SETTLEMENTAGREEMENT
THISSETTLEMENTAGREEMENT(the"Agreement")statesthetermsofa settlementofclaimsanddisputesreachedamongZhuhai Yuehua Electronics Co.,Ltd.("Zhuhai")andSouthern Products, Inc. andSigmacUSA,Inc. (collectively "SNPD"), andEdwardMeadows("Meadows").SNPD,Meadows andZhuhaimaybereferred tocollectively herein as the "Parties"andindividually as a "Party".
ThepartiesstipulateandagreethatallSettlementDiscussionsconcerningthetermsand conditionsofthisSettlementTermSheetareinadmissibleevidenceincivil litigationpursuanttoFederalRules of CivilProcedure 408,oritsstatelaw equivalent, andmaynotbeadmittedas evidence inanylegal proceeding.Forthis purpose,Settlement Discussions shall be deemedtoincludeemails concerning settlement, lettersconcerningsettlement, settlementmemoranda, settlement terms sheets,draftsettlementagreements,any means oftelecommunication concerning settlementmattersandanyothersettlementdiscussions or communications.
WHEREAS,disputeshavearisenconcerningcertaintransactions,contractual relationshipsbetweentheParties,andanarrayofancillarylegal issues (Collectively the("ZhuhaiClaims");and
WHEREAS,ZhuhaihascommencedacivilactionagainstSNPDandMeadowsand otherpartiesseeking,interalia,paymentfor productsales in theSuperior Courtof theState ofCaliforniafor theCountyofLos Angeles:Zhuhai vs.NJVSUSA Corporation,et al.,Case No.BC473921(referredto as"theCivil Case"); and
WHEREAS,SNPDhasfiledaCross-ComplaintagainstZhuhaiintheCivilCase seeking,interalia,damagesfor Intentional Misrepresentation and Unlawful,Unfair, and FraudulentBusinessActs;and
WHEREAS,SNPDisengagedindiscussionswithaprivateequityinvestorinterestedinfundingSNPD'sfutureoperationsintotheforeseeablefuture;and
WHEREAS,theprivateequityinvestorhasexpressedanunwillingnesstoinvest substantialcapitaltofundSNPDbecause ofthe litigationrisk surrounding the Zhuhai claims; and
WHEREAS,SNPDwishestopaytoZhuhaiandZhuhaiwishestoacceptinsettlement ofallclaimsitmayhaveagainstSNPDa totalof $425,000 USDollars(the"Debt"),without either partyadmittinganyliability for thesame; and
WHEREAS,subjecttotheconsummationoftheothertransactionscontemplatedherein, thePartiesdesiretoeffectacomprehensive andcomplete compromise in full settlement and mutualreleaseof allclaims thatZhuhai may haveagainst SNPDandMeadows,includingthe satisfaction ofthe ZhuhaiClaimsand the Dismissal ofthe CivilCase, andallclaimsthat SNPD may have against Zhuhai,includingthe satisfaction and the Dismissal oftheCross-Complaint;and
NOWTHEREFORE,inconsiderationofpayments,releases,andcovenantsand agreementsstatedherein,thePartieshavereachedcertain agreements, the essential terms ofwhichare as follows:
| • | PaymentonEquityRaises.ContingentuponSNPD'sreceiptoffundingfromany privateequityinvestor,SNPDshallpayZhuhai: |
(a)2.4%of thefirst3millionofanyequityraisedbySigmacUSA
(b)3.3%of thenext3millionofanyequityraisedbySigmacUSA
(c)4.9%ofthenext4millionofanyequityraisedbySigmacUSA
Paymentsonequityraisedshallbe madewithin5businessdaysfromfunding directlyfromtheescrowagent,andshallcontinueuntilallamounts owed have beenpaid in full(either fromEquity raises orSales (below)).In the event that the sum of$425,000 is not paid within1 year of thedate hereof,SNPD andSigmac (but notMeadows) shallbe deemedto bein defaultofthisAgreement.
| • | PaymentonSales.SigmacUSAInc. shallpayZhuhai0.25%ofitsnetcollections onamonthlybasis.PaymentsonSalesshallcontinueuntilallamounts owed have been paidin full(either fromEquityraisesorSales). |
| • | DismissaloftheCivilCase.Withinfive(5)courtdaysafterexecutionofthis Agreement,thepartiesshalldismisswithprejudicetheirrespective pleadings as against oneanotherin theCivil Case. |
| • | MutualReleaseandCovenantNottoSue.ThePartiesagreethateachofthem(on behalfofthemselvesandtheiragents,representatives,employees,heirs, executors,successorsandassigns) releases, forever discharges andcovenants not to sueanyother PartyorParties(and theirrespectiveagents, representatives, members, affiliates, subsidiaries, employees, attorneys, accountants, professionals, heirs,executors, administrators, successors andassigns, as the case may be) andreleaseseveryotherPartyfrom anyand allclaims actions,causes of action, suits, debts,damages,demands, judgments, orexecutions whatsoever, whether known or unknown,whether understatute orincontract, tort or otherwise, andwhetherinlaw orin equity, that anyPartyeverhad,has now,or may everhaveagainst anyotherPartyas ofthe date ofexecution ofthis Agreement. This Mutual Release and Covenant NottoSue includes, without limitation, anyclaimsforpayment oftheZhuhai Claims or Debt,anyclaims and counterclaims which wereassertedinorcould have been asserted in theCivil Case,allclaimsforattorneys' fees andcostsincurred in theCivilCaseor otherwise, and/oranyclaims, whetherknown or unknown, identified in Article5 below. |
| • | ReleaseofUnknownClaims.ItisunderstoodbyeachPartythatthereisarisk thatsubsequenttotheexecutionofthis Agreement, aParty maydiscover facts different from or inaddition tothefacts whichhenowknows or believestobetrue with respect tothesubject matter ofthis Agreement, orthat certain debts, claims, expenses, or liabilities presently known may be or become greaterthana Partynowexpects or anticipates.Each Partyintends thisAgreement toapply to allunknown orunanticipatedresults,as well asthose known andanticipated, and it is theintention of eachPartyto herebyfully, finally, absolutely, and forever resolveanyandallclaims and disputes which have existed,doexist,or may exist relating tothe Company or itsactivities,assets, liabilities,or members. |
| • | Scope.Theforegoingreleasesdonotextendto,nordothePartiesintendbythis Agreementtosettleorcompromise,anyrightsorclaims: |
a. That arebasedupontherightsandobligationsestablishedbythis Agreement;
b. AgainstEdwardWang,NIVSUSA,Inc.oranyotherpersonorentity controlledbyEdwardWang;or
c.AssertedinLosAngelesCountySuperiorCourtCaseNo.BC476331,capitionedZhuhaiYueHuaElectronicCo.,Ltd. v. SiloDigitalCorporation, Inc.,et al.
| • | MutualNon-Disparagement.ThePartiesshallexecuteanagreementofmutual non-disparagementagreeingnot,afterthedateofthisAgreement,to disparage or criticize thecharacter,business operationsandpractices,ethics,or actions of one another. With regard todisputesand claims the Partiesshallbeauthorized to state that all suchdisputes,claims andrights havebeen resolved to their mutual satisfaction. |
| • | Confidentiality.ThePartiesagreethattheyshallexecuteastandardagreementof confidentialityregardingtheterms and agreements reflected inthisAgreement. Notwithstanding thisagreementofconfidentiality, the Parties understand and agree that SNPD isa publiclyreporting company andas such willberequired to makecertain publicdisclosuresof the final settlement agreementoncesigned. |
| • | MediationandArbitrationofClaims.ThePartiesfurtheragreethattheyshall participateinnon-bindingmediation of anyclaim,controversy or dispute arising outofthisagreement or of anyagreement executed by the Parties(oreitherof them)to give effect to the agreementsreflected inthisAgreement.Such mediation shallbe acondition precedent to anyactionto enforceanysuch agreement. Shouldsuchclaim, controversy or disputenotbe resolved through mediation,the Partiesagreeexclusively tobinding arbitrationofsuchmatter beforea singlearbitrator pursuantto therulesoftheAmericanArbitration Association (AAA).The arbitrator shall havethe authority to award fees, includinglegal fees,andexpensesincurredinsucharbitration to the prevailing party in such arbitration.Nothingcontained inthisArticle8,however,shall precludethe Partiesfromseeking equitable relief,whereappropriate, in any courtof competent jurisdiction. AnysuchMediation orArbitration shall be heldand followthe rules of court and laws ofthe stateofNevada,inthe County of Clark. |
| • | Miscellaneous.ThisAgreementisintendedtosetforthallessentialtermsofa settlementofdisputesbetweenthe Parties asstated herein.It is anticipated that the Parties shallpromptlyproceedto thepreparationand execution of such further documents and agreements asare necessary togiveeffectto theterms stated herein andagreetocooperate inthe preparationand execution of such agreements and documents.The lawsof the State of California shall govern thisAgreement. Eachparty isrepresented bycounsel,andhas conferred with counsel, concerning theexecution ofthisAgreement.The language of thisAgreement shall not be presumptivelyconstrued infavor of or againstany of the parties hereto. |
| • | GoverningLaw,ChoiceofForumandConsenttoJurisdiction.ThisAgreement shallbeconstruedunderthelawsoftheStateofCalifornia. Notwithstanding the dismissal,if any,ofCaseNo.BC 473921,the Partiesjointly requestthatthe Courtretaincontinuing jurisdictionoverthemto enforce thisAgreement pursuant CodeofCivil Procedure section664.6; however, even in the event ofa default, theParties haveagreedthatMeadows hasbeenreleased fromall furtherliability under these claims andwillno longer be a defendant. |
WHEREFORE,the parties have executed this Agreement as of the 20thday of May.
| Zhuhai Yue Hua Electronics Co. Ltd. | Southern Products, Inc. |
| /s/ Fang Xian Yue | /s/ Edward Meadows |
Fang Xian Yue President | Edward Meadows Chief Executive Officer & Officer |
| SigmacUSA, Inc. |
| /s/ Edward Meadows | /s/ Edward Meadows |
| Edward Meadows, Individually | Edward Meadows Chief Executive Officer & Director |
