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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): April 16, 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
Item 3.02 Unregistered Sales of Equity Securities
Item 8.01 Other Events
CirTran Corporation (the "Company"), an international full-service
contract manufacturer of IT, consumer products, and consumer electronics
products, has formed a new wholly owned marketing-driven subsidiary, CirTran
Online Corporation ("COC"), to sell the Company's products via eBay(R) sellers,
to offer training and other services to those sellers, and to telemarket
directly to previous buyers of its products.
The Company also signed a three-year Assignment and Exclusive Services
Agreement (the "GMA Agreement") for COC with Global Marketing Alliance, LLC
("GMA"), founded by Mr. Sov Ouk, and its affiliate companies, Online Profit
Academy, LLC, and Online 2 Income, LLC. Based in the Salt Lake area, the
companies offer a wide range of services to eBay sellers. In connection with the
GMA Agreement, the Company also signed a three-year Employment Agreement (the
"Employment Agreement") with Mr. Ouk to serve a Senior Vice President of the new
subsidiary.
The GMA Agreement
The GMA Agreement was signed and entered into by and among the Company
and COC, on the one hand, and Global Marketing Alliance, LLC, a Utah limited
liability company; Online Profit Academy, LLC, a Utah limited liability company
("OP"); eProfits Marketing, LLC, a Utah limited liability company ("EP"); and
Online 2 Income, LLC, a Utah limited liability company ("OL," and collectively
referred together with GM, OP, and EP, as "GMA") and Sovatphone Ouk ("Ouk" or
collectively with GMA, "GMA-Ouk"), on the other hand. The Agreement was signed
on April 16, 2007, to be effective as of January 1, 2007.
In connection with the GMA Agreement, the Company desired to outsource
to GMA the online marketing and sales of all of the COC Products listed in the
GMA Agreement (referred to as the "Outsourced Operations"), and GMA agreed to
perform the Outsourced Operations. At the time of the execution of the GMA
Agreement, COC tendered a one time non-recoupable payment to GMA in the amount
of Five Thousand Dollars ($5,000) in full consideration of the following:
(a) a revocable, worldwide license to use the name "Global
Marketing" whereby both COC and GMA will have rights to use
the name "Global Marketing" during the term of the GMA
Agreement. COC's license to use "Global Marketing" shall
automatically terminate upon termination or breach of this
Agreement;
(b) GMA's commitment obtained herein to perform the Outsourced
Operations and all reasonable expansions of the Outsourced
Operations with respect to future COC Products; and
(c) GMA assigning its Current GMA Contracts, as listed in the GMA
Agreement, to COC as of the Effective Date.
2
Under the GMA Agreement, the term "GMA Net Sales" means all revenue
generated from the Current GMA Contracts and any New GMA Contracts that are
assumed or accepted by COC pursuant to the GMA Agreement, less returns and
charge backs, and "COC Net Sales" means all revenue generated to COC from the
online sale of COC Products, less returns and charge backs. Under the GMA
Agreement, COC agreed (i) to remit 95% of GMA Net Sales to GMA and retain the
remaining 5% of GMA Net Sales, and (ii) to retain 95% of COC Net Sales, and
remit the remaining 5% of COC Net Sales to GMA at reasonable intervals mutually
agreeable to both COC and GMA. Additionally, under the GMA Agreement, GMA will
be responsible to pay for all of its direct overhead, labor and expenses to
operate its business from its share of GMA Net Sales or COC Net Sales payable as
set forth in the GMA Agreement.
Also in connection with the GMA Agreement and unless waived in writing
by COC, as a condition to the effectiveness of the GMA Agreement, Mr. Ouk needs
to remain affiliated with GMA and remain involved with GMA business operations.
Moreover, COC agreed to employ Mr. Ouk as its Senior Vice President, whereby he
shall be directly responsible for the online marketing and sales of the COC
Products, as set forth in and subject to the terms and conditions of his
Employment Agreement, as discussed below.
The initial term of the GMA Agreement is for three years. The parties
also agreed that the GMA Agreement would renew for successive terms of two years
each unless, at least 30 days prior to the end of the initial term or the
then-current renewal term, either party notifies the other of its intent to not
renew.
This description of the GMA Agreement is qualified in its entirety by
reference to the GMA Agreement, attached to this Current Report as Exhibit 99.1
below. Any discrepancies between this description and the GMA Agreement should
be resolved in favor of the GMA Agreement itself.
Employment Agreement
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In connection with the GMA Agreement, COC entered into the Employment
Agreement with Mr. Ouk, hiring Mr. Ouk as COC's Senior Vice President directly
responsible for the online and web sales and marketing division of COC to
perform those duties reasonably delegated by the Board of Directors of COC (the
"Board") and all other reasonable duties consistent with such description. Mr.
Ouk agreed to perform his obligations to COC pursuant to the Employment
Agreement under the direction of COC; provided, however, that COC acknowledged
that Mr. Ouk is also the CEO of Global Marketing Alliance, LLC and its group of
companies ("GMA"), which is providing services to COC and generating and
distributing to COC certain of GMA's revenues pursuant to the GMA Agreement, and
Mr. Ouk agreed to allocate his time between the Company and GMA as determined in
his sole reasonable discretion.
The Employment Agreement, which was executed on April 16, 2007, was
effective as of January 1, 2007, and runs through December 31, 2009, unless
sooner terminated as provided in the Employment Agreement. The Employment
Agreement will renew for successive terms of two (2) years each unless, at least
30 days prior to the end of the current term, any party notifies the other party
of the intent not to renew.
3
As compensation under the Employment Agreement, COC agreed to the
following:
(i) COC agreed to cause CirTran Corporation to issue to Mr. Ouk
options (the "Options") to purchase a total of 3,000,000
shares of CirTran's common stock. The Options will be issued
pursuant to a new CirTran Stock Plan, will be exercisable at
$0.02 per share, and will expire five years after the date of
grant. COC agreed that the Options will vest 100% on the date
of grant, which shall be the date of the Employment Agreement.
(ii) During the first week of each year beginning in 2008, Mr. Ouk
will be granted additional options to purchase 3,000,000
shares of CirTran's common stock, as adjusted for subsequent
stock splits and recapitalizations, with an exercise price
equal to the fair market value of CirTran's common stock on
the date of grant, and with terms determined in accordance
with CirTran's Stock Option Plan by CirTtran's board of
directors or the committee established pursuant to CirTran's
Stock Option Plan.
(iii) Mr. Ouk will receive 5% of the gross margin actually received
by COC or CirTran from New Business, net of discounts and
returns, as applicable (the "New Business Payments"). For
purposes of the Employment Agreement, "New Business" means new
business opportunities generated for COC or CirTran through
the efforts or contacts of Mr. Ouk, such as product
manufacturing agreements, product endorsement agreements and
other opportunities agreed to by COC in writing. If Mr. Ouk
has so requested in his notice of potential New Business, and
subject to compliance with applicable securities laws, COC
agreed to cause CirTran to provide up to 50% of the New
Business Payments due to Mr. Ouk under the Employment
Agreement to be payable in the form of restricted common stock
of CirTran valued at the trading price of CirTran's common
stock on its principal market.
Under the Employment Agreement, Mr. Ouk covenanted and agreed that, for
a period of two years after the Employment Agreement is terminated, he will not,
directly or indirectly,
(i) solicit, induce or hire away, or assist any third party in
soliciting, diverting or hiring away, any employee of COC,
whether or not the employee's employment is pursuant to a
written agreement and whether or not such employment is for a
specified term or is at will, or
(ii) induce or attempt to induce any customer, supplier, dealer,
lender, licensee, consultant or other business relation of COC
to cease doing business with COC; provided, however, that this
provision does not apply to customers of contracts assigned to
COC under the GMA Agreement following the termination or
expiration of the GMA Agreement.
4
This description of the Employment Agreement is qualified in its
entirety by reference to the Employment Agreement, attached to this Current
Report as Exhibit 99.2 below. Any discrepancies between this description and the
Employment Agreement should be resolved in favor of the Employment Agreement
itself.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Assignment and Exclusive Services Agreement, executed
April 16, 2007.
99.2 Employment Agreement, executed April 16, 2007.
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: April 20, 2007 By: /s/ Iehab Hawatmeh
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Iehab J. Hawatmeh, President
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