AYTU AYTU BioPharma Inc

Item 1.01 Entry into a Material Definitive Agreement.

As set forth in the Current Report on Form 8-K as originally filed with the SEC on November 4, 2019 and as amended on November 4, 2019 and November 7, 2019, in connection with the purchase agreement by and between Aytu BioScience, Inc. (the “Company”) and Cerecor Inc. (“Cerecor”), the Company assumed from Cerecor a fixed payment obligation to Deerfield CSF, LLC (“Deerfield”) of approximately $16.6 million (the “Deerfield Obligation”). In connection with the Company’s assumption of the Deerfield Obligation, the Company, each of Deerfield and certain of its affiliates (collectively, the “Deerfield Parties”), Avadel U.S. Holdings, Inc. and its subsidiaries, Armistice Capital Master Fund, Ltd. (“Armistice”) and Cerecor entered into a Consent and Limited Waiver Agreement dated October 31, 2019 (the “Waiver”), pursuant to which: (i) Armistice agreed to enter into a guarantee of the Deerfield Obligation (the “Armistice Guarantee”); (ii) Cerecor agreed to enter into a guarantee of the Deerfield Obligation; and (iii) Armistice agreed to enter into an escrow agreement (the “Escrow Agreement”) with the Deerfield Parties and JPMorgan Chase Bank, N.A. (the “Escrow Agent”), pursuant to which Armistice deposited approximately $15 million into an escrow account (the “Escrow Funds”) to guarantee the balloon payment of $15 million due to the Deerfield Parties by the Company on the last business day of January 2021 or earlier (the “Balloon Payment Obligation”).

On May 29, 2020, the Company, Armistice and the Deerfield Parties entered into an Early Payment Agreement and Escrow Instruction (the “Early Payment Agreement”) pursuant to which, (i) the Company agreed to transfer the sum of $15 million to the Deerfield Parties in early satisfaction of the Balloon Payment Obligation (ii) the Deerfield Parties jointly and severally, acknowledged receipt and payment in full of the Balloon Payment and (iii) the Deerfield Parties and Armistice agreed to deliver to the Escrow Agent the joint written instruction to release the Escrow Funds to Armistice. The parties to the Early Payment Agreement acknowledged and agreed that the remaining fixed payments set forth on Schedule I of the Waiver other than the Balloon Payment Obligation remain due and payable pursuant to the terms of the Waiver, and that nothing in the Early Payment Agreement alters, amends, or waives any provisions or obligations in the Waiver or the deerfield agreement other than as expressly set forth therein. As further consideration for the early payment of the Balloon Payment Obligation contemplated by the Early Payment Agreement, Armistice agreed (i) to pay to the Company, in immediately available funds, an amount equal to $200,000 and (ii) to reimburse the Company for all reasonable out–of-pocket legal expenses and fees incurred in connection with the Early Payment Agreement and the transactions contemplated thereby. On April 3, 2020, a majority of the Company’s disinterested board of directors approved the Company entering into an agreement whereby the Company would either assume the Escrow Agreement pursuant to an assignment and assumption agreement or paying the Balloon Payment Obligation.

The foregoing description of the Early Payment Agreement is qualified in its entirety by the full text of the Early Payment Agreement, a copy of which is attached hereto as Exhibit 10.1.