DUTCHESS PRIVATE EQUITIES FUND, L.P.
312 Stuart Street, Third Floor, 100 Mill Plain Road,Third Floor,
Boston, MA 02116 Danbury, CT 06811
Phone: (617) 960-3570 Phone (203) 791-3838
April 28, 2003
Cal Bay International, Inc.
1582 Parkway Loop
Suite G
Tustin, CA 92780
Attention: Robert Thompson
RE: DUTCHESS PRIVATE EQUITIES FUND, LP
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Dear Mr. Thompson:
Reference is made to that certain Investment Agreement of even date
between you and the undersigned ("Agreement"). Pursuant to Section 12(b) of the
Agreement, you are issuing six hundred seventy five thousand six hundred seventy
five (675,675) of shares of your common stock to the undersigned ("Commitment
Shares"). The Commitment Shares shall be deemed fully paid as of the Execution
Date. Capitalized terms used and not defined herein have the meaning given them
in the Agreement.
The Investor agrees not to publicly sell, dispose of or otherwise transfer
any Commitment Shares until the earlier of (1) the Effective Date or (2) ninety
(90) days after the Execution Date (such earlier date hereafter referred to as
the "First Release Date").
From and after the First Release Date until that date which is thirty (30)
days after the First Release Date (such date hereafter referred to as the
"Second Release Date"), the Investor may publicly sell up to a maximum of two
hundred thousand (200,000) of the Commitment Shares ("First Release Shares").
For each thirty (30) day period after the Second Release Date, in addition to
being able to sell any of the First Release Shares remaining unsold as of the
Second Release Date, Investor shall be free to sell or otherwise transfer up to
one hundred fifty eight thousand five hundred fifty nine (158,559) of the
Commitment Shares. For example, if 100,000 Commitment Shares are sold prior to
the Second Release Date, Investor shall be free to sell 100,000 shares at any
time after the Second Release Date and, in addition, 158,559 shares every thirty
(30) days after the Second Release Date.
In the event the Commitment Shares are not registered sooner under the
Securities Act of 1933, such Shares shall be salable under Rule 144 one year
after the Execution Date.
If you agree with the foregoing, kindly signify your agreement by executing
this letter below where indicated and return a copy to the undersigned.
Accepted and Agreed: Very truly yours,
Cal Bay International, Inc. Dutchess Private Equities Fund, LP
By Dutchess Capital Management, LLC,
its general partner
By: /s/Robert Thompson, CEO By: /s/ Douglas H. Leighton,
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Robert Thompson Douglas H. Leighton
A managing member