CHINA AGRI-BUSINESS INC. FORM OF SERIES C COMMON STOCK PURCHASE WARRANT
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO CHINA AGRI-BUSINESS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
No.
C-
Issue
Date: _____, 2008
CHINA
AGRI-BUSINESS INC.
FORM
OF SERIES C COMMON STOCK PURCHASE WARRANT
FOR
VALUE
RECEIVED, ____________________ (“Holder”),
is
entitled to purchase, subject to the provisions of this Warrant, from China
Agri-Business, Inc., a Maryland corporation (“Company”),
at an
exercise price per share equal to $1.50 (the exercise price in effect being
herein called the “Exercise
Price”),
up to
25,000 shares (“Warrant
Shares”)
of the
Company’s Common Stock, par value $0.001 per share (“Common
Stock”)
and
one series D warrant (the “Series
D Warrants”).
The
number of Warrant Shares and Series D Warrants purchasable upon exercise
of this
Warrant and the Exercise Price shall be subject to adjustment from time to
time
as described herein.
This
Warrant is being issued pursuant to the Private Placement Memorandum, dated
September 8, 2008 (the “PPM”),
among
the Company and the initial holders of the Company Warrants (as defined below).
Capitalized terms used herein have the respective meanings ascribed thereto
in
the PPM unless otherwise defined herein.
Section
1. Term.
The
term of this Warrant shall commence on the issue date indicated above and
shall
expire on the third anniversary thereof (the “Expiration
Date”)
(such
period being the "Term"), unless terminated earlier under Section 5
below.
Section
2. Registration
and Transfers.
The
Company shall maintain books for the transfer and registration of the Warrant.
Upon the initial issuance of this Warrant, the Company shall issue and register
the Warrant in the name of the Holder. Subject to the restrictions set forth
in
Section 12, the Company shall transfer this Warrant from time to time upon
the
books to be maintained by the Company for that purpose, upon surrender hereof
for transfer, properly endorsed or accompanied by appropriate instructions
for
transfer and such other documents as may be reasonably required by the Company,
including, if required by the Company, an opinion of its counsel to the effect
that such transfer is exempt from the registration requirements of the
Securities Act, to establish that such transfer is being made in accordance
with
the terms hereof, and a new Warrant shall be issued to the transferee and
the
surrendered Warrant shall be canceled by the Company.
Section
3. Exercise
of Warrant.
(a) Method
of Exercise.
Subject
to the provisions hereof, the Holder may exercise this Warrant, in whole
or in
part, at any time prior to its expiration upon surrender of the Warrant,
together with delivery of a duly executed Warrant exercise form, in the form
attached hereto as Appendix
A
(the
“Exercise
Agreement”)
and
payment by cash, certified check or wire transfer of funds of
the
aggregate Exercise Price for that number of Warrant Shares and Series D Warrant
then being purchased, to the Company during normal business hours on any
business day at the Company’s principal executive offices (or such other office
or agency of the Company as it may designate by notice to the Holder).
(b) Series
D Warrant.
The
Series D Warrant issuable upon exercise of this Warrant shall entitle the
holder
to purchase shares of Common Stock in an amount equal to the number of Warrant
Shares purchased pursuant to this Warrant at an exercise price per share
equal
to $2.00. The Series D Warrant shall otherwise be of like tenor to this Warrant
and shall be substantially in the form attached hereto as Exhibit
A.
(c) Issuance
of Certificates.
Certificates for the Warrant Shares and Series D Warrant so purchased shall
be
delivered to the Holder within a reasonable time, not exceeding ten (10)
business days, after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the Holder
and shall be registered in the name of the Holder or such other name as shall
be
designated by the Holder, as specified in the Exercise Agreement. If this
Warrant shall have been exercised only in part, then, unless this Warrant
has
expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Holder a new Warrant representing the right
to
purchase the number of shares with respect to which this Warrant shall not
then
have been exercised. As used herein, “business day” means a day, other than a
Saturday or Sunday, on which banks in New York City are open for the general
transaction of business. Each exercise hereof shall constitute the
re-affirmation by the Holder that the representations and warranties contained
in the Subscription Agreement are true and correct in all material respects
with
respect to the Holder as of the time of such exercise. Upon partial exercise
of
this Warrant, a new Warrant containing the same date and provisions of this
Warrant shall, at the request of the Holder, be issued by the Company to
the
Holder for the remaining portion of this Warrant which shall not have been
exercised.
Section
4. Ownership
Limitation.
Notwithstanding anything to the contrary set forth herein, at no time may
the
Holder exercise all or a portion of this Warrant if the number of Warrant
Shares
to be issued pursuant to such exercise would result in the Holder beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act
and
the rules thereunder) more than 9.99% of all of the Common Stock outstanding
at
such time. Notwithstanding anything to the contrary contained herein, the
limitation on exercise of this Warrant may be waived by written agreement
between the Holder and the Company; provided,
however,
such
waiver may not be effective less than sixty-one (61) days from the date
thereof.
Section
5. Call
Provision.
Upon
completion of a subsequent financing by the Company for gross proceeds of
not
less than seven million five hundred thousand dollars ($7,500,000), the Company
may, at any time during the Term, call for the termination of all or any
unexercised portion of this Warrant ("Call"). To exercise this right, the
Company must deliver to the Holder, registered on the books of the Company,
a
written notice (a "Call Notice") indicating that this Company is making a
Call
and that all Holders have thirty (30) days to exercise any unexercised portion
of their Warrants. If the conditions set forth above for such Call are satisfied
from the period from the date of the Call Notice through and including the
Call
Date (as defined below), then any portion of this Warrant subject to such
Call
Notice for which a notice of exercise shall not have been received by the
Call
Date will be cancelled at 6:30 p.m. (New York City time) on the thirtieth
calendar day after the date of the Call Notice (the "Call Date").
Section
6. Payment
of Taxes.
The
Company shall not be required to pay any tax or taxes which may be payable
in
respect of any transfer involved in the issuance or delivery of any certificates
for Warrant Shares in a name other than that of the Holder in respect of
which
such shares are issued, and in such case, the Company shall not be required
to
issue or deliver any certificate for Warrant Shares or any Warrant until
the
person requesting the same has paid to the Company the amount of such tax
or has
established to the Company’s reasonable satisfaction that such tax has been
paid. The Holder shall be responsible for income taxes due under federal,
state
or other law, if any such tax is due.
Section
7. Mutilated
or Missing Warrants.
In case
this Warrant shall be mutilated, lost, stolen, or destroyed, the Company
shall
issue in exchange and substitution of and upon surrender and cancellation
of the
mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
or destroyed, a new Warrant of like tenor and for the purchase of a like
number
of Warrant Shares, but only upon receipt of evidence reasonably satisfactory
to
the Company of such loss, theft or destruction of the Warrant, and with respect
to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with
respect thereto, if requested by the Company.
Section
8. Reservation
of Common Stock.
The
Company shall at all times reserve and keep available out of its authorized
but
unissued shares of Common Stock, solely for the purpose of providing for
the
exercise of the Company Warrants, such number of shares of Common Stock as
shall
from time to time equal the number of shares sufficient to permit the exercise
of the Company Warrants (as defined below) in accordance with their respective
terms. The Company agrees that all Warrant Shares issued upon due exercise
of
the Warrant shall be, at the time of delivery of the certificates for such
Warrant Shares, duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock of the Company.
Section
9. Adjustments.
Subject
and pursuant to the provisions of this Section, the Exercise Price and number
of
Warrant Shares subject to this Warrant shall be subject to adjustment from
time
to time as set forth hereinafter.
(a) Reorganization,
Consolidation, Merger, etc.
In case at any time or from time to time, the Company shall effect any merger,
reorganization, restructuring, reverse stock split, consolidation, sale of
all
or substantially all of the Company’s assets or any similar transaction or
related transactions (each such transaction, a “Fundamental
Change”),
then,
in each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder
of
this Warrant, on the exercise hereof, at any time after the consummation
of such
Fundamental Change, shall receive, in lieu of the Warrant Shares issuable
on
such exercise prior to such consummation or such effective date, the stock
and
other securities and property (including cash) to which such Holder would
have
been entitled upon such consummation of a Fundamental Change if such Holder
had
so exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided herein.
If
the
Company at any time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any class or classes
that may be issued or outstanding, this Warrant, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be deemed
to
evidence the right to purchase an adjusted number of such securities and
kind of
securities as would have been issuable as the result of such change with
respect
to the Common Stock immediately prior to such reclassification or other
change.
(b) Dissolution.
In the event of any dissolution of the Company following the transfer of
all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock
and
other securities and property (including cash, where applicable) receivable
by
the Holder of this Warrant after the effective date of such dissolution pursuant
to this Section to a bank or trust company (a “Trustee”)
as
trustee for the Holder of this Warrant.
(c) Continuation
of Terms.
Upon any Fundamental Change or transfer (and any dissolution following any
transfer) referred to in this Section, this Warrant shall continue in full
force
and effect and the terms hereof shall be applicable to any other securities
and
property receivable on the exercise of this Warrant after the consummation
of
such Fundamental Change or transfer or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon
the
issuer of any other securities, including, in the case of any such transfer,
the
person acquiring all or substantially all of the properties or assets of
the
Company, whether or not such person shall have expressly assumed the terms
of
this Warrant as provided in Section 9(d). In the event this Warrant does
not
continue in full force and effect after the consummation of the transaction
described in this Section, then only in such event will the Company’s securities
and property (including cash, where applicable) receivable by the Holder
of the
Warrants be delivered to the Trustee as contemplated by Section
9(b).
(d) Extraordinary
Events Regarding Common Stock.
In the event that the Company shall (a) issue additional shares of Common
Stock
as a dividend or other distribution on outstanding Common Stock, (b) subdivide
its outstanding shares of Common Stock, or (c) combine its outstanding shares
of
the Common Stock into a smaller number of shares of the Common Stock, then,
in
each such event, the Exercise Price shall, simultaneously with the happening
of
such event, be adjusted by multiplying the then Exercise Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Exercise Price then in effect.
The
Exercise Price, as so adjusted, shall be readjusted in the same manner upon
the
happening of any successive event or events described in this Section. The
number of Warrant Shares that the Holder of this Warrant shall thereafter,
on
the exercise hereof, be entitled to receive shall be adjusted to a number
determined by multiplying the number of Warrant Shares that would otherwise
(but
for the provisions of this Section) be issuable on such exercise by a fraction
of which (a) the numerator is the Exercise Price that would otherwise (but
for
the provisions of this Section) be in effect, and (b) the denominator is
the
Exercise Price in effect on the date of such exercise.
(e) Subsequent
Offerings.
If the
Company shall, at any time prior to the second anniversary of the Issue Date,
issue any shares of its Common Stock at a price per share less than the Exercise
Price (the “Subsequent Offering Price”), the Exercise Price shall be lowered to
a price equal to the Subsequent Offering Price. Notwithstanding the foregoing,
no adjustment in the Exercise Price shall be made for shares of Common Stock
issued, or warrants or options to purchase shares Common Stock granted in
connection with any of the following: (a) any stock option plan or other
benefit
plan for directors, officers, employees, advisors or consultants of the Company,
(b) payment of interest on any outstanding notes, (c) full or partial
consideration in connection with a strategic merger, consolidation or purchase
of substantially all of the securities or assets of a corporation or other
entity, or (d) full or partial consideration in connection with strategic
licensing agreements or other partnering arrangements.
(f) Effectiveness
of Adjustment.
An
adjustment to the Exercise Price shall become effective immediately after
the
payment date in the case of each dividend or distribution and immediately
after
the effective date of each other event which requires an
adjustment.
(g) Notice
of Adjustment.
Upon
the happening of any event requiring an adjustment of the Exercise Price,
the
Company shall promptly give written notice thereof to the Holder at the address
appearing in the records of the Company, stating the adjustments resulting
from
such event and setting forth in reasonable detail the method of calculation
and
the facts upon which such calculation is based. Failure to give such notice
to
the Holder or any defect therein shall not affect the legality or validity
of
the subject adjustment.
Section
10. Benefits.
Nothing
in this Warrant shall be construed to give any person, firm or corporation
(other than the Company and the Holder) any legal or equitable right, remedy
or
claim, it being agreed that this Warrant shall be for the sole and exclusive
benefit of the Company and the Holder.
Section
11. No
Rights as Stockholder.
Prior
to the exercise of this Warrant, the Holder shall not have or exercise any
rights as a stockholder of the Company by virtue of its ownership of this
Warrant.
Section
12. Compliance
with Securities Laws.
The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
and
the Warrant Shares and Series D Warrant to be issued upon exercise hereof
are
being acquired solely for the Holder's own account and not as a nominee for
any
other party, and for investment, and that the Holder will not offer, sell
or
otherwise dispose this Warrant or any Warrant Shares to be issued upon exercise
hereof except pursuant to an effective registration statement, or an exemption
from registration, under the Securities Act and any applicable state securities
laws.
Section
13. Notices.
Unless
otherwise provided, any notice required or permitted under this Warrant shall
be
given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given
upon
such delivery, (ii) if given by telex or facsimile, then such notice shall
be
deemed given upon receipt of confirmation of complete transmittal, (iii)
if
given by mail, then such notice shall be deemed given upon the earlier of
(A)
receipt of such notice by the recipient or (B) three days after such notice
is
deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall
be
deemed given one business day after delivery to such carrier. All notices
shall
be addressed as follows: if to the Holder, at its address as set forth in
the
subscription agreement pertaining to the PPM, if to the Company, at the address
as follows, or at such other address as the Holder or the Company may designate
by ten days’ advance written notice to the other: China Agri-Business, Inc.,
_______, Attn: _____, telecopier number: ____, with a copy by telecopier
only
to: Xxxxxxx Xxxx, LLP, 0000 Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000, Attn.: Xxxxxxx X. Xxxxx, Esq., telecopier number: (000)
000-0000.
Section
14. Assignability.
This
Warrant shall be binding upon the Company and its successors and assigns,
and
shall inure to the benefit of the Holder and its successors and
assigns.
Section
15. Governing
Law; Consent to Jurisdiction.
This
Warrant shall be governed by and construed in accordance with the laws of
the
State of New York. Any action brought by either party against the other
concerning this Warrant shall be brought only in the state courts of New
York or
in the federal courts located in the state of New York. Both parties agree
to
submit to the jurisdiction of such courts. The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and
costs.
Section
16. Amendment;
Waiver.
This
Warrant is one of a series of Warrants of like tenor issued by the Company
pursuant to the PPM (collectively, the “Company
Warrants”).
Any
term of this Warrant may be amended or waived (including the adjustment
provisions included in Section 9 of this Warrant) upon the written consent
of
the Company and the holders of Company Warrants representing over 50% of
the
number of shares of Common Stock then subject to all outstanding Company
Warrants (the “Majority
Holders”);
provided,
that
(x) any such amendment or waiver must apply to all Company Warrants; and
(y) the
number of Warrant Shares subject to this Warrant, the Exercise Price and
the
Expiration Date may not be amended, and the right to exercise this Warrant
may
not be altered or waived in any manner adverse to the Holder, without the
written consent of the Holder.
Section
17. Section
Headings.
The
section headings in this Warrant are for the convenience of the Company and
the
Holder and in no way alter, modify, amend, limit or restrict the provisions
hereof.
Section
18. Entire
Agreement.
This
Warrant, the PPM, and any other transaction documents executed in connection
therewith (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
and
thereof. There are no restrictions, promises, warranties or undertakings,
other
than those set forth or referred to herein and therein. This Warrant and
the PPM
supersede all prior agreements and understandings among the parties hereto
with
respect to the subject matter hereof and thereof.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed,
as of
the date first written above.
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By:
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Name:
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Title:
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APPENDIX
A
WARRANT
EXERCISE FORM
The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
the payment of the Exercise Price and surrender of the Warrant, _______________
shares of Common Stock (“Warrant Shares”) and ______ Series D Warrants provided
for therein, and requests that certificates for the Warrant Shares and Series
D
Warrant be issued as follows:
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Name
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Address
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Federal
Tax ID or Social Security No.
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certified
mail to the above address, or
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electronically
(provide DWAC
Instructions:___________________),
or
other
(specify):__________________________________________).
and,
if
the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name
of
the undersigned Holder or the undersigned’s Assignee as below indicated and
delivered to the address stated below.
Dated:
___________________, ____
Note:
The signature must correspond with
Signature:______________________________
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the
name of the Holder as written on the first page
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of
the Warrant in every particular, without
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alteration
or enlargement or any change whatever,
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Name
(please print)
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unless
the Warrant has been assigned.
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Address
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Federal
Identification or
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Social
Security No.
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Assignee:
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EXHIBIT
A
FORM
OF SERIES D COMMON STOCK PURCHASE WARRANT
