PROMISSORY NOTE

 

US$25,000 October 25, 2012

 

FOR VALUE RECEIVED, the undersigned, Innolog Holdings Corporation, a Nevada
Corporation, and Innovative Logistics Techniques, Inc., a Virginia corporation
(“Innolog”), with principal executive offices are located at 4000 Legato Road,
Suite 830, Fairfax, Virginia 22033, telephone number is (703) 766-1412, fax
number is (703) 766-1425 (together, the “Maker”), promises to pay to Erich
Winkler at such place as the Payee may later designate in writing, in lawful
money of the United States, the principal sum of TWENTY-FIVE THOUSAND United
States dollars ($25,000) (the “Principal Amount” as further defined herein) in
accordance with this secured promissory note (the “Note”) under the terms set
forth herein.

 

1.    Principal Amount:

 

The Principal Amount is TWENTY-FIVE THOUSAND thousand dollars and 00/100
($25,000) (“Principal Amount”).

 

2.    Maturity Date/Pre-payment:

 

The maturity date (“Maturity Date”) is November 25, 2012. The Maker shall have
the right to prepay at any time and from time to time, in advance of the
Maturity Date, without premium or penalty (but the entire Fee shall be due and
payable), all or part of the then outstanding Principal Amount and other amounts
due and owing. Each payment shall be applied first to the principal balance due.
The Maturity Date may be extended with the approval of all parties.

 

3.    Rate of Interest/Fee:

 

Maker shall pay to Payee simple interest at the rate of ten percent (10%) per
annum due and payable on the Maturity Date.

 

4.    Additional Compensation:

 

Maker shall issue to Payee or Payee’s designee Warrants in a number equal to the
Principal Amount, convertible into common stock of Innolog Holdings Corporation,
a Nevada corporation, at an exercise price of $0.07 per share for five years
from the date hereof, with such other terms that are substantially the same as
other similar warrants.

 

5.    Late Fee:

 

If this Note is not paid in full within three (3) business days of the Maturity
Date, a one time late fee (“Late Fee”) of ten percent (10%) of the principal
amount outstanding hereunder shall be due and owing.

 

6.    Security Interest/Subordination

 

Maker shall grant to Payee and the holders of the other similar notes a joint
and several security interest in the following specific monthly accounts
receivable of Maker or Innolog: DFAS-IN/BVD/IN, Prime # W91WAW-09-C-0173
Contract Name: ODCSLOG; Account Number 5030-116 referred to by Maker as the
“Army Receivable” and the proceeds therefrom (the “Collateral”). Payee
recognizes that such Collateral may have been pledged to other lenders. Payee is
an officer, director or insider of Maker and acknowledges that as such the
repayment of this Note may be subordinate to the repayment or payment to other
creditors of Maker, including other secured creditors with interests in the
Collateral. Furthermore, Payee understands and agrees that such Collateral may
have been pledged or may be pledged in the future to one or more non- officer,
director or insider parties and hereby agrees that they shall have a prior claim
in such Collateral and shall promptly execute and delivery any subordination,
release or other agreements or instruments as may be requested by any such
secured party from time to time.

 

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7.  Events of Default

 

The following shall constitute Events of Default hereunder:

 

(a)          If Maker defaults in the payment of any amount due on this Note
when due; and

 

(b)          If Maker shall (i) make a general assignment for the benefit of
creditors, or (ii) apply for or consent to the appointment of a receiver,
trustee or liquidator for itself or all or a substantial part of its assets, or
(iii) be adjudicated a bankrupt or insolvent, or (iv) file a voluntary petition
in bankruptcy or file a petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether Federal or state) relating to relief of debtors, or admit (by answer,
by default or otherwise) the material allegations of a petition filed against it
in any bankruptcy, reorganization, insolvency or other proceeding (whether
Federal or state) relating to relief of debtors, or (v) suffer or permit to
continue unstayed and in effect for sixty (60) consecutive days any judgment,
decree or order entered by a court of competent jurisdiction, that approves an
involuntary petition seeking reorganization of Maker, or appoints, pursuant to
such a petition, a receiver, trustee or liquidator for it or all or a
substantial part of its assets.

 

8.  Remedies

 

(a)          Upon the happening of an Event of Default, Payee may, in Payee's
sole and absolute discretion and without notice or demand to Maker, declare the
entire amount of principal and interest thereon remaining outstanding hereunder
immediately due and payable, whereupon, the same shall forthwith become and be
due and payable without any presentment, demand or notice of any kind, all of
which are expressly waived by Maker.

 

(b)          If an Event of Default shall occur, the Maker shall pay the Payee,
on demand by the Payee, all reasonable costs and expenses incurred by the Payee
in connection with the collection and enforcement of this Note, including
attorneys fees.

 

(c)          Upon an event of default, all amounts outstanding shall bear
interest at the default interest rate of eighteen percent 18% per annum until
paid in full, which shall be in addition to any Late Fee owed.

 

9.  Miscellaneous

 

(a)          This Note shall be deemed to be made and entered into under the
laws of the Commonwealth of Virginia and for all purposes shall be construed and
enforced in accordance with the laws of the Commonwealth of Virginia, but not
with respect to the law of conflicts.

 

(b)          This Note shall be binding upon Maker and Maker's successors and
assigns and shall inure to the benefit of Payee and Payee's successors and
assigns; and each reference herein to Maker or to Payee shall, except where the
context shall otherwise require, be deemed to include its respective successors
and assigns. Notwithstanding the foregoing, Maker shall not have any right to
assign his obligations hereunder without Payee's prior written consent and Payee
may not assign its interests hereunder without Maker’s prior written consent.

 

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(c)          Any failure by Payee to exercise any right or remedy hereunder
shall not constitute a waiver of the right to exercise the same or any other
right or remedy at any subsequent time, and no single or partial exercise of any
right or remedy shall preclude other or further exercise of the same or any
other right or remedy.

 

(d)          None of the terms and provisions hereof may be waived, altered,
modified, or amended except by an agreement in writing signed by Maker and
Payee.

 

IN WITNESS WHEREOF, intending to be legally bound, Maker and Payee caused this
Promissory Note to be executed as of the day and year first above written by its
duly authorized and empowered officer or representative.

 

Innolog Holdings Corporation   Payee       By:         William Danielczyk,
Chairman, or   Erich Winkler   Eric Wagner, CFO           Innovative Logistics,
Techniques, Inc.           By:         Richard Stewart, President    

 

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