EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) dated June 3, 2014 (the
“Effective Date”) by and between Tonix Pharmaceuticals Holding Corp., a company
incorporated under the laws of Nevada (the “Company”), and Gregory Sullivan, MD,
an individual (the “Executive”).

 

WHEREAS, the Company previously entered into a consulting agreement with
Executive, dated September 1, 2013, as amended on April 15, 2014 (the
“Consulting Agreement”) relating to, among other things, compensation to be paid
for services; and

 

WHEREAS, the parties wish to enter into this Agreement directly between
Executive and the Company, on the terms and conditions contained in this
Agreement, which will supersede the Consulting Agreement (and which Consulting
Agreement will terminate simultaneously with the execution of this Agreement)
and all prior agreements and understandings between the Company and Executive,
oral or written with respect to its subject matter.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties, intending to be legally bound, agree as follows:

 

1.            Definitions. As used in this Agreement, the following terms shall
have the following meanings:

 

(a)“Board” means the Board of Directors of the Company.

 

(b)“Cause” means any of the following:

 

(i)the commission of an act of fraud, embezzlement or dishonesty by Executive,
or the commission of some other illegal act by Executive (other than traffic
violations or other offenses or violations outside of the course of Executive’s
employment), that has a demonstrable material adverse impact on the Company or
any successor or affiliate thereof;

 

(ii)a conviction of, or plea of “guilty” or “no contest” to, a felony by
Executive;

 

(iii)any unauthorized use or disclosure by Executive of confidential information
or trade secrets of the Company or any successor or affiliate thereof that has,
or may reasonably be expected to have, a material adverse impact on any such
entity;

 

(iv)Executive’s gross negligence, failure to follow a material, lawful and
reasonable request of the Company or material violation of any duty of loyalty
to the Company or any successor or affiliate thereof, or any other demonstrable
material misconduct on the part of Executive;

 

 

 

 

(v)Executive’s ongoing and repeated failure or refusal to perform or neglect of
Executive’s duties as required by this Agreement, which failure, refusal or
neglect continues for thirty (30) days following Executive’s receipt of written
notice from the Company stating with specificity the nature of such failure,
refusal or neglect; or

 

(vi)Executive’s material breach of any Company policy or any material provision
of this Agreement;

 

provided, however, that prior to the determination that “Cause” under this
Section 1(b) has occurred, the Board shall (A) provide to Executive in writing,
in reasonable detail, the reasons for the determination that such “Cause”
exists, (B) only with respect to clause (vi) above, afford Executive a
reasonable opportunity to remedy any such breach, (C) provide Executive an
opportunity to be heard prior to the final decision to terminate Executive’s
employment hereunder for such “Cause” and (D) make any decision that such
“Cause” exists in good faith.

 

The foregoing definition shall not in any way preclude or restrict the right of
the Company or any successor or affiliate thereof to discharge or dismiss
Executive for any other acts or omissions, but such other acts or omissions
shall not be deemed, for purposes of this Agreement, to constitute grounds for
termination for Cause.

 

(c)          “Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the Treasury Regulations and other interpretive guidance
issued thereunder.

 

(d)          “Good Reason” means the occurrence of any of the following events
or conditions without Executive’s written consent:

 

(i)a material reduction of Executive’s title, authority, duties or
responsibilities, or the assignment to Executive of duties materially
inconsistent with Executive’s positions with the Company as stated in Section
2(a) hereof;

 

(ii)a material diminution in Executive’s base compensation, unless a similar
reduction is imposed across-the-board to senior management of the Company and is
not greater than 15%;

 

(iii)a material change in the geographic location at which Executive must
perform his duties (and the parties acknowledge that a relocation of Executive’s
principal office to a location more than fifty (50) miles from the Company’s
then current offices (excepting reasonable travel on the Company’s business)
shall constitute a material change for purposes of this clause (iii));

 

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(iv)any other action or inaction that constitutes a material breach by the
Company or any successor or affiliate of its obligations to Executive under this
Agreement; or

 

(v)the Company’s delivery of a Non-Renewal Notice (as hereinafter defined).

 

Executive must provide written notice to the Company of the occurrence of any of
the foregoing events or conditions without Executive’s written consent within
ninety (90) days of the occurrence of such event. The Company or any successor
or affiliate shall have a period of thirty (30) days to cure such event or
condition after receipt of written notice of such event from Executive. “Good
Reason” shall not exist unless and until the Company fails to cure the condition
within the allotted timeframe.

 

(e)         “Involuntary Termination” means (i) Executive’s Separation from
Service by reason of Executive’s discharge by the Company other than for Cause,
or (ii) Executive’s Separation from Service by reason of Executive’s resignation
of employment with the Company for Good Reason. Executive’s Separation from
Service by reason of Executive’s death or discharge by the Company following
Executive’s Permanent Disability shall not constitute an Involuntary
Termination. Executive’s Separation from Service by reason of resignation from
employment with the Company for Good Reason shall be an “Involuntary
Termination” only if such Separation from Service occurs within six (6) months
following the initial existence of the act or failure to act constituting Good
Reason, and then only after an opportunity to cure has been provided in
accordance with Section 1(d).

 

(f)        “Permanent Disability” of Executive shall be deemed to have occurred
if Executive shall become physically or mentally incapacitated or disabled or
otherwise unable fully to discharge his duties hereunder for a period of ninety
(90) consecutive calendar days or for one hundred twenty (120) calendar days in
any one hundred eighty (180) calendar-day period. The existence of Executive’s
Permanent Disability shall be determined by the Company on the advice of a
physician chosen by the Company and the Company reserves the right to have
Executive examined by a physician chosen by the Company at the Company’s
expense.

 

(g)        “Separation from Service,” with respect to Executive, means
Executive’s “separation from service,” as defined in Treasury Regulation Section
1.409A-1(h).    

 

(h)        “Stock Awards” means all stock options, restricted stock and such
other awards granted pursuant to the Company’s stock option and equity incentive
award plans or agreements and any shares of stock issued upon exercise thereof.

 

2.            Services to Be Rendered.

 

(a)        Duties and Responsibilities. Executive shall serve as Chief Medical
Officer of the Company. In the performance of such duties, Executive shall
report directly to and shall be subject to the direction of the President.
Executive shall be employed by the Company on a full time basis. Executive’s
primary place of work shall be the Company’s executive offices in New York, New
York, or such other location within the New York City area as may be designated
by the Company from time to time. Executive shall also render services at such
other places within or outside the United States as the Company may direct from
time to time. Executive shall be subject to and comply with the policies and
procedures generally applicable to senior executives of the Company to the
extent the same are not inconsistent with any term of this Agreement.

 

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(b)        Exclusive Services. Executive shall at all times faithfully,
industriously and to the best of his ability, experience and talent perform to
the satisfaction of the Company all of the duties that may be assigned to
Executive hereunder and shall devote substantially all of his productive time
and efforts to the performance of such duties. Executive agrees that he will not
join any boards, other than community and civic boards (which do not interfere
with his duties to the Company), without the prior approval of the Company.
Except as provided below, the Company shall be entitled to all benefits, profits
or other issues arising from or incidental to all work, services and advice
performed or provided by Executive. Provided that the activities listed below do
not interfere with the duties and responsibilities under this Agreement, nothing
in this Agreement shall preclude Employee from devoting reasonable periods
required for:

 

(i)Serving as a member or owner of any organization involving no conflict of
interest with the Company, provided that Executive must obtain the prior
approval of the Board;

 

(ii)Serving as a consultant in his area of expertise to government, commercial
and academic panels where it does not conflict with the interests of the
Company; and

 

(iii)Managing his personal investments, including owning shares of companies
whose securities are publicly traded, so long as such securities do not
constitute more than five percent (5%) of the outstanding securities of any such
company.

 

3.            Compensation and Benefits. The Company shall pay or provide, as
the case may be, to Executive the compensation and other benefits and rights set
forth in this Section 3.

 

(a)        Base Salary. The Company shall pay to Executive a base salary of
$225,000 per year, payable in accordance with the Company’s usual pay practices
(and in any event no less frequently than monthly). Executive’s base salary
shall be subject to review annually by and at the sole discretion of the Board
and/or the Compensation Committee of the Board or its designee.

 

(b)        Annual Bonus. Executive shall be entitled to participate in any bonus
plan that the Board or its designee may approve for the senior executives of the
Company. Any bonus awarded under this Section 3(c) shall be calculated following
the close of the fiscal year to which the bonus relates, and paid in a lump sum
by no later than two and one-half (2 ½) months following the end of the fiscal
year in which such bonus award is earned, provided that Executive remains
employed on the date of payment (and has not given notice of resignation).

 

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(c)        Benefits. Executive shall be entitled to participate in benefits
under the Company’s benefit plans and arrangements, including, without
limitation, any employee benefit plan or arrangement made available in the
future by the Company to its senior executives, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. The Company shall have the right to amend or delete any such
benefit plan or arrangement made available by the Company to its senior
executives and not otherwise specifically provided for herein.

 

(d)        Expenses. The Company shall reimburse Executive for reasonable
out-of-pocket business expenses incurred in connection with the performance of
his duties hereunder, subject to (i) such policies as the Company may from time
to time establish, (ii) Executive furnishing the Company with evidence in the
form of receipts satisfactory to the Company substantiating the claimed
expenditures, and (iii) Executive receiving advance approval from the President
in the case of expenses (or a series of related expenses) in excess of $5,000.

 

(e)        Vacation. Executive shall have the right to four weeks of vacation
during each successive one year period of his employment by the Company, which
vacation time shall be taken at such time or times in each such one year period
so as not to materially and adversely interfere with the performance of his
responsibilities under this Agreement. Executive shall not be entitled to carry
over any unused vacation time from one year to the next and any accrued but
unused vacation time will be waived. In addition, Executive shall be entitled to
additional paid time off in accordance with the policies of the Company
applicable to senior management personnel from time to time.

 

(f)        Withholding. The Company shall be entitled to withhold from amounts
payable or benefits accorded to Executive under this Agreement all federal,
state and local income, employment and other taxes, as and in such amounts as
may be required by applicable law.

 

(g)        Equity Awards. Executive shall be entitled to participate in any
equity or other employee benefit plan that is generally available to senior
executive officers, as distinguished from general management, of the Company.
Except as otherwise provided in this Agreement, Executive’s participation in and
benefits under any such plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan.

 

4.            Employment Term. The term of this Agreement (as it may be extended
by the following sentence or terminated earlier pursuant to Section 5, the
“Employment Term”) shall begin on June 3, 2014 and end on the close of business
on June 2, 2015. The Employment Term shall be automatically extended for
additional one-year periods unless, at least sixty (60) days prior to the end of
the expiration of the Employment Term, Executive or the Company notifies the
other party in writing (a “Non-Renewal Notice”) that it does not wish to extend
such Employment Term. Executive’s employment hereunder shall be coterminous with
the Employment Term, unless sooner terminated as provided in Section 5.

 

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5.            Termination; Severance. Executive shall be entitled to receive
benefits upon a Separation from Service only as set forth in this Section 5:

 

(a)        General. Either the Company or Executive may terminate Executive’s
employment hereunder, for any reason, at any time prior to the expiration of the
Employment Term, upon thirty (30) days prior written notice to the other party.
Upon termination of Executive’s employment hereunder for any reason, Executive
shall be deemed simultaneously to have resigned from any position or office he
may at the time hold with the Company or any of its affiliates. In addition,
upon expiration of the Employment Term, the Company shall (i) reimburse
Executive for any expenses properly incurred under Section 3(d) and which have
not previously been reimbursed as of the effective date of the termination,
(ii) pay Executive for any accrued, but unused, vacation time as of the
effective date of the termination, and (iii) pay Executive for any accrued and
unpaid base salary through and including the effective date of termination
(collectively, the “Accrued Compensation”). The Accrued Compensation will be
paid in a lump sum on the first regularly scheduled payroll date following the
effective date of the termination of Executive’s employment with the Company.

 

(b)        Separation from Service by Death or Following Permanent Disability.
Subject to Sections 5(e) and 10(p) and Executive’s continued compliance with
Section 6, in the event of Executive’s Separation from Service as a result of
Executive’s death or discharge by the Company following Executive’s Permanent
Disability, Executive or Executive’s estate, as applicable, shall be entitled to
receive his base salary through the end of the month in which Executive’s
Separation from Service occurs as a result of Executive’s death or Permanent
Disability.

 

(c)        Severance upon Involuntary Termination. Subject to Sections 5(e) and
10(p) and Executive’s continued compliance with Section 6, if Executive’s
employment is Involuntarily Terminated, Executive shall be entitled to receive,
in lieu of any severance benefits to which Executive may otherwise be entitled
under any severance plan or program of the Company, the benefits provided below,
which, with respect to clause (ii) and the last sentence of clause (iii) (if
applicable) will be payable in a lump sum within ten (10) days following the
effective date of Executive’s Release (as hereinafter defined):

 

(i)the Company shall pay to Executive his fully earned but unpaid base salary,
when due, through the date of Executive’s Involuntary Termination at the rate
then in effect (without regard to any reduction in salary that gave rise to an
event of Good Reason), plus all other benefits, if any, under any Company group
retirement plan, nonqualified deferred compensation plan, equity award plan or
agreement, health benefits plan or other Company group benefit plan to which
Executive may be entitled pursuant to the terms of such plans or agreements at
the time of Executive’s Involuntary Termination;

 

(ii)Executive shall be entitled to receive severance pay in an amount equal to
the base salary payable to Executive under Section 3(a) of this Agreement from
the date of Executive’s Involuntary Termination until the one year anniversary
of such Involuntary Termination (the “Severance Period”);

 

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(iii)During the Severance Period (or, if earlier, until the date on which the
applicable continuation period under COBRA expires), the Company shall arrange
to provide Executive and his eligible dependents who were covered under the
Company’s health insurance plans as of the date of Executive’s Involuntary
Termination with health (including medical, dental and vision) insurance
benefits substantially similar to those provided to Executive and his dependents
immediately prior to the date of such Involuntary Termination. If any of the
Company’s health benefits are self-funded as of the date of Executive’s
Involuntary Termination, or if the Company cannot provide the foregoing benefits
in a manner that is exempt from Section 409A (as defined below) or that is
otherwise compliant with applicable law (including, without limitation, Section
2716 of the Public Health Service Act), instead of providing continued health
insurance benefits as set forth above, the Company shall instead pay to
Executive an amount equal to (A) the number of months from the date of
Executive’s Involuntary Termination until the end of the Employment Term, as
appropriate multiplied by (B) the monthly premium Executive would be required to
pay for continuation coverage pursuant to COBRA for Executive and his eligible
dependents who were covered under the Company’s health plans as of the date of
Executive’s Involuntary Termination (calculated by reference to the premium as
of the date of Involuntary Termination); and

 

(iv)That portion of the Stock Awards that would have vested over the Severance
Period shall be automatically accelerated so as to be immediately vested as of
the date of Involuntary Termination and any vested options or similar award
(e.g., a stock appreciation right) may be exercised at any time during the
Severance Period (subject to earlier termination (A) in connection with a
recapitalization or similar transaction pursuant to the Company’s equity
incentive plans governing such Stock Awards or (B) the contractual term of the
Stock Award), or if longer, through the date such vested options or similar
award are exercisable under the terms of the applicable Stock Award.

 

(d)        Termination for Cause or Voluntary Resignation Without Good Reason.
In the event of Executive’s termination of employment as a result of Executive’s
discharge by the Company for Cause or Executive’s resignation without Good
Reason (other than as a result of Executive’s death or Separation from Service
by reason of discharge by the Company following Executive’s Permanent
Disability), the Company shall not have any other or further obligations to
Executive under this Agreement (including any financial obligations) except that
Executive shall be entitled to receive the Accrued Compensation. In addition, in
the event of Executive’s Separation from Service as a result of Executive’s
discharge by the Company for Cause or Executive’s resignation without Good
Reason (other than as a result of Executive’s death or Separation from Service
by reason of discharge by the Company following Executive’s Permanent
Disability), all vesting of Executive’s unvested Stock Awards previously granted
to him by the Company shall cease and none of such unvested Stock Awards shall
be exercisable following the date of such termination. The foregoing shall be in
addition to, and not in lieu of, any and all other rights and remedies which may
be available to the Company under the circumstances, whether at law or in
equity.

 

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(e)        Release. As a condition to Executive’s receipt of any
post-termination benefits pursuant to Sections 5(b) or (c) above, Executive (or,
in the event of Executive’s incapacity as a result of his Permanent Disability,
Executive’s legal representative) shall execute and not revoke a general release
of all claims in favor of the Company (the “Release”) in a form reasonably
acceptable to the Company. In the event the Release does not become effective
within the fifty-five (55) day period following the date of Executive’s
Separation from Service, Executive shall not be entitled to the aforesaid
payments and benefits.

 

(f)        Exclusive Remedy. Except as otherwise expressly required by law
(e.g., COBRA) or as specifically provided herein, all of Executive’s rights to
salary, severance pay, benefits, bonuses and other amounts hereunder (if any)
accruing after the termination of Executive’s employment shall cease upon such
termination. In the event of Executive’s termination of employment with the
Company, Executive’s sole remedy shall be to receive the payments and benefits
described in this Section 5. In addition, Executive acknowledges and agrees that
he is not entitled to any reimbursement by the Company for any taxes payable by
Executive as a result of the payments and benefits received by Executive
pursuant to this Section 5, including, without limitation, any excise tax
imposed by Section 4999 of the Code.

 

(g)        No Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 5 be reduced by any compensation earned by Executive as the result of
employment by another employer or self-employment or by retirement benefits;
provided, however, that loans, advances or other amounts owed by Executive to
the Company may be offset by the Company against amounts payable to Executive
under this Section 5.

 

(h)        Return of the Company’s Property. In the event of Executive’s
termination of employment for any reason, the Company shall have the right, at
its option, to require Executive to vacate his offices prior to or on the
effective date of separation and to cease all activities on the Company’s
behalf. Upon Executive’s termination of employment in any manner, as a condition
to Executive’s receipt of any severance benefits described in this Agreement,
Executive shall immediately surrender to the Company all lists, books and
records of, or in connection with, the Company’s business, and all other
property belonging to the Company, it being distinctly understood that all such
lists, books and records, and other documents, are the property of the Company.
Executive shall deliver to the Company a signed statement certifying compliance
with this Section 5(h) prior to the receipt of any severance benefits described
in this Agreement.

 

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6.        Certain Covenants.

 

(a)        Restrictive Covenant. Executive hereby covenants and agrees that
during the Employment Term and for a period of one year following the end of the
Employment Term (the “Restricted Period”), Executive will not, without the prior
written consent of the Company, directly or indirectly, on his own behalf or in
the service or on behalf of others, whether or not for compensation, engage in
any business activity, or have any interest in any person, firm, corporation or
business, through a subsidiary or parent entity or other entity (whether as a
shareholder, agent, joint venture, security holder, trustee, partner, executive,
creditor lending credit or money for the purpose of establishing or operating
any such business, partner or otherwise) with any Competing Business in the
Covered Area. For the purpose of this Section 6(a), (i) "Competing Business"
means any biotechnology or pharmaceutical company, any contract manufacturer,
any research laboratory or other company or entity (whether or not organized for
profit) that has, or is seeking to develop, one or more products or therapies
that is related to (A) treatment of disorders of the central nervous system,
including fibromyalgia, post-traumatic stress disorder, headaches or (B) any
other disorders that are addressed by the Company’s pipeline programs and
intellectual property portfolio and (ii) "Covered Area" means all geographical
areas of the United States and foreign jurisdictions where the Company (or its
subsidiaries) then have offices and/or is developing or selling its products
directly or indirectly through distributors and/or other sales agents. Company
acknowledges that Executive, immediately prior to entering into this Agreement,
served as Assistant Professor of Clinical Psychiatry in the Department of
Psychiatry at Columbia University, and his areas of expertise include the
diagnosis, treatment, and neurobiology of anxiety and mood disorders, and
notwithstanding the foregoing, starting the date immediately after the
Employment Term and through the end of the Restricted Period, Executive may
engage in activities similar to those conducted prior to entry into this
Agreement for a hospital or academic institution, provided that he does not act
engage in activities prohibited by the first sentence of this paragraph 6(a) for
a biotechnology or pharmaceutical company or other business entity engaged in
the sale or development of drugs. Passive ownership of less than five percent
(5%) of a public company shall not be a violation of this Section 6(a).

 

 

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(b)        Confidential Information. Executive recognizes and acknowledges that
by reason of Executive’s employment by and service to the Company before, during
and, if applicable, after the Employment Term, Executive will have access to
certain confidential and proprietary information relating to the Company’s
business, which may include, but is not limited to, unique business strategies,
theories and concepts, information regarding plans, strategies, opportunities,
processes, ideas, research and know-how developed by or for the Company, trade
secrets, patents, other intellectual property, clinical studies, regulatory
dossiers, manufacturing, marketing, personnel, financial data, technical
information, methods, processes, formulae and information which Company has
obtained from third parties (collectively referred to as “Confidential
Information”). Executive acknowledges that such Confidential Information is a
valuable and unique asset of the Company and Executive covenants that he will
not, unless expressly authorized in writing by the Company, at any time during
the course of Executive’s employment use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation
except in connection with the performance of Executive’s duties for the Company
and in a manner consistent with the Company’s policies regarding Confidential
Information. Executive also covenants that at any time after the termination of
such employment, directly or indirectly, he will not use any Confidential
Information or divulge or disclose any Confidential Information to any person,
firm or corporation, unless such information is in the public domain through no
fault of Executive or except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order Executive to divulge, disclose or
make accessible such information. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive’s possession during the course of Executive’s
employment shall remain the property of the Company. Except as required in the
performance of Executive’s duties for the Company, or unless expressly
authorized in writing by the Company, Executive shall not remove any written
Confidential Information from the Company's premises, except in connection with
the performance of Executive’s duties for the Company and in a manner consistent
with the Company’s policies regarding Confidential Information. Upon termination
of Executive’s employment, Executive agrees to return immediately to the Company
all written Confidential Information (including, without limitation, in any
computer or other electronic format) in Executive's possession. Notwithstanding
anything to the contrary contained in this Agreement, Executive shall not be
prohibited from disclosing to third parties, or using without the prior written
consent of Company, information that (a) was, on the date of this Agreement,
generally known to the public, (b) is as of the date of this Agreement, lawfully
in the possession of Executive, as evidenced by written dated records (c) is
subsequently disclosed to Executive by a third party who is in lawful possession
of such information and is not under an obligation of confidence, (d) is
disclosed by Company to third parties without restriction on use and disclosure,
or (e) is required to be disclosed by law or a final order of a court or other
governmental agency or authority of competent jurisdiction provided, however,
Executive give prompt notice to the Company prior to any disclosure, which would
allow the Company sufficient time to seek injunctive relief or other appropriate
remedy in respect to such disclosure. As a condition of Executive’s continued
employment with the Company and in order to protect the Company’s interest in
such proprietary information, the Company shall be allowed to require
Executive’s execution of a confidentiality agreement and/or proprietary
information and inventions agreement, as reasonably requested by the Company not
inconsistent with the provisions of this paragraph 6(b).

  

(c)        Solicitation of Employees. During the Restricted Period, Executive
shall not, directly or indirectly, solicit or encourage to leave the employment
of the Company or any of its affiliates, any person known or reasonably expected
to be known to Executive to be an employee of the Company or any of its
affiliates.

 

(d)        Solicitation of Consultants and other Third Parties. During the
Restricted Period, Executive shall not, directly or indirectly, hire, solicit or
encourage to cease work with the Company or any of its affiliates any
consultant, distributor, licensee or other third party partner known or
reasonably expected to be known to Executive to be then under contract with the
Company or any of its affiliates.

 

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(e)        Rights and Remedies Upon Breach. If Executive breaches or threatens
to commit a breach of any of the provisions of this Section 6 (the “Restrictive
Covenants”), the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity:

 

(i)Specific Performance. The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction by way of a
temporary restraining order, preliminary injunction, permanent injunction, or
other equitable remedy, all without the need to post a bond or any other
security or to prove any amount of actual damage or that money damages would not
provide an adequate remedy, it being acknowledged and agreed that any such
breach or threatened breach may cause irreparable injury to the Company and that
money damages will not provide adequate remedy to the Company; and

 

(ii)Accounting and Indemnification. The right and remedy to require Executive
(A) to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by Executive
or any associated party deriving such benefits as a result of any such breach of
the Restrictive Covenants; and (B) to indemnify the Company against any other
losses, damages (including special and consequential damages), costs and
expenses, including actual reasonable attorneys’ fees and court costs, which may
be incurred by them and which result from or arise out of any such breach or
threatened breach of the Restrictive Covenants.

 

(f)        Severability of Covenants/Blue Penciling. If any court determines
that any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
If any court determines that any of the Restrictive Covenants, or any part
thereof, are unenforceable because of the duration of such provision or the area
or scope covered thereby, such court shall have the power to reduce the
duration, area or scope of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced. Executive hereby
waives any and all right to attack the validity of the Restrictive Covenants on
the grounds of the breadth of their scope or the length of their term.

 

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(g)        Definitions. For purposes of this Section 6, the term “Company” means
not only Tonix Pharmaceuticals Holding Corp., but also any company, partnership
or entity which, directly or indirectly, controls, is controlled by or is under
common control with Tonix Pharmaceuticals Holding Corp.

 

7.        Insurance; Indemnification.

 

(a)        Insurance. The Company shall have the right to take out life, health,
accident, “key-man” or other insurance covering Executive, in the name of the
Company and at the Company’s expense in any amount deemed appropriate by the
Company. Executive shall assist the Company in obtaining such insurance,
including, without limitation, submitting to any required examinations and
providing information and data required by insurance companies.

 

(b)        Indemnification. Executive will be provided with indemnification
against third party claims related to his work for the Company in accordance
with the Company’s articles of incorporation and bylaws (as may be amended from
time to time) and Nevada law. The Company shall provide Executive with directors
and officers liability insurance coverage at least as favorable as that which
the Company may maintain from time to time for members of the Board and other
executive officers.

 

8.        General Relationship. Executive shall be considered an employee of the
Company within the meaning of all federal, state and local laws and regulations
including, but not limited to, laws and regulations governing unemployment
insurance, workers’ compensation, industrial accident, labor and taxes.

 

9.        Representations and Warranties of Executive. Executive hereby
represents and warrants to the Company that (a) the execution, delivery and
performance of this Agreement by Executive does not and shall not conflict with,
breach, violate or cause a default under any agreement, contract or instrument
to which the Executive is a party or any judgment, order or decree to which
Executive is subject, (b) Executive is not a party to or bound by any employment
agreement, (c) Executive is not a party to or bound by any consulting agreement,
non-compete agreement, confidentiality agreement or similar agreement with any
other person or entity that would affect the Company or the obligations of
Executive hereunder and (d) upon the execution and delivery of this Agreement by
the Company and Executive, this Agreement will be a valid and binding obligation
of Executive, enforceable in accordance with its terms.

 

10.        Miscellaneous.

 

(a)        Modification; Prior Claims. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
including, without limitation, the Consulting Agreement. This Agreement may be
amended or modified only with the written consent of Executive and an authorized
representative of the Company. No oral waiver, amendment or modification will be
effective under any circumstances whatsoever.

 

(b)        Assignment; Assumption by Successor. The rights of the Company under
this Agreement may, without the consent of Executive, be assigned by the
Company, in its sole and unfettered discretion, to any person, firm, corporation
or other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly, acquires all or substantially all of the
assets or business of the Company. The Company will require any successor
(whether direct or indirect, by purchase, merger or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and to agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place; provided, however, that no such assumption shall relieve the Company of
its obligations hereunder.  As used in this Agreement, the “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.

 

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(c)        Survival. The covenants, agreements, representations and warranties
contained in or made in Sections 3(f), 3(g), 5, 6, 7, 9 and 10 of this Agreement
shall survive the termination of Executive’s employment.

 

(d)        Third-Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.

 

(e)        Waiver. The failure of either party hereto at any time to enforce
performance by the other party of any provision of this Agreement shall in no
way affect such party’s rights thereafter to enforce the same, nor shall the
waiver by either party of any breach of any provision hereof be deemed to be a
waiver by such party of any other breach of the same or any other provision
hereof.

 

(f)        Section Headings. The headings of the several sections in this
Agreement are inserted solely for the convenience of the parties and are not a
part of and are not intended to govern, limit or aid in the construction of any
term or provision hereof.

 

(g)        Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be delivered as follows with notice deemed given as
indicated: (i) by personal delivery when delivered personally; (ii) by overnight
courier upon written verification of receipt; (iii) by email, telecopy or
facsimile transmission upon acknowledgment of receipt of electronic
transmission; or (iv) by certified or registered mail, return receipt requested,
upon verification of receipt. Notice shall be sent to Executive at the address
listed on the Company’s personnel records and to the Company at its principal
place of business, or such other address as either party may specify in writing.

      

(h)        Severability. All Sections, clauses and covenants contained in this
Agreement are severable, and in the event any of them shall be held to be
invalid by any court, this Agreement shall be interpreted as if such invalid
Sections, clauses or covenants were not contained herein.

 

(i)        Governing Law. This Agreement shall be governed by, and construed in
accordance with and subject to, the laws of the State of New York applicable to
agreements made and to be performed entirely within such state without regard to
its conflicts of law rules.

 

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(j)        Jurisdiction and Venue.

 

(i)The Company and Executive hereby irrevocably and unconditionally submit, for
themselves and their property, to the exclusive jurisdiction of any New York
State court or federal court of the United States of America sitting in the City
of New York and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or for recognition or
enforcement of any judgment, and the Company and Executive hereby irrevocably
and unconditionally agree that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. The Company and Executive
irrevocably waive, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. The Company and Executive agree that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Executive agrees
not to commence a claim or proceeding hereunder in a court other than a New York
State court or federal court located in the City of New York, except if
Executive has first brought such claim or proceeding in such New York State
court or federal court located in the City of New York, and such court or courts
have denied jurisdiction over such claim or proceeding.

 

(ii)The Company and Executive irrevocably and unconditionally waive, to the
fullest extent they may legally and effectively do so, any objection that they
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State
court or federal court of the United States of America sitting in the City of
New York and any appellate court from any thereof.

 

(iii)The parties further agree that the mailing by certified or registered mail,
return receipt requested to both (x) the other party and (y) counsel for the
other party (or such substitute counsel as such party may have given written
notice of prior to the date of such mailing), of any process required by any
such court shall constitute valid and lawful service of process against them,
without the necessity for service by any other means provided by law.
Notwithstanding the foregoing, if and to the extent that a court holds such
means to be unenforceable, each of the parties’ respective counsel (as referred
to above) shall be deemed to have been designated agent for service of process
on behalf of its respective client, and any service upon such respective counsel
effected in a manner which is permitted by New York law shall constitute valid
and lawful service of process against the applicable party.

 

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(k)        Non-transferability of Interest. None of the rights of Executive to
receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Executive. Any attempted
assignment, transfer, conveyance, or other disposition (other than as aforesaid)
of any interest in the rights of Executive to receive any form of compensation
to be made by the Company pursuant to this Agreement shall be void.

 

(l)        Gender. Where the context so requires, the use of the masculine
gender shall include the feminine and/or neuter genders and the singular shall
include the plural, and vice versa, and the word “person” shall include any
corporation, firm, partnership or other form of association.

 

(m)        Counterparts. The parties may execute this Agreement in multiple
counterparts, each of which constitutes an original as against the party that
signed it, and both of which together constitute one agreement. The signatures
of both parties need not appear on the same counterpart. In the event that any
signature is delivered by facsimile transmission or by an e-mail which contains
a portable document format (.pdf) file of an executed signature page, such
signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such signature page were an original thereof.

 

(n)        Construction. The language in all parts of this Agreement shall in
all cases be construed simply, according to its fair meaning, and not strictly
for or against any of the parties hereto. Without limitation, there shall be no
presumption against any party on the ground that such party was responsible for
drafting this Agreement or any part thereof.

 

(o)        Withholding and other Deductions. All compensation payable to
Executive hereunder shall be subject to such deductions as the Company is from
time to time required to make pursuant to law, governmental regulation or order.

 

(p)        Code Section 409A.

 

(i)This Agreement is not intended to provide for any deferral of compensation
subject to Section 409A of the Code, and, accordingly, the severance payments
payable under Sections 5(c)(ii) and 5(c)(iii) shall be paid no later than the
later of: (A) the fifteenth (15th) day of the third month following Executive’s
first taxable year in which such severance benefit is no longer subject to a
substantial risk of forfeiture, and (B) the fifteenth (15th) day of the third
month following first taxable year of the Company in which such severance
benefit is no longer subject to substantial risk of forfeiture, as determined in
accordance with Code Section 409A and any Treasury Regulations and other
guidance issued thereunder. To the extent applicable, this Agreement shall be
interpreted in accordance with Code Section 409A and Department of Treasury
regulations and other interpretive guidance issued thereunder.

 

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(ii)If Executive is a “specified employee” (as defined in Section 409A of the
Code), as determined by the Company in accordance with Section 409A of the Code,
on the date of Executive’s Separation from Service, to the extent that the
payments or benefits under this Agreement are subject to Section 409A of the
Code and the delayed payment or distribution of all or any portion of such
amounts to which Executive is entitled under this Agreement is required in order
to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code,
then such portion deferred pursuant to this Section 9(p)(ii) shall be paid or
distributed to Executive in a lump sum on the earlier of (A) the date that is
six (6)-months following Executive’s Separation from Service, (B) the date of
Executive’s death or (C) the earliest date as is permitted under Section 409A of
the Code. Any remaining payments due under the Agreement shall be paid as
otherwise provided herein.

 

(iii)To the extent applicable, this Agreement shall be interpreted in accordance
with the applicable exemptions from Section 409A of the Code. If Executive and
the Company determine that any payments or benefits payable under this Agreement
intended to comply with Sections 409A(a)(2), (3) and (4) of the Code do not
comply with Section 409A of the Code, Executive and the Company agree to amend
this Agreement, or take such other actions as Executive and the Company deem
reasonably necessary or appropriate, to comply with the requirements of Section
409A of the Code and the Treasury Regulations thereunder (and any applicable
transition relief) while preserving the economic agreement of the parties. To
the extent that any provision in this Agreement is ambiguous as to its
compliance with Section 409A of the Code, the provision shall be read in such a
manner that no payments payable under this Agreement shall be subject to an
“additional tax” as defined in Section 409A(a)(1)(B) of the Code.

 

(iv)Any reimbursement of expenses or in-kind benefits payable under this
Agreement shall be made in accordance with Treasury Regulation Section
1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Executive’s
taxable year following the taxable year in which Executive incurred the
expenses. The amount of expenses reimbursed or in-kind benefits payable in one
year shall not affect the amount eligible for reimbursement or in-kind benefits
payable in any other taxable year of Executive’s, and Executive’s right to
reimbursement for such amounts shall not be subject to liquidation or exchange
for any other benefit.

 

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(v)In the event that the amounts payable under Sections 5(c)(ii) and 5(c)(iii)
are subject to Section 409A of the Code and the timing of the delivery of
Executive’s Release could cause such amounts to be paid in one or another
taxable year, then notwithstanding the payment timing set forth in such
sections, such amounts shall not be payable until the later of (A) the payment
date specified in such Section or (B) the first business day of the taxable year
following Executive’s Separation from Service.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.

 

EXECUTIVE:   TONIX PHARMACEUTICALS HOLDING CORP. /s/ GREGORY SULLIVAN   /s/ SETH
LEDERMAN Gregory Sullivan, MD   Name:  Seth Lederman, MD     Title: Chief
Executive Officer

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