Item 1.01 Entry into a Material Definitive Agreement.
As of March 11, 2013, Arrhythmia Research Technology, Inc. ("ART") and its
wholly owned subsidiaries, Micron Products, Inc. ("Micron") and RMDDxUSA Corp.
("RMDDxUSA") (collectively, the "Company" or the "Obligors") entered into a
First Amendment and Loan Modification Agreement (the "First Amendment") with RBS
Citizens, National Association ("RBS") (successor by merger to Citizens Bank of
Massachusetts) and RBS Asset Finance, Inc. ("RBS Finance"). The First Amendment
relates to that certain Amended and Restated Loan and Security Agreement entered
into by ART and Micron with RBS dated as of March 30, 2012, as amended (the
"Loan Agreement") and that certain Master Lease Agreement entered into between
Micron and RBS Finance as of December 30, 2009 and, as amended, by ART, Micron
and RMDDxUSA and certain lease schedules thereunder (the "Equipment Lease"). As
part of the winding down of the discontinued operations of RMDDxUSA as
previously announced, pursuant to the First Amendment, RBS Finance has agreed,
upon the fulfillment of certain conditions, including receipt of payment of the
greater of $148,861 or all proceeds from the sale of certain enumerated RMDDxUSA
equipment, to release its security interest in equipment intended to be sold by
RMDDxUSA. RBS and RBS Finance formally withdrew a prior notice of default (which
had been previously rescinded informally) arising from the previously announced
intended liquidation and dissolution of RMDDxUSA and sale, transfer and/or
disposition of its assets.
Furthermore pursuant to the First Amendment, the parties thereto agreed that,
upon the fulfillment of certain conditions precedent, including the payment by
the Company of a loan modification fee of $25,000, the filing of certain UCC
financing statements and verification of RBS's first security interests: (a) all
obligations under the Loan Agreement and Equipment Lease shall be paid in full
upon the earlier of April 30, 2013 or the occurrence of an Event of Default (as
defined) under the Loan Agreement or the Equipment Lease; (b) the definition of
"Collateral" contained in the Loan Agreement was amended to include additional
personal property including accounts receivable, payment intangibles, inventory,
general intangibles, cash and deposit accounts, equipment, software, subleases,
chattel paper, accounts and other general intangibles, substitutes, replacements
or exchanges thereof, records, insurance proceeds and liens, guaranties, rights
remedies and privileges pertaining to such assets. In the event that the
obligations under the Loan Agreement and Equipment Lease are not repaid on or
before March 29, 2013, an additional fee of $500.00 per day shall accrue. See
Item 7.01 below for further information.
Furthermore, the Revolving Note issued in accordance with the Loan Agreement was
modified to provide that (a) each LIBOR Advantage loan from time to time shall
bear interest thereon at a per annum rate equal to 4.00% above the LIBOR
Advantage Rate for any LA Interest Period; (b) to define "LIBOR Rate Margin" to
mean 400 basis points (4.0%) per annum and (c) to define "Prime Rate Margin" to
mean 300 basis points (3%) per annum.
Item 7.01 Regulation FD Disclosure.
On March 7, 2013 the Compensation Committee of the Board of Directors
recommended to the Board of Directors that Michael S. Gunter's title be changed
from Interim Chief Executive Officer to President and Chief Executive Officer. A
multi-year employment agreement is expected to be finalized prior to March 31,
2013.
On March 13, 2013, ART accepted a commitment letter issued by a Massachusetts
state chartered bank with respect to an up to $4 million committed term
revolving line of credit with a maturity date of June 30, 2015. The line of
credit is intended to replace the $3 million RBS demand line of credit. The
commitment also contemplates a $1.5 million 5 year term loan to replace the
existing RBS Finance equipment leases and a $1.0 million 5 year capital asset
purchase line. The documentation for each of the revolving line of credit, term
loan and purchase line are currently being prepared and are subject to
completion by the bank of its due diligence process. The Company expects the
replacement bank facilities to be closed by April 30, 2013.
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