EXHIBIT 10.2

THIS SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) AND THE
SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER OTHERWISE COMPLIES WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR LAWS OF ANY OTHER RELEVANT COUNTRY.

SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE

 

US$1,750,000   May 30, 2018
Boston, Massachusetts

FOR VALUE RECEIVED, GI DYNAMICS, INC., a Delaware corporation (“Payor”), hereby
promises to pay to the order of CRYSTAL AMBER FUND LIMITED (the “Holder”), the
principal sum of One Million Seven Hundred and Fifty Thousand dollars
(US$1,750,000) with interest on the outstanding principal amount at the rate of
ten percent (10%) per annum, compounded annually based on a 365-day year.
Interest shall commence with the date hereof and shall continue on the
outstanding principal until paid in full or, if permitted by the terms of the
Note, converted pursuant to Section 2 below.

1. PAYMENT AND MATURITY

(a) Reference is hereby made to the Note and Warrant Purchase Agreement (the
“Purchase Agreement”) dated as of even date herewith between Payor and Holder.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings given to them in the Purchase Agreement.

(b) If this Senior Unsecured Convertible Promissory Note (this “Note”) has not
already been paid in full or, if permitted by the terms of this Note, converted
in accordance with the terms of Section 2(a) below, the entire outstanding
principal balance of this Note and all unpaid accrued interest thereon shall be
due and payable on May 30, 2023 (the “Maturity Date”). All payments of interest
and principal shall be in lawful money of the United States of America. All
payments shall be applied first to accrued interest, and thereafter to
principal. If any payments on this Note become due on a Saturday, Sunday or a
public holiday under the laws of the State of New York, such payment shall be
made on the next succeeding business day and such extension of time shall be
included in computing interest in connection with such payment.

 

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(c) Upon the occurrence and during the continuance of any Event of Default, the
principal balance of this Note shall bear interest at the rate of sixteen
percent (16%) per annum, including after the commencement of, and during the
pendency of, any bankruptcy or other insolvency proceeding.

2. CONVERSION

(a) Optional Conversion. Subject to Section 6(c) of this Note, the Holder shall
have the option (the “Conversion Option”), but not the obligation, at any time
after the date hereof and prior to May 30, 2023, exercisable upon written notice
to the Payor, to (a) convert all (but not less than all) of the entire unpaid
principal amount of this Note together with any interest accrued but unpaid
thereon (such principal amount and interest, the “Outstanding Amount”) into the
number of CDIs equal to the quotient obtained by dividing (x) the Outstanding
Amount by (y) US$0.018 (such conversion price, the “Conversion Price”). In lieu
of receiving CDIs, upon exercising the Conversion Option, the Holder may elect
to instead receive the corresponding number of shares of Common Stock for the
CDIs to be issued upon such conversion.

(b) Change of Control. Upon the consummation of a Change of Control prior to
May 30, 2023 the Holder may, at its option, (i) receive an amount in cash equal
to all unpaid interest that has accrued to date hereunder and 110% of the entire
unpaid principal amount of this Note in full satisfaction of all obligations
under the Note, or (ii) subject to the provisions of Section 6(a) hereof, retain
the Note, including, without limitation, the Conversion Option set forth in
Section 2(a) hereof. A “Change of Control” means any transaction or series of
related transactions that could result in any of the following: (i) the sale of
all or substantially all of the assets of the Payor to any person or related
group of persons (other than the Holder or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Holder), (ii)
the acquisition, directly or indirectly, by any person or related group of
persons (other than the Payor or the Holder or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Payor or the Holder) of beneficial ownership of securities possessing more than
fifty percent (50%) of the total combined voting power of the Payor’s
outstanding securities pursuant to a tender or exchange offer made directly to
the Payor’s stockholders, (iii) a merger or consolidation of the Payor, other
than for the purpose of re-domiciling the Payor, unless following such
transaction or series of transactions, the holders of the Payor’s securities
prior to the first such transaction continue to hold more than fifty percent
(50% percent) of the voting rights and equity interests in the surviving entity,
(iv) a recapitalization, reorganization or other transaction involving the Payor
that constitutes or results in a transfer of more than one-third of the equity
interests in the Payor, unless following such transaction or series of
transactions, the holders of the Payor’s securities prior to the first such
transaction continue to hold more than fifty percent (50%) of the voting rights
and equity interests in the surviving entity or acquirer or (v) the execution by
the Payor or its controlling stockholders of an agreement providing for or
reasonably likely to result in any of the foregoing events.

(c) Fractional Shares and Conversion Process. No fractional shares of Payor’s
capital stock will be issued upon conversion of this Note. In lieu of any
fractional share to which Holder would otherwise be entitled, Payor will pay to
Holder in cash the amount of the unconverted principal and interest balance of
this Note that would otherwise be converted into such fractional share. Upon
valid conversion of this Note pursuant to Section 2, Holder shall surrender this
Note, duly endorsed, at the principal offices of Payor and the Payor must, if
the CDIs are quoted on the Australian Securities Exchange (“ASX”), do the
following:

 

(i) allot and issue to CHESS Depositary Nominees Pty Ltd (“CDN”) the number of
shares of Common Stock underlying the CDIs the subject of the conversion notice
and procure CDN to allot and issue to the Holder the number of CDIs representing
the Common Stock issued to CDN under this provision;

 

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(ii) enter CDN into the Payor’s register of members as the holder of the
relevant number of shares of Common Stock and procure CDN to enter the Holder
into the register of CDI holders as the holder of the relevant number of CDIs;

 

(iii) deliver to the Holder a holding statement showing the Holder as the holder
of the relevant number of CDIs;

 

(iv) apply for, and use its reasonable efforts to obtain, official quotation of
the relevant number of CDIs (and underlying shares of Common Stock) on ASX as
soon as practicable; and

 

(v) deliver to the Holder a check payable to Holder for any cash amounts payable
as a result of any fractional shares.

If, at the time of conversion, CDIs are no longer quoted on ASX, then on
conversion of the Note the Payor must issue directly to the Holder the number of
shares of Common Stock over which the Note is convertible into and must procure
that those shares be listed for trading on any securities exchange on which the
Payor’s Common Stock is tradeable and deliver to the Holder a check payable to
Holder for any cash amounts payable as a result of any fractional shares.

(d) Holder Representations and Warranties; Transfer and Assignment. The
representations and warranties and rights and obligations of transfer and
assignment of Holder that are set forth in Section 4 of the Purchase Agreement
with respect to the shares of Common Stock or CDIs issuable to Holder are hereby
made a part of this Note and incorporated herein by this reference.

(e) Restriction on Transfer. Notwithstanding any other provision of this Note or
the Purchase Agreement, the Holder may not sell or transfer any shares of Common
Stock or CDIs issued to the Holder pursuant to Section 2(a) hereof (“Restricted
Securities”), or grant, issue or transfer interests in, or options over, any
Restricted Securities, at any time within 12 months after the issue of those
Restricted Securities (“Restricted Period”) except as permitted by section 708
or any other applicable section of the Corporations Act 2001 (Cth). Before
commencement of the Restricted Period, to prevent any such restricted dealings
in the Restricted Securities during the Restricted Period, the Holder agrees to
(i) the application of a holding lock to the Restricted Securities by the
Payor’s securities registry for the Restricted Period, and (ii) enter into any
other documents reasonably necessary to prevent any such restricted dealings in
the Restricted Securities during the Restricted Period.

 

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3. DEFAULT; REMEDIES

(a) The occurrence of any Event of Default described in Section 5.1 of the
Purchase Agreement shall be an Event of Default hereunder.

(b) Upon the occurrence and during the continuance of any Event of Default, all
unpaid principal on this Note, accrued and unpaid interest thereon and all other
amounts owing hereunder shall, at the option of the Holder, and, upon the
occurrence of any Event of Default pursuant to Sections 5.1(b), (c) or (d) of
the Purchase Agreement, automatically, be immediately due, payable and
collectible by Holder pursuant to applicable law.

(c) Upon the occurrence and during the continuance of any Event of Default,
Payor shall pay, on demand, all reasonable attorneys’ fees and court costs
incurred by Holder in enforcing and collecting this Note.

4. PREPAYMENT. Payor may not prepay this Note prior to the Maturity Date without
the consent of the Holder, except to the extent permitted pursuant to
Section 2(b) hereof.

5. NON-TRANSFERABLE. The Holder may not sell or transfer this Note, or grant,
issue or transfer interests in, or options over, this Note at any time within 12
months after the date hereof except as permitted by section 708 or any other
applicable section of the Corporations Act 2001 (Cth).

6. FUNDAMENTAL TRANSACTIONS; CORPORATE EVENTS.

(a) Fundamental Transactions. If, at any time while this Note is outstanding,
(i) the Payor effects any merger or consolidation of the Payor with or into
another person pursuant to which the Common Stock is effectively converted and
exchanged, (ii) the Payor effects any sale of all or substantially all of its
assets in one or a series of related transactions pursuant to which the Common
Stock is effectively converted and exchanged, (iii) any tender offer or exchange
offer (whether by the Payor or another person) is completed pursuant to which at
least a majority of the outstanding Common Stock is tendered and exchanged for
other securities, cash or property or (iv) the Payor effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (other than as a result of a subdivision or
combination of shares of Common Stock) (in any such case, a “Fundamental
Transaction”), then prior to any subsequent conversion of this Note, and subject
to the provisions of Section 2(b) hereof, the Holder shall be entitled to
require the surviving entity to issue to the Holder an instrument identical to
this Note (with an appropriate adjustment to the conversion price(s)) such that
the Holder may receive stock (or a beneficial interest in stock) of the
surviving company’s stock. Subject to the provisions of Section 2(b) hereof, the
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (a) and insuring that this Note (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

(b) Notice of Corporate Events. If the Payor (i) declares a dividend or any
other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants to
subscribe for or purchase any shares of the Payor

 

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or any subsidiary, (ii) authorizes and publicly approves, or enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) publicly authorizes the voluntary dissolution, liquidation
or winding up of the affairs of the Payor, then the Payor shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least ten (10) business days prior to the applicable record or
effective date on which a person would need to hold Common Stock or CDIs in
order to participate in or vote with respect to such transaction, and the Payor
will take all steps reasonably necessary in order to insure that the Holder is
given the practical opportunity to convert this Note prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.

(c) Subsequent Equity Sales. Notwithstanding any provision of this Note to the
contrary, in the event that the Payor issues any CDIs or Common Stock or any
security that is exchangeable or convertible into CDIs or Common Stock
(“Additional Securities”) after the date hereof at a price per CDI (or the
equivalent for shares of Common Stock) that is less than the Conversion Price
(or the equivalent for shares of Common Stock) in an equity financing, then the
Conversion Price shall be reduced to the lowest price per CDI (or the equivalent
for shares of Common Stock) at which any Additional Security was issued or sold
or deemed to be issued or sold. The Payor agrees that it will provide a notice
to the Holder describing the material terms and conditions of any issuance of
Additional Securities promptly after the issuance thereof. For the avoidance of
doubt, the price per CDI (or the equivalent for shares of Common Stock) at which
any Additional Securities are issued by the Payor to the Holder after the date
hereof, including, without limitation, upon conversion into CDIs or Common Stock
of the Senior Secured Convertible Promissory Note, dated June 15, 2017, issued
to the Holder by the Payor, will have no effect on the Conversion Price.

7. WAIVER; PAYMENT OF FEES AND EXPENSES. Payor waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of this Note, and
shall pay all costs of collection when incurred, including, without limitation,
reasonable attorneys’ fees, costs and other expenses. The right to plead any and
all statutes of limitations as a defense to any demands hereunder is hereby
waived to the full extent permitted by law. No delay by Holder shall constitute
a waiver, election or acquiescence by it.

8. CUMULATIVE REMEDIES. Holder’s rights and remedies under this Note and the
Purchase Agreement shall be cumulative. No exercise by Holder of one right or
remedy shall be deemed an election, and no waiver by Holder of any Event of
Default shall be deemed a continuing waiver of such Event of Default or the
waiver of any other Event of Default.

9. MISCELLANEOUS

(a) Governing Law. The terms of this Note shall be construed in accordance with
the laws of the State of New York, as applied to contracts entered into by New
York residents within the State of New York, and to be performed entirely within
the State of New York.

 

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(b) Exclusive Jurisdiction. All actions and proceedings arising out of, or
relating to, this Agreement shall be heard and determined in any state or
federal court sitting in the State of New York, County of New York. The
undersigned, by execution and delivery of this Agreement, expressly and
irrevocably consent and submit to the personal jurisdiction of any of such
courts in any such action or proceeding; and (ii) waive any claim or defense in
any such action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens or any similar basis.

(c) Successors and Assigns; Assignment. The terms and conditions of this Note
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. The Payor may not assign this Note or delegate any of
its obligations hereunder without the written consent of the Holder. Subject to
Section 5 hereof, the Holder may assign this Note and its rights hereunder
without the consent of the Payor, subject to compliance with Section 4 of the
Purchase Agreement.

(d) Titles and Subtitles. The titles and subtitles used in this Note are used
for convenience only and are not to be considered in construing or interpreting
the Note.

(e) Notices. All notices required or permitted hereunder by the Holder of this
Note to Payor shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the principal offices of the Payor, to the
attention of the Chief Executive Officer, (b) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (c) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery. Any refusal of delivery of a notice by Payor shall
be deemed to have been delivered.

(f) Amendment; Modification; Waiver. No term of this Note may be amended,
modified or waived without the written consent of the Payor and Holder provided
that, while the Payor is admitted to the Official List of the ASX, any
amendment, modification or waiver must not contravene the ASX Listing Rules.

(g) Counterparts. This Note may be executed in two or more counterparts, each of
which shall be deemed and original, but all of which together shall constitute
one and the same instrument.

(h) Voting Rights. This Note does not carry any voting rights at stockholder
meetings of the Payor unless and until the Note is converted.

(i) Participation Rights. The Holder is not by virtue of holding this Note
entitled to participate in any new issue of securities made by the Payor to
stockholders without first converting the Note.

(j) Equal Ranking. The Common Stock and CDIs issued pursuant to a conversion of
this Note will rank, from the date of issue, equally with the existing shares of
Common Stock and CDIs of the Payor in all respects.

 

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(k) Reorganisations. While the Payor is admitted to the Official List of the
ASX, the rights of the Holder will be changed to the extent necessary to comply
with the ASX Listing Rules applying to a reorganization of the Payor’s capital
at the time of the reorganization.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this CONVERTIBLE PROMISSORY NOTE
as of the date first written above.

 

GI DYNAMICS, INC. /s/ Scott Schorer Name:   Scott Schorer Title:   Chief
Executive Officer

AGREED TO AND ACCEPTED:

CRYSTAL AMBER FUND LIMITED /s/ Kevin Smith Name:   Kevin Smith Title:  
Alternate Director   Crystal Amber Asset Management (Guernsey) Ltd

SIGNATURE PAGE