AMENDED AND RESTATED SECURED CONVERTIBLE TERM NOTE

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.

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 ”).

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.

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.

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 thereun