Exhibit 10.5

 

PROMISSORY NOTE

 

$120,000.00

 

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 DANIEL J. A. KOLKE
(“Promisee”) at San Mateo, California, or at such other place as Promisee may
designate in writing, in lawful money of the United States of America, the
principal sum of One Hundred Twenty Thousand and NO/100 Dollars ($120,000.00),
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 May 30, 2009 (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 Promisee 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 Promisee’s 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 Promisee 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

 

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(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

 

(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.

 

Promisee has the right at his 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 Promisee agrees 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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