8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2020

GI DYNAMICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-55195	84-1621425
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

320 Congress Street

Boston, MA 02210

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (781) 357-3300

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective February 28, 2020, the Board of Directors (the “Board”) of GI Dynamics, Inc. (the “Company”) increased the size of the Board from four to five directors and elected Dr. Praveen Tyle, Ph.D. to fill such vacancy and serve as a Class III director to serve until the 2020 Annual Meeting of Stockholders and thereafter in accordance with the Company’s Bylaws until his successor is duly elected and qualified or his earlier resignation, removal or death. In relation to potential committee appointments, it is currently proposed that Dr. Tyle will join the Company’s compensation committee, possibly as chair, and become a member of the audit committee.

Dr. Tyle will be compensated for his service on the Board pursuant to the terms and conditions of a board member agreement (the “Board Member Agreement”), a copy of which is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference, in accordance with the Company’s Non-Employee Director Compensation Policy (the “Policy”), a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. Pursuant to the Board Member Agreement and the Policy, the Company shall pay to Dr. Tyle an annual retainer of $50,000, plus any annual committee fees, if any. In addition, on February 28, 2020, the Board granted, subject to stockholder approval, Dr. Tyle non-qualified stock options (the “Options”) to purchase 30,000 shares of the Company’s common stock, par value $0.01 per share, at an exercise price equal to the fair market value per share as of the grant date, which Options shall fully vest on the one year anniversary of the grant date, subject to Dr. Tyle’s continued service on the Board. In the event of a change of control of the Company (as defined in the award documents), the Options shall become vested in full.

In addition, Dr. Tyle will enter into the Company’s standard indemnification agreement, a form of which is attached as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.

There was no understanding or arrangement between Dr. Tyle and any other person pursuant to which Dr. Tyle was elected as a director. There are no related party transactions involving the Company that are required to be disclosed pursuant to Item 404(a) of Regulation S-K related to Dr. Tyle.

A copy of the Australian Securities Exchange announcement regarding Mr. Tyle’s election is attached hereto as Exhibit 99.1.

Item 9.01      Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1†	Non-Employee Director Compensation Policy, incorporated by reference to Exhibit 10.1 of GI Dynamics Inc.’s Current Report on Form 8-K, filed with the SEC on September 12, 2014.
10.2†	Board Member Agreement by and between GI Dynamics, Inc. and Praveen Tyle.
10.3†	Form of Indemnification Agreement incorporated by reference to Exhibit 10.4 of GI Dynamics, Inc.’s Quarterly Report on Form 10-Q, filed with the SEC on November 10, 2014.
99.1	Australian Securities Exchange announcement of GI Dynamics, Inc. dated March 2, 2020 (Australian Eastern Daylight Time)

† Management contract or compensatory plan or arrangement.

1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GI DYNAMICS, INC.
Dated: March 3, 2020	/s/ Charles Carter
	Charles Carter
	Chief Financial Officer

2

EX-10.2

Exhibit 10.2

 

Friday, February 21, 2020

Re:         Board Member Agreement

Praveen Tyle

Dear Praveen,

GI Dynamics, Inc. (the “Company”) is pleased to invite you to serve as a member of the Company’s board of directors (the “Board”). If you accept this invitation, your membership on the Board will commence upon your formal election to the Board, which the Company expects to occur as soon as practicable following your acceptance. The initial board vote and approval will be followed by the traditional vote of all shareholders at the next Annual General Meeting or an interim meeting should one be scheduled.

You are being invited to join the Board because of your reputation and experience in areas that relate to the Company’s business and strategy. The Company expects that, as a member of the Board, you will contribute to the success of the Company by participating in meetings of the Board and providing the Company with advice and guidance consistent with your role as a member of the Board. Board meetings are generally expected to occur up to 4-5 times a year on a primarily quarterly basis. Board meetings alternate between in-person and telephonic. Committee meetings largely occur on a telephonic basis.

You will receive an annual retainer of $50,000 payable in arrears in calendar quarterly installments of $12,500; your first partial quarter will be paid on a pro rata basis. To the extent that you are appointed to any formal board committee, you will also receive compensation as set forth below. All amounts shown are the annual rate, which will be divided by 4 for quarterly payments, or prorated for any partial quarter:

o   Audit Committee

■    Chair: $15,000

■    Member: $3,000

o   Compensation Committee

■    Chair: $10,000

■    Member: $2,000

o Nominating & Governance Committee

■    Chair: $5,000

■    Member: $1,000

GI Dynamics, Inc. Board of Directors Offer Letter: Praveen Tyle 1

 

The Company will reimburse you for the reasonable out-of-pocket expenses incurred in attending meetings of the Board and of any committee on which you may serve upon submission by you of reasonable supporting documentation.

Following your appointment by the Board as a Director of the Company and approval by the Board and stockholders of the Company, you will be issued an option to purchase up to 30,000 shares of the Company’s common stock subject to shareholder approval at the Company’s Annual General Meeting in 2020. These option shares shall vest on the first anniversary of the date of grant (subject to your continued service to the Company as a Director). Annually, subject to approval by the Board and stockholders of the Company at subsequent Annual General Meetings, you will be issued an equity award, initially targeted to be an option to purchase up to 30,000 shares of the Company’s common stock. These option shares shall vest in full on the first anniversary of the date of grant (subject to your continued service to the Company as a Director). All options shall be exercisable at a price per share equal to the fair market value of the Company’s common stock on the date of grant of the option (as determined by the Board in accordance with Section 409A of the Internal Revenue Code of 1986, as amended). The options that you receive hereunder shall be subject to the terms of a non-qualified stock option agreement to be executed by you and the Company. In the event that the Company is subject to a change in control, the option shares shall immediately vest and shall be fully exercisable.

The Company has adopted provisions in its Certificate of Incorporation and Bylaws to indemnify directors. You and the Company will also enter into an Indemnification Agreement in customary form which will set forth the terms and conditions of the Company’s obligations to indemnify you. For the avoidance of doubt, for the duration of your service as a director of the Company, and thereafter for so long as you shall be subject to any pending or possible liability or expense for which indemnification may be provided in accordance with the Company’s customary indemnification agreement to be entered into between you and the Company, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance.

As a member of the Board, you agree to hold in confidence and trust and to act in a fiduciary manner with respect to all confidential information provided to you by the Company or other members of the Board. You acknowledge that the Company and the Board reserves the right to withhold any information and to exclude you from any portion of a Board meeting if such information or attendance could reasonably be expected to result in a conflict of interest with your duties to a third party or adversely affect the attorney-client privilege between the Company and its counsel.

GI Dynamics, Inc. Board of Directors Offer Letter: Praveen Tyle 2

 

Nothing in this invitation or the stock option or indemnification agreements should be construed to interfere with or otherwise restrict in any way the rights of the Company and the Company's stockholders to remove any individual from the Board at any time in accordance with the provisions of applicable law.

We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this invitation by signing and dating this letter in the space provided below and returning it to me.

If you would like to set up a call so I can answer any questions you might have, I am available in the coming days at your convenience.

On behalf of the Company’s Board, we look forward to working with you.

Very truly yours,

/s/ Dan Moore

Dan Moore

Chairman of the Board of Directors

GI Dynamics, Inc.

Agreed to and Accepted:

/s/ Praveen Tyle

Praveen Tyle

Dated: 2/22/2020

GI Dynamics, Inc. Board of Directors Offer Letter: Praveen Tyle 3

EX-99.1

Exhibit 99.1

 

  Boston, United States Sydney, Australia 2 March 2020 AEDT                                 Chief Financial Officer / Secretary United States:
Charles Carter +1 (781) 357-3263 ccarter@gidynamics.com     Investor Relations United States:
Janell Shields +1 (781) 357-3280 investor@gidynamics.com Appointment of Director BOSTON and SYDNEY — 2 March 2020 — GI Dynamics^® Inc. (ASX:GID), a medical device company that is developing EndoBarrier^® for patients with type 2 diabetes and obesity, is pleased to announce that it has increased the size of the Board from four to five directors and elected Dr. Praveen Tyle, Ph.D. to fill such vacancy and serve as a Class III director to serve until the 2020 Annual Meeting of Stockholders and thereafter in accordance with the Company’s Bylaws. Dr. Tyle is the executive vice president of research and development for Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) since May 2016. Dr. Tyle was previously a member of the executive management team at Osmotica Pharmaceutical Corp., serving as president and chief executive officer from January 2013 through April 2016 and prior to that as executive vice president and chief scientific officer. Prior to his service at Osmotica, Dr. Tyle held a series of scientific leadership positions within the pharmaceutical industry. Dr. Tyle serves as director of Eyegate Pharmaceuticals, Inc. and Orient Europharma Ltd. Dr. Tyle received his B.Pharm. from the Indian Institute of Technology, Banaras Hindu University and his Ph.D. in pharmaceutics and pharmaceutical chemistry from the Ohio State University. Dr. Tyle will provide the board with clinical and scientific expertise, with depth of knowledge in diabetes and obesity. Dr. Tyle will also provide additional business and operational perspectives from his extensive management and directorship experience. Material Terms of Appointment Dr. Tyle will be compensated for his service on the Board under the Company’s Non-Employee Director Compensation Policy (the “Policy”). Pursuant to the Policy and in connection with his appointment to the Board, the Company shall pay to Dr. Tyle an annual retainer of US$50,000 plus any annual committee fees, if any. In relation to potential committee appointments, it is currently proposed that Dr Tyle will join the Company’s compensation committee, possibly as chair, and also become a member of the audit committee.   In addition, the Board has agreed to grant, subject to obtaining stockholder approval, Dr. Tyle non-qualified stock options (the “Options”) to purchase 30,000 shares of the Company’s common stock, par value $0.01 per share, at an exercise price equal to the fair market value per share as of the grant date, which Options shall fully vest on the one year anniversary of the grant date, subject to Dr. Tyle’s continued service on the Board. In the event of a change of control of the Company (as defined in the award paperwork), the Options shall become vested in full.

 

 

Boston, United States Sydney, Australia 2 March 2020 AEDT                                 Chief Financial Officer / Secretary United States:
Charles Carter +1 (781) 357-3263 ccarter@gidynamics.com     Investor Relations United States:
Janell Shields +1 (781) 357-3280 investor@gidynamics.com In addition, Dr. Tyle will enter into the Company’s standard indemnification agreement. “We look forward to working with Dr. Tyle over the coming years as we position GI Dynamics and EndoBarrier to provide an alternative effective treatment for type 2 diabetes,” said Dan Moore, chair of GI Dynamics. About GI Dynamics GI Dynamics^®, Inc. (ASX:GID) is the developer of EndoBarrier^®, the first endoscopically-delivered medical device for the treatment of type 2 diabetes and the reduction of obesity. EndoBarrier is not approved for sale and is limited by federal law to investigational use only. EndoBarrier is subject to an Investigational Device Exemption by the FDA in the United States and is entering concurrent pivotal trials in the United States and India. Founded in 2003, GI Dynamics is headquartered in Boston, Massachusetts. For more information please visit the Company website at www.gidynamics.com. Forward-Looking Statements This announcement may contain forward-looking statements. These statements are based on GI Dynamics management’s current estimates and expectations of future events as of the date of this announcement. Furthermore, the estimates are subject to several risks and uncertainties that could cause actual results to differ materially and adversely from those indicated in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, risks associated with our ability to continue to operate as a going concern; our ability to raise sufficient additional funds to continue operations and to conduct the planned pivotal trial of EndoBarrier in the United States (STEP-1); our ability to execute STEP-1 under FDA’s Investigational Device Exemption; our ability to enlist clinical trial sites and enroll patients in accordance with STEP-1; the risk that the FDA stops STEP-1 early as a result of the occurrence of certain safety events or does not approve an expansion of STEP-1; our ability to enroll patients in accordance with I-STEP; our ability to secure a CE Mark; our ability to maintain compliance with our obligations under our existing convertible note and warrant agreements executed with Crystal Amber, including our obligations to make payment on the Note that is due on 31 March 2020 and our ability to restructure the terms of the Note with Crystal Amber that is due on 31 March 2020 if we are unable to raise sufficient funds to enable us to fully repay such Note when due; obtaining and maintaining regulatory approvals required to market and sell our products; the possibility that future clinical trials will not be successful or confirm earlier results; the timing and costs of clinical trials; the timing of regulatory submissions; the timing, receipt and maintenance of regulatory approvals; the timing and amount of other expenses; the timing and extent of third-party reimbursement; intellectual-property risk; risks related to excess inventory; risks related to assumptions regarding the size of the available market; the benefits of our products; product pricing; timing of product launches; future financial results; and other factors, including those described in our filings with the U.S. Securities and Exchange Commission. Given these uncertainties, one should not place undue reliance on these forward-looking statements. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise, unless we are required to do so by law. ###