rmdxturnkeycontract.htm


    
      

      

    

    Exhibit 10.28


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    CONTRACT
AGREEMENT

    


    For

    


    SecureAlert,
Inc.

    


    


    


    


    


    


    


    


    


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    This
agreement made as of the 18th day
of  September,  2006.

    


    Between:
Dynamic Source
Manufacturing Inc.(DSM)

    


    And:
SecureAlert,
Inc.

    


    Whereas
DSM is engaged, inter alia, in the assembly of printed circuit boards in North
America;

    


    And
whereas CUSTOMER has agreed to purchase and DSM has agreed to provide the
services and materials hereinafter described in connection with the manufacturer
of Customer’s products.

    


    Now
therefore this agreement witnesseth that in consideration of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
parties hereto agree with the other as follows:

    


    Article
1.00 – Definitions

    


    In this
agreement, unless the context otherwise requires;

    


    
      	
              1.1

            	
              “Assembly
      Charges” means the charges detailed in the documents annexed Schedules
      “3.0” inclusive to this Agreement including but not limited to, board
      level assembly, in-circuit and functional testing, packaging and shipping
      FOB DSM plant of manufacturer Calgary, Alberta of all finished
      product;

            


    

    


    
      	
              1.2

            	
              “Forecast”
      means the document annexed as Schedule “2.0” to this Agreement which shall
      be updated monthly by the 15th
      of each month;

            


    

    


    
      	
              1.3

            	
              “Master
      Bill of Material” means the items detailed in document annexed as Schedule
      “1.0” inclusive to this Agreement;

            


    

    


    
      	
              1.4

            	
              “Product”
      means Customer’s product;

            


    

    


    
      	
              1.5

            	
              “Property”
      means any raw material, tooling and fixtures, test equipment provided by
      CUSTOMER in connection with the assembly by DSM of the
      product;

            


    

    


    
      	
              1.6

            	
              “Services”
      means the provision by DSM of all required materials as set out in the
      Master Bill of Material together with all assembly services including but
      not limited to board level assembly, in-circuit and functional testing,
      packaging and shipping of finished product. Services will be rendered as
      required by CUSTOMER pursuant to one or more purchase orders to be issued
      by it to DSM pursuant to the provisions of this
  agreement.

            


    

    


    
      	
              1.7

            	
              “Inventory”
      means all components that are specifically required and purchased on
      behalf of CUSTOMER for the manufacture of CUSTOMER’S
    products.

            


    

     

    


    
      Article 2.00 –
Services

    

    


    
      	
              2.1

            	
              CUSTOMER
      agrees to purchase the services and DSM agrees to provide Services in
      accordance with the provisions of this
  Agreement.

            


    

    
 

    
      Article 3.00 –
Payment

    

    


    
      	
              3.1

            	
              Terms
      of Payment: Full payment in advance. Currency being US
    dollar.

            


    

    


    


    


    


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      Article 4.00 –
Taxes

    

    


    
      	
              4.1

            	
              Prices
      quoted by DSM to CUSTOMER shall be exclusive of all applicable taxes
      including but not limited to value added taxes. CUSTOMER is responsible
      for payment of these taxes.

            


    

    
 

    
      Article 5.00 –
Pricing

    

    


    
      	
              5.1

            	
              CUSTOMER
      agrees to pay DSM prices then in effect for raw materials required for the
      Product and all other aspects of the Services required in connection
      therewith. Unless otherwise agreed by the parties and subject to
      provisions in Article 5.00, all prices quoted by DSM shall remain in
      effect for a period of twelve (12) months writing from the date of quote.
      Provided that in the event that there is a change in market conditions or
      pricing from suppliers in connection with any raw materials to be
      purchased by DSM then either Party shall give written particulars of same
      to the other Party following which either Party may give notice to the
      other requesting amendment to any quoted price. The Parties shall then use
      their best efforts to attempt to negotiate, in good faith, an amendment to
      any such initially quoted price(s) so as to fairly reflect the change in
      market conditions and an appropriate adjustment shall be made to the price
      for each unit of product incorporating and devices subject to the price
      change from the initial quoted
prices.

            


    

    


    
      	
              5.2

            	
              In
      the event that CUSTOMER introduces or requires changes to the Product, and
      if any such change results in an increase/decrease in the price of, or
      time required, for the performance of any aspect of the work covered by
      this agreement, an adjustment shall be made to the contract pricing and or
      delivery schedule to reflect these changes. In all cases, CUSTOMER is
      responsible for all costs related to obsolescence and additional set-up
      costs relating to the required
changes.

            


    

    


    
      	
              5.3

            	
              The
      Parties agree that DSM allocates a material scrap / shrinkage factor of
      1.5% of the unit material cost. Provided that in the event that the
      CUSTOMER’s design of material components and / or required procurement of
      components per CUSTOMER AVL (approved vendor list) results in the normal
      yield characteristics of a component and / or assembly process not being
      met and DSM have provided CUSTOMER reports indicating their detection of
      the fault(s) which may be attributable to CUSTOMER design then DSM shall
      have the right to invoice CUSTOMER for any scrap and / or shrinkage cost
      in excess of the 1.5% level and / or any additional process assembly
      costs.

            


    

    


    
      	
              5.4

            	
              It
      is understood and agreed that DSM quoted manufacturing charge is based on
      standard deliveries of components available to the electronics industry.
      Accordingly, in the event that certain components are on allocation or in
      the event that additional costs are incurred in order to procure
      components to meet CUSTOMER scheduling requirements then such additional
      costs shall be for the account of CUSTOMER. In addition, in the event of
      engineering changes or replacement of suppliers or if special
      transportation is required then all such additional costs resulting there
      from, without limiting the generality of the foregoing, all freight
      charges, duties, taxes, and brokerage fees shall be for the account of
      CUSTOMER who shall indemnify and save harmless DSM in connection
      therewith. DSM shall keep CUSTOMER advised of any additional costs that
      may arise and consult with and seek CUSTOMER prior written approval for
      any such additional costs.

            


    

    
 

    
      Article 6.00 – Ownership of
Property

    

    


    
      	
              6.1

            	
              The
      parties acknowledge and agree that the Property is owned by CUSTOMER and
      shall not be disposed of in any way without CUSTOMER prior written
      authorization. DSM agrees to act in a commercially reasonable and prudent
      manner in its handling and storage of CUSTOMER Property so as to minimize
      any loss or damage thereto. DSM further agrees to segregate the Property
      from other materials in DSM possession and to ensure that at all times the
      Property is clearly identified as being the Property of CUSTOMER. The
      Parties acknowledge and agree that the Property consigned by CUSTOMER to
      DSM for the purpose of DSM fulfilling the Services is to be independently
      insured by CUSTOMER in the event that DSM general insurance does not cover
      a claim for any reason and / or
circumstance.

            


    

    


    


    


    


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
              6.2

            	
              CUSTOMER
      or the CUSTOMER’S REPRESENTATIVE shall have the right upon reasonable
      notice to inspect the premises of DSM to ensure that the requirements of
      this Agreement, including, without limitation, paragraph 6.1 above, are
      being complied with by DSM at all times. CUSTOMER also has the right to
      allow CUSTOMER’S own end Customer the right upon reasonable notice to
      inspect the premises of DSM. However, DSM has the right to deny entry to
      CUSTOMER’S own end Customer if they are deemed to be a competitor of
      DSM.

            


    

    
 

    Article 7.00 – Liability for
Inventory

    


    
      	
              7.1

            	
              The
      inventory held by DSM on behalf of CUSTOMER to meet the finished product
      volumes contained in the forecast, shall be CUSTOMER’s responsibility in
      the event of any variation or termination of the Agreement subject.
      CUSTOMER further agrees that it shall, in any event be responsible for all
      inventory the parties agree from time to time as non-cancelable and
      non-returnable as listed in Schedule 4. CUSTOMER also acknowledges and
      agrees that at the end of the life of a product or upon cancellation of
      this Agreement that some inventory would be deemed excess and obsolete due
      to Minimum Purchase Quantities (MPQ) set by various component suppliers as
      well as requirements necessary for DSM automated manufacturing processes
      and that CUSTOMER would have liability for this inventory. It is the
      responsibility of DSM to ensure customer’s inventory is stored and
      packaged correctly.

            


    

    
 

    
      Article 8.00 – Variations to
Master Bill of Material

    

    


    
      	
              8.0

            	
              The
      parties agree that the parts and materials on the Master Bill of Materials
      list shall be subject to amendment from time to time as a result of
      engineering changes, introduction of new designs and obsolescence of prior
      designs as determined by CUSTOMER and that DSM will manufacture the
      Products using components obtained from vendors included on the CUSTOMER
      approved vendor list. Any changes accepted by DSM must be in written form
      from CUSTOMER.

            


    

    
 

    
      Article 9.00 – Limited
Warranty and Limitations of Damages

    

    


    
      	
              9.1

            	
              DSM
      warrants that it shall use its best efforts to ensure that all Products
      and Services are provided on a defect free basis. Accordingly, board level
      assembly, product assembly and testing will be performed by DSM in
      accordance with IPC-A-610C Class 2 standard. DSM further warrants that it
      shall comply with all applicable laws and regulations in providing the
      Services.

            


    

    


    
      	
              9.2.1

            	
              In
      the event there is a defect in the product that is not caused by
      unreasonable use, failure to provide reasonable and necessary maintenance
      or damage to the product while in the possession of CUSTOMER, DSM will use
      its best efforts to repair the defect and return the product in a timely
      manner. In the event that product is rejected at CUSTOMER IQC as not
      meeting IPC-A-610C (Class 2), DSM shall rework or replace the product at
      DSM expense. The CUSTOMER’s sole and exclusive remedy will consist of the
      repair of the Product, and the costs in respect thereof shall be for the
      account of DSM.

            


    

    


    
      	
               
      

            	
              9.3

            	
              In
      order to obtain performance under the warranty obligation, the CUSTOMER
      shall deliver the Product to DSM at DSM expense. However, DSM shall be
      responsible for only those delivery costs associated with the return of
      the Product from the CUSTOMER’s own location, address
      being  Suite 400 150 West Civic Center Drive, Sandy Utah
      84070

            


    

    


    
      	
               
      

            	
              9.4

            	
              The
      term of the warranty commences on the date the Product is delivered to
      CUSTOMER and continues, in the case of defects in workmanship, for a
      period of 12 months. In the case of defects in the components, DSM will
      pass-through to the CUSTOMER any warranty that is offered by the component
      supplier or manufacturer.

            


    

    


    
      	
               
      

            	
              9.5

            	
              It
      is understood by and between the parties that there are no express
      warranties in this Agreement other than the warranties provided in section
      9.1 above. DSM makes no warranty of merchantability of the products or of
      the fitness of the Products for any particular
  purpose.

            


    

    


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
               
      

            	
              9.6

            	
              Under
      no circumstances shall DSM be liable to CUSTOMER or any other person for
      any consequential, incidental, economic, indirect, or special damages
      arising out of a breach of this Agreement or any warranty, express or
      implied, under this Agreement.

            


    

    


    


    
      	
               
      

            	
              9.7

            	
              Under
      no circumstances shall CUSTOMER be liable to DSM or any other person for
      any consequential, incidental, economic, indirect, or special damages
      arising out of a breach of this Agreement or any warranty, express or
      implied, under this Agreement.

            


    

    


    


    
      	
              9.8

            	
              Under
      no circumstances shall DSM be liable to CUSTOMER or any other person for
      any consequential, incidental, economic, indirect, or special damages
      arising out water ingress into to the OTD unit unless the  OTD
      unit is shown to meet or exceed (compliant with ) an international water
      ingress specification prior to production
  manufacturing.

            


    

    


    


    
      	
               
      

            	
              Article 10.00 –
      Schedule of Deliveries / Order
  Requirements

            


    

    


    
      	
              10.1

            	
              CUSTOMER
      will order Products by Forecast which will set forth specifics as to
      required amounts and delivery dates. On or prior to the fifteenth (15th)
      day of each month, CUSTOMER will deliver a Forecast to DSM, setting forth
      CUSTOMER order and delivery schedule for the next 6 months. Upon
      acceptance and acknowledgement of CUSTOMER Forecast by DSM, CUSTOMER will
      be firmly and irrevocably obligated to buy from DSM and DSM will be
      obligated to manufacture and deliver to CUSTOMER except as identified in
      Time Fences / Allowable Quantity Variations as outlined below. At the
      completion of manufacturing the assembly, DSM will hold finished goods for
      no more than 30 days beyond a schedule that is within the Time Fences that
      are non-cancelable. DSM will then either invoice the customer and ship the
      goods or will make arrangements to invoice and store/hold finished goods
      on behalf of CUSTOMER.

            


    

    


    Allowable
Variance from Forecast

    


    
      	
              Month
      after date of
      Forecast

            	
              %
      cancelable

            	
              %
      re-schedulable

            	
              maximum
      reschedule period

            
	 
      	 
      	 
      	 
      
	
              One

            	
              0

            	
              0

            	
              0

            
	 
      	 
      	 
      	 
      
	
              Two

            	
              0

            	
              25

            	
              30
      days

            
	 
      	 
      	 
      	 
      
	
              Three

            	
              0

            	
              50

            	
              30
      days

            
	 
      	 
      	 
      	 
      
	
              Four

            	
              50

            	
              100

            	
              60
      days

            
	 
      	 
      	 
      	 
      
	
              Five

            	
              100

            	
              100

            	
              60
      days

            
	 
      	 
      	 
      	 
      
	
              Six

            	
              100

            	
              100

            	
              60
      days

            


    

    


    
      	
               
      

            	
              In
      the event that CUSTOMER requires Product quantity increases to purchase
      order schedule, DSM will make reasonable efforts to procure / pull-in
      deliveries of components to meet the increased quantity
      demands.

            


    

    


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
              10.2

            	
              In
      the event that CUSTOMER issues any Engineering Change Orders (ECO) or any
      similar orders or notices requiring any change in the Products listed in
      CUSTOMER subject purchase orders, that effects the agreed upon delivery
      date, DSM has the right to invoice and ship or invoice and hold the
      finished goods, prior to completion of the requested ECO or change
      notices, fifteen days after the original schedule date. All assembled and
      work in process product requiring treatment by this ECO will be considered
      rework. Any rework charges will be negotiated between CUSTOMER and DSM and
      executed upon receipt of a rework purchase order from
      CUSTOMER.

               

            


    

    
      	
              10.3

            	
              Customer
      agrees to purchase a minimum monthly quantity of 6500 units of assembly
      /month Rev 3.0 (or equivalent) for 12 consecutive months beginning
      October 1st,
      2006 other than the agreement set out in section 11.1 of this
      Agreement.

            


    

    


    


    Article 11.00 – Right to
Terminate

    


    
      	
              11.1

            	
              This
      agreement may be terminated by either Party upon one hundred and eighty
      (180) days written notice to the
other.

            


    

    
      	
              11.2

            	
              In
      the event that either Party is in breach of any of its material
      obligations under this Agreement then the other Party may give written
      notice of such breach to the defaulting Party and request remedy of same.
      If the Party in breach fails to remedy said breach within thirty (30) days
      after the date of notice then this Agreement may be terminated immediately
      by written notice of termination by the complaining
  Party.

            


    

    
      	
              11.3

            	
              Notwithstanding
      the provisions contained in sections 11.1 and 11.2 either Party may
      terminate this Agreement by written notice to take effect immediately upon
      receipt thereof by the other Party in the event that the Party receiving
      notice:

            


    

    
      	
            	
              (a)

            	
              has
      become bankrupt or insolvent or has made an assignment for the benefit of
      creditors, or a receiver is appointed for its business or a voluntary or
      involuntary petition of bankruptcy is filed, or proceedings for the
      reorganization of the Party are instituted;
or

            


    

    
      	
            	
              (b)

            	
              has
      attempted to assign any part of the rights granted to it under this
      Agreement without prior written consent of the other
  Party.

            


    

    
 

    
      Article 12.00 – Effect of
Termination

    

    


    
      	
              12.1

            	
              Upon
      termination of this Agreement:

            


    

    
      	
            	
              (a)

            	
              DSM
      shall fulfill its obligations as contained in paragraphs 12.1 (b), (c),
      (d) and CUSTOMER shall then immediately assume responsibility for the
      payment of all CUSTOMER material, work in process, finished Product and
      all other outstanding CUSTOMER inventory then being held by DSM, including
      the inventory being held pursuant to section 7.1 hereof together with all
      other monies due and owing pursuant to this
  Agreement;

            


    

    
      	
            	
              (b)

            	
              The
      Parties shall facilitate the transfer of all of CUSTOMER Property then
      being held by DSM to CUSTOMER as contained in paragraph 12.1 (a) including
      all documentation relating thereto;

            


    

    
      	
            	
              (c)

            	
              DSM
      shall immediately return all original design drawings, copies of drawings,
      specifications, written descriptions, customer supplied and/or paid for
      equipment and other recorded technical information furnished to DSM by
      CUSTOMER pursuant to this Agreement;
and

            


    

    
      	
            	
              (d)

            	
              Each
      Party shall cease to use the documentation and information provided to it
      by the other Party pursuant to the provisions of this
      Agreement.

            


    

    


    
      	
              12.2

            	
              Save
      and except for the provisions contained in section 12.1 the obligations of
      the Parties arising under this Agreement shall forthwith
      terminate.

            


    

    
 

    
      Article 13.00 – Force
Majeure

    

    


    
      	
              13.1

            	
              None
      of the Parties shall be liable for any failure or omission in the
      performance of any provision of this Agreement, if failure is caused by or
      shall directly or indirectly, from acts of God, Government Orders,
      legislation, or regulations, embargoes, fire, storm, floods, strikes,
      labour trouble, wars, riots, failure of carriers or suppliers to transport
      or furnish materials or other contingencies beyond reasonable control of
      the Parties.

            


    

    DSM
shall, however, give prompt notice to CUSTOMER in the event of the occurance of
any of the above contingencies that DSM expects will delay the delivery of the
Services or any part thereof in a timely manner. Any notice from DSM shall
include the best estimate of DSM as to the expected period of delay. Upon
receipt of such notice or upon CUSTOMER becoming aware of the occurance of any
of the above contingencies which CUSTOMER reasonably expects will delay the
delivery of the Services or any part thereof in a timely manner, CUSTOMER shall
be free to obtain some or all of the Services without delay and without penalty
that are expected to be the subject of delay from other suppliers during the
said period notwithstanding its obligations arising pursuant to this
Agreement.

    In such
circumstances, DSM shall co-operate with CUSTOMER and any new suppliers to
achieve a smooth, effective and expeditious transition and DSM shall deliver any
Property as directed by CUSTOMER during the period of delay. DSM shall be
entitled to give notice to CUSTOMER following resolution of any outstanding
difficulties resulting from any such contingency in respect of which it has
given notice, or that CUSTOMER became aware of, that DSM is then in a position
to provide the affected Services in a timely manner in accordance with the
provisions of this Agreement. In any event, CUSTOMER shall then have the option
to deal with DSM in connection with the provision of the affected Services
commencing on the (30th) day
following receipt of such notice from DSM.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      Article 13.00 –
Notice

    

    


    
      	
              13.1

            	
              Any
      notice required or permitted to be given for the purposes of this Ageement
      shall be in writing and shall be sufficiently given if personally
      delivered to an officer of DSM or sent by facsimile, courier or registered
      letter, postage prepaid and:

            


    

    
      	 	
              (a)   
      if
      to DSM, addressed to it at:

            
	 	 
      	
              Dynamic
      Source Manufacturing Inc.

            
	 	 
      	
              Unit
      117, 2765 – 48th
      Ave NE

            
	 	 
      	
              Calgary,
      Alberta, Canada

            
	 	 
      	
              T3J
      5M9

            
	 	 
      	
              Facsimile
      (403) 532-0412

            
	 	 
      	 
      
	 	
              (b)   
      if
      to Secure Alert, addressed to it at:

            
	 	 
      	
              SecureAlert,
      Inc.

            
	 	 
      	
              150
      W. Civic Center Drive

            
	 	 
      	
              Suite
      400  Sandy, Utah 84070

            
	 	 
      	
              Fax
      (801) 451-6281

            


    

    
 

    
      Article 14.00 – General
Provisions

    

    


    
      	
              14.1

            	
              Time
      shall be the essence of this Agreement and every part
    thereof.

            


    

    
      	
              14.2

            	
              The
      Parties hereto shall and will execute such further and other papers and
      documents and do and perform and cause to be done and performed such
      further acts and things as necessary in order to give full effect to this
      Agreement and to every part
thereof.

            


    

    
      	
              14.3

            	
              This
      Agreement shall be governed by and construed in accordance with the laws
      of the Province of Alberta where it is made. The Parties agree that the
      courts of the Province of Alberta shall have sole and exclusive judicial
      jurisdiction to determine any matter arising under this Agreement that
      cannot be resolved by the Parties directly or Arbitrator. It is agreed and
      understood that any purchase order or other document related to the
      Services issued by CUSTOMER to DSM during the term of this Agreement shall
      be subject to and governed by the terms of this
  Agreement.

            


    

    
      	
              14.4

            	
              This
      Agreement constitutes the entire agreement between the Parties and except
      as herein stated and in the instruments and documents to be executed and
      delivered pursuant hereto, contains all the representations and warranties
      of the respective Parties. There are no verbal statements,
      representations, warranties and undertakings or agreements between the
      Parties. This Agreement may not be amended or modified in any respect
      except by written instrument signed by the
  Parties.

            


    

    
      	
              14.5

            	
              This
      Agreement shall be binding upon and shall ensure to the benefit of the
      Parties hereto, their permitted successors and
  assigns.

            


    

    


    IN WITNESS WHEREOF the Parties
hereto have executed this Agreement as of the day, month and year set out
below.

    


    
      	 
      	
              Dynamic Source
      Manufacturing Inc.

            	
              SecureAlert,
      Inc.

            
	 
      	
              Name
      : __________________________

            	
              Name:
      __________________________

            
	 
      	 
      	 
      
	 
      	
              ________________________________

            	
              ________________________________

            
	 
      	
              (Authorized
      Signing Officer)

            	
              (Authorized
      Signing Officer)

            
	 
      	 
      	 
      
	 
      	
              Date:
      ___________________________

            	
              Date:
      ___________________________

            
	 
      	 
      	 
      
	 
      	
              ________________________________

            	
              ________________________________

            
	 
      	
              (Authorized
      Signing Officer)

            	
              (Authorized
      Signing Officer)

            
	 
      	 
      	 
      
	 
      	
              Date:
      ___________________________

            	
              Date:
      ___________________________