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SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Agreement") is made and entered into in
Salt Lake City, Utah by and among Xxxxxxx X. Xxxx, Tradequest International,
Inc., a Mississippi corporation, Xxxxxx Xxxxxxxxx, Xxxx Xxxxxx, and Xxxxxx
Xxxxxxx as of the date executed by the parties below.
Explanatory Statement
A. Tradequest International, Inc., (formerly Ethika Corporation), a
Mississippi corporation and Tradequest, Inc., a Utah corporation entered into an
Agreement and Plan of Reorganization dated November 27, 2000 which closed on
April 10, 2001 whereby the Mississippi corporation was to acquire 100% of the
outstanding common stock of the Utah corporation in exchange for 6,098,379
shares of the Mississippi corporation common stock.
B. Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxxx were the directors of the
Mississippi corporation at the time of the above Reorganization Agreement and
resigned as such following the appointment of Xxxx Xxxxxx, Xxxxxxxxx Xxxxxx and
Xxxxx Xxxxxx as the new officers and directors of the Mississippi corporation in
April 2001.
C. Xxxxxxx X. Xxxx, invested certain funds with Xxxx Xxxxxx in March
2001. Xx. Xxxx also was issued 765,000 shares of the Mississippi corporation
common stock in exchange for common stock of the Utah corporation purportedly
owned by Xx. Xxxx.
D. In September 2001, Xx. Xxxx filed a legal proceeding in Utah
District Court naming the Mississippi corporation and Messrs Brovarone, Casutt
and Xxxxxxx as defendants.
E. The parties hereto believing it is in their mutual best interest to
enter into this Settlement Agreement whereby the legal proceeding filed by Xx.
Xxxx be dismissed as to the Mississippi corporation and Messrs Brovarone and
Xxxxxxx, the purported acquisition of the Utah corporation by the Mississippi
corporation pursuant to the Reorganization Agreement by rescinded and held null
and void and that Xx. Xxxx be issued a controlling interest in the Mississippi
corporation for the purpose of the Mississippi being prepared for and seek out a
reorganization into a new business.
F. The parties acknowledge that the Mississippi corporation is
currently in arrears to its transfer agent in the amount of approximately $3,000
and will require payment and a deposit of $1,000 prior to reactivating transfer
of common stock. In addition, an estimated $2,000 will be required for the
Mississippi corporation's auditors to complete the delinquent financial
statements and reports to be filed with the U.S. Securities and Exchange
Commission. The parties further acknowledge that the Mississippi corporation has
filed neither state or federal income tax returns for the fiscal year ended
December 31, 2001.
NOW, THEREFORE, in consideration of the mutual covenants, promises,
agreements, representations, and warranties hereinafter set forth, the parties
hereto do hereby covenant, promise, agree, represent, and warrant as follows:
1. Explanatory Statement Incorporated by Reference. The Explanatory
Statement is incorporated by reference in this Agreement as a substantive part
hereof The Parties represent and warrant to each other that the matters and
facts set forth in the Explanatory Statement are true, correct, and complete.
2. Closing. The closing (the "Closing") of this Settlement Agreement
shall take place on July __, 2002(the "Closing Date"), at 10:00 A.M. o'clock
Denver, Colorado time at the law offices of Xxxxx Xxxx, Esq.
3. Dismissal of Legal Action Xxxxxxx X. Read agrees to file a Motion to
Dismiss with Prejudice the legal action against the Mississippi corporation,
Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxxx within ten business days of the execution of
this agreement. Xx. Xxxx shall provide a copy of the filed Motion to Dismiss to
all parties prior to closing.
4. Rescission of the Reorganization Agreement. The undersigned as the
officers and directors of the Utah corporation and the Mississippi corporation,
both before and after the April 2001 reorganization, agree that the
Reorganization Agreement is hereby rescinded, null and void and shall be
considered by the two corporations and never having closed. As result thereof
and conditioned upon the dismissal of the legal proceedings described above, the
following events shall be deemed to have occurred as of the effective date of
the dismissal:
A. Xxxx Xxxxxx, Xxxxxxxxx Xxxxxx and Xxxxx Xxxxxx hereby appoint Xxxxx
Read, Xxxxxxx Read and Xxxxxx X. Xxxxxxxxx as Directors of the Mississippi
corporation and resign as officers and directors of the Mississippi corporation;
B. The common stock issued to Xxxx Xxxxxx (3,481,425 shares), Xxxxx
Xxxxxx (45,000) and Choice Holdings (960,000 shares) are herewith returned to
the new board of directors of the Mississippi corporation with medallion
signature guaranteed stock powers of the registered holders thereof for
cancellation;
C. Xxxxx Read, Xxxxxxx Read and Xxxxxx X. Xxxxxxxxx as the new board of
directors of the Mississippi corporation hereby authorize the issuance of the
following shares of common stock:
Xxxxxxx X. Xxxx 2,335,000 shares
D. Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxxx waive any and all interest in
those certain stock options granted pursuant to the Plan of Reorganization which
are hereafter null and void.
5. Investment and Due Diligence Representation. Xxxxxxx Read
acknowledges and agrees that he is acquiring the shares for his own account and
agree not to distribute any shares within the meaning of the Securities Act of
0000 (xxx 0000 Xxx), unless an appropriate registration statement has been filed
with the SEC or unless an exemption from registration under the 1933 Act is
available. Each certificate for shares issued shall be stamped or otherwise
imprinted with the following or a substantially similar legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") nor any
state securities laws. These shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an opinion of
counsel acceptable to the company that an exemption from such
registration is available."
By execution of this Agreement Mr. Read represents that he has
sufficient investment sophistication and ability to take the financial risks
associated with this transaction. Mr. Read also represents and warrants that he
has performed an inquiry in the affairs and financial condition of the
Mississippi corporation to his own satisfaction and is not relying upon any
representation or warranties of any other person or party to this Settlement
Agreement.
6. Contribution of Legal Services. Xxxxxx Xxxxxxxxx agrees to
contribute legal services to the Mississippi corporation with respect to the
preparation and filing of delinquent Securities and Exchange Commission reports
for the fiscal quarters ended June 30, 2001, September 30, 2001, fiscal year
ended December 31, 2001, the fiscal quarter ended March 31, 2002, the fiscal
quarter ended June 30, 2002 and the fiscal quarter ended September 30, 2002.
7. Entire Agreement. This Agreement contains the entire Agreement among
the parties which may not be amended nor may any rights hereunder be waived
except by an instrument in writing signed by the party sought to be charged with
such amendment or waiver.
8. Choice of Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Utah. Any action to enforce the terms
and conditions of this Agreement shall be brought in the State or Federal courts
in and for Salt Lake City, Utah.
9. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors, personal
representatives and assigns.
10. Counterpart and Facsimile Signatures. This Agreement may be
executed in any number of counterparts of the signature page, each of which
shall be considered an original. In addition, a signature which is reproduced by
facsimile transmission shall be deemed an original.
AGREED TO AND ACKNOWLEDGED BY THE PARTIES HERETO AS BINDING THIS 19th DAY OF
SEPTEMBER 2002.
TRADEQUEST INTERNATIONAL, INC.
/s/ Xxxx Xxxxxx /s/Xxxxxxxxx Xxxxxx
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Xxxx Xxxxxx Xxxxxxxxx Xxxxxx
Individually and as Individually and as
President, Director Secretary, Director
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxx
-------------------- ------------------
Xxxxxx Xxxxxxxxx Xxxxxx Xxxxxxx
Former Director Former Director
/s/ Xxxxxxx X. Read /s/ Xxxxxxx Read
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Xxxxxxx X. Read Xxxxxxx Read
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
