GI DYNAMICS, INC. (OTCMKTS:GIDYL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Senior Secured Convertible Promissory Note and Related Note Purchase Agreement
On August 21, 2019, GI Dynamics, Inc. (the “Company”) entered into a Fifth Amendment to Senior Secured Convertible Promissory Note (the “Note Amendment”), by and between the Company, as borrower, and Crystal Amber Fund Limited, as holder (“Crystal Amber”), to which the Company and Crystal Amber amended the Senior Secured Convertible Promissory Note issued by the Company to Crystal Amber on June 15, 2017 and amended on December 31, 2018, March 29, 2019, April 30, 2019 and June 30, 2019, in the aggregate principal amount of US$5,000,000 (as so amended, the “Note”) by extending the maturity date (and associated final conversion date) of the Note from October 1, 2019 to March 31, 2020. to the terms of the Note Amendment, Crystal Amber also agreed to waive the application of the definition of Qualified Financing (as defined in the Note) with respect to the financing (the “Financing”) to be completed to the terms and conditions of that certain Securities Purchase Agreement, dated of even date therewith (as amended, restated, supplemented, or otherwise modified from time to time, the “August 2019 SPA”), by and between the Company and Crystal Amber.
In addition, on August 21, 2019, the Company entered into a Fifth Amendment to Note Purchase Agreement (the “NPA Amendment”) by and between the Company and Crystal Amber, which NPA Amendment amended the Note Purchase Agreement, dated as of June 15, 2017, as amended on December 31, 2018, March 29, 2019, April 30, 2019 and June 30, 2019, by and between the Company and Crystal Amber to provide for the amendment of the Note in the form of the Note Amendment.
The foregoing description of the Note Amendment and the NPA Amendment does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the Note Amendment and the NPA Amendment, each of which will be included as an exhibit to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2019.
August 2019 SPA
On August 21, 2019, the Company entered into the August 2019 SPA, as purchaser. to the August 2019 SPA, Crystal Amber agreed to exercise certain outstanding warrants issued on May 30, 2018 and June 30, 2019 (the “Existing Warrants”), in accordance with the terms of such Existing Warrants, and purchase an aggregate of 412,427,495 CHESS Depositary Interests (the “Existing Warrants CDIs”) (subject to the effect of any rounding) (with each Existing Warrants CDI representing 1/50th of a share of the Company’s common stock, par value US$0.01 per share (the “Common Stock”)), at an aggregate purchase price of approximately US$5,403,107 (the “Aggregate Exercise Price”) in accordance with the following exercise schedule (unless earlier dates are requested by the Company) (all amounts are approximate): (i) US$2,000,000 in Existing Warrants CDIs at the closing; (ii) US$2,000,000 in Existing Warrants CDIs on September 30, 2019; (iii) US$1,000,000 in Existing Warrants CDIs on October 31, 2019; and (iv) US$403,107 in Existing Warrants CDIs on November 15, 2019.
In addition, to the August 2019 SPA, the Company issued and sold to Crystal Amber a senior unsecured convertible promissory note in an aggregate principal amount of US$4,596,893, or such lesser amount as may be set forth in a notice delivered by the Company to Crystal Amber (the “August 2019 Note”), to be funded on December 6, 2019, or such earlier or later date as may be requested by the Company (the “Funding Date”), and agreed to issue to Crystal Amber a warrant (the “August 2019 Warrant”) to purchase CHESS Depositary Interests (“CDIs”) (with each CDI representing 1/50th of a share of Common Stock) or Common Stock as set forth in the August 2019 Warrant, subject to the receipt of required stockholder approval approving the issuance of the August 2019 Warrant and the funding of the August 2019 Note. Crystal Amber is the Company’s largest stockholder.
The August 2019 Note accrues interest at a rate equal to 10% per annum from the Funding Date, compounded annually, other than during the continuance of an event of default, when the August 2019 Note accrues interest at a rate of 16% per annum. The entire outstanding principal balance and all unpaid accrued interest thereon is due on the fifth anniversary of the Funding Date. Subject to the receipt of required stockholder approval (for the purposes of, among others, Rule 10.11 of the Australian Securities Exchange (the “ASX”) Listing Rules), the entire outstanding principal balance under the August 2019 Note and all unpaid accrued interest thereon is convertible into CDIs at the option of Crystal Amber at a conversion price equal to US$0.02 per CDI. In the event that the Company issues additional CDIs to a stockholder other than Crystal Amber in a subsequent equity financing at a price per CDI that is less than the conversion price under the August 2019 Note, the conversion price shall be reduced to the lowest such price per CDI. In addition, upon a change of control of the Company, Crystal Amber may, at its option, demand that the Company prepay all accrued and unpaid interest plus 110% of the remaining outstanding unconverted principal balance. The Company may not prepay the August 2019 Note without the consent of Crystal Amber. If the stockholder approvals required to issue the August 2019 Warrant or to approve the conversion rights under the August 2019 Note are not obtained, the Company is obligated to prepay all accrued and unpaid interest plus 110% of the remaining outstanding unconverted principal balance on the earlier of the Funding Date or the date that is six months following the date of the stockholder meeting at which the requisite approvals were not obtained.
to the terms of the August 2019 Warrant and subject to stockholder approval of the August 2019 Warrant’s issuance, Crystal Amber will be entitled to purchase up to 229,844,650 CDIs (or the corresponding number of shares of Common Stock) at an exercise price per CDI equal to US$0.02, subject to adjustment as provided in the August 2019 Warrant. The number of CDIs available for purchase under the August 2019 Warrant will be proportional to the principal balance outstanding under the August 2019 Note on the Funding Date. Accordingly, if the full amount of the August 2019 Note is received by the Company (i.e., US$4,596,893) then the August 2019 Warrant will be exercisable in respect of 229,844,650 CDIs. However, if a lesser amount is received by the Company under the August 2019 Note then the maximum number of CDIs that can be issued on exercise of the
