Exhibit 10.2

INNOVATE BIOPHARMACEUTICALS, INC.
 
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
 
September 21, 2018
 
Non-employee members of the board of directors (the “Board”) of Innovate
Biopharmaceuticals, Inc. (the “Company”) shall be eligible to receive cash and
equity compensation as set forth in this Non-Employee Director Compensation
Policy (this “Policy”). The cash and equity compensation described in this
Policy shall be paid or be made, as applicable, automatically and without
further action of the Board, to each member of the Board who is not an employee
of the Company or any parent or subsidiary of the Company (each, a “Non-Employee
Director”), who may be eligible to receive such cash or equity compensation,
unless such Non-Employee Director declines the receipt of such cash or equity
compensation by written notice to the Company. This Policy shall become
effective on the date hereof (the “Effective Date”) and shall remain in effect
until it is revised or rescinded by further action of the Board. This Policy may
be amended, modified or terminated by the Board at any time in its sole
discretion. The terms and conditions of this Policy shall supersede any prior
cash and/or equity compensation arrangements for service as a member of the
Board between the Company and any of its Non-Employee Directors and between any
subsidiary of the Company and any of its non-employee directors.
 
1. Cash Compensation.
 
(a) Annual Retainers. Each Non-Employee Director shall receive an annual
retainer of $40,000 for service on the Board.
 
(b) Additional Annual Retainers. In addition, a Non-Employee Director shall
receive the following annual retainers:
 
(i) Chairman of the Board. A Non-Employee Director serving as Chairman of the
Board shall receive an additional annual retainer of $35,000 for such service.
 
(ii) Audit Committee. A Non-Employee Director serving as Chairperson of the
Audit Committee shall receive an additional annual retainer of $25,000 for such
service. A Non-Employee Director serving as a member of the Audit Committee
(other than the Chairperson) shall receive an additional annual retainer of
$7,500 for such service.
 
(iii) Compensation Committee. A Non-Employee Director serving as Chairperson of
the Compensation Committee shall receive an additional annual retainer of
$15,000 for such service. A Non-Employee Director serving as a member of the
Compensation Committee (other than the Chairperson) shall receive an additional
annual retainer of $7,500 for such service.
 
(iv) Nominating and Corporate Governance Committee. A Non-Employee Director
serving as Chairperson of the Nominating and Corporate Governance Committee
shall receive an additional annual retainer of $15,000 for such service. A
Non-Employee Director serving as a member of the Nominating and Corporate
Governance Committee (other than the Chairperson) shall receive an additional
annual retainer of $7,500 for such service.
 
(c) Payment of Retainers. The annual retainers described in Sections 1(a) and
1(b) shall be earned on a quarterly basis based on a calendar quarter and shall
be due and payable as soon as practicable after the first day of the quarter in
which such services are to be rendered (i.e., as soon as practicable after
January 1, April 1, July 1 and October 1). In the event a Non-Employee Director
is appointed or elected during the course of any quarter, such Non-Employee
Director shall receive a prorated portion of the retainer(s) otherwise payable
to such Non-Employee Director for such calendar quarter pursuant to Sections
1(a) and 1(b), with such prorated portion determined by multiplying such
otherwise payable retainer(s) by a fraction, the numerator of which is the
number of days during which the Non-Employee Director serves as a Non-Employee
Director or in the applicable positions described in Section 1(b) during the
applicable calendar quarter and the denominator of which is the number of days
in the applicable calendar quarter.

2. Equity Compensation. Non-Employee Directors shall be granted the equity
awards described below. The awards described below shall be granted under and
shall be subject to the terms and provisions of any applicable Company equity
incentive plan then-maintained by the Company (the “Equity Plan”) and shall be
granted subject to the execution and delivery of award agreements, including
attached exhibits, in substantially the forms previously approved by the Board.
All applicable terms of the Equity Plan apply to this Policy as if fully set
forth herein, and all equity grants hereunder are subject in all respects to the
terms

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of the Equity Plan. Notwithstanding anything else to the contrary herein, awards
shall only be made pursuant to this policy if there are sufficient authorized
but unissued shares reserved under the Equity Plan for such awards or if the
awards are subject to stockholder approval at a future Annual Stockholder
Meeting on a Board approved proxy statement. If there are not sufficient
authorized but unissued shares so reserved and the Board chooses not to make the
awards subject to stockholder approval, the awards shall be made as soon as
reasonably practicable after a sufficient number of additional shares become
available under the Equity Plan for such awards.
 
(a) Annual Awards. A Non-Employee Director who (i) serves on the Board as of the
date of any annual meeting of the Company’s stockholders (an “Annual Meeting”)
after the Effective Date and (ii) will continue to serve as a Non-Employee
Director immediately following such Annual Meeting shall be automatically
granted, on the date of such Annual Meeting, an option to purchase 25,000 shares
of the Company’s common stock (at a per-share exercise price equal to the
closing price per share of the Company’s common stock on the date of such annual
meeting (or on the last preceding trading day if the date of the annual meeting
is not a trading day) (or in the case of the Chairman of the Board, 40,000) (as
determined in accordance with ASC 718) (with the number of shares of Common
Stock underlying each such award subject to adjustment as provided in the Equity
Plan). At such Non-Employee Director’s written election at least 30 days prior
to the date of grant, such grant may instead be in the form of restricted stock
units of the Company having equivalent value (using the Black Scholes valuation
methodology) to the value of the annual award to be paid. Any such election will
remain in effect until revoked by such Non-Employee Director, provided that any
such revocation is made at least 30 days prior to the date of grant. The awards
described in this Section 2(a) shall be referred to as the “Annual Awards.” For
the avoidance of doubt, a Non-Employee Director elected for the first time to
the Board at an Annual Meeting shall receive both an Annual Award in connection
with such election and shall receive an Initial Award (as defined below) on the
date of such Annual Meeting as well.
 
(b) Initial Awards. Except as otherwise determined by the Board, each
Non-Employee Director who is initially elected or appointed to the Board on any
date other than the date of an Annual Meeting (including directors appointed to
the Board in connection with the consummation of the Company’s reverse merger
transaction on January 29, 2018, to the extent such individual has not been
previously granted an award in anticipation of Board service) shall be
automatically granted, on the date of such Non-Employee Director’s initial
election or appointment (such Non-Employee Director’s “Start Date”) or as soon
as practical, thereafter, an option to purchase 50,000 shares of the Company’s
common stock (at a per-share exercise price equal to the closing price per share
of the Company’s common stock on the date of such election or appointment (or on
the last preceding trading day if such date is not a trading day). At such
Non-Employee Director’s written election before the date of grant, such grant
may instead be in the form of restricted stock units of the Company having
equivalent value (using the Black Scholes valuation methodology) to the value of
the initial award. The awards described in this Section 2(b) shall be referred
to as “Initial Awards.”  For the avoidance of doubt, no Non-Employee Director
shall be granted more than one Initial Award.
 
(c) Termination of Service of Employee Directors. Members of the Board who are
employees of the Company or any parent or subsidiary of the Company who
subsequently terminate their service with the Company and any parent or
subsidiary of the Company and remain on the Board will not receive an Initial
Award pursuant to Section 2(b) above, but to the extent that they are otherwise
eligible, will be eligible to receive, after termination from service with the
Company and any parent or subsidiary of the Company, Annual Awards as described
in Section 2(a) above.

(d) Vesting of Awards Granted to Non-Employee Directors. Each Initial Award
shall vest as to 10% of the underlying shares on the date of grant, with the
remainder of the shares vesting in thirty-six (36) equal monthly installments.
Each Annual Award shall vest in thirty-six (36) equal monthly installments. In
all cases, vesting shall be subject to the Non-Employee Director’s continued
service on the Board as a Non-Employee Director through each applicable vesting
date. No portion of an Annual Award or Initial Award that is unvested at the
time of a Non-Employee Director’s termination of service on the Board as a
Non-Employee Director shall become vested and exercisable thereafter. All of a
Non-Employee Director’s Annual Awards and Initial Awards shall vest in full
immediately prior to the occurrence of a Change in Control (as defined in the
Equity Plan), to the extent outstanding at such time.