital stays, non-reimbursable activities and improve quality of care.  In addition, recent changes to Medicare and Medicaid reimbursement policies are expected to spur increased use of telemedicine applications.

 

For example, in the pharmaceutical industry, MedMicro and other digital imaging products are used by manufacturers to share, archive, and analyze tissue sample images.  Our pharmaceutical and biotechnology customers use these products to facilitate improvements in the pre-clinical drug development process.

 

Trestle Acquisition

 

Background on Trestle’s Business

 

Trestle’s business was created through the combination of the operations of two companies – Illumea Corporation (“Illumea”) and Vidimedix Corporation. (“Vidimedix”).  Illumea received seed funding from the Department of Pathology at University of Southern California.  Its mission was the development of applications for the digital review and analysis of traditional glass microscope slides.  Vidimedix was founded in conjunction with the Texas Back Institute to develop a personal computer-based telemedicine application providing physicians with integrated access to patient records, videoconferencing, and data from clinical diagnostic devices.  The operations of these businesses were merged in 2000.

 

Acquisition of Trestle’s Business and Assets

 

On May 20, 2003, following approval of the Bankruptcy Court of the Eastern District of New York, the Company through its wholly owned subsidiary, Trestle Acquisition Corp. (“TRAC”), purchased substantially all of the assets of Trestle Corporation, a Delaware corporation (“Old Trestle”), pursuant to an Asset Purchase Agreement, dated April 16, 2003.  Old Trestle was historically in the telepathology and telemedicine industries.  Under the terms of the acquisition, TRAC paid the sellers $1,250,000 in cash, and assumed certain liabilities of Old Trestle consisting of approximately $369,000 of accounts payable and accrued liabilities and certain amounts of deferred revenue on contracts in progress.

 

The acquired assets included (a) intellectual property, (b) tangible personal property, (c) accounts receivable, (d) cash and cash equivalents, (e) certain real and personal property lease agreements and leasehold improvements, (f) software and the contracts related thereto used or held for use in or relating to the Old Trestle business and (g) certain assumed contracts.

 

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Use of Proceeds

 

Net proceeds to us from the sale of the Securities offered at an assumed offering price of $2.00 per Share are estimated to be up to $3,000,000, prior to deducting offering expenses.  We expect to use the net proceeds of this offering as follows:

 

Research and development

 

$

1,000,000

 

Sales and marketing

 

1,000,000

 

Working capital

 

750,000

 

Fees and expenses

 

250,000

 

Total

 

$

3,000,000

 

 

The Company may use brokers, dealers, finders, investment bankers, venture capitalists or strategic partners to locate investors.  In such event, an engagement, success or finder’s fee or commission may be paid.  Those fees and commissions are not included in the “fees and expenses” caption above however, the Company does not anticipate that will exceed ten (10%) of the proceeds from the sale of the Securities.

 

Company Information

 

Our principal office is located at 199 Technology Drive, Suite 105, Irvine, California 92618.  Our phone number is (949) 673-1907 and facsimile number is (949) 673-1058.  The Company’s Common Stock is traded on the Over-The-Counter Bulletin Board market (the “OTC Bulletin Board”) under the ticker symbol “TLHO.OB.”  Our website address is http://www.trestlecorp.com.  Information contained in our website does not constitute part of this Memorandum. We are incorporated in the state of Delaware.

 

Risk Factors

 

This Memorandum contains forward-looking statements that involve risks and uncertainties.  These statements refer to our future plans, objectives, expectations and intentions.  Our actual results could differ materially from those discussed in, or implied by such forward-looking statements.  Factors that could contribute to these differences include, but are not limited to, the risks and uncertainties discussed below.  You should carefully consider these risks and uncertainties and the other information in this Memorandum before deciding to purchase the Securities.  If any of these risks and uncertainties actually occurs, our business, financial condition or operating results could be materially adversely affected.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business, financial condition or operating results.

 

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Risks related to the Company and our business

 

We have a history of net losses and may never achieve or maintain profitability.

 

We have a history of incurring losses from operations.  As of March 31, 2004, we had an accumulated deficit of approximately $40,800,000.  We anticipate that our operating expenses will increase substantially in the foreseeable future as we increase our sales and marketing activities, and continue to develop our technology, products and services.  These efforts may prove more expensive than we currently anticipate and we may incur significant additional costs and expenses in connection with our business development activities.  Such costs and expenses could prevent us from achieving or maintaining profitability in future periods.  If we do achieve profitability in any period, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

 

Our auditors have expressed a going concern opinion.

 

Primarily as a result of our recurring losses and our lack of available capital, the Company has received a report from our independent auditors that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.

 

We recently acquired Old Trestle and have limited operating history.

 

We recently acquired substantially all of the assets of Old Trestle.  Prior to our acquisition of Old Trestle’s assets and our recent Pepin/Merhi film library sale, we were involved in the production and distribution of filmed entertainment.  Your evaluation of our business and prospects may be difficult because of our limited operating history with Old Trestle’s products.  There can be no assurance that we will be successful in developing and managing the operations of Old Trestle’s products.  We face certain risks as a result of the recent acquisition, including:

 

                                          risks of entering into industries and markets or developing and producing products where we have limited or no experience,

 

                                          the potential loss of key customers of Trestle, and

 

                                          the potential loss of key personnel of Trestle.

 

Even when an acquired company has already developed and marketed products, there can be no assurance that the products will continue to be successful, that product enhancements will be made in a timely fashion or we will have identified all possible issues that might arise with respect to the acquired company or its products.

 

We have substantial funding requirements.  Additional funding may not be available to us or may not be available on acceptable terms.

 

We currently estimate that our existing capital resources will enable us to sustain operations for at least one month.  We expect that net proceeds from the sale of the Securities will enable us to sustain operations for up to 18 months, if all of the Securities are sold.

 

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However, we are not required to raise any minimum proceeds or sell any minimum amount of Securities.  We have expended and will continue to expend substantial amounts of money for research and development, capital expenditures, working capital needs and manufacturing and marketing of our products.  Our future research and development efforts, in particular, are expected to include development of additional applications of our current products and additional product lines, which will likely require additional funds.

 

The exact timing and amount of spending required cannot be accurately determined and will depend on several factors, including:

 

                                          progress of our research and development efforts,

 

                                          competing technological and market developments,

 

                                          commercialization of products currently under development by us and our competitors, and

 

                                          market acceptance and demand for our products.

 

We cannot assure you that additional financing will be available when needed or on terms acceptable to us.  If adequate and acceptable financing is not available, we may have to delay development or commercialization of certain of our products or eliminate some or all of our development activities.  We may also reduce our marketing or other resources devoted to our products.  Any of these options could reduce our sales growth and result in continued net losses.

 

If we lose key personnel or are unable to hire additional qualified personnel, it could impact our ability to grow our business.

 

We believe our future success will depend in large part upon our ability to attract and retain highly skilled technical, managerial, sales and marketing, finance and operations personnel.  Currently, we are in the process of seeking a qualified individual to serve as our President.  We face intense competition for all such personnel, and we may not be able to attract and retain these individuals.  Our failure to do so could delay product development, affect the quality of our products and services, and/or prevent us from sustaining or growing our business.  In addition, employees may leave our company and subsequently compete against us.  Our key employees include Michael Doherty, our Chairman, Jack Zeineh, MD, our Chief Scientific Officer and Gary Freeman, our Chief Financial Officer.

 

We have taken steps to retain our key employees, including the granting of stock options and warrants that vest over time, and we have entered into employment agreements with some of our key employees.  The loss of key personnel, especially if without advanced notice, or the inability to hire or retain qualified personnel, including a President, could harm our ability to maintain and build our business operations.  Furthermore, we have no key man life insurance on any of our key employees.

 

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Rapid growth may place significant demands on our personnel.

 

We currently have limited management and administrative resources.  If we are successful in implementing our strategy, we may experience a period of rapid growth and expansion which could place significant additional demands on our management and administrative resources.  Our management team’s failure to manage this potential growth effectively could have a material adverse effect on our business.

 

Undetected errors or failures in our software could result in loss or delay in the market acceptance for our product, lost sales or costly litigation.

 

Because our software products are complex, they may contain errors that can be detected at any point in a product’s lifecycle.  While we continually test our products for errors, errors in our products may be found in the future even after our products have been commercially introduced.  Detection of any significant errors may result in, among other things, loss of, or delay in, market acceptance and sales of our products, diversion of development resources, injury to our reputation, increased service and warranty costs or costly litigation.  Additionally, because our products support or rely on other systems and applications, any software errors or bugs in these systems or applications may result in errors in the performance of our software, and it may be difficult or impossible to determine where the error resides.  Product errors could harm our business and have a material adverse effect on our results of operations.

 

A successful products liability claim could require us to pay substantial damages and result in harm to our business reputation.

 

The manufacture and sale of our products involve the risk of product liability claims.  We do not carry product liability insurance.  A successful claim brought against us could require us to pay substantial damages and result in harm to our business reputation, remove our products from the market or otherwise adversely affect our business and operations.

 

Our products could infringe on the intellectual property rights of others, which may lead to costly litigation, lead to payment of substantial damages or royalties and/or prevent us from manufacturing and selling our current and future products.

 

If third parties assert that our products or technologies infringe their intellectual property rights, our reputation and ability to license or sell our products could be harmed.  Whether or not the litigation has merit, it could be time consuming and expensive for us and divert the attention of our technical and management personnel from other work.  In addition, these types of claims could be costly to defend and result in our loss of significant intellectual property rights.

 

A determination that we are infringing the proprietary rights of others could have a material adverse effect on our products, revenues and income.  In the event of any infringement by us, we cannot assure you that we will be able to successfully redesign our products or processes to avoid infringement.  Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our products and could require us to pay substantial damages and/or royalties.

 

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Any disruption or delay in the supply of components or custom subassemblies could require us to redesign our products or otherwise delay our ability to assemble our products, which could cause our sales to decline and result in continued net losses.

 

We assemble our products from a combination of (i) commodity technology components, such as computers and monitors, (ii) custom subassemblies, (iii) proprietary hardware for scanning microscopy, (iv) commodity operating systems, and (v) proprietary applications software.  While we typically use components and subassemblies that are available from alternate sources, any unanticipated interruption of the supply of these components or subassemblies could require us to redesign our products or otherwise delay our ability to assemble our products, which could cause our sales to decline and result in continued net losses.

 

 If we fail to accurately forecast component and material requirements for our products, we could incur additional costs and significant delays in shipments, which could result in loss of customers.

 

We must accurately predict both the demand for our products and the lead times required to obtain the necessary components and materials.  Lead times for components and materials that we order vary significantly and depend on factors including the specific supplier requirements, the size of the order, contract terms and current market demand for components.  If we overestimate our component and material requirements, we may have excess inventory, which would increase our costs, impair our available liquidity and could have a material adverse effect on our business, operating results and financial condition.  If we underestimate our component and material requirements, we may have inadequate inventory, which could interrupt and delay delivery of our products to our customers.  Any of these occurrences would negatively impact our net sales, business and operating results and could have a material adverse effect on our business, operating results and financial condition.

 

It is possible that our future operating results will be below the expectations of public market analysts and investors.  If our operating results fall below market expectations, the price of our Common Stock could decline significantly.

 

We have experienced significant fluctuations in our quarterly operating results in the past, and we expect to experience fluctuations in the future. Our customers, who are primarily public and private clinical laboratories, research organizations and hospitals, generally operate on annual budgets. Their spending practices, business cycles and budgeting cycles affect our revenues. Factors that may have an influence on our operating results in any particular quarter include:

 

                                          demand for our products,

 

                                          seasonality of our sales,

 

                                          new product introductions by us or our competitors, and the costs and time required for a transition to the new products,

 

                                          timing of orders and shipments for capital equipment sales,

 

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                                          our mix of sales between our distributors and our direct sales force,

 

                                          competition (including pricing pressures),

 

                                          timing and amount of research and development expenses (including clinical trial-related expenditures),

 

                                          foreign currency fluctuations,

 

                                          delays between our incurrence of expenses to develop new products (including expenses related to marketing and service capabilities), and

 

                                          the timing of sales and payments received for the new products and the uncertainty of FDA or other domestic and international regulatory clearances or approvals.

 

Due to the factors noted above, our future earnings and stock price may be subject to significant volatility, particularly on a quarterly basis.  It is possible that our future operating results will be below the expectations of public market analysts and investors.  If our operating results fall below market expectations, the price of our Common Stock could decline significantly.

 

Risks related to the industry

 

If we fail to successfully introduce new products, our future growth may suffer.  Certain products at an early stage of development are the areas of future growth for Trestle and sustainability of Trestle.

 

As part of our growth strategy, we intend to develop and introduce a number of new products, including digital backbone systems and image analysis systems.  Such products are currently in research and development, and we have generated no revenues from such potential products and may never generate revenues.  A substantial portion of our resources have been and for the foreseeable future will continue to be dedicated to our research programs and the development of products.  If we do not introduce these new products on a timely basis, or if they are not well accepted by the market, our business and the future growth of our business may suffer.  There can be no assurance that we will be able to develop a commercial product from these projects.  Our competitors may succeed in developing technologies or products that are more effective than ours.

 

If we do not update and enhance our technologies, they will become obsolete or noncompetitive.  Our competitors may succeed in developing products, and obtaining related regulatory approvals, faster than us.

 

We operate in a highly competitive industry and competition is likely to intensify.  Emerging technologies, extensive research and new product introductions characterize the market for our products and services.  We believe that our future success will depend in large part upon our ability to conduct successful research in our fields of expertise, to discover new technologies as a result of that research, to develop products based on our technologies, and to

 

14



 

commercialize those products.  If we fail to stay at the forefront of technological development, we will be unable to compete effectively.

 

Our existing and potential competitors may possess substantial financial and technical resources and production and marketing capabilities greater than ours.  We cannot assure you that we will be able to compete effectively with existing or potential competitors or that these competitors will not succeed in developing technologies and products that would render our technology and products obsolete and noncompetitive.  Our position in the market could be eroded rapidly by our competitors’ product advances.

 

In addition, because our products are dependent upon other operating systems, we will need to continue to respond to technological advances in these operating systems.

 

Our success depends, in part, on attracting customers who will embrace the new technologies offered by our products.

 

It is vital to our long-term growth that we establish customer awareness and persuade the market to embrace the new technologies offered by our products.  This may require in certain instances a modification to the culture and behavior of customers to be more accepting of technology and automation.  Organizations may be reluctant or slow to adopt changes or new ways of performing processes and instead may prefer to resort to habitual behavior within the organization.  Our marketing plan must overcome this obstacle, invalidate deeply entrenched assumptions and reluctance to behavioral change and induce customers to utilize our products rather than the familiar options and processes they currently use.  If we fail to attract additional customers at this early stage, our business and the future growth of our business may suffer.

 

Our success depends, in part, on our ability to protect our intellectual property rights.

 

Our success is heavily dependent upon protecting our ability to protect our proprietary technology.  We rely on patents, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish our intellectual property rights and protect our products.  These legal means, however, afford only limited protection and may not adequately protect our rights.  Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others.  Litigation could result in substantial costs and diversion of resources and management attention.

 

We cannot assure you that competitors or other parties have not filed or in the future will not file applications for, or have not received or in the future will not receive, patents or obtain additional proprietary rights relating to products or processes used or proposed to be used by us.  In that case, our competitive position could be harmed and we may be required to obtain licenses to patents or proprietary rights of others.

 

In addition, the laws of some of the countries in which our products are or may be sold may not protect our products and intellectual property to the same extent as U.S. laws, if at all.  We may be unable to protect our rights in proprietary technology in these countries.

 

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We depend on third-party licenses for our products.

 

We rely on certain software technology which we license from third parties and use in our products to perform key functions and provide additional functionality.  Because our products incorporate software developed and maintained by third parties, we are, to a certain extent, dependent upon such third parties’ ability to maintain or enhance their current products, to develop new products on a timely and cost-effective basis, and to respond to emerging industry standards and other technological changes.  Further, these third-party technology licenses may not always be available to us on commercially reasonable terms or at all.

 

If our agreements with third-party vendors are not renewed or the third-party software fails to address the needs of our software products, we would be required to find alternative software products or technologies of equal performance or functionality.  We cannot assure that we would be able to replace the functionality provided by third-party software if we lose the license to this software, it becomes obsolete or incompatible with future versions of our products or is otherwise not adequately maintained or updated.

 

Certain of our customers rely on the availability of third-party reimbursement or third-party funding for the purchase of our products.  Failure of sufficient reimbursement from third-party payors or sufficient funding could cause our sales and the future potential growth of our business to decline.

 

Hospitals and other healthcare institutions in the U.S. that purchase our products generally rely on third-party payors and other sources for reimbursement of healthcare costs to reimburse all or part of the cost of the procedures in which our products are used.  If hospitals and other healthcare institutions are unable to obtain adequate reimbursement from third-party payors for the procedures in which our products or products currently under development are intended to be used, our sales and future growth of our business could be adversely affected.  We cannot estimate what amount of our product is eligible for reimbursement approval.  In addition, changes in the healthcare system may affect the reimbursability of future products.

 

Market acceptance of our products and products under development in countries outside of the U.S. is also dependent on availability of reimbursement within prevailing healthcare payment systems in those countries.  Reimbursement and healthcare payment systems in international markets vary significantly by country, and include both government-sponsored healthcare and private insurance.  We cannot assure you that we will be able to obtain international reimbursement approvals in a timely manner, if at all.  Failure to receive international reimbursement approvals could harm the market acceptance of our products in the international markets in which such approvals are sought.

 

Other consumers in industries such as pathology, pharmaceutical and biotechnology that purchase our products generally rely on funding or grants from governments and private foundations to fund the purchase of our products.  If such consumers are unable to obtain adequate funding sources for the purchase of our products, our sales and future growth of our business could be adversely affected.

 

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The marketing and sale of our future products will require regulatory approval and on-going certifications.  Failure to obtain and maintain required regulatory approvals and certifications could prevent or delay our ability to market and sell our future products and may subject us to significant regulatory fines or penalties.

 

The United States Food and Drug Administration (the “FDA”) regulates design, testing, manufacturing, labeling, distribution, marketing, sales and service of image analysis products.  Such products are marketed in the U.S. according to premarket notifications to the FDA under Section 510(k) of the Federal Food, Drug and Cosmetic Act.  Unless an exemption applies, each image analysis product that we wish to market in the U.S. must first receive either 510(k) clearance or premarket approval from the FDA.  The process of obtaining required regulatory approval or clearance can be lengthy, expensive and uncertain.  Moreover, regulatory clearance or approval, if granted, may include significant limitations on the indicated uses for which a product may be marketed.

 

Delays in obtaining clearances or approvals will adversely affect our ability to market and sell our image analysis products and may subject us to significant regulatory fines or penalties, which would result in a decline in revenue and profitability.

 

Failure to comply with applicable requirements in the United States can result in fines, recall or seizure of products, total or partial suspension of production, withdrawal of existing product approvals or clearances, refusal to approve or clear new applications or notices and criminal prosecution.

 

Our image analysis products are subject to similar regulation in other countries.  Sales of our image analysis products outside the United States are subject to foreign regulatory requirements that vary from country to country.  The time required to obtain approvals from foreign countries may be longer or shorter than that required for FDA approval, and requirements for foreign licensing may differ from FDA requirements.

 

Our future products may require compliance with quality system regulations which is difficult and costly.

 

We operate under the Current Good Manufacturing Practice guidelines adopted by the FDA.  In connection with the development of new products, we may be required to be in compliance with the quality regulation system, which include production design controls, testing, quality control, storage and documentation procedures.  Compliance with quality system regulations is difficult and costly.  We cannot assure you that we will be able to comply with quality system regulation requirements.  If we do not achieve compliance, the FDA may deny marketing clearance which would harm our business.  In addition, we may not be found to be compliant as a result of future changes in, or interpretations of, regulations by the FDA or other regulatory agencies.

 

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Risks related to the transaction

 

This offering has no escrow, no minimum, and no refunds

 

Our Common Stock is being offered on a “best-efforts” basis.  There is no minimum amount of money that must be raised, there is no escrow of the funds being raised, and no refunds will be made.  We do not know how many of the Securities offered will be sold.  Therefore, you will bear the risk that we will accept subscriptions for a nominal number of Securities and then be unable to implement our business plan which would materially impact the value of the Shares, the Warrants and the Warrant Shares.  If a nominal number of Securities are sold, we may (i) reduce our costs by delaying, canceling, suspending or scaling back research and product development and marketing programs, (ii) liquidate assets, (iii) seek or be forced into bankruptcy and/or (iv) continue operations, but incur material harm to our business, financial condition, and results of operations.  These measures could have a material adverse effect on the Company’s ability to continue as a going concern.  There can be no assurance that the Company can complete the transactions necessary to provide the required funding on a timely basis in order to continue ongoing operations in the normal course of business.

 

You may not revoke your subscription exercise.

 

Once you have signed and delivered your Purchase Agreement, you may not revoke your subscription unless we change the offering prior to Closing on your purchase, in which event you will have the right to cancel your subscription and promptly receive back any funds you have delivered or to reaffirm your subscription under the amended terms of the offering.

 

You may not resell the Securities until they have been registered under the Act.

 

Since the Securities will not be registered under the Act, or other applicable state securities laws, you will not be able to resell them until the resale is subsequently registered under the Act and applicable state securities laws or an exemption from registration under the Act and applicable state securities laws is available.  As an inducement for you to purchase the Securities, we have agreed to file a registration statement with the SEC after the investment has closed.  However, because the registration statement is subject to the review of the SEC, we cannot guarantee that the Securities will ever be registered.  Thus, you should consider the investment in the Securities to be an illiquid investment.

 

The issuance and sale of the Securities could cause our stock price to decline.

 

Sales of substantial amounts of our Common Stock in the public market, or the perception that such sales could occur, could adversely affect the market price of our Common Stock.  Sale of our Shares and the potential for such sales, could cause our stock price to decline.

 

You will bear the risk of any declines in the price of the Securities.

 

The price of the Securities may go down during the period after you agree to purchase the Securities.  Accordingly, you will bear the risk that this fluctuation in the price of the Securities purchase may cause you to lose the amount invested.

 

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Our stock price is likely to be highly volatile because of several factors, including a limited public float.

 

The market price of our Common Stock is likely to be highly volatile because there has been a relatively thin trading market for our Common Stock, which causes trades of small blocks of Common Stock to have a significant impact on our stock price.  You may not be able to resell the Securities following periods of volatility because of the market’s adverse reaction to volatility.

 

Other factors that could cause such volatility may include, among other things:

 

                                          actual or anticipated fluctuations in our operating results,

 

                                          announcements concerning our business or those of our competitors or customers,

 

                                          changes in financial estimates by securities analysts or our failure to perform as anticipated by the analysts,

 

                                          announcements of technological innovations,

 

                                          conditions or trends in the industry,

 

                                          litigation,

 

                                          patents or proprietary rights,

 

                                          departure of key personnel,

 

                                          failure to hire a President or other key personnel, and

 

                                          general market conditions.

 

Because our Common Stock is considered a penny stock, any investment in the Securities is considered to be a high-risk investment and is subject to restrictions on marketability.

 

Our Common Stock is currently traded on the OTC Bulletin Board and is considered a “penny stock.”  The OTC Bulletin Board is generally regarded as a less efficient trading market than the Nasdaq SmallCap Market.

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.”  Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market.  The broker-dealer also must provide the customer with bid and offer quotations for the

 

19



 

penny stock, the compensation of the broker-dealer and any salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account.  In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock.  Since the Securities are subject to the regulations applicable to penny stocks, the market liquidity for the Securities could be adversely affected because the regulations on penny stocks could limit the ability of broker-dealers to sell the Securities and thus your ability to sell the Securities in the secondary market.

 

Any future sale of a substantial number of Shares of our Common Stock could depress the trading price of our Common Stock, lower our value and make it more difficult for us to raise capital.

 

Any sale of a substantial number of Shares (or the prospect of sales) may have the effect of depressing the trading price of our Common Stock.  In addition, these sales could lower our value and make it more difficult for us to raise capital.  Further, the timing of the sale of the Shares may occur at a time when we would otherwise be able to obtain additional equity capital on terms more favorable to us.

 

If all of the Shares are sold in this offering, the Company will have outstanding approximately 5,313,000 shares of Common Stock (assuming the sale of the maximum number of Securities offered and assuming the exercise in full of all of the Warrants), of which 5,313,000 are eligible for resale in the public market, subject to applicable federal securities law restrictions, and approximately 1,957,000 warrants and options to acquire Common Stock, of which 1,957,000 are eligible for resale in the public market, subject to vesting and applicable federal securities law restrictions.

 

We have additional securities available for issuance, including preferred stock, which if issued could adversely affect the rights of the holders of our Common Stock.

 

Our articles of incorporation authorize the issuance of 40,000,000 shares of Common Stock and 5,000,000 shares of preferred stock (of which 75,000 shares designated as Series A Convertible Preferred Stock and 250,000 shares designated as Series B Convertible Preferred Stock).  The Common Stock and the preferred stock can be issued by, and the terms of the preferred stock, including dividend rights, voting rights, liquidation preference and conversion rights can generally be determined by, our board of directors without stockholder approval.  Any issuance of preferred stock could adversely affect the rights of the holders of the Securities by, among other things, establishing preferential dividends, liquidation rights or voting powers.  Accordingly, our stockholders will be dependent upon the judgment of our management in connection with the future issuance and sale of shares of our Common Stock and preferred stock, in the event that buyers can be found therefore.  Any future issuances of Common Stock or preferred stock would further dilute the percentage ownership of our Company held by the public stockholders.  Furthermore, the issuance of preferred stock could be used to discourage or

 

20



 

prevent efforts to acquire control of our Company through acquisition of shares of Common Stock.

 

Capitalization

 

The following table sets forth our capitalization as of March 31, 2004 and as adjusted to give effect to the issuance and sale by us of the Units at an assumed offering price of $2.00 per Share prior to deducting offering expenses payable by us. 

 

 

 

 

 

March 31,
2004

 

 

 

Actual

 

As Adjusted

 

 

 

 

 

 

 

TOTAL DEBT:

 

 

 

 

 

 

 

 

 

 

 

Convertible note payable, net of unamortized debt discount of $16,000

 

$

404,000

 

$

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $10 par value, 4,675,000 shares authorized, no shares issued and outstanding

 

$

 

$

 

 

 

 

 

 

 

Common stock, $.001 par value, 40,000,000 shares authorized, 3,063,000 issued and outstanding, actual; and 4,563,000 issued and outstanding, as adjusted (1)

 

3,000

 

4,500

 

 

 

 

 

 

 

Additional paid in capital

 

43,019,000

 

46,052,500

 

 

 

 

 

 

 

Deferred stock compensation

 

(419,000

)

(419,000

)

 

 

 

 

 

 

Accumulated deficit

 

(40,824,000

)

(40,824,000

)

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ EQUITY:

 

1,814,000

 

4,814,000

 

 

 

 

 

 

 

TOTAL CAPITALIZATION:

 

$

2,218,000

 

$

4,814,000

 

 


(1)                                  Excludes (a) up to 750,000 Warrant Shares issuable upon exercise of the Warrants which are included in this offering, (b) warrants to purchase up to 1,366,453 shares of our Common Stock at a weighted average exercise price $19.17 per share, that vest over varying periods of time, and (c) 850,000 shares of Common Stock reserved for issuance pursuant to the Company’s Stock Option Plan, of which options to purchase 590,500 shares of Common Stock at a weighted average exercise price of $3.65 have been granted as of the date hereof, that vest over varying periods of time.

 

This capitalization table should be read in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2003 and the quarterly period ended March 31, 2004, which are attached hereto as Exhibits B and C, respectively.

 

21



 

Industry Overview

 

Trestle develops and sells digital imaging and telemedicine products primarily into the healthcare and pharmaceutical markets.  Digital imaging products are utilized by human and animal pathologists in both clinical practice and research.  Telemedicine products are used by medical specialists and administrative staff in a range of clinical settings.

 

Telemedicine can be the use of communication equipment to link healthcare providers and patients in different locations.  In contrast to the more traditional ways of providing medical care (e.g., face-to-face consultations or examinations), telemedicine is a cost-effective alternative.  Telemedicine offers increased cost efficiency, reduced transportation expenses, improved patient access to specialists, improved quality of care, and better communication among providers.

 

Both the healthcare and pharmaceutical markets share common requirements, including: increased productivity; accelerated time to diagnosis; improved access to information; and automation of repetitive tasks.

 

Digital Imaging

 

Trestle’s original digital imaging product, MedMicro, is a live microscopy product designed to enable pathologists in dispersed locations to review the same tissue samples simultaneously.  The Company’s latest product, MedScan, is designed to further digitize the pathologist workflow by capturing and storing images from whole glass slides.  These applications transform the pathologist work environment enabling more efficient image sharing, archiving, management and analysis.

 

According to Microscopy, Marketing and Education (“MME”), the microscope replacement market generates approximately $2 billion in revenue per year.  Management estimates that Trestle’s digital imaging products are potential near-term replacements for more than 35% of this market or $700 million annually.  Currently, according to Pharmaceutical Research and Manufacturers of America, over $32 billion is spent on pharmaceutical research and development.  The Company’s digital database and analysis tools under development are designed to streamline research and development processes and workflow, and are expected to provide additional revenue opportunities.

 

The digital imaging markets can be categorized by type of tissue (human or animal) and use (diagnostic or research).

 

Human Pathology

 

Pathologists focusing on human disease study the origin, course and indicators of disease.  Pathology divides into clinical pathology – the analysis of fluids such as urine and blood – and Trestle’s market, anatomic pathology – the analysis of tissue.  Clinical pathology market is dominated by large national laboratories that use large-scale automation and is generally a high volume, low margin business.  The technology for the automation of anatomic pathology has not

 

22



 

been historically available.  As a result, anatomic pathology remains a less consolidated and higher margin industry.

 

According to Credit Suisse First Boston, the worldwide anatomic pathology market is approximately $10 billion annually.  According to the College of American Pathologists, the market’s growth is correlated to cancer rates and expected to grow at 6-8% per year with the aging of the current population.

 

The College of American Pathologists reports a total of 16,500 pathologists in the United States, with approximately two-thirds or 11,000 practicing anatomic pathology.  These pathologists generally practice within one or more market segments, including pathology labs, integrated health systems, and commercial and academic research.

 

Animal Pathology

 

Animal pathology includes testing in research and diagnostic treatment of both pets and livestock.  Animal pathology for treatment is mainly conducted by labs providing services to veterinary practices.  The majority of animal pathology is conducted by pharmaceutical and biotechnology companies for drug development.

 

The dynamics of veterinary pathology for treatment resemble human diagnostic pathology.  Veterinary pathologists seek to improve access to specialists, management and archiving of data, and improved workflow and tissue analysis.

 

The pharmaceutical and biotechnology industries develop and market products for the treatment of disease and improvements in health.  Potential drugs are eliminated prior to testing on humans through high volume animal toxicity testing.  Companies seek to improve this process in order to eliminate toxic drugs early and speed effective compounds to market.  Companies also address potential bottlenecks by streamlining the pathologist workflow and automating repetitive tasks.

 

The key market segments in animal pathology are pharmaceutical toxicology groups, academic and government research, contract research organizations (CROs), and biotechnology firms.

 

Digital Imaging Applications

 

Digital imaging products share common uses in both human and animal pathology, including consultation, communication and collaboration; education and publication; archiving and management; workflow; and analysis, as described below.

 

Consultation, Communication and Collaboration
 

Pathologists frequently consult with other pathologists and specialists in carrying out their daily work.  There are often delays in consulting due to the transportation of slides or having to travel to distant locations in order to meet face-to-face.  Trestle’s products allow sharing of images real time, eliminating the need for slide transportation or travel.  Pathologists and specialists are able to simultaneously view and manipulate the slides and provide consultation in real-

 

23



 

time.  In addition, communication is improved as multiple pathologists and specialists can view and manipulate the same slide simultaneously.

 

Education and Publication

 

Tissue images are critical to pathology publications and instruction.  Traditional publications are limited to the inclusion of a snapshot of one location on the slide or references to glass slide archives.  Trestle’s products allow whole slides to be cited in publications and accessed in a digital format, improving the availability of high quality samples and facilitating sample access.

 

Archiving and Management

 

Viewing and accessing multiple tissue samples is critical to anatomic pathology workflow.  Typically, tissue images are incomplete and stored in cumbersome formats with no efficient links to associated data.  Trestle’s products under development are designed to link a digital slide together with relevant data in a flexible and easily accessible digital archive.

 

Workflow

 

Pathologists work predominantly with traditional microscopes.  Microscopes are both ergonomically inefficient and make cross-referencing images and other data difficult.  Trestle’s products under development will enable a pathologist to view multiple diagnostic-quality images and associated information simultaneously.

 

Analysis

 

Analysis of tissue samples is still predominantly done by humans rather than computers.  Limitations on automation have resulted from, among other things, the difficulty of capturing data, the complexity of data and the pattern recognition required for evaluation.  Trestle’s MedScan product facilitates the data capture process, enabling further development of digital analysis applications.

 

Telemedicine

 

Historically, customers have been slow to adopt telemedicine in their daily work environment due to limited telecommunications infrastructure and limited insurance reimbursement and physician licensure.  However, as telecommunications costs decrease and access improves, and as reimbursement and regulatory policies improve, adoption of remote medicine tools is increasing.

 

Key market sectors in telemedicine include healthcare providers, biomedical and pharmaceutical companies, employers, prisons, and assisted living institutions.  These market segments share the common goal of providing services via electronic networks rather than through physical presence.  These market segments also share many of the goals of telemedicine, including:

 

                                          expansion of markets;

 

                                          generation of additional revenue;

 

                                          reduction of patient acquisition and retention costs; and

 

24



 

                                          reduction in staffing and operational costs.

 

According to BCC, the entire United States telemedicine market was over $4.3 billion in 2003, of which $1.2 billion was software sales in 2003.  According to BCC, this market will grow to approximately $6.9 billion in 2007, of which $2.0 billion is projected to be software sales.  Our telemedicine products are primarily software, with some hardware device integration and resale.

 

Products and Technology

 

Digital Imaging Products

 

Digital imaging is used in pathology for capturing, storing, and distributing digital images in two categories: live virtual microscopy and stored virtual microscopy.  In live virtual microscopy, digital images are captured and viewed in real time while the slide is on the microscope. In stored virtual microscopy, an image is digitally captured, processed and stored electronically for viewing and analyzing at a later time.  Thus, the original data source, the microscopic slide, does not need to be on the image acquisition device in order to be viewed.

 

Live and stored digital imaging each have their strengths and weaknesses, with each serving particular needs in the pathology workplace. With MedMicro and MedScan, Trestle has created products for both applications.  Taken together, they provide the foundation for a fully digital environment that combines live virtual microscopy and stored virtual microscopy to deliver a comprehensive solution for digital microscopy.

 

In areas of science and medicine other than pathology, transforming data from a physical format (such as paper or tissue) to a computer-based format (such as text or digital image) has not only enhanced existing methods of work, but also enabled whole new working techniques and applications.  The Company believes the field of pathology will be no exception.

 

MedMicro, the Company’s first digital microscopy product, provides live, easily-manipulated, diagnostic quality images from a remote microscope.  MedMicro products consist of proprietary software combined with off-the-shelf automation components, laboratory microscopes, digital cameras, and a standard personal computer for operation.  MedMicro customers may also upgrade their purchases with multi-slide loaders and additional objectives.

 

The Company’s digital imaging products under development include: 1) enhancements to MedScan, a digital slide scanner enabling the capture of whole glass slides; 2) automated slide loaders to allow higher volume automated digitization of slides; 3) database tools to enable workflow management, association and referencing of digital slides; and 4) image analysis tools to facilitate diagnostic screening.

 

Telemedicine Products

 

The Company’s telemedicine product, MedReach, consists of proprietary software which integrates videoconferencing, clinical devices, medical images and patient data.  MedReach

 

25



 

enables healthcare organizations to remotely examine, diagnose and treat patients and allows improved service and increased patient traffic with minimal additional personnel or facilities.

 

MedReach provides secure remote access to clinical data based on object-oriented design models.  MedReach also enables compliance with healthcare-specific standards such as Health Insurance Portability and Accountability Act of 1996 and Digital Imaging and Communications in Medicine interfaces.

 

MedReach has been designed to meet workflow needs and legacy environments of healthcare institutions.  An implementation is customized to meet the needs of the specific customers, and generally consists of the backbone WebServer software, hardware, various media applications, and client workstations.

 

Competition

 

The digital imaging and telemedicine markets are highly competitive, and many have greater resources and better name recognition than we do.

 

Our competitors in the digital imaging market include Advanced Database Systems, Aperio, Fairfield Imaging, Tissue Informatics, Midwest Information Systems, Scimagix, Apollo Telemedicine, Bacus Labs, Interscope Technologies, Chromavision, Applied Imaging, Nikon, and Soft Imaging.

 

Our competitors in the telemedicine market include, VitelNet, Polycom, Tandberg, Televital, Health Hero Networks, Healthtek Solutions, Visual Telecommunications Network, Healthcare Vision, Second Opinion, and Siemens.

 

Regulatory Issues

 

Medicare

 

The Balanced Budget Act of 1997 authorized payment for telemedicine services and mandated that Medicare reimburse telemedicine care and fund telemedicine demonstration projects.  This act had many restrictions that caused problems for telemedicine service providers.  On October 1, 2001, new legislation, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 went into effect that created favorable changes to telemedicine reimbursement.  These changes include:

 

                                          Expanded payment sites (Originating Site) to include physician and practitioner offices, critical access hospitals, rural health clinics, federally qualified health centers and hospitals.

 

                                          Increased Originating Site fees of $20 per visit, increasing over time.

 

                                          Expanded billable telemedicine services to include direct patient care, physician consultations and office psychiatry services.

 

26



 

                                          Equalized physician payments for telemedicine services to standard clinical services.

 

                                          Expanded the geographic regions that are authorized for reimbursement.

 

                                          Initiated pilot to reimburse for use of store and forward applications in Alaska and Hawaii.

 

                                          Authorized prospective payment for telemedicine services applicable to home care.

 

Medicaid

 

Medicaid is a jointly funded Federal-state health insurance program for persons with low income and/or disabilities.  Medicaid reimbursement for services furnished through telemedicine applications is available at the state’s option.  States which currently authorize fees for service reimbursement include Arkansas, California, Georgia, Illinois, Iowa, Kansas, Louisiana, Minnesota, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, South Dakota, Texas, Utah, Virginia, and West Virginia.  Two additional states, Kentucky and Maine, are enacting regulations to cover telemedicine.

 

Commercial

 

Commercial insurers’ reimbursement for telemedicine services varies by organization and state.  Some of the larger insurers, including Blue Cross/Blue Shield, not only reimburse for these services but are also leaders in developing telemedicine programs.  Many states including California, Louisiana, Texas and others, have passed laws or have laws pending that prevent discrimination between regular and telemedicine visits.

 

Food and Drug Administration

 

Trestle’s products can be considered medical devices and subject to regulation by the FDA.  The FDA categorizes medical devices into three classes; these classes are referred to as Class I, Class II, and Class III.  Class I devices (“general controls”) are the lowest category and many are exempt from FDA pre-market notification or approval requirements.  MedMicro is registered with the FDA as Class I Medical Device.  The medical device components in MedReach have been registered by the manufacturing companies as Class I.  As part of continued FDA compliance efforts, Trestle operates under Current Good Manufacturing Practice guidelines.  Certain next generation applications may require more detailed FDA approval processes.

 

Intellectual Property

 

Trestle has one issued and three pending patents on its products, including SmartFocusä, a continuous focus system improving the capture of accurate, in-focus tissue sample information at sub-micron resolution despite sample variations and defects, and while maintaining high

 

27



 

speed.  We also rely on trade secrets and proprietary know-how that we seek to protect, including with confidentiality agreements.

 

28



 

Management Team

 

Trestle is located in Irvine, CA and has sales and service staff located nationwide.  The Company currently has 30 full-time employees.

 

Executive Team

 

Trestle’s executive team brings the talent and knowledge needed to successfully and profitably grow Trestle.  Currently, we are in the process of seeking a qualified individual to serve as President of the Company.  We cannot assure you that we will be able to locate and hire such an individual within an acceptable time frame or on terms acceptable to us.

 

The following outlines key team members:

 

NAME

 

AGE

 

POSITION

 

 

 

 

 

Michael S. Doherty

 

50

 

Chairman of the Board

Crosby Haffner

 

31

 

Interim President

Jack Zeineh

 

33

 

Chief Science Officer

Gary Freeman

 

36

 

Chief Financial Officer

William D. Dallas

 

48

 

Director

Michael S. Hope

 

61

 

Director

Gary M. Gray

 

59

 

Director

Paul Guez

 

59

 

Director

 

MICHAEL S. DOHERTY has been a Director of the Company since December 1997 and Chairman of the Board since May 2003.  Since November 1999, Mr. Doherty has been President of Doherty & Company, LLC, a firm specializing in venture capital and private equity funding for development stage companies. From February 1999 to October 1999, Mr. Doherty served as Senior Managing Director of Spencer Trask Securities Incorporated. Mr. Doherty served as Managing Director and Director of Private Equity at Cruttenden Roth Incorporated from October 1996 to February 1999. From 1992 to October 1996, he served as Vice President of Arnhold and S. Bleichroeder, Inc., a New York-based investment banking, brokerage and asset managemen t firm.  Mr. Doherty was a director of Zyan Communications, Inc. from July 1999 to December 2000, and Chairman of the Board of Directors from July 1999 to March 2000; Zyan filed for Chapter 11 bankruptcy proceedings in December 2000.  Mr. Doherty was also a non-executive director of ACLN, Ltd. from January 1999 to March 2002.  ACLN was a foreign private issuer whose shares were suspended from the New York Stock Exchange following an order from the SEC and a subsequent enforcement action against ACLN and three of its officers.

 

CROSBY HAFFNER was appointed Interim President of the Company in November 2003, and was a consultant to the Company from June 2003 through November 2003.  Mr. Ha ffner became a Managing Director of Doherty & Company, LLC in November 2003.  From December 2001 to October 2003, Mr. Haffner was a consultant to technology companies.  Prior to these engagements, Mr. Haffner was the President and Chief Operating Officer at Zyan Communications, Inc. from 1995 to November 2000, and its Chairman and Chief Executive

 

29



 

Officer from December 2000 to December 2001.  Zyan filed for Chapter 11 bankruptcy proceedings in December 2000.

 

JACK ZEINEH, M.D. was appointed Chief Science Officer in May 2003.  Prior to joining the Company, Dr. Zeineh was co-founder of Illumea and the inventor of the MedMicro and MedScan products.  Dr. Zeineh was the Chief Scientific Officer of Trestle Corporation, a subsidiary of Med Diversified, Inc., which filed for Chapter 11 bankruptcy proceedings in November 2002. Dr. Zeineh brings experience in the biomedical industry with a specialty in computer imaging systems and software design.  Dr. Zeineh has published 12 articles on biomedical techniques, including telepathology.  Dr. Zeineh was educated in Biological Sciences at University of California at Irvine and received his medical degree at the University of California at San Diego School of Medicine.

 

GARY FREEMAN was elected Co-President and Chief Financial Officer of the Company in January 2003, and resigned the position of Co-President in September 2003.  Mr. Freeman is also currently a Vice President and director of Kellogg & Andelson, a Southern California based public accounting firm.  In 2000, Mr. Freeman co-founded Catalyst Business Systems, a consulting firm, which merged with Kellogg & Andelson in 2002.  From 1990 to 2000, Mr. Freeman worked at BDO Seidman, LLP in various capacities, including as a partner from 1998 to 2000.

 

WILLIAM D. DALLAS was appointed as a Director of the Company in March of 2001.  Mr. Dallas also served as a Director of the Company from May 2000 through December 2000.  Mr. Dallas is currently the Chairman of the Board of Dallas Capital Management, a diverse private equity, advisory firm that he founded in 1999.  Mr. Dallas is also currently the Chairman and Chief Executive Officer of the following companies:  Sysdome Corporation, MindBox, LLC and Diversified Capital, and was a director of Castle & Cooke from 2000 to 2002.  Mr. Dallas was the founder of First Franklin and served as its Chairman from 1981 to 1999.  First Franklin was purchased in 1999 by National City Corporation.

 

MICHAEL S. HOPE has been a Director of the Company since November 2003 and is Chairman of our Audit Committee.  Mr. Hope has acted as a financial consultant to various companies since 1997, including acting as the Interim Chief Financial Officer and Corporate Secretary of the Company from March 1998 to April 1999.  Prior to his various financial consulting assignments, Mr. Hope served as Executive Vice President of Metro-Goldwyn-Mayer Inc. from 1993 to 1997. Prior to joining MGM, Mr. Hope was Executive Vice President, Planning and Operations and Chief Financial Officer for Paramount Communications Inc.  Mr. Hope was previously a member of the Board of Directors of Zyan Communications, which filed for Chapter 11 bankruptcy proceedings in December 2000.

& nbsp;

GARY M. GRAY has been a Director of the Company since 1991 and served as the Chairman of the Board from March 1998 to April 1999.  Mr. Gray is currently a Managing Director of Selected Equities Limited.  From 1999 to 2003, Mr. Gray was a Managing Director of Milestone Capital, Inc., a firm based in Houston, Texas which, in concert with affiliated foreign entities, invested in or acquires control of private companies.  Prior to locating in Houston in 1997, from 1994 to 1997, Mr. Gray practiced law and provided business consulting services to foreign clients from offices based in Oklahoma and, from 1991 to 1993, practiced law

 

30



 

in New York. Prior to attending Harvard Law School from 1987 to 1990, Mr. Gray was involved in various investment and banking activities, principally in Oklahoma.

 

PAUL GUEZ has been a Director of the Company since 1999. As an investor in many business activities, Mr. Guez is also chairman of the board of DVT 3000, a DVD company, and has been the president of Stone Canyon International, a movie production firm, since 1998.  For the past thirteen years, Mr. Guez has been overseeing Azteca Production, a clothing manufacturing company that h e founded with his brother, Hubert Guez in 1990. Prior to Azteca, Mr. Guez headed the JAG clothing label, which he purchased in 1984, as well as the Sassoon Jeans label which he launched in 1976.

 

The Company’s Bylaws allow our Board to fix the number of directors between five and nine. The number of directors is currently fixed at five.  Our Board of Directors currently has an Audit Committee, comprised of Mr. Hope (Chairman) and Mr. Dallas, and a Compensation Committee, comprised of Mr. Gray (Chairman) and Mr. Hope.  Our Board has identified Mr. Hope, an independent director, as its Audit Committee’s financial expert.  The Company has adopted a Code of Ethics which applies to our principal executive officer, principal financial officer, and prin cipal accounting officer.  A copy of the Code of Ethics may be obtained by any person without change upon written request to the Company, attention: Investor Relations in care of the Company’s principal offices.

 

List of Exhibits

 

Exhibit A:

Form of Purchase Agreement

 

 

 

Exhibit A

Form of Warrant

 

Exhibit B

Company’s Wiring Instructions

 

Appendix I

Accredited Investor Questionnaire

 

Appendix II

Registration Statement Questionnaire

 

Appendix III

Investor’s Officer’s Certificate

 

 

Exhibit B:

Annual Report on Form 10-KSB for the year ended December 31, 2003 (Incorporated by Reference)

 

 

Exhibit C:

Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2004 (Incorporated by Reference)

 

 

Exhibit D:

Company’s Proxy Statement dated August 1, 2003 for a Special Meeting of Shareholders (Incorporated by Reference)

 

 

Exhibit E:

Company’s 8-K Filing dated May 19, 2004 announcing retention of Synthetica as counsultant and Maurizio Vecchione and Barry Hall employment contracts (Incorporated by Reference)

 

 

Exhibit F:

Company’s SB-2 Filing dated May 20, 2004 (Incorporated by Reference)

 

31


EX-2 3 a04-7740_1ex2.htm EX-2

 

Exhibit A

 

Form of Purchase Agreement

 



 

Exhibit 2

 

 

TRESTLE HOLDINGS, INC.

 

 

COMMON STOCK PURCHASE AGREEMENT

 

 

UP TO 1,500,000 UNITS

 

OF

 

COMMON STOCK

 

Dated as of June 1, 2004

 

 



 

TABLE OF CONTENTS

 

1.

AUTHORIZATION OF SECURITIES

 

 

 

 

2.

SALE AND PURCHASE OF STOCK

 

 

 

 

3.

SUBSCRIPTION; CLOSING; DELIVERIES

 

 

 

 

 

3.1

Subscription

 

 

3.2

Closing

 

 

3.3

Deliveries by the Company and Investor

 

 

3.4

General Closing Procedures

 

 

3.5

Conditions of Company’s Obligations

 

 

 

 

4.

RESTRICTIONS ON TRANSFER OF SECURITIES.

 

 

 

 

 

4.1

Restrictions on Transfer

 

 

4.2

Removal of Transfer Restrictions

 

 

 

 

5.

REPRESENTATIONS AND WARRANTIES BY THE COMPANY

 

 

 

 

 

5.1

Organization, Standing, etc

 

 

5.2

Corporate Acts and Proceedings

 

 

5.3

Binding Obligations

 

 

5.4

Capitalization

 

 

5.5

Securities

 

 

5.6

Consent; No Violation

 

 

 

 

6.

INVESTOR REPRESENTATIONS AND WARRANTIES

 

 

 

 

7.

INDEMNIFICATION

 

 

 

 

 

7.1

Indemnification by the Company

 

 

7.2

Indemnification by the Investor

 

 

7.3

Procedure

 

 

 

 

8.

ADDITIONAL DEFINITIONS

 

 

 

 

9.

MISCELLANEOUS

 

 

 

 

 

9.1

Waivers and Amendments

 

 

9.2

Notices

 

 

9.3

Severability

 

 

9.4

Choice of Law

 

 

9.5

Expenses

 

 

9.6

Commissions; Finder’s Fees

 

 

9.7

Counterparts

 

 

9.8

Headings; Interpretation

 

 

i



 

LIST OF EXHIBITS

 

 

 

Exhibit A

Form of Warrant

 

 

 

 

Exhibit B

Company’s Wiring Instructions

 

 

 

 

LIST OF APPENDICES

 

 

 

Appendix I

Accredited Investor Questionnaire

 

 

 

 

Appendix II

Registration Statement Questionnaire

 

 

 

 

Appendix III

Investor’s Officer’s Certificate

 

 

ii



 

TRESTLE HOLDINGS, INC.
COMMON STOCK PURCHASE AGREEMENT

 

This Common Stock Purchase Agreement (this “Agreement”) is made and entered into as of June 1, 2004, by and among Trestle Holdings, Inc., a Delaware corporation with principal offices located at 199 Technology Drive, Suite 105, Irvine, California 92618 (the “Company”), and the undersigned investor (the “Investor”).

 

A.                                   The Company desires to sell to the Investor Units (defined below), and the Investor desires to purchase that number of Units set forth on the signature page hereof upon the terms and conditions hereinafter set forth at a purchase price of $2.00 per Unit, with each “Unit” being defined as and consisting of: (a) one share (a “Share”) of Common Stock of the Company, par value $.001 per share (the “Common Stock”), and (b) a warrant (a “Warrant”) to purchase one-half share of Common Stock (a “Warrant Share”) at an exercise price of $2.00 per Warrant Share which is exercisable for a period of three years from the date of issuance.  The form of Warrant is attached hereto as Exhibit A.

 

B.                                     The Company is offering up to 1,500,000Units, for an aggregate offering of up to $3,000,000, with no minimum amount of Units required to be sold by the Company.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       AUTHORIZATION OF SECURITIES.  On or before the Closing Date (as defined in Section 3), the Company will have authorized the issuance and sale of up to 1,500,000shares of Common Stock and up to 750,000Warrants, including the underlying Warrant Shares, at a price of $2.00 per Unit.  The shares of Common Stock so authorized for sale shall be issued and sold pursuant to this Agreement and other common stock purchase agreements (the “Other Purchase Agreements”) between the other investor signatories thereto, if any, and the Company.  The Other Purchase Agreements will be identical to this Agreement (except that the respective amounts of shares of Common Stock to be purchased will vary as specified on the signature page of each such agreement).  The Warrants so authorized for sale shall be issued and sold pursuant to the form of Warrant attached as Exhibit A to this Agreement and other warrants (the “Other Warrant Agreements”) between the other investor signatories thereto, if any, and the Company.  The Other Warrant Agreements will be identical to the form of Warrant attached as Exhibit A to this Agreement (except that the respective amounts of Warrant Shares will vary as specified on the first page of each such agreement).  The sale to each Investor of Units is to be a separate sale.

 

2.                                       SALE AND PURCHASE OF STOCK.  Upon the terms and subject to the conditions herein contained, the Company will issue and sell to the Investor, and the Investor will purchase from the Company, at the Closing (as defined in Section 3) on the Closing Date, the number of Units specified on the signature page attached hereto and will pay the Company the amount (the “Purchase Price”) specified on the signature page attached hereto at a price per Unit of $2.00.  As of the date hereof, Investor is delivering to the Company a fully executed copy of this Agreement, the Warrant in the form attached hereto as Exhibit A, the Accredited Investor

 

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Questionnaire in the form attached hereto as Appendix I, and the Registration Statement Questionnaire in the form attached hereto as Appendix II.

 

3.                                       SUBSCRIPTION; CLOSING; DELIVERIES.

 

3.1                                 Subscription.  The period for the subscription for the purchase of Units under this Agreement and the Other Purchase Agreements will begin as of June 1, 2004 and will terminate at 11:50 p.m. Pacific time on July 15, 2004, unless extended by the Company for an additional period not to exceed 60 days (the “Termination Date”).  The Units are being offered on a “best efforts, no minimum” basis.

 

3.2                                 Closing.  The closing of the sale and purchase of the Units (the “Closing”) will occur at the offices of Kaye Scholer LLP, 1999 Avenue of the Stars, Suite 1700, Los Angeles, California 90067, at 10:00 A.M., California time, on the date specified by the Company and of which the Investor shall be notified by facsimile, electronic mail or otherwise, or at such other time or day, as the parties hereto may agree (the “Closing Date”).

 

3.3                                 Deliveries by the Company and Investor.  At the Closing, the Company shall deliver, or cause to be delivered, to the Investor a stock certificate evidencing the shares of Common Stock and the Warrants being purchased by it, each of which will be registered in the Investor’s name as stated on the signature page attached hereto, against delivery to the Company of payment by wire transfer or transfers in accordance with the instructions on Exhibit B in an amount equal to the Purchase Price of such Units.  The Investor shall make payment by wire transfer to the Company on the Closing Date.  Notwithstanding the foregoing, delivery of the Units to the Investor will take place within 3 days of the Closing Date, or as soon thereafter as the Company’s transfer agent is able to deliver such Units (but in any event not later than 3 business days thereafter).

 

3.4                                 General Closing Procedures.  The Investor acknowledges and agrees that, except as provided by this Agreement, the subscription for Units may not be revoked by the Investor once this Agreement and the Warrant is signed by the Investor and delivered by fax, or by any other means to the Company.  The Investor further acknowledges and agrees that a legally binding agreement between the Investor and the Company shall occur only after this Agreement and the Warrant is executed and delivered by the Company and the Company has the right, in its sole discretion, to accept or reject the Investor’s subscription in whole or in part.  In the case of rejection, the Company will promptly return any rejected payments and (if rejected in whole) copies of all executed subscription documents (including this Agreement and the Warrant) to the Investor.

 

3.5                                 Conditions of Company’s Obligations.  The Company’s obligation to issue and sell the Units to the Investor on the Closing Date is subject to: (i) the receipt and acceptance by the Company of a fully executed copy of this Agreement, the Warrant, the Accredited Investor Questionnaire in the form attached hereto as Appendix I, and the Registration Statement Questionnaire in the form attached hereto as Appendix II; (ii) the representations and warranties of the Investor in this Agreement, the Warrant, the Accredited Investor Questionnaire and the Registration Statement Questionnaire shall be true and correct in all material respects as of the date hereof and as of the Closing Date; and (iii) receipt of the Investor’s Purchase Price.

 

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4.                                       RESTRICTIONS ON TRANSFER OF SECURITIES.

 

4.1                                 Restrictions on Transfer.

 

(a)                                  The Investor understands and agrees that the Units to be acquired by it (including, individually, each of Shares, the Warrants and the Warrant Shares) have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).  Accordingly, the Units (including, individually, each of the Shares, the Warrants and the Warrant Shares) will not be transferable except in accordance with this Agreement and as may be permitted under various exemptions contained in the Securities Act or upon satisfaction of the registration and prospectus delivery requirements of the Securities Act.  The Investor acknowledges that it must bear the economic risk of its investment in the Units for an indefinite period of time since none of the underlying shares of Common Stock, the Warrants and the Warrant Shares have been registered under the Securities Act and therefore none of them can be sold unless they are subsequently registered or an exemption from registration is available.

 

(b)                                 The Investor agrees with the Company that:

 

(i)                                     Subject to Section 4.2, the stock certificates evidencing the shares of Common Stock it has agreed to purchase, the Warrant Shares, when and if issued, and each stock certificate issued in transfer thereof, will bear the following legend:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR WITH ANY SECURITIES COMMISSION UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.”

 

(ii)                                  The stock certificates representing such Shares and Warrant Shares and each stock certificate issued in transfer thereof, will also bear any legend required under any applicable state securities law.

 

(iii)                               Absent an effective registration statement under the Securities Act covering any proposed disposition of Units or any part thereof, it will not offer for sale, sell, transfer, assign, pledge, hypothecate or otherwise dispose of any or all of its Units (including, individually, each of the Shares, the Warrants and the Warrant Shares) without first providing the Company with an opinion of counsel to the effect that such offer, sale, transfer, assignment, pledge, hypothecation or other disposition will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable state securities or blue sky laws, except that no such registration

 

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or opinion will be required with respect to: (A) a transfer not involving a change in beneficial ownership, (B) the distribution of any of the Shares, the Warrants and the Warrant Shares by such Investor to any of its partners or retired partners or to the estate of any of its partners or retired partners, members, officers and directors or (C) a sale to be effected in accordance with Rule 144 under the Securities Act (or any comparable exemption).

 

(iv)                              It consents to the Company’s making a notation on its records or giving instructions to any transfer agent of the Shares and Warrant Shares in order to implement the restrictions on transfer of the Shares and Warrant Shares contemplated by this Section 4.1.

 

(v)                                 The Shares and Warrant Shares are not transferable on the books of the Company unless the stock certificate submitted to the transfer agent evidencing the Shares or the Warrant Shares is accompanied by a separate officer’s certificate in the form of Appendix III, executed by an officer of the Investor.

 

(vi)                              Until such time as one or more of the requirements set forth in Section 4.2 have been satisfied, the Shares and Warrant Shares shall be restricted securities under the Securities Act and may be transferable only in accordance with this Agreement or the requirements of the Securities Act or any other applicable federal or state law, rule or regulation.

 

4.2                                 Removal of Transfer Restrictions.  The Company shall remove any legend endorsed on a stock certificate evidencing Shares, Warrants and Warrant Shares pursuant to Section 4.1(b)(i), and any stop transfer instructions and record notations with respect to such Shares, Warrants and Warrant Shares and issue a certificate without such legend to the holder of such Shares, Warrants and Warrant Shares: (A) if such Shares, Warrants and Warrant Shares are registered under the Securities Act, (B) if such Shares, Warrants and Warrant Shares may be sold under Rule 144(k) under the Securities Act or (C) if such holder provides the Company with an opinion of counsel to the effect that a sale or transfer of such Shares, Warrants and Warrant Shares may be made without registration under the Securities Act.

 

5.                                       REPRESENTATIONS AND WARRANTIES BY THE COMPANY.  In order to induce the Investor to enter into this Agreement and to purchase the Units, the Company covenants with, and represents and warrants to, the Investor as follows:

 

5.1                                 Organization, Standing, etc.  The Company and each of its Subsidiaries (as defined in Section 9) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all requisite power and authority to carry on its business, as conducted, to own and hold its properties and assets.

 

5.2                                 Corporate Acts and Proceedings.  All corporate acts and proceedings required for the authorization, execution and delivery of this Agreement, the offer, issuance and delivery of the Units to be sold by the Company and the performance of this Agreement have been duly and validly taken or will have been so taken prior to the Closing.

 

5.3                                 Binding Obligations.  This Agreement constitutes legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

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5.4                                 Capitalization.  The authorized capital stock of the Company as of March 21, 2004 is as set forth in the Quarterly Report on Form 10-QSB for the quarter ended March 31, filed with the Commission on May 17, 2004.

 

5.5                                 Securities.  The Units to be sold by the Company, when issued by the Company and paid for pursuant to the terms of this Agreement, will be validly issued, fully paid and non-assessable and will be free and clear of all Liens (as defined in Section 9) and restrictions, other than restrictions on transfer imposed by (a) Sections 4.1 and 4.2, (b) applicable state securities laws, and (c) the Securities Act.

 

5.6                                 Consent; No Violation.  The execution, delivery and performance by the Company of this Agreement and the Warrant: (a) will not require from the Company’s Board of Directors (the “Board”) or stockholders any consent or approval that has not been obtained, (b) will not require any authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality of government, except such as will have been obtained prior to the Closing, (c) will not cause the Company to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, domestic or foreign, (iii) any order, writ, judgment, injunction, decree, determination or award or (iv) any provision of the Certificate of Incorporation or Bylaws of the Company, (d) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under, any indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement or other agreement, lease or instrument, commitment or arrangement to which the Company is a party or by which the Company or any of its properties, assets or rights is bound or affected and (e) will not result in the creation or imposition of any Lien; except where any of the foregoing would not have, alone or in the aggregate, a material adverse effect on the business, financial condition, operations or assets of the Company.

 

6.                                       INVESTOR REPRESENTATIONS AND WARRANTIES.  The Investor represents and warrants that:

 

(a)                                  It has the right, power, authority and capacity to execute and deliver this Agreement, the Warrant and each other document contemplated by this Agreement.  The Investor, if executing this Agreement and the Warrant in a representative or fiduciary capacity, has full power and authority to execute and deliver this Agreement, the Warrant and each other document contemplated hereby for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation, limited liability company or other entity for whom or which the Investor is executing this Agreement.  The Investor, if an individual, has reached the age of majority according to the laws of the state in which he or she resides.

 

(b)                                 The execution, delivery and performance of this Agreement, the Warrant and each other document contemplated hereby by the Investor have been duly and validly authorized by all necessary action by the Investor, and no other action on the part of the Investor is required to authorize the execution, delivery and performance of this Agreement, the Warrant and each other document contemplated hereby.  This Agreement, the Warrant and each other document contemplated hereby constitutes legal, valid and binding obligations of the Investor enforceable against the Investor in accordance with its terms.

 

A-5



 

(c)                                  It is acquiring the Units for its own account for investment purposes and not with a view to, or in connection with, the distribution of all or any part thereof.

 

(d)                                 It is not aware of, and in no way relying on, any form of general solicitation or general advertising or the publication of any advertisement in connection with the offer and sale of the Units.

 

(e)                                  It has had access to and reviewed (i) the Confidential Private Placement Memorandum of the Company, dated June 1, 2004, (ii) the periodic and other reports filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (iii) any other documents requested by it in connection with the execution of this Agreement and the Warrant.

 

(f)                                    It has, by reason of its business or financial experience or the business or financial experience of its professional advisers who are unaffiliated with and uncompensated by the Company, the ability to utilize the information made available to it in connection with the offering of the Units to evaluate the merits and risks of an investment in the Units and to make an informed investment decision with respect thereto; and it is an “accredited investor” (as defined in Rule 501(a) promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act) by virtue of, among other things, the fact that it meets the investor qualification standards set forth on Appendix I.

 

(g)                                 It has had the opportunity to ask questions and receive answers from representatives of the Company regarding the terms and conditions of the Units and the finances, business and prospects of the Company as it deemed relevant, and all such questions have been answered and information provided to it and its professional advisers’ satisfaction.

 

(h)                                 It understands that the Units (including the Shares, the Warrants and the Warrant Shares) have not been registered under the Securities Act or registered or qualified under any applicable state securities or blue sky laws; that the offering and sale of the Units is intended to be exempt from registration under the Securities Act and from registration or qualification under applicable provisions of state securities or blue sky laws; and that, accordingly, the Units (including the Shares, the Warrants and the Warrant Shares) may not be offered for sale, sold, transferred, assigned, pledged, hypothecated or otherwise disposed of unless registered under the Securities Act and applicable state securities or blue sky laws or an exception from such registration is available.

 

(i)                                     It is a resident of the State indicated as part of its address on its signature page attached hereto.

 

(j)                                     It understands that the Company may pay certain brokers, dealers and finders a finder’s fee or commission not to exceed 10% as part of this transaction.

 

(k)                                  It understands that the Company may not sell Units to any other investor and the Company is not required to sell a minimum number of Units.  If the Company is not able to raise sufficient funds from the sale of Units, it may not be able to implement its business plan which would materially impact the value of the Shares, the Warrants and the Warrant Shares.

 

A-6



 

7.                                       INDEMNIFICATION.

 

7.1                                 Indemnification by the Company.  The Company agrees to indemnify, defend and hold the Investors and their officers, trustees, directors, partners, employees, consultants and agents (the “Investors’ Indemnitees”) harmless from and against any damages or third-party claims incurred or suffered by any of the Investors’ Indemnitees as a result of or arising out of or in connection with the Company’s breach of any representation, warranty, covenant or agreement of the Company contained in this Agreement and such indemnity shall survive the execution and delivery of this Agreement for a period of one year.

 

7.2                                 Indemnification by the Investor.  The Investor agrees to indemnify, defend and hold the Company and its officers, trustees, directors, partners, employees, consultants and agents (the “Company’s Indemnitees”) harmless from and against any damages or third-party claims incurred or suffered by any of the Company’s Indemnitees as a result of or arising out of or in connection with the breach of any representation, warranty, covenant or agreement of the Investor contained in this Agreement and such indemnity shall survive the execution and delivery of this Agreement for a period of one year.

 

7.3                                 Procedure.  The applicable indemnified persons hereunder will promptly notify the applicable indemnitor hereunder of any potential indemnification claim upon discovery of the facts supporting the potential claim.  In any indemnification hereunder, the Company shall have the right to participate in any action brought against any indemnified person and to defend, manage and resolve the matter at the Company’s cost and with the indemnitees’ reasonable cooperation.

 

8.                                       ADDITIONAL DEFINITIONS.  Unless the context otherwise requires, the terms defined in this Section 9 have the meanings herein specified for all purposes of this Agreement.

 

Affiliate” means any Person which directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.

 

Holder” of any Unit means the record or beneficial owner of such Unit.  A Holder of Units will be treated as the Holder of the Restricted Units underlying the Units.

 

Holders of a Requisite Majority of the Restricted Units” means the Person(s) who are the Holders at the time of determination of a majority or more of the Restricted Units.

 

Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by law.

 

Person” includes any individual, corporation, trust, association, company, partnership, limited liability company, joint venture and other entity and any government, governmental agency, instrumentality or political subdivision.

 

Restricted Unit” means (a) the Units (including the underlying shares of Common Stock, the Warrants and the Warrant Shares) and (b) any securities issued or issuable with respect to such Units by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger or consolidation or reorganization; provided, however, that Units will only be treated as Restricted Units if and so long as they have not been (i) sold to or through a broker or dealer or underwriter in a public distribution or a public

 

A-7



 

securities transaction or (ii) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect to such Units are removed upon the consummation of such sale and the seller and purchaser of such Units receives an opinion of counsel for the Company, which is in form and content reasonably satisfactory to the seller and buyer and their respective counsel, to the effect that such Units in the hands of the purchaser are freely transferable without restriction or registration under the Securities Act in any public or private transaction.

 

Subsidiary” means any corporation, association or other business entity at least 50% of the outstanding equity of which entitled to vote in the election of directors (or the equivalent) is at the time owned or controlled directly or indirectly by the Company or by one or more of such subsidiary entities or both.

 

9.                                       MISCELLANEOUS.

 

9.1                                 Waivers and Amendments.  With the written consent of the Holders of a Requisite Majority of the Restricted Units, the obligations of the Company and the rights of the Holders of Units under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by the Board, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of any supplemental agreement or modifying in any manner the rights and obligations hereunder of the Holders of Units and the Company; provided, however, that no such waiver or supplemental agreement may (a) affect any of the rights of any Holder of Units created by the Delaware General Corporation Law without compliance with all applicable provisions of the Delaware General Corporation Law or (b) reduce the aforesaid proportion of Restricted Units, the Holders of which are required to consent to any waiver or supplemental agreement, without the consent of the Holders of all the Restricted Units.  Upon the effectuation of each such waiver, consent or agreement of amendment or modification, the Company will promptly give written notice thereof to the Holders of the Restricted Units who have not previously consented thereto in writing.  Neither this Agreement nor any provision hereof or thereof, may be amended, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 10.1.  No waiver by any party of the breach of any term or provision contained in this Agreement, in any one or more instances, will be deemed to be a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

 

9.2                                 Notices.  All notices, requests, consents and other communications required or permitted hereunder will be in writing and will be delivered, or mailed first class postage prepaid, registered or certified mail:

 

(a)                                  if to any Investor or Holder of any of the Units, to its address shown on signature page hereto, or at such other address as such Investor or Holder may specify by written notice to the Company; and

 

(b)                                 if to the Company, at the Company’s address first above written or at such other address as the Company may specify by written notice to the Investor.

 

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Each such notice, request, consent and other communication will be effective when delivered, if delivered personally, or, if sent by mail, at the earlier of its actual receipt or three days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid.

 

9.3                                 Severability.  Should any one or more of the provisions of this Agreement be determined to be illegal, invalid or unenforceable, it is the intention of the parties hereto that all other provisions of this Agreement should be given effect separately from the provision or provisions determined to be illegal, invalid or unenforceable and should not be affected thereby.

 

9.4                                 Choice of Law.  It is the intention of the parties hereto that the internal substantive laws, and not the laws of conflicts, of Delawareshould govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties hereto.

 

9.5                                 Expenses.  The Company and the Investor will each pay all expenses incurred by each such party in connection with the transactions contemplated hereby.

 

9.6                                 Commissions; Finder’s Fees.  Each party hereto will indemnify and hold harmless the other against and in respect of any claim for brokerage or other commissions or finder’s fees relative to this Agreement or to the transactions contemplated hereby based in any way on agreements or arrangements made or claimed to have been made by such party with any third party.

 

9.7                                 Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document.  All such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument.

 

9.8                                 Headings; Interpretation.  The headings of the Sections of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.  Except as otherwise expressly provided in this Agreement, the following rules of interpretation apply to this Agreement:  (i) the singular includes the plural and the plural includes the singular; (ii) “or” and “any” are not exclusive; (iii) a reference to a law includes any amendment or modification to such law and any rules or regulations issued thereunder; (iv) a reference to a person includes its permitted successors and assigns; (v) a reference in this Agreement to a Section, Exhibit or Appendix is to the Section, Exhibit or Appendix of this Agreement; and (vi) the neuter gender shall include the feminine and masculine.  References to this Agreement shall include a reference to all Exhibits and Appendices hereto, as the same may be amended, modified, supplemented or replaced from time to time.  References to any agreement, document or instrument shall mean a reference to such agreement, document or instrument as the same may be amended, modified, supplemented or replaced from time to time.  The use of the word “including” in this Agreement to refer to specific examples shall be construed to mean “including, without limitation” or “including, but not limited to” and shall not be construed to mean that the examples given are an exclusive list of the topics covered.  All accounting terms used in this Agreement should, except as otherwise provided for herein, be construed in accordance with generally accepted accounting principles.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.

 

 

 

TRESTLE HOLDINGS, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

[COMMON STOCK PURCHASE AGREEMENT SIGNATURE PAGE - COMPANY]

 



 

The foregoing Agreement is hereby accepted as of the date first above written.

 

 

 

 

[Print Name of Investor]

 

 

 

 

 

By

 

 

 

Name:

 

 

Its:

 

 

 

 

 

                                                           

 

Street Address

 

 

 

 

 

                                                           

 

City, State, Zip Code

 

 

 

                                                           

 

Telephone

 

 

 

                                                           

 

Facsimile

 

 

 

                                                           

 

Electronic mail address

 

 

 

 

 

                                                           

 

Tax ID Number

 

 

 

 

 

                                                           

 

Number of Units Subscribed for

 

 

 

 

 

$

                                                           

 

Purchase Price

 

 

 

 

 

[Please complete Appendix I and Appendix II]

 



 

Exhibit A

 



 

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

SHARES OF COMMON STOCK

 

Warrant No.     

 

Dated June 30, 2004 (the “Effective Date”)

 

TRESTLE HOLDINGS, INC., a Delaware corporation (the “Company”), hereby certifies that, for value received,                                                    , or its registered assigns (“Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to an aggregate of                                            (           ) 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 $2.00 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:

 

10.                                 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.

 

11.                                 Piggyback Registration Rights.

 

11.1                           Right to Piggyback .  Whenever the Company proposes to register any of its securities under the Securities Act (other than on a registration on Form S-4 or any successor form or a registration of non-convertible debt securities) on a registration form which may be used for the registration of any Warrant Shares (a “Piggyback Registration”), the Company will give prompt written notice to Holder of its intention to effect such a registration and will include in such registration all Warrant Shares (in accordance with the priorities set forth in Sections 2(a) and 2(b) below) with respect to which the Company has received written requests for inclusion within fifteen (15) days after the delivery of the Company’s notice.

 

2



 

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

 

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

 

11.4                           Other Registrations.  If the Company has previously filed a registration statement with respect to Warrant Shares pursuant to this Section 2, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least 90 days has elapsed from the effective date of such previous registration.

 

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

 

12.                                 Registration of Transfers and Exchanges.

 

12.1                           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.

 

12.2                           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

 

3



 

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.

 

13.                                 Duration and Exercise of Warrants.

 

13.1                           The term of this Warrant (the “Exercise Period”) shall be the period commencing June 30th, 2004 and ending on June 30th, 2007 (the “Expiration Date”).

 

13.2                           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.

 

13.3                           Subject to Sections 3(b), 5 and 8, 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 199 Technology Drive, Suite 105, Irvine, California 92618, 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 4(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. 

 

13.4                           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 4(d) at any time or from time to time during the Exercise Period by delivering notice in accordance with Section 4(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 4(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.

 

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

 

X =  (A-B)

 

Y

 

4



 

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 4(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 4(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.

 

13.5                           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 4, 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.

 

13.6                           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 hundred (100) 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.

 

5



 

13.7                           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.

 

14.                                 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.

 

15.                                 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.

 

16.                                 Adjustments

 

16.1                           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.

 

16.2                           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

 

6



 

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 7(b) shall similarly apply to successive reclassifications, changes and conversions.

 

17.                                 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 downto the nearest whole number of shares.

 

18.                                 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 9 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 9 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., 199 Technology Drive, Suite 105, Irvine, California 92618, Attention: Chief Financial Officer, or to facsimile no.  (949) 673-1058, 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 9.

 

19.                                 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.

 

20.                                 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.

 

21.                                 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.

 

7



 

22.                                 Miscellaneous.

 

22.1                           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.

 

22.2                           Subject to Section 13(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.

 

22.3                           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:

 

(a)                                  “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.”

 

(b)                                 any legend required by applicable state securities laws;

 

(c)                                  any legend required by the Company’s certificate of incorporation or certificate of determination; and/or

 

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

 

22.4                           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.

 

22.5                           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.

 

22.6                           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

 

8



 

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:

 

Name:  Michael Doherty

 

Title:  Chairman

 

 

Acknowledged and agreed to:

 

 

By:

 

,

its

 

 

 

By:

 

,

 

its

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

9



 

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]

 

o 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 -

 

o 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”).

 



 

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-5



 

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-6



 

Appendix I

 

Accredited Investor Questionnaire

 

 

TRESTLE HOLDINGS, INC.

 

ACCREDITED INVESTOR QUESTIONNAIRE

 

Trestle Holdings, Inc.

199 Technology Drive, Suite 105

Irvine, California 92618

 

Ladies and Gentlemen:

 

The following information is furnished to you in order for you to determine whether the undersigned (the “Investor”) will be a qualified purchaser of common stock, $.001 par value per share (the “Common Stock”) of Trestle Holdings, Inc. (the “Issuer”), pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Act”), and Regulation D promulgated thereunder (“Regulation D”).  Capitalized terms used herein without definition shall have the meaning ascribed to them in the Common Stock Purchase Agreement, dated as of June 1, 2004 (the “Purchase Agreement”), by and between the Issuer and the Investor.

 

I understand that you will rely upon the following information for purposes of such determination and that the Units will not be registered under the Act in reliance upon the exemption from registration provided by Section 4(2) of the Act and Regulation D.

 

The undersigned understands that this Questionnaire is merely a request for information and is not an offer to sell or a solicitation of an offer to buy or a sale of the Units.  The undersigned also understands that he or she may be required to furnish additional information.

 

1.               Representations and Warranties of the Investor.  The Investor hereby makes the following representations and warranties to the Issuer and agrees with the Issuer that:

 

 

(a)

Accredited Investor.  The Investor is (check applicable box):

 

 

 

 

 

 
 
(i)
o
 
a bank as defined in Section 3(a)(2) of the Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act acting in either an individual or fiduciary capacity.
 
 
 
 
 
 
 
 
(ii)
o
 
a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

A-8



 

 
 
(iii)
o
 
an insurance company as defined in Section 2(a)(13) of the Act.
 
 
 
 
 
 
 
 
(iv)
o
 
an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act.
 
 
 
 
 
 
 
 
(v)
o
 
a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.
 
 
 
 
 
 
 
 
(vi)
o
 
a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000.
 
 
 
 
 
 
 
 
(vii)
o
 
an employee benefit plan (A) within the meaning of the Employee Retirement Income Security Act of 1974 and the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or (B) having total assets in excess of $5,000,000 or (C) if a self-directed plan, with investment decisions made solely by persons that are accredited investors.
 
 
 
 
 
 
 
 
(viii)
o
 
a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
 
 
 
 
 
 
 
 
(ix)
o
 
an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, corporation, Massachusetts or similar business trust, or partnership not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
 
 
 
 
 
 
 
 
(x)
o
 
any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment.
 
 
 
 
 
 
 
 
(xi)
o
 
an individual. (See paragraph 1(b) below.)
 
 
 
 
 
 
 
 
(xii)
o
 
an entity of which each equity or beneficial owner is an entity described in (1) - (10) under this paragraph 1(a) or is an individual who could check one (1) of the first three (3) boxes under paragraph 1(b).

 

A-9



 

 
 
 
 
 
 
 

 

 

 

 

 

(Initial)

 

 

 

 

 

 

 

(b)

Individual Investors.  If the Investor checked the box in paragraph 1(a)(11) for “an individual,” then the Investor (check all applicable boxes):

 

 

 

 

 

 
 
(i)
o
 
is a director or executive officer of the Company.
 
 
 
 
 
 
 
 
(ii)
o
 
has an individual net worth, or joint net worth with that person’s spouse, at the time of his or her purchase exceeding $1,000,000.
 
 
 
 
 
 
 
 
(iii)
o
 
had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
 
 
 
 
 
 
 
 
(iv)
o
 
none of the above.
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

 

(Initial)

 

 

 

 

 

 

2.  The undersigned represents that:

 

 

 

 

(a)

the information contained herein is complete and accurate and may be relied upon, and

 

 

 

 

(b)

the undersigned will notify the Issuer immediately of any adverse change in any of such information occurring prior to the Closing (as defined in and pursuant to the Purchase Agreement).

 

IN WITNESS WHEREOF, the undersigned has initialed the foregoing statements and executed this Questionnaire this      day of                                , 2004.

 

 

By:

 

 

Name:

Title:

 

A-10



 

Appendix II

 

Registration Statement Questionnaire

 

In connection with the preparation of the Registration Statement, please provide us with the following information:

 

Pursuant to the “Selling Stockholders” section of the Registration Statement, please state your organization’s name exactly as it should appear in the Registration Statement and provide the following information, as of                              , 2004, as to your organization:

 

                                                    [name]

 

(1)

 

(2)

 

(3)

 

 

 

 

 

Number of shares of Trestle Holdings, Inc. Common Stock owned prior to completion of the sale of shares included in Registration Statement

 

Number of shares of Trestle Holdings, Inc. Common Stock which are being included in the Registration Statement

 

Number of shares of Trestle Holdings, Inc. Common Stock, if any, which will be owned after completion of sale of shares included in Registration Statement

 

Has your organization had any position, office or other material relationship within the past three years with Trestle Holdings, Inc. or its affiliates?

 

o Yes       o No

 

If yes, please indicate the nature of any such relationships below:

 

 

 

 

The undersigned represents that:

 

(a)                                  the information contained herein is complete and accurate and may be relied upon, and

 

II



 

(b)                                 the undersigned will notify the Issuer immediately of any adverse change in any of such information occurring prior to the Closing (as defined in and pursuant to that certain Common Stock Purchase Agreement, dated June 1, 2004, by and between the Issuer and the Investor).

 

 

IN WITNESS WHEREOF, the undersigned has initialed the foregoing statements and executed this Questionnaire this           day of                , 2004.

 

By:

 

 

Name:

Title:

 



 

Appendix III

 

Investor’s Officer’s Certificate

 

 

INVESTOR’S OFFICER’S CERTIFICATE

 

Trestle Holdings, Inc.

199 Technology Drive, Suite 105

Irvine, California 92618

 

Ladies and Gentlemen:

 

The undersigned, an officer of, or other person duly authorized by [                                                     ] (the “Investor”) hereby certifies to Trestle Holdings, Inc. (the “Issuer”) that the Investor is the purchaser of the shares of common stock, $.001 par value per share (the “Common Stock”) of the Issuer as evidenced by the attached stock certificate(s).  As such, the Investor sold such shares on                                , 200   in accordance with the registration statement number [                                           ] and the requirement of delivering a current prospectus, and current annual and quarterly reports by the Company has been complied with in connection with such sale.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this             day of                            , 200    .

 

 

By:

 

 

Name:

Title:

 

III


EX-3 4 a04-7740_1ex3.htm EX-3

Exhibit 3

 

Amendment to

Private Placement Memorandum and Common Stock Purchase Agreement

 

This amendment (the “Amendment”) is made and entered into as of June 30, 2004 by and between Trestle Holdings, Inc., a Delaware corporation with principal offices located at 199 Technology Drive, Suite 105, Irvine, California 92618 (the “Company”), and the undersigned investor (the “Investor”).

 

WHEREAS, the Company and the Investor entered into that certain Common Stock Purchase Agreement (the “Agreement”) wherein the Investor purchased a number of Units under the Agreement; and

 

WHEREAS, the Company and the Investor acknowledge that, under the Private Placement Memorandum and the Agreement, each Unit sold to Investor is defined as and consists of: (a) one share (a “Share”) of Common Stock of the Company, par value $.001 per share (the “Common Stock”), and (b) the right to purchase one-half share of Common Stock (each right to purchase a full share of Common Stock, a “Warrant Share”) at an exercise price of $2.00 per Warrant Share which is exercisable for a period of three years from issuance; and

 

WHEREAS, the Company and the Investor desire to amend the Agreement to correct clerical errors in the Private Placement Memorandum and the Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       The Company and the Investor acknowledge and agree that the definition of “Unit” under the Private Placement Memorandum and the Agreement is hereby deleted and replaced in its entirely with the following definition: each “Unit” is defined as and consists of: (a) one share (a “Share”) of Common Stock of the Company, par value $.001 per share (the “Common Stock”), and (b) the right to purchase one-half share of Common Stock (each right to purchase a full share of Common Stock, a “Warrant Share”) at an exercise price of $2.00 per Warrant Share which is exercisable for a period of three years from issuance.

 



 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized representatives.

 

TRESTLE HOLDINGS, INC.

 

 

By:

 

 

Michael Doherty

Chairman, Trestle Holdings, Inc.

 

 

The foregoing Agreement is hereby accepted as of the date first above written.

 

 

 

[Print Name of Investor]

 

 

 

By

 

 

Name:

 

Its:

 

 

 

                                                          

 

Street Address

 

 

 

                                                          

 

City, State, Zip Code

 

 

 

                                                          

 

Telephone

 

 

 

                                                          

 

Facsimile

 

 

 

                                                          

 

Electronic mail address

 

 

 

                                                          

 

Tax ID Number

 

 

 

                                                          

 

Number of Units Subscribed for

 

 

 

$

                                                          

 

Purchase Price

 

 


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