rmdxcitizen.htm


    
      

      

    

    Exhibit
10.25

    Citizens

    


    Bank
Investments
Trust Insurance
www.citizensnational.net

    


    CHANGE
IN TERMS AGREEMENT

    


    
      	
              Principal

            	
              Loan
      Date

            	
              Maturity

            	
              Loan
      No.

            	
              Call
      / Col

            	
              Account

            	
              Officer

            	
              Initials

            
	
              $3,600,000.00

            	
              03-14-2008

            	
              03-01-2009

            	
              400949881

            	 
      	 
      	 
      	
              RCB01

            


    

     

    References in the boxes above are
for Lender's use only and do not limit the applicability of this document to any
particular loan or item.

    Any item
above containing "***" has been omitted due to text length
limitations.

    


    Borrower:

    


    REMOTEMDX,
INC.

    150 W
CIVIC CENTER DRIVE SUITE 400 SANDY, UT 84070

    


    lender:

    


    Citizens
National Bank Main Office

    127 S
Side Square P.O. Box 1279 Macomb,lL 61455

    


    
      	
              Principal
      Amount: $3,600,000.00

            	
              Initial
      Rate: 7.000%

            	
              Date
      of Agreement: March 14, 2008

            


    

     

    DESCRIPTION
OF EXISTING INDEBTEDNESS. Original Revolving Line of Credit Dated 6/26/06 in the
Amount of $2,000,000, Subsequently

    Increased
to $4,000,000, Monthly Interest Only Payments Wall Street Journal National Prime
Rate Floating Daily, Maturing 3/1/08.

     

    DESCRIPTION
OF COLLATERAL. Borrower acknowledges this Change in Terms Agreement is secured
by the--following collateral described in the security instruments listed within
the Promissory Note: (A) inventory, chattel paper, accounts, letter of credit
rights, equipment and general intangibles described in Commercial
Security Agreements dated June 26, 2006. (B) deposit accounts described in an
Assignment of Deposit Account dated June 26, 2006. (C) the Letters of
Credit referenced below.

     

    DESCRIPTION
OF CHANGE IN TERMS. Reduce Line of Credit commitment to $3,600,000, secured by
amended Letters of Credit referenced below and extend maturity date to 311
/09.1

     

    PROMISE
TO PAY. REMOTEMDX, INC. ("Borrower") promises to pay to Citizens National Bank
("lender"), or order, in lawful money of the United States of America, the
principal amount of Three Million Six Hundred Thousand & 00/100 Dollars
($3,600,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each
advance.

     

    PAYMENT.
Borrower will pay this loan in full immediately upon Lender's demand. If no
demand is made, Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on March 1, 2009. In addition,
Borrower will pay regular monthly payments of all accrued unpaid interest due as
of each payment date, beginning April 1, 2008, with all subsequent interest
payments to be due on the same day of each month after that. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
accrued unpaid interest; and then to principal. Interest on this loan is
computed on a 365/360 simple interest basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay lender at Lender's address shown above or at
such other place as lender may
designate in writing.

     

    VARIABLE
INTEREST RATE. The interest rate on this loan is subject to change from time to
time based on changes in an independent index which is the Prime Rate as
published in The Wall Street Journal (the "Index"). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notifying Borrower. Lender will tell Borrower the current Index rate upon
Borrower's request. The interest rate change will not occur more often than each
day. Borrower understands that Lender may make loans based on other rates as
well. The Index currently is 6.000% per annum. The interest rate to be applied
to the unpaid principal balance during this loan will be at a rate equal to the
Index, adjusted if necessary for any minimum and maximum rate limitations
described below, resulting in an initial rate of 7.000% per annum. NOTICE: Under
no circumstances will the interest rate on this loan be less than 7.000% per
annum or more than the maximum rate allowed by applicable law.

     

    PREPAYMENT;
MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of this
Agreement, Borrower understands that Lender is entitled to a minimum interest
charge of $100.00. Other than Borrower's obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, early payments will reduce the principal
balance due. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse", or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lender's rights under this Agreement, and Borrower will remain obligated to pay
any further amount owed to Lender. All written communications concerning
disputed amounts, including any check or other payment instrument that indicates
that the payment constitutes "payment in full" of the amount owed or that is
tendered with other conditions or limitations or as full satisfaction of a
disputed amount must be mailed or delivered to: Citizens National Bank, Main
Office, 127 S Side Square, P.O. Box 1279, Macomb, IL 61455..

    LATE
CHARGE. If a payment is 10 days or more late, Borrower will be charged
$100.00.

     

    INTEREST
AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the
interest rate on this loan shall be increased to

    18.000%
per annum. However, in no event will the interest rate exceed the maximum
interest rate limitations under applicable law.

    DEFAULT.
Each of the following shall constitute an Event of Default under this
Agreement:

    Payment
Default. Borrower fails to make any payment when due under the
Indebtedness.

     

    Other
Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between lender and
Borrower.

     

    False
Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Agreement or the Related
Documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time
thereafter.

     

    Insolvency.
The dissolution or termination of Borrower's existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower's
property, any assignment far the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

     

    Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing
the

    

      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    loan No:
400949881

    


    CHANGE
IN TERMS AGREEMENT (Continued)

    


    Page
2

    


    Indebtedness.
This includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of

    the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with

    Lender
monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its
sole discretion, as being

    an
adequate reserve or bond for the dispute.

     

    Events
Affecting Guarantor. Any of the preceding events occurs with respect to any
guarantor, endorser, surety, or accommodation party of any of the Indebtedness
or any guarantor, endorser, surety, or accommodation party dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness evidenced by this Note.

    Change In
Ownership. Any change in ownership of twenty-five percent (25%) or more of the
common stock of Borrower.

     

    Adverse
Change. A material adverse change occurs in Borrower's financial condition, or
Lender believes the prospect of payment or

    performance
of the Indebtedness is impaired.

    Insecurity.
Lender in good faith believes itself insecure.

     

    LENDER'S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance
under this Agreement and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.

     

    ATTORNEYS'
FEES; EXPENSES. Lender may hire or pay someone else to help collect this
Agreement if Borrower does not pay. Borrower will pay Lender that
amount. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses, whether or not
there is a lawsuit, including attorneys' fees, expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay
or
injunction), and
appeals. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all
other sums provided by
Jaw.

     

    JURY WAIVER. Lender
and Borrower hereby waive the right to any jury trial in any action, proceeding,
or counterclaim brought by either lender or Borrower against the
other.

     

    GOVERNING LAW. This
Agreement will be governed by federal law applicable to lender and, to the.
extent not preempted by federal law, the laws of the State of Illinois without
regard to its conflicts of law provisions. This Agreement has !been accepted by
lender in the State of Illinois.

     

    


    CHOICE OF
VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to
the jurisdiction of the courts of McDonough County, State of
Illinois.

     

    RIGHT OF SETOFF. To the extent
permitted by applicable law, Lender reserves a right of setoff in all Borrower's
accounts with Lender (whether checking, savings,
or some other account). This includes all accounts Borrower
holds jointly with someone else and all accounts Borrower may open in the
future. However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the debt against any and all such accounts.

     

    Collateral. Collateral
securing other loans with
Lender may also secure this loan. To the extent collateral
previously has been
given to
Lender by any person which
may secure this Indebtedness, whether directly or indirectly, it is specifically
agreed that,
to the extent prohibited by law,
all such collateral consisting of household goods will not secure this
Indebtedness. In addition, if any collateral requires the giving of a
right
of rescission under Truth in Lending for this Indebtedness, such
collateral also will not secure this
Indebtedness unless and
until all required notices of that right have been
given.

     

    LINE OF
CREDIT. This Agreement
evidences a revolving line of credit. Advances under this Agreement may be requested only in
writing by Borrower or as
provided in this paragraph. All
communications,
instructions, or directions by telephone
or otherwise to Lender are
to be directed to Lender's office shown above. The following person or
persons are authorized,
except as
provided in this paragraph, to request advances
and authorize payments under the line of credit until Lender
receives from Borrower, at Lender's address shown above, written notice
of revocation of such authority: DAVID DERRICK,
Chief Executive
Officer
of REMOTEMDX, INC.;
CHAD OLSEN,
Controller of REMOTEMDX, INC.; MICHAEL ACTON. Chief Financial Officer of REMOTEMDX,
INC.; and JAMES DALTON, President of REMOTEMDX, INC. Draws
to be taken on
approved invoices presented to Citizens National Bank from the following
companies: CP Baker Securities, Inc, RemoteMDx, Inc., Dynamic Source Manufacturing and
Advanta Design Group, Inc. lender may advance funds under this note to
(i) pay itself interest, (ii) make deposits into the Account (as defined
below) if it contains less than the required compensating balance, and (iii) to
pay itself fees and other amounts that may be owed to it. Borrower agrees to be
liable for all sums either: (A) advanced in accordance with the instructions of
an authorized person or (B) credited to any of Borrower's accounts with Lender.
The unpaid principal balance owing on this Agreement at any time may be
evidenced by endorsements on this Agreement or by Lender's internal records,
including daily computer print-outs. Lender will have no obligation to advance
funds under this Agreement if: (A) Borrower or any guarantor is in default under
the terms of this Agreement or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Agreement; (B) Borrower or any guarantor ceases doing business or is insolvent;
(C) any guarantor seeks, claims or otherwise
attempts to limit, modify or
revoke such guarantor's guarantee of this Agreement or any other loan with
Lender; (D) Borrower has applied funds provided pursuant to this Agreement for
purposes other than those authorized by Lender; or (E) Lender in
good faith believes itself
insecure.

     

    CONTINUING
VALIDITY. Except as
expressly changed by this Agreement, the terms of ,the original obligation or
obligations, including all agreements evidenced or securing the
obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this
Agreement does not waive
Lender's right to strict performance of the obligation(s) as changed, nor
obligate Lender to make any future
change in terms.
Nothing in this Agreement
will constitute a satisfaction of the obligation(s). It is the intention of
Lender to retain as liable parties all makers and endorsers of the original
obligation(s), including accommodation parties, unless a party is expressly
released by Lender in writing. Any maker or endorser, including accommodation
makers, will not be released by virtue of
this Agreement. If any
person who signed the original obligation does not sign this Agreement below,
then all persons signing below acknowledge that this Agreement is given
conditionally, based on the representation to Lender that the non-signing party
consents to the changes and provisions of this Agreement or
otherwise will not be
released by it. This
waiver applies not only to any initial extension, modification or release, but
also to all such subsequent actions.,

     

    LETTER OF CREDIT. In addition to the
other collateral for this Note, Borrower acknowledges
and agrees that this Note
is secured by a
Letter of Credit issued to lender on its
behalf by United States
Trust Company, N.A. dated June 26, 2006,
as amended, to be serviced
by Bank of
America. The Change in Terms Agreement is additionally
secured by a letter of Credit issued to lender on its behalf by Union
Bank of California,
N.A. dated August 8, 2006, and Letter of Credit issued to lender on its
behalf by First Republic Bank, now a division of Merrill lynch Bank &
Trust Co., FSB, dated August 9, 2006. Lender shall return the letter(s)
of credit securing the loan after the applicable preference period, determined
in lenders sole and absolute discretion, following the occurrence of both of the
following (i) payment in full of all amounts payable to Lender under .the Note
and related documents and (ii) Borrower's acknowledgment, and agreement in
writing, that Lender has no further obligation to loan amounts to Borrower
pursuant to such documents.

    ADDITIONAL REQUIREMENTS. Lender will
require borrower to maintain its operating
deposit account and research and development account at

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    loan No:
400949881

    


    CHANGE
IN TERMS AGREEMENT (Continued)

    


    Page
3

    


    lenders
institution. Lender will require quarterly profit and loss statements, business
balance sheet and annual tax returns from borrower. Lender will require an
amount equal to 5% of the line of credit as compensating balance in the
operating account. Borrower will remit for deposit to lender all Secure Alert-
TrackerPal product receipts. Lender will provide internet access including
scanned images of all checks being deposited. In addition to and not in
limitation of other rights of Lender to payment, twenty-five (25) percent of all
deposits received into the Account (as defined in the Assignment of Deposit
Account described above) will be applied to the operating line of credit and
seventy-five (75) percent will remain in the borrowers operating deposit
account.

     

    SUCCESSORS
AND ASSIGNS. Subject to any limitations stated in this Agreement on transfer of
Borrower's interest, this Agreement shall be

    binding
upon and inure to the benefit of the parties, their successors and assigns. If
ownership of the Collateral becomes vested in a person other than Borrower,
Lender, without notice to Borrower, may deal with Borrower's successors with
reference to this Agreement and the Indebtedness by way of forbearance or
extension without releasing Borrower from the obligations of this Agreement or
liability under the Indebtedness.

    


    MISCELLANEOUS
PROVISIONS. This Agreement is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not

    preclude
Lender's right to declare payment of this Agreement on its demand. If any part
of this Agreement cannot be enforced, this fact will not affect the rest of the
Agreement. Lender may delay or forgo enforcing any of its rights or remedies
under this Agreement without losing them. Borrower and any other person who
signs, guarantees or endorses this Agreement, to the extent allowed by law,
waive presentment, demand for payment, and notice of dishonor. Upon any change
in the terms of this Agreement, and unless otherwise expressly stated in
writing, no party who signs this Agreement, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All su.ch parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Agreement are joint and
several.

     

    PRIOR TO SIGNING
THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE AGREEMENT.

     

    


    BORROWER:

    


    Bu,

    


    Officer

    


    of