MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THE PARTIES
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT ("Agreement") is entered
into as of the 31st day of July 2002, by and between on the one hand CirTran
Corporation, a Nevada corporation, and its predecessor in interest Circuit
Technology, Inc. (collectively, "CirTran"), and on the other hand
OsicomTechnologies, Inc., a Delaware corporation ("Osicom DE"), Entrada
Networks, Inc., a Delaware corporation ("Entrada DE"), and Entrada Networks,
A.J., Inc. ("Entrada AJ") (collectively, Osicom DE, Entrada DE, and Entrada AJ
will be referred to as the "Entrada Parties"). CirTran and the Entrada Parties
are sometimes referred to collectively as the "Parties."
RECITALS
1. On or about January 19, 2001, CirTran filed a civil action against
Osicom Technologies, Inc., a New Jersey corporation ("Osicom NJ") and Entrada
DE. That case was subsequently removed to the United States District Court for
the Central District of Utah, and assigned Civil No. 2:01CV142B (the "Federal
case"). Entrada AJ asserted a Counterclaim against CirTran in the Federal case.
2. On or about January 4, 2001, Orbit Systems, Inc. ("Orbit") filed a
civil action against CirTran in the Third Judicial District Court, Salt Lake
County, West Valley Department, State of Utah, assigned Civil No. 010100050 (the
"State case"). In the State case, Orbit seeks to recover the purchase price of
$173,310, plus interest, costs, attorneys' fees, and other damages, from CirTran
for the following electronic components that Orbit alleges CirTran is bound by
contract to purchase:
CirTran Part No. Orbit Part No. Quantity
120534-1 OM304252-00 25,000
293D106X9016B2T OM962-1005-130 164,000
293D475X9010A2T OM962-4704-040 96,000
These parts are collectively referred to as the "Orbit parts."
3. In February 2001, CirTran filed a Third-Party Complaint against
Osicom NJ and Entrada DE in the State case, alleging that Osicom NJ and Entrada
DE are liable to indemnify and reimburse CirTran for any liability that might be
imposed against CirTran in the State case. Entrada AJ indicated its intent to
assert a Counterclaim against CirTran in the State case, if the case was not
dismissed or stayed on the grounds that CirTran's Third Party Claims were
substantively identical to those asserted by CirTran in the Federal case.
4. Collectively, the claims asserted between the Parties in the Federal
and State case shall be referred to as the "Claims."
5. The Parties now desire to enter into a full and final settlement of
the Claims arising from, or in any way relating to, the Claims asserted between
them in the Federal and State cases, as more particularly set forth herein.
TERMS
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises and covenants set forth herein, it is hereby AGREED AS FOLLOWS:
1. Payment. Entrada AJ has agreed to make a series of payments to
CirTran in the total amount of $265,000, by a series of six payments as follows:
a. Payment # 1: $50,000 to be received no later than August 1, 2002.
b. Payment # 2: $50, 000 to be received no later than August 15,
2002 .
c. Payment # 3: $45,000 to be received no later than September 5,
2002.
d. Payment # 4: $40,000 to be received no later than September 26,
2002.
e. Payment # 5: $40,000 to be received no later than October 14,
2002.
f. Payment # 6: $40,000 to be received no later than October 29,
2002.
g. Payment #2 will be made to Entrada AJ's attorneys, Xxxxxxx Xxxxx
Xxxxxxx & Xxxxxxxxx, LLP ("Xxxxxxx Xxxxx"), to hold for the
benefit of CirTran. Upon written notice from Xxxxxxx Xxxxx to
CirTran's attorneys Durham Xxxxx & Xxxxxxx ("Xxxxxx Xxxxx") that
Payment #2 has been received by Xxxxxxx Xxxxx, Durham Xxxxx will
notify CirTran that Payment # 2 has been received and CirTran
will immediately ship to Entrada AJ at its own expense the unused
materials identified in paragraph 2, subject to the terms in
paragraphs 2-5, below. Upon delivery of written notice that the
parts have been shipped, Xxxxxxx Xxxxx will release Payment #2 to
Durham Xxxxx, at the wire address provided below. All other
payments will be made directly from Entrada AJ to the wire
address provided below.
h. All payments except Payment #2 will be by wire transfer to
CirTran care of Durham Xxxxx & Xxxxxxx, KeyBank National
Association, Account No.: 4450-1000-1292, ABA No.: 000000000,
Name of Account: Durham Xxxxx & Xxxxxxx Trust Account, Attn:
CirTran/Entrada Settlement.
2. Purchase of Product by Entrada AJ. The payments by Entrada AJ to
CirTran are, in part, for the purchase of certain products from CirTran. Entrada
AJ's payments will first be applied as the purchase price for products, in the
order listed, on the following terms:
a. $30,237 in unused materials formerly designated as for 404
PCBs, at the prices and quantities shown below, as agreed by the
parties pursuant to the inspection conducted on Monday, July 22, 2002,
and the Inspection Acknowledgement as initialed by the Authorized
Representative of both parties, which Inspection Acknowledgement is
incorporated into this agreement by reference:
Counterclaim CTC Total
QOH CTC Cost Value
OM402404-01
000-0000-000 21216 $ 0.0036 $ 76.38
312019-00 4490 $ 3.2545 $ 14,612.71
000-0000-000 412 $ 0.1265 52.12
000-0000-00 86 $ 3.7720 $ 324.39
000-0000-00 1970 $ 0.5000 $ 985.00
302353-00 267 $ 1.2995 $ 346.97
000-0000-000 151 $ 21.5000 $ 3,246.50
000-0000-000 535 $ 0.0048 $ 2.57
000-0000-000 1010 $ 0.0048 $ 4.85
000-0000-000 430 $ 0.0032 $ 1.38
302354-00 1064 $ 0.4255 $ 452.73
000-0000-000 670 $ 0.0032 $ 2.14
000-0000-000 5000 $ 0.0058 $ 29.00
000-0000-000 1254 $ 0.0153 $ 19.19
000-0000-000 23782 $ 0.4255 $ 10,119.24
================
$ 30,275.15
b. $127,773 in unused materials formerly designated as for 701
PCBs, at the prices and quantities shown below, as agreed by the
parties pursuant to the inspection conducted on Monday, July 22, 2002,
and the Inspection Acknowledgement as initialed by the Authorized
Representative of both parties, which Inspection Acknowledgement is
incorporated into this agreement by reference
TC CTC Total
OM905-7701-01TC QOH CTC Cost Value
------------------------
000-0000-00 658
1.7683 $ 1,163.54
000-0000-00 4309 0.5643 $ 2,431.57
302366-00 5457 2.1500 $ 11,732.55
304252-00 2050 2.4700 $ 5,063.50
304259-00 7467 0.2059 $ 1,537.46
315024-00 68963 0.1035 $ 7,137.67
330036-00 15181 0.0097 $ 147.26
330275-00 395 3.4380 $ 1,358.01
000-0000-00 239 6.7000 $ 1,601.30
000-0000-000 5988 0.0058 $ 34.73
000-0000-00 1421 11.6533 $ 16,559.34
000-0000-00 11718 0.0059 $ 69.14
000-0000-000 72674 0.0276 $ 2,005.80
000-0000-000 1391 0.7475 $ 1,039.77
000-0000-000 139228 0.0216 $ 3,007.32
000-0000-000 300884 0.0152 $ 4,573.44
000-0000-000 19650 0.0466 $ 915.69
000-0000-000 27448 0.0177 $ 485.83
000-0000-000 17210 0.5900 $ 10,153.90
000-0000-000 6793 0.5500 $ 3,736.15
000-0000-000 4755 0.3900 $ 1,854.45
000-0000-000 1545 1.6600 $ 2,564.70
000-0000-000 3718 0.1900 $ 706.42
000-0000-000 6649 0.2246 $ 1,493.37
000-0000-000 3810 0.5309 $ 2,022.73
000-0000-000 1408 24.5000 $ 34,496.00
000-0000-000 13206 0.0049 $ 64.71
000-0000-000 28454 0.0048 $ 136.58
000-0000-000 13548 0.0158 $ 214.06
000-0000-000 10181 0.0049 $ 49.89
000-0000-000 82920 0.0034 $ 281.93
000-0000-000 135069 0.0037 $ 499.76
000-0000-000 32375 0.0033 $ 106.84
000-0000-000 28286 0.0038 $ 107.49
000-0000-000 31318 0.0036 $ 112.74
000-0000-000 28291 0.0037 $ 104.68
000-0000-000 64442 0.0036 $ 231.99
000-0000-000 38896 0.0036 $ 140.03
000-0000-000 21455 0.0038 $ 81.53
000-0000-000 35080 0.0031 $ 108.75
000-0000-000 64320 0.0562 $ 3,614.78
000-0000-000 1277 1.9726 $ 2,519.01
000-0000-000 4758 0.0153 $ 72.80
000-0000-000 16586 0.0153 $ 253.77
000-0000-000 77788 0.0153 $ 1,190.16
$127,783.10
c. All purchases were subject to inspection and acceptance by
Entrada AJ, and Entrada AJ had the right to reject any materials which
were not in their original packaging.
3. Payment of CirTran Accounts Receivable. CirTran contends that
Entrada AJ has due and owing as accounts receivable the sum of approximately
$274,000. Entrada AJ denies owing this accounts receivable. The payments by
Entrada AJ to CirTran are, in part, for the settlement of the accounts
receivable dispute. After the payments discussed in the preceding paragraphs are
applied as stated in those paragraphs, the Parties agree that Entrada AJ's
payments will be applied in the amount of $22,490 as payment in full for all
accounts receivable.
4. Payment of CirTran RMA. CirTran contends that it is owed $19,500 for
unpaid Return Material Authorizations ("RMAs"). After the payments discussed in
the preceding paragraphs are applied as stated in those paragraphs, Entrada AJ's
payments will be applied in the amount of $19,500 as payment in full for all
RMAs.
5. Final Payment by Entrada AJ. After the payments discussed in the
preceding paragraphs are applied as stated in those paragraphs, Entrada AJ's
payments will be applied in the amount of $65,000 as additional consideration
for the mutual release and settlement of the Claims. By accepting this amount in
compromise of the Claims referred to herein, CirTran is allowing Entrada AJ a
discount of $406,000 because of the defects found and discovered by Entrada AJ
in regards to the missing trace in the raw printed circuit boards.
6. Shipment of the Parts Formerly Designated as for 404 and 701 PCBs.
Prior to the execution of this Agreement, a representative of Entrada AJ has
visited CirTran's facility in Salt Lake City, Utah, on July 22, 2002, and
inspected all of the remaining parts formerly designated as for 404 and 701 PCBs
that the subject of this Agreement. During this inspection, Entrada AJ
identified those products it would purchase under this agreement, and supervised
CirTran's preparation of the products for shipment, and the number of 404 and
701 PCBs purchased are indicated in the "Inspection Acknowledgement" referenced
in Paragraph 2 above.
7. Entrada AJ to Issue Purchase Order to CirTran for Orbit Parts. As
further consideration for the covenants and promises memorialized in this
Agreement, Entrada AJ agrees that upon execution of this Agreement, it will
issue a Purchase Order to CirTran in the form attached as Exhibit "A," by which
it will purchase up to $125,000 (the "Total Price Limit") worth of the following
parts, at the following price(s):
CirTran Part No. Orbit Part No. Quantity Entrada AJ P.O.Price Total
---------------------------- ---------------------- --------------------- ---------------------------- ---------------
120534-1 OM304252-00 25,000 or more, up 25,000 @ $2.35 $ 58,750.00
to the Total Price
Limit
---------------------------- ---------------------- --------------------- ---------------------------- ---------------
293D106X9016B2T OM962-1005-130 164,000 or more, up 164,000 @ $0.215 $ 35,260.00
to the Total Price
Limit
---------------------------- ---------------------- --------------------- ---------------------------- ---------------
293D475X9010A2T OM962-4704-040 96,000 or more, up 96,000 @ $0.322 $ 30,990.00
to the Total Price
Limit
---------------------------- ---------------------- --------------------- ---------------------------- ---------------
$125,000.00
---------------------------- ---------------------- --------------------- ---------------------------- ---------------
Notwithstanding anything in the Purchase Order to the contrary, the
Parties agree that the Purchase Order will be non-cancelable so long as the
Orbit parts are able to be delivered within 90 days after the last payment in
Paragraph (1). Notwithstanding anything in the Purchase Order to the contrary,
the Parties also agree that the Purchase Order will be assignable to Orbit upon
the written consent of Entrada AJ, which consent will not be unreasonably
withheld. CirTran will deliver the Orbit parts within ninety days after the last
payment referenced in Paragraph 1 (and not before the final payment) and Entrada
AJ will pay the Purchase Order pursuant to its standard terms and conditions, by
wire transfer to the trust account identified in Paragraph 1(g), within 30 days
after shipment. The parties understand and agree that Entrada AJ's promise to
issue the Purchase Order and purchase the parts pursuant to that Purchase Order
is done separate and independent of CirTran's ability to negotiate release of
the claims asserted against CirTran by Orbit in the State case. CirTran shall
bear all risks associated with the claims against CirTran in the State case, and
agrees it will have no right to seek indemnification, contribution, or any other
remedy from any of the Entrada Parties or other parties released in this
Agreement as a result of any claims by Orbit in the State case.
8. Dismissal:
a. Federal case. Upon execution of this Agreement, counsel for
each of the Parties shall sign and deliver to counsel for CirTran a
signed original Stipulation for Dismissal With Prejudice and an
original Order of Dismissal With Prejudice in the Federal case, in the
form attached hereto as Exhibit "B." CirTran shall cause the signed
Stipulation of Dismissal With Prejudice and the Order of Dismissal With
Prejudice to be filed with the Court in the Federal case immediately
upon the last of the three payments specified in paragraph 1. The
Parties shall then cooperate and take all steps reasonably necessary to
secure the entry of the Order of Dismissal in the Federal case.
b. State case. Upon execution of this Agreement, counsel for each
of the Parties shall sign and deliver to counsel for CirTran a signed
original Stipulation for Dismissal of Third Party Claims With Prejudice
and an original Order of Dismissal of Third Party Claims With Prejudice
in the State case, in the form attached hereto as Exhibit "C." CirTran
shall cause the signed Stipulation of Dismissal of Third Party Claims
With Prejudice and the Order of Dismissal of Third Party Claims With
Prejudice to be filed with the Court in the State case immediately upon
the last of the three payments specified in paragraph 1. The Parties
shall then cooperate and take all steps reasonably necessary to secure
the entry of the Order of Dismissal of Third Party Claims in the State
case.
9. CirTran's Release. CirTran shall and does hereby acknowledge full
and complete satisfaction of, and does hereby release, discharge and acquit the
Entrada Parties and anyone else, including any of the Entrada Parties' agents,
representatives, attorneys, heirs, successors, transferees, assignees and
employees, past and present, from any and all past, present, and future claims,
demands, damages, liabilities, actions and causes of action of every kind,
nature and description, asserted or unasserted, known or unknown, of whatever
nature, character or description, which have been or could be or could have been
brought against them relating to or in any way connected with the Claims or the
subject matter of the Claims. Any doubt as to the scope of this release is to be
resolved in favor of including any asserted claim within the subject matter
covered by this Agreement. CirTran also acknowledges that by this Agreement,
each party is to bear their own costs and attorney fees.
10. The Entrada Parties' Release. The Entrada Parties shall and do
hereby acknowledge full and complete satisfaction of, and do hereby release,
discharge and acquit the CirTran and anyone else, including any of CirTran's
agents, representatives, attorneys, heirs, successors, transferees, assignees
and employees, past and present, from any and all past, present, and future
claims, demands, damages, liabilities, actions and causes of action of every
kind, nature and description, asserted or unasserted, known or unknown, of
whatever nature, character or description, which have been or could be or could
have been brought against him relating to or in any way connected with the
Claims or the subject matter of the Claims. Any doubt as to the scope of this
release is to be resolved in favor of including any asserted claim within the
subject matter covered by this Agreement. The Entrada Parties also acknowledge
that by this Agreement, each party is to bear their own costs and attorney fees.
11. Release of Other Defendants and Other Parties. The Parties
acknowledge that there has been a dispute as to the proper Parties to the
CirTran claims in the Federal case and State case. The Entrada Parties are only
authorized to sign on behalf of themselves, and do not purport to have authority
to do so for those entities improperly named in the Federal case or the State
case. However, the Entrada Parties enter into this Agreement with the intent and
purpose that it includes a full and complete release of any and all claims
CirTran has or may have against any entity or entities named as defendants to
the claims brought by CirTran in the Federal case or in the State case,
including without limitation Osicom NJ and Sorrento Networks Corporation.
CirTran acknowledges that all such claims are included in, and subject to, the
Claims that are dismissed paragraph 8 of the Terms section of this Agreement.
12. No Other Claims. The Parties shall and do hereby acknowledge that
they are not aware of any claims or potential claims against the other, and that
regardless of such knowledge or lack thereof, the parties acknowledge they are
aware of no claims or potential claims which are not included in this Agreement.
13. Unknown or Undiscovered Information. Each of the Parties
acknowledge that they may hereafter discover facts different from or in addition
to those which they now know or believe to be true with respect to the Claims
and they each agree that this Agreement shall be and remain effective in all
respects notwithstanding such different or additional facts or the discovery
thereof.
14. Warranties and Representations. The following warranties and
representations are material to the Agreement and shall survive this Agreement:
a. Authority: The Parties each warrant and represent that they
have full authority to enter into this Agreement and to perform their
obligations under this Agreement.
b. Authenticity: The Parties each warrant and represent that all
signatures to this Agreement on their behalf and that all signatures to
be made on their behalf to documents to be provided or exchanged
pursuant to this Agreement are and will each be authentic and binding
upon them.
15. No Warranties or Representations. Each of the Parties acknowledge
that, except as expressly stated in this Agreement, no party (nor any of its
agents, employees, attorneys or representatives) has made any statement or
representation to any other party regarding any fact relied on by any other
party in entering into this Agreement. Each party specifically acknowledges that
he or she has not relied on any statement, representation or promise of any
other party, or of any of its agents, employees, attorneys, or representatives
in executing this Agreement, except as expressly set forth herein. In addition,
each of the Parties acknowledge that it is under no duress or undue influence
and that each executes this Agreement as an act of its own voluntary will.
16. Opportunity to Investigate. Each of the Parties acknowledge that
its attorneys have made such investigation of facts pertaining to this
Agreement, and all of the matters pertaining thereto, as it deems necessary.
17. Representations During Negotiation. In entering into this
Agreement, the Parties, and each of them, recognize that there may have been
statements made in the course of negotiations by the other parties hereto and/or
their counsel, or that there may have been incomplete disclosures or
nondisclosures of fact. The parties acknowledge that they are aware that they
may, after execution of this Agreement, discover facts which they did not
heretofore know, or which they thought not to have existed, or which they
believe to be true with respect to the Agreement Claims. Accordingly, each party
assumes the risk of any incomplete disclosure or mistake. If any party should
subsequently discover that any fact assumed or relied on in entering into this
Agreement did not exist, was mistaken or otherwise untrue, or that any
understanding of the facts or of the law was incorrect, such party shall not be
entitled to set aside this Agreement. This Agreement is intended to be final and
binding between the Parties.
18. No Admission. It is agreed that this mutual release and settlement,
and the information contained in this Agreement, is not to be construed as an
admission by or on behalf of any of the Parties of any wrongful acts or
liability whatsoever.
19. Integration. This Agreement is the complete agreement between the
Parties relating to the subject matter hereof, and there are no written or oral
understandings or agreements directly or indirectly connected with this
Agreement and settlement that are not incorporated herein. Any prior
negotiations, correspondence, or understandings relating to the subject matter
of the Claims and this Agreement shall be deemed to be merged into this
Agreement and shall be of no further force or effect. This Agreement may not be
amended or modified except in writing executed by each of the Parties.
20. Severability. In the event one or more of the provisions of this
Agreement, for any reason, should be held invalid, illegal or unenforceable, in
any respect, such invalidity, illegality or unenforceability shall not affect
any of the remaining provisions of this Agreement and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision(s) had never
been contained herein.
21. Construction and Interpretation. The Parties acknowledge that this
Agreement, and the documents to be executed and exchanged in accordance with
this Agreement, are the product of negotiations in which each party has been
represented by legal counsel of their own selection, or that each party had the
opportunity for such representation. The Parties therefore agree that the
Agreement and the documents to be executed and exchanged in accordance with this
Agreement are to be construed and interpreted fairly and reasonably in
accordance with their terms and not as against any party as the drafter thereof.
22. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
23. Enforcement. If any party shall seek to enforce or protect its
rights under this Agreement or under any document or instrument executed and
delivered in connection herewith in any action, suit, arbitration, case or other
proceeding, including all bankruptcy cases and proceedings, the prevailing party
shall be entitled to receive from the other party payment of its costs and
expenses, including expert witness fees and reasonable attorney fees incurred
(whether such costs or fees are incurred before or after the commencement of the
proceeding), including any and all appeals or petitions therefrom.
24. No Assignment of Claims. The Parties represent and warrant to each
other that they have not sold, assigned, conveyed or otherwise transferred,
prior to the execution of this Agreement, any interest, claim or demand which
they had, now have, or may claim to have against the other, which is addressed
by this Agreement, and that each of the signatories hereto has complete and
unrestricted authority to compromise and release all claims and potential claims
released by this Agreement.
25. Separate Execution. This Agreement may be executed in any number of
duplicate originals or counterparts, each of which when so executed shall
constitute in the aggregate but one and the same document. Copies or facsimiles
of signatures to this Agreement have the same effect as if the signatures were
placed on the originals and shall be deemed to be fully executed by each
signatory.
26. Confidentiality. The parties agree that neither the receipt nor the
amount of payment provided for in this Agreement, nor any other term contained
herein, shall be disclosed to any third party absent written consent from the
non-disclosing parties. Notwithstanding the foregoing, discloure may properly be
made absent prior written authorization where disclosure is made to any taxing
authorities, attorneys or accountants, or as required by order of court or
governmental and/or regulatory agencies. To each person or entity to whom a
permissible disclosure is made, excluding only the taxing authorities, said
person or entity shall be advised by the party making the disclosure of this
confidentiality provision and directed to maintain confidentiality in conformity
herewith.
[Remainder of this Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
dates indicated below.
ENTRADA PARTIES:
Dated: July ___, 2002. OSICOM TECHNOLOGIES, INC.
By:
------------------------------------
Its:
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Dated: July 31, 2002. ENTRADA NETWORKS, INC.
By:
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Its:
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Dated: July 31, 2002. ENTRADA NETWORKS, A.J., INC.
By:
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Its:
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CIRTRAN:
Dated: July 31, 2002. CIRTRAN CORPORATION
By:
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Its:
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Dated: July 31, 2002. CIRCUIT TECHNOLOGY, INC.
By:
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Its:
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