OPTION AGREEMENT
Exhibit
4.3
THE
SECURITIES REPRESENTED BY THIS AGREEMENT AND ISSUABLE UPON THE EXERCISE OF
THE
OPTION EVIDENCED HEREBY (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS AND THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER
AND AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT
REQUIRED AND IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION FROM REGISTRATION
UNDER ANY APPLICABLE STATE SECURITIES LAWS WITH AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY REGARDING COMPLIANCE WITH AND THE AVAILABILITY
OF
ANY SUCH STATE SECURITIES LAWS.
OPTION
AGREEMENT
OPTION
AGREEMENT, dated as of May 3, 2007 (this “Agreement”),
by
and among Mr. Xx Xxxx, a resident and citizen of the People's Republic of
China
(the “Optionee”),
and
Xx. Xxxxxxx Xxxxxxx, a resident and citizen of Japan (the “Option
Grantor”)
relating to shares of stock of Millennium Quest, Inc., a Delaware corporation
(the “Company”).
BACKGROUND
The
Optionee and Option Grantor are each parties to a Share Exchange Agreement,
dated May 3, 2007 (the “Share
Exchange Agreement”),
pursuant to which the Option Grantor is exchanging all of his interests in
International Lorain Holding, Inc., a Cayman Islands company, for Series
B
Voting Convertible Preferred Stock of the Company.
In
order
to close the transactions contemplated by the Share Exchange Agreement the
Optionee and the Option Grantor are entering into this Agreement to document
their mutual understanding regarding the Optionee's rights with respect to
certain shares of the Series B Voting Convertible Preferred Stock of the
Company
owned by the Option Grantor.
NOW,
THEREFORE, in consideration of the premises, mutual covenants herein set
forth
and other good and valuable consideration, subject to the terms and conditions
herein, the Option Grantor and the Optionee hereby agree as
follows:
1. Grant
of Option.
Subject
to the terms and conditions herein, the Option Grantor hereby grants to
the
Optionee an option (the “Option”)
to
purchase 627,897
shares
of the Company’s Series B Voting Convertible Preferred Stock along with any of
the Company's Common Stock that such Series B Voting Convertible Stock
may be
converted into (the “Option
Shares”)
for an
exercise price equal to $66.15 per share. The number of Series B Voting
Convertible Preferred Stock and Common Stock that such Series B Voting
Convertible Preferred Stock will be converted into will be adjusted for
an
splits, reverse splits, stock dividends or any other adjustments to the
capital
structure of the Company. Specifically, the Company contemplates completing
a 1
for 32.84 reverse split and the number of Common Shares covered by this
Agreement will be reduced to reflect such 1 for 32.84 reverse split. The
Optionee, may exercise the option in this Agreement for all of the Option
Shares
or a portion of the Option Shares, at his sole discretion.
2. Exercise
of the Option.
The
Optionee may exercise the option described in this Agreement at any time
at the
Optinonee's discretion, but in no event may the option be exercised on any
date
after the seventh anniversary of the date hereof.
3. Rights
of Optionee.
The
Optionee shall not have any rights to dividends or any other rights of a
stockholder with respect to any Option Shares until such Option Shares shall
have been issued to Optionee (as evidenced by the appropriate entry on the
transfer books of the Company) upon purchase of such Option Shares upon exercise
of the Option.
4. Exercise
Procedure.
(a) The
Optionee may only exercise this Option for the purchase of all of the Option
Shares. This Option may not be exercised in part. The Optionee may exercise
this
Option by delivering to the Option Grantor a written notice duly signed by
the
Optionee indicating that the Optionee is exercising the Option accompanied
by
payment in an amount equal to the full purchase price for the Option Shares.
(b) Following
receipt by the Option Grantor of such notice of exercise and full payment
of the
Exercise Price, the Option Grantor shall issue, as soon as practicable, a
duly
executed stock power for the Option Shares transferring the Option Shares
as
designated by the Optionee and deliver the underlying stock certificate and
the
executed stock power as directed by the Optionee.
(c)
In
order to exercise the option under this Agreement, the Optionee must comply
with
all applicable law. The Optionee must provide satisfactory assuance that
all PRC
law and other applicable laws related to the transfer of the Shares to the
Optionee have been satisified.
5. Lock-up.
If
the
Optionee exercises the Option in accordance with Section 4 above, then
the
Optionee shall be bound to the lock-up provisions of Section 2.07 of the
Share
Exchange Agreement to the same extent to which the Option Grantor is bound
as if
the Optionee had been an original party to the Share Exchange
Agreement.
6. Legend.
If
the
Option Shares are not then covered by a registration statement, each certificate
for the Option Shares shall bear a legend that is substantially similar
to the
following:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH
OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF ITS COUNSEL THAT SUCH REGISTRATION
IS NOT
REQUIRED.”
7. Notices.
Each
notice relating to this Agreement shall be in writing and delivered in
person or
by facsimile or certified mail to the addresses of the respective parties
hereto
as specified on the signature page hereto, or to such other address as
either
party hereto may hereinafter duly give to the other.
8. Binding.
This
Agreement shall be binding upon and inure to the benefit of the parties
hereto,
and their successors, assigns.
9. Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the matters herein, and cannot be amended, modified or terminated
except by an agreement in writing executed by the parties hereto.
10. Governing
Law; Jursidiction.
This
Agreement shall be construed in accordance with and governed by the laws
of the
State of New York without regard to the conflicts of law principles thereof.
Each party agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
may
be commenced in the state and federal courts sitting in the City of New
York,
Borough of Manhattan (“New York Courts”). Each party hereto hereby irrevocably
submits to the jurisdiction of the New York Courts for the adjudication
of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not
to
assert in any proceeding, any claim that it is not personally subject to
the
jurisdiction of any such New York Court, or that such proceeding has been
commenced in an improper or inconvenient forum.
11. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the parties will, to the fullest
extent permitted by law, be entitled to specific performance under this
Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach by Option Grantor
of
its obligations under Section 4b and Option Grantor hereby agrees, to the
fullest extent permitted by law, to waive in any action for specific performance
of any such obligation the defense that a remedy at law would be
adequate.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date
first set forth above.
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/s/
Xx Xxxx
Optionee:
Xx Xxxx
Address:
Beihuan
Zhong Road
Junan
County
Shandong,
China 276600
|
/s/
Xxxxxxx Xxxxxxx
Option
Grantor: Xxxxxxx Xxxxxxx
Address:
Beihuan
Zhong Road
Junan
County
Shandong,
China 276600
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