FORM OF INVESTOR WARRANT
Warrant No. __________
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A FINANCIAL INSTITUTION THAT IS
AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT.
COMMON STOCK PURCHASE WARRANT
YONGYE BIOTECHNOLOGY INTERNATIONAL, INC.
Warrant
Shares: _______ Initial
Exercise Date: April 17, 2008
THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant ”)
certifies that, for value received, _____________ (the
“
Holder ”)
is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on
or after the date hereof (the “
Initial Exercise Date ”)
and on or prior to the close of business on the five year
anniversary of the Initial Exercise Date (the “
Termination Date ”)
but not thereafter, to subscribe for and purchase from Yongye
Biotechnology International, Inc., a Nevada corporation (the
“
Company ”),
up to ______ shares (the “
Warrant Shares ”)
of Common Stock. The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).
Section 1 .
Definitions .
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (the “
Purchase Agreement ”),
dated of even date herewith, among the Company and the purchasers
signatory thereto.
Section 2 .
Exercise .
a)
Exercise of Warrant .
Exercise of the purchase rights represented by this Warrant may be
made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by
delivery to the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered
Holder at the address of the Holder appearing on the books of the
Company) of a duly executed facsimile copy of the Notice of
Exercise Form annexed hereto; and, within 3 Trading Days of the
date said Notice of Exercise is delivered to the Company, the
Company shall have received payment of the aggregate Exercise Price
of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank. If the exercise is for less
than all of the Warrant Shares, then the Company shall return to
the Holder, together with the certificate(s) for the Warrant
Shares, a new Warrant certificate for the balance of the Warrant
Shares.
b)
Exercise Price .
The exercise price per share of the Common Stock under this Warrant
shall be $1.848
, subject
to adjustment hereunder (the “
Exercise Price ”);
provided ,
however ,
after the Effective Date, the Company shall have the option to
reduce the then Exercise Price to any amount for up to 100% of all
outstanding Warrants.
c)
Cashless Exercise .
If, at any time after the first anniversary of the date that this
Warrant is issued, there is no effective Registration Statement
registering, or no current prospectus available for, the resale of
the Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A)
= the VWAP on the Trading Day immediately preceding the date
of such election;
(B)
= the Exercise Price of this Warrant, as adjusted;
and
(X)
= the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means
of a cash exercise rather than a cashless
exercise.
d)
Exercise Limitations .
The Company shall not effect any exercise of this Warrant, and a
Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that
after giving effect to such issuance after exercise as set forth on
the applicable Notice of Exercise, the Holder (together with the
Holder’s Affiliates, and any other person or entity acting as
a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by the Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any
of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(d), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most
recent periodic or annual report, as the case may be, (B) a more
recent public announcement by the Company or (C) any other notice
by the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock
was reported. The “
Beneficial Ownership Limitation ”
shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The
Holder, upon not less than 61 days’ prior notice to the
Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(d), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of
this Section 2(d) shall continue to apply. Any such increase or
decrease will not be effective until the 61
st day
after such notice is delivered to the Company. The provisions of
this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section
2(d) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
e)
Mechanics of Exercise .
(i) Delivery of Certificates Upon Exercise .
Certificates for shares purchased hereunder shall be transmitted by
the Transfer Agent to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission (“
DWAC ”)
system if the Company is then a participant in such system and
either (A) there is an effective Registration Statement permitting
the resale of the Warrant Shares by the Holder or (B) the shares
are eligible for resale without volume or manner-of-sale
limitations pursuant to Rule 144, and otherwise by physical
delivery to the address specified by the Holder in the Notice of
Exercise within 3 Trading Days from the delivery to the Company of
the Notice of Exercise Form, surrender of this Warrant (if
required) and payment of the aggregate Exercise Price as set forth
above (the “
Warrant Share Delivery Date ”).
This Warrant shall be deemed to have been exercised on the date the
Exercise Price is received by the Company. The Warrant Shares shall
be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(e)(vi) prior to the issuance of such shares, have been
paid. If the Company fails for any reason to deliver to the Holder
certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based
on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per
Trading Day on the fifth Trading Day after such liquidated damages
begin to accrue) for each Trading Day after such Warrant Share
Delivery Date until such certificates are delivered. For purposes
hereof, the term “
VWAP ”
shall mean, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted
average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is
then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York
City time); (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the OTC Bulletin
Board; (c) if the Common Stock is not then listed or quoted for
trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published
by Pink Sheets, LLC (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price
per share of the Common Stock so reported; or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the Purchasers of a majority in interest of the Securities then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
(ii) Delivery of New Warrants Upon Exercise .
If this Warrant shall have been exercised in part, the Company
shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
(iii)
Rescission Rights. If the Company fails to cause the Transfer
Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to
Section 2(e)(i) by the Warrant Share Delivery Date, then, the
Holder will have the right to rescind such
exercise.
(iv)
Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights
available to the Holder, if the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to
purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then
the Company shall (A) pay in cash to the Holder the amount by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required
to deliver to the Holder in connection with the exercise at
issue times (2) the price at which the sell order giving rise
to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the
Warrant and equivalent number of Warrant Shares for which such
exercise was not honored or deliver to the Holder the number
of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover
a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the
immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in
respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure
to timely deliver certificates representing shares of Common
Stock upon exercise of the Warrant as required pursuant to the
terms hereof.
(v)
No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such
exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or
round up to the next whole share.
(vi)
Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder or in
such name or names as may be directed by the Holder; provided,
however, that in the event certificates for Warrant Shares are
to be issued in a name other than the name of the Holder, this
Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the
Holder and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
(vii)
Closing of Books. The Company will not close its stockholder
books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms
hereof.
Section 3 .
Certain Adjustments .
a)
Stock Dividends and Splits .
If the Company, at any time while this Warrant is outstanding: (i)
pays a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator
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