AMENDMENT NO. 2 TO ASSET ACQUISITION AGREEMENT (THIS “AMENDMENT”)

Exhibit 10.1

AMENDMENT NO. 2 TO ASSET ACQUISITION AGREEMENT

(THIS “AMENDMENT”)

Reference is made to that certain Asset Acquisition Agreement, dated February 28, 2019 (the “Agreement”) by and among Timber Pharmaceuticals LLC, a Delaware limited liability company (the “Company”), Patagonia Pharmaceuticals LLC, a New Jersey limited liability company (“Patagonia”), Xxxxxxxx Xxxx (“X Xxxx”) and Xxxxxxx Xxxx (“Z Rome” and, collectively with the Company, Patagonia and X Xxxx, the “Parties”), as amended by that certain Amendment to Asset Acquisition Agreement executed by the Company on July 13, 2022 and by Patagonia on July 20, 2022, as applicable. All capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Agreement.

RECITALS

WHEREAS, Section 7.3 of the Agreement provides that the Agreement may not be modified except in a writing signed by the Parties;

WHEREAS, on July 13, 2022 and July 20, 2022, as applicable, the Parties executed an amendment to the Agreement (“Amendment No. 1”);

WHEREAS, the Company intends to enter into an Agreement and Plan of Merger with XXX US Holding, Inc. (“XXX”) and XXX Xxxxx Merger Sub, Inc. (the “Merger Agreement”); and

WHEREAS, the Parties have determined that this Amendment is advisable and in the best interests of their respective entities.

The Parties, intending to be legally bound, and in accordance with Section 7.3 of the Purchase Agreement, hereby agree as follows:

1. Effective automatically and with no further actions upon the closing of the transactions contemplated by the Merger Agreement (the “Merger Effective Time”), Section 5 of the Agreement as amended by Amendment No. 1, shall be amended in its entirety to state the following:

“Section 5

Milestone Payments and Business Updates

In addition to the Closing Payments, Company or XXX shall pay to the Seller (or its permitted designee, as determined by the Seller in its sole discretion), if earned, the following payments:

(a)(i) upon signing of Amendment No. 1, a one-time payment of $12,500 toward Patagonia’s legal fees (which has been paid);

(a)(ii) no later than September 1, 2022, a one-time payment of $2.25 million (which has been paid);

(a)(iii) no later than five Business Days after the Merger Effective Time, a one-time payment of $1.065 million;

(a)(iv) no later than June 1, 2024, a one-time payment of $1 million;

(b) one year after approval by the FDA, if it occurs on or prior to April 1, 2026, of an original new drug application submitted to the FDA pursuant to 21 U.S.C § 355(b) and 21 C.F.R. Part 314 (“FDA Approval”), necessary for the commercial marketing and sale of the Product in the United States for moderate-to-severe X-linked and/or moderate-to-severe lamellar (autosomal recessive congenital) ichthyosis in adults and/or pediatric patients 6 years of age and older, or a substantially similar indication (the “Indication”), a one-time payment of $3 million;

(c) one year after approval by the European EMA, to be pursued at Company’s or XXX’s sole discretion, of an MAA filed by the Company, XXX, or an Affiliate thereof (“EMA Approval”), necessary for the commercial marketing and sale of the Product in the European Union for the Indication, a one-time payment of $1 million;

(d) one year after Japanese PMDA approval, to be pursued at Company’s or XXX’s sole discretion, of an MAA filed by the Company, XXX, or an Affiliate thereof (“PMDA Approval”), necessary for the commercial marketing and sale of the Product in Japan for the Indication, a one-time payment of $1 million;

(e) during the period commencing upon FDA Approval of the Product and ending upon a Generic Product Entry Date in the US, earn-out payments equal to:

(i) ten percent (10%) of up to $100 million Net Sales per year in the United States; and

(ii) twelve percent (12%) of Net Sales in excess of $100 million per year in the United States;

which shall both be reduced to five (5%) percent following a Generic Product Entry Date in the US;

(f) during the period commencing upon non-US regulatory approval of the Product, and ending upon a Generic Product Entry Date outside of the US, on a market-by-market basis, earn-out payments equal to ten percent (10%) of Net Sales outside of the US, which shall be reduced to three (3%) percent following a Generic Product Entry Date (on a market-by-market basis) outside of the US; and

(g) no later than January 15^th and July 15th of each calendar year, Company or XXX will send Patagonia a report providing an update regarding the Business and Company’s and LEO’s development and commercialization of the Product in the US and outside the US on a market-by-market basis.”

2. Effective as of the Merger Effective Time, Section 7.1 of the Agreement, as amended by Amendment No. 1, shall be amended in its entirety to state the following:

7 .1 Notices. All notices required or permitted hereunder shall be in writing addressed to the parties at their respective addresses as set forth below, unless another address shall have been designated:

If to the Company or XXX, to:

Xxx US Holding, Inc.

Xxxxxxxxxxxxxx 00
XX-0000 Xxxxxxxx
Xxxxxxx

Attn: ____________

E-mail: xxxxx@xxx-xxxxxx.xxx

With a copy (which shall not constitute notice) to:

Xxxxxxxxx & Xxxxxxx LLP

The New York Times Building, 000 0xx Xxx

New York

NY 10018

Attn: Uri Doron

E-mail: XXxxxx@xxx.xxx

If to Seller, to:

Patagonia Pharmaceuticals LLC

0000 Xxxxxxxx Xxxx

Fairfield, CT 06824

Attn.: Xxxxxxx Xxxx, President

With a copy (which shall not constitute notice) to:

Xxxxx X. Xxxxxxxxx, Esq.

Xxxxxxxxx Xxxxxxx, P.A

4800 IDS Center, 00 Xxxxx 0xx Xxxxxx

Minneapolis, MN 55402-2100

3.	Release of Patagonia Security Interest; XXX Security Interest.

(a)

The Parties agree that upon the execution of the Merger Agreement, the Security Agreement between the Company and Patagonia shall be terminated and the security interest of Patagonia in the Collateral (as defined in the Security Agreement) shall be terminated. Patagonia shall take all necessary actions to release the liens it has on the Collateral as promptly as possible thereafter, and shall promptly provide evidence of such release to the reasonable satisfaction of XXX and the Company, but in any case no longer than ten (10) days following the execution of the Merger Agreement.

(b)

Patagonia acknowledges that upon the execution of the Merger Agreement, the Company shall xxxxx XXX a security interest in the Purchased Assets in connection with bridge financing of at least $2 million to be provided by XXX to the Company. XXX shall continue (directly if it forecloses on the Purchased Assets or indirectly through ownership of the Company) to be bound by the terms of the Agreement (including the obligations set forth in Section 4.3 of the Agreement); provided, that from the time of the execution of the Merger Agreement, the following shall be deleted from Section 4.3 and Section 7.5 of the Agreement:

•

Section 4.3: “~~, in which case, at the election of the Seller, Timber will, at Seller~~’~~s election, transfer all rights in and to the Product, as they then exist, to Seller for the consideration of $10.~~”

•

Section 7.5: “a) In the event of a Termination for Breach where Timber is the breaching party, all rights in and to the Product, as they then exist, will revert to the Seller, in exchange for $10, without any further obligations to Timber. In such event, Timber will provide reasonable assistance to Seller or its designee in connection with the transfer of the IND, NDA, or any equivalent non-US regulatory filing.”

(c)

Upon the execution of the Merger Agreement, the Company or XXX will pay to Patagonia a one-time payment of $25,000 toward Patagonia’s legal fees.

Entire Agreement. This Amendment and the Agreement contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings, promises and representations, whether written or oral, between the Parties with respect to the subject matter hereof and thereof. All references in the Agreement to “this Agreement”, “hereof”, “hereby” and words of similar import shall refer to the Agreement as amended by Amendment No. 1 and this Amendment No. 2.

Further Amendments. The Parties confirm that this Amendment is entered into in connection with and as a condition to XXX entering into the Merger Agreement. The parties shall not, without the prior consent of XXX, further amend the Agreement for as long as the Merger Agreement is in effect. XXX is a third-party beneficiary to the Agreement and this Amendment and is entitled to the rights and benefits hereunder and may enforce the provisions hereof as if it was a party hereto.

6.	Counterparts. This Amendment may be executed in any number of counterparts (which may be delivered by facsimile, email transmission of a .pdf or other electronic transmission), each of which shall be deemed to be an original, but all which shall be deemed to be one and the same instrument.

This Amendment is executed by the undersigned as of the last date set forth below.

	TIMBER PHARMACEUTICALS LLC

	By:	/s/ Xxxx Xxxxxxx
	Name:	Xxxx Xxxxxxx
	Title:	Chief Executive Officer
	Date:	August 20, 2023


	PATAGONIA PHARMACEUTICALS LLC

	By:	/s/ Xxxxxxx Xxxx
	Name:	Xxxxxxx Xxxx
	Title:	President
	Date:	August 15, 2023


	/s/ Xxxxxxxx Xxxx
	Xxxxxxxx Xxxx
	Date:	August 15, 2023


	/s/ Xxxxxxx Xxxx
	Xxxxxxx Xxxx
	Date:	August 15, 2023

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AMENDMENT NO. 2 TO ASSET ACQUISITION AGREEMENT (THIS “AMENDMENT”)

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