cellynx_ex1004.htm


    Exhibit
10.4

     

    THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.

     

    CELLYNX,
INC.

     

    Amended
and Restated Subordinated Convertible Promissory Note

    
    

     

    
      	$262,356.16	
               Issue
      Date:  November 10, 2007

            


    

     

    FOR VALUE
RECEIVED Cellynx, Inc., a California corporation (the “Company”),
promises to pay to Palomar Ventures III, L.P., a Delaware limited partnership
(the “Holder”),
or its registered assigns, the principal amount of Two Hundred Sixty Two
Thousand and Three Hundred Fifty Six dollars and 16/100ths
($262,356.16), together with interest accrued thereon at a rate equal to four
percent (4%) per annum.  All unpaid principal, together with any
interest accrued thereon, shall be due and payable upon the earlier of
(i) November 9, 2010 (the “Maturity
Date”) at the written request of the Holder to the Company, or
(ii) when, upon or after the occurrence of an Event of Default (as defined
below), such amounts are declared due and payable by the Holder or made
automatically due and payable in accordance with the terms hereof.

     

    This Note
is the “Note”
issued pursuant to that certain Note and Warrant Purchase Agreement by and among
the Company and the Investors set forth therein, dated August 15, 2006, as the
same may from time to time be amended, modified or supplemented, including
without limitation that confirming letter between the parties dated on or about
November 10, 2007 (the “Purchase
Agreement”).

     

    THE
OBLIGATIONS DUE UNDER THIS NOTE ARE UNSECURED.

     

    The
Company was obligated to pay the Holder the principal sum of Two Hundred Sixty
Two Thousand and Three Hundred Fifty Six dollars and 16/100ths
($262,356.16) together with interest accrued thereon pursuant to a Secured
Subordinated Promissory Note dated August 15, 2006 (the “August 2006
Note”). The Holder was also entitled to purchase shares of the Company’s
securities pursuant to a Warrant to Purchase Common Stock dated August 15, 2006
(“August
2006 Warrant”). In contemplation of the completion of a reverse merger
with a publicly traded corporation whereby the Company shall control the
surviving corporation (the surviving corporation, “Pubco”),
the Company has reached an agreement with the Holder whereby this Note shall
replace and supersede the August 2006 Note and cancel the August 2006
Warrant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
following is a statement of the rights of the Holder of this Note and the
conditions to which this Note is subject, and to which the Holder, by the
acceptance of this Note, agrees:

     

    1. Replacement Note. As
evidenced by each party’s signature hereto, and for good and valuable
consideration, the Holder and the Company agree that the August 2006
Note  and the August 15, 2006 promissory note issued by the Company to
Palomar Ventures Principals Funds III, L.P. (“Principals Fund Note”) will be
canceled, replaced and superseded in its entirety by this Note.  The
Holder represents that the Principals Fund Note has been properly acquired by
Holder prior to this date.

     

    2. Cancellation of August 2006
Warrant.    As evidenced by each party’s signature
hereto, and for good and valuable consideration, the Holder and the Company
agree that the August 2006 Warrant will be canceled in its entirety upon
execution of this Note.

     

    3. Interest.  Interest
on this Note shall accrue at a rate of four percent (4%) per annum from the
issuance date hereof. Interest shall be computed on the basis of a 360-day year
applied to actual days elapsed.

     

    4. Conversion.  Until
the Maturity Date, the Notes and interest accrued thereon shall be convertible
at the option of Holder into the number of shares of common stock of Pubco equal
to 4.8% of the shares of common stock of Pubco outstanding on the date of the
closing of the contemplated reverse merger and equity financing, on a fully
diluted basis, exclusive of unvested options (“Conversion
Shares”).  At the closing of the reverse merger and equity
financing, the Company shall notify Holder in writing the number of outstanding
shares on a fully-diluted basis (“Outstanding
Shares”), exclusive of unvested options and the determination of the
number of Conversion Shares based on the number of Outstanding
Shares.  The number of Conversion Shares shall be adjusted for any
stock split, stock dividend, combinations and the like.  The term
“Conversion
Price” shall mean the principal amount of the Note plus accrued interest
divided by Conversion Shares.

     

    4.1  Fractional Shares; Nonassessable;
Effect of Conversion.  Any fractional shares to be issued upon
conversion of this Note shall be rounded down to the nearest whole
share.  The Company covenants that the Conversion Shares, upon
conversion of this Note, shall be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue
thereof.  Upon conversion of this Note in full and the payment of the
amounts specified in this Section 4.1,
the Company and Pubco shall be forever released from all their obligations and
liabilities under this Note.

     

    5. 
Registration
Rights.  Holder has the right to register its Conversion Shares
in any registration statement in which shares of Pubco owned by Tareq Risheq,
Robert Legendre and Daniel Ash are to be included; provided however that the
Conversion Shares must qualify under applicable provisions of the Securities Act
of 1933, as amended, for inclusion in such registration statement.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    6. Prepayment.  The
Company may prepay this Note in whole without prepayment penalty of any
kind.  Any such prepayment shall be made pro rata to the holders of
the then outstanding Notes issued pursuant to the Purchase Agreement, based on
the principal amounts of the then outstanding Notes.  Upon prepayment
of this Note, the Company shall grant Holder a warrant in the form set forth in
Exhibit A which permits Holder to purchase a number of shares equal to the
number of Conversion Shares at the Conversion Price less any shares of Company
common stock issued as a result of any partial conversion of this Note (“Pop-Up
Warrant”).  If granted, the Pop-Up Warrant shall expire on the
Maturity Date.

     

    7. Subordination.  The
indebtedness evidenced by this Note is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of payment to the prior
payment in full of all of the Company’s Senior Indebtedness (defined below),
whether now or hereafter existing.

     

    7.1 Insolvency
Proceedings.  If there shall occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization,
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation, or any other marshaling of the assets and liabilities of the
Company, (i) no amount shall be paid by the Company in respect of the
principal of this Note at the time outstanding, unless and until the principal
of and interest on the Senior Indebtedness then outstanding shall be paid in
full, and (ii) no claim or proof of claim shall be filed with the Company
by or on behalf of the Holder of this Note that shall assert any right to
receive any payments in respect of the principal of this Note, unless such claim
or proof of claim is subject to the payment in full of the principal of and
interest on all of the Senior Indebtedness then outstanding.

     

    7.2 Default on Senior
Indebtedness.  If there shall occur an event of default that
has been declared in writing, or is automatically effective in the case of
bankruptcy or insolvency events, with respect to any Senior Indebtedness (as
such event of default is defined therein or in the instrument under which it is
outstanding), which event of default permits the holder to accelerate the
maturity thereof, then, unless and until such event of default shall have been
cured or waived or shall have ceased to exist, or all Senior Indebtedness shall
have been paid in full, no payment shall be made in respect of the principal of
this Note at the time outstanding.

     

    7.3 Effect of
Subordination.  Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 7 to receive cash, securities or
other properties otherwise payable or deliverable to the Holder, nothing
contained in this Section 7 shall impair, as between the Company and the
Holder, the obligation of the Company, subject to the terms and conditions of
this Note, to pay to the Holder the principal of this Note as and when the same
become due and payable, or shall prevent the Holder, upon default hereunder,
from exercising all rights, powers and remedies otherwise provided herein or by
applicable law.

     

    7.4 Subrogation.  Subject
to the payment in full of all Senior Indebtedness, the Holder shall be
subrogated to the rights of the holder(s) of such Senior Indebtedness (to the
extent of the payments or distributions made to the holder(s) of such Senior
Indebtedness pursuant to the provisions of this Section 7) to receive
payments and distributions of assets of the Company applicable to the Senior
Indebtedness.  No such payments or distributions applicable to the
Senior Indebtedness shall, as between the Company and its creditors, other than
the holders of Senior Indebtedness and the Holder, be deemed to be a payment by
the Company to or on account of this Note; and for purposes of such subrogation,
no payments or distributions to the holders of Senior Indebtedness to which the
Holder would be entitled except for the provisions of this Section 7 shall,
as between the Company and its creditors, other than the holders of Senior
Indebtedness and the Holder, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    7.5 Reliance of the Holders of Senior
Indebtedness.  By acceptance of this Note, the Holder shall be
deemed to acknowledge and agree that the foregoing subordination provisions are,
and are intended to be, an inducement to and a consideration of each holder of
Senior Indebtedness, whether such Senior Indebtedness was created or acquired
before or after the creation of the indebtedness evidenced by this Note, and
each such holder of Senior Indebtedness shall be deemed conclusively to have
relied on such subordination provisions in acquiring and holding, or in
continuing to hold, such Senior Indebtedness.

     

    7.6 Undertaking.  By
acceptance of this Note, the Holder agrees to execute and deliver such documents
as may be reasonably requested from time to time by the Company or a holder of
any Senior Indebtedness, including customary forms of subordination agreement
requested from time to time by a holder of Senior Indebtedness, in order to
implement the foregoing provisions of this Section 7.  The
Company may require that the Holder execute such documents as a condition to the
Holder’s rights hereunder.

     

    8. Events of
Default.  The occurrence of any of the following shall
constitute an “Event of
Default” under this Note:

     

    8.1 Failure to
Pay.  The Company shall fail to pay when due any payment on the
due date hereunder and such payment shall not have been made within
five (5) days of the Company’s receipt of the Holder’s written notice to
the Company of such failure to pay; or

     

    8.2 Voluntary Bankruptcy or Insolvency
Proceedings.  The Company shall (i) apply for or consent
to the appointment of a receiver, trustee, liquidator or custodian of itself or
of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated, (iii) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its property by any official in an involuntary case or
other proceeding commenced against it, or (iv) take any action for the
purpose of effecting any of the foregoing; or

     

    8.3 Involuntary Bankruptcy or Insolvency
Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of the Company or of
all or a substantial part of the Company’s property, or an involuntary case or
other proceedings seeking liquidation, reorganization or other relief with
respect to the Company or the Company’s debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect shall be commenced and an order
for relief entered or such proceeding shall not be dismissed or discharged
within thirty (30) days of commencement.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    Upon the
occurrence or existence of any Event of Default described in Section 8.1
and at any time thereafter during the continuance of such Event of Default, the
Holder may, with the consent of the holders of at least a majority of the
principal amount of all then outstanding Notes issued pursuant to the Purchase
Agreement, by written notice to Company, declare this Note immediately due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained in this Note to the
contrary notwithstanding.  Upon the occurrence or existence of any
Event of Default described in Sections 8.2
and 8.3, immediately and without
notice, this Note shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained in this Note to the
contrary notwithstanding.  In addition to the foregoing remedies, upon
the occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy permitted to it by law.

     

               “Senior
Indebtedness” means, unless expressly subordinated to or made on a parity
with the amounts due under this Note, the principal of (and premium, if any),
unpaid interest on, amounts reimbursable, fees, expenses, costs of enforcement
and any other amounts due in connection with (i) indebtedness of the
Company, or with respect to which the Company is a guarantor, to banks,
commercial finance lenders, insurance companies, leasing or equipment financing
institutions or other lending institutions regularly engaged in the business of
lending money, which is for money borrowed, or purchase or leasing of equipment
in the case of lease or other equipment financing, whether or not secured, and
(ii) any such indebtedness or any debentures, notes or other evidence of
indebtedness issued in exchange for such Senior Indebtedness, or any
indebtedness arising from the satisfaction of such Senior Indebtedness by a
guarantor.

     

    9. Miscellaneous.

     

    9.1 Pari Passu
Notes.  The Holder acknowledges and agrees that the payment of
all or any portion of the outstanding principal amount of this Note shall be
pari passu in right of
payment and in all other respects to the other Notes issued pursuant to the
Purchase Agreement or pursuant to the terms of such Notes.  In the
event the Holder receives payments in excess of its pro rata share of Company’s
payments to the holders of all of the Notes, then the Holder shall hold in trust
all such excess payments for the benefit of the holders of the other Notes and
shall pay such amounts held in trust to such other holders upon demand by such
holders.

     

    9.2 Loss, Theft, Destruction or
Mutilation of Note.  Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note and, in the case of loss, theft or destruction, delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Note, the
Company shall execute and deliver, in lieu of this Note, a new Note executed in
the same manner as this Note, in the same principal amount as the unpaid
principal amount of this Note.

     

    9.3 Payment.  All
payments under this Note shall be made in lawful tender of the United
States.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    9.4 Waivers.  The
Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.

     

    9.5 Waiver and Amendment.  Any
provision of this Note may be amended, waived or modified upon the written
consent of the Company and the holders of at least a majority of the principal
amount of all then outstanding Notes issued pursuant to the Purchase
Agreement.

     

    9.6 Notices.  Any
notice, request or other communication required or permitted hereunder shall be
given in accordance with the Purchase Agreement.

     

    9.7 Expenses; Attorneys’
Fees.  If action is instituted to collect this Note and the
Holder prevails on claims in such action, the Company promises to pay all
reasonable costs and expenses of the Holder, including, without limitation,
reasonable attorneys’ fees and costs of the Holder, incurred in connection with
such action.

     

    9.8 Successors and
Assigns.  This Note may be assigned or transferred by the
Holder only with the prior written approval of the Company.  Subject
to the preceding sentence, the rights and obligations of the Company and the
Holder of this Note shall be binding upon and benefit the successors, assigns,
heirs, administrators and transferees of the parties.

     

    9.9 Governing
Law.  THIS NOTE SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS
OF THE STATE OF CALIFORNIA AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
CALIFORNIA RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN
CALIFORNIA.

     

    [Remainder
of page intentionally left blank.]

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties have caused this Note to be executed by their
officers thereunto duly authorized.

     

    
    

     

    
      	 	

              “COMPANY”

               

              CELLYNX,
      INC., a California corporation

               

              By: /s/ Tareq
      Risheq                                                       
      

              Tareq
      Risheq, CEO

               

               

              “HOLDER”

               

              PALOMAR
      VENTURES III, L.P.,

              a
      Delaware limited partnership

              By:  Palomar
      Management III, L.L.C.,

              a
      Delaware limited liability company

              Its:  General
      Partner

               

              


              By:
      /s/ Randall R.
      Lunn                                                  

              Randall
      R. Lunn, Managing Member
 


    

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

     

    FORM OF
WARRANT

     

     

     

     

     -8-