Re: Quality Grain Settlement Proposal for Resumption of Operations

Dear Mr. Akufo-Addo:
In approximately 1996, the Republic of Ghana, through its representative Mr. George Yankey and Juliet Woodard Cotton created a corporation named Quality Grain Ghana, Ltd. The purpose of the corporation was to produce and mill rice for consumption in Ghana, thereby reducing the nation’s dependency upon imputed rice in the approximate amount of $100,000,000 per year.

The project was funded by loans from the South Trust Bank in Atlanta, Georgia, based upon guaranties from the Export-Import Bank of the United States, supported by the full faith and credit guaranty of the Republic of Ghana.

This proposal is submitted by Oscar Hudson and Quality Grain USA, Inc. Many details of the Ghanaian Company’s transactions are unknown to us because of the fraud perpetrated against Quality Grain USA, Inc., and its stockholders and against the Republic of Ghana by Juliet Woodard Cotton, the chief executive office of both corporations. On April 27, 2001, the Superior Court of Gwinnett County, Georgia, rendered a Judgment against Mrs. Cotton for $7.2 million to recover actual funds that were misappropriated from the borrowed money. A copy of the Judgment and Court Order is attached as Exhibit 1.

The significant portion of the United States Court Order is it’s ruling that Oscar Hudson and Quality Grain USA, Inc., are the rightful owners of the assets of Quality Grain Ghana, Ltd., which includes the $11 million rice mill in Aveyime and all other property interests appurtenant.

The purpose of this proposal, therefore, is to resolve the controversy created by the fraudulent acts of Juliet Woodard Cotton (and others) that resulted in the payment of approximately $20 million by the Republic of Ghana with no return. Similarly, Oscar Hudson and Quality Grain USA, Inc. invested approximately $1 million in establishing Quality Grain Ghana, Ltd., only to be fraudulently excluded from interest and management input once the deal was put together and financing arranged.

Consequently, the Republic of Ghana is seeking to protect its interests by seizing the $11 million mill facility in accord with its subrogation rights under the agreement between it and Quality Grain Ghana, Ltd. However, pursuant to the incorporation papers (See Exhibit 2) and the United States Court Order, that property belongs to Oscar Hudson and Quality Grain USA, Inc., and the Republic of Ghana jointly.

This matter is further complicated by the fact that the Republic of Ghana (through the Rawlings Administration) was integrally involved and assisted Mrs. Cotton in all of her activities. Even though a new Administration is in power, the Republic of Ghana cannot divorce itself from the conduct of the previous lawful administration. We, therefore, believe that the Republic of Ghana will respect the property rights of United States investors as established by a competent court of jurisdiction in the United States, and respectfully request that said rights be acknowledged.

Background and Government Complicity

Juliet Woodard approached her uncle, Oscar Hudson, in 1991 to finance her efforts to convert her father’s small rice farm into an international project. He agreed. When she succeeded in reaching an agreement with the Republic of Ghana and obtained financing, she (with the aid of Dr. George Yankey) excluded him and Quality Grain USA, Inc. from the Ghanaian Corporation. Instead of the shares being issued at 76% to Quality Grain USA and 24% to the Republic of Ghana, the 76% share was issued to Juliet Woodard and the remainder to Dr. Yankey as the Government’s representative. Fraudulent invoices were issued to draw down the borrowed funds.

In 2000, after filing suit against Mrs. Cotton to stop her fraudulent conduct, Oscar Hudson went to Ghana seeking to meet with Government officials to alert them and rectify the situation. He was not granted any audience with anyone in the Rawlings Administration. Later, through the office of a U.S. Congressman the matter was brought to the attention of the Vice President, but no action was taken. Subsequently, Mr. Hudson was received by the Ghanaian Ambassador to the United States, Koby Koomson, Mr. Koomson was concerned about the guaranty to repay by the Government, but informed Mr. Hudson (after consultation with the Administration) that the Government would pay the notes to avoid controversy during the elections and deal with Mrs. Cotton after the elections. The monies paid by Ghana on the Quality Grain notes should never have been paid and Oscar Hudson tried to prevent this loss from occurring. Moreover, he was treated rudely by the Trade Attach?, Mr. Addo, who told him to come back when he had a U.S. Court Order establishing his interest. Which, of course, he has now done.

Ultimately, Mr. Hudson was forced to cooperate with the United States FBI and Internal Revenue Services who began investigating Mrs. Cotton’s activities. However, even after this development and a cable to Ghana from Interpol, both Mr. Hudson and Quality Grain were ignored. Loan payments continued to be made and additional monies were advanced to Mrs. Cotton. No actions were taken to correct the situation until the Kufuor Administration was in office. Needless to say, the new Administration knew nothing of Oscar Hudson or Quality Grain USA, Inc., until it was notified of the United States Court Order by the U.S. Embassy in Ghana around April 30, 2001.

Efforts to contact the Kufuor Administration through the Ghanaian Embassy in Washington, D.C., in March of 2001 were routed to Dr. Samuel Dapaah, who is now under indictment as a part of the conspiracy. Mr. Hudson went to Ghana in March 2001, for this purpose, but declined to meet with Dr. Dapaah after being advised that Dr. Dapaah was involved in assisting and covering up Mrs. Cotton’s fraudulently conduct.

Legal Status

Currently, Quality Grain USA has a petition pending before the Court in Ghana asking that the Court reconsider its earlier ruling that the Government take possession of Quality Grain’s $11 million mill facility on the grounds that (1) no notice and due process was given of the court action and seizure and (2) the Government (by virtue of the previous administration) participated in bringing about the default of the guaranty agreement. It should be noted that the lending agreement forming the basis for the seizure action does not disclose that the Government was a controlling shareholder of Quality Grain Ghana.

Resolution

Oscar Hudson and Quality Grain USA recognize that, through the conduct of Juliet Woodard Cotton and persons in the Rawlings Administration, the Republic of Ghana has experienced both a substantial monetary loss and lost opportunity. Mr. Hudson and Quality Grain USA have suffered the same loss, and now face a conflict with the current Administration over control of the $11 million mill facility that remains and over continuing the project that everyone agrees is feasible and needed.

We therefore propose that the Republic of Ghana and Quality Grain USA accept each other as partners to continue the project. Quality Grain USA has undertaken negotiation with Jackson & Associates Securities of Atlanta, Georgia and with Africa Global of Washington, D.C. concerning an infusion of new capitol as well as with the Overseas Private Investment Corporation (OPIC) concerning refinancing of the project to obtain additional operating capitol and to repay the Republic of Ghana a substantial amount of the its expenditures in the project.

Specifically, Quality Grain USA proposes to repurchase the Republic of Ghana’s 24% interest in Quality Grain Ghana for the sum of $2.5 million, payable upon completion of total recapitalization and refinancing. In addition, Quality Grain would repay the Republic of Ghana $10 million of the payments made to U.S. Banks at the time of closing of the proposed refinancing. The Republic of Ghana would in exchange accept a promissory note for the balance of the expenditures under terms to be negotiated secured by a limited second mortgage on the $11 million mill facility and other asserts. The Government would also convey all appropriate interest in the 2,000 acres of land and improvements associated with the project to Quality Grain.

The Republic of Ghana would support Quality Grain’s refinancing efforts by providing its guaranty to OPIC or other lending institution and contracting through its appropriate procurement agency to purchase all of the rice produced and milled at the Quality Grain facility.

The result of this arrangement would be a net gain to the Republic of Ghana of $2.5 million for its stock in Quality Grain Ghana, initial repayment of the balance, secured by the assets and income of the company.

To facilitate this transaction, Quality Grain requests that the Government release control of all assets to Quality Grain and subordinate its subrogated collateral position in the property in favor of the 24% venture capital investors who would also provide an additional $2.5 million in the form of a short term loan for operating capital secured by the assets and income.

Operation and Management

Quality Grain USA has entered into a management and consulting agreement with Lewis & Sons Rice Farm and Mill in West Memphis, Arkansas, a black-owned operation that has grown and milled rice for over thirty (30) years. Lewis & Sons will provide on site management of production and mill operation. The agriculture Department of the University of Arkansas at Pine Bluff has agreed to serve as scientific and technical consultants in terms of soil, water, weather, seed variety and disease issues. The State of Arkansas is the leading producer of rice in the United States. A team of individuals, involved on behalf of Quality Grain, is presently involved in producing much of the rice imported into Ghana.

Through the support of the Office of Congressman John Conyers of Michigan, the state in which Oscar Hudson lives, additional linkages of support have been developed with the U.S. Department of Agriculture and a national organization engaged in assistance to black farmers, the Community to Enhance Resources to Underserved Farmers (CERUF).

Through these linkages, Quality Grain will also bring technical assistance to the small farmers in the Ghanaian agricultural community. All employees except essential personnel will be Ghanaian. Additionally, Quality Grain will contract with and work in harmony with Ghanaian farmers to avoid any loss of revenue to existing Ghanaian farmers engaged or interested in rice production. To facilitate this concept of local inclusion, Quality Grain proposes to establish a Rice Cooperative to which local farmers can belong. The Cooperative would finance and assist local rice production for members who process their crops through the Quality Grain mill facility.

Expansion of Relationship

In addition to resolving the present issues of debt and assets as outlined above, Quality Grain USA proposes that it and the Republic of Ghana enter into an import relationship for rice with regard to rice that is currently being imported into the country through the government’s procurement agency. The Republic of Ghana currently imports $50 million in rice annually from the U.S. It is in Ghana’s interest that a portion of this trade is done with a company that is investing in Ghana and which already has a financial obligation to Ghana.

Quality Grain USA is prepared to begin shipping U.S. rice immediately if the Government agrees that it is in the mutual interest of both parties to do so.

Conclusion

Quality Grain proposes to resume immediate operation of the rice growing and milling operation in Ghana, to repurchase Ghana’s 24% interest in Quality Grain Ghana, to repay $10 million of Ghana’s expenditures upon refinancing, and to repay the balance of Ghana’s expenditures under terms to be negotiated. Ghana is asked to release and subordinate its collateral security interests in all assets (real property and personal property) and to support all refinancing efforts by extending its guaranty and contracting to purchase the rice produced and milled.

Respectfully submitted, Oscar Hudson and Quality Grain USA, Inc.

By: O. Jerome Green, Attorney OJG:sjf