Unassociated Document


    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.

     

    CHINA
AGRI-BUSINESS INC.

     

    COMMON
STOCK PURCHASE WARRANT

     

    FOR VALUE RECEIVED, Legend Merchant Group, Inc. (“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 $1.00 (the exercise price in effect being herein called the
“Exercise Price”), up to 1,000 shares (“Warrant Shares”) of the Company’s Common
Stock, par value $0.001 per share (“Common Stock”). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time as described herein.

     

    Section
1.                                Term.  Subject
to the terms and conditions set forth herein, this Warrant shall be exercisable,
in whole or in part, during the term commencing on the date hereof and ending at
5:00 p.m., New York time, on October 9, 2012 and shall be void thereafter. (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 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)           Issuance of
Certificates.  Certificates for the Warrant Shares 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.   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. Each
certificate for Common Stock, issued upon exercise of this Warrant, unless
either (i) at the time of exercise such Common Stock or any other securities of
the Company that may at any time be issuable on the exercise hereof, are
registered under the Act, or (ii) the Holder shall deliver to the Company an
opinion of counsel reasonably satisfactory to the Company that the Common Stock
represented thereby, or any other securities of the Company that may at any time
be issuable on the exercise hereof, need no longer be subject to the restriction
contained herein, shall bear a legend substantially in the following
form:

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE.  THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS OR THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT THE PROPOSED TRANSACTION WILL BE EXEMPT FROM SUCH
REGISTRATION.

     

    The
provisions of this Section 3(b) shall be binding upon all subsequent holders of
certificates for Common Stock issuable upon exercise of the Warrant bearing the
above legend and all subsequent holders of this Warrant, if any.

     

    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 is 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 the address as
follows Legend Merchant Group, Inc., 30 Broadway, 38th Floor, New York, New York
10004, telecopier number (212) 809-5567, if to the Company, at the address as
follows: China Agri-Business, Inc., 11 East 86th Street, Suite 19 B, New York,
NY 10028 Attn: Michael Segal, telecopier number: (212) 348-5601, with a copy by
telecopier only to: Blank Rome, LLP, The Chrysler Building, 405 Lexington Ave.,
New York, NY 10174, Attn.: Jeffrey A. Rinde, Esq., telecopier number: (212)
885-5001 or at such other address as the Holder or the Company may designate by
ten days’ advance written notice to the other.

     

    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.                                Amendment.  Any
term of this Warrant may be amended with the written consent of the Company and
the Holder. Any amendment effected in accordance with this Section 15 shall be
binding upon the Holder, each subsequent holder of any portion of this Warrant,
each future holder of all such Warrants, and the Company.

     

    Section
16.                                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
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 constitutes 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 supersedes 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
October 9, 2009.

     

    
      
        	 	
                CHINA
      AGRI-BUSINESS, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Liping
      Deng	 
	 	 	      
                Name:  Liping Deng

              	 
	 	 	      
                Title:
       Chief Executive Officer

              	 
	 	 	 	 


      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    APPENDIX
“A”

    


    NOTICE
OF EXERCISE

    


    To:           China
Agri-Business, Inc.

    


    (1)           The
undersigned hereby elects to purchase ____ shares of Common Stock of China
Agri-Business, Inc. pursuant to the provisions of Section 3(a) of the attached
Warrant, and tenders herewith payment of the purchase price for such shares of
Common Stock in full.

    


    (2)           In
exercising this Warrant, the undersigned hereby confirms and acknowledges that
the Common Stock to be issued are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment, and
that the undersigned will not offer, sell or otherwise dispose of any such
Common Stock except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any applicable state securities
laws.

    


    (3)           Please
modify the records of the Company to reflect the exercises covered
hereby.  Please issue a certificate or certificates representing said
Common Stock in the name of the undersigned or in such other name as is
specified below:

    


    
      (Name)                                                                

       

    

    
      (Name)                                                                



     

    (4)           Please
issue a new Warrant for the unexercised portion of the attached Warrant in the
name of the undersigned or in such other name as is specified
below:

    


    (Name)                                                                

     

    (Name)                                                                

    


    


    Dated:                                                                                                    _________________________________

    Signature of Holder