HOLDBACK
      ESCROW AGREEMENT

     

    This
      Holdback Escrow Agreement, dated as of December 24, 2007 (this “Agreement”),
      is
entered
      into by and among Discovery Technologies, Inc., a Nevada corporation (the
“Company”),
      the
      investors set forth on Exhibit
      A
      and
      signatory hereto (collectively, the “Investors”),
      and
      Tri-State Title & Escrow,
      LLC (the “Escrow
      Agent”).
      The
      principal address of each party hereto is set forth
      on
Exhibit
      A.
      The
      Company is sometimes referred to herein as the Escrowing Party.

     

    WITNESSETH:
      

     

    WHEREAS,
      the Company, through, Hickey Freihofner Capital, a division of Brill Securities,
      Inc, Member NASD/MSRB/SIPC (the “Placement Agent”),
      proposes to make a private offering to accredited institutional investors
      (the “Offering”)
      of the
      Company’s common stock, par value $0.001 per share (the
      “Securities”)
      in
      reliance upon available exemptions from the registration requirements
      of the U.S. Securities Act of 1933, as amended (the “Act”)
      and
      pursuant to the
      Securities Purchase Agreement (the
      “Securities
      Purchase Agreement”),
      in an
      minimum amount of twenty million dollars ($20,000,000) and a maximum aggregate
      amount of twenty six million dollars ($26,000,000) (the “Subscription
      Amount”);

     

    WHEREAS,
      the Company has agreed to deposit at the closing of the transactions
      contemplated by the Securities Purchase Agreement (the “Closing”)
      an
      aggregate of $4,250,000.00 of the proceeds received
      from subscriptions made by the investors in the Offering (the “Investors”)
      for
      the Securities
      as more fully specified in this Agreement (the “Escrowed
      Funds”)
      with
      the Escrow Agent, to be held in escrow
      and administered and distributed as described in Section 4.12 of the Securities
      Purchase Agreement and Section 3 of this Agreement;

     

    WHEREAS,
      Escrow Agent is willing to hold the Escrowed Funds in escrow subject
      to the terms and conditions of this Agreement;

     

    WHEREAS,
      in contemplation of, and as a material inducement for the Investors to
      enter
      into the Securities Purchase Agreement, the Company and Escrow Agent have each
      agreed to execute and deliver this Agreement; and

     

    WHEREAS,
      capitalized terms used but not otherwise defined herein shall have the
      respective meanings given to such terms in the Securities Purchase
      Agreement.

     

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

     

    1. Appointment
      of Escrow Agent.
      The
      Company hereby appoints Escrow Agent as escrow
      agent in accordance with the terms and conditions set forth herein and the
      Escrow Agent
      hereby accepts such appointment.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2. Delivery
      of the Escrowed Funds.

     

    2.1 The
      Company hereby directs that the Escrowed
      Funds be delivered simultaneously with the Closing to the Escrow Agent’s account
      (the “Escrow
      Account”)
      as
      follows:

    


    Account
      Name: Tri-State Title & Escrow, LLC

    Bank:
      Access National Bank, Reston, VA 20191

    Account
      No.: 2681757

    ABA
      No:
      .056009039 

    Escrowed
      Funds: $4,250,000.00

    


    3. Escrow
      Agent to Hold and Disburse Escrowed Funds.
      Promptly following the Closing, the Escrow Agent will provide written notice
      to
      the Company (for simultaneous distribution to the Investors) that the Escrow
      Agent has received the entire amount of Escrowed Funds in the Escrow Account.
      The Escrow Agent will hold and
      disburse the Escrowed Funds received by it pursuant to the terms of this
      Agreement, as follows: 

     

    3.1 Pursuant
      to Section 4.12 of the Securities Purchase Agreement, the Company has undertaken
      that
      no
      later than 120 days following the Closing Date, the Board of Directors of the
      Company shall be comprised of a minimum of five members, a majority of which
      shall be “independent directors” as such term is defined in NASDAQ Marketplace
      Rule 4200(a)(15). Accordingly, $2,000,000
      (the
      “Board
      Holdback Escrow
      Amount”)
      of the
      Escrowed Funds is to be held in the Escrow Account subject to the satisfaction
      of the Company’s obligations under Section 4.12 of the Securities Purchase
      Agreement. 

     

    3.2 Pursuant
      to Section 4.15 of the Securities Purchase Agreement, the Company has undertaken
      that no later than three
      months
      following the Closing Date, the Company will hire a chief financial officer
      who
      is a
      certified public accountant or possesses experience such that he or she can
      reasonably serve as a chief financial officer, fluent in English, and
who
      has a
      working familiarity with
      (i) US
      GAAP and (ii) auditing procedures and compliance for United States public
      companies;
      provided that if the proposed CFO is not a certified public accountant, who
      is
      fluent in English and an expert in GAAP and auditing procedures and compliance
      for United States public companies, then such proposed CFO shall be subject
      to
      Pinnacle’s reasonable approval. The Company shall enter into an employment
      agreement with the CFO for a term of no less than two years. Accordingly,
      $2,000,000
      (the
      “CFO
      Holdback Escrow
      Amount”)
      of the
      Escrowed Funds is to be held in the Escrow Account subject to the satisfaction
      of the Company’s obligations under Section 4.15 of the Securities Purchase
      Agreement. 

     

    3.3 Pursuant
      to Section 4.13 of the Securities Purchase Agreement, the Company has undertaken
      that by the thirtieth day following the Closing Date, the Company shall hire
      either of CCG Elite, Hayden Communications, or Integrated Corporate Relations
      as
      the Company’s investor relations firm. Accordingly, $250,000
      (the
      “IR
      Holdback Escrow
      Amount”)
      of the
      Escrowed Funds is to be held in the Escrow Account subject to the satisfaction
      of the Company’s obligations under Section 4.13 of the Securities Purchase
      Agreement. The
      IR
      Holdback Escrow Amount shall remain in the Escrow Account and shall only be
      released by the Escrow Agent to the Company upon the Escrow Agent’s receipt of
      written notice from the Company and the Investors then holding a majority of
      the
      Shares (the “Required
      Investors”)
      that
      the Company has hired one of the aforementioned investor relations firms and
      then only to the extent that the Company evidences investor relations related
      expenses for payment; provided, however, if there are no such investor relations
      related expenses or only a portion of such IR Holdback Escrow Amount is required
      to pay investor relations related expenses, any remaining portion shall be
      returned to the Investors pro rata to the accounts for such Investors set forth
      on Schedule
      1.
      No
      other portion of the Escrowed Funds may be used by the Company for such
      purposes.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    3.4 If
      for
      any reason or for no reason whatsoever, the Escrow Agent does not receive the
      written notice contemplated
      herein
      from the Company and the Required Investors relating to either the release
      of
      (i) the Board Holdback Escrow Amount prior to 125 calendar days following the
      Closing Date (the “Board
      Compliance Period”)
      or
      (ii) CFO Holdback Escrow Amount prior to 95 calendar days following the Closing
      Date (the “CFO
      Compliance Period”)
      (each
      such failure or breach being referred to as an “Event,”
and
      for purposes of this Section the date such Event occurs being referred to as
      “Event
      Date”),
      then
      in addition to any other rights the Investors may have hereunder, under the
      Securities Purchase Agreement or under applicable law, on each such Event Date
      and on each monthly anniversary of such Event Date (if the applicable Event
      shall not have been cured by such date) until the applicable Event is cured,
      the
      Company shall pay to each Investor by wire transfer an amount in immediately
      available funds, as partial liquidated damages and not as a penalty, equal
      to 1%
      of the aggregate Investment Amount paid by such Investor for Shares pursuant
      to
      the Securities Purchase Agreement. The partial liquidated damages payable under
      this Section 3.4 shall be independent of any other damages payable under this
      Agreement, the Securities Purchase Agreement or any other Transaction Document
      and shall apply on a daily pro-rata basis for any portion of a month prior
      to
      the cure of an Event. In no event will the Company be liable for partial
      liquidated damages under this Agreement in excess of 1% of the aggregate
      Investment Amount of the Investors in any 30-day period in respect of any single
      Event (it being understood that if the Company suffers an Event relating to
      its
      failure to comply with Section 4.12 of the Securities Purchase Agreement and
      an
      Event relating to its failure to comply with Section 4.15 of the Securities
      Purchase Agreement in a 30-day period it will be responsible for 2% of partial
      liquidated damages under this provision in a 30-day period). It is further
      understood that partial liquidated damages under this Agreement are limited
      to
      the Board Holdback Escrow Amount as to that Event and the CFO Holdback Escrow
      Amount as to that Event; provided that the Investors are entitled to all other
      remedies available under applicable law. On any Event Date, the Company will
      deliver to each Investor a written notice which shall set forth the relevant
      Event. Schedule
      1
      attached
      hereto shall set forth the name, address, Investment Amount and delivery
      instructions for any partial liquidated damages contemplated hereby of each
      Investor.

     

    3.5 In
      the
      event that the Escrow Agent does not timely receive the written notice from
      the
      Company and the Required Investors in accordance with the terms hereof prior
      to
      the expiration of either of the Board Compliance Period and/or the CFO
      Compliance Period, as relevant, the Company hereby irrevocably directs the
      Escrow Agent to automatically, and without any action on the part of the parties
      hereto, disburse the partial liquidated damages applicable to any such Event
      to
      the Investors as contemplated herein until the earlier of (i) such time as
      all
      Escrowed Funds applicable to such Event have been disbursed to the Investors
      or
      (ii) such time as the Escrow Agent receives written notice from the Company
      and
      the Required Investors that the obligations of the Company under the Securities
      Purchase Agreement applicable to such Event have been adequately complied
      with.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.
      Interpleader.
      Should
      any controversy arise among the parties hereto with respect
      to this Agreement or with respect to the right to receive the Escrowed Funds,
      the Escrow Agent shall have the right to consult counsel and/or to institute
      an
      appropriate interpleader
      action to determine the rights of the parties. The Escrow Agent is also
hereby
      authorized to institute an appropriate interpleader action upon receipt of
      a
      written letter of direction executed by the parties so directing the Escrow
      Agent. If the Escrow Agent
      is
      directed to institute an appropriate interpleader action, it shall institute
      such action
      not prior to thirty (30) days after receipt of such letter of direction and
      not
      later than
      sixty (60) days after such date. Any interpleader action instituted in
      accordance with this
      Section 4 shall be filed in any court of competent jurisdiction in Virginia,
      and
      the portion of the Escrowed Funds in dispute shall be deposited with the court
      and in such event the Escrow Agent shall be relieved of and discharged from
      any
      and all obligations and liabilities under and pursuant to this Agreement with
      respect to that portion of the Escrowed Funds.

    


    5.
      Exculpation
      and Indemnification of Escrow Agent and Investors.

     

    5.1
       The
      Escrow Agent and the Investors shall have no duties or responsibilities
other
      than those expressly set forth herein. The Escrow Agent and the Investors shall
      have no duty
      to
      enforce any obligation of any person to make any payment or delivery, or to
      direct
      or
      cause any payment or delivery to be made, or to enforce any obligation of any
      person
      to
      perform any other act. The Escrow Agent and the Investors shall be under no
      liability
      to the other parties hereto or anyone else, by reason of any failure, on the
      part of any
      party
      hereto or any maker, guarantor, endorser or other signatory of a document or
      any
      other
      person, to perform such person’s obligations under any such document. Except for
      amendments to this Agreement
      referenced below, and except for written instructions given to the Escrow Agent
      by the Company and the Required Investors relating to the Escrowed Funds, the
      Escrow Agent shall not be obligated to recognize any other
      agreement.

     

    5.2
       Neither
      the Escrow Agent nor the Investors shall be liable to the Company or
to
      anyone
      else for any action taken or omitted by it, or any action suffered by it to
      be
taken
      or
      omitted, in good faith and acting upon any order, notice, demand, certificate,
      opinion
      or advice of counsel (including counsel chosen by the Escrow Agent), statement,
      instrument,
      report, or other paper or document (not only as to its due execution and the
      validity
      and effectiveness of its provisions, but also as to the truth and acceptability
      of any
      information therein contained), which is believed by the Escrow Agent or the
      Investors to be
      genuine and to be signed or presented by the proper person or persons. The
      Escrow Agent
      shall not be bound by any of the terms thereof, unless evidenced by written
      notice delivered
      to the Escrow Agent signed by the proper party or parties and, if the duties
      or
rights
      of
      the Escrow Agent are affected, unless it shall give its prior written consent
      thereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5.3
       Neither
      the Escrow Agent nor the Investors shall be responsible for the sufficiency
      or accuracy of the form, or of the execution, validity, value or genuineness
      of,
any
      document or property received, held or delivered to it hereunder, or of any
      signature or
      endorsement thereon, or for any lack of endorsement thereon, or for any
      description therein;
      nor shall the Escrow Agent or the Investors be responsible or liable to the
      Company or
      to
      anyone else in any respect on account of the identity, authority or rights,
      of
      the person
      executing or delivering or purporting to execute or deliver any document or
      property or this Agreement.
      The
      Escrow Agent shall have no responsibility with respect
      to the use or application of the Escrowed Funds pursuant to the provisions
      hereof.

     

    5.4
       The
      Escrow Agent shall have the right to assume, in the absence of written
notice
      to
      the contrary from the proper person or persons, that a fact or an event, by
      reason of
      which
      an action would or might be taken by the Escrow Agent, does not exist or has
      not
      occurred, without incurring liability to the Company or to anyone else for
      any
      action taken or omitted to be taken or omitted, in good faith and in the
      exercise of its own best judgment, in reliance upon such
      assumption.

     

    5.5 To
      the
      extent that the Escrow Agent becomes liable for the payment of taxes,
      including withholding taxes, in respect of income derived from the investment
      of
the
      Escrowed Funds, or any payment made hereunder, the Escrow Agent may pay such
      taxes;
      and the Escrow Agent may withhold from any payment to the Company (but not
      from
      any partial liquidated damages paid to Investors) of the Escrowed Funds
such
      amount as the Escrow Agent estimates to be sufficient to provide for the payment
      of such
      taxes not yet paid, and may use the sum withheld for that purpose. The Escrow
      Agent
      shall be indemnified and held harmless by the Company against any liability
      for
      taxes and for any penalties
      in respect of taxes, on such investment income or payments in the manner
provided
      in Section 5.6.

     

    5.6 The
      Escrow Agent will be indemnified and held harmless by the Company
      from and against all expenses, including all counsel fees and disbursements,
      or
loss
      suffered by the Escrow Agent in connection with any action, suit or proceedings
      involving
      any claim, or in connection with any claim or demand, which in any way,
directly
      or indirectly, arises out of or relates to this Agreement, the services of
      the
Escrow
      Agent hereunder, except for claims relating to gross negligence by Escrow Agent
      or
      breach
      of this Agreement by the Escrow Agent, or the monies or other property
      held by it hereunder. Promptly after the receipt of the Escrow Agent of notice
      of any demand or claim or the commencement of any action, suit or proceeding,
      the Escrow Agent shall, if a claim in respect thereof is to be made against
      the
      Escrowing Party,
      notify it thereof in writing, but the failure by the Escrow Agent to give such
      notice shall
      not
      relieve any such party from any liability which an Escrowing Party may have
      to
the
      Escrow Agent hereunder. Notwithstanding any obligation to make payments and
      deliveries hereunder, the Escrow Agent may retain and hold for such time as
      it
      deems necessary such amount of monies or property as it shall, from time to
      time, in its sole discretion, seem sufficient to indemnify itself for any such
      loss or expense and for any amounts due it under Section 8.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.7 For
      purposes hereof, the term “expense or loss” shall include all amounts
paid
      or
      payable to satisfy any claim, demand or liability, or in settlement of any
      claim, demand, action, suit or proceeding settled with the express written
      consent of the Escrow Agent, and all costs and expenses, including, but not
      limited to, counsel fees and disbursements, paid or incurred in investigating
      or
      defending against any such claim, demand, action, suit or
      proceeding.

     

    6. Termination
      of Agreement and Resignation of Escrow Agent.

     

    6.1 This
      Agreement
      shall
      terminate upon disbursement of all of the Escrowed Funds, provided that the
      rights of the Escrow Agent and the Investors and the obligations of the Company
      under Section 5 shall survive the termination hereof.

     

    6.2 The
      Escrow Agent may resign at any time and be discharged from its duties
      as
      Escrow Agent hereunder by giving the Company at least five (5) business days
      written
      notice thereof (the “Notice
      Period”).
      As
      soon as practicable after its resignation, the
      Escrow Agent shall, if it receives notice from the Company within the Notice
      Period, turn
      over
      to a successor escrow agent appointed by the Company all Escrowed Funds
(less
      such amount as the Escrow Agent is entitled to retain pursuant to Section 8)
      upon presentation
      of the document appointing the new escrow agent and its acceptance thereof.
      If
      no new
      agent is so appointed within the Notice Period, the Escrow Agent shall return
      the
      Escrowed Funds to the parties from which they were received without interest
      or
      deduction.

     

    7. Form
      of Payments by Escrow Agent.

     

    7.1 Any
      payments of the Escrowed Funds by the Escrow Agent pursuant to the
      terms
      of this Agreement
      shall be
      made by wire transfer unless directed to be made by check by the receiving
      party.

     

    7.2 All
      amounts referred to herein are expressed in United States Dollars and
all
      payments by the Escrow Agent shall be made in such dollars.

     

    8. Compensation. Escrow
      Agent shall be entitled to the following compensation from
      the
      Company (it being understood that no Investor shall be responsible to pay the
      Escrow Agent any compensation hereunder):

     

    8.1 Documentation
      Fee: The
      Company shall pay a documentation fee to the Escrow
      Agent of $2,000 receipt of which is hereby acknowledged by Escrow
      Agent.

     

    8.2 Interest:
      The
      Escrowed Funds shall accrue interest (the “Accrued
      Interest”)
      at the
      available rate obtained by the Escrow Agent with respect to the period during
      which such funds are held in the Escrow Account.
      Each
      time Escrowed Funds are disbursed to the Company in accordance with this
Agreement,
      the Company shall be paid Accrued Interest of 2.0% per annum on the aggregate
      amount of Escrowed Funds disbursed to the Company at such time and the balance
      of Accrued Interest, if any, shall be retained by the Escrow Agent.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    9. Notices. All
      notices, requests, demands, and other communications provided herein shall
      be in
      writing, shall be delivered by hand or by first-class mail, shall be
deemed
      given when received and shall be addressed to parties hereto at their respective
      addresses first set forth on Exhibit
      A
      hereto.

     

    10. Further
      Assurances. From
      time
      to time on and after the date hereof, the Company
      shall deliver or cause to be delivered to the Escrow Agent such further
documents
      and instruments and shall do and cause to be done such further acts as the
      Escrow Agent shall reasonably request (it being understood that the Escrow
      Agent
      shall have
      no
      obligation to make any such request) to carry out more effectively the
      provisions and
      purposes of this Agreement, to evidence compliance herewith or to assure
itself
      that it is protected in acting hereunder.

     

    11. Consent
      to Service of Process.
      The
      Company hereby irrevocably consents to the jurisdiction
      of the courts of the State of Virginia and of any Federal court located in
      such
state
      in
      connection with any action, suit or proceedings arising out of or relating
      to
      this Agreement
      or any action taken or omitted hereunder, and waives personal service
of
      any
      summons, complaint or other process and agrees that the service thereof may
      be
made
      by
      certified or registered mail directed to it at the address listed on
Exhibit
      A hereto.

     

    12. Miscellaneous.

     

    12.1 This
      Agreement shall be construed without regard to any presumption
      or other rule requiring construction against the party causing such instrument
      to be drafted. The terms “hereby,” “hereof,” “hereunder,” and any similar
terms,
      as
      used in this Agreement, refer to the Agreement in its entirety and
      not
      only to the particular portion of this Agreement
      where
      the term is used. The word “person” shall mean any natural person, partnership,
      corporation, government and any other form of business of legal entity. All
      words or terms used in this Agreement,
      regardless of the number or gender in which they were used, shall be deemed
      to
      include any other number and any other gender as the context may require. This
      Agreement
      shall
      not be admissible in evidence to construe the provisions of any prior
      agreement.

     

    12.2 This
      Agreement
      and the
      rights and obligations hereunder of the Company may not be assigned. This
Agreement
      and the
      rights and obligations hereunder of the Escrow Agent may be assigned by the
      Escrow Agent, with the prior consent
      of the Company and the Required Investors. This Agreement shall be binding
      upon
      and inure to
      the
      benefit of each party’s respective successors, heirs and permitted assigns. No
      other person
      shall acquire or have any rights under or by virtue of this Agreement. This
      Agreement
      may not
      be changed orally or modified, amended or supplemented without an express
      written agreement executed by the Escrow Agent, the Company and the Required
      Investors. This Agreement
      is
      intended to be for the sole benefit of the parties hereto and
      their
      respective successors, heirs and permitted assigns, and none of the provisions
      of this
      Agreement are intended to be, nor shall they be construed to be, for the
benefit
      of any third person.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    12.3 This
      Agreement shall be governed by, and construed in accordance
      with, the internal laws of the State of Virginia. The representations and
      warranties contained in this Agreement
      shall
      survive the execution and delivery hereof
      and any investigations made by any party. The headings in this
      Agreement
      are for
      purposes of reference only and shall not limit or otherwise affect any
of
      the
      terms thereof. 

     

    12.4 This
      Agreement may be executed in a number
      of
      counterparts, by facsimile, each of which shall be deemed to be an original
      as
of
      those
      whose signature appears thereon, and all of which shall together constitute
      one
and
      the
      same instrument. This Agreement shall become binding when one or more of the
      counterparts hereof, individually or taken together, are signed by all the
      parties.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

    TRI-STATE
      TITLE & ESCROW, LLC

    


    


    By: 
      /s/
      Guy W
      Turner 

    
      

    

    Name:
      Guy
      W. Turner

    Title:
      President

    


    


    DISCOVERY
      TECHNOLOGIES, INC.

    


    


    By: 
      /s/
      Tao
      Li

    
      

    

    Name:
      Tao
      Li

    Title:
      Chairman of the Board, 

    President
      and Chief Executive Officer

    


    


    NAME
      OF INVESTOR:

     

    ___________________________________

     

    By:

    
      

    

    Name:
      

    Title:

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

      EXHIBIT
        A

    

     

    PARTIES
      TO AGREEMENT

     

    Tri
      State Title & Escrow LLC 

    360
      Main
      Street, 1st
      Floor

    P.O.
      Box
      391

    Washington,
      VA 22747

    (800)
      984-2155

    Attention:
      Johnnie L. Zarecor

    


    Telephone:   
      (540)
      675-2155 

    Fax:               (540)
      675-2155

    Email:            escrow@tristatetitle.net


    


    Discovery
      Technologies, Inc.

    45
      Old
      Millstone Drive, Unit 6,

    East
      Windsor, NJ 08520

    Attn:
      Mr.
      Yinshing David To

    


    [Insert
      Investors]

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    Schedule
      1

     

    
      
        
        

      

      
        11