Exhibit 10.3





 


 


 


GI
Dynamics, Inc.


 


 



 


 


Securities
Purchase Agreement


 


 


 


 



 


 


 


 






     


     


    

 


GI
Dynamics, Inc.


 


Securities
Purchase Agreement


 


This
Securities Purchase Agreement (this “Agreement”) is made as of the 21st day of
August, 2019 (the “Effective Date”) by and between GI Dynamics,
Inc., a Delaware corporation (the “Company”), and Crystal
Amber Fund Limited (the “Purchaser”). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings given to them in the Note (as defined below).


 


The parties hereby agree as follows:


 


	1.	Terms of the Securities 


 


1.1 
The Financing. Subject to the terms of this Agreement, the Purchaser agrees to (i) 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 CDI representing 1/50th of a share of the Company’s common
stock, par value $0.01 per share (the “Common Stock”)), at an aggregate purchase price of Five Million
Four Hundred Three Thousand One Hundred Six Dollars and Ninety Five Cents (US$5,403,106.95) (the “Aggregate Exercise
Price”) and (ii) purchase from the Company, and the Company agrees to issue and sell to the Purchaser, an unsecured
convertible promissory note in the aggregate principal amount of up to Four Million Five Hundred Ninety-Six Thousand Eight Hundred
Ninety-Three Dollars (US$4,596,893) (the “Loan Amount”) in substantially the form attached hereto as
Exhibit A (the “Note”). The Note may, subject to stockholder approval, be converted
into CDIs as provided in such Note.


 


1.2 
The Warrant. In order to induce the Purchaser to enter into this Agreement, to exercise the Existing Warrants, to purchase
the Note and to make the loan evidenced thereby, the Company agrees, in accordance with the terms of this Agreement, to issue to
the Purchaser a warrant to purchase CDIs or Common Stock as provided in such warrant and in substantially the form attached hereto
as Exhibit B (the “Warrant”). The Warrant shall only be issuable (a) in the event of the
Advance (as defined in the Note) under the Note and (b) in accordance with Section 2.3 of this Agreement following receipt of stockholder
approval to issue the Warrant in accordance with the same stockholder approval process described in Section 2(c) of the Note, and
if stockholder approval is obtained, shall have a term that expires on the fifth (5th) anniversary of the Funding Date
(as defined in the Note). If stockholder approval for issuance of the Warrant is not obtained, the Warrant will not be capable
of being issued and the Purchaser shall be entitled to the remedy described in Section 2(c) of the Note in accordance with the
procedures described therein, in full satisfaction of all obligations under the Note and in lieu of issuance of the Warrant.


 






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	2.	The Closing


 


2.1 
Closing Date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall
be held on the Effective Date or at such other time as the Company and the Purchaser shall agree (the “Closing Date”).


 


2.2 
The Closing; Exercise of Existing Warrants; and Delivery of Note.


 


(A) At the Closing
(i) in accordance with the terms of the Existing Warrants and this Agreement, the Purchaser will deliver to the Company a
Notice of Exercise for a cash exercise of $2,000,000 (“Initial Exercise Price”) in CDIs with respect
to the Existing Warrants and a wire transfer of immediately available funds in an amount equal to the Initial Exercise Price; and
(ii) the Company shall issue and deliver to the Purchaser (a) 144,466,319 Existing Warrant CDIs (subject to the effect of
any rounding) required to be issued in connection with the delivery of the Initial Exercise Price and (b) the Note; and (iii) the
Company shall execute and deliver such other documents as the Purchaser shall reasonably require.


 


(B) On September 30,
2019, or such earlier date as may be requested by the Company (the “Second Exercise Date”), in accordance
with the terms of the Existing Warrants and this Agreement the Purchaser will deliver to the Company a Notice of Exercise for a
cash exercise of $1,999,999.99 (“Second Exercise Price”) in CDIs with respect to the Existing Warrants
not exercised at the Closing and a wire transfer of immediately available funds in an amount equal to the Second Exercise Price
and the Company shall issue and deliver to the Purchaser 157,480,314 Existing Warrant CDIs (subject to the effect of any rounding)
required to be issued in connection with the delivery of the Second Exercise Price.


 


(C) On
October 31, 2019, or such earlier date as may be requested by the Company (the “Third Exercise Date”),
in accordance with the terms of the Existing Warrants and this Agreement, the Purchaser will deliver to the Company a Notice of
Exercise for a cash exercise of $1,000,000 (“Third Exercise Price”) in CDIs with respect to the Existing
Warrants not exercised at the Closing or on the Second Exercise Date and a wire transfer of immediately available funds in an amount
equal to the Third Exercise Price and the Company shall issue and deliver to the Purchaser 78,740,157 Existing Warrant CDIs (subject
to the effect of any rounding) required to be issued in connection with the delivery of the Third Exercise Price.


 


(D) On
November 15, 2019, or such earlier date as may be requested by the Company (the “Fourth Exercise Date”),
in accordance with the terms of the Existing Warrants and this Agreement the Purchaser will deliver to the Company a Notice of
Exercise for a cash exercise of $403,106.96 (“Fourth Exercise Price”) in CDIs with respect to the Existing
Warrants not exercised at the Closing or on the Second Exercise Date or the Third Exercise Date and a wire transfer of immediately
available funds in an amount equal to the Fourth Exercise Price and the Company shall issue and deliver to the Purchaser 31,740,705
Existing Warrant CDIs (subject to the effect of any rounding) required to be issued in connection with the delivery of the Fourth
Exercise Price.


 






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2.3 
Issuance and Delivery of Warrant. Subject to and conditioned upon receipt by the Company of the Advance under the Note, the
Company shall issue and deliver the Warrant to the Purchaser within five business days of the date of the Company’s receipt
of stockholder approval of the issue of the Warrant in accordance with the same stockholder approval process described in Section
2(c) of the Note.


	3.	Representations, Warranties and Covenants of the Company


The Company hereby
represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date, as follows:


 


3.1 
Organization; Good Standing and Qualification. The Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has all requisite corporate power and authority to own its property and carry on its
business as now conducted. The Company is duly qualified to transact business and is in good standing in the Commonwealth of Massachusetts
and in each jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification
necessary.


 


3.2 
Corporate Power. The Company has all requisite corporate power to (i) execute and deliver this Agreement, (ii) deliver the
Existing Warrants CDIs, (iii) execute and deliver the Note and subject to the abovementioned stockholder approval, (iv) execute
and deliver the Warrant in favor of the Purchaser and any other document provided for herein or by any of the foregoing (collectively,
as the same may from to time be amended, modified, supplemented or restated, the “Financing Documents”)
and to carry out and perform its obligations under the terms of the Financing Documents and to, subject to the abovementioned stockholder
approval, issue CDIs in accordance with the terms thereof.


 


(a) 
Authorization. The execution and delivery of each of the Financing Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Note, the issuance of the
Existing Warrants CDIs, the issuance of the Warrant, the reservation of the Common Stock underlying the CDIs issuable upon conversion
of the Note (the “Conversion CDIs”), the reservation of the Common Stock underlying the CDIs issuable
upon exercise of the Warrant (the “Warrant CDIs” and, together with the Note, the Existing Warrants CDIs,
the Warrant, the Conversion CDIs and the Common Stock, “Securities”) and the issuance of the Conversion
CDIs and the Warrant CDIs, was duly authorized by the Company’s board of directors. Other than those consents and authorizations
obtained by the Company prior to the date hereof that are in full force and effect on the Closing Date and except for any required
stockholder approval of the Company as set forth in Section 2(c) of the Note and in this Agreement, no further consent or authorization
is required by the Company, its board of directors or its stockholders. Each of the Financing Documents has been (or in the case
of the Warrant, will be) duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of
the Company enforceable in accordance with its terms, subject to laws of general application relating to equitable principles,
bankruptcy, insolvency and the relief of debtors. Upon conversion of the Note into Conversion CDIs in accordance with the provisions
of this Agreement and the Note, the Conversion CDIs will be validly issued, fully paid and nonassessable and free of any liens
or encumbrances (other than as set out in Section 2(f) of the Note). Upon the exercise of the Warrant in accordance with the provisions
of this Agreement and the Warrant, the Warrant CDIs will be validly issued, fully paid and nonassessable and free of any liens
or encumbrances (other than as set out in Section 5(b) of the Warrant). Upon exercise of the Existing Warrants, the Existing Warrants
CDIs will be validly issued, fully paid and nonassessable and free of any liens or encumbrances (other than as set out in clause
5(b) of the Existing Warrants). The issuance of the Note (and the Conversion CDIs), the Warrant (and the Warrant CDIs), and the
Existing Warrants CDIs pursuant to the provisions of this Agreement will not give rise to any preemptive rights or rights of first
refusal granted by the Company, and the Note (and the Conversion CDIs), the Warrant (and the Warrant CDIs) and the Existing Warrants
CDIs will be issued in compliance with all applicable federal and state securities laws, and will be free of any liens or encumbrances;
provided, however, that the Note and the Warrant (and the underlying securities) may be subject to restrictions on transfer
as set out in the Financing Documents or under state and/or federal securities laws as set forth herein or as otherwise required
by such laws at the time the transfer is proposed. The issuance and sale of the Note (and the Conversion CDIs), the Warrant (and
the Warrant CDIs) and the Existing Warrants CDIs do not and will not cause any dilution adjustment in any existing securities of
the Company, and the Purchaser hereby waives any dilution adjustment that might otherwise result from the issuance and sale of
the Note (and the Conversion CDIs) or the Warrant (and the Warrant CDIs) or the issuance of the Existing Warrants CDIs pursuant
to the terms of any existing security held by the Purchaser.


 






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3.3 
Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations,
declarations, or filings with, any governmental authority, required on the part of the Company in connection with the valid execution
and delivery of the Financing Documents, the offer, sale or issuance of the Note, the Conversion CDIs, the Warrant, the Warrant
CDIs and the Existing Warrants CDIs, or the consummation of any other transaction contemplated hereby shall have been obtained
and will be effective at the Closing, except for (i) any stockholder approval described by Section 2(c) of the Note and this Agreement
and (ii) any notices required or permitted to be filed with certain foreign, state and/or federal securities commissions or stock
exchanges, which notices will be filed on a timely basis.


 


3.4 
No Conflicts. The execution, delivery and performance of the Financing Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Note, the Warrant
and the Existing Warrants CDIs and the reservation for issuance and issuance of the Conversion CDIs and the Warrant CDIs) will
not (i) result in a violation of the certificate of incorporation or by-laws of the Company or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company is
a party or by which the Company is bound, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
including federal and state securities laws and regulations applicable to the Company or by which any property or asset of the
Company is bound or affected. For the avoidance of doubt, the Purchaser agrees that the execution, delivery and performance of
the Financing Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby
shall not conflict with or constitute a default under the Note Purchase Agreement, dated as of June 15, 2017, and amended as of
December 31, 2018, March 31, 2019, April 30, 2019, June 30, 2019 and of even date herewith, between the Company and the Purchaser,
including, without limitation, the restriction on additional indebtedness set forth in Section 3.14 thereof.


 






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3.5 
Offering. Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 4 hereof,
the offer, issue, and sale of the Note and the Warrant and the issue and sale of the Existing Warrants CDIs are and will be exempt
from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Act”),
and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit, or qualification
requirements of all applicable state securities laws.


 


3.6 
Use of Proceeds. The Company shall use the proceeds from the exercise of the Existing Warrants and the sale and issuance of
the Note to continue work on the three highest priority programs, comprised of STEP-1 (United States) clinical trial enrollment,
I-STEP (India with Apollo Sugar) clinical trial enrollment, CE Mark, and for general corporate purposes advance for general corporate
purposes.


 


3.7 
Delivery of SEC Filings. The Company has provided the Purchaser with copies of the Company’s most recent Annual Report on Form
10-K for the fiscal year ended December 31, 2018, and all other reports filed by the Company pursuant to the Securities Exchange
Act of 1934, as amended (the “1934 Act”) since the filing of the Annual Report on Form 10-K and prior
to the date hereof (collectively, the “SEC Filings”); which reports represent all filings required of
the Company pursuant to the 1934 Act for such period. During the two (2) years prior to the date hereof, the Company has filed
all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting
requirements of 1934 Act (all of the foregoing filed prior to the date hereof or prior to the date of the Closing, and all exhibits
included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the “SEC Documents”). As of their respective filing dates, or, if amended or superseded
by a subsequent filing, as of the date of the last such amendment or superseding filing, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed or, if amended or superseded by a subsequent filing,
as of the date of the last such amendment or superseding filing, with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of their respective filing dates, or, if amended or superseded
by a subsequent filing, as of the date of the last such amendment or superseding filing, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).


 






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3.8 
Conduct of Business; Regulatory Permits. To the knowledge of the Company, the Company is not in violation of any term of, or
in default under, its Certificate of Incorporation, as amended and as in effect on the date hereof, or any certificate of designation
of an outstanding series of stock of the Company or Bylaws, as amended and as in effect on the date hereof. The Company is not
in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company, and the
Company does not and will not conduct its business in violation of any of the foregoing, except for possible violations which could
not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company. Without limiting
the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the ASX (defined
below) and, assuming the Note, the Existing Warrants CDIs and the Warrant are issued, has no knowledge of any facts or circumstances
that would reasonably lead to a suspension of its securities by the ASX in the foreseeable future. Except as set forth in its SEC
Filings, the Company possesses all certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, and the Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit.


 


3.9 
Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the SEC, the ASX, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries or affiliates, the Securities or any of the Company’s or its subsidiaries’
officers or directors, whether of a civil or criminal nature or otherwise, which, if adversely determined, would have a material
adverse effect on the Company’s business or financial condition.


 


3.10 
Securities Laws. The Company shall timely make all filings and reports relating to the issuance of the Securities required
under applicable securities laws, including filing any notice of sale of securities required by applicable law or regulation and
complying with any applicable “blue sky” laws of the states of the United States. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 3.10. The Company shall not sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined in the Act) that could be
integrated with the issuance of the Note or the Warrant in a manner that could require the registration of the Note or the Warrant
under the Act.


 


3.11 
Efforts to Obtain Stockholder Approval. The Company shall use its commercially reasonable efforts to obtain any stockholder
approval described in Section 2(c) of the Note in respect of the Note and the same form of approval in respect of the Warrant on
or prior to December 31, 2019. The Company covenants that its proposal to stockholders in respect of approval of the Warrant issuance
will be interconditional with its proposal to stockholders in respect of approval of issuance of CDIs upon conversion of the Note,
such that if either proposal is not approved, then neither proposal may be approved.


 


	4.	Representations and Warranties of the Purchaser


 


The Purchaser hereby represents and warrants
to the Company as follows:


 


4.1 
Purchase for Own Account. The Purchaser understands that the Securities have not been registered under the Act and the Purchaser
is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the public sale
or distribution thereof, except pursuant to sales registered or exempted from registration. The Purchaser represents that its acquisition
of any Securities under the Note, the Warrant or Existing Warrants will be acquired solely for its own account and beneficial interest
for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention
of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same.


 






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4.2 
Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth
in Section 3, the Purchaser hereby: (i) acknowledges that it has received all the information it has requested from the
Company including, but not limited to, the SEC Filings, (ii) represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities and
(iii) further represents that it has such knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.


 


4.3 
Ability to Bear Economic Risk. The Purchaser acknowledges that investment in the Securities involves a high degree of risk,
and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite
period of time and to suffer a complete loss of its investment.


 


4.4 
Rule 144. The Purchaser is aware that none of the Securities may be sold pursuant to Rule 144 adopted under the Act unless
certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of
certain current public information about the Company, the resale following the required holding period under Rule 144 and the number
of shares being sold during any three month period not exceeding specified limitations.


 


4.5 
Accredited Investor Status. The Purchaser is an “accredited investor” as such term is defined in
Rule 501 under the Act.


 


4.6 
Regulation S.  In issuing and selling the Securities, the Company may be relying upon the “safe harbor”
provided by Regulation S and/or on Section 4(2) under the Act; it is a condition to the availability of the Regulation S
“safe harbor” that the Securities not be offered or sold in the United States or to a U.S. person until the
expiration of a one-year “distribution compliance period” (or a six-month “distribution compliance
period,” if the issuer is a “reporting issuer,” as defined in Regulation S) following the closing; and
notwithstanding the foregoing, prior to the expiration of the one-year “distribution compliance period” (or
six-month “distribution compliance period,” if the issuer is a “reporting issuer,” as defined in
Regulation S) after the closing (the “Restricted Period”), the Note, the Warrant and the underlying
securities, and the Existing Warrants CDIs may, subject to any restrictions contained in the Note or the Warrant,
as applicable, be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of
this Agreement and the Note or the Warrant, as applicable, and either: (A) if the offer or sale is within the United States
or to or for the account of a U.S. person (as such terms are defined in Regulation S), the securities are offered and sold
pursuant to an effective registration statement or pursuant to Rule 144 under the Act or pursuant to an exemption from the
registration requirements of the Act; or (B) the offer and sale is outside the United States and to other than a U.S. person.
If the Purchaser is not a United States person, the Purchaser hereby represents that the Purchaser is satisfied as to the
full observance of the laws of the Purchaser’s jurisdiction applicable to the Purchaser in connection with any
invitation to subscribe for the Securities, including (i) the legal requirements within the Purchaser’s jurisdiction
for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that
may be relevant to the purchase, holding, redemption, sale or transfer of such Securities. The Purchaser’s subscription
and payment for, and the Purchaser’s continued beneficial ownership of the Securities, will not violate any applicable
securities or other laws of the Purchaser’s jurisdiction that are applicable to the Purchaser.


 






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4.7 
Rule 506(d). If the Purchaser beneficially owns twenty percent (20%) or more of the outstanding voting securities of the Company,
calculated in accordance with Rule 506(d) of Regulation D of the Act, or may designate a director of the Company, the Purchaser
hereby represents and warrants to the Company that the Purchaser has not been convicted of any of the felonies or misdemeanors
or been subject to any of the orders, judgments, decrees or other conditions set forth in Rule 506(d) of Regulation D of the Act.


 


4.8 
Further Limitations on Disposition. Without in any way limiting the representations set forth above and subject to any restrictions
contained in the Note and the Warrant, as applicable, the Purchaser further agrees not to make any disposition of all or any portion
of the Securities unless and until:


 


(a) 
There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or


 


(b) 
The Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Purchaser
shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will
not require registration under the Act or any applicable state securities laws.


 


(c) 
Notwithstanding the provisions of paragraphs (a) and (b) above, but subject to the terms of the Note and the Warrant, as applicable,
no such registration statement or opinion of counsel shall be necessary for a transfer by the Purchaser to (i) any shareholder,
partner, retired partner, member or former member of the Purchaser for no additional consideration or (ii) any affiliate, including
affiliated funds, for no additional consideration, in each case if all transferees agree in writing to be subject to the terms
hereof to the same extent as if they were the Purchaser hereunder.


 


(d) 
Notwithstanding the provisions of paragraphs (a) and (b) above, the Company acknowledges and agrees that the Securities may
be pledged by the Purchaser, and its successors and assigns, in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities, provided that any pledge of those Securities does not constitute an offer of those
Securities for sale within 12 months after their issue such that it would require disclosure under section 707(3) of the Corporations
Act 2001 (Cth). The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder,
and no Person effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make
any delivery to the Company pursuant to this Agreement or any other Financing Document. The Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request, at the Purchaser’s expense, in connection
with a pledge of the Securities to such pledgee by the Purchaser and any successor or assignee.


 






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4.9 
Legends. The Purchaser understands that any securities issued upon conversion of the Note or exercise of the Warrant, and the
Existing Warrants CDIs, may bear one or all of the following legends:


 


(a) 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SALE OR DISTRIBUTION OF SUCH SHARES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.”


 


(b) 
Any legend set forth in or required by another section of this Agreement, the Note or the Warrant, as applicable.


 


(c) 
Any legend required by the securities laws of any state or country to the extent such laws are applicable to the securities
represented by the certificate so legended.


 


4.10 
Market Standoff. The Purchaser agrees not to sell any of the Securities during a period specified by the representative of
the underwriters of Common Stock (not to exceed one hundred eighty (180) days) following the effective date of the initial registration
statement of the Company filed under the Act, so long as all officers, directors, and 1% stockholders have executed similar agreements
and are similarly restricted from selling the Company’s stock.


 


4.11 
Foreign Ownership Restrictions. The Purchaser acknowledges and agrees that in order to ensure that US persons do not purchase
any CDIs that may be issued to them, a number of procedures governing the trading and clearing of CDIs, while the Company is listed
on the ASX, will be implemented, including the application to any CDIs issued to them of the status of Foreign Ownership Restrictions
securities under the ASX Settlement Operating Rules and the addition of the notation “FORUS” to the CDI description
on ASX trading screens and elsewhere, which will inform the market of the prohibition of US persons acquiring CDIs.


 


	5.	Events of Default; Remedies


 


5.1 
Events of Default. Each of the following shall constitute an event of default (each, an “Event of Default”)
under this Agreement and the other Financing Documents:


 


(a) 
Any default in the payment, when the same becomes due and payable, of principal under or interest in respect of the Note or
other amount due and payable under any other Financing Document including, but not limited to, the failure by the Company to pay
on the Maturity Date, upon a Change of Control pursuant to Section 2(b) of the Note or to the extent due and payable under Section
2(c) of the Note, any and all unpaid principal, accrued interest and all other amounts owing under any Financing Document;


 






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(b) 
The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any
other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any general assignment for the benefit
of creditors or takes any corporate action in furtherance of any of the foregoing;


 


(c) 
An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within sixty (60) days)
under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors
(or other similar official) is appointed to take possession, custody or control of any property of the Company;


 


(d) 
The Company’s stockholders (other than the Purchaser) or board of directors affirmatively vote to liquidate, dissolve,
or wind up the Company or the Company otherwise ceases to carry on its ongoing business operations;


 


(e) 
If (i) a material portion of the Company’s assets is attached, seized, levied on, or comes into possession of a trustee
or receiver and the attachment, seizure or levy is not removed in thirty (30) days, (ii) the Company is enjoined, restrained, or
prevented by a court order or other order of a governmental body from conducting its business, or (iii) notice of lien, levy, or
assessment is filed against any material portion of the Company’s assets by any court order or other order of any governmental
body and it is not paid within sixty (60) days after the Company received notice thereof; or


 


(f) 
The Company shall fail in any material respect to observe or perform any covenant, obligation, condition or agreement contained
in this Agreement or any other Financing Document (other than a failure to pay as specified in Section 5.1(a) hereof) and
such failure shall continue for thirty (30) days after the Company’s receipt of written notice thereof.


 


5.2 
Remedies. Upon the occurrence or existence of any Event of Default (other than an Event of Default referred to in Sections
5.1(b) or 5.1(c) hereof) and at any time thereafter during the continuance of such Event of Default, the Purchaser or
any holder of the Note may, by written notice to the Company, declare all outstanding obligations payable by the Company under
the Note and the other Financing Documents to be immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. Upon the
occurrence or existence of any Event of Default described in Sections 5.1(b) or 5.1(c) hereof, immediately and without
notice, all outstanding obligations payable by the Company hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein
to the contrary notwithstanding. In the event of any Event of Default, the Company shall pay all reasonable attorneys’ fees
and costs incurred by the Purchaser in enforcing and collecting the Note and the other Financing Documents. No right or remedy
conferred upon or reserved to the Purchaser under this Agreement is intended to be exclusive of any other right or remedy, and
every right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now and hereafter
existing under applicable law.


 






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	6.	Conditions to Closing 


 


6.1 
Conditions to Purchaser’s Obligations at the Closing. The obligations of the Purchaser under the Financing Documents
are subject to the fulfillment on or before the Closing of each of the following conditions, which may be waived in writing by
the Purchaser:


 


(a) 
Representations and Warranties. The representations and warranties of the Company contained in Section 3 shall be true
on and as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such specified date).


 


(b) 
Performance. The Company shall have performed and complied with all agreements, obligations, and conditions contained in the
Financing Documents that are required to be performed or complied with by it on or before the Closing.


 


(c) 
Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the lawful issuance and sale of the Note, the Conversion CDIs,
the Warrant, the Warrant CDIs and the exercise of the Existing Warrants CDIs shall be duly obtained and effective as of the Closing.


 


(d) 
Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form and substance to the Purchaser’s counsel, which
shall have received all such counterpart original and certified copies of such documents as it may reasonably request.


 


6.2 
Conditions to Company’s Obligations at the Closing. The obligations of the Company under the Financing Documents are
subject to the fulfillment on or before the Closing of each of the following conditions, which may be waived in writing by the
Company:


 


(a) 
Representations and Warranties. The representations and warranties made by the Purchaser in Section 4 hereof shall
be true and correct on the Closing Date.


 


(b) 
Purchase Price. The Purchaser shall have delivered to the Company the Initial Exercise Notice together with the Initial Exercise
Price.


 


	7.	Miscellaneous


 


7.1 
Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party
any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.


 


7.2 
Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York.


 






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7.3 
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.


 


7.4 
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.


 


7.5 
Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (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, with written verification of receipt. All communications shall be sent to the address set forth in this Section
7.5 or at such other address as the Company or the Purchaser may designate by ten (10) days advance written notice to the other
parties hereto.


 





If to the Purchaser:


 


Crystal Amber Fund
Limited


PO Box 286


Floor 2, Trafalgar
Court


Les Banques


St Peter Port


Guernsey


GY1 4LY


 


With a copy (that shall
not constitute notice) to:


 


Estera - GG - Crystal
Amber Team


CrystalAmberTeam@estera.com


 


If to the Company:


 


GI DYNAMICS, INC.


320 Congress Street


Floor 3


Boston, MA 02205


Attention: Chief Executive
Officer


 


With a copy (that shall
not constitute notice) to:


 


Melanie Figueroa, Esq.


Mitchell Silberberg
& Knupp LLP


437 Madison Avenue,
25th Floor


New York, New York
10022


Email: mxf@msk.com


 






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7.6 
Amendment; Modification; Waiver. No amendment, modification or waiver of any provision of this Agreement or consent to departure
therefrom shall be effective unless in writing and approved by the Company and the Purchaser provided that, while the Company is
admitted to the Official List of the ASX, any proposed amendment, modification or waiver of any provision of this Agreement must
not contravene the ASX Listing Rules.


 


7.7 
Entire Agreement. This Agreement, the Exhibits hereto, and the Financing Documents constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.


 






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In
Witness Whereof, the parties have executed this Securities Purchase Agreement
as of the date first written above.


 





	 	COMPANY:
	 	 
	 	GI Dynamics, Inc.
	 	 
	 	By:	/s/ Scott Schorer
	 	Name: 	Scott Schorer
	 	Title: 	Chief Executive Officer
	 	 	 
	 	PURCHASER:
	 	 
	 	Crystal Amber Fund Limited
	 	 
	 	By: 	/s/ Laurence McNairn
	 	Name: 	Laurence McNairn
	 	Title: 	Director
	 	 	 
	 	Executed by Crystal Amber Asset Management (Guernsey) Ltd as Investment Manager of Crystal Amber Fund Limited







 


[Signature
Page to Note Purchase Agreement]


 






    15 


     


    

 


Exhibit
A


 


Form
of Unsecured Convertible Promissory Note


 


[See Exhibit 10.4 to this Quarterly Report
on Form 10-Q.]


 






     


     


    

 


Exhibit
B


 


Form
of Warrant


 


[See Exhibit 10.5
to this Quarterly Report on Form 10-Q.]