Document:

Exhibit 10.31

 

MANAGEMENT SERVICES AGREEMENT

 

This MANAGEMENT SERVICES AGREEMENT (this “Agreement”), dated as of January 1, 2020 (the “Effective Date”), is by and among TardiMed Sciences, LLC, a Connecticut limited liability company (the “Management Company”) and Timber Pharmaceuticals, LLC, a Delaware limited liability company (the “Company”). Capitalized terms used but not otherwise defined herein shall have the meanings set forth Section 9 of this Agreement.

 

RECITALS

 

WHEREAS, the Management Company, together with its Affiliates, provides, on an advisory basis, management and other services and assistance in connection with the development, registration, financing and commercialization of pharmaceutical products worldwide (the “Territory”); and

 

WHEREAS, the Company and the Management Company each desire to enter into this Agreement.

 

AGREEMENTS

 

NOW THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

1.     Appointment as Management Company. The Management Company is hereby retained by the Company to provide, on a non-exclusive, advisory basis, certain management and other services and assistance to the Company as may be requested by the Company and agreed to by the Management Company from time to time during the Term, including, but not limited to, the services described on Schedule A hereto (the “Management Services”). The Management Company shall use commercially reasonable efforts to provide the Management Services in a manner consistent with industry standards for such Management Services, as employed by biotechnology and/or pharmaceutical companies that are similarly situated to the Company. The Management Company shall primarily focus on providing senior-level strategic and tactical guidance, oversight, advice and support services with respect to pharmaceutical, strategic and operational, investment and financial related matters, and assistance to the Company in developing key in-house capabilities. In this capacity, the Management Company will commit significant management resources to the Company to facilitate the Company’s business plan and objectives. It is the parties’ intent and expectation that the Management Services will include guidance, oversight, advice and support with respect to key activities necessary or useful to enhance the Company’s ability to obtain regulatory approval for the Company’s pharmaceutical products (collectively, the “Company’s Products”) in the Territory. For clarity, notwithstanding anything in this Agreement to the contrary, the Management Services do not include, among other things, operational, day-to-day leadership and decision-making (including, but not limited to, leadership and decision-making with respect to the development, pricing and launch of the Company’s Products upon their FDA approval), which are instead retained exclusively by the

 

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Company.

 

2.              Compensation. In exchange for the Management Services to be provided by the Management Company to the Company hereunder, the Company shall pay the Management Company, and the Management Company shall be entitled to receive from the Company, a quarterly management fee (the “Management Fee”) in the amount of $180,000.00 with respect to each quarter of the Term. The Management Fee with respect to each quarter shall be paid no later than the tenth day of such calendar quarter by ACH or wire transfer of immediately available funds to an account or accounts previously specified in writing by the Management Company. The Management Company shall deliver a written invoice to the Company prior to the first day of such calendar quarter, and if the Management Company fails to deliver such a written invoice prior to the first day of such calendar month, then the Company shall pay the Management Fee with respect to a given calendar quarter no later than thirty (30) days after the receipt of a written invoice from the Management Company. Notwithstanding the foregoing, the Management Fee payable for the initial quarter (or quarters) of the Term shall be paid as $90,000 due by the tenth day of such calendar quarter, with the remaining $90,000 due and payable promptly upon the consummation of the Company’s planned permanent financing around its planned reverse merger transaction, anticipated in March/April 2020.  As the business evolves, the Management Company and the Company shall negotiate in good faith to appropriately adjust the compensation level and scope of activities as may be deemed necessary.

 

3.     Expenses. The Management Company shall be reimbursed by the Company the cost of its out-of-pocket expenses incurred in connection with providing the Management Services performed hereunder, per approved Company policy and procedures.

 

4.     Effective Period of Agreement and Amendments.

 

(a)           The term of this Agreement (the “Term”) shall begin on the Effective Date and end on the third (3rd) anniversary thereof, and be renewable annually thereafter as mutually agreed upon by the Management Company and the Company; provided, that the Term may be terminated prior to the expiration thereof (i) by the Management Company at any time for any reason or no reason by giving the Company written notice of such termination at least one hundred eighty (180) days in advance of such termination date (unless such notice is waived by the Company in its sole discretion, in which case such termination shall be effective as of the date of such waiver), (ii) by the Company for Cause by giving the Management Company written notice of such termination, (iii) by the Company upon written notice to the Management Company if a Sale of the Company has been consummated; provided, however, that within thirty (30) days following such termination, the Company shall pay to the Management Company an amount equal to 100% of all remaining amounts to be paid to the Management Company through the third (3rd) anniversary of the Effective Date under this Agreement.

 

(b)           Any amendment to this Agreement shall be in writing and shall be approved and executed by both the Management Company and the Company; provided, however, that such approval of the Company shall be subject to the authorization and approval of the Board. Sections 5, 6, 7, 11, 12, 15 and 16 of this Agreement shall survive the expiration or termination of the Term.

 

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5.              Business Opportunity. During the Term and for a period of two (2) years thereafter, if the Management Company is formally offered an opportunity to pursue a potential transaction to acquire, license or obtain a pharmaceutical product in the Field or to acquire a majority ownership interest in a Person that sells pharmaceutical products in the Field (but not including a minority investment) that the Management Company reasonably believes is, or may be, within the scope of the business and investment objectives of the Company and would be beneficial to the business of the Company and that the Management Company desires to pursue (each an “Opportunity”), then the Management Company shall present such Opportunity to the Board. The Board shall determine whether to pursue any such Opportunity and shall make such determination within a reasonable period of time; provided, that if the Board determines not to pursue any such Opportunity, then the Management Company and its Affiliates shall be free and clear to pursue such Opportunity on its own.

 

6.     Restrictive Covenants. During the Term, the Management Company will have access to the most sensitive and most valuable trade secrets, proprietary information and other confidential information of the Company, including pharmaceutical studies and reports, management reports, marketing studies, marketing plans, business plans, financial statements, feasibility studies, financial, accounting and statistical data, price and cost information, customer lists, contracts, policies and procedures, internal memoranda, reports and other materials or records of a proprietary or confidential nature (collectively, “Confidential Information”), which constitute valuable business assets of the Company and its Affiliates, and the use, application or disclosure of such Confidential Information will cause substantial and possibly irreparable damage to the business and asset value of the Company. Therefore, as an inducement for the Company to enter into this Agreement and to protect the Confidential Information and other business interests of the Company, the Management Company agrees to be bound by the restrictive covenants contained in this Section 6.

 

(a)           Confidential Information. After the date of this Agreement, the Management Company will, and, in the case of the Management Company, will cause its Affiliates, directors, managers, officers, equity holders, employees, agents, successors and permitted assigns to, keep confidential and not disclose to any other Person or use for his or its own benefit, as applicable, or the benefit of any other Person any Confidential Information; provided, however, that the obligations under this Section 6(a) will not apply to Confidential Information that (i) is or becomes generally available to the public without breach of the commitments contemplated by this Section 6(a), (ii) was available to the Management Company or its Affiliates, directors, managers, officers, equity holders, employees or agents on a non-confidential basis prior to the date of this Agreement or (iii) is required to be disclosed by any Law or Order; provided, that as soon as practicable prior to any such disclosure, the Management Company, as applicable, shall give the Company prompt written notice of such disclosure to enable the Company to seek a protective order or otherwise preserve the confidentiality of such information.

 

(b)           Covenant Not to Compete. For the period beginning on the Effective Date and ending on the second anniversary of the date on which the Management Company and its Affiliates cease to own any Stock or any other equity interest in the Company (the “Restricted Period”), the Management Company will not, directly or indirectly, own,

 

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manage, operate, join, control, finance or participate in, or participate in the ownership, management, operation, control or financing of, or be connected as an owner, investor, partner, joint venturer, director, limited liability company manager, employee, independent contractor, consultant or other agent of, any Person or enterprise that is developing a pharmaceutical product for any of the same indications as the Company, or owns, licenses, sells, or markets such a product anywhere in or with respect to the Territory.

 

(c)           During the Restricted Period, the Management Company will not, directly or indirectly:

 

i.                                          solicit or induce or attempt to solicit or induce (including by recruiting, interviewing or identifying or targeting as a candidate for recruitment) any officer or personnel (whether engaged as an employee or independent contractor) of the Company (a “Business Associate”), unless already an employee or consultant of the Management Company, to terminate, restrict or hinder such Business Associate’s association with the Company or interfere in any way with the relationship between such Business Associate and the Company; provided, however, that after the termination or expiration of this Agreement, general solicitations published in a journal, newspaper or other publication or posted on an internet job site and not specifically directed toward Business Associates will not constitute a breach of the covenants in this Section 6(c); or

 

ii.                                       hire or otherwise retain the services of any Business Associate as officer, employee, independent contractor, licensee, consultant, advisor, agent or in any other capacity, or attempt or assist anyone else to do so.

 

(d)           Scope of Covenants; Equitable Relief. The Management Company acknowledges and agrees that (i) the restrictive covenants contained in this Section 6 and the territorial, time, activity and other limitations set forth herein are commercially reasonable and do not impose a greater restraint than is necessary to protect the goodwill and legitimate business interests of the Company and its businesses, (ii) any breach of the restrictive covenants in this Section 6 will cause irreparable injury to the Company and that actual damages may be difficult to ascertain and would be inadequate, (iii) if any breach of any such covenant occurs, then the Company will be entitled to seek injunctive relief in addition to such other legal and equitable remedies that may be available (without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Agreement) and (iv) the Management Company hereby waives the claim or defense that an adequate remedy at law exists for such a breach.

 

7.              Inventions.

 

(a)           The Management Company agrees that all Inventions will be the sole and exclusive property of the Company. The Management Company hereby irrevocably transfers and assigns to the Company, and agrees to irrevocably transfer and assign to the Company, all right, title and interest throughout the world in and to any and all pharmaceutical products, inventions, improvements, techniques, know-how, algorithms,

 

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processes, designs, technology, information, software, illustrations, artwork, documentation, photographs, trademarks, materials, original works of authorship, biological or chemical specimens or samples, databases and trade secrets that the Management Company may solely or jointly make, conceive or develop or reduce to practice during the Term, that result from or arise out of the Services provided to the Company or that are aided by the use of time, materials, facilities, trade secrets, or proprietary information of the Company, whether or not they are eligible for patent, copyright, mask work, trade secret, trademark or other legal protection (collectively, the “Inventions”). Without limiting the generality of the foregoing, any inventions created by the Management Company not arising out of the Services provided to the Company shall remain the property of the Management Company.

 

(b)           The Management Company hereby irrevocably transfers and assigns to the  Company, and agrees to irrevocably transfer and assign to the Company, all right, title and interest throughout the world to any and all intellectual property rights in or associated with such Inventions, including without limitation all patents, copyrights, trademark rights, trade dress rights and trade secret rights, and applications for any of the foregoing (collectively “Intellectual Property Rights”). The Management Company will promptly make full written disclosure to the Company of all Inventions and will hold all Inventions in trust for the sole right and benefit of the Company. All copyrightable works made by the Management Company during the Term are and will be treated as “works made for hire” to the greatest extent permitted by applicable law. At the Company’s request and expense, during and after the Term, the Management Company will assist and cooperate with the Company in all respects and will cause all Management Company personnel to assist and cooperate with the Company in all respects, and will execute documents and will cause all Management Company personnel to execute documents, and will take such further acts reasonably requested by the Company to enable the Company to acquire, transfer, maintain, perfect and enforce its Intellectual Property Rights and other legal protections for the Inventions. The Management Company hereby appoints the officers of the Company as the Management Company’s attorney-in-fact to execute documents on behalf of the Management Company for this limited purpose.

 

(c)           The assignments by the Management Company to the Company of Inventions hereunder includes (i) all rights of attribution, paternity, integrity, disclosure and withdrawal, (ii) any rights that the Management Company may have under the Visual Artists Rights Act of 1990 or similar federal, state, foreign or international laws or treaties, and (iii) all other rights throughout the world sometimes referred to as “moral rights” (collectively “Moral Rights”). To the extent that Moral Rights cannot be assigned under applicable law, the Management Company hereby waives such Moral Rights to the extent permitted under applicable law and consents to any and all actions of the Company that would otherwise violate such Moral Rights.

 

(d)           To the extent that the Management Company owns or controls (presently or in the future) any patent rights, copyright rights, mask work rights, trade secret rights, or any other intellectual property or proprietary rights that may block or interfere with, or may otherwise be required for, the exercise by the Company of the rights assigned to the

 

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Company under this Section 7 (collectively, “Related Rights”), the Management Company hereby grants or will cause to be granted to the Company a non-exclusive, royalty-free, irrevocable, perpetual, transferable, worldwide license (with the right to sublicense) to make, have made, use, offer to sell, sell, import, copy, modify, create derivative works based upon, distribute, sublicense, display, perform and transmit any products, software, hardware, methods or materials of any kind that are covered by such Related Rights, to the extent necessary to enable the Company to exercise all of the rights assigned to the Company under this Section 7.

 

8.              Warranties.

 

(a)           No Pre-existing Obligations. The Management Company represents and warrants that the Management Company has no pre-existing obligations or commitments (and will not assume or otherwise undertake any obligations or commitments) that would be in conflict or inconsistent with or that would hinder the Management Company’s performance of its obligations under Section 1 of this Agreement.

 

(b)           Agreements with Consultant Personnel. The Management Company represents and warrants that all Management Company personnel who perform Services provided to the Company are and will be bound by written agreements with the Management Company under which: (i) the Management Company does not own and is not assigned ownership of any Inventions arising out of such Services provided to the Company, including all Intellectual Property Rights therein; and (ii) the Management Company personnel agree to limitations on the use and disclosure of Confidential Information no less restrictive than those provided in Section 6.

 

9.              Definitions.

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. As used herein, the term “control” means: (i) the power to vote at least fifty percent (50%) of the voting power of a Person, or (ii) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of such a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Board” means the board of directors of the Company.

 

“Cause” shall exist with respect to the Management Company if:

 

(i)            the Management Company has been convicted of or pleaded nolo contendere in respect of any felony or any other crime involving fraud or dishonesty with respect to the Company or any of its Affiliates involving amounts in excess of $25,000;

 

(ii)           the Management Company has substantially and repeatedly failed to perform its duties and responsibilities under this Agreement, which failure continues for

 

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at least thirty (30) days following the Management Company’s receipt of written notice thereof specifying in reasonable detail the action or omission that constitutes such failure; or

 

(iii)                the Management Company has engaged in any act or omission constituting willful misconduct that has caused material injury to the Company.

 

“Field” means orphan dermatology.

 

“Law” means any federal, state, local, municipal, foreign, international, multinational or other constitution, statute, law, rule, regulation, ordinance, code, principle of common law or treaty.

 

“Order” means any order, injunction, judgment, decree, ruling, assessment or arbitration award of any government authority or arbitrator.

 

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, investment fund, any other business entity and a governmental entity or any department, agency or political subdivision thereof.

 

“Sale of the Company “ means a transaction or series of related transactions in which an independent third Person, or an independent group of related third Persons, acquires (whether by merger, consolidation, sale, exclusive license, exclusive marketing or distribution, recapitalization, transfer, exchange or other distribution or disposition) from stockholders of the Company shares representing more than fifty percent (50%) of (i) the issued and outstanding shares of capital stock of the Company or any of its subsidiaries (provided that, in the case of such sale of the shares of capital stock of any of the Company’s subsidiaries, the shares of capital stock of such subsidiary or subsidiaries constitute substantially all of the assets of the Company and its subsidiaries, taken as a whole), or (ii) the assets of the Company and its subsidiaries, taken as a whole.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Stock” means, collectively, (i) any series of Preferred Stock of the Company and (ii) the Common Stock of the Company (the “Common Stock”).

 

10.  Notices. All notices and other communications hereunder shall be in writing and shall be (a) delivered personally, (b) sent by overnight mail, postage prepaid, or (c) sent by e-mail, with electronic, written or oral confirmation of receipt, addressed as follows (or at such other address or number for a party as shall be specified by like notice):

 

if to the Management Company, to:

 

TardiMed Sciences, LLC

50 Tice Bulevard, Suite A26

Woodcliff Lake, NJ 07677

 

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Email:  mderby@tardimed.com

Attention: Managing Director

 

if to the Company, to:

 

Timber Pharmaceuticals, LLC

50 Tice Boulevard, Suite A26

Woodcliff Lake, NJ 07677

Email:  jkoconis@timberpharma.com

Attention: CEO

 

Any such notice shall be deemed to be delivered, given and received for all purposes as of: (i) the date so delivered, if delivered personally, (ii) by electronic, written or oral confirmation of receipt if sent by email or (iii) on the date of receipt or refusal indicated by the overnight carrier, if sent by overnight mail, postage and charges prepaid and properly addressed.

 

11.       Liability; Indemnification.

 

(a)              Notwithstanding and in addition to any rights afforded the Company and any of its present or former partners, shareholders, members, directors, officers, employees or agents (collectively, the “Company Indemnitees”), the Management Company shall indemnify and hold harmless each Company Indemnitee from and against any loss, expense or damage payable to a third party by such Company Indemnitee as a result of any claim, action or proceeding brought against a Company Indemnitee by such third party, including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of such claim, action or proceeding, to the extent arising primarily from (i) the material breach of this Agreement by the Management Company or (ii) any fraud, bad faith or gross negligence of the Management Company or any Management Company Indemnitee (as defined below).

 

(b)              Notwithstanding and in addition to any rights afforded the Management Company and any of its present or former partners, shareholders, members, directors, officers, employees or agents (collectively, the “Management Company Indemnitees”), the Company shall indemnify and hold harmless each Management Company Indemnitee from and against any loss, expense or damage payable to a third party by such Management Company Indemnitee as a result of any claim, action or proceeding brought against a Management Company Indemnitee by such third party, including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of such claim, action or proceeding, to the extent arising from the Management Company’s performance of the Management Services; provided, however, that Company shall have no indemnification obligations hereunder to the extent such loss, expense or damage results primarily from the material breach of this Agreement by the Management Company or fraud, bad faith or gross negligence of the Management Company or any Management Company Indemnitee.

 

(c)              If any Management Company Indemnitee or Company Indemnitee (each, an “Indemnitee”) learns of a third party claim for which it intends to seek indemnification

 

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hereunder, then such Indemnitee shall give prompt written notice thereof to the indemnifying party and shall permit the indemnifying party to defend and/or settle such third party claim, so long as it does so diligently and in good faith; provided, that any delay in providing such notice shall not limit the rights of indemnification of such Indemnitee under this Agreement except to the extent such delay prejudices the indemnifying party’s ability to defend such claim. If determined by the indemnifying party, any such indemnification may be paid by the indemnifying party in advance of the final disposition of any such action, proceeding or claim upon receipt of an undertaking by or on behalf of such Indemnitee seeking advancement to repay the amount advanced should it ultimately be determined that such Indemnitee was not entitled to be indemnified hereunder.

 

(d)              NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, (i) NEITHER PARTY SHALL HAVE ANY LIABILITY FOR CONSEQUENTIAL, PUNITIVE, INDIRECT, SPECIAL, EXEMPLARY OR INCIDENTAL DAMAGES, TO THE OTHER PARTY (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, REVENUES, DATA AND/OR USE), ARISING OUT OF OR IN CONNECTION HEREWITH OR THE PERFORMANCE BY THE MANAGEMENT COMPANY OF THE SERVICES, AND (ii) IN NO EVENT SHALL THE AGGREGATE LIABILITY OF THE MANAGEMENT COMPANY UNDER THIS AGREEMENT EXCEED THE AGGREGATE AMOUNT PAID BY THE COMPANY TO THE MANAGEMENT COMPANY UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE OCCURRENCE OF THE EVENT GIVING RISE TO THE ALLEGED DAMAGES.

 

12.  Structural Indemnification. The Management Company hereby agrees to defend, indemnify and hold harmless the Company against all claims, expenses, costs, damages, liabilities and losses (including attorneys’ fees, judgments, fines, excise taxes or penalties) incurred or suffered by the Company (or one or more of the Company’s Affiliates) as arising out of or resulting from any taxes imposed upon the Company related to the treatment of any employee or service provider of the Management Company for purposes of tax reporting or tax withholdings and/or the status of any employee of the Management Company as an employee of the Company.

 

13.  Insurance. During the Term, the Company shall obtain and maintain at its own expense, standard directors and officers liability insurance policy (“D&O Policy”), which D&O Policy shall list individual members of the Management Company as an additional insured. At all times during the engagement of the Management Company and for a period of three (3) years thereafter, the Company shall maintain the D&O Policy in amounts not less than those in effect on the Effective Date.

 

14.  Relationship of the Parties. Nothing contained herein shall be construed to place the parties in the relationship of employer/employee, partners or joint venturers. Except as otherwise provided in this Agreement, the Company shall have no power to obligate or bind the Management Company in any manner whatsoever. The Management Company shall not have any power to obligate or bind the Company in any manner whatsoever, other than as provided by this Agreement and pursuant to the exercise fits authority hereunder.

 

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15.  Non-Assignability and Delegation. This Agreement shall not be assigned by either party hereto without the prior written consent of the other party; provided, however, that the consent of the Company to any assignment of this Agreement shall be subject to the authorization and approval of the Board. Notwithstanding the foregoing, the Company shall be permitted, without any requirement to obtain the Management Company’s consent, to assign this Agreement (a) in part or in its entirety to an Affiliate of the Company or (b) in its entirety to the successor to all or substantially all of the assets or business of the Company to which this Agreement relates, whether by merger, acquisition, sale of stock, sale of assets, or otherwise. The Management Company, together with its Affiliates, shall perform the Management Services itself and shall not subcontract or delegate any of its rights or obligations under this Agreement without the prior written consent of the Company following the authorization and approval of the Board. Any and all contracts with third parties relating to the Company Products will be between the Company and the applicable third party, except to the extent that the Company agrees in writing to allow the Management Company to directly contract with one or more third parties. Subject to the prohibitions contained in this Section 15, this Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the Company and the Management Company.

 

16.  Governing Law. This Agreement, including its existence, validity, construction and operating effect, and the rights of each party hereto, shall be governed by and construed in accordance with the laws of the State of New York without giving effect to any conflicts or choice of laws provisions that would cause the application of the domestic substantive laws of any other jurisdiction.

 

17.  Miscellaneous.

 

(a)              If any provision of this Agreement as applied to any party or any circumstances is determined by an arbitrator or any court having jurisdiction to be void, unenforceable or inoperative as a matter of law, then such provision shall be modified to the greatest extent legally possible so that the intent of this Agreement may be legally carried out. If any one or more of the provisions contained herein, or the application thereof in any circumstances, is held void, unenforceable or inoperative as a matter of law in any respect or for any reason, then the validity, enforceability and operation of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that each party’s rights and privileges shall be enforceable to the fullest extent permitted by law.

 

(b)              This Agreement may be executed in counterparts, any of which may be delivered via email, .pdf or other forms of electronic delivery, each of which shall be deemed to be an original and all of which, taken together, shall constitute one agreement.

 

Signature Page Follows.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

	
 
    	
Management   Company
    
	
 
    	
 
    
	
 
    	
TARDIMED   SCIENCES, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael L. Derby
    
	
 
    	
Name:
    	
Michael   L. Derby
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
Company
    
	
 
    	
 
    	
 
    
	
 
    	
TIMBER   PHARMACEUTICALS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John V. Koconis
    
	
 
    	
Name:
    	
John   V. Koconis
    
	
 
    	
Title:
    	
CEO
    

 

[Signature Page to Management Services Agreement]

 

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Schedule A

 

·                  Senior-level strategic and tactical guidance and support

·                  Oversight, advice and support services relating to pharma-related matters, including:

·                  Research & development strategy and tactical support

·                  Preclinical management support services

·                  Project management support services

·                  Human resources support services

·                  Financial and accounting oversight and strategy

·                  Administrative and finance services, including accounts payable, payroll, and other services, as needed

·                  Information technology infrastructure and technical support

·                  Business development strategy and tactical leadership of such activities

·                  Merger and acquisition strategy and tactical support

 

12Exhibit 10.32

 

CONSULTING SERVICES AGREEMENT
 Between
 TIMBER PHARMACEUTICALS, LLC and 
 AT CONSULTING LLC

 

This Consulting Services Agreement (this “Agreement”) is made and entered into as of the 8th day of January, 2020 (“Effective Date”), by and between Timber Pharmaceuticals, LLC, located at 50 Tice Boulevard, Suite A26, Woodcliff Lake, NJ 07677 (“COMPANY”), and AT CONSULTING LLC (“CONSULTANT”) with an address at 40 East Shore Rd, Mountain Lakes, NJ 07046 and referred to collectively as the “Parties” or singly for either entity as the “Party”.

 

AGREEMENT

 

1.                                      Performance; Independent Contractor.

 

COMPANY hereby retains CONSULTANT, and CONSULTANT hereby agrees to be retained, to provide certain services (the “Services”) exclusively as an independent contractor of COMPANY.  CONSULTANT shall perform the Services for COMPANY and shall commit such resources and professional time as is reasonably necessary to perform the Services.

 

2.                                      Consideration

 

COMPANY shall compensate CONSULTANT as per the terms and conditions in Exhibit A.

 

3.                                      Representations and Warranties of COMPANY.

 

The execution, delivery and performance of this Agreement by COMPANY will not result in any breach of, or default under, any term or provision of any agreement, obligation, instrument, judgment, decree, order, statute, rule or governmental regulation to which COMPANY is a party or by which COMPANY may be bound or which applies to COMPANY.  COMPANY has all rights and permissions necessary for CONSULTANT to perform the Services.  COMPANY is duly authorized to enter into this Agreement and perform its obligations hereunder.

 

4.                                      Representations and Warranties of CONSULTANT.

 

The execution, delivery and performance of this Agreement by CONSULTANT will not result in any breach of, or default under, any term or provision of any agreement, obligation, instrument, judgment, decree, order, statute, rule or governmental regulation to which CONSULTANT is a party or by which CONSULTANT may be bound or which applies to CONSULTANT.  CONSULTANT has all rights and permissions necessary to  perform the Services.  If required, CONSULTANT has obtained all authorizations to enter into this Agreement and perform the obligations hereunder.

 

 

5.                                      Confidentiality and Nondisclosure.

 

The Confidentiality Agreement between COMPANY and CONSULTANT dated as of March 5, 2019 is hereby incorporated by reference as though fully set forth herein, and as so amended such that:

 

A.                                    The term shall remain in full force and effect during the Term of this Agreement and;

 

B.                                    neither Party shall use the other Party’s Confidential Information for its own or any third party’s benefit, or allow any persons or entities access to the Confidential Information and;

 

C.                                    CONSULTANT’S compensation shall be considered Confidential Information.

 

6.                                      Return of Materials

 

The CONSULTANT agrees to promptly return, following the termination of this Agreement or upon earlier request by the COMPANY, all tangible or digital or other electronic embodiments of the Confidential Information in the CONSULTANT’S possession and (i) supplied by the COMPANY in conjunction with the CONSULTANT’S performance of the Services under this Agreement or (ii) generated by the CONSULTANT in the performance of the Services under this Agreement.

 

7.                                      Intellectual Property

 

CONSULTANT’S written and other work product, including all inventions, data, and other developments of any type, whether tangible or intangible, generated in the course of the CONSULTANT’s services rendered pursuant to this Agreement is work for hire, and is the sole property of COMPANY.  CONSULTANT shall retain no rights in such written and otherwise tangible products of its work.  CONSULTANT hereby assigns to COMPANY any and all right, title and interest it may have in any written and otherwise tangible work product which it may invent and assist in inventing, while performing the services pursuant to this Agreement.  CONSULTANT hereby assigns to COMPANY any interest it may have in any trade names, trademarks, service marks or other forms of intellectual property which it may create or assist in the creating in the course of its provision of services pursuant to this Agreement. CONSULTANT shall disclose to COMPANY all art which it has invented in the course of rendering services pursuant to this Agreement.  CONSULTANT shall assist COMPANY in securing protection of intellectual property by signing agreements, assignments and other documents.  CONSULTANT shall be compensated for its time spent assisting COMPANY to secure intellectual property protections.  To the extent that CONSULTANT has contributed as an inventor or creator of patentable or otherwise protectable intellectual property, COMPANY and its assignees shall recognize CONSULTANT, without additional compensation, in applications for intellectual property protection.

 

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8.                                      Term and Termination.

 

The term of this Agreement shall commence upon the Effective Date.  This Agreement shall be in effect for (12) months (“Initial Term”) from the Effective Date, unless earlier terminated for breach.

 

Should COMPANY choose to terminate a specific Service prior to completion for any reason, COMPANY agrees to pay CONSULTANT:

 

A.                                    all reasonable direct fees for Services performed up to the effective date of termination, and;

 

B.                                    all pre-approved non-cancelable or non-refundable costs for third party contracted Services and other expenses, if any, incurred in connection with any specific Service being terminated to the date of termination .

 

9.                                      Indemnification.

 

COMPANY will defend, indemnify, and hold CONSULTANT and its officers, trustees, affiliates, agents, servants, employees and independent contractors harmless from and against any third party claims, demands, suits, action s, causes of actions, losses, damages, fines and liabilities, including reasonable attorneys’ fees, arising out of the Services or breach of any of the covenants of this Agreement by COMPANY (“CONSULTANT Losses”), and will pay any costs and damages which may be assessed against CONSULTANT, except that COMPANY shall not be obligated to indemnify CONSULTANT for CONSULTANT Losses to the extent they result from the negligence or willful misconduct of CONSULTANT.

 

CONSULTANT will defend, indemnify, and hold COMPANY and its officers, trustees, affiliates, agents, servants, employees and independent contractors harmless from and against any third party claims, demands, suits, actions, causes of actions, losses, damages, fines and liabilities, including reasonable attorneys’ fees, arising out of the breach of any of the covenants of this Agreement by CONSULTANT (“COMPANY Losses”), and will pay any costs and damages which may be assessed against COMPANY, except that CONSULTANT shall not be obligated to indemnify COMPANY for COMPANY Losses to the extent they result from the negligence or willful misconduct of COMPANY.

 

10.                               Advertising.

 

Neither Party shall use the name, trademarks or employee names of the other Party in any announcement, press release, publication or promotional material or in any form of public distribution, including the Party’s website or any social networking media without the prior written consent of the other Party except as required by applicable law, any court or administrative order.

 

Notwithstanding the foregoing provisions of this Section, either Party shall have the right to include the name of the other Party in any listing of clients, the type of services provided and the respective fees charged or forecasted to be charged for the sole purpose of

 

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providing such information to board members, financial institutions and prospective equity or debt investors in the respective Party.

 

11.                               Notices.

 

All notices under this Agreement shall be in writing, and shall be deemed given when personally delivered, or three (3) calendar days after being sent by prepaid certified or registered U.S. mail to the address of the other Party to be noticed as set forth herein or such other address as such Party last provided to the other by written notice.  Email shall also be considered acceptable as long as there is a confirmation of acceptance.

 

12.                               Counterparts; Facsimile Signatures.

 

This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Signatures received by facsimile shall be deemed to be original signatures.

 

13.                               Injunctive Relief, Governing Law and Limitations of Liability

 

Injunctive Relief.  Notwithstanding the foregoing, the Parties shall (in addition to any other remedies that may be available, in law, in equity or otherwise) be entitled to seek injunctive relief in connection with the breach or threatened breach of the covenants of this Agreement without the necessity of proving actual damages.

 

Governing Law.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New Jersey, without giving effect to principles of conflicts of law.

 

Limitations of Liability. Except in the case of willful misconduct, gross negligence or fraudulent behavior, in no event shall either Party or its respectful affiliates be liable to the other Party or its respective affiliates for any special, indirect, incident al, consequential or exemplary damages, including without limitation, lost savings, lost profits or other economic loss, or loss of records or data, or failure to achieve expected or positive clinical trial outcome as a result of or arising out of this Agreement, the provision of Services hereunder or any other matters relating to or arising from this Agreement, whether such claim be in tort, contract or otherwise and whether or not the possibility of such damages was reasonably foreseeable or disclosed.

 

14.                               Assignment.

 

This Agreement may not be assigned or otherwise transferred (in whole or in part, whether voluntarily, by operation of law or otherwise) by either Party without the prior written consent of the other Party (which consent shall not be unreasonably withheld); provided, however, that such consent shall not be required if the COMPANY (i) makes an assignment to an affiliate, or (ii) makes an assignment in connection with the transfer or sale of all or substantially all of its business (whether by asset sale, merger, consolidation, or similar

 

4

 

transaction) related to this Agreement.  This Agreement shall be binding upon the permitted successors and assigns of the Parties.

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by duly authorized representatives of all parties hereto as of the Effective Date.

 

 

	
AT CONSULTING LLC
    	
 
    	
Timber Pharmaceuticals, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Amir Tavakkol
    	
 
    	
By:
    	
/s/ John   Koconis
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Amir Tavakkol
    	
 
    	
Name:
    	
John Koconis
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
Principal
    	
 
    	
Title:
    	
CEO
    

 

5

 

Exhibit A

 

Services and Compensation

 

I.                                        Services

 

A.                                    CONSULTANT shall provide consultation on matters including, but not limited to, product development, pre-clinical development, clinical development, and regulatory matters relative to COMPANY’S technologies, the derivative products, and any other products that may be identified in the future.  In accordance with CONSULTANT’S convenience, CONSULTANT shall participate in meetings (whether virtual or in-person) relating to product development, clinical and regulatory matters, and matters relating to fundraising by COMPANY.  CONSULTANT shall provide other reasonable consulting Services as requested by COMPANY.

 

B.                                    COMPANY can list CONSULTANT on its website with a biography approved by CONSULTANT and can reasonably communicate this as such notwithstanding the terms in Section 10.

 

II.                                   Compensation

 

A.                                    COMPANY shall pay CONSULTANT all fees, expenses and other amounts owed to CONSULTANT for Services within thirty (30) days of receipt of an invoice from CONSULTANT without any setoff or deduction.

 

B.                                    Service activities will be billed at an hourly rate of $300/ hour until a public financing is consummated for the company, where the rate will increase to $350/hr.

 

C.                                    For the period beginning with the Effective date and through January 24, 2020, the COMPANY agrees to compensate the CONSULTANT for 104 hours, an amount not to exceed 8,125 USD.  After January 24, 2020, CONSULTANT agrees to bill the company pursuant to this Agreement and as detailed in Exhibit A on an hourly basis.  If, at any time, after February 1 2020, consulting services for a 4 week period are expected to exceed $12,500, prior approval from the Company is required.

 

D.                                    Approved out of pocket and vendor expenses (i.e., Travel, FedEx etc.) will be billed at cost.  Out of pocket and vendor expenses exceeding $50.00 shall be agreed upon in writing before these expenses are incurred.

 

E.                                     Travel time to perform requested Services will be performed at 50% of the above hourly rates and billed up to a maximum of eight hours/day.

 

F.                                      Invoicing and Payment Terms

 

1)                                     Monthly invoices for Services will be prepared and forwarded approximately ten (10) days after the end of the month during which the corresponding fees for services are earned. Invoices ordinarily will be dated

 

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as of the last day of the month for which they apply and are submitted electronically. Invoices shall be submitted to: jkoconis@timberpharma.com.  Invoices and/or expenses must be submitted within three (3) months of occurrence or will be considered waived and not payable by the COMPANY.

 

2)                                     Supporting documentation for invoices will be submitted including receipts for expenses of $25.00 or greater per transaction.

 

3)                                     CONSULTANT shall provide Form W-9 to COMPANY accompanying the first invoice

 

4)                                     FORM 1099 shall be submitted by COMPANY annually

 

5)                                     CONSULTANT’s invoices shall be paid to:

 

Amir Tavakkol

40 East Shore Rd

Mountain Lakes, NJ 07046

 

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