Item 1.01 Entry int
o Material Definitive Agreement.
On October
11
, 2016, Arrhythmia Research Technology, Inc. (the “Company”)
, with the consent of all seven investors,
amended the terms of its $500,000 Subordinated Promissory Notes (“Notes”)
and Warrants
, which were originally issued as part of
p
rivate
o
ffering on
December 19, 2013. The
Amendment
provide
d
each investor with the option to extend the maturity date
of their Note and the
expiration date
of their
unexercised Warrants.
Six
of the seven investors
elected
to extend the maturity
dates of
their respective Notes, aggregating
to
$
4
50,000, from December 18, 2016 to December 31, 2018.
Additionally, the
expiration date of
7
0,000 unexercised
warrants
slated to expire on December 18, 2016, were al
so extended to December 31, 2018
.
The terms of the Note of the investor electing not to extend
,
remain
s
unchanged
. This investor has no unexercised warrants
.
The extended Notes will
bear interest on the unpaid principal at a simple annual interest rate equal to 10% per annum
during the extension period
,
December 19, 2016 to December 31, 2018.
Interest only shall be payable in cash on a quarterly basis.
Each investor entered into a
Subordination Agreement
with the i
nitial
o
ffering which remains in effect throughout the extension period. The Subordination Agreements provide
that the indebtedness pursuant to the Notes shall be subordinated to all indebtedness of the Company pursuant to its March 2013 multi-year credit facility with a Massachusetts based bank.
The initial offering provided that f
or every $50,000 in principal amount of Note, each investor received a Warrant to purchase 10,000 shares of common stock (collectively, the “Warrants”). The Warrants are exercisable during the period commencing six months after issuance and for three years from issuance, at an exercise price equal to $3.51 per share, namely, the closing market price of the Company’s common stock on the day prior to the closing date of the offering.
Five
of the
six
investors
who are
extending the maturity date of their No
tes, collectively possess
W
arrants
to purchase
7
0,000 shares of common stock at an exercise price equal to $3.51 per share.
The foregoing descriptions of the
Amendment to the
Notes
and the Amendment to the
Warrants are qualified in their entirety by the forms of the
a
mendments
which are attached as Exhibits
4.1 and 4.3, respectively, and the form of Subordination Agreement reference
d
as Exhibit 4.2 hereto.