FORBEARANCE AGREEMENT

 

 

 

THIS FORBEARANCE AGREEMENT (“Agreement”) is entered into as of March 1, 2012 (the “Effective Date”), by and among Advanced Beauty Solutions, LLC (“ABS”), a California limited liability company; and CirTran Corporation, a Nevada Corporation (“Judgment Debtor” or “CIRTRAN”); CirTran Beverage, Corp., a Utah corporation (“CirTran Beverage”); CirTran Product Corp., a Utah corporation (“CirTran Products”); CirTran Media Corp., a Utah corporation (“CirTran Media”); and Iehab Hawatmeh, an individual (“Iehab”) (the Judgment Debtor together with CirTran Beverage, CirTran Products, CirTran Media, and Iehab are individually and collectively referred to herein as the “CirTran Parties”).

 

 

 

 

 

Country	Mark	Date Filed	Date Registered	Serial/Registration Number
United States	True Ceramic Pro	4-9-2004	n/a	78/399698
United States	True Ceramic Pro	4-9-2004	7-1-2008	78/979167
International	True Ceramic Pro	10-13-2004	10-13-2004	0861761

 

 

NAME OF WORK	REGISTRATION NO.	REGISTRATION DATE
Advanced Beauty Solutions website and web pages	TX-6-064-955	10/4/2004
Advanced Beauty Solutions brochure and literature	TX-6-064-956	10/4/2004
True Ceramic Pro – Live Ops (TCP5) infomercial and related master tapes	N/A	N/A

 

Forbearance Agreement ABS (Final).doc

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The liquidating plan, a copy which is attached to the Confirmation Order, further provides in relevant part on page 30, line 18 of the plan as follow:

 

 

NOW THEREFORE, in consideration of the foregoing and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ABS and CirTran Parties hereby agree as follows:

 

1. Incorporation of Recitals. Each of the above Recitals is represented to be true and correct and deemed to be the agreement of ABS and the CirTran Parties.

2. Confirmation of Judgment; No Waiver.

 

a.

The CirTran Parties hereby acknowledge that the Judgments, except to the extent of any issue now pending before the BAP in the BAP Appeal and proceedings pursuant thereto, are valid and enforceable obligations against CIRTRAN, due and payable in full without defense, set off or counterclaim of any kind. ABS’s entry into this Agreement, acceptance of interest or principal payments, negotiations with the CirTran Parties, or any creditor of CIRTRAN, obtaining an appraisal or conducting other analysis or investigation of the collateral for the Agreement, or any other action or failure to act on the part of ABS shall not constitute a renewal, extension or modification of the Adversary Judgment and the Attorneys’ Fees Judgment or a waiver of ABS’s rights or remedies in connection thereto.

 

b.

ABS acknowledges that CIRTRAN’s entry into this Agreement; payment of interest, principal, or other amounts; negotiations, communications, or course of dealing with ABS; or any other act or failure to act of CIRTRAN shall not constitute a renewal, extension, or modification of the Judgments or a waiver of CIRTRAN’s rights in connection therewith.

 

3. Execution; Forms of Agreements; Conditions Precedent.  Contemporaneous with the execution of this Agreement and the delivery thereof to ABS:

 

a.

The CirTran Parties shall tender to ABS Twenty-Five Thousand Dollars ($25,000), which ABS shall apply towards a reduction of the total amounts owed under the Judgments, and all payments received from the CirTran Parties will be used to first reduce the Attorneys’ Fees Judgment until it is satisfied;

 

b.

CIRTRAN shall execute and tender to ABS a stipulation to an additional judgment in the form of the stipulated judgment attached hereto as Exhibit A for all attorney fees incurred by ABS in negotiating the Forbearance Agreement to resolve the Adversary Judgment and the Attorneys’ Fee Judgment (the “Stipulation for Judgment”). The additional stipulated judgment shall be filed only after an uncured default of this Agreement by the CirTran Parties.

 

c.

CIRTRAN shall execute and tender to ABS a Pledge and Security Agreement in the form attached hereto as Exhibit B (“Pledge and Security Agreement”) which Pledge and Security Agreement shall secure the Agreement and shall constitute a lien in favor of ABS on all of the assets of CIRTRAN (the “Junior Lien”), including CIRTRAN’s equity interest in its subsidiaries and various entities.  Concurrently with the execution of the Pledge and Security Agreement, ABS shall enter into a Subordination Agreement with YA Global subordinating the Junior Liens to the Senior Liens (“YA Subordination Agreement”);

d.	CIRTRAN shall execute and tender to ABS a Trademark Assignment in the form attached hereto as Exhibit C whereby CIRTRAN shall assign the True Ceramic Pro Trademarks, U.S. Registration Nos. 78/979167, 78/399698 and International Registration No. 0861761 to ABS (the “Trademark Agreement”);

 

e.

CIRTRAN shall execute and tender to ABS a Claim Assignment in the form attached hereto as Exhibit D wherein CIRTRAN shall assign its creditor claim against the estate of ABS to ABS to the extent of the balance due under this Agreement, after adjustment for the value of the intellectual property assigned previously or as provided above (the “Claim Assignment Agreement”). Any distribution on such creditor claim in excess of the permitted amounts due to ABS pursuant to this Agreement shall be paid to CIRTRAN;

 

f.

Within five business days after the execution of this Agreement, CIRTRAN shall deliver to ABS details of all prior use of the trademark and copyrights, which will include a report showing where the copyrighted infomercial has been displayed and sales volume, by month, of True Ceramic Pro products from June 7, 2006, the date of entry of the order approving the original purchase agreement for the sale to CIRTRAN of the intellectual property assets of ABS, to the Effective Date, the date of the return of the intellectual property assets to ABS from CIRTRAN.  Such data will be provided for information purposes only.  All claims of ABS related to payments for the sales of the trademarked goods under the Purchase Agreement have been fully and finally resolved in the Adversary Action, and no further cause of action, claim for relief, or other remedy will be based thereon. For avoidance of doubt, nothing herein limits, modifies or restricts the full and complete release set forth in Section 9 of this Agreement;

 

g.

ABS and YA Global shall execute a subordination agreement in the form attached hereto as Exhibit E, wherein ABS shall subordinate its security interests in all of the assets of CIRTRAN (created by the Pledge and Security Agreement described in Section 3(d) above) in favor of the security interests held by YA Global over the same assets.

 

a.

CIRTRAN will pay ABS, in full satisfaction of the Adversary Judgment and the Attorneys’ Fees Judgment, a total principal amount of One Million Eight Hundred Ten Thousand Dollars ($1,810,000.00) (the “Settlement Amount”) ($1,835,000 less the $25,000 paid at closing), subject to adjustment as provided in Section 4(c) below. CIRTRAN, CirTran Beverage, CirTran Products, and CirTran Media shall only be jointly and severally liable to pay ABS the first $150,840 of the Settlement Amount in resolution of the pending OSC re: contempt for the transfer $150,840 in violation of the Court’s order; only CIRTRAN shall be liable to pay ABS the amounts in excess of $150,840.  The Settlement Amount shall be payable as follows: (i) CIRTRAN and, to the extent of the initial $150,840, CirTran Beverage, CirTran Products, and CirTran Media shall pay ABS $7,500 per month for 46 consecutive months, commencing on March 29, 2012, and continuing on the last day of each month until January 30, 2016, except that in December 2012 CirTran shall pay $15,000 rather than $7,500, and (ii) thereafter, the entire unpaid balance of the Settlement Amount, as finally determined as provided below, shall be due and payable on January 30, 2016.  If any payment date falls on a weekend or legal holiday in the State of California, the payment will be due on the next succeeding business day.

 

b.

During the Forbearance Period, interest on the Settlement Amount will not accrue if all payments provided herein are timely made. If the CirTran Parties default on their payment obligation under this  Agreement, default interest at the rate of 10% per annum will immediately accrue, which will be calculated from the Effective Date.

 

c.

The Settlement Amount due under this Agreement shall be reduced by (a) the greater of (i) the amount of credit granted by either the BAP or the Bankruptcy Court to CIRTRAN for the value of the intellectual property previously conveyed to ABS and to be conveyed pursuant to Exhibit C; and (ii) the amount received by ABS for sale of such intellectual property to a third party during the term of this Agreement, whether in a single or series of transactions, provided that if ABS sells less than all of such intellectual property, the value of the portion retained shall be determined by agreement of the parties or, in the absence of agreement, by the Bankruptcy Court; and (b) any distribution to which CIRTRAN would be entitled as a creditor of ABS but for the assignment by CIRTRAN of such creditor claim by the execution and delivery of the Claim Assignment Agreement in the form of Exhibit D. Notwithstanding the foregoing, the Settlement Amount shall never be reduced below $90,000, which shall be payable to ABS during the first 12 months under this Agreement pursuant to Section 4(a) above. Any principal reduction resulting from (a) or (b) above will be applied to the final payment due on January 30, 2016 first, followed by the application to all other payments due under this Agreement in reverse order of maturity.

d.

The BAP Appeal shall continue to determine, either in such appeal or on remand as the BAP may determine, the amount of credit due CIRTRAN for the conveyance of the copyright intellectual property prior to the Effective Date of this Agreement at issue in the Satisfaction Motion and the amount of credit due CIRTRAN for the conveyance of the trademark intellectual property on the Effective Date of this Agreement. The Parties will agree that the determination of any issue decided by the BAP will be conclusive, and no appeal may be had from such ruling. If the BAP fails to determine the value of the copyrights assigned to ABS or remand the issue to the Bankruptcy Court, the Parties will agree to submit to a judicial determination of the value of all the intellectual property transferred from CIRTRAN to ABS before the Bankruptcy Court. The determination by the Bankruptcy Court of the fair market value of the intellectual property on the date of transfer will be conclusive in the absence of manifest error, and no appeal to such determination will be allowed. Any attorney fees awarded by the court in the BAP Appeal to CirTran shall be added to increase the amount determined by the court to be credited against the Adversary Judgment. Any such fees awarded by the court in the BAP Appeal to ABS shall be added to the balance payable under this Agreement at maturity.

 

e.

Except for the BAP Appeal and the judicial determination of the fair market value of the intellectual property assets transferred by CIRTRAN to ABS, all litigation and disputes between ABS and its affiliates on the one hand and CIRTRAN and its affiliates on the other, including the pending OSC Re: Contempt proceeding against the CirTran Parties and all other claims, known or unknown and whether or not previously asserted, shall be dismissed, and the foregoing parties have exchanged mutual general releases herein, excepting only obligations arising under the Agreement and the related Pledge and Security Agreement, Assignment Agreement and the BAP Appeal, including any additional attorney fees incurred in prosecuting the BAP Appeal as further provided below.  ABS shall cause the dismissal of the OSC re: Contempt within thirty (30) days following execution of the Agreement.

 

f.

If the CirTran Parties are in payment default of their payment obligations to ABS under this Agreement, and if YA Global sells, assigns, conveys, or otherwise transfers its Senior Liens to the CirTran Parties, or to any party directly or indirectly owned or controlled by the CirTran Parties, or which is acquiring the Senior Liens in active participation with the CirTran Parties, without requiring such party to first cure the payment defaults under this Agreement, then ABS shall have the right, but not the obligation, to immediately terminate the standstill and/or forbearance provisions set forth in Section 1 of the YA Subordination Agreement and Section 4 of this Agreement and ABS shall be entitled to take all appropriate action to accelerate, demand, collect, or enforce payment of the Settlement Amount, the Adversary Judgment and the Attorney Fee Judgment.  The termination of the standstill/forbearance provisions of Section 4 of this Agreement and Section 1 of the YA Subordination Agreement shall not affect, modify, or alter the other provisions of this Agreement or the YA Subordination Agreement, including, without limitation, the priority of the YA Senior Liens over the Junior Liens and YA Global’s rights in connection with the same, all as set forth in this Agreement. For the avoidance of doubt, an assignment of all or part of the YA Global Senior Liens shall not give ABS any right to terminate the standstill/forbearance provisions of Section 4 of this Agreement and Section 1 of the YA Subordination Agreement, and such provisions will remain in full force and effect, if such assignment is (a) to a subsidiary or affiliate of YA Global or an existing investor in YA Global (determined as of the date hereof), (b) to any party other than the CirTran Parties, or a party directly or indirectly owned or controlled by the CirTran Parties, or who is acquiring the Senior Liens in active participation with the CirTran Parties, or (c) made at a time when there is then no existing payment default under this Agreement.

 

 

 

 

 

6. CirTran Parties Covenants. During the Forbearance Period, the CirTran Parties will do all of the following:

 

a.	make timely payments to ABS for all amounts due pursuant to this Agreement to the extent of their obligations as set forth in section 4.a.; and

 

b.	comply with all other requirements of this Agreement.

 

a.	any failure to make a timely payment in accordance with the terms of this Agreement; or

 

b.	any failure by the CirTran parties to perform or satisfy any of the covenants and conditions of the Agreement or the failure by the CirTran Parties to perform any of the other obligations set forth in this Agreement.

 

 

ABS for itself and its executors, administrators, general partners, limited partners, employees, representatives, shareholders, predecessors, subsidiaries and/or affiliates, parents, heirs, trustees, trustors, beneficiaries, successors-in-interest, transferees, assigns, officers, directors, managers, members, servants, employees, insurers, underwriters, successors, attorneys, and agents and each of them, now and in the future, and all persons acting by, through, under or in concert with them, and each of them, hereby release and discharge the CirTran Parties and their past, present and future administrators, affiliates, agents, assigns, participants, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, servicers, shareholders, subsidiaries and successors, and each of them, and each of their respective administrators, affiliates, agents, assigns, participants, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them, and all persons acting by, through, under or in concert with the CirTran Parties, from any and all claims, disputes, demands, damages, debts, liabilities, obligations, expenses, liens, contracts, agreements, causes of action, suits, matters, controversies, claims for attorneys’ fees, costs, incidental expenses, increased overhead, emotional distress damages, consequential damages, punitive damages, and interest existing on, or at any time prior to the Effective Date of this Agreement by all parties hereto, of whatever nature, character or description, whether in law, in equity or otherwise, whether known or unknown, asserted or unasserted, fixed, liquidated or contingent, anticipated or unanticipated, known or unknown, suspected or unsuspected, that it may have or claim to have against any and all of them, for or because of any matter or thing done, omitted, or suffered to be done by any of the other parties prior to and including the Effective Date arising from, out of, or in any way connected with all agreements, business, transactions, prior negotiations, courses of dealing, representations, expectations, agreements, arrangements, or transactions between the parties, including any matter or thing done, omitted, or suffered to be done  or statement or omission by any party, including any matter arising out of, related to or in any way connected to any judgment enforcement related to the Adversary Judgment and the Attorney Fees Judgment, excepting only the obligations arising under the Agreement and the related Pledge and Security Agreement, Assignment Agreement, Subordination Agreement and the BAP Appeal, including any additional attorney fees incurred in prosecuting the BAP Appeal as awarded by the court.

ABS and the CirTran Parties acknowledge that they are familiar with Section 1542 of the Civil Code of the State of California which provides as follows:

 

 

ABS and the CirTran Parties waive and relinquish any right or benefit which they have or may have under Section 1542 of the Civil Code of the State of California or any similar provision of the statutory or non-statutory law of any other jurisdiction, to the full extent that it may lawfully waive all such rights and benefits. In connection with such waiver and relinquishment, ABS and the CirTran Parties acknowledge that it is aware that it or its attorneys or agents may hereafter discover facts in addition to or different from those which it now knows or believes to exist with respect to the subject matter of the foregoing release or with respect to ABS and the CirTran Parties, but that ABS and the CirTran Parties intend hereby fully, finally and forever to release all of the claims, known or unknown, suspected or unsuspected, which now exist or may exist hereafter by ABS and the CirTran Parties against each other, except as otherwise expressly provided in the foregoing release. This release shall be and remain in effect notwithstanding the discovery or existence of any such additional or different fact.

 

10. Miscellaneous.

 

a.	Agreement to Cooperate. All the parties hereto agree to and will cooperate fully with each other in the performance of this Agreement, including without limitation executing any additional documents reasonably necessary to the full performance of this Agreement.

 

b.

Limitation on Relationship. This Agreement shall not be deemed or construed to create a partnership, tenancy in common, joint tenancy, joint venture, co-ownership or any other relationship aside from a debtor-creditor relationship between ABS or any of the CirTran Parties on the one hand and ABS on the other hand.

 

c.	Integration. This Agreement incorporates all negotiations of the parties hereto and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

d.

Severability. If any provision of this Agreement is held illegal or unenforceable in a judicial proceeding, such provision shall be severed and shall be inoperative, and, provided that the fundamental terms and conditions of this Agreement (including, without limitation, the exhibits executed and delivered pursuant to Section 3, Section 4 Forbearance Agreement and the related Subordination Agreement, Section 5 Bankruptcy Court Approval; Perfection of ABS Security Interest, Section 7 Events of Default and Section 9 Release remain legal and enforceable, the remainder of this Agreement shall remain operative and binding on the Parties.

 

e.

Reversal of Payments. If ABS receives any payments or proceeds of collateral which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be paid to a trustee, debtor-in-possession, receiver, subordinate lender, stop notice claimant, lienholder, or any other party under any bankruptcy law, common law, equitable cause or otherwise, then, to such extent, the obligations or part thereof intended to be satisfied by such payments or proceeds shall be reserved and continue as if such payments or proceeds had not been received by ABS.

 

f.	Modification. This Agreement may not be amended, waived or modified in any manner without the written consent of the party against whom the amendment, waiver or modification is sought to be enforced.

 

g.

Reimbursement. Without limiting CIRTRAN’s obligations under the Adversary Judgment and Attorneys Fee Judgment, the CirTran Parties agrees to reimburse ABS for all costs and expenses, including without limitation reasonable attorneys’ fees, expended or incurred by ABS in connection with (i) the amendment and enforcement of this Agreement, including without limitation during any workout, attempted workout, and/or in connection with the rendering of legal advice as to ABS’s rights, remedies and obligations under this Agreement, (ii) collecting any sum which becomes due ABS under this Agreement, (iii) any proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, (iv) the protection, preservation or enforcement of any rights or remedies of ABS or any of ABS’s collateral for the Agreement, or (v) appraisals, title reports, title or other insurance, or investigation or analysis of or relating to the collateral for the Agreement.

 

h.	Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

 

i.	Section Headings. The various headings used in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof.

j.	Counterparts. This Agreement may be executed in any number of counterparts which, when taken together, shall constitute but one agreement.

 

k.

Notices. All notices, consents, approvals or other instruments required or permitted to be given by either party pursuant to this Agreement shall be in writing and given by (i) hand delivery, or (ii) express overnight delivery service and shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b) the next business day following the date of deposit with the delivery service, if delivered by express overnight delivery service. Notices shall be provided to the parties and addresses specified below or to such other address as the CirTran Parties  or ABS, as the case may be, shall in like manner designate in writing:

 

Attn: Iehab Hawatmeh

4125 S. 6000 W.

West Valley City, Utah 84128

 

Leonard Shulman

8105 Irvine Center Drive, Suite 600

Irvine, California 92618

 

l.	Authorization. The individual executing this Agreement on behalf of the CirTran Parties represents and warrants that he has full corporate power and authority to execute this Agreement and to create binding obligations of the CirTran Parties enforceable in accordance with the terms hereof.

 

m.	Legal Counsel Representation. The CirTran Parties represent that they have been provided an opportunity to seek legal representation in connection with this Agreement.

 

IN WITNESS WHEREOF, ABS and the CirTran Parties have executed this Agreement as of the date set forth in the preamble.

 

 

Advanced Beauty Solutions, LLC, a California limited liability company

 

By: /s/ Jason Dodo

Name: Jason Dodo

Title: Manager

 

 

CirTran Corporation, a Nevada corporation

 

By: /s/ Iehab Hawatmeh

Name: Iehab Hawatmeh

Title: Chief Executive Officer

 

CirTran Beverage Corp., a Utah corporation

 

By: /s/ Iehab Hawatmeh

Name: Iehab Hawatmeh

Title: Chief Executive Officer

 

CirTran Products Corp., a Utah corporation

 

By: /s/ Iehab Hawatmeh

Name: Iehab Hawatmeh

Title: Chief Executive Officer

 

CirTran Media Corp., a Utah corporation

 

By: /s/ Iehab Hawatmeh

Name: Iehab Hawatmeh

 

/s/ Iehab Hawatmeh

Iehab Hawatmeh, an individual

CONDITIONAL GUARANTY

Iehab Hawatmeh hereby unconditionally, absolutely, and irrevocably guarantees to ABS the full payment of the first $150,840 of the amount owing by CIRTRAN to ABS under the foregoing Forbearance Agreement, provided, however, that the right of ABS to enforce this guaranty shall be conditioned upon the occurrence, while Hawatmeh is an officer or director of the any of the CirTran Parties, of fraud, intentional misrepresentation or material omission, and/or willful misconduct on the part of any of the CirTran Parties and/or Hawatmeh, including, without limitation, misrepresentations, acts or omissions in connection with this guaranty or the Forbearance Agreement, or any of the transactions evidenced thereby or related thereto (it being acknowledged and agreed that mere nonpayment or simple covenant defaults under such Forbearance Agreement, shall not on their own constitute willful misconduct). The guaranty set forth herein shall automatically terminate upon the payment of $150,840 under such Forbearance Agreement.

 

/s/ Iehab Hawatmeh

Iehab Hawatmeh, an individual

 

 

 

 

 

 

 

ARTICLE I - GRANT OF SECURITY INTEREST; COLLATERAL

 

Section 1.1   Collateral.  As security for the full and punctual performance of Pledgor’s obligations under the Judgments (as defined in the Forbearance Agreement) (the “Secured Obligations”), Pledgor hereby grants, pledges, hypothecates, transfers, and assigns to Secured Party all of (i) Pledgor’s rights (including Pledgor’s right to vote), title, and interest in the Pledged Entities, (ii) Pledgor’s right, title, ownership, equity, or other interests in funds Pledgor receives from the Pledged Entities (collectively referred to as the “Pledged Interests”), whether now owned or hereafter acquired, now existing or hereafter arising and wherever located, all rights and benefits appurtenant thereto, and all proceeds thereof; and (iii) in and to all assets and personal property of Pledgor, wherever located and whether now or hereinafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including without limitation, all Goods, Inventory, Equipment, Fixtures, Instruments, Documents, Accounts, Contracts and Contract Rights, Chattel Paper, Deposit Accounts, Money, Letters of Credit and Letter-of-Credit Rights, Commercial Tort Claims, Securities and all other Investment Property, General Intangibles, Farm Products, all books and records and information relating to any of the foregoing, all supporting obligations, and any and all Proceeds and products of any and all of the foregoing, and as more particularly described on Exhibit A attached hereto (collectively, the “Collateral”).

Section 1.2   Definitions.  As used herein, the following terms shall have the following respective meanings:

 

 

 

 

Section 1.3    Perfection of Security Interest; Further Acts.  Upon Secured Party’s written request, Pledgor shall promptly take such actions as may be reasonably required to perfect the security interest of Secured Party in the Collateral under applicable law.

 

Section 1.4           Acts of Secured Party.  Neither Secured Party nor any of Secured Party’s trustees, beneficiaries, heirs, successors or assigns, agents, employees, or counsel shall be liable for any action taken or omitted to be taken by such party or parties relative to any of the Collateral, except for such party’s or parties’ own gross negligence or willful misconduct.

 

Section 1.5            Custody of Collateral.  Secured Party shall not have any duty concerning the collection or protection of the Collateral or any income thereon or payments with respect thereto, or concerning the preservation of any rights pertaining thereto beyond exercising reasonable care with respect to the custody of any tangible evidence of the Collateral actually in its possession.

 

Section 1.6           Security Interest and Delivery.  Pledgor hereby grants to Secured Party a continuing security interest in the Collateral to secure prompt payment and performance by Pledgor of Pledgor’s obligations under the Forbearance Agreement.

 

ARTICLE II - POWERS OF PLEDGOR PRIOR TO AN EVENT OF DEFAULT

 

Section 2.1           Distributions; Exercise of Rights.  Until the occurrence of any uncured Event of Default (as defined in Section 4) and so long as any cash Distribution is not subject to the terms of the Forbearance Agreement, Pledgor shall be entitled to (a) receive cash Distributions allocable to the Collateral, and (b) exercise the voting, administration, management, and all other powers, rights, and duties of Pledgor with respect to the Pledged Entities’ operating agreement or bylaws, as applicable, subject to the priority rights of YA Global under the Priority YA Global Lien.  If Pledgor shall become entitled to receive or shall receive from the Pledged Entities, any non-cash Distribution as an addition to, on account of, in substitution of, or in exchange for the Collateral or any part thereof, the same shall be received and held by Pledgor in trust and as agent for Secured Party, subject to the priority rights of YA Global.

Section 2.2           Termination of Powers.  Upon the occurrence of a default that is continuing, all such powers, rights, and remedies of Pledgor, which are conditionally permitted pursuant to Section 2.1, shall cease and the provisions of Section 4 hereof shall apply, subject to the priority rights of YA Global under the Priority YA Global Lien.

 

ARTICLE III - REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR

 

Pledgor hereby covenants with Secured Party, and represents and warrants to Secured Party, subject to the provisions of that certain Forbearance Agreement of even date between the parties and the Priority YA Global Lien and other liens, claims or encumbrances of record as of the date hereof, as follows:

 

Section 3.1           Ownership.  Pledgor is the owner of the Collateral and does not have outstanding options or rights or other agreements to acquire or sell or otherwise transfer all or any portion of the Collateral.

 

 

Section 3.3            Collateral Documents.  The Collateral and all certificates, writings, papers, and documents relating to the Collateral are genuine and in all respects what they purport to be, and all information relating to the Collateral, including financial information, whether previously or in the future, is or will be true, complete, and correct in all material respects, and Pledgor expressly acknowledges that Secured Party is relying on such information.

 

Section 3.4           No Transfer.  Except pursuant to the Priority YA Global Lien and other liens of record as of the date hereof and except for the transfer affected by this Agreement and the Forbearance Agreement, Pledgor will not transfer the Collateral, or any portion thereof, or suffer or permit any transfer thereof to occur.

 

Section 3.5           Property of the Pledged Entities.  For those Pledged Entities in which Pledgor owns a controlling interest, Pledgor shall cause such Pledged Entities to make complete and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required by law and shall, upon request, provide Secured Party with documentation evidencing that such taxes, assessments, or contributions were paid.  Pledgor indemnifies Secured Party against any loss or liability suffered or incurred by Secured Party by reason of such taxes, assessments, or contributions.

 

Section 3.6           No Financing Statements.  Except for the Priority YA Global Lien and other liens of record as of the date hereof, financing statements filed or to be filed in favor of Secured Party as secured party, or such other financing statements expressly permitted with Secured Party’s prior written consent, which may be withheld in Secured Party’s sole discretion, there are not now, and will not in the future be, and Pledgor will not execute or permit, any financing statements under the UCC covering any or all of the Collateral, and no such financing statements are, or will be, filed in any public office.

 

Section 3.7           Inspection of Collateral.  Pledgor will permit Secured Party to have access to and inspect the Collateral and the books, records, and files of Pledgor and the Pledged Entities pertaining thereto, during normal business hours.

Section 3.7           Secured Party’s Right to Perform Acts.  Subject to the rights of YA Global pursuant to the Priority YA Global Lien, Pledgor authorizes Secured Party to perform any and all acts that Secured Party in good faith deems necessary for protection and preservation of the Collateral or its value, or Secured Party’s security interest therein, including but not limited to, immediately transferring upon request by Secured Party any Collateral into Secured Party’s own name.  Pledgor agrees to take such other actions and to execute and deliver such other writings, documents, notices, financing statements, and/or instructions as Secured Party shall deem necessary or desirable to perfect and maintain perfected Secured Party’s security interest in the Collateral.  Pledgor hereby appoints Secured Party, with full power of substitution, whether or not a default has occurred or is continuing hereunder, as attorney-in-fact of Pledgor for the purpose of carrying out of the provisions of this Agreement, dealing with, maintaining, or foreclosing Secured Party’s interest in the Collateral, and taking any action, pressing any claim, executing any instrument, and providing any endorsement that Secured Party may deem necessary or advisable to accomplish the purpose hereof, which appointment being coupled with an interest is irrevocable for the term hereof, all subject to the Prior YA Global Lien.

 

ARTICLE IV - EVENTS OF DEFAULT AND REMEDIES

 

Section 4.1            Events of Default.  An event of default shall occur and be continuing upon the occurrence of any of the following (“Event(s) of Default”):

 

(a) Pledgor fails to perform Pledgor’s obligations under the Forbearance Agreement and/or this Agreement;

 

(b) Any statement or representation made by Pledgor under the Forbearance Agreement or this Agreement is false when made in any material respect; and

 

(c) A petition in bankruptcy is filed by or against Pledgor, a receiver is appointed over the Collateral, or Pledgor makes an assignment for the benefit of creditors.

 

Section 4.2           Secured Party’s Remedies.  Upon the occurrence of an Event of Default, Secured Party may, at Secured Party’s option, and without notice, declare that the outstanding principal and all accrued interest are immediately due and payable, terminate any agreement for the rights granted under Section 2.1 above, and in addition to, and in furtherance of, all rights and remedies of a secured party under the UCC, any other statute or rules, and the Forbearance Agreement, subject to the Priority YA Global Lien, the Secured Party shall have the right to:

 

(a) effect the transfer of any or all of the Collateral, subject only to the provisions of the UCC and any other applicable statute that, in accordance with such statute, cannot be waived, in any one or more of the following ways;

 

(b) proceed by a suit or suits at law or in equity to foreclose all or any part of the security interests in the Collateral and sell the Collateral or any portion thereof, under a judgment or decree of a court of competent jurisdiction, retaining during the duration of such judicial enforcement all other rights with respect to the Collateral; and

 

(c) exercise all of the rights and remedies of a secured party under the UCC.

 

Section 4.3           Remedies Cumulative.  The obligations of Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated, or otherwise affected by, any circumstances or occurrence except as specifically provided in this Agreement.  The rights, powers, and remedies of Secured Party under this Agreement shall be cumulative and not exclusive of any other right, power, or remedy that Secured Party may have against Pledgor or any other person or entity pledging collateral pursuant to the Forbearance Agreement or existing at law or in equity or otherwise.  Secured Party’s rights, powers, and remedies may be pursued singly, concurrently, or otherwise, at such time and in such order as Secured Party may determine in Secured Party’s sole and absolute discretion.  Secured Party shall have no duty to exercise any of the aforesaid rights, powers, and remedies and shall not be responsible for any failure to do so or delay in so doing.

Section 4.4           Application of Collateral.  All proceeds from the sale of all or any portion of the Collateral, and all Distributions now or at any time hereafter received or retained by Secured Party pursuant to the provisions of this Agreement, shall be applied by Secured Party to the satisfaction of Pledgor’s obligations under the Forbearance Agreement in such order and priority as determined by Secured Party in its sole and absolute discretion and in accordance with applicable law.

 

Section 4.5           Preferences.  To the extent Pledgor makes a payment or payments to Secured Party, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid to a trustee, receiver, or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then, to the extent of such payment or proceeds received, Pledgor’s obligations intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Secured Party.

 

ARTICLE V - MISCELLANEOUS PROVISIONS

 

Section 5.1           Further Assurances.  Pledgor hereby agrees to sign and deliver to Secured Party financing statements, continuation statements, and other documents, agreements, and instruments, in form acceptable to Secured Party, and do such further acts, as Secured Party may from time to time reasonably request or which are reasonably necessary to establish and maintain a valid and perfected security interest in the Collateral (and to pay any filing fees relative thereto) or to further assure or confirm Secured Party’s rights hereunder.  Without limiting the foregoing, Pledgor authorizes Secured Party, to the extent permitted by law, to file such financing statements and amendments thereto and continuations thereof relating to all or any part of the Collateral without the signatures of Pledgor (including, to the extent permitted by law, to file a photographic or other reproduction of this Agreement).

 

Section 5.2           No Release, Etc.  No delay or omission to exercise any remedy, right, or power accruing upon an Event of Default or an Event of Default shall impair any such remedy, right, or power or shall be construed as a waiver thereof, but any such remedy, right, or power may be exercised from time to time and as often as may be deemed expedient.  A waiver of an Event of Default shall not be construed to be a waiver of any subsequent Event of Default or to impair any remedy, right, or power of Secured Party.  Any and all of Secured Party’s rights with respect to any Collateral shall continue unimpaired, and Pledgor shall be and remain obligated in accordance with the terms hereof, notwithstanding, among other things: (a) any renewal, extension, amendment, or modification of, or addition or supplement to, or deletion from, this Agreement or the Forbearance Agreement or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof; (b) any waiver, consent, delay, extension of time, indulgence, or other action or inaction under or in respect of this Agreement or Forbearance Agreement; (c) any exercise or non-exercise of any right, remedy, power, or privilege under or in respect of this Agreement or the Forbearance Agreement; (d) any sale, exchange, release, surrender, or substitution of, or realization upon, any Collateral (except to the extent otherwise specifically agreed to by Secured Party) or any other security held by Secured Party to secure the Indebtedness; (e) the furnishing to or acceptance by Secured Party of any additional security to secure the Indebtedness; or (f) any invalidity, irregularity, or unenforceability of all or any part of Pledgor’s obligations or of any security therefor.

 

Section 5.3           Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 5.4           Modification; Waiver in Writing.  No modification, amendment, extension, discharge, termination, or waiver of any provision of this Agreement, nor consent to any departure by Pledgor therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given.  Except as otherwise expressly provided herein, no notice to or demand on Pledgor shall entitle Pledgor to any other or future notice or demand in the same, similar, or other circumstances.

 

Section 5.5           Number and Gender.  All references to sections and exhibits are to sections and exhibits in or to this Agreement unless otherwise specified.  Unless otherwise specified, the words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision, article, section, or other subdivision of this Agreement.  Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

 

Section 5.6           Headings, Etc.  The headings and captions of various paragraphs of this Agreement are for the convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

 

Section 5.7           Counterparts.  This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement.  The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

 

Section 5.8           Entire Agreement.  This Agreement, the exhibits attached hereto, and the Forbearance Agreement embody the final, entire agreement of Pledgor and Secured Party with respect to Pledgor’s obligations and supersede any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof.  This Agreement is intended by Pledgor and Secured Party as a final and complete expression of the terms of the Agreement, and no course of dealing between Pledgor and Secured Party, no course of performance, no trade practices, and no evidence of prior, contemporaneous or subsequent oral agreements or discussions or other extrinsic evidence of any nature shall be used to contradict, vary, supplement or modify any term of this Agreement.  There are no oral agreements between Pledgor and Secured Party.

 

Section 5.9           Waiver of Right to Trial by Jury.  PLEDGOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, OR ANY CLAIM, COUNTERCLAIM, OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY PLEDGOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  SECURED PARTY IS. HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY PLEDGOR.

Section 5.10         Successors and Assigns.  This Agreement and all obligations of Pledgor hereunder shall be binding upon the successors and assigns of Pledgor, except that Pledgor, unless otherwise expressly provided in the Forbearance Agreement and this Agreement and then only to the extent provided therein, shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Secured Party.  Secured Party shall have the right to assign its interest in this Agreement and all rights and remedies of Secured Party hereunder shall inure to the benefit of Secured Party and its participants, successors and assigns.  Neither this Agreement nor anything set forth herein is intended to, nor shall it, confer any rights on any person or entity other than the parties hereto and all third party rights are expressly negated.

 

Section 5.11         Notices. All notices, consents, approvals, or other instruments required or permitted to be given by either party pursuant to this Agreement shall be in writing and given by (i) hand delivery, or (ii) express overnight delivery service and shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b) the next business day following the date of deposit with the delivery service, if delivered by express overnight delivery service.  Notices shall be provided to the parties and addresses specified in the introductory paragraph of this Agreement or to such other address as such Pledgor or Secured Party, as the case may be, shall in like manner designate in writing.

 

Section 5.12        Termination.  Upon the indefeasible payment and performance in full of Pledgor’s obligations to Secured Party, this Agreement shall terminate and upon Secured Party’s execution and delivery to Pledgor of documents prepared by Pledgor and acceptable to Secured Party, which shall, upon such execution and delivery, terminate Secured Party’s lien on the Collateral.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by its duly authorized officer on the date first set forth above.

 

PLEDGOR:

 

 

By: /s/ Iehab Hawatmeh

Name: Iehab Hawatmeh

Title: Chief Executive Officer

 

 

 

Name		Percentage Interest Owned by Pledgor
Racore Network, Inc., a Utah corporation		100%
Racore Technology Corporation, a Utah corporation		100%
CirTran Corporation, a Utah corporation		100%
CirTran- Asia, Inc., a Utah corporation		100%
CirTran Beverage Corp., a Utah corporation		100%
CirTran Media Corp., a Utah corporation		100%
CirTran Online Corp., a Utah corporation		100%
CirTran Products Corp., a Utah corporation		100%*

 

 

 

 

 

For the purpose of securing prompt and complete payment and performance by the Pledgor of all of the Obligations, Pledgor unconditionally and irrevocably hereby grants to the Secured Party a continuing security interest in and to, and lien upon, the following “Collateral” of the Pledgor (all capitalized terms used herein and not defined in the Agreement shall have the respective meaning’s ascribed thereto in the UCC):

 

All personal property of Pledgor, wherever located and whether now or hereinafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including without limitation, all:

 

1. Goods;

 

2. Inventory, including, without limitation, all goods, merchandise and other personal property which are held for sale or lease, or are furnished or to be furnished under any contract of service or are raw materials, work-in-process, supplies or materials used or consumed in the Pledgor’s business, and all products thereof, and all substitutions, replacements, additions or accessions therefor and thereto; and any cash or non-cash Proceeds of all of the foregoing;

 

3. Equipment, including, without limitation, all machinery, equipment, furniture, parts, tools and dies, of every kind and description, of the Pledgor (including automotive equipment and motor vehicles), now owned or hereafter acquired by the Pledgor, and used or acquired for use in the business of the Pledgor, together with all accessions thereto and all substitutions and replacements thereof and parts therefor and all cash or non-cash Proceeds of the foregoing;

 

4. Fixtures, including, without limitation, all goods which are so related to particular real estate that an interest in them arises under real estate law and all accessions thereto, replacements thereof and substitutions therefor, including, but not limited to, plumbing, heating and lighting apparatus, mantels, floor coverings, furniture, furnishings, draperies, screens, storm windows and doors, awnings, shrubbery, plants, boilers, tanks, machinery, stoves, gas and electric ranges, wall cabinets, appliances, furnaces, dynamos, motors, elevators and elevator machinery, radiators, blinds and all laundry, refrigerating, gas, electric, ventilating, air-refrigerating, air-conditioning, incinerating and sprinkling and other fire prevention or extinguishing equipment of whatsoever kind and nature and any replacements, accessions and additions thereto, Proceeds thereof and substitutions therefor;

 

5. Instruments (including promissory notes);

 

6. Documents;

 

7. Accounts, including, without limitation, all Contract Rights and accounts receivable, health-care-insurance receivables, and license fees; any other obligations or indebtedness owed to the Pledgor from whatever source arising; all rights of Pledgor to receive any payments in money or kind; all guarantees of Accounts and security therefor; all cash or non-cash Proceeds of all of the foregoing; all of the right, title and interest of Pledgor in and with respect to the goods, services or other property which gave rise to or which secure any of the accounts and insurance policies and proceeds relating thereto, and all of the rights of the Pledgor as an unpaid seller of goods or services, including, without limitation the rights of stoppage in transit, replevin, reclamation and resale and all of the foregoing, whether now existing or hereafter created or acquired;

 

 

8. Contracts and Contract Rights, including, to the extent not included in the definition of Accounts, all rights to payment or performance under a contract not yet earned by performance and not evidenced by an Instrument or Chattel Paper;

 

9. Chattel Paper (whether tangible or electronic);

 

10. Deposit Accounts (and in and to any deposits or other sums at any time credited to each such Deposit Account);

 

11. Money, cash and cash equivalents;

 

12. Letters-of-Credit and Letter-of-Credit Rights (whether or not such Letter-of-Credit is evidenced by a writing);

 

13. Commercial Tort Claims;

 

14. Securities Accounts, Security Entitlements, Securities, Financial Assets and all other Investment Property, including, without limitation, all ownership or membership interests in any subsidiaries or affiliates (whether-or not controlled by the Pledgor);

 

15. General Intangibles, including, without limitation, all Payment Intangibles and Intellectual Property, tax refunds and other claims of the Pledgor against any governmental authority, and all choses in action, insurance proceeds, goodwill customer lists, formulae, permits, research and literary rights, and franchises.

 

16. Farm Products;

 

17. All books and records and information (including all ledger sheets, files, computer programs, tapes and related data processing software) evidencing an interest in or relating to any of the foregoing and/or to the operation of the Pledgor’s business, and all rights of access to such books .and records, and information, and all property in which such books and records, and information are stored, recorded and maintained.

 

18. To the extent not already included above, all Supporting Obligations, and any and all cash and non-cash Proceeds, products, accessions, and/or replacements of any of the foregoing, including proceeds of insurance covering any or all of the foregoing.

 

Pledge and Security Agreement ABS (12-01-11).doc

B-10

 

 

 

WHEREAS, CIRTRAN CORPORATION (the “Assignor”), a Nevada corporation, is using certain trademarks in conjunction with its business, including but not limited to the trademarks and registrations thereof set forth in Schedule A attached hereto (all hereinafter collectively referred to as the “Trademarks”);

 

WHEREAS, ADVANCED BEAUTY SOLUTIONS, LLC (the “Assignee”), a California limited liability company, is desirous of acquiring the entire right, title and interest in and to said Trademarks, including the right to bring actions for infringement of said Trademarks occurring prior to the date of this Assignment; and

 

WHEREAS, Assignor wishes to herein memorialize said assignment, transfer and sale of the Trademarks to Assignee.

 

NOW, THEREFORE, TO ALL WHOM IT MAY CONCERN, be it known that for good and valuable consideration set forth in the Forbearance Agreement entered into between Assignor and Assignee as of March 1, 2012, the receipt and legal sufficiency of which is hereby acknowledged, subject to the terms of that certain Order Pursuant to Sections 105, 363, 365 and 1146 of the Bankruptcy Code (the “Sale Order”), the Assignor has sold, assigned and transferred, and by these presents does sell, assign and transfer unto the Assignee, the entire right, title and interest in and to the Trademarks, and in and to all of the goodwill of the business appurtenant thereto, together with all claims for damages by reason of past or current infringement of same, with the right to sue for and collect the same for its own use and enjoyment, and for the use and enjoyment of its successors, assigns or other legal representatives.

 

AND, the Assignor hereby requests the United States Commissioner of Patents and Trademarks (the “Commissioner”), as well as his or her foreign counterparts in the foreign jurisdictions which exercise authority over any of the Trademarks to record this Trademark Assignment. The Assignor hereby further requests the Commissioner and his or her foreign counterparts to issue any and all registrations resulting from applications to register the Trademarks resulting from applications among the Trademarks or derived therefrom to Assignee as assignee of the entire interest.

AND, the Assignor hereby warrants only against claims arising by, through or under Assignor and covenants that pursuant to the Sale Order, it has full right to convey the entire interest herein assigned, and that the Assignor has not executed, and will not execute, any agreement inconsistent herewith.

 

 

Trademark Assignment ABS.doc

C-1

 

 

ASSIGNEE FURTHER ACKNOWLEDGES AND AGREES THAT ASSIGNOR DOES NOT WARRANT THAT THE TRADEMARKS ARE FREE OF CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT BY ANY THIRD PARTY.  ASSIGNOR HEREBY DISCLAIMS ANY SUCH WARRANTY OR INDEMNIFICATION AGAINST TRADEMARK INFRINGEMENT(S).  NOTWITHSTANDING THE ABOVE DISCLAIMER BY ASSIGNOR, ASSIGNOR AND ITS AGENTS AND EMPLOYEES REPRESENT THAT THEY HAVE NO KNOWLEDGE OF ANY TRADEMARK INFRINGEMENT CLAIM(S) BY ANY THIRD PARTY.

 

AND, the Assignor, for itself and its successors and assigns, hereby covenants and agrees that at any time and from time to time forthwith upon the request of the Assignee, the Assignor will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all such further acts, deeds, instruments, transfers and assurances as may be reasonably required by the Assignee in order to assign, transfer, set over and convey unto, and vest in, the Assignee, its respective successors and assigns, any and all of the Trademarks, and to put the Assignee in actual possession and operating control thereof, to assist the Assignee in exercising all rights with respect thereto and to assure the Assignee of the full benefits thereof.

 

AND, the Assignor hereby constitutes and appoints the Assignee and its successors and assigns as its true and lawful attorneys in fact in connection with the transactions contemplated by this instrument, with full power of substitution to demand and receive, in the name and stead of the Assignor but on behalf of and for the benefit of the Assignee and its successors and assigns, any and all of the trademarks hereby conveyed, assigned, and transferred or intended so to be, and to give receipt and releases for and in respect of the same and any part thereof, and from time to time to institute and prosecute, in the name of the Assignor or otherwise, for the benefit of the Assignee or its successors and assigns, proceedings at law, in equity, or otherwise, which the Assignee or its successors or assigns deem proper in order to collect or reduce to possession or endorse any of the Trademarks, and to do all acts and things in relation to such trademarks that the Assignee or its successors or assigns reasonably deem desirable.

 

In the event that any provision of this Agreement would, under applicable law, be invalid or unenforceable in any respect, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending item or provision in any other situation or in any other jurisdiction.

 

This Agreement shall be binding upon and shall inure to the benefit of the respective successors and permitted assigns of the Assignor and the Assignee. This Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and permitted assigns.

 

 

 

This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law.

 

IN TESTIMONY WHEREOF, the Assignor has caused this Assignment to be executed by its duly authorized representative on March 1, 2012.

 

 

                                             

 

 

 

I, ____________________________________, a Notary Public in and for the County and State aforesaid, do hereby certify that_________________________________________, personally known to me to be the same person(s) whose name(s) is (are) subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that they signed, sealed and delivered the said instrument as a free act and deed on behalf of the identified company, ADVANCED BEAUTY SOLUTIONS, LLC, a California limited liability company, with authority to do so.

 

IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal, this _____ day of December, 2011.

 

I, ____________________________________, a Notary Public in and for the County and State aforesaid, do hereby certify that_________________________________________, personally known to me to be the same person(s) whose name(s) is (are) subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that they signed, sealed and delivered the said instrument as a free act and deed on behalf of the identified company, ADVANCED BEAUTY SOLUTIONS, LLC, a California limited liability company, with authority to do so.

 

IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal, this _____ day of December, 2011.

 

 

 

Country	Mark	Date Filed	Date Registered	Serial/Registration Number
United States	True Ceramic Pro	4-9-2004	n/a	78/399698
International	True Ceramic Pro	10-13-2004	10-13-2004	0861761

 

This SUBORDINATION AGREEMENT (this “Agreement”) is made as of March 1, 2012, by and between YA GLOBAL INVESTMENTS, L.P., a Cayman Island exempt limited partnership (“YA Global”), and ADVANCED BEAUTY SOLUTIONS, LLC, a California limited liability company (“ABS”, and together with YA Global, collectively, the “Creditors”).

 

WHEREAS, YA Global has entered into a certain Forbearance Agreement and Amendment of even date herewith (the “YA Global Forbearance Agreement”) with CirTran Corporation, a Nevada corporation (the “Borrower”), and the Borrower’s subsidiaries Racore Network, Inc., CirTran - Asia, Inc., CirTran Beverage Corp., CirTran Media Corp., CirTran Online Corp., CirTran Products Corp., and CirTran Corporation, each a Utah corporation (collectively, together with the Borrower and Iehab Hawatmeh, the “Obligors”);

WHEREAS, pursuant to the Financing Documents (as defined in the YA Global Forbearance Agreement), YA Global is the holder of security interests in and to, and liens upon, all assets of the Obligors (collectively, the “Senior Liens”);

WHEREAS, ABS has entered into a certain Forbearance Agreement of even date herewith (the “ABS Forbearance Agreement”) with the Borrower and, for the limited and express purposes set forth in the ABS Forbearance Agreement, CirTran Beverage Corp., CirTran Media Corp., CirTran Products Corp., and Iehab Hawatmeh;

WHEREAS, pursuant to the Pledge and Security Agreement (as defined in the ABS Forbearance Agreement), ABS is the holder of security interests in and to, and liens upon, all assets of the Borrower (collectively, the “Junior Liens”);

WHEREAS, it is a condition precedent to YA Global’s agreement to forbear under the YA Global Forbearance Agreement that ABS enter into this Agreement;

WHEREAS, it is a condition precedent to ABS’s agreement to forbear under the ABS Forbearance Agreement that YA Global enter into this Agreement; and

WHEREAS, the Creditors desire to enter into this Agreement to set forth their respective understanding with respect to priority of their respective security interests and liens.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by and between YA Global and ABS as follows:

 

 

Subordination Agreement ABS.doc

E-1

 

 

 

 

 

 

For the purposes of this Paragraph 5,“Bankruptcy Code” shall mean Title 11 of the United States Code (11 U.S.C §§ 101 etseq.), and “Bankruptcy Law” shall mean the Bankruptcy Code, or any similar federal, state, or foreign requirement of law for the relief of debtors or any arrangement, reorganization, insolvency, moratorium, assignment for the benefit of creditors, any other marshaling of the assets and liabilities of the Obligors, or any similar law relating to or affecting the enforcement of creditors’ rights generally.

 

 

[Remainder of Page Intentionally Left Blank]

 

YA GLOBAL INVESTMENTS, L.P.,

a Cayman Island exempt limited partnership

By:         Yorkville Advisors, LLC,

its Investment Manager

By: /s/ Troy Rillo

Name: Troy Rillo

Title: Sr. Managing Director

ADVANCED BEAUTY SOLUTIONS, LLC,

a California limited liability company

By: /s/ Jason Dodo

Name: Jason Dodo

 

 

Country	Mark	Date Filed	Date Registered	Serial/Registration Number
United States	True Ceramic Pro	4-9-2004	n/a	78/399698
International	True Ceramic Pro	10-13-2004	10-13-2004	0861761
United States	True Ceramic Pro	4-9-2004	7-1-2008	78/979167

 

 

 

 

(See Attached)