================================================================================
AMENDED AND RESTATED INVESTOR REGISTRATION RIGHTS AGREEMENT
-----------------------------------------------------------
THIS AMENDED AND RESTATED INVESTOR REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated as of August 23, 2006, is entered into by and among CIRTRAN
CORP., a Nevada corporation with its principal office located at 0000 X. 0000
Xxxx, Xxxx Xxxxxx Xxxx, XX 00000 (the "Company"), and the undersigned investors
(each, an "Investor" and collectively, the "Investors").
RECITALS:
---------
WHEREAS, in connection with the Securities Purchase Agreement by and
among the parties hereto of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Investors secured convertible debentures (the "Convertible Debentures") which
shall be convertible into that number of shares of the Company's common stock,
par value $0.001 per share (the "Common Stock"), pursuant to the terms of the
Securities Purchase Agreement for an aggregate purchase price of up to One
Million Five Hundred Thousand Dollars ($1,500,000);
WHEREAS, to induce the Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations there under, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws; and
WHEREAS, on or about December 30, 2005, the parties hereto entered into
a Securities Purchase Agreement (the "December 2005 SPA") and other related
agreements, documents and instruments, including without limitation the Investor
Registration Rights Agreement dated December 30, 2005. This Agreement shall
supersede the Investor Registration Rights Agreement dated December 30, 2005.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investors hereby agree as follows:
1. DEFINITIONS.
------------
Capitalized terms not defined herein shall have the meaning ascribed to
them in the Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
(b) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
(c) "Registrable Securities" means the shares of Common Stock issuable
to Investors upon conversion of the Convertible Debentures pursuant to the
Securities Purchase Agreement dated the date hereof as well as the Warrant
Shares as defined in the Securities Purchase Agreement.
(d) "Registration Statement" means a registration statement under the
1933 Act which covers the Registrable Securities.
2. REGISTRATION.
-------------
(a) Subject to the terms and conditions of this Agreement, the
Company shall prepare and file with the SEC, no later than October 15, 2006 (the
"Scheduled Filing Deadline"), a registration statement on Form S-1 or SB-2 (or,
if the Company is then eligible, on Form S-3) under the 1933 Act (the "Initial
Registration Statement") for the registration for the resale by all Investors
who purchased Convertible Debentures pursuant to the Securities Purchase
Agreement 206,900,000 shares of Common Stock to be issued upon conversion of the
Convertible Debentures issued pursuant to the Securities Purchase Agreement and
the Securities Purchase Agreement dated December 30, 2005, as well as fifteen
million (15,000,000) shares of Common Stock to be issued upon conversion of the
Warrant of even date herewith and ten million (10,000,000) shares of Common
Stock to be issued upon conversion of the Warrant dated December 30, 2005. The
Company shall cause the Initial Registration Statement to remain effective until
all of the Registrable Securities have been sold. Prior to the filing of the
Registration Statement with the SEC, the Company shall furnish a copy of the
Initial Registration Statement to the Investors for their review and comment.
The Investors shall furnish comments on the Initial Registration Statement to
the Company within twenty-four (24) hours of the receipt thereof from the
Company.
(b) Effectiveness of the Initial Registration Statement. The
Company shall use its best efforts (i) to have the Initial Registration
Statement declared effective by the SEC no later than ninety (90) days after the
Scheduled Filing Deadline (the "Scheduled Effective Deadline"), and (ii) to
ensure that the Initial Registration Statement and any subsequent Registration
Statement remains in effect until all of the Registrable Securities have been
sold, subject to the terms and conditions of this Agreement. The Investors may
declare that an event of default has occurred hereunder if the Initial
Registration Statement is not filed by the Scheduled Filing Deadline or not
declared effective by the SEC within two hundred seventy (270) days after filing
thereof.
(c) Failure to File or Obtain Effectiveness of the Initial
Registration Statement.
(i) In the event the Initial Registration Statement is not
filed by the Scheduled Filing Deadline then as partial relief for the damages to
any holder of Registrable Securities by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
2
not be exclusive of any other remedies at law or in equity), the Company will
pay as liquidated damages to the holder, at the holder's option, either a cash
amount or shares of the Company's Common Stock within three (3) business day,
after demand therefore, equal to two percent (2%) of the liquidated value of the
Convertible Debentures outstanding as liquidated damages for each thirty (30)
day period after the Scheduled Filing Deadline during which the Initial
Registration Statement has not been filed.
(ii) In the event the Initial Registration Statements is
not declared effective by the SEC on or before the Scheduled Effective Date, or
if after the Initial Registration Statement has been declared effective by the
SEC, sales cannot be made pursuant to the Initial Registration Statement
(whether because of a failure to keep the Initial Registration Statement
effective, failure to disclose such information as is necessary for sales to be
made pursuant to the Initial Registration Statement, failure to register
sufficient shares of Common Stock or otherwise) then as partial relief for the
damages to any holder of Registrable Securities by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies at law or in equity), the
Company will pay as liquidated damages to the holder, at the holder's option,
either a cash amount or shares of the Company's Common Stock within three (3)
business day, after demand therefore, equal to (x) one percent (1%) of the
liquidated value of the Convertible Debentures outstanding as liquidated damages
for the period commencing one (1) day after the Scheduled Effective Date and
ending sixty (60) days thereafter, plus (y) two percent (2%) of the liquidated
value of the Convertible Debentures outstanding as Liquidated Damages for each
thirty (30) day period commencing sixty-one (61) days after the Scheduled
Effective Date during which the Initial Registration Statement has not been
declared effective by the SEC.
(iii) The liquidated damages payments described in
subsection (i) and (ii) above are hereinafter collectively referred to as the
"Liquidated Damages".
(d) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the Liquidated Damages shall constitute liquidated
damages and not penalties and are in addition to all other rights of the
Investor, including the right to call a default. The parties further acknowledge
that (i) the amount of loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (ii) the amounts specified in such subsections
bear a reasonable relationship to, and are not plainly or grossly
disproportionate to, the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of a
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal counsel and negotiated this Agreement at
arm's-length.
3. RELATED OBLIGATIONS.
--------------------
(a) The Company shall keep the Initial Registration Statement
effective pursuant to Rule 415 at all times until the date on which the Investor
shall have sold all the Registrable Securities covered by such Initial
Registration Statement (the "Registration Period"), which Initial Registration
Statement (including any amendments or supplements thereto and prospectuses
3
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.
(b) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the Initial
Registration Statement and the prospectus used in connection with such Initial
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such Initial
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Initial
Registration Statement. In the case of amendments and supplements to the Initial
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company's filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall
incorporate such report by reference into the Initial Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement the Initial Registration Statement.
(c) The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i) at
least one (1) copy of such Initial Registration Statement as declared effective
by the SEC and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, all exhibits and
each preliminary prospectus, (ii) ten (10) copies of the final prospectus
included in such Initial Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents as such Investor may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by such Investor.
(d) The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Initial Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as any Investor reasonably requests, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (w) make any change to its articles of incorporation or bylaws, (x)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify each
Investor who holds Registrable Securities of the receipt by the Company of any
4
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "Blue Sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
(e) As promptly as practicable after becoming aware of such event
or development, the Company shall notify each Investor in writing of the
happening of any event as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event shall such
notice contain any material, nonpublic information), and promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to each Investor. The Company shall also promptly notify each Investor
in writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when the Initial Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to each Investor by facsimile on the same day
of such effectiveness), (ii) of any request by the SEC for amendments or
supplements to the Initial Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to the Initial Registration Statement would be
appropriate.
(f) The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of the Initial
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction within the United States
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify each Investor
who holds Registrable Securities being sold of the issuance of such order and
the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.
(g) At the reasonable request of any Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of the Initial
Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company's independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Initial Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.
(h) The Company shall make available for inspection by (i) any
Investor and (ii) one (1) firm of accountants or other agents retained by the
Investors (collectively, the "Inspectors") all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree, and each Investor hereby agrees, to hold in
strict confidence and shall not make any disclosure (except to an Investor) or
use any Record or other information which the Company determines in good faith
to be confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct a
5
misstatement or omission in the Initial Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement of which the Inspector and the Investor has knowledge.
Each Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.
(i) The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in the Initial Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(j) The Company shall use its best efforts either to cause all the
Registrable Securities covered by the Initial Registration Statement (i) to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
(ii) the inclusion for quotation on the National Association of Securities
Dealers, Inc. Over-the-Counter Bulletin Board for such Registrable Securities.
The Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(j).
(k) The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to the Initial Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request.
(l) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Initial Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.
(m) The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
6
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 0000 Xxx) covering a twelve (12) month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Initial Registration Statement.
(n) The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
(o) Within two (2) business days after the Initial Registration
Statement which covers Registrable Securities is declared effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Initial Registration Statement has been
declared effective by the SEC in the form attached hereto as Exhibit A.
(p) The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to the Initial Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
-----------------------------
Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f) hereof or
the first sentence of Section 3(e) hereof, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Initial
Registration Statement(s) covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(e) hereof or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended certificates for shares of
Common Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor's receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) hereof or the first
sentence of Section 3(e) hereof and for which the Investor has not yet settled.
5. EXPENSES OF REGISTRATION.
-------------------------
All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 hereof, including, without
limitation, all registration, listing and qualifications fees, printers, legal
and accounting fees shall be paid by the Company.
6. INDEMNIFICATION.
----------------
With respect to Registrable Securities which are included in the
Initial Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
7
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in the
Initial Registration Statement or any post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other "Blue Sky" laws of any jurisdiction in which Registrable
Securities are offered ("Blue Sky Filing"), or the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) any untrue statement or alleged untrue
statement of a material fact contained in any final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation there under relating to the offer or sale of the
Registrable Securities pursuant to the Initial Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). The Company shall reimburse the Investors and each such
controlling person promptly as such expenses are incurred and are due and
payable, for any legal fees or disbursements or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) hereof: (x) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in connection with the
preparation of the Initial Registration Statement or any such amendment thereof
or supplement thereto; (y) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; and (z) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 hereof.
(b) In connection with the Initial Registration Statement, each
Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a) hereof, the Company, each of its directors, each of its officers,
employees, representatives, or agents and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each an "Indemnified
8
Party"), against any Claim or Indemnified Damages to which any of them may
become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or is 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 to the
Company by such Investor expressly for use in connection with such The Initial
Registration Statement; and, subject to Section 6(d) hereof, such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) hereof for only that amount of a Claim or Indemnified Damages
as does not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Initial Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9 hereof.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such new
prospectus was delivered to each Investor prior to such Investor's use of the
prospectus to which the Claim relates.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
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 control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one (1) counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
9
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
(e) The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
-------------
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 hereof to the fullest extent permitted by law; provided,
however, that: (i) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
---------------------------
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any similar rule or regulation of the SEC
that may at any time permit the Investors to sell securities of the Company to
the public without registration ("Rule 144") the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents as are required by the applicable provisions of Rule 144; and
10
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 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 to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. AMENDMENT OF REGISTRATION RIGHTS.
---------------------------------
Provisions of this Agreement 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 Investors who then hold at least two-thirds (2/3) of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to fewer than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
10. MISCELLANEOUS.
--------------
(a) A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two (2) or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement 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 transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) 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:
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 not: Durham Xxxxx & Xxxxxxx
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
11
If to an Investor, to its address and facsimile number on the Schedule of
Investors attached hereto, with copies to such Investor's representatives as set
forth on the Schedule of Investors or to such other address and/or facsimile
number and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
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.
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) The laws of the State of Nevada shall govern all issues
concerning the relative rights of the Company and the Investors as 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 New Jersey, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New Jersey or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New Jersey. In the event that any party
hereto commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the District of New Jersey shall have the sole and exclusive jurisdiction over
any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the Superior Court Division of New Jersey,
Chancery Division of Xxxxxx County shall have sole and exclusive jurisdiction.
Any of these courts shall be proper venue for any such lawsuit or judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the jurisdiction of any of the courts
specified herein and agree to accept the service of process to vest personal
jurisdiction over them in any of these courts. 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. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
12
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(e) This Agreement, the Irrevocable Transfer Agent Instructions,
the Securities Purchase Agreement and related documents including the
Convertible Debenture and the Escrow Agreement dated the date hereof by and
among the Company, the Investors set forth on the Schedule of Investors attached
hereto, and Xxxxx Xxxxxxxx, Esq. (the "Escrow Agreement") and the Security
Agreement dated the date hereof (the "Security Agreement") constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the
Irrevocable Transfer Agent Instructions, the Securities Purchase Agreement and
related documents including the Convertible Debenture, the Escrow Agreement and
the Security Agreement supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
(f) This Agreement shall inure to the benefit of and be binding
upon the permitted successors and assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent and no rules of strict construction
will be applied against any party.
(j) This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
IN WITNESS WHEREOF, the parties have caused this Investor Registration
Rights Agreement to be duly executed as of day and year first above written.
COMPANY:
CIRTRAN CORP.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President & CEO
14
SCHEDULE I
----------
SCHEDULE OF INVESTORS
Address/Facsimile
Name Signature Number of Investors
--------------- ------------------------- ------------------------------
Cornell Capital By: Yorkville Advisors, 000 Xxxxxx Xxxxxx - Xxxxx 0000
Partners, LP LLC Xxxxxx Xxxx, XX 00000
Its: General Partner Facsimile: (000) 000-0000
By: /s/ Xxxx Xxxxxx
----------------------
Name: Xxxx Xxxxxx
Title: President and
Portfolio Manager
With a copy to: Xxxxx Xxxxxxxx, Esq. 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
15
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
-------------------------
Attention:
Re: CIRTRAN CORP.
-------------
Ladies and Gentlemen:
We are counsel to CirTran Corp., a Nevada corporation (the "Company"),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the "Securities Purchase Agreement") entered into by and
among the Company and the investors named therein (collectively, the
"Investors") pursuant to which the Company issued to the Investors shares of its
Common Stock, par value $0.001 per share (the "Common Stock"). Pursuant to the
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Investors (the "Investor Registration Rights Agreement")
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "1933 Act"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
____, the Company filed a Registration Statement on Form ________ (File No.
333-_____________) (the "Registration Statement") with the United States
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Investors as a selling stockholder there
under.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
By:_____________________________
cc: [LIST NAMES OF INVESTORS]
16
--------------------------------------------------------------------------------
