Item 1.01
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Entry Into a Material Definitive Agreement
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Ginger Capital Joint Venture
On May 23, 2017, Bionik Laboratories Corp. (the
“Company”) entered into a Co-operative Joint Venture
Contract (the “Agreement”) with Ginger Capital
Investment Holding Ltd., a Hong Kong corporation (“Ginger
Capital”), to establish a cooperative joint venture
enterprise in the People’s Republic of China. The name of the
cooperative joint venture will be “China Bionik Medical
Rehabilitation Technology Ltd.” and it will be a limited
liability company established for the purposes of strengthening the
economic cooperation and technical exchange between the parties and
adopting advanced technology and scientific management methods
through the distribution and promotion of the Company’s
products in the People’s Republic of China, Hong Kong and
Macau (the “Territory”). The registered capital of the
joint venture will be ten million RMB or approximately US$1.45
million, which will be contributed entirely by Ginger Capital. The
terms of the cooperation include the entering into a Distribution
Agreement and License Agreement between the Company and the joint
venture company for the commercialization of the Company’s
products in the Territory. In consideration of granting rights to
the joint venture enterprise to market and sell the Company’s
products in the Territory, the joint venture enterprise is tasked
with the responsibility of obtaining approval from the PRC Food and
Drug Administration and such other approvals in order for such
marketing and sale in the Territory to be conducted. The joint
venture enterprise will be co-managed by the parties and each party
will be represented at the board level by directors appointed by
them. Any profit distribution will be 75% in favor of Ginger
Capital and 25% in favor of the Company.
The foregoing description of the Agreement does not purport to be
complete and is qualified in its entirety by the Agreement, a copy
of which is attached as Exhibit 10.1 to this Current Report on Form
8-K and is incorporated herein by reference.
Ginger Capital Investment
In conjunction with the requirement of Ginger Capital to capitalize
the joint venture enterprise, affiliates of Ginger Capital
collectively invested or committed to invest $500,000 in the
Company on May 23, 2016, and the Company issued or will issue to
such affiliates of Ginger Capital convertible promissory notes
(collectively, the “Note”) and three-year common stock
purchase warrants (collectively, the
“Warrant”).
The Company intends to use the net proceeds from the investment for
the Company’s working capital and general corporate
purposes.
The Note bears interest at a fixed rate of 8% per annum, payable at
the earlier of the one year anniversary of the Note and the
consummation of a “qualified financing”, as defined in
the Note (the “Maturity Date”).
Upon an equity or equity-linked round of financing of the Company
that raises gross proceeds of $3,000,000 or more (“New Round
Stock”), the outstanding principal and accrued interest (the
“Outstanding Balance”) shall convert into New Round
Stock based upon the lesser of: (i) $0.50 per New Round Stock and
(ii) the quotient obtained by dividing (x) the Outstanding Balance
on the conversion date multiplied by 1.10 by (y) the actual price
per New Round Stock in the Qualified Financing.
Upon the Maturity Date, Ginger Capital shall further be issued the
Warrant, exercisable into a number of shares of the Company’s
common stock equal to (i) in the case of the conversion of the
Note, 25% of the number of shares issued upon conversion and (ii)
in the case of the repayment of the Note in cash, the number of
shares of Common Stock equal to the quotient obtained by dividing
the Outstanding Balance by 4. The exercise price per share is
$.60.
The Note contains customary events of default, which, if uncured,
entitle Ginger Capital to accelerate the due date of the unpaid
principal amount of, and all accrued and unpaid interest on, the
Note.
The issuance of the Note and the Warrant will not be registered
under the Securities Act. The Company relied upon the exemption
from securities registration provided by Section 4(a)(2) under the
Securities Act of 1933, as amended, for transactions not involving
a public offering.
The foregoing description of the Note and the Warrant does not
purport to be complete and is qualified in its entirety by the Note
and the Warrant.