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 Kurt Thomet, an
individual residing at 706 Fairwinds Loop, Vancouver, WA 95661 (“Thomet”). The
Company and Thomet collectively shall be referred to as the “Parties.”

 

WHEREAS, the Company is indebted to Thomet in the aggregate amount of
$5,437,136.40 (the “Owed Amount”) which includes accrued interest earned but not
paid;

 

WHEREAS, Thomet has instituted an action in the Circuit Court for the State of
Oregon, for the County of Lane (the “Lawsuit”) seeking damages for breach of
contract.

 

WHEREAS; the Company is willing to settle the Owed Amount by paying certain
consideration to Thomet 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 Thomet 60 monthly payments of $12,500 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, with subsequent payments due on or before the 25th day of each calendar
month following such date. All Settlement Payments, if not paid when due, will
bear interest at the rate of 12% per annum, or the maximum rate permitted by
applicable law, whichever is less. If Company fails to timely pay 2 consecutive
Settlement Payments when due, or is otherwise in breach of this Agreement, then
Thomet may declare all remaining Settlement Payments (and all accrued but unpaid
interest) due in its entirety, and such sum will thereafter bear interest at the
rate of 18% per annum, or the maximum rate permitted by applicable law,
whichever is less.

 

 

 

 

  b. The Company hereby agrees to issue Thomet 500,000 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, Thomet 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, Thomet 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 Thomet an
aggregate of 1,000,000 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.

 

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

 

  3. Forgiveness of the Obligation. Thomet agrees that upon the execution of
this Agreement and the issuance of the Preferred Shares and Common Shares and
payment of the attorneys’ fees as provided in Section 4, below, the Owed Amount
will be forgiven in its entirety and Thomet shall have no right to the Owed
Amount as of the Effective Date, although Thomet shall retain the right to the
Consideration. Thomet 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. In addition, Thomet agrees to, not later than five business
days after issuance of the Preferred Shares and Common Shares and payment of the
attorneys’ fees as provided in Section 4, below, withdraw the Lawsuit with
prejudice.         4. Attorneys’ Fees. Contemporaneous with the execution of
this Agreement the Company will pay the legal fees incurred by Thomet in
connection with the negotiation of this Agreement in the amount of $5,000.

 

 

 

 

  5. Release. In consideration of the foregoing and upon fulfillment of the
conditions of this Agreement, Thomet 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, Thomet
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, Thomet
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.  
        Thomet 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. Thomet hereby agrees to
release any security interest that he may have against the Company’s assets.
Thomet 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. Thomet agrees that
in the event that a third party brings a claim against the Company alleging that
Thomet transferred or otherwise pledged a portion of the Owed Amount, and/or the
promissory note(s) reflecting the Owed Amount, Thomet 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 Oregon, excluding its conflict of laws rules. Each party consents to the
exclusive jurisdiction of any State Court or Federal Court in Lane County,
Oregon with repsect to any claim or action arising out of or related to this
Agreement.         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/ Kurt Thomet
  Kurt Thomet

 

 

 

 

EXHIBIT B

 

Voting Agreement