Exhibit 10.16
CirTran Corporation
Form 10-KSB
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
THIS SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS (the
"Settlement Agreement") is made as of November 3, 2000, by and
between Cirtran Corporation, a Nevada corporation, formerly known
as Circuit Technology, Inc. ("Cirtran"), Xxxxx Xxxxxxxx
("Xxxxxxxx") and Future Electronics Corporation, a Massachusetts
corporation ("Future" and collectively with Cirtran and Xxxxxxxx,
the "Parties"), with reference to the following facts:
RECITALS
1. In 1998 and 1999, Future supplied Cirtran's predecessor,
Circuit Technology, Inc., a Utah corporation ("CTI"), with
electronic components which CTI ordered pursuant to purchase
orders. CTI was unable to pay Future for all of the electronic
components shipped by Future to CTI. As of the date hereof, the
principal balance due and owing Future from CTI is $646,283.96
(the "Unpaid Balance");
2. On or about June 17, 1999, Xxxxxxxx executed a letter of
Guarantee agreeing to jointly and severally guarantee all present
and future indebtedness of CTI, towards Future, up to a maximum
amount of $575,000.00, plus interest and attorney's fees and
disbursements;
3. On or about January 12, 2000, Future commenced an action
against CTI and Xxxxxxxx in the Third Judicial District Court,
Salt Lake County, State of Utah, entitled Future Electronics
Corporation v. Circuit Technology, Inc. and Xxxxx Xxxxxxxx, civil
number 0000000000 (the "Lawsuit");
4. On or about May 4, 2000, the Third District Court granted
partial summary judgement in the Lawsuit against CTI and Xxxxxxxx
and in favor of Future;
5. Pursuant to the Court's granting of partial summary
judgment, CTI is liable to Future in the amount of $646,283.96
plus interest, costs and reasonable attorneys' fees and Xxxxxxxx
is jointly and severally liable to Future for $575,000.00 plus
interest, costs and reasonable attorneys' fees of the total
amount owing by CTI to Future;
6. On July 1, 2000, Cirtran (formerly known as Xxxxxxxxxx
Ventures, Inc.), acquired all of the assets and liabilities of
CTI pursuant to an Asset Purchase Agreement entered into by the
parties;
7. Cirtran is the successor in interest to CTI and has assumed
the liability for the Unpaid Balance; and
8. The Parties hereto have agreed to settle and compromise all
the claims, disputes and differences between them arising from
the foregoing.
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NOW, THEREFORE, in consideration of the covenants,
conditions and releases hereinafter set forth, the Parties hereto
agree as follows:
1. The Recitals are hereby incorporated into and made a part of
this Settlement Agreement.
2. Except as set forth in sections 3 through 5 below, each of
the Parties hereto releases each of the other Parties hereto,
including their agents, successors, assigns, employees,
attorneys, agents, stockholders, officers and directors, from any
and all sums of money, accounts, actions, suits, proceedings,
claims, damages and demands of whatsoever kind or nature which
any of them at any time had or has up to the date hereof against
any of the other of them for or by reason of or in respect of any
act, cause, matter or thing relating or referring to the matters
referred to herein, including claims asserted or which could have
been asserted in the Lawsuit.
3. In consideration of the promises and agreements of Future in
favor of Cirtran set forth herein, Cirtran and Xxxxxxxx hereby
agree with Future as follows:
(1) Cirtran will pay Future $83,000, the receipt of which is
hereby acknowledged.
(2) Cirtran will execute and deliver to Future a promissory note
(the "First Note") concurrent with the execution and delivery of
this Settlement Agreement, in the amount of $166,000.00, the
receipt of which is hereby acknowledged. The First Note shall be
substantially in the form attached hereto as Exhibit A.
(3) Cirtran will execute and deliver to Future a promissory note
(the "Second Note") in the original principal amount of
$73,000.00 together with interest thereon at the rate of 6%,
compounded monthly, interest commencing at the execution thereof,
the receipt of which is hereby acknowledged. The Second Note
shall be substantially in the form attached hereto as Exhibit B.
The First Note and the Second Note shall be referred to herein
collectively as the "Notes."
(4) Cirtran will issue to Future 352,070 shares of Cirtran
restricted common stock (the "Cirtran Shares"), the receipt of
which is hereby acknowledged.
(5) Cirtran will execute and deliver to Future a Registration
Rights Agreement (the "Registration Agreement") substantially in
the form attached hereto as Exhibit C, the receipt of which is
hereby acknowledged.
(6) Cirtran will cause Xxxxxxxx, Xxxx Xxxxxxxx and Xxxxx
Kokozyan to lock up their shares of common stock of Cirtran until
June 27, 2002, pursuant to lock up letters in favor of Future
substantially in the form attached hereto as Exhibit D.
(7) Cirtran hereby grants Future a participation right whereby
Future shall be
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entitled to purchase its pro rata share of any
subsequent offering of Cirtran's equity securities, excluding
shares issued in connection with the exercise of options,
warrants and other common stock purchase rights, any equity
securities issued in consideration for a merger, acquisition or
similar business combination, shares issued in connection with
any stock split, stock dividend, or recapitalization of Cirtran,
any equity securities issued in connection with a public offering
of Cirtran's securities and any equity securities issued pursuant
to any bank debt, equipment leasing arrangement or other
nonequity interim financing approved by the board of directors of
Cirtran. This participation right shall terminate upon the
earlier of (i) payment of the balance due and owing under the
Notes or (ii) sale or other disposition by Future of the Cirtran
Shares.
(8) Cirtran hereby agrees to grant Future the right to appoint
one (1) member of its board of directors for so long as any
amounts are due Future pursuant to this Section 3 and the Notes.
(9) Cirtran and Xxxxxxxx will execute and deliver to Future a
Confession of Judgment substantially in the form attached hereto
as Exhibit E.
4. In consideration of the promises and agreements of Cirtran
in favor of Future set forth herein, Future hereby agrees with
Cirtran as follows:
(a) Future will execute and deliver to Cirtran a
Subscription Agreement in connection with its purchase of
the Cirtran Shares, substantially in the form attached
hereto as Exhibit F.
(b) Future will execute and deliver to Cirtran the
Registration Agreement attached hereto as Exhibit C.
(c) Future will execute and deliver to Cirtran a
Stipulation of Dismissal substantially in the form attached
hereto as Exhibit G.
(d) Future will execute and deliver to Cirtran a right
of first refusal in favor of Abacus Ventures, Inc. regarding
the Cirtran Shares substantially in the form attached hereto
as Exhibit H.
5. Upon execution of this Agreement by Future and delivery by
Cirtran of the items set forth in Section 3, Cirtran shall be
authorized to file the Stipulation of Dismissal with the
appropriate court. Upon receipt of the fully-executed Confession
of Judgment, Future shall hold such document and shall utilize
the Confession of Judgment in accordance with the terms of this
Section 5 only. In the event Cirtran fails to make a payment to
Future under the terms of either the First Note or Second Note
within five (5) business days after any such payment becomes due,
Future or Future's counsel, shall fax notice of such default to
Cirtran's counsel, Xxxxx X. Xxxxxxxxx, at (000) 000-0000. If
Cirtran fails to deliver the delinquent payment to Future's
counsel within five (5) business days from
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the date notice of
such default is faxed to Cirtran's counsel, Future shall be
entitled to file the Confession of Judgment against Cirtran and
Xxxxxxxx as set forth in Utah Code Xxx. 78-22-3 and Rule 58A of
the Utah Rules of Civil Procedure. The Confession of Judgment
shall be supported by an affidavit of default to be executed by
Future's attorney setting forth the default and stating the
balance owing which shall be an amount equal to the unpaid
balance, interest, costs and reasonable attorney fees as referred
in the Recitals, less all payments made to Future under (a) the
terms of this Settlement Agreement, (b) the First Note, and (c)
the Second Note. In calculating the amount paid by Cirtran to
Future for purposes of determining the balance owing under the
Confession of Judgment, Future shall reduce the amount of the
outstanding balance by the amount of any interest paid under the
Second Note and the net proceeds or value of consideration Future
receives from the sale, transfer or other disposition of all or a
portion of the Cirtran Shares. Future shall thereupon be
entitled to file the Confession of Judgment with or without an
action and without additional notice to Cirtran or Xxxxxxxx or
their counsel. In the event Cirtran defaults under either the
First Note or the Second Note and Future elects to enter the
Confession of Judgment, the Notes shall be null and void and
Cirtran shall have no further obligation to Future under the
Notes. Upon receipt of the final installment under the First
Note, Future shall xxxx the First Note "paid in full" and return
it Cirtran. Upon Cirtran's payment in full of the Second Note,
Future shall xxxx the Second Note "paid in full" and return it to
Cirtran.
6. The Parties hereto represent and warrant that they have not
heretofore assigned transferred or purported to assign or
transfer to any person, firm or corporation, any matter herein
released by them.
7. The Parties affirmatively represent that they have read this
Settlement Agreement and understand the terms used herein and the
consequences thereof. Each of the Parties acknowledges that it
has knowingly, freely and voluntarily entered into this
Settlement Agreement for the mutual benefits provided for herein
and not pursuant to any form of duress, and each acknowledges
that the provisions hereof are a necessary and reasonable method
to provide for the resolution of the disputes covered hereby.
Each of the Parties acknowledges that it has been represented by
legal counsel and by knowledgeable and experienced business
representatives with respect to the negotiation and preparation
of this Settlement Agreement and that it is executed in mutual
good faith between the Parties.
8. This Settlement Agreement shall inure to the benefit of and
be binding upon the heirs, successors, administrators, executors
and assigns of the Parties hereto.
9. This Settlement Agreement shall be construed under and shall
be deemed governed by the laws of the State of Utah.
10. Execution of this Settlement Agreement shall not be
construed to be an admission of liability and/or wrongdoing by
any of the Parties.
11. This Settlement Agreement constitutes the entire agreement
between the Parties and
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supercedes all oral or written agreements
made and entered into by and among the Parties prior to the date
hereof.
12. This Settlement Agreement is to be construed fairly and not
in favor of or against any party, regardless of which party
drafted or participated in the drafting of its terms.
13. Except as otherwise provided by law, the terms and
conditions of this Settlement Agreement, including all of the
provisions hereof and the sum provided for herein to be paid,
are, shall be and shall remain strictly confidential, and are not
to be disclosed to anyone (other than the attorneys, auditors and
accountants for the Parties), and neither party hereto, including
its attorneys, representatives and agents, shall make any
statement or representation whatsoever relating thereto to any
other person or entity except pursuant to an order of a court of
competent jurisdiction. The parties hereto specifically have
relied upon this covenant of confidentiality as a material
condition in executing this Settlement Agreement.
14. The Parties hereto hereby represent and warrant that they
have been duly authorized and empowered to execute this
Settlement Agreement and all other documents and instruments
executed and delivered herewith, that no consent or other action
on the part of any other party is required in connection
therewith, and that such execution will be binding upon the
entity on whose behalf they are signing.
15. This Settlement Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
16. Any term or provision of this Settlement Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any
other jurisdiction.
17. In the event any action or proceeding is brought to enforce
any of the terms and conditions of this Settlement Agreement, the
party in whose favor judgment is entered shall be entitled to
have and recover from the other party all costs and attorneys'
fees incurred in connection with the enforcement action. Any
such action shall be commenced and prosecuted in the courts of
Salt Lake County, State of Utah. Cirtran hereby consents to
jurisdiction of such courts in connection with the commencement
or prosecution of such action.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this
Settlement Agreement and Release of all Claims on the date and
year first above written.
DURHAM XXXXX & XXXXXXX CIRTRAN CORPORATION,
a Nevada corporation
/s/ Xxxxxxx X. Xxxxx
By: /s/ Xxxxx Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxxx
Its: President
Attorneys for Cirtran Corporation,
and Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
XXXXX XXXXXXXX, individually
XXXXX XXXX SESSIONS FUTURE ELECTRONICS CORPORATION,
& XXXXXXX a Massachusetts corporation
/s/ Xxxx X. Xxxxxx By: /s/ Future Electronics Corporation
/s/ Xxxxxx X. Xxxxxx, Xx.
Attorneys for Future Electronics
Corporation
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STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
On the _____ day of November, 2000, personally appeared
before me ______________________, the ___________________ of
Cirtran Corporation, who did state that he is authorized to sign
on behalf of said corporation, and that the statements contained
herein are true and accurate to the best of his knowledge,
information and belief.
______________________________
My Commission: NOTARY PUBLIC, Residing at:
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
On the _____ day of November, 2000, personally appeared
before me Xxxxx Xxxxxxxx, the signer of the foregoing instrument,
and did state that the statements contained herein are true to
the best of his knowledge, information and belief.
______________________________
My Commission: NOTARY PUBLIC, Residing at:
______________________________
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STATE OF )
: ss
COUNTY OF )
On the _____ day of November, 2000, personally appeared
before me ______________________, the ___________________ of
Future Electronics Corporation, who did state that he is
authorized to sign on behalf of said corporation, and that the
statements contained herein are true and accurate to the best of
his knowledge, information and belief.
______________________________
My Commission: NOTARY PUBLIC, Residing at:
______________________________
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