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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
CirTran Corporation
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(Name of Registrant as Specified in Charter)
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(Name of Person(s) Filing Proxy Statement If Other Than The Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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or Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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computed pursuant to Exchange Act Rule 0-11 (Set forth the
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[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form of Schedule and the date of its filing.
(1) Amount Previously Paid:
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(3) Filing Party:
(4) Date Filed:
CirTran Corporation
4125 South 6000 West
West Valley City, Utah 84128 (801) 963-5112
Annual Meeting of Stockholders
August 11, 2011
Dear Fellow Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders to
be held at 4125 South 6000 West, West Valley City, Utah, on Thursday, August 11,
2011, at 10:00 a.m., Mountain Daylight Time.
The business to be conducted at the Annual Meeting is explained in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. At
the Annual Meeting, we will also discuss our results for the past year.
This year, we will be using the new "Notice and Access" method of
providing proxy materials to you via the Internet. We believe that this new
process should provide you with a convenient and quick way to access your proxy
materials and vote your shares, while allowing us to conserve natural resources
and reduce the costs of printing and distributing the proxy materials. On or
about [______________], 2011, we will mail to many of our stockholders a Notice
of Internet Availability of Proxy Materials containing instructions on how to
access our proxy statement and the Form 10-K and vote electronically via the
Internet. The Notice also contains instructions on how to receive a paper copy
of your proxy materials.
You are requested to date, sign and return the enclosed proxy which is
solicited by the Board of Directors of the Company and will be voted as
indicated in the accompanying proxy statement and proxy. Your vote is important.
Please sign and date the enclosed Proxy and return it promptly in the enclosed
return envelope whether or not you expect to attend the meeting. The giving of
your proxy as requested hereby will not affect your right to vote in person
should you decide to attend the Annual Meeting. The return envelope requires no
postage if mailed in the United States. If mailed elsewhere, foreign postage
must be affixed. Your proxy is revocable at any time before the meeting.
Thank you for your continued support.
Sincerely,
Iehab Hawatmeh,
Chief Executive Officer and
Chairman of the Board of Directors
Salt Lake City, Utah _____________________, 2011
CirTran Corporation
4125 South 6000 West
West Valley City, Utah 84128
(801) 963-5112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, AUGUST 11, 2011
The 2011 Annual Meeting of Stockholders (the "Meeting") of CirTran Corporation
(the "Company") will be held at 4125 South 6000 West, West Valley City, Utah, on
Thursday, August 11, 2011, at 10:00 a.m., Mountain Daylight Time. The purposes
of the Meeting are:
1. Elect three directors to serve for one year each, until the next
Annual Meeting of Stockholders and until their successors are
elected and shall qualify;
2. Ratify the Board of Directors' selection of Hansen Barnett &
Maxwell, P.C. as the Independent Registered Public Accounting Firm
and Auditor of the Company for the year ending December 31, 2011;
3. To consider and act upon a proposed amendment to the Company's
Articles of Incorporation that increases the authorized capital of
the Company to include 4,500,000,000 shares of common stock;
4. To approve and adopt Amended and Restated Bylaws of the Company; and
5. To consider and act upon a proposal to adjourn the Annual Meeting,
if necessary or appropriate, to solicit additional Proxies; and
6. Transact such other business as may properly come before the meeting
or at any postponement or adjournment thereof.
Only CirTran stockholders of record at the close of business on June 22,
2011, have the right to receive notice of, and to vote at, the Meeting and
any adjournment thereof.
The items of business, including the nominees for director, are more fully
described in the Proxy Statement accompanying this Notice of Annual
Meeting.
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to be held on August 11, 2011:
The proxy statement and annual report to stockholders are available at
[HTTP://____________________.com].
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors,
Iehab Hawatmeh, Chief Executive Officer
and Chairman of the Board of Directors
Salt Lake City, Utah ___________________, 2011
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CIRTRAN CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
TABLE OF CONTENTS
Notice Of Annual Meeting Of Stockholders And Proxy Statement i
Questions And Answers About The Meeting 1
Proposal No. 1: Election Of Directors 5
Proposal No. 2: Ratification Of Selection Of Independent Registered
Public Accounting Firm And Auditor 6
Policy On Pre-Approval Of Audit And Permissible Non-Audit Services 7
Independence 7
Financial Statements And Reports 7
Principal Accountant Fees And Services 7
Proposal No. 3: To Approve A Proposed Amendment To The Company's
Articles Of Incorporation To Increase The Authorized Capital Of
The Company To Include 4,500,000,000 Shares Of Common Stock, Par
Value $.001 Per Share. 8
Proposal No. 4: To Approve and Adopt Amended and Restated
Bylaws of the Company. 14
Proposal No. 5: To Adjourn the Annual Meeting, if Necessary
or Appropriate, to Solicit Additional Proxies. 15
Corporate Governance 15
Director Independence 16
Stockholder Communications With Directors 16
Committees Of The Board Of Directors 16
Board Leadership Structure 16
Board Role in Risk Oversight 16
Code Of Ethics 17
Executive Officers 17
Indemnification Of Officers And Directors 17
Executive Compensation 17
Summary Compensation Table 18
Employment Agreements 18
Outstanding Equity Awards At Fiscal Year-End 19
Director Compensation 20
Security Ownership Of Certain Beneficial Owners And Management 20
Compliance With Section 16(A) Of The Exchange Act 21
Certain Relationships And Related Transactions 21
Other Matters 24
Annual Report 25
Further Information 25
ii
CirTran Corporation
4125 South 6000 West
West Valley City, Utah 84128
(801) 963-5112
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 11, 2011
This Proxy Statement and the enclosed proxy card are being furnished in
connection with the solicitation of proxies by the Board of Directors (the
"Board") of CirTran Corporation (the "Company," "CirTran," "we," "us") from the
holders of shares of common stock of the Company to be voted at the 2011 Annual
Meeting of Stockholders (the "Meeting") to be held on Thursday, August 11, 2011,
at 10:00 a.m. Mountain Daylight Time at 4125 South 6000 West, West Valley City,
Utah (the "Meeting"). Distribution of this Proxy Statement and the accompanying
proxy card is scheduled to begin on or about [______________], 2011.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be Held on August 11, 2011:
This proxy statement and the Company's 2010 Annual Report to Stockholders
are available for viewing, printing and downloading at [____________________],
using the information provided on the form of Notice provided.
Copies of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2010, as filed with the Securities and Exchange Commission
("SEC"), will be furnished without charge to any stockholder upon written
request to CirTran Corporation, 4125 South 6000 West, West Valley City, Utah
84128, ATTN: Investor Relations. This proxy statement and the Company's 2010
Annual Report on Form 10-K for the fiscal year ended December 31, 2010, are also
available on the SEC's website at www.sec.gov.
The enclosed proxy is solicited by the Board.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Why did I receive this Proxy Statement?
We have sent you the Notice of Annual Meeting of Stockholders, this Proxy
Statement, and the enclosed proxy or voting instruction card because the CirTran
Board of Directors is soliciting your proxy to vote at CirTran's Annual Meeting
on August 11, 2011. This Proxy Statement contains information about matters to
be voted on at the Meeting.
Who is entitled to vote?
The Board has designated June 22, 2011, as the record date for the Meeting
(the "Record Date"). You may vote if you owned common stock as of the close of
business on the Record Date. On the Record Date, there were 1,498,972,923 shares
of our common stock that were outstanding and entitled to vote at the Meeting.
How many votes do I have?
Each share of common stock that you own at the close of trading on the
Record Date, entitles you to one vote.
What am I voting on?
You will be voting on proposals to:
o Elect three directors to serve for one year each, until the next
Meeting of Stockholders or until successors are elected and shall
qualify;
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o Ratify the Audit Committee's selection of Hansen Barnett & Maxwell,
P.C. as the Company's independent registered public accountant for
fiscal year 2011;
o Amend the Company's Articles of Incorporation to increase the
authorized capital of the Company to include 4,500,000,000 shares of
Common Stock, par value $.001 per share;
o Approve and adopt Amended and Restated Bylaws of the Company;
o Adjourn the Annual Meeting for the purpose of soliciting additional
Proxies, if necessary or appropriate; and
o Consider and act upon such other business as may properly come
before the meeting or at any postponement or adjournment thereof.
How do I vote?
You may vote by mail. You do this by completing and signing your proxy
card, using the prepaid and addressed envelope included with this proxy
statement. If you mark your voting instructions on the proxy card, your shares
will be voted:
o as you instruct, and
o at the discretion of Mr. Hawatmeh, if a proposal properly comes up
for a vote at the meeting that is not on the proxy card.
For your voting instructions to be effective, your proxy card must be received
no later than the close of business on August 9, 2011.
You may vote by Internet. If you have Internet access, you may submit your
proxy by following the instructions provided in the Notice, or if you requested
printed proxy materials, by following the instructions provided with your proxy
materials and on your proxy card or voting instruction card. On the Internet
voting site, you can confirm that your instructions have been properly recorded.
If you vote on the Internet, you can also request electronic delivery of future
proxy materials. If you vote on the Internet, please note that there may be
costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, for which you will be responsible.
You may vote by telephone. You can also vote by telephone by following the
instructions provided on the Internet voting site, or if you requested printed
proxy materials, by following the instructions provided with your proxy
materials and on your proxy card or voting instruction card. Easy-to-follow
voice prompts allow you to vote your shares and confirm that your instructions
have been properly recorded.
You may vote at the Meeting. If you are planning to attend the Meeting and
wish to vote your shares in person, we will give you a ballot at the meeting. If
your shares are held in street name, you need to bring an account statement or
letter from your broker, bank or other nominee, indicating that you are the
beneficial owner of the shares on the Record Date. Even if you plan to be
present at the meeting, we encourage you to complete and mail the enclosed card
in advance of the meeting to vote your shares by proxy.
What if I return my proxy or voting instruction card but do not mark it to show
how I am voting?
Your shares will be voted according to the instructions you have indicated
on your proxy or voting instruction card. You can specify whether your shares
should be voted for all, some, or none of the nominees for director. You can
also specify whether you approve, disapprove, or abstain from the other
proposals. If no direction is indicated, your shares will be voted FOR the
election of the nominees for director, FOR the ratification of the selection of
Hansen Barnett & Maxwell, P.C. as our independent public accountant, FOR the
amendment to the Company's Articles of Incorporation, FOR the approval and
adoption of the Amended and Restated Bylaws of the Company, and FOR the proposal
to adjourn the Annual Meeting for the purpose of soliciting additional Proxies,
if necessary, provided that no Proxy that is specifically marked "AGAINST" the
proposal to amend the Company's Articles of Incorporation to increase the
Company's authorized share capital will be voted in favor of the adjournment
proposal, unless it is specifically marked "FOR" the adjournment proposal.
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May I revoke my proxy or change my vote after I return my proxy card or voting
instruction card?
You may revoke your proxy or change your vote at any time before it is
exercised in one of three ways:
o Notify our Corporate Secretary in writing before the Meeting that
you are revoking your proxy;
o Submit another proxy card (or voting instruction card if you hold
your shares in street name) with a later date; or
o Vote in person at the Meeting on August 11, 2011.
What does it mean if I receive more than one proxy or voting instruction card?
It means that you have multiple accounts at the transfer agent
and/or with banks and stockbrokers. Please vote all of your shares by
returning all proxy and voting instruction cards you receive.
What constitutes a quorum?
A quorum must be present to properly convene the Meeting. The presence, in
person or by proxy, of the holders of a majority of the outstanding shares that
are entitled to vote at the Meeting constitutes a quorum. You will be considered
part of the quorum if you return a signed and dated proxy or voting instruction
card or if you attend the Meeting. Abstentions and broker non-votes will be
counted as shares present at the meeting for purposes of determining whether a
quorum exists, but not as shares cast for any proposal. Because abstentions and
broker non-votes are not treated as shares cast, they would have no impact on
any of the proposals.
What vote is required in order to approve each proposal?
The required vote is as follows:
Election of Directors: The election of the nominees for director requires
the affirmative vote of a plurality of the shares cast at the Meeting. This
means that the nominees receiving the greatest number of votes in favor of their
election will be elected, even if they receive less than a majority of such
votes. If you do not want to vote your shares for a particular nominee, you may
so indicate in the space provided on the proxy card or on the voting instruction
card. In the unanticipated event that any of the nominees is unable or declines
to serve, the proxy holder will have the discretion to vote the proxy for
another person, as shall be designated by the Board to replace the nominee, or,
in lieu thereof, the Board may reduce the number of directors. Although
abstentions are counted as shares present and entitled to be voted, abstentions
will have no effect on the election of directors. Broker non-votes, if any, will
not have any effect on the result of the vote.
Ratification of the Selection of Independent Registered Public Accountant:
Ratification of the selection of Hansen Barnett & Maxwell, P.C. as our
independent registered public accountant requires the affirmative vote of a
majority of the shares cast at the Meeting. If the stockholders do not ratify
the appointment of Hansen Barnett & Maxwell, P.C., the Audit Committee of the
Board may, but is not required to, reconsider such appointment. In determining
whether this proposal received the requisite number of affirmative votes,
abstentions will be counted and will have the same effect as a vote against the
proposal. Broker non-votes, if any, will not have any effect on the result of
the vote.
Approval of Increase in Authorized Capital: The proposal for the approval
of the amendment to our Articles of Incorporation to increase the authorized
capital to include 4,500,000,000 shares of our common stock requires the
affirmative vote of the holders of at least a majority of our outstanding shares
of common stock. Stockholders may vote in favor or against this proposal, or
they may abstain. Abstentions and broker non-votes will be counted for purposes
of determining the presence or absence of a quorum. Abstentions are deemed to be
"votes cast", and have the same effect as a vote against this proposal. Broker
non-votes are not deemed to be votes cast and, therefore, have no effect on the
vote with respect to this proposal.
3
Approval and Adoption of Amended and Restated Bylaws: The proposal for the
approval and adoption of the Amended and Restated Bylaws of the Company requires
the affirmative vote of the holders of at least a majority of our outstanding
shares of common stock. Stockholders may vote in favor or against this proposal,
or they may abstain. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum. Abstentions are
deemed to be "votes cast", and have the same effect as a vote against this
proposal. Broker non-votes are not deemed to be votes cast and, therefore, have
no effect on the vote with respect to this proposal.
What is the Board's recommendation?
The Board's recommendations are set forth together with a description of
the proposals in this Proxy Statement. In summary, the Board recommends that you
vote:
o FOR election of the three directors named in this Proxy Statement to
serve until the Annual Meeting of Stockholders in 2011 and until
their successors are duly elected and qualified;
o FOR the appointment of Hansen Barnett & Maxwell, P.C. as the
Independent Registered Public Accounting Firm and Auditor of the
Company and the authorization of the Board to fix the remuneration
of the Independent Registered Public Accounting Firm and Auditor;
o FOR the approval of the amendment to the Company's Articles of
Incorporation to increase the authorized capital to include
4,500,000,000 shares of common stock; o FOR the approval and
adoption of the Amended and Restated Bylaws of the Company; and
o FOR he proposal to adjourn the Annual Meeting for the purpose of
soliciting additional Proxies, if necessary or appropriate.
How will voting on any other business be conducted?
We do not know of any business or proposals to be considered at the
Meeting other than those that are described in this Proxy Statement. If any
other business is proposed and we decide to allow it to be presented at the
Meeting, the proxies that we receive from our stockholders give the proxy
holders the authority to vote on that matter according to their best judgment.
Who will count the votes?
Representatives of the Company will tabulate the votes that are received
prior to the Meeting and will act as the inspectors of election and will
tabulate the votes, if any, that are cast in person at the Meeting.
Who pays to prepare, mail, and solicit the proxies?
We will pay all of the costs of soliciting these proxies. We will ask
banks, brokers, and other nominees and fiduciaries to forward the proxy
materials to the beneficial owners of our common stock and to obtain the
authority of executed proxies. We will reimburse them for their reasonable
expenses. In addition to the use of the mail, proxies may be solicited by our
officers, directors, and other employees by telephone or by personal
solicitation. We will not pay additional compensation to these individuals in
connection with their solicitation of proxies.
How do I submit a stockholder proposal for next year's Annual Meeting?
Any stockholder who intends to present a proposal at the 2011 Annual
Meeting of Stockholders must deliver such proposal to the Corporate Secretary,
c/o CirTran Corporation, 4125 South 6000 West, West Valley City, Utah 84128, not
later than November 15, 2011, if the proposal is submitted for inclusion in our
proxy materials for that meeting pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934.
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What do I need for admission to the Meeting?
You may attend the Meeting only if you are a stockholder of record or a
beneficial owner as of the Record Date, or you hold a valid proxy for the
Meeting. You should be prepared to present photo identification for admittance.
If you are a stockholder of record, your name will be verified against the list
of stockholders of record prior to your being admitted to the Meeting. If you
hold your shares in street name, you should provide proof of beneficial
ownership on the record date, such as a brokerage account statement showing that
you owned CirTran common stock as of the record date, a copy of the voting
instruction card provided by your broker, bank, or other nominee, or other
similar evidence of ownership as of the record date. If you do not provide photo
identification or comply with the other procedures outlined above upon request,
you will not be admitted to the Meeting.
Who should I call if I have questions?
If you have questions about the proposals or the Meeting, you may call
Edwin Van Stam at (801) 963-5112. You may also send an e-mail to
edwin.vanstam@cirtran.com.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Bylaws provide that the stockholders or the Board shall determine the
number of directors from time to time, but that there shall be no fewer than
three directors. The Board has set the number of directors at three. The Board
currently consists of three members: Iehab J. Hawatmeh, Fadi Nora, and Kathryn
Hollinger. All three of the current directors are nominees for re-election at
the Meeting.
Each director who is elected at the Meeting will hold office until the
Company's Annual Meeting in 2012, until a successor is elected and qualified, or
until the director resigns, is removed, or becomes disqualified. The Board has
no reason to believe that any of the nominees for director will be unwilling or
unable to serve, if elected. If due to unforeseen circumstances a nominee should
become unavailable for election, the Board may either reduce the number of
directors or may substitute another person for that nominee, in which event your
shares will be voted for that other person.
The following information is furnished with respect to the Board's
nominees for election as directors of the Company, including the nominee's
position with the Company, tenure as director and age as of June 15, 2011. Stock
ownership information is shown under the heading "Security Ownership of Certain
Beneficial Owners and Management" and is based upon information furnished by the
respective individuals.
Position with the Company Director
Name and Place of Residence and Principal Occupation Age Since
----------------------------- ----------------------------- ------- --------
Iehab Hawatmeh President, Chief Executive 44 2000
West Valley, Utah Officer, Director
Fadi Nora Director, Businessman 50 2007
Mission Viejo, California
Kathryn Hollinger, Cordova, Director; Controller 60 N/A
Tennessee
Set forth below is information regarding each of the above named
individuals, including a description of his positions and offices with the
Company, a description of his principal occupation and business experience
during at least the last five years and directorships presently held by him in
other companies.
Director Nominees
The nominees to the Board in 2011 are Iehab J. Hawatmeh, Fadi Nora, and
Kathryn Hollinger. Two of these nominees, Messrs. Hawatmeh and Nora, currently
serve as a member of our Board. Ms. Hollinger currently serves as an employee of
the Company and will be a new director if elected. The following information is
furnished with respect to these nominees:
5
Iehab J. Hawatmeh founded our predecessor company in 1993 and has been our
Chairman, President and CEO since July 2000. Mr. Hawatmeh oversees all daily
operation including technical, operational and sales functions for the Company.
Mr. Hawatmeh is currently functioning in a dual role as Chief Financial Officer.
Prior to his involvement with the Company, Mr. Hawatmeh was the Processing
Engineering Manager for Tandy Corporation overseeing that company's contract
manufacturing printed circuit board assembly division. In addition, he was
responsible for developing and implementing Tandy's facility Quality Control and
Processing Plan model. Mr. Hawatmeh received a Master's of Business
Administration from University of Phoenix and a Bachelor's of Science in
Electrical and Computer Engineering from Brigham Young University.
The Board has reviewed Mr. Hawatmeh's business background and service with
the Company in connection with his qualification to sit as a member of the
Company's board. Based on his years of service as an executive officer of the
Company, his background in the electronics assembly industry, and his
engineering, financial, and corporate strategic planning background, the Board
has concluded that Mr. Hawatmeh is qualified to serve as a member of the Board.
Fadi Nora is a self-employed investment consultant. He was formerly a
director of ANAHOP, Inc., a private financing company, and was a consultant for
several projects and investment opportunities, including CirTran Corporation,
NFE records, Focus Media Group, and other projects. He has been a member of our
Board since February 2007. Prior to his affiliation with ANAHOP, Mr. Nora worked
with Prudential Insurance services and its affiliated securities brokerage firm
Pru-Bach, as District Sales Manager. Mr. Nora received a B.S. in Business
Administration from St. Joseph University, Beirut, Lebanon, in 1982, and an MBA
- Masters of Management from the Azusa Pacific University School of Business in
1997. He also received a degree in financial planning from the University of
California at Los Angeles.
The Board has reviewed Mr. Nora's background in the private financing
brokerage industries in connection with his qualification to sit as a member of
the Company's board. Based on Mr. Nora's prior work as a business consultant,
and his experience with investment opportunities, capital raising transactions,
and financial planning, the Board has concluded that Mr. Nora is qualified to
serve as a member of the Board.
Kathryn Hollinger has been with CirTran for 11 years as the Company's
controller. She has been involved with the day-to-day accounting and finance
issues throughout her term with the Company. Ms. Hollinger studied mathematics
and accounting at Northridge University (now Cal. State University Northridge).
On June 15, 2011, pursuant to the Bylaws of the Company, Messrs. Hawatmeh
and Nora appointed Ms. Hollinger to the Company's Board of Directors.
The Board has reviewed Ms. Hollinger's background and familiarity with the
Company and its operations since 2000 in connection with her qualification to
sit as a member of the Company's board. Based on Ms. Hollinger's prior work with
the Company as the Company's Controller, and her experience and familiarity with
the Company's internal operations and finances, the Board has concluded that Ms.
Hollinger is qualified to serve as a member of the Board.
We will vote your shares as you specify in your proxy card. If you sign,
date, and return your proxy card but do not specify how you want your shares
voted, we will vote them FOR the election of each of the director nominees who
are listed above.
RECOMMENDATION - The Board recommends a vote FOR each director nominee.
------------------------------------------
PROPOSAL NO. 2 RATIFICATION OF SELECTION
OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM AND AUDITOR
The Board has appointed and recommended the accounting firm of Hansen
Barnett & Maxwell, P.C. as the Independent Registered Public Accounting Firm and
Auditor of the Company and its subsidiaries for the fiscal year ending December
31, 2011.
6
Hansen Barnett & Maxwell, P.C. audited the Company's financial statements
for the fiscal years ended December 31, 2006 through 2010.
A representative of Hansen Barnett & Maxwell, P.C., is expected to be
present at the Meeting and to have an opportunity to make a statement if they
desire to do so. The Hansen Barnett & Maxwell, P.C. representative is also
expected to be available to respond to appropriate questions at the Meeting.
If the stockholders fail to ratify the appointment of Hansen Barnett &
Maxwell, P.C., the Board is not required to, but may reconsider its appointment.
Policy on Pre-Approval of Audit and Permissible Non-Audit Services
The Board pre-approves any engagement of Hansen Barnett & Maxwell, P.C.
and has the ultimate authority and responsibility to select, evaluate and where
appropriate, replace the independent registered public accountants and nominate
an independent registered public accounting firm for stockholder approval. While
ratification of the selection of the independent registered public accounting
firm by the stockholders is not required and is not binding upon the Board or
the Company, in the event of a negative vote on such ratification, the Board
might choose to reconsider its selection.
Prior to the performance of any services, the Board approves all audit and
non-audit services to be provided by the Company's independent registered public
accountant and the fees to be paid therefor. Although the Sarbanes-Oxley Act of
2002 permits the audit committee of the Board to pre-approve some types or
categories of services to be provided by the independent registered public
accountants, as the Company does not currently have an audit committee, it is
the current practice of the Board to specifically approve all services provided
by the independent registered public accountants in advance, rather than to
pre-approve any type of service. In connection with this practice, the Board has
considered whether the provision of non-audit services is compatible with
maintaining Hansen Barnett & Maxwell, P.C.'s independence.
Independence
Hansen Barnett & Maxwell, P.C. has advised us that it has no direct or
indirect financial interest in the Company or in any of its subsidiaries and
that it has had, during the last three years, no connection with the Company or
any of its subsidiaries, other than as independent auditors or in connection
with certain other activities, as described below.
Financial Statements and Reports
The financial statements of the Company for the year ended December 31,
2010, and the report of the independent auditors will be presented at the
Meeting and is included with this Proxy Statement.
Income Taxes
Hansen Barnett & Maxwell, P.C. has been engaged to prepare the Company's
income tax filings for the year ended December 31, 2010.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees for Fiscal Years 2010 and 2009
The aggregate fees billed to the Company by Hansen Barnett & Maxwell,
P.C., the Company's independent registered public accounting firm and auditor,
for the fiscal years ended December 31, 2010 and 2009, are as follows:
7
2010 2009
---------- -----------
Audit Fees (1) $ 122,082 $ 134,926
Audit-Related Fees -- --
Tax Fees (2) $ 8,250 $ 8,425
All Other Fees -- --
--------
(1) Audit Fees consist of the audit of our annual financial statements
included in the Company's Annual Report on Form 10-K for its 2009 and 2010
fiscal years and Annual Report to Stockholders, review of interim financial
statements and services that are normally provided by the independent auditors
in connection with statutory and regulatory filings or engagements for those
fiscal years.
(2) Tax Fees consist of fees for tax consultation and tax compliance
services.
The Board of Directors, acting in the absence of a designated Audit
Committee, has considered whether the provision of non-audit services is
compatible with maintaining the independence of Hansen Barnett & Maxwell, P.C.,
and has concluded that the provision of such services is compatible with
maintaining the independence of the Company's auditors.
Management anticipates that representatives of Hansen Barnett & Maxwell,
P.C. will be present at the Meeting, will be available to respond to questions
and may make a statement if they so desire.
RECOMMENDATION - the Board recommends a vote "for" ratification
of the appointment of Hansen Barnett
& Maxwell, P.C. as CirTran's independent registered
public accounting firm
and auditor for 2011.
-------------------------------------------
PROPOSAL NO. 3
PROPOSED AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED
CAPITAL OF THE COMPANY TO INCLUDE
4,500,000,000 SHARES OF COMMON STOCK.
The Board of Directors has determined that it is in the Company's best
interest to amend the Company's Articles of Incorporation, as amended to date
(the "Amendment") to increase the Company's authorized capital stock (the
"Increase") to include 4,500,000,000 shares of common stock, par value $0.001
per share.
As of the date of this Proxy Statement, pursuant to our Articles of
Incorporation (as amended to date), we had the authority to issue 1,500,000,000
shares of common stock, of which 1,498,972,293 were issued and outstanding.
As discussed below, if the Stockholders of the Company as of the Record
Date approve the Amendment to the Company's Articles of Incorporation to approve
the Increase, and the Board of Directors determines that the Increase continues
to be in the best interest of the Company, the Board of Directors will file with
the Nevada Secretary of State the Articles of Amendment to the Company's
Articles of Incorporation, substantially in the form set forth in Appendix 1 to
this Proxy Statement, at which time the Increase will take effect.
8
General
As of the Record Date, there were 1,498,972,293 shares of our Common Stock
(the "Common Stock") issued and outstanding. As of the Record Date there were
options, warrants, and similar rights exercisable or convertible to 271,400,000
shares of common stock contingent upon an increase in the number of shares
authorized assuming all holders wished to convert or exercise their rights. This
figure does not include the shares of Common Stock issuable upon conversion of
the Debentures discussed in more detail below. Additionally, during 2009, we
entered into the following agreements to sell shares of Common Stock, contingent
upon an increase in the number of shares authorized:
o On July 14, 2009, the Company entered into a Stock Purchase
Agreement with Mr. Nora, a director of the Company, to sell him
75,000,000 shares of the Company's common stock at a purchase price
of $.003 per share, for a total of $225,000, payable through the
conversion of outstanding loans made by the director to the Company.
Mr. Nora and the Company acknowledged in the purchase agreement that
the Company did not have sufficient shares to satisfy the issuances,
and agreed that the shares would be issued once the Company had
sufficient shares to do so.
o Also, on July 14, 2009, the Company entered into a Stock Purchase
Agreement with the Company's President to sell him 50,000,000 shares
of the Company's Common Stock at a purchase price of $.003 per
share, for a total amount of $150,000, payable through the
conversion of outstanding loans made by the Company's President to
the Company. Mr. Hawatmeh and the Company acknowledged in the
purchase agreement that the Company did not have sufficient shares
to satisfy the issuances, and agreed that the shares would be issued
once the Company had sufficient shares to do so.
o On August 12, 2009, and September 3, 2009, the Company entered into
securities purchase agreements with a note holder to sell 15,000,000
and 12,000,000 shares of the Company's common stock at a purchase
price of $0.01 per share, for a total amount of $270,000, payable
through the conversion of outstanding loans made by the note holder
to the Company. The note holder and the Company acknowledged in the
purchase agreement that the Company did not have sufficient shares
to satisfy the issuances, and agreed that the shares would be issued
once the Company had sufficient shares to do so.
As described in our periodic filings, one of our main sources of funding
historically has been through the sales of convertible debt and equity
instruments, including convertible debentures and notes.
Management believes that the proposed Amendment would benefit the Company
by providing greater flexibility to the Board of Directors to honor the
agreements described above, as well possible conversion notices by holders of
convertible securities (discussed in more detail below), to issue additional
equity securities to raise additional capital, to pursue strategic investment
partners, to facilitate possible future acquisitions and to provide stock
related employee benefits. To date, one of our primary sources of financing has
been private sales of Common Stock or other equity or debt securities
convertible into Common Stock. To facilitate these transactions, management
believes that the authorized capital of the Company will need to be increased
pursuant to a stockholder-approved amendment to the Articles of Incorporation.
As of the date of this Proxy Statement, we had outstanding three
convertible debentures, discussed in more detail below, the May 2005 Debenture,
the December 2005 Debenture, and the August 2006 Debenture. On January 24, 2011,
the Company, certain of its subsidiaries listed below, and YA Global Investments
(formerly known as Cornell Capital Partners, LP) ("YA") finalized an amended and
restated forbearance agreement (the "A&R Forbearance Agreement") and related
agreements, which related to the three debentures and agreements between the
Company and YA and its predecessors. The A&R Forbearance Agreement was dated as
of January 7, 2011, but the final conditions for closing were met on January 24,
2011.
A&R Forbearance Agreement
An overview and summary of the A&R Forbearance Agreement between the
Company and YA, together with other agreements entered into in connection with
the A&R Forbearance Agreement, follows. The summaries of the terms and
conditions of the A&R Forbearance Agreement and the other agreements do not
purport to be complete, and are qualified in their entirety by reference to the
full text of the agreements which were filed as exhibits to a Current Report on
Form 8-K filed on January 28, 2011.
9
The A&R Forbearance Agreement related specifically to three debentures
issued by the Company to YA or its predecessor entities: a May 26, 2005,
debenture in the principal amount of $3,750,000 (the "May Debenture"), a
December 30, 2005, debenture in the principal amount of $1,500,000 (the
"December Debenture"), and an August 23, 2006, debenture in the principal amount
of $1,500,000 (the "August Debenture," and collectively with the May Debenture
and the December Debentures, the "Debentures"), together with certain other
agreements entered into in connection with the issuance of the Debentures
(collectively, the "Financing Documents").
The parties to the A&R Forbearance Agreement are the Company; YA; and the
following subsidiaries of the Company: Racore Network, Inc. (hereinafter,
"Racore"); Cirtran - Asia, Inc. (hereinafter, "Asia"); CIRTRAN BEVERAGE CORP.
(hereinafter, "Beverage"); Cirtran Media Corp. (hereinafter, "Media"); Cirtran
Online Corp. (hereinafter, "Online"); Cirtran Products Corp. (hereinafter,
"Products"); and Cirtran Corporation (Utah) (hereinafter, "Cirtran Sub," and
together with Racore, Asia, Beverage, Media, Online and Products, collectively,
jointly and severally, the "Guarantors"). The A&R Forbearance Agreement
references certain events of default under the Financing Documents, and notes
that the Company and the Guarantors (collectively, the "Obligors") had requested
that YA forbear from enforcing its rights and remedies under the Financing
Documents, and sets for the agreement between the Obligors and YA with respect
to such forbearance.
Specifically, the Obligors agreed to waive any claims against YA, and
released any such claims the Obligors may have had. The Obligors also ratified
their respective obligations under the Financing Documents, and agreed to the
satisfaction of certain conditions precedent, including the following: payment
of certain funds to YA at the time of execution of the A&R Forbearance
Agreement; the entry by Iehab Hawatmeh, President of the Company, into a
Guaranty Agreement and a Pledge Agreement (both discussed below); the entry into
a Ratification and Joinder Agreement by the Obligors (discussed below); the
execution of a confession of judgment in a litigation matter between YA, the
Company, and Katana Electronics, LLC ("Katana"); and the delivery of a new
warrant (the "Warrant") to YA (discussed below).
Additionally, the Obligors agreed to seek to obtain waivers from their
respective landlords at their properties in Utah and Arkansas; agreed to seek to
obtain deposit account control agreements from the Company's banks and
depository institutions; and to repay the Company's obligations under the
Debentures on the following schedule:
o $225,000.00, on or before the date of the A&R Forbearance Agreement
to be applied as follows (x) $75,000.00 in reimbursement of the
legal fees and expenses incurred by the Lender as required by
Paragraph 18, below, and (y) $150,000.00 applied first to accrued
but unpaid interest and then to the principal balance of the
Obligations;
o $75,000.00 on February 1, 2011;
o $75,000.00 on March 1, 2011;
o $75,000.00 on April 1, 2011;
o $200,000.00 on May 1, 2011;
o $200,000.00 on June 1, 2011;
o $200,000.00 on July 1, 2011;
o $200,000.00 on August 1, 2011;
o $200,000.00 on September 1, 2011;
o $200,000.00 on October 1, 2011;
o $200,000.00 on November 1, 2011;
o $200,000.00 on December 1, 2011; and
10
o the remaining balance of the Obligations shall be paid in full in
good and collected funds by federal funds wire transfer on or before
the earlier of (i) the occurrence of a Termination Event (as defined
in the A&R Forbearance Agreement), or (ii) 3:00 P.M. (prevailing
Eastern time) on December 31, 2011 (the "Termination Date").
The equivalent shares of convertible securities, unconverted options and
warrants consisted of the following as of June 15, 2011:
Equivalent
Shares
---------------
Convertible debenture, 12% stated interest
rate, secured by all of the Company's assets,
Due on December 31, 2011. 1,305,781,333
YA Global warrants 25,000,000
Warrants 117,000,000
Options outstanding 119,400,000
Stock purchase agreements and separation agreement 162,000,000
The convertible equity and debt securities listed above are referred to
herein as the "Convertible Securities." All of the Convertible Securities are
exercisable or convertible into shares of our Common Stock. As of the date of
this Proxy Statement, we did not have sufficient shares to satisfy all of these
conversions or exercises.
Convertible Debentures
The following table summarizes the number of shares of our Common Stock
that would be issuable upon conversion of the Debentures as of June 15, 2011,
assuming that the full principal amount of those securities, together with any
interest accrued, was converted into shares of our Common Stock, irrespective of
the availability of shares and any conversion limitations contained in the
Debentures, and further assuming that the applicable conversion or exercise
prices at the time of such conversion or exercise were as follows:
[Update as of record date]
Conversion Price Shares issuable Shares issuable Shares issuable Total shares
as of June 15, upon conversion upon conversion upon conversion of issuable in
2011 of of $1,041,218(principal) connection with
$620,136 $$1,500,000 plus $590,030 conversion of
(principal) (principal) accrued and unpaid aggregate
plus $113,243 plus $52,716 interest YA Global principal amount
accrued and accrued and Debenture under of Convertible
unpaid interest unpaid interest Revised and Amended Debentures
of YA Global Forbearance
YA Global Debenture under Agreement
Debenture under Revised and
Revised and Amended
Amended Forbearance
Forbearance Agreement
Agreement
------------------------------------------------------------------------------------------------------
$0.0030 244,459,666 517,572,000 543,749,667 1,305,781,333
11
As of the date of this Proxy Statement, we had essentially no additional
shares to issue under our authorized capital limits. The proposed Increase is
intended, in part, to permit the Company to satisfy any conversion notices that
may be presented.
As noted above, in January 2011, we entered into the A&R Forbearance
Agreement with the holders of the three Convertible Debentures (described more
fully below), pursuant to which we agreed to make scheduled payments in exchange
for which the holder of the Convertible Debentures agreed to forbear from
enforcing its rights and remedies as a result of the existing defaults until the
earlier of (i) the occurrence of a Termination Event (as defined in the
Forbearance Agreement), or (ii) the Termination Date, which is given as December
31, 2011. However, in the event that we are unable to meet our payment
obligations, the holder of the Convertible Debentures has the right to convert
into shares of our Common Stock, as described above.
Additionally, assuming that we are able to increase our authorized capital
and issue shares upon conversion of the Convertible Debentures, because the
formula for calculating the shares to be issued in connection with conversions
of these securities varies based on the market price of our Common Stock, there
effectively is no limitation on the number of shares of Common Stock which may
be issued in connection with their conversion. As such, holders of our Common
Stock will experience substantial dilution of their interests to the extent that
the Debentures are converted and shares of the Company's Common Stock are
issued.
Accordingly, under the terms of all of the Convertible Securities listed
above, in light of the conversion prices and as of June 15, 2011, we had
obligations to issue 1,305,781,333 shares of our Common Stock.
Purpose of the Increase
The Company requires additional financing, and we intend to pursue private
placements of equity and convertible debt securities as we have historically
done. However, as detailed above, we do not have sufficient shares to enable us
to pursue such private placements or capital-raising transactions.
In addition to better positioning the Company for future capitalization,
management believes that the Increase may make other corporate opportunities,
including potential mergers with or acquisitions of businesses or other related
avenues of strategic growth more available to the Company. As of the date of
this Proxy Statement, the Company had no plans for acquisitions or other
business combinations, although the Company continues to be open to potential
opportunities for the Company.
As of the date of this proxy statement, our Articles of Incorporation (as
amended to date), authorized us to issue only up to 1,500,000,000 shares of our
Common Stock. If the increase to the authorized capital is approved, we
anticipate that we may use the additional shares available to us in connection
with a variety of purposes, including issuances in connection with conversions
of the listed Convertible Securities.
As noted above, the issuances of shares under most of the Convertible
Securities are tied to variable conversion prices. Accordingly, if the market
price of our Common Stock rises, our obligations to issue shares of our Common
Stock will correspondingly decrease. Management believes that in light of market
conditions and our potential to develop and market our products, an increase of
our authorized capital to include 4,500,000,000 shares of our Common Stock will
enable us to meet our obligations, although there can be no guarantee that this
will be the case. As discussed above, most of the Convertible Securities include
conversion limitations or caps, such that the holders of such Convertible
Securities are limited from converting the entire outstanding amount of such
Convertible Security into shares of our Common Stock. As such, it is unlikely
that we would be required to meet conversion obligations of all of the
Convertible Securities at one time. Nevertheless, in the event that we need to
amend our Articles of Incorporation to further increase our authorized capital,
we will again seek stockholder approval of such amendment.
If the Amendment to our Articles of Incorporation is approved by our
stockholders, we will have approximately 3,000,000,000 additional shares to
issue to meet our obligations as listed above. However, because most of the
Convertible Securities are held by third parties, it is not possible for
management to allocate these additional shares or determine in advance how the
Company will issue the shares or reserve them. Moreover, because most of the
Convertible Securities have a variable conversion price, management is unable to
determine how many shares may be issued in connection with any of the
Convertible Securities, other than the options and warrants as listed above. If
the amendment to our Articles of Incorporation is approved, management does
intend to reserve out of the increased authorized capital a total of 281,400,000
shares in connection with currently outstanding options and 142,000,000 shares
in connection with currently outstanding warrants. Management will continue to
report the Company's issuances of shares in connection with each of the
Convertible Securities above in its periodic reports filed with the SEC.
12
There is a risk of significant downward pressure on the price of the
Common Stock as the holders of the various Convertible Securities convert such
Convertible Securities into shares of our Common Stock and sell material amounts
of Common Stock, which could encourage short sales. This could place significant
downward pressure on the price of the Common Stock. Generally, "short selling"
means selling a security, contract or commodity not owned by the seller. The
seller is committed to eventually purchase the financial instrument previously
sold. Short sales are used to capitalize on an expected decline in the
security's price. As the holders of the Convertible Securities convert such
securities, we issue shares to them, which they then may choose to sell into the
market pursuant to Rule 144 or other exemptions from the registration
requirements. Such sales could have a tendency to depress the price of the
stock, which could increase the potential for short sales.
Our issuances of shares in connection with conversions of the Convertible
Securities may result in substantial dilution to the interests of other holders
of Common Stock.
Because the conversion prices of most of the Convertible Securities are is
based on the market price of our Common Stock, there is effectively no limit on
the number of shares that may be issued. As such, our stockholders are subject
to the risk of substantial dilution to their interests as a result of our
issuance of shares in connection with conversions of the Convertible Securities.
Potential Anti-Takeover Effect. Although the increased proportion of
unissued authorized shares to issued shares could, under certain circumstances,
have an anti-takeover effect (for example, by permitting issuances that would
dilute the stock ownership of a person seeking to effect a change in the
composition of the Company's Board of Directors or contemplating a tender offer
or other transaction for the combination of the Company with another entity),
the Increase is not being proposed as part of a plan of additional stock
issuances. Nevertheless, management could use the additional shares that will be
available following the Increase to resist or frustrate a third-party
transaction.
For these reasons, the Company's Board of Directors is seeking stockholder
approval of the proposed Amendment to the Company's Articles of Incorporation to
increase the Company's authorized capital to include 4,500,000,000 shares of
Common Stock.
If the Amendment is approved at the Annual Meeting, generally, no
stockholder approval would be necessary for the issuance of all or any portion
of the additional shares of Common Stock unless required by law or any rules or
regulations to which the Company is subject.
Depending upon the consideration per share received by the Company for any
subsequent issuance of Common Stock, such issuance could have a dilutive effect
on those stockholders who paid a higher consideration per share for their stock.
Also, future issuances of Common Stock will increase the number of outstanding
shares, thereby decreasing the percentage ownership in the Company (for voting,
distributions and all other purposes) represented by existing shares of Common
Stock. The availability for issuance of the additional shares of Common Stock
may be viewed as having the effect of discouraging an unsolicited attempt by
another person or entity to acquire control of the Company. Although the Board
of Directors has no present intention of doing so, the Company's authorized but
unissued Common Stock could be issued in one or more transactions that would
make a takeover of the Company more difficult or costly, and therefore less
likely. Holders of Common Stock do not have any preemptive rights to acquire any
additional securities issued by the Company.
13
If the Company's stockholders do not approve the Amendment, due to changes
in the market price of the Common Stock affecting conversion ratios of
conversions of the Convertible Securities, the Company may be precluded from
issuing shares of our Common Stock as required, and we may be deemed to be in
default of the Convertible Securities, which could adversely affect the
Company's operations and financial condition. Moreover, even if the Company were
to negotiate additional merger or acquisition transactions on terms acceptable
to the Company, it would not be able to complete such transactions without an
increase in authorized capital.
Adoption of the proposal to approve the Amendment requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock on
the Record Date entitled to vote on Proposal No. 3. If approved by the
stockholders, the Amendment would become effective upon the filing with the
Secretary of State of the State of Nevada of Articles of Amendment to the
Articles of Incorporation setting forth such increase.
Consent Required for Approval of the Increase in Authorized Shares
Under Nevada law and our Articles of Incorporation, as amended to date,
the proposal to amend the Company's Articles of Incorporation to increase the
Company's authorized share capital (Proposal No. 3) must be approved by the
holders of at least a majority of our outstanding shares of Common Stock.
The proposal to effectuate the Increase is a "non-discretionary" item,
meaning that brokerage firms cannot vote shares in their discretion on your
behalf if you have not given the broker instructions to vote your shares held in
"street" name. Abstentions will be counted as votes against this Proposal 3.
Broker non-votes will count in determining a quorum for purposes of conducting
the Annual Meeting, but will not count for or against Proposal 3.
Procedure for Effecting Increase in Authorized Capital.
If the stockholders approve the Increase, and the Board of Directors
decides to implement the Increase, the Company will file an amendment to its
Articles of Incorporation ("Articles of Amendment") with the Secretary of State
of Nevada, not sooner than ten days and not later than twenty days following
such approval by the Stockholders, to amend its existing Articles of
Incorporation. The Increase will become effective at the time specified in the
Amended Certificate, which is referred to below as the "effective time."
No Appraisal or Dissenters' Rights
Under Nevada corporate law, the Company's stockholders are not entitled to
appraisal or dissenters' rights with respect to the Increase, and the Company
will not independently provide stockholders with any such right.
RECOMMENDATION - the Board recommends a vote "for" the proposed amendment
to the Company's Articles of Incorporation to increase the Company's authorized
capital to include 4,500,000,000 shares of Common Stock, par value $0.001.
--------------------------------------------------
PROPOSAL NO. 4
APPROVAL AND ADOPTION OF AMENDED AND RESTATED
BYLAWS OF THE COMPANY.
The current version of the Company's bylaws was adopted in March 1987 when
the Company was named Vermillion Ventures Inc. Certain provisions of the bylaws
are more limiting than the Nevada corporate laws permit or are inconsistent with
the history of the Company. As such, on June 15, 2011, the Company's Board of
Directors approved the proposed amended and restated bylaws (the "Amended and
Restated Bylaws"), subject to stockholder approval, and recommended that the
Stockholders of the Company approve and adopt the Amended and Restated Bylaws.
The Proposed Amended and Restated Bylaws are included in Appendix 2.
14
Among other things, the Amended and Restated Bylaws:
- Give the Board of Directors more discretion in determining the
timing of annual meetings of the Company's stockholders;
- Provide additional lead time prior to a stockholder meeting for the
Company to provide notice of an annual or special meeting of
stockholders;
- Change the possible number of Directors to permit a board ranging in
size from one to nine directors;
- Specifically permit the Board of Directors to act by written
consent;
- Specify that the Company's officers shall include a President,
Secretary, Treasurer (together with such other officers as may be
appointed by the Board of Directors), and lists potential duties for
such positions;
- Authorize the formation of Board committees, and enumerate the
powers and duties of such committees;
- Include indemnification provisions that comport with Nevada
corporate law requirements (see "Indemnification of our Officers and
Directors" below); and
- Clarify the procedures for amendment to the Bylaws by the Board of
Directors and the stockholders.
This list is not meant to be a complete discussion of the Bylaws, and you
are encouraged to review the Amended and Restated Bylaws attached as an exhibit
to this Proxy Statement.
The Company's Board of Directors has reviewed the current bylaws and has
determined that it is in the best interest of the Company and its shareholders
to adopt the Amended and Restated Bylaws.
RECOMMENDATION - the Board recommends a vote "for" the approval and
adoption of the proposed Amended and Restated Bylaws of the Company.
PROPOSAL NO. 5
ADJOURNMENT OF THE ANNUAL MEETING TO SOLICIT ADDITIONAL PROXIES.
Our Board of Directors unanimously executed a written consent dated June
17, 2011, authorizing and recommending that our stockholders approve a proposal
to adjourn the Annual Meeting, if necessary or appropriate, to solicit
additional Proxies if there are insufficient votes at the time of the Annual
Meeting to approve the proposal to amend the Company's Articles of Incorporation
to increase the Company's authorized share capital.
RECOMMENDATION - the Board recommends a vote "for" the proposal to adjourn
the Annual Meeting if necessary or appropriate, to solicit additional Proxies if
there are insufficient votes at the time of the Annual Meeting to approve the
proposal to amend the Company's Articles of Incorporation to increase the
Company's authorized share capital.
---------------------------------------------
INFORMATION ABOUT CIRTRAN CORPORATION
The Board of Directors
The Board is elected by and is accountable to the stockholders of the
Company. The Board establishes policy and provides strategic direction,
oversight, and control of the Company. The Board met one time during 2009 and 4
times during 2010. All directors attended all of the meetings.
15
Director Independence
As of the date of this Proxy Statement, the Company's Common Stock was
traded on the OTC Bulletin Board (the "Bulletin Board"). The Bulletin Board does
not impose standards relating to director independence, or provide definitions
of independence. The Company presently has no fully independent directors.
Stockholder Communications with Directors
If the Company receives correspondence from a stockholder that is
addressed to the Board, we forward it to every director or to the individual
director to whom it is addressed. Stockholders who wish to communicate with the
directors may do so by sending their correspondence to the director or directors
at the Company's headquarters at 4125 South 6000 West, West Valley City, Utah
84128.
Directors are encouraged by the Company to attend the Meeting if their
schedules permit.
Committees of the Board of Directors
As of the date of this Proxy Statement, the Company did not have
separately-designated Audit, Compensation, Governance or Nominating Committees.
The Company's full Board acts in these capacities. The Board has determined that
the Company does not have at present an audit committee financial expert as
defined under Securities and Exchange Commission rules. The limited resources
available to the Company at this time make it difficult to retain the services
of outside directors.
As of the date of this Proxy Statement, there have been no changes to the
procedures by which security holders may recommend nominees to our Board of
Directors.
Board Leadership Structure
As of the date of this Proxy Statement, one individual held the position
of Chief Executive Officer, President, and Chairman of the Board. At this time,
the Board believes that combining the Chairman and CEO role is most effective
for the Company's leadership and governance. Having one person as Chairman and
CEO provides unified leadership and direction to the Company and strengthens the
ability of the CEO to develop and implement strategic initiatives and respond
efficiently in various situations. Nevertheless, the Company continues to review
the merits of separating these offices, and will make such changes as the Board
determines to be in the best interests of the Company.
Board Role in Risk Oversight
While risk management is primarily the responsibility of the Company's
management team, the Board of Directors is responsible for overall supervision
of the company's risk management efforts as they relate to the key business
risks facing the organization. Management identifies, assesses, and manages the
risks most critical to the Company's operations and routinely advises the Board
on those matters. Those areas of material risk can include operational,
financial, legal and regulatory, human capital, informational technology and
security, and strategic and reputational risks. The Board's role in risk
oversight of the Company is consistent with the Company's leadership structure,
with senior management having responsibility for assessing and managing the
Company's risk exposure, and the Board providing oversight as necessary in
connection with those efforts.
The Board also hears from third-party advisors in order to maintain
oversight of risks that could affect the Company, including the Company's
outside counsel, and others. These advisors are consulted on a periodic basis
and as particular issues arise in order to provide the Board with the benefit of
independent expert advice and insights on specific risk-related matters.
At its regularly scheduled meetings, the Board also receives management
updates on the business, including operational issues, financial results and
business outlook and strategy.
16
The Board also discusses with management the Company's compliance with
legal and regulatory requirements, the Company's policies with respect to risk
assessment and management of risks that may affect the Company, and the
Company's system of disclosure control and system of controls over financial
reporting.
We believe the division of risk management responsibilities described
above is an effective approach for addressing the risks facing our Company and
that our Board leadership structure supports this approach.
Code of Ethics
The Company expects that all of its directors, officers and employees will
maintain a high level of integrity in their dealings with and on behalf of the
Company and will act in the best interests of the Company. The Company has
adopted a Code of Business Conduct and Ethics ("Code of Ethics") which provides
principles of conduct and ethics for the Company's directors, officers and
employees. This Code of Ethics complies with the requirements of the
Sarbanes-Oxley Act of 2002. This Code of Ethics is available on the Company's
website at www.cirtran.com under "Investor Relations--Corporate Governance" and
is also available in print to any stockholder who requests a copy by writing to
our corporate secretary at 4125 South 6000 West, West Valley City, Utah 84128.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers and directors of CirTran as of April 15, 2011:
Name Age Position
--------------------- ----- -------------------------------------------------
Iehab J. Hawatmeh 44 President, Chief Executive Officer, Director,
Chairman, Chief Financial Officer
Fadi Nora 50 Director
Kathryn Hollinger 60 Director
Biographical information for our directors is included in the discussion
beginning on page 5 concerning the nominees for director.
Indemnification of Officers and Directors
Our current Bylaws do not provide for indemnification of our officers or
directors. However, Nevada corporate law permits corporations to provide
indemnification for officers and directors, either as provided in the
corporation's articles of incorporation or bylaws, or in certain enumerated
circumstances. The Board of Directors believes that the proposed Amended and
Restated Bylaws would provide more certainty with respect to indemnification of
the Company's officers and directors.
If approved and adopted by the shareholders at the Annual Meeting, the
Amended and Restated Bylaws would authorize us to indemnify our officers and
directors under certain circumstances. We anticipate that we will enter into
indemnification agreements with each of our executive officers and directors
pursuant to which we will agree to indemnify each such person for all expenses
and liabilities incurred by such person in connection with any civil or criminal
action brought against such person by reason of their being an officer or
director of the Company. In order to be entitled to such indemnification, such
person must have acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Company and, with respect to
criminal actions, such person must have had no reasonable cause to believe that
his conduct was unlawful.
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the Named
Executive Officers in each of the last two fiscal years.
17
Summary Compensation Table
Name and principal Year Salary Bonus Stock Option Nonequity Nonqualified All Total
position ($) ($) awards awards incentive plan deferred other ($)
($) ($) compensation compensation compensation
($) earnings ($)(1)
($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
-------------------------------------------------------------------------------------------------------------------------
Iehab J. Hawatmeh, (2) 2010 $465,000 $194,035 -- $42,581 -- -- $28,773 $730,389
President and Chief 2009 $314,231 -- -- $10,538 -- -- $23,789 $348,558
Executive Officer
(Principal Executive
Officer)
Shaher Hawatmeh,(3) 2010 $210,000 -- -- -- -- -- $7,266 $217,266
Chief Operating Officer 2009 $210,000 -- -- -- -- -- $21,456 $231,456
----------------------
(1) Amounts for Mr. Iehab Hawatmeh and Shaher Hawatmeh include $12,250
and $9,000 for car allowance, respectively, and $13,539 each for
payments of medical insurance premiums.
(2) Mr. Iehab Hawatmeh, has not received cash payments for salary during
the year. His salary expense has been accrued.
(3) As noted below, Mr. Shaher Hawatmeh resigned from the Company on
March 5, 2010.
Employment Agreements
On August 1, 2009, we entered into an Employment Agreement with Mr.
Hawatmeh, our President, which amends and restates in their entirety (i) the
Employment Agreement between us and Mr. Hawatmeh dated July 1, 2004, and the
Amendment to Employment Agreement dated January 4, 2007. The term of the
employment agreement continues until August 31, 2014, and automatically extends
for successive one year periods, with an annual base salary of $345,000. The
Employment Agreement also grants to Mr. Hawatmeh options to purchase a minimum
of 6,000,000 shares of the Company's stock each year, with the exercise price of
the options being the market price of the Company's Common Stock as of the grant
date. The Employment Agreement also provides for health insurance coverage, cell
phone, car allowance, life insurance, and director and officer liability
insurance, as well as any other bonus approved by the Board. The Employment
Agreement includes additional incentive compensation as follows: a quarterly
bonus equal to 5 percent of the Company's earnings before interest, taxes,
depreciation and amortization for the applicable quarter; bonuses equal to 1.0
percent of the net purchase price of any acquisitions completed by the Company
that are directly generated and arranged by Mr. Hawatmeh; and an annual bonus
(payable quarterly) equal to 1 percent of the gross sales, net of returns and
allowances of all beverage products of the Company and its affiliates for the
most recent fiscal year.
Pursuant to the Employment Agreement, Mr. Hawatmeh's employment may be
terminated for cause, or upon death or disability, in which event the Company is
required to pay Mr. Hawatmeh any unpaid base salary and unpaid earned bonuses.
In the event that Mr. Hawatmeh is terminated without cause, the Company is
required to pay to Mr. Hawatmeh (i) within thirty (30) days following such
termination, any benefit, incentive or equity plan, program or practice (the
"Accrued Obligations") paid when the bonus would have been paid Employee if
employed; (ii) within thirty (30) days following such termination (or on the
earliest later date as may be required by Internal Revenue Code Section 409A to
the extent applicable), a lump sum equal to thirty (30) month's annual base
salary, (iii) bonuses owing under the Employment Agreement for the two year
period after the date of termination (net of an bonus amounts paid as Accrued
Obligations) based on actual results for the applicable quarters and fiscal
years; and (iv) within twelve (12) months following such termination (or on the
earliest later date as may be required by Internal Revenue Code Section 409A to
the extent applicable), a lump sum equal to thirty (30) month's Annual Base
Salary; provided that if Employee is terminated without cause in contemplation
of, or within one (1) year, after a change in control, then two (2) times such
annual base salary and bonus payment amounts.
18
On July 1, 2004, we entered into an employment agreement with our
President and CEO, Iehab Hawatmeh, with an effective date of June 26, 2004 for a
term of five years, automatic renewal on a year-to-year basis, base salary of
$225,000, bonus of 5% of earnings before interest, taxes, depreciation, and
amortization, payable quarterly, as well as any other bonus approved by the
Board, and health insurance coverage, cell phone, car allowance, life insurance,
and director and officer liability insurance. Mr. Hawatmeh's employment could be
terminated for cause, or upon death or disability; a severance penalty applied
in the event of termination without cause, in an amount equal to five full years
of the then-current annual base compensation, half upon termination and half one
year later, together with a continuation of insurance benefits for a period of
five years. On January 1, 2007, an amendment to the employment agreement became
effective. The amended agreement is for a term of five years and renews
automatically on a year-to year basis, provides for base salary of $295,000,
plus a quarterly bonus of 5% of earnings before interest, taxes, depreciation,
and amortization, as well as an annual bonus payable as soon as practicable
after completion of the audit of the Company's annual financial statements equal
to 0.5% of gross sales for the most recent fiscal prior year which exceed 120%
of gross sales for the previous fiscal year, plus an additional bonus of 1% of
the net purchase price of any acquisitions that are generated by the executive,
and any other bonus approved by the Board. The amended agreement also provides
for a grant of options to purchase 5,000,000 shares of the Company's Common
Stock in accordance with the terms of the Company's Stock Option Plan, with
terms and an exercise price at the fair market value of the Company's Common
Stock on the date of grant. The amended agreement provides for benefits
including health insurance coverage, car allowance, and life insurance.
On March 5, 2010, we entered into a Separation Agreement ("Agreement")
with Mr. Shaher Hawatmeh. As of the date of the "Agreement" Mr. Hawatmeh's
employment with us terminated and he no longer has any further employment
obligations with us. In consideration of his execution of this "Agreement" we
will pay Mr. Hawatmeh's "Separation Pay" of $210,000 in twenty-six bi-weekly
payments. The first payment of the Separation Pay was to begin on March 19,
2010. We have made the first payment to Mr. Hawatmeh. Additional terms of the
separation agreement include payment of all amounts necessary to cover health
and medial premiums on behalf of Mr. Hawatmeh, his spouse and dependents through
April 20, 2010, all outstanding car allowances and expense ($750) due and owing
as of February 28, 2010, satisfaction and payment by us (with a complete release
of Mr. Hawatmeh) of all outstanding amounts due and owing on our Corporate
American Express Card (issued in the name of Shaher) and the issuance and
delivery to Mr. Hawatmeh of ten million (10,000,000) share of our Common Stock
within a reasonable time following authorization by our stockholders of
sufficient shares to cover such issuance.
On May 1, 2009, PlayBev, a newly consolidated entity, entered into
compensation agreements with its managers, Mr. Hawatmeh and Mr. Nora. The agreed
compensation consists of a monthly fee of $10,000 for each manager,
reimbursement of reasonable expenses on behalf of the Company, a car allowance
for Mr. Nora of $1,000 per month to cover the cost of use, fuel and repairs. The
Company has accrued $420,000 in compensation, which is included in related party
payables as of December 31, 2010.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table summarizes information regarding options and other
equity awards exercised and the awards owned by the Named Executive Officers
that have vested as of December 31, 2010:
19
Option Awards Stock Awards
-------------------------------------------------------------------------------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Equity Awards: Payout
Incentive Market Number of Value of
Plan Awards: Number of Value of Unearned Unearned
Number of Number of Number of Shares or Shares Shares, Shares,
Securities Securities Securities Units of or Units Units, or Units, or
Underlying Underlying Underlying Stock of Stock Other Other
Unexer-cised Unexercised Unexercised That Have That Rights Rights That
Options Options Unearned Option Option Not Have Not That Have Have Not
(#) (#) Options Exercise Expiration Vested Vested Not Vested Vested
Name Exercisable Unexercisable (#) Price ($) Date (#) ($) (#) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
-------------------------------------------------------------------------------------------------------------------------
Iehab J. 6,000,000 - - $0.013 01-18-12 - - - -
Hawatmeh, 6,000,000 - - $0.012 11-21-12 - - - -
President and
Chief
Executive
Officer (1)
----------------------------------
(1) Includes amounts related to two separate grants of options, one at
the beginning and one at the end of 2007. The former grant was
intended to relate to services to be rendered during 2007, and the
latter was intended to relate to services to be rendered during
2008.
DIRECTOR COMPENSATION
The table below summarizes the compensation paid by the Company to our
directors for the fiscal year ended December 31, 2010.
Nonqualified
Non-equity deferred
Fees earned or Stock Option incentive plan compensation All other
paid in cash awards awards compensation earnings compensation Total
Name ($) ($) ($) ($) ($) ($) ($)
---------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
----------------------------------------------------------------------------------------------------------------
Iehab Hawatmeh
(1) - - - - - - -
----------------------------------------------------------------------------------------------------------------
Fadi Nora (2) 20,000 - 53,703 - - 27,261 100,964
----------------------------------------------------------------------------------------------------------------
------------------------
(1) Iehab Hawatmeh also served as an executive officer of the Company
during 2010. He received compensation for his services as an
executive officer, set forth above in the Summary Compensation
Table. He did not receive any additional compensation for his
services as director of the Company.
(2) The amounts in this column reflect the dollar amount recognized for
financial statement reporting purposes, excluding the effect of
estimated forfeitures, for the fiscal year ended December 31, 2010,
in accordance with accounting principles. Assumptions used in the
calculation of these amounts are included in Note 21 to the
Company's audited financial statements for the year ended December
31, 2010.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the ownership of the
Company's Common Stock by each person who, to the knowledge of the Company, is
the beneficial owner of more than 5% of the outstanding shares of Common Stock,
or who is (i) each person who is currently a director, (ii) each Named Executive
Officer, (iii) all current directors and Named Executive Officers as a group as
of April 15, 2011.
20
(1) Title of class (2) Name of beneficial owner Amount and nature of Percent of class
beneficial ownership
----------------------------------------------------------------------------------------------------------------
Common Stock Iehab J. Hawatmeh (1) 157,060,960 10.5%
Fadi Nora (2) 93,294,199 6.2%
All Officers and Directors as a Group 250,355,159 16.7%
(2 persons)
--------------------
(1) Includes options to purchase up to 24,000,000 shares that can be
exercised anytime at exercise prices ranging between $0.012 and
$0.013 per share. Excludes shares underlying a Stock Purchase
Agreement to purchase 50,000,000 shares.
(2) Includes 2,599,500 shares beneficially owned by Mr. Nora's spouse.
Also includes options to purchase up to 9,600,000 shares that can be
exercised anytime at exercise prices ranging between $0.012 and
$0.013 per share. Includes 12,000,000 shares received from Mrs.
Sawabini, on behalf of her husband Mr. Fakhouri. Excludes shares
underlying a Stock Purchase Agreement to purchase 75,000,000 shares.
The persons named in the table have sole or shared voting and dispositive
power with respect to all shares beneficially owned, subject to community
property laws where applicable. Beneficial ownership is determined according to
the rules of the Securities and Exchange Commission, and generally means that
person has beneficial ownership of a security if he or she possesses sole or
shared voting or investment power over that security. Each director, officer, or
5% or more stockholder, as the case may be, has furnished us information with
respect to beneficial ownership. Except as otherwise indicated, we believe that
the beneficial owners of the Common Stock listed above, based on the information
each of them has given to us, have sole or shared investment and voting power
with respect to their shares, except where community property laws may apply.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers, directors, and persons who beneficially own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with the SEC. Officers, directors, and greater-than-ten-percent stockholders are
also required by the SEC to furnish us with copies of all Section 16(a) forms
that they file.
Based solely upon a review of these forms that were furnished to the
Company, and based on representations made by certain persons who were subject
to this obligation that such filings were not required to be made, the Company
believes that all reports that were required to be filed by these individuals
and persons under Section 16(a) were filed on time in fiscal year 2010, except
as follows:
One of the Company's directors, Mr. Nora, has not filed a Form 4 or Form 5
since April 2008. He is in the process of preparing a Form 5 to make required
disclosures, and anticipates filing the Form 5 in the second quarter of 2011.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Play Beverages, LLC
Effective January 1, 2010, the Company began to consolidate into its
financial statements the accounts of PlayBev Corporation, formerly an
unconsolidated related party. PlayBev Corporation holds the Playboy license and
is majority-owned by the Company and its related parties. In prior years,
PlayBev was not required to be consolidated due to lack of control over
significant decisions by the Company or its affiliates. However. in the fourth
quarter of 2010, the Company reevaluated its relationship with PlayBev and
concluded that it was required to consider whether it had a variable interest in
PlayBev. Management concluded that PlayBev's level of equity was not sufficient
to permit PlayBev to operate on its own without additional subordinated support
and that the Company was the primary beneficiary for accounting purposes.
21
During 2006, Playboy Enterprises International, Inc. ("Playboy") entered
into a licensing agreement with Play Beverages, LLC ("PlayBev"), then an
unrelated Delaware limited liability company, whereby PlayBev agreed to
internationally market and distribute a new energy drink carrying the Playboy
name and "Rabbit Head" logo symbol. In May 2007, PlayBev entered into an
exclusive agreement with the Company to arrange for the manufacture, marketing
and distribution of the energy drinks, other Playboy-licensed beverages, and
related merchandise through various distribution channels throughout the world.
In an effort to finance the initial development and marketing of the new
drink, the Company with other investors formed After Bev Group LLC ("AfterBev"),
a California limited liability company and partially owned, consolidated
subsidiary of the Company. The Company contributed its expertise in exchange for
an initial 84 percent membership interest in AfterBev. The other initial
AfterBev members contributed $500,000 in exchange for the remaining 16 percent.
The Company borrowed an additional $250,000 from an individual, and contributed
the total $750,000 to PlayBev in exchange for a 51 percent interest in PlayBev's
cash distributions. The Company previously recorded this $750,000 amount as an
investment in PlayBev, accounted for under the cost method. PlayBev then
remitted these funds to Playboy as part of a guaranteed royalty prepayment.
Along with the membership interest granted the Company, PlayBev agreed to
appoint the Company's president and one of the Company's directors to two of
PlayBev's three executive management positions. Additionally, an unrelated
executive manager of PlayBev resigned, leaving the remaining two executive
management positions occupied by the Company president and one of the Company's
directors. On August 23, 2008, PlayBev's members agreed to amend its operating
agreement to change the required membership vote on major managerial and
organizational decisions from 75 percent to 95 percent. Since 2007, the two
affiliates personally purchased membership interests from PlayBev directly and
from other PlayBev members constituting an additional 23.1 percent, which
aggregated 34.35 percent. Despite the combined 90.5 percent interest owned by
these affiliates and the Company, the Company cannot unilaterally control
significant operating decisions of PlayBev, as the amended operating agreement
requires that various major operating and organizational decisions be agreed to
by at least 95 percent of all members. The other members of PlayBev are not
affiliated with the Company. In previous years, management concluded that while
PlayBev is a related party, the Company did not have the ability to unilaterally
control significant operating decisions of PlayBev, and therefore had not
accounted for PlayBev's operations as if it was a consolidated subsidiary.
However, on January 1, 2010, the Company adopted ASU 2009-17 (ASC Topic 810,
Consolidation), Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities. ASU 2009-17 amends the consolidation guidance
applicable to variable interest entities ("VIEs") and requires additional
disclosures concerning an enterprise's continuing involvement with VIEs. The
Company evaluated the impact of this guidance and determined that the adoption
resulted in the December 31, 2010, consolidation of PlayBev.
PlayBev has no operations, so under the terms of the exclusive
manufacturing and distribution agreement, we were appointed as the master
manufacturer and distributor of the beverages and other products that PlayBev
licensed from Playboy. In so doing, we assumed all the risk of collecting
amounts owed from customers, and contracting with vendors for manufacturing and
marketing activities. In addition, PlayBev is owed a royalty from the Company
equal to our gross profits from collected beverage sales, less 20 percent of our
related cost of goods sold, and 6 percent our collected gross sales. We incurred
$745,121 in royalty expenses due to PlayBev during the year ended December 31,
2009. The intercompany royalty and expense items have been eliminated in the
consolidated financial statements as of and for the year ended December 31,
2010.
We also agreed to provide services to PlayBev for initial development,
marketing, and promotion of the new beverage. These services are to be billed to
PlayBev and recorded as an account receivable from PlayBev. We initially agreed
to carry up to a maximum of $1,000,000 as a receivable due from PlayBev in
connection with these billed services. On March 19, 2008 we agreed to increase
the maximum amount it would carry as a receivable due from PlayBev, in
connection with these billed services, from $1,000,000 to $3,000,000. As of
March 19, 2008 we also began charging interest on the outstanding amounts owing
at a rate of seven percent per annum. PlayBev has agreed to repay the receivable
and accrued interest out of the royalties due PlayBev. We have billed PlayBev
for marketing and development services totaling $3,776,101 for the year ended
December 31, 2009, which has been included in revenues for our marketing and
media segment during 2009. As of December 31, 2009, the interest accrued on the
balance owing from PlayBev totaled $735,831. The net amount due us from PlayBev
for marketing and development services, after netting the royalty owed to
PlayBev, totaled $6,955,817 at December 31, 2009. All these intercompany
balances have been eliminated in the consolidated financial statements as of
December 31, 2010.
22
AfterBev Group, LLC
Following AfterBev's organization in May 2007, we entered into consulting
agreements with two individuals, one of whom had loaned us $250,000 when we
invested in PlayBev, and the other one was one of our directors. The agreements
provided that we assign to each individual approximately one-third of our share
in future AfterBev cash distributions, in exchange for their assistance in the
initial AfterBev organization and planning, along with their continued
assistance in subsequent beverage development and distribution activities. The
agreements also provided that as we sold a portion of its membership interest in
AfterBev, the individuals would each be owed their proportional assigned share
distributions in the proceeds of such a sale. The actual payment of the
distributions depended on what we did with the sale proceeds. If we used the
proceeds to help finance beverage development and marketing activities, the
payment of distributions would be deferred, pending collections from customers
once beverage product sales eventually commenced. Otherwise, the proportional
assigned share distributions would be due to the two individuals.
Throughout the balance of 2007, as energy drink development and marketing
activities progressed, we raised additional funds by selling portions of its
membership interest in AfterBev to other investors, some of whom were our
stockholders. In some cases, we sold a portion of its membership interest,
including voting rights. In other cases, we sold merely a portion of its share
of future AfterBev profits and losses. By the end of 2007, after taking into
account the two interests it had assigned, we had retained a net 14 percent
interest in AfterBev's profits and losses, but had retained 52 percent of all
voting rights in AfterBev. We recorded the receipt of these net funds as
increases to its existing minority interest in AfterBev, and the rest as amounts
owing as distributable proceeds payable to the two individuals with assigned
interests of our original share of AfterBev.
At the end of 2007, we agreed to convert the amount owing to one of the
individuals into a promissory note. In exchange, the individual agreed to
relinquish his approximately one-third portion of our remaining share of
AfterBev's profits and losses. Instead, the individual received a membership
interest in AfterBev. In January 2008, the other assignee, which is one our
directors, similarly agreed to relinquish the distributable proceeds owed to
him, in exchange for an interest in AfterBev's profits and losses. Accordingly,
he purchased a 24 percent interest in AfterBev's profits and losses in exchange
for foregoing $863,973 in amounts due to him. Of this 24 percent, by the end of
December 31, 2008, the director had sold or transferred 23 percent to unrelated
investors and retained the remaining 1 percent interest in AfterBev's profits
and losses. In turn, the director loaned $834,393 to us in the form of unsecured
advances. Of the amounts loaned, $600,000 was used to purchase interest in
PlayBev directly which resulted in a reduction of $600,000 of amounts owed by
PlayBev to us. During the year ended December 31, 2009, the director advanced an
additional $500,000 to us for his purchase of an additional 3 percent interest
in PlayBev, which resulted in a reduction of $500,000 of amounts owed by PlayBev
to us. As of December 31, 2010 we still owed the director $686,999 in the form
of unsecured advance. In addition, during the year ended December 31, 2009 one
of our directors and our president purchased 6 percent and 5 percent of AfterBev
shares, respectively, in private sales from existing stockholders of Afterbev.
Global Marketing Alliance
We entered into an agreement with GMA, and hired GMA's owner as the Vice
President of CirTran Online (CTO), one of our subsidiaries. Under the terms of
the agreement, we outsource to GMA the online marketing and sales activities
associated with our CTO products. In return, we provide bookkeeping and
management consulting services to GMA, and pay GMA a fee equal to five percent
of CTO's online net sales. In addition, GMA assigned to us all of its
web-hosting and training contracts effective as of January 1, 2007, along with
the revenue earned thereon, and we also assumed the related contractual
performance obligations. We recognize the revenue collected under the GMA
contracts, and remit back to GMA a management fee approximating their actual
costs. We recognized net revenues from GMA related products and services in the
amount of $1,095,086 and $2,572,955 for the years ended December 31, 2010 and
2009, respectively.
Transactions involving ANAHOP, Inc.
In May 2006, we closed a private placement of shares of the Company's
Common Stock and warrants (the "May Private Offering"). Pursuant to a securities
purchase agreement we issued 14,285,715 shares of Common Stock (the "May
Shares") to ANAHOP, Inc. ("ANAHOP"), a California company partially owned by
Fadi Nora. The consideration paid for the May Shares was $1,000,000. In addition
to the Shares, the Company issued warrants (the "Warrants") to designees of
ANAHOP to purchase up to an additional 36,000,000 shares of Common Stock. Of
this amount, Mr. Nora was designated to receive Warrants to purchase 10,000,000
shares of Common Stock.
23
In June 2006, the Company closed a second private placement of shares of
its Common Stock and warrants (the "June Private Offering"). Pursuant to a
securities purchase agreement (the "Agreement"), the Company agreed to issue up
to 28,571,428 shares of Common Stock (the "June Shares") to ANAHOP. The total
consideration to be paid for the June Shares will be $2,000,000 if all tranches
of the sale close.
Pursuant to the Agreement, ANAHOP agreed to pay $500,000 (the "First
Tranche Payment"). Upon the receipt of the First Tranche Payment, the Company
agreed to issue a certificate or certificates to the Purchaser representing
7,142,857 of the June Shares.
The remaining $1,500,000 is to be paid by ANAHOP as follows:
(i) No later than thirty calendar days following the date on which any
class of the Company's capital stock is first listed for trading on
either the Nasdaq Small Cap Market, the Nasdaq Capital Market, the
American Stock Exchange, or the New York Stock Exchange, ANAHOP
agreed to pay an additional $500,000 to the Company; and
(ii) No later than sixty calendar days following the date on which any
class of the Company's capital stock is first listed for trading on
either the Nasdaq Small Cap Market, the Nasdaq Capital Market, the
American Stock Exchange, or the New York Stock Exchange, ANAHOP
agreed to pay an additional $1,000,000 to the Company. (The payments
of $500,000 and $1,000,000 are referred to collectively as the
"Second Tranche Payment.")
Upon receipt by the Company of the Second Tranche Payment, the Company
agreed to issue a certificate or certificates to ANAHOP representing the
remaining 21,428,571 June Shares.
Additionally, once the Company has received the Second Tranche Payment,
the Company agreed to issue warrants to designees of ANAHOP to purchase up to an
additional 63,000,000 shares.
On April 11, 2008, Mr. Nora disassociated himself from the other
principals of ANAHOP, and as part of the asset settlement, relinquished
ownership of 12,857,144 shares of CirTran Corporation Common Stock and all of
the warrants previously assigned to him.
OTHER MATTERS
Stockholder Proposals
Any stockholder proposal intended to be considered for inclusion in the
proxy statement for presentation in connection with the 2011 Annual Meeting of
Stockholders must have been received by the Company by December 31, 2010. No
valid proposals were received from eligible stockholders. As of the date of this
Proxy Statement, the Board does not intend to present, and has not been informed
that any other person intends to present, any matter for action at the Meeting,
other than as set forth herein and in the Notice of Meeting. If any other matter
properly comes before the meeting, it is intended that the holders of proxies
will act in accordance with their best judgment on these matters.
Any stockholder proposal intended to be considered for inclusion in the
proxy statement for presentation in connection with the 2012 Annual Meeting of
Stockholders must have been received by the Company by December 31, 2011. The
proposal must be in accordance with the provisions of Rule 14a-8 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934. The Company suggests that any such request be submitted by certified mail,
return receipt requested. The Board of Directors will review any proposal which
is received by December 31, 2011, and determine whether it is a proper proposal
to present to the 2012 Annual Meeting.
24
Solicitation of Proxies
The accompanying proxy is solicited on behalf of the Board. In addition to
the solicitation of proxies by mail, certain of the officers and employees of
the Company, without extra compensation, may solicit proxies personally or by
telephone and, if deemed necessary, third party solicitation agents may be
engaged by the Company to solicit proxies by means of telephone, facsimile or
telegram, although no such third party has been engaged by the Company, as of
the date hereof.
Stockholders who currently receive multiple copies of the proxy statement
(and related documents) at their address and would like to request
"householding" of their communications should contact their broker or, if a
stockholder is a registered holder of shares of Common Stock, he or she should
submit a written request to the Company's transfer agent for its Common Stock,
Interwest Stock Transfer, 1981 East 4800 South, Suite # 100, Salt Lake City,
Utah 84117. Stockholders who are now "householding" their communications, but
who wish to receive separate proxy statements (and related documents) in the
future may also notify the transfer agent. We will promptly deliver, upon
written or oral request, a separate copy of the proxy statement (and related
documents) at a shared address to which a single copy was delivered.
ANNUAL REPORT
We will provide, without charge, on the written request of any beneficial
owner of shares of our Common Stock entitled to vote at the Annual Meeting of
Stockholders, a copy of our Annual Report on Form 10-K as filed with the U.S.
Securities and Exchange Commission for our fiscal year ended December 31, 2009.
Written requests should be mailed to CirTran, Attention: Investor Relations,
4125 South 6000 West, West Valley City, Utah 84128.
Please return the enclosed proxy card as soon as possible. Unless a quorum
consisting of a majority of the outstanding shares entitled to vote is
represented at the annual meeting, no business can be transacted. Therefore,
please be sure to date and sign your proxy card exactly as your name appears on
your stock certificate and return it in the enclosed postage prepaid return
envelope. Please act promptly to ensure that you will be represented at this
important meeting.
FURTHER INFORMATION
Additional copies of the Company's Annual Report on Form 10-K for the year
ended December 31, 2010, (including financial statements and financial statement
schedules), that has been filed with the Securities and Exchange Commission may
be obtained without charge by writing to CirTran, Attention: Investor Relations,
4125 South 6000 West, West Valley City, Utah 84128. The reports and other
filings of CirTran, including this Proxy Statement, also may be obtained from
the SEC's on-line database, located at www.sec.gov.
By Order of the Board of Directors,
--------------------------------------------
Iehab Hawatmeh, Chief Executive Officer and
Chairman of the Board of Directors
Date: June ___, 2011
25
APPENDIX 1
PROPOSED ARTICLES OF AMENDMENT
26
APPENDIX 2
PROPOSED AMENDED AND RESTATED BYLAWS
27
CIRTRAN CORPORATION
Annual Meeting of Stockholders
August 11, 2011
PROXY
This Proxy is solicited on behalf of the Board of Directors for use at the
Annual Meeting on August 11, 2011
The undersigned appoints Iehab Hawatmeh, Chairman of the Board of Directors, or,
failing him, Fadi Nora, Director, with full power of substitution, the attorney
and proxy of the undersigned, to attend the annual meeting of stockholders of
CirTran Corporation, to be held August 11, 2011, beginning at 10:00 am, MDT, at
its corporate offices located at 4125 South 6000 West, West Valley City, Utah
84128, and at any adjournment thereof, and to vote the stock the undersigned
would be entitled to vote if personally present, on all matters set forth in the
proxy statement sent to stockholders, a copy of which has been received by the
undersigned, as follows:
Please mark your votes as indicated [X]
Total Number of Shares Held: ____________
This proxy when properly signed will be voted in the manner directed herein by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS .
1. Election of Directors
Nominees - Iehab J. Hawatmeh
Fadi Nora
Kathryn Hollinger
FOR Election of NOT FOR Election of ABSTAIN
ALL Nominees ALL Nominees
[ ] [ ] [ ]
Except vote withheld from the following nominee listed above. (INSTRUCTION: To
withhold authority to vote for a nominee, strike a line through the nominee's
name in the list below.)
Iehab J. Hawatmeh
Fadi Nora
Kathryn Hollinger
2. Ratify the Board of Directors' selection of Hansen Barnett & Maxwell, P.C.
as the Independent Registered Public Accounting Firm and Auditor of the
Company for the year ending December 31, 2011
FOR NOT FOR ABSTAIN
[ ] [ ] [ ]
28
3. To approve a proposed amendment to the Company's Articles of Incorporation
that increases the authorized capital of the Company to include
4,500,000,000 shares of common stock
FOR NOT FOR ABSTAIN
[ ] [ ] [ ]
4. To approve and adopt Amended and Restated Bylaws of the Company
FOR NOT FOR ABSTAIN
[ ] [ ] [ ]
5. To approve a proposal to adjourn the Annual Meeting, if necessary or
appropriate, to solicit additional Proxies
FOR NOT FOR ABSTAIN
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
IMPORTANT - PLEASE SIGN AND RETURN PROMPTLY. When joint tenants hold shares,
both should sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person. Please sign exactly as
your name appears on your stock certificate(s).
--------------------------------------------------------------------------------
Print Name Signature Date
29
ARTICLES OF AMENDMENT FOR ARTICLES OF INCORPORATION
CERTIFICATE OF AMENDMENT
Certificate of Amendment to Articles of Incorporation
-----------------------------------------------------
For Nevada Profit Corporations
------------------------------
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
-Remit in Duplicate-
1. Name of Corporation: CirTran Corporation.
2. The articles have been amended as follows (provide article numbers, if
available):
The Articles of Incorporation are to be amended by striking out the first
paragraph of Article IV, as amended to date, in its entirety, and inserting a
new first paragraph of Article IV reading as follows:
ARTICLE IV
CAPITALIZATION
The aggregate number of shares which this Corporation shall have authority
to issue is 4,500,000,000 Common Shares having a par value of $0.001 per
share. Each share of stock shall entitle the holder thereof to one (1)
vote on each matter submitted to a vote at a meeting of the shareholders.
All stock of the Corporation shall be of the same class and shall have the
same rights and preferences. The capital stock of the Corporation shall be
issued as fully paid, and the private property of the shareholders shall
not be liable for the debts, obligations or liabilities of the
Corporation. Fully paid stock of this Corporation shall not be liable to
any further call of assessment.
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or
such greater proportion of the voting power as ay be required in the case
of a vote by classes or series, or as may be required by the provisions of
the articles of incorporation have voted in favor of the amendment is:
__________________ in favor; against; and abstaining.*
4. Signatures (Required):
--------------------------- -----------------------------------
President or Vice President and Secretary or Asst. Secretary
*If any proposed amendment would alter or change any preference or relative or
other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof. IMPORTANT: Failure to
include any of the above information and remit the proper fees may cause this
filing to be rejected.
AMENDED AND RESTATED
BYLAWS
OF
CiRTRAN CORPORATION
a Nevada corporation
2011
TABLE OF CONTENTS
ARTICLE I OFFICES.............................................................1
Section 1.01. Locations of Offices...................................1
Section 1.02. Principal Nevada Office................................1
ARTICLE II SHAREHOLDERS.......................................................1
Section 2.01. Annual Meeting.........................................1
Section 2.02. Special Meetings.......................................1
Section 2.03. Place of Meetings......................................2
Section 2.04. Notice of Meetings.....................................2
Section 2.05. Closing of Transfer Books..............................2
Section 2.06. Voting Lists...........................................2
Section 2.07. Quorum.................................................3
Section 2.08. Proxies................................................3
Section 2.09. Voting of Shares by Corporation........................3
Section 2.10. Voting of Shares.......................................3
Section 2.11. Informal Action by Shareholders........................3
Section 2.12. Examination by Shareholders of Books and Records.......4
ARTICLE III BOARD OF DIRECTORS................................................4
Section 3.01. General Powers.........................................4
Section 3.02. Number, Tenure, and Qualifications.....................4
Section 3.03. Regular Annual Meeting.................................4
Section 3.04. Regular Meetings.......................................4
Section 3.05. Special Meetings.......................................4
Section 3.06. Notice.................................................4
Section 3.07. Quorum.................................................5
Section 3.08. Manner of Acting.......................................5
Section 3.09. Vacancies and Newly Created Directorships..............5
Section 3.10. Compensation...........................................5
Section 3.11. Presumption of Assent..................................5
Section 3.12. Resignations...........................................5
Section 3.13. Informal Action by Directors...........................5
Section 3.14. Meetings by Telephone Conference Call..................6
Section 3.15. Removal of Directors...................................6
ARTICLE IV OFFICERS...........................................................6
Section 4.01. Number.................................................6
Section 4.02. Election, Term of Office, and Qualifications...........6
Section 4.03. Subordinate Officers, etc..............................7
Section 4.04. Resignations...........................................7
Section 4.05. Removal................................................7
i
Section 4.06. Vacancies and Newly Created Offices....................7
Section 4.07. The Chairman of the Board..............................7
Section 4.08. The President..........................................7
Section 4.09. The Vice-Presidents....................................8
Section 4.10. The Secretary..........................................8
Section 4.11. The Chief Financial Officer............................9
Section 4.12. General Manager........................................9
Section 4.13. Salaries..............................................10
ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF
CORPORATE FUNDS.......................................10
Section 5.01. Execution of Instruments..............................10
Section 5.02. Loans.................................................10
Section 5.03. Deposits..............................................11
Section 5.04. Checks, Drafts, etc...................................11
Section 5.05. Bonds and Debentures..................................11
Section 5.06. Sale, Transfer, etc., of Securities...................11
Section 5.07. Proxies...............................................11
ARTICLE VI CAPITAL STOCK.....................................................12
Section 6.01. Stock Certificates....................................12
Section 6.02. Transfer of Stock.....................................12
Section 6.03. Regulations...........................................12
Section 6.04. Maintenance of Stock Book at Principal Place of
Business..............................................12
Section 6.05. Transfer Agents and Registrars........................13
Section 6.06. Closing of Transfer Books and Fixing of Record
Date..................................................13
Section 6.07. Lost or Destroyed Certificates........................13
ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES.........................14
Section 7.01. How Constituted.......................................14
Section 7.02. Powers................................................14
Section 7.03. Proceedings...........................................14
Section 7.04. Quorum and Manner of Acting...........................14
Section 7.05. Meetings by Telephone Conference Call.................14
Section 7.06. Informal Action by Committee Members..................14
Section 7.07. Resignations..........................................15
Section 7.08. Removal...............................................15
Section 7.09. Vacancies.............................................15
Section 7.10. Compensation..........................................15
ARTICLE VIII INDEMNIFICATION.................................................15
Section 8.01. Indemnification Third Party Actions...................15
Section 8.02. Indemnification Corporation Actions...................16
ii
Section 8.03. Determination.........................................16
Section 8.04. General Indemnification...............................16
Section 8.05. Advances..............................................16
Section 8.06. Scope of Indemnification..............................17
Section 8.07. Insurance.............................................17
ARTICLE IX FISCAL YEAR.......................................................17
ARTICLE X DIVIDENDS..........................................................17
ARTICLE XI AMENDMENTS........................................................17
iii
AMENDED AND RESTATED
BYLAWS
OF
CIRTRAN CORPORATION
ARTICLE I
OFFICES
-------
Section 1.01. Locations of Offices. The corporation may maintain such
offices, within or without the State of Nevada, as the Board of Directors may
from time to time designate.
Section 1.02. Principal Nevada Office. The address of the principal office
of the corporation in the State of Nevada shall be located at 2360 Corporate
Circle, Ste 400, Henderson, Nevada 89074, and said address may be changed by the
Board of Directors at any time.
ARTICLE II
SHAREHOLDERS
------------
Section 2.01. Annual Meeting. The annual meeting of the shareholders shall
be held on the second Tuesday of April of each year, or at such time as is
provided in the notice of the meeting, provided that whenever such date falls on
a legal holiday the meeting shall be held on the next succeeding business day,
beginning with the year following the filing of the Articles of Incorporation,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the election of directors shall not
be held on the day designated herein for the annual meeting of the shareholders,
or at any adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of the shareholders as soon thereafter as may be
convenient.
Section 2.02. Special Meetings. Special meetings of the shareholders may
be called at any time by the Chairman of the Board, the President, or by the
Board of Directors, or in their absence or disability, by any Vice-President,
and shall be immediately called by the President, or in his absence or
disability, by a Vice-President, or by the Secretary upon the written request of
the holders of not less than one-tenth of all the shares entitled to vote at the
meeting, such written request to state the purpose, or purposes, of the meeting
and to be delivered to the President, such Vice-President or the Secretary. In
case of failure to call such meeting within twenty (20) days after such request,
such shareholder or shareholders may call the same.
1
Section 2.03. Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Nevada, as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Nevada, as the place
for the holding of such meeting. If no such designation is made, or if a special
meeting be otherwise called, the place of meeting shall be at the principal
office of the corporation. (78.310 and 78.375) Citations in parentheses are to
Nevada Revised Statutes, Volume 4. These citations are for reference only and
shall not constitute a part of these bylaws. Section 2.04. Notice of Meetings.
The Secretary or Assistant Secretary, if any, shall cause notice of the date,
time, place, and purpose or purposes of all meetings of the shareholders
(whether annual or special), to be mailed at least ten (10) (but not more than
sixty (60)) days prior to the meeting, to each shareholder of record entitled to
vote. (78.370)
Section 2.05. Closing of Transfer Books. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors of the corporation may provide that the
stock transfer books shall be closed, for a period of not more than sixty (60)
days, for the purpose of determining shareholders entitled to notice of or to
vote at such meeting. If the stock transfer books are closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting, such
books shall be closed for at least ten (10) days immediately preceding such
meeting.
In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty (60) days and, in
case of a meeting of shareholders, not less than ten (10) days prior to the date
on which the particular action requiring such determination of shareholders is
to be taken. If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or to vote at
a meeting of shareholders or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof. (75.350)
Section 2.06. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make a complete list of
the shareholders entitled to vote at each meeting of the shareholders of the
corporation or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder, for any purpose germane to the meeting, during
the whole time of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
2
Section 2.07. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 2.08. Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy,
provided, however, that the right to vote by proxy shall exist only in case the
instrument authorizing such proxy to act shall have been executed in writing by
the stockholder or by his duly authorized attorney in fact. Such instrument
authorizing a proxy to act shall be delivered at the beginning of such meeting
to the Secretary of the corporation or to such other officer or person who may,
in the absence of the Secretary be acting as Secretary of the meeting. In the
event that any such instrument shall designate two or more persons to act as
proxies, a majority of such persons present at the meeting, or, if only one be
present, that one shall (unless the instrument shall otherwise provide) have all
of the powers conferred by the instrument upon all persons so designated. No
proxy shall be valid after six months from the date of its execution, unless
otherwise provided in the proxy, which in no case shall exceed seven years from
the date of its execution. Persons holding stock in a fiduciary capacity shall
be entitled to vote the shares so held, except that no trustee or pledgee shall
be entitled to vote shares held by him without a transfer of such shares into
his name. (78.355)
Section 2.09. Voting of Shares by Corporation. In addition to regulations
and restrictions imposed by law upon the voting of shares, shares of its own
stock belonging to the corporation or held by it in a fiduciary capacity shall
not be voted directly or indirectly at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time. (78.283)
Section 2.10. Voting of Shares. Each outstanding share of stock shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that voting rights of the shares of any class
or classes are limited or denied by the Articles of Incorporation of the
corporation as permitted by law.
Section 2.11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, except the election of directors, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by a majority of the shareholders entitled to vote with respect
to the subject matter thereof. (78.320, 78.325)
3
Section 2.12. Examination by Shareholders of Books and Records. Any person
who is a shareholder of record, upon written demand stating the purpose thereof,
shall have the right to examine, in person, or by agent or attorney, at any
reasonable time or times, for any proper purpose, the corporation's books and
records of account, minutes of record of shareholders and to make extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. (78.257)
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.01. General Powers. The property, affairs and business of the
corporation shall be managed by its Board of Directors. The Board of Directors
may exercise all the powers of the corporation whether derived from law or the
Articles of Incorporation, except such powers as are by statute, by the Articles
of Incorporation or by these Bylaws, vested solely in the stockholders of the
corporation. (78.120)
Section 3.02. Number, Tenure, and Qualifications. The number of directors
of the corporation shall not be fewer than one (1) nor more than nine (9). The
number of directors may be fixed or changed within the range by the shareholders
or the Board of Directors, but no decrease shall shorten the term of an
incumbent director.
Each director shall hold office until the election at the next annual
meeting of the shareholders and until his successor shall have been elected and
shall qualify. Directors need not be residents of the State of Nevada or
shareholders of the corporation. (78.115, 78.330)
Section 3.03. Regular Annual Meeting. A regular annual meeting of the
Board of Directors shall be held without other notice than this Bylaw,
immediately after, and at the same place as, the annual meeting of shareholders.
Section 3.04. Regular Meetings. The Board of Directors may provide by
resolution, the time and place, either within or without the State of Nevada,
for the holding of regular meetings without other notice than such resolution.
(78.310)
Section 3.05. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President, Vice-President, or any
director. The person or persons authorized to call special meetings of the Board
of Directors may fix any place, either within or without the State of Nevada, as
the place for holding any special meeting of the Board of Directors called by
them.
Section 3.06. Notice. Notice of any special meeting shall be given at
least five (5) days prior thereto by written notice delivered personally or
mailed to each director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting.
Section 3.07. Quorum. A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, but if less than a majority is present at a meeting, a majority of
the directors present may adjourn the meeting from time to time without further
notice. (78.315)
4
Section 3.08. Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall, unless the act of a
greater number of directors is required by the Articles of Incorporation of the
corporation or these Bylaws, be the act of the Board of Directors and individual
directors shall have no power as such. (78.315)
Section 3.09. Vacancies and Newly Created Directorships. If any vacancies
shall occur in the Board of Directors by reason of death, resignation, or
otherwise, or if the number of directors shall be increased, the directors then
in office shall continue to act and such vacancies or newly created
directorships shall be filled by a vote of the directors then in office, though
less than a quorum, in any way approved by the meeting. Any directorship to be
filled by reason of the removal of one or more directors by the shareholders may
be filled by election by the shareholders at the meetings at which the director
or directors are removed. (78.335, 78.340)
Section 3.10. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting, unless he shall file
his written dissent to such action with the person acting as the Secretary of
the meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail to the Secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 3.12. Resignations. A director may resign at any time by
delivering a written resignation to either the President, a Vice-President, the
Secretary or Assistant Secretary, if any. Unless otherwise provided in the
resignation, the resignation shall become effective on its acceptance by the
Board of Directors, provided that if the Board has not acted thereon within ten
(10) days from the date presented, the resignation shall be deemed accepted.
(78.335)
Section 3.13. Informal Action by Directors. Any action required to be
taken at a meeting of the directors of the corporation or any other action which
may be taken at a meeting of the directors or of a committee, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors, or all of the members of the committee,
as the case may be. Such written consent shall be filed with the minutes of
proceedings of the board of directors or committee. Such consent shall have the
same legal effect as a unanimous vote of all the directors or members of the
committee. (78.315)
Section 3.14. Meetings by Telephone Conference Call. Members of the Board
of Directors may participate in a meeting of the Board of Directors by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other. Participation in such
a meeting shall constitute presence in person at such meeting. (78.315)
5
Section 3.15. Removal of Directors. At a shareholders' meeting called
expressly for that purpose, directors may be removed in the manner provided in
this section unless otherwise provided by the Articles of Incorporation. One or
more director or the entire Board of Directors may be removed, with or without
cause, by a vote of the holders of the not less than two-thirds (2/3) of the
shares then entitled to vote at an election of directors. If at the time of any
shareholders' meeting called for such purpose the shareholders are entitled to
cumulate their votes for directors and if less than the entire Board is to be
removed, no one of the directors may be removed if the votes of a sufficient
number of shares are cast against his removal which, if then cumulatively voted
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which he is a part, would
be sufficient to elect him. Whenever the holders of the shares of any class are
entitled to elect one or more directors by the provisions of the Articles of
Incorporation, the provisions of this section shall apply, in respect of the
removal of a director or a director so elected, to the vote of the holders of
the outstanding shares of that class and not to the vote of the outstanding
shares as a whole. (78.335)
ARTICLE IV
OFFICERS
--------
Section 4.01. Number. The officers of the corporation shall be a
President, a Secretary, a Treasurer, a Resident Agent, and such other officers
as may be appointed by the Board of Directors, including one or more
Vice-Presidents, as shall be determined by resolution. The Board of Directors
may elect, but shall not be required to elect, a Chairman of the Board and the
Board of Directors may appoint a General Manager. (78.130)
Section 4.02. Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the Board
of Directors. Each such officer (whether chosen at an annual meeting of the
Board of Directors to fill a vacancy or otherwise) shall hold his office until
the next ensuing annual meeting of the Board of Directors and until his
successor shall have been chosen and qualified, or until his death or until his
resignation or removal in the manner provided in these Bylaws. Any one person
may hold any two or more of such offices except that the President shall not
also be the Secretary. No person holding two or more offices shall act in or
execute any instrument in the capacity of more than one office. The Chairman of
the Board, if any, shall be and remain director of the corporation during the
term of his offices. No other officer need be a director. (78.130)
Section 4.03. Subordinate Officers, etc. The Board of Directors from time
to time may appoint such other officers or agents as it may deem advisable, each
of whom shall have such title, hold office for such period, have such authority,
and perform such duties as the Board of Directors from time to time may
determine. The Board of Directors from time to time may delegate to any officer
or agent the power to appoint any such subordinate officer or agents and to
prescribe their respective titles, terms of office, authorities, and duties.
Subordinate officers need not be stockholders or directors.
6
Section 4.04. Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the President, or
the Secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 4.05. Removal. Any officer may be removed, either for or without
cause, from office at any special meeting of the Board of Directors called for
that purpose or at a regular meeting, by the vote of a majority of the total
number of directors then in office, whenever in the judgment of the Board of
Directors the best interests of the corporation will be served thereby. Any
officer or agent appointed in accordance with the provisions of Section 4.03
hereof may also be removed, either for or without cause, by any officer upon
whom such power of removal shall have been conferred by the Board of Directors.
Section 4.06. Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or any other cause, or if a new office shall be created, then such vacancies or
newly created offices may be filled by the Board of Directors at any regular or
special meeting.
Section 4.07. The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties:
(a) He shall preside at all stockholders' meetings.
(b) He shall preside at all meetings of the Board of Directors.
(c) He shall be a member of the Executive Committee, if any.
Section 4.08. The President. The President shall have the following powers
and duties:
(a) He shall be the chief executive officer of the corporation, and,
subject to the directions of the Board of Directors, shall have
general charge of the business, affairs, and property of the
corporation and general supervision over its officers, employees and
agents.
(b) If no Chairman of the Board has been chosen, or if such officer is
absent or disabled, he shall preside at meetings of the stockholders
and Board of Directors.
(c) He shall be a member of the Executive Committee, if any.
(d) He shall be empowered to sign certificates representing stock of the
corporation, the issuance of which shall have been authorized by the
Board of Directors.
(e) He shall have all powers and perform all duties normally incident to
the office of a President of a corporation and shall exercise such
other powers and perform such other duties as from time to time may
be assigned to him by the Board of Directors.
7
Section 4.09. The Vice-Presidents. The Board of Directors shall, from time
to time, designate and elect one or more Vice-Presidents, one of whom may be
designated to serve as Executive Vice-President. Each Vice-President shall have
such powers and perform such duties as from time to time may be assigned to him
by the Board of Directors or the President. At the request or in the absence or
disability of the President, the Executive Vice-President or, in the absence or
disability of the Executive Vice-President, the Vice-President designated by the
Board of Directors or (in the absence of such designation by the Board of
Directors) by the President, as Senior Vice-President, may perform all duties of
the President, and when so acting, shall have all the powers of, and be subject
to all the restrictions upon, the President.
Section 4.10. The Secretary. The Secretary shall have the following powers
and duties:
(a) He shall keep or cause to be kept a record of all of the
proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose.
(b) He shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by statute.
(c) He shall be the custodian of the records and of the seal of the
corporation, and shall cause such seal (or a facsimile thereof) to be
affixed to all certificates representing stock of the corporation prior to
the issuance thereof and to all instruments, the execution of which on
behalf of the corporation under its seal shall have been duly authorized
in accordance with these Bylaws, and when so affixed he may attest the
same.
(d) He shall see that the books, reports, statements, certificates,
and other documents and records required by statute are properly kept and
filed.
(e) He shall have charge of the stock books of the corporation and
cause the stock and transfer books to be kept in such manner as to show at
any time the amount of the stock of the corporation of each class issued
and outstanding, the manner in which and the time when such stock was paid
for, the names alphabetically arranged and the addresses of the holders of
record thereof, the number of shares held by each holder, and time when
each became such holder of record; and he shall exhibit at all reasonable
times to any director, upon application, the original or duplicate stock
register. He shall cause the stock book referred to in Section 6.04 hereof
to be kept and exhibited at the principal office of the corporation in the
manner and for the purpose provided in such Section.
(f) He shall be empowered to sign certificates representing stock of
the corporation, the issuance of which shall have been authorized by the
Board of Directors.
(g) He shall perform in general all duties incident to the office of
Secretary and such other duties as are given to him by these Bylaws or as
from time to time may be assigned to him by the Board of Directors or the
President.
8
Section 4.11. The Chief Financial Officer. The Chief Financial Officer
will have the following powers and duties:
(a) He shall have charge and supervision over and be responsible for
the monies, securities, receipts, and disbursements of the corporation.
(b) He shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the
corporation in such banks or trust companies or with such banks or other
depositories as shall be selected in accordance with Section 5.03 hereof.
(c) He shall cause the monies of the corporation to be disbursed by
checks or drafts (signed as provided in Section 5.04 hereof) drawn upon
the authorized depositories of the corporation, and cause to be taken and
preserved proper vouchers for all monies disbursed.
(d) He shall render to the Board of Directors or the President,
whenever requested, a statement of the financial condition of the
corporation and of all of his transactions as Treasurer, and render a full
financial report at the annual meeting of the stockholders, if called upon
to do so.
(e) He shall cause to be kept correct books of account of all the
business and transactions of the corporation and shall exhibit such books
to any directors upon request during business hours.
(f) He shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements giving such
information as he may desire with respect to any and all financial
transactions of the corporation.
(g) He shall perform in general all duties incident to the office of
Chief Financial Officer and such other duties as are given to him by these
Bylaws or as from time to time may be assigned to him by the Board of
Directors or the President.
Section 4.12. General Manager. The Board of Directors may employ and
appoint a General Manager who may, or may not, be one of the officers or
directors of the corporation. The General Manager, if any, shall have the
following powers and duties:
(a) After the President, he shall be the next most senior executive
officer of the corporation and, subject to the directions of the Board of
Directors, shall have general charge of the business affairs and property
of the corporation and general supervision over its officers, employees,
and agents.
(b) After the President, he shall have the management of the
business of the corporation and of all of its dealings, but at all times
subject to the control of President and the Board of Directors.
(c) Subject to the approval of the Board of Directors or the
Executive Committee, if any, he shall have the power to employ all
employees of the corporation, or delegate such employment to subordinate
officers, or division chiefs, and shall have authority to discharge any
person so employed.
9
(d) He shall make a report to the President and Directors quarterly,
or more often if required to do so, setting forth the results of the
operations under his charge, together with suggestions looking to the
improvement and betterment of the condition of the corporation, and he
shall perform such other duties as the Board of Directors shall require.
Section 4.13. Salaries. The salaries or other compensation of the officers
of the corporation shall be fixed from time to time by the Board of Directors
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents appointed in accordance with the provisions of Section 4.03
hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he is also a director of the
corporation.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
--------------------------------------------
AND DEPOSIT OF CORPORATE FUNDS
------------------------------
Section 5.01. Execution of Instruments. Subject to any limitation
contained in the Articles of Incorporation or in these Bylaws, the President,
any Vice-President, or the General Manager, if any, may, in the name and on
behalf of the corporation, execute and deliver any contract or other instrument
authorized in writing by the Board of Directors. The Board of Directors may,
subject to any limitation contained in the Articles of Incorporation or in these
Bylaws, authorize in writing any officer or agent to execute and deliver any
contract or other instrument in the name and on behalf of the corporation; any
such authorization may be general or confined to specific instances.
Section 5.02. Loans. No loan or advance shall be contracted on behalf of
the corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed
as security for the payment of any loan, advance, indebtedness, or liability of
the corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
Section 5.03. Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositories as the Board of
Directors may select, or as from time to time may be selected by any officer or
agent authorized to do so by the Board of Directors.
Section 5.04. Checks, Drafts, etc. All notes, drafts, acceptances, checks,
endorsements, and, subject to the provisions of these Bylaws, evidences of
indebtedness of the corporation shall be signed by such officer or officers or
such agent or agents of the corporation and in such manner as the Board of
Directors from time to time may determine. Endorsements for deposit to the
credit of the corporation in any of its duly authorized depositories shall be in
such manner as the Board of Directors from time to time may determine.
10
Section 5.05. Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the President or a Vice-President and by the Secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
Where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has been used on
any such bond or debenture, shall cease to be an officer of the corporation for
any reason before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as though the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such officer.
Section 5.06. Sale, Transfer, etc., of Securities. Sales, transfers,
endorsements, and assignments of shares of stocks, bonds, and other securities
owned by or standing in the name of the corporation and the execution and
delivery on behalf of the corporation of any and all instruments in writing
incident to any such sale, transfer, endorsement, or assignment, shall be
effected by the President, or by any Vice-President, together with the
Secretary, or by any officer or agent, thereunto authorized by the Board of
Directors.
Section 5.07. Proxies. Proxies to vote with respect to shares of stock of
other corporations used by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the President or any
Vice-President and the Secretary or Assistant Secretary, if any, of the
corporation or by any officer or agent thereunto authorized by the Board of
Directors.
ARTICLE VI
CAPITAL STOCK
-------------
Section 6.01. Stock Certificates. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by the President or any
Vice-President and the Secretary or Assistant Secretary, if any, and sealed with
the seal (which may be a facsimile, engraved or printed) of the corporation,
certifying the number and kind, class, or series of shares owned by him in the
corporation; provided, however, that where such a certificate is countersigned
by (a) a transfer agent, or (b) registered by a registrar, the signature of any
such President, Vice-President, Secretary or Assistant Secretary may be a
facsimile. In case any officer who shall have signed, or whose facsimile
signature or signatures shall have been used on any such certificate, shall
cease to be such officer of the corporation, for any reason, before the delivery
of such certificate by the corporation, such certificate may nevertheless be
adopted by the corporation and be issued and delivered as though the person who
signed it or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be such officer. Certificates representing shares of
stock of the corporation shall be in such form as provided by the statutes of
the State of Nevada. There shall be entered upon the stock books of the
corporation at the time of issuance of each share, the number of the certificate
issued, the name and address of the person owning the shares represented
thereby, the number and kind, class or series of such shares, and the date of
issuance thereof. Every certificate exchanged or returned to the corporation
shall be marked "Cancelled" with the date of cancellation. (78.235)
11
Section 6.02. Transfer of Stock. Transfers of shares of the stock of the
corporation shall be made on the books of the corporation by the holder of
record thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed in writing and filed with the Secretary of the
corporation or any of its transfer agents, and upon surrender of the certificate
or certificates, properly endorsed or accompanied by proper instruments of
transfer, representing such shares. Except as provided by law, the corporation
and transfer agents and registrars, if any, shall be entitled to treat the
holder of record of any share or shares of stock as the absolute owner thereof
for all purposes, and accordingly shall not be bound to recognize any legal,
equitable or other claim to or interest in such share or shares on the part of
any other person whether or not it or they shall have express or other notice
thereof.
Section 6.03. Regulations. Subject to the provisions of this Article VI
and of the Articles of Incorporation, the Board of Directors may make such rules
and regulations as they may deem expedient concerning the issuance, transfer,
redemption, and registration of certificates for shares of the stock of the
corporation.
Section 6.04. Maintenance of Stock Book at Principal Place of Business. A
stock book (or books where more than one kind, class or series of stock is
outstanding) shall be kept at the principal place of business of the corporation
in Reno, Nevada, containing the names alphabetically arranged of original
stockholders of the corporation, their addresses, their interest, the amount
paid on their shares of stock, and all transfers thereof and the number and
class of the shares held by each. Such stock books shall at all reasonable hours
be subject to inspection by persons entitled by law to inspect the same.
(78.257)
Section 6.05. Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of stock of the corporation, and may
require all such certificates to bear the signature of either or both. The Board
of Directors may from time to time define the respective duties of such transfer
agents and registrars. No certificate of stock shall be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such stock, and until registered by a
registrar, if at such date the corporation had a registrar for such stock.
Section 6.06. Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the stock books
of the corporation for a period of not to exceed sixty (60) days preceding
the date of any meeting of stockholders, the date for payment of any
dividend, the date for the allotment of rights, a date in connection with
obtaining the consent of shareholders for any purpose, or in order to make
a determination of shareholders for any other purpose.
12
(b) In lieu of closing the stock transfer books as aforesaid, the
Board of Directors may fix in advance, not exceeding sixty (60) days
preceding the date of any meeting of shareholders, the date for the
payment of the dividend, the date for the allotment of rights, the date
when any change or conversion or exchange of capital stock shall go into
effect. The Board of Directors also may fix in advance, not exceeding
sixty (60) days preceding the date of any meeting of shareholders, a date
in connection with obtaining any such consent, or in order to make a
determination of shareholders for any other purpose as a record date for
the determination of the shareholders entitled to a notice of, and to vote
at, any such meeting and any adjournment thereof, entitled to receive
payment of any such dividend, or to any such allotment of rights, to
exercise the rights in respect of any such change, conversion, or exchange
of capital stock, to give such consent, or for any other purpose.
(c) If the stock transfer books shall be closed or a record date set
for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for or such
record date shall be at least ten (10) days immediately preceding such
meeting. (78.350)
Section 6.07. Lost or Destroyed Certificates. The corporation may issue a
new certificate for stock of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the Board
of Directors may, in their discretion, require the owner of the lost or
destroyed certificate or his legal representatives, to give the corporation a
bond in such form and amount as the Board of Directors may direct, and with such
surety or sureties as may be satisfactory to the Board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
to do so.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
----------------------------------------
Section 7.01. How Constituted. The Board of Directors may designate an
Executive Committee and such other committees as the Board of Directors may deem
appropriate, each of which committees shall consist of one or more directors.
Members of the Executive Committee and of any such other committee shall be
designated annually at the annual meeting of the Board of Directors; provided,
however, that at any time the Board of Directors may abolish or reconstitute the
Executive Committee or any such other committee. Each member of the Executive
Committee and of any such other committee shall hold office until his successor
shall have been designated or until his resignation or removal in the manner
provided in these Bylaws. (78.125)
Section 7.02. Powers. During the intervals between meetings of the Board
of Directors, the Executive Committee shall have and may exercise all powers of
the Board of Directors in the management of the business and affairs of the
corporation, except for such powers as by law may not be delegated by the Board
of Directors to an Executive Committee. (78.125)
13
Section 7.03. Proceedings. The Executive Committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix its
own presiding and recording officer or officers, and may meet at such place or
places, at such time or times and upon such notice (or without notice) as it
shall determine from time to time. It shall keep a record of its proceedings and
shall report such proceedings to the Board of Directors at the meeting of the
Board of Directors next following.
Section 7.04. Quorum and Manner of Acting. At all meetings of the
Executive Committee, and of such other committees as may be designated hereunder
by the Board of Directors, the presence of members constituting a majority of
the total authorized membership of the committee shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the act
of majority of the members present at any meeting at which a quorum is present
shall be the act of such committee. The members of the Executive Committee, and
of such other committees as may be designated hereunder by the Board of
Directors, shall act only as a committee and the individual members thereof
shall have no powers as such.
Section 7.05. Meetings by Telephone Conference Call. Members of the
Executive Committee, and of such other committees as may be designated
hereunder, may participate in a meeting of the committee by means of conference
telephone or similar communication equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at such a meeting.
Section 7.06. Informal Action by Committee Members. Any action required to
be taken at a meeting of the Executive Committee, or of such other committees as
may be designated hereunder, or any other action which may be taken at a meeting
of a committee, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the members of the
committee. Such written consent shall be filed with the minutes of proceedings
of the committee. Such consent shall have the same legal effect as a unanimous
vote of all the members of the committee. (78.315)
Section 7.07. Resignations. Any member of the Executive Committee, and of
such other committees as may be designated hereunder by the Board of Directors,
may resign at any time by delivering a written resignation to either the
President, the Secretary, or Assistant Secretary, if any, or to the presiding
officer of the committee of which he is a Member, if any shall have been
appointed and shall be in office. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 7.08. Removal. The Board of Directors may at any time remove any
member of the Executive Committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.09. Vacancies. If any vacancy shall occur in the Executive
Committee or of any other committee designated by the Board of Directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the Board of Directors or by the remaining members of
the Executive Committee.
14
Section 7.10. Compensation. The Board of Directors may allow a fixed sum
and expenses of attendance to any member of the Executive Committee or of any
other committee designated by it hereunder who is not an active salaried
employee of the corporation for attendance at each meeting of the said
committee.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.01. Indemnification Third Party Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation) by reason of the fact that
he is or was a director, officer, employee, or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses (including attorney's fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe that his conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. (78.751)
Section 8.02. Indemnification Corporation Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper. (78.751)
15
Section 8.03. Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in Sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. Any other indemnification
under Sections 8.01 or 8.02 hereof shall be made by the corporation upon a
determination that indemnification of the director, officer, employee, or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 8.01 or 8.02 hereof. Such determination shall be
made either by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit, or proceeding, or (3) by
the shareholders by a majority vote of a quorum of shareholders at any meeting
duly called for such purpose. (78.751)
Section 8.04. General Indemnification. The indemnification provided by
this Article shall not be deemed exclusive of any other indemnification granted
under any provision in the corporation's Articles of Incorporation, Bylaws,
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office. (78.751)
Section 8.05. Advances. Expenses incurred in defending a civil or criminal
action, suit, or proceeding as contemplated in this Article may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon a majority vote of a quorum of the Board of Directors and upon
receipt of an undertaking by or on behalf of the director, officer, employee, or
agent to repay such amount or amounts unless it ultimately be determined that he
is to be indemnified by the corporation as authorized by this Article.
Section 8.06. Scope of Indemnification. The indemnification authorized by
this Article shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who cease to be directors, officers, employees, or agents of the corporation and
shall inure to the benefit of the heirs, executors, and administrators of all
such persons and shall be in addition to all other indemnification permitted by
law. (78.751)
Section 8.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against any such liability under the provisions of this Article
VIII or the laws of the State of Nevada, as the same may hereafter be amended or
modified. (78.751)
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ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law.
ARTICLE XI
AMENDMENTS
All bylaws of the corporation, whether adopted by the Board of Directors
or the stockholders, shall be subject to amendment, alteration or repeal, and
new bylaws may be made, by the Board of Directors or the holders of a majority
of the outstanding shares of common stock of the corporation, except that:
(a) No bylaw adopted or amended by the shareholders shall be altered
or repealed by the Board of Directors;
(b) No bylaw shall be adopted by the Board of Directors which shall
require more than a majority of the voting shares for a quorum at a
meeting of shareholders, or more than a majority of the votes cast to
constitute action by the shareholders, except where higher percentages are
required by law or by the Articles of Incorporation; provided, however,
that
(i) If any bylaw regulating an impending election of directors
is adopted or amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of the
stockholders for the election of directors, the bylaws so adopted or
amended or repealed, together with a concise statement of the
changes made; and
(ii) No amendment, alteration or repeal of this Article XI
shall be made except by the stockholders.
***
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CERTIFICATE OF OFFICER
The undersigned Officer of CirTran Corporation, a Nevada corporation,
hereby certifies that the foregoing is a full, true and correct copy of the
Bylaws of said corporation, with all amendments to date of this Certificate.
WITNESS the signature of the undersigned this _____ day of _________,
2011.
----------------------------------
Iehab Hawatmeh
President, Chief Executive Officer
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