SETTLEMENT AGREEMENT

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").

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.

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.

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.

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.

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.

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:

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.