registration_agreement.htm


    EXHIBIT
      10.2

    REGISTRATION
      RIGHTS AGREEMENT

    


    Registration
      Rights Agreement (the
“Agreement”),
      dated as of December 20, 2007, by and between EDGELINE HOLDINGS, INC., a corporation organized
      under the laws of State of Nevada, with its principal executive office at 1330
      Post Oak Blvd., Suite 1600, Houston, Texas 77056 (the “Company”), and
      Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company, with
      its principal office at 50 Commonwealth Avenue, Suite 2, Boston, MA 02116 (the
      “Holder”).

    


    Whereas, in
      connection with the
      Investment Agreement by and between the Company and the Investor of this date
      (the “Investment
      Agreement”), the Company has agreed to issue and sell to the Investor an
      indeterminate number of shares of the Company’s Common Stock, $.08 par value per
      share (the “Common
      Stock”), to be purchased pursuant to the terms and subject to the
      conditions set forth in the Investment Agreement; and

    


    Whereas, to
      induce the Investor
      to execute and deliver the Investment Agreement, the Company has agreed to
      provide certain registration rights under the Securities Act of 1933, as
      amended, and the rules and regulations thereunder, or any similar successor
      statute (collectively, the “1933 Act”), and
      applicable state securities laws, with respect to the shares of Common Stock
      issuable pursuant to the Investment Agreement.

    


    Now
      therefore, in consideration of the
      foregoing promises and the mutual covenants contained hereinafter and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Company and the Investor hereby agree as follows:

    


    


    


    


    


    


    Section
      1.  DEFINITIONS.

    


    As
      used
      in this Agreement, the following terms shall have the following meanings:

    


    “Execution
      Date” means
      the date of this Agreement set forth above.

    


    “Investor”
means
      Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company.

    


    “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

    


    “Potential
      Material
      Event” means any of the following: (i) the possession
      by the
      Company of material information not ripe for disclosure in the Registration
      Statement, which shall be evidenced by determinations in good faith by the
      Board
      of Directors of the Company that disclosure of such information in the
      Registration Statement would be detrimental to the business and affairs of
      the
      Company, or (ii) any
      material engagement or activity by the Company which would, in the good faith
      determination of the Board of Directors of the Company, be adversely affected
      by
      disclosure in the Registration Statement at such time, which determination
      shall
      be accompanied by a good faith determination by the Board of Directors of the
      Company that the Registration Statement would be materially misleading absent
      the inclusion of such information.

    


    “Principal
      Market”
shall mean The American Stock Exchange, National Association of Securities
      Dealer’s, Inc., Over-the-Counter electronic bulletin board, the Nasdaq National
      Market or The Nasdaq SmallCap Market whichever is the principal market on which
      the Common Stock of the Company is listed.

    


    “Register,”
“Registered,”
and
      “Registration”
refer to
      the Registration effected by preparing and filing one (1) or more
      Registration Statements in compliance with the 1933 Act and pursuant to Rule
      415
      under the 1933 Act or any successor rule providing for offering securities
      on a
      continuous basis (“Rule 415”), and the
      declaration or ordering of effectiveness of such Registration Statement(s)
      by
      the United States Securities and Exchange Commission (the “SEC”).

    


    
      
         

      

      
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    “Registrable
      Securities” means (i)
the shares
      of Common Stock issued or issuable pursuant to the Investment
      Agreement, and (ii) any
      shares of capital stock issued or issuable with respect to such shares of Common
      Stock, if any, as a result of any stock split, stock dividend, recapitalization,
      exchange or similar event or otherwise, which have not been (x) included in the
      Registration Statement that has been declared effective by the SEC, or (y) sold under circumstances
      meeting all of the applicable conditions of Rule 144 (or any similar provision
      then in force) under the 1933 Act.

    


    “Registration
      Statement” means the registration statement of the Company filed under
      the 1933 Act covering the Registrable Securities.

    


    All
      capitalized terms used in this Agreement and not otherwise defined herein shall
      have the same meaning ascribed to them as in the Investment Agreement.

    


    
      	
              Section
                2.  REGISTRATION.
                

            


    

    


    (a)  The
      Company
      shall, within forty-five (45) days of the date of this Agreement, file with
      the
      SEC the Registration Statement or Registration Statements (as is necessary)
      on
      Form SB-2 (or, if such form is unavailable for such a registration, on such
      other form as is available for such registration), covering the resale of all
      of
      the Registrable Securities, which Registration Statement(s) shall state that,
      in
      accordance with Rule 416 promulgated under the 1933 Act, such Registration
      Statement also covers such indeterminate number of additional shares of Common
      Stock as may become issuable upon stock splits, stock dividends or similar
      transactions.  The Company shall initially register for resale
      15,000,000 shares of Common Stock which would be issuable on the date preceding
      the filing of the Registration Statement based on the closing bid price of
      the
      Company’s Common Stock on such date and the amount reasonably calculated that
      represents Common Stock issuable to other parties as set forth in the Investment
      Agreement except to the extent that the SEC requires the share amount to be
      reduced as a condition of effectiveness.

    


    (b)  The
      Company
      shall use all commercially reasonable efforts to have the Registration
      Statement(s) declared effective by the SEC within ninety (90) calendar days
      after the Execution Date.

    


    (c)  The
      Company
      agrees not to include any other securities in the Registration Statement
      covering the Registrable Securities without Investor’s prior written consent
      which Investor may withhold in its sole discretion. Furthermore, the Company
      agrees that it will not file any other Registration Statement (excluding a
      registration statement on Form S-8) for other securities, until thirty calendar
      days after the Registration Statement for the Registrable Securities is declared
      effective by the SEC.

    


    
      	
              Section
                3.  RELATED
                OBLIGATIONS. 

            


    

    


    At
      such time as the Company is
      obligated to prepare and file the Registration Statement with the SEC pursuant
      to Section 2(a), the Company will effect the registration of the Registrable
      Securities in accordance with the intended method of disposition thereof and,
      with respect thereto, the Company shall have the following obligations:

    


    


    (a)  The
      Company
      shall use all commercially reasonable efforts to cause such Registration
      Statement relating to the Registrable Securities to become effective within
      ninety (90) days after the Execution Date and shall keep such Registration
      Statement effective until the earlier to occur of  the date on which
(A) the Investor shall
      have sold all the Registrable Securities; or (B) the Investor has
      no right
      to acquire any additional shares of Common Stock under the Investment Agreement
      (the “Registration
      Period”).  The Registration Statement (including any amendments
      or supplements thereto and prospectuses contained therein) shall not contain
      any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein, or necessary to make the statements therein, in light of
      the
      circumstances in which they were made, not misleading. The Company shall use
      all
      commercially reasonable efforts to respond to all SEC comments within seven
      (7)
      business days from receipt of such comments by the Company. The Company shall
      use all commercially reasonable efforts to cause the Registration Statement
      relating to the Registrable Securities to become effective no later than
      five  (5)  business days after notice from the SEC that the
      Registration Statement may be declared effective.  The Investor agrees
      to provide all information which it is required by law to provide to the
      Company, including the intended method of disposition of the Registrable
      Securities, and the Company’s obligations set forth above shall be conditioned
      on the receipt of such information.

    


    
      
         

      

      
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    (b)  The
      Company
      shall prepare and file with the SEC such amendments (including post-effective
      amendments) and supplements to the Registration Statement and the prospectus
      used in connection with such Registration Statement, which prospectus is to
      be
      filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
      to keep such Registration Statement effective during the Registration Period,
      and, during such period, comply with the provisions of the 1933 Act with respect
      to the disposition of all Registrable Securities of the Company covered by
      such
      Registration Statement until such time as all of such Registrable Securities
      shall have been disposed of in accordance with the intended methods of
      disposition by the Investor thereof as set forth in such Registration
      Statement.  In the event the number of shares of Common Stock covered
      by the Registration Statement filed pursuant to this Agreement is at any time
      insufficient to cover all of the Registrable Securities, the Company shall
      amend
      such Registration Statement, or file a new Registration Statement (on the short
      form available therefor, if applicable), or both, so as to cover all of the
      Registrable Securities, in each case, as soon as practicable, but in any event
      within thirty (30) calendar days after the necessity therefor arises (based
      on
      the then Purchase Price of the Common Stock and other relevant factors on which
      the Company reasonably elects to rely), assuming the Company has sufficient
      authorized shares at that time, and if it does not, within thirty (30) calendar
      days after such shares are authorized.  The Company shall use
      commercially reasonable efforts to cause such amendment and/or new Registration
      Statement to become effective as soon as practicable following the filing
      thereof.

    


    (c)  The
      Company
      shall make available to the Investor whose Registrable Securities are included
      in any Registration Statement and its legal counsel without charge (i) promptly after the
      same is
      prepared and filed with the SEC at least one (1) copy of such Registration
      Statement and any amendment(s) thereto, including financial statements and
      schedules, all documents incorporated therein by reference and all exhibits,
      the
      prospectus included in such Registration Statement (including each preliminary
      prospectus) and, with regards to such Registration Statement(s), any
      correspondence by or on behalf of the Company to the SEC or the staff of the
      SEC
      and any correspondence from the SEC or the staff of the SEC to the Company
      or
      its representatives; (ii) upon the effectiveness
      of
      any Registration Statement, the Company shall make available copies of the
      prospectus, via EDGAR, included in such Registration Statement and all
      amendments and supplements thereto; and (iii) such other documents,
      including copies of any preliminary or final prospectus, as the Investor may
      reasonably request from time to time in order to facilitate the disposition
      of
      the Registrable Securities.

    


    (d)  The
      Company
      shall use commercially reasonable efforts to (i) register and qualify
      the
      Registrable Securities covered by the Registration Statement under such other
      securities or “blue sky” laws of such states in the United States as the
      Investor reasonably requests; (ii) prepare and file
      in those
      jurisdictions, such amendments (including post-effective amendments) and
      supplements to such registrations and qualifications as may be necessary to
      maintain the effectiveness thereof during the Registration Period; (iii) take such other actions
      as may be necessary to maintain such registrations and qualifications in effect
      at all times during the Registration Period, and (iv) take all other actions
      reasonably necessary or advisable to qualify the Registrable Securities for
      sale
      in such jurisdictions; provided, however, that the
      Company shall not be required in connection therewith or as a condition thereto
      to (x) qualify to do
      business in any jurisdiction where it would not otherwise be required to qualify
      but for this Section 3(d), or (y) subject itself to
      general
      taxation in any such jurisdiction.  The Company shall promptly notify
      the Investor who holds Registrable Securities of the receipt by the Company
      of
      any notification with respect to the suspension of the registration or
      qualification of any of the Registrable Securities for sale under the securities
      or “blue sky” laws of any jurisdiction in the United States or its receipt of
      actual notice of the initiation or threatening of any proceeding for such
      purpose.

    


    (e)  As
      promptly as
      practicable after becoming aware of such event, the Company shall notify
      Investor in writing of the happening of any event as a result of which the
      prospectus included in the Registration Statement, as then in effect, includes
      an untrue statement of a material fact or omission to state a material fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading (“Registration
      Default”) and use all diligent efforts to promptly prepare a supplement
      or amendment to such Registration Statement and take any other necessary steps
      to cure the Registration Default (which, if such Registration Statement is
      on
      Form S-3, may consist of a document to be filed by the Company with the SEC
      pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below)
      and to be incorporated by reference in the prospectus) to correct such untrue
      statement or omission, and make available copies of such supplement or amendment
      to the Investor. The Company shall also promptly notify the Investor (i) when a prospectus
      or any
      prospectus supplement or post-effective amendment has been filed, and when
      the
      Registration Statement or any post-effective amendment has become effective
      (the
      Company will prepare notification of such effectiveness which shall be delivered
      to the Investor on the same day of such effectiveness and by overnight mail),
      additionally, the Company will promptly provide to the Investor, a copy of
      the
      effectiveness order prepared by the SEC once it is received by the Company;
      (ii) of any request by
      the SEC for amendments or supplements to the Registration Statement or related
      prospectus or related information, (iii) of the Company’s
      reasonable determination that a post-effective amendment to the Registration
      Statement would be appropriate, (iv) in the event the
      Registration Statement is no longer effective, or (v) if the Registration
      Statement is stale as a result of the Company’s failure to timely file its
      financials or otherwise. The Company acknowledges that its failure to cure
      the
      Registration Default within ten (10) business days will cause the Investor
      to
      suffer damages in an amount that will be difficult to
      ascertain.  Accordingly, the parties agree that it is appropriate to
      include a provision for liquidated damages equal to five thousand dollars
      ($5,000) per day.  The parties acknowledge and agree that the
      liquidated damages provision set forth in this section represents the parties’
good faith effort to quantify such damages and, as such, agree that the form
      and
      amount of such liquidated damages are reasonable and will not constitute a
      penalty.  It is the intention of the parties that interest payable
      under any of the terms of this Agreement shall not exceed the maximum amount
      permitted under any applicable law. If a law, which applies to this Agreement,
      which sets the maximum interest amount, is finally interpreted so that the
      interest in connection with this Agreement exceeds the permitted limits, then:
      (1) any such interest
      shall be reduced by the amount necessary to reduce the interest to the permitted
      limit; and (2) any sums
      already collected (if any) from the Company which exceed the permitted limits
      will be refunded to the Company.  The Investor may choose to make this
      refund by reducing the amount that the Company owes under this Agreement or
      by
      making a direct payment to the Company.  If a refund reduces the
      amount that the Company owes the Investor, the reduction will be treated as
      a
      partial payment.

    


    
      
         

      

      
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    (f)  The
      Company
      shall use all commercially reasonable efforts to prevent the issuance of any
      stop order or other  suspension of effectiveness of the Registration
      Statement, or the suspension of the qualification of any of the Registrable
      Securities for sale in any jurisdiction and, if such an order or suspension
      is
      issued,  to obtain the withdrawal of such order or suspension at the
      earliest possible moment and to notify the Investor holding Registrable
      Securities being sold of the issuance of such order and
      the  resolution thereof or its receipt of actual notice of the
      initiation or threat of any proceeding concerning the effectiveness of the
      registration statement.

    


    (g)  The
      Company
      shall permit the Investor and one (1) legal counsel, designated by the Investor,
      to review and comment upon the Registration Statement and all amendments and
      supplements thereto at least one (1) calendar day prior to their filing with
      the
      SEC.  However, any postponement of a filing of a Registration
      Statement or any postponement of a request for acceleration or any postponement
      of the effective date or effectiveness of a Registration Statement by written
      request of the Investor (collectively, the "Investor's Delay") shall not act
      to
      trigger any penalty of any kind, or any cash amount due or any in-kind amount
      due the Investor from the Company under any and all agreements of any nature
      or
      kind between the Company and the Investor.  The event(s) of an
      Investor's Delay shall act to suspend all obligations of any kind or nature
      of
      the Company under any and all agreements of any nature or kind between the
      Company and the Investor.

    


    (h)  At
      the request
      of the Investor, the Company's counsel shall furnish to the Investor an opinion
      letter confirming the effectiveness of the registration
      statement.  Such opinion letter shall be issued as of the date of the
      effectiveness of the registration statement and be in a form suitable to the
      Investor.

    


    (i)  The
      Company
      shall hold in confidence and not make any disclosure of information concerning
      the Investor unless (i)
disclosure of such
      information is necessary to comply with federal or
      state securities laws, (ii) the disclosure of
      such
      information is necessary to avoid or correct a misstatement or omission in
      any
      Registration Statement, (iii) the release of such
      information is ordered pursuant to a subpoena or other final, non-appealable
      order from a court or governmental body of competent jurisdiction, or (iv) such information
      has been
      made generally available to the public other than by disclosure in violation
      of
      this Agreement or any other agreement.  The Company agrees that it
      shall, upon learning that disclosure of such information concerning the Investor
      is sought in or by a court or governmental body of competent jurisdiction or
      through other means, give prompt written notice to the Investor and allow the
      Investor, at the Investor’s expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order covering such information.

    


    (j)  The
      Company
      shall use all commercially reasonable efforts to maintain designation and
      quotation of all the Registrable Securities covered by any Registration
      Statement on the Principal Market.  If, despite the Company’s
      commercially reasonable efforts, the Company is unsuccessful in satisfying
      the
      preceding sentence, it shall use commercially reasonable efforts to cause all
      the Registrable Securities covered by any Registration Statement to be listed
      on
      each other national securities exchange and automated quotation system, if
      any,
      on which securities of the same class or series issued by the Company are then
      listed, if any, if the listing of such Registrable Securities is then permitted
      under the rules of such exchange or system.  The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

    


    
      
         

      

      
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    (k)  The
      Company
      shall cooperate with the Investor to facilitate the prompt preparation and
      delivery of certificates representing the Registrable Securities to be offered
      pursuant to the Registration Statement and enable such certificates to be in
      such denominations or amounts, as the case may be, as the Investor may
      reasonably request (and after any sales of such Registrable Securities by the
      Investor, such certificates not bearing any restrictive legend).

    


    (l)  The
      Company
      shall provide a transfer agent for all the Registrable Securities not later
      than
      the effective date of the first Registration Statement filed pursuant
      hereto.

    


    (m)  If
      requested by
      the Investor, the Company shall (i) as soon as reasonably
      practical incorporate in a prospectus supplement or post-effective amendment
      such information as the Investor reasonably determines should be included
      therein relating to the sale and distribution of Registrable Securities,
      including, without limitation, information with respect to the offering of
      the
      Registrable Securities to be sold in such offering; (ii) make all required
      filings
      of such prospectus supplement or post-effective amendment as soon as reasonably
      possible after being notified of the matters to be incorporated in such
      prospectus supplement or post-effective amendment; and (iii) supplement or make
      amendments to any Registration Statement if reasonably requested by the
      Investor.

    


    (n)  The
      Company
      shall use all commercially reasonable efforts to cause the Registrable
      Securities covered by the applicable Registration Statement to be registered
      with or approved by such other governmental agencies or authorities as may
      be
      necessary to facilitate the disposition of such Registrable Securities.

    


    (o)  The
      Company
      shall otherwise use all commercially reasonable efforts to comply with all
      applicable rules and regulations of the SEC in connection with any registration
      hereunder.

    


    (p)  Within
      one (1)
      business day after the Registration Statement which includes Registrable
      Securities is declared effective by the SEC, the Company shall deliver to the
      transfer agent for such Registrable Securities, with copies to the Investor,
      confirmation that such Registration Statement has been declared effective by
      the
      SEC.

    


    (q)  The
      Company
      shall take all other reasonable actions necessary to expedite and facilitate
      disposition by the Investor of Registrable Securities pursuant to the
      Registration Statement.

    


    


    Section
      4.  OBLIGATIONS OF THE
      INVESTOR.

    


    (a)  At
      least five
      (5) calendar days prior to the first anticipated filing date of the Registration
      Statement  the Company shall notify the Investor in writing of the
      information the Company requires from the Investor for the Registration
      Statement.  It shall be a condition precedent to the obligations of
      the Company to complete the registration pursuant to this Agreement with respect
      to the Registrable Securities and the Investor agrees to furnish to the Company
      that information regarding itself, the Registrable Securities and the intended
      method of disposition of the Registrable Securities as shall reasonably be
      required to effect the registration of such Registrable Securities and the
      Investor shall execute such documents in connection with such registration
      as
      the Company may reasonably request.  The Investor covenants and agrees
      that, in connection with any sale of Registrable Securities by it pursuant
      to
      the Registration Statement, it shall comply with the “Plan of Distribution”
section of the then current prospectus relating to such Registration
      Statement.

    


    (b)  The
      Investor,
      by its acceptance of the Registrable Securities, agrees to cooperate with the
      Company as reasonably requested by the Company in connection with the
      preparation and filing of any Registration Statement hereunder, unless the
      Investor has notified the Company in writing of an election to exclude all
      of
      the Investor’s Registrable Securities from such Registration Statement.

    


    (c)  The
      Investor
      agrees that, upon receipt of written notice from the Company of the happening
      of
      any event of the kind described in Section 3(f) or the first sentence of 3(e),
      the Investor will immediately discontinue disposition of Registrable Securities
      pursuant to any Registration Statement(s) covering such Registrable Securities
      until the Investor’s receipt of the copies of the supplemented or amended
      prospectus contemplated by Section 3(f) or the first sentence of 3(e).

    


    
      
         

      

      
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              Section
                5.  EXPENSES
                OF REGISTRATION. 

            


    

    


    All
      expenses, other than underwriting
      discounts and commissions and other than as set forth in the Investment
      Agreement, incurred in connection with registrations including comments, filings
      or qualifications pursuant to Sections 2 and 3, including, without limitation,
      all registration, listing and qualifications fees, printing and accounting
      fees,
      and fees and disbursements of counsel for the Company or for the Investor shall
      be paid by the Company.

    


    
      	
              Section
                6.  INDEMNIFICATION.
                

            


    

    


    In
      the event any Registrable Securities
      are included in the Registration Statement under this Agreement:

    


    


    (a)  To
      the fullest
      extent permitted by law, the Company, under this Agreement, will, and hereby
      does, indemnify, hold harmless and defend the Investor who holds Registrable
      Securities, the directors, officers, partners, employees, counsel, agents,
      representatives of, and each Person, if any, who controls, any Investor within
      the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended
      (the “1934
      Act”) (each, an “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, attorneys’ fees, amounts paid in settlement or expenses, joint
      or several (collectively, “Claims”), incurred
      in
      investigating, preparing or defending any action, claim, suit, inquiry,
      proceeding, investigation or appeal taken from the foregoing by or before any
      court or governmental, administrative or other regulatory agency, body or the
      SEC, whether pending or threatened, whether or not an indemnified party is
      or
      may be a party thereto (“Indemnified
      Damages”), to which any of them may become subject insofar as such Claims
      (or actions or proceedings, whether commenced or threatened, in respect thereof)
      arise out of or are based upon: (i) any untrue statement
      or
      alleged untrue statement of a material fact in the Registration Statement or
      any
      post-effective amendment thereto or in any filing made in connection with the
      qualification of the offering under the securities or other “blue sky” laws of
      any jurisdiction in which the Investor has requested in writing that the Company
      register or qualify the Shares (“Blue Sky Filing”), or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which the statements therein were made, not misleading,
      (ii) any untrue
      statement or alleged untrue statement of a material fact contained in the final
      prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading, or (iii) any violation or
      alleged
      violation by the Company of the 1933 Act, the 1934 Act, any other law,
      including, without limitation, any state securities law, or any rule or
      regulation thereunder relating to the offer or sale of the Registrable
      Securities pursuant to the Registration Statement (the matters in the foregoing
      clauses (i) through (iii) being, collectively, “Violations”).  Subject
      to the restrictions set forth in Section 6(c) the Company shall reimburse the
      Investor and each such controlling person, promptly as such expenses are
      incurred and are due and payable, for any reasonable legal fees or other
      reasonable expenses incurred by them in connection with investigating or
      defending any such Claim. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to
      a Claim
      arising out of or based upon a Violation which is due to the inclusion in the
      Registration Statement of the information furnished to the Company by any
      Indemnified Person expressly for use in connection with the preparation of
      the
      Registration Statement or any such amendment thereof or supplement thereto;
      (ii) shall not be
      available to the extent such Claim is based on (a) a failure of the
      Investor
      to deliver or to cause to be delivered the prospectus made available by the
      Company or (b) the
      Indemnified Person’s use of an incorrect prospectus despite being promptly
      advised in advance by the Company in writing not to use such incorrect
      prospectus;  (iii) any claims based
      on the
      manner of sale of the Registrable Securities by the Investor or of the
      Investor’s failure to register as a dealer under applicable securities laws;
(iv) any omission of the
      Investor to notify the Company of any material fact that should be stated in
      the
      Registration Statement or prospectus relating to the Investor or the manner
      of
      sale; and (v) any
      amounts paid in settlement of any Claim if such settlement is effected without
      the prior written consent of the Company, which consent shall not be
      unreasonably withheld.  Such indemnity shall remain in full force and
      effect regardless of any investigation made by or on behalf of the Indemnified
      Person and  shall survive the resale of the Registrable Securities by
      the Investor pursuant to the Registration Statement.

    


    
      
         

      

      
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        (b)  In
      connection with any Registration Statement in which Investor is participating,
      the Investor agrees to severally and jointly indemnify, hold harmless and
      defend, to the  same extent and in the same manner as is set forth in
      Section 6(a), the Company, each of its  directors, each of its
      officers who signs the Registration Statement, each Person, if any, who controls
      the Company within the meaning of the 1933 Act or the 1934 Act and the Company’s
      agents (collectively and together with an Indemnified Person, an “Indemnified Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
      or
      Indemnified Damages arise out of or are based upon any Violation, in each case
      to the extent, and only to the extent, that such Violation is due to the
      inclusion in the Registration Statement of the written information furnished
      to
      the Company by the Investor expressly for use in connection with such
      Registration Statement; and, subject to Section 6(c), the Investor will
      reimburse any legal or other expenses reasonably incurred by them in connection
      with investigating or defending any such Claim; provided, however, that the
      indemnity agreement contained in this Section 6(b) and the agreement with
      respect to contribution contained in Section 7 shall not apply to amounts paid
      in settlement of any Claim if such settlement is effected without the prior
      written consent of the Investor, which consent shall not be unreasonably
      withheld; provided, further, however, that the Investor shall only be liable
      under this Section 6(b) for  that amount of a Claim or Indemnified
      Damages as does not exceed the net proceeds to such Investor as a result of
      the
      sale of Registrable Securities pursuant to such Registration
      Statement.  Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the resale of the Registrable Securities by the Investor
      pursuant to the Registration Statement. Notwithstanding anything to the contrary
      contained herein, the indemnification agreement contained in this Section 6(b)
      with respect to any preliminary prospectus shall not inure to the benefit of
      any
      Indemnified Party if the untrue statement or omission of material fact contained
      in the preliminary prospectus were corrected on a timely basis in the
      prospectus, as then amended or supplemented.  This indemnification
      provision shall apply separately to each Investor and liability hereunder shall
      not be joint and several.

    


    (c)  Promptly
      after
      receipt by an Indemnified Person or Indemnified Party under this Section 6
      of
      notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses to
      be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the Indemnified Person or Indemnified Party, the representation
      by
      counsel of the Indemnified Person or Indemnified Party and the indemnifying
      party would be inappropriate due to actual or potential differing interests
      between such Indemnified Person or Indemnified Party and any other party
      represented by such counsel in such proceeding.  The indemnifying
      party shall pay for only one (1) separate legal counsel for the Indemnified
      Persons or the Indemnified Parties, as applicable, and such counsel shall be
      selected by the Investor, if the Investor is entitled to indemnification
      hereunder, or the Company, if the Company is entitled to indemnification
      hereunder, as applicable.  The Indemnified Party or Indemnified Person
      shall cooperate fully with the indemnifying party in connection with any
      negotiation or defense of any such action or Claim by the indemnifying party
      and
      shall furnish to the indemnifying party all information reasonably available
      to
      the Indemnified Party or Indemnified Person which relates to such action or
      Claim.  The indemnifying party shall keep the Indemnified Party or
      Indemnified Person fully apprised at all times as to the status of the defense
      or any settlement negotiations with respect thereto.  No indemnifying
      party shall be liable for any settlement of any action, claim or proceeding
      affected without its written consent, provided, however, that the indemnifying
      party shall not unreasonably withhold, delay or condition its consent. No
      indemnifying party shall, without the consent of the Indemnified Party or
      Indemnified Person, consent to entry of any judgment or enter into any
      settlement or other compromise which does not include as an unconditional term
      thereof the giving by the claimant or plaintiff to such Indemnified Party or
      Indemnified Person of a release from all liability in respect to such
      Claim.  Following indemnification as provided for hereunder, the
      indemnifying party shall be subrogated to all rights of the Indemnified Party
      or
      Indemnified Person with respect to all third parties, firms or corporations
      relating to the matter for which indemnification has been made.  The
      failure to deliver written notice to the indemnifying party within a reasonable
      time of the commencement of any such action shall not relieve such indemnifying
      party of any liability to the Indemnified Person or Indemnified Party under
      this
      Section 6, except to the extent that the indemnifying party is prejudiced in
      its
      ability to defend such action.

    


    (d)  The
      indemnity
      agreements contained herein shall be in addition to (i) any cause of action
      or
      similar right of the Indemnified Party or Indemnified Person against the
      indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

    


    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    Section
      7.  CONTRIBUTION.

    


    To
      the extent any indemnification by an
      indemnifying party is prohibited or limited by law, the indemnifying party
      agrees to make the maximum contribution with respect to any amounts for which
      it
      would otherwise be liable under Section 6 to the fullest extent permitted by
      law; provided, however,
      that: (i) no
      contribution shall be made under circumstances where the maker would not have
      been liable for indemnification under the fault standards set forth in Section
      6; (ii) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
      from
      any seller of Registrable Securities who was not guilty of fraudulent
      misrepresentation; and (iii)
contribution by any
      seller of Registrable Securities shall be limited in
      amount to the net amount of proceeds received by such seller from the sale
      of
      such Registrable Securities.

    


    
      	
              Section
                8.

            	
              REPORTS
                UNDER THE 1934
                ACT. 

            


    

    


    With
      a view to making available to the
      Investor the benefits of Rule 144 promulgated under the 1933 Act or any other
      similar rule or regulation of the SEC that may at any time permit the Investor
      to sell securities of the Company to the public without registration (“Rule 144”), provided
      that the Investor holds any Registrable Securities are eligible for resale
      under
      Rule 144 (k), the Company agrees to:

    


    (a)           
make
      and keep
      public information available, as those terms are understood and defined in
      Rule
      144;

    


    (b)           
file
      with the
      SEC in a timely manner all reports and other documents required of the Company
      under the 1933 Act and the 1934 Act so long as the Company remains subject
      to
      such requirements (it being understood that nothing herein shall limit the
      Company’s obligations under Section 5(c) of the Investment Agreement) and the
      filing of such reports and other documents is required for the applicable
      provisions of Rule 144; and

    


    (c)           
furnish
      to
      the Investor, promptly upon request, (i) a written statement
      by the
      Company that it has complied with the reporting requirements of Rule 144, the
      1933 Act and the 1934 Act, (ii) a copy of the most
      recent
      annual or quarterly report of the Company and such other reports and documents
      so filed by the Company, and (iii) such other information
      as may be reasonably requested to permit the Investor to sell such securities
      pursuant to Rule 144 without registration.

    


    Section
      9.  NO
      ASSIGNMENT OF REGISTRATION RIGHTS.

    


    The
      rights and obligations under this
      Agreement shall not be assignable.

     

    


    Section
      10.  AMENDMENT OF REGISTRATION
      RIGHTS.

    


    The
      provisions of this Agreement may be
      amended only with the written consent of the Company and Investor.

    


    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    Section
      11.  MISCELLANEOUS.

    


    (a)  Any
      notices or
      other communications required or permitted to be given under the terms of this
      Agreement that must be in writing will be deemed to have been delivered (i) upon receipt, when
      delivered personally; (ii)
upon receipt, when
      sent by facsimile (provided a confirmation of
      transmission is mechanically or electronically generated and kept on file by
      the
      sending party); or (iii)
      one (1) day after deposit with a nationally recognized overnight delivery
      service, in each case properly addressed to the party to receive the
      same.  The addresses and facsimile numbers for such communications
      shall be:

    


    If
      to the
      Company:

    


                          
      Edgeline Holdings, Inc.

    1330
      Post
      Oak Blvd.

    Suite
      1600

    Houston,
      Texas 77056

    Telephone:
(713)
      621-5208

    Facsimile:
      (713) 621-5336

    


    


    If
      to the
      Investor:

    


    Dutchess
      Private Equities Fund,
      Ltd.

    50
      Commonwealth Ave, Suite 2

    Boston,
      MA 02116

    Telephone:
      (617) 301-4700

    Facsimile:  (617)
      249-0947

    


    Each
      party shall provide five (5)
      business days prior notice to the other party of any change in address, phone
      number or facsimile number.

    


    (b)  Failure
      of any
      party to exercise any right or remedy under this Agreement or otherwise, or
      delay by a party in exercising such right or remedy, shall not operate as a
      waiver thereof.

    


    (c)   This
      Agreement and the Transaction Documents constitute the entire agreement among
      the parties hereto with respect to the subject matter hereof and
      thereof.  There are no restrictions, promises, warranties or
      undertakings, other than those set forth or referred to herein and
      therein.

    


    (d)  This
      Agreement
      and the Transaction Documents supersede all prior agreements and understandings
      among the parties hereto with respect to the subject matter hereof and
      thereof.

    


    (e)
The
      headings in this
      Agreement are for convenience of reference only and shall not limit or otherwise
      affect the meaning hereof.  Whenever required by the context of this
      Agreement, the singular shall include the plural and masculine shall include
      the
      feminine.  This Agreement shall not be construed as if it had been
      prepared by one of the parties, but rather as if all the parties had prepared
      the same.

    


    (f)  This
      Agreement
      may be executed in two or more identical counterparts, each of which shall
      be
      deemed an original but all of which shall constitute one and the same
      agreement.  This Agreement, once executed by a party, may be delivered
      to the other party hereto by facsimile transmission of a copy of this Agreement
      bearing the signature of the party so delivering this Agreement.

    


    (g)  Each
      party
      shall do and perform, or cause to be done and performed, all such further acts
      and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated hereby.

    


    (h)
      In case any provision of
      this Agreement is held by a court of competent jurisdiction to be excessive
      in
      scope or otherwise invalid or unenforceable, such provision shall be adjusted
      rather than voided, if possible, so that it is enforceable to the maximum extent
      possible, and the validity and enforceability of the remaining provisions of
      this Agreement will not in any way be affected or impaired thereby.

    


    


    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    Section
      12.  DISPUTES SUBJECT
      TO
      ARBITRATION GOVERNED BY MASSACHUSETTS LAW

    


    All
      disputes arising under this
      agreement shall be governed by and interpreted in accordance with the laws
      of
      the Commonwealth of Massachusetts, without regard to principles of conflict
      of
      laws.  The parties to this agreement will submit all disputes arising
      under this agreement to arbitration in Boston, Massachusetts before a single
      arbitrator of the American Arbitration Association (“AAA”).  The
      arbitrator shall be selected by application of the rules of the AAA, or by
      mutual agreement of the parties, except that such arbitrator shall be an
      attorney admitted to practice law in the Commonwealth of
      Massachusetts.  No party to this agreement will challenge the
      jurisdiction or venue provisions as provided in this section.  Nothing contained herein shall
      prevent
      the party from obtaining an injunction.

    


    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    


     

    SIGNATURE
      PAGE OF REGISTRATION RIGHTS AGREEMENT

    


     

    Your
      signature on this Signature Page
      evidences your agreement to be bound by the terms and conditions of the
      Investment Agreement and the Registration Rights Agreement as of the date first
      written above.

     

     

    The
      undersigned signatory hereby
      certifies that he has read and understands the Registration Rights Agreement,
      and the representations made by the undersigned in this Registration Rights
      Agreement are true and accurate, and agrees to be bound by its terms.

     

    


    DUTCHESS
      PRIVATE EQUITIES FUND,
      LTD.,

    


    


    


    By:
_/s/  Douglas
      H.
      Leighton___

    Douglas
      H. Leighton, Director

    


    


    


    EDGELINE
      HOLDINGS, INC.

    


    


    By:
_/s/  Carl
      A.
      Chase__________

          Carl
      A. Chase, CFO and Director

    
      
         

      

      
        11