Exhibit 10.1

Purchase Order Financing Agreement
(the “Agreement”)
 
LINE AMOUNT
$2,000,000
ISSUANCE DATE
August 24, 2007
MATURITY DATE
August 24, 2009

FOR VALUE RECEIVED, LOGISTICAL SUPPORT, LLC., a California limited liability
company (the “Company”), as a duly authorized and wholly owned subsidiary of
Logistical Support, Inc., a Utah corporation (OTC BB: LGSL) (“Parent”) hereby
promises to pay DUTCHESS PRIVATE EQUITIES FUND, LTD. (the “Holder”) on August
24, 2009 (the “Maturity Date”), or earlier, the Line Amount of Two Million
Dollars ($2,000,000) U.S., plus accrued and unpaid interest thereon, in such
amounts, at such times and on such terms and conditions as are specified herein.
The Company, Parent and the Holder are sometimes hereinafter collectively
referred to as the “Parties” and each a “Party” to this Agreement.
 
WHEREAS, the Company desires to finance, from the Holder, certain of its Orders
(as hereinafter defined) now existing, or hereinafter received, which represent
amounts due from bona fide contracts for the sale and delivery of goods, in the
ordinary course of the Company’s business; and,
 
WHEREAS, the Holder desires to finance those Orders of the Company that it deems
acceptable upon the terms and conditions set forth in the this Agreement.
 
WHEREAS, the Parent hereby agrees to fully secure all obligation entered into
herein by the Company through the Continuing Unconditional Guaranty of even date
herewith between the Holder and the Parent.
 
WHEREAS, the Holder shall fund the Line Amount in an escrow account with Gersten
Savage, LLP.
 
In consideration of the above recitals, the terms and covenants of this
Agreement and other good and valuable consideration, including the payment of
money from Holder to Company, the receipt of which is hereby acknowledged, and
intending to be bound hereby, the Parties agree as follows:
 
Article 1 Payment; Repayment; Interest
 
Section 1.1 Interest
 
a. The Company shall pay interest on the unused portion of the Line Amount
(“Line Amount Interest”) at the rate of three percent (3%) per annum, at such
times and in such amounts as outlined in this Article 1. The Company shall make
mandatory monthly payments of interest (the “Line Amount Interest Payments”), in
an amount equal to the interest accrued on the unused balance of the Line Amount
from the last Line Amount Interest Payment until such time as the current Line
Amount Interest Payment is due and payable. The Line Amount Interest Payments
shall commence on the first month following the Issuance Date and shall continue
until the Maturity Date. The Line Amount Interest Payments shall be paid on the
first day of each such month.
 

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b. The Company shall pay interest on each Advance Amount (as hereinafter
defined) (“Advance Interest”) at the rate of two percent (2%) per month, at such
times and in such amounts as outlined in this Article 1. The Company shall make
mandatory monthly payments of interest (the “Advance Interest Payments”), in an
amount equal to the interest accrued on the balance of the Advance Amount from
the last Advance Interest Payment until such time as the current Advance
Interest Payment is due and payable. The Advance Interest Payments shall
commence on the first month immediately following the Advance Request (as
defined herein) and shall continue until the Maturity Date. The Advance Interest
Payments shall be paid on the first day of each such month.
 
c. The Company shall have the right, but not the obligation, to make the Line
Amount Interest Payments or the Advance Interest Payments (collectively,
hereinafter referred to as “Interest Payments”) from the Line Amount. In the
event the Company chooses to make Interest Payments from the Line Amount, the
Holder shall treat any such funds drawn for an Interest Payment as an Advance on
the Line Amount and such interest shall thereafter accrue interest at the rate
applicable on Advance Amounts hereunder.
 
Section 1.2 Payment for Orders.
 
At such time as the Company desires to request funds from the Line Amount for an
Order or for Interest Payments as outlined in this Article 1 (each, an
“Advance”), the Company shall submit to the Holder, a duly authorized request
for an Advance (“Advance Request”), in the form attached as Exhibit A hereto and
incorporated by reference, specifying the amount requested for such Advance
(each, an “Advance Amount” or collectively, the “Advance Amounts”), and, subject
to the satisfaction of the Holder, the Company and the Holder shall sign a
release for the requested funds to be transferred directly from the escrow
account with Gersten Savage (“Escrow Account”) to the Company’s account.
 
Notwithstanding anything to the contrary contained herein, in no event shall the
outstanding Advances exceed the Line Amount. If at any time the aggregate amount
of outstanding Advances exceeds the Line Amount, the Company shall immediately
pay to Holder, in cash, the amount of such excess. The Holder shall have the
right to terminate its obligation to make any Advance under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default.
 
Section 1.3 Repayment
 
The Company shall make mandatory payments to the Holder on each Advance
(“Payment” or collectively, the “Payments”) as funds are paid to and received by
the Company from the contract of orders in Exhibit B (“Collateral Orders” or
“Orders”) (attached hereto and incorporated herein by reference). Immediately
upon, and in any event not later than one (1) business day of Company’s receipt
of all or any portion of funds from Collateral Orders or from the Company’s
Factoring Line (defined below) for the proceeds related specifically to the
Collateral Orders, the Company shall pay to the Holder such portion of funds
received by the Company via wire transfer in immediately available funds.
Notwithstanding anything to the contrary contained herein, the Company shall
immediately make Payment to the Holder on ANY funds received from the customer
listed on Exhibit B.
 
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The Company shall use all commercially reasonable best efforts to maintain and
use the current factoring line of credit with Wells Fargo Bank, NA (“Factoring
Line”) in order to ensure the Holder full payment on the Advance Amount.
Intercreditor Agreement s/b entered into w/ Wells.
 
The Company may make additional payments (“Prepayment”) without any penalties
provided the Company has paid all Interest Payments then required to be paid.
 
Article 2 Collateral; Sale; Purchase Price; Assignment and Transfer of
Ownership.
 
2.1 Collateral.
 
As security for all outstanding Advances, Interest Payments and other amounts
owing from the Company to the Holder under this Agreement or any other document
executed in connection herewith, the Company shall grant in favor of the Holder
a security interest in parts and supplies for the Orders (“Raw Materials”) and
all finished goods created from the Raw Materials as are listed on the Schedules
of Orders (collectively with the Raw Materials and all other property provided
as collateral security under or in connection with this Agreement or the
Security Agreement, the “Collateral”) pursuant to a Security Agreement dated of
even date herewith from the Company in favor of the Holder (the “Security
Agreement,”) and the Continuing Unconditional Guaranty dated of even date
herewith from the Parent in favor of the Holder (the “Guaranty” and together
with the Security Agreement and this Agreement and all other documents executed
in connection herewith, the “Transaction Documents”).
 
2.2 Offer of Orders for Sale; Acceptance by Holder.
 
a. Company shall offer to sell to Holder as absolute owner, with full recourse,
all of Company’s right, title and interest in such Raw Materials and all
finished goods created from the Raw Materials as are listed on the Schedules of
Orders. The current version of the Schedule of Orders is attached hereto as
Exhibit B and may be periodically revised by Holder.
 
b. Each Schedule of Orders shall be accompanied by such documentation supporting
and evidencing the Order, as Holder shall from time-to-time request, as outlined
on Exhibit B or this Agreement, including, without limitation, Section 24 of
this Agreement.
 
2.3 Assignment and Sale
 
For those Orders that Holder agrees to finance for the Company, the Company
shall assign and transfer over to Holder as absolute owner with full recourse
all of Company’s right, title and interest in the parts and supplies being used
to fulfill such Order. The Company agrees to execute the Assignment of Order
substantially in the form attached hereto as Exhibit C for Orders being sold to
Holder.
 
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2.4 Threshold Amount
 
If at any time during the term of this Agreement, the Company raises any funds
from a third-party, whether involving the issuance of debt or equity, in excess
of one dollar ($1.00) (a “Financing”), then the Company shall pay to the Holder
one hundred percent (100%) of the net proceeds therefrom as prepayment of the
Line Amount and all accrued and unpaid interest thereon and all penalties, if
any, then due. A Financing will also include the sale by the Company of any of
its assets which are deemed to be material to the Company (excluding assets sold
in the normal course of business). All prepayments described in this Section 2.4
shall be made to the Holder within three (3) business day of the Company’s
receipt of proceeds from the Financing. Failure to comply with this Section 2.4
shall constitute an Event of Default (as described in Article 4 hereof).
 
Article 3 Term; Renewal; Unpaid Amounts
 
a. The term of this Agreement shall be for twenty-four (24) months. All amounts
outstanding under the Line Amount and all accrued and unpaid interest thereon
shall become immediately due and payable to the Holder, if not earlier in
accordance with the terms of this Agreement, on the Maturity Date.
 
b. So long as no Event of Default has occurred and is continuing, the Company
shall have the option to renew the Line Amount for an additional twenty-four
(24) months upon the Maturity Date. At such time, the Company shall pay to the
Holder three percent (3%) of the Line Amount as a renewal fee.
 
c. In the event that on the Maturity Date, there is an outstanding balance on
the Line Amount, the Holder can exercise its right to increase the Advance
Amounts by ten percent (10%) as an initial penalty and increase the interest
rates applicable under this Agreement by an additional two and one-half percent
(2.5%) per month, compounded daily, until the Line Amount and all accrued and
unpaid interest thereon is paid in full. The Company shall also continue to pay
interest on the Advance Amounts in accordance with the interest rates outlined
in this Agreement. The foregoing shall constitute an Event of Default under this
Agreement and entitle the Holder, in its discretion, to exercise any and all
remedies available to the Holder including those remedies described in Article 4
of this Agreement.
 
Article 4 Defaults and Remedies
 
Section 4.1 Events of Default. Each of the following shall constitute an “Event
of Default” under this Agreement:
 
(a) the Company fails to make any Payment on the Line Amount of this Agreement
within two (2) business days of the Payment being due, as outlined herein, or on
the Maturity Date, as applicable, upon receipt of Collateral Orders or
otherwise; or
 
(b) the Company, pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter defined): (i) commences a voluntary case; (ii) consents to the entry
of an order for relief against it in an involuntary case or if such an
involuntary case is commenced against the Company and is not dismissed or stayed
within thirty (30) calendar days (and the Holder shall not be obligated to make
Advances during such 30 calendar day period); (iii) consents to the appointment
of a Custodian (as hereinafter defined) of it or for all or substantially all of
its property; (iv) makes a general assignment for the benefit of its creditors;
or (v) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or substantially all of
its property; or (C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for sixty (60) calendar days; or
 
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(c) any of the Company’s representations or warranties contained in this
Agreement or any other Transaction Document were false when made; or,
 
(d) the Company breaches any covenant or condition of this Agreement or any
other Transaction Document, and such breach, if subject to cure, continues for a
period of five (5) business days.
 
(f) the Company’s failure to pay any taxes when due unless such taxes are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been provided on the Company’s books; provided, however,
that in the event that such failure is curable, the Company shall have ten (10)
business days to cure such failure; or,
 
(g) an attachment or levy is made upon the Company’s assets having an aggregate
value in excess of twenty-five thousand dollars ($25,000) or a judgment is
rendered against the Company or the Company’s property involving a liability of
more than twenty-five thousand dollars ($25,000) which shall not have been
vacated, discharged, stayed or bonded pending appeal within ninety (90) days
from the entry hereof; or,
 
(h) any change in the Company’s condition or affairs (financial or otherwise)
which in the Holder’s reasonable, good faith opinion, would have a Material
Adverse Effect; provided, however, that in the event that such failure is
curable, the Company shall have ten (10) business days to cure such failure; or,
 
(i) any lien in the Collateral in favor of the Holder, except for liens
permitted under the Security Agreement, created hereunder or under any of the
Transaction Documents for any reason ceases to be or is not a valid and
perfected lien in such Collateral having a first priority interest in favor of
the Holder; or,
 
(j) If there is a default or other failure to perform in any agreement to which
the Company is a party with a third party or parties, including the Factoring
Line, resulting in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount in excess
of $25,000; or
 
(k) the indictment or threatened indictment of the Company, any officer of the
Company under any criminal statute, or commencement or threatened commencement
of criminal or civil proceeding against the Company or any officer of the
Company pursuant to which statute or proceeding penalties or remedies sought or
available include forfeiture of any of the property of the company.
 
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As used in this Section 4.1, the term “Bankruptcy Law” means Title 11 of the
United States Code or any similar federal or state law for the relief of
debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
 
Section 4.2 Remedies. Upon the occurrence of an Event of Default, in addition to
the rights and remedies contained herein and in the other Transaction Documents,
the Holder may enforce its rights and remedies against any Collateral
 
For each Event of Default, as outlined in this Agreement, the Holder can
exercise its right to increase the Advance Amounts ten percent (10%) as an
initial penalty. In addition, the Holder may elect to increase the Advance
Amounts by two and one-half percent (2.5%) per month paid as a penalty for
Liquidated Damages in addition to the current Interest being paid on the Line
Amount and Advance Amounts. The Liquated Damages will be compounded daily. It is
the intention and acknowledgement of both parties that the Liquidated Damages
not be deemed as interest.
 
In the event of an Event of Default hereunder remains uncured for a period of
five (5) days, the Holder shall be unilaterally entitled to request the Escrow
Agent, as defined herein, to transfer any Remaining Escrow Funds (as defined in
the Escrow Agreement between the Company and the Escrow Agent of even date
herewith) to be transferred immediately back to the Holder. All Advance Amounts
shall also become immediately due and payable to the Holder.
 
In the event of an Event of Default hereunder remains uncured for sixty (60)
days, the Holder shall have the right, but not the obligation, to switch the
Advance Amounts to a three-year (“Convertible Maturity Date”) fifteen percent
(15%) interest bearing convertible debenture at the terms described in Section
4.2 (the “Convertible Debenture”) the Parent. At such time of an Event of
Default, the Convertible Debenture shall be considered issued (“Convertible
Closing Date”). If the Holder chooses to convert the Advance Amounts to a
Convertible Debenture (“Residual Amount”), the Parent shall have forty-five (45)
business days after notice of the same (the “Notice of Convertible Debenture”)
to file a registration statement covering an amount of shares equal to three
hundred percent (300%) of the Residual Amount. The Parent shall use its best
efforts to require such registration statement shall be declared effective under
the Securities Act of 1933, as amended (the “Securities Act”), by the Securities
and Exchange Commission (the “Commission”) within ninety (90) business days of
the date the Parent files such Registration Statement. In the event the Parent
does not file such registration statement within twenty (20) business days of
the Holder’s request, or such registration statement is not declared by the
Commission to be effective under the Securities Act within the time period
described above , the Residual Amount shall increase by five thousand dollars
($5,000) per day. In the event the Parent is given the option for accelerated
effectiveness of the registration statement, it agrees that it shall cause such
registration statement to be declared effective as soon as reasonably
practicable. In the event that the Parent is given the option for accelerated
effectiveness of the registration statement, but chooses not to cause such
registration statement to be declared effective on such accelerated basis, the
Residual Amount shall increase by five thousand dollars ($5,000) per day
commencing on the earliest date as of which such registration statement would
have been declared to be effective if subject to accelerated effectiveness.
 
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Section 4.3 Conversion Privilege
 
(a) The Holder shall have the right to convert the Convertible Debenture into
shares of Common Stock at any time following the Convertible Closing Date and
which is before the close of business on the Convertible Maturity Date. The
number of shares of Common Stock issuable upon the conversion of the Convertible
Debenture shall be determined pursuant to Article 4, but the number of shares
issuable shall be rounded up or down, as the case may be, to the nearest whole
share.
 
(b) The Convertible Debenture may be converted, whether in whole or in part, at
any time and from time to time.
 
(c) In the event all or any portion of the Convertible Debenture remains
outstanding on the Convertible Maturity Date (the “Debenture Residual Amount”),
the unconverted portion of such Convertible Debenture will automatically be
converted into shares of Common Stock on such date in the manner set forth in
Section 4.3.
 
Section 4.4 Conversion Procedure
 
(a) The Residual Amount may be converted, in whole or in part any time and from
time to time, following the Convertible Closing Date. Such conversion shall be
effectuated by surrendering to the Parent, or its attorney, the Convertible
Debenture to be converted together with a facsimile or original of the signed
notice of conversion (the “Notice of Conversion”). The date on which the Notice
of Conversion is effective (“Conversion Date”) shall be deemed to be the date on
which the Holder has delivered to the Parent a facsimile or original of the
signed Notice of Conversion, as long as the original Convertible Debenture(s) to
be converted are received by the Parent within five (5) business days
thereafter. At such time that the original Convertible Debenture has been
received by the Parent, the Holder can elect to whether a reissuance of the
Convertible Debenture is warranted, or whether the Parent can retain the
Convertible Debenture as to a continual conversion by the Holder.
Notwithstanding the above, any Notice of Conversion received after 4:00 P.M. EST
shall be deemed to have been received the following business day (receipt being
via a confirmation of the time such facsimile to the Parent is received).
 
(b) Common Stock to be Issued. Upon the conversion of any Convertible Debentures
and upon receipt by the Parent or its attorney of a facsimile or original of the
Holder’s signed Notice of Conversion, the Parent shall instruct its transfer
agent to issue stock certificates without restrictive legends or stop transfer
instructions, if at that time the aforementioned registration statement
described in Section 4.1 has been declared effective (or with proper restrictive
legends if the registration statement has not as yet been declared effective),
in such denominations to be specified at conversion representing the number of
shares of Common Stock issuable upon such conversion, as applicable. In the
event that the Debenture is aged one year and deemed sellable under Rule 144,
the Parent shall, upon a Notice of Conversion, instruct the transfer agent to
issue free trading certificates without restrictive legends, subject to other
applicable securities laws. The Parent is responsible to provide all costs
associated with the issuance of the shares, including but not limited to the
opinion letter, FedEx of the certificates and any other costs that arise. The
Parent shall act as registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Convertible Debenture.
The Parent warrants that no instructions, other than these instructions, have
been given or will be given to the transfer agent and that the Common Stock
shall otherwise be freely resold, except as may be set forth herein or subject
to applicable law.
 
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(c) Conversion Rate. Holder is entitled to convert the Debenture Residual
Amount, plus accrued interest, anytime following the Convertible Maturity Date,
at eighty percent (80%) of the lowest closing bid price during the twenty (20)
trading immediately preceding the Convertible Maturity Date (“Conversion
Price”). No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded up or
down, as the case may be, to the nearest whole share.
 
(d) Nothing contained in the Convertible Debenture shall be deemed to establish
or require the payment of interest to the Holder at a rate in excess of the
maximum rate permitted by governing law. In the event that the rate of interest
required to be paid exceeds the maximum rate permitted by governing law, the
rate of interest required to be paid thereunder shall be automatically reduced
to the maximum rate permitted under the governing law and such excess shall be
returned with reasonable promptness by the Holder to the Parent.
 
(e) It shall be the Parent’s responsibility to take all necessary actions and to
bear all such costs to issue the Common Stock as provided herein, including the
responsibility and cost for delivery of an opinion letter to the transfer agent,
if so required. Holder shall be treated as a shareholder of record on the date
Common Stock is issued to the Holder. If the Holder shall designate another
person as the entity in the name of which the stock certificates issuable upon
conversion of the Convertible Debenture are to be issued prior to the issuance
of such certificates, the Holder shall provide to the Parent evidence that
either no tax shall be due and payable as a result of such transfer or that the
applicable tax has been paid by the Holder or such person. Upon surrender of any
Convertible Debentures that are to be converted in part, the Parent shall issue
to the Holder a new Convertible Debenture equal to the unconverted amount, if so
requested in writing by the Holder.
 
(f) Within five (5) business days after receipt of the documentation referred to
above in Section 4.2, the Parent shall deliver a certificate, for the number of
shares of Common Stock issuable upon the conversion. In the event the Parent
does not make delivery of the Common Stock as instructed by Holder within five
(5) business days after the Conversion Date, then in such event the Parent shall
pay to the Holder one percent (1%) in cash of the dollar value of the Debenture
Residual Amount remaining after said conversion, compounded daily, per each day
after the fifth (5th) business day following the Conversion Date that the Common
Stock is not delivered to the Holder.
 
(g) The Parent acknowledges that its failure to deliver the Common Stock within
five (5) business days after the Conversion Date will cause the Holder to suffer
damages in an amount that will be difficult to ascertain. Accordingly, the
parties agree that it is appropriate to include in this Agreement a provision
for liquidated damages. The parties acknowledge and agree that the liquidated
damages provision set forth in this section represents the parties’ good faith
effort to quantify such damages and, as such, agree that the form and amount of
such liquidated damages are reasonable and will not constitute a penalty. The
payment of liquidated damages shall not relieve the Parent from its obligations
to deliver the Common Stock pursuant to the terms of this Convertible Debenture.
 
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(h) The Parent shall at all times reserve (or make alternative written
arrangements for reservation or contribution of shares) and have available all
Common Stock necessary to meet conversion of the Convertible Debentures by the
Holder of the entire amount of Convertible Debentures then outstanding. If, at
any time the Holder submits a Notice of Conversion and the Parent does not have
sufficient authorized but unissued shares of Common Stock (or alternative shares
of Common Stock as may be contributed by stockholders of the Parent) available
to effect, in full, a conversion of the Convertible Debentures (a “Conversion
Default,” the date of such default being referred to herein as the “Conversion
Default Date”), the Parent shall issue to the Holder all of the shares of Common
Stock which are available, and the Notice of Conversion as to any Convertible
Debentures requested to be converted but not converted (the “Unconverted
Convertible Debentures”), may be deemed null and void upon written notice sent
by the Holder to the Parent. The Parent shall provide notice of such Conversion
Default (“Notice of Conversion Default”) to the Holder, by facsimile within
three (3) business days of such default (with the original delivered by
overnight mail or two day courier), and the Holder shall give notice to the
Parent by facsimile within five (5) business days of receipt of the original
Notice of Conversion Default (with the original delivered by overnight mail or
two day courier) of its election to either nullify or confirm the Notice of
Conversion.
 
(i) The Parent agrees to pay the Holder payments for a Conversion Default
(“Conversion Default Payments”) in the amount of (N/365) multiplied by .24
multiplied by the initial issuance price of the outstanding or tendered but not
converted Convertible Debentures held by the Holder where N = the number of days
from the Conversion Default Date to the date (the “Authorization Date”) that the
Parent authorizes a sufficient number of shares of Common Stock to effect
conversion of all remaining Convertible Debentures. The Parent shall send notice
(“Authorization Notice”) to the Holder that additional shares of Common Stock
have been authorized, the Authorization Date, and the amount of Holder’s accrued
Conversion Default Payments. The accrued Conversion Default shall be paid in
cash or shall be convertible into Common Stock at the conversion rate set forth
in the first sentence of this paragraph, upon written notice sent by the Holder
to the Parent, which Conversion Default shall be payable as follows: (i) in the
event the Holder elects to take such payment in cash, cash payments shall be
made to the Holder by the fifth (5th) day of the following calendar month, or
(ii) in the event Holder elects to take such payment in stock, the Holder may
convert such payment amount into Common Stock at the conversion rate set forth
in the first sentence of this paragraph at any time after the fifth (5th) day of
the calendar month following the month in which the Authorization Notice was
received, until the expiration of the mandatory three (3) year conversion
period.
 
(j) The Parent acknowledges that its failure to maintain a sufficient number of
authorized but unissued shares of Common Stock to effect in full a conversion of
the Convertible Debentures will cause the Holder to suffer damages in an amount
that will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision set forth in
this section represents the parties’ good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Parent from its obligations to deliver the Common Stock
pursuant to the terms of this Convertible Debenture.
 
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(k) If, by the third (3rd) business day after the Conversion Date of any portion
of the Convertible Debentures to be converted (the “Delivery Date”), the
transfer agent fails for any reason to deliver the Common Stock upon conversion
by the Holder and after such Delivery Date, the Holder purchases, in an open
market transaction or otherwise, shares of Common Stock (the “Covering Shares”)
solely in order to make delivery in satisfaction of a sale of Common Stock by
the Holder (the “Sold Shares”), which delivery such Holder anticipated to make
using the Common Stock issuable upon conversion (a “Buy-In”), the Parent shall
pay to the Holder, in addition to any other amounts due to Holder pursuant to
this Convertible Debenture, and not in lieu thereof, the Buy-In Adjustment
Amount (as defined below). The “Buy In Adjustment Amount” is the amount equal to
the excess, if any, of (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Covering Shares over (y) the net proceeds
(after brokerage commissions, if any) received by the Holder from the sale of
the Sold Shares. The Parent shall pay the Buy-In Adjustment Amount to the Holder
in immediately available funds within five (5) business days of written demand
by the Holder. By way of illustration and not in limitation of the foregoing, if
the Holder purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount which the Parent will be required to pay to the Holder will be
$1,000.
 
(l) The Parent shall defend, protect, indemnify and hold harmless the Holder and
all of its shareholders, officers, directors, employees, counsel, and direct or
indirect investors and any of the foregoing person’s agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Section 16 Indemnitees”) from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Section
16 Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the
“Section 16 Indemnified Liabilities”), incurred by any Section 16 Indemnitee as
a result of, or arising out of, or relating to (i) any misrepresentation or
breach of any representation or warranty made by the Parent in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, (ii) any breach of any covenant, agreement, or obligation of the
Parent or Company contained in the Transaction Documents or any other
certificate, instrument, or document contemplated hereby or thereby, (iii) any
cause of action, suit, or claim brought or made against such Section 16
Indemnitee by a third party and arising out of or resulting from the execution,
delivery, performance, or enforcement of the Transaction Documents or any other
certificate, instrument, or document contemplated hereby or thereby, (iv) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Common Stock underlying the
Convertible Debenture (“Securities”), or (v) the status of the Holder or holder
of the Securities as an investor in the Parent, except insofar as any such
misrepresentation, breach or any untrue statement, alleged untrue statement,
omission, or alleged omission is made in reliance upon and in conformity with
written information furnished to the Parent by the Holder or the Investor which
is specifically intended by the Holder or the Investor to be relied upon by the
Parent, including for use in the preparation of any such registration statement,
preliminary prospectus, or prospectus, or is based on illegal trading of the
Common Stock by the Holder or the Investor. To the extent that the foregoing
undertaking by the Parent may be unenforceable for any reason, the Parent shall
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities that is permissible under applicable law. The indemnity
provisions contained herein shall be in addition to any cause of action or
similar rights the Holder may have, and any liabilities the Holder may be
subject to.
 
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Article 5 Additional Financing and Registration Statements
 
Section 5.1 The Company and the Parent will not enter into any additional
financing agreements, debt or equity, without prior expressed written consent
from the Holder, which shall not be unreasonably withheld. Failure to do so will
result in an Event of Default and the Holder may elect to take the action
outlined in Article 4.
 
Section 5.2 The Holder shall also reserve the right to switch to the terms of
the new financing. If at any time while the Line Amount is outstanding, if the
Company or Parent issues or agree to issue any common stock or securities
convertible into or exercisable for shares of commons stock (or modify any of
the foregoing which may be outstanding) to any person or entity. Additionally,
if the Company or Parent shall, issue or agree to issue any of the
aforementioned securities to any person, firm or corporation at terms deemed by
the Holder to be more favorable to the other investor than the terms or
conditions of this Agreement, then the Holder is granted the right to modify any
such term or condition of the Agreement to be the same as any such term or
condition of any subsequent offering. The rights of the Holder in this Section 5
are in addition to any other right the Holder has pursuant to this Agreement and
the Security Agreement of even date between the Holder and the Company.
 
The Company and Parent agree that it shall cause its Chief Executive Officer,
Bruce Littell (“Littell”), and any entity under the control of Littell, to
refrain from selling any Stock, while there is an outstanding balance owed to
the Holder by the Company on this Agreement (“Lock-Up Period”).
 
Article 6 Notice.
 
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
 
If to the Company:
 
Logistical Support, LLC.
19734 Dearborn St
Chatsworth, CA 91311
Phone: 818-885-0300
 

 
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If to the Holder:
 
Dutchess Capital Management
Douglas Leighton
50 Commonwealth Ave Suite 2
Boston, MA 02116
Phone: 617-301-4700
Facsimile: 617-249-0947
 

Each party shall provide five (5) business days prior notice to the other party
of any change in address, phone number or facsimile number.
 
Article 7 Time
 
Where this Agreement authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Agreement. A “business day” shall
mean a day on which the banks in New York are not required or allowed to be
closed.
 
Article 8 No Assignment
 
This Agreement and the terms and conditions herein, shall not be assignable.
 
Article 9 Rules of Construction.
 
In this Agreement, unless the context otherwise requires, words in the singular
number include the plural, and in the plural include the singular, and words of
the masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender. The numbers and
titles of sections contained in the Agreement are inserted for convenience of
reference only, and they neither form a part of this Agreement nor are they to
be used in the construction or interpretation hereof. Wherever, in this
Agreement, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Parent and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Agreement.
 
Article 10 Governing Law
 
The validity, terms, performance and enforcement of this Agreement shall be
governed and construed by the provisions hereof and in accordance with the laws
of the Commonwealth of Massachusetts applicable to agreements that are
negotiated, executed, delivered and performed solely in the Commonwealth of
Massachusetts.
 
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Article 11 Litigation
 
The parties to this agreement will submit all disputes arising under this
agreement to arbitration in Boston, Massachusetts before a single arbitrator of
the American Arbitration Association (“AAA”). The arbitrator shall be selected
by application of the rules of the AAA, or by mutual agreement of the parties,
except that such arbitrator shall be an attorney admitted to practice law in the
Commonwealth of Massachusetts. No party to this agreement will challenge the
jurisdiction or venue provisions as provided in this section. Nothing in this
section shall limit the Holder’s right to obtain an injunction for a breach of
this Agreement from a court of law.
 
Article 12 Conditions to Closing
 
The Company shall have delivered this Agreement and the Security Agreement duly
executed by the Company to the Holder before Closing and shall have paid to the
Holder all fees and expenses owing to the Holder pursuant to this Agreement.
 
Article 13 Fees & Expenses
 
Section 13.1 Administration Fee. The Company agrees to pay for related expenses
associated with the proposed transaction of thirty-five thousand dollars
($35,000) of which, seventeen thousand five hundred dollars ($17,500) has been
paid. This amount shall cover, but is not limited to, the following: due
diligence expenses, document creation expenses, closing costs, and transaction
administration expenses. This shall be deducted from the first closing and
funding.
 
Section 13.1 Misdirected Payment Fee. Fifteen percent (15%) of the amount of any
payment (but in no event less than $1,000) on account of a Collateral Order
which has been received by Company and not delivered in kind to Holder on the
next business day following the date of receipt by Company, or thirty percent
(30%) of the amount of any such payment which has been received by Company as a
result of any action taken by Company to cause such payment to be made to
Company.
 
Section 13.2 Out-of-Pocket Expenses. The out-of-pocket expenses directly
incurred by Holder in the administration of this Agreement such as wire transfer
fees, postage and audit fees shall be the responsibility of the Company.
 
Section 13.3 Advance Fee. The Company agrees to pay one percent (1%) of the
Advance Amount at the time of each Advance. The Company, at its sole option, may
elect to pay the Advance Fee from the Line Amount. In the event the Company
chooses to pay the Advance Fee from the Line Amount, the Company agrees to
deliver all necessary paperwork to Gersten Savage, LLP along with the Request
for Advance.
 
Article 16 Indemnification
 
In consideration of the Holder’s execution and delivery of this Agreement and
the acquisition and funding by the Holder hereunder and in addition to all of
the Company’s other obligations under the documents contemplated hereby, the
Company shall defend, protect, indemnify and hold harmless the Holder and all of
their shareholders, officers, directors, employees, counsel, and direct or
indirect investors and any of the foregoing person’s agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“INDEMNITEES”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements (the “INDEMNIFIED LIABILITIES’),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the
Company in the Agreement, or any other certificate, instrument or document
contemplated hereby or thereby (ii) any breach of any covenant, agreement or
obligation of the Company contained in the Agreement or any other certificate,
instrument or document contemplated hereby or thereby, except insofar as any
such misrepresentation, breach or any untrue statement, alleged untrue
statement, omission or alleged omission is made in reliance upon and in
conformity with written information furnished to the Company by, or on behalf
of, the Holder or based on illegal or alleged illegal trading of the Shares by
the Holder. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The indemnity provisions contained herein
shall be in addition to any cause of action or similar rights the Holder may
have, and any liabilities the Holder may be subject to.
 
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Article 17 Waiver
 
The Holder’s delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not
waiver, affect, or diminish any right of the Holder under this Agreement to
demand strict compliance and performance herewith. Any waiver by the Holder of
any Event of Default shall not waive or affect any other Event of Default,
whether such Event of Default is prior or subsequent thereto and whether of the
same or a different type. None of the undertakings, agreements and covenants of
the Company contained in this Agreement, and no Event of Default, shall be
deemed to have been waived by the Holder, nor may this Agreement be amended,
changed or modified, unless such waiver, amendment, change or modification is
evidenced by an instrument in writing specifying such waiver, amendment, change
or modification and signed by the Holder.
 
Article 18 Senior Obligation
 
The Company shall cause this Agreement to be senior in right of payment to all
other Indebtedness of the Company for the Collateral.
 
Article 19 Transactions With Affiliates
 
The Company shall not, and shall cause each of its Subsidiaries not to, enter
into, amend, modify or supplement, or permit any Subsidiary to enter into,
amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiary’s officers, directors, persons who
were officers or directors at any time during the previous two years,
shareholders who beneficially own five percent (5%) or more of the Common Stock,
or affiliates or with any individual related by blood, marriage or adoption to
any such individual or with any entity in which any such entity or individual
owns a five percent (5%) or more beneficial interest (each a “Related Party”)
during the Lock Up Period.
 
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Article 20 Security
 
As security for the Line Amount, the Company grants to the Holder a continuing
first priority in the Raw Materials and other Collateral as more particularly
described in Section 2.1 hereof. The Company agrees to execute all documents
appropriate and necessary in order to perfect Holder’s security interest in the
Collateral Orders, the Raw Materials and the other Collateral.
 
Article 21 Investor Shares; Date of Consideration
 
a. The Parent shall issue to the Holder five hundred thousand (500,000) shares
of unregistered, restricted Common Stock (the “Incentive Shares”) as an
incentive for the Holder entering into this Agreement with the Company. The
Incentive Shares shall be issued and delivered to the Holder upon Closing. The
Parent’s failure to issue the Incentive Shares shall constitute an Event of
Default and the Holder may elect to enforce the remedies outlined in Article 4
hereof. The Parent’s obligation to provide the Holder with the Incentive Shares,
as set forth herein, shall survive the termination of this Note and any default
on this obligation shall provide the Holder with all rights, remedies and
default provisions set forth in this Note or otherwise available by law. The
Incentive Shares shall carry piggy back registration rights until such time as
the Holder can freely sell the Incentive Shares promulgated under Rule 144
without restrictions for volume limitations thereunder. The Parent shall notify
the Holder within ten (10) business days of its intention to file a registration
statement, and the Holder shall have the option to request the Incentive Shares
to be included in the registration statement. In the event the Holder requests
the Parent includes the Incentive Shares and the Parent files a registration
statement that does not include the Incentive Shares, the Parent shall pay to
the Holder five hundred thousand (500,000) additional shares. The Parent shall
not be obligated to pay the five hundred thousand (500,000) additional shares in
the event the United States Securities and Exchange Commission deems the
Incentives Shares in excess of those allowed to be registered under Rule 415.
The Holder shall have retain the full right to waive any such piggyback
registration rights.
 
b. The Parent hereby acknowledges that the date of consideration for the
Incentive Shares is August 24, 2007 and shall use all commercially reasonable
best efforts to facilitate sales under Rule 144 of the Securities Act. The
Parent shall provide an opinion letter from counsel within two (2) business days
of written request by the Holder stating that the date of consideration for the
Incentives Shares is August 24, 2007 and submission of proper Rule 144 support
documentation consisting of a Form 144, a broker’s representation letter and a
seller’s representation letter. In the event the Parent does not deliver the
opinion letter within two business days, the Parent shall be in default as
outlined in Article 4. In the event that counsel to the Parent fails or refuses
to render an opinion as required to issue the Incentive Shares in accordance
with this paragraph (either with or without restrictive legends, as applicable),
then the Parent irrevocably and expressly authorizes counsel to the Holder to
render such opinion and shall authorize the Transfer Agent to accept and to rely
on such opinion for the purposes of issuing the Shares (which is attached as
Exhibit D hereto). Any costs incurred by Holder for such opinion letter shall be
added to the current outstanding Advance Amounts.
 
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Article 22 Disputes on Collateral Orders
 
Company shall notify Holder promptly of and, if requested by Holder, will settle
all disputes concerning any Collateral Order at Company’s sole cost and expense.
Holder may, but is not required to, attempt to settle, compromise, or litigate
(collectively, “Resolve”) the dispute upon such terms, as Holder in its sole
discretion deems advisable, for Company’s account and risk and at Company’s sole
expense. Upon the occurrence of an Event of Default, Holder may resolve such
issues with respect to any Account of Company and any expenses incurred by
Holder in connection therewith shall be added to the obligations owing
hereunder.
 
Article 23 Escrow
 
The delivery and execution of this Agreement is done in conjunction with the
Escrow Agreement between the Company and Gersten Savage, LLP (“Escrow Agent’) of
even date herewith.
 
Article 24 Representations and Warranties of the Company
 
a. It is fully authorized to enter into this Agreement and to perform hereunder.
 
b. This Agreement constitutes its legal, valid and binding obligation.
 
c. Company is in good standing in the jurisdiction of its organization and in
the Utah.
 
d. The Collateral Orders are and will remain:
 
i. Bona fide existing obligations created by the sale and delivery of goods or
the rendition of services in the ordinary course of Company’s business and are
valid, fully collectible obligations form the vendors and/or payors to the
Company for the Collateral Orders (“Account Debtors”).
 
ii. Unconditionally owed and to the best knowledge of Company will be paid to
the Holder without defenses, disputes, offsets, counterclaims, or rights of
return or cancellation.
 
iii. Not sales to any entity that is affiliated with Company or in any way not
an “arm’s length” transaction.
 
e. No person has a lien or ownership interest in, or claim against, the
Collateral Orders.
 
f. The Raw Materials for the Collateral Orders have not been previously financed
by Company.
 
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g. The Account Debtors have not paid to Company, or Company’s representatives,
or otherwise for Company’s benefit, any part or all of the Line Amount of the
Collateral Orders except as reflected in the Schedule of Orders covering that
Collateral Orders.
 
h. There exist no circumstances, to the Company’s best knowledge, that would
entitle the Account Debtors to refuse to pay the amounts due on the Collateral
Orders, or to reduce the amounts due on the Collateral Orders from those amounts
shown in the Schedule of Orders.
 
i. Company has not received notice or otherwise learned of actual or imminent
bankruptcy, insolvency, or material impairment of the financial condition of any
applicable Account Debtor regarding the Collateral Orders.
 
j. The financial statements, Purchase Order / Invoices, orders, proofs of
delivery, account ledgers and all other documents submitted by Company to Holder
concerning the Collateral Orders or otherwise required under this Agreement are
true, accurate and genuine.
 
Article 25 Miscellaneous
 
a. All pronouns and any variations thereof used herein shall be deemed to refer
to the masculine, feminine, impersonal, singular or plural, as the identity of
the person or persons may require.
 
b. Neither this Agreement nor any provision hereof shall be waived, modified,
changed, discharged, terminated, revoked or canceled, except by an instrument in
writing signed by the party effecting the same against whom any change,
discharge or termination is sought.
 
c. Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered or sent by
facsimile transmission: (i) if to the Company, at its executive offices or (ii)
if to the Holder, at the address for correspondence set forth in the Article 6,
or at such other address as may have been specified by written notice given in
accordance with this paragraph.
 
d. This Agreement may be executed in two or more counterparts, all of which
taken together shall constitute one instrument. Execution and delivery of this
Agreement by exchange of facsimile copies bearing the facsimile signature of a
party shall constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
 
e. This Written Agreement represent the FINAL AGREEMENT between the Company and
the Holder and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties, there are no unwritten oral
agreements among the parties.
 
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f. The execution, delivery and performance of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Articles of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws or (ii) conflict with, or
constitute a material default (or an event which with notice or lapse of time or
both would become a material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Company or
any of its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree, including United States federal and state
securities laws and regulations and the rules and regulations of the principal
securities exchange or trading market on which the Common Stock is traded or
listed (the “Principal Market”), applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is
in violation of any term of, or in default under, the Articles of Incorporation,
any Certificate of Designations, Preferences and Rights of any outstanding
series of preferred stock of the Company or the By-laws or their organizational
charter or by-laws, respectively, or any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations that would not individually or in the aggregate
have a Material Adverse Effect. The business of the Company and its Subsidiaries
is not being conducted, and shall not be conducted, in violation of any law,
statute, ordinance, rule, order or regulation of any governmental authority or
agency, regulatory or self-regulatory agency, or court, except for possible
violations the sanctions for which either individually or in the aggregate would
not have a Material Adverse Effect. The Company is not required to obtain any
consent, authorization, permit or order of, or make any filing or registration
(except the filing of a registration statement) with, any court, governmental
authority or agency, regulatory or self-regulatory agency or other third party
in order for it to execute, deliver or perform any of its obligations under, or
contemplated by, this Agreement in accordance with the terms hereof or thereof.
All consents, authorizations, permits, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof and are in full force and
effect as of the date hereof. The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of the
Principal Market as in effect on the date hereof and on each of the Closing
Dates and is not aware of any facts which would reasonably lead to delisting of
the Common Stock by the Principal Market in the foreseeable future.
 
g. The Company and its “Subsidiaries” (which for purposes of this Agreement
means any entity in which the Company, directly or indirectly, owns capital
stock or holds an equity or similar interest) are corporations duly organized
and validly existing in good standing under the laws of the respective
jurisdictions of their incorporation, and have the requisite corporate or
limited liability company power and authorization to own their properties and to
carry on their business as now being conducted. Both the Company and its
Subsidiaries are duly qualified to do business and are in good standing in every
jurisdiction in which their ownership of property or the nature of the business
conducted by them makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any
material adverse effect on the business, properties, assets, operations, results
of operations, financial condition or prospects of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Agreement.
 
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h. Authorization; Enforcement; Compliance with Other Instruments. (i) The
Company has the requisite corporate or limited liability company power and
authority to enter into and perform this Agreement, and to issue the Agreement
in accordance with the terms hereof and thereof, (ii) the execution and delivery
of the Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby, have been duly and validly authorized by the
Company’s Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors, or its shareholders, (iii) the Agreement
has been duly and validly executed and delivered by the Company, and (iv) the
Agreement constitutes the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.
 
i. The execution and delivery of this Agreement shall not alter any prior
written agreements between the Company and the Holder.
 
j.  There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants,
auditors and lawyers formerly or presently employed by the Company, including
but not limited to disputes or conflicts over payment owed to such accountants,
auditors or lawyers.
 
k. All representations made by or relating to the Company of a historical nature
and all undertaking described herein shall relate and refer to the Company, its
predecessors, and the Subsidiaries.
 
l. The only officer, director, employee and consultant stock option or stock
incentive plan currently in effect or contemplated by the Company has been
submitted to the Holder or is described with Reports. No other plan will be
adopted nor may any options.
 
m. The Company hereby represent and warrants to the Holder that: (i) it has
voluntarily entered into this Agreement of its own freewill, (ii) it is not
entering into this Agreement under economic duress with this Agreement and
anticipated continued financing, (iii) the terms of this Agreement are
reasonable and fair to the Company, and (iv) the Company has had independent
legal counsel of its own choosing review this Agreement, advise the Company with
respect to this Agreement, and represent the Company in connection with its
entering into this Agreement.
 
[SIGNATURE PAGE TO FOLLOW]
 
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IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the date
first written above.

              LOGISTICAL SUPPORT, INC.  
   
   
           

--------------------------------------------------------------------------------

Name: Bruce W. Littell   Title: Chief Executive Officer           DUTCHESS
PRIVATE EQUITIES FUND, LTD.          

--------------------------------------------------------------------------------

Name: Douglas H. Leighton  
Title: Director

 
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EXHIBIT A
 
REQUEST FOR ADVANCE
 
AS OF ____________
FOR LOGISTICAL SUPPORT, INC (“COMPANY”) and
Dutchess Private Equities Fund, Ltd. (“HOLDER”)
 

Date:  ____________________
 
Dear Mr. Leighton,
 
Pursuant to the terms and conditions of the Purchase Order Financing Agreement
dated August 24, 2007, the Company is hereby requesting an Advance of
$__________ for fulfillment of the attached orders.
 
The Company is hereby executing this request in conjunction with the Assignment
of Orders.
 
Sincerely,
 
_____________________________
Bruce Littell
Chief Executive Officer
 

Accepted:
 
______________________________
Douglas Leighton
Director
 

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EXHIBIT B
 
SCHEDULE OF ORDERS
 

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EXHIBIT C
 
ASSIGNMENT OF ORDERS
 
AS OF ____________
FOR LOGISTICAL SUPPORT, INC (“COMPANY”) and
Dutchess Private Equities Fund, Ltd. (“HOLDER”)
 
FOR VALUE RECEIVED, Company unconditionally and irrevocably sells, bargains,
transfers and assigns to Holder, with full recourse in Holder, as of the date
shown above, all of Company’s right, title and interest in and to the Raw
Materials Orders enumerated in Exhibit “A” attached hereto (hereinafter
“Collateral Orders”), together with any security or guarantees associated with
those Collateral Orders, including the proceeds of credit insurance due and
payable in connection with the Collateral Orders.
 
Holder shall have the rights to the Collateral Orders set forth in that certain
Project Order Financing Agreement dated August 24, 2007 and to which Company and
Holder are Parties including, but not limited to, (i) in Holder’s own name and
for Holder’s own benefit, to make and effect collections from the Account
Debtors of the Collateral Orders; and, (ii) to receive, take possession of,
endorse and deposit in Holder’s own bank account(s) any and all payments,
commercial paper, notes or acceptances or other things of value received in
payment of the Collateral Orders.
 
By signing below, Holder accepts the assignment of the Orders set out in the
attached Exhibit “A”.
 
The terms “Account Debtors”, “Orders”, “Parties” and “Collateral Orders” shall
have the same meaning as defined in the Purchase Order Financing Agreement dated
August 24, 2007 and entered into by the Parties.
 
COMPANY
 
 
 
___________________________________
Name: Bruce W. Littell
Title: Chief Executive Officer
DUTCHESS PRIVATE EQUITIES FUND, LTD.
 
 
 
______________________________________
Name: Douglas H. Leighton
Title: Director
PARENT
 
 
___________________________________
Name: Bruce W. Littell
Title: Chief Executive Officer
 

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EXHIBIT D
 
Interwest Transfer Company
1981 East Murray Holladay Road, Suite 100
Salt Lake City, Utah 84117
Telephone (801) 272-9294
 
RE: Issuance of Common Stock
 
To Whom It May Concern:
 
Please use this letter as authorization to have the attached request for the
issuance of free trading shares, pursuant to paragraph Rule 144 of the
Securities Act, to Dutchess Private Equities Fund, Ltd which acquired the fully
paid, non-assessable securities.
 
The Company does hereby instruct Interwest Transfer Company to rely on the
opinion for resale of shares from Trombly Business Law or Gersten Savage, LLP.
 
The Company represents that Dutchess is not recognized as an affiliate of the
company.
 
Regards,
 

Bruce W. Littell
Chief Executive Officer
Logistical Support, Inc.
 

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