Document:

Form of Restated Security Agreement

    EXHIBIT
      10.04

     

    THIS
      NOTE
      AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
      MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
      APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO ELINEAR, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    AMENDED
      AND RESTATED

    SECURED
      CONVERTIBLE TERM NOTE

     

    FOR
      VALUE
      RECEIVED, ELINEAR, INC., a Delaware corporation (the “Borrower”),
      hereby promises to pay to (the “Holder”)
      or its
      registered assigns or successors in interest, on order, the sum of
      [______________], together with any accrued and unpaid interest hereon, on
      February 1, 2008 (the “Maturity
      Date”)
      if not
      sooner paid. The [______________] of the original principal amount of this
      Note
      is subject to amortization payments under section 1.2 hereof and is hereinafter
      referred to as the “Amortizing
      Principal Amount.”

     

    This
      Amended and Restated Secured Convertible Term Note amends and restates in its
      entirety that certain Secured Convertible Term Note in the original principal
      amount of $5,000,000 issued by the Company in favor of Holder on February 28,
      2005.

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in that certain Securities Purchase Agreement dated as of the date hereof
      between the Borrower and the Holder (the “Purchase
      Agreement”).

     

    The
      following terms shall apply to this Note: 

     

    ARTICLE
      I

    INTEREST
      & AMORTIZATION

     

    1.1 (a) Interest
      Rate.
      Subject
      to Sections 1.1(b), 4.12 and 5.6 hereof, interest payable on this Note shall
      accrue at a rate per annum (the “Interest Rate”) equal to the “prime rate”
      published in The
      Wall Street Journal
      from
      time to time, plus seventy five basis points (75 bp). The prime rate shall
      be
      increased or decreased as the case may be for each increase or decrease in
      the
      prime rate in an amount equal to such increase or decrease in the prime rate;
      each change to be effective as of the day of the change in such rate. Subject
      to
      Section 1.1(b) hereof, the Interest Rate shall not be less than five and one
      half percent (5.50%). Interest shall be calculated on the basis of a 360 day
      year. Interest on the Amortizing Principal Amount shall be payable monthly,
      in
      arrears, commencing on April 1, 2005 and on the first day of each consecutive
      calendar month thereafter (each, a “Repayment
      Date”)
      and on
      the Maturity Date, whether by acceleration or otherwise. 

     

    (b) Interest
      Rate Adjustment.
      The
      Interest Rate shall be subject to adjustment on the last business day of each
      month hereafter until the Maturity Date (each a “Determination
      Date”).
      If on
      any Determination Date (i) the Borrower shall have registered under the
      Securities Act of 1933, as amended (the “Securities
      Act”),
      the
      shares of Common Stock underlying the conversion of this Note and the exercise
      of the Warrant issued on a registration statement (the “Registration
      Statement”
      (as
      more fully described in the Registration Rights Agreement)) declared effective
      by the Securities and Exchange Commission (the “SEC”),
      and
      (ii) the market price (the “Market Price”) of the Common Stock as reported by
      Bloomberg, L.P. on the Principal Market (as defined below) for the five (5)
      consecutive trading days immediately preceding such Determination Date exceeds
      the then applicable Fixed Conversion Price by at least twenty five percent
      (25%), the Interest Rate for the succeeding calendar month shall automatically
      be reduced by 200 basis points (200 b.p.) (2.0.%) for each incremental twenty
      five percent (25%) increase in the Market Price of the Common Stock above the
      then applicable Fixed Conversion Price. Notwithstanding the foregoing (and
      anything to the contrary contained in herein), in no event shall the Interest
      Rate be less than zero percent (0%).  

     

    1.2 Minimum
      Monthly Principal Payments.
      Borrower shall make monthly payments on the Repayment Date for the outstanding
      principal of the Amortized Principal Amount beginning on August 1, 2005 and
      recurring on each succeeding Repayment Date thereafter until the Amortizing
      Principal Amount has been repaid in full, whether by the payment of cash or
      by
      the conversion of such principal into Common Stock pursuant to the terms hereof.
      Subject to Section 2.1 and Article 3 below, beginning on August 1, 2005 on
      each
      Repayment Date, the Borrower shall make payments to the Holder in the amount
      of
      $[__________] (the “Monthly
      Principal Amount”),
      together with any accrued and unpaid interest then due on such portion of the
      Amortizing Principal Amount plus any and all other amounts which are then owing
      under this Note that have not been paid (the Monthly Principal Amount, together
      with such accrued and unpaid interest and such other amounts, collectively,
      the
“Monthly
      Amount”).
      Any
      Principal Amount that remains outstanding on the Maturity Date shall be due
      and
      payable on the Maturity Date.

     

    ARTICLE
      II

    CONVERSION
      REPAYMENT 

     

    2.1 (a) Payment
      of Monthly Amount in Cash or Common Stock.
      If the
      Monthly Amount (or a portion thereof of such Monthly Amount if such portion
      of
      the Monthly Amount would have been converted into shares of Common Stock but
      for
      Section 3.2) shall be paid in cash pursuant to Section 2.1(b) or 2.1(c), then
      the Borrower shall pay the Holder an
      amount
      equal to One Hundred one percent (101%) of the principal amount of the Monthly
      Amount then due and owing to the
      Holder
      in
      cash, within three (3) days of the Repayment Date
      (excluding such portion thereof of such Monthly Amount that would have been
      converted into shares of Common Stock but for Section 3.2 ). If the Monthly
      Amount (or a portion of such Monthly Amount if not all of the Monthly Amount
      is
      converted into shares of Common Stock pursuant to Section 3.2) is to be paid
      in
      shares of Common Stock pursuant to Section 2.1(b), the number of such shares
      to
      be issued by the Borrower to the Holder on such Repayment Date (in respect
      of
      such portion of the Monthly Amount converted into in shares of Common Stock
      pursuant to Section 2.1(b)), shall be the number determined by dividing (x)
      the
      portion of the Monthly Amount converted into shares of Common Stock, by (y)
      the
      then applicable Fixed Conversion Price. For purposes hereof, the initial
“Fixed
      Conversion Price”
      means
      $1.00, subject to Section 3.5 of this Agreement, shall at no time be less than
      $1.00. The Fixed Conversion Price shall be reset to the closing price of the
      common stock on each date upon which an aggregate of $500,000 of conversions
      are
      made (singularly or in the aggregate) pursuant to the terms hereof (the
“Reset”). For the purposes of the preceding sentence, if a conversion amount
      exceeds the applicable $500,000 threshold, triggering a Reset, such conversion
      amount (not to exceed $50,000) shall be converted at such Fixed Conversion
      Price
      then in effect. 

     

        (b)
       Monthly
      Amount Conversion Guidelines.
      Subject
      to Sections 2.1(a), and 2.2 hereof, the Holder shall convert into shares of
      Common Stock all or a portion of the Monthly Amount due on each Repayment Date
      according to the following guidelines (collectively, the “Conversion
      Criteria”):
      (i)
      the average closing price of the Common Stock as reported by Bloomberg, L.P.
      on
      the Principal Market for the five (5) consecutive trading days immediately
      preceding such Redemption Date shall be greater than or equal to 110% of the
      Fixed Conversion Price and (ii) the amount of such conversion does not exceed
      10.42% of the aggregate dollar trading volume of the Common Stock for the twenty
      two (22) trading days immediately preceding the applicable Repayment Date.
      If
      the Conversion Criteria are not met, the Holder shall convert only such part
      of
      the Monthly Amount that meets the Conversion Criteria. 

     

    (c) Borrower’s
      right to convert the Monthly Amount if Conversion Criteria is not
      met.
      Subject
      to Sections 2.1 and 2.2 hereof, if the Borrower is required to pay cash pursuant
      to Section 2.1(b) hereof because the average closing price of the Common Stock
      on the Principal Market is less than one hundred ten percent (110%) of the
      Fixed
      Conversion Price for the five (5) trading days immediately preceding a Repayment
      Date, then the Borrower may elect to provide the Holder with a notice (the
      “Repayment
      Notice”)
      requiring the conversion of the Monthly Amount (together with accrued and unpaid
      interest and applicable fees) at a conversion price equal to eighty five percent
      (85%) of the average of the five (5) lowest closing prices of the Common Stock
      during the twenty two (22) trading days immediately prior to the date of the
      Repayment Notice, provided, however, that such conversion of the Monthly Amount
      does not exceed 10.42% of the aggregate dollar trading volume of the Common
      Stock for the twenty two (22) trading days immediately preceding delivery of
      a
      Repayment Notice. In no event shall Borrower convert pursuant to this Section
      2.1(c) if the conversion price for the purposes of this Section 2.1(c) is less
      than $1.00. If the Monthly Amount (or a portion of such Monthly Amount if not
      all of the Monthly Amount is converted into shares of Common Stock pursuant
      to
      Section 3.2) is to be paid in shares of Common Stock pursuant to Section 2.1(c),
      the number of such shares to be issued by the Borrower to the Holder on such
      Repayment Date (in respect of such portion of the Monthly Amount converted
      into
      in shares of Common Stock pursuant to Section 2.1(c)), shall be the number
      determined by dividing (x) the portion of the Monthly Amount converted into
      shares of Common Stock, by (y) the eighty five (85%) of the average of the
      five
      (5) lowest closing prices of the Common Stock during the twenty two (22) trading
      days immediately prior to the date of the Repayment Notice.

    

    (d)
        Application
      of Conversion Amounts.
      Any
      amounts converted by the Holder pursuant to Section 2.1 (a), (b), or (c) shall
      be deemed to constitute payments of, or applied against, (i) first, outstanding
      fees, (ii) second, accrued interest on the Amortizing Principal Amount, and
      (iii), the Amortizing Principal Amount. 

     

    2.2 No
      Effective Registration.
      Notwithstanding anything to the contrary herein, no amount payable hereunder
      may
      be converted into Common Stock unless (a) either (i) an effective current
      Registration Statement exists, or (ii) an exemption from registration of the
      Common Stock is available pursuant to Rule 144 of the Securities Act, and (b)
      no
      Event of Default hereunder exists and is continuing, unless such Event of
      Default is cured within any applicable cure period or is otherwise waived in
      writing by the Holder in whole or in part at the Holder’s option.

     

    2.3 Optional
      Redemption of Amortizing Principal Amount.
      The
      Borrower will have the option of prepaying the outstanding Amortizing Principal
      Amount (“Optional
      Amortizing Redemption”),
      in
      whole or in part, by paying to the Holder a sum of money equal to one hundred
      fifteen percent (115%) of the Amortizing Principal Amount to be redeemed,
      together with accrued but unpaid interest thereon and any and all other sums
      due, accrued or payable to the Holder arising under this Note, the Purchase
      Agreement or any Related Agreement (the “Amortizing
      Redemption Amount”)
      on the
      Amortizing Redemption Payment Date (as defined below). The Borrower shall
      deliver to the Holder a notice of redemption (the “Notice
      of Amortizing Redemption”)
      specifying the date for such Optional Amortizing Redemption (the “Amortizing
      Redemption Payment Date”),
      which
      date shall be not less than seven (7) business days after the date of the Notice
      of Amortizing Redemption (the “Redemption
      Period”).
      A
      Notice of Amortizing Redemption shall not be effective with respect to any
      portion of the Amortizing Principal Amount for which the Holder has a pending
      election to convert pursuant to Section 3.1 or for conversions initiated or
      made
      by the Holder pursuant to Section 3.1 during the Redemption Period. The
      Amortizing Redemption Amount shall be determined as if such Holder’s conversion
      elections had been completed immediately prior to the date of the Notice of
      Amortizing Redemption. On the Amortizing Redemption Payment Date, the Amortizing
      Redemption Amount shall be paid in good funds to the Holder. In the event the
      Borrower fails to pay the Amortizing Redemption Amount on the Amortizing
      Redemption Payment Date as set forth herein, then such Notice of Amortizing
      Redemption will be null and void.

     

    ARTICLE
      III

    CONVERSION
      RIGHTS

     

    3.1. Holder’s
      Conversion Rights.
      Subject
      to Section 2.2, the Holder shall have the right, but not the obligation, to
      convert all or any portion of the then aggregate outstanding Amortizing
      Principal Amount of this Note, together with interest and fees due hereon,
      at
      the Fixed Conversion Price, as adjusted, into shares of Common Stock, subject
      to
      the terms and conditions set forth in this Article III. The Holder may exercise
      such right by delivery to the Borrower of a written Notice of Conversion
      pursuant to Section 3.3. The shares of Common Stock to be issued upon such
      conversion are herein referred to as the “Conversion
      Shares.”

     

    3.2 Conversion
      Limitation.
      Notwithstanding anything contained herein to the contrary, the Holder shall
      not
      be entitled to convert pursuant to the terms of the Note an amount that would
      be
      convertible into that number of shares of Common Stock which, when added to
      the
      number of shares of Common Stock otherwise beneficially owned by such Holder
      including those issuable upon exercise of warrants held by such Holder would
      exceed 4.99% of the outstanding shares of Common Stock of the Borrower at the
      time of conversion. For the purposes of the immediately preceding sentence,
      beneficial ownership shall be determined in accordance with Section 13(d) of
      the
      Exchange Act and Regulation 13d-3 thereunder. The conversion limitation
      described in this Section 3.2 shall automatically become null and void without
      any notice to Borrower upon the occurrence and during the continuance beyond
      any
      applicable grace period of an Event of Default, or upon 75 days prior notice
      to
      the Borrower, except that at no time shall the beneficial ownership exceed
      8.33%
      of the Common Stock. Notwithstanding anything contained herein to the contrary,
      the number of shares of Common Stock issuable by the Borrower and acquirable
      by
      the Holder pursuant to the terms of this Note, the Purchase Agreement or any
      Related Agreement at a price below the market price of the Common Stock on
      the
      date of this Note, shall not exceed 8.33% of the shares outstanding (subject
      to
      appropriate adjustment for stock splits, stock dividends, or other similar
      recapitalizations affecting the Common Stock) (the “Maximum
      Common Stock Issuance”),
      unless the issuance of shares hereunder in excess of the Maximum Common Stock
      Issuance shall first be approved by the Borrower’s shareholders. If at any point
      in time and from time to time the number of shares of Common Stock issued
      pursuant to the terms of this Note, the Purchase Agreement or any Related
      Agreement, together with the number of shares of Common Stock that would then
      be
      issuable by the Borrower to the Holder in the event of a conversion or exercise
      pursuant to the terms of this Note, the Purchase Agreement or any Related
      Agreement, would exceed the Maximum Common Stock Issuance but for this Section
      3.2, the Borrower shall promptly call a shareholders meeting to solicit
      shareholder approval for the issuance of the shares of Common Stock hereunder
      in
      excess of the Maximum Common Stock Issuance.

     

    3.3 Mechanics
      of Holder’s Conversion.
      (a) In
      the event that the Holder elects to convert any amounts outstanding under this
      Note into Common Stock, the Holder shall give notice of such election by
      delivering an executed and completed notice of conversion (a “Notice
      of Conversion”)
      to the
      Borrower, which Notice of Conversion shall provide a breakdown in reasonable
      detail of the Principal Amount, accrued interest and fees being converted.
      On
      each Conversion Date (as hereinafter defined) and in accordance with its Notice
      of Conversion, the Holder shall make the appropriate reduction to the Principal
      Amount, accrued interest and fees as entered in its records and shall provide
      written notice thereof to the Borrower within two (2) business days after the
      Conversion Date. Each date on which a Notice of Conversion is delivered or
      telecopied to the Borrower in accordance with the provisions hereof shall be
      deemed a “Conversion
      Date”.
      A form
      of Notice of Conversion to be employed by the Holder is annexed hereto as
      Exhibit A. 

    

    (b)
       Pursuant
      to the terms of a Notice of Conversion, the Borrower will issue
      instructions to the transfer agent accompanied by an opinion of counsel, if
      so
      required by the Borrower’s transfer agent, within one
      (1) business
      days
      of the
      date of the delivery to Borrower of the Notice of Conversion and shall cause
      the
      transfer agent to transmit the certificates representing the Conversion Shares
      to the Holder by crediting the account of the Holder’s designated broker with
      the Depository Trust Corporation (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      within three (3) business days after receipt by the Borrower of the Notice
      of
      Conversion (the “Delivery
      Date”).
      In
      the case of the exercise of the conversion rights set forth herein the
      conversion privilege shall be deemed to have been exercised and the Common
      Stock
      issuable upon such conversion shall be deemed to have been issued upon the
      date
      of receipt by the Borrower of the Notice of Conversion. The Holder shall be
      treated for all purposes as the record holder of such shares of Common Stock,
      unless the Holder provides the Borrower written instructions to the
      contrary.

    

    3.4 Conversion
      Mechanics.

     

    (a) The
      number of shares of Common Stock to be issued upon each conversion of this
      Note
      pursuant to this Article III shall be determined by dividing that portion of
      the
      Principal Amount and interest and fees to be converted, if any, by the then
      applicable Fixed Conversion Price. In the event of any conversions of
      outstanding obligations under this Note in part pursuant to this Article III,
      such conversions shall be deemed to constitute conversions (i) first, of the
      Monthly Amount for the current calendar month, (ii) then of the accrued interest
      on the Principal Amount being converted in such Conversion Notice, and (iii)
      then of outstanding Amortizing Principal Amount, by applying the conversion
      amount to Monthly Principal Amounts for the remaining Repayment Dates in
      chronological order..

     

    3.5 (a)
      The
      Fixed Conversion Price and number and kind of shares or other securities to
      be
      issued upon conversion is subject to adjustment from time to time upon the
      occurrence of certain events, as follows:

     

    A. Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      shall be proportionately reduced in the case of subdivision of shares or stock
      dividend or proportionately increased in the case of combination of shares,
      in
      each such case by the ratio which the total number of shares of Common Stock
      outstanding immediately after such event bears to the total number of shares
      of
      Common Stock outstanding immediately prior to such event.

     

    B. During
      the period the conversion right exists, the Borrower will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Common Stock upon the full conversion of this Note. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. The Borrower agrees that its issuance
      of
      this Note shall constitute full authority to its officers, agents, and transfer
      agents who are charged with the duty of executing and issuing stock certificates
      to execute and issue the necessary certificates for shares of Common Stock
      upon
      the conversion of this Note.

     

    C. Share
      Issuances.
      Subject
      to the provisions of this Section 3.4, if the Borrower shall at any time prior
      to the conversion or repayment in full of the Principal Amount issue any shares
      of Common Stock or securities convertible into Common Stock to a person other
      than the Holder (except (i) securities issued upon the conversion or exercise
      of
      any securities issued pursuant to this Note, the Purchase Agreement , the
      Related Agreement or that certain Supplement, dated of even date herewith,
      by
      and between the Holder and the Borrower (the “Supplement”); (ii) securities
      issued upon the conversion or exercise of any convertible securities, options,
      warrants or other obligations to issue shares outstanding on the date hereof;
      iii) securities issued upon the conversion or exercise of any notes issued
      to
      the Other Investors on or about February 28, 2005 or the date hereof upon the
      same terms and conditions as the Notes, Warrants or the Supplemental Warrants
      (as defined in the Supplement); iv) shares of Common Stock or options to
      employees, officers or directors of the Company pursuant to the any employee
      stock or option plan and/or any qualified stock option plan adopted by the
      Borrower; (v) securities issued pursuant to any acquisition or strategic
      transactions, provided that such issuance shall only be to a Person which is,
      itself or through its subsidiaries, an operating company in a business
      synergistic with the business of the Borrower or any of Borrowers subsidiaries
      and in which the Borrower receives benefits in additional to the investment
      of
      funds, but shall not include a transaction in which the Company is issuing
      securities primarily for the purpose of raising capital or to an entity whose
      primary business is investing in securities; and (vi) up to, in the aggregate,
      $1,000,000 shares of Common Stock or equivalents in any 12 month period to
      consultants as payment for service rendered) for a consideration per share
      (the
“Offer
      Price”)
      less
      than the Fixed Conversion Price in effect at the time of such issuance, then
      the
      Fixed Conversion Price shall be immediately reset to such lower Offer Price
      pursuant to the formula below (“Subsequent
      Offering”).
      For
      purposes hereof, the issuance of any security of the Borrower convertible into
      or exercisable or exchangeable for Common Stock shall result in an adjustment
      to
      the Fixed Conversion Price at the time of issuance of such
      securities.

     

    If
      the
      Company issues any additional shares pursuant to Section 3.4 above then, and
      thereafter successively upon each such issue, the Fixed Conversion Price shall
      be adjusted by multiplying the then applicable Fixed Conversion Price by the
      following fraction: 

     

    

    
      	
                                                                          
                A + B

                                                       
                ______________________

            
	
               

                                                         
                (A + B) + [((C - D) x B) / C]

            

    

     

    A
      = Total
      amount of shares convertible pursuant to this Note.

     

    B
      =
      Actual shares sold in the offering

     

    C
      = Fixed
      Conversion Price

     

    D
      =
      Offering price 

     

    

     

    D.
       Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid Principal Amount and accrued interest thereon,
      shall
      thereafter be deemed to evidence the right to purchase an adjusted number of
      such securities and kind of securities as would have been issuable as the result
      of such change with respect to the Common Stock immediately prior to such
      reclassification or other change.

     

    3.6 Issuance
      of Replacement Note.
      Upon
      any partial conversion of this Note, a replacement Note containing the same
      date
      and provisions of this Note shall, at the written request of the Holder, be
      issued by the Borrower to the Holder for the outstanding Principal Amount of
      this Note and accrued interest which shall not have been converted or paid.
      Subject to the provisions of Article IV, the Borrower will pay no costs, fees
      or
      any other consideration to the Holder for the production and issuance of a
      replacement Note.

     

    ARTICLE
      IV

    EVENTS
      OF DEFAULT

     

     Upon
      the
      occurrence and continuance of an Event of Default beyond any applicable grace
      period, the Holder may make all sums of principal, interest and other fees
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable. In the event of such an acceleration, the amount due and owing
      to
      the Holder shall be 115% of the outstanding principal amount of the Note (plus
      accrued and unpaid interest and fees, if any) (the “Default
      Payment”).
      The
      Default Payment shall be applied first to any fees due and payable to Holder
      pursuant to this Note, the Purchase Agreement or the Related Agreements, then
      to
      accrued and unpaid interest due on the Note and then to outstanding principal
      balance of the Note.

     

    The
      occurrence of any of the following events set forth in Sections 4.1 through
      4.10, inclusive, is an “Event
      of Default”:

     

    4.1 Failure
      to Pay Principal, Interest or other Fees.
      The
      Borrower fails to pay when due any installment of principal, interest or other
      fees hereon in accordance herewith or any other note to Holder, and in any
      such
      case, Borrower does not cure such failure a period of five (5) days
      .

     

    4.2 Breach
      of Covenant.
      The
      Borrower breaches any covenant or any other term or condition of this Note
      or
      the Purchase Agreement in any material respect, any such case, such breach,
      if
      subject to cure, continues for a period of thirty (30) days of such
      breach.

     

    4.3 Breach
      of Representations and Warranties.
      Any
      representation or warranty made by the Borrower in this Note or the Purchase
      Agreement, or by the Borrower or any of its Subsidiaries in any Related
      Agreement, shall, in any such case, be false or misleading in any material
      respect on the date that such representation or warranty was made or deemed
      made.

     

    4.4 Receiver
      or Trustee.
      The
      Borrower shall make an assignment for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for it or for a substantial
      part of its property or business; or such a receiver or trustee shall otherwise
      be appointed.

     

    4.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      the Borrower or any of its Subsidiaries or any of their respective property
      or
      other assets for more than $750,000, and shall remain unvacated, unbonded or
      unstayed for a period of thirty (30) days.

     

    4.6 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower, unless such proceeding
      is withdrawn by Borrower within sixty (60) days of being filed.

     

    4.7 Stop
      Trade.
      An SEC
      stop trade order or Principal Market trading suspension of the Common Stock
      shall be in effect for fifteen (15) consecutive days, excluding in all cases
      a
      suspension of all trading on a Principal Market, provided
      that the
      Borrower shall not have been able to cure such trading suspension within thirty
      (30) days of the notice thereof or list the Common Stock on another Principal
      Market within sixty (60) days of such notice. The “Principal Market” for the
      Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
      NASDAQ National Market System, American Stock Exchange, or New York Stock
      Exchange (whichever of the foregoing is at the time the principal trading
      exchange or market for the Common Stock).

     

    4.8
        Failure
      to Deliver Common Stock or Replacement Note.
      The
      Borrower shall fail (i) to timely deliver Common Stock to the Holder pursuant
      to
      and in the form required by this Note, and Section 9 of the Purchase Agreement,
      if such failure to timely deliver Common Stock shall not be cured within ten
      (10) business days or (ii) to deliver a replacement Note to Holder within ten
      (10) business days following the required date of such issuance pursuant to
      this
      Note, the Purchase Agreement or any Related Agreement (to the extent required
      under such agreements).

     

                   
      4.9  Change
      of Control.The
      occurrence of a change in the controlling ownership of the
      Borrower.

     

    DEFAULT
      RELATED PROVISIONS

     

    4.11 Default
      Interest Rate.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Borrower shall pay interest on this Note in an amount equal to one and one
      half
      percent (1.5%) per month, and all outstanding obligations under this Note,
      including unpaid interest, shall continue to accrue such additional interest
      from the date of such Event of Default until the date such Event of Default
      is
      cured or waived. 

     

    4.12 Conversion
      Privileges.
      The
      conversion privileges set forth in Article III shall remain in full force and
      effect immediately from the date hereof and until this Note is paid in
      full.

     

    4.13 Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    5.2 No
      Shorting.
      The
      Holder, or any of its affiliates and investment partners has not during the
      thirty (30) days prior to the date hereof, will not and will not cause any
      person or entity to directly engage in “short sales” of Common Stock during the
      term of this Note.

     

    5.3 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to the Borrower at the address
      provided in the Purchase Agreement executed in connection herewith, and to
      the
      Holder at the address provided in the Purchase Agreement for such Holder, with
      a
      copy to or at such other address as the Borrower or the Holder may designate
      by
      ten days advance written notice to the other parties hereto. A Notice of
      Conversion shall be deemed given when made to the Borrower pursuant to the
      Purchase Agreement.

     

    5.4 Amendment
      Provision.
      The
      term “Note” and all reference thereto, as used throughout this instrument, shall
      mean this instrument as originally executed, this Amended and Restated Note
      or
      if later amended or supplemented, then as so amended or supplemented, and any
      successor instrument issued pursuant to Section 3.5 hereof, as it may be amended
      or supplemented.

     

    5.5 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns, and
      may
      be assigned by the Holder in accordance with the requirements of the Purchase
      Agreement and upon the terms herein. This Note shall not be assigned by the
      Borrower without the consent of the Holder.

     

    5.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York, without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the State of New York. Both parties
      and
      the individual signing this Note on behalf of the Borrower agree to submit
      to
      the jurisdiction of such courts. The prevailing party shall be entitled to
      recover from the other party its reasonable attorney’s fees and costs. In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision of this Note. Nothing contained herein
      shall be deemed or operate to preclude the Holder from bringing suit or taking
      other legal action against the Borrower in any other jurisdiction to collect
      on
      the Borrower’s obligations to Holder, to realize on any collateral or any other
      security for such obligations, or to enforce a judgment or other court in favor
      of the Holder.

     

    5.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

     

    5.8 Security
      Interest.
      The
      Holder has been granted a security interest in certain assets of the Borrower
      and its Subsidiaries as more fully described in the Master Security Agreement
      dated as of the date hereof. 

     

                   
      5.9 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the other.

     

    5.10 Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay to Holder
      reasonable costs of collection, including reasonable attorney’s fees.

     

     [Balance
      of page intentionally left blank; signature page follows.]

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Borrower has caused this Note to be signed in its name effective as of this
      14th
      day of
      July, 2005.

    

    ELINEAR,
      INC.

     

    By:________________________________

    Name:
      Michael Lewis

    Title:
      Chief Executive Officer

    

    WITNESS:

    

    

    _______________________________

    

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

    

    (To
      be
      executed by the Holder in order to convert all or part of the Note into Common
      Stock

    

    [Name
      and
      Address of Holder]

    

    

    The
      Undersigned hereby converts $_________ of the principal due on [specify
      applicable Repayment Date] under the Convertible Term Note issued by ELINEAR,
      INC. dated February __, 2005 by delivery of Shares of Common Stock of ELINEAR,
      INC. on and subject to the conditions set forth in Article III of such
      Note.

    

    

    1. Date
      of
      Conversion   _______________________

    

    2. Shares
      To
      Be Delivered: _______________________

    

    

    By:_______________________________

    Name:_____________________________

    Title:______________________________exv10w35

 

EXHIBIT 10.35

SERVICES AGREEMENT

     This SERVICES AGREEMENT (“Agreement”) is entered into as of June 20, 2005 (the “Effective
Date”), by and between IntraBiotics Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and Hickey & Hill, Inc., a California corporation (“H&H”).

RECITALS:

     WHEREAS, the Company desires to engage H&H to provide the Company with certain administrative
and financial consulting services set forth on Exhibit A attached hereto (collectively, the
“Services”).

     WHEREAS, H&H desires to provide such Services on the terms and subject to the conditions as
set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants expressed herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:

1. Services.

     A. Subject to the terms and on the conditions contained herein, H&H will use commercially
reasonable efforts to provide to the Company the Services, which shall be provided on a continuous
basis without specific request. In performing the Services, H&H shall comply with all applicable
laws, rules and regulations, including without limitation, the rules and regulations of the SEC,
Nasdaq, and applicable tax authorities, and the Company’s Certificate of Incorporation and Bylaws.
In addition, H&H shall follow all policies and procedures approved by the Company’s Board of
Directors (the “Board”) or any committee of the Board.

     B. The parties agree that Mr. Denis Hickey (“Mr. Hickey”) shall be appointed by the Company’s
Board of as the Chief Executive Officer and the Chief Financial Officer of the Company. Mr. Hickey
shall serve at the pleasure of the Board and may be removed, with or without cause, at any time by
the Board. Such removal shall not result in the termination of this Agreement unless such
termination occurs as provided in Section 4.B. The Company and Mr. Hickey shall execute and
deliver the Company’s standard form of officer indemnification agreement as set forth on
Exhibit B attached hereto and he shall be covered by the Company’s D&O insurance policy.

2. Information; Confidentiality.

     A. In connection with H&H’s activities on the Company’s behalf, the Company will furnish H&H
with all information and data concerning the Company (the “Information”) which H&H may reasonably
request, will provide H&H with access to

1

 

the Company’s directors, consultants, independent accountants and legal counsel, and will
otherwise cooperate fully with H&H in order to facilitate H&H’s performance of the Services.

     B. H&H shall not, and shall cause its directors, officers, employees, agents (including Mr.
Hickey) and representatives (collectively with H&H, the “Restricted Parties”) not to, directly or
indirectly, disclose to any person or entity, any confidential information acquired by any
Restricted Party during the course of or as an incident to H&H’s performance of the terms of this
Agreement, relating to the Company or the Services H&H is performing for the Company, including,
but not limited to, proprietary technology, operating procedures, financial statements or other
financial information, trade secrets, know-how, and forecasts, competitive analyses, the substance
of agreements, and any other documents embodying such confidential information (including, without
limitation, the Information) (collectively, the “Confidential Information”). The foregoing
restrictions and obligations under this paragraph shall not apply to any confidential information
that is or becomes generally available to the public or business community other than as a result
of a disclosure by any Restricted Party and shall not apply to any information disclosed to the
extent disclosure is required by applicable law or in connection with the performance of the
Services by H&H.

3. Compensation for Services; Expenses.

     A. In consideration of the performance of the Services by H&H set forth in Section 1 above,
the Company shall pay to H&H the following:

          (i) a one-time fee of $20,000, payable promptly following execution of this Agreement which
includes the performance of the Services during the month of June; and

          (ii) a monthly fee of $9,000 beginning in July, 2005, payable monthly on the last day of each
calendar month that this Agreement is in effect.

     B. In addition to the fees described in Section 3.A above, the Company agrees to reimburse
H&H, upon request from time to time, for all reasonable and documented out-of-pocket expenses
incurred by H&H in connection with the matters contemplated by this Agreement. The Company shall
also reimburse H&H for reasonable legal fees incurred by it in connection with the review of this
Agreement, not to exceed $1,000.

4. Term and Termination.

     A. This Agreement shall remain in effect until the first anniversary of the Effective Date
unless terminated earlier under this Section 4. Section 2.B shall survive the termination of this
Agreement for a period of one year and Section 6 shall survive the termination of this Agreement.

     B. The Company or H&H may terminate this Agreement immediately if the other party breaches its
obligations hereunder and fails to cure such breach within ten

2

 

(10) days following written notice thereof. In addition, the Company may terminate this
Agreement upon thirty (30) days’ written notice of termination to H&H. H&H may terminate this
Agreement upon ninety (90) days written notice of termination to the Company.

     C. Upon termination of this Agreement, H&H shall promptly return to the Company all
Confidential Information.

5. Independent Contractor; Relationship of the Parties.

     Nothing herein shall be deemed to constitute any Restricted Party to be the employee or agent
of the Company. H&H shall be an independent contractor and shall have responsibility for and
control over the details and means of performing the Services.

6. Indemnification

     A. The Company agrees to indemnify and hold harmless H&H and its officers, directors,
employees, agents and shareholders (collectively, the “Indemnitees”) from and against any and all
losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses
and disbursements incurred by any of the Indemnitees (“Losses”) and any and all actions, suits,
proceedings and investigations in respect thereof against any of the Indemnitees (“Actions”) that
directly or indirectly, are caused by, related to, based upon, arise from, or are in connection
with the performance of the Services, except to the extent that any such Losses or Actions are
caused by the gross negligence or willful misconduct of the respective Indemnitee.

     B. Promptly after receipt by an Indemnitee of notice of the commencement of any Action for
indemnification is sought hereunder, such Indemnitee will, if a claim in respect thereof is to be
made against the Company under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and the Company shall have the right to participate in, and, to the
extent the Company so desires, to assume the defense thereof. The failure to deliver written
notice to the Company shall not relieve the Company of any liability to the Indemnitee under this
Section except the Company was materially prejudiced by such failure. The Company shall not consent
to entry of any judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to each of the Indemnitees a release from all
liability in respect to such Action.

7. Amendments, Etc.

     No amendment, modification, waiver, termination or discharge of any provision of this
Agreement nor consent to any departure by a party therefrom, shall in any event be effective unless
the same shall be in writing specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged (a) in the case of a waiver or modification,
signed by the parties, and (b) in case of a waiver, termination or discharge, signed by the party
granting or effecting the same. Each

3

 

amendment, modification, waiver, termination or discharge shall be effective only in the
specific instance and for the specific purpose for which given. No provision of this Agreement
shall be varied, contradicted or explained by any oral agreement, course of dealing or performance
or any other matter not set forth in an agreement in writing and signed by the parties.

8. Notices.

     All notices, requests, consents and other communications hereunder shall be in writing, shall
be addressed to the receiving party’s address set forth on the signature pages hereto or to such
other address as a party may designate by notice hereunder, and shall be either (a) delivered by
hand, (b) made by telex, telecopy or facsimile transmission, (c) sent by recognized overnight
courier, or (d) sent by registered or certified mail, return receipt requested, postage prepaid.
All notices, requests, consents and other communications hereunder shall be deemed to be effective
(i) if delivered by hand, at the time of the delivery thereof to the receiving party at the address
of such party set forth above, (ii) if made by telex, telecopy or facsimile transmission, at the
time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if
sent by overnight courier, on the next business day following the day such notice is delivered to
the courier service, or (iv) if sent by registered or certified mail, on the third business day
following the day such mailing is made.

9. Further Assurances.

     Each of the parties hereto agrees to duly execute and deliver, or cause to be duly executed
and delivered, such further instruments and do and cause to be done such further acts and things,
including, without limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time and from time to
time reasonably request in connection with this Agreement to carry out more effectively the
provisions and purposes of, or to better assure and confirm unto such other party its rights and
remedies under, this Agreement.

10. Severability.

     If any provision hereof should be held invalid, illegal or unenforceable in any respect in any
jurisdictions then, to the fullest extent permitted by law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally construed in order to
carry out the intentions of the parties hereto as nearly as may be possible, and (b) such
invalidity, illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction.

11. No Third Party Beneficiaries.

     Nothing contained in this Agreement shall create any rights in, or be deemed to have been
executed for the benefit of, any person or entity that is not a party hereto; provided, however,
that the provisions of Section 6 are intended for the benefit of the Indemnified Parties.

4

 

12. Governing Law; Jurisdiction.

     This Agreement shall be governed by and construed in accordance with the laws of the State of
California without giving effect to principles of conflicts of law. Each of the parties irrevocably
submits to the exclusive jurisdiction of any courts of the State of California or the United States
District Court for the Northern District of California for the purpose of any suit, action or other
proceeding arising out of this Agreement, or any of the agreements or transactions contemplated
hereby, which is brought by or against it.

13. Entire Agreement.

     This Agreement constitutes, on and as of the date hereof, the entire agreement of the parties
with respect to the subject matter hereof, an all prior or contemporaneous understandings or
agreements, whether written or oral, between the parties with respect to such subject matter are
hereby superseded in their entirety.

(Remainder of Page Intentionally Left Blank)

5

 

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

	 	 	 	 	 	 	 
	 	 	INTRABIOTICS PHARMACEUTICALS,
	 	 	INC., a Delaware corporation
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Greg W Schafer
	 	 	 	 	 

	 	 	Its:	 	CFO
	 
	 	 	 	 	 	 
	 	 	Address:	 	2483 East Bayshore Road
	 

	 	 	 	 	 	Suite 100
	 

	 	 	 	 	 	Palo Alto, CA 94303
	 
	 	 	 	 	 	 
	 	 	HICKEY & HILL, INC., a California
	 	 	corporation
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Larry Hill
	 	 	 	 	 

	 	 	Its:	 	President
	 
	 	 	 	 	 	 
	 	 	Address:	 	1009 Oak Hill Road
	 

	 	 	 	 	 	Suite 201
	 

	 	 	 	 	 	Lafayette, CA 94549

6

 

EXHIBIT A

SERVICES

	1.	 	Review of and familiarization with the Company and its records, transfer of the Company’s
records to H&H’s offices, and set up of accounting systems and files.
	 
	2.	 	Manage the administration of the Company, including without limitation:

	 	•	 	Make available the services of Mr. Hickey as the Company’s Chief Executive Officer
and Chief Financial Officer of the Company, as contemplated by Section 1.B of the
Agreement
	 
	 	•	 	Prepare and file the Company’s SEC filings and certifications, including, without
limitation: Forms 10-Q and 10-K (including the preparation and execution of the officer
certifications required pursuant to Sarbanes-Oxley in connection therewith), Forms 8-K,
Proxy Statements, Annual Report, Forms 3, 4, 5, as required
	 
	 	•	 	Communicate with the Company’s counsel and independent public accountants re the SEC
filings and other appropriate matters
	 
	 	•	 	Communicate with the board of directors as necessary or desirable, not less than
monthly and with interim updates as requested by the board
	 
	 	•	 	Make quarterly presentations to board of directors and committees
	 
	 	•	 	Organize and hold the Company’s Annual Stockholders’ Meeting
	 
	 	•	 	Communicate with SEC and Nasdaq and make appropriate filings, as necessary or appropriate
	 
	 	•	 	Implement the year-end audit and related certifications
	 
	 	•	 	Manage monthly accounts payables
	 
	 	•	 	Close and reconcile monthly financial accounts
	 
	 	•	 	Direct external investment manager
	 
	 	•	 	Oversee stockholder communications and provide investor relations functions
	 
	 	•	 	Perform other management activities necessary or appropriate or as requested by the
board of directors

	3.	 	Transition accounting system
	 
	4.	 	Terminate 401(k) plan and make required filings in connection with the termination
	 
	5.	 	Terminate health plans and other benefit plans and make required filings

 

 

	6.	 	Compile, sign and file all required tax returns
	 
	7.	 	Maintain required insurance, and renew same
	 
	8.	 	Perform all human resources functions
	 
	9.	 	Communicate with the board of directors, attorneys and other parties as requested by the
board in connection with the class action lawsuit, administer the payment of legal fees and
expenses by the Company’s D&O Insurance provider in connection with the lawsuit and respond to
discovery requests; provided, however, that H&H will not be required to devote more than 40
hours per month to responding to discovery requests.
	 
	10.	 	Provide office space for the foregoing activities

 

 

EXHIBIT B

FORM OF INDEMNIFICATION AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]