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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 15, 2007
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CirTran Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Nevada
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(State of Other Jurisdiction of Incorporation)
0-26059 68-0121636
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(Commission File Number) (IRS Employer Identification No.)
4125 South 6000 West, West Valley City, Utah 84128
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(Address of Principal Executive Offices) (Zip Code)
801-963-5112
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Item 1.01 Entry into a Material Definitive Agreement
Amended and Restated Exclusive Manufacturing, Marketing and
Distribution Agreement
On August 21, 2007, CirTran Beverage Corp., a Utah corporation ("CBC"),
entered into an Amended and Restated Exclusive Manufacturing, Marketing, and
Distribution Agreement (the "PlayBev Agreement") with Play Beverages, LLC, a
Delaware limited liability company ("PlayBev"). The PlayBev Agreement amends and
restates an earlier version of the Agreement dated May 25, 2007.
By way of background, PlayBev is engaged in the business of marketing
and distributing beverages, including energy drinks and flavored water
beverages, and related merchandise with the Playboy and rabbit head logo (the
"Products") pursuant to a license agreement ("License Agreement") from Playboy
Enterprises, Inc. ("Playboy"). CBC was formed by CirTran to arrange for the
manufacture, marketing and distribution of the Products through various
distribution channels, including traditional retail channels as well as
catalogs, internet, live shopping and other channels.
Pursuant to the PlayBev Agreement, PlayBev granted to CBC the exclusive
rights during the term of the Agreement to manufacture, market, distribute and
sell the Products through all distribution channels in the territory as defined
in the agreement (the "Territory"). CBC will be the exclusive manufacturer of
all the Products for PlayBev to be sold in the Territory. The initial Products
under the PlayBev Agreement will consist of an energy drink and flavored or
unflavored water beverage (the "Initial Products"). Additionally under the
PlayBev Agreement, CBC shall be the exclusive master distributor for PlayBev for
all Products to be sold in the Territory. The Territory is defined in the
PlayBev Agreement as Australia, Benelux, Brazil, Canada, Chile, China, Denmark,
France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Korea,
Lebanon, Mexico, New Zealand, Norway, Peru, Philippines, Portugal, Russia, South
Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, United Arab Emirates,
United Kingdom, and the United States and the United States' territories and
possessions: provided, however, that only products bearing the RABBIT HEAD
DESIGN Trademarks may be advertised, promoted, sold, and/or distributed in Chile
and Japan. Under the PlayBev Agreement, PlayBev agreed promptly to notify CBC of
any changes in the Territory.
For its manufacturing services rendered under the PlayBev Agreement,
CBC shall receive from PlayBev an amount equal to 20% of the cost of goods sold
("COGS"), as defined in the PlayBev Agreement, for the Products sold. For its
distribution services rendered under the PlayBev Agreement, CBC shall receive
from PlayBev 6% of the gross sales ("Gross Sales"), as defined in the PlayBev
Agreement, of all Products in the United States. Additionally, pursuant to a
separate agreement (the "ASM Agreement," discussed below) with American Sales &
Merchandising, LLC ("ASM"), CBC agreed to pay 2/3 of such 6%, or 4% of gross
sales to ASM. Pursuant to the PlayBev Agreement, CBC and PlayBev anticipated
that ASM would utilize outside commissioned sales representatives, brokers, or
sales contractors for customers throughout the territory covered by the
Agreement. CBC and PlayBev agreed that commissions owing to these outside sales
representatives, up to 3% of gross sales, would be received by CBC from PlayBev
for payment to the sales force directly or through ASM.
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Additionally, CBC agreed that during the term of the PlayBev Agreement
it would keep books, accounts, and records of relevant transactions related to
the PlayBev Agreement, and that PlayBev or its authorized representatives would
have the right to inspect and audit such records.
The initial term of the PlayBev Agreement is ten years and runs through
December 31, 2017, and the agreement provides for automatic renewal for up to
two renewal terms of three years each unless PlayBev notifies CBC or CBC
notifies PlayBev in writing of its intent not to renew at least three, but not
more than 12, months prior to the termination of the initial term or the
then-current renewal term.
During the term of the PlayBev Agreement, both parties agreed that they
will not sell or distribute in the United States the Product or any products
that are confusingly or substantially similar or directly competitive to the
Product other than as set forth in the PlayBev Agreement.
The foregoing summary of the terms and conditions of the PlayBev
Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the Amended and Restated PlayBev Agreement
attached as an exhibit hereto, and which is hereby incorporated herein by
reference.
Exclusive Sales Distribution/Representative Agreement
On August 23, 2007, CBC entered into an Exclusive Sales
Distribution/Representative Agreement (the "ASM Agreement") with ASM, a Delaware
limited liability company.
Under the ASM Agreement, CBC appointed ASM as its exclusive primary
agent for sales of products (the "Products") covered by the ASM Agreement in the
territories listed and defined under the PlayBev Agreement. ASM will provide
distribution services, promote the sales of the Products, solicit orders at
prices and on terms fixed by CBC, and provide quarterly budget figures for the
accounts serviced by ASM. Pursuant to the ASM Agreement, CBC agreed to supply
ASM with sales and promotional materials, accept or reject orders forwarded by
ASM within 10 days, set sales prices, deliver no fewer than 90% of confirmed
orders, pay sales commissions, and reimburse ASM for certain expenses.
Under the ASM Agreement CBC agreed to pay ASM commissions equal to 4%
of the amounts received by CBC, net of cash discounts, chargebacks, and returns
(the "Commissionable Receipts"). Additionally, for Commissionable Receipts
received by CBC for products sold to the accounts serviced by an ASM-designated
representative, CBC agreed to pay the to the representative an amount equal to
the commissions payable to the representatives, but not more than three percent
(3%) of the Commissionable Receipts that are attributed to such representative
through the 2007 selling season and thereafter. CBC agreed to provide commission
statements to ASM not later than the 25th of every month, showing Commissionable
Receipts received by CBC in the prior month. Moreover, CBC agreed to remit
commissions due to ASM on a monthly basis, in arrears, each month following a
month in which there is a Commissionable Receipt, and that all late commission
payments would bear interest at a rate of 10% per annum.
The foregoing summary of the terms and conditions of the ASM Agreement
does not purport to be complete and is qualified in its entirety by reference to
the full text of the ASM Agreement attached as an exhibit hereto, and which is
hereby incorporated herein by reference.
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Settlement Agreement
On August 15, 2007, CirTran Corporation, a Nevada corporation
("CirTran"), entered into an agreement (the "Settlement Agreement") with Trevor
M. Saliba, a former director of CirTran.
Under the Settlement Agreement, Mr. Saliba acknowledged that his
employment and any positions he held with CirTran or any of its subsidiaries
were terminated as of June 14, 2007 (the "Separation Date"), and that any
post-termination benefits or compensation would be limited to what was contained
in the Settlement Agreement. Mr. Saliba agreed to forfeit vested stock options
to purchase 4,000,000 shares of CirTran common stock.
Under the Settlement Agreement, CirTran agreed to pay to Mr. Saliba his
base salary for 12 months following the Separation Date (net of certain amounts
owed by Mr. Saliba to CirTran), and to pay $5,056.89, an amount equal to the
quarterly bonus to which Mr. Saliba would have been entitled to receive pursuant
to his employment agreement. Additionally, CirTran agreed to issue 4,000,000
restricted shares of its common stock, with 1,000,000 shares to be issued (i)
upon the execution of the Settlement Agreement; (ii) during the first week of
October 2007; (iii) during the first week of December 2007; and (iv) during the
first week of February 2008. CirTran also agreed to pay certain amounts to Mr.
Saliba in connection with After Bev Group, LLC, transactions, an allowance of up
to $500 per month for 12 months to cover insurance premium payments, and
$4,965,15 representing certain unpaid salary and reimbursable expenses.
The foregoing summary of the terms and conditions of the Settlement Agreement
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Settlement Agreement attached as an exhibit hereto, and
which is hereby incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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99.1 Amended and Restated Exclusive Manufacturing,
Marketing, and Distribution Agreement, dated as of
August 21, 2007.
99.2 Exclusive Sales Distribution / Representative
Agreement, dated as of August 23, 2007.
99.3 Settlement Agreement between CirTran Corporation and
Trevor M. Saliba
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CirTran Corporation
Date: September 21, 2007 By: /s/ Iehab Hawatmeh
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Iehab J. Hawatmeh, President
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