Exhibit 10.12
CirTran Corporation
Form 10-KSB
CIRTRAN CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Investor Rights Agreement (the
"Agreement") is entered into as of the 3rd day of November, 2000,
by and among Cirtran Corporation, a Nevada corporation, formerly
known as Circuit Technology, Inc. ("Cirtran" or the "Company"),
and Future Electronics Corporation, a Delaware corporation, or
its assignee or designee ("Investor").
RECITALS
A. The Company proposes to sell and issue 352,070 shares
of its restricted common stock (the "Shares") pursuant to a
Subscription Agreement and a Settlement Agreement and Release of
all Claims of even date herewith between Investor and the Company
(collectively, the "Purchase Agreement"); and
B. As a condition of entering into the Purchase Agreement,
Investor has requested that the Company extend to it registration
rights, information rights and other rights as set forth below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth
in this Agreement and in the Purchase Agreement, the parties
mutually agree as follows:
1. Definitions. As used in this Agreement the following
terms shall have the following respective meanings:
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Holder" means any person owning of record Registrable
Securities then outstanding that have not been sold to the
public or any assignee of record of such Registrable Securities
who succeeds to registration rights in accordance with the
provisions hereof.
"Investor" or "Investors" shall mean Future Electronics
Corporation together with any other person or persons to whom any
of the rights granted to Future Electronics Corporation under
this Agreement are assigned in accordance with the provisions
hereof.
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration
statement or document.
"Registrable Securities" means (a) the Shares; (b) any
shares of common stock of the Company acquired pursuant to the
participation right set forth in Section 3(g) of the Release; and
(c) any common stock of the Company issued as a dividend or other
distribution with respect to, or in exchange for or in
replacement of the Shares. Notwithstanding the foregoing,
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Registrable Securities shall not include any securities sold by a
person to the public either pursuant to a registration statement
or Rule 144 or sold in a private transaction in which the
transferor's rights under Section 2 of this Agreement are not
assigned.
"Registrable Securities then outstanding" shall be the
number of shares determined by calculating the total number of
shares of the Company's common stock that are Registrable
Securities.
"Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 2 hereof,
including, without limitation, all registration, qualification
and filing fees, accounting fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, reasonable
fees and disbursements of a single special counsel for all of the
Holders, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration
(but excluding Selling Expenses and the compensation of regular
employees of the Company which shall be paid in any event by the
Company).
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of
Registrable Securities pursuant to a registration.
"Shares" shall mean the Company's common stock issued
pursuant to the Purchase Agreement and held by Investor and its
permitted assigns.
2. Piggyback Registrations. The Company shall notify all
Holders of Registrable Securities in writing at least thirty (30)
days prior to the filing of any registration statement under the
Securities Act for purposes of a public offering of securities of
the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating solely to
the sale of securities to participants in a Company stock plan or
relating solely to corporate reorganizations or other
transactions under Rule 145 of the Securities Act or that do not
include substantially the same information as would be required
to be included in a registration statement covering the sale of
the Registrable Securities) and will afford each such Holder an
opportunity to include in such registration statement up to fifty
percent (50%) of such Registrable Securities held by such Holder.
Each Holder desiring to include in any such registration
statement up to fifty percent (50%) of the Registrable Securities
held by it shall, within ten (10) days after delivery of the
above-described notice from the Company, so notify the Company in
writing, in which event the Company shall, subject to the
provisions of this Section 2, use its best efforts to cause to be
registered under the Securities Act all of the Registrable
Securities that each such Holder has requested to be registered.
If a Holder decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the
right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
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Notwithstanding any other provision of the Agreement,
if the underwriter managing the registration determines in good
faith and notifies the Company in writing that marketing factors
require a limitation of the number of shares to be underwritten,
the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders
requesting registration; and third, to any shareholder of the
Company (other than a Holder) on a pro rata basis. No such
reduction shall (i) reduce the securities being offered by the
Company for its own account to be included in the registration
and underwriting, or (ii) reduce the amount of securities of the
Holders included in the registration below ten percent (10%) of
the total amount of securities included in such registration. The
Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 2 prior to the
effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be
borne by the Company.
In the event the total number of shares of Registrable
Securities to be included in a registration by all Holders under
this Section 2 is limited pursuant to the provisions of the
preceding paragraph, such limited total amount shall be allocated
among such Holders of Registrable Securities to be included in
proportion to the amount of Registrable Securities then held by
each such Holder.
All Holders distributing their Registrable Securities
through an underwriting described in this Section 2 shall enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the
Company, and if any person does not agree to the terms of any
such underwriting, said person shall be excluded from the
underwriting upon written notice from the Company or the
underwriter; provided, that if any shares are so excluded from
the registration and if the number of shares of Registrable
Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include
securities in the registration the right to include additional
securities in an aggregate amount equal to the number of shares
excluded, with such shares to be allocated among the persons
requesting additional inclusion on a pro rata basis consistent
with the allocation provisions set forth above.
3. Obligations of the Company. Whenever required under
Section 2 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of
the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to 180 days
or until the distribution contemplated in the Registration
Statement has been completed; provided, however, that such 180-
day period shall be extended for a period of time equal to the
period the Holder refrains from selling any securities included
in such registration at the request of an underwriter of common
stock (or other securities) of the Company; and provided further
that applicable rules under the Securities Act governing the
obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (i) includes any
prospectus required by Section 10(a)(3) of the Act or (ii)
reflects facts or events representing a
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material or fundamental
change in the information set forth in the registration
statement, the incorporation by reference of information required
to be included in (i) and (ii) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act
in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders; provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless
the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations
under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which
the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on
which similar securities issued by the Company are then listed.
(h) Furnish on the date that such Registrable
Securities are delivered to the underwriters for sale in
connection with a registration pursuant to Section 2, if such
securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date
that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration
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of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in
form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
4. Expenses of Registration. Except as specifically
provided herein, all Registration Expenses incurred in connection
with any registration, qualification or compliance pursuant to
Section 2 shall be borne by the Company. All Selling Expenses
incurred in connection with any registrations hereunder shall be
borne by the Holders of the securities so registered pro rata on
the basis of the number of shares so registered.
5. Termination of Registration Rights. Each Holder's
rights pursuant to Section 2 shall expire upon the date that is
three (3) years after the date hereof.
6. Furnishing Information. It shall be a condition
precedent to the obligations of the Company to take any action
under Section 2 that the selling Holders shall furnish to the
Company such information regarding themselves, the Registrable
Securities held by them and the intended method of disposition of
such securities as shall be reasonably required to effect the
registration of their Registrable Securities.
7. Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or
regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of SEC Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without
registration or pursuant to such form.
8. Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to
Section 2 may be transferred or assigned by a Holder to any
individual or entity which does not compete directly with the
Company's business as it is conducted at the time of such
transfer; provided, however, that (i) the transferor shall,
within ten (10) business days after such transfer, furnish to the
Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such
registration rights are being assigned and (ii) such transferee
shall agree to be subject to all restrictions set forth in this
Agreement.
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9. Amendment of Registration Rights. Any provision hereof
may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
a majority in interest of the Holders. Any amendment or waiver
effected in accordance with this Section 9 shall be binding upon
each Holder and the Company. By acceptance of any benefits under
this agreement, Holders of Registrable Securities hereby agree to
be bound by the provisions hereunder.
10. Indemnification. In the event any Registrable
Securities are included in a registration statement:
(a)To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, each of their legal
counsel, accountants, the partners, members, officers and
directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions
or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration
statement; and the Company will pay to each such Holder, partner,
member, officer, director, underwriter or controlling person for
any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided however, that the indemnity
agreement contained in this Section shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor
shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly
for use in connection with such registration by such Holder,
partner, member, officer, director, underwriter or controlling
person of such Holder.
(b)To the extent permitted by law, each Holder will,
if Registrable Securities held by such Holder are included in the
securities as to which such registration qualifications or
compliance is being effected, indemnify and hold harmless the
Company, each of its directors, its officers and each person, if
any, who controls the Company within the meaning of the
Securities Act, legal counsel and accountants for the Company,
any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's
partners, members, directors or officers or any person who
controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such
director, officer, controlling person, legal counsel, accountant,
underwriter or other such Holder, or partner, director, officer
or
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controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder
under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and
each such Holder will pay as incurred any legal or other expenses
reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner,
member, officer, director or controlling person of such other
Holder in connection with investigating or defending any such
loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 10 shall
not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; provided further, that, in no event shall
any indemnity under this Section 10 exceed the net proceeds from
the offering received by such Holder.
(c)Promptly after receipt by an indemnified party of
notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party,
deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall
have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding.
The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party, but the omission so to deliver written notice
to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under
this Section 10.
11. Basic Financial Information and Reporting.
(a) The Company will maintain books and records of
account in which full and correct entries will be made of all its
business transactions pursuant to a system of accounting
established and administered in accordance with generally
accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles
consistently applied.
(b) As soon as practicable after the end of each
fiscal year of the Company, and in any event within ninety (90)
days thereafter, the Company will furnish each Investor with
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a balance sheet of the Company, as at the end of such fiscal
year, and a statement of income and a statement of cash flows of
the Company, for such year, all audited by independent
accountants and prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in
each case in comparative form the figures for the previous fiscal
year, all in reasonable detail. Such financial statements shall
be accompanied by a report and opinion thereon by independent
public accountants of national standing selected by the Company's
Board of Directors.
(c) The Company will furnish each Investor as soon as
practicable after the end of the first, second and third
quarterly accounting periods in each fiscal year of the Company,
and in any event within forty-five (45) days thereafter, a
balance sheet of the Company as of the end of each such quarterly
period, and a statement of income and a statement of cash flows
of the Company for such period and for the current fiscal year to
date, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need be attached to
such statements and year-end audit adjustments may not have been
made.
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by
and construed under the laws of the State of Utah as applied to
agreements to be performed entirely within Utah.
(b) Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto and
shall inure to the benefit of and be enforceable by each person
who shall be a holder of Registrable Securities from time to
time; provided, however, that prior to the receipt by the Company
of adequate written notice of the transfer of any Registrable
Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as
the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment
of dividends or any redemption price. Nothing in this Agreement,
express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in
this Agreement.
(c) Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable
or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set
forth herein and therein.
(d) Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of any other provision hereof unless the effect
of the declaration of invalidity or unenforceabilty is to reduce
the value of Investor's investment, in which event the court
declaring any provision unenforceable shall be required to reform
the Agreement so as to protect Investor from any reduction in the
value of its investment in a manner as nearly identical to the
original provision declared invalid as may be possible.
Notwithstanding the foregoing, this Section 12(d) does not apply
to Section 10 (a) and (b), which governs the Investor's
indemnification of the Company.
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(e) Waiver. Except as otherwise expressly provided,
the obligations of the Company and the rights of the Holders
under this Agreement may be waived only with the written consent
of majority of the Holders of Registrable Securities then
outstanding.
(f) Delays or Omissions. It is agreed that no delay
or omission to exercise any right, power, or remedy accruing to
any Holder, upon any breach, default or noncompliance of the
Company under this Agreement shall impair any such right power,
or remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or
of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent,
or approval of any kind or character on any Holder's part of any
breach, default or noncompliance under the Agreement or any
waiver on such Holder's part of any provisions or conditions of
this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies,
either under this Agreement, by law, or otherwise afforded to
Holders, shall be cumulative and not alternative.
(g) Notices. All notices required or permitted
hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified,
(b) by e-mail if confirmed under subsection (d) below, (c) when
sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next
business day, (d) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (e) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent
to the party to be notified at the address as set forth in the
Purchase Agreement or at such other address as such party may
designate by ten (10) days advance written notice to the other
parties hereto.
(h) Attorneys' Fees. In the event that any suit or
action is instituted to enforce any provision in this Agreement
the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing
any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
(i) Titles and Subtitles. The titles of the sections
and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this
Agreement.
(j) Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed
this Registration Rights Agreement as of the date set forth in
the first paragraph hereof.
COMPANY:
CIRTRAN CORPORATION
By: Xxxxx Xxxxxxxx
Its: President
INVESTOR:
FUTURE ELECTRONICS CORPORATION
By: ______________________________
Its: _____________________________
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