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EXCLUSIVE DISTRIBUTION AGREEMENT
This
DISTRIBUTION AGREEMENT (the “Agreement”) is made
and entered into effective September 20, 2007
(“Effective Date”), by and between SecureAlert,
Inc., a Utah corporation (“Company”), with its
principal executive office located at 150 West Civic Center
Drive, suite 400, Sandy, Utah 84070, and Electronic Monitoring
Services Corporation (“Distributor”), with its
principal executive office located at P.O. Box 364744, San
Juan, Puerto Rico 00936.
WITNESSETH:
WHEREAS,
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 (hereinafter
referred to as the “Device Services”);
and
WHEREAS,
Company and Distributor now desire to enter into a business
arrangement whereby Distributor will have the exclusive rights
to promote, market, and sell the Device Services within the
Territory (as hereinafter defined) 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 herby
acknowledged, the parties hereto agree as
follows:
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1.1
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Initial
Term . The
initial term of this Agreement (hereinafter referred to as 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 of 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 three (3) years term under
the same terms and conditions set forth herein (each, hereinafter
referred to as a “Renewal Term”, and collectively with
the Initial Term, the “Term”).
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2.
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Appointment;
Assignment of Duties; Territory.
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2.1
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Appointment. The Company
hereby appoints the Distributor as exclusive distributor to
promote, market, and sell the Device Services within the
Territory.
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2.2.1
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Distributor Duties. During the Term,
Distributor shall, at its own cost and expense, within the
Territory:
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(a)
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use
commercially reasonable efforts to identify, locate and obtain
potential users of the Device Services (the
“Subscribers”);
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(b)
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deliver
units of the Device to the Subscribers, train them in its use, and
otherwise assist the Subscribers by providing information upon
request;
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(c)
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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
they may agree; and
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(d)
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have
on hand a sufficient number of Devices, trained professional staff,
and facilities and resources, necessary to perform the
Distributor’s Services in accordance with the terms
hereof.
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2.2.2
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Company’s Duties. During the Term, Company
shall, at its own cost and expense:
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(a)
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supply
contractual, marketing, promotion and training materials to be used
by Distributor in connection with the marketing and distribution of
the Device Services. All materials will be in
English. Any materials to be used in a language other
than English will be at the expense of Distributor and the content
of such must be approved by the Company. 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;
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(b)
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maintain
a Monitoring Center and related staff, customer service support,
and services, to support both English and Spanish speaking
Subscribers and Users (as hereinafter defined);
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(c)
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upon
Distributor achieving 1,000 Spanish speaking users of the Device
(“Users”) in the Territory excluding Florida, the
Company will establish a Monitoring Center in Puerto Rico to handle
offenders and Users.
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2.3
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Territory. The definition of Territory includes
all of Central and South America, the Caribbean, Puerto Rico, the
State of Florida, but excludes Mexico.
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3.
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Purchases, Subscribers Pricing; Distributor’s
Compensation. The Company agrees to provide the
Devices and the Device Services for Distributor’s customers
under the terms and conditions set forth herein.
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3.1
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Purchases. Except for
Florida, all Devices deployed by Distributor must be bought by
Distributor from Company. Company agrees to give to
Distributor six month term on payment for the
Devices. As consideration for this Exclusive
Distribution Agreement in the, Distributor agrees to initially
purchase 2,000 Devices at Company’s current price of $500.00
each. The prices for the Device 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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3.2
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Subscribers Pricing . The
current retail price for the Device Services, equipment warranty,
and non-emergency airtime for Subscribers is $8.00 per day per in
service Device (the “Rate Plan”). Changes to
the Rate Plan shall be determined by the Company. The
Company shall inform the Distributor of any Retail Price Change in
writing and any such change will become effective upon receipt by
Distributor of notice thereof, and applicable to Subscribers
contracted by Distributor thereafter.
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3.3
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Distributor’s
Compensation, Payment.
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3.3.1
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Compensation. In consideration of this
Agreement, Distributor shall pay Company, per Device in
service:
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(A) in
Florida - $6.50 per day; and
(B)
in the other Territory - $5.50 per day
If
the Rate Plan or the Device Price is changed by the Company,
in no case will Distributor net receipt (after payment to
Company) thereon be in that case the Company and the
Distributor will share proratedly in the increase or decrease
in the rate change.
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4.
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Upgrades; First Option. Company agrees that (i)
as it or entity controlling Company (“Parent), or any entity
directly or indirectly controlled by Company or Parent
(“Affiliate”) develops hardware or software upgrades to
the Device or the Device Services same will be incorporated, free
of charge, into Distributor’s product and service; and
distributor shall have the first option to distribute any and all
monitoring devices, location or otherwise, which are developed by
Company, Parent or Affiliate.
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5.
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Exclusivity. The rights and authorities given to Distributor
in this Agreement are on an exclusive basis to the Territory
subject to the following exceptions:
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(A)
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The
Company currently has contracts in the State of Florida and will be
able to continue those contracts with no remuneration going to
Distributor.
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(B)
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The
Company has a Territory Account Manager (“TAM”) over
Florida that may from time to time originate additional contracts
in Florida. For those accounts originated by the
Company’s TAM during the Term, Distributor agrees to pay TAM
the amount of commission agreed between the Company and TAM not to
exceed $.50 per day per device.
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6.
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Warranties and Representations. Distributor
agrees that it shall not make any warranty or representation to any
person regard
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