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      NEITHER
        THIS SECURITY NOR THE SECURITIES INTO 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 OR OTHER LOAN SECURED BY SUCH
        SECURITIES.

      

      COMMON
        STOCK PURCHASE WARRANT

      

      To
        Purchase                           
       Shares of Common Stock of

      

      MILLENNIUM
        QUEST, INC.

       

      THIS
        COMMON STOCK PURCHASE WARRANT (the “Warrant”)
        certifies that, for value
        received,                                  
        (the “Holder”),
        is
        entitled, subject to Shareholder Approval and the Amendment Filing, and upon
        the
        other terms and limitations on exercise hereinafter set forth, at any time
        on or
        after May 3, 2007 (the “Initial
        Exercise Date”)
        and on
        or prior to the close of business on the third anniversary of the Initial
        Exercise Date (the “Termination
        Date”)
        but
        not thereafter, to subscribe for and purchase from Millennium Quest, Inc.,
        a
        Delaware corporation (the “Company”),
        up
        to                                  
        shares (the “Warrant Shares”) of the Common Stock, par value $0.001 per share,
        of the Company (the “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). 

       

      This
        Warrant is being issued to the Holder pursuant to Section 2(b) of that
        certain engagement letter agreement dated March 16, 2007 between International
        Lorain Holding, Inc. and Sterne, Agee & Leach, Inc. 

       

      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
        May 3, 2007, among the Company, the purchasers signatory thereto, and the
        Beneficial Owners. For the sake of clarity, the stated number of Warrant
        Shares
        and the stated Exercise Price set forth herein are determined pre-Reverse
        Split
        and will be adjusted by the Reverse Split. 

       

      
        
          
          

        

        
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      Section
        2. Exercise.

       

      a)  Exercise
        of Warrant.
        Subject
        to Shareholder Approval and the Amendment Filing, 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 of a duly executed facsimile copy of the
        Notice
        of Exercise Form annexed hereto (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 such Holder appearing on the books of the Company); and, within three
        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. Notwithstanding anything herein to the contrary, the Holder
        shall
        not be required to physically surrender this Warrant to the Company until
        the
        Holder has purchased all of the Warrant Shares available hereunder and the
        Warrant has been exercised in full, in which case, the Holder shall surrender
        this Warrant to the Company for cancellation within three Trading Days of
        the
        date the final Notice of Exercise is delivered to the Company. Partial exercises
        of this Warrant resulting in purchases of a portion of the total number of
        Warrant Shares available hereunder shall have the effect of lowering the
        outstanding number of Warrant Shares purchasable hereunder in an amount equal
        to
        the applicable number of Warrant Shares purchased. The Holder and the Company
        shall maintain records showing the number of Warrant Shares purchased and
        the
        date of such purchases. The Company shall deliver any objection to any Notice
        of
        Exercise Form within one Business Day of receipt of such notice. The Holder
        and
        any assignee, by acceptance of this Warrant, acknowledge and agree that,
        by
        reason of the provisions of this paragraph, following the purchase of a portion
        of the Warrant Shares hereunder, the number of Warrant Shares available for
        purchase hereunder at any given time may be less than the amount stated on
        the
        face hereof. 

       

      b)  Exercise
        Price.
        The
        exercise price per share of the Common Stock under this Warrant shall be
        $0.1294153, subject to adjustment as set forth herein (the “Exercise
        Price”).

       

      c)  Cashless
        Exercise.
        If at
        any time after one year from the date of issuance of this Warrant 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 tender Warrants for cancellation and in return 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 

      

      
        
          
          

        

        
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      (X)
        = the
        number of Warrant Shares issuable upon exercise of the Warrants tendered
        for
        cancellation in accordance with the terms of this Warrant by means of a cash
        exercise rather than a cashless exercise.

      

      “VWAP”
means,
        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 for trading as reported by Bloomberg Financial 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 the 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
        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 Holder
        and
        reasonably acceptable to the Company.

      

      Notwithstanding
        anything herein to the contrary, on the Termination Date, this Warrant shall
        be
        automatically exercised via cashless exercise pursuant to this Section
        2(c).

      

      d)  Mechanics
        of Exercise.
        

       

      i.  Authorization
        of Warrant Shares.
        The
        Company covenants that all Warrant Shares which may be issued upon the exercise
        of the purchase rights represented by this Warrant will, upon exercise of
        the
        purchase rights represented by this Warrant and subject to Shareholder Approval
        and the Amendment Filing, be duly authorized, validly issued, fully paid
        and
        nonassessable and free from all taxes, liens and charges created by the Company
        in respect of the issue thereof (other than taxes in respect of any transfer
        occurring contemporaneously with such issue). 

       

      ii.  Delivery
        of Certificates Upon Exercise.
        Subject
        to and in reliance on Holder’s covenant in Section 6(b) of the Registration
        Rights Agreement, in the event of exercise of this Warrant at a time when
        a
        Registration Statement covering the resale of the Warrant Shares is effective
        under the Securities Act, certificates
        for shares purchased hereunder shall be transmitted by the transfer agent
        of the
        Company 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 a participant in such system, and otherwise by physical
        delivery to the address specified by the Holder in the Notice of Exercise
        within
        three 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 (“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)(vii) prior to the issuance
        of
        such shares, have been paid. 

       

      
        
          
          

        

        
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      iii.  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.

       

      iv.  Rescission
        Rights.
        If the
        Company fails to cause its transfer agent to transmit to the Holder a
        certificate or certificates representing the Warrant Shares by the Warrant
        Share
        Delivery Date, then the Holder will have the right to rescind such
        exercise.

       

      v.  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 its transfer agent to transmit to the Holder a certificate or certificates
        representing the Warrant Shares pursuant to an exercise by 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) 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 (1) 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 (A) the number of shares purchased in the Buy-In at issue times
        (B)
        the price at which the sell order giving rise to such purchase obligation
        was
        executed, and (2) 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 (1) 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.

       

      
        
          
          

        

        
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      vi.  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 pay
        a
        cash adjustment in respect of such final fraction in an amount equal to such
        fraction multiplied by the Exercise Price.

       

      vii.  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.

       

      viii.  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.

       

      e)  Registration
        Rights.
        The
        Company shall prepare and file with the Commission a registration statement
        under the Securities Act on Form S-1 (or on such other form appropriate for
        such
        purpose) covering the resale of all Warrant Shares for an offering to be
        made on
        a continuous basis pursuant to Rule 415.  The Company shall provide to the
        Holders and its assignees registration rights at least as favorable to the
        selling stockholder as the rights set forth in the Registration Rights
        Agreement, and the Company shall enter into a registration rights agreement
        with
        the Holder and its assignees on terms and conditions at least as favorable
        to
        the selling stockholder as the Registration Rights Agreement. In furtherance
        of
        its covenants herein, the Company shall include the Warrant Shares on the
        Registration Statement to be filed for the benefit of the Investors pursuant
        to
        the Registration Rights Agreement. 

       

      
        
          
          

        

        
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      Section
        3. Certain Adjustments.

       

      a)  Stock
        Dividends and Splits.
        If the
        Company, at any time while this Warrant is outstanding: (A) 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),
        (B)
        subdivides outstanding shares of Common Stock into a larger number of shares,
        (C) combines (including by way of the Reverse Split) outstanding shares of
        Common Stock into a smaller number of shares, or (D) 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 shall be the number of shares of Common Stock outstanding
        immediately after such event and the number of shares issuable upon exercise
        of
        this Warrant shall be proportionately adjusted. Any adjustment made pursuant
        to
        this Section 3(a) shall become effective immediately after the record date
        for
        the determination of stockholders entitled to receive such dividend or
        distribution and shall become effective immediately after the effective date
        in
        the case of a subdivision, combination or re-classification.

       

      b)  Pro
        Rata Distributions.
        If the
        Company, at any time while the Warrant is outstanding, shall distribute to
        all
        holders of Common Stock (and not to Holders of the Warrants) (i) evidences
        of
        its indebtedness or assets (including cash and cash dividends), (ii) any
        security (other than a distribution of Common Stock covered by subpart (a)
        above), or (iii) rights or warrants to subscribe for or purchase any security,
        (each, a “Distributed Property”) then in each such case the Holder shall, upon
        exercise of this Warrant, be entitled to receive such Distributed Property
        as
        the Holder would have received had the Holder exercised the Warrant prior
        to the
        record date for the distribution of the Distributed Property. 

       

      c)  Fundamental
        Transaction.
        If, at
        any time while this Warrant is outstanding, (A) the Company effects any merger
        or consolidation of the Company with or into another Person, (B) the Company
        effects any sale of all or substantially all of its assets in one or a series
        of
        related transactions, (C) any tender offer or exchange offer (whether by
        the
        Company or another Person) is completed pursuant to which holders of Common
        Stock are permitted to tender or exchange their shares for other securities,
        cash or property, or (D) the Company effects any reclassification of the
        Common
        Stock or any compulsory share exchange pursuant to which the Common Stock
        is
        effectively converted into or exchanged for other securities, cash or property
        (in any such case, a “Fundamental
        Transaction”),
        then,
        upon any subsequent exercise of this Warrant, the Holder shall have the right
        to
        receive, for each Warrant Share that would have been issuable upon such exercise
        immediately prior to the occurrence of such Fundamental Transaction, at the
        option of the Holder, (a) upon exercise of this Warrant, the number of shares
        of
        Common Stock of the successor or acquiring corporation or of the Company,
        if it
        is the surviving corporation, and any additional consideration (the
“Alternate
        Consideration”)
        receivable upon or as a result of such reorganization, reclassification,
        merger,
        consolidation or disposition of assets by a Holder of the number of shares
        of
        Common Stock for which this Warrant is exercisable immediately prior to such
        event or (b) if the Company is acquired in an all cash transaction, cash
        equal
        to the value of this Warrant as determined in accordance with the Black-Scholes
        option pricing formula. For purposes of any such exercise, the determination
        of
        the Exercise Price shall be appropriately adjusted to apply to such Alternate
        Consideration based on the amount of Alternate Consideration issuable in
        respect
        of one share of Common Stock in such Fundamental Transaction, and the Company
        shall apportion the Exercise Price among the Alternate Consideration in a
        reasonable manner reflecting the relative value of any different components
        of
        the Alternate Consideration. If holders of Common Stock are given any choice
        as
        to the securities, cash or property to be received in a Fundamental Transaction,
        then the Holder shall be given the same choice as to the Alternate Consideration
        it receives upon any exercise of this Warrant following such Fundamental
        Transaction. To the extent necessary to effectuate the foregoing provisions,
        any
        successor to the Company or surviving entity in such Fundamental Transaction
        shall issue to the Holder a new warrant consistent with the foregoing provisions
        and evidencing the Holder’s right to exercise such warrant into Alternate
        Consideration. The terms of any agreement pursuant to which a Fundamental
        Transaction is effected shall include terms requiring any such successor
        or
        surviving entity to comply with the provisions of this Section 3(c) and insuring
        that this Warrant (or any such replacement security) will be similarly adjusted
        upon any subsequent transaction analogous to a Fundamental
        Transaction.

       

      
        
          
          

        

        
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      d)  Calculations.
        All
        calculations under this Section 3 shall be made to the nearest cent or the
        nearest 1/100th of a share, as the case may be. For purposes of this Section
        3,
        the number of shares of Common Stock deemed to be issued and outstanding
        as of a
        given date shall be the sum of the number of shares of Common Stock (excluding
        treasury shares, if any) issued and outstanding.

       

      e)  Voluntary
        Adjustment By Company.
        The
        Company may at any time during the term of this Warrant reduce the then current
        Exercise Price to any amount and for any period of time deemed appropriate
        by
        the Board of Directors of the Company.

       

      
        
          
          

        

        
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      f)  Notice
        to Holders.
        

       

      i.  Adjustment
        to Warrant Shares; Notice of Adjustment.
        Whenever the Exercise Price is adjusted pursuant to any provision of this
        Section 3, the number of Warrant Shares issuable hereunder shall be increased
        such that the aggregate Exercise Price payable hereunder, after taking into
        account the decrease in the Exercise Price, shall be equal to the aggregate
        Exercise Price prior to such adjustment. The Company shall promptly mail
        to each
        Holder a notice setting forth the Exercise Price and Warrant Share amount
        after
        each adjustment and setting forth a brief statement of the facts requiring
        such
        adjustment. 

       

      ii.  Notice
        to Allow Exercise by Holder.
        If (A)
        the Company shall declare a dividend (or any other distribution in whatever
        form) on the Common Stock; (B) the Company shall declare a special nonrecurring
        cash dividend on or a redemption of the Common Stock; (C) the Company shall
        authorize the granting to all holders of the Common Stock rights or warrants
        to
        subscribe for or purchase any shares of capital stock of any class or of
        any
        rights; (D) the approval of any stockholders of the Company shall be required
        in
        connection with any reclassification of the Common Stock, any consolidation
        or
        merger to which the Company is a party, any sale or transfer of all or
        substantially all of the assets of the Company, of any compulsory share exchange
        whereby the Common Stock is converted into other securities, cash or property;
        (E) the Company shall authorize the voluntary or involuntary dissolution,
        liquidation or winding up of the affairs of the Company; then, in each case,
        the
        Company shall cause to be mailed to the Holder at its last address as it
        shall
        appear upon the Warrant Register of the Company, at least 20 calendar days
        prior
        to the applicable record or effective date hereinafter specified, a notice
        stating (x) the date on which a record is to be taken for the purpose of
        such
        dividend, distribution, redemption, rights or warrants, or if a record is
        not to
        be taken, the date as of which the holders of the Common Stock of record
        to be
        entitled to such dividend, distributions, redemption, rights or warrants
        are to
        be determined or (y) the date on which such reclassification, consolidation,
        merger, sale, transfer or share exchange is expected to become effective
        or
        close, and the date as of which it is expected that holders of the Common
        Stock
        of record shall be entitled to exchange their shares of the Common Stock
        for
        securities, cash or other property deliverable upon such reclassification,
        consolidation, merger, sale, transfer or share exchange; provided that the
        failure to mail such notice or any defect therein or in the mailing thereof
        shall not affect the validity of the corporate action required to be specified
        in such notice. The Holder is entitled to exercise this Warrant during the
        20-day period commencing on the date of such notice to the effective date
        of the
        event triggering such notice.

       

      
        
          
          

        

        
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      Section
        4. Transfer
        of Warrant.

       

      a)  Transferability.
        Subject
        to compliance with any applicable securities laws and the conditions set
        forth
        in Section 4(d), this Warrant and all rights hereunder (including, without
        limitation, any registration rights) are transferable, in whole or in part,
        upon
        surrender of this Warrant at the principal office of the Company or its
        designated agent, together with a written assignment of this Warrant
        substantially in the form attached hereto duly executed by the Holder or
        its
        agent or attorney and funds sufficient to pay any transfer taxes payable
        upon
        the making of such transfer. Upon such surrender and, if required, such payment,
        the Company shall execute and deliver a new Warrant or Warrants in the name
        of
        the assignee or assignees and in the denomination or denominations specified
        in
        such instrument of assignment, and shall issue to the assignor a new Warrant
        evidencing the portion of this Warrant not so assigned, and this Warrant
        shall
        promptly be cancelled. A Warrant, if properly assigned, may be exercised
        by a
        new holder for the purchase of Warrant Shares without having a new Warrant
        issued. 

       

      b)  New
        Warrants.
        This
        Warrant may be divided or combined with other Warrants upon presentation
        hereof
        at the aforesaid office of the Company, together with a written notice
        specifying the names and denominations in which new Warrants are to be issued,
        signed by the Holder or its agent or attorney. Subject to compliance with
        Section 4(a), as to any transfer which may be involved in such division or
        combination, the Company shall execute and deliver a new Warrant or Warrants
        in
        exchange for the Warrant or Warrants to be divided or combined in accordance
        with such notice.

       

      c)  Warrant
        Register.
        The
        Company shall register this Warrant, upon records to be maintained by the
        Company for that purpose (the “Warrant
        Register”),
        in
        the name of the record Holder hereof from time to time. The Company may deem
        and
        treat the registered Holder of this Warrant as the absolute owner hereof
        for the
        purpose of any exercise hereof or any distribution to the Holder, and for
        all
        other purposes, absent actual notice to the contrary.

       

      d)  Transfer
        Restrictions.
        In
        connection with any transfer of this Warrant, the
        Company may require, as a condition of allowing such transfer (i) that the
        Holder or transferee of this Warrant, as the case may be, furnish to the
        Company
        a written opinion of counsel (which opinion shall be in form, substance and
        scope customary for opinions of counsel in comparable transactions) to the
        effect that such transfer may be made without
        registration under
        the
        Securities Act and under applicable state securities or blue sky laws, (ii)
        that
        the holder or transferee execute and deliver to the Company an investment
        letter
        in form and substance acceptable to the Company and (iii) that the transferee
        be
        an “accredited
        investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
        promulgated under the Securities Act or a “qualified institutional buyer” as
        defined in Rule 144A(a) under the Securities Act.

       

      
        
          
          

        

        
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      Section
        5. Miscellaneous.

       

      a)  No
        Rights as Shareholder Until Exercise.
        This
        Warrant does not entitle the Holder to any voting rights or other rights
        as a
        shareholder of the Company prior to the exercise hereof as set forth in Section
        2(d)(ii). 

       

      b)  Loss,
        Theft, Destruction or Mutilation of Warrant.
        The
        Company covenants that upon receipt by the Company of evidence reasonably
        satisfactory to it of the loss, theft, destruction or mutilation of this
        Warrant
        or any stock certificate relating to the Warrant Shares, and in case of loss,
        theft or destruction, of indemnity or security reasonably satisfactory to
        it
        (which, in the case of the Warrant, shall not include the posting of any
        bond),
        and upon surrender and cancellation of such Warrant or stock certificate,
        if
        mutilated, the Company will make and deliver a new Warrant or stock certificate
        of like tenor and dated as of such cancellation, in lieu of such Warrant
        or
        stock certificate.

       

      c)  Saturdays,
        Sundays, Holidays, etc.
        If the
        last or appointed day for the taking of any action or the expiration of any
        right required or granted herein shall not be a Business Day, then such action
        may be taken or such right may be exercised on the next succeeding Business
        Day.

       

      d)  Authorized
        Shares.
        

       

      The
        Company covenants to take all action in a timely manner to obtain Shareholder
        Approval and effect the Amendment Filing, and thereafter, during the period
        the
        Warrant is outstanding, reserve from its authorized and unissued Common Stock
        a
        sufficient number of shares to provide for the issuance of the Warrant Shares
        upon the exercise of any purchase rights under this Warrant. The Company
        further
        covenants that its issuance of this Warrant shall constitute full authority
        to
        its officers who are charged with the duty of executing stock certificates
        to
        execute and issue the necessary certificates for the Warrant Shares upon
        the
        exercise of the purchase rights under this Warrant. The Company will take
        all
        such reasonable action as may be necessary to assure that such Warrant Shares
        may be issued as provided herein without violation of any applicable law
        or
        regulation, or of any requirements of the Trading Market upon which the Common
        Stock may be listed. The Company further covenants to list the Warrant Shares
        on
        each Trading Market on which its Common Stock is or becomes listed.

       

      Except
        and to the extent as waived or consented to by the Holder, the Company shall
        not
        by any action, including, without limitation, amending its certificate of
        incorporation or through any reorganization, transfer of assets, consolidation,
        merger, dissolution, issue or sale of securities or any other voluntary action,
        avoid or seek to avoid the observance or performance of any of the terms
        of this
        Warrant, but will at all times in good faith assist in the carrying out of
        all
        such terms and in the taking of all such actions as may be necessary or
        appropriate to protect the rights of Holder as set forth in this Warrant
        against
        impairment. Without limiting the generality of the foregoing, the Company
        will
        (a) not increase the par value of any Warrant Shares above the amount payable
        therefor upon such exercise immediately prior to such increase in par value,
        (b)
        take all such action as may be necessary or appropriate in order that the
        Company may validly and legally issue fully paid and nonassessable Warrant
        Shares upon the exercise of this Warrant, and (c) use commercially reasonable
        efforts to obtain all such authorizations, exemptions or consents from any
        public regulatory body having jurisdiction thereof as may be necessary to
        enable
        the Company to perform its obligations under this Warrant.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Before
        taking any action which would result in an adjustment in the number of Warrant
        Shares for which this Warrant is exercisable or in the Exercise Price, the
        Company shall obtain all such authorizations or exemptions thereof, or consents
        thereto, as may be necessary from any public regulatory body or bodies having
        jurisdiction thereof.

       

      e)  Jurisdiction.
        All
        questions concerning the construction, validity, enforcement and interpretation
        of this Warrant shall be determined in accordance with the provisions of
        the
        Purchase Agreement.

       

      f)  Reissuance
        of Warrant.
        Following Shareholder Approval and the Amendment Filing, the Company, at
        the
        request of the Holder and upon delivery of this Warrant for cancellation
        and
        reissuance hereunder, shall issue to Holder, at the Company’s expense, a new
        Warrant that gives effect to the Shareholder Approval and the Amendment Filing
        but which otherwise is on exactly the same terms and conditions as this
        Warrant.

       

      g)  Nonwaiver
        and Expenses.
        No
        course of dealing or any delay or failure to exercise any right hereunder
        on the
        part of Holder shall operate as a waiver of such right or otherwise prejudice
        Holder’s rights, powers or remedies, notwithstanding the fact that all rights
        hereunder terminate on the Termination Date. If the Company willfully and
        knowingly fails to comply with any provision of this Warrant, which results
        in
        any material damages to the Holder, the Company shall pay to Holder such
        amounts
        as shall be sufficient to cover any costs and expenses including, but not
        limited to, reasonable attorneys’ fees, including those of appellate
        proceedings, incurred by Holder in collecting any amounts due pursuant hereto
        or
        in otherwise enforcing any of its rights, powers or remedies
        hereunder.

       

      h)  Notices.
        Any
        notice, request or other document required or permitted to be given or delivered
        to the Holder by the Company shall be delivered in accordance with the notice
        provisions of the Purchase Agreement to the Holder as follows:

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

      

      i)  Limitation
        of Liability.
        No
        provision hereof, in the absence of any affirmative action by Holder to exercise
        this Warrant to purchase Warrant Shares, and no enumeration herein of the
        rights
        or privileges of Holder, shall give rise to any liability of Holder for the
        purchase price of any Common Stock or as a stockholder of the Company, whether
        such liability is asserted by the Company or by creditors of the
        Company.

       

      j)  Remedies.
        Holder,
        in addition to being entitled to exercise all rights granted by law, including
        recovery of damages, will be entitled to specific performance of its rights
        under this Warrant. The Company agrees that monetary damages would not be
        adequate compensation for any loss incurred by reason of a breach by it of
        the
        provisions of this Warrant and hereby agrees to waive and not to assert the
        defense in any action for specific performance that a remedy at law would
        be
        adequate.

       

      k)  Successors
        and Assigns.
        Subject
        to applicable securities laws, this Warrant and the rights and obligations
        evidenced hereby shall inure to the benefit of and be binding upon the
        successors of the Company and the successors and permitted assigns of Holder.
        The provisions of this Warrant are intended to be for the benefit of all
        Holders
        from time to time of this Warrant and shall be enforceable by any such Holder
        or
        holder of Warrant Shares.

       

      l)  Amendment.
        This
        Warrant may be modified or amended or the provisions hereof waived with the
        written consent of the Company and the Holder.

       

      m)  Severability.
        Wherever possible, each provision of this Warrant shall be interpreted in
        such
        manner as to be effective and valid under applicable law, but if any provision
        of this Warrant shall be prohibited by or invalid under applicable law, such
        provision shall be ineffective to the extent of such prohibition or invalidity,
        without invalidating the remainder of such provisions or the remaining
        provisions of this Warrant.

       

      n)  Headings.
        The
        headings used in this Warrant are for the convenience of reference only and
        shall not, for any purpose, be deemed a part of this Warrant.

       

      

      ********************

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
        officer thereunto duly authorized.

       

      
        	 Dated:                                     	 	 
	 	MILLENNIUM
                QUEST, INC.
	 
 	 
 	 
 
	 	By:  	
              
	 	
                

                 

              
	 	 

      

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      NOTICE
        OF EXERCISE

      

      TO: MILLENNIUM
        QUEST, INC.

      

      (1) The
        undersigned hereby elects to purchase ________ Warrant Shares of the Company
        pursuant to the terms of the attached Warrant (only if exercised in full),
        and
        tenders herewith payment of the exercise price in full, together with all
        applicable transfer taxes, if any.

       

      (2) Payment
        shall take the form of (check applicable box):

       

      o
        in lawful money of the
        United States; or

       

      o
        [if permitted] the cancellation of such
        number of Warrant Shares as is necessary, in accordance with the formula
        set
        forth in subsection 2(c), to exercise this Warrant with respect to the maximum
        number of Warrant Shares purchasable pursuant to the cashless exercise procedure
        set forth in subsection 2(c).

       

      (3) Please
        issue a certificate or certificates representing said Warrant Shares in the
        name
        of the undersigned or in such other name as is specified below:

       

      _______________________________

       

      

      The
        Warrant Shares shall be delivered to the following DWAC Account Number or
        by
        physical delivery of a certificate to:

      

      _______________________________

       

      _______________________________

       

      _______________________________

      

      (4)
        Accredited
        Investor.
        The
        undersigned is an “accredited investor” as defined in Regulation D promulgated
        under the Securities Act of 1933, as amended.

      

      [SIGNATURE
        OF HOLDER]

       

      Name
        of
        Investing Entity:
        ________________________________________________________________________

      Signature
        of Authorized Signatory of Investing Entity:
        __________________________________________________

      Name
        of
        Authorized Signatory:
        ____________________________________________________________________

      Title
        of
        Authorized Signatory:
        _____________________________________________________________________

      Date:
        ________________________________________________________________________________________

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      ASSIGNMENT
        FORM

      

      (To
        assign the foregoing warrant, execute

      this
        form
        and supply required information. 

      Do
        not
        use this form to exercise the warrant.)

      

      

      

      FOR
        VALUE
        RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and
        all
        rights evidenced thereby are hereby assigned to

       

      

      _______________________________________________
        whose address is

      

      _______________________________________________________________.

      

      

      

      _______________________________________________________________

      

      Dated:
        ______________, _______

      

      

      Holder’s
        Signature: _____________________________

      

      Holder’s
        Address:  _____________________________

       

                                                                                        
        _____________________________

      

      

      

      Signature
        Guaranteed: ___________________________________________

      

      

      NOTE:
        The
        signature to this Assignment Form must correspond with the name as it appears
        on
        the face of the Warrant, without alteration or enlargement or any change
        whatsoever, and must be guaranteed by a bank or trust company. Officers of
        corporations and those acting in a fiduciary or other representative capacity
        should file proper evidence of authority to assign the foregoing
        Warrant.Exhibit
      10.1

    SECURITIES
      PURCHASE AGREEMENT

    

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of May 3, 2007, by and among Millennium Quest, Inc., a Delaware
      corporation, and all predecessors thereto (the “Company”)
      and the
      investors identified on the signature pages hereto (each, an “Investor”
      and
      collectively, the “Investors”).
      Hisashi Akazawa and Si Chen join as additional parties to this Agreement for
      purposes of Sections 5 and 7 only (each a “Beneficial
      Owner”
and
      together the “Beneficial
      Owners”).

    

    R
      E C
      I T A L S

    

    A. Subject
      to the terms and conditions set forth in this Agreement and pursuant to Section
      4(2) of the Securities Act (as defined below) and Rule 506 promulgated
      thereunder, the Company desires to issue and sell to each Investor, and each
      Investor, severally and not jointly, desires to purchase from the Company
      certain securities of the Company, as more fully described in this
      Agreement.

     

    B. Prior
      to
      the consummation of the purchase and sale of the Company’s securities pursuant
      to this Agreement, the Company shall consummate its acquisition (“Lorain
      Acquisition”)
      of all
      of the outstanding capital shares of International Lorain Holding, Inc., a
      Cayman Islands company (“Lorain”),
      in
      consideration of the Company’s issuance of 697,663 shares of its Series B Voting
      Convertible Preferred Stock, pursuant to that certain Share Exchange Agreement
      of even date herewith (“Share
      Exchange Agreement”)
      between the Company, Lorain and Hisashi Akazawa.

     

    A
      G R
      E E M E N T

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Investors agree as
      follows:

     

    ARTICLE
      1.

    DEFINITIONS

     

    1.1.  Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms shall have the meanings indicated in this
      Section 1.1:

     

    “2007
      Guaranteed ATNI” has
      the
      meaning set forth in Section 5.2(a).

     

    “2007
      Make Good Shares” has
      the
      meaning set forth in Section 5.2(a).

     

    “2008
      Guaranteed
      ATNI” has
      the
      meaning set forth in Section 5.2(b).

     

    “2008
      Make Good Shares” has
      the
      meaning set forth in Section 5.2(b).

     

    “Action”
      means
      any action, suit, inquiry, notice of violation, proceeding (including any
      partial proceeding such as a deposition) or investigation pending or threatened
      in writing against or affecting the Company, any Subsidiary or any of their
      respective properties before or by any court, arbitrator, governmental or
      administrative agency, regulatory authority (federal, state, county, local
      or
      foreign), stock market, stock exchange or trading facility.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Affiliate”
      means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144.

     

    “Amendment
      Filing”
shall
      mean the filing of a certificate of amendment to the restated certificate of
      incorporation of the Company with the Delaware Secretary of State for purposes
      of effecting (i) an increase in the number of authorized shares of Common Stock
      to 200,000,000 shares, (ii) a change in the corporate name of the Company to
      “Lorain International Food Group, Inc.”, and (iii) the Reverse
      Split.

     

    “Business
      Day”
      means
      any day except Saturday, Sunday and any day which is a federal legal holiday
      or
      a day on which banking institutions in the State of New York or the State of
      Utah are authorized or required by law or other governmental action to
      close.

     

    “Buy-In”
      has
      the
      meaning set forth in Section 4.1(c).

     

    "Certificate
      of Designation" shall
      mean a Certificate of Designation to be filed prior to the Closing by the
      Company with the Secretary of State of the State of Delaware, setting forth
      the
      rights, preferences and privileges of the Shares, in the form attached as
Exhibit
      A
      hereto.

     

    “Closing”
      means
      the closing of the purchase and sale of the Shares pursuant to Article
      II.

     

    “Closing
      Date”
      means
      the Business Day on which all of the conditions set forth in Sections 6.1 and
      6.2 hereof are satisfied, or such other date as the parties may
      agree.

     

    "Closing
      Escrow Agreement"
      means
      the Closing Escrow Agreement, dated as of the date hereof, between the Placement
      Agent, the Company and the Escrow Agent pursuant to which the Investors shall
      deposit their Investment Amounts with the Escrow Agent to be applied to the
      transactions contemplated hereunder, in the form of Exhibit
      B
      hereto.

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
      means
      the common stock of the Company, par value $0.001 per share, and any securities
      into which such common stock may hereafter be reclassified or for which it
      may
      be exchanged as a class.

     

    “Common
      Stock Equivalents”
      means
      any securities of the Company or any Subsidiary which entitle the holder thereof
      to acquire Common Stock at any time, including without limitation, any debt,
      preferred stock, rights, options, warrants or other instrument that is at any
      time convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock or other securities that entitle the holder
      to
      receive, directly or indirectly, Common Stock.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Company
      Counsel”
      means
      Thelen Reid Brown Raysman & Steiner LLP.

     

    “Company
      Deliverables”
      has the
      meaning set forth in Section 2.2(a).

     

    “Disclosure
      Materials”
      means
      the SEC reports, the Draft S-1 Registration Statement and the schedules to
      this
      Agreement. 

     

    “Disclosure
      Schedules”
      means
      the Disclosure Schedules of the Company delivered by the Company to Investors
      contemporaneously with this Agreement.

     

    “Draft
      S-1 Registration Statement”
means
      a
      draft registration statement on Form S-1 under the Securities Act, draft
      dated April 24, 2007, to be filed by the Company (with such changes as are
      needed to finalize such draft) with the Commission, pursuant to the Registration
      Rights Agreement, for purposes of registering the resale of the Underlying
      Shares and Warrant Shares. 

     

    “Effective
      Date”
      means
      the date that the Registration Statement required by Section 2(a) of the
      Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Escrow
      Agent”
means
      Thelen Reid Brown Raysman & Steiner LLP, 701 Eighth Street N.W., Washington,
      DC 20001. 

     

    “Evaluation
      Date” has
      the
      meaning set forth in Section 3.1(t).

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

     

    “FCPA”
      means
      the
      Foreign Corrupt Practices Act of 1977, as amended.

     

    “FCPA
      Subsidiary”
      means
      any Subsidiary of the Company that has been subject to the FCPA prior to the
      Closing Date, and specifically excluding Lorain and its subsidiaries.

     

    “GAAP”
      means
      U.S. generally accepted accounting principles, consistently
      applied.

     

    “Intellectual
      Property Rights”
      has the
      meaning set forth in Section 3.1(q).

     

    “Investment
      Amount”
      means,
      with respect to each Investor, the Investment Amount indicated on such
      Investor’s signature page to this Agreement.

     

    “Investor
      Deliverables”
      has the
      meaning set forth in Section 2.2(b).

     

    “Investor
      Party”
      has the
      meaning set forth in Section 4.7.

     

    “Lien”
      means
      any lien, charge, encumbrance, security interest, right of first refusal, right
      of participation or other restrictions of any kind.

     

    “Lorain
      Acquisition”
has
      the
      meaning set forth in Recital B to this Agreement. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Make
      Good Escrow Agreement” means
      the
      Make Good Escrow Agreement, dated as of the date hereof, among the Company,
      the
      Placement Agent, the Securities Transfer Corporation, as the Make Good Escrow
      Agent (the “Make
      Good Escrow Agent”)
      and the
      Beneficial Owners, in the form of Exhibit
      C
      hereto.

     

    “Material
      Adverse Effect”
      means
      any of (i) a material and adverse effect on the legality, validity or
      enforceability of any Transaction Document, (ii) a material and adverse effect
      on the results of operations, assets, prospects, business or condition
      (financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
      or (iii) an adverse impairment to the Company’s ability to perform on a timely
      basis any of its obligations under any Transaction Document.

     

    “New
      York Courts”
      means
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan.

     

    “Outside
      Date”
      means
      the 15th
      following the date of this Agreement.

     

    “Person”
      means an
      individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Placement
      Agent”
      means
      Sterne, Agee & Leach, Inc.

     

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened.

     

    “Registration
      Rights Agreement”
      means
      the Registration Rights Agreement, dated as of the date of this Agreement,
      among
      the Company and the Investors, in the form of Exhibit
      D
      hereto.

     

    “Registration
      Statement”
      means a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Investors of the Underlying
      Shares and Warrant Shares.

     

    “Reverse
      Split”
      means a
      1 for 32.84 reverse stock split of the Company’s Common Stock.

     

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “SEC
      Reports”
      has the
      meaning set forth in Section 3.1(h).

     

    “Securities”
      means
      the Shares, Warrants, Underlying Shares and Warrant Shares.

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Series
      B Preferred Stock”
      means
      the Series B Voting Convertible Preferred Stock, par value $0.001, of the
      Company.

     

    “Share
      Delivery Date”
      has the
      meaning set forth in Section 4.1(c).

     

    “Share
      Exchange Agreement”
      has the
      meaning set forth in Recital B to this Agreement.

     

    “Shares”
      means
      the shares of Series B Preferred Stock issued or issuable to the Investors
      pursuant to this Agreement.

     

    “Short
      Sales”
      include,
      without limitation, all “short sales” as defined in Rule 200 promulgated under
      Regulation SHO under the Exchange Act and all types of direct and indirect
      stock
      pledges, forward sale contracts, options, puts, calls, swaps and similar
      arrangements (including on a total return basis), and sales and other
      transactions through non-US broker dealers or foreign regulated
      brokers.

     

    “Stockholder
      Approval”
      has the
      meaning set forth in Section 4.13.

     

    “Subsidiary”
      means
      any subsidiary of the Company as set forth on Schedule 3.1(a).

     

    “Trading
      Day”
      means
      (i) a day on which the Common Stock is traded on a Trading Market (other than
      the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
      Market (other than the OTC Bulletin Board), a day on which the Common Stock
      is
      traded in the over-the-counter market, as reported by the OTC Bulletin Board,
      or
      (iii) if the Common Stock is not quoted on any Trading Market, a day on which
      the Common Stock is quoted in the over-the-counter market as reported by the
      Pink Sheets LLC (or any similar organization or agency succeeding to its
      functions of reporting prices); provided, that in the event that the Common
      Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
      Trading Day shall mean a Business Day.

     

    “Trading
      Market”
      means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
      or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
      on the date in question.

     

    “Transaction
      Documents”
      means
      this Agreement, the Certificate of Designation, the Registration Rights
      Agreement, the Closing Escrow Agreement, the Make Good Escrow Agreement and
      any
      other documents or agreements executed in connection with the transactions
      contemplated hereunder.

     

    “Underlying
      Shares”
      means
      the shares of Common Stock issuable upon conversion or exchange of the
      Shares.

     

    “Warrants”
means
      collectively the Common Stock purchase warrants, in the form of Exhibit
      E,
      delivered to the Investors at the Closing in accordance with Section 2.2(a)
      and
      6.1(e) hereof, which Warrants shall be (i) immediately exercisable subject
      to
      Shareholder Approval at an exercise price of $0.1294153 per share (pre-Reverse
      Split), (ii) have a term of exercise equal to three years, and (iii) issued
      to
      each Investor in a number equal to 20% of the shares of common stock issuable
      upon conversion of the Series B Preferred Stock purchased by such Investor.
      

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
      2.

    PURCHASE
      AND SALE

     

    2.1.  Closing.
      Subject
      to the terms and conditions set forth in this Agreement, at the Closing the
      Company shall issue and sell to each Investor, and each Investor shall,
      severally and not jointly, purchase from the Company, the number of Shares
      and
      Warrants set forth on each respective Investor’s signature page attached hereto,
      in consideration of the Investor’s payment of the Investment Amount set forth
      thereon. The Closing shall take place at the offices of Escrow Agent on the
      Closing Date or at such other location or time as the parties may
      agree.

     

    2.2.  Closing
      Deliveries.
      (a)
      On or
      prior to the Closing, the Company shall deliver or cause to be delivered to
      each
      Investor the following (the “Company
      Deliverables”):

     

    (i)  this
      Agreement duly executed by the Company and each Beneficial Owner;

     

    (ii)  a
      copy of
      the executed, filed and effective Certificate of Designation, accompanied by
      a
      certified copy thereof issued by the Secretary of State of the State of
      Delaware;

     

    (iii)  a
      certificate, executed by the Secretary of the Company and dated as of the
      Closing Date, as to (i) the resolutions consistent with Section 3.1(c) as
      adopted by the Company's Board of Directors in a form reasonably acceptable
      to
      the Investors, and (ii) the current certificate of incorporation, as amended,
      and bylaws, as amended, of the Company;

     

    (iv)  executed
      consents of at least a majority of (i) the shares of Common Stock then
      outstanding, and (ii) the share of Common Stock and Series A Preferred Stock
      then outstanding voting as a group, irrevocably approving the items set forth
      in
      Section 4.13 herein;

     

    (v)  the
      legal
      opinion of King & Wood, People’s Republic of China, Counsel to the Company
      addressed to the Investors, in the form of Exhibit
      F
      attached
      hereto; 

     

    (vi)  the
      legal
      opinion of Company Counsel addressed to the Investors, in the form of Exhibit
      G
      attached hereto;

     

    (vii)  the
      Closing Escrow Agreement, duly executed by all parties thereto;

     

    
      
         

      

      
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    (viii)  the
      Make
      Good Escrow Agreement, duly executed by all parties thereto;

     

    (ix)  the
      Registration Rights Agreement, duly executed by the Company; and

     

    (x)  the
      Draft
      S-1 Registration Statement.

     

    (b)  On
      or
      prior to the Closing Date, each Investor shall deliver or cause to be delivered
      the following (the “Investor
      Deliverables”):

     

    (i)  to
      the
      Company, this Agreement duly executed by the Investor;

     

    (ii)  to
      the
      Escrow Agent for deposit and disbursement in accordance with the Closing Escrow
      Agreement, Investment Amount, in United States dollars and in immediately
      available funds, by wire transfer to an account designated in writing by the
      Company for such purpose; and

     

    (iii)  to
      the
      Company, the Registration Rights Agreement, duly executed by such
      Investor.

     

    (c)  Within
      three (3) Business Days following the Closing Date, the Company shall deliver
      or
      cause to be delivered the following:

     

    (i)  one
      or
      more stock certificates evidencing Shares with a stated value equal to such
      Investor’s Investment Amount, registered in the name of such Investor;
      and

     

    (ii)  a
      Warrant
      registered in the name of such Investor evidencing the number of Warrants set
      forth on such Investor’s signature page attached hereto.

     

     

    ARTICLE
      3.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1.  Representations
      and Warranties of the Company.
      Except
      as set forth under the corresponding section of the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof and to qualify any
      representation or warranty otherwise made herein to the extent of such
      disclosure, the Company hereby makes the following representations and
      warranties to each Investor:

     

    (a)  Subsidiaries.
      All of
      the direct or indirect subsidiaries of the Company are set forth on Schedule
      3.1(a).
      Except
      as disclosed in Schedule
      3.1(a),
      the
      Company owns, directly or indirectly, all of the capital stock of each
      Subsidiary free and clear of any and all Liens, and all the issued and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights. The
      Company owns all of the outstanding capital stock of Lorain in accordance with
      the Share Exchange Agreement, free and clear of all Liens. For the sake of
      clarity, as used herein the term Subsidiaries includes Lorain and all direct
      and
      indirect subsidiaries of Lorain. 

     

    
      
         

      

      
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    (b)  Organization
      and Qualification.
      The
      Company and each Subsidiary are duly incorporated or otherwise organized,
      validly existing and in good standing under the laws of the jurisdiction of
      its
      incorporation or organization (as applicable), with the requisite power and
      authority to own and use its properties and assets and to carry on its business
      as currently conducted. Neither the Company nor any Subsidiary is in violation
      of any of the provisions of its respective certificate or articles of
      incorporation, bylaws or other organizational or charter documents. The Company
      and each Subsidiary are duly qualified to conduct its respective businesses
      and
      are in good standing as a foreign corporation or other entity in each
      jurisdiction in which the nature of the business conducted or property owned
      by
      it makes such qualification necessary, except where the failure to be so
      qualified or in good standing, as the case may be, could not, individually
      or in
      the aggregate, have or reasonably be expected to result in a Material Adverse
      Effect.

     

    (c)  Authorization;
      Enforcement.
      Subject
      to Shareholder Approval and the Amendment Filing, the Company has the requisite
      corporate power and authority to enter into and to consummate the transactions
      contemplated by each of the Transaction Documents and otherwise to carry out
      its
      obligations thereunder. The execution and delivery of each of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated thereby have been duly authorized by all necessary action on the
      part of the Company and no further action is required by the Company, its board
      of directors or its stockholders in connection therewith, other than Shareholder
      Approval or the Amendment Filing. Each Transaction Document has been (or upon
      delivery will have been) duly executed by the Company and, when delivered in
      accordance with the terms hereof, will constitute the valid and binding
      obligation of the Company enforceable against the Company in accordance with
      its
      terms, except as such enforceability may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation or similar laws relating
      to,
      or affecting generally the enforcement of, creditors’ rights and remedies or by
      other equitable principles of general application.

     

    (d)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated thereby
      do
      not and will not (i) conflict with or violate any provision of the Company’s or
      any Subsidiary’s certificate or articles of incorporation, bylaws or other
      organizational or charter documents, or (ii) conflict with, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a Company
      or Subsidiary debt or otherwise) or other understanding to which the Company
      or
      any Subsidiary is a party or by which any property or asset of the Company
      or
      any Subsidiary is bound or affected, or (iii) result in a violation of any
      law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which the Company or a Subsidiary is
      subject (including federal and state securities laws and regulations), or by
      which any property or asset of the Company or a Subsidiary is bound or affected;
      except in the case of each of clauses (ii) and (iii), such as could not,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect.

     

    
      
         

      

      
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    (e)  Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) the filing with the Commission of one
      or
      more Registration Statements in accordance with the requirements of the
      Registration Rights Agreement, (ii) filings required by state securities laws,
      (iii) the filing of a Notice of Sale of Securities on Form D with the Commission
      under Regulation D of the Securities Act, (iv) the information statement
      referred to in Section 4.13; (v) an information statement that complies with
      Section 14(f) of the Exchange Act and Rule 14f-1 thereunder; (vi) the Amendment
      Filing; and (vii) the filings required in accordance with Section 4.5
      (collectively, the “Required
      Approvals”).
      

     

    (f)  Issuance
      of the Shares.
      The
      Shares and the Warrants have been duly authorized and, when issued and paid
      for
      in accordance with the Transaction Documents, will be duly and validly issued,
      fully paid and nonassessable, free and clear of all Liens other than
      restrictions on transfer provided for in the Transaction Documents. Upon
      Stockholder Approval and the Amendment Filing, the Company will reserve from
      its
      duly authorized capital stock the shares of Common Stock issuable upon
      conversion of the Shares and exercise of the Warrants. Subject to Shareholder
      Approval and the Amendment Filing, the Underlying Shares and Warrant Shares,
      when issued in accordance with the terms of the Transaction Documents, will
      be
      validly issued, fully paid and nonassessable, free and clear of all Liens other
      than restrictions on transfer provided for in the Transaction Documents.

     

    (g)  Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(g).
      No
      Person has any right of first refusal, preemptive right, right of participation,
      or any similar right to participate in the transactions contemplated by the
      Transaction Documents. Except as set forth in Schedule
      3.1(g),
      there
      are no outstanding options, warrants, scrip rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any securities of the Company or any Subsidiary,
      or
      contracts, commitments, understandings or arrangements by which the Company
      or
      any Subsidiary is or may become bound to issue additional securities of the
      Company or any Subsidiary. The issue and sale of the Securities will not,
      immediately or with the passage of time, obligate the Company to issue shares
      of
      Common Stock or other securities to any Person (other than the Investors) and
      will not result in a right of any holder of Company securities to adjust the
      exercise, conversion, exchange or reset price under such securities. All of
      the
      outstanding shares of capital stock of the Company are validly issued, fully
      paid and nonassessable, have been issued in compliance with all federal and
      state securities laws, and none of such outstanding shares was issued in
      violation of any preemptive rights or similar rights to subscribe for or
      purchase securities. Except for Shareholder Approval, no further approval or
      authorization of any stockholder, the board of directors of the Company or
      others is required for the issuance and sale of the Securities. Except for
      the
      Transaction Documents and as set forth on Schedule
      3.1(g),
      there
      are no stockholders agreements, voting agreements or other similar agreements
      with respect to the Company’s capital stock to which the Company is a party or,
      to the knowledge of the Company, between or among any of the Company’s
      stockholders. 

     

    
      
         

      

      
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    (h)  SEC
      Reports; Financial Statements.
      The
      Company has filed all reports required to be filed by it under the Securities
      Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
      since January 1, 2004 (collectively, the “SEC
      Reports”)
      on a
      timely basis or has timely filed a valid extension of such time of filing and
      has filed any such SEC Reports prior to the expiration of any such extension.
      As
      of their respective dates, the SEC Reports complied in all material respects
      with the requirements of the Securities Act and the Exchange Act and the rules
      and regulations of the Commission promulgated thereunder, and none of the SEC
      Reports, when filed, contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading. The financial statements of the Company included
      in the SEC Reports comply in all material respects with applicable accounting
      requirements and the rules and regulations of the Commission with respect
      thereto as in effect at the time of filing. Such financial statements have
      been
      prepared in accordance with GAAP applied on a consistent basis during the
      periods involved, except as may be otherwise specified in such financial
      statements or the notes thereto, and fairly present in all material respects
      the
      financial position of the Company and its consolidated Subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments. 

     

    (i)  Lorain
      Financial Statements; Draft S-1 Registration Statement.
      The
      Company has delivered to each Investor the following financial statements:
      (i)
      audited consolidated balance sheet of Lorain as of December 31, 2006; (ii)
      audited consolidated statements of income, stockholders’ equity and cash flows
      of Lorain for the period from August 4, 2006 (date of incorporation of Lorain)
      to December 31, 2006; and (iii) the pro forma unaudited combined balance sheet
      and statements of income and cash flows of Lorain as of and for the three years
      ended December 31, 2006 (collectively, the “Lorain Financial Statements”). The
      Lorain Financial Statements comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto. The Lorain Financial Statements have been prepared in
      accordance with GAAP, except as may be otherwise specified in such financial
      statements or the notes thereto and except that unaudited financial statements
      may not contain all footnotes required by GAAP, and fairly present in all
      material respects the financial position of Lorain and its consolidated
      subsidiaries as of and for the dates thereof and the results of operations
      and
      cash flows for the periods then ended, subject, in the case of unaudited
      statements, to normal, year-end audit adjustments. 

     

    The
      Company has delivered to each Investor the Draft S-1 Registration Statement.
      After giving effect to the Lorain Acquisition and the transactions contemplated
      by the Transaction Documents, the Draft S-1 Registration Statement does not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading. 

    

    
      
         

      

      
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    (j)  Press
      Releases.
      The
      press releases disseminated by the Company during the twelve months preceding
      the date of this Agreement taken as a whole do not contain any untrue statement
      of a material fact or omit to state a material fact required to be stated
      therein or necessary in order to make the statements therein, in light of the
      circumstances under which they were made and when made, not
      misleading.

     

    (k)  Material
      Changes.
      

     

    (A)  Since
      the
      date of the latest balance sheet included within the SEC Reports, except as
      specifically disclosed in the SEC Reports, (i) there has been no event,
      occurrence or development that has had or that could reasonably be expected
      to
      result in a Material Adverse Effect, (ii) the Company has not incurred any
      liabilities (contingent or otherwise) other than (A) trade payables and accrued
      expenses incurred in the ordinary course of business consistent with past
      practice and (B) liabilities not required to be reflected in the Company’s
      financial statements pursuant to GAAP or required to be disclosed in filings
      made with the Commission, (iii) the Company has not altered its method of
      accounting or the identity of its auditors, (iv) the Company has not declared
      or
      made any dividend or distribution of cash or other property to its stockholders
      or purchased, redeemed or made any agreements to purchase or redeem any shares
      of its capital stock, and (v) the Company has not issued any equity securities
      to any officer, director or Affiliate. The Company does not have pending before
      the Commission any request for confidential treatment of
      information.

     

    (B)  Lorain.
      Since
      the date of the latest balance sheet included within the Lorain Financial
      Statements, except as specifically disclosed in the Draft S-1 Registration
      Statement, (i) there has been no event, occurrence or development that has
      had
      or that could reasonably be expected by the Company or Lorain to result in
      a
      Material Adverse Effect, (ii) none of Lorain or any of its direct or indirect
      subsidiaries have incurred any liabilities (contingent or otherwise) other
      than
      (A) trade payables and accrued expenses incurred in the ordinary course of
      business consistent with past practice and (B) liabilities not required to
      be
      reflected in the Lorain Financial Statements pursuant to GAAP or disclosed
      in
      the Draft S-1 Registration Statement as filed with the Commission under the
      Securities Act, (iii) none of Lorain or any of its direct or indirect
      subsidiaries have altered their method of accounting, (iv) none of Lorain or
      any
      of its direct or indirect subsidiaries has declared or made any dividend or
      distribution of cash or other property to its stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock and (v) none of Lorain or any of its direct or indirect subsidiaries
      has
      issued any equity securities to any officer, director or Affiliate.

     

    (l)  Litigation.
      There
      is no Action which (i) adversely affects or challenges the legality, validity
      or
      enforceability of any of the Transaction Documents, the Securities or the Share
      Exchange Agreement or (ii) could, if there were an unfavorable decision,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
      director or officer thereof (in his or her capacity as such), is or has been
      the
      subject of any Action involving a claim of violation of or liability under
      U.S.
      or foreign federal or state securities laws or a claim of breach of fiduciary
      duty. There has not been, and to the knowledge of the Company, there is not
      pending any investigation by the Commission involving the Company or any current
      or former director or officer of the Company (in his or her capacity as such).
      The Commission has not issued any stop order or other order suspending the
      effectiveness of any registration statement filed by the Company under the
      Exchange Act or the Securities Act.

     

    
      
         

      

      
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    (m)  Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company or any
      Subsidiary, is imminent with respect to any of the employees of the Company
      or
      any Subsidiary which could reasonably be expected to result in a Material
      Adverse Effect. Except as set forth in Schedule
      3.1(m),
      none of
      the Company's or its Subsidiaries' employees is a member of a union that relates
      to such employee's relationship with the Company or such Subsidiary, and neither
      the Company or any of its Subsidiaries is a party to a collective bargaining
      agreement, and the Company and its Subsidiaries believe that their relationships
      with their employees are good. No executive officer of the Company or any
      Subsidiary, to the knowledge of the Company or any Subsidiary, is, or is now
      expected to be, in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement or
      non-competition agreement, or any other contract or agreement or any restrictive
      covenant, and the continued employment of each such executive officer does
      not
      subject the Company or any of its Subsidiaries to any liability with respect
      to
      any of the foregoing matters. The Company and its Subsidiaries are in compliance
      with all U.S. federal, state, local and foreign laws and regulations relating
      to
      employment and employment practices, terms and conditions of employment and
      wages and hours, except where the failure to be in compliance could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    (n)  Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any U.S. or
      foreign court, arbitrator or governmental body, or (iii) is or has been in
      violation of any U.S. or foreign statute, rule or regulation of any governmental
      authority, including without limitation all foreign, federal, state and local
      laws relating to taxes, environmental protection, occupational health and
      safety, product quality and safety and employment and labor matters, except
      in
      each case as could not, individually or in the aggregate, have or reasonably
      be
      expected to result in a Material Adverse Effect. The Share Exchange Agreement
      and the transaction contemplated thereby comply with all applicable laws, rules
      and regulations of the United States and the People’s Republic of China.

     

    (o)  Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as described in
      the
      Disclosure Documents, except where the failure to possess such permits could
      not, individually or in the aggregate, have or reasonably be expected to result
      in a Material Adverse Effect, and neither the Company nor any Subsidiary has
      received any notice of proceedings relating to the revocation or modification
      of
      any such permits.

     

    
      
         

      

      
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    (p)  Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title to all real property
      owned by them that is material to their respective businesses and good and
      marketable title in all personal property owned by them that is material to
      their respective businesses, in each case free and clear of all Liens, except
      for Liens as do not materially affect the value of such property and do not
      materially interfere with the use made and proposed to be made of such property
      by the Company and the Subsidiaries. Any real property and facilities held
      under
      lease by the Company and the Subsidiaries are held by them under valid,
      subsisting and enforceable leases of which the Company and the Subsidiaries
      are
      in compliance, except as could not, individually or in the aggregate, have
      or
      reasonably be expected to result in a Material Adverse Effect.

     

    (q)  Patents
      and Trademarks.
      The
      Company and the Subsidiaries have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights that are necessary or material
      for
      use in connection with their respective businesses as described in the
      Disclosure Documents and which the failure to so have could, individually or
      in
      the aggregate, have or reasonably be expected to result in a Material Adverse
      Effect (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a written notice that the
      Intellectual Property Rights used by the Company or any Subsidiary violates
      or
      infringes upon the rights of any Person. All such Intellectual Property Rights
      are enforceable and there is no existing infringement by another Person of
      any
      of the Intellectual Property Rights. The Company and its Subsidiaries have
      taken
      reasonable security measures to protect the secrecy, confidentiality and value
      of all of their intellectual properties, except where failure to do so could
      not, individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    (r)  Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged. Neither the Company nor any Subsidiary has any reason to believe that
      it will not be able to renew its existing insurance coverage as and when such
      coverage expires or to obtain similar coverage from similar insurers as may
      be
      necessary to continue its business on terms consistent with market for the
      Company’s and such Subsidiaries’ respective lines of business without a
      significant increase in cost.

     

    (s)  Transactions
      With Affiliates and Employees.
      Except
      as set forth in Schedule
      3.1(s),
      none of
      the officers, directors or employees of the Company or any Subsidiary is
      presently a party to any transaction with the Company or any Subsidiary (other
      than for services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or, to
      the
      knowledge of the Company, any entity in which any officer, director, or any
      such
      employee has a substantial interest or is an officer, director, trustee or
      partner, in each case in excess of $60,000 other than (i) for payment of salary
      or consulting fees for services rendered, or (ii) reimbursement for bona fide
      expenses incurred on behalf of the Company or any Subsidiary. 

     

    
      
         

      

      
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    (t)  Internal
      Accounting Controls.
      The
      Company is in compliance with all requirements of the Sarbanes-Oxley Act of
      2002, as amended, and the rules and regulations thereunder, that are applicable
      to it. The Company and the Subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with GAAP and to maintain asset accountability, (iii)
      access to assets is permitted only in accordance with management’s general or
      specific authorization, and (iv) the recorded accountability for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences. The Company has established disclosure
      controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
      15d-15(e)) for the Company and designed such disclosure controls and procedures
      to ensure that information required
      to be disclosed by the Company in the reports it files or submits under the
      Exchange Act is recorded, processed, summarized and reported, within the time
      periods specified in the Commission’s rules and forms.
      The
      Company’s certifying officers have evaluated the effectiveness of the Company’s
      disclosure controls and procedures as
      of the
      end of the period covered by the Company’s most recently filed periodic report
      under the Exchange Act (such
      date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company’s internal controls over financial reporting (as such
      term is defined in Rule 13a-15(e) under the Exchange Act) that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting. 

     

    (u)  Solvency.
      Based
      on the financial condition of the Company as of the Closing Date (and assuming
      that the Closing shall have occurred), (i) the Company’s fair saleable value of
      its assets exceeds the amount that will be required to be paid on or in respect
      of the Company’s existing debts and other liabilities (including known
      contingent liabilities) as they mature, (ii) the Company’s assets do not
      constitute unreasonably small capital to carry on its business for the current
      fiscal year as now conducted and as proposed to be conducted including its
      capital needs taking into account the particular capital requirements of the
      business conducted by the Company, and projected capital requirements and
      capital availability thereof, and (iii) the current cash flow of the Company,
      together with the proceeds the Company would receive, were it to liquidate
      all
      of its assets, after taking into account all anticipated uses of the cash,
      would
      be sufficient to pay all amounts on or in respect of its debt when such amounts
      are required to be paid. The Company does not intend to incur debts beyond
      its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt).

     

    (v)  Certain
      Fees.
      Except
      for fees payable to the Placement Agent, no brokerage or finder’s fees or
      commissions are or will be payable by the Company or any Subsidiary to any
      broker, financial advisor or consultant, finder, placement agent, investment
      banker, bank or other Person with respect to the transactions contemplated
      by
      the Transaction Documents. The Investors shall have no obligation with respect
      to any fees or with respect to any claims (other than such fees or commissions
      owed by an Investor pursuant to written agreements executed by such Investor
      which fees or commissions shall be the sole responsibility of such Investor)
      made by or on behalf of other Persons for fees of a type contemplated in this
      Section that may be due in connection with the transactions contemplated by
      this
      Agreement.

     

    
      
         

      

      
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    (w)  Certain
      Registration Matters.
      Assuming the accuracy of the Investors’ representations and warranties set forth
      in Section 3.2(b)-(e), no registration under the Securities Act is required
      for
      the offer and sale of the Securities by the Company to the Investors under
      the
      Transaction Documents. The Company is eligible to register its Common Stock
      for
      resale by the Investors under Form S-1 promulgated under the Securities Act.
      Except as set forth on Schedule
      3.1(w),
      the
      Company has not granted or agreed to grant to any Person any rights (including
      “piggy-back” registration rights) to have any securities of the Company
      registered with the Commission or any other governmental authority that have
      not
      been satisfied.

     

    (x)  Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
      Exchange Act, and the Company has taken no action designed to, or which to
      its
      knowledge is likely to have the effect of, terminating the registration of
      the
      Common Stock under the Exchange Act nor has the Company received any
      notification that the Commission is contemplating terminating such registration.
      The Company has not during the two years preceding the date hereof, received
      notice from any Trading Market to the effect that the Company is not in
      compliance with the listing or maintenance requirements thereof. The Company
      is,
      and has no reason to believe that it will not in the foreseeable future continue
      to be, in compliance with the listing and maintenance requirements for continued
      listing of the Common Stock on the Trading Market on which the Common Stock
      is
      currently listed or quoted. The issuance and sale of the Securities under the
      Transaction Documents does not contravene the rules and regulations of the
      Trading Market on which the Common Stock is currently listed or quoted, and
      no
      approval of the stockholders of the Company thereunder is required for the
      Company to issue and deliver to the Investors the Securities contemplated by
      the
      Transaction Documents.

     

    (y)  Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately following the
      Closing will not have become, an “investment company” within the meaning of the
      Investment Company Act of 1940, as amended.

     

    (z)  Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s certificate of
      incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Investors as a result
      of
      the Investors and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including without limitation the
      Company’s issuance of the Securities and the Investors’ ownership of the
      Securities.

     

    (aa)  No
      Additional Agreements.
      The
      Company does not have any agreement or understanding with any Investor with
      respect to the transactions contemplated by the Transaction Documents other
      than
      as specified in the Transaction Documents.

     

    
      
         

      

      
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    (bb)  Consultation
      with Auditors.
      The
      Company has consulted its independent auditors concerning the accounting
      treatment of the transactions contemplated by the Transaction Documents, and
      in
      connection therewith has furnished such auditors complete copies of the
      Transaction Documents.

     

    (cc)  Disclosure.
      The
      Company confirms that neither it nor any Person acting on its behalf has
      provided any Investor or its respective agents or counsel with any information
      that the Company believes constitutes material, non-public information
      concerning the Company, the Subsidiaries or their respective businesses, except
      insofar as the existence and terms of the proposed transactions contemplated
      hereunder may constitute such information. The Company understands and confirms
      that the Investors will rely on the foregoing representations and covenants
      in
      effecting transactions in securities of the Company. All disclosure provided
      to
      the Investors regarding the Company, the Subsidiaries or their respective
      businesses and the transactions contemplated hereby, furnished by or on behalf
      of the Company (including the Company’s representations and warranties set forth
      in this Agreement) are true and correct and do not contain any untrue statement
      of a material fact or omit to state any material fact necessary in order to
      make
      the statements made therein, in light of the circumstances under which they
      were
      made, not misleading. The Company acknowledges and agrees that no Investor
      has
      made nor makes any representations or warranties with respect to the
      transactions contemplated hereby other than those specifically set forth in
      Section 3.2 hereof.

     

    (dd)  No
      Integrated Offering.
      Assuming
      the accuracy of the Investors’ representations and warranties set forth in
      Section 3.2, neither the Company, nor any of its Affiliates, nor any Person
      acting on its or their behalf has, directly or indirectly, made any offers
      or
      sales of any security or solicited any offers to buy any security, under
      circumstances that would cause this offering of the Securities to be integrated
      with prior offerings by the Company for purposes of the Securities Act or any
      applicable shareholder approval provisions of any Trading Market on which any
      of
      the securities of the Company are listed or designated. 

     

    (ee)  Tax
      Status.
      Except
      as set forth on Schedule
      3.1(ee),
      and for
      matters that would not, individually or in the aggregate, have or reasonably
      be
      expected to result in a Material Adverse Effect, the Company and each Subsidiary
      has filed all necessary federal, state and foreign income and franchise tax
      returns and has paid or accrued all taxes shown as due thereon, and the Company
      has no knowledge of a tax deficiency which has been asserted or threatened
      against the Company or any Subsidiary.

     

    (ff)  No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Securities for sale only to the
      Investors and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act.

     

    (gg)  Foreign
      Corrupt Practices.
      Neither
      the Company, any FCPA Subsidiary, nor to the knowledge of the Company or any
      FCPA Subsidiary, any agent or other person acting on behalf of the Company
      or
      any FCPA Subsidiary, has (i) directly or indirectly, used any funds for unlawful
      contributions, gifts, entertainment or other unlawful expenses related to
      foreign or domestic political activity, (ii) made any unlawful payment to
      foreign or domestic government officials or employees or to any foreign or
      domestic political parties or campaigns from corporate funds, (iii) failed
      to
      disclose fully any contribution made by the Company, any FCPA Subsidiary (or
      made by any person acting on its behalf of which the Company or any FCPA
      Subsidiary is aware) which is in violation of law, or (iv) violated in any
      material respect any provision of the FCPA, as amended.

     

    
      
         

      

      
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    (hh)  Accountants.
      The
      Company’s and Lorain’s accountants are set forth on Schedule
      3.1(hh)
      of the
      Disclosure Schedule. To the knowledge of the Company, such accountants, who
      the
      Company expects will express their opinions with respect to the financial
      statements of the Company and Lorain to be included in the Registration
      Statement, are each a registered public accounting firms as required by the
      Securities Act and are independent of the Company and Lorain, as the case may
      be, in accordance with Rule 2-01 of Regulation S-X under the Exchange Act.
      

     

    (ii)  Acknowledgment
      Regarding Investors’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Investors is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated thereby. The Company further
      acknowledges that no Investor is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to the Transaction
      Documents and the transactions contemplated thereby and any advice given by
      any
      Investor or any of their respective representatives or agents in connection
      with
      the Transaction Documents and the transactions contemplated thereby is merely
      incidental to the Investors’ purchase of the Securities. The Company further
      represents to each Investor that the Company’s decision to enter into this
      Agreement and the other Transaction Documents has been based solely on the
      independent evaluation of the transactions contemplated hereby by the Company
      and its representatives.

     

    (jj)  Acknowledgement
      Regarding Investors’ Trading Activity.
      Anything
      in this Agreement or elsewhere herein to the contrary notwithstanding (except
      for Sections 3.2(f) and 4.5 hereof), it is understood and acknowledged by the
      Company (i) that none of the Investors have been asked to agree, nor has any
      Investor agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities based on securities issued
      by the Company or to hold the Securities for any specified term; (ii) that
      past
      or future open market or other transactions by any Investor, including Short
      Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
      placement transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) that any Investor, and counter-parties in
      “derivative” transactions to which any such Investor is a party, directly or
      indirectly, presently may have a “short” position in the Common Stock, and (iv)
      that each Investor shall not be deemed to have any affiliation with or control
      over any arm’s length counter-party in any “derivative” transaction. The Company
      further understands and acknowledges that (a) one or more Investors may engage
      in hedging activities at various times during the period that the Securities
      are
      outstanding, including, without limitation, during the periods that the value
      of
      the Warrant Shares deliverable with respect to Securities are being determined
      and (b) such hedging activities (if any) could reduce the value of the existing
      stockholders' equity interests in the Company at and after the time that the
      hedging activities are being conducted.  The Company acknowledges that such
      aforementioned hedging activities do not constitute a breach of any of the
      Transaction Documents.

     

    
      
         

      

      
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    (kk)  Regulation
      M. 
      The Company has not, and to its knowledge no one acting on its behalf has,
      (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or, paid any compensation for soliciting purchases of, any of the
      Securities, or (iii) paid or agreed to pay to any person any compensation for
      soliciting another to purchase any other securities of the Company, other than,
      in the case of clauses (ii) and (iii), compensation paid to the Company’s
      placement agent in connection with the placement of the Securities.

     

    3.2.  Representations
      and Warranties of the Investors.
      Each
      Investor hereby, for itself and for no other Investor, represents and warrants
      to the Company as follows:

     

    (a)  Organization;
      Authority.
      Such
      Investor is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with the requisite
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the applicable Transaction Documents and otherwise
      to carry out its obligations thereunder. The execution, delivery and performance
      by such Investor of the transactions contemplated by this Agreement has been
      duly authorized by all necessary corporate or, if such Investor is not a
      corporation, such partnership, limited liability company or other applicable
      like action, on the part of such Investor. Each of this Agreement and the
      Registration Rights Agreement has been duly executed by such Investor, and
      when
      delivered by such Investor in accordance with the terms hereof, will constitute
      the valid and legally binding obligation of such Investor, enforceable against
      it in accordance with its terms, except as such enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      or
      similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
      application.

     

    (b)  Investment
      Intent.
      Such
      Investor is acquiring the Securities as principal for its own account for
      investment purposes only and not with a view to or for distributing or reselling
      such Securities or any part thereof, without prejudice, however, to such
      Investor’s right at all times to sell or otherwise dispose of all or any part of
      such Securities in compliance with applicable federal and state securities
      laws.
      Subject to the immediately preceding sentence, nothing contained herein shall
      be
      deemed a representation or warranty by such Investor to hold the Securities
      for
      any period of time. Such Investor is acquiring the Securities hereunder in
      the
      ordinary course of its business. Such Investor does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

     

    (c)  Investor
      Status.
      At the
      time such Investor was offered the Securities, it was, and at the date hereof
      it
      is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.
      Such Investor is not a registered broker-dealer under Section 15 of the Exchange
      Act.

     

    (d)  General
      Solicitation.
      Such
      Investor is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    
      
         

      

      
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    (e)  Access
      to Information.
      Such
      Investor acknowledges that it has reviewed the Disclosure Materials and has
      been
      afforded (i) the opportunity to ask such questions as it has deemed necessary
      of, and to receive answers from, representatives of the Company concerning
      the
      terms and conditions of the offering of the Securities and the merits and risks
      of investing in the Securities; (ii) access to information about the Company
      and
      the Subsidiaries and their respective financial condition, results of
      operations, business, properties, management and prospects sufficient to enable
      it to evaluate its investment; and (iii) the opportunity to obtain such
      additional information that the Company possesses or can acquire without
      unreasonable effort or expense that is necessary to make an informed investment
      decision with respect to the investment. Neither such inquiries nor any other
      investigation conducted by or on behalf of such Investor or its representatives
      or counsel shall modify, amend or affect such Investor’s right to rely on the
      truth, accuracy and completeness of the Disclosure Materials and the Company’s
      representations and warranties contained in the Transaction Documents.

     

    (f)  Certain
      Trading Activities.
      Such
      Investor has not directly or indirectly, nor has any Person acting on behalf
      of
      or pursuant to any understanding with such Investor, engaged in any transactions
      in the securities of the Company (including, without limitations, any Short
      Sales involving the Company’s securities) since the earlier to occur of (1) the
      time that such Investor was first contacted by the Company or the Placement
      Agent regarding an investment in the Company and (2) the 30th
      day
      prior to the date of this Agreement. Notwithstanding the foregoing, in the
      case
      of an Investor that is a multi-managed investment vehicle whereby separate
      portfolio managers manage separate portions of such Investor's assets and the
      portfolio managers have no direct knowledge of the investment decisions made
      by
      the portfolio managers managing other portions of such Investor's assets, the
      representation set forth above shall only apply with respect to the portion
      of
      assets managed by the portfolio manager that made the investment decision to
      purchase the Securities covered by this Agreement. Such Investor covenants
      that
      neither it nor any Person acting on its behalf or pursuant to any understanding
      with it will engage in any transactions in the securities of the Company
      (including Short Sales) prior to the time that the transactions contemplated
      by
      this Agreement are publicly disclosed.

     

    (g)  Independent
      Investment Decision.
      Such
      Investor has independently evaluated the merits of its decision to purchase
      the
      Securities pursuant to the Transaction Documents, and such Investor confirms
      that it has not relied on the advice of any other Investor’s business and/or
      legal counsel in making such decision. Such Investor has not relied on the
      business or legal advice of Placement Agent or any of its agents, counsel or
      Affiliates in making its investment decision hereunder, and confirms that none
      of such Persons has made any representations or warranties to such Investor
      in
      connection with the transactions contemplated by the Transaction
      Documents.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    ARTICLE
      4.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1.  (a)    Securities
      may only be disposed of in compliance with state and federal securities laws.
      In
      connection with any transfer of the Securities other than pursuant to an
      effective registration statement, to the Company, to an Affiliate of an Investor
      or in connection with a pledge as contemplated in Section 4.1(b), the Company
      may require the transferor thereof to provide to the Company an opinion of
      counsel selected by the transferor, the form and substance of which opinion
      shall be reasonably satisfactory to the Company, to the effect that such
      transfer does not require registration of such transferred Securities under
      the
      Securities Act.

     

    (b)  Certificates
      evidencing the Securities will contain the following legend, until such time
      as
      they are not required under Section 4.1(c):

     

    [NEITHER
      THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES
      HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT 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. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
      CONVERSION OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

     

    The
      Company acknowledges and agrees that an Investor may from time to time pledge,
      and/or grant a security interest in some or all of the Securities pursuant
      to a
      bona fide margin agreement in connection with a bona fide margin account and,
      if
      required under the terms of such agreement or account, such Investor may
      transfer pledged or secured Securities
      to the
      pledgees or secured parties. Such a pledge or transfer would not be subject
      to
      approval or consent of the Company and no legal opinion of legal counsel to
      the
      pledgee, secured party or pledgor shall be required in connection with the
      pledge, but such legal opinion may be required in connection with a subsequent
      transfer following default by the Investor transferee of the pledge. No notice
      shall be required of such pledge. At the appropriate Investor’s expense, the
      Company will execute and deliver such reasonable documentation as a pledgee
      or
      secured party of Securities may reasonably request in connection with a pledge
      or transfer of the Securities including the preparation and filing of any
      required prospectus supplement under Rule 424(b)(3) of the Securities Act or
      other applicable provision of the Securities Act to appropriately amend the
      list
      of Selling Stockholders thereunder. Except as otherwise provided in Section
      4.1(c), any Securities subject to a pledge or security interest as contemplated
      by this Section 4.1(b) shall continue to bear the legend set forth in this
      Section 4.1(b) and be subject to the restrictions on transfer set forth in
      Section 4.1(a).

     

    
      
         

      

      
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    (c)  Certificates
      evidencing Underlying Shares shall not contain any legend (including the legend
      set forth in Section 4.1(b)): (i) following a sale or transfer of such
      Underlying Shares pursuant to an effective registration statement (including
      a
      Registration Statement), or (ii) following a sale or transfer of such Underlying
      Shares pursuant to Rule 144 (assuming the transferee is not an Affiliate of
      the
      Company), or (iii) while such Underlying Shares are eligible for sale under
      Rule
      144(k). If an Investor shall make a sale or transfer of Underlying Shares either
      (x) pursuant to Rule 144 or (y) pursuant to a registration statement and in
      each
      case shall have delivered to the Company or the Company’s transfer agent the
      certificate representing Underlying Shares containing a restrictive legend
      which
      are the subject of such sale or transfer
      and a representation letter in customary form (the
      date of
      such sale or transfer and Underlying Share delivery being the “Share
      Delivery Date”)
      and (1)
      the Company shall fail to deliver or cause to be delivered to such Investor
      a
      certificate representing such Underlying Shares that is free from all
      restrictive or other legends by the third Trading Day following the Share
      Delivery Date and (2) following such third Trading Day after the Share Delivery
      Date and prior to the time such Underlying Shares are received free from
      restrictive legends, the Investor, or any third party on behalf of such
      Investor, purchases (in an open market transaction or otherwise) shares of
      Common Stock to deliver in satisfaction of a sale by the Investor of such
      Underlying Shares (a "Buy-In"),
      then
      the Company shall pay in cash to the Investor (for costs incurred either
      directly by such Investor or on behalf of a third party) the amount by which
      the
      total purchase price paid for Common Stock as a result of the Buy-In (including
      brokerage commissions, if any) exceed the proceeds received by such Investor
      as
      a result of the sale to which such Buy-In relates. The Investor shall provide
      the Company written notice indicating the amounts payable to the Investor in
      respect of the Buy-In.

     

    4.2.  Furnishing
      of Information.
      As long
      as any Investor owns the Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. As long as any Investor owns Securities, if the
      Company is not required to file reports pursuant to such laws, it will prepare
      and furnish to the Investors and make publicly available in accordance with
      Rule
      144(c) such information as is required for the Investors to sell the
Underlying
      Shares
      under Rule 144. The Company further covenants that it will take such further
      action as any holder of Securities may reasonably request, all to the extent
      required from time to time to enable such Person to sell the Underlying
      Shares
      and Warrant Shares without registration under the Securities Act within the
      limitation of the exemptions provided by Rule 144.

     

    
      
         

      

      
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    4.3.  Integration.
      The
      Company shall not, and shall use its best efforts to ensure that no Affiliate
      of
      the Company shall, sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Investors, or that would be integrated with the offer
      or sale of the Securities for purposes of the rules and regulations of any
      Trading Market in a manner that would require stockholder approval of the sale
      of the Securities to the Investors.

     

    4.4.  Subsequent
      Registrations.
      Other
      than pursuant to the Registration Statement, prior to the Effective Date, the
      Company may not file any registration statement (other than on Form S-8) with
      the Commission with respect to any securities of the Company.

     

    4.5.  Securities
      Laws Disclosure; Publicity.
      By 9:00
      a.m. (New York time) on the Trading Day following the Closing Date, the Company
      shall issue a press release disclosing the transactions contemplated hereby
      and
      the Closing. By the fourth Trading Day following the execution of this Agreement
      the Company will file a Current Report on Form 8-K disclosing the material
      terms
      of the Transaction Documents (and attach as exhibits thereto the Transaction
      Documents), and by the fourth Trading Day following the Closing Date the Company
      will file a Current Report on Form 8-K to disclose the Closing and the
      information and financial statements required by Item 9.01(c) of Form 8-K.
      In
      addition, the Company will make such other filings and notices in the manner
      and
      time required by the Commission and the Trading Market on which the Common
      Stock
      is listed. Notwithstanding the foregoing, the Company shall not publicly
      disclose the name of any Investor, or include the name of any Investor in any
      filing with the Commission (other than the Registration Statement and any
      exhibits to filings made in respect of this transaction in accordance with
      periodic filing requirements under the Exchange Act) or any regulatory agency
      or
      Trading Market, without the prior written consent of such Investor, except
      to
      the extent such disclosure is required by law or Trading Market
      regulations.

     

    4.6.  Limitation
      on Issuance of Future Priced Securities

     

    .
      During
      the six months following the Closing Date, the Company shall not issue any
      “Future Priced Securities” as such term is described by NASD
      IM-4350-1.

     

    4.7.  Indemnification
      of Investors.
      Subject
      to the provisions of this Section 4.7, the Company will indemnify and hold
      each
      Investor and its directors, officers, shareholders, members, partners, employees
      and agents (and any other Persons with a functionally equivalent role of a
      Person holding such titles notwithstanding a lack of such title or any other
      title), each Person who controls such Investor (within the meaning of Section
      15
      of the Securities Act and Section 20 of the Exchange Act), and the directors,
      officers, shareholders, agents, members, partners or employees (and any other
      Persons with a functionally equivalent role of a Person holding such titles
      notwithstanding a lack of such title or any other title) of such controlling
      persons (each, a “Investor
      Party”)
      harmless from any and all actual losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such Investor Party may suffer or incur as a result
      of or
      relating to (a) any breach of any of the representations, warranties, covenants
      or agreements made by the Company or the Beneficial Owners in this Agreement
      or
      in the other Transaction Documents or (b) any action instituted against an
      Investor, or any of them or their respective Affiliates, by any stockholder
      of
      the Company with respect to any of the transactions contemplated by the
      Transaction Documents (unless such action is based upon a breach of such
      Investor’s representations, warranties or covenants under the Transaction). If
      any action shall be brought against any Investor Party in respect of which
      indemnity may be sought pursuant to this Agreement, such Investor Party shall
      promptly notify the Company in writing, and the Company shall have the right
      to
      assume the defense thereof with counsel of its own choosing reasonably
      acceptable to the Investor Party. Any Investor Party shall have the right to
      employ separate counsel in any such action and participate in the defense
      thereof, but the fees and expenses of such counsel shall be at the expense
      of
      such Investor Party except to the extent that (i) the employment thereof has
      been specifically authorized by the Company in writing, (ii) the Company has
      failed after a reasonable period of time to assume such defense and to employ
      counsel or (iii) in such action there is, in the reasonable opinion of such
      separate counsel, a material conflict on any material issue between the position
      of the Company and the position of such Investor Party, in which case the
      Company shall be responsible for the reasonable fees and expenses of no more
      than one such separate counsel. The Company will not be liable to any Investor
      Party under this Agreement (i) for any settlement by a Investor Party effected
      without the Company’s prior written consent, which shall not be unreasonably
      withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
      claim, damage or liability is attributable to any Investor Party’s breach of any
      of the representations, warranties, covenants or agreements made by such
      Investor Party in this Agreement or in the other Transaction Documents as
      determined by a final non-appealable judgment of a court of competent
      jurisdiction. 

     

    
      
         

      

      
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    4.8.  Reimbursement.
      If any
      Investor becomes involved in any capacity in any Proceeding by or against any
      Person who is a stockholder of the Company (except as a result of (i)
      Proceedings brought by another Investor against such Investor, (ii) sales,
      pledges, margin sales and similar transactions by such Investor to or with
      any
      other stockholder or (iii) as a result of a breach of such Investor’s
      representations, warranties or covenants under the Transaction Documents or
      any
      violations by such Investor of state or federal securities laws or any conduct
      by such Investor which constitutes fraud, gross negligence, willful misconduct
      or malfeasance), solely as a result of such Investor’s acquisition of the
      Securities under this Agreement, the Company will reimburse such Investor for
      its reasonable legal and other expenses (including the cost of any
      investigation, preparation and travel in connection therewith) incurred in
      connection therewith, as such expenses are incurred. The reimbursement
      obligations of the Company under this paragraph shall be in addition to any
      liability which the Company may otherwise have, shall extend upon the same
      terms
      and conditions to any Affiliates of the Investors who are actually named in
      such
      action, proceeding or investigation, and partners, directors, agents, employees
      and controlling persons (if any), as the case may be, of the Investor and any
      such Affiliate, and shall be binding upon and inure to the benefit of any
      successors, assigns, heirs and personal representatives of the Company, the
      Investors and any such Affiliate and any such Person. The Company also agrees
      that neither the Investors nor any such Affiliates, partners, directors, agents,
      employees or controlling persons shall have any liability to the Company or
      any
      Person asserting claims on behalf of or in right of the Company solely as a
      result of acquiring the Securities under this Agreement, except if such claim
      arises primarily from a breach of such Investor’s representations, warranties or
      covenants under the Transaction Documents or any agreements or understandings
      such Purchaser may have with any such stockholder or any violations by the
      Investor of state or federal securities laws or any conduct by such Investor
      which constitutes fraud, gross negligence, willful misconduct or
      malfeasance.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    4.9.  Non-Public
      Information.
      The Company covenants and agrees that neither it nor any other Person acting
      on
      its behalf will provide any Investor or its agents or counsel with any
      information that the Company believes constitutes material non-public
      information, unless prior thereto such Investor shall have executed a written
      agreement regarding the confidentiality and use of such information. The Company
      understands and confirms that each Investor shall be relying on the foregoing
      representations in effecting transactions in securities of the
      Company.

     

    4.10.  Listing
      of Securities.
      The
      Company agrees, (i) if the Company applies to have the Common Stock traded
      on
      any other Trading Market, it will include in such application the Underlying
      Shares and Warrant Shares, and will take such other action as is necessary
      or
      desirable to cause the Underlying Shares and Warrant Shares to be listed on
      such
      other Trading Market as promptly as possible, and (ii) it will take all action
      reasonably necessary to continue the listing and trading of its Common Stock
      on
      a Trading Market and will comply in all material respects with the Company’s
      reporting, filing and other obligations under the bylaws or rules of the Trading
      Market.

     

    4.11.  Use
      of
      Proceeds.
      The
      Company will use the net proceeds from the sale of the Shares hereunder for
      working capital purposes and not for the satisfaction of any portion of the
      Company’s debt (other than payment of trade payables and accrued expenses in the
      ordinary course of the Company’s business and consistent with prior practices),
      or to redeem any Common Stock or Common Stock Equivalents.

     

    4.12.  Make
      Good Shares.
      The
      Company covenants and agrees that upon any transfer under Article 5 of 2007
      Make
      Good Shares and 2008 Make Good Shares to the Investors in accordance with
      Section 5 of the Make Good Escrow Agreement, the Company shall promptly reissue
      such 2007 Make Good Shares or 2008 Make Good Shares in the applicable Investor’s
      name and deliver the same as directed by such Investor. 

     

    4.13.  Stockholder
      Approval. The Company covenants and agrees to effect the approval of its
      stockholders of (i) an increase in the number of authorized shares of Common
      Stock to 200,000,000 shares, (ii) the change the name of the Company from
      Millennium Quest, Inc. to Lorain International Food Group, Inc., and (iii)
      the
      Reverse Split, which stockholder approval shall be deemed to occur on the
      twentieth day following the mailing by the Company of the definitive information
      statement on Schedule 14C pertaining thereto (collectively “Stockholder
      Approval”)
      in
      accordance with Rule 14c-2(b) under the Exchange Act. The Company agrees to
      effect Stockholder Approval as soon as possible, but in no event later than
      May
      31, 2007.

     

    4.14.  Acknowledgment
      of Dilution. The Company acknowledges that the issuance of Underlying Shares
      upon conversion of Shares will result in substantial dilution of the outstanding
      shares of Common Stock. The Company further acknowledges that its obligation
      to
      honor conversions under the Shares is unconditional and absolute and not subject
      to any right of set off, counterclaim, delay or reduction, regardless of the
      effect of any such dilution or any claim that the Company may have against
      any
      Investor.

     

    4.15.  Reservation
      of Shares. Upon Stockholder Approval and the Amendment Filing, the Company
      shall maintain a reserve from its duly authorized shares of Common Stock to
      comply with its conversion obligations under the Shares and exercise obligation
      under the Warrants. If on any date the Company would be, if notice of conversion
      or exercise were to be delivered on such date, precluded from issuing the number
      of Underlying Shares or Warrant Shares issuable upon conversion in full of
      the
      Shares or exercise of the Warrants due to the unavailability of a sufficient
      number of authorized but unissued or reserved shares of Common Stock, then
      the
      Board of Directors of the Company shall promptly prepare and mail to the
      stockholders of the Company proxy materials or other applicable materials
      requesting authorization to amend the Company’s certificate of incorporation or
      other organizational document to increase the number of shares of Common Stock
      which the Company is authorized to issue so as to provide enough shares for
      issuance of the Underlying Shares and Warrant Shares. In connection therewith,
      the Board of Directors shall (a) adopt proper resolutions authorizing such
      increase, (b) recommend to and otherwise use its best efforts to promptly and
      duly obtain stockholder approval (including the hiring of a nationally
      recognized proxy solicitor firm) to carry out such resolutions (and hold a
      special meeting of the stockholders as soon as practicable, but in any event
      not
      later than the 60th
      day
      after delivery of the proxy or other applicable materials relating to such
      meeting) and (c) within five Business Days of obtaining such stockholder
      authorization, file an appropriate amendment to the Company’s certificate of
      incorporation or other organizational document to evidence such
      increase.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    4.16.  Retention
      of U.S. Counsel. As a further inducement to the Investors to enter into this
      Agreement and purchase the Securities offered hereby, the Company covenants
      and
      agrees to use its good faith best efforts to retain, and rely upon, the law
      firm
      of Thelen Reid Brown Raysman & Steiner LLP as primary counsel on matters
      relating to U.S. corporate and securities laws, including, but not limited
      to,
      the representation of the Company in connection with the preparation, filing
      and
      prosecution of the Registration Statement and all other reports, registration
      statements and filings to be made by the Company with the Commission.

     

    ARTICLE
      5.

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS

    OF
      THE
      BENEFICIAL OWNERS

    

    5.1.  Representations
      and Warranties of the Company.
      As an
      inducement to the Investors to enter into this Agreement and purchase the
      Securities, each of the Beneficial Owner hereby makes the following
      representations and warranties to, and covenants and agreements with, each
      Investor:

     

    (a)  Authority.
      Such
      Beneficial Owner has all individual power and authority to enter into this
      Agreement and to carry out its obligations hereunder. This Agreement has been
      duly executed by such Beneficial Owner, and when delivered by such Beneficial
      Owner in accordance with the terms hereof, will constitute the valid and legally
      binding obligation of such Beneficial Owner, enforceable against it in
      accordance with its terms, except as such enforceability may be limited by
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      or
      similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.
      

     

    (b)  Record
      and Beneficial Ownership.
      Immediately prior to the closing of the transactions under the Share Exchange
      Agreement, Hisashi Akazawa was the sole record and beneficial owner of all
      of
      the outstanding capital shares of Lorain, as the term beneficial owner is
      defined under Rule 13d-3(d) under the Exchange Act, free and clear of all
      pledges, liens and encumbrances. Hisashi Akazawa is the sole record owner,
      and
      Hisashi Akazawa and Si Chen are the sole beneficial owners, of all 697,633
      shares Series B Preferred Stock issued by the Company under the Share Exchange
      Agreement, as the term beneficial owner is defined under Rule 13d-3(d) under
      the
      Exchange Act, free and clear of all pledges, liens and encumbrances.

     

    
      
         

      

      
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    (c)  Share
      Exchange Agreement.
      The
      representations and warranties of Lorain and Hisashi Akazawa contained in the
      Share Exchange Agreement were true and correct in all material respects as
      of
      the date when made and as of the closing of the transactions thereunder as
      though made on and as of such date. Lorain and Hisashi Akazawa performed,
      satisfied and complied in all material respects with all covenants, agreements
      and conditions required to be performed, satisfied or complied with by them
      under the Share Exchange Agreement at or prior to the closing of the
      transactions thereunder. 

     

    5.2.  Make
      Good Shares. 

     

    (a)  2007
      Make Good.
      The
      Beneficial Owners agree that if the After-Tax Net Income for the fiscal year
      ended December
      31, 2007
      reported
      in the Company’s Annual Report on Form 10-K for the fiscal year ending December
      31, 2007, as filed with the Commission (the “2007
      Annual Report”)
      is less
      than $9,266,000, inclusive of all commissions, legal fees, auditing fees and
      other fees and expenses incurred in the Lorain Acquisition (the “2007
      Guaranteed ATNI”),
      the
      Beneficial Owners will transfer to each Investor, for no additional
      consideration, their pro rata share of 302,337 shares of Series B Preferred
      Stock or the equivalent amount of Common Stock (adjusted for the Reverse Split)
      following a conversion of such shares of Series B Preferred Stock in accordance
      with the Certificate of Designation (for this purpose, any such conversion
      to be
      conducted without regard to any restrictions or caps on conversion contained
      in
      the Certificate of Designation or otherwise applicable to such shares) (the
      “2007
      Make Good Shares”).
      If the
      Company’s audited consolidated financial statements for the fiscal year ended
      December 31, 2007 specify that the 2007 Guaranteed ATNI shall have been
      achieved, no transfer of the 2007 Make Good Shares shall be required by this
      Section 5.2(a) and all 2007 Make Good Shares deposited with the Make Good Escrow
      Agent shall be returned to the Beneficial Owners within seven Business Days
      after the date which the 2007 Annual Report is filed with the Commission and
      otherwise in accordance with the Make Good Escrow Agreement. Transfers of 2007
      Make Good Shares required under this Section 5.2(a) shall be made to Investors
      within seven Business Days after the date which the 2007 Annual Report is filed
      with the Commission and otherwise in accordance with the Make Good Escrow
      Agreement.

     

    (b)  2008
      Make Good.
      The
      Beneficial Owners agree that, if the Company’s After-Tax Net Income reported in
      the Company’s Annual Report on Form 10-K for the fiscal year ending December 31,
      2008, as filed with the Commission (the “2008
      Annual Report”)
      is less
      than $12,956,000 (the “2008
      Guaranteed ATNI”),
      the
      Beneficial Owners will transfer to each Investor for no additional
      consideration, their pro rata share of 302,337 shares of Series B Preferred
      Stock, or the equivalent amount of Common Stock (adjusted for the Reverse Split)
      following a conversion of such shares of Series B Preferred Stock in accordance
      with the Certificate of Designation (for this purpose, any such conversion
      to be
      conducted without regard to any restrictions or caps on conversion contained
      in
      the Certificate of Designation or otherwise applicable to such shares) (the
      “2008
      Make Good Shares”).
      If the
      2008 Annual Report indicates that the Company shall have satisfied the 2008
      Guaranteed ATNI test specified above for such period, then no transfer to
      Investors of 2008 Make Good Shares shall be required by this Section 5.2(b)
      and
      all 2008 Make Good Shares deposited with the Make Good Escrow Agent shall be
      returned to the Beneficial Owners within seven Business Days after the date
      which the Company’s 2008 Annual Report is filed with the Commission and
      otherwise in accordance with the Make Good Escrow Agreement. Transfers of 2008
      Make Good Shares required under this Section 5.2(b) shall be made to Investors
      within seven Business Days after the date which the Company’s 2008 Annual Report
      is filed with the Commission and otherwise in accordance with the Make Good
      Escrow Agreement. 

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    (c)  Make
      Good Escrow.
      In
      connection with the foregoing, the Beneficial Owners agree that within one
      Trading Day following the Closing, the Beneficial Owners will deposit all
      potential 2007 Make Good Shares and 2008 Make Good Shares into escrow in
      accordance with the Make Good Escrow Agreement along with undated stock powers
      with Medallion guarantees (or with such other instruments of transfer as in
      accordance with the requirements of the Company’s transfer agent), in the form
      and number acceptable to the Investors in their reasonable discretion, and
      the
      handling and disposition of the 2007 Make Good Shares and 2008 Make Good Shares
      shall be governed by this Section 5.2 and such Make Good Escrow Agreement.
      The
      parties hereby agree that the Beneficial Owners’ obligation to transfer shares
      of Common Stock to Investors pursuant to this Section 5.2 shall continue to
      run
      to the benefit of an Investor only to the extent of the portion of such Shares
      or, in the case of their conversion, Underlying Shares which have not been
      transferred or sold by such Investor as of the date the Company files with
      the
      Commission the 2007 Annual Report or 2008 Annual Report, as the case may be,
      and
      that Investors shall not have the right to assign their rights to receive all
      or
      any such shares of Common Stock to other Persons in conjunction with negotiated
      sales or transfers of any of their Securities or otherwise. The
      2007
      Make Good Shares or 2008 Make Good Shares, as applicable, corresponding to
      Shares or, in the case of their conversion, Underlying Shares which have been
      transferred or sold by an Investor, shall be released from the Make Good Escrow
      and returned to the Beneficial Owners within seven Business Days after the
      date
      which the Company’s 2007 Annual Report or 2008 Annual Report, as applicable, is
      filed with the Commission.

     

    (d)  After-Tax
      Net Income.
      For
      purposes of this Section 5.2, the term After-Tax Net Income or ATNI shall mean
      the after-tax net income of the Company and its consolidated subsidiaries
      prepared in accordance with GAAP consistently applied; provided in the event
      that the release of the 2007 Make Good Shares or the 2008 Make Good Shares
      to the Investors or the Beneficial Owners is deemed to be an expense or
      deduction from revenues/income of the Company for the applicable year, as
      required under GAAP, then such expense or deduction shall be excluded for
      purposes of determining whether or not the 2007 Guaranteed ATNI or the 2008
      Guaranteed ATNI has been achieved by the Company.

     

    (e)  Pro
      Rata Share.
      Each
      Investor’s pro rata share of the 2007 Make Good Shares or the 2008 Make Good
      Shares shall be determined by dividing the 2007 Make Good Shares or the 2008
      Make Good Shares, as the case may be, by a fraction the denominator of which
      is
      the aggregate Investment Amount of all Shares or, in the case of their
      conversion, Underlying Shares held by the Investors as of the date the Company
      files with the Commission the 2007 Annual Report or 2008 Annual Report, as
      the
      case may be (each such date, a “Make
      Good Determination Date”),
      and
      the numerator of which is the Investment Amount of the Shares or, in the case
      of
      their conversion, Underlying Shares held by such Investor as of such Make Good
      Determination Date. 

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    ARTICLE
      6.

    CONDITIONS
      PRECEDENT TO CLOSING

     

    6.1.  Conditions
      Precedent to the Obligations of the Investors toPurchase
Securities.
      The
      obligation of each Investor to acquire the Shares and Warrants at the Closing
      is
      subject to the satisfaction or waiver by such Investor, at or before the
      Closing, of each of the following conditions:

     

    (a)  Representations
      and Warranties.
      The
      representations and warranties of the Company and the Beneficial Owners shall
      be
      true and correct in all material respects (except for those representations
      and
      warranties that are qualified by materiality or Material Adverse Effect, which
      shall be true and correct in all respects) as of the date when made and as
      of
      the Closing Date as though made at that time (except for representations and
      warranties that speak as of a specific date, which shall remain true and correct
      as of such specific date);

     

    (b)  Performance.
      The
      Company and the Beneficial Owners shall have performed, satisfied and complied
      in all material respects with all covenants, agreements and conditions required
      by the Transaction Documents to be performed, satisfied or complied with by
      each
      of them at or prior to the Closing;

     

    (c)  No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits the consummation of any
      of
      the transactions contemplated by the Transaction Documents;

     

    (d)  Adverse
      Changes.
      Since
      the date of execution of this Agreement, no event or series of events shall
      have
      occurred that reasonably could have or result in a Material Adverse Effect
      or a
      material adverse change with respect to the Company or Lorain;

     

    (e)  Company
      Deliverables.
      The
      Company shall have delivered the Company Deliverables in accordance with Section
      2.2(a); and

     

    (f)  Termination.
      This
      Agreement shall not have been terminated as to such Investor in accordance
      with
      Section 7.5.

     

    6.2.  Conditions
      Precedent to the Obligations of the Companyto sell Securities.
      The
      obligation of the Company to sell Shares and Warrants at the Closing is subject
      to the satisfaction or waiver by the Company, at or before the Closing, of
      each
      of the following conditions:

     

    (a)  Representations
      and Warranties.
      The
      representations and warranties of the Investors shall be true and correct in
      all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date, which shall remain true and correct as of such specific
      date);

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    (b)  Performance.
      Each
      Investor shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by such Investor at or
      prior to the Closing;

     

    (c)  No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits the consummation of any
      of
      the transactions contemplated by the Transaction Documents;

     

    (d)  Investors
      Deliverables.
      Each
      Investor shall have delivered its Investors Deliverables in accordance with
      Section 2.2(b); and

     

    (e) Termination.
      This
      Agreement shall not have been terminated as to such Investor in accordance
      with
      Section 7.5.

     

    ARTICLE
      7.

    MISCELLANEOUS

     

    7.1.  Fees
      and Expenses.
      Each
      party shall pay the fees and expenses of its advisers, counsel, accountants
      and
      other experts, if any, and all other expenses incurred by such party incident
      to
      the negotiation, preparation, execution, delivery and performance of the
      Transaction Documents. The Company shall pay all stamp and other taxes and
      duties levied in connection with the sale of the Securities.

     

    7.2.  Entire
      Agreement.
      The
      Transaction Documents, together with the Exhibits and Schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements, understandings, discussions and
      representations, oral or written, with respect to such matters, which the
      parties acknowledge have been merged into such documents, exhibits and
      schedules.

     

    7.3.  Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile (provided the sender receives a machine-generated
      confirmation of successful transmission) at the facsimile number specified
      in
      this Section prior to 3:30 p.m. (New York City time) on a Trading Day, (b)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      on
      a day that is not a Trading Day or later than 3:30 p.m. (New York City time)
      on
      any Trading Day, (c) the Trading Day following the date of mailing, if sent
      by
      U.S. nationally recognized overnight courier service, or (d) upon actual receipt
      by the party to whom such notice is required to be given. The address for such
      notices and communications shall be as follows:

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

     

    
      	 	 If to the Company:	Millennium
              Quest, Inc.
              Beihuan
                Road

              Junan
                County

              Shandong,
                China

              Attn:
                Mr. Si Chen

              Facsimile:
                (0086539) 7314886 7311026 

            
	 	 	
               

            
	 	With a copy to: 	Thelen Reid Brown Raysman & Steiner LLP
              
              701
                8th
                Street NW

              Washington,
                D.C. 20001

              Facsimile:
                (202) 654-1804

              Attn.:
                Louis A. Bevilacqua, Esq.

            
	 	 	 
	 	If to an Investor: 	To the address set forth under such
              Investor’s name on the signature pages hereof;
	 	 	 
	 	If to the Beneficial
              Owners:	Beihuan Road
              Junan
                County

              Shandong,
                China

              Facsimile:
                (0086539) 7314886 7311026 

            
	 	 	 
	 	With a copy to:	King and Wood PRC Lawyers
              40th
                Floor, Office Tower A, Beijing Fortune Plaza, 

              7
                Dongsanhuan Zhoulu, Chaoyang District, 

              Beijing
                100020, China

              Facsimile:
                (008610) 5878-5566

              Attn.:
                Charles Law 

            

    

     

    or
      such
      other address as may be designated in writing hereafter, in the same manner,
      by
      such Person.

     

    7.4.  Amendments;
      Waivers; No Additional Consideration.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed by the Company and the Investors holding a majority of the
      Shares or, in the event of their conversion, Underlying Shares. No waiver of
      any
      default with respect to any provision, condition or requirement of this
      Agreement shall be deemed to be a continuing waiver in the future or a waiver
      of
      any subsequent default or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of either party to exercise
      any right hereunder in any manner impair the exercise of any such right. No
      consideration shall be offered or paid to any Investor to amend or consent
      to a
      waiver or modification of any provision of any Transaction Document unless
      the
      same consideration is also offered to all Investors who then hold Securities.
      In
      the event of any discrepancy between this Agreement and the Make Good Escrow
      Agreement, the terms of the Make Good Escrow Agreement shall apply to the extent
      of such discrepancy.

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    7.5.  Termination.
      This
      Agreement may be terminated prior to Closing:

     

    (a)  by
      written agreement of the Investors and the Company; and

     

    (b)  by
      the
      Company or an Investor (as to itself but no other Investor) upon written notice
      to the other, if the Closing shall not have taken place by 6:30 p.m. Eastern
      time on the Outside Date; provided,
      that
      the right to terminate this Agreement under this Section 7.5(b) shall not
      be available to any Person whose failure to comply with its obligations under
      this Agreement has been the cause of or resulted in the failure of the Closing
      to occur on or before such time.

     

    In
      the
      event of a termination pursuant to this Section, the Company shall promptly
      notify all non-terminating Investors. Upon a termination in accordance with
      this
      Section 7.5, the Company and the terminating Investor(s) shall not have any
      further obligation or liability (including as arising from such termination)
      to
      the other and no Investor will have any liability to any other Investor under
      the Transaction Documents as a result therefrom.

     

    7.6.  Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. 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. This Agreement shall be
      construed as if drafted jointly by the parties, and no presumption or burden
      of
      proof shall arise favoring or disfavoring any party by virtue of the authorship
      of any provisions of this Agreement or any of the Transaction
      Documents.

     

    7.7.  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Investors. Any Investor may assign any or all of its rights
      under
      this Agreement to any Person to whom such Investor assigns or transfers any
      Shares, provided such transferee agrees in writing to be bound, with respect
      to
      the transferred Shares, by the provisions hereof that apply to the
“Investors.”

     

    7.8.  No
      Third-Party Beneficiaries

     

    .
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.7 (as to each Investor Party).

     

    7.9.  Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each party agrees that all Proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement and any other Transaction Documents (whether
      brought against a party hereto or its respective Affiliates, employees or
      agents) shall be commenced exclusively in the New York Courts. Each party hereto
      hereby irrevocably submits to the exclusive 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 (including with respect
      to the enforcement of the any of the Transaction Documents), 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.
      Each party hereto hereby irrevocably waives personal service of process and
      consents to process being served in any such Proceeding by mailing a copy
      thereof via registered or certified mail or overnight delivery (with evidence
      of
      delivery) to such party at the address in effect for notices to it under this
      Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      Each party hereto hereby irrevocably waives, to the fullest extent permitted
      by
      applicable law, any and all right to trial by jury in any legal proceeding
      arising out of or relating to this Agreement or the transactions contemplated
      hereby. If either party shall commence a Proceeding to enforce any provisions
      of
      a Transaction Document, then the prevailing party in such Proceeding shall
      be
      reimbursed by the other party for its reasonable attorneys’ fees and other costs
      and expenses incurred with the investigation, preparation and prosecution of
      such Proceeding.

     

    
      
         

      

      
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    7.10.  Survival.
      The
      representations, warranties, agreements and covenants contained herein shall
      survive the Closing and the delivery of the Shares and Warrants.

     

    7.11.  Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    7.12.  Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    7.13.  Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Investor
      exercises a right, election, demand or option under a Transaction Document
      and
      the Company does not timely perform its related obligations within the periods
      therein provided, then such Investor may rescind or withdraw, in its sole
      discretion from time to time upon written notice to the Company, any relevant
      notice, demand or election in whole or in part without prejudice to its future
      actions and rights.

     

    7.14.  Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement Securities.
      If a replacement certificate or instrument evidencing any Securities is
      requested due to a mutilation thereof, the Company may require delivery of
      such
      mutilated certificate or instrument as a condition precedent to any issuance
      of
      a replacement.

     

    
      
         

      

      
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    7.15.  Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Investors and the Company will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be
      adequate.

     

    7.16.  Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Investor pursuant
      to
      any Transaction Document or an Investor enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

     

    7.17.  Independent
      Nature ofInvestors’
      Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Securities pursuant to the Transaction Documents has been made by
      such
      Investor independently of any other Investor. Nothing contained herein or in
      any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no Investor
      will be acting as agent of such Investor in connection with monitoring its
      investment in the Securities or enforcing its rights under the Transaction
      Documents. Each Investor shall be entitled to independently protect and enforce
      its rights, including without limitation the rights arising out of this
      Agreement or out of the other Transaction Documents, and it shall not be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose. The Company acknowledges that each of the Investors
      has been provided with the same Transaction Documents for the purpose of closing
      a transaction with multiple Investors and not because it was required or
      requested to do so by any Investor. Each Investor represents that it has been
      represented by its own separate legal counsel in its review and negotiations
      of
      this Agreement and the Transaction Documents.

     

    7.18.  Limitation
      of Liability.
      Notwithstanding anything herein to the contrary, the Company acknowledges and
      agrees that the liability of an Investor arising directly or indirectly, under
      any Transaction Document of any and every nature whatsoever shall be satisfied
      solely out of the assets of such Investor, and that no trustee, officer, other
      investment vehicle or any other Affiliate of such Investor or any investor,
      shareholder or holder of shares of beneficial interest of such a Investor shall
      be personally liable for any liabilities of such Investor.

     

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    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

     

    
      	 	
              MILLENNIUM
                QUEST, INC.

            
	 	 
	 	
              By:______________________________

                Si
                Chen, Chief
                Executive Officer

               

               

              Only
                as to Sections 5 and 7 herein:

               

              ____________________________

              Hisashi
                Akazawa

               

              ____________________________

              Si
                Chen

               

            

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES FOR INVESTORS FOLLOW]

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      	 	
              NAME
                OF INVESTOR

               

              _________________________________________

               

              By:
                ______________________________________  

                    
                Name: 

                    
                Title: 

               

              Shares
                Subscribed For: ______________________

               

              Warrants
                Subscribed For:____________________

               

              Investment
                Amount: $_______________________

               

              Tax
                ID No.:_______________________________

               

            
	 	 
	 	
              ADDRESS
                FOR NOTICE

               

              c/o:
                ___________________________________

               

              Street:
                _________________________________

               

              City/State/Zip:___________________________

               

              Attention:______________________________

               

              Tel:___________________________________

               

              Fax:___________________________________

            
	 	 
	 	
              DELIVERY
                INSTRUCTIONS

                  (if
                different from above)

               

              
                c/o:
                  ___________________________________

                 

                Street:
                  _________________________________

                 

                City/State/Zip:___________________________

                 

                Attention:______________________________

                 

                Tel:___________________________________

              

            

    

     

     

    
      
         

      

      
        35

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