SETTLEMENT AGREEMENT

 

SETTLEMENT AGREEMENT, made this 28th day of February 2018 and effective as of
December 30, 2017 (the “Effective Date”) (the “Agreement”), by and between Quest
Solution Inc., a Delaware corporation (the “Company”) and George Zicman, an
individual residing at 14820 Parisian Ct, Reno, NV (“Zicman”). The Company and
Zicman collectively shall be referred to as the “Parties.”

 

WHEREAS, the Company is indebted to Zicman in the aggregate amount of
$1,304,198.55 (the “Owed Amount”) which includes accrued interest earned but not
paid;

 

WHEREAS; the Company is willing to settle the Owed Amount by paying certain
consideration to Zicman as set forth in Section 2 below.

 

WHEREAS, each of the Parties desires to release each of the other Parties from
any and all claims in connection with the Owed Amount upon the fulfillment of
the conditions set forth in Section 2 below.

 

NOW THEREFORE, in consideration of the mutual covenants and other good and
valuable considerations hereinafter contained, the Parties agree as follows:

 

  1. Recitals. The above recitals are incorporated into this Agreement.        
2. Settlement. On the date hereof, or as otherwise set forth below, the Company
shall satisfy the Owed Amount in the manner set forth below:

 

  a. The Company will pay Zicman 60 monthly payments of $3,000 each (the
“Settlement Payments”) commencing the earlier of (i) 8 months from the date
hereof; or (ii) the date when the Company’s obligation under its promissory note
with Scansource, Inc., currently in the amount of approximately $2,800,000 is
satisfied and all amounts currently in default due under the credit agreement
(currently approximately $6.0 million) with Scansource is reduced to $2.0
million.         b. The Company hereby agrees to issue Zicman 100,000 shares of
Common Stock within three (3) days of the execution of this Agreement (the
“Common Shares”). The Common Shares will be subject to restriction in accordance
with the Securities Act of 1933, as amended and the Securities Exchange Act of
1934, as amended (collectively “U.S. Securities Laws”) and will bear the
standard 1933 Act restrictive legend. In addition, Zicman hereby agrees that he
will not sell more than 10%of the shares of Common stock beneficially owned by
him in any 30-day period (the “Trading Restriction”). The Trading Restriction
shall be null and void 180 days after the Company’s common stock is listed on
the NASDAQ Capital Market or another National Market. In addition, Zicman agrees
to execute the voting proxy agreement in favor of the Company’s CEO, Shai
Lustgarten, attached hereto as Exhibit B.

 

   

 

 

  c. The Company agrees to issue Zicman an aggregate of 600,000 shares of Series
C Preferred Stock which rights will be governed by the terms set forth in the
Certificate of Designation of Rights and Preferences (the “COD”)attached as
Exhibit A hereto, except that no dividends will be payable or will accrue on the
Preferred Shares until two years from the date of issuance; and the Preferred
Shares will be convertible into Common Stock at $1.00 per share at the holder’s
option and will be automatically convertible into common stock if the Company’s
common stock has a closing price of $1.50 per share for 20 consecutive trading
days. In addition, Zicman hereby agrees that he will not sell more than 10%of
the shares of Common stock beneficially owned by him in any 30-day period (the
“Trading Restriction”). The Trading Restriction shall be null and void 180 days
after the Company’s common stock is listed on the NASDAQ Capital Market or
another National Market. In addition, Zicman agrees to execute the voting proxy
agreement in favor of the Company’s CEO, Shai Lustgarten, attached hereto as
Exhibit B.

 

The Settlement Payments and the issuance of the Preferred Shares shall
constitute the total consideration for the Owed Amount (the “Consideration”).

 

  3. Forgiveness of the Obligation. Zicman agrees that upon the execution of
this Agreement and the issuance of the Preferred Shares, Common Shares, the Owed
Amount will be forgiven in its entirety and Zicman shall have no right to the
Owed Amount as of the Effective Date although they retain the right to the
Settlement Payments. Zicman agrees to sign any document deemed necessary by the
Company’s auditors to reflect such forgiveness after review by his counsel;
provided, that any such letter or agreement will not effect the economic terms
of this Agreement.         4. Continuing Services. The Company and Zicman agree
that any continuing series performed on behalf of the Company will be subject to
a mutually agreeable consulting agreement between the Company and Zicman.      
  5. Release. In consideration of the foregoing and upon fulfillment of the
conditions of this Agreement, Zicman hereby releases and discharges the Company,
the Company’s officers, directors, principals, control persons, past and present
employees, agents, insurers, successors, and assigns (“Company Parties”) from
all actions, cause of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, Zicman
ever had, now has or hereafter can, shall or may, have for, upon, or by reason
of any matter, cause or thing whatsoever, whether or not known or unknown, in
connection with the Owed Amount, from the beginning of the world to the day of
the date of this Release. Notwithstanding anything in this paragraph, Zicman
does not waive any rights that he derives from this Agreement or any other
agreement that he may enter into with the Company pursuant to Section 4 below.

 

   

 

 

    Zicman hereby confirms that, upon receipt of the items set forth in Section
2 hereof, the Company shall have no obligation to pay any other fees, expenses,
accrued but unpaid interest or dividends or any other payment or reimbursements
that comprise the Owed Amount, except for payments and rights set forth in the
COD as modified in Section 2(b) hereof. Zicman hereby agrees to release any
security interest that he may have against the Company’s assets. Zicman
represents and warrants that no other person or entity has any interest in the
Owed Amount and that he has not pledged, and that it has not assigned or
transferred, or purported to assign or transfer, to any person or entity all or
any portion of the Owed Amount.         6. Indemnification. Zicman agrees that
in the event that a third party brings a claim against the Company alleging that
Zicman transferred or otherwise pledged a portion of the Owed Amount, and/or the
promissory note(s) reflecting the Owed Amount, Zicman shall be responsible for
any damages arising against the Company relating thereto including reasonable
expenses in defending such third party action.         7. Mutual
Non-Disparagement. All Parties agree not to disparage or otherwise make
unfavorable remarks regarding any other party to this Agreement.         8.
Merger and Amendment. This Agreement and its Exhibits contain the entire
agreement and understanding concerning the Owed Amounts and supersedes and
replaces all prior negotiations, proposed agreement and agreements, written or
oral. Each of the parties hereto acknowledges that none of the parties hereto,
agents or counsel of any party, has made any promise, representation or warranty
whatsoever, express or implied, not contained herein concerning the subject
hereto, to induce it to execute this Agreement and acknowledges and warrants
that it is not executing this Agreement in reliance on any promise,
representation or warranty not contained herein. This Agreement may not be
modified or amended in any manner except by an instrument in writing
specifically stating that it is a supplement, modification or amendment to the
Agreement and signed by each of the Parties hereto against whom such
modification or amendment shall be claimed to be effective.         9. Duplicate
Originals; Counterparts. This Agreement may be executed in any number of
duplicate originals and each duplicate original shall be deemed to be an
original. This Agreement may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together
shall constitute a single agreement.         10. Severability. Each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited or invalid under applicable law, such provision will be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.         11. Governing Law. This Agreement shall be
interpreted and the rights and liabilities of the Parties determined in
accordance with the laws of the State of New York, excluding its conflict of
laws rules.         12. Representation by Counsel. Each party hereto represents
and agrees with each other that it has been represented by or had the
opportunity to be represented by, independent counsel of its own choosing, and
that it has had the full right and opportunity to consult with its respective
attorney(s), that to the extent, if any, that it desired, it availed itself of
this right and opportunity, that it or its authorized officers (as the case may
be) have carefully read and fully understand this Agreement in its entirety and
have had it fully explained to them by such party’s respective counsel, that
each is fully aware of the contents thereof and its meaning, intent and legal
effect, and that it or its authorized officer (as the case may be) is competent
to execute this Agreement and has executed this Agreement free from coercion,
duress or undue influence.

 

   

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Release Agreement as
of the day and year first written above.

 

  QUEST SOLUTION INC.         By: /s/ Shai Lustgarten   Name: Shai Lustgarten  
Title: Chief Executive Officer         /s/ George Zicman   George Zicman

 

   

 

 

EXHIBIT A

 

Certificate of Designation of Series C Preferred Stock

 

   

 

 

EXHIBIT B

 

Voting Agreement