Document:

Exhibit

Exhibit 10.61

FOURTH AMENDMENT 
TO
LOAN AND SECURITY AGREEMENT

This Fourth Amendment to Loan and Security Agreement (“Fourth Amendment to Loan and Security Agreement”) is dated as of June 19, 2015 and is made by and among UniBank for Savings (together with its successors and assigns, the “Bank” or “Lender”), Arrhythmia Research Technology, Inc., a corporation duly organized and validly existing under the laws of the State of Delaware (sometimes referred to herein as “Arrhythmia”) and Micron Products Inc., a corporation duly organized and validly existing under the laws of the Commonwealth of Massachusetts (sometimes referred to herein as “Micron”).
 
RECITALS

A.    The Bank extended a line of credit dated March 29, 2013 to the Borrowers as evidenced by the $4,000,000.00 Commercial Revolving Line of Credit Promissory Note made by the Borrowers in favor of the Bank, as amended by First Amendment to Commercial Revolving Line of Credit Promissory Note dated October 3, 2013 (as amended to date and as may be further amended from time to time, the “Line Note”).

B.    The Bank extended a term loan dated March 29, 2013 to the Borrowers as evidenced by the $1,500,000.00 Commercial Term Promissory Note made by the Borrowers in favor of the Bank (as amended to date and as may be further amended from time to time, the “Term Note”).

C.    The Bank extended an equipment line of credit dated March 29, 2013 to the Borrowers as evidenced by the $1,000,000.00 Commercial Equipment Line of Credit Promissory Note made by the Borrowers in favor of the Bank, as amended by First Amendment to Commercial Equipment Line of Credit Promissory Note dated April 10, 2014 (as amended to date and as may be further amended from time to time,  the “Equipment Note”).

D.    The Bank extended an equipment line of credit dated June 26, 2014 to the Borrowers as evidenced by the $1,000,000.00 Commercial Equipment Line of Credit Promissory Note made by the Borrowers in favor of the Bank (as amended to date and as may be further amended from time to time, the “2014 Equipment Note”).

E.    Except where the context requires otherwise, all capitalized terms used herein shall have the meanings set forth in the Loan and Security Agreement between the Bank and the Borrowers dated as of March 29, 2013 (as amended to date and as may be further amended from time to time, the “Loan Agreement”).

F.    The Borrowers have requested that the Bank:

		
	(i)
	Modify certain provisions in the Loan Agreement; and

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Exhibit 10.61

		
	(ii)
	Provide an extension to the Termination Date of the Line of Credit and Line Note to June 30, 2017; and

		
	(iii)
	Provide additional financial accommodations to the Borrowers in the form of a $1,000,000.00 Equipment Line of Credit Loan to the Borrowers.

Now therefore, in order to induce the Bank to enter into this Fourth Amendment to Loan and Security Agreement, the Fourth Modification Documents (as hereafter defined), to provide the additional financial accommodations to the Borrowers and for other valuable consideration, the receipt and sufficiency of which is acknowledged, the Borrowers jointly and severally make the following representations, warranties, covenants and agreements effective as of the date of this Fourth Amendment to Loan and Security Agreement: 

1.Inducement Representations.  The Borrowers hereby jointly and severally represent, warrant and covenant to the Bank that:  (a) no Event of Default has occurred, and no event has occurred which with notice or lapse of time or both would constitute an Event of Default under any of the Loan Documents; (b) the Loan Documents, including this Fourth Amendment to Loan and Security Agreement and the other Fourth Modification Documents are the valid, binding and enforceable obligations of the Borrowers, as applicable; (c) the Borrowers have no defenses, setoffs, claims or counterclaims against the Bank with respect to any of the Loans and to the extent any such defenses, setoffs, claims or counterclaims exist, the Borrowers hereby waive and release the same; (d) the execution and delivery of this Fourth Amendment to Loan and Security Agreement and each of the other Fourth Modification Documents have been duly authorized by all necessary corporate action; (e) all of the representations and warranties of the Borrowers set forth in the Loan Agreement and the other Loan Documents, as amended hereby, are true, accurate and complete on and as of the date hereof; (f) the payment and performance of all Obligations of the Borrowers to the Bank (as defined in the Loan Agreement) are secured and shall continue to be secured in accordance with the terms of the Loan Agreement and all other Loan Documents which create or perfect security interests in favor of the Bank; and (g) all facts set forth in the Recital Section of this Fourth Amendment to Loan and Security Agreement are true, accurate, and complete.

2.Amendment to Definitions in Section 1 of the Loan Agreement. 

(a)      Section 1 of the Loan Agreement is hereby amended by adding thereto the following new definitions and, for terms already defined therein, amending and restating such definitions as set forth below:

2015 Equipment Line of Credit means the Borrowers’ Equipment Line of Credit Loan with the Bank referred to in Section 2 hereof, the indebtedness of which is evidenced by the 2015 Equipment Note.

2015 Equipment Note means the Commercial Equipment Line of Credit Promissory Note dated June 19, 2015 made by the Borrowers in favor of the Lender in the original face amount of $1,000,000.00 evidencing indebtedness for the 2015 

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Exhibit 10.61

Equipment Line of Credit, as the same may be amended, modified, restated or replaced from time to time.

Agreement or Loan Agreement means the Loan and Security Agreement, as amended by the First Amendment to Loan and Security Agreement dated October 3, 2013, as further amended by the Second Amendment to Loan and Security Agreement dated April 10, 2014, as further amended by Third Amendment to Loan and Security Agreement dated June 26, 2014, as further amended by Fourth Amendment to Loan and Security Agreement dated June 19, 2015, as the same may be further amended from time to time.  Any and all references to the Agreement or Loan Agreement shall include the First Amendment to Loan and Security Agreement, the Second Amendment to Loan and Security Agreement, the Third Amendment to Loan and Security Agreement and the Fourth Amendment to Loan and Security Agreement.

Fourth Amendment to Loan and Security Agreement means this Fourth Amendment to Loan and Security Agreement, which amends the Loan and Security Agreement between the Bank and the Borrowers dated as of March 29, 2013.

Fourth Modification Documents mean the following:

		
	(i)
	the Fourth Amendment to the Loan and Security Agreement;

		
	(ii)
	the Second Amendment to Line Note;

		
	(iii)
	the 2015 Equipment Note; and 

		
	(iv)
	all other documents executed by the Borrowers listed on the Closing Agenda attached hereto as Schedule H.

Loan Documents - the definition thereof shall additionally include this Fourth Amendment to Loan and Security Agreement and the Fourth Modification Documents.

Loans mean:

(i)    the Line of Credit evidenced by the Line Note;

(ii)   the Term Loan evidenced by the Term Note;

(iii)  the Equipment Line of Credit evidenced by the Equipment Note; 

(iv)  the 2014 Equipment Line of Credit evidenced by the 2014 Equipment Note; 

(v)  the 2015 Equipment Line of Credit evidenced by the 2015 Equipment Note; and

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Exhibit 10.61

(vi)   any other loans made by the Bank to Arrhythmia or Micron or both at any time.

Second Amendment to Line Note means the Second Amendment to Commercial Revolving Line of Credit Promissory Note dated June 19, 2015, which amends the Commercial Revolving Line of Credit Promissory Note dated as of March 29, 2013. Any and all references to the Line Note shall include the First Amendment to Line Note and the Second Amendment to Line Note.

(b)     All other existing definitions in the Loan Agreement are hereby ratified and confirmed as amended to date.

3.Amendment to Section 2.1 of the Loan Agreement.  Existing Section 2.1 is hereby deleted and the following is hereby inserted in its stead:

“2.1  Line of Credit. 

(a)  Pursuant to this Agreement and the terms and conditions of the Line Note and upon satisfaction of the conditions precedent in Section 5 hereof, the Borrowers may borrow, repay and reborrow under the Line of Credit; provided, however, that (i) the aggregate amount of all advances and borrowings at any one time outstanding thereunder shall not exceed the face amount of the Line Note minus the amount of all Open Credits or such lesser amount provided for in the Availability Letter (such maximum permitted amount being referred to as the “Maximum Availability”); and (ii) any privilege of the Borrowers to request advances or to borrow under the Line of Credit shall terminate on June 30, 2017 (as such date may be extended by the Bank in writing from time to time, in the Bank’s sole and absolute discretion, the “Termination Date”) or at the Bank’s option, on the earlier occurrence of a Default or an Event of Default;

(b)  All advances under the Line of Credit shall be evidenced by the Line Note, shall bear interest thereunder and all principal, interest and other amounts due thereunder shall be due and payable in full on the Termination Date;

(c)  Borrower shall not request advances under the Line of Credit which would cause the Maximum Availability to be exceeded if the advance were made.  

(d)  The making of any advances by the Bank to the Borrowers under the Line of Credit in excess of the Maximum Availability is for the Borrowers’ benefit and does not in any way effect the unconditional obligation of the Borrowers to repay such advances under the terms of the Line Note and the other applicable Loan Documents.  Without limiting any other rights available to the Bank under the Loan Documents, the Borrowers agree to pay to the Bank upon DEMAND (whether or not an Event of Default exists) the principal balance of the Line of 

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Exhibit 10.61

Credit outstanding in excess of the Maximum Availability together with all accrued and unpaid interest owing on said excess amounts.”

4.New Section 2.3B.  The following new Section 2.3B is inserted immediately following the end of Section 2.3A and immediately preceding Section 2.4:

“2.3B  2015 Equipment Line of Credit.

(a)  Pursuant to this Agreement and the terms and conditions of the 2015 Equipment Note and upon satisfaction of the conditions precedent in Section 5 hereof, the Borrowers may borrow and repay (but not reborrow) under the 2015 Equipment Line of Credit; provided, however, that (i) the aggregate amount of all advances and borrowings at any one time outstanding thereunder shall not exceed the face amount of the 2015 Equipment Note minus the amount of all Open Credits (such maximum permitted amount being referred to as the “2015 Equipment Maximum Availability”); (ii) any privilege of the Borrowers to request advances or to borrow under the 2015 Equipment Line of Credit shall terminate on the earlier of: (A) June 19, 2016 or (B) the date upon which the amount of all advances under the 2015 Equipment Line of Credit are equal to the face amount of the 2015 Equipment Note (such date as it may be extended in writing from time to time, in the Bank’s sole discretion, being referred to herein as the “2015 Equipment Conversion Date”) or, at the Bank’s option, on the earlier occurrence of a Default or an Event of Default.

(b)  All advances under the 2015 Equipment Line of Credit shall be evidenced by the 2015 Equipment Line Note, shall bear interest thereunder and all principal, interest and other amounts due thereunder shall be due and payable in full on the Maturity Date (as defined in the 2015 Equipment Note).

(c)  Any advance under the 2015 Equipment Line of Credit shall not exceed eighty percent (80%) of the invoice amount of the equipment being purchased with the proceeds of the 2015 Equipment Line of Credit.

(d)  Borrowers shall not request advances under the 2015 Equipment Line of Credit which would cause the 2015 Equipment Maximum Availability to be exceeded if the advance were made.  

(e)  The making of any advances by the Bank to the Borrowers under the 2015 Equipment Line of Credit in excess of the 2015 Equipment Maximum Availability is for the Borrowers’ benefit and does not in any way effect the unconditional obligation of the Borrowers to repay such advances under the terms of the 2015 Equipment Line Note and the other applicable Loan Documents.  Without limiting any other rights available to the Bank under the Loan Documents, the Borrowers agree to pay to the Bank upon DEMAND (whether or not an Event of Default exists) the principal balance of the 2015 Equipment Line 

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Exhibit 10.61

of Credit outstanding in excess of the 2015 Equipment Maximum Availability together with all accrued and unpaid interest owing on said excess amounts.”

5.Amendment to Section 5.1 of the Loan Agreement.  Existing Section 5.1 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

“5.1  Initial Advances.  The initial advance under the Line of Credit, the single advance under the Term Loan, the initial advance under the Equipment Line of Credit,  the initial advance under the 2014 Equipment Line of Credit and the initial advance under the 2015 Equipment Line of Credit shall be subject to the following conditions precedent (unless waived by the Bank in its sole discretion):

(a)  Approval of Bank Counsel.  All legal matters incident to the transactions hereby contemplated shall be satisfactory to counsel for the Bank.

(b)  Proof of Action.  The Bank shall have received such documents evidencing each Borrower’s power to execute and deliver this Agreement and the other Loan Documents and the Bank shall have received evidence of compliance with all conditions set forth in the Bank’s Commitment Letter to the Borrowers dated March 12, 2013 in a timely fashion, all satisfactory to the Bank and its counsel.

(c)  The Note and Loan Documents.  The Borrowers shall have delivered to the Bank the Notes, this Agreement, the other Loan Documents and such other documents as the Bank may request including without limitation all documents necessary to confirm, secure and perfect the Bank’s security interest in the Collateral in form and substance satisfactory to the Bank (the “Security Documents”) including without limitation the Landlord’s Consents and Waivers, the Financing Statements of the Borrowers, the Patent Security Agreements and Trademark Security Agreements.

(d)  Opinion of Counsel.  The Bank shall have received from counsel for the each of the Borrowers a written opinion, satisfactory in form and substance to the Bank and its counsel, including without limitation due authority and enforceability opinions for each Borrower.

(e)  No Event of Default.  No Event of Default has occurred, and no Default shall have occurred, the Maximum Availability under the Line of Credit and the Equipment Maximum Availability under the Equipment Line of Credit, as applicable, shall not be exceeded at the time of the advance request or the making of the advance.

(f)  No Material Adverse Change.  There shall have been no material adverse change in the assets, liabilities, financial condition or business of the 

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Exhibit 10.61

Borrowers since the date of any financial statements delivered to the Bank before or after the date of this Agreement.

(g)  Collateral Priority.  The Bank shall have received evidence satisfactory to it that all Loan Documents perfecting the Bank’s security interest in Collateral have been duly recorded and filed and all other action necessary to perfect the Bank’s liens in the Collateral have been taken such that the Bank’s liens shall constitute first priority perfected liens in all Collateral, subject to no other liens or encumbrances unacceptable to the Bank, all to the Bank’s complete satisfaction.

(h)  Evidence of Insurance.  At or prior to Closing, the Borrowers shall deliver to the Bank an insurance binder or binders evidencing insurance coverage(s) as required in Section 6.3 hereof. 

(i)  Organizational Documents.  The Bank shall have received from each Borrower and satisfactorily reviewed and approved certified copies of the organizational documents for each Borrower and all amendments thereto, together with the resolutions of the appropriate parties authorizing the execution and delivery of the Loan Documents, said organizational documents to be in form and substance satisfactory to the Bank and its counsel.

(j)  Operating Accounts.  Prior to Closing, the Borrowers shall establish its operating accounts with the Bank.  

(k)  Certificates.  The Bank shall have received from the Borrowers and satisfactorily reviewed and approved Certificates of Legal Existence and Certificates of Good Standing issued by the Secretary of State for each jurisdiction in which each Borrower is registered to conduct its business, Certificates of Tax Good Standing issued by the Delaware Division of Revenue and the Massachusetts Department of Revenue and an accountant’s letter of tax good standing with respect to filing and payment of any and all taxes for the Borrowers.

(l)  2012 Financial Statements.  The Bank shall have received and satisfactorily reviewed the 2012 financial statements of the Borrowers, said financial statements to be in form, scope and substance satisfactory to the Bank in its sole and absolute discretion.

(m)  Other Conditions.  There shall be compliance with all other conditions and provisions contained in this Agreement and the other Loan Documents as applicable pertaining to advances.”

6.Amendment to Section 5.2 of the Loan Agreement. Existing Section 5.2 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

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Exhibit 10.61

“5.2  Subsequent Advances.  Every subsequent advance under the Line of Credit, the Equipment Line of Credit, the 2014 Equipment Line of Credit and the 2015 Equipment Line of Credit will be made subject to the continued satisfaction of the conditions set forth in Sections 5.1 (a) through (m) inclusive above through the date of the applicable advance and to the following additional conditions precedent that:

(a)  Representations and Warranties.  The representations and warranties contained in Section 4 hereof and in each other Loan Document shall be true and correct.  Any request for a borrowing shall be deemed a certification by each Borrower as to the truth and accuracy of the representations and warranties contained in Section 4 hereof and in each other Loan Document as of the date of such request.

(b)  Termination Date; Conversion Date.  As applicable, the Termination Date (as defined in the Line Note) of the Line of Credit has not been reached, the Conversion Date (as defined in the Equipment Note) of the Equipment Line of Credit has not been reached, the 2014 Equipment Conversion Date (as defined in the 2014 Equipment Note) has not been reached and the 2015 Equipment Conversion Date (as defined in the 2015 Equipment Note) has not been reached.”

7.Amendment to Section H of Schedule A to the Loan Agreement.  Existing Section H of Schedule A to the Loan Agreement is hereby deleted and the following is inserted in its stead:

“H.  Use of Loan Proceeds.

		
	1.
	Proceeds of the Line of Credit are to be used to payoff and terminate the existing Line of Credit with Citizens Bank and other obligations to Citizens Bank, including but not limited to the letter of credit issued for the benefit of the Bank of Nova Scotia and to pay costs and expenses and costs associated with the Line of Credit, Term Loan and Equipment Loan with UniBank for Savings (including without limitation UniBank for Saving’s legal costs and expenses) and for working capital including without limitation those purposes and payees set forth in the Authorization to Disburse associated with the Line of Credit dated March 29, 2013 this day.

		
	2.
	Proceeds of the Term Loan are to be used to pay off existing debt owing under existing equipment leases, to finance accounts payable and costs associated with the closure of the Borrower’s Wireless DX division, and to pay costs and expenses and costs associated with the Line of Credit, Term Loan and Equipment Loan with UniBank for Savings (including without limitation UniBank for Saving’s legal costs and expenses) and for working capital including without limitation those purposes and payees set forth in 

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Exhibit 10.61

the Authorization to Disburse associated with the Term Loan dated March 29, 2013.

		
	3.
	Proceeds of the Equipment Loan are to be used to purchase equipment and to pay costs and expenses and costs associated with the Line of Credit, Term Loan and Equipment Loan with UniBank for Savings (including without limitation UniBank for Saving’s legal costs and expenses) and for working capital including without limitation those purposes and payees set forth in the Authorization to Disburse associated with the Equipment Loan dated March 29, 2013.

		
	4.
	Proceeds of the 2014 Equipment Line of Credit are to be used to purchase new and used equipment and to pay expenses and costs associated with the 2014 Equipment Line of Credit with UniBank for Savings (including without limitation UniBank for Savings’ legal costs and expenses) all as more particularly set forth in the authorization to disburse dated June 26, 2014.”

		
	5.
	Proceeds of the 2015 Equipment Line of Credit are to be used to purchase new and used equipment and to pay expenses and costs associated with the 2015 Equipment Line of Credit with UniBank for Savings (including without limitation UniBank for Savings’ legal costs and expenses) all as more particularly set forth in the authorization to disburse dated June 19, 2015.”

8.New Schedule H.  The following new Schedule H attached hereto is added to the Loan Agreement following the end of Schedule G.

9. Other Loan Document Amendments and Reaffirmation.  The Line Note is being amended this date pursuant to the Second Amendment to Line Note dated of even date herewith. 

10.No Waiver.  The Borrowers hereby acknowledge that the Bank has made no waiver of any provision of the Loan Documents nor of any Default or Event of Default which may exist and that no such waiver shall be implied by virtue of this Fourth Amendment or otherwise.

11.Costs and Expenses.  The Borrowers will pay to the Bank upon demand all costs and expenses (including attorney’s fees) reasonably incurred by the Lender in connection with the documentation and closing of the Fourth Modification Documents.

12.Conditions.  The effectiveness of the Fourth Modification Documents shall be conditioned upon, at the Bank’s option: (a) the execution and delivery of this Fourth Amendment to Loan and Security Agreement and the other Fourth Modification Documents by all of the parties thereto; and (b) the receipt by Bank of all other documents and certificates reasonably requested by Bank and its counsel including without limitation, the Bring Down Certificate for each Borrower.

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Exhibit 10.61

13.Reaffirmation of Loan Documents.  Except as expressly modified herein all other terms and conditions of the Loan Documents are hereby ratified and confirmed and the Loan Documents, as modified hereby, are and continue to be in full force and effect.  All references in the Loan Documents to any Loan Document shall mean that Loan Document, as amended to date and as further amended from time to time.

14.Reaffirmation of Cross-Collateralization and Cross-Default.  The Borrowers hereby acknowledge that the obligations of the Borrowers set forth in the Loan and Security Agreement and the other Loan Documents are intended to capture all obligations and debts of the Borrowers owing to the Bank.  This includes any agreements, loan agreements, security agreements, mortgages, letters or credit, and any other existing or future loans. The Borrowers  acknowledge that all obligations of the Borrowers owing to the Bank are cross-collateralized and cross-defaulted with all obligations outstanding.  

[This space intentionally left blank; signature page to follow.]

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Exhibit 10.61

IN WITNESS WHEREOF the parties have executed this instrument under seal as of the 19th day of June, 2015.

Borrowers:

Arrhythmia Research Technology, Inc.

_____________________________            By: /s/ Salvatore Emma, Jr.
		
	Witness
	Salvatore Emma, Jr., President and 

Chief Executive Officer
Duly Authorized

Micron Products Inc.

_____________________________            By: /s/ Salvatore Emma, Jr.
		
	Witness
	Salvatore Emma, Jr., President and

Chief Executive Officer
Duly Authorized            

Bank:

UniBank for Savings

_____________________________            By: /s/ John Decker
		
	Witness
	     John Decker, Vice President 

                        

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Exhibit 10.61

SCHEDULE H

FOURTH MODIFICATION TO FINANCING ARRANGEMENTS
TO 
ARRHYTHMIA RESEARCH TECHNOLOGY, INC. AND
MICRON PRODUCTS INC.
MADE BY
UNIBANK FOR SAVINGS

CLOSING DATE:  June 19, 2015

	
			
	Lender:
John Decker, Vice President
UniBank for Savings 
24 Gold Star Boulevard
Worcester, MA  01605
Phone:  (508) 849-4253
Fax:      (508) 234-7603
Email:  John.Decker@unibank.com 

	Borrowers:
Arrhythmia Research Technology, Inc.
Micron Products Inc.

Guarantors:
None

	Lender’s Counsel:
Anthony J. Salvidio, II, Esquire
Fletcher Tilton, PC (“FT”)
370 Main Street, 11th Floor
Worcester, MA 01608
Phone:  (508) 459-8004 
Fax:      (508) 459-8304 
Email:   asalvidio@fletchertilton.com 

Karen M. LaFond, Esquire 
Phone:  (508) 459-8015 
Fax:      (508) 459-8315 
Email:  klafond@fletchertilton.com 

	Borrowers’ Counsel:
Paul J. D’Onfro, Esquire
Mirick O’Connell DeMaille & Lougee LLP (“MODL”)
100 Front Street
Worcester, MA  01608
Phone:  (508) 929-1624
Fax:       (508) 983-6249
Email:  pdonfro@mirickoconnell.com 

	DOCUMENTS
	RESPONSIBLE PARTY

	 
	 

	Fourth Modification to Financing Arrangements
	 

	 
	 

	1.        Fourth Amendment to Loan and Security Agreement
	FT

	2.    Second Amendment to Commercial Revolving Line of Credit Promissory
	FT

	3.    $1,000,000.00 Equipment Line of Credit Promissory Note 
	FT

	4.    Disbursement Authorization - $1,000,000.00 Equipment Line of Credit Promissory Note
	FT

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Exhibit 10.61

	
			
	Lender:
John Decker, Vice President
UniBank for Savings 
24 Gold Star Boulevard
Worcester, MA  01605
Phone:  (508) 849-4253
Fax:      (508) 234-7603
Email:  John.Decker@unibank.com 

	Borrowers:
Arrhythmia Research Technology, Inc.
Micron Products Inc.

Guarantors:
None

	5.    Copy of existing and continuing UCC-1 Financing Statements  
a)    Arrhythmia Research Technology, Inc. (Delaware) All Asset
b)    Arrhythmia Research Technology, Inc. (Delaware) Specific Equipment
c)    Micron Products Inc. (Massachusetts) All Asset
d)    Micron Products, Inc. (Massachusetts) Specific Equipment
	FT

	6.    UCC-1 Specific Equipment Financing Statements of Arrhythmia Research Technology, Inc. filed with:
a)    Delaware Secretary of State
b)    Worcester North District Registry of Deeds
c)    Any and all other applicable filing/recording offices where  specific equipment is possessed
	FT 
(to come upon purchase of each unit of specific equipment)

	7.    UCC-1 Specific Equipment Financing Statements of Micron Products Inc. filed with:
a)    Massachusetts Secretary of the Commonwealth
b)    Worcester North District Registry of Deeds
c)    Any and all other applicable filing/recording offices where  specific equipment is possessed
	FT
(to come upon purchase of each unit of specific equipment)

	8.    Evidence of Hazard and Liability Insurance coverage listing Lender as Loss Payee and Additional Insured as applicable
a)    Arrhythmia Research Technology, Inc. 
b)    Micron Products Inc.
	In Lender’s Files

	9.    Certificates of Good Standing
a)    Arrhythmia Research Technology, Inc. 
b)    Micron Products Inc.
	MODL

	10.    Bring Down Certificates
a)    Arrhythmia Research Technology, Inc. 
b)    Micron Products Inc.
	FT

	11.    Opinion of Counsel to Borrowers re: Authorization, Due Authority, Enforceability
	MODL

	12.    Identification
	In Lender’s Files

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Exhibit 10.61

COMMERCIAL EQUIPMENT LINE OF CREDIT
PROMISSORY NOTE

$1,000,000.00                         Worcester, Massachusetts
     June 19, 2015

FOR VALUE RECEIVED Arrhythmia Research Technology, Inc., a corporation duly organized and validly existing under the laws of the State of Delaware having a principal place of business at 25 Sawyer Passway, Fitchburg, Massachusetts 01420 and Micron Products Inc., a corporation duly organized and validly existing under the laws of the Commonwealth of Massachusetts having a principal place of business at 25 Sawyer Passway, Fitchburg, Massachusetts 01420 (each and collectively, the “Borrower”) jointly and severally promise to pay to the order of UniBank for Savings (with its successors, assigns and any future holder or holders of this Note being the “Lender”) at its offices at 49 Church Street, Whitinsville, Massachusetts 01588 or at such other place as the Lender may from time to time designate in writing, the principal sum of One Million and 00/100 Dollars ($1,000,000.00), or the aggregate unpaid principal amount of all advances made by the Lender to the Borrower under terms hereinafter set forth, whichever is less, in lawful money of the United States, to pay interest on each advance at a variable per annum rate equal to the Interest Rate (as hereafter defined), unless the Default Rate is in effect in which event the Interest Rate shall be the Default Rate.  All advances shall be due and payable as set forth herein, but if not sooner paid, this Note and all amounts due hereunder shall be due and payable on June 19, 2021 (said date as the same may be extended from time to time in the Lender’s discretion, being the “Maturity Date”), without notice or demand.  

This Note evidences the Borrower’s indebtedness under the $1,000,000 Equipment Line of Credit made by the Bank to the Borrower of even date herewith as defined in the Loan and Security Agreement among the Borrower and the Bank dated March 29, 2013 (as the same may be amended or modified from time to time, the “Loan Agreement”), incorporated herein by reference (the “2015 Equipment Line of Credit”).    

Subject to the terms and conditions set forth herein and in the Loan Agreement, the Borrower may request advances and borrow funds under the 2015 Equipment Line of Credit during the period from the date hereof until the earlier of: (i) June 19, 2016 or (ii) the date upon which the amount of all advances under this Note are equal to the face amount of this Note (such date as it may be extended in writing from time to time, in the Bank’s sole discretion, being referred to herein as the “2015 Equipment Conversion Date”).  The Borrower’s privilege to 

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Exhibit 10.61

request advances and borrow funds under the 2015 Equipment Line of Credit shall terminate on the 2015 Equipment Conversion Date or, at the Bank’s option, an earlier Default or Event of Default.  The aggregate amount of all advances advanced under the 2015 Equipment Line of Credit shall not exceed $1,000,000.00.  Advances which are repaid may not be reborrowed.  Should the amount of said advances at any time exceed the maximum amount permitted herein, the Borrower shall be obligated to immediately pay to the Bank the amount of such excess together with accrued and unpaid interest.

Interest on the outstanding principal of all advances hereunder shall be due and payable commencing one month from the date hereof and continuing monthly thereafter on the same day or last day, whichever shall first occur, of each succeeding month (each a “Payment Date”) until the 2015 Equipment Conversion Date.   
    
Commencing with the first Payment Date after the 2015 Equipment Conversion Date, principal and interest shall be due and payable in consecutive monthly installments the number of which shall be equal to the number of months remaining between the 2015 Equipment Conversion Date and the Maturity Date and of which all but the last (the “Final Payment”) shall be in such amount as is necessary to amortize the outstanding principal balance of this Note with interest thereon at the rate applicable from time to time hereunder based upon an assumed direct reduction amortization schedule equal to six (6) years from the date of this Note.  Each such monthly installment of principal and interest shall be subject to adjustment by the Lender from time to time in order to insure that payments are sufficient to properly amortize the then outstanding principal balance of this Note with interest thereon based upon the applicable assumed amortization schedule and changes in the rate of interest applicable from time to time to the principal balance of this Note.  The Lender may adjust any monthly installment upon written notice to the Borrower if a failure to so adjust would result in less than the total amount of all accrued interest due being paid on any Payment Date (as hereafter defined).

The first of said consecutive monthly payments of principal and interest shall be due and payable on the first Payment Date after the 2015 Equipment Conversion Date and the remainder of said monthly payments shall be due on the same day or last day, whichever shall first occur, of each succeeding month thereafter (each a “Payment Date”).  The Final Payment shall be in an amount equal to the then outstanding principal balance of this Note plus all accrued and unpaid interest and all other amounts owing hereunder.  The Final Payment, unless sooner paid, shall be due and payable on the Maturity Date, without notice or demand. 

This Note has been executed and delivered subject to the following additional terms and conditions:

1.   Definitions.  For purposes of this Note, the following terms shall have the following meanings:

1.1  “Banking Day” means any day other than a Saturday or Sunday, or other day on which commercial banks in the Commonwealth of Massachusetts are authorized or required to close under the laws of the Commonwealth of Massachusetts.

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Exhibit 10.61

1.2  “Base Rate” means the Federal Home Loan Bank of Boston Five Year Rate of interest, as disclosed on the rate sheet provided to Lender.  In the event that such rate of interest currently referred to shall no longer exist or no longer be referred to as the “Federal Home Loan Bank of Boston Five Year Rate” or “Federal Home Loan Bank of Boston Rate”, or in the event the Lender or a future holder of the Note shall no longer use the Federal Home Loan Bank of Boston Five Year Rate as its reference rate of interest, then the term “Base Rate” shall be deemed to refer to the comparable reference rate of interest adopted or used in lieu thereof by the Lender or any such future holder, which represents a reasonable substitute in the form of Standards Rates used in the market at that time such as the  Treasury Rates or other indexes, whether such rate be referred as to the “Base Rate” or otherwise.

1.3  “Default” means the occurrence of an Event of Default or the occurrence of any event, which with the giving of notice or the passage of time, or both would constitute an Event of Default.

1.4  “Event of Default” has the meaning given to it in Section 11 hereof and the Loan Agreement and includes but is not limited to a failure by the Borrower to comply with any term or condition of this Note or any other Loan Document.

1.5  “Governing State” means the Commonwealth of Massachusetts.

1.6  “Interest Rate” shall have the meaning given to it in Section 2 hereof, unless the Default Rate is in effect, in which event the Interest Rate shall be the Default Rate.

1.7  “Loan Agreement” means the Loan and Security Agreement between the Lender and the Borrower dated March 29, 2013, as the same may be amended from time to time.

1.8  “Loan Documents” has the meaning given to it in the Loan Agreement and includes without limitation this Note and any and all agreements, instruments, documents, security agreements, mortgages, financing statements, and supplements thereto and relating to the loan evidenced by this Note (the “Loan”), or entered into between the Borrower or any one of them in favor of, or with, the Lender, at any time, for any purpose, all as amended, renewed or extended from time to time.

1.9  “Obligations” mean all liabilities, indebtedness, obligations, advances, covenants and loans now or hereafter due or owing by or from any Borrower (including without limitation any obligation as a guarantor) to the Lender of whatever kind, description or nature, whether or not evidenced by any note or other instrument, whether or not for the payment of money, whether or not currently contemplated at the time of this Agreement, whether now existing, or hereafter arising or created, whether such obligations be direct or indirect, absolute or contingent, primary or secondary, secured or unsecured, or due or to become due, including, without limitation, all liabilities and obligations under the Notes and other Loan Documents, and all indemnity and 

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Exhibit 10.61

reimbursement obligations of any Borrower, actual or contingent, in respect of letters of credit or banker’s acceptances issued by the Lender for the account of or guaranteed by any Borrower, all obligations of any partnership of joint venture as to which any Borrower is or may become liable and any so called SWAP contracts entered into by or given by any Borrower to the Lender, regardless of how they arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, any and all obligations arising under any foreign exchange contracts, interest rate cap, floor or hedging agreements, or similar agreements, all obligations of any Borrower to the Lender arising out of or in connection with any Automated Clearing House (“ACH”) Agreements relating to the processing of ACH transactions, all obligations of any Borrower to the Lender to repay overdrafts whether or not such obligations are related to the transactions described in the Notes and other Loan Documents, and includes obligations to perform acts and refrain from taking action as well as obligations to pay money.  The term “Obligations” shall also include without limitation all accrued interest and all costs and expenses, including attorney’s fees, costs and expenses relating to the appraisal and/or valuation of assets and all costs and expenses incurred or paid by the Lender in exercising, preserving, defending, collecting, administering, enforcing or protecting any of its rights under the Obligations or hereunder or with respect to the Collateral or in any litigation arising out of the transactions evidenced by the Obligations.  The term “Obligations” shall be construed in its broadest and most comprehensive sense.

1.11  “Open Credits” mean the face amount of all letters of credit or bankers acceptances issued by the  Lender for the account of any Borrower or guaranteed by any Borrower.

1.12  “Prime Rate” means the highest per annum rate of interest published by the Wall Street Journal from time to time as the Prime Rate.  In the event that the reference rate of interest currently referred to in the Wall Street Journal as the “Prime Rate” shall no longer exist or no longer referred to as the “Prime Rate”, or in the event the Lender or a future holder of the Note shall no longer use the Wall Street Journal published Prime Rate as its reference rate of interest, then such term shall be deemed to refer to the comparable fluctuating reference rate of interest adopted or used in lieu thereof by the Lender or any such future holder, whether such rate be referred as to the “prime rate”, “base rate” or otherwise.

2.  Interest Rate.  Except as hereinafter provided, the outstanding principal balance of this Note shall bear interest at a fluctuating per annum rate of interest equal to the Prime Rate plus one quarter of one percent (0.25%) until the 2015 Equipment Conversion Date.  On the 2015 Equipment Conversion Date, the per annum rate of interest shall be automatically adjusted to a fixed per annum rate equal to the greater of:  (i) the Base Rate as at the 2015 Equipment Conversion Date plus three percentage points (3.00) or (ii) four and one quarter of one percent (4.25%), at which time the interest rate shall be fixed until the Maturity Date.  Changes in the rate of interest resulting from changes in the Prime Rate shall take place immediately without notice or demand of any kind.  For all purposes of this Note, the Lender’s written notice or 

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Exhibit 10.61

statement to the Borrower of the applicable rate of interest shall be conclusive and binding absent manifest error.  

3.  Advances, Notice Of Borrowing.  

3.1  When the Borrower desires to borrow hereunder, it shall give the Lender notice specifying the date of the proposed borrowing (which shall be a Banking Day) and the amount to be borrowed.  If any advance is made, the Lender shall record on the books and records of the Lender an appropriate notation evidencing such advance, each repayment on account of the principal thereof and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error.  Amounts borrowed under this Note may not be reborrowed.   Unless a Default or an Event of Default occurs, the Borrower may borrow and repay under this Note; provided, however, that: (i) each request by the Borrower for an advance hereunder shall be accompanied by an invoice evidencing the price and specifications of the equipment being purchased; (ii) at no time shall the outstanding principal balance of this Note exceed an amount equal to the face amount of this Note minus the aggregate amount of all Open Credits (the “2015 Equipment Maximum Availability”); (iii) at no time shall advances be requested which would cause the outstanding principal balance of this Note to exceed the 2015 Equipment Maximum Availability; (iv) all outstanding principal plus accrued and unpaid interest shall be paid in full on the Maturity Date; and (v) any privilege to request advances hereunder shall terminate on the 2015 Equipment Conversion Date.  

3.2  [Intentionally omitted].

3.3  Any advance hereunder shall not exceed eighty percent (80%) of the invoice amount of the equipment being purchased with the proceeds of the 2015 Equipment Line of Credit.

3.4  The making of any advances by the Lender to the Borrower under the 2015 Equipment Line of Credit in excess of the 2015 Equipment Maximum Availability is for the Borrower’s benefit and does not in any way effect the unconditional obligation of the Borrower to repay such advances under the terms of this Note and the other applicable Loan Documents.  Without limiting any other rights available to the Lender under the Loan Documents, the Borrower agrees to pay to the Lender upon DEMAND (whether or not an Event of Default exists) the principal balance of the 2015 Equipment Line of Credit outstanding in excess of the 2015 Equipment Maximum Availability together with all accrued and unpaid interest.

4. Interest Rate/Payments.

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Exhibit 10.61

4.1.  Interest Rate, Payment of Interest.  So long as no Event of Default has occurred and subject to the terms hereof, each advance hereunder shall bear interest at the interest rate called for and calculated pursuant to the terms of this Note.  

4.2.  Accounts; Records.  The Lender is authorized (but not required) to charge principal and interest and all other amounts due under this Note to any account of any Borrower with the Lender when and as it becomes due.  All advances made by the Lender to the Borrower shall be evidenced by an appropriate notation on the books and records of the Lender, which records shall reflect each repayment on account of the principal thereof, and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records of the Lender, as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error; provided, however, that the failure by the Lender to make any such notation with respect to any advance or payment shall not limit or otherwise affect the obligations of the Borrower hereunder.

4.3  Additional Payments.  If the Lender in its reasonable judgment determines that the effect of an applicable law or government regulation, guideline or order or the interpretation thereof by any governmental authority charged with the administration thereof (such as, for example, a change in official reserve requirements which the Lender is required to maintain in respect of loans or deposits or other funds procured for funding such loans) is to increase the cost to the Lender of making or continuing a Loan hereunder or to reduce the amount of any payment of principal or interest receivable by the Lender thereon, then the Borrower shall pay to the Lender on demand such additional amounts as the Lender may determine in its sole and absolute discretion, to be required to compensate the Lender for such additional costs or reduction.  Any additional payment under this section will be computed from the effective date at which such additional costs have to be borne by the Lender.  A certificate as to any additional amounts payable pursuant to this section setting forth the basis and method of determining such amounts shall be conclusive, absent manifest error, as to the determination by the Lender set forth therein if made reasonably and in good faith.  The Borrower shall pay any and all amounts so certified to it by the Lender within ten (10) days of receipt of such certificate.

5.  360 Day Year / Default Rate.  All computations of interest under this Note shall be made on the basis of a three hundred sixty (360) day year and the actual number of days elapsed.  To the extent allowed by applicable law, after the occurrence of any Event of Default, after the Maturity Date or after judgment has been rendered on this Note, all outstanding principal and unpaid interest shall bear, until paid, interest at a rate per annum equal to four (4.000) percentage points greater than the Interest Rate called for and calculated pursuant to the terms of this Note (the “Default Rate”).

6.  Late Charge.  If a regularly scheduled payment is fifteen (15) days or more late, Borrower will be charged five percent (5.000%) of the unpaid portion of the regularly scheduled payment or twenty five dollars ($25.00), whichever is greater. If the Lender demands payment of 

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Exhibit 10.61

the Loan and the Borrower does not pay the Loan within fifteen (15) days after the Lender’s demand, the Borrower will be charged either five percent (5.000%) of the unpaid principal plus accrued unpaid interest or twenty five dollars ($25.00), whichever is greater. 

7.  Expenses.  The Borrower further promises to pay to the Lender, as incurred, and as an additional part of the unpaid principal balance, all costs, expenses and reasonable attorneys’ fees (which may include, without limitation, the allocable cost of the Lender’s internal legal counsel) incurred:  (a) in the protection, modification, collection, defense or enforcement of all or part of this Note or any guaranty hereof or any other Loan Document; (b) in the foreclosure or enforcement of any mortgage or security interest which may now or hereafter secure either the debt hereunder or any guaranty thereof; (c) with respect to any action taken to protect, defend, modify or sustain the lien of any such mortgage or security agreement; (d) with respect to any litigation or controversy arising from or connected with this Note or any mortgage or security agreement or collateral which may now or hereafter secure this Note; or (e) with respect to any act to protect defend, modify, enforce or release any of its rights or remedies with regard to, or otherwise effect collection of, any collateral which may now or in the future secure this Note or with regard to or against the Borrower or any endorser, guarantor or surety of this Note.

8.  Prepayment.  The Borrower may prepay this Note in whole or in part, at any time, without penalty or premium.

9.  Mandatory Prepayment / Application of Payments.  

9.1.  The Borrower shall be required to prepay ON DEMAND all advances made under this Note to the extent the aggregate of all such advances exceeds the amounts permitted hereunder.  In addition the Borrower shall pay, if applicable, charges incurred pursuant to the terms hereof.  

9.2.   All payments, including any prepayments shall, at the option of the Lender, be applied first to interest on the unpaid principal of all advances due under this Note, and then to the payment of all fees, costs, and expenses incurred by the Lender or owing to the Lender by the Borrower arising out of the loan transaction evidenced by this Note which have not been paid or reimbursed to the Lender, and then to the balance on account of the principal due under this Note.

Prepayments of principal (whether voluntary or involuntary) shall be applied to unpaid principal installments under this Note in inverse order of their maturity and shall not affect the obligation to pay regular installments due hereunder until the entire indebtedness is paid in full.

10.  Loan Agreement. This Note has been executed and delivered in accordance with the Loan Agreement which sets forth further terms and conditions upon which the entire unpaid principal hereof and all interest hereon may become due and payable prior to the Maturity Date, and generally as to further rights of the Lender and duties of the Borrower with respect hereto.  Capitalized terms not defined herein which are defined terms in the Loan Agreement shall have 

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Exhibit 10.61

the meanings set forth therein.  No reference to the Loan Agreement or other Loan Documents or to any provision thereof shall affect or impair the absolute and unconditional obligation of the Borrower to pay principal or interest or other amounts owing under this Note.

11.  Default.  

11.1.    The happening of any of the following events or conditions shall constitute an “Event of Default” under this Note:

11.1.1.  Failure to make any payment of principal or interest or any sum due under this Note or any other promissory note or instrument made by the Borrower or any one or more of them in favor of the Lender; or

11.1.2.   Failure by any Borrower to observe or perform any covenant contained herein; or 

11.1.3   A default or the occurrence of an event of default in any other Loan Document including, without limitation, an Event of Default as defined in the Loan Agreement. 

11.2.  Upon and after the occurrence of a Default or an Event of Default, the availability of advances hereunder shall, at the option of the Lender, be deemed to be automatically terminated.  Upon and after an Event of Default, at the option of the Lender, the whole of the indebtedness evidenced by this Note, including principal and interest, and all other amounts which may be or become due or owing by the Borrower to the Lender shall, at the option of the Lender, immediately become due and payable without presentment, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived by the Borrower.

12.  Waivers, Consent to Jurisdiction.  Each Borrower agrees that no delay or failure on the part of the Lender in exercising any power, privilege, remedy, option or right hereunder shall operate as a waiver thereof or of any other power, privilege, remedy or right; nor shall any single or partial exercise of any power, privilege, remedy, option or right hereunder preclude any other or future exercise thereof or the exercise of any other power, privilege, remedy, option or right.  The rights and remedies expressed herein are cumulative, and may be enforced successively, alternately, or concurrently and are not exclusive of any rights or remedies which holder may or would otherwise have under the provisions of all applicable laws, and under the provisions of all agreements between the Borrower and the Lender.

Each Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.  Each Borrower hereby assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any party or person 

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Exhibit 10.61

primarily or secondarily liable, and to the addition, release and/or substitution of all or any portion of any collateral now or hereafter securing this Note.

Each Borrower hereby waives such rights as it may have to notice and/or hearing under any applicable federal or state laws pertaining to the exercise by Lender of such rights as the Lender may have regarding the right to seek prejudgment remedies and/or deprive Borrower of or affect the use of or possession or enjoyment of Borrower’s property prior to the rendition of a final judgment against the Borrower.  Each Borrower further waives any right it may have to require Lender to provide a bond or other security as a precondition to or in connection with any prejudgment remedy sought by Lender, and waives any objection to the issuance of such prejudgment remedy based on any offsets, claims, defenses or counterclaims to any action brought by the Lender.

EACH BORROWER AND LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN AND ACCEPT THIS NOTE.

Each Borrower hereby agrees that the following courts:  State Court - Any state or local court of the Governing State; Federal Court - United States District Court for the District of the Governing State; or at the option of Lender, any court in which Lender shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy, shall have exclusive jurisdiction to hear and determine any claims or disputes between Borrower and Lender pertaining directly or indirectly to this Note or to any matter arising in connection with this Note.  Each Borrower expressly submits and consents in advance to such jurisdiction in any action or proceeding commenced in such courts, hereby waiving personal service of the summons and complaint, or other process or papers issued therein, and agreeing that service of such summons and complaint, or other process or papers, may be made by registered or certified mail addressed to Borrower at the address set forth herein.  Should Borrower fail to appear or answer any summons, complaint, process or papers so served within thirty (30) days after the mailing thereof, it shall be deemed in default and an order and/or judgment may be entered against it as demanded or prayed for in such summons, complaint, process or papers.  The exclusive choice of forum set forth herein shall not be deemed to preclude the enforcement of any judgment obtained in such forum or the taking of any action under this Note to enforce the same in any appropriate jurisdiction.

This Note shall be governed by and construed in accordance with the laws of the Governing State.

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Exhibit 10.61

13.  Maximum Permissible Interest Rate. The Borrower shall not be obligated to pay and the Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject the Lender to any civil or criminal penalties.  If, because of the acceleration of maturity the payment of interest in advance or any other reason, the Borrower is required, under the provisions of any Loan Document or otherwise, to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess of such maximum rate, together with interest thereon at the rate provided herein from the date of such payment, shall be immediately and automatically applied to the reduction of the unpaid principal balance of this Note as of the date on which such excess payment was made.  If the amount to be so applied to reduction of the unpaid principal balance exceeds the unpaid principal balance, the amount of such excess shall be refunded by the Lender to the Borrower.

14.  Replacement Documents.  Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other security document(s) which is not of public record and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other document(s), the Borrower will issue, in lieu thereof, a replacement Note or other document(s) in the same principal amount thereof and otherwise of like tenor.

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Exhibit 10.61

15.  Transfer and Assignment.

15.1.    The Lender may at any time pledge, endorse, assign, or transfer all or any portion of its rights under the Loan Documents including any portion of this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act.  12 U.S.C. Section 341.  No such pledge or enforcement thereof shall release the Lender from its obligations under any of the Loan Documents.

15.2.    The Lender shall have the unrestricted right at any time or from time to time, and without any Borrower’s consent, to sell, assign, endorse, or transfer all or any portion of its rights and obligations hereunder to one or more lenders or other entities (each an “Assignee”), and each Borrower agrees that it shall execute, or cause to be executed such documents including without limitation, amendments to this Note and to any other documents, instruments, and agreements executed in connection herewith as the Lender shall deem necessary to effect the foregoing.  In addition, at the request of the Lender or any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if the Lender has retained any of its rights and obligations hereunder following such assignment, to the Lender, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the note held by the Lender prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Lender after giving effect to such assignment.  Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by the Lender in connection with such assignment, and the payment by such Assignee of the purchase price agreed to by Lender and such Assignee, such Assignee shall be a party to this Note and shall have all of the rights and obligations of the Lender hereunder (and under any and all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by the Lender pursuant to the assignment documentation between the Lender and such Assignee, and the Lender shall be released from its obligation hereunder and thereunder to a corresponding extent.

15.3.    The Lender shall have the unrestricted right at any time and from time to time, and without the consent of or notice to the Borrower to grant to one or more institutions or other persons (each a “Participant”) participating interests in the Lender’s obligations to lend hereunder and/or any or all of the loans held by the Lender hereunder.  In the event of any such grant by the Lender of a participating interest to a Participant, whether or not upon notice to the Borrower, the Lender shall remain responsible for the performance of its obligations hereunder and the Borrower shall continue to deal solely and directly with the Lender in connection with Lender’s rights and obligations hereunder.  The Lender shall furnish any information concerning the Borrower in its possession from time to time to any prospective assignees and Participants, provided that the Lender shall require any such prospective assignee or Participant to maintain the confidentiality of such information.

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Exhibit 10.61

16.   Setoff.  Each Borrower hereby grants to the Lender a lien, security interest, and a right of setoff as security for all of the Obligations, upon and against all deposits, credits, collateral, and property of any Borrower, now or hereafter in the possession, custody, safekeeping, or control of the Lender or any entity under the control of the Lender, or in transit to any of them.  At any time, without demand or notice, the Lender may set off the same or any part thereof and apply the same to any liability or obligation of the Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS, OR OTHER PROPERTY OF EACH BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.  The Lender shall not be required to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and each Borrower waives, to the fullest extent that it lawfully can:  (a) any right it might have to require the Lender to pursue any particular remedy before proceeding against them; and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until the Obligations are paid in full.

17.  Security.  This Note and all other Obligations are secured by all assets of each Borrower whenever arising or created in accordance with the terms of the Loan Agreement and all other documents which create or perfect security interests in assets or properties of any Borrower.  This Note and all other Obligations are further secured by that certain specific equipment of the Borrower to be purchased with the proceeds of the Loan.

18. Extension of Relevant Dates.  In the event that any relevant date upon which a payment is due and payable under this Note or which affects any interest rate option of the Borrower shall fall on a date which is not a Banking Day, then any such relevant date may be extended by the Lender in accordance with the Modified Following Banking Day Convention and interest shall continue to accrue, and the relevant due dates shall also be extended, for the period of that extension at the interest rate or rates then in effect.  For purposes hereof, the “Modified Following Banking Day Convention” shall mean the convention for adjusting any relevant date if it would otherwise fall on a day that is not a Banking Day.  When used in conjunction with the term, “Modified Following Banking Day Convention”, and a date, such term shall mean that an adjustment will be made if that date would otherwise fall on a day that is not a Banking Day so that the date will be the first following day that is a Banking Day.

Notwithstanding anything to the contrary hereinabove contained, if application of the Modified Following Banking Day Convention would cause any payment due under the terms of this Note to be due and payable in a calendar month which differs from the month in which the payment would otherwise have been due, then, at the Lender’s option, the Modified Following Banking Day Convention shall not apply and such payment shall be due and payable on the immediately preceding Banking Day.

19.  Joint and Several Obligations; Miscellaneous.  This Note and all representations and covenants of the Borrower herein shall be the joint and several obligation of the Borrower 

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Exhibit 10.61

and each provision of this Note shall apply to each and all jointly and severally and to the property and liabilities of each and all.  This Note is the final, complete and exclusive statement of the terms governing this Note.  No modification or amendment hereof shall be effective unless the same shall be in writing and signed by the Lender and the Borrower.  If any provision of this Note shall to any extent by held invalid or unenforceable, then only such provision shall be deemed ineffective and the remainder of this Note shall not be affected.  The provisions of this Note shall bind the heirs, executors, administrators, assigns and successors of each and every Borrower and shall inure to the benefit of Lender, its successors and assigns.  This Note shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
    
20.  Acknowledgment of Borrower.  The Borrower acknowledges receipt of a copy of this Note, and attests that each advance is to be used for general commercial purposes and that no part of such proceeds will be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

21.  COMMERCIAL TRANSACTION.  EACH BORROWER ACKNOWLEDGES THAT THE ADVANCES EVIDENCED BY THIS NOTE ARE PART OF A COMMERCIAL TRANSACTION. 

[This space intentionally left blank; signature page to follow.]

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Exhibit 10.61

This Note has been executed as a sealed instrument on the date first above written.
                            
Arrhythmia Research Technology, Inc.

_____________________________        By: /s/ Salvatore Emma, Jr. 
		
	Witness
	Salvatore Emma, Jr., President and  Chief Executive Officer 

Duly Authorized

Micron Products Inc.

_____________________________        By: /s/ Salvatore Emma, Jr.
		
	Witness
	Salvatore Emma, Jr., President and 

Chief Executive Officer
                                    Duly Authorized

-27-ex_41.htm

Exhibit 4.1

 

FORM OF COMMON STOCK PURCHASE WARRANT

 

ONE HORIZON GROUP, INC.

 

	  	  	  
	
Warrant No.: 2015-[-]

	  	
Number of Warrants:

Date of Issuance: August 10, 2015 (“Issuance Date”)

Date: August 9, 2018 (“Expiration Date”)

One Horizon Group, Inc., a Delaware corporation (the “Company”), certifies that, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, __________________, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the date hereof (the “Exercisability Date”), but not after 5:30 p.m., New York Time, on the Expiration Date, (__) fully paid and nonassessable shares of Common Stock (as defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(d)), this Warrant may be exercised by the Holder on any day on or after the Exercisability Date, in whole or in part (but not as to fractional shares), by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant and (ii) if both (A) the Holder is not electing a Cashless Exercise (as defined below) pursuant to Section 1(c) of this Warrant and (B) a registration statement registering the issuance of the Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”), is effective and available for the issuance of the Warrant Shares, or an exemption from registration under the Securities Act is available for the issuance of the Warrant Shares, payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds (a “Cash Exercise”). The Holder shall not be required to surrender this Warrant in order to effect an exercise hereunder, provided that in the event of an exercise of this Warrant for all Warrant Shares then issuable hereunder, this Warrant is surrendered to the Company by the second (2nd) Trading Day following the date on which the Company has received each of the Exercise Notice and, if this Warrant is being exercised pursuant to a Cash Exercise, the Aggregate Exercise Price (the “Exercise Delivery Documents”). On or before the second (2nd) Trading Day following the date on which the Company has received the Exercise Delivery Documents, the Company shall transmit by email or facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and Computershare Trust Company, N.A., the Company’s transfer agent for the Common Stock and Warrants (the “Transfer Agent”). On or before the third (3rd) Trading Day following the date on which the Company has received the Exercise Notice duly completed and executed by the Holder, and in the case of a Cash Exercise, the Aggregate Exercise Price (the “Share Delivery Date”), the Company shall, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission system, or if the Transfer Agent is not participating in the Fast Automated Securities Transfer Program (the “FAST Program”) or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Delivery Documents and surrender of this Warrant, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after any exercise and at the Company’s own expense, issue a new Warrant (in accordance with Section 6(e)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable based on the income of the Holder or in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

  

  

  

 

 In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares or to credit the Holder’s balance account with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise pursuant to an exercise on or before the Share Delivery Date, and if after such date the Holder purchases (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall within three (3) Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares or credit such Holder’s balance account with DTC) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Weighted Average Price of a share of Common Stock on the date of exercise.

 

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $2.50 per share of Common Stock, subject to adjustment as provided herein.

 

(c) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement registering the issuance of the Warrant Shares under the Securities Act is not effective or available for the issuance of the Warrant Shares and an exemption from registration under the Securities Act is not available for the issuance of the Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

	
Net Number = (A x B) - (A x C)

              B

	  
	
For purposes of the foregoing formula:

	  	  
	
A=

	  	
the total number of shares with respect to which this Warrant is then being exercised.

	  	  
	
B=

	  	
the Weighted Average Price of the shares of Common Stock (as reported by Bloomberg) for the five Trading Days immediately preceding the date of the Exercise Notice.

	  	  
	
C=

	  	
the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

(d) Limitations on Exercises. (1) The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Holder (together with such Holder’s affiliates and any other Persons acting as a group together) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), it being acknowledged that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act, and the Holder is solely responsible for any schedules required to be filed in accordance therewith. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Proxy Statement, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, where such request indicates that it is being made pursuant to this Warrant, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Warrants, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided, that (i) any such increase will not be effective until the 61st day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Warrants.

 

  

  

  

 

(e) No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

 

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a) Adjustment upon Subdivision or Combination of Shares of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(b) Other Events. If any event occurs of the type contemplated by the provisions of Section 2(a) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features to the holders of the Company’s equity securities), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided, that no such adjustment pursuant to this Section 2(b) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

 

(c) Par Value. Notwithstanding anything to the contrary in this Warrant, in no event shall the Exercise Price be reduced below the par value of the Company’s Common Stock.

 

3. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time prior to the Expiration Date the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all of the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(b) Fundamental Transactions. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property purchasable upon the exercise of the Warrant prior to such Fundamental Transaction), such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights), if any, that the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been exercised immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon exercise of this Warrant within 90 days after the consummation of the Fundamental Transaction but, in any event, prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had the Warrant been exercised immediately prior to such Fundamental Transaction.

 

  

  

  

 

4. RESERVATION OF WARRANT SHARES. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of shares of Common Stock which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive or any other contingent purchase rights of Persons other than the Holder (taking into account the adjustments and restrictions in Section 2). Such reservation shall comply with the provisions of Section 1. The Company covenants that all shares of Common Stock so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such actions as may be reasonably necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

 

5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

6. REGISTRATION AND REISSUANCE OF WARRANTS.

 

(a) Registration of Warrant. The Company or its Transfer Agent shall register this Warrant, upon the records to be maintained by the Company or its Transfer Agent for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. The Company or its Transfer Agent shall also register any transfer, exchange, reissuance or cancellation of any portion of this Warrant in the Warrant Register.

 

 (b) Transfer of Warrant. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required by applicable securities laws. Subject to applicable securities laws, if this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company or its Transfer Agent, as directed by the Company, together with all applicable transfer taxes, whereupon the Company will, or will cause its Transfer Agent to, forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 6(e)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 6(e)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred. The acceptance of the new Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the new Warrant that the Holder has in respect of this Warrant.

 

(c) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form or the provision of reasonable security by the Holder to the Company and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company or its Transfer Agent, as directed by the Company, shall execute and deliver to the Holder a new Warrant (in accordance with Section 6(e)) representing the right to purchase the Warrant Shares then underlying this Warrant.

 

  

  

  

 

(d) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company or its Transfer Agent, as directed by the Company, together with all applicable transfer taxes, for a new Warrant or Warrants (in accordance with Section 6(e)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that the Company or its Transfer Agent, as directed by the Company, shall not be required to issue Warrants for fractional shares of Common Stock hereunder.

 

(e) Issuance of New Warrants. Whenever the Company or its Transfer Agent, as directed by the Company, is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall (i) be of like tenor with this Warrant, (ii) represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 6(b) or Section 6(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date and (iv) have the same rights and conditions as this Warrant.

 

7. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the information set forth in the Warrant Register. The Company shall give written notice to the Holder (i) reasonably promptly following any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation; provided, that in each case, such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

8. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall use all reasonable efforts to take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant and (iii) shall, so long as any of the Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then outstanding (without regard to any limitations on exercise).

 

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

10. LIMITATION OF LIABILITY. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Warrant Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

 

12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

  

  

  

 

13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via email or facsimile within two (2) Trading Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within five (5) Trading Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Trading Days submit via email or facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Trading Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. The expenses of the investment bank and accountant will be borne by the Company unless the investment bank or accountant determines that the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares by the Holder was incorrect, in which case the expenses of the investment bank and accountant will be borne by the Holder.

 

14. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder may cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to seek an injunction restraining any breach. Notwithstanding the foregoing or anything else herein to the contrary, if the Company is for any reason unable to issue and deliver Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof, the Company shall have no obligation to pay to the Holder any cash or other consideration or otherwise “net cash settle” this Warrant.

 

15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

 

(a) “Bloomberg” means Bloomberg Financial Markets.

 

(b) “Change of Control” means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.

 

(c) “Common Stock” means (i) the Company’s shares of Common Stock, $0.001 par value per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(d) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

 

(e) “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., the NYSE Amex LLC, The Nasdaq Stock Market, or the OTC Bulletin Board®.

 

(f) “Fundamental Transaction” means that (A) the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person providing to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), or (v) reorganize, recapitalize or reclassify the Common Stock or (B) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

  

  

  

 

(g) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(h) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(i) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(j) “Principal Market” means The Nasdaq Capital Market.

 

(k) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(l) “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

 

(m) “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the five preceding Trading Days, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the five preceding Trading Days, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink OTC Markets Inc. If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 13 with the term “Weighted Average Price” being substituted for the term “Exercise Price.” All such determinations shall be appropriately adjusted for any share dividend, share split or other similar transaction during such period.

 

[Signature Page Follows]

 

  

  

  

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

	 	 
One Horizon Group, Inc.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Martin Ward	 
	 	 	 
Martin Ward

	 
	 	 	 
Chief Financial Officer

	 
	 	 	 	 

 

 

 

  

  

  

 

 

 

EXHIBIT A

 

EXERCISE NOTICE BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ONE HORIZON GROUP, INC.

 

The undersigned holder hereby exercises the right to purchase of the shares of Common Stock (“Warrant Shares”) of One Horizon Group, Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Exercise Price. The Holder intends that payment of the Exercise Price shall be made as (check one):

 

o Cash Exercise under Section 1(a).

 

o Cashless Exercise under Section 1(c).

 

2. Cash Exercise. If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $        to the Company in accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder Warrant Shares in accordance with the terms of the Warrant.

 

4. Representations and Warranties. By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended) permitted to be owned under Section 1(d) of this Warrant to which this notice relates.

 

DATED: _________ ________

 

	  	  	  
	
(Signature must conform in all respects

	
to name of the Holder as specified on

	
the face of the Warrant)

	  
	  
	
Registered Holder

	  	  
	
Address:

	  	  
	  

 

 

  

  

  

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice.

 

	  	  	  
	
ONE HORIZON GROUP, INC.

	  	  
	
By:

	  	  
	
Name:

	
Title:

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