Exhibit 10.24
AGREEMENT TO PROVIDE LETTER OF CREDIT
This Agreement is entered into by and among Xxxx X. Xxxxxxx and Xxxxxx
Xxxxxxx, as trustees of the Xxxxxxx Family Trust, established by trust agreement
dated December 8, 2003 ("LC Provider"), and RemoteMDx, Inc., a Utah corporation
("RemoteMDx") and SecureAlert, Inc, a Utah corporation and subsidiary of
RemoteMDx ("SecureAlert"), dated June 30, 2006.
RECITALS
LC Provider and RemoteMDx desire to enter into an agreement pursuant to
which LC Provider will provide a letter of credit as collateral to secure a line
of credit from Citizens National Bank ("Citizens Bank") for the benefit of
RemoteMDx.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. Letter of Credit. LC Provider will arrange for and establish an
unconditional, irrevocable letter of credit in the amount of
$1,000,000 (the "LC") in favor of Citizens Bank. The LC will serve
as collateral to secure the repayment of a line of credit from
Citizens Bank to RemoteMDx (the "Citizens LOC"), providing for
loans from Citizens Bank to RemoteMDx of up to $10 million. The
initial draw upon the Citizens LOC is represented by that certain
Promissory Note dated June ___, 2006, from RemoteMDx to Citizens
Bank in the original principal amount of $2,000,000 (the "Note"),
attached hereto as Exhibit "A". The LC will be substantially in
the form of the LC attached hereto as Exhibit "B," and shall
secure the Citizens LOC pursuant to the terms of the Commercial
Security Agreement between RemoteMDx and Citizens Bank attached
hereto as Exhibit "C". The LC shall terminate immediately upon the
earlier to occur of: (i) June 30, 2008, and (ii) such time as the
Citizens LOC has been terminated. Interest, if any, paid on
amounts deposited by LC Provider under the LC will be the sole and
exclusive property of LC Provider. Upon termination of the LC and
payment of all amounts due to LC Provider hereunder, all
obligations of Remote and SecureAlert hereunder to LC Provider
shall cease. RemoteMDx will not modify or amend any terms of the
Citizens LOC agreements with Citizens Bank, including the interest
rate on the Citizens LOC, without the consent of LC Provider,
which consent will not be unreasonably withheld.
2. Consideration. In consideration for establishing the LC, RemoteMDx
will:
a. Issue to LC Provider, for no additional consideration,
100,000 shares of common stock of RemoteMDx (the "Shares"),
upon funding of the initial $2 million of the Citizens LOC;
1
b. Pay to LC Provider an amount equal to eleven percent (11%)
per annum of the total amount of the LC until the LC is
terminated. Such payments will be made on a monthly basis
in arrears on the first day of each month; and
c. Pay to LC Provider $10,000, upon the funding of the initial
$2 million of the Citizens LOC, against the fees and costs
incurred by LC Provider to establish the LC.
3. Collateral. Remote MDx and SecureAlert will grant to LC Provider a
security interest in the assets of Remote MDx and SecureAlert,
pursuant to the terms of the Security Agreement (the "Security
Agreement") attached hereto as Exhibit "D".
4. Initial Draw. The initial draw on the Citizens LOC will be a
$1,050,700 check to RemoteMDx, 000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx
000, Xxxxx, XX 00000 and will be used solely for inventory
previously purchased by RemoteMDx.
5. Subsequent Draws. Without the consent of LC Provider, all
subsequent draws under the Citizens LOC will be used exclusively
to pay RemoteMDx's manufacturers, either Dynamic Source
Manufacturing or Advanta Design Group Inc., or to reimburse
RemoteMDx for payments made to those manufacturers. However,
Citizens Bank shall be entitled to make draws upon the Citizens
LOC for its own benefit as provided in the Note without the
consent of LC Provider. In no event will Remote MDx draw a
principal amount exceeding $10,000,000 from the Citizens LOC
without the written consent of LC Provider.
6. Monthly Reports. RemoteMDx will furnish to LC Provider monthly
reports on new contracts, the amounts deposited into lockbox and
amounts paid towards principal and interest.
7. Draw-Downs on LC by Citizens Bank. In the event Citizens Bank
shall draw on the LC to satisfy amounts owed by RemoteMDx on the
Citizens LOC, the amount of any such draw down (the "Draw Down
Amount") shall be immediately due and payable by RemoteMDx to LC
Provider, together with interest thereon at the rate of eighteen
percent (18%) per annum from the date Citizens Bank draws such
funds until paid in full. To the extent Citizens Bank shall draw
on the LC, the amounts that become due, together with interest,
from Remote MDx to LC Provider under this section 7, shall be in
lieu of the payments set forth in Section 2(b), above, but Remote
MDx shall remain liable for the payments set forth in Section
2(b), above, on the portion of the LC that is not drawn upon by
Citizens Bank. Immediate repayment of any Draw Down Amount from
Remote MDx to LC Provider shall be secured by the Security
Agreement.
2
8. Binding Effect. The parties agree that this Agreement may not be
assigned by either party without the prior written consent of the
other party; which consent shall not be unreasonably withheld.
9. Miscellaneous Provisions.
a. Amendment; Waiver. The provisions of this Agreement may be
amended or waived only in a writing signed by each party.
b. Attorney Fees. The prevailing party in any litigation
concerning this Agreement is entitled to reimbursement of
its reasonable attorney fees and expenses from the
non-prevailing party, including costs and expenses incurred
on appeal or in bankruptcy proceedings.
c. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but
all of which together will constitute the same instrument.
d. Governing Law. The construction and performance of this
Agreement will be governed by the laws of the State of Utah
without regard to the choice of law provisions thereof.
e. Severability. In the event that any term or provision of
this Agreement will be deemed by a court of competent
jurisdiction to be overly broad in scope, duration or area
of applicability, the court considering the same will have
the power and is hereby authorized and directed to limit
such scope, duration or area of applicability, or all of
them, so that such term or provision is no longer overly
broad and to enforce the same as so limited. Subject to the
foregoing sentence, in the event any provision of this
Agreement will be held to be invalid or unenforceable for
any reason, such invalidity or unenforceability will attach
only to such provision and will not affect or render
invalid or unenforceable any other provision of this
Agreement.
[Signatures on Following Page]
3
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
RemoteMDx: RemoteMDx, Inc.
By: __/s/___________________________
Title: Chief Executive Officer
SecureAlert: SecureAlert, Inc.
By: __/s/___________________________
Title: Chief Executive Officer
LC Provider: The Xxxxxxx Family Trust
___/s/_____________________________
Xxxx X. Xxxxxxx, Trustee
___/s/_____________________________
Xxxxxx Xxxxxxx, Trustee
4
