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Exhibit 10.86
LOCK DOWN AGREEMENT
THIS LOCK DOWN AGREEMENT (the "Agreement) is entered into as of the
27th day of July, 2006, by and between CirTran Corporation (the "Company") and
Cornell Capital Partners, LP ("Cornell"). The Company and Cornell may each be
referred to herein as a "Party" and collectively as the "Parties."
RECITALS
A. In December 2005, the Company and Cornell entered into a
transaction (the "Transaction") whereby the Company issued to Cornell a
convertible debenture (the "Cornell Debenture") in the principal amount of
$1,500,000.
B. In connection with the Transaction, the Company also issued to
Cornell warrants to purchase up to 10,000,000 shares of the Company's common
stock (the "Warrants"). The Warrants have an exercise price of $0.09 per share.
C. The Company and Cornell desire to enter into an agreement
whereby Cornell agrees that it will not convert or exercise any of the Cornell
Debenture or the Warrants in excess of the Company's authorized but unissued
shares of the Company's common stock (the "Authorized But Unissued Share
Amount") until the Company has taken all steps necessary to increase its
authorized capital.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises and undertakings set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:
1. Lock Down/ No Conversion or Exercise.
X. Xxxxxxx Debenture. Pursuant to this Agreement, Cornell hereby
agrees that it will not convert in excess of the Authorized
But Unissued Share Amount on the Cornell Debenture until the
Company has increased its authorized capital stock.
B. Warrants. Pursuant to this Agreement, Cornell hereby agrees
that it will not exercise in excess of the Authorized But
Unissued Share Amount of the Warrants until the Company has
increased its authorized capital stock.
2. Company Obligations. In connection with this Agreement, the Company
hereby agrees:
A. Not later than twenty (20) days following the date on which
the Company's Registration Statement on Form SB-2 (SEC File
No. 333-128549), registering the resale of shares by Highgate
House Funds, Ltd. (the "Registration Statement") is declared
effective by the U.S. Securities and Exchange Commission (the
"SEC"), the Company will file with the SEC a proxy statement,
information statement, or such other form as is appropriate,
to effectuate an amendment to the Company's articles of
incorporation to increase the Company's authorized capital
stock. The Company also agrees to use its best efforts to
respond to any comments issued by the SEC and to effectuate
the amendment of the Company's articles of incorporation to
increase its authorized capital from 750,000,000 shares to
1,500,000,000 shares or such other number as the Company deems
appropriate.
B. The Company agrees to notify Cornell upon the filing of the
proxy statement, information statement, or such other form as
is appropriate, with the SEC, and upon the effective date of
the amendment of the Company's articles of incorporation.
C. The Parties hereby acknowledge and agree that in the event
that the Company has not effectuated the increase in its
authorized capital to 1,500,000,000 shares of common stock by
October 30, 2006, such failure shall constitute an "Event of
Default" under the Cornell Debenture and related documents and
agreements.
3. Termination. The Parties hereby acknowledge and agree that this
Agreement shall terminate upon the effectiveness of the increase in the
Company's authorized capital as described herein. The Parties further agree that
upon the termination of this Agreement, Cornell shall have no obligation to
exercise the Warrants or convert any amount of the Cornell Debenture, but shall
have any and all rights as delineated in the transaction documents relating to
the Warrants and the Cornell Debenture, as appropriate.
DATED as of July 27, 2006.
CIRTRAN CORPORATION CORNELL CAPITAL PARTNERS LP
By: __________________________ By: Yorkville Advisors, LLC
Name: Xxxxx Xxxxxxxx Its: General Partner
Title: President & CEO
By:________________________________
Name: Xxxx Xxxxxx
Title: Portfolio Manager
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