EXHIBIT 10.4
RESTRICTED ACCOUNT AGREEMENT
This Restricted Account Agreement (this
"Agreement") is entered into this 28 th 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, 14
th 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) sec
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