CALL OPTION AGREEMENT
This
CALL
OPTION AGREEMENT (this “Agreement”)
is
made and entered into as of December 24, 2007 (the “Effective
Date”),
between Xxx Xx, a resident of the People’s Republic of China (“Purchaser”)
and
Yinshing Xxxxx To, a resident of Hong Kong (“Seller”).
Purchaser and Seller are also referred to herein together as the “Parties”
and
individually as a “Party”.
RECITALS
WHEREAS,
pursuant to a Share Exchange Agreement, dated as of the date hereof, among
Discovery Technologies, Inc., a Nevada Corporation (the “Company”)
and
the shareholders of Green Agriculture Holding Company, a New Jersey Corporation
(“Green”),
the
Company acquired 100% of the issued and outstanding capital stock of Green;
and
WHEREAS,
Purchaser has agreed with Seller, as a condition to his continuing to provide
services to Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“TechTeam”),
a PRC
company that is a wholly owned subsidiary of Green, as its Chairman and Chief
Executive Officer, to enter into this Agreement; and
WHEREAS,
Seller is the holder of 6,535,676 shares of the Company’s $0.001 par value per
share common stock (“Common
Stock”)
and
therefore, has determined that it is in his best interest to, and will receive
benefits from, Purchaser’s performance as CEO and Chairman of TechTeam and
entered into the Share Exchange Agreement based on the possibility of such
benefits; and
WHEREAS,
Seller desires to grant to Purchaser an option to acquire 6,535,676 shares
of
the Common Stock owned by him (“Seller’s
Shares”)
pursuant
to the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, the Parties, in consideration of the foregoing premises and the
terms, covenants and conditions set forth below, and other good and valuable
consideration, receipt of which is acknowledged, hereby agree as
follows:
AGREEMENT
1.
DEFINITIONS;
INTERPRETATION.
1.1. Terms
Defined in this Agreement.
The
following terms when used in this Agreement shall have the following
definitions:
“Bankruptcy
Law”
means
any Law of any jurisdiction relating to bankruptcy, insolvency, corporate
reorganization, company arrangement, civil rehabilitation, special liquidation,
moratorium, readjustment of debt, appointment of a conservator, trustee or
receiver, or similar debtor relief.
1
“Call
Price”
means,
with respect to any exercise of the Call Right, $0.001 per share of the Seller’s
Shares subject to any Call Exercise Notice.
“Conditions”
means
Conditions 1 through 4, as defined below, in the aggregate.
“Condition
1”
means
the entry by Purchaser and TechTeam into a binding employment agreement for
a
term of not less than five years for Purchaser to serve as TechTeam’s Chief
Executive Officer and Chairman of its Board of Directors.
“Condition
2”
means
the United States Securities and Exchange Commission declaring a registration
statement filed by the Company under the Securities Act of 1933 effective,
or,
investors who purchased Common Stock from the Company pursuant to the Securities
Purchase Agreement dated as of December 24, 2007 being able to sell their Common
Stock under Rule 144, as then effective under the U.S. Securities Act of 1933,
as amended.
“Condition
3”
means
TechTeam achieving not less than $7,500,000 in pre-tax profits, as determined
under United States Generally Accepted Accounting Principles consistently
applied (“US GAAP”) for the fiscal year ending June 30, 2008.
“Condition
4”
means
TechTeam achieving not less than $4,000,000 in pre tax profits, as determined
under US GAAP for the six months ended December 31, 2008.
“Government
Authority”
means
any: (a) nation, principality, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or quasi
governmental authority of any nature (including any governmental division,
subdivision, department, agency, bureau, branch, office, commission, council,
board, instrumentality, officer, official, representative, organization, unit,
body or Person and any court or other tribunal); or (d) individual, Person
or
body exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of
any
nature.
“Law”
means
any federal, state, local, municipal, foreign or other law, statute,
legislation, constitution, principle of common law, resolution, ordinance,
code,
order, edict, decree, proclamation, treaty, convention, rule, regulation,
permit, ruling, directive, pronouncement, requirement (licensing or otherwise),
specification, determination, decision, opinion or interpretation that is,
has
been or may in the future be issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Government Authority.
“Person”
means
any individual, firm, company, corporation, limited liability company,
unincorporated association, partnership, trust, joint venture, governmental
authority or other entity, and shall include any successor (by merger or
otherwise) of such entity.
1.2. Interpretation.
(a) Certain
Terms.
The
words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement
as a whole and not to any particular provision of this Agreement. The term
“including” is not limited and means “including without
limitation.”
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(b) Section References;
Titles and Subtitles.
Unless
otherwise noted, all references to Sections herein are to Sections of this
Agreement. The titles, captions and headings of this Agreement are inserted
for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
(c) Reference
to Entities, Agreements, Statutes.
Unless
otherwise expressly provided herein, (i) references to a Person include its
successors and permitted assigns, (ii) references to agreements (including
this Agreement) and other contractual instruments shall be deemed to include
all
subsequent amendments, restatements and other modifications
thereto
or supplements thereof and (iii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such statute
or regulation.
2.
CALL
RIGHT.
2.1. Call
Right.
Purchaser shall have, during the Exercise Period (as defined below), and when
a
Condition is met, the right and option to purchase from the Seller, and upon
the
exercise of such right and option the Seller shall have the obligation to sell
to Purchaser, a portion of the Seller’s Shares identified in the Call Exercise
Notice (the “Call
Right”).
Purchaser shall be permitted to purchase, and Seller shall be obligated to
sell,
the following numbers of Seller’s Shares upon the attainment of the following
Conditions:
|
Condition
|
Number
of Seller’s Shares as to
which
there is a Call Right
|
|||
|
Condition
1
|
3,267,838
|
|||
|
Condition
2
|
1,089,279
|
|||
|
1,089,279
|
||||
|
Condition
4
|
1,089,280
|
|||
2.2. Call
Period.
The
Call Right shall be exercisable by Purchaser, by delivering a Call Exercise
Notice at any time during the period (the “Exercise
Period”)
commencing on the date hereof and ending at 6:30 p.m. (New York time) on the
fifth anniversary date hereof (such date or the earlier expiration of the Call
Right is referred to herein as the “Expiration
Date”).
2.3. Exercise
Process.
In
order to exercise the Call Right during the Exercise Period, Purchaser shall
deliver to the applicable Seller, a written notice of such exercise
substantially in the form attached hereto as Appendix A
(a
“Call
Exercise Notice”)
to
such address or facsimile number set forth therein. The Call Exercise Notice
shall indicate the number of Seller’s Shares as to which Purchaser is then
exercising its Call Right and the aggregate Call Price. Provided the Call
Exercise Notice is delivered in accordance with Section 6.4 to such Seller
on or
prior to 6:30 p.m. (New York time) on a Business Day, the date of exercise
(the
“Exercise
Date”)
of the
Call Right shall be the date of such delivery of such Call Exercise Notice.
In
the event the Call Exercise Notice is delivered after 6:30 p.m. (Hong Kong
time)
on any day or on a date which is not a Business Day, the Exercise Date shall
be
deemed to be the first Business Day after the date of such delivery of such
Call
Exercise Notice. The delivery of a Call Exercise Notice in accordance herewith
shall constitute a binding obligation (a) on the part of Purchaser to purchase,
and (b) on the part of such Seller to sell, the Seller’s Shares subject to such
Call Exercise Notice in accordance with the terms of this
Agreement.
3
2.4. Call
Price.
If the
Call Right is exercised pursuant to this Section 2, as payment for the Seller’s
Shares being purchased by Purchaser pursuant to the Call Right, Purchaser shall
pay the aggregate Call Price to the Seller (but no later than fifteen (15)
Business Days of the Exercise Date).
2.5 Cashless
Exercise.
In lieu
of delivery of the Call Price, Purchaser shall have the right, at its option,
from time to time or times during the Exercise Period, Purchaser
may satisfy its obligation to pay the Call Price through a “cashless exercise,”
in which Purchaser shall be entitled to purchase the Seller’s Shares as
determined as follows:
|
X
=
Y [(A-B)/A]
|
|
|
where:
|
|
|
X
=
the number of Seller’s Shares to be sold to Purchaser.
|
|
|
Y
=
the number of Seller’s Shares with respect to which the Call Right is
being exercised.
|
|
|
A
=
the arithmetic average of the Closing Prices for the five Trading
Days
immediately prior to (but not including) the Exercise
Date.
|
|
|
B
=
the Call Price.
|
2.5. Delivery
of the Shares.
Upon the
receipt of a Call Exercise Notice, the applicable Seller shall deliver, or
take
all steps necessary to cause to be delivered, the Seller’s Shares being
purchased pursuant to such Call Exercise Notice.
3.
ENCUMBRANCES;
TRANSFERS, SET-OFF AND WITHHOLDINGS.
3.1.
Encumbrances.
Upon
exercise of the Call Right, such Seller’s Shares being purchased shall be sold,
transferred and delivered to Purchaser free and clear of any claim, pledge,
charge, lien, preemptive rights, restrictions on transfers (except as required
by securities laws of the United States), proxies, voting agreements and any
other encumbrance whatsoever.
3.2 Transfers.
Prior
to the Expiration Date, Seller shall continue to own, free and clear of any
hypothecation, pledge, mortgage or other encumbrance, except pursuant to this
Agreement and except in favor of the Collateral Agent (as defined below) for
the
benefit of the Purchaser, such amount of the Seller’s Shares as may be required
from time to time to in order for Purchaser to exercise its Call Right in full.
4
3.3.
Set-off.
Purchaser shall be absolutely entitled to receive all Seller’s Shares subject to
the exercise of a Call Right, and for the purposes of this Agreement, Seller
hereby waives, as against Purchaser, all rights of set-off or counterclaim
that
would or might otherwise be available to such Seller.
3.4 Escrow
of Seller’s Shares.
(a) Upon
execution of this Agreement, Seller shall deliver to Guzov Ofsink, LLC, as
Collateral Agent (the “Collateral
Agent”),
certificates representing Seller’s Shares. The certificates representing the
Seller’s Shares (together with duly executed stock powers in blank) shall be
held by the Collateral Agent.
(b) Upon
receipt of a Call Exercise Notice, the Collateral Agent shall promptly deliver
the Seller’s Shares being purchased pursuant to such Call Exercise Notice in
accordance with the instructions set forth therein. In the event that the
Collateral Agent shall receive notice from the Parties that the Conditions
have
not been met, the Seller’s Shares shall be distributed in accordance with their
instructions.
4.
REPRESENTATIONS
AND WARRANTIES.
4.1. Representations
and Warranties by Seller.
Seller
represents and warrants to Purchaser, that:
(a)
Due
Authorization.
The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder to be carried out by it have been duly
authorized by all necessary action on the part of Seller. This Agreement, and
all agreements and documents executed and delivered pursuant to this Agreement,
constitute valid and binding obligations of such Seller, enforceable against
such Seller in accordance with its terms, subject to applicable Bankruptcy
Laws
and other laws or equitable principles of general application affecting the
rights of creditors generally.
(b)
No
Conflicts.
The
execution or delivery of this Agreement by such Seller nor the fulfillment
or
compliance by such Seller with any of the terms hereof shall, with or without
the giving of notice and/or the passage of time, (i) conflict with, or result
in
a breach of the terms, conditions or provisions of, or constitute a default
under, (A) the organizational or charter documents of the Seller or (B) any
contract or any judgment, decree or order to which Seller is subject or by
which
the Seller is bound, or (ii) require any consent, license, permit,
authorization, approval or other action by any Person or Government Authority
which has not yet been obtained or received. The execution, delivery and
performance of this Agreement by such Seller or compliance with the provisions
hereof by the Seller does not, and shall not, violate any provision of any
Law
to which the Seller is subject or by which it is bound.
(c) No
Actions.
There
are no lawsuits, actions (or to the best knowledge of such Seller,
investigations), claims or demands or other proceedings pending or, to the
best
of the knowledge of such Seller, threatened against the Seller which, if
resolved in a manner adverse to the Seller, would adversely affect the right
or
ability of the Seller to carry out its obligations set forth in this
Agreement.
5
(d) Title.
Seller
owns the Seller’s Shares free and clear of any claim, pledge, charge, lien,
preemptive rights, restrictions on transfers, proxies, voting agreements and
any
other encumbrance whatsoever, except as contemplated by this Agreement. The
Seller has not entered into or is a party to any agreement that would cause
the
Seller to not own such Seller’s Shares free an clean of any encumbrance, except
as contemplated by this Agreement.
4.2 Representations
and Warranties by Purchaser.
Purchaser represents and warrants to the Sellers, that:
(a)
Due
Authorization.
The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder to be carried out by it have been duly
authorized by all necessary action on the part of Purchaser. This Agreement,
and
all agreements and documents executed and delivered pursuant to this Agreement,
constitute valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable Bankruptcy Laws
and other laws or equitable principles of general application affecting the
rights of creditors generally.
(b)
No
Conflicts.
The
execution or delivery of this Agreement by Purchaser nor the fulfillment or
compliance by Purchaser with any of the terms hereof shall, with or without
the
giving of notice and/or the passage of time, (i) conflict with, or result in
a
breach of the terms, conditions or provisions of, or constitute a default under,
(A) the organizational or charter documents of Purchaser or (B) any contract
or
any judgment, decree or order to which Purchaser is subject or by which
Purchaser is bound, or (ii) require any consent, license, permit, authorization,
approval or other action by any Person or Government Authority which has not
yet
been obtained or received. The execution, delivery and performance of this
Agreement by Purchaser or compliance with the provisions hereof by Purchaser
does not, and shall not, violate any provision of any Law to which Purchaser
is
subject or by which it is bound.
(c) No
Actions.
There
are no lawsuits, actions (or to the best knowledge of Purchaser,
investigations), claims or demands or other proceedings pending or, to the
best
of the knowledge of Purchaser, threatened against Purchaser which, if resolved
in a manner adverse to Purchaser, would adversely affect the right or ability
of
Purchaser to carry out its obligations set forth in this Agreement.
5. EVENTS
OF
DEFAULT AND TERMINATION
5.1 Events
of Default.
The
occurrence at any time with respect to a Party (the “Defaulting
Party”)
of any
of the following events shall constitute an event of default (an “Event
of Default”)
with
respect to such party:
(a) Failure
to Pay or Deliver.
The
failure by a Party to make, when due, any payment under this Agreement or
deliver the Seller’s Shares in accordance with this Agreement, if such failure
is not remedied on or before the third Business Day after notice of such failure
is given to the Defaulting Party;
(b) Breach
of Agreement.
The
failure by a Party to comply with or perform any agreement, covenant or
obligation (other than a failure described in Section 5.1(a)) to be complied
with or performed by such Party in accordance with this Agreement if such
failure is not remedied on or before the tenth Business Day after notice of
such
failure is given to the Defaulting Party; or
6
(c) Bankruptcy.
A Party
(1) is dissolved (other than pursuant to a consolidation, amalgamation or
merger); (2) becomes insolvent or is unable to pay its debts or fails or admits
in writing its inability generally to pay its debts as they become due; (3)
makes a general assignment, arrangement or composition with or for the benefit
of its creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any relief under any
Bankruptcy Law, or a petition is presented for its winding-up or liquidation,
and in the case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgment of insolvency
or bankruptcy or the entry of an order for relief or the making of an order
for
its winding-up or liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or presentation
thereof; (5) has a resolution passed for its winding-up, official management
or
liquidation (other than pursuant to a consolidation, amalgamation or merger);
(6) seeks or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar official
for it or for all or substantially all it assets; (7) has a secured party take
possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on
or
against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or
rescinded, in each case within 30 days thereafter; (8) causes or is subject
to
any event with respect to it which, under the applicable Law, has an analogous
effect to any of the events described in clauses (1) through (7); or (9) takes
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts.
5.2 Termination.
If at
any time an Event of Default with respect to a Party has occurred and is
continuing, the other party may terminate this Agreement and deem the Expiration
Date to have occurred by giving written notice to the Defaulting Party
specifying the relevant Event of Default.
6.
MISCELLANEOUS.
6.1. Governing
Law; Jurisdiction.
This
Agreement shall be construed according to, and the rights of the Parties shall
be governed by, the laws of the State of New York, without reference to any
conflict of laws principle that would cause the application of the laws of
any
jurisdiction other than New York. Each Party hereby irrevocably submits to
the
exclusive jurisdiction of the federal and state courts sitting in the City
of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or
in connection herewith, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
such court, that such, suit, action or proceeding is brought in an inconvenient
forum, or that the venue of such suit, action or proceeding is
improper.
6.2. Successors
and Assigns.
Each of
the Parties shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other Party. The provisions
hereof shall inure to the benefit of, and be binding upon, the successors and
permitted assigns of the Parties.
7
6.3. Entire
Agreement; Amendment.
This
Agreement constitutes the full and entire understanding and agreement between
the Parties with regard to the subject matter hereof. Any term of this Agreement
may be amended only with the written consent of each Party.
6.4. Notices
and Other Communications.
Any and
all notices, requests, demands and other communications required or otherwise
contemplated to be made under this Agreement shall be in writing and shall
be
provided by one or more of the following means and shall be deemed to have
been
duly given (a) if delivered personally, when received, (b) if
transmitted by facsimile, on the date of transmission with receipt of a
transmittal confirmation, or (c) if by an internationally recognized
overnight courier service, one Business Day after deposit with such courier
service. All such notices, requests, demands and other communications shall
be
addressed as follows:
To
Purchaser at:
0xx
Xxxxx,
Xxxxxxx A
Xxxxx
X.
Xx.000, Xxxxx Xxxxxx Xxxx
Xian,
Shaanxi Province,
People’x
Xxxxxxxx xx Xxxxx 000000
Tel:
(000)-00-00-00000000
To
Seller
at:
Green
Agriculture Holding Corporation.
00
Xxx
Xxxxxxxxx Xxxxx, Xxxx 0,
Xxxx
Xxxxxxx, XX 00000
Attn:
Mr.
Yinshing Xxxxx To
or
to
such other address or facsimile number as a party may have specified to the
other parties in writing delivered in accordance with this Section
6.4.
6.5. Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any Person
hereunder, upon any breach or default under this Agreement, shall impair any
such right, power or remedy nor shall it be construed to be a waiver of any
such
breach or default, or an acquiescence therein, or of or in any similar breach
or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Person hereunder of any breach or default under
this Agreement, or any waiver on the part of any Person of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing and signed by the waiving
or
consenting Person.
6.6. Severability.
If any
provision of this Agreement is found to be invalid or unenforceable, then such
provision shall be construed, to the extent feasible, so as to render the
provision enforceable and to provide for the consummation of the transactions
contemplated hereby on substantially the same terms as originally set forth
herein, and if no feasible interpretation would save such provision, it shall
be
severed from the remainder of this Agreement, which shall remain in full force
and effect unless the severed provision is essential to the rights or benefits
intended by the Parties. In such event, the Parties shall use best efforts
to
negotiate, in good faith, a substitute, valid and enforceable provision or
agreement which most nearly affects the Parties’ intent in entering into this
Agreement.
8
6.7 Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
Parties to express their mutual intent, and no rules of strict construction
will
be applied against any Party.
6.8. Further
Assurances.
The
Parties shall perform such acts, execute and deliver such instruments and
documents and do all other such things as may be reasonably necessary to effect
the transactions contemplated hereby.
6.9. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one instrument.
Execution and delivery of this Agreement by exchange of facsimile copies bearing
the facsimile signature of a Party shall constitute a valid and binding
execution and delivery of this Agreement by such Party.
[remainder
of page intentionally blank]
9
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
written above.
|
Purchaser:
|
||
| |
|
|
| /s/ Xxx Xx | ||
|
Xxx
Xx
|
||
|
Seller:
|
||
| |
|
|
|
/s/
Yinshing Xxxxx To
|
||
|
Yinshing
Xxxxx To
|
||
Acknowledged
and agreed to:
|
Collateral
Agent:
GUZOV
OFSINK, LLC, as Collateral Agent
|
|||
| By: /s/ Xxxxxx Xxxxxx | |||
|
Name:
Xxxxxx Xxxxxx
Title:
Partner
|
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APPENDIX
A
Form
of Exercise Notice
[Date]
[________________]
(the “Seller”)
[________________]
[________________]
Attention:
[_______]
|
Re:
|
Call
Option Agreement dated December
24, 2007 (the “Call
Option Agreement”),
between Xxx Xx (“Purchaser”)
and Yinshing Xxxxx To (“Seller”).
|
Dear
Sir:
In
accordance with Section 2.3 of the Call Option Agreement, Purchaser hereby
provides this notice of exercise of the Call Right in the manner specified
below:
| (a) |
The
Purchaser hereby exercises its Call Rights with respect to Seller’s Shares
pursuant to the Call Option
Agreement.
|
| (c) |
The
Purchaser intends that payment of the Call Exercise Price shall be
made as
(check one):
|
_______
“Cash Exercise”
_______
“Cashless Exercise”
| (d) |
If
the Purchaser has elected a Cash Exercise, the Purchaser shall pay
the sum
of $____________ to the Seller.
|
| (e) |
Pursuant
to this exercise, the Seller shall deliver to _______________ Seller’s
Shares in accordance with the instructions attached
hereto.
|
|
Dated:
_______________, ______
|
|
|
Xxx
Xx
|
11
