AmendmentNo. 1 to the Call Option Agreement

This Amendment No. 1, dated March ____, 2010 (the “Amendment”), to the Call Option  Agreement, dated December 29, 2009 (the “Original Agreement”), is made by and among _____________, a resident of the People’s Republic of China (the “Purchaser”) and Kelvin Chan, a resident of Hong Kong (the “Seller”). Capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in the Original Agreement.

RECITALS

 

WHEREAS, pursuant to the Original Agreement the Seller has granted the Purchaser an option during the Exercise Period to purchase from the Seller a portion of the Seller’s Shares, which term refers to shares of Common Stock, par value $.001 per share, of Rongfu Aquaculture, Inc. (Rongfu Common Stock”), a Delaware corporation (“Rongfu”);

 

WHEREAS, simultaneously with the execution of this Amendment, the Seller and certain other holders of Rongfu Common Stock are consummating a Share Exchange Agreement with Granto, Inc., a Nevada corporation (“Granto”) and certain other persons pursuant to which the Seller is transferring to Granto all of the Rongfu Common Stock held by the Seller in exchange for the issuance to the Seller of an equivalent number of shares of Common Stock, par value $.001 per share of Granto (“Granto Common Stock”); and

 

WHEREAS, the parties wish to amend the Original Agreement in all respects necessary to provide that the shares subject to the option shall be the same number of shares of Granto Common Stock rather than Rongfu Common Stock and in certain other respects.

 

NOW, THEREFORE, in consideration of the mutual promises herein, contained and intending to be legally bound, the parties hereby agree that the Original Agreement shall be amended as follows:

 

A.	The Original Agreement is hereby amended in all respects so that that the shares subject to the option granted by the Seller to the Purchaser thereunder shall be the same number of shares of Granto Common Stock rather than Rongfu Common Stock.

 

B.	All references in the operative sections of the Original Agreement to “the Shell Company” or “the Company” shall mean Granto rather than  Rongfu.

 

C.	Except as amended hereby, the Original Agreement shall remain in full force and effect.

 

This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

 

 

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on the day and year first above written.

 

 

This CALL OPTION AGREEMENT (this “Agreement”) is made and entered into as of December 29, 2009 (the “Effective Date”), among ______________ with the ID number _______________, a resident of the People’s Republic of China (the “Purchaser”) and Kelvin Chan with the passport number H0062741, a resident of Hong Kong (the “Seller”). Purchaser and Seller are also referred to herein together as the “Parties” and individually as a “Party.”

 

 

WHEREAS, RONGFU AQUACULTURE, INC, a United States-domiciled shell company (the “Shell Company”), FLOURISHING BLESSING (HONG KONG) CO. LTD incorporated in the Hong Kong (the “HK Company”) and the sole shareholder of the HK Company Kelvin CHAN has entered into a Share Exchange Agreement (the “Exchange Agreement”) as of December 29, 2009. Pursuant to the Exchange Agreement, the Shell Company is expected to acquire 100% of the issued and outstanding capital stock of the FLOURISHING BLESSING (HONG KONG) CO. LTD;

 

WHEREAS, at the closing of the Exchange Agreement, the Seller will hold directly 18,000,000 shares of common stock of the Shell Company (the “Common Stock”);

 

WHEREAS, the Seller has agreed with the Purchaser to enter into this Agreement, as a condition to the Purchaser continuing to provide services to Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Co., Ltd. (the “Company”), a PRC company, which is the wholly owned subsidiary of HK Company, as its deputy general manager;

 

WHEREAS, the Seller has determined that it is in her best interest to receive benefits from the Purchaser’s performance as the deputy general manager of the Company;

 

WHEREAS, the Seller desires to grant to Purchaser an option to acquire __________ of the shares of Common Stock to be issued to him pursuant to the Exchange Agreement (for purposes of this Agreement, including the Call Right described herein, the “Seller’s Shares”) pursuant to the terms and conditions set forth herein;

 

NOW, THEREFORE, the Parties, in consideration of the foregoing premises and the terms, covenants and conditions set forth below, and for other good and valuable consideration, receipt of which is acknowledged, hereby agree as follows:

 

 

 

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.

 

“Business Day” means any day on which commercial banks are required to be open in the United States.

“Conditions” means Conditions 1 through 4, as defined below, in the aggregate.

 

“Condition 1” means: the entry by the Purchaser and the Company into a binding employment agreement for a term of not less than five years for Purchaser to serve as the Company’s deputy general manager.

 

“Condition 2” means the Company achieving not less than 1 million US Dollar in after-tax net income, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) for the fiscal year ended December 31, 2010.

 

“Condition 3” means the Company achieving not less than 1.5 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2011.

 

“Condition 4” means the Company achieving not less than 2 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2012.

 

"Distributions" means any cash proceeds arising from or in respect of, or in exchange for, or accruing to or in consequence of the Seller’s Shares from the date hereof to the Expiration Date, including without limitation, the Dividends.

 

"Dividends" means the dividends declared by the Shell Company and accrued in respect of the Seller’s Shares (whether or not such dividends shall have been paid and received by the Purchaser or her Nominee(s)).

 

“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.

 

"Nominee" means such person nominated by the Purchaser in the Transfer Notice to be the transferee of the Call Right or the Seller’s Shares;

 

“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.

 

“Transfer Notice” means the notice substantially in the form set out in Appendix B.

 

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.”

(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. The 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 the Purchaser or her Nominee(s), a portion of the Seller’s Shares identified in the Call Exercise Notice (the “Call Right”). Purchaser or Nominee(s) shall be permitted to purchase, and Seller shall be obligated to sell, the following number of Seller’s Shares upon the attainment of the following Conditions:

 

However, in case that the Company achieve not less than 2 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 201 1then the Purchaser or his Nominee(s) shall be permitted to purchase and the Seller shall be obligated to sell 30% of the Shares owned by the Seller and it shall be considered that both Condition 3 and Condition 4 have been met; for purpose of avoiding doubt, there will be no more call right to be granted to the Purchaser even if the Company achieves not less than 2 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2012.

 

Notwithstanding anything in this Agreement, in case that the Seller violates any provisions of this Agreement, the Purchaser shall receive an irrevocable Call Right to any and all of the Seller’s Shares then held by the Seller, without any regard to the Conditions being met. The Purchaser shall be entitled to exercise such Call Right immediately and the Seller shall transfer to the Purchaser or her Nominee(s) all the Seller’s Shares immediately upon the Purchaser’s or her Nominee(s)’s exercise of such Call Right.

 

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 therefrom (such date or the earlier expiration of the Call Right is referred to herein as the “Expiration Date”).

 

2.3.    Nominees: The Purchaser may, at any time during the Exercise Period, at her sole discretion, nominate one or more person(s) (each a “Nominee”) to be the transferee(s) of whole or part of her Call Right, who shall hold and/or exercise the transferred Call Right on behalf of the Purchaser.

 

 

 

2.7     Transfer Notice: In case that the Purchaser transfers any or all of her Call Right to one or more Nominees in accordance with Section 2.3 above, the Purchaser shall provide a Transfer Notice to the Seller.

 

 

3.       ENCUMBRANCES; TRANSFERS, SET-OFF AND WITHHOLDINGS

 

 

 

 

3.4    Escrow of the Seller’s Shares.

 

 

4.    REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

4.1.    Representations and Warranties by the Seller. The Seller represents and warrants to the Purchaser that:

 

(a)           Valid and Binding Obligations. This Agreement, and all agreements and documents executed and delivered pursuant to this Agreement, constitute valid and binding obligations of the 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. Neither the execution or delivery of this Agreement by the Seller nor the fulfillment or compliance by the 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, 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 the Seller or compliance with the provisions hereof by the Seller do 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 the Seller, investigations), claims or demands from any other third party, or other proceedings pending or, to the best of the knowledge of the 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 (the “Actions”) as of the execution of this Agreement. The Seller further warrants and covenants that such actions will not occur after the execution of this Agreement.

 

(d)           Title. The 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 and clear of any encumbrance, except as contemplated by this Agreement.

 

(e)           Exercise of Rights. Without first obtaining written instruction from the Purchaser, the Seller will not exercise any rights in connection with the Seller’s Shares to which the Seller is entitled as of the date of this Agreement, including but not limited to voting rights, share transfer right, dividends rights, preemptive right or any rights in connection with pledge, proxy, charge, lien. The Seller further warrants and covenants that it will, unconditionally and immediately, exercise any rights in connection with the Seller’s Shares in compliance with the Purchaser’s written instruction upon its receipt of such written instruction.

 

4.2    Representations and Warranties by Purchaser. The Purchaser represents and warrants to the Seller that:

 

(a)           Valid and Binding Obligations. This Agreement, and all agreements and documents executed and delivered pursuant to this Agreement, constitute valid and binding obligations of the Purchaser, enforceable against the 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.

 

 

 

4.3.          Covenants.

 

(a)           Without the prior written consent of the Purchaser, the Seller shall vote the Seller’s Shares such that the Shell Company shall not, (i) issue or create any new shares, equity, registered capital, ownership interest, or equity-linked securities, or any options or warrants that are directly convertible into, or exercisable or exchangeable for, shares, equity, registered capital, ownership interest, or equity-linked securities of the Shell Company or other similar equivalent arrangements, (ii) alter the shareholding structure of the Shell Company and (or) the HK Company, (iii) cancel or otherwise alter the Seller’s Shares, (iv) amend the charter or the by-laws of the Shell Company and (or) the HK Company, (v) liquidate or wind up the Shell Company and (or) the HK Company, (vi) sell, transfer, assign, hypothecate or otherwise reduce the value of any assets held by the Shell Company including but without limitation, any and all shares of the HK Company held by the Shell Company and the Company held by the HK Company or (vi) act or omit to act in such a way that would be detrimental to the interest of the Purchaser in the Seller’s Shares, (vii) transfer, assign, pledge, hypothecate or vest any option on his shares in the Shell Company to any third party. The Seller shall cause the Shell Company, the HK Company and the Company to disclose to the Purchaser true copies of all the financial, legal and commercial documents of the Shell Company, the HK Company and the Company and the resolutions of the shareholders and the board of directors.

 

(b)           The Seller agrees that the Purchaser or her Nominee(s) shall be entitled to all the Distributions in respect of the Seller’s Shares. In the event that any such Distributions have been received by the Seller for any reason, the Seller shall, at the request of the Purchaser, pay an amount equivalent to the Distributions received by him to the Purchaser or her Nominee(s) at the time of the exercise of the Call Right by the Purchaser or her Nominee(s).

 

(c)           The transaction contemplated hereunder and any information exchanged between the Parties pursuant to this Agreement will be held in complete and strict confidence by the concerned Parties and their respective advisors, and will not be disclosed to any person except: (i) to the Parties’ respective officers, directors, employees, agents, representatives, advisors, counsel and consultants that reasonably require such information and who agree to comply with the obligation of non-disclosure pursuant to this Agreement; (ii) with the express prior written consent of the other Party; or (iii) as may be required to comply with any applicable law, order, regulation or ruling, or an order, request or direction of a government agency; provided, however, that the foregoing shall not apply to information that: (1) was known to the receiving Party prior to its first receipt from the other Party; (2) becomes a matter of public knowledge without the fault of the receiving Party; or (3) is lawfully received by the Party from a third person with no restrictions on its further dissemination.

 

(d)           If at any time: (i) the Seller fails to 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 Seller by the Purchaser; (ii) the Seller fails to comply with or perform any agreement, covenant or obligation to be complied with or performed by the Seller 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 Seller by the Purchaser; or (iii) the Seller (1) becomes insolvent or is unable to pay his debts or fails or admits in writing his inability generally to pay his debts as they become due; (2) makes a general assignment, arrangement or composition with or for the benefit of his creditors; (3) institutes or has instituted against his a proceeding seeking a judgment of insolvency or bankruptcy or any relief under any Bankruptcy Law, (4) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for him or for all or substantially all his assets; (5) has a secured party that takes possession of all or substantially all his assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all his assets, (6) causes or is subject to any event with respect to him which, under the applicable Law, has an analogous effect to any of the events described in clauses (1) through (5); or (7) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts, then the Call Right shall become immediately exercisable in respect of all of the Seller’s Shares without further regard to the occurrence of any of the Conditions as per Section 2 of this Agreement.

 

5.    MISCELLANEOUS.

 

 

 

 

 

 

 

 

 

 

[Remainder of the Page Intentionally Left Blank]

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

Acknowledged and agreed to:

   

 

Global Law Office

 

 

 

 

[Date]

[________________] (the “Seller”)

[________________]

[________________]

                                  

 

Attention: [ ]

 

 

Dear Sir:

 

In accordance with Section 2.4 of the Call Option Agreement, Purchaser hereby provides this notice of exercise of the Call Right in the manner specified below:

 

 

 

Dated:                             , ______

 

_____________________________________

 

 

 

To            :           [        ] (the “Seller”)

 

From :                  [        ] (the “Purchaser”)

 

I, the undersigned, refer to the Call Option Agreement (the "Call Option Agreement") dated December 29, 2009 made between Purchaser and Seller. Terms defined in the Call Option Agreement shall have the same meanings as used herein.

 

I hereby give you notice that I will transfer to [Nominees' names] the following portion of the Call Right, expressed in terms of the number of Seller’s Shares represented by the portion of the Call Right transferred in accordance with the terms and conditions of the Call Option Agreement,.

Dated [ ]

Yours faithfully