Exhibit 10.4

 

PROMISSORY NOTE

 

$644,000.00

 

December 30, 2007

 

San Mateo, California

 

This Promissory Note is entered into pursuant to the Settlement Agreement dated
December 30, 2007.

 

1.             Promise to Pay.

 

ETELOS INCORPORATED (“Maker”) promises to pay to the order of SELMA AND DANIEL
A. KOLKE (“Promisees”) at San Mateo, California, or at such other place as
Promisees may designate in writing, in lawful money of the United States of
America, the principal sum of Six Hundred Forty-four Thousand and 00100 Dollars
($644,000.00), with interest thereon until maturity, whether scheduled or
accelerated, at the rate of 7.50%.

 

2.             Payment Obligation

 

Maker shall commence making equal monthly payments of principal and interest on
or before January 1, 2008, in accordance with the attached Schedule, and the
unpaid balance of principal and accrued interest, if any, shall be due and
payable in full on or before June 30, 2017 (the “Maturity Date”).

 

3.             No Pre-Payment Penalty

 

There shall be no penalty for any prepayment, in full or in part, at any time
before the Maturity Date.

 

4.             Security

 

There will be no security for this Note for so long as Daniel J. A. Kolke
remains either an employee or member of the Board of Directors of Maker prior to
the Maturity Date.  If, at any time prior to the Maturity Date, Daniel J. A.
Kolke is neither an employee or member of the Board of Directors of Maker, then
Maker will grant to Promisees a security interest in certain assets of Maker,
which security interest shall be subordinated to any and all bank debt or
convertible corporate debt of Maker, but senior to short-term liabilities of the
Maker.

 

5.             Events of Default.  The occurrence of any of the following shall,
at Promisees’ ‘option, (1) make all sums of interest, principal and any other
amounts owing immediately due and payable without notice of default,
presentment, or demand for payment, protest, or notice of nonpayment or dishonor
or any other notices or demands; and (2) give Promisees the right to exercise
any other right or remedy provided by contract or applicable law:

 

(a)       Maker shall fail to make a monthly payment of principal or interest
when due under this Note, without providing notice of non-payment; or to perform
any other obligation under this Note or any contract, instrument, addenda, or
document executed in connection with this Note; or

 

(b)      Any representation or warranty made in the Settlement Agreement or in
any financial statement, certificate, or other document provided by Maker shall
be found by a court of competent jurisdiction to have been false or misleading;
or

 

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(c)       Maker shall fail to pay its debts generally as they become due or
shall file any petition or action for relief under any bankruptcy, insolvency,
reorganization, moratorium, creditor composition law, or any other law for the
relief of or relating to debtors; an involuntary petition shall be filed under
any bankruptcy law against Maker, or a custodian, receiver, trustee, assignee
for the benefit of creditors, or other similar official shall be appointed to
take possession, custody, or control of the properties of Maker; or the
dissolution of Maker.

 

Promisees have the right at their sole option to continue to accept interest
and/or principal payments due under the Note after any such default, and such
acceptance shall not constitute a waiver of said default or an extension of the
maturity date unless Promisees agree otherwise in writing.

 

6.     Choice of Law.   This Note shall be construed in accordance with, and
governed in all respects by, the laws of the State of California, excluding its
conflicts of laws principles.  The Parties agree to submit to the jurisdiction
of the Federal and state courts of California in and for San Mateo County [CA]
and agree to be bound by the decisions of such courts with respect to the breach
or interpretation of this Agreement, or the enforcement of any and all rights,
duties, liabilities, obligations, powers, and other relations between the
Parties arising out of this Agreement.

 

7.     General. This Promissory Note is entered into pursuant and subject to the
terms and conditions of a certain Settlement Agreement between the Parties and
others of even date.  Maker has all necessary right, power and authority to
issue and perform its obligations under this Note.  This Note is a binding
obligation of Maker and shall be binding upon the Parties and their respective
heirs and permitted successors, and assigns.  Notices shall be given in
accordance with the provisions in the Settlement Agreement. The failure of any
Party to enforce any provision of this Note in accordance with its terms will
not constitute a waiver of future enforcement of that or any other provision of
this Note.  To the fullest extent permitted by applicable law, Maker, for itself
and its agents, legal representatives, successors, and assigns, expressly waives
presentment, demand, protest, notice of dishonor, notice of nonpayment, notice
of maturity, notice of protest, presentment for the purpose of accelerating
maturity, diligence in collection, and the benefit of any exemption or
insolvency laws.

 

 

ETELOS INCORPORATED

 

 

 

 

 

/s/ Jeffrey L. Garon

 

Authorized Signatory

 

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