Exhibit 10.03

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) dated March 19, 2014 (the
“Effective Date”) by and between Tonix Pharmaceuticals Holding Corp., a company
incorporated under the laws of Nevada (the “Company”), and Leland Gershell, an
individual (the “Executive”) with reference to the following facts:

 

WHEREAS, Executive currently serves as the Chief Financial Officer and Treasurer
of the Company which is engaged in the business of developing innovative
prescription medications for challenging disorders of the central nervous
system; and

 

WHEREAS, the Company and Executive previously entered into an employment
agreement, dated April 1, 2012, as amended October 15, 2013 (the “Prior
Agreement”); and

 

WHEREAS, the parties wish to enter into this Agreement directly between the
Executive and the Company in its entirety, on the terms and conditions contained
in this Agreement, which will supersede the Prior Agreement (and which Prior
Agreement will terminate simultaneously with the execution of this Agreement)
and all prior agreements and understandings between the Executive and the
Company, oral or written with respect to its subject matter. Executive will
continue to serve as Chief Financial Officer and Treasurer and option awards and
vesting of options granted to Executive will not be affected by the termination
of the Prior Agreement.

 

 NOW THEREFORE, in consideration of the foregoing facts and 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 CEO 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 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 Company 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), afford Executive a
reasonable opportunity to remedy any such breach, (C) provide the Executive an
opportunity to be heard prior to the final decision to terminate the 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)           “Change in Control” means and includes each of the following:

 

(i)a transaction or series of transactions (other than an offering of the
Company’s common stock to the general public through a registration statement
filed with the Securities and Exchange Commission) whereby any “person” or
related “group” of “persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (other than the Company, any of its subsidiaries, an employee benefit
plan maintained by the Company or any of its subsidiaries or a “person” that,
prior to such transaction, directly or indirectly controls, is controlled by, or
is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act),
of securities of the Company possessing forty percent (40%) or more of the total
combined voting power of the Company’s securities outstanding immediately after
such acquisition; or

 

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(ii)the consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (A) a
merger, consolidation, reorganization, or business combination or (B) a sale or
other disposition of all or substantially all of the Company’s assets in any
single transaction or series of related transactions or (C) the acquisition of
assets or stock of another entity, in each case other than a transaction:

 

(1)which results in the Company’s voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of the Company or the person that,
as a result of the transaction, controls, directly or indirectly, the Company or
owns, directly or indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at least sixty percent
(60%) of the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and

 

(2)after which no person or group beneficially owns voting securities
representing forty percent (40%) or more of the combined voting power of the
Successor Entity; provided, however, that no person or group shall be treated
for purposes of this clause (2) as beneficially owning forty percent (40%) or
more of combined voting power of the Successor Entity solely as a result of the
voting power held in the Company prior to the consummation of the transaction.

 

Notwithstanding the foregoing, a transaction shall not constitute a “Change in
Control” if: (i) its sole purpose is to change the state or Country of the
Company’s incorporation; (ii) its sole purpose is to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction; (iii) it
constitutes the Company’s initial public offering of its securities; or (iv) it
is a transaction effected primarily for the purpose of financing the Company
with cash (as determined by the Board in good faith and without regard to
whether such transaction is effectuated by a merger, equity financing or
otherwise).

 

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

 

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(e)           “Enterprise Value” means in the case of a Change in Control in
which consideration is payable to the Company in respect of its assets or
business, the total cash and non-cash (including, without limitation, the
assumption of debt) consideration received by the Company, net of any fees and
expenses in connection with the transaction; or in the case of a Change in
Control in which consideration is payable to the Company’s stockholders, the
total cash and non-cash (including, without limitation, the assumption of debt)
consideration payable to the Company’s stockholders net of any fees and expenses
in connection with the transaction. “Enterprise Value” shall also include, if
applicable, any cash or non-cash consideration payable to the Company or to the
Company’s stockholders on a contingent, earnout or deferred basis. To the extent
that any consideration in a transaction is not received in cash upon the
consummation of the Change in Control, the value of such non-cash consideration
for purposes of calculating the Enterprise Value will be determined by the Board
prior to the Change in Control in good faith. In the event that less than 100%
of the stock or assets of the Company is purchased in the Change in Control
transaction, the Enterprise Value shall be extrapolated from the percentage of
the Company’s capital stock or assets impacted in such Change in Control
transaction to determine if the Enterprise Value Threshold (as hereinafter
defined) was met, but the Sale Bonus (as hereinafter defined) shall be
calculated based on the actual consideration received by the Company or
shareholders, as the case may be.

 

(e)           “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;

 

(iii)a material change in the geographic location at which Executive must
perform his or her duties (and the parties acknowledge that a relocation of the
Company’s principal executive offices 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));

 

(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).

 

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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.

 

(f)           “Involuntary Termination” means (i) Executive’s Separation from
Service by reason of Executive’s discharge by the Company other than for Cause,
or (ii) the 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.

 

(g)           “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 such physician chosen by the Company at the
Company’s expense.

 

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

 

(i)           “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 continue to serve as
Chief Financial Officer and Treasurer of the Company. In the performance of such
duties, Executive shall report directly to and shall be subject to the direction
of the Company’s chief executive officer (“CEO”). In the event of the CEO’s
incapacity or unavailability, Executive shall be subject to the direction of the
President or other person so designated by the Board.  Executive shall be
employed by the Company on a full-time basis. Executive hereby consents to serve
as an officer and/or director of the Company or any subsidiary or affiliate
thereof without any additional salary or compensation. 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 CEO
from time to time. Executive shall also render services at such other places
within or outside the United States as the CEO 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 all
of the duties to the satisfaction of the Company 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
$325,000 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 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 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.)

 

(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.

 

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(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 CEO 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. Except as modified
by Section 5, any Stock Award agreements to which the Company and Executive are
bound on the date hereof shall remain in effect in accordance with their
respective terms.

 

(h)           Change in Control Bonus. In consideration of Executive’s prior
service to the Company and the service to be provided hereunder, in the event
the Company consummates a Change in Control transaction where the Enterprise
Value equals or exceeds a minimum value of $50 million (the “Enterprise Value
Threshold”), the Executive shall be entitled to a cash bonus in the amount of
2.0% of the Enterprise Value (the “Sale Bonus”). The Sale Bonus shall be payable
ninety-one (91) days after the completion of the Change in Control transaction,
provided, however, that Executive shall not be entitled to receive the Sale
Bonus unless Executive remains employed by the Company for the ninety (90) days
following the completion of the Change in Control transaction unless Executive’s
employment is Involuntarily Terminated in which case the Sale Bonus would be
payable immediately. Notwithstanding anything else to the foregoing, the Sale
Bonus pursuant to this Section 3(h) will terminate upon the Company granting the
Executive long-term incentive compensation mutually agreed to by the Board and
the Executive pursuant to a new Company equity incentive plan. The Executive
shall remain entitled to receive the Sale Bonus if (i) an Involuntary
Termination occurs and (ii) (A) a Change in Control transaction meeting the
Enterprise Value Threshold occurs within one hundred twenty (120) days after the
date of Involuntary Termination or (B) on the date of Involuntary Termination,
the Company is a party to a binding agreement, which may include a binding
letter of intent, that would constitute a Change in Control transaction with a
value that equals or exceeds the Enterprise Value Threshold, and the Company
subsequently consummates the Change in Control transaction.

 

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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 the Effective Date and end on the close of
business on March 18, 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.

 

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, as appropriate, 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 other
position or office he may at the time hold with the Company or any of its
affiliates. In addition, upon termination of Executive’s employment hereunder
for any reason, including, without limitation, expiration of the Employment
Term, the Company shall (i) reimburse the 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, (iii) pay
Executive for any accrued and unpaid base salary through and including the
effective date of termination, and (iv) pay Executive any earned by not paid
bonus for the year prior to the year in which the effective date of termination
occurs (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(f) and 9(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, full vesting of all Stock Awards, and
a payment equal to six (6) months of Executive’s base salary.

  

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(c)           Severance upon Involuntary Termination. Subject to Sections 5(f)
and 9(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”);

 

(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

 

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(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 90th day 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.

 

(e)           Termination in Connection with a Change in Control Event. Subject
to Sections 5(f) and 9(p) and Executive’s continued compliance with Section 6,
if Executive’s employment is Involuntarily Terminated within twelve (12) months
after consummation of a Change in Control transaction or within ninety (90) days
prior to the consummation of a Change in Control or if terminated after an
agreement has been executed that contemplates the consummation of an Change in
Control but before it closes, Executive shall be entitled to receive, in lieu of
(A) any severance benefits to which Executive may otherwise be entitled under
any severance plan or program of the Company or (B) pursuant to Section 5(c)
hereof, 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:

 

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(i)an amount equal to one and one-half (1 ½) times Executive’s then current base
salary (without regard to any reduction in base salary that gave rise to an
event of Good Reason), provided, however, that so long as Executive is still
entitled to receive the Sale Bonus, the amount shall equal three-quarters (¾)
times Executive’s then current base salary (without regard to any reduction in
base salary that gave rise to an event of Good Reason);

 

(ii)the Company shall arrange to provide, for a period of twelve (12) months
from the date of Executive’s Involuntary Termination, Executive and his or her
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 or her dependents immediately prior to the date of
such Involuntary Termination, provided, however, that so long as Executive is
still entitled to receive the Sale Bonus, the period of coverage shall be six
(6) months. 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) twelve (12) months (or six (6)
months if Executive is still entitled to receive the Sale Bonus) 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

 

(iii)the vesting and/or exercisability of any outstanding unvested portions of
such Stock Awards shall be automatically accelerated so as to be immediately
vested and exercisable as of the date of Involuntary Termination and shall
remain exercisable through 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).

 

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(f)           Release. As a condition to Executive’s receipt of any
post-termination benefits pursuant to Sections 5(b), (c) or (e) 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.

 

(g)           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.

 

(h)           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.

 

(i)           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(i) prior to the receipt of any severance benefits described
in this Agreement.

 

(j)           Waiver of the Company’s Liability. Executive recognizes that his
employment is subject to termination with or without Cause for any reason and
therefore Executive agrees that Executive shall hold the Company harmless from
an against any and all liabilities, losses, damages, costs and expenses,
including but not limited to, court costs and reasonable attorney’s fees, which
Executive may incur as a result of Executive’s termination of employment.
Executive further agrees that Executive shall bring no claim or cause of action
against the Company for damages or injunctive relief based on a wrongful
termination of employment. Executive agrees that the sole liability of the
Company to Executives upon termination of this Agreement shall be that
determined by this Section 5. In the event this covenant is more restrictive
than permitted by laws of the jurisdiction in which the Company seeks
enforcement thereof, this covenant shall be limited to the extent permitted by
law.

 

12

 

 

 6.             Certain Covenants.

 

(a)           Noncompetition. The 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”), the 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. For the purpose of this Section 6(a), "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 (B) any other
disorders that are addressed by the Company’s pipeline programs and intellectual
property portfolio. Passive ownership of less than 5% of a public company shall
not be a violation of this Section 6(a).

 

(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, the 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. 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.

 

13

 

 

(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 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 third party partner then under contract
with the Company or any of its affiliates within one year of the termination of
such consultant’s engagement by the Company or any of its affiliates.

 

(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 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.

 

14

 

 

(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.

 

(g)           Enforceability in Jurisdictions. The Company and Executive intend
to and do hereby confer jurisdiction to enforce the Restrictive Covenants upon
the courts of any jurisdiction within the geographical scope of such covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the Company and Executive that such
determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.

 

(h)           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.  Limitation on Benefits.

 

(a)           Notwithstanding anything contained in this Agreement to the
contrary, if any payment, benefit or distribution of any type to or for the
benefit of Executive by the Company or any of its affiliates, whether paid or
payable, provided or to be provided, or distributed or distributable pursuant to
the terms of this Agreement or otherwise (collectively, the “Total Payments”)
would be subject to the excise tax imposed under Section 4999 of the Code (the
“Parachute Tax”), then if a reduction in the Total Payments shall result in
Executive receiving a greater after tax payment than if he paid the Parachute
Tax, at the election of Executive, the Total Payments shall be reduced (but not
below zero) so that the maximum amount of the Total Payments (after reduction)
shall be one dollar ($1.00) less than the amount which would cause the Total
Payments to be subject to the Parachute Tax. Unless the Executive shall have
given prior written notice to the Company to effectuate a reduction in the Total
Payments if such a reduction is required, which notice shall be consistent with
the requirements of Section 409A to avoid the imputation of any tax, penalty or
interest thereunder, such reduction shall occur in the following order: (A) by
first reducing or eliminating the portion of the Total Payments which are not
payable in cash and are not attributable to equity awards (other than that
portion of the Total Payments subject to clause (C) hereof), (B) then by
reducing or eliminating cash payments (other than that portion of the Total
Payments subject to clause (C) hereof), (C) then by reducing or eliminating the
portion of the Total Payments which are not payable in cash and are attributable
to equity awards, and (D) then by reducing or eliminating the portion of the
Total Payments (whether payable in cash or not payable in cash) to which
Treasury Regulation § 1.280G-1 Q/A 24(c) (or successor thereto) applies, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time. This Section 7 shall take precedence over the provisions
of any other plan, arrangement or agreement governing the Executive’s rights and
entitlements to any benefits or compensation.

 

15

 

 

(b)           Any determination that Total Payments to the Executive must be
reduced or eliminated in accordance with this Section 7 and the assumptions to
be utilized in arriving at such determination, shall be made by the Board in the
exercise of its reasonable, good faith discretion based upon the advice of such
professional advisors it may deem appropriate in the circumstances. Such
determinations shall take into account the value of any reasonable compensation
for services related to prior services provided in connection with the Prior
Agreement and to be provided by Executive pursuant to this Agreement, including
the non-competition provisions applicable to Executive under this Agreement,
provided, however, that (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior
to the date of payment of the Total Payments shall be taken into account, (ii)
no portion of the Total Payments shall be taken into account, which in the
opinion of the Board and its professional advisors does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code;
(iii) the Total Payments shall be reduced only to the extent necessary so that
the Total Payments (other than those referred to in the immediately preceding
clause (i) or (ii)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the Code
or are otherwise not subject to disallowance as deductions, in the opinion of
the professional advisors to the Company; and (iv) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments shall
be determined by the Company’s independent registered public accounting firm
based on Sections 280G and 4999 of the Code and the regulations for applying
those sections of the Code, or on substantial authority within the meaning of
Section 6662 of the Code. Executive and the Company shall cooperate in the
valuation pursuant to this Section 7(b), including the non-competition
provisions.

 

(c)           As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Board hereunder, it
is possible that Total Payments to the Executive which will not have been made
by the Company shall have been made (“Underpayment”) or that Total Payments to
the Executive which were made should not have been made (“Overpayment”). If an
Underpayment has occurred, the amount of any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive. In the event of an
Overpayment, then the Executive shall promptly repay the Company the amount of
any such Overpayment together with interest on such amount (at the same rate as
is applied to determine the present value of payments under Section 280G of the
Code or any successor thereto), from the date the reimbursable payment was
received by the Executive to the date the same is repaid to the Company.

 

 

16

 

 

 8.             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 to the maximum
extent permitted by Nevada law pursuant to the Prior Agreement or this
Agreement. 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 other executive officers.

 

9.             General Relationship; Representations and Warranties of
Executive.

 

(a)           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.

 

(b)           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 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 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 Prior Agreement. For the sake of clarity, any
Stock Awards agreements to which the Company and Executive are bound on the date
hereof shall remain in effect in accordance with their respective terms, except
as modified by Section 5. 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.

 

17

 

 

(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, except as otherwise defined in Section 6(g).

 

(c)           Survival. The covenants, agreements, representations and
warranties contained in or made in Sections 3(g), 3(h), 5, 6, 7, 8 and 10 of
this Agreement shall survive any 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.

 

18

 

 

(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.

 

(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 the 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 and Company agree 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 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.

 

19

 

 

(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)The provisions of Section 5 of this Agreement are 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 (iii)
and 5(e)(i), (ii) and (iii) shall be paid in accordance with such provisions,
but in no event 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.

 

20

 

 

(ii)If the 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 the 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.

 

(v)In the event that the amounts payable under Sections 5(c)(ii) and (iii) and
5(e)(i), (ii) and (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.

 

[Signature page follows]

 

21

 

 

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/ LELAND GERSHELL   /s/ SETH
LEDERMAN Leland Gershell   Name: Seth Lederman     Title: Chief Executive
Officer

      

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