Document:

Restricted Account Agreement

EXHIBIT
10.4

 

RESTRICTED
ACCOUNT AGREEMENT

 

This
Restricted Account Agreement (this "Agreement") is entered into this
28th day of
February 2005, by and among NORTH FORK BANK, a New York banking corporation with
offices at 275 Broadhollow Road, Melville, New York 11747 (together with its
successors and assigns, the "Bank"), ELINEAR,
INC., a
Delaware corporation with offices at 2901 West Sam Houston Pkwy North, Suite
E-300, Houston Texas 77043 (together with its successors and assigns, the
"Company"), and LAURUS MASTER FUND, LTD., a Cayman Islands corporation with
offices at 825 Third Avenue, 14th Floor,
New York, New York 10022 (together with its successors and assigns, "Laurus").
Unless otherwise defined herein, capitalized terms used herein shall have the
meaning provided such terms in the Purchase Agreement referred to
below.

WHEREAS,
Laurus has provided financing to the Company, which financing is evidenced by a
Securities Purchase Agreement (as amended, modified or supplemented from time to
time, the "Purchase Agreement") and the Related Agreements referred to
therein;

 

WHEREAS,
the Company and Laurus have retained the Bank to provide certain services with
respect to the Restricted Account (as defined below); and

 

WHEREAS,
the Company and Laurus have agreed that an amount of cash equal to $3,860,000
shall be deposited by Laurus on behalf of the Company by wire transfer of
immediately available funds into the Restricted Account, which cash shall be
held by the Bank, as security for the Company’s obligations under the Purchase
Agreement and the Related Agreements. For the purposes of this Agreement, the
"Restricted Account" shall mean that certain deposit account (as defined in
Section 9-102 of the Uniform Commercial Code as in effect in the State of New
York on the date hereof) described on Exhibit B hereto, which Restricted Account
shall be maintained at the Bank and shall be in the sole dominion and control of
Laurus; 

 

NOW
THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1. The Bank
is hereby authorized to accept for deposit into the Restricted Account the sum
of $3,860,000. The Bank hereby agrees to hold any and all monies, and other
amounts from time to time on deposit and/or held in the Restricted Account for
the benefit of the Laurus and shall not release any monies held in the
Restricted Account until such time as the Bank shall have received a notice from
Laurus substantially in the form attached hereto as Exhibit A (a "Release
Notice"). Following the receipt of a Release Notice from Laurus, the Bank agrees
to promptly disburse the amount of cash referred to in such Release Notice to
such account as Laurus shall determine in its sole discretion. The Bank hereby
agrees that it will only comply with written instructions originated by Laurus
directing disposition of funds in the Restricted Account. The Company hereby
irrevocably authorizes the Bank to comply with any and all instructions given to
the Bank by Laurus with respect to the Restricted Account without further
consent by the Company. The Bank, the Company and Laurus agree that the
Restricted Account is in Laurus’ sole dominion and control. 

 

2. Each of
the Company, Laurus and the Bank hereby agrees that the Restricted Account shall
not be closed, and the account name and account number in respect thereof shall
not be changed, in any case, without the consent of the Laurus, except as
specifically provided for in Section 9 below.

 

3.  The Bank
hereby subordinates any claims and security interests it may have against, or
with respect to, the Restricted Account (including any amounts from time to time
on deposit therein) to the security interests of Laurus therein, and agrees that
no amounts shall be charged by it to, or withheld or set-off or otherwise
recouped by it from, the Restricted Account or any amounts from time to time on
deposit therein; provided that, in connection with all service charges and any
other charges which the Bank is entitled to receive in connection with the
servicing and maintaining of the Restricted Account (such charges, collectively,
the "Charges"), each of the Company, Laurus and the Bank hereby agrees that the
Bank will collect such Charges in the following manner: (i) first, the Bank will
charge other deposit accounts maintained by the Company with the Bank, (ii)
second, in the event that there are insufficient collected funds in such other
deposit accounts to pay such Charges, the Bank will promptly notify the Company
and Laurus with respect to same and, within seven (7) business days of the
Company’s receipt of such notice, the Company shall pay to the Bank the full
amount of such Charges then due, and (iii) third, if the Company fails to pay to
the Bank such Charges then due within the time period set forth in the preceding
clause (ii), the Bank will promptly provide a written notice to Laurus of such
occurrence and, in such case, the Bank is hereby authorized, following a period
of five (5) business days after the receipt of such written notice by Laurus, to
deduct such Charges then due from the Restricted Account, unless, during such
five (5) business day period, Laurus pays the amount of any such Charges then
due to the Bank from its own account. Except for the payment of the Charges as
set forth in the immediately preceding proviso, the Bank agrees that it shall
not offset, deduct or claim against the Restricted Account unless and until
Laurus has notified the Bank in writing that all of the Company’s obligations
under the Purchase Agreement and the Related Agreements have been performed.

 

4. The
Company and the Bank agree that the maintenance by the Bank of the Restricted
Account shall be as agent for Laurus. The Bank shall be responsible for the
performance of only such duties as are set forth herein. The Bank’s duties
hereunder, however, are merely ministerial, and the Bank shall have no liability
or obligation to the Company or Laurus or to any other person for any act or
omission of the Bank in connection with the performance of the Bank’s duties in
servicing and/or maintaining the Restricted Account, except for acts of gross
negligence or willful misconduct by Bank. IN NO EVENT, HOWEVER, SHALL THE BANK
HAVE ANY RESPONSIBILITY FOR CONSEQUENTIAL, INDIRECT, SPECIAL OR EXEMPLARY
DAMAGES OR LOST PROFITS, WHETHER OR NOT IT HAS NOTICE THEREOF, AND REGARDLESS OF
THE BASIS, THEORY OR NATURE OF THE ACTION UPON WHICH THE CLAIM IS ASSERTED, NOR
SHALL IT HAVE ANY RESPONSIBILITY OR LIABILITY FOR THE VALIDITY OR ENFORCEABILITY
OF ANY SECURITY INTEREST OR OTHER INTEREST OF LAURUS OR THE COMPANY IN THE
RESTRICTED ACCOUNT. In furtherance of and without limiting the foregoing, the
Company and Laurus agree that the Bank shall not be liable for any damage or
loss to them for any delay or failure of performance arising out of the acts or
omissions of any third parties, including, but not limited to, various
communication services, courier services, the Federal Reserve system, any other
bank or any third party who may be affected by funds transactions, fire,
mechanical, computer or electrical failures or other unforeseen contingencies,
strikes or any similar or dissimilar cause beyond the reasonable control of the
Bank. This paragraph shall survive the termination of this
Agreement.

 

5. Except
where the Bank has been grossly negligent or has acted in bad faith, each of
Laurus and the Company and their respective successors and assigns will release
the Bank from and shall indemnify and hold the Bank harmless from and against
any and all losses, claims, damages, liabilities, costs and expenses (including,
without limitation, reasonable counsel fees, whether arising in an action or
proceeding among the parties hereto or otherwise, without regard to the merit or
lack of merit thereof) to which the Bank may become subject, or which it may
suffer or incur, arising out of or based upon this Agreement or the actions
contemplated hereby. This paragraph shall survive termination of this
Agreement.

 

6. The Bank
shall be fully protected in acting on any order or direction by Laurus
respecting the items received by the Bank or the monies or other items in the
Restricted Account without making any independent inquiry whatsoever as to
Laurus’ rights or authority to give such order or direction or as to the
application of any payments made pursuant thereto.

7. Nothing
in this Agreement shall be deemed to prohibit the Bank from complying with its
customary procedures in the event that it is served with any legal process with
respect to the Restricted Account.

 

8. The
rights and powers granted in this to Laurus have been granted in order to
protect and further perfect its security interests in the Restricted Account
(including any amounts from time to time on deposit therein) and are powers
coupled with an interest and will be affected neither by any purported
revocation by the Company of this Agreement or the rights granted to Laurus
hereunder or by the bankruptcy, insolvency, conservatorship or receivership of
the Company or the Bank or by the lapse of time. 

 

9. This
Agreement may not be amended or waived except by an instrument in writing signed
by each of the parties hereto. This Agreement may be terminated by the Bank upon
giving the Company and Laurus thirty (30) days prior written notice. Laurus
shall designate a successor bank on or prior to the effective date of such
termination and the Bank shall deliver the balance in the Restricted Account to
such successor bank. Any notice required to be given hereunder may be given, and
shall be deemed given when delivered, via telefax, U.S. mail return receipt
requested or nationally recognized overnight courier to each of the parties at
the address set forth above. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof or thereof, as the case may be. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York, without regard to its conflict of laws principles. This
Agreement sets forth the entire agreement between the parties hereto as to the
matters set forth herein and supersede all prior communications, written or
oral, with respect to the matters herein. EACH OF THE PARTIES HERETO HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS AGREEMENT. THE BANK, THE
COMPANY AND LAURUS EACH HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE COUNTY OF NEW YORK IN
CONNECTION WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR ANY MATTERS
CONTEMPLATED HEREBY OR THEREBY. 

 

 

Agreed
and accepted this ___ day of February, 2005. 

 

 

NORTH
FORK BANK

 

 

By:     

Name:

Title:

 

  LAURUS
MASTER FUND, LTD.

 

 

By:     

Name:
David Grin

Title:
Director

 

 

ELINEAR,
INC.

 

 

 

By:     

Name:
Michael Lewis

Title:
Chief Executive OfficerRegistrationRights Agreement

EXHIBIT
10.5

 

REGISTRATION
RIGHTS AGREEMENT 

 

This
Registration Rights Agreement (this "Agreement") is made and entered into as of
February 28, 2005, by and between eLINEAR, INC., a corporation organized under
the laws of the State of Delaware (the "Company"), and Laurus Master Fund, Ltd.
(the "Purchaser").

 

This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof, by and between the Purchaser and the Company (as amended, modified
or supplemented from time to time, the "Securities Purchase Agreement"), and
pursuant to the Note and the Warrants referred to therein.

 

The
Company and the Purchaser hereby agree as follows: 

 

1.  Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the
Securities Purchase Agreement shall have the meanings given such terms in the
Securities Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

 

"Commission" means
the Securities and Exchange Commission.

 

"Common
Stock" means
shares of the Company's common stock, par value $0.02 per share.

 

"Effectiveness
Date" means
(i) with respect to the initial Registration Statement required to be filed
hereunder, a date no later than one hundred and five (105) days following the
date hereof and (ii) with respect to each additional Registration Statement
required to be filed hereunder, a date no later than sixty (60) days following
the Filing Date.

 

"Effectiveness
Period" shall
have the meaning set forth in Section 2(a).

 

"Exchange
Act" means
the Securities Exchange Act of 1934, as amended, and any successor
statute.

 

 

"Filing
Date" means,
with respect to (i) the initial Registration Statement required to be filed
hereunder, a date no later than forty five (45) days following the date hereof
and (ii) with respect to shares of Common Stock issuable to the Holder as a
result of adjustments to the Fixed Conversion Price made pursuant to Section 3.4
of the Secured Convertible Term Note or Section 4 of the Warrant or otherwise,
sixty (60) days after the occurrence such event.

 

"Holder" or
"Holders" means
the Purchaser or any of its affiliates or transferees to the extent any of them
hold Registrable Securities.

 

"Indemnified
Party" shall
have the meaning set forth in Section 5(c).

 

"Indemnifying
Party" shall
have the meaning set forth in Section 5(c).

 

"Note" has the
meaning set forth in the Securities Purchase Agreement.

 

"Proceeding" means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened. 

 

"Prospectus" means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus. 

 

"Registrable
Securities" means
the shares of Common Stock issued or issuable upon the conversion or exercise of
Note and Warrant issued pursuant to the Securities Purchase Agreement and upon
the conversion or exercise of notes for up to $15 Million Dollars (including the
Note) and warrants to purchase up to 2,250,000 shares of Common Stock (including
the Warrant) issued by the Company on the same terms and conditions as the Notes
and Warrants. 

 

"Registration
Statement" means
each registration statement required to be filed hereunder, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

 

"Rule
144" means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule. 

 

"Rule
415" means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule. 

 

"Rule
424" means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule. 

 

"Securities
Act" means
the Securities Act of 1933, as amended, and any successor statute.

 

"Securities
Purchase Agreement" means
the agreement between the parties hereto calling for the issuance by the Company
of Notes plus Warrants.

 

"Trading
Market" means
any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the NASDAQ National
Market, the American Stock Exchange or the New York Stock Exchange.

 

"Warrant" means
the Common Stock purchase warrants issued pursuant to the Securities Purchase
Agreement. 

 

2.  Registration.

 

(a)  On or
prior to the Filing Date the Company shall prepare and file with the Commission
a Registration Statement covering the Registrable Securities for an offering to
be made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form SB-2, in which case such registration
shall be on another appropriate form in accordance herewith). The Company shall
use its reasonable commercial efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event no later than the Effectiveness Date. The
Company shall use its reasonable commercial efforts to keep the Registration
Statement continuously effective under the Securities Act until the date which
is the earlier date of when (i) all Registrable Securities have been sold or
(ii) all Registrable Securities may be sold immediately without registration
under the Securities Act and without volume restrictions pursuant to Rule
144(k), as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company's
transfer agent and the affected Holders (the "Effectiveness
Period").

 

(b)  If: (i)
the Registration Statement is not filed on or prior to the Filing Date; (ii) the
Registration Statement is not declared effective by the Commission by the
Effectiveness Date; (iii) after the Registration Statement is filed with and
declared effective by the Commission, the Registration Statement ceases to be
effective (by suspension or otherwise) as to all Registrable Securities to which
it is required to relate at any time prior to the expiration of the
Effectiveness Period (without being succeeded immediately by an additional
registration statement filed and declared effective) for a period of time which
shall exceed 30 days in the aggregate per year or more than 20 consecutive
calendar days (defined as a period of 365 days commencing on the date the
Registration Statement is declared effective); or (iv) or the Common Stock is
not listed or quoted, or is suspended from trading on any Trading Market for a
period of ten (10) consecutive Trading Days (provided the Company shall not have
been able to cure such trading suspension within 30 days of the notice thereof
or list the Common Stock on another Trading Market); (any such failure or breach
being referred to as an "Event," and for purposes of clause (i) or (ii) the date
on which such Event occurs, or for purposes of clause (iii) the date which such
30 day or 20 consecutive day period (as the case may be) is exceeded, or for
purposes of clause (iv) the date on which such ten (10) Trading Day period is
exceeded, being referred to as "Event Date"), then until the applicable Event is
cured, the Company shall pay to each Holder an amount in cash, as liquidated
damages and not as a penalty, equal to 1.250% for each thirty (30) day period
(prorated for partial periods) on a daily basis of the original principal amount
of the Note; provided however that if an Event Date occurs concurrently, or
otherwise overlaps such Events shall be deemed one Event for purposes of the
partial liquidated damages. While such Event continues, such liquidated damages
shall be paid not less often than each thirty (30) days. Any unpaid liquidated
damages as of the date when an Event has been cured by the Company shall be paid
within three (3) days following the date on which such Event has been cured by
the Company.

 

(c) Within
three (3) business days of the Effectiveness Date, the Company shall cause its
counsel to issue a blanket opinion in the form attached hereto as Exhibit A, to
the transfer agent stating that the shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon
notice of a sale by the Purchaser and confirmation by the Purchaser that it has
complied with the prospectus delivery requirements, provided that the Company
has not advised the transfer agent orally or in writing that the opinion has
been withdrawn. Copies of the blanket opinion required by this Section 2(c)
shall be delivered to the Purchaser within the time frame set forth above.

 

3.  Registration
Procedures. If and
whenever the Company is required by the provisions hereof to effect the
registration of any Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible: 

 

(a)  prepare
and file with the Commission the Registration Statement with respect to such
Registrable Securities, respond as promptly as possible to any comments received
from the Commission, and use its best efforts to cause the Registration
Statement to become and remain effective for the Effectiveness Period with
respect thereto, and promptly provide to the Purchaser copies of all filings and
Commission letters of comment relating thereto;

 

(b)  prepare
and file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by the Registration Statement and to keep
such Registration Statement effective until the expiration of the Effectiveness
Period;

 

(c)  furnish
to the Purchaser such number of copies of the Registration Statement and the
Prospectus included therein (including each preliminary Prospectus) as the
Purchaser reasonably may request to facilitate the public sale or disposition of
the Registrable Securities covered by the Registration Statement;

 

(d)  use its
commercially reasonable efforts to register or qualify the Purchaser's
Registrable Securities covered by the Registration Statement under the
securities or "blue sky" laws of such jurisdictions within the United States as
the Purchaser may reasonably request, provided, however, that the Company shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;

 

(e)  list the
Registrable Securities covered by the Registration Statement with any securities
exchange on which the Common Stock of the Company is then listed; 

 

(f)  immediately
notify the Purchaser at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event of which
the Company has knowledge as a result of which the Prospectus contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and

 

(g)  upon
reasonable notice, make available for inspection by the Purchaser and any
attorney, accountant or other agent retained by the Purchaser, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all publicly available, non-confidential
information reasonably requested by the attorney, accountant or agent of the
Purchaser.

 

4.  Registration
Expenses. All
expenses relating to the Company's compliance with Sections 2 and 3 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the NASD, transfer taxes, fees of transfer agents and registrars, are called
"Registration Expenses". All selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any special
counsel to the Holders beyond those included in Registration Expenses, are
called "Selling Expenses." The Company shall only be responsible for all
Registration Expenses.

 

5.  Indemnification.

 

(a)  In the
event of a registration of any Registrable Securities under the Securities Act
pursuant to this Agreement, the Company will indemnify and hold harmless the
Purchaser, and its officers, directors and each other person, if any, who
controls the Purchaser within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Purchaser, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Purchaser, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by or on
behalf of the Purchaser or any such person in writing specifically for use in
any such document.

 

(b)  In the
event of a registration of the Registrable Securities under the Securities Act
pursuant to this Agreement, the Purchaser will indemnify and hold harmless the
Company, and its officers, directors and each other person, if any, who controls
the Company within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact which was furnished in writing by the Purchaser to the
Company expressly for use in (and such information is contained in) the
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary Prospectus
or final Prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
person for any reasonable legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Purchaser will be liable in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished in writing
to the Company by or on behalf of the Purchaser specifically for use in any such
document. Notwithstanding the provisions of this paragraph, the Purchaser shall
not be required to indemnify any person or entity in excess of the amount of the
aggregate net proceeds received by the Purchaser in respect of Registrable
Securities in connection with any such registration under the Securities
Act.

 

(c)  Promptly
after receipt by a party entitled to claim indemnification hereunder (an
"Indemnified Party") of notice of the commencement of any action, such
Indemnified Party shall, if a claim for indemnification in respect thereof is to
be made against a party hereto obligated to indemnify such Indemnified Party (an
"Indemnifying Party"), notify the Indemnifying Party in writing thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability which it may have to such Indemnified Party other than under this
Section 5(c) and shall only relieve it from any liability which it may have to
such Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action shall
be brought against any Indemnified Party and it shall notify the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such Indemnified Party, and, after
notice from the Indemnifying Party to such Indemnified Party of its election so
to assume and undertake the defense thereof, the Indemnifying Party shall not be
liable to such Indemnified Party under this Section 5(c) for any legal expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof; if the Indemnified Party retains its own counsel, then the Indemnified
Party shall pay all fees, costs and expenses of such counsel, provided, however,
that, if the defendants in any such action include both the indemnified party
and the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the Indemnifying Party or if
the interests of the Indemnified Party reasonably may be deemed to conflict with
the interests of the Indemnifying Party, the Indemnified Party shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the Indemnifying Party as incurred.

 

(d)  In order
to provide for just and equitable contribution in the event of joint liability
under the Securities Act in any case in which either (i) the Purchaser, or any
officer, director or controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 5 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the
Purchaser or such officer, director or controlling person of the Purchaser in
circumstances for which indemnification is provided under this Section 5; then,
and in each such case, the Company and the Purchaser will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Purchaser is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the Registration Statement bears to
the public offering price of all securities offered by such Registration
Statement, provided, however, that, in any such case, (A) the Purchaser will not
be required to contribute any amount in excess of the public offering price of
all such securities offered by it pursuant to such Registration Statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 10(f) of the Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.

 

6.  Representations
and Warranties of Purchaser.

 

(a)
Purchaser agrees to provide the Company any information or assistance requested
by the Company in order to file or complete the Registration
Statement.

 

7.  Miscellaneous.

 

(a)  Remedies. In the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. 

 

(b)  No
Piggyback on Registrations. Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in any
Registration Statement other than the Registrable Securities, and the Company
shall not after the date hereof enter into any agreement providing any such
right for inclusion of shares in the Registration Statement to any of its
security holders. The Company has not previously entered into any agreement
granting any registration rights with respect to any of its securities to any
Person that have not been fully satisfied. 

 

(c)  Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

 

(d)  Discontinued
Disposition. Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of a Discontinuation
Event (as defined below), such Holder will forthwith discontinue disposition of
such Registrable Securities under the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. For purposes of this Section 7(d), a
"Discontinuation Event" shall mean (i) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company shall
provide true and complete copies thereof and all written responses thereto to
each of the Holders); (ii) any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and/or (v) the occurrence of any event or passage of time that makes
the financial statements included in such Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any 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.

 

(e)  Piggy-Back
Registrations. If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall so request in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered to the
extent the Company may do so without violating registration rights of others
which exist as of the date of this Agreement, subject to customary underwriter
cutbacks applicable to all holders of registration rights and subject to
obtaining any required the consent of any selling stockholder(s) to such
inclusion under such registration statement.

 

(f)  Amendments
and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

 

 

(g)  Notices. Any
notice or request hereunder may be given to the Company or the Purchaser at the
respective addresses set forth below or as may hereafter be specified in a
notice designated as a change of address under this Section 7(g). Any notice or
request hereunder shall be given by registered or certified mail, return receipt
requested, hand delivery, overnight mail, Federal Express or other national
overnight next day carrier (collectively, "Courier") or telecopy (confirmed by
mail). Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any party to whom it is addressed,
in the case of those by mail or overnight mail, deemed to have been given three
(3) business days after the date when deposited in the mail or with the
overnight mail carrier, in the case of a Courier, the next business day
following timely delivery of the package with the Courier, and, in the case of a
telecopy, when confirmed. The address for such notices and communications shall
be as follows:

 

	
      If
      to the Company:
	
      ELINEAR,
      Inc. 

      2901
      West Sam Houston Pkwy North

      Suite
      E-300

      Houston,
      TX 77043

      Attention:
      Ramzi Nassar

      Chief
      Strategy Officer

      Facsimile:
      (713) 896-0510 

	 	 
	 	
      with
      a copy to:

	 	
      Brewer
      & Pritchard, PC

      3
      Riverway, Suite 1800

      Houston,
      TX 77056

	 	
      Attention:
      Thomas C. Pritchard 

      Facsimile:
      (713) 209-2921 

	
       
	 
	
      If
      to a Purchaser:
	
      To
      the address set forth under such Purchaser name on the signature pages
      hereto.

	
       
	 
	
      If
      to any other Person who is then the registered
Holder:
	
       

      To
      the address of such Holder as it appears in the stock transfer books of
      the Company

or such
other address as may be designated in writing hereafter in accordance with this
Section 7(g) by such Person.

 

(h)  Successors
and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Notes and the Securities Purchase Agreement with the prior written consent
of the Company, which consent shall not be unreasonably withheld.

 

(i)  Execution
and Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.

 

(j)  Governing
Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such Proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such Proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its reasonable attorneys
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Proceeding. 

 

(k)  Cumulative
Remedies. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

 

(l)  Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.

 

(m)  Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;

 

SIGNATURE
PAGE FOLLOWS]

 

IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above. 

 

	
      eLINEAR,
      INC.
	 	
      Laurus
      Master Fund, Ltd.

	 	 	 
	 	 	 
	
      By:
	 	 	
      By:
	 
	
      Name:
	 	 	
      Name:
	 
	
      Title:
	 	 	
      Title:
	 
	 	 	 
	 	 	
      Address
      for Notices:

	 	 	 
	 	 	
      ____________________________

	 	 	
      ____________________________

	 	 	
      Attention: ________________

	 	 	
      Facsimile: ________________

EXHIBIT
A

 

[February
____, 2005]

	
      [Continental
      Stock Transfer

      &
      Trust Company

      Two
      Broadway

      New
      York, NY 10004

      Attn:
      William Seegraber]
	 

	
      Re:

       
	
      [Company
      Name]. Registration Statement on Form [S-3]

       

Ladies
and Gentlemen:

 

As
counsel to[company name] , a Delaware corporation (the åCompanyæ), we have been
requested to render our opinion to you in connection with the resale by the
individuals or entitles listed on Schedule A attached hereto (the åSelling
Stockholdersæ), of an aggregate of [amount]shares (the åSharesæ) of the
Company’s Common Stock.

 

A
Registration Statement on Form [S-3] under the Securities Act of 1933, as
amended (the åActæ), with respect to the resale of the Shares was declared
effective by the Securities and Exchange Commission on [date]. Enclosed is the
Prospectus dated [date]. We understand that the Shares are to be offered and
sold in the manner described in the Prospectus.

 

Based
upon the foregoing, upon request by the Selling Stockholders at any time while
the registration statement remains effective, it is our opinion that the Shares
have been registered for resale under the Act and new certificates evidencing
the Shares upon their transfer or re-registration by the Selling Stockholders
may be issued without restrictive legend. We will advise you if the registration
statement is not available or effective at any point in the future.

 

Very
truly yours,

[Company
counsel]

 

 

Schedule
A

	
      Selling
      Stockholder

       
	 	
      Shares

       

      Being
      Offered

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