UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 30, 2016

 

QUEST SOLUTION, INC.

(Exact name of registrant as specified in charter)

 

Delaware   000-09047   20-3454263
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)

 

860 Conger Street, Eugene, OR 97402
(Address of Principal Executive Offices) (Zip Code)

 

(514) 744-1000

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, If Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR  240.13e-4(c))

 

 

 

   
 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On November 30, 2016, the Company and Quest Exchange Ltd. (“Quest Exchange”) entered into an Exchange and Transfer Agreement (the “Exchange and Transfer Agreement”) with Viascan Group Inc. (“VGI”) for the sale of the outstanding shares of Quest Solution Canada Inc. (formerly known as ViascanQData, Inc.) (“Quest Canada”) to VGI (the “Transaction”). Gilles Gaudreault, the Company’s former Chief Executive Officer and a former member of the Company’s Board of Directors, has an equity interest in VGI. The Transaction closed on December 6, 2016, with an effective date of September 30, 2016.

 

Pursuant to the Exchange and Transfer Agreement, in consideration for the Transaction, VGI will pay approximately $1.0 million in cash to the Company, with $550,000 payable at closing, $300,000 payable on the one month anniversary of the signing date, and $150,000 payable on the two month anniversary of the signing date. Under the Exchange and Transfer Agreement, VGI transferred to the Company and Quest Exchange, as applicable: 5,200,000 exchangeable shares of Quest Exchange, one share of the Company’s Series B Preferred Stock and 1,049,250 shares of the Company’s Series C Preferred Stock (in each case, including any related dividend rights). Pursuant to the Exchange and Transfer Agreement, VGI reimbursed the Company for certain intercompany advances for the benefit of Quest Canada since September 10, 2016 and assumed certain debts in the amount of approximately $1 million. The Exchange and Transfer Agreement provides that the Company will forgive the balance of all intercompany loans due to the Company from Quest Canada or VGI in the amount of approximately $7 million.

 

The Exchange and Transfer Agreement further provides that, in the event of a Change of Structure (as defined in the Exchange and Transfer Agreement) of Quest Canada or VGI during the seven year period following the closing of the Transaction, the Company has a right of first refusal to match any bona fide Change of Structure transaction offer received by Quest Canada or VGI. If the Company does not exercise its right of first refusal and Quest Canada or VGI proceeds to close a Change of Structure transaction with a third party, then the Company will receive 15% of the net proceeds of the transaction, up to $2.3 million.

 

The Exchange and Transfer Agreement includes customary representations and warranties and confidentiality, employee and customer non-solicitation, and indemnification provisions.

 

In connection with the Transaction, on November 30, 2016, the Company entered into a Redemption Agreement (the “Redemption Agreement”) with Danis Kurdi and 3587967 Canada, Inc. Mr. Kurdi is the Company’s former Vice President of Printers and Media and has an equity interest in VGI. Under the Redemption Agreement, the Company redeemed 789,780 shares of the Company’s Series C Preferred Stock. No additional payments were made to Mr. Kurdi for the redemption of his shares.

 

In addition, the employment agreements between the Company and Messrs. Gaudreault and Kurdi, Jean-Paul Chartier, Pierre André-Paulin and Bertrand Martelle were terminated and certain amounts owed to them by the Company were forgiven, and Messrs. Gaudreault, Chartier and Paulin transferred shares of the Company’s common stock to the Company.

 

The foregoing description of the terms of the Exchange and Transfer Agreement and Redemption Agreement is not complete and is qualified in its entirety by reference to the full text of such agreements, which are filed as Exhibits 2.1 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

 

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Item 1.02. Termination of a Material Definitive Agreement.

 

The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the termination of the employment agreements between the Company and Messrs. Gaudreault, Chartier, Martelle, and Kurdi and Item 5.02 of this Current Report on Form 8-K with respect to the termination of the employment agreement between the Company and Joey Trombino is incorporated by reference herein.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance  Sheet Arrangement of a Registrant.

 

On November 30, 2016, the Company, Quest Exchange, Quest Marketing, Inc., and Bar Code Specialties, Inc. and their subsidiaries and/or affiliates (collectively, the “Quest Parties”), and ScanSource, Inc. and/or its subsidiaries and affiliates (“ScanSource”), entered into an amendment (the “Amendment”) to that certain Secured Promissory Note, dated July 1, 2016, in the original principal amount of $12,492,136.51 (the “Note”). The Amendment extends the maturity date of the Note from December 31, 2016 to March 31, 2017. The Amendment provides that the Note will be payable in four consecutive monthly installments of principal and accrued interest in a minimum principal amount of $400,000 each, with any remaining principal and accrued interest due and payable on March 31, 2017. The Amendment also provides that the Company will make an additional principal payment of $300,000 upon the earlier of December 15, 2016 and the closing of the Transaction. The interest rate of the Note remains at 12% per annum.

 

The foregoing description of the terms of the Amendment is not complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated by reference herein.

 

In connection with the Amendment, Thomas Miller, the Company’s Interim Chief Executive Officer, President and Chairman of the Board, entered into a letter of credit for the benefit of ScanSource in the amount of $300,000 and pledged 202,530 shares of the Company’s Series C Preferred Stock to ScanSource as additional security for the Note and other obligations of the Company owing to ScanSource. Also, in connection with the Amendment, George Zicman, the Company’s Vice President of Sales, entered into a letter of credit for the benefit of ScanSource in the amount of $400,000 and pledged 1,041,000 shares of the Company’s Series C Preferred Stock to ScanSource as additional security for the Note and other obligations of the Company owing to ScanSource. In addition, the Company collaterally assigned and granted to ScanSource a security interest in all of the Company’s rights and remedies under the Exchange and Transfer Agreement as additional security for the Note and other obligations owing to ScanSource.

 

The Quest Parties and ScanSource also entered into an amendment to a trade credit extension letter, pursuant to which ScanSource may extend trade credit to the Quest Parties in the amount of $17,000,000. The amendment to the trade credit extension letter contains a financial covenant providing that the Quest Parties may not incur any liabilities in excess of $45 million in the aggregate.

 

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In connection with the consummation of the Transaction, ScanSource released Quest Canada from any payment obligations under the Company’s financing arrangements with ScanSource. As a condition to the release, ScanSource received (i) payment of $272,752.10 (CND) and $72,641.71 for all amounts owing by Quest Canada to ScanSource and (ii) payment of $1,252,000 to be applied toward the outstanding balance of the Note.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment  of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(a), (b)

 

On November 30, 2016, in connection with the Transaction, Mr. Gaudreault resigned from all positions as a director and officer of the Company. Mr. Gaudreault had previously taken a leave of absence from the Company on September 15, 2016, in connection with the execution of the letter of intent for the Transaction.

 

(e)

 

Following consummation of the Transaction, Joey Trombino will continue to serve as the Company’s Chief Financial Officer but will be an employee of Quest Canada and will no longer be an employee of the Company. To effectuate this change, on November 30, 2016, the Company and Mr. Trombino mutually agreed to terminate his employment agreement, dated April 19, 2016. The Company and Mr. Trombino entered into a Contractor Agreement (the “Contractor Agreement”), with an effective date of October 1, 2016, for Mr. Trombino to serve as the Company’s Chief Financial Officer. Mr. Trombino will allocate approximately 75% of his working time to providing services to the Company and 25% of his working time to providing services to Quest Canada.

 

The Contractor Agreement has a term of one year ending on September 30, 2017. Pursuant to the Contractor Agreement, Mr. Trombino will receive (i) a monthly payment of $9,250, (ii) 400,000 shares of the Company’s common stock and (iii) reimbursement for reasonable charges or expenses incurred in the performance of his services. Mr. Trombino will be eligible to receive an additional fee in the aggregate amount of $33,000, payable in cash or the Company’s common stock, based on achievement of certain performance objectives set forth in the Contractor Agreement. Quest Canada shall be responsible for paying Mr. Trombino’s benefits by virtue of his employment with Quest Canada.

 

The foregoing description of the terms of the Contractor Agreement is not complete and is qualified in its entirety by reference to the full text of the Contractor Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and are incorporated by reference herein.

 

Item 7.01. Regulation FD Disclosure

 

On December 6, 2016, the Company issued a press release (the “Press Release”) announcing signing of the Exchange and Transfer Agreement and consummation of the Transaction. A copy of the Press Release is attached hereto as Exhibit 99.1 and incorporated into this Item 7.01 by reference.

 

Pursuant to the rules and regulations of the Securities and Exchange Commission, the information in this Item 7.01 disclosure, including Exhibit 99.1, and the information set forth therein, is deemed to have been furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.

 

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Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit    
Number   Description
     
4.1   Amendment to Secured Promissory Note, by and among Quest Solution, Inc., Quest Marketing, Inc., Bar Code Specialties, Inc., Quest Exchange Ltd. and their subsidiaries and/or affiliates and ScanSource, Inc. and/or its subsidiaries and affiliates
     
2.1   Exchange and Transfer Agreement, by and among Viascan Group, Inc., Quest Solution, Inc., and Quest Exchange Ltd. (exhibits and schedules have been omitted, and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request)
     
10.1   Redemption Agreement, by and between Quest Solution, Inc. and Danis Kurdi and 3587967 Canada, Inc.
     
10.2   Contractor Agreement, by and between Quest Solution, Inc. and Joey Trombino
     
99.1   Press Release, dated December 6, 2016

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: December 6, 2016

 

  QUEST SOLUTION, INC.
     
  By: /s/ Thomas O. Miller
    Thomas O. Miller
    Interim Chief Executive Officer and President

 

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EXHIBIT INDEX

 

Exhibit Number   Description
     
4.1   Amendment to Secured Promissory Note, by and among Quest Solution, Inc., Quest Marketing, Inc., Bar Code Specialties, Inc., Quest Exchange Ltd. and their subsidiaries and/or affiliates and ScanSource, Inc. and/or its subsidiaries and affiliates
     
2.1   Exchange and Transfer Agreement, by and among Viascan Group, Inc., Quest Solution, Inc., and Quest Exchange Ltd. (exhibits and schedules have been omitted, and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request)
     
10.1   Redemption Agreement, by and between Quest Solution, Inc. and Danis Kurdi and 3587967 Canada, Inc.
     
10.2   Contractor Agreement, by and between Quest Solution, Inc. and Joey Trombino
     
99.1   Press Release, dated December 6, 2016

 

   
 

 

 

 

EXCHANGE AND TRANSFER AGREEMENT

 

THIS EXCHANGE AND TRANSFER AGREEMENT (this “ Agreement ”) is made and entered into this 30th day of November, 2016 (the “ Signing Date ”), between and among Viascan Group, Inc., a Canadian corporation (“ VGI ”) and Quest Solution, Inc., a Delaware corporation (the “ Company ”), and Quest Exchange Ltd., a Canadian corporation and the Company’s controlled subsidiary (“ QEI ”, and together with the Company, the “ Company Parties ”). VGI and the Company Parties are each a “ Party ” and are collectively, the “ Parties .”

 

WHEREAS , VGI is the current owner of: 5,200,000 shares of Series A preferred stock of QEI (the “ A Shares ”), one (1) share of series B preferred stock of the Company (the “ B Share ”), and 1,049,250 shares of Series C preferred stock of the Company (the “ C Shares ”, and together with the A Shares and the B Share, the “ Equity Interests ”); and

 

WHEREAS , QEI is the current owner of 57,590 shares of common stock of Quest Solution Canada, Inc. (f/k/a ViaScanQdata Inc.), a Canadian corporation (“ QSC ”)(the “ QSC Shares ”); and

 

WHEREAS , the Company Parties and VGI desire to exchange the Equity Interests for the QSC Shares, and, in connection therewith, QEI shall cancel the A Shares, and the Company shall redeem the B Share and C Shares from VGI, all under the terms set forth in this Agreement.

 

NOW, THEREFORE , for $1.00 and other good and valuable consideration (including the agreements and covenants set forth herein), the receipt and legal sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.        Exchange and Transfer of Equity Interests and Additional Agreements .

 

(a)        Equity Transfers . The following transfers shall be effective as of the Closing Date:

 

(i)       VGI hereby sells, transfers and conveys to QEI, and QEI hereby redeems and repurchases from VGI, the A Shares (including any related dividend rights).

 

(ii)       VGI hereby sells, transfers and conveys to the Company, and the Company hereby redeems and repurchases from VGI, the B Share and C Shares (including any related dividend rights).

 

(iii)       QEI hereby sells, transfers and conveys to VGI, and VGI hereby repurchases from QEI, the QSC Shares (including any related dividend rights).

 

     
 

 

(b)        Additional Agreements and Covenants . In connection with the foregoing exchange, the Parties further covenant and agree as follows:

 

(i)       VGI shall (and/or, after Closing shall cause QSC to (as the case may be)):

 

(A)       On the Signing Date (and at the Closing), reimburse the Company, in cash or other immediately available funds in $USD (without interest), for all Intercompany Advances. For purposes of this section, the term “ Intercompany Advances ” means all advances made by the Company to or for the benefit of QSC from September 10, 2016, through the Signing Date, as reasonably (I) calculated and determined by the Company, and (II) confirmed by VGI, in accordance with past practice.

 

(B)       Pay the Company the sum of $600,000 USD in cash or other immediately available funds, with $150,000 payable on the Signing Date (the “ Closing Payment ”) and the remaining $450,000 payable in two (2) installments (without interest), with the first installment of $300,000 payable on the one (1) month anniversary of the Signing Date, and the second installment of $150,000 due and payable on the two (2) month anniversary of the Signing Date.

 

(C)       Pay the Company a payment of $170,000 USD in cash or other immediately available funds on the five (5) month anniversary of the Signing Date.

 

(D)       At and as of the Closing, assume liability for the following debts and claims (all of which have arisen, directly or in directly, out of the operations of QSC and/or VGI): (I) all sums due to Jeffrey Lem, The Lem Family Trust, and the 2010 Lem Family Trust pursuant to that certain share purchase agreement dated February 2015, as amended; (II) all sums due to UPM (est. $180,000); and (III) all sums due to Avery Dennison Canada Corporation or its assigns pursuant to that certain C$1,598,422.72 Commercial Promissory Note executed by the Company and QSC (collectively, the “ Assumed Debts ”).

 

(E)       At and as of the Closing, deliver to the Company: (I) original executed copies of the resignations, general releases, and/or post-Closing QSC employment obligation assumption attached hereto as Exhibit 1(b)(i)-E1 through Exhibit 1(b)(i)-E5 , as signed by the former employees of the Company listed thereon and QSC (the “ Employee Releases ”); and (II) original duly executed stock powers in the form of stock power attached hereto as Exhibit 1(b)(i)-E6 through Exhibit 1(b)(i)-E8 , accompanied by the stock certificates referred to thereon and signed by the former employees of the Company listed thereon (the “ Employee Stock Powers ”).

 

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(F)       At and as of the Closing, transfer all right, title and interest in the QSC printing press located in Garden Grove, California, to the Company, free of all liens, claims or encumbrances (the “ Garden Grove Press ”).

 

(G)       At and as of the Closing, deliver an original, executed copy of the Company’s Series C preferred stock redemption agreement attached hereto as Exhibit 1(b)(i)-G , as executed by Mr. Danis Kurdi and 3587967 Canada, Inc. (the “ Related Redemption Agreement ”).

 

(H)       In the event of a proposed Change of Structure (as defined below) of VGI or QSC at any time during the seven (7) year period following the Closing Date, both:

 

(I)       First, provide the Company with a right of first refusal to match any bona fide Change of Structure transaction offer received by VGI or QSC (as the case may be) that such Party desires to accept (each, an “ Offer ”), as follows: Each time the Party receives an Offer, the VGI shall, within five (5) business days thereafter, provide written notice to the Company specifying the financial and other pertinent terms of the Offer and any other information reasonably requested by the Company (the “ Offer Notice ”). Upon receipt of the Offer Notice, the Company shall then have the right to match the terms of the Offer by delivery of a written notice to VGI (the “ ROFR Exercise Notice ”) within thirty (30) days thereafter. In the event that the Company delivers the ROFR Exercise Notice, then the Company and other applicable transaction parties shall proceed to consummate and close the Offer under the material terms set forth in the Offer Notice. In the event the Company does not deliver the ROFR Exercise Notice by the end of the thirty (30) business day period, then (a) this shall constitute a waiver of its right of first refusal under this section with respect to the current Offer, but shall not affect their respective rights with respect to any future Offer, and (b) VGI or QSC (as the case may be) shall be free to pursue the current Offer, subject to subsection (II) below.

 

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(II) Next, if the Company does not deliver a ROFR Exercise Notice and VGI or QSC proceeds to close the current Offer with a 3rd party, pay to the Company (or its designee), a sum equal to the lesser of (I) $2,300,000 USD, or (II) fifteen percent (15%) of the Net Proceeds (as defined below) arising from the Change of Structure attributable to QSC, not to exceed an aggregate $2,300,000 USD. The said amount shall be payable in cash in the same proportion that the cash received by VGI and/or QSC upon closing of the Change of Structure transaction on the total consideration paid by the third party. Notwithstanding the generality of the foregoing, a minimum of twenty-five percent (25%) of the amount due to the Company according to this section must be paid in cash to the Company at the closing of the Change of Structure transaction, with the balance either (a) paid to the Company upon VGI and/or QSC monetizing the non-cash consideration and in the same proportion as described above, or (b) distributed to the Company in the same form as received by VGI and/or QSC (as determined by the Company in its sole discretion).

 

As used in this section, “ Change of Structure ” means (a) the sale of all or substantially all of the assets of VGI or QSC, whether in a single transaction or in a series of transactions, (b) the sale by one or more stockholders of VGI or QSC, in a single transaction or in a series of transactions occurring within any single 12 month period, of more than 50% of the issued and outstanding capital stock of VGI or QSC (as the case may be) to any unaffiliated individual, corporation, trust or other entity, (c) a merger, reorganization, exchange of stock or other securities, or other business combination between VGI or QSC and another corporation, trust or other business entity which results in either the then-current stockholders of VGI owning less than a majority of the total issued and outstanding capital stock of the surviving entity, or the then-current stockholders of QSC owning less than a majority of the total issued and outstanding capital stock of the surviving entity, or (d) the sale of any material asset(s) or line(s) of business of QSC outside the ordinary course of business, but specifically excludes (1) any stock transaction between Danis Kurdi and Gilles Gaudreault, (2) any stock transaction between VGI and QSC, (3) any stock transaction between any of the persons identified in clause (1) and (2) and any affiliated person(s) and/or corporation(s), or (4) any sale of assets of QSC’s “ribbons division,” including, but not limited to, the equipment required for production, the primary resources and inventory related to the ribbons division, generating less than one million dollars ($1,000,000 USD) in Net Proceeds (and with all amounts received in excess of $1,000,000 subject to distribution as provided herein).

 

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Further, as used in this section, “ Net Proceeds ” means:

 

-       in the case of asset(s) or line(s) of business as contemplated in paragraphs (a) or (d) hereinabove, the gross proceeds payable (be it cash, the then-current present/fair market value of deferred/earn-out payments, securities, assumption of debt, or any other consideration or combination thereof) upon the Change of Structure, reduced by any debt or other liability directly associated to such asset(s) or line(s) of business, or

 

-       in the case of any other transaction contemplated by paragraph (b) or (c) hereinabove, the gross proceeds payable (be it cash, the then-current present/fair market value of deferred/earn-out payments, securities, assumption of debt, or any other consideration or combination thereof) upon the Change of Structure, net of any costs and expenses reasonably incurred by VGI or QSC in connection with the transaction, attributable to QSC, its subsidiaries, or any of such parties’ assets (including goodwill), as determined by agreement of the Parties acting in good faith, or in absence of such agreement within ten (10) business days preceding the closing of the Change of Structure, as determined by an independent, certified valuation firm (the “ Firm ”). The Firm shall be selected by agreement of the Parties within ten (10) business days, or, in absence of such agreement, each of VGI and the Company shall select their own Firm, and the Net Proceeds shall then be determined by taking the average of the Net Proceeds calculation determined by each Party’s Firm. If VGI and the Company agree upon a Firm as set forth above, then the parties shall equally share all costs and expenses of the Firm. If VGI and the Company obtain separate Firms, each Party shall pay their respective Firm’s costs and expenses. VGI and QSC covenant and agree, for themselves and on behalf of their shareholders, that all Change of Structure proceeds shall be held undistributed, in trust, until the determination of Net Proceeds, and simultaneously released to the Parties in the manner set forth above promptly thereafter.

 

(ii)       The Company shall:

 

(A)       For a period of ninety (90) days after Closing, maintain email and website server access for QSC, and reasonably assist (at no expense to the Company) with the transition of the same to a provider selected by QSC.

 

(B)       At and as of the Closing, deliver original executed resignations of any executive officers or directors of QSC selected by VGI (in form and substance satisfactory to the Company) (the “ QSC Resignations ”).

 

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(C)       At and as of the Closing, and after giving effect to the various transactions and exchange referenced herein, forgive the balance of all intercompany loans due to the Company from QSC or VGI.

 

(D)       Both maintain in full force and effect a reasonably prudent level of directors and officers liability insurance coverage for Mr. Gilles Gaudreault for a period of not less than three (3) years after Closing, and also indemnify Mr. Gaudreault for his actions as an officer and/or director of the Company in accordance with the indemnity requirements set forth in the Company’s bylaws and Delaware law.

 

(iii)        At and as of the Closing, each of the Company and QSC (or VGI on its behalf) shall enter into a post-closing agreement with ScanSource, Inc., which agreement (including all related/ancillary documentation) shall relieve the each party from any and all liability (and all liens) from any amount owing to ScanSource from the other party prior to or after the Closing Date (the “ScanScoure Agreement”).

 

(iv)       At and as of the Closing, each of the Company and VGI shall enter into separate agreements with Mr. Joey Trombino, allocating Mr. Trombino’s time between the Parties as follows: 75% Company, 25% VGI/QSC (the “ Trombino Agreements ”).

 

(v)        Attached hereto as Exhibit 1(b)-(v) is QSC’s pro forma balance sheet as of September 30, 2016 (the “ Interim Balance Sheet ”). Within fifteen (15) days of the Signing Date, the Parties shall work together in good faith to prepare and agree upon a balance sheet for QSC as of the Closing Date (but before giving effect to any of the transactions referenced in this Agreement) and using the same methodologies and accounting principles that were used in the preparation of the Interim Balance Sheet (the “ Final Balance Sheet ”). To the extent the Final Balance Sheet reveals an increase in QSC’s Net Assets from the Interim Balance Sheet, VGI shall tender within thirty (30) days thereafter to the Company, in cash or other immediately available funds (in $USD), the amount of such increase. To the extent the Final Balance Sheet reveals a decrease in QSC’s Net Assets from the Interim Balance Sheet, the amount of such decrease shall be deducted from the 2nd payment installment to be delivered to the Company in accordance with Section 1(b)(i)(B) , above. For purposes of this section, the term “ Net Assets ” QSC’s Total Assets, minus its Total Liabilities, plus Net Interco, each as set forth on the applicable QSC Interim or Final Balance Sheet. In the event the Parties are unable to agree on the Final Balance Sheet, all disputes shall be fully and finally determined by Mr. Joey Trombino, acting reasonably and in good faith.

 

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(vi)       From and after the Closing, each of the Parties shall keep all its rights in names, trademarks and other such intellectual property; provided, however, that the Company hereby grants the QSC an exclusive, limited license to use, solely in Canada, the name “Quest Solution Canada” and the mark “QSC,” until one hundred and twenty days after the Signing Date. On or prior to the one hundred and twenty day anniversary of the Signing Date, QSC shall change its corporate name with all regulatory authorities and cease and desist from use of any name containing the words “Quest,” “Solution,” “QSC,” or any combination and/or derivation thereof.

 

2.        Closing .

 

(a)        Time, Date and Place of Closings . The deliveries contemplated by this Agreement are to be made upon the parties’ execution and delivery of this Agreement on the Signing Date, but, for all purposes, shall be effective as of 11:59 PM on September 30, 2016 (the “ Closing ” or “ Closing Date ”).

 

(b)        Events Comprising the Closing . The Closing shall not be deemed to have occurred unless and until all documents referenced herein shall have been delivered, and none of these items shall have been delivered unless and until all of them have been delivered (or the delivery thereof has been waived by the receiving Party).

 

(c)        Deliveries at the Closing . The Closing shall be subject to delivery of the following items by each of the Parties:

 

(i)       From VGI and/or QSC (as the case may be) to the Company:

 

(A)       Certificates representing the Equity Interests, duly endorsed in blank for transfer or accompanied by a duly executed stock power in the form of stock power attached hereto as Exhibit 2(c)(i)-(A) through Exhibit 2(c)(i)-(C) .

 

(B)       Immediately available funds equal to the Intercompany Advances and Closing Payment.

 

(C)       The Employee Releases and Employee Stock Powers.

 

(D)       The Related Redemption Agreement.

 

(E)       Copies of the releases and/or acknowledgements of assumption and transfer related to the Assumed Debts.

 

(F)       An original executed bill of sale for the Garden Grove Press in the form attached hereto as Exhibit 2(c)(i)-(F) .

 

(G)       A copy of its Trombino Agreement.

 

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(H)       A duly executed copy of the ScanSource Agreement.

 

(I)       An original certificate of the President of VGI certifying as to (I) the resolutions of the board of directors and shareholders of VGI, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and (II) the names and signatures of the officers of VGI authorized to sign this Agreement and the documents to be delivered hereunder

 

(J)       Such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to the Company, as may be required to give effect to this Agreement.

 

(ii)       From the Company Parties to VGI:

 

(A)       A Certificate representing the QSC Shares, duly endorsed in blank for transfer or accompanied by a duly executed stock power in the form of stock power attached hereto as Exhibit 3(c)(ii)-(A) .

 

(B)       The QSC Resignations.

 

(C)       An original signed counterpart to the Related Redemption Agreement.

 

(D)       A copy of its Trombino Agreement.

 

(E)       A duly executed copy of the ScanSource Agreement.

 

(F)       An original certificate of the President of each of the Company and QEI certifying as to (I) the resolutions of the board of directors of the Company and QEI, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and (II) the names and signatures of the officers of the Company and QEI authorized to sign this Agreement and the documents to be delivered hereunder.

 

(G)       Such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to the Company, as may be required to give effect to this Agreement.

 

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3.        Representations and Warranties of VGI . VGI hereby represents and warrants to the Company Parties as follows:

 

(a)       VGI has good, valid and marketable title to the Equity Interests, free and clear of all liens, claims and encumbrances, with full legal right and power to transfer and convey absolute ownership of the Equity Interests to the Company Parties in accordance with Section 1(a) hereof, and upon execution and delivery of this Agreement, each of the respective Company Parties will obtain good, valid and marketable title to the Equity Interests free and clear of all liens, claims and encumbrances whatsoever. The Equity Interests constitute all of the ownership interest in the Company, QEI, or any of their subsidiaries legally or beneficially owned or held by VGI. VGI has no equity interest in Company or QEI other than the Equity Interests and has no rights by contract, option or otherwise to acquire any equity or economic interest or to exercise any governance rights with respect to the Company or QEI.

 

(b)       VGI has full power and authority to enter into this Agreement and this Agreement constitutes a valid and binding agreement of VGI enforceable against VGI in accordance with its terms.

 

(c)       The execution and delivery of this Agreement, the consummation of the transactions contemplated herein and the fulfillment of and compliance with the terms and conditions hereof do not and will not with the passing of time or giving of notice (i) violate any provision of any law, judicial or administrative order, award, judgment or decree applicable to VGI or the Equity Interests or (ii) conflict with, result in a breach of, or right to cancel, or constitute a default under any agreement or instrument to which VGI is a party, by which VGI is bound or to which VGI or the Equity Interests are subject.

 

(d)       VGI has reviewed with its own legal and tax advisors the Canadian and United States federal, state, local, and/or provincial tax consequences of the transactions contemplated by this Agreement. VGI relies solely on such advisors and not on any statements or representations of the Company, the Company’s counsel and any of the Company’s agents. VGI understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of the transactions contemplated by this Agreement.

 

(e)       To the best knowledge of VGI, no representation or warranty made by VGI in this Agreement or pursuant hereto contains any untrue statement of any material fact or omits to state any material fact that is necessary to make the statements made, in the context in which made, not false or misleading in any respect. There is no fact that has not been disclosed to the Company Parties in this Agreement or otherwise in writing, that, so far as VGI can reasonably foresee, will have a material adverse effect on the Company Parties.

 

  9  
 

 

4.        Representations and Warranties of the Company and QEI . The Company Parties represent and warrant to VGI as follows:

 

(a)       QEI has good, valid and marketable title to the QSC Shares, free and clear of all liens, claims and encumbrances, with full legal right and power to transfer and convey absolute ownership of the QSC Shares to VGI and upon execution and delivery of this Agreement, VGI will obtain good, valid and marketable title to the QSC Shares free and clear of all liens, claims and encumbrances whatsoever. The QSC Shares constitute all of the ownership interest in QSC legally or beneficially owned or held by QEI or the Company. Neither of the Company Parties has an equity interest in QSC other than the QSC Shares, and, except as expressly set forth in this Agreement, has no rights by contract, option or otherwise to acquire any equity or economic interest or to exercise any governance rights with respect to QSC.

 

(b)       Each of the Company Parties has full power and authority to enter into this Agreement and this Agreement constitutes a valid and binding agreement of the Company Parties, enforceable against each Party in accordance with its terms.

 

(c)       The execution and delivery of this Agreement, the consummation of the transactions contemplated herein and the fulfillment of and compliance with the terms and conditions hereof do not and will not with the passing of time or giving of notice (i) violate any provision of any law, judicial or administrative order, award, judgment or decree applicable to the Company Parties or the QSC Shares or (ii) conflict with, result in a breach of, or right to cancel, or constitute a default under any agreement or instrument to which either of the Company Parties is a party, by which either Party is bound or to which either Party or the QSC Shares are subject.

 

(d)       The Company Parties have reviewed with their own legal and tax advisors the Canadian and United States tax consequences of the transactions contemplated by this Agreement. The Company Parties are relying solely on such advisors and not on any statements or representations of VGI, VGI’s counsel and/or any of VGI’s agents. The Company Parties understand that they (and not VGI) shall be responsible for each party’s own tax liability that may arise as a result of the transactions contemplated by this Agreement.

 

5.        Agreement Not to Solicit Customers .

 

(a)       VGI covenants and agrees that in further consideration of the exchange and transfer of the Equity Interests, VGI will not, and, after the Closing, QSC will not, directly or indirectly, on VGI’s or QSC’s own behalf, or on behalf of any other person or entity, solicit, contact, call upon, communicate with or attempt to communicate with any Company Customer or Company Prospect or any representative of any Company Customer or Company Prospect, with a view to sale or providing of any deliverable or service in the United States that is competitive or potentially competitive with any deliverable or service sold or provided by the Company, from the Closing Date through the six (6) month period thereafter (the “ Non-Solicitation Period ”). “ Company Customer ” shall mean any person or entity under contract with the Company to receive the Company’s products and/or services at any time during the twelve (12) month period prior to the Closing Date through the Non-Solicitation Period. “ Company Prospect ” shall mean any person or entity that the Company had material contact with at any time during the twelve (12) month period prior to the Closing Date and throughout the Non-Solicitation Period, for the purpose of marketing and/or selling the Company’s products to such person or entity.

 

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(b)       The Company Parties covenant and agree that in further consideration of the exchange and transfer of the QSC Shares, the Company Parties will not, directly or indirectly, on either Party’s own behalf, or on behalf of any other person or entity, solicit, contact, call upon, communicate with or attempt to communicate with any QSC Customer or QSC Prospect or any representative of any QSC Customer or QSC Prospect, with a view to sale or providing of any deliverable or service in Canada that is competitive or potentially competitive with any deliverable or service sold or provided by QSC, from the Closing Date at any time during the Non-Solicitation Period. “ QSC Customer ” shall mean any person or entity under contract with QSC to receive the QSC’s products and/or services at any time during the twelve (12) month period prior to the Closing Date through the Non-Solicitation Period. “ QSC Prospect ” shall mean any person or entity that QSC had material contact with at any time during the twelve (12) month period prior to the Closing Date and throughout the Non-Solicitation Period, for the purpose of marketing and/or selling QSC’s products to such person or entity.

 

6.        Agreement Not to Solicit Employees and Contractors .

 

(a)       Subject to the Trombino Agreements, VGI covenants and agrees that that in further consideration of the exchange and transfer of the Equity Interests, VGI will not, and, after the Closing, QSC will not, directly or indirectly, on VGI’s or QSC’s own behalf, or on behalf of any other person or entity, (i) induce or attempt to induce any Company Employee from ceasing to serve as an employee, contractor or agent of the Company, or (ii) solicit any Company Employee to work with/for VGI or any other company during the Non-Solicitation Period. “ Company Employee ” as used herein means any person, who is serving as an employee, contractor, or agent for the Company at any time during the Non-Solicitation Period.

 

(b)       Subject to the Trombino Agreements, the Company Parties covenant and agree that that in further consideration of the exchange and transfer of the QSC Shares, the Company Parties not, directly or indirectly, on either Party’s own behalf, or on behalf of any other person or entity, (i) induce or attempt to induce any QSC Employee from ceasing to serve as an employee, contractor or agent of the QSC, or (ii) solicit any QSC Employee to work with/for either of the Company Parties or any other company during the Non-Solicitation Period. “ QSC Employee ” as used herein means any person, who is serving as an employee, contractor, or agent for QSC at any time during the Non-Solicitation Period.

 

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7.        Proprietary Information .

 

(a)       Each of VGI and the Company Parties acknowledges that it has had access to Trade Secrets and Confidential Information (each as defined below) of the other Party. Each Party acknowledges and agrees that such Trade Secrets and Confidential Information are the sole and exclusive property of the disclosing Party (or a third party providing such information to the disclosing Party) (collectively, the “ Disclosing Party ”), and that the Disclosing Party owns all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property rights thereto. Each Party receiving Trade Secrets or Confidential Information (the “ Receiving Party ”) acknowledges and agrees that the disclosure of the Disclosing Party’s Trade Secrets and Confidential Information to the Receiving Party does not confer upon the Receiving Party any license, interest or rights of any kind in or to the Trade Secrets or Confidential Information. The Receiving Party agrees to hold in confidence and not reproduce, distribute, transmit, reverse engineer, decompile, disassemble, or transfer, directly or indirectly, in any form, by any means, or for any purpose, any Trade Secrets or Confidential Information or any portion thereof, except (i) with the prior written consent of the Disclosing Party; or (ii) otherwise in connection with and in furtherance of the legitimate business interests of the Disclosing Party.

 

(b)       The Receiving Party agrees that its obligations under this Agreement shall apply (i) with regard to the Trade Secrets, for so long as such information shall remain a trade secret under applicable law, and (ii) with regard to Confidential Information, for a period from the Closing Date through three (3) years after the Closing Date. As used herein, “ Trade Secrets ” means information of the Disclosing Party, its affiliates, its licensors, suppliers, customers, or prospective licensors or customers that is a trade secret under the law. As used herein, “ Confidential Information ” means information, other than Trade Secrets, that is of value to the Disclosing Party and is treated as confidential, including, but not limited to, future business plans and strategies, information regarding the Disclosing Party’s ownership, employees, hiring practices, and/or staffing supply fulfillment, and the terms and conditions of this Agreement, to the extent not otherwise considered Trade Secrets.

 

(c)       Notwithstanding anything herein to the contrary, the Receiving Party shall not be restricted from disclosing or using Trade Secrets or Confidential Information that (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure by the Receiving Party or its agents or representatives; (ii) becomes available to the Receiving party in a manner that is not in contravention of applicable law from a source (other than the Disclosing Party or its affiliates, managers, members, officers, employees, agents or representatives) that is not bound by a confidential relationship with the Disclosing Party or by a confidentiality or other similar agreement; (iii) was known to the Receiving Party on a non-confidential basis and not in contravention of applicable law or a confidentiality or other similar agreement before its disclosure to the Receiving Party by the Disclosing Party or its managers, members, officers, employees, agents or representatives; or (iv) is required to be disclosed by law, court order or other legal process; provided, however, that in the event disclosure is required by law, court order or other legal process, the Receiving Party shall provide the Disclosing Party with prompt notice of such requirement so that the Disclosing Party may seek an appropriate protective order prior to any such required disclosure by the Receiving Party.

 

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8.        Indemnity and Equitable Remedies .

 

(a)       Each of VGI and the Company Parties agrees to indemnify and hold the other party and its subsidiaries and affiliates (including, with respect to VGI, QSC) harmless from any third party loss, liability, cost or expense (including reasonable expenses of investigation and reasonable attorneys’ fees) arising out of any breach of this Agreement by such other party.

 

(b)       VGI further agrees to indemnify and hold the Company Parties and each of their respective subsidiaries and affiliates harmless from any third party loss, liability, cost or expense (including reasonable expenses of investigation and reasonable attorneys’ fees) arising out of or related to the operations of QSC after the Closing Date.

 

(c)       The Company Parties further agree to indemnify and hold VGI and QSC and each of their respective subsidiaries and affiliates harmless from any third party loss, liability, cost or expense (including reasonable expenses of investigation and reasonable attorneys’ fees) arising out of or related to the operations of QSI after the Closing Date.

 

(d)       In addition to the other remedies set forth herein, if a Party breaches or violates any of the covenants or terms of Section 1(b)(iv), 5, 6, or 7 of this Agreement, the non-breaching Party shall have the right, without notice to any other Party, to seek and obtain, without the need of bond, a writ of injunction against the breaching Party restraining the breaching Party from violating any such covenant or term, such notice being hereby expressly waived by the breaching Party. Additionally, the non-breaching Party shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to obtain damages for such conduct, to enforce specific performance of such provision and/or to obtain any other relief or any combination of the foregoing that the non-breaching Party may elect to pursue. In the event the non-breaching Party prevails in any such proceeding, the breaching Party will pay all costs incurred by the non-breaching Party in enforcing or attempting to enforce the terms of this Agreement, including without limitation the securing of an injunction hereunder, including a reasonable attorney’s fee. The non-breaching Party’s rights and remedies provided for herein are cumulative and not alternative and are in addition to any and all remedies otherwise available at law or equity.

 

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9.        Notices . Whenever notice is required to be given to any Party pursuant to the terms of this Agreement it shall not be construed to mean exclusively personal notice unless otherwise specifically provided, but such notice may be given in writing, by electronic mail, by mail, addressed to any Party at the address below, with postage thereon prepaid. Any such notice shall be deemed to have been given at the time it is deposited in the United States or Canadian mail. Notice to a Party may also be given personally, by facsimile to the number below, or electronically via email sent to the address below, such notice shall be deemed to have been given at the time it is sent.

 

If to VGI or QSC, to:

 

Gilles Gaudreault

8102 rte Transcanadienne

Ville St-Laurent, (Quebec)

J3X 2A7, Canada

 

E-mail: ggaudreault@questsolution.com

Fax: 514-956-0326

 

If to either of the Company Parties, to:

 

860 Conger Street

Eugene, Oregon 97402

USA

 

E-Mail: tmiller@questsolution.com

Fax: 425-274-0949

 

A Party may change its address by delivering written notice in accordance with this section.

 

10.        Public Announcements . Except as may be required by law, none of the Parties shall engage in, encourage or support any publicity or disclosure of any kind or form in connection with this Agreement or the transactions contemplated, whether to the financial community, governmental agencies or the public generally, unless the parties hereto mutually agree in advance on the form, timing and contents of any such publicity, announcement or disclosure. Notwithstanding the foregoing, the Company may file disclosure documents pertaining to this Agreement and the transactions contemplated hereunder at any time after the date hereof.

 

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11.        Expenses . Each Party will bear its own expenses incurred in connection with the negotiation, execution and delivery of this Agreement and the transactions contemplated hereby.

 

12.        Brokers’ or Finders’ Fees . Each Party will indemnify and hold the other harmless from any claim for brokers’ or finders’ fees arising out of the transactions contemplated hereby by any person claiming to have been engaged by such Party.

 

13.        General Release . For good and valuable consideration and as part of, and in connection with this Agreement, effective as of the Closing:

 

(a)       The Company Parties, for themselves and on behalf of their shareholders, former shareholders, directors, officers, employees and affiliates (collectively, the “ Company Group ”), hereby waive, discharge and release VGI, QSC, and each of their employees, officers, shareholders, former shareholders, directors, and affiliates (collectively, the “ VGI Released Parties ”) from any and all claims, demands, charges, complaints, liabilities, obligations, actions, causes of action, suits, costs, expenses, losses, attorneys’ fees, and damages of any nature whatsoever, known or unknown (collectively, “ Claims ”), for relief of any nature at law or in equity, which any of the Company Group now has, owns or holds, or claims to have, own or hold, or which such party at any time heretofore had, owned or held, or claimed to have, own or hold against any of the VGI Released Parties from the beginning of time through the Closing. It is agreed that this is a general release and it is to be broadly construed as a release of all claims, provided that this release shall not apply to any of the VGI Released Parties’ obligations set forth in this Agreement

 

(b)       VGI, for itself and on behalf of the VGI Released Parties, hereby waives, discharges and releases the Company Group from any and all Claims for relief of any nature at law or in equity, which any of the VGI Released Parties now has, owns or holds, or claims to have, own or hold, or which such party at any time heretofore had, owned or held, or claimed to have, own or hold against any of the Company Group from the beginning of time through the Closing. It is agreed that this is a general release and it is to be broadly construed as a release of all claims, provided that this release shall not apply to any of the Company Parties’ obligations set forth in this Agreement.

 

14.        Severability . Should any court of competent jurisdiction decide, hold, adjudge or decree that any provision, clause or term of this Agreement is invalid, void or unenforceable, such determination shall not affect any other provision of this Agreement, and all other provisions of this Agreement shall remain in full force and effect as if such void or unenforceable provision, clause or term had not been included herein. Such determination shall not be deemed to affect the validity or enforceability of this entire Agreement in any other situation or circumstance, and the Parties agree that the scope of this Agreement is intended to extend to each Party the maximum protection permitted by law.

 

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15.        Non-Waiver . Neither the failure nor any delay by any Party in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.

 

16.        Governing Law; Disputes .

 

(a)       This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware (excluding any conflict of laws, rule or principle which might refer such construction to the laws of another jurisdiction) and shall be treated in all respects as a Delaware contract.

 

(b)       The Parties irrevocably attorn to the non-exclusive jurisdiction of the state and federal courts of Delaware with respect to any matter arising hereunder or related thereto, provided that each Party agrees that any dispute between such Parties relating to this Agreement will first be submitted in a written notice to the designated senior executives of the Parties who will meet in an effort to resolve such dispute. In the event the executives are unable to resolve the dispute within thirty (30) days of receipt of such notice, any aggrieved Party may file suit or, if all Parties agree, submit the dispute to binding arbitration.

 

17.        Miscellaneous . The covenants, representations and warranties contained in this Agreement shall survive the Closing. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement and the documents referenced herein constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and supersede all prior written and oral agreements and understandings between the Parties with respect to the subject matter, including the Letter of Intent between the Parties dated September 15, 2016. This Agreement may not be amended except by a written agreement executed by each Party. Each party has participated in the negotiation of this Agreement and the other documents referenced herein and has had the opportunity to have the Agreement and such other documents reviewed by their legal counsel. This Agreement and such other documents shall not be strictly construed against any Party. This Agreement is binding on the successors and assigns of each of the Parties.

 

18.        Further Actions . Each Party shall execute such documents and take such action as may be reasonably requested by the other Party to carry out the provisions and purposes of this Agreement.

 

[Signatures on Following Page]

 

  16  
 

 

IN WITNESS WHEREOF , the Parties, intending to be legally bound, have executed and delivered this Agreement as of the Closing Date.

 

  VIASCAN GROUP, INC.
     
  By: /s/ Gilles Gaudreault
  Name: Gilles Gaudreault
  Title: secretary
     
  QUEST SOLUTION, INC.
     
  By: /s/ Thomas O. Miller
  Name: Thomas O. Miller
  Title: CEO
     
  QUEST EXCHANGE, INC.
     
  By: /s/ Thomas O. Miller
  Name: Thomas O. Miller
  Title: President

 

  17  
 

 

AMENDMENT TO SECURED PROMISSORY NOTE

 

This Amendment to the Secured Promissory Note (this “ Amendment ”) is made as of this 30th day of November, 2016 by and among Quest Solution, Inc., Quest Marketing, Inc., Bar Code Specialties, Inc., Quest Exchange Ltd., and their subsidiaries and/or affiliates, with principal offices at 860 Conger Street, Eugene, Oregon 97402 (collectively, “Quest”), and ScanSource, Inc., a South Carolina corporation and/or its subsidiaries and affiliates (collectively, “ ScanSource ”), and, in consideration of the mutual covenants herein contained and benefits to be derived herefrom.

 

W I T N E S S E T H:

 

WHEREAS, ScanSource and/or its subsidiaries and affiliates have, from time to time, extended trade and other credit to Quest; and

 

WHEREAS, Quest, Quest Solution Canada Inc., and ScanSource have entered into that certain Secured Promissory Note in the original principal amount of Twelve Million Four Hundred Ninety-Two Thousand One Hundred Thirty-Six and 51/100 Dollars ($12,492,136.51) dated as of July 1, 2016 (the “Note”); and

 

WHEREAS, ScanSource and Quest desire to amend the Note as described herein;

 

NOW, THEREFORE, in consideration of the premises contained herein, the parties hereto agree as follows:

 

1.        Definitions . All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Note, as applicable.

 

2.        Release of Quest Solution Canada Inc. Quest Solution Canada Inc. is hereby removed as a “Debtor” for all purposes under the Note.

 

3.        Amendment to Note . The Note is hereby amended as follows:

 

(a)       The opening paragraph of the Note is hereby amended by replacing “December 31, 2016 (the “ Maturity Date ”)” therein with “March 31, 2017 (the “ Maturity Date ”).”

 

(b)        Section 1 is hereby amended and restated in its entirety to read as follows:

 

1. Principal and Interest Payments

 

The Principal amount of the Note shall be repaid in Four (4) consecutive monthly installments of principal and accrued interest with any remaining Principal and accrued interest due and payable on the Maturity Date. The first such installment in the principal amount of a minimum of Four Hundred Thousand and 00/100 Dollars ($400,000.00), plus all accrued interest on the Principal through such payment date, shall be due by December 15, 2016, and each remaining installment of Principal and interest shall be paid monthly and due by the fifteenth (15th) day of each succeeding month, in a minimum principal amount of Four Hundred Thousand and 00/100 Dollars ($400,000.00) each, plus all accrued interest on the Principal through such payment date. In addition to the monthly installment payments, an additional principal payment of Three Hundred Thousand and 00/100 Dollars ($300,000.00) shall be due upon the earlier of (i) December 15, 2016, 2016 and (ii) the closing of the sale of Quest Solution Canada Inc. to Viascan Group Inc. The remaining Principal balance of this Note and all accrued interest shall be due and payable in full on the Maturity Date. Interest shall be charged at the rate of Twelve percent (12.0%) per annum starting on July 1, 2016; provided, that following the occurrence and during the continuance of an Event of Default (as defined in Section 5 herein), interest on the Principal shall accrue at the Default Rate (as defined in Section 5 herein) and shall be due and payable on demand.”

 

 
 

 

(c)       Each of the following documents entered into after the date of the Note shall be deemed to be “Transaction Documents” for all purposes under the Note and the other Transaction Documents:

 

(i) any letter of credit issued for the benefit of ScanSource and/or its subsidiaries or affiliates at the request of Thomas Owen Miller, as applicant; (ii) any letter of credit issued for the benefit of ScanSource and/or its subsidiaries or affiliates at the request of George Eremia Zicman, as applicant; (iii) that certain Letter Agreement dated November 30, 2016, by and among ScanSource, Thomas Owen Miller and George Eremia Zicman; (iv) that certain Pledge Agreement, dated on or about the date hereof, by Thomas Owen Miller in favor of ScanSource and/or its subsidiaries or affiliates, and all documents, instruments and agreements entered into in connection therewith; (v) that certain Pledge Agreement, dated on or about the date hereof, by George Eremia Zicman in favor of ScanSource and/or its subsidiaries or affiliates, and all documents, instruments and agreements entered into in connection therewith; (vi) that certain Consent and Limited Release Letter dated as of November 30, 2016; and (vii) that certain Collateral Assignment Agreement dated November 30, 2016 in favor of ScanSource

 

(d)       Each of Thomas Owen Miller and George Eremia Zicman shall be deemed to be “Obligors” for all purposes under the Note and the other Transaction Documents. For the avoidance of doubt, the liability of Thomas Owen Miller to ScanSource under his respective letter of credit and George Eremia Zicman to ScanSource under his respective letter of credit will be limited to Three Hundred Thousand and 00/100 Dollars ($300,000.00) and Four Hundred Thousand and 00/100 Dollars (400,000.00), respectively.

 

4.         Miscellaneous .

 

(a)       This Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument.

 

(b)       This Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof.

 

(c)       Any determination that any provision of this Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Amendment.

 

 
 

 

(d)       Quest warrants and represents that it has consulted with independent legal counsel of its selection in connection with this Amendment and is not relying on any representations or warranties of ScanSource or its counsel in entering into this Amendment.

 

(e)       As of November 16, 2016, the outstanding principal balance on the Note owing to ScanSource was equal to Eleven Million One Hundred Ten Thousand Six and 46/100 Dollars ($11,110,006.46), which amount Quest acknowledges and agrees is due and owing without setoff, defense or counterclaim.

 

(f)       Quest acknowledges and agrees that (i) ScanSource has at all times acted in good faith with respect to the Note and any other matter, (ii) ScanSource has not exercised any control over the business affairs of Quest, and (iii) Quest has no claims against ScanSource, whether for actions taken or not taken. To the extent that Quest may have any such claim, defense, setoff or counterclaim or any other recoupments, Quest releases and forever discharges each of ScanSource and its present and former affiliates and subsidiaries, predecessors in interest, present and former officers, agents, directors, attorneys and employees, and the respective heirs, executors, successors and assigns of all of the foregoing, whether past, present or future (collectively with ScanSource, the “ScanSource Affiliates”) of and from any and all manner of action and actions, cause and causes of action, suits, rights, debts, torts, controversies, damages, judgments, executions, recoupments, claims and demands whatsoever, asserted or unasserted, in law or in equity which, against any ScanSource Affiliate, Quest ever had or now has by reason of any matter, cause, causes or thing whatsoever, including, without limitation, any presently existing claim, recoupment, or defense, whether or not presently suspected, contemplated or anticipated.

 

THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Page to Follow]

 

 
 

 

IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be duly executed and delivered by its proper and duly authorized officer as of the date set forth above.

 

  QUEST SOLUTION, INC.
     
  By : /s/ Thomas Owen Miller
  Name:   Thomas Owen Miller
  Title: Chief Executive Officer
     
  QUEST MARKETING, INC.
     
  By: /s/ Thomas Owen Miller   
  Name: Thomas Owen Miller
  Title: Chief Executive Officer
     
  BAR CODE SPECIALTIES, INC.
     
  By : /s/ Thomas Owen Miller   
  Name:   Thomas Owen Miller
  Title: Chief Executive Officer
     
  QUEST EXCHANGE LTD.
     
  By: /s/ Thomas Owen Miller   
  Name: Thomas Owen Miller
  Title: Chief Executive Officer
     
  SCANSOURCE, INC.
     
  By: /s/ Cleveland McBeth, Jr.  
  Name: Cleveland McBeth, Jr.
  Title: Vice President, Worldwide Reseller Financial Services

 

 
 

 

 

 

Quest Solution, Inc.

Redemption Agreement

 

THIS REDEMPTION AGREEMENT (this “ Agreement ”) is entered into as of the ___ day of November, 2016 (the “ Signing Date ”), by and between Quest Solution, Inc., a company organized and existing under the laws of the state of Delaware (“ QSI ”), and Mr. Danis Kurdi and 3587967 Canada, Inc. (collectively, “ Seller ”).

 

WHEREAS , in connection with the transactions evidenced by this Agreement, QSI is concurrently redeeming (or causing to be redeemed) all of the issued and outstanding capital stock of QSI and its subsidiaries that is currently held by Viascan Group, Inc. (“VGI”) (the “ Carve-Out Transaction ”); and

 

WHEREAS , Seller is the owner of 789,780 shares of Series C preferred stock of QSI, including all related/accrued dividend rights (the “ Equity Interest ”); and

 

WHEREAS , QSI desires to redeem the Equity Interest from Seller, and Seller is also desirous of having its Equity Interest redeemed under the terms set forth herein; and

 

WHEREAS , Seller is also a shareholder of VGI and, as such, will benefit from the Carve-Out Transaction; and

 

WHEREAS, Seller’s entry into and performance of this Agreement forms a material portion of the consideration to be received by QSI in connection with the Carve-Out Transaction, and QSI would not enter into the Carve-Out Transaction but for the existence (and Seller’s performance) of this Agreement.

 

NOW, THEREFORE , for $1.00 and other good and valuable consideration (including the agreements and covenants set forth herein), the receipt and legal sufficiency of which are hereby acknowledged, QSI and Seller hereby agree as follows:

 

1.        Incorporation of Recitals . The agreement recitals above are hereby incorporated by reference into the Agreement.

 

2.        Redemption of Equity Interest . At and as of the Closing (as defined below), Seller agrees to assign and transfer to QSI all of its right, title and interest in and to the Equity Interest, and QSI agrees redeem the Equity Interest from Seller.

 

3.        Representations, Warranties, Releases, and Covenants of Seller . Seller represents, warrants and covenants to QSI as follows:

 

 
 

 

(a)       Seller has good and marketable title to the Equity Interest, free and clear of any liens, claims, encumbrances or rights of set off, with full legal right and power to transfer and convey absolute ownership of the Equity Interest to QSI, and that at Closing QSI will obtain good and marketable title to the Equity Interest free and clear of all liens, claims, encumbrances and rights of set off whatsoever. The Equity Interest (together with any QSI capital stock to be transferred as part of the Carve-Out Transaction) constitutes all of the capital stock ownership interest in QSI legally or beneficially owned or held by Seller, and Seller has no equity interest in QSI other than the Equity Interest and has no rights by contract, option or otherwise to acquire any equity or economic interest or to exercise any governance rights with respect to QSI.

 

(b)       This Agreement constitutes the valid and binding agreement of Seller enforceable against Seller in accordance with its terms, and no consent of any federal, state, local or other authority is required to be obtained by Seller in connection with the consummation of the transactions contemplated by this Agreement.

 

(c)       The execution and delivery of this Agreement and the consummation of the transactions contemplated herein do not and will not with the passage of time or giving of notice (i) violate any provision of any organizational document, judicial or administrative order, award, judgment or decree applicable to Seller or the Equity Interest, or (ii) conflict with, result in a breach of or right to cancel or constitute a default under any agreement or instrument to which Seller is a party or by which Seller is bound or to which the Equity Interest is subject.

 

(d)       Seller, for itself and its successors, assigns, attorneys, insurers, affiliates, and heirs, hereby (i) irrevocably, completely, unconditionally, and forever releases, acquits, and discharges QSI and its successors, affiliates, assigns, officers, directors, shareholders, employees, agents, attorneys, insurers, and heirs of any of them (collectively, the “ QSI Affiliates ”) from any and all claims, demands, actions, causes of action, damages, obligations, liabilities, suits, losses and expenses of whatsoever kind or nature, whether or not now known, unknown or suspected or claimed, whether absolute or contingent, liquidated or unliquidated, whether liability be direct or indirect, foreseen or unforeseen, whether or not heretofore asserted, in law, arbitration, equity or otherwise (collectively, “ Claims ”), which Seller ever had, now has, or hereinafter can, shall, or may have, arising, directly or indirectly, from any matter, action or omission by the QSI Affiliates of any nature whatsoever occurring in whole or in part up through the date this Agreement is delivered to QSI, including any Claims relating to the value of the Equity Interest, adequacy of the Redemption consideration, and/or any dividends or other sums due or payable arising out of the ownership of the Equity Interest; and (ii) agrees and covenants that neither Seller, nor will any person, organization, or other entity on Seller’s behalf, will file, charge, claim, sue, or cause or permit to be filed, charged, or claimed, any civil action, suit, or legal proceeding seeking any type of personal relief, or share in any remedy against QSI and/or the QSI Affiliates involving any matter covered by this release.

 

2
 

 

(e)       To the best knowledge of Seller, no representation or warranty made by Seller in this Agreement or pursuant hereto contains any untrue statement of any material fact or omits to state any material fact that is necessary to make the statements made, in the context in which made, not false or misleading in any respect. There is no fact that has not been disclosed to QSI in this Agreement or otherwise in writing, that, so far as the Seller can reasonably foresee, will have a material adverse effect on QSI.

 

4.        Representations and Warranties of QSI . QSI represents, warrants, and covenants to Seller as follows:

 

(a)       QSI is a Corporation duly organized and validly existing under the laws of the state of Delaware and has the power and authority necessary to consummate the transactions contemplated by this Agreement.

 

(b)       This Agreement constitutes the valid and binding agreement of QSI enforceable against QSI in accordance with its terms, and no consent of any federal, state, local or other authority is required to be obtained by QSI in connection with the consummation of the transactions contemplated by this Agreement.

 

(c)       The execution and delivery of this Agreement and the consummation of the transactions contemplated herein do not and will not with the passage of time or giving of notice (i) violate any provision of any judicial or administrative order, award, judgment or decree applicable to QSI, or (ii) conflict with, result in a breach of or right to cancel or constitute a default under any agreement or instrument to which QSI is a party or by which it is bound.

 

(d)       QSI, for itself and on behalf of the QSI Affiliates, hereby (i) irrevocably, completely, unconditionally, and forever releases, acquits, and discharges each Seller and its successors, affiliates, assigns, officers, directors, shareholders, employees, agents, attorneys, insurers, and heirs of any of them, as applicable (the “ Seller Parties ”), from any and all Claims which QSI ever had, now has, or hereinafter can, shall, or may have, arising, directly or indirectly, from any matter, action or omission by the Seller Parties of any nature whatsoever occurring in whole or in part up through the date this Agreement is delivered to Seller; and (ii) agrees and covenants that neither QSI nor any QSI Affiliate, nor will any person, organization, or other entity on any such party’s behalf, will file, charge, claim, sue, or cause or permit to be filed, charged, or claimed, any civil action, suit, or legal proceeding seeking any type of personal relief, or share in any remedy against Seller or the Seller Parties involving any matter covered by this release.

 

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5.        Closing .

 

(a)        Time, Date and Place of Closings . The deliveries contemplated by this Agreement are to be made upon the parties’ execution and delivery of this Agreement on the Signing Date, but, for all purposes, shall be effective as of the closing of the Carve-Out Transaction as of 11:59 PM on September 30, 2016 (the “ Closing ”).

 

(b)        Events Comprising the Closing . The Closing shall not be deemed to have occurred unless and until all documents referenced herein shall have been delivered, and none of these items shall have been delivered unless and until all of them have been delivered.

 

(c)        Deliveries by Seller at the Closing . Delivery by Seller of a certificate representing the Equity Interests, duly endorsed in blank for transfer or accompanied by a duly executed stock power in the form of stock power attached hereto as Exhibit A .

 

6.        Severability . If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained therein.

 

7.        Miscellaneous . The covenants, representations and warranties contained in this Agreement shall survive the Closing. The parties hereto shall execute and deliver such other documents and take such other action as may be reasonably requested by a party to carry out the provisions and purposes of this Agreement. This Agreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and/or written agreements and understandings between the parties hereto with respect to such subject matter.

 

8.        Applicable Law . This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware (excluding any conflict of laws, rule or principle which might refer such construction to the laws of another jurisdiction) and shall be treated in all respects as a Delaware contract. The parties hereto irrevocably attorn to the non-exclusive jurisdiction of the state and federal courts of Delaware with respect to any matter arising hereunder or related thereto.

 

9.        Electronic Signatures; Counterparts . This Agreement may be executed electronically, and in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed, shall be deemed to be an original and all of which, when taken together, shall constitute but one and the same agreement.

 

10.        Entire Agreement . Each party acknowledges that it has read this Agreement and had the opportunity to discuss it with legal and tax advisors, and that each party shall be bound, with respect to the matters contained herein, only by its terms. The parties further agree that this Agreement contains the entire understanding and agreement of the parties with respect to the matters contained herein, and supersedes all prior proposals, understandings and agreements between the parties relating to the subject matter of this Agreement.

 

[Signatures on Following Page.]

 

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[QSI Series C Redemption Agreement Signature Page]

 

IN WITNESS WHEREOF, this Agreement has been duly executed by QSI and Seller as of the date first above written.

 

  QUEST SOLUTION, INC.
     
  By: /s/ Tom Miller
    Tom Miller, CEO

 

  Seller:
   
  Danis Kurdi
     
  /s/ Danis Kurdi
     
  Address: **********
    **********

 

  3587967 Canada, Inc.
     
  By: /s/ Danis Kurdi
     
  Title (if any): President
     
  Address: **********
  **********

 

5
 

 

Exhibit A

 

Quest Solution, Inc.

Stock Power

 

FOR VALUE RECEIVED, the undersigned does hereby irrevocably assign and transfer unto Quest Solution, Inc., a Delaware corporation (the “Company”), the shares of Series C Preferred Stock of the Company issued in the name of the undersigned on the books of the Company (the “Shares”), and does hereby irrevocably constitute and appoint ___________________, as attorney-in-fact for the undersigned to transfer said stock on the books of the Company with full power of substitution in the premises.

 

The undersigned hereby waives any and all rights of the undersigned pursuant to Section 4 of the Certificate of Designation of Series C Preferred Stock of the Company, including any rights to receive a redemption price of $1.00 per share for the Shares transferred herewith.

 

Dated this 30th day of September, 2016.

 

  Seller:
   
  Danis Kurdi
   
  /s/ Danis Kurdi
     
  Address: **********
    **********

 

     
  3587967 Canada, Inc.
     
  By: /s/ Danis Kurdi
     
  Title (if any): President
     
  Address: **********
    **********

 

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CONTRACTOR AGREEMENT

 

THIS CONTRACTOR AGREEMENT (the “Agreement”) is made as of the 1st day of October, 2016 between QUEST SOLUTION, INC., a Delaware corporation (“QSI”) and JOEY TROMBINO , an individual (“Contractor”) who is an employee of QUEST SOLUTION CANADA INC., a Canadian corporation (“QSC”);

 

WHEREAS , QSC and/or certain of its affiliates are divesting any and all interests in QSI, and QSI and/or certain of its affiliates are divesting any and all interests in QSC (collectively, with certain related arrangements, the “ Sale Transaction ”); and

 

WHEREAS , the Sale Transaction is effective as of September 30,2016 (the “ Effective Date ”); and

 

WHEREAS , Contractor had previously been employed by QSI as its Chief Financial Officer pursuant to a contract of employment dated April 19, 2016; and

 

WHEREAS , on the Effective Date, Contractor’s employment with QSI ended, and he became employed exclusively by QSC under a new contract of employment with QSC; and

 

WHEREAS , QSC consents to Contractor’s provision of Chief Financial Officer services to QSI while he is an exclusive employee of QSC; and

 

WHEREAS , Contractor desires to provide those Chief Financial Officer services to QSI on a contract basis, and QSI desires Contractor to so provide them; and

 

WHEREAS , QSC, QSI and Contractor acknowledge that Contractor shall, after the Effective Date, remain an employee of QSC and QSC alone, and that the services he provides to QSI as Chief Financial Officer will be exclusively as an independent contractor of QSI, not as an employee; and

 

WHEREAS , QSI and Contractor consequently wish to set forth the terms and conditions under which they agree Contractor shall provide and be compensated for the Chief Financial Officers services he provides to QSI.

 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, QSI and Contractor agree as follows:

 

Article 1

SERVICES TO BE PROVIDED

 

1.1        Provision of Services

 

In accordance with the terms of this Agreement, Contractor shall provide to QSI the services that are specified in SCHEDULE A (the “Services”), which schedule is incorporated herein by reference. Subject to periodic reporting obligations and the reasonable requests of QSI’s Chief Executive Officer and/or its Board of Directors, Contractor shall be free to deliver the Services and to determine the manner in which they are conducted as he deems fit without the exercise of control by QSI. QSI and Contractor acknowledge and agree that, for the duration of this Agreement, approximately seventy-five percent (75%) of Contractor’s working time will be allocated to providing the Services to QSI, and the remaining twenty-five percent (25%) of Contractor’s working time will be allocated to his employer QSC or otherwise as he sees fit. This allocation shall be subject to adjustment by mutual agreement of QSI and Contractor, upon consultation at least on a quarterly basis, provided that if such adjustments result in Contractor providing more than seventy-five percent (75%) of his time to the Services, the adjustments cannot be implemented without receiving the prior approval of Contractor’s employer, QSC. Moreover, if such adjustment is the result of a change in the services that Contractor is to perform, the fees payable to the Contractor hereunder shall be adjusted as mutually agreeable to the parties.

 

     
 

 

1.2        Status of Contractor

 

Contractor acknowledges and agrees that his employment with QSI has expired. Contractor shall at all times remain employed by QSC during the term of, and while performing the Services under, this Agreement. Contractor and QSI agree and acknowledge that nothing in this Agreement creates, is intended to create, or shall be construed to create an employment relationship between Contractor and QSI.

 

Article 2

TERM AND TERMINATION

 

2.1        Term

 

This Agreement shall be effective as of October 1, 2016 and shall have a term of one (1) calendar year thereafter, ending on September 30, 2017 unless terminated as provided in Section 2.2.

 

2.2        Termination

 

  a. QSI may, in its sole discretion, terminate this Agreement upon thirty (30) days prior written notice to Contractor. In that event, all remaining amounts owing to Contractor under the full term of this Agreement per Article 3 (subject to the pro rata payment identified in Section 3.1.a.ii) shall be paid by QSI to Contractor on or prior to the date of termination of the Agreement.
     
  b. QSI may immediately terminate this Agreement upon written notice to Contractor if, in Contractor’s provision of the Services hereunder, Contractor is grossly negligent, engages in fraudulent conduct, or otherwise materially fails to perform the Services he has agreed to provide. QSI may also terminate this Agreement if, during the term hereof, Contractor is accused of serious criminal conduct or otherwise engages in behavior that is materially contrary to QSI’s core values. If QSI terminates the Agreement under this Section 2.2-b, QSI’s remaining obligations under this Agreement shall be subject to a full accord and satisfaction and no longer chargeable against QSI. In that event, QSI shall owe Contractor no further compensation under Article 3 of this Agreement, except that which is owing under Section 3.a.1.i as of the date of termination.
     
  c. Contractor may terminate this Agreement if, after providing written notice and a thirty (30) day opportunity to cure, QSI fails to pay him an amount Contractor is due under Article 3 of this Agreement. In that event, all remaining amounts owing to Contractor under the full term of this Agreement per Article 3 (subject to the pro rata payment identified in Section 3.1.a.ii) shall be paid by QSI to Contractor on or within five (5) business days of the date of termination of the Agreement.
     
  d. This Agreement may be terminated at any time by mutual agreement of QSI and Contractor. In that event, the Agreement shall immediately and fully discharged, and the only obligations chargeable against any party are those which were due and owing as of the time of termination. With respect to the fee due under Section 3.1.a.ii, the amount of the fee due to the Contractor upon such termination shall be determined by mutual agreement of the parties.

 

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Article 3

FEES

 

3.1        Fees for Services

 

a. QSI shall compensate Contractor for the Services he provides under this Agreement as follows:

 

  i. a monthly payment due on the first day on each month in advance for an amount of $9,250 USD through the full term of this Agreement or otherwise until it is terminated in keeping with Article 2.
     
  ii. the Contractor shall be eligible for an additional fee in the aggregate amount of $33,000, payable in cash or common stock of QSI (as solely determined by QSI), with fifty percent (50%) would be payable 6 months after the Effective Date and the remaining fifty (50%) would be payable 12 months after the Effective Date. This fee will be payable, in whole or in part, if the Contractor achieves the objectives set forth in SCHEDULE B , attached hereto and incorporated herein by reference, as determined by the QSI in its sole and reasonable discretion. Should the Agreement be terminated pursuant to Section 2.2 and the Contractor has met the objectives set forth in SCHEDULE B through the date of termination, the Contractor will be paid a pro rata portion of that portion of the fee not previously paid through the date of termination, but only if such payment is required under the relevant provisions of Section 2.2.
     
  iii. QSI shall issue Contractor 400,000 shares of its unrestricted common stock on the date this Agreement is signed and delivered.
     
  iv. Contractor agrees and acknowledges that he shall be exclusively liable for all tax consequences and obligations stemming from any payment he receives under Section 3.1-a-i, including any payment for which an IRS Form 1099 will issue; and
     
  v. Contractor agrees and acknowledges that QSC is solely responsible for any and all benefits to which Contractor may be entitled by virtue of his employment with QSC, and that QSI is neither offering nor responsible for providing Contractor with any benefits in exchange for his provision of Services under this Agreement.

 

b. In addition to fees for the Services, QSI shall reimburse Contractor for any charges or expenses he incurs which are reasonable and either incidental to or necessary for his performance of the Services hereunder, provided that the Contractor provides written evidence thereof reasonably satisfactory to QSI.

 

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Article 4

MISCELLANEOUS

 

4.1        Notices

 

  a. Any notice, direction or other communication given under this Agreement shall be in writing and shall be hand delivered or sent by overnight courier, prepaid registered mail, electronic mail or facsimile, in each case addressed as follows:

 

If to Contractor :

 

  Attention: Joey Trombino
     
  Email: **********

 

If to Quest Solution, Inc. :

 

  Attention: Chief Executive Officer
     
  Email: tmiller@questsolution.com

 

  b. Any such communication shall be deemed to have been validly and effectively given: (i)in the case of hand-delivery, facsimile, or email, on the date of delivery or transmission, (ii) in the case of overnight courier, on the first business date following the date of mailing, and (iii) in the case of prepaid registered mail, five (5) business days following the date of mailing. Communications shall not be sent by mail in the event of actual or threatened disruption of postal service. Any party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to such party at its changed address.

 

4.2        Third Party Beneficiaries

 

QSI and Contractors intend that this Agreement shall not benefit or create any right or cause of action in, or on behalf of, any person or entity, other than the parties to this Agreement. No Person, other than the Parties to this Agreement, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum. Notwithstanding the foregoing, in consideration for QSC’s acceptance of and agreement to the provisions of the Agreement (as noted below), QSC is a third party beneficiary with respect to the last sentence of Section 1.1 of this Agreement.

 

4.3        Amendments

 

This Agreement may only be amended or otherwise modified by written agreement executed by both QSI and the Contractor.

 

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4.4        Waiver

 

  a. No waiver of any of the provisions of this Agreement by any party shall be deemed to constitute a waiver of any other provision (whether or not similar), nor shall such waiver be binding unless executed in writing by the party to be bound by the waiver.
     
  b. No failure on the part of the parties to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right, nor shall any single or partial exercise of any such right preclude any other or further exercise of such right or the exercise of any other right.

 

4.5        Entire Agreement

 

This Agreement constitutes the entire agreement between the parties with respect to the subject matter contemplated in this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth herein and therein and the parties have not relied and are not relying on any other information, discussion or understanding in entering into this Agreement.

 

4.6        Successors and Assigns

 

  a. This Agreement shall be binding upon and enure to the benefit of the parties and their respective successors and permitted assigns, if any.
     
  b. This Agreement constitutes a personal services contract. Neither this Agreement nor any of the rights or obligations under this Agreement shall be assignable or transferable by Contractor, without the prior written consent of QSI. Any prohibited assignment or transfer shall be null and void.

 

4.7        Severability

 

If any provision of this Agreement is held invalid or unenforceable for any reason, such invalidity shall not affect the validity of the remaining provisions of this Agreement, and the Parties shall substitute for the invalid provision a valid provision that most closely approximates the intent and economic effect of the invalid provision.

 

4.8        Governing Law and Forum Selection

 

The parties have specifically requested and agreed that this Agreement shall be governed by and interpreted according to the laws of the State of Delaware , without regard to the conflicts of laws principles thereof. Any dispute or other litigation brought by the parties, which arises from or relates to this Agreement, shall be filed in a court of competent jurisdiction in Lane county, Oregon.

 

4.9        Counterparts

 

This Agreement may be executed by original or electronic signature and in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.

 

  5  
 

 

IN WITNESS WHEREOF the parties hereto have executed this Services Agreement as of the date set forth above. The parties further represent and acknowledge that they have read and received legal counsel to the extent they deem proper regarding the content and meaning of this Agreement, and that they sign because they desire its terms and both agree and intend to be bound thereby.

 

  /s/ Joey Trombino
  JOEY TROMBINO
     
  QUEST SOLUTION, INC.
     
  By: /s/ Thomas O. Miller
  Title: President

 

AGREED TO AND ACKNOWLEDGED BY QSC AS OF OCTOBER 1, 2016:

 

Quest Solution Canada, Inc. (“ QSC ”) hereby agrees and consents to, approves of and acknowledges the above Services Agreement. QSC hereby expressly agrees and acknowledges that it shall be exclusively and solely liable for all incidents to and consequences of Contractor’s employment with QSC, and it shall hold Quest Solution, Inc. (“ QSI ”) harmless for any liability of whatever kind that QSI incurs in that regard. QSC further represents, warrants and covenants to QSI that it will not alter its employment arrangements with Contractor in such a way that adversely affects Contractor’s ability to perform the services as contemplated under this Agreement.

 

QUEST SOLUTION CANADA, INC.

 

By: /s/ Thomas O. Miller  
Title: President  

 

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SCHEDULE A

 

Services

 

Joey Trombino shall serve as QSI’s Chief Financial Officer (“CFO”) and shall deliver to QSI the services that are customarily associated with a public company’s CFO. These services may, from time to time and without limitation, include reporting to and performing the specific tasks assigned to him by QSI’s Chief Executive Officer and/or Board of Directors. Mr. Trombino may additionally be required to provide reports to QSI’s Board of Directors and/or its legal counsel. The manner and means of Mr. Trombino’s performance and delivery of these services, however, shall be at his discretion and without the exercise of the control by QSI.

 

Mr. Trombino works primarily from Montreal, Quebec and may perform as much, or as little, of the Services hereunder for QSI from that location as he desires, with the lone exception that Mr. Trombino shall travel to QSI’s offices in Garden Grove, California, Eugene, Oregon, and elsewhere, as is necessary to complete and sufficiently deliver the CFO services he has agreed to provide under this Agreement.

 

  7  
 

 

SCHEDULE B

 

Objectives

 

1-The achievement of an Adjusted EBITDA of 5% for the term of the Agreement

 

2-Integration of Quest Marketing Inc. and BCS Inc. into one corporate legal entity to streamline operations that result in cost savings.

 

3-Ensure -timely and accurate reporting of -regulatory filings and development and implementation of adequate management reports.

 

4-Management of the ScanSource relationship and successful renegotiation of the existing agreements with similar or more favorable terms for QSI

 

5-Management of the investor community and carrying out strategic and capital alternatives for QSI as defined by the CEO.

 

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Quest Solution Spins-Off Canadian Subsidiary to Viascan Group

 

EUGENE, OR / ACCESSWIRE / December 6, 2016 / Quest Solution, Inc., “The Company” (OTCQB: QUES), today announced that it has signed the definitive agreement and concluded the transaction to spin off all the shares of Quest Solution Canada Inc. to Viascan Group Inc. with an effective date of September 30, 2016.

 

Under the terms of the Exchange and Transfer Agreement, for the sale of all of the outstanding shares of Quest Solution Canada Inc., the Company will receive a total of $1.0 million in cash, of which $550,000 is receivable at closing and $300,000 to be received on or before December 30, 2016 and $150,000 on or before January 30, 2017. In addition, the Company has redeemed 1 share of Preferred Class B Stock and 1,839,030 shares of Preferred Class C Stock of the Company, as well as the accrued dividend of $31,742 thereon. Lastly, Quest Exchange Ltd., a wholly owned subsidiary of the Company, redeemed 5,200,000 exchangeable shares as part of the divestiture.

 

As a result of this spin off, the total number of common shares of the Company on a fully diluted basis are reduced by 7,039,030. Additionally, as part of the transaction, Viascan Group Inc. will assume $1.0 million of liabilities which the Company had at September 30, 2016. Other consideration that is part of the transaction include:

 

    Full release from five employment contracts, inclusive of our former CEO, Gilles Gaudreault. This release included cancelation of the contracts as well as the deferred salary and signing bonus provisions which would have inured to the employee.
     
  The Company is canceling the intercompany debts of approximately $7.0 million as well. The Company will also receive a contingent consideration of 15% of the net value proceeds, up to a maximum of $2.3 million, received upon a liquidity event or a change of control of Quest Solution Canada Inc. for a period of 7 years subsequent to the transaction.
     
    The Company also negotiated a right of first refusal for any offer to purchase Quest Solution Canada Inc. for a 7-year period.

 

Tom Miller, Interim Chief Executive Officer, stated, “Quest Solution has been, and continues to be, one of the largest and leading integrators of data collection and mobile computing technology in the United States. Solutions and services from Quest and our partners enable Fortune 500 companies in Retail, Manufacturing, Transportation and Logistics, and Healthcare to streamline their supply chains, improve customer service, and realize improved ROI on company assets.”

 

Miller continued, “The outlook as we move into 2017 is strong as we anticipate favorable increases in capital investments within the industries we serve. In addition, the industry is going through a technology refresh cycle as companies replace out of date mobile platforms with new ones that can accommodate business demands. With the spin-off now complete, investments which had been going into the Canadian operation can now be put into our core businesses. The Company will now have the added flexibility to enhance its offerings and services to customers with the goal of driving increased value to the shareholders.”

 

DISCLAIMER: Please note the date of the release appears in real time and will automatically update as your release crosses the wires. To make changes or to schedule your release for distribution please email newsdesk@issuerdirect.com or call our News Desk Team at 919.481.4000. If there is a problem with your news distribution, please note that Issuer Direct must be contacted no more than 90 minutes after your intended cross time in order to be of assistance. Any correspondence received outside of this timeframe will be dealt with at the discretion of management. Per our corporate policy, this release will not be made public without your direct approval.

 

 
 

 

 

 

The divestiture of the Canadian business will allow for the simplification of the operations and services. This transaction should help us refocus on the Company’s strengths in mobile computing and data collection, reduce our costs, and accelerate our path to profitability. The carve-out will not have a material impact on the income statement in the 4 th quarter.

 

Management is currently working on an annual summary letter to the shareholders, as well as a webinar to interested parties regarding the Company’s business strategy going forward. More detail will be provided by the Company as it becomes available later in December.

 

About Quest Solution, Inc.

 

Quest Solution is a Specialty Systems Integrator focused on Field and Supply Chain Mobility. We are also a manufacturer and distributor of consumables (labels, tags, and ribbons), RFID solutions, and barcoding printers. Founded in 1994, Quest is headquartered in Eugene, Oregon, with offices throughout the United States.

 

Rated in the Top 1% of global solution providers, Quest specializes in the design, deployment, and management of enterprise mobility solutions, including Automatic Identification and Data Capture (AIDC), Mobile Cloud Analytics, RFID (Radio Frequency Identification), and proprietary Mobility software. Our mobility products and services offering is designed to identify, track, trace, share, and connect data to enterprise systems such as CRM or ERP solutions. Our customers are leading Fortune 500 companies from several sectors including manufacturing, retail, distribution, food / beverage, transportation and logistics, health care, and chemicals / gas / oil.

 

Information about Forward-Looking Statements

 

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Statements in this press release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. This release contains “forward-looking statements” that include information relating to future events and future financial and operating performance. The words “may,” “would,” “will,” “expect,” “estimate,” “can,” “believe,” “potential,” and similar expressions and variations thereof are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to: fluctuations in demand for Quest Solution, Inc.’s products, the introduction of new products, the Company’s ability to maintain customer and strategic business relationships, the impact of competitive products and pricing, growth in targeted markets, the adequacy of the Company’s liquidity and financial strength to support its growth, the Company’s ability to manage credit and debt structures from vendors, debt holders and secured lenders, the Company’s ability to successfully integrate its acquisitions, risks related to the sale of Quest Solution Canada Inc. to Viascan Group Inc., and other information that may be detailed from time-to-time in Quest Solution Inc.’s filings with the United States Securities and Exchange Commission. Examples of such forward-looking statements in this release include, among others, statements regarding our outlook, capital investment, our offerings and services to customers, operational and financial initiatives, cost reduction and profitability, and simplification of operations. For a more detailed description of the risk factors and uncertainties affecting Quest Solution, Inc. please refer to the Company’s recent Securities and Exchange Commission filings, which are available at http://www.sec.gov. Quest Solution, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by law.

 

Investor Contact:

 

Joey Trombino, CFO

(514) 744-1000 ext. 1228

jtrombino@questsolution.com

 

SOURCE : Quest Solution, Inc.

 

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