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SETTLEMENT AGREEMENT
AND
MUTUAL RELEASE
This agreement is made and entered into this 10th day of February,
2006, by and between Xxxxxx Xxxxxxx d/b/a Xxxxxxx Xxxxxxxx ("Xxxxxxx") and
CirTran Corporation ("CirTran").
Recitals
X. Xxxxxxx is an individual who does business in his own name and
under the name "Salamon Brothers."
B. CirTran is a Nevada corporation. CirTran maintains its
principal place of business in Utah.
C. On February 26, 2003, Xxxxxxx filed a complaint against
CirTran in the United States District Court, Eastern District of New York,
entitled "Xxxxxx Xxxxxxx d/b/a Salamon Brothers, Plaintiff, vs. CirTran
Corporation, Defendant," case no. 2:03-cv-00948-JS-ARL. On April 7, 2003,
CirTran filed a motion objecting to the jurisdiction of the Eastern District of
New York. On May 9, 2003, Xxxxxxx voluntarily dismissed the lawsuit in the
Eastern District of New York
D. On September 11, 2003, Xxxxxxx re-filed the lawsuit in the
United States District Court for the District of Utah, Central Division, case
no. 2:03-cv-00787-TS-SA. The Complaint asserts claims for Specific Performance
and Breach of Contract seeking to recover a fee to be paid in the form of
restricted shares of CirTran common stock that allegedly became due on November
5, 2002, based on a $5 million equities financing transaction that occurred
between CirTran and third-party Cornell Capital Partners L.P. ("Cornell") on
that date.
E. On October 10, 2003, CirTran filed an Answer to the Complaint
denying the material allegations thereof and asserting various affirmative
defenses.
F. On December 13, 2004, Xxxxxxx filed a Supplemental Complaint
in the District of Utah in which he added claims for Specific Performance and
Breach of Contract seeking to recover an additional fee from a second equities
financing transaction that occurred between CirTran and Cornell on May 12, 2004.
G. On January 26, 2005, CirTran filed an Answer to the
Supplemental Complaint denying the material allegations of the Supplemental
Complaint and asserting various affirmative defenses.
H. The claims asserted in the Complaint and Supplemental
Complaint allege that CirTran is obligated to pay Xxxxxxx these fees pursuant to
a Financial Consulting Agreement dated October 2, 2002. Xxxxxxx alleges that his
fees became due and owing on the date of each of CirTran's transactions with
Cornell, as recited above, and that CirTran has failed to pay the fee by
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issuance of the restricted shares of CirTran common stock required by the
parties' contracts.
I. The parties hereto disagree whether and to what extent CirTran
is liable to Xxxxxxx for the claims asserted in the Complaint and Supplemental
Complaint. Nevertheless, the parties have agreed to a settlement of the claims
asserted in these actions on the terms stated herein.
NOW THEREFORE, pursuant to these Recitals, and for and in consideration
of the terms and conditions of this agreement, the mutual benefits to be derived
herefrom, and other good and valuable consideration, the parties agree as
follows:
1. Shares of Common Stock.
a. Issuance of CirTran Stock. Not later than four (4)
business days following the execution of this agreement by all of the parties
hereto, CirTran shall deliver to Xxxxxxx a certificate (the "Certificate")
representing four million (4,000,000) shares (the "Shares") of CirTran common
stock. This Certificate will bear the restrictive legend required by Rule 144.
b. Removal of the Restrictive Legend. Upon tender by
Xxxxxxx to CirTran or its counsel of (i) the Certificate signed by Xxxxxxx, and
(ii) the Rule 144(k) Representations in the form attached hereto as Exhibit A,
CirTran shall cause its counsel to deliver an opinion to CirTran's transfer
agent, with a copy to Xxxxxxx, stating that the restrictive legend on the
Certificate may be removed, which opinion shall be issued within two (2)
business days after receipt of the signed Certificate and Rule 144(k)
Representations. CirTran shall immediately thereafter cause its transfer agent
to cancel the Certificate bearing the restrictive legend and issue to Xxxxxxx a
new certificate representing the Shares without a restrictive legend.
c. Ownership of Shares. CirTran hereby acknowledges that
it is issuing these Shares in connection with this settlement as payment of
Xxxxxxx'x fee, that this fee was earned by Xxxxxxx on November 5, 2002, the date
on which CirTran closed an equity financing transaction with Cornell, that the
Company should have paid this fee on that date, and that Xxxxxxx was entitled to
receive the fee as of that date.
2. Warrants to Purchase Common Stock.
a. Issuance of Warrants. Not later than five (5)
business days following the execution of this agreement by all of the parties
hereto, CirTran shall deliver the following to Xxxxxxx:
i. A Warrant for Xxxxxx Xxxxxxx to purchase
5,250,000 shares of CirTran common stock at a strike price of five
cents per share that shall remain open for 5 years following the date
of issuance of the Warrant. This Warrant shall be in the form attached
hereto as Exhibit B.
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ii. A Warrant for Xxxxxxx X. Xxxxx to purchase
1,750,000 shares of CirTran common stock at a strike price of five
cents per share that shall remain open for 5 years following the date
of issuance of the Warrant. This Warrant shall be in the form attached
hereto as Exhibit C.
b. Piggy-Back Registration Rights. Not later than 6
months following the date of execution of this agreement by all of the parties
hereto, CirTran shall prepare and file with the U.S. Securities and Exchange
Commission ("SEC") a registration statement (the "Registration Statement") and
shall include in the Registration Statement the resale by the Holders (as that
term is defined in the Warrants attached hereto) of the shares of common stock
(the "Underlying Shares") issuable upon exercise of the Warrants. CirTran shall
use its best efforts to have the Registration Statement declared effective by
the SEC, and Xxxxxxx shall cooperate and assist CirTran by providing whatever
information may be necessary or requested by the SEC. CirTran does not represent
or warrant that the Registration Statement will be declared effective or that
the SEC will allow it to remain effective for any period of time. CirTran shall
send a copy of the Registration Statement to Xxxxxxx when it is filed with the
SEC.
c. Investment Representations and Warranties. Because
the issuance of the Warrants by the CirTran to Xxxxxxx constitutes a transaction
in securities, to further induce CirTran's issuance of the Warrants, Xxxxxxx
hereby represents and warrants to CirTran and its agents and attorneys as
follows:
i. Accredited Status. Xxxxxxx is an "Accredited
Investor" as that term is defined in Regulation D under the
Securities Act.
ii. Sole Party in Interest. Xxxxxxx is the sole
and true party in interest, and no person or entity other than
Xxxxxxx and Xxxxxxx X. Xxxxx have or will have upon the
issuance of the Warrants any beneficial ownership interest in
the Warrants or any portion of the Warrants, whether direct or
indirect.
iii. Investment Purpose. Xxxxxxx represents that
he is acquiring the Warrants for his own account for
investment purposes and not on behalf of any other person or
entity or for or with a view to resale or distribution.
iv. Knowledge and Experience. Xxxxxxx has been
advised, to his satisfaction and understanding, with respect
to the advisability of an investment in CirTran. Xxxxxxx is
experienced in evaluating and making speculative investments,
and has the capacity to protect his interests in connection
with the acquisition of the Warrants and any share issued
thereunder. Xxxxxxx has such knowledge and experience in
financial and business matters in general, and investments in
the manufacturing industry in particular, that Xxxxxxx is
capable of evaluating the merits and risks of Xxxxxxx'x
investment in CirTran. Xxxxxxx has been informed that an
investment in CirTran is speculative and has concluded that
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Xxxxxxx'x proposed investment is appropriate in light of his
overall investment objectives and financial situation.
v. Investment Advisors. Xxxxxxx represents that
no investment advisor or Xxxxxxx representative has been
consulted or retained in connection with Xxxxxxx'x decision to
obtain the Warrants.
vi. Exclusive Reliance on this Agreement. In
making the decision to obtain the Warrants, Xxxxxxx has relied
exclusively upon information included in this Agreement, and
investigations made by Xxxxxxx, and not on any other
representations, promises or information, whether written or
verbal, by any person.
vii. Accuracy of Representations and Information.
All representations made by Xxxxxxx in this Agreement and all
documents and instruments related to this Agreement, and all
information provided by Xxxxxxx to CirTran concerning Xxxxxxx
and his respective financial positions is correct and complete
as of the date hereof. If there is any material change in such
information before the actual issuance of the Warrants,
Xxxxxxx immediately will provide such information to CirTran.
Xxxxxxx specifically acknowledges that CirTran will rely on
these representations contained in this Section 2.c. in
connection with CirTran's ability to issue the Warrants.
viii. No Representations. None of the following
have ever been represented, guaranteed, or warranted to
Xxxxxxx or Xxxxxxx X. Xxxxx by CirTran or any of its
employees, agents, representatives or affiliates, or any
broker or any other person, including Xxxxxxx, expressly or by
implication:
(a) The approximate or exact length of time
that Xxxxxxx or Xxxxxxx X. Xxxxx will be
required to remain as owner of the Shares
and the Warrants;
(b) The percentage of profit or amount of or
type of consideration, profit or loss
(including tax write-offs or other tax
benefits) to be realized, if any, as a
result of an investment in the Shares and
the Warrants; or
(c) The past performance or experience on
the part of the Company or any affiliate or
their associates, agents or employees, or of
any other person as being indicative of
future results of an investment in the
Shares and the Warrants.
3. Release by Xxxxxxx. In exchange for this agreement, Xxxxxxx
and his agents, successors and assigns, hereby irrevocably and unconditionally
release and forever discharge CirTran, its successors, assigns, officers,
directors, owners, employees, insurers, agents, representatives, and attorneys,
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and all persons acting by, through, under or in concert with them, or any of
them, including Xxxxx Xxxxxxxx, from any and all actions, causes of action,
suits, claims, rights, damages, losses, costs and expenses (including attorneys'
fees and costs actually incurred) of any nature whatsoever, known or unknown,
suspected or unsuspected, fixed or contingent which he now has, owns or holds,
or claims to have, own or hold, or at any time heretofore had, owned or held, or
claimed to have, own or hold, or may hereafter have, own or hold, or claim to
have, own or hold, arising out of conduct or matters occurring prior to the date
of this agreement.
It is the intention of the parties that CirTran shall have no further
obligation to Xxxxxxx. CirTran is free to engage in financing arrangements of
its choosing with any party of its choosing without incurring any obligation to
pay a fee to Xxxxxxx or give him some other consideration. Xxxxxxx hereby
acknowledges that all obligations owed by CirTran pursuant to any contract he
has or may have had with CirTran, including but not limited to the Financial
Consulting Agreement dated September 20, 2001, and the Letter of Agreement dated
October 2, 2002, are by this agreement irrevocably and unconditionally
discharged and satisfied in full.
4. Release by CirTran. In exchange for this agreement, CirTran
and its officers, agents, successors and assigns, hereby irrevocably and
unconditionally release and forever discharge Xxxxxxx and his insurers, agents,
representatives, and attorneys, and all persons acting by, through, under or in
concert with them, or any of them, from any and all actions, causes of action,
suits, claims, rights, damages, losses, costs and expenses (including attorneys'
fees and costs actually incurred) of any nature whatsoever, known or unknown,
suspected or unsuspected, fixed or contingent which they now have, own or hold,
or claim to have, own or hold, or at any time heretofore had, owned or held, or
claimed to have, own or hold, or may hereafter have, own or hold, or claim to
have, own or hold, arising out of conduct or matters occurring prior to the date
of this agreement.
5. Dismissal of Action. Concurrent with the execution of this
agreement by all of the parties hereto, the parties will execute, through their
respective attorneys, and file with the United States District Court a Request
for Dismissal and proposed Order of Dismissal, in the form attached hereto as
Exhibit D, requesting that the court dismiss the Complaint and Supplemental
Complaint with prejudice with each party to bear its own attorneys' fees and
costs. By executing this Settlement Agreement, the parties each hereby authorize
and instruct their respective attorneys to execute and file the Request for
Dismissal and proposed Order of Dismissal attached hereto.
6. Notices and Delivery. Any notice to be given to any party
shall be served by U.S. Mail, certified, return receipt requested, and shall be
deemed complete on the date the notice is received by the recipient as indicated
on the return receipt. The deliveries required under paragraphs 1 and 2, above,
shall be done by Federal Express next business day delivery with a tracking
number. Deliveries and notice shall be given as follows, unless written notice
of change of address is given to all parties:
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If to Xxxxxxx:
Xxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
with a copy to:
Xxxx X. Xxxxx, Esq.
Xxxx X. Xxxxx PC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
If to CirTran:
CirTran Corporation
Attn: Xxxxx Xxxxxxxx
0000 Xxxxx 0000 Xxxx
Xxxx Xxxxxx Xxxx, Xxxx 00000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Durham Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
7. Consideration. The parties hereto acknowledge and agree that
good and valuable consideration has been given for the covenants and agreements
set forth herein and that each party has been fully advised (to the extent that
they have deemed necessary) regarding this agreement and their respective claims
by competent legal counsel of their choosing.
8. No Admission of Liability. The parties agree that this
agreement is entered into in settlement of disputed claims, and execution of
this agreement shall not be deemed to be an admission of liability or an
admission against interest by any party hereto.
9. Non-assignment. The parties each warrant and represent that
there has been no assignment, sale, or transfer of any of the claims being
released hereby and that their execution of this agreement constitutes a full
and complete release and discharge of those claims. The parties each warrant and
represent that there has been no prior assignment of the assets being
transferred hereunder.
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10. Full and Independent Knowledge. Each party hereto represents
that it has been represented by an attorney in connection with the preparation
and review of this agreement, that its representative has specifically discussed
with its attorney the meaning and effect of this agreement and that its
representative has carefully read and understands the scope and effect of each
provision contained herein. Each party hereto further represents that it does
not rely and has not relied upon any representation or statement made by the
other party hereto or any of its representatives with regard to the subject
matter, basis or effect of this agreement and has voluntarily entered into this
agreement.
11. Successors. This agreement shall be binding upon and inure to
the benefit of the administrators, successors and assigns of each of the
parties.
12. Preparation of This Agreement and Construction of its Terms.
The parties agree that each of them have, through their attorneys, participated
in and contributed to the preparation of this agreement. The parties agree that
this agreement shall be regarded and deemed as having been prepared jointly by
the parties hereto. Any ambiguity or uncertainty existing herein shall not be
interpreted or construed against any party thereto by virtue of who may have
drafted such provision.
13. Amendment to This Agreement. This agreement may not be
altered, amended, modified or otherwise changed in any respect or particular
whatsoever except by a writing executed by an authorized representative of each
party hereto.
14. Further Assurances. Each of the parties, without further
consideration, agrees to execute and deliver such other documents and take such
other action as may be necessary to consummate more effectively the subject
matter hereof.
15. Authorization. Any person signing this agreement for or on
behalf of an entity other than a natural person does by said signature warrant
that he or she is duly authorized by said entity to undertake such action on its
behalf, and that such signature is the valid and binding act of that entity.
16. Attorneys' Fees. If any action is brought because of any
breach of or to enforce, interpret, rescind, or terminate any of the provisions
of this agreement, the party prevailing in such action shall be entitled to
recover from the other party reasonable attorneys' fees and court costs incurred
in connection with such action, the amount of which shall be fixed by the court
and made a part of any judgment rendered.
17. Entire Agreement. This agreement sets forth the entire
agreement between the parties and supersedes any and all prior contracts,
agreements or understandings between the parties pertaining to the subject
matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
and Mutual Release as of the date first shown above.
CirTran: CIRTRAN CORPORATION
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx, President
Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx, an individual,
d/b/a Salamon Brothers
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EXHIBIT A
Rule 144(k) Representations
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To CirTran Corporation
Re: Removal of Restrictive Legend Pursuant to Rule 144(k)
Xxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Total Number of Shares: 4,000,000 Certificate Number _________________
Gentlemen:
This letter is submitted to the Company in connection with my request
that the restrictive legend on the certificate(s) representing the above
identified securities (the "Securities") be removed pursuant to Rule 144
promulgated under the Securiteis Act of 1933 ("Rule 144"). In connection
herewith, the undersigned represents and warrants to the Company as follows:
1. The undersigned is not and has not during the preceding three months of
the date of this letter been an affiliate of the Company, within the
meaning of Rule 144(a)(1), (i.e. a person that directly or indirectly,
through one or more intermediaries, control or is controlled by or is
under common control with the Company.)
2. The Securities are "restricted securities" as defined in Rule
144(a)(3).
3. I have been the beneficial owner of the Securities for more than the
past two years. Neither I nor any "related persons" have had a short
position in, or any put or option to dispose of, any of the securities
of the Company or any securities convertible into such securities of
the same class at any time; and the full purchase price for the
Securities was paid more than two years ago.
4. I understand that Rule 144(k) prohibits sales made by a person who is
an affiliate at the time of sale or by a person who was an affiliate of
the Company during the 3 months preceding the sale. Thus, while the
Company may remove the restricted legend from the certificate(s)
representing my securities based upon the facts as they exist on the
date of this letter, any change in my status may require the Company to
reissue certificates to me with a restricted legend placed thereon.
5. I further agree to notify the Company promptly of any changes in the
facts set forth in this letter.
6. I have not agreed to act in concert with any other person for the
purpose of selling securities of the Company.
To the best of my knowledge and belief, all of the foregoing information is
accurate and complete as of the date hereof.
Sincerely,
________________________________________ Date ________________________
Xxxxxx Xxxxxxx
EXHIBIT B
WARRANT
-------
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.
CIRTRAN CORP.
Warrant To Purchase Common Stock
Warrant No.: 2006-001 Number of Shares: 5,250,000
Date of Issuance: February ___, 2006
CirTran Corp., a Nevada corporation (the "Company"), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Xxxxxx Xxxxxxx (the "Holder"), the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 11:59 P.M. Eastern Time on the
Expiration Date (as defined herein) Five Million Two Hundred Fifty Thousand
(5,250,000) fully paid and nonassessable shares of Common Stock (as defined
herein) of the Company (the "Warrant Shares") at the exercise price per share
provided in Section 1(b) below or as subsequently adjusted.
Section 1.
(a) This Warrant is the common stock purchase warrant (the
"Warrant") issued pursuant to the Securities Purchase Agreement ("Securities
Purchase Agreement") dated the date hereof between the Company and the Buyers
listed on Schedule I thereto.
(b) Definitions. The following words and terms as used in this
Warrant shall have the following meanings:
(i) "Business Day" means any day other than
Saturday, Sunday or other day on which commercial banks in the City of New York
are authorized or required by law to remain closed.
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(ii) "Common Stock" means (i) the Company's
common stock, par value $0.001 per share, and (ii) any capital stock into which
such Common Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
(iii) "Expiration Date" means the date five (5)
years from the Issuance Date of this Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or authorized to be
closed in the City of New York or the State of New York or on which trading does
not take place on the Principal Exchange or automated quotation system on which
the Common Stock is traded (a "Holiday"), the next date that is not a Holiday.
(iv) "Issuance Date" means the date hereof.
(v) "Person" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(vi) "Principal Market" means the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, whichever is at the time the principal trading exchange or
market for such security, or the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg or, if no bid or sale
information is reported for such security by Bloomberg, then the average of the
bid prices of each of the market makers for such security as reported in the
"pink sheets" by the National Quotation Bureau, Inc.
(vii) "Securities Act" means the Securities Act of
1933, as amended.
(viii) "Warrant" means this Warrant and all
Warrants issued in exchange, transfer or replacement thereof.
(ix) "Warrant Exercise Price" shall be $0.05 or
as subsequently adjusted as provided in Section 8 hereof.
(x) "Warrant Shares" means the shares of Common
Stock issuable at any time upon exercise of this Warrant.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all
references herein (A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to herein shall be
deemed references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Warrant, the words
"herein", "hereof", and "hereunder" and words of similar import, shall refer to
this Warrant as a whole and not to any provision of this Warrant, and the words
"Section", "Schedule", and "Exhibit" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.
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(iii) Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, pro rata as hereinafter provided, at any time on any Business Day on or
after the opening of business on such Business Day, commencing with the first
day after the date hereof, and prior to 11:59 P.M. Eastern Time on the
Expiration Date (i) by delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto (the "Exercise Notice"), of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, payment to the Company of an amount
equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the applicable Warrant
Exercise Price) as to which this Warrant is being exercised (plus any applicable
issue or transfer taxes) (the "Aggregate Exercise Price") in cash or wire
transfer of immediately available funds and the surrender of this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) to a common carrier for overnight delivery to the
Company as soon as practicable following such date ("Cash Basis").
In the event of any exercise of the rights represented by this Warrant
in compliance with this Section 2, the Company shall on or before the fifth
(5th) Business Day following the date of receipt of the Exercise Notice, the
Aggregate Exercise Price and this Warrant (or an indemnification undertaking
with respect to this Warrant in the case of its loss, theft or destruction) and
the receipt of the representations of the holder specified in Section 6 hereof,
if requested by the Company (the "Exercise Delivery Documents"), then the
Company shall, on or before the fifth (5th) Business Day following receipt of
the Exercise Delivery Documents, issue and surrender to a common carrier for
overnight delivery to the address specified in the Exercise Notice, a
certificate, registered in the name of the holder, for the number of shares of
Common Stock to which the holder shall be entitled pursuant to such request.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to
above the holder of this Warrant shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised. In the case of a dispute as to the
determination of the Warrant Exercise Price or the arithmetic calculation of the
Warrant Shares, the Company shall promptly issue to the holder the number of
Warrant Shares that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the holder via facsimile within one (1) Business
Day of receipt of the holder's Exercise Notice.
(b) If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation of the
Warrant Shares within one (1) day of such disputed determination or arithmetic
calculation being submitted to the holder, then the Company shall immediately
submit via facsimile (i) the disputed determination of the Warrant Exercise
Price to an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside
accountant. The Company shall cause the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the holder of the results no later than forty-eight
(48) hours from the time it receives the disputed determinations or
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calculations. Such investment banking firm's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive absent manifest
error.
(c) Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five (5) Business Days after any exercise
and at its own expense, issue a new Warrant identical in all respects to this
Warrant exercised except it shall represent rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised.
(d) No fractional Warrant Shares are to be issued upon any pro
rata exercise of this Warrant, but rather the number of Warrant Shares issued
upon such exercise of this Warrant shall be rounded up or down to the nearest
whole number.
Section 3. Covenants as to Common Stock. The Company hereby covenants
and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution
for or replacement of this Warrant will upon issuance be, duly authorized and
validly issued.
(b) All Warrant Shares which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.
(c) During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized and
reserved at least one hundred percent (100%) of the number of shares of Common
Stock needed to provide for the exercise of the rights then represented by this
Warrant and the par value of said shares will at all times be less than or equal
to the applicable Warrant Exercise Price. If at any time the Company does not
have a sufficient number of shares of Common Stock authorized and available,
then the Company shall call and hold a special meeting of its stockholders
within sixty (60) days of that time for the sole purpose of increasing the
number of authorized shares of Common Stock.
(d) The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. The Company will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Warrant
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.
(e) This Warrant will be binding upon any entity succeeding to
the Company by merger, consolidation or acquisition of all or substantially all
of the Company's assets.
4
Section 4. Taxes. The Company shall pay any and all taxes, except any
applicable withholding, which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as
otherwise specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the holder of shares
of capital stock of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution of
this Warrant or the Warrant Shares, except pursuant to sales registered or
exempted under the Securities Act; provided, however, that by making the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. The holder of this Warrant further represents, by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act (an "Accredited Investor"). Upon exercise of
this Warrant, the holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company, that the Warrant Shares so purchased are
being acquired solely for the holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale
and that such holder is an Accredited Investor. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to
assure the Company that the issuance of its securities upon exercise of this
Warrant shall not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
5
been issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price upon Subdivision or
Combination of Common Stock. If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, any Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock obtainable upon exercise of this Warrant
will be proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately decreased.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(b) Notice. Immediately upon any adjustment of the Warrant
Exercise Price, the Company will give written notice thereof to the holder of
this Warrant, setting forth in reasonable detail, and certifying, the
calculation of such adjustment.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on
receipt of an indemnification undertaking (or, in the case of a mutilated
Warrant, the Warrant), issue a new Warrant of like denomination and tenor as
this Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
6
If to Holder: Xxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: ____________________________
With Copy to: Xxxx X. Xxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: CirTran Corp.
0000 X. 0000 Xxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy (which shall Durham Xxxxx & Xxxxxxx
not constitute notice) to: 000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a holder of this Warrant, to it at the address and facsimile number set
forth on Exhibit C hereto, with copies to such holder's representatives as set
forth on Exhibit C, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this Warrant. Each party shall
provide five days' prior written notice to the other party of any change in
address or facsimile number. Written confirmation of receipt (A) given by the
recipient of such notice, consent, facsimile, waiver or other communication, (or
(B) provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
Section 11. Date. The date of this Warrant is set forth on page 1
hereof. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date.
7
Section 12. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of Warrants representing at least two-thirds of the Warrant Shares
issuable upon exercise of the Warrants then outstanding; provided that, except
for Section 8(d), no such action may increase the Warrant Exercise Price or
decrease the number of shares or class of stock obtainable upon exercise of any
Warrant without the written consent of the holder of such Warrant.
Section 13. Descriptive Headings; Governing Law. The descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Utah, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Utah or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of Utah. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Salt Lake County and the United States District Court for the District of Utah,
for the adjudication of any dispute hereunder or in connection herewith or
therewith, or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Section 14. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH
PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS
TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
8
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the date first set forth above.
CIRTRAN CORP.
By: /s/
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President & CEO
9
EXHIBIT A TO WARRANT
--------------------
EXERCISE NOTICE
---------------
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
CIRTRAN CORP.
The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of Cirtran Corp.
(the "Company"), evidenced by the attached Warrant (the "Warrant"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.
Payment of Warrant Exercise Price. The holder shall pay the Aggregate
Exercise Price of $______________ to the Company in accordance with the terms of
the Warrant.
Delivery of Warrant Shares. The Company shall deliver to the holder
_________ Warrant Shares in accordance with the terms of the Warrant.
Date:
-----------------, ------
Name of Registered Holder
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EXHIBIT B TO WARRANT
--------------------
FORM OF WARRANT POWER
---------------------
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Cirtran Corp. represented by warrant
certificate no. _____, standing in the name of the undersigned on the books of
said corporation. The undersigned does hereby irrevocably constitute and appoint
______________, attorney to transfer the warrants of said corporation, with full
power of substitution in the premises.
Dated:
----------------------------- -------------------------------
By:____________________________
Name:__________________________
Title:_________________________
B-1
EXHIBIT C
WARRANT
-------
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.
CIRTRAN CORP.
Warrant To Purchase Common Stock
Warrant No.: 2006-002 Number of Shares: 1,750,000
Date of Issuance: February ___, 2006
CirTran Corp., a Nevada corporation (the "Company"), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Xxxxxxx X. Xxxxx (the "Holder"), the registered holder hereof or
its permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 11:59 P.M. Eastern Time on the
Expiration Date (as defined herein) One Million Seven Hundred Fifty Thousand
(1,750,000) fully paid and nonassessable shares of Common Stock (as defined
herein) of the Company (the "Warrant Shares") at the exercise price per share
provided in Section 1(b) below or as subsequently adjusted.
Section 1.
(a) This Warrant is the common stock purchase warrant (the
"Warrant") issued pursuant to the Securities Purchase Agreement ("Securities
Purchase Agreement") dated the date hereof between the Company and the Buyers
listed on Schedule I thereto.
(b) Definitions. The following words and terms as used in this
Warrant shall have the following meanings:
(i) "Business Day" means any day other than
Saturday, Sunday or other day on which commercial banks in the City of New York
are authorized or required by law to remain closed.
1
(ii) "Common Stock" means (i) the Company's
common stock, par value $0.001 per share, and (ii) any capital stock into which
such Common Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
(iii) "Expiration Date" means the date five (5)
years from the Issuance Date of this Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or authorized to be
closed in the City of New York or the State of New York or on which trading does
not take place on the Principal Exchange or automated quotation system on which
the Common Stock is traded (a "Holiday"), the next date that is not a Holiday.
(iv) "Issuance Date" means the date hereof.
(v) "Person" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(vi) "Principal Market" means the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, whichever is at the time the principal trading exchange or
market for such security, or the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg or, if no bid or sale
information is reported for such security by Bloomberg, then the average of the
bid prices of each of the market makers for such security as reported in the
"pink sheets" by the National Quotation Bureau, Inc.
(vii) "Securities Act" means the Securities Act of
1933, as amended.
(viii) "Warrant" means this Warrant and all
Warrants issued in exchange, transfer or replacement thereof.
(ix) "Warrant Exercise Price" shall be $0.05 or
as subsequently adjusted as provided in Section 8 hereof.
(x) "Warrant Shares" means the shares of Common
Stock issuable at any time upon exercise of this Warrant.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all
references herein (A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to herein shall be
deemed references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Warrant, the words
"herein", "hereof", and "hereunder" and words of similar import, shall refer to
this Warrant as a whole and not to any provision of this Warrant, and the words
"Section", "Schedule", and "Exhibit" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.
2
(iii) Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, pro rata as hereinafter provided, at any time on any Business Day on or
after the opening of business on such Business Day, commencing with the first
day after the date hereof, and prior to 11:59 P.M. Eastern Time on the
Expiration Date (i) by delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto (the "Exercise Notice"), of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, payment to the Company of an amount
equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the applicable Warrant
Exercise Price) as to which this Warrant is being exercised (plus any applicable
issue or transfer taxes) (the "Aggregate Exercise Price") in cash or wire
transfer of immediately available funds and the surrender of this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) to a common carrier for overnight delivery to the
Company as soon as practicable following such date ("Cash Basis").
In the event of any exercise of the rights represented by this Warrant
in compliance with this Section 2, the Company shall on or before the fifth
(5th) Business Day following the date of receipt of the Exercise Notice, the
Aggregate Exercise Price and this Warrant (or an indemnification undertaking
with respect to this Warrant in the case of its loss, theft or destruction) and
the receipt of the representations of the holder specified in Section 6 hereof,
if requested by the Company (the "Exercise Delivery Documents"), then the
Company shall, on or before the fifth (5th) Business Day following receipt of
the Exercise Delivery Documents, issue and surrender to a common carrier for
overnight delivery to the address specified in the Exercise Notice, a
certificate, registered in the name of the holder, for the number of shares of
Common Stock to which the holder shall be entitled pursuant to such request.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to
above the holder of this Warrant shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised. In the case of a dispute as to the
determination of the Warrant Exercise Price or the arithmetic calculation of the
Warrant Shares, the Company shall promptly issue to the holder the number of
Warrant Shares that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the holder via facsimile within one (1) Business
Day of receipt of the holder's Exercise Notice.
(b) If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation of the
Warrant Shares within one (1) day of such disputed determination or arithmetic
calculation being submitted to the holder, then the Company shall immediately
submit via facsimile (i) the disputed determination of the Warrant Exercise
Price to an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside
accountant. The Company shall cause the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the holder of the results no later than forty-eight
(48) hours from the time it receives the disputed determinations or
3
calculations. Such investment banking firm's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive absent manifest
error.
(c) Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five (5) Business Days after any exercise
and at its own expense, issue a new Warrant identical in all respects to this
Warrant exercised except it shall represent rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised.
(d) No fractional Warrant Shares are to be issued upon any pro
rata exercise of this Warrant, but rather the number of Warrant Shares issued
upon such exercise of this Warrant shall be rounded up or down to the nearest
whole number.
Section 3. Covenants as to Common Stock. The Company hereby covenants
and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution
for or replacement of this Warrant will upon issuance be, duly authorized and
validly issued.
(b) All Warrant Shares which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.
(c) During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized and
reserved at least one hundred percent (100%) of the number of shares of Common
Stock needed to provide for the exercise of the rights then represented by this
Warrant and the par value of said shares will at all times be less than or equal
to the applicable Warrant Exercise Price. If at any time the Company does not
have a sufficient number of shares of Common Stock authorized and available,
then the Company shall call and hold a special meeting of its stockholders
within sixty (60) days of that time for the sole purpose of increasing the
number of authorized shares of Common Stock.
(d) The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. The Company will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Warrant
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.
(e) This Warrant will be binding upon any entity succeeding to
the Company by merger, consolidation or acquisition of all or substantially all
of the Company's assets.
4
Section 4. Taxes. The Company shall pay any and all taxes, except any
applicable withholding, which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as
otherwise specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the holder of shares
of capital stock of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution of
this Warrant or the Warrant Shares, except pursuant to sales registered or
exempted under the Securities Act; provided, however, that by making the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. The holder of this Warrant further represents, by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act (an "Accredited Investor"). Upon exercise of
this Warrant, the holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company, that the Warrant Shares so purchased are
being acquired solely for the holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale
and that such holder is an Accredited Investor. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to
assure the Company that the issuance of its securities upon exercise of this
Warrant shall not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
5
been issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price upon Subdivision or
Combination of Common Stock. If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, any Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock obtainable upon exercise of this Warrant
will be proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately decreased.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(b) Notice. Immediately upon any adjustment of the Warrant
Exercise Price, the Company will give written notice thereof to the holder of
this Warrant, setting forth in reasonable detail, and certifying, the
calculation of such adjustment.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on
receipt of an indemnification undertaking (or, in the case of a mutilated
Warrant, the Warrant), issue a new Warrant of like denomination and tenor as
this Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
6
If to Holder: Xxxxxxx X. Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With Copy to: Xxxx X. Xxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: CirTran Corp.
0000 X. 0000 Xxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy (which shall Durham Xxxxx & Xxxxxxx
not constitute notice) to: 000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a holder of this Warrant, to it at the address and facsimile number set
forth on Exhibit C hereto, with copies to such holder's representatives as set
forth on Exhibit C, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this Warrant. Each party shall
provide five days' prior written notice to the other party of any change in
address or facsimile number. Written confirmation of receipt (A) given by the
recipient of such notice, consent, facsimile, waiver or other communication, (or
(B) provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
Section 11. Date. The date of this Warrant is set forth on page 1
hereof. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date.
7
Section 12. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of Warrants representing at least two-thirds of the Warrant Shares
issuable upon exercise of the Warrants then outstanding; provided that, except
for Section 8(d), no such action may increase the Warrant Exercise Price or
decrease the number of shares or class of stock obtainable upon exercise of any
Warrant without the written consent of the holder of such Warrant.
Section 13. Descriptive Headings; Governing Law. The descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Utah, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Utah or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of Utah. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Salt Lake County and the United States District Court for the District of Utah,
for the adjudication of any dispute hereunder or in connection herewith or
therewith, or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Section 14. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH
PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS
TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
8
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the date first set forth above.
CIRTRAN CORP.
By: /s/
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President & CEO
9
EXHIBIT A TO WARRANT
--------------------
EXERCISE NOTICE
---------------
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
CIRTRAN CORP.
The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of Cirtran Corp.
(the "Company"), evidenced by the attached Warrant (the "Warrant"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.
Payment of Warrant Exercise Price. The holder shall pay the Aggregate
Exercise Price of $______________ to the Company in accordance with the terms of
the Warrant.
Delivery of Warrant Shares. The Company shall deliver to the holder
_________ Warrant Shares in accordance with the terms of the Warrant.
Date:
------------------, ------
Name of Registered Holder
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EXHIBIT B TO WARRANT
--------------------
FORM OF WARRANT POWER
---------------------
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Cirtran Corp. represented by warrant
certificate no. _____, standing in the name of the undersigned on the books of
said corporation. The undersigned does hereby irrevocably constitute and appoint
______________, attorney to transfer the warrants of said corporation, with full
power of substitution in the premises.
Dated:
------------------------------- -----------------------------------
By:________________________________
Name:______________________________
Title:_____________________________
B-1
EXHIBIT D
DURHAM XXXXX & XXXXXXX
Xxxxx X. Xxxxxxxxx (4267)
Xxxxx X. Xxxxx (8736)
Xxxx X. Xxxxxxx (9224)
000 Xxxx Xxxxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
(000) 000-0000
Attorneys for Defendant
XXXX XXXXXXXX XXXXX XXX & XXXXXXXX
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attorneys for Plaintiff
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
--------------------------------------------------------------------------------
|
XXXXXX XXXXXXX d/b/a SALAMON BROTHERS, | REQUEST FOR DISMISSAL
|
Plaintiff, |
| Case No. 2:03CV00787 TS
vs. |
| Xxxxxxxxx Xxx Xxxxxxx
CIRTRAN CORP., |
|
Defendant. |
|
--------------------------------------------------------------------------------
1
IT IS HEREBY STIPULATED by and between plaintiff Xxxxxx Xxxxxxx d/b/a
Salamon Brothers and defendant CirTran Corporation that plaintiff's Complaint
and Supplemental Complaint in this action be dismissed with prejudice, pursuant
to Rule 41(a)(2), Federal Rules of Civil Procedure, each party to bear its own
attorneys' fees and costs.
Dated: February ___, 0000 XXXXXX XXXXX & XXXXXXX
--------------------------------
Xxxxx X. Xxxxx
Attorneys for defendant
Dated: February ___, 2006 XXXX XXXXXXXX XXXXX XXX & XXXXXXXX
--------------------------------
Xxxxxx X. Xxxxxxxx
Attorneys for plaintiff
2
DURHAM XXXXX & XXXXXXX
Xxxxx X. Xxxxxxxxx (4267)
Xxxxx X. Xxxxx (8736)
Xxxx X. Xxxxxxx (9224)
000 Xxxx Xxxxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
(000) 000-0000
Attorneys for Defendant
XXXX XXXXXXXX XXXXX XXX & XXXXXXXX
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attorneys for Plaintiff
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
--------------------------------------------------------------------------------
|
XXXXXX XXXXXXX d/b/a SALAMON BROTHERS, | ORDER OF DISMISSAL
|
Plaintiff, |
| Case No. 2:03CV00787 TS
vs. |
| Xxxxxxxxx Xxx Xxxxxxx
CIRTRAN CORP., |
|
Defendant. |
|
--------------------------------------------------------------------------------
1
BASED ON THE STIPULATION by and between plaintiff Xxxxxx Xxxxxxx d/b/a
Salamon Brothers and defendant CirTran Corporation, it is ordered that
plaintiff's Complaint and Supplemental Complaint in this action be, and hereby
are, dismissed with prejudice, pursuant to Rule 41(a)(2), Federal Rules of Civil
Procedure, each party to bear its own attorneys' fees and costs.
Dated: ______________
BY THE COURT:
-----------------------------------------
Judge Xxx Xxxxxxx
United States District Court, District of Utah
2
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