GI DYNAMICS, INC. (OTCMKTS:GIDYL) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement |
On June15, 2017 (the Closing Date), GI Dynamics, Inc. (the
Company) entered into a Note Purchase Agreement by and between
the Company, as borrower, and Crystal Amber Fund Limited, as
purchaser (the Purchaser). to the Note Purchase Agreement, the
Company issued and sold to the Purchaser a senior secured
convertible promissory note in an aggregate original principal
amount of $5,000,000 (the Note). The Purchaser is the Companys
largest shareholder.
The Note accrues interest at a rate equal to 5% per annum,
compounded annually, other than during the continuance of an
event of default, when the Note accrues interest at a rate of 8%
per annum. The entire outstanding principal balance and all
unpaid accrued interest thereon is due on the maturity date,
December 31, 2018. The Note is secured by a first priority
security interest in substantially all personal property assets
of the Company, including intellectual property.
Subject to the receipt of any required shareholder approval (for
the purposes of, among others, Listing Rule 10.11 of the
Australian Securities Exchange (the ASX)), the entire outstanding
principal balance under the Note and all unpaid accrued interest
thereon is convertible into CHESS Depositary Interests (CDIs),
each representing 1/50th of a share of the Companys common stock,
(i) at the option of the Purchaser at a conversion price
calculated based on the five-day volume weighted average closing
price of the Companys CDIs on the ASX, or (ii) automatically upon
the occurrence of an equity financing in which the Company raises
at least $10,000,000 (a Qualified Financing) at the price per CDI
of the CDIs issued and sold in such financing. If shareholder
approval is required to approve the issuance of any CDIs upon
such a conversion and such approval is 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 maturity date or the date that is six months
following the date of the stockholder meeting at which the
requisite approval was not obtained.
In the event that the Borrower issues additional CDIs in a
subsequent equity financing at a price per CDI that is less than
the then-effective optional conversion price (based on the
five-day volume weighted average price on the ASX), the Purchaser
has a 30-day option to convert (subject to any applicable
shareholder approval) at an adjusted conversion price reflecting,
on a weighted average basis, the lower price per CDI. The number
of CDIs that the Purchaser may acquire upon conversion of the
Note at this adjusted conversion price is limited to the number
that maintains the Purchasers fully-diluted ownership percentage
of the Company at the same level as existed immediately preceding
the applicable subsequent equity financing.
In addition, upon a change of control of the Company (other than
a change of control resulting from a Qualified Financing) in
which the Companys stockholders receive cash consideration, the
Company is obligated to prepay all accrued and unpaid interest
plus 110% of the remaining outstanding unconverted principal
balance. Other than as described above, the Company may not
prepay the Note without the consent of the Purchaser.
The Note Purchase Agreement contains customary events of default.
If a default occurs and is not cured within the applicable cure
period or is not waived, any outstanding obligations under the
Note may be accelerated. The Note Purchase Agreement and related
Note documents also contain additional representations and
warranties, covenants and conditions, in each case customary for
transactions of this type.
The foregoing description of the Note Purchase Agreement and the
Note 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 Purchase Agreement and the
Note, each of which will be included as an exhibit to the
Companys Quarterly Report on Form 10-Q for the fiscal quarter
ending June 30, 2017. A copy of the press release announcing the
financing is attached hereto as Exhibit 99.1.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure set forth under Item 1.01 of this Current Report
on Form 8-K is incorporated into this Item 2.03 by reference.
| Item3.02 | Unregistered Sales of Equity Securities |
The disclosure set forth under Item 1.01 of this Current Report
on Form 8-K is incorporated into this Item 3.02 by reference.
| Item9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
See Exhibit Index attached hereto, which is incorporated by
reference herein.