AYTU BIOSCIENCE, INC. (OTCMKTS:AYTU) Files An 8-K Entry into a Material Definitive Agreement

Consent and Limited Waiver Agreement

Under the Purchase Agreement, the Company has assumed from Seller a fixed payment obligation to Deerfield CSF, LLC (“Deerfield”) of approximately $16.6 million (the “Deerfield Obligation”). The Deerfield Obligation requires fixed monthly payments equal to $86,840 from November 2019 through January 2021 plus $15 million due in January 2021. Additionally, monthly variable payments are due to Deerfield equal to 15% of net revenue generated from a subset of the Product Portfolio, subject to an aggregate monthly minimum of $100,000, except for January 2020, when a one-time minimum payment of $150,000 is due. The variable payment obligation continues through February 2026 or until aggregate variable payments of approximately $9.3 million have been made. The Deerfield Obligation was previously assigned to Seller to an asset purchase agreement between Seller and Avadel U.S. Holdings, Inc. (“Avadel”) dated February 12, 2018. In order to assign the Deerfield Obligation to the Company, each of Deerfield and certain of its affiliates (collectively, the “Deerfield Parties”) and Avadel must consent to the assignment of the Deerfield Obligation to the Company.

Accordingly, the Company has entered into a Consent and Limited Waiver Agreement among the Deerfield Parties, Avadel, Armistice Capital Master Fund, Ltd. (“Armistice”), and Seller, dated October 31, 2019 (the “Waiver”), to which: (i) Armistice has agreed to enter into a guarantee of the Deerfield Obligation (the “Armistice Guarantee”); (ii) Seller has agreed to enter into a guarantee of the Deerfield Obligation (the “Seller Guarantee” together with the Armistice Guarantee, the “Guarantees”); and (iii) Armistice has agreed to enter into an escrow agreement with the Deerfield Parties (the “Escrow Agreement”), to which Armistice will deposit approximately $15 million into an escrow account. In consideration for the Company assuming the Deerfield Obligation, the Guarantees, and the Escrow Agreement, each of the Deerfield Parties and Avadel have agreed to execute the Waiver and provide for assignment of the Deerfield Obligation. Steven Boyd, a member of the Company’s board of directors, is the founder and chief investment officer of Armistice.

The foregoing description of the Waiver, the Armistice Guarantee, the Seller Guarantee, and the Escrow Agreement is qualified in its entirety by the full text of: (i) the Waiver, a copy of which is attached hereto as Exhibit 10.6; (ii) the Armistice Guarantee, a copy of which is attached as Exhibit A-1 to the Waiver; (iii) the Seller Guarantee, a copy of which is attached as Exhibit A-2 to the Waiver; and (iv) the Escrow Agreement, a copy of which is attached as Exhibit B to the Waiver.

Item 9.01 Financial Statements and Exhibits.

(d) The following exhibit is being filed herewith: