DISTRIBUTION AGREEMENT
This
DISTRIBUTION AGREEMENT (the “Agreement”) is made and entered into effective May
31, 2007 (“Effective Date”), by and between SecureAlert, Inc., a Utah
corporation (the “Company”), with its principal executive office located at 000
Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx, XX 00000, and Quest Guard,
Inc., a Utah Corporation (“Distributor”), with its principal executive office
located at 0000 Xxxxx Xxxx, Xx. Xxxxxx, XX 00000.
WITNESSETH:
WHEREAS,
the Company is, among other things, the manufacturer and seller of electronic
location monitoring devices (the “Device”) and provider of services relative to
the monitoring, maintenance and repair of the Device (“Device Services”);
and
WHEREAS,
the Company and Distributor now desire to enter into a business arrangement
whereby Distributor will have the exclusive rights to provide certain Services
(as defined herein) for the Company within the Bail Bond industry under the
terms and conditions set forth herein;
NOW
THEREFORE, in consideration of the mutual promises, covenants, representations
and good and valuable consideration hereinafter set forth, the adequacy of
which
is hereby acknowledged, the parties hereto agree as follows:
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1
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Term.
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1.1
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Initial
Term. The initial term of this Agreement (the “Initial
Term”)shall commence as of the Effective Date and shall continue until
the
earlier of (i) three (3) years after the Effective Date and (ii)
the date
this Agreement is earlier terminated in accordance with the provisions
hereof.
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1.2
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Renewal
Term. This Agreement will automatically renew for
consecutive one (1) year terms under the same terms and conditions
set
forth herein (each a “Renewal Term”) unless terminated by either party
upon delivering written notice to the other party at least ninety
(90)
days but not more than one hundred twenty (120) days prior to the
end of
the then existing term. The Renewal Term(s), if any, together
with the Initial Term are collectively referred to hereinafter as
the
“Term.”
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2
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Services
and Performance.
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2.1
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Services. During
the Term of this Agreement, Distributor shall perform the following
services (the “Services”) for the
Company:
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(a)
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Distributor
shall use commercially reasonable efforts to identify, locate and
obtain
potential purchasers of the Company’s Device and Device Services within
the Bail Bond industry.
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B-1
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(b)
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Distributor
shall deploy units of the Device to the customers, train the customer’s in
the use of the Device and otherwise assist the customers by providing
information to such customers upon
request.
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(c)
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Distributor
shall provide additional guidance and advice to the Company with
regard to
the Company’s strategy to exploit its products and services, and such
other support for the Company’s products and services as may mutually be
agreed upon.
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Distributor
shall, at its own cost and expense, have on hand during the Term of this
Agreement a sufficient number of trained professional staff and sufficient
facilities and resources necessary in order to perform the Services in
accordance with the terms of this Agreement.
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2.2
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Assignment
of Duties. Distributor may not assign or delegate to any
other person, firm, or entity any of its duties hereunder without
the
prior written consent of the
Company.
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3
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Sales,
Payments and Pricing.
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3.1
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Sales. The
Company shall sell and or lease directly to Distributor all
Devices. The Company shall directly contract with and provide
the Device Services and collect all funds from the Distributor with
respect to such Device sales and Device
Services.
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A.
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The
Distributor recognizes and agrees that it has in its possession XXXXX
units and that it will pay the daily service rate on these units
beginning
on the Effective Date.
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B.
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The
Distributor will purchase XXXXX devices (that includes the XXXXX
units
described above) at the Device Pricing listed
below.
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3.2
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Pricing. The
retail prices for the Device, Device Services, equipment warranty,
non-emergency airtime for subscribers and sales personnel shall be
determined by the Company. The Company shall inform the
Distributor of any pricing change in writing and any such change
will
become effective upon receipt by Distributor of notice
thereof.
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Rate
Plan:
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A.
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Device
Pricing = $ XXXXX per
device
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B.
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Daily
Service Rate to Offender = $ XXXXX per
day
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C.
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Daily
Service Rate to Bail Agent = $ XXXXX per
day
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D.
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Daily
Service Rate charged by SecureAlert to Quest Guard = $ XXXXX per
day
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B-2
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3.3
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Payment. Except
for the purchase of the XXXXX units and the first
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month’s
monitoring fee, Distributor will not be liable for any payments until
such
time as Distributor collects revenues from either the Offender or
the Bail
Bond Agent.
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4
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Customer
Contacts and
Approvals.
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4.1 Approvals. Distributor
shall only contact companies within the Bail Bond industry in connection with
the sale or marketing of the Device and Device Services.
4.2 Referrals. All
referrals that the Company receives as a result of Distributor’s efforts will be
forwarded to Distributor.
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5
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Marketing,
Promotion and Training
Materials. The Company will
supply marketing, promotion and training materials to be used by
Distributor in connection with the marketing and distribution of
the
Devices and Device Services. No materials shall be used by
Distributor except for those provided by the Company or that are
otherwise
pre-approved in writing by the Company. The Company is not
responsible for expenses incurred by Distributor in connection with
any
marketing promotions.
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5.1
Monitoring Center. The Company will maintain a Monitoring
center and related staff, customer service support, and services. All
monitoring center operations and customer services shall be inclusive in the
pricing outlined in this agreement, and will be provided to the
Distributor.
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6
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Upgrades
and Software. The Company agrees that if it
develops additional upgrades to its devices and service, that said
upgrades will be incorporated into Distributor’s product and
service. In addition, the Company agrees to allow Distributor
software access that enables Distributor to turn off and on devices
remotely.
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7
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Exclusivity. The
rights and authorities with respect to the performance of the Services
and
sales of the Device and Device Services given to Distributor in this
Agreement are on an exclusive basis in the Bail Bond industry within
the
North American Territory.
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7.1 Bail
Bonds Distribution Channels. It is understood and agreed that in
many jurisdictions and geographical locations Bail Bonds agencies in order
to
comply with state and or local laws must create separate business entities
for
electronic monitoring in order to sell, distribute, own, or manage any
electronic monitoring devices, equipment, or related devices, equipment, and
or
services. Bail Industry representatives shall be seeking sales and
marketing activity for pretrial and post sentencing applications within and
without the criminal justice industry, these business entities are also covered
by this agreement.
B-3
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8
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Warranties
and Representations. Distributor
agrees that it shall not make any warranty or representation to any
person
regarding the nature, capability, dependability or terms of sale
or
service regarding the Device or Device Services which are not made
in
Company-provided or Company-approved marketing or promotional materials
or
that are not otherwise pre-approved in writing by the
Company. Company warrants that the life of the devices will be
three years.
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9
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Indemnity.
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9.1 The
Company’s Indemnity. The Company agrees to indemnify and hold
harmless Distributor, and Distributor’s parent, subsidiaries, affiliates,
successors, assigns, officers, directors, members, governors, shareholders,
employees and agents (the “Distributor Indemnified Parties”) from and against
any and all losses, damages, liabilities, obligations, judgments, reasonable
attorneys fees and costs, settlements, costs and other expenses (each, a “Loss”)
incurred or suffered by the Distributor Indemnified Parties as a direct result
of any material breach by the Company of this Agreement during the Term of
this
Agreement in connection with Distributor-initiated
customers. Notwithstanding anything to the contrary, the Company’s
total liability for any Loss incurred by the Company as a result of the
Company’s indemnification obligations hereunder shall not exceed the lesser of
(i) the actual aggregate amount of any Losses or (ii) the aggregate total of
all
commissions paid by the Company to Distributor over the 12-month period
immediately preceding any Loss.
9.2 Distributor’s
Indemnity. Anything herein to the contrary notwithstanding,
Distributor hereby agrees to indemnify and hold harmless The Company and its
subsidiaries, affiliates, successors, assigns, officers, directors, members,
governors, shareholders, employees and agents (the “Company Indemnified
Parties”) from and against any Loss that directly or indirectly arises from, or
is related to, any material breach by Distributor of this Agreement, including,
without limitation, any Loss resulting from the negligent or intentional
misrepresentation by Distributor, its employees or agents, to any person with
respect to the Device or Device Services covered by this Agreement.
9.3 Indemnification
Procedure. The indemnifying party will assume the defense, at its
sole expense, and with legal counsel reasonably acceptable to the indemnified
parties, of any claim or proceeding as to which such indemnifying party has
an
indemnification obligation hereunder. If the indemnifying party fails
to do so, the indemnified parties will have the right to assume their own
defense, and the indemnifying party will be obligated to reimburse the
indemnified parties for any and all reasonable expenses (including but not
limited to reasonable attorneys’ fees and costs) incurred in the defense of such
claims or litigation, in addition to indemnifying party’s other indemnity
obligations hereunder. An indemnifying party may not enter into any
settlement or compromise of any claim without the prior written consent of
the
indemnified parties unless such settlement or compromise is solely for money
damages or will have no continuing effect in any material respect on the
indemnified parties.
X-0
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00
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Xxx-Xxxxxxxxxxxx. Xxxxxxx
the prior written consent of the other party, during the Term of
this
Agreement and for a period of one (1) year after the termination
of this
Agreement, each of the parties hereto agrees not to hire or sub-contract
any employee or agent of the other party for purposes of providing
services similar to those contemplated by this
Agreement.
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11
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Termination. This
Agreement may be immediately terminated by the Company upon (i) the
failure of the Distributor to comply with laws and regulations which
materially affect its contracting rights or reputation and where
such
failure is not cured within thirty (30) days of receipt of written
notice
thereof or (ii). the occurrence of a material breach of this Agreement
or
fraud by Distributor. This Agreement may also be terminated by
the written agreement of the
parties.
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12
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Dispute
Resolution.
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12.1 Disputes. The
parties agree that in the event of any dispute arises between them under this
Agreement, they desire to avoid litigation. Accordingly, the
aggrieved party will give notice of the dispute to the other party and both
parties will attempt to settle the dispute amicably during the thirty (30)-day
period following such notice.
12.2 Mediation. If
the dispute remains unsettled, the parties agree to then submit the dispute
to
mediation. If the parties cannot agree on a mediator, each will
select a mediator and the two mediators so selected will select a third mediator
who shall alone hear the dispute. Mediation will, if possible, be
conducted during the ninety (90)-day period following expiration of the thirty
(30)-day period.
12.3 Arbitration. If
mediation fails to resolve the dispute within the above-described ninety
(90)-day period, the parties agree that the dispute will be submitted to final
and binding arbitration in accordance with the rules of the American Arbitration
Association (“AAA”); but the parties agree that this reference to the rules of
the AAA shall not constitute appointment of AAA as the authority or the body
that will hear and resolve the dispute. A single arbitrator will be
selected in the same manner described above for the selection of a single
mediator. If the parties cannot agree on a single arbitrator, each
will select an arbitrator and the two arbitrator s so selected will select
a
third arbitrator. Unless otherwise directed by the arbitrator(s),
such arbitration must be concluded within one hundred twenty (120) days of
the
expiration of the ninety (90)-day period previously specified for
mediation.
12.4 Situs. Any
mediation or arbitration hearing or meeting held hereunder shall take place
at
the Company’s offices in Salt Lake City, Utah.
12.5 Costs. The
costs of mediation (including the mediator’s fees and expenses and costs
directly related to the conduct of the mediation, but excluding each party’s
direct costs for transportation, attorneys, etc., for which each will be solely
responsible) will be shared equally by the parties. The costs of
arbitration shall be allocated among or between the parties as determined by
the
arbitrator.
B-5
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13
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Assignment
and Delegation.
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13.1 Assignment. This
Agreement in part or in whole maybe assigned with the consent of both
parties.
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14
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Miscellaneous.
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14.1
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Compliance
with Laws. Distributor shall fully comply with all
applicable laws, regulations, ordinances, court or agency decisions
and
other issuances having the authority of law regarding the matters
that are
the subject of this Agreement.
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14.2
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Authority. Each
of the persons who signs this Agreement represents and warrants that
he or
she has full power and authority to execute this Agreement on behalf
of
the party for whom he or she is signing, and that upon execution
hereof,
this Agreement will be valid, binding and enforceable against the
party in
accordance with its terms.
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14.3
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Governing
Law. This Agreement shall be construed according to and
governed by the laws of the State of Utah, without giving effect
to
principles of conflict of laws. The parties agree that
jurisdiction over and venue in any legal proceeding arising out of
or
relating to this Agreement will exclusively be in the state or federal
courts located in Salt Lake City,
Utah.
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14.4
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Notices. All
notices, demands or other communications which are required or permitted
to be given pursuant to this Agreement shall be in writing and shall
be
delivered personally, sent by telecopy or mailed by prepaid registered
mail to the affected party at the address indicated for such party
herein
or to such other address as such party may from time to time advise
the
other party hereto in writing.
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14.5
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Amendments. This
Agreement may not be amended, modified, supplemented or waived orally,
and
may only be so amended, modified, supplemented or waived by an instrument
in writing executed by the parties hereto. Any change to
Exhibit B hereto must be initialed by both
parties.
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14.6
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Binding
Effect. This Agreement and all the terms and provisions
hereof shall be binding upon and inure solely to the benefit of the
parties hereto and their respective permitted successors and
assigns.
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14.7
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Counterparts. This
Agreement may be executed in one or more counterparts, each of which
shall
be deemed an original, but all of which, when taken together, shall
constitute one and the same
instrument.
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B-6
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14.8
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Entire
Agreement. This Agreement contains the entire understanding
and Agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, whether written or oral,
between the parties.
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14.9
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Severability. In
the event that in any legal proceedings before a competent tribunal
it is
determined that any of the sections of this Agreement or any subsection,
provision or, part thereof is invalid, such section, subsection,
provision
or part thereof shall be deemed to be severed from this Agreement
for the
purposes only of particular legal proceedings in question, and this
Agreement, and the said section, subsection, provision or part thereof,
shall in every other respect continue in full force and
effect.
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14.10
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Effective
Date. The effective date of this agreement (the “Effective
Date”) shall be the date set forth below the company’s signature in its
signature block below.
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B-7
IN
WITNESS WHEREOF, the parties have executed this Distribution Agreement as of
the
Effective Date.
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THE
COMPANY:
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SecureAlert,
Inc.
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By:
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____/s/
Xxxxx
Xxxxxx ________
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Name:
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Xxxxx
Xxxxxx __________
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Title:
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President_______________
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DISTRIBUTOR:
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Quest
Guard, Inc.
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___________________________________
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By:
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___/s/
Xxxxx X. Behymer_________
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Name:
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Xxxxx
X. Xxxxxxx
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Title:
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V.P.
of Operations
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Address:
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0000
Xxxxx Xxxx
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Xx.
Xxxxxx, XX 00000
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B-8
