THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE STATE AND FOREIGN SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Warrant No.  [____] May 21, 2012

 

WARRANT TO PURCHASE SHARES OF COMMON STOCK

 

OF

 

INNOLOG HOLDINGS CORPORATION

 

THIS CERTIFIES that, for value received, Glen Hill Investments LLC or its
assigns is entitled to purchase from INNOLOG HOLDINGS CORPORATION, a Nevada
corporation (the “Corporation”), subject to the terms and conditions hereof,
8,750,000 shares (the “Warrant Shares”) of common stock of the Company, $0.001
par value (the “Common Stock”). This warrant, together with all warrants
hereafter issued in exchange or substitution for this warrant is referred to as
the “Warrant” and the holder of this Warrant is referred to as the “Holder.” The
number of Warrant Shares is subject to adjustment as hereinafter provided.
Notwithstanding anything to the contrary contained herein, this Warrant shall
expire at 5:00 pm Eastern Time on May 31, 2017, (the “Warrant Termination
Date”).

 

This Warrant is being issued in connection with the purchase by the initial
Holder of this Warrant of a convertible promissory note of the Company dated as
of the date hereof in the original principal amount of $1,750,000 (the "Note")
pursuant to the Note Purchase Agreement dated as of May 31, 2012 (the "Note
Purchase Agreement") by and among the Company, the initial Holder and the other
persons named therein.

 

1.  Exercise of Warrant.

 

(a)          The Holder may, at any time prior to the Warrant Termination Date
exercise this Warrant in whole or in part. The exercise price shall be at a
price per share equal to $0.069 (“Exercise Price”). This Holder may exercise
this Warrant by (1) surrendering this Warrant (properly endorsed) at the
principal office of the Corporation, or at such other agency or office of the
Corporation in the United States of America as the Corporation may designate,
(2) providing written notice stating the Holder elects to exercise the Warrant
and specifying the number of Warrants being exercised and the name or names in
which the Holder wishes the Certificate for shares of Common Stock to be issued,
and (3) paying to the Corporation the Exercise Price in lawful money of the
United States by check or wire transfer for each share of Common Stock being
purchased. Upon any partial exercise of this Warrant, there shall be executed
and issued to the Holder a new Warrant in respect of the shares of Common Stock
as to which this Warrant shall not have been exercised. In the event of the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, as applicable, registered in
the name of the Holder, shall be delivered to the Holder hereof as soon as
practicable after the rights represented by this Warrant shall have been so
exercised.

  

 

 

 

(b)          In lieu of exercising this Warrant pursuant to Section 1(a), if the
fair market value of one share of Common Stock is greater than the Exercise
Price (at the date of calculation as set forth below), the Holder may elect to
receive a number of Warrant Shares equal to the value of this Warrant (or of any
portion of this Warrant being canceled) by surrender of this Warrant at the
principal office of the Company (or such other office or agency as the Company
may designate) together with a properly completed and executed Notice of
Exercise reflecting such election, in which event the Company shall issue to the
Holder that number of Shares computed using the following formula:

 

X = Y (A – B) A

 

Where:

 

  X = The number of shares of Common Stock to be issued to the Holder          
Y = The number of shares of Common Stock purchasable under this Warrant or, if
only a portion of the Warrant is being exercised, the portion of the Warrant
being canceled (at the date of such calculation)           A = The fair market
value of one share of Common Stock (at the date of such calculation)           B
= The Exercise Price (as adjusted to the date of such calculation)

 

For purposes of the calculation above, the fair market value of one Share shall
be determined by the Board of Directors of the Company, acting in good faith;
provided, however, that where a public market exists for the Company’s Common
Stock at the time of such exercise, the fair market value per share of Common
Stock shall be the average market closing price for the Company’s Common Stock
as determined for the thirty-day period ending two business days prior to the
date of determination of fair market value.

 

2. Reservation of Warrant Shares. The Corporation agrees that, prior to the
expiration of this Warrant, it will at all times have authorized and in reserve,
and will keep available, solely for issuance or delivery upon the exercise of
this Warrant, the number of Warrant Shares as from time to time shall be
issuable by the Corporation upon the exercise of this Warrant.

 

3. No Stockholder Rights. Prior to the exercise of this Warrant, Holder shall
not have any voting rights or other rights as a stockholder of the Corporation
with respect to the Warrant Shares.

 

4. Transferability of Warrant. Prior to the Warrant Termination Date and subject
to compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Corporation by
the Holder in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed for
transfer. Any registration rights to which this Warrant may then be subject
shall be transferred together with the Warrant to the subsequent purchaser.
PLEASE NOTE, HOWEVER, the Warrants and any shares of our Common Stock will be
subject to certain restrictions on transferability and may not be resold or
otherwise transferred except pursuant to registrations under or exemptions from
the registration requirements of the Securities Act and applicable state and
foreign securities laws.

 

2

 

 

5. Certain Adjustments. With respect to any rights that Holder has to exercise
this Warrant and convert into shares of Common Stock, Holder shall be entitled
to the following adjustments:

 

(a)          Merger, Consolidation or Reorganization. If at any time there shall
be a merger, consolidation or reorganization of the Corporation with or into
another corporation when the Corporation is not the surviving corporation, then,
as part of such merger, consolidation or reorganization, lawful provision shall
be made so that the holder hereof shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and upon payment of
the aggregate Exercise Price then in effect, the number of shares of stock or
other securities or property (including cash) of the successor corporation
resulting from such merger, consolidation or reorganization, to which the holder
hereof as the holder of the stock deliverable upon exercise of this Warrant
would have been entitled in such merger, consolidation or reorganization if this
Warrant had been exercised immediately before such merger, consolidation or
reorganization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the holder hereof as the holder of this Warrant after the merger,
consolidation or reorganization.

 

(b)          Reclassification, Recapitalization, etc. If the Corporation at any
time shall, by subdivision, combination or reclassification of securities,
recapitalization, automatic conversion, or other similar event affecting the
number or character of outstanding shares of Common Stock, or otherwise, change
any of the securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the holder hereof as the holder of this Warrant after the merger,
consolidation or reorganization.

 

(c)          Split or Combination of Common Stock and Stock Dividend. In case
the Corporation shall at any time subdivide, recapitalize, split forward or
change its outstanding shares of Common Stock into a greater number of shares or
declare a dividend upon its Common Stock payable solely in shares of Common
Stock, the Exercise Price shall be proportionately reduced and the number of
Warrant Shares proportionately increased. Conversely, in case the outstanding
shares of Common Stock of the Corporation shall be combined or reverse split
into a smaller number of shares, the Exercise Price shall be proportionately
increased and the number of Warrant Shares proportionately reduced.

 

(d)          Notice of Adjustments. Upon any adjustment in accordance with this
Section 5, the Company shall give notice thereof to the Holder, which notice
shall state the event giving rise to the adjustment, the Exercise Price as
adjusted and the number of securities or other property purchasable upon the
exercise of the rights under this Warrant, setting forth in reasonable detail
the method of calculation of each. The Company shall, upon the written request
of any Holder, furnish or cause to be furnished to such Holder a certificate
setting forth (i) such adjustments, (ii) the Exercise Price at the time in
effect and (iii) the number of securities and the amount, if any, of other
property that at the time would be received upon exercise of this Warrant.

 

3

 

 

6. Legend and Stop Transfer Orders. Unless the Warrant Shares have been
registered under the Securities Act, and then in that case subject to the
Holders’ compliance with the prospectus delivery requirements of Section 5 of
the Securities Act, upon exercise of any part of the Warrant, the Corporation
shall instruct its transfer agent to enter stop transfer orders with respect to
such Warrant Shares, and all certificates or instruments representing the
Warrant Shares shall bear on the face thereof substantially the following
legend:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE STATE OR FOREIGN SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

7. Miscellaneous. This Warrant shall be governed by and construed in accordance
with the laws of the State of Nevada. All the covenants and provisions of this
Warrant by or for the benefit of the Corporation shall bind and inure to the
benefit of its successors and assigns hereunder. Nothing in this Warrant shall
be construed to give to any person or corporation other than the Corporation and
the holder of this Warrant any legal or equitable right, remedy or claim under
this Warrant. This Warrant shall be for the sole and exclusive benefit of the
Corporation and the holder of this Warrant. The section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation hereof. Upon receipt of customary and reasonable indemnity and
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Warrant, and of indemnity reasonably satisfactory to the
Corporation, if lost, stolen or destroyed, and upon surrender and cancellation
of this Warrant, if mutilated, the Corporation shall execute and deliver to the
Holder a new Warrant of like date, tenor and denomination. No fractional shares
or scrip representing fractional shares shall be issued upon the exercise of
this Warrant, but in lieu of such fractional shares the Company shall make a
cash payment for such fractional shares on the basis of the Exercise Price then
in effect. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase the Warrant Shares, and no mere enumeration in this
Warrant of the rights or privileges of the Holder, shall give rise to any
liability of such Holder for the Exercise Price, whether such liability is
asserted by the Company or by creditors of the Company.

*****

 

[Signature Page Follows]

 

4

 

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officer as of the date first written above.

 

  INNOLOG HOLDINGS CORPORATION       By: /s/ William P. Danielczyk    Name:
William P. Danielczyk   Title: Executive Chairman

 

5

 

  

WARRANT EXERCISE FORM

 

To Be Executed by the Holder in Order to Exercise Warrant

 

To: INNOLOG HOLDINGS CORPORATION   Dated:_________________________   4000 Legato
Road, Suite 830   Fairfax, VA 22033

 

The undersigned, pursuant to the provisions set forth in the attached Warrant
No. ______, hereby irrevocably elects to purchase (check applicable box):

 

¨____________ Shares of the Common Stock of INNOLOG HOLDINGS CORPORATION covered
by such Warrant; or

 

¨The maximum number of shares of Common Stock covered by such Warrant.

 

The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant. Such payment takes
the form of (check applicable box or boxes):

 

¨$__________ in lawful money of the United States

 

¨Net exercise pursuant to Section 1(b) of the Warrant

 

The undersigned hereby requests that certificates for the Warrant Shares
purchased hereby be issued in the name of:

 

            (please print or type name and address)           (please insert
social security or other identifying number)       and be delivered as follows:
                  (please print or type name and address)           (please
insert social security or other identifying number)  

 

and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant for the balance of
such shares be registered in the name of, and delivered to, Holder.

 

      Signature of Holder

 

6

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form. Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

 

  whose address is                

 

  Dated: _________________________ , _______

 

  Holder's Signature:           Holder's Address:              

 

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust corporation.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

 

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