Item 1.01. Entry into a Material Definitive Agreement.
Effective January 7, 2019, Innovate Biopharmaceuticals, Inc. (the "Company") and
Gustavia Capital Partners LLC and/or its affiliates (the "Holder") entered into
an Option to Purchase Senior Convertible Note (the "Option Agreement"), pursuant
to which Holder granted to the Company an option to purchase from Holder a
Senior Convertible Note (as defined in the Option Agreement) (the "Senior
Convertible Note"), originally issued as a Senior Note with an original issue
date of on or about January 26, 2018 and subsequently exchanged on October 4,
2018 for the Senior Convertible Note.
Summary of Material Terms of the Option Agreement
The Company has paid to Holder $250,000 in U.S. dollars in consideration for the
option to purchase the Senior Convertible Note pursuant to the Option Agreement
The Company may exercise the Option on or before March 31, 2019 (or such later
date as Holder may designate to the Company in writing) (the "Option Termination
The purchase price for the Senior Convertible Note shall be $5,196,666.67 (which
amount shall be proportionally reduced for any principal converted under the
Senior Convertible Note during the Option Period (as defined in the Senior
Convertible Note), plus any unpaid accrued interest (the "Purchase Price").
The Option shall be exercised, if at all, by the Company on or before the Option
Termination Date. To exercise, the Company must deliver to Holder an executed
copy of the Notice of Intent to Exercise Option ("Notice of Exercise"), attached
as Exhibit A to the Option Agreement, ten days prior to the effective exercise
date (the "Exercise Date"). Within ten business days of such Notice of Exercise
and payment of the Purchase Price by the Company, Holder shall deliver the
Senior Convertible Note to the Company for cancellation.
The foregoing summary description of the Option Agreement does not purport to be
complete and is qualified in its entirety by reference to the Option Agreement,
a copy of which is filed herewith as Exhibit 10.1, and is incorporated herein by
Item 8.01. Other Events.
Pursuant to the terms of the Note and Holder's right to call any portion of the
Note prior to entering into the Option Agreement, the Company paid the Holder
approximately $1,000,000 on January 8, 2019.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
Option to Purchase Senior Convertible Note, by and between the
10.1 Company and Gustavia Capital Partners LLC and/or its affiliates
dated as of January 7, 2019
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