Exhibit 10.2


 


THIS
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.


 


UNSECURED
CONVERTIBLE PROMISSORY NOTE


 


	US$500,000	August 4, 2020




 


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”),
an aggregate principal sum of US$500,000, or such other amount as shall become due after giving effect to Section 2(b)
hereof, with interest on the outstanding principal amount at the rate of five percent (5%) per annum. Interest (i) shall commence
on the date hereof and shall be compounded annually based on a 365-day year and (ii) shall continue on the outstanding principal
until paid in full pursuant to Section 1(b) below or converted pursuant to Section 2 below.


 


1. Payment
and Maturity


 


(a) Reference
is hereby made to that certain Convertible Note Purchase Agreement (the “Purchase Agreement”), dated
as of even date herewith, between Payor and the 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 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 below, the entire outstanding principal
balance of this Note and all unpaid accrued interest thereon shall be due and payable on demand; provided; however, that such
demand cannot be made prior to the six (6) month anniversary of the date hereof (the “Maturity Date”).
All payments shall be in lawful money of the United States of America. All payment 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 unpaid principal balance of this Note shall bear interest
at the eight percent (8%) per annum, including after the commencement of, and during the pendency of, any bankruptcy or other
insolvency proceeding.


 


2. Conversion


 


(a) Qualified
Equity Financing Conversion. Following the delisting of Payor from the Official List of the ASX, upon the closing of a Qualified
Equity Financing (as defined below), all of the then outstanding unpaid principal amount of this Note, together with any interest
accrued but unpaid thereon (such principal amount and interest, the “Outstanding Amount”) shall be automatically
converted into a number of shares of Capital Stock issued in the Qualified Equity Financing (the “Conversion Shares”).
The number of Conversion Shares to be issued by Payor upon such conversion shall equal the quotient obtained by dividing (x) the
Outstanding Amount by (y) the Conversion Price (defined below). At least five (5) days prior to the closing of the Qualified Equity
Financing, Payor will notify the Holder in writing of the terms of the Conversion Shares that are expected to be issued pursuant
to the Qualified Equity Financing. As used herein, a “Qualified Equity Financing” means the next round
of equity financing of Capital Stock in a single transaction or a series of related transactions involving the issuance, following
the date hereof, of the Payor’s securities to one or more investors, from which Payor receives gross proceeds of not less
than US$8 million (excluding the conversion of this Note and excluding conversion of any other debt that is outstanding as of
immediately prior to the issuance of this Note). “Conversion Price” means the product of (x) eighty
percent (80%) and (y) the lowest per share purchase price of the Capital Stock issued in the Qualified Equity Financing.


 


(b) Change
of Control. Upon the consummation of a Change of Control prior to the Maturity Date, 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 then outstanding unpaid principal
amount of this Note in full satisfaction of all obligations under this Note, or (ii) subject to the provisions of Section
6(a) hereof, retain the Note, including, without limitation, the conversion rights 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 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 Payor or the Holder or a person
that directly or indirectly controls, is controlled by, or is under common control with, 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 Payor’s stockholders, (iii) a merger or consolidation of Payor,
other than for the purpose of re-domiciling Payor, unless following such transaction or series of transactions, the holders of
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 Payor
that constitutes or results in a transfer of more than one-third of the equity interests in Payor, unless following such transaction
or series of transactions, the holders of 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 Payor or its
controlling stockholders of an agreement providing for or reasonably likely to result in any of the foregoing events. For the
avoidance of doubt, the Qualified Equity Financing shall not constitute a Change of Control.


 






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(c) Stockholder
Approval. Notwithstanding anything to the contrary contained herein or in the Purchase Agreement, in the event that the rules
of the ASX (or any other exchange on which the Payor’s common stock is then traded) require the Payor to obtain stockholder
approval to issue the securities pursuant to Section 2(a) hereof, the Payor shall convene a meeting of stockholders to seek approval
to issue those securities. For the avoidance of doubt, while the Payor is listed on the ASX and the rules of the ASX require the
Payor to obtain stockholder approval to issue any of the securities pursuant to Section 2(a) hereof, no conversion may occur under
this Note, unless and until the Payor has obtained stockholder approval pursuant to this Section 2(c).


 


(d) Fractional
Shares. No fractional shares of Payor’s Capital Stock will be issued upon conversion of this Note. In lieu of any fractional
share to which the Holder would otherwise be entitled, Payor will pay to the Holder in cash the amount of the unconverted principal
and interest balance of this Note that would otherwise be converted into such fractional share.


 


(e) 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 Capital
Stock issuable to Holder are hereby made a part of this Note and incorporated herein by this reference.


 


(f) Restriction
on Transfer. Notwithstanding any other provision of this Note or the Purchase Agreement, the Holder may not sell or transfer
any shares of capital stock, including, but not limited to, common stock or CHESS Depositary Interests (“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 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.


 


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 (other than an Event of Default described in Sections 5.1(b)
or 5.1(c) of the Purchase Agreement), 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)
or 5.1(c) of the Purchase Agreement, automatically, be immediately due, payable and collectible by Holder pursuant to applicable
law.


 






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(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.


 


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 twelve (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) Payor effects any merger or consolidation of Payor with
or into another person pursuant to which the Conversion Shares are effectively converted and exchanged, (ii) Payor effects any
sale of all or substantially all of its assets in one or a series of related transactions pursuant to which the Conversion Shares
are effectively converted and exchanged, (iii) any tender offer or exchange offer (whether by Payor or another person) is completed
pursuant to which at least a majority of the outstanding common stock of Payor is tendered and exchanged for other securities,
cash or property or (iv) Payor effects any reclassification of the Conversion Shares or any compulsory share exchange pursuant
to which the Conversion Shares are effectively converted into or exchanged for other securities, cash or property (other than
as a result of a subdivision or combination of shares of the Conversion Shares) (in any such case, a “Fundamental
Transaction”), then prior to any subsequent conversion of this Note pursuant to Section 2(a) hereof, 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.


 


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 the Holder shall constitute a waiver, election or acquiescence
by it.


 


8. Cumulative
Remedies. The Holder’s rights and remedies under this Note and the Purchase Agreement shall be cumulative. No
exercise by the Holder of one right or remedy shall be deemed an election, and no waiver the 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.


 






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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.


 


(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. 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 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 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 Payor and the
Holder provided that, while 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) No
Voting Rights. This Note does not carry any voting rights at stockholder meetings of Payor.


 


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


 


(j) Equal
Ranking. The Conversion Shares issued pursuant to a conversion of this Note will rank, from the date of issue, equally with
the shares of Capital Stock issued by Payor in the Qualified Equity Financing, in all respects.


 


(k) Reorganizations.
While Payor is admitted to the Official List of the ASX, the Note and all its terms shall comply with the ASX Listing Rules.


 


[Signature
page follows]


 




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In
Witness Whereof, the parties have executed
this Unsecured Convertible Promissory Note as of the date first written above.


 


	 	GI Dynamics, Inc.
	 	 
	 	By:	/s/ Scott Schorer
	 	Name:	Scott Schorer
	 	Title:	President and CEO




 


Agreed
to and Accepted:


 


Crystal
Amber Fund Limited


 


	By:	 /s/ Laurence McNairn	 
	Name:	Laurence McNairn	 
	Title:	Executed by Crystal Amber Asset	 
	 	Management (Guernsey) Ltd as Investment	 
	 	Manager of Crystal Amber Fund Limited