Document:

remote10qsb063007ex10-16.htm

    
      
        

        

      

      Exhibit
        10.16

       
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 150
      West Civic Center Drive, Suite 400, Sandy, UT  84070, and Quest Guard,
      Inc., a Utah Corporation (“Distributor”), with its principal executive office
      located at 3826 River Road, St. George, UT 84770.

    

    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:

    

    
      	
              1

            	
              Term.

            

    

     

    
      	
              1.1

            	
              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.

            

    

     

    
      	
              1.2

            	
              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.”

            

    

     

    
      	
              2

            	
              Services
                and Performance.

            

    

     

    
      	
              2.1

            	
              Services.  During
                the Term of this Agreement, Distributor shall perform the following
                services (the “Services”) for the
                Company:

            

    

     

    
      	
               

            	
              (a)

            	
              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.

            

    

     

    

     

    

    
      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

    

    

    
      	
               

            	
              (b)

            	
              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.

            

    

     

    
      	
               

            	
              (c)

            	
              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.

            

    

     

    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.

    

    
      	
              2.2

            	
              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.

            

    

     

    
      	
              3

            	
              Sales,
                Payments and Pricing.

            

    

     

    
      	
              3.1

            	
              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.

            

    

     

    
      	
               

            	
              A.

            	
              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.

            

    

    
      	
               

            	
              B.

            	
              The
                Distributor will purchase XXXXX devices (that includes the XXXXX
                units
                described above) at the Device Pricing listed
                below.

            

    

    

    
      	
              3.2

            	
              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.

            

    

     

    Rate
      Plan:

    
      	
               

            	
              A.

            	
              Device
                Pricing =  $ XXXXX per
                device

            

    

    
      	
               

            	
              B.

            	
              Daily
                Service Rate to Offender = $ XXXXX per
                day

            

    

    
      	
               

            	
              C.

            	
              Daily
                Service Rate to Bail Agent = $ XXXXX per
                day

            

    

    
      	
               

            	
              D.

            	
              Daily
                Service Rate charged by SecureAlert to Quest Guard = $ XXXXX per
                day

            

    

    

    

    
      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

    

    

    
      	
              3.3

            	
              Payment.  Except
                for the purchase of the XXXXX units and the first

            	
              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.

            

    

     

    
      	
              4

            	
              Customer
                Contacts and
                Approvals.

            

    

     

    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.

     

    
      	
              5

            	
              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.

            

    

     

    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.

    

    
      	
              6

            	
              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.

            

    

     

    
      	
              7

            	
              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.

            

    

     

    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

          
            

          

        

        
          
          

        

      

    

    

    
      	
              8

            	
              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.

            

    

     

    
      	
              9

            	
              Indemnity.

            

    

     

    

    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.

     

    

    
      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

    

    

    
      	
              10

            	
              Non-Solicitation.  Without
                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.

            

    

     

    
      	
              11

            	
              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.

            

    

     

    
      	
              12

            	
              Dispute
                Resolution.

            

    

     

    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

          
            

          

        

        
          
          

        

      

    

    

    
      	
              13

            	
              Assignment
                and Delegation.

            

    

     

    13.1           Assignment.  This
      Agreement in part or in whole maybe assigned with the consent of both
      parties.

    

    
      	
              14

            	
              Miscellaneous.

            

    

     

    
      	
              14.1

            	
              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.

            

    

     

    
      	
              14.2

            	
              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.

            

    

     

    
      	
              14.3

            	
              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.

            

    

     

    
      	
              14.4

            	
              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.

            

    

     

    
      	
              14.5

            	
              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.

            

    

     

    
      	
              14.6

            	
              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.

            

    

     

    
      	
              14.7

            	
              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.

            

    

     

    

    
      
        
          
          

        

        
          B-6

          
            

          

        

        
          
          

        

      

    

    

    
      	
              14.8

            	
              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.

            

    

     

    
      	
              14.9

            	
              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.

            

    

     

    
      	
              14.10

            	
              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.

            

    

     

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
          
          

        

        
          B-7

          
            

          

        

        
          
          

        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Distribution Agreement as of
      the
      Effective Date.

    

    
      	 	
              THE
                COMPANY:

            
	 	 	 	 
	 	
              SecureAlert,
                Inc.

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              ____/s/
                Randy
                Olshen    ________      
                

            
	 	 	
              Name:

            	
              Randy
                Olshen   __________

            
	 	 	
              Title:

            	
              President_______________

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              DISTRIBUTOR:

            
	 	
              Quest
                Guard, Inc.

            
	 	 	 	 
	 	
              ___________________________________

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              ___/s/
                Danny H. Behymer_________

            
	 	 	 	 
	 	 	 	 
	 	 	
              Name:

            	
              Danny
                H. Behymer

            
	 	 	
              Title:

            	
              V.P.
                of Operations

            
	 	 	 	 
	 	 	
              Address:

            	
              3826
                River Road

            
	 	 	 	
              St.
                George, UT 84770

            

    

     

     

    
 

    

     

    B-8Exhibit
4.1

INCORPORATED UNDER
THE LAWS OF THE STATE OF DELAWARE

	
  NUMBER

  	
   

  	
  TorreyPines

  Therapeutics, Inc.

  	
   

  	
  SHARES

  

 

	
  AUTHORIZED COMMON STOCK:

  150,000,000 SHARES

  PAR VALUE: $.001

  	
   

  	
  CUSIP 89235K 10
  5

  

 

This
Certifies that

Is The
Record Holder Of

Shares of TorreyPines Therapeutics, Inc. Common
Stock                                     transferable
on the books of the Corporation by the holder hereof, in person or by duly
authorized attorney upon surrender of this Certificate properly endorsed. This
Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.

Witness
the facsimile seal of the Corporation and the facsimile signatures of its duly
authorized officers.

Dated:

	
  /s/ Craig Johnson

  	
   

  	
   

  	
   

  	
  /s/ Neil Kurtz

  
	
  SECRETARY

  	
   

  	
  [SEAL]

  	
   

  	
  PRESIDENT

  

 

COUNTERSIGNED AND REGISTERED:

AMERICAN STOCK TRANSFER &
TRUST COMPANY

(New York, NY)

	
  BY:

  	
  TRANSFER AGENT AND
  REGISTRAR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATURE

  	
   

  

 

The following
abbreviations, when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full according to
applicable laws or regulations:

 

	
  TEN COM

  	
  –

  	
  as tenants in common

  	
  UNIF GIFT MIN ACT –

  	
                Custodian                   

  
	
  TEN ENT

  	
  –

  	
  as tenants by the entireties

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  
	
  JT TEN

  	
  –

  	
  as joint tenants with right of

  	
   

  	
  under Uniform Gifts to Minors

  
	
   

  	
   

  	
  survivorship and not as tenants

  	
   

  	
  Act

  
	
   

  	
   

  	
  in common

  	
   

  	
  (State)

  

 

Additional abbreviations
may also be used though not in the above list.

 

For Value Received                                                     
hereby sell, assign and transfer unto

 

PLEASE INSERT SOCIAL
SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

(PLEASE PRINT OR
TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 

 

                                                                Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint

 

                                                   Attorney to transfer the
said stock on the books of the within named Corporation with full power of
substitution in the premises.

 

	
  Dated

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:

  	
  THE SIGNATURE TO THIS
  ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE
  CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY
  CHANGE WHATEVER.

  
					

 

 

·NOTICE SIGNATURE GUARANTEED:

 

SIGNATURE(S) MUST BE GUARANTEED BY A FIRM WHICH IS A
MEMBER OF A REGISTERED NATIONAL STOCK EXCHANGE OR BY A BANK (OTHER THAN A
SAVINGS BANK), OR A TRUST COMPANY. THE GUARANTEEING FIRM MUST BE A MEMBER OF
THE MEDALLION GUARANTEE PROGRAM.

 

TRANSFER FEE WILL APPLY

 

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN TORREYPINES
THERAPEUTICS, INC. (THE “COMPANY”) AND THE AMERICAN STOCK TRANSFER & TRUST
COMPANY DATED AS OF MAY 13, 2005, AS AMENDED (THE “RIGHTS AGREEMENT”), THE
TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE REDEEMED, MAY EXPIRE
OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY
THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A
COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A
WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, RIGHTS ISSUED TO
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR CERTAIN RELATED
PERSONS AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

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