PROMISSORY NOTE
PROMISSORY NOTE
| US$10,000.00 (Principal Amount) | January 28, 2013 |
FOR VALUE RECEIVED, the undersigned, Innolog Holdings Corporation (“IHC”) and Innovative Logistics Techniques, Inc. (“Innolog”) (together the “Maker”), and Xxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxxx as Guarantors (“Guarantors”), each jointly and severally promise to pay to the Xxxxxx X. Xxxxxxxxxx (“Holder”), at such place as Holder may later designate in writing, in lawful money of the United States, the principal sum of TEN THOUSAND US DOLLARS ($10,000.00) (“Principal Amount”) in accordance with this promissory note (the “Note”) under the terms set forth herein. Holder may offset any prior amounts owed in providing the Principal Amount. All of the obligations directly or indirectly due to Holder hereunder and in connection with the transactions contemplated hereby and all obligations owed to affiliates of Holder in connection with this or any other loan (including guarantees), including without limitation principal, interest, fees, past due fees, settlement amounts, purchase prices, payments under any guarantee, costs and expenses, are collectively referred to as the “Obligations.”
Maker represents, warrants and covenants that the net proceeds of this loan shall be used solely to pay the payroll, including payroll taxes for the employees of Maker which are currently due and payable.
| 1. | Repayments & Special Terms |
Principal and interest under this Note is due and payable on the earlier of (a) 1:00 PM EST on the business day following the receipt of any of the account receivables described in Section 6 hereof and (b) 5:00 PM EDST February 12, 2013 (“Maturity Date”).
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 interest and Xxx and other amounts described hereunder. Each payment shall be applied first to the principal balance due.
TIME IS OF THE ESSENCE on the repayment of this Note. There is no grace period on the repayment and payment of the amounts due hereunder.
| 2. | Interest/Fee/Additional Compensation |
(a) Maker shall pay to Holder a flat fee of seven percent (7%) or Seven Hundred Dollars ($700), which amount is deemed to be earned immediately but shall be due and payable on the Maturity Date.
(b) In addition, Maker shall issue to Holder or Holder’s designee 10,000 Warrants, convertible into common stock of Innolog Holdings Corporation, a Nevada corporation (“IHC”), at an exercise price of $0.01 per share for five years from the date hereof, with such other terms that are substantially the same as other similar warrants. Maker agrees that such warrants are of uncertain value.
(c) In addition, Maker shall reimburse Holder for expenses incurred in connection with this Note, including a wire transfer fee of $25.
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| 3. | Late Fee and Default Interest |
As noted above, time is of the essence on the repayment of this Note. If this Note is not paid in full on or before the Maturity Date, there shall be a late fee of one thousand dollars ($1,000). There shall accrue additional Late Fees of 10% of the total outstanding amounts owed hereunder (principal, plus interest, plus late fees) every ten (10) calendar days until repaid in full. In addition to the Late Fee(s), 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 or accrued hereunder and the Late Fee(s).
| 4. | Additional Representations, Warranties and Understandings |
The Board of Directors of Innolog and IHC and Xx. Xxxxx Xxxxxxxx, the majority shareholder and senior creditor of Maker are aware of and have approved this Note. They recognize and agree that:
i. The timely repayment of this Loan will be made come hell or high water as a priority for the Company.
ii. The proceeds of the Collateral will immediately be used to repay the Note, plus the Interest/Fees under this Note.
iii. If there is a default under this Note, any other amounts owed by Maker or its affiliates to Holder or any of its affiliates shall be immediately due and payable.
| 5. | Events of Default |
The following shall constitute Events of Default hereunder:
(a) If Maker or Guarantor defaults in the payment of any amount due on this 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) If Maker uses any accounts receivables or other moneys that come into the company other than for payment of amounts due to governmental agencies, normal operating expenses and regular current accounts payables before all amounts due under this Note are repaid in full; and
(c) If Maker directly or indirectly redirects any of the Collateral or proceeds of the Collateral without first paying all of the amounts due hereunder; and
(d) If Maker or Guarantor 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; and
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(e) If any confession of judgment is filed or threatened to be imminently filed against IHC, Innolog or Guarantor; and
(f) If any lien or levy is imposed on IHC, Innolog or Guarantor; and
(g) If any representation or warranty of Maker is untrue or any covenant of Maker is breached.
| 6. | Remedies |
(a) Upon the occurrence of an Event of Default, Holder may, in Xxxxxx's sole and absolute discretion and without notice or demand to Maker or to any Guarantor, accelerate the due date of any amounts owed hereunder and 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 and Guarantors.
(b) If an Event of Default shall occur, the Maker and Guarantors shall jointly and severally immediately 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, accountants and tax advisor’s fees and the amounts described above.
(c) Maker and Guarantors understand, acknowledge and agree, that upon an Event of Default, Holder shall immediately file the confession of Judgments against each of IHC, Innolog and Guarantors under this Note and the Guaranty.
(d) Holder may immediately file and send to the appropriate authorities the Letter from Maker and any other documents or instruments directing that all payments under the two Navy Contracts listed below be sent directly to the account designated by Holder until such time as Xxxxxx states in writing that all of the Obligations and all amounts owed hereunder are paid in full. Maker shall immediately execute and deliver to Holder such letters and documents and take whatever actions requested by Xxxxxx to effectuate the above, including, without limitation changing the bank account information in any government payment system to direct all accounts receivable payments to go to such account as directed by Xxxxxx until the Obligations are paid in full.
| 7. | Security |
Maker hereby grants to Holder a security interest in the following accounts receivable of Maker or Innolog as listed below:
1. N0017311F0438 NRL-EWS Contract Name: Navy; (January and February Billing Amount each approximately $70,000), and if this Note is not repaid in full with such proceeds any and all future xxxxxxxx thereunder, referred to by Maker as the “Little Navy” A/R, and
2. N0017-08-C-20423 3018 ODCSLOG Contract Name: Navy; (January and February Billing Amount, each for approximately $200,000), and if this Note is not repaid in full with such proceeds any and all future xxxxxxxx thereunder, referred to by Maker as the “Big Navy” A/R,
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each, as may be more fully described in an Attachment A if any, and the proceeds therefrom from time to time (the “Collateral”). If for any reason such Collateral is compromised or becomes unavailable to Holder, then future accounts receivable under such above-referenced contracts shall immediately and automatically be assigned to Holder and such additional accounts receivable shall be deemed part of the Collateral.
Maker shall (within 2 business of request of Holder) execute and immediately deliver (a) such documents and instruments as Holder may request from time to time to secure, evidence and perfect Holder's security interest and priority in the Collateral; and (b) such documents and instruments and take such actions as Holder may request from time to time to mandate that the US Navy direct and make any and all future payments to the Holder at such account as designated by Holder, until such time as this Note and all of the Obligations are paid in full; and (c) such powers of attorney as may be requested by Xxxxxx in order for Holder to act upon and receive direct payment of the Collateral from the US Navy or any governmental agency related thereto.
In addition, this Note and the Obligations, including the full and prompt payment of and the performance of this Note and the commitments hereunder and a backstop of any clawback, preference or alleged preference of the payments made hereunder to Holder by any court, trustee or governmental body of any kind are directly, unconditionally and irrevocably guaranteed by the Guarantors pursuant to a Guaranty and Indemnity Agreement with Guarantors of even date herewith (the “Guaranty”). In addition to the Guaranty, all of the Obligations are secured by the accounts receivable of Maker; provided, however that the holder may not file any instruments perfecting such security interest until after the Maturity Date. Upon request by the Holder, Maker shall immediately execute and deliver such security interests, UCC-I and other filing statements or other documents or interests requested by Xxxxxx in order to perfect the above-referenced security interests and the direct payment of existing or future accounts receivables to Holder.
| 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 and Guarantors (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court sitting in the Northern District 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 this Note and (ii) hereby waive, and agree 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 suit, action or proceeding is improper.
(b) This Note shall be binding upon Maker and Maker's successors and assigns and shall inure to the benefit of Holder and Xxxxxx'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. This Note shall be binding upon Guarantors and Guarantors' heirs, successors and assigns and shall inure to the benefit of Holder and Xxxxxx's successors and assigns; and each reference herein to Guarantors, except where the context shall otherwise require, be deemed to include its heirs, successors and assigns. Notwithstanding the foregoing, neither Maker nor Guarantors shall have any right to assign his obligations hereunder without Xxxxxx's prior written consent.
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(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 same or any other right or remedy.
(d) Maker and Guarantors, 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 payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability 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 or Guarantors liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.
(i) No delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relating 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 right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.
(ii) THE MAKER AND GUARANTOR ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVE ITS RESPECIVE 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 or Guarantors 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 Guarantors (or the performance thereof). The Maker and the Guarantors acknowl-edge that a breach by it of its obligations 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 and Guarantors each agree 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 law 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.
(f) Maker and Guarantors shall pay all costs and expenses associated with this Note, the loan and the transactions contemplated hereby and hereunder.
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(g) Maker and Guarantors agree 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.
(h) Maker and Guarantors shall immediately upon request execute and deliver such other documents, agreements and instruments as requested by Xxxxxx to carry out the intent of this Note and related documents and to protect and perfect Holder’s interests in any collateral or otherwise.
(i) 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.
(j) Maker acknowledges the position of Xxxx Xxxxxxxxx as a significant other of Holder, and as a consultant and legal counsel for Maker. Maker acknowledges that Xxxx Xxxxxxxxx’x role, business representation and legal representation in this transaction is for and on behalf of Xxxxxx and specifically now and forever with full and complete knowledge, corporate authority and consent, waives any conflict of interest by or potential conflict of interest of Xxxx Xxxxxxxxx and hereby indemnifies and holds him harmless against any losses, claims or other actions of any kind.
(j) Maker and Guarantors understand, acknowledge and agree that the occurrence of an Event of Default hereunder shall cause acceleration of not only this Note and the Obligations hereunder, but also acceleration of ANY OTHER OBLIGATIONS OWED TO PAYEE; AND THAT THERE ARE SIGNIFICANT LATE FEES HEREUNDER.
CONFESSED JUDGMENT
IMPORTANT NOTICE:
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., and Guarantors, jointly and severally (all three collectively hereinafter referred to as “Debtor”), promise to pay to the order of Holder the sum of TWELVE THOUSAND DOLLARS AND ZERO CENTS ($12,000.00), plus any additional Late Fee(s), plus interest on the entire outstanding Obligations at 18% per annum, compounded daily, from the Maturity Date until paid, including and after the recording of this confession of judgment, plus all costs of collection, including all attorneys’ fees, and accounting 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 Xxxxxx X. Xxxxxxxxxx, to wit:
Xxxxxxx X. Xxxxxx, of 00000 Xxxxx Xxxxxx, #000X, Xxxxxxx, Xxxxxxxx 00000
Xxxxxxx Xxxxxx, of 00000 Xxxxx Xxxxxx, #000X, Xxxxxxx, Xxxxxxxx 00000.
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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 Xxxxxx X. Xxxxxxxxxx, in the amount of $12,000.00, 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 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 in Fairfax, Virginia (the Circuit Court of Fairfax County).
Furthermore, Maker and Guarantors, jointly and severally acknowledge the Holders right to pursue the guarantee, the Collateral, the security and the 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. Xxxxxx 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.
[Signature Page on Following Page]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, each represent and warrant 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(s) or representative(s).
| MAKER | |||
| Innolog Holdings Corporation | |||
| By: | |||
| Xxxxxxx X. Xxxxxxxxxx | |||
| Executive Chairman, Chairman | |||
| & Authorized Representative | |||
| Innovative Logistics Techniques, Inc. | |||
| By: | |||
| Xxxxxxx Xxxxxxx | |||
| President | |||
| & Authorized Representative | |||
WITNESSED
____________________________
Name: _____________________
THIS NOTE IS ENDORSED BY GUARANTOR AS IF
GUARANTOR WAS THE MAKER HEROF
| Xxxxxxx X. Xxxxxxxxx | |
| Xxxxxxx X. Xxxxxxxxxx |
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