Document:

SECURED PROMISSORY NOTE AGREEMENT

 

	
US$25,000.00

	
April 27,2011                  

 

FOR VALU E RECEIVED, the undersigned, Innolog Holdings Corporation and Innovative Logistics Techniques, Inc., (together the "Maker"), jointly and severally prom isle to pay to the Kay M. Gumbinner Trust (the "Holder"), at such place as t he Holder may later designate in writing , in lawful money of the United States, the principal sum of TWENTY FIVE THOUSAND US DOLLARS ($25,000.00) in accordance with this prom issory note (the "Note") under the terms set forth herein.

 

1.               Interest/Fee

 

The total interest and fees due and owing in connection with this loan through the Maturity Date is two thousand five hundred dollars ($2,500.00).

 

2.               Repayment

 

Principal and interest due under this Note shall be payable by 5:00PM EST on the maturity date of Thursday, May 5, 2011 ("Maturity Date"). Furthermore, this Note shall be repaid as a first priority from any and all amounts received by Maker from ANY accounts receivable recei ved by any of Maker subject only to normal operating expenses and regular current operating accounts payables until this Note is repaid in full. No payments are to be made to any ot her notes or government agencies prior to the repay ment of the repayment of thi s Note.

 

Maker shall have the right to prepay at any time and from time to time, in advance of maturity, all or part of the principal amount of this Note, along with the above interest and fee. Each pay ment shall be applied fi rst to the principal balance due.

 

TIME IS OF THE ESSENCE on the repayment of this Note.

 

3.               Late Fee and Default Interest

 

As noted above, time is of the essence on the repayment of this Note. I f this Note is not paid in full on or before the Maturity Date, of Maker is otherwise in breach of this Note, t here shall be a late fee of twenty percent (20%) or $5,000. There shall accrue additional Late Fees of ten percent (I 0%) every fifteen (15) calendar days until repa id in fu ll. In add ition, after the Maturity Date, this Note shall accrue interest from the Maturity Date at the rate of eighteen percent (18%) per annum, compounded daily until paid in full ("Default Interest"). Such Default Interest shall be on the outstanding principal amount, the interest due under the Note and the Late Fee(s).

 

4.               Events of Default

 

Each of the following shall constitute Events of Default hereunder:

 

(a)        If Maker defaults in the payment of any amount due on thi s Note when due (there is no requirement for any notice and there is no right to cure any failure of payment when due); and

 

(b)       I f Maker defaults in any other obligation to Holder or any of its affiliates, includ ing, without limitation, any other Notes to Holder and any Forbearance or Extension Agreement wi th Holder or any of its affiliates ("Other Agmts"); and

 

  

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(c)        If Maker breaches any of the Other Agreements; and

 

(d)       If Maker uses any accounts receivables or other moneys that come into the company from any source other than for payment of normal operating expenses and regular current accounts payables before all amounts due under this Note are repaid in full; and

 

(e)       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.

 

5.              Remedies

 

(a)       Upon the happening of an Event of Default, Holder may, in Holder'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 Holder, on demand by the Holder, all costs and expenses incurred by the Holder in connection with the collection and enforcement of this Note, including attorneys' fees and the amounts described above.

 

6.              Security

 

This Note including all late fees, interest, penalties and the Confessed Judgment are secured by the accounts receivable of Maker and the Security Agreement previously executed by Maker (or Innovative Logistics Techniques, Inc.) in connection with prior notes and/or forbearance and extension agreements in favor of Holder; provided, however that the holder may not file any instruments perfecting such security interest until after the Maturity Date. After the Maturity Date, Maker shall immediately upon request by the Holder execute and deliver such security interests, UCC-I and other filing statements or other documents or interests requested by Holder in order to perfect such security interest.

 

7.              Priority of Repayment.

 

This Note shall be repaid by Maker prior to the repayment of any other debt of Maker of any kind other than normal operating expenses and regular current accounts payables.

 

8.              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, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. Maker (i) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Northern Di strict of Virginia and the courts of the Commonwealth of Virginia located in Fairfax County for the purposes of any suit, action or proceeding arising out of or relating to thi s Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the su it, action or proceeding is improper.

  

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(b)       Thi s Note shall be binding upon Maker and Maker's successors and assigns and shall inure to the benefit of Holder and Holder's successors and assigns; and each reference herein to Maker or to Holder 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 Holder's prior written consent.

 

(c)       Any failure by Holder 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 sa me or any other right or remedy.

 

(d)       Maker, and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands' and notices in connection with the delivery , acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or pay ment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their l iability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Maker liable for the payment ofthis Note, AND DO HEREBY WAIVE TRIAL BY J URY.

 

(i)       No delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relat ing hereto, shall operate as a waiver of such rights or any other right of the Holder, nor shall any waiver by the Holder of any such righ t or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

 

(ii)       THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

 

(e)       The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder's right to pursue actual damages for any failure by the Maker to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, the warrants and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Maker (or the performance thereof). The Maker acknowledges that a breach by it of its ob ligations hereunder will cause irreparable and material harm to the Holder and that the remedy at law for any such breach may be inadequate. Therefore the Maker agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available rights and remedies, at l aw or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

  

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(f)       Maker agrees to pay immediately upon request and without any need of any approvals or determinations of any kind all costs and expenses of enforcement of this Note, including, without limitation, attorneys' fees and expenses.

 

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

 

CONFESSED JUDGMENT

 

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR OR GUARANTOR AND ALLOWS THE HOLDER TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

 

Maker, Innolog Holdings Corporation and Innovative Logistics Techniques, Inc., jointly and severally (hereinafter referred to as "Debtor"), promise to pay to the order of Holder the sum of THIRTY-TWO THOUSAND FIVE HUNDRED DOLLARS AND ZERO CENTS ($32,500.00), plus any additional Late Fee(s) plus interest at 18% per annum, compounded daily, from the Maturity Date until paid, including and after the recording of this confession of judgment, plus a all costs of collection, including all attorneys' fees, less credit for any payments made.

 

Debtor hereby appoints the following persons, or any one of them, as the undersigned 's attorney-in-fact for the purpose of confessing judgment in favor of KAY M. GUMBINNER TRUST and Robert Gumbinner and Fred Gumbinner, trustees under a trust agreement dated January 9, 2008 (known as the Kay M. Gumbinner Trust), to wit:

 

Richard A. Golden, of I 0627 Jones Street, # I 0 I B, Fairfax, Virginia 22030

Randall Borden, of I 0627 Jones Street, #20 I A, Fairfax, Virginia 22030.

 

The undersigned 's said attorneys in fact are explicitly authorized, whether a suit, motion or action be pending for the indebtedness or not, to confess judgment in favor of the KAY M. GUMBINNER TRUST and Robert Gumbinner and Fred Gumbinner, trustees under a t rust agreement dated January 9, 2008 (known as the Kay M. Gumbinner Trust), in the amount of $32,500.00, plus all costs and expenses of collection (including attorneys' fees), plus additional Late Fees, plus interest from the date of judgment so confessed at the rate of 18% per annum, compounded monthly, or such lesser amount of principal plus interest as the creditor may be willing to accept.

 

Such confession of judgment may be made in the clerk's office of the circ ui t court in the Commonwealth of Virginia, located at Fairfax, Virginia.

  

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Furthermore, Maker, jointly and severally acknowledge the Holders right to pursue the security and accounts receivable securing this debt and the Confessed Judgment. Debtor hereby expressly waives the benefit of any homestead exemption as to this debt and waives demand, protest, notice of presentment, notice of protest, and notice of non-payment and dishonor of this note. Debtor agrees this confessed judgment note is provided not in payment of, but as additional security for and evidence of obligations due to the Holder under the Note.

 

IN WITNESS WHEREOF, the undersigned represents that he is duly authorized and empowered to enter into this agreement and Maker has caused this Note to be executed as of the day and year first above written by its duly authorized and empowered officer or representative.

 

	  	
MAKER

	  	
 

	  	
Innolog Holdings  Corporation

	  	
Innovative  Logistics  Techniques, Inc.

	  	  
	  	
By:

	/s/ William P. Danielczyk
	  	  	William P. Danielczyk
	  	  	Executive Chairman, Chairman
	  	  	& Authorized Representative
	 	 	For each of the respective entities

 

	
WITNESSED

	
/s/ Judith griffith

	
Name:

	
Judith Griffith

 

  

- 5 -SETTLEMENT AGREEMENT

THIS  SETTLEMENT   AGREEMENT  (the  "Agreement")  is  made  between  the  Kay  M. Gumbinner Trust, a Virginia trust ("Holder") and Innovative Logistics Techniques, Inc. a Virginia corporation and Innolog Holdings Corporation, a Nevada corporation, each with its principal place of business in Virginia (together, "Innolog" or "Maker") (collectively referred to as the "Parties").

RECITALS

A.       Maker has entered  into three Promissory  Notes in February 2011 in favor of Holder (collectively such notes are referred to herein as the "February Notes").

B.       The Parties have entered into three separate extension agreement that extended the Maturity Dates under the February Notes, provided additional compensation to Holder and which have granted Holder various rights beyond the rights contained in the February Notes, specifically that certain Extension and Forbearance Agreement, that certain Second Extension and Forbearance Agreement ("2d Extension"), and that certain Third Extension & Forbearance Agreement dated as of April 11, 2011 ("3rd Extension") (collectively, the "Prior Extensions").

C.        In addition, in connection with the February Notes and the Prior Extensions the Parties entered  into various other agreements,  including without limitation, a Security Agreement  in March

2011 (the "March KMG Security Agreement").

D.       Maker entered into a Secured Promissory Note in favor of Holder in April 2011 (the "April Note"). Collectively, the February Notes and the April Notes are referred to herein as the "Notes".

E.        The February Notes, the Prior Extensions, the March KMG Security Agreement and the April Note, along with any related documents are herein referred to as the "KMG Loan Documents".

F.        Maker acknowledges and agrees that it is in significant breach of the KMG Loan Documents in various respects, including non-payment, missed deadlines and material breaches of various representations, warranties and covenants.

G.        Maker understands, acknowledges and agrees that it could be liable for treble damages based on its breaches, subjecting it to potential liability in excess of $300,000.

H.        The Parties desire to settle the amounts owed and outstanding by Maker to Holder and to modify and amend the KMG Loan Documents as provided herein.

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged  by the Parties, and in further consideration of the covenants and promises, agreements and premises set forth below, the Parties agree as follows:

1.        Binding Effect of Recitals.   The above Recitals are incorporated into this Agreement by reference.   Maker represents  and warrants that the recitals are true and correct in all respects. Capitalized  terms not otherwise defined  herein shall have the meanings provided in the KMG Loan Documents.

 

  

  

  

 

2.       Indebtedness. Maker acknowledges and agrees that Maker is in default under the KMG Loan Documents and that as of May 30, 2011, One Hundred Thirty Thousand Dollars and 00/100 ($130,000) is due and owing to Holder.

3.        Forebearance Fee/Conditions of Forebearance.  In consideration of Holder forebearing to exercise  certain of its rights and agreeing  to a settlement  amount as described  herein, Maker agrees as follows: the following:

a.          Maker shall pay to Holder the sum of One Hundred Thirty-Six Thousand and 001100 Dollars ($136,500), comprised of $130,000 past due and payable plus a five percent (5%) forbearance fee of $6,500 by wire transfer by or before 3:00PM, Monday, June 13, 2011, or earlier pursuant to the receipt of specific accounts receivable under paragraph 3.c. and 3.d. hereof or as othenwise provided herein.

b.          Either, at Maker's election, (a) 50,000 warrants on the same terms and conditions as provided in the Second Extension and Forbearance Agreement between the Parties or (b) an additional 50,000 shares of preferred stock of Innolog Holdings Corporation. Those warrants or stock and the 402,000 shares of preferred stock warrants that were to be delivered under the Prior Extensions shall be delivered to Holder no later than Friday June 9, 2011.

c.          Furthermore,  the  Notes  and  the  obligations  contained   in  the  KMG  Loan  Documents   and hereunder  are further secured  by the following  specific accounts  receivable - (i) 5030:116, ODSLOG, Army,  in the amount of approximately $106,509.01, due and  payable on or before June 9, 2011; and (ii) 5015:001, JECP, SAIC,  in the amount  of approximately  $43,633.49, due and payable on or about 6/6111 (collectively, the "Payment Receivables").  Such  security  is intended  to be in addition  to any security  already  held  by  Holder  or  to  which  Holder  may  be entitled  under any  of  the  KMG  Loan Documents or herein.

d.         Maker shall convey,  wire transfer  and turn over to Holder the Payment Receivables,  including any  proceeds  there from  (up to the amount  outstanding or due and owing  hereunder)  within three (3) business  hours  of  Maker's knowledge  of  its  receipt  of  any  amounts  under,  in connection   with  or pursuant  to the Payment  Receivables.  The proceeds of the Payment Receivables  shall not be used for any other  purpose other than payment of the amounts owed to Holder until such time as Holder is paid in full.

e.          There shall be an additional late fee of ten percent (10%) of the total obligations then outstanding if any of the payments listed above are not made at or before the times required above, and an additional ten percent (10 %) of any amount outstanding (including late fees and interest) each fifteen (15) days thereafter. Furthermore, Maker agrees that if it breaches paragraph 3.d. above it shall be liable to Holder for three times the amount then due and owing to Holder.

4.        Security. By way of clarification and expansion, but in no way a limitation of any of the rights, interest or security of Holder contained in any of the KMG Loan Documents, the security interests and collateral under each of the February Notes, the April Note, the March KMG Security Agreement and the KMG Loan Documents in general and hereunder are for all of the accounts receivable of Innovative Logistics Techniques, Inc. existing or hereafter acquired and any proceeds there from, including the specific Payment Receivables described above. The March KMG Security Agreement is herby amended to include this definition and description of the collateral referenced in paragraph 3.c. herein. Maker hereby authorizes Holder to file a UCC 1 financing statement and any other documents or instruments evidencing such security interest in the collateral.

 

  

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5.        KMG Loan Documents.

a.  This Agreement shall not constitute a novation of any of the KMG Loan Documents and each of the KMG Loan Documents shall remain in full force and effect subject only to Holder's agreement to additional terms and provisions set forth herein. All of the other terms of the KMG Loan Documents shall remain in full force and effect and Holder shall have and maintain all of its rights there under, including having additional Late Fees.

b.  Maker reaffirms all of the Representations and Warranties contained in each of the KMG Loan Documents and restates them as true and accurate as of the date hereof.

c.  Each of the KMG Loan Documents is modified and amended to include that Maker agrees to immediately execute and deliver any and all such further documents, agreements and instruments as may requested by Holder from time to time to carry out the intent of the KMG Loan Documents, including without limitation, the protection, priority and preference of the security for each of the Notes and the collateral described in the March KMG Security Agreement as modified herein, all of the obligations contained in the KMG Loan Documents and herein. Furthermore, Maker specifically agrees that the March KMG Security Agreement shall apply to each of the February Notes and to the April Note and the terms and provisions of the Security Agreement shall be incorporated by reference into each of the Notes as if specifically contained therein (with the modification of the definition of the collateral as provided in paragraph 4 herein).

d.  Any reference to the Company in any of the KMG Loan Documents shall mean Maker, Innovative Logistics Techniques, Inc. and Innolog Holdings Corporation.

6.        Release and Waiver.

a.        Maker hereby acknowledge  and stipulate that they have no claims or causes of action against Holder or any of its Trustees in any capacity of any kind whatsoever, whether arising out of the KMG Loan Documents or out of the negotiation, execution and delivery of this Agreement or any other relationship among any of such parties.   Maker hereby releases Holder and its trustees from any and all claims, causes of action,  demands  and liabilities of any kind  whatsoever whether direct or indirect, fixed or contingent, liquidated or non liquidated, disputed or undisputed, known or unknown, which Maker have or may acquire in the future relating in any way to any event, circumstance, action or failure to act by Holder in connection  with any of the obligations, from its inception through the date of this Agreement.

b.        If Maker satisfies each and every Condition of Forbearance set forth in Paragraph 3 hereof on or before the dates provided herein, Holder shall release Maker from any further liability in connection with the KMG Loan Documents, except for the ongoing indemnification obligation pursuant to Paragraph 10 hereof.

7.        Failure  to Make Settlement  Payments  or  Deliver Stock.   If Maker fails to satisfy each of the Conditions  of Forbearance set forth  in Paragraph 3 hereof, in addition to the rights and remedies provided herein and in the KMG Loan Documents, Holder shall have the right to pursue all of rights and remedies under the KMG Loan Documents.

 

  

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8.        Impairment of Collateral. In addition to the provisions of the March KMG Security Agreement, Maker shall not allow any impairment of the Collateral and shall immediately notify Holder if it has any reasonable reason to believe that the Collateral or Holder's position as a secured thereof, may be impaired or compromised in any way, including if any other creditor threatens to file any confession of judgment or to take any other action whatsoever to directly or indirectly recover on, perfect or seek payment of any claim. Maker and each of its agents (including counsel) are required to make such disclosure to Holder immediately upon becoming aware of such situation. Maker understands and agrees that immediately upon any such event all amounts due and owing hereunder shall automatically and without any further action be immediately due and payable.

9.        No Obligation to Extend Future Forbearances;  No Waiver.   Maker acknowledges and agrees that Holder is not obligated and does not agree to extend any other or future forbearances except as expressly set forth herein. This Agreement shall not constitute a waiver by Holder of any of Maker's defaults under the Loan Documents.  Except as expressly provided herein, Holder reserves all of its rights and remedies under each of the KMG Loan Documents.  No action or course of dealing on the part of Holder, its trustees, officers, employees, consultants, or agents, nor any failure or delay by Holder with respect to exercising any right, power or privilege of Holder under any Note, any other KMG  Loan Document, or  this  Agreement, shall operate  as  a waiver thereof,  except  to the extent expressly provided herein.

10.      Indemnification. In consideration of the forbearance and this settlement by Holder, Maker hereby indemnifies, exonerates and holds Holder and each of its Trustees (collectively, the "Indemnified Parties") free and harmless from and against any and all actions, causes of action, suits, losses (including potential, threatened or actual losses of the benefit of the bargain under any of the KMG Loan Documents or this Agreement, including repayment of principal and all interest, fees, expenses and settlement amounts, including any "claw back" or similar concept or action of or for any amounts by any trustee or debtor in possession or other creditor in any actual or threatened bankruptcy proceeding.), costs, liabilities and damages, and expenses incurred in connection with any of the KMG Loan Documents and this Agreement (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"), incurred or to be incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to the KMG Loan Documents and this Agreement and the transactions contemplated therein and herein and any claim, threat, proceeding or action by any third part or any creditor or claimant of Maker or any trustee in bankruptcy or Debtor in possession, and if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Maker hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Furthermore, Maker shall pay all fees and expenses (including legal, accountant, tax or other advisory fees) on a current basis as incurred (i.e., Maker shall pay any legal and any accounting or tax fee retainer or other expenses up front without the need to Holder to make payment and then seek reimbursement from Maker) and payment of any losses of any principal, interest or fees received by Holder pursuant to the KMG Loan Documents or this Agreement. The intent of this indemnification provision is to ensure that Holder and its Trustees are made whole (i.e., receive the full benefit of their bargain) and do not incur or have to carry any expenses or exposure of any kind.

The indemnification and expense reimbursement/payment  and current payment obligations of Maker under this Agreement shall in each case survive the payment in full of this settlement, the Notes and any of the KMG Loan Documents.

11.      Authority to Execute Agreement/Signatures.  The Parties warrant that they are fully empowered and authorized to execute  this Agreement and that the person signing on behalf of each party  is fully authorized  to  do so.    The  Boards of  Directors of each of  Maker are aware  of  this Settlement  Agreement and have authorized and approved its execution and delivery by Maker.  The Parties warrant and represent that there are no additional entities or persons affiliated with any of the parties hereto who are necessary to effectuate this Agreement.

 

  

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12.      Further Assurances. Maker agrees to immediately execute and deliver such other documents, instruments and agreements as may be requested from time to time by Holder or its counsel to carry out and effectuate the intent of this Agreement and to protect Holder's interest in the collateral to the fullest extent allowed by law, irrespective of the interests of any other party, including those affiliated with Maker.

13.      Miscellaneous. This Agreement may be executed in two or more identical counterparts, all of which constitute one and the same Agreement.  Facsimile and electronic signatures will have the same force and effect as originals.

CONFESSED JUDGMENT

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE HOLDER TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

Maker, Innolog Holdings Corporation and Innovative Logistics Techniques, Inc., jointly and severally (hereinafter referred to as "Debtor"),  promise to pay to the order of Holder the sum of ONE HUNDRED  THIRTY-SIX  THOUSAND  FIVE DOLLARS  AND ZERO CENTS ($136,500.00), plus a Late Fee of THIRTEEN THOUSAND SIX HUNDRD FIFTY Dollars and 00/100 cents ($13,650.00);  plus additional  late fees and interest at 18% per annum, compounded daily, from the May 20, 2011, until paid, including  and after the recording of this confession of judgment, plus all costs of collection, including all attorneys' fees, less credit for any payments made (and common stock received from the Warrants).

Debtor  hereby  appoints  the  following  persons,  or  any one  of  them, as  the  undersigned's attorney-in-fact  for the purpose of confessing judgment in favor of KAY M. GUMBINNER TRUST and Robert Gumbinner and Fred Gumbinner, trustees under a trust agreement dated January 9, 2008 (known as the Kay M. Gumbinner Trust), to wit:

Richard A. Golden, of 10627 Jones Street, #101B, Fairfax, Virginia 22030

Randall Borden, of 10627 Jones Street, #20 I A, Fairfax, Virginia 22030.

The undersigned's said attorneys in fact are explicitly authorized, whether a suit, motion or action be pending for the indebtedness or not, to confess judgment in favor of the KAY M. GUMBINNER TRUST and Robert Gumbinner and Fred Gumbinner, trustees under a trust agreement dated January 9, 2008 (known as the Kay M. Gumbinner Trust), in the amount of $136,500.00, plus all costs and expenses of collection (including attorneys' fees), plus additional later fees of ten percent (10%) each fifteen (15) days, starting from June 13, 2011, and interest from the earlier of June 13, 2011 and date of judgment so confessed at the rate of 18% per annum, compounded daily, or such lesser amount of principal plus interest as the creditor may be willing to accept.

Such  confession of  judgment  may  be made in the clerk's  office of the circuit  court  in the Commonwealth of Virginia, located at Fairfax, Virginia.

 

  

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Furthermore, Maker, jointly and severally acknowledge the Holders right to pursue the security and accounts receivable securing the Obligations and the Confessed Judgment. Debtor hereby expressly waives the benefit of any homestead exemption as to this debt and waives demand, protest, notice of presentment, notice of protest, and notice of non-payment and dishonor of this note.

Debtor agrees this confessed judgment note is provided not in payment of, but as additional security for and evidence of obligations due to the Holder under the Loan Documents and this Agreement.

IN WITNESS WHEREOF, the Holder and Maker have executed  this Agreement as of the date set forth below.

	 	INNOVATIVE LOGISTICS TECHNIQUES,
	
KAY M. GUMBINNER TRUST, Trustee

	
INC.

	
or its Duly Authorized and Empowered

	  
	
Representative or Attorney in Fact

	  
	  	By: 	
/s/ William P. Danielczyk,

	  	  
	  	
William P. Danielczyk, Chairman &/or Executive

	
By: /s/ Robert Gumbinner,

	
Chairman

	  	  
	
Robert Gumbinner,

	
Dated as of: May 31, 20II

	
Trustee

	  
	  	  
	  	
INNOLOG HOLDINGS CORPORATION

	  	  
	
Dated as of: May 3I , 20 II

	  
	  	  
	  	By: 	
/s/ William P. Danielczyk,

	  	  
	  	
William P. Danielczyk, Chairman & Executive

	  	
Chairman

	  	
Dated as of: May 3 I, 20 II

  

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