Document:

ex10_26.htm

Exhibit 10.26

EMPLOYMENT AGREEMENT EXTENSION

THIS EMPLOYMENT AGREEMENT EXTENSION (the “Extension”) is entered into effective as of the December 31, 2011 (the “Effective Date”), by and between Tower Financial Corporation, an Indiana corporation (the “Company”) and Richard R. Sawyer, a resident of Allen County, Indiana (the “Employee”).

WHEREAS, the Company notified the Employee on August 27, 2011 that it wishes to extend the Employee’s original employment agreement (the “Original Agreement”) dated September 18, 2009 (Exhibit A), for a term to end on March 31, 2013, under the same terms and conditions as the Original Agreement.

WHEREAS, the Employee wishes to be employed by the Company for the extended term, under the same terms and conditions as the Original Agreement dated September 18, 2009.

WHEREAS, the extension received regulatory approval from the Federal Reserve Board (“FRB”) on January 4, 2012, and the concurrence of the Federal Deposit Insurance Corporation (“FDIC”) on January 17, 2012.

NOW, THEREFORE, for and in consideration of the foregoing recitals and of the mutual covenants and agreements set forth herein, the parties, intending to be legally bound hereby, agree as follows:

5.           Term.  The term of the original agreement shall continue in full force and effect through and including March 31, 2013, subject to FDIC concurrence.

6.           Notification.  The Company will be obligated to notify Employee on or prior to December 1, 2012, of its intent to either extend the original Agreement for an additional term beyond March 31, 2013 or enter into a new agreement with the Employee.

7.           Termination or Repayment of Certain Severance Payments.  If the Company, or its successor, becomes aware that Employee has committed, is substantially responsible for, or has violated, any of the respective acts or omissions, conditions, or offenses described and set forth at 12 C.F.R §359.4(a)(4),  then the Company,  or its successor, may (a) terminate any severance benefits due under Sections 6 of the Original Agreement and/or (b) demand and be entitled to reimbursement for severance benefits already paid to Employee under such sections.

8.           Continuation of Agreement.  All the remaining terms and conditions of the Original Agreement not in conflict with this Extension shall remain in full force and effect for the Term.

IN WITNESS WHEREOF, the parties have executed this Extension as of the date first above written and agree that the effective date of the Extension will be the expiration date of the original term, January 1, 2012.

	
TOWER FINANCIAL CORPORATION

	  	  	 
	  	  	 	  	  	 
	
By:

	
/s/: Robert N. Taylor

	 	
By

	
/s/: Richard R. Sawyer

	 
	  	  	 	  	  	 
	
Its:  

	Chair, Compensation Committee	 	  	  	 
	  	  	 	  	  	 
	
Date:

	
January 18, 2012

	 	
Date:

	
January 18, 2012

	 

  

  

  

Exhibit A

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 18th day of September, 2009, by and between Tower Financial Corporation, an Indiana corporation (the “Company”) and RICHARD R. SAWYER, a resident of Allen County, Indiana (the “Employee”).

WHEREAS, the Company is in the business of operating a bank and financial services holding company and, directly or through subsidiary entities, operates or may operate various banking, trust company and other permitted businesses;

WHEREAS, Company wishes to employ Employee, and Employee wishes to be employed by the Company, under the following terms and conditions,

NOW, THEREFORE, for and in consideration of the foregoing recitals and of the mutual covenants and agreements set forth herein, the parties, intending to be legally bound hereby, agree as follows:

	
  

	
1.

	
Employment.  The Company hereby employs Employee, for the Term set forth in Section 3, as the Company’s Chief Financial Officer.  Employee agrees to accept such employment upon the terms and conditions set forth herein, and to devote his full-time, attention and best efforts to the performance of his duties, as more fully described below.

2.           Duties.  During the Term, Employee’s duties (“Duties”) shall consist of those Duties as are consistent with the position of Chief Financial Officer, or such other duties, for and on behalf of the Company or any of its affiliates, with executive responsibilities commensurate with a position generally similar to that described in Section 1, as may from time to time be assigned to him by the Company’s Chief Executive Officer or its Board of Directors. Employee’s Duties also include or may include, without limitation, serving as an officer, director or employee of one or more Company subsidiaries or affiliates.

Employee agrees that any programs, financial or other products, software, systems or other intellectual property that may be developed by the Company, with or without Employee’s participation and assistance, and whether or not within the scope of Employee’s Duties hereunder, shall be deemed to constitute works for hire belonging to the Company, and, in all events, shall be and remain the Company’s exclusive property; and Employee shall not assert (and hereby relinquishes) any rights or claims therein or thereto.

3.           Term.  This Agreement shall become enforceable from and after the execution by the parties, notwithstanding the delayed effective date described herein. Subject to the provisions of Sections 3(a) through 3(d) and unless otherwise extended as provided herein, the term of this Agreement (the “Term”) shall commence on November 27, 2009 (the “Effective Date”) and shall extend through December 31, 2011. Until commencement of the Effective Date, however, Employee’s existing Employment Agreement, dated November 27, 2007, shall remain in full force and effect.

(a)           If, on or prior to the ninetieth (90th) day prior to the expiration of the Term or any Extended Term as provided herein, the Company fails to notify Employee that it elects to extend the term of this Agreement for an additional two year period (an “Extended Term”), on the basis of the same terms and conditions as those applicable during the preceding Term or, if applicable, the preceding Extended Term, the Term or, if applicable, the then current Extended Term, will in fact terminate as specified herein, subject, however, to the Company’s obligation to pay Employee the Severance Amount set forth in Section 6(f)(i).

(b)           In the event that, on or prior to the ninetieth (90th) day prior to the expiration of the Term or, if applicable, any Extended Term, the Company has timely notified Employee of its election to extend the Term or, if applicable, any Extended Term, for an additional period of two (2) years, and, on or prior to the thirtieth (30th) day thereafter Employee has either failed to notify the Company that he is unwilling to extend his employment with the Company during such Extended Term, on the basis of the same terms and conditions as applicable during the preceding Term or Extended Term, or, alternatively, has affirmatively notified the Company that he agrees to proceed in accordance with the Company’s election to extend the Term or Extended Term, if applicable, this Agreement shall be deemed to have been further so extended.

  

  

  

(c)           In the event that in accordance with the provisions of Section 3(b), the Company has timely notified Employee of its election to extend the Term or any Extended Term, but, on or prior to the thirtieth (30th) day thereafter, Employee notifies the Company that he declines to accept the Company’s election to continue such employment during the proposed Extended Term, on the basis of the same terms and conditions as those applicable during the preceding Term or, if applicable, the preceding Extended Term, the Agreement will in fact terminate on the then applicable expiration date, subject, however, to the Company’s obligation to pay Employee the Severance Amount set forth in Section 6(f)(ii).

(d)           If, during the Term or any Extended Term, and without Cause as defined in Section 6(c), the Company terminates the Agreement, Employee will be entitled either to the Severance Amount described in Section 6(e), or, if applicable the Change in Control Payment described in Section 6(g)(i), but not both.

Following the Term or any Extended Term, if any, any continued employment, unless pursuant to another written employment agreement, if any, shall be on an at-will basis, subject to such terms and conditions as the parties may mutually agree in writing.

4.           Compensation.

(a)           Base Salary.  During the Term, and unless otherwise mutually agreed in writing during the Term or any Extended Term, Employee will receive an annual base salary of $135,000 (the “Base Salary”), payable in accordance with the Company’s normal payroll practices in effect from time to time.  Such Base Salary shall be subject to periodic review, and may be increased, but not decreased, from time to time at the Board of Director’s sole discretion upon the recommendation of the Company’s Compensation Committee.

(b)           Bonus.  During the Term or any Extended Term, if applicable, and unless otherwise mutually agreed in writing, Employee will be eligible to receive a bonus at such times and in such amounts, if any, as the Company’s Board of Directors, on the recommendation of its Compensation Committee, may determine, in the exercise of its sole and exclusive discretion.  Any such bonus compensation may be either, in whole or in part, performance based, consistent with the requirements of Section 162 of the Internal Revenue Code of 1986, as amended, or discretionary, and may be based upon the provisions of any applicable incentive plan or upon the recommendation of its Compensation Committee, in recognition of Employee’s performance of his Duties in an extraordinary manner deserving of additional compensation. Nothing in this Agreement, however, shall limit the Board’s discretion to adopt, amend or terminate any performance-based or any other bonus plan.

(c)           Stock Options; Restricted Stock.  During the Term or any Extended Term, Employee shall be eligible to participate in such other stock option, restricted stock or other equity-based incentive plans, including any plans contemplating the potential grant of incentive stock options, non-qualified stock options, restricted stock, or various other equity based awards, that may be adopted by the Company from time to time; provided, however, that nothing herein shall be deemed to entitle Employee to any specific benefit grant or award (any such grant or award to be solely discretionary with the Board, upon the recommendation of the Compensation Committee) or to limit the Board’s discretion to adopt, amend or terminate any plan or program.

(d)           Other Benefit Plans.  The Company agrees that, if otherwise eligible, Employee will be covered by or will be entitled to participate in any vacation programs, 401(k) plans or programs, disability or life insurance plans or programs, medical and/or hospitalization plans, and/or in any and all other benefit plans which may be adopted from time to time by the Company during the Term or any Extended Term, for the general benefit of the Company’s senior executives.  Nothing herein, however, shall limit the Company’s ability to exercise the discretion provided to it under any such benefit plan, or otherwise in its discretion to adopt, amend or terminate any such benefit plan or program.

  

  

  

(e)           Business Expenses.  The Company shall reimburse Employee for all ordinary and necessary business-related expenses incurred by him while carrying out his employment responsibilities hereunder.  Such reimbursement shall be in accordance with the Company’s policies and practices regarding the types or amounts of business expenses for which Employee may be entitled to reimbursement hereunder, including any required pre-authorizations, and to establish policies regarding such reimbursements.

5.           Agreement to Maintain Confidentiality.

(a)           Without the Company’s prior consent, Employee shall not divulge any confidential business information, and he agrees and covenants that all confidential business information regarding the Company’s business practices and processes, its marketing plans and methods, its operations analyses and software, customer and client lists and identities, however developed or generated, as well as information concerning customer preferences and current or prospective business opportunities, its financial and budgetary information, business development ideas and strategies, and its other trade information, trade secrets, know-how, and other information regarding the Company’s affairs (“Confidential Business Information”) has been and will continue to be received and held by Employee in the strictest confidence.  Employee agrees not to divulge to any other person or use for his personal benefit or for the benefit of any other person, any such Confidential Business Information, except insofar as that person has a need to know such Confidential Business Information in the ordinary course of the Company’s business and for its benefit.  Employee further agrees that, upon expiration of the Term or any Extended Term, if any, or upon earlier termination of the Agreement, regardless of reason or by whom terminated, he will not exploit and will surrender to the Company any and all documents, records and rights, in whatever form, that may be in his possession or control containing any such Confidential Business Information, as well as any and all other property that may belong to the Company, including, without limitation, computer hardware and software, pagers, PDAs, Blackberries, cell phones and other electronic equipment, notes, reports, studies and all electronically stored information.

(b)           For purposes of this Agreement, information shall not be deemed to constitute “Confidential Business Information” to the extent that the information (i) is in the public domain, or hereafter becomes generally known or available outside the Company through no action or omission on the part of Employee in violation of this Agreement, (ii) is furnished to any person by the Company without restriction on disclosure, (iii) becomes known to Employee from a source other than the Company, without a breach of any obligation hereunder, (iv) is required to be disclosed by law (in which case Employee will give prompt written notice to the Company of any such required disclosure to the extent such notice would not be prohibited by law), or (v) is disclosed after written approval for disclosure has been granted by the Company.

(c)           The provisions of this Section 5 shall survive any expiration of the Term or any Extended Term, or the prior termination of this Agreement.

6.           Termination of Employment.

(a)           Termination Due to Death.  Employee’s employment with the Company will automatically terminate immediately upon his death, and Employee’s estate or designated beneficiary, in addition to any life insurance benefit payable to Employee or his designated beneficiary, will be entitled to (i) any earned but unpaid Base Salary to the date of termination, (ii) in the discretion of the Board, upon the recommendation of the Compensation Committee, any pro rata bonus for the partial calendar year to the date of Employee’s death, and (iii) any unpaid vacation and unreimbursed expenses payable hereunder. Unless otherwise required, and subject to the provisions of Section 8(a), all payments shall be made within 30 days of Employee’s termination of employment, except for the pro rata bonus, which shall be paid within 21⁄2 months of the end of the fiscal year in which the termination occurred.  Except for the foregoing payment amounts, Employee shall be entitled to no other compensation, benefits or payments.

(b)           Termination Due to Disability.  If, during the Term or any Extended Term, Employee suffers a “Disability” as defined by one or more of the alternative definitions of disability set forth in Section 409A of the Internal Revenue Code and the guidance and regulations issued pursuant thereto, the Company, in the exercise of its sole discretion, shall be entitled to terminate Employee’s employment hereunder, immediately upon written notice to Employee of such decision, subject, however, to the payment to Employee of (i) any earned but unpaid Base Salary, (ii) any pro rata bonus for the partial calendar year to the date of such notice, and (iii) unpaid vacation and unreimbursed expenses payable hereunder. Unless otherwise required, and subject to the provisions of Section 8(a), Employee’s employment shall terminate and all payments shall be made within 30 days of Employee’s receipt of written notice of termination of employment, except for any pro rata bonus, which shall be paid within 21⁄2 months of the end of the fiscal year in which the termination occurred. Except for the foregoing payment amounts, or any amounts payable to Employee under any Company long-term disability plan, if any, Employee shall be entitled to no other compensation, benefits or payments by reason of his disability.

  

  

  

(c)           Termination by Company for Cause.  During the Term or any Extended Term, if any, the Company shall be entitled to terminate Employee’s employment hereunder for “Cause,” as defined below, by providing written notice to Employee of such decision.  For purposes of this Agreement, Cause shall mean (i) the commission by Employee of an act of malfeasance, dishonesty, fraud or breach of trust against the Company or any of its affiliates, employees, clients or vendors resulting or intended to result in substantial gain or personal enrichment to which Employee was not legally entitled; (ii) the continued non-performance or breach by Employee of any of his material Duties or obligations hereunder, whether expressed in writing or otherwise generally understood, after a written demand by the Company for correction of such non-performance or breach is delivered to Employee, which specifically identifies the non-performance and the manner in which the Company asserts that Employee has not performed, and the continued non-performance following the expiration of thirty (30) days of his receipt of such written demand; or (iii) Employee’s indictment, conviction of or plea of guilty or no contest to any felony or any crime involving moral turpitude.

Upon termination of this Agreement for Cause, the Company shall pay Employee any earned but unpaid Base Salary to the date of termination, any earned and unpaid vacation and any unreimbursed expenses otherwise payable hereunder; provided, however, that nothing herein shall be deemed to preclude the Company from asserting a damage claim, if any, against Employee by reason of circumstances related to the termination for Cause.  All such payments shall be made within 30 days of Employee’s termination of employment.  Except for the foregoing payment amounts, Employee shall be entitled to no other compensation, benefits or payments by reason of his termination of employment for cause.

(d)           Termination by Employee During the Term or Extended Term.  Employee may voluntarily terminate his employment with the Company, without reason, at any time during the Term or any Extended Term, if applicable, and, if so terminated, but subject in any event to the provisions of Section 6(g)(ii) if there has been a “Change in Control,” as defined therein, he shall be entitled to (i) any earned but unpaid Base Salary to the date of termination, (ii) in the discretion of the Board, upon the recommendation of the Compensation Committee, any pro rata bonus for the partial calendar year to the date of termination, and (iii) any earned and unpaid vacation and unreimbursed expenses otherwise payable hereunder. Unless otherwise required, and subject to the provisions of Section 8(a), all payments required to be made by the reason of this Section 6(d) shall be made within 30 days of Employee’s termination of employment, except for any pro rata bonus, which, if awarded, shall be paid within 21⁄2 months of the end of the fiscal year in which the termination occurred.  Except for the foregoing payment amounts, and, if applicable, any amounts to which Employee may be entitled under the provisions of Section 6(g), Employee shall be entitled to no other compensation, benefits or payments by reason of Employee’s voluntary termination of employment.

(e)           Termination by Company Without Cause.  If, during the Term or any Extended Term, the Company terminates this Agreement and Employee’s employment hereunder, without Cause as defined in Section 6(c), Employee shall be entitled to receive any earned by unpaid Base Salary to the date of termination, any earned and unpaid vacation and unreimbursed expenses otherwise payable hereunder, and, in addition, as liquidated damages or as a severance payment (the “Severance Amount”), the greater of (i) Employee’s Base Salary, pro rated monthly, multiplied by the number of months, or portion thereof, remaining to the expiration of the Term or, if applicable, any Extended Term, or (ii) twelve (12) months Base Salary, in either case payable in a lump sum, in cash and without discount, within thirty (30) days of termination, subject, in the case of the Severance Amount, however, to the following limitations:

If Employee is a “Specified Employee” at the time of his separation from service, payment of such Severance Amount shall be delayed for six (6) months after the date of the separation from service, if required by Section 409A of the Internal Revenue Code and the guidance and regulations thereunder (the “Delayed Payment Period”). After such six month delay, the required lump sum Severance Amount shall promptly thereafter be paid to Employee.

  

  

  

The term “Specified Employee” shall mean a key employee as defined in Section 416(i) of the Internal Revenue Code, without regard to Paragraph (5) thereof, determined as of December 31 of the calendar year preceding the year in which the separation from service occurs.

In the event that, during the Delayed Payment Period, Employee is found to have been in violation of his covenants and obligations described in Section 7(a), the Company shall not be required to pay Employee the foregoing Severance Amount. In the further event that, even after having received the required Severance Amount, Employee is found to have been in breach of his covenants and obligations pursuant to Section 7(a), whether prior to the receipt of or after having received the Severance Amount, then the Company shall be entitled, through institution of legal proceedings, to recover the Severance Amount from Employee, in addition to any and all other remedies to which the Company may be entitled by reason of such breach, including the remedy set forth in Section 7(b).

Furthermore, if Employee’s employment is terminated hereunder by the Company without Cause, all unvested stock options or shares of restricted stock held by Employee shall be deemed fully vested, effective as of the date of termination; provided that all vested stock options shall continue to be exercisable by Employee, subject, however, to the provisions of the particular Company plan or program pursuant to which the stock options were granted and to the terms of the actual stock option agreement and option, only during the ninety (90) day period following Employee’s separation from service.

Except for the foregoing payment amounts, and provisions regarding stock options and restricted stock, Employee shall be entitled to no other compensation, benefits or payments by reason of his termination without Cause.

(f)           Non-Extension.

(i)           By the Company.  If, as contemplated by the provisions of Section 3(a), the Company fails to notify Employee that it elects to extend the Term or any Extended Term, if applicable, for an additional two year period, then, in addition to Employee’s entitlement to continue to be paid all compensation and benefits as prescribed under the provisions of Section 4 for the balance of the Term or any Extended Term, if applicable, during which time he shall continue to render services to the Company as contemplated by this Agreement, Employee shall also be entitled to receive the following post-employment payment (the “Post-Employment Payment”), payable in a lump sum, in cash and without discount, within thirty (30) days of his separation from service, subject, however, to Delayed Payment Period limitations described in Section 6(e), if applicable.

The Post-Employment Payment shall be equal to the sum of Employee’s Base Salary, pro rated on a monthly basis, multiplied by nine (9) months.

(ii)           By Employee.  If, as contemplated by the provisions of Section 3(c), the Company has timely notified Employee of its election to extend the Term or any Extended Term, if applicable, but Employee has exercised his right, as described therein, to decline such continued employment, Employee shall thereafter continue his employment on the basis of the same terms and conditions of employment to the expiration of the Term or Extended Term, if applicable, but, in addition thereto, shall only be entitled to receive any earned by unpaid Base Salary, any pro rata bonus for the calendar year to the date of separation from service, and any unpaid vacation pay and unreimbursed expenses payable hereunder.

(g)           Change in Control.  In the event that a change in control occurs, as defined in Section 409A of the Internal Revenue Code and the guidance and regulations issued thereunder (a “Change in Control”), then:

(i)           If, during the Term or any Extended Term, if applicable, and within three (3) months before or twelve (12) months after such a Change in Control, Employee’s employment is terminated by the Company, without Cause as defined in Section 6(c), Employee shall thereupon be entitled,

  

  

  

(A)           to receive a “Change in Control Payment” equal to the amount described in Section 6(e), payable in the manner and subject to the Delayed Payment Period described therein; and

(B)           to have all unvested stock options and shares of restricted stock, if any, then held by Employee fully vest, as of the date of separation from service; provided that all vested stock options shall be exercisable by Employee, subject in any event to the provisions of the particular Company plan or program pursuant to which the stock options were granted and to the terms of the actual stock option agreement and option, only during the ninety (90) day period following separation from service.

(ii)           If within three (3) months before or twelve (12) months after such a Change in Control, Employee’s compensation or his functional responsibilities are materially reduced, Employee may in such event, by written notice, elect to voluntarily terminate his employment, and Employee shall thereupon be entitled, in lieu of any payments to which he might otherwise be entitled by reason of the application of Section 6(d):

(A)           to receive a Change in Control Payment equal to the amount described in Section 6(e), payable in the manner and subject to the Delayed Payment Period described therein; and

(B)           to have all unvested stock options and shares of restricted stock, if any, then held by Employee fully vest, as of the date of separation from service; provided that all vested stock options shall be exercisable by Employee, subject in any event to the provisions of the particular Company plan or program pursuant to which the stock options were granted and to the terms of the actual stock option agreement and option, only during the ninety (90) day period following separation from service.

7.           Non-Solicitation.

(a)           Non-Solicitation.  Employee agrees that, during the Term or any Extended Term, if applicable, and for a period of twelve (12) months immediately following the earlier to occur of the expiration of the Term or Extended Term, if applicable, or the earlier termination of Employee’s employment hereunder, for whatever reason and by whomever initiated, and whether or not Employee is entitled to continue to receive compensation hereunder, he will not, directly or indirectly (i) solicit, take away, hire, employ or endeavor to employ any person employed by the Company, or (ii) solicit, take away or attempt to take away any of the existing or prospective customers or clients, vendors or licensors of the Company or any of its subsidiaries (as of the date of expiration or actual termination of employment, whichever is later), whether for the purpose of conducting any business which directly or indirectly provides banking, financial or other services similar in nature to the services provided by the Company or any of its subsidiaries, or otherwise. As used herein, the term “prospective customers or clients” shall include persons or entities with whom the Company or its subsidiaries have been in contact within the previous twelve (12) months for the purpose of establishing or conducting a business relationship.

(b)           Specific Enforcement.

(i)           Employee acknowledges that any violation of any provision of Section 7(a) by him will cause irreparable damage to the Company, that such damage will be incapable of precise measurement, and that, as a result, the Company will not have an adequate remedy at law to redress the harm which such violation will cause.  Therefore, in the event of any violation of any provision of Section 7(a) by Employee, Employee agrees that, in addition to all other remedies that the Company or any of its subsidiaries may have at law or in equity, including the right to discontinue paying any further compensation hereunder, or the right to sue for damages, the Company shall be entitled to injunctive relief, including, without limitation, the right to obtain a temporary restraining order and a temporary injunction to restrain any such violation. In such event, the Company shall not be required to post a bond in excess of the minimum bond required under the civil rules of the court having jurisdiction over the controversy.

  

  

  

(ii)           In the event that a court shall find that Employee has violated any of the restrictions set forth in Section 7(a), then the period of the restrictions set forth herein shall automatically be extended by the number of days that the court determined Employee to have been in violation of such restriction.  Furthermore, in addition to any other relief to which the Company shall be entitled, the Company shall be entitled to recover from Employee its reasonable costs and attorney fees incurred by the Company in seeking enforcement of these provisions.

8.           Miscellaneous.

(a)           Special Provision Regarding Section 409A of the Internal Revenue Code. This Agreement is intended to comply with the applicable requirements of IRC Section 409A and shall be limited, construed, and interpreted in accordance with such intent (including final regulations or any other guidance). Notwithstanding anything hereunder to the contrary, any provision of the Agreement that is inconsistent with said Section 409A shall be deemed to be amended to comply with IRC Section 409A and to the extent such provision cannot be amended to comply with IRC Section 409A, such provision shall be null and void.

(b)           Other Rights.  This Agreement shall not prevent or limit Employee’s continuing or future participation in any benefit, bonus, incentive or other plans, if any, provided by the Company or any of its subsidiaries and for which Employee may qualify, nor shall this Agreement limit or otherwise affect such rights as Employee has under any other agreements with the Company or any of its subsidiaries.  Amounts which are vested benefits or which Employee is otherwise entitled to receive under the terms of any plan of the Company or any of its subsidiaries and any other payment or benefit required by law at or after termination of employment shall be payable in accordance with such plan or applicable law, except as specifically provided by this Agreement.

(c)           Entire Agreement; Amendments.  This Agreement discharges and cancels all previous and contemporaneous agreements, both written and oral, between Employee and the Company.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof.  No agreements, representations or statements of any party not contained herein shall be binding on either party, and no amendment or variation of the terms and conditions of this Agreement shall be valid unless in writing and signed by both parties.

(d)           Assignability; Successors of the Company.

(i)           This Agreement and the rights and duties created hereunder shall not be assignable or delegable by Employee.  The Company may, at its option and without Employee’s consent, assign its rights and duties hereunder to any successor entity, Company affiliate or subsidiary, or any transferee of the Company’s assets.

(ii)           The Agreement will be binding upon and inure to the benefit of the Company, Employee and their respective heirs, representatives and successors.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and 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.  As used in this Agreement, the term “Company” means the Company as hereinbefore defined and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(e)           No Waiver.  No failure or delay by any party to this Agreement to enforce any rights specified hereunder shall operate as a waiver of such right, nor will any single or partial exercise of a right preclude any further or later enforcement of the same right within the period of the applicable statute of limitations.

(f)           Governing Law.  This Agreement and the performance of the parties under this Agreement shall be construed in accordance with the laws of the State of Indiana, regardless of the jurisdiction in which the action or proceeding may be commenced.

  

  

  

(g)           Notices.  All notices and other communications provided for or contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when delivered and received by the other party, or when sent by recognized overnight courier, or by faxed communication (with overnight delivery of a hard copy thereof) to the following addresses and/or contact numbers:

	
  

	
If to the Company:

	
Tower Financial Corporation

Attn:  Michael D. Cahill

116 East Berry Street, Suite 100

Fort Wayne, IN  46802

	
  

	
If to Employee:

	
Richard R. Sawyer

8214 Grand Forest Court

Fort Wayne, IN 46815

or to such other address or contact number as either party hereto will have furnished to the other in writing in accordance with this Section 8, except that such notice of change of address or contact number shall be effective only upon receipt.

(h)           Counterparts.  This Agreement may be exercised in any number of counterparts, each of which as so executed shall be deemed to be an original, and such counterparts shall together be deemed to constitute but one agreement.

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

 

 

	TOWER FINANCIAL CORPORATION	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
By:

	
/s/ Michael D. Cahill

	  	
/s/ Richard R. Sawyer

	 
	
Its:

	
Chief Executive Officer & President

	  	
Richard R. Sawyer

	 
	
Date:

	
September 18, 2009

	  	
Date:

	
September 18, 2009EXHIBIT
10.01

 

SUBSCRIPTION
AGREEMENT

 

SUBSCRIPTION
AGREEMENT made as of this ___ day of ____________, 201_, between Tonix Pharmaceuticals Holding Corp., a Nevada corporation
(the “Company”), and the undersigned (the “Subscriber”).

WHEREAS,
pursuant to a Confidential Private Placement Memorandum dated November 16, 2011 (the “PPM”), the
Company is offering in a private placement (the “Offering”) to accredited investors a minimum of 160 Units
(the “Minimum Offering”) and a maximum of 400 Units (the “Maximum Offering”), plus up to
an additional 80 Units to cover over-allotments, at a purchase price of $25,000 per Unit, with each Unit (the “Units”)
consisting of 25,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”),
one five-year detachable Class A warrant (the “Class A Warrant”) to purchase 25,000 shares of Common
Stock with an exercise price of $1.25 per share and one non-detachable Class B warrant (the “Class B Warrant”)
to purchase up to 25,000 shares of Common Stock upon the occurrence of certain events, with an exercise price of $0.01 per share
(the Class A Warrant and Class B Warrant are collectively referred to as the “Warrants”); and

WHEREAS,
the holders of the Debentures (as hereinafter defined) are entitled to exchange their Debentures for Units in this Offering (the
“Exchanged Debentures”). The Exchanged Debentures will count towards the Minimum and Maximum Offering. In October
and November 2011, the Company issued secured convertible debentures (the “Debentures”) in the principal face
amount of $2,075,000 for aggregate cash proceeds of $1,575,000 and the exchange of $500,000 in previously issued promissory notes
of the Company’s wholly-owned subsidiary, to accredited investors in private placement transactions pursuant to Rule 506
of Regulation D and to non-U.S. Persons pursuant to Regulation S; and

WHEREAS,
the Subscriber desires to subscribe for the number of Units set forth on the signature page hereof, on the terms and conditions
hereinafter set forth.

NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto
do hereby agree as follows:

	 	I.	SUBSCRIPTION FOR AND REPRESENTATIONS
    AND COVENANTS OF SUBSCRIBER

 

1.1          Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company
such number of Units set forth upon the signature page hereof, at a price equal to $25,000 per Unit, and the Company agrees to
sell such to the Subscriber for said purchase price, subject to the Company’s right to sell to the Subscriber such lesser
number of (or no) Units as the Company may, in its sole discretion, deem necessary or desirable. The purchase price is payable
by wire transfer of immediately available funds, pursuant to the wire instructions attached as Exhibit G to the PPM or
by check payable to Signature Bank, as escrow agent for Tonix Pharmaceuticals Holding Corp. (or for holders of the Debentures,
by delivering the original Debenture to counsel to the Company). 

    	 

    	 

    
 

1.2          The
Subscriber recognizes that the purchase of Units involves a high degree of risk in that (i) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and
the Units; (ii) the Units are not registered under the Securities Act of 1933, as amended (the “Act”), or any
state securities law; (iii) there is no trading market for the Units, none is likely ever to develop, and the Subscriber may not
be able to liquidate his, her or its investment; (iv) transferability of the Units is extremely limited; and (v) an investor could
suffer the loss of his, her or its entire investment.

1.3          The
Subscriber is an “accredited investor,” as such term in defined in Rule 501 of Regulation D promulgated under the
Act, and the Subscriber is able to bear the economic risk of an investment in the Units.

1.4          The
Subscriber has prior investment experience (including investment in non-listed and non-registered securities), and has read and
evaluated, or has employed the services of an investment advisor, attorney or accountant to read and evaluate, all of the documents
furnished or made available by the Company to the Subscriber and to all other prospective investors in the Units, including the
PPM, as well as the merits and risks of such an investment by the Subscriber. The Subscriber’s overall commitment to investments
which are not readily marketable is not disproportionate to the Subscriber’s net worth, and the Subscriber’s investment
in the Units will not cause such overall commitment to become excessive. The Subscriber, if an individual, has adequate means
of providing for his or her current needs and personal and family contingencies and has no need for liquidity in his or her investment
in the Units. The Subscriber is financially able to bear the economic risk of this investment, including the ability to afford
holding the Units for an indefinite period or a complete loss of this investment.

1.5          The
Subscriber acknowledges receipt and careful review of the PPM, all supplements to the PPM, and all other documents furnished in
connection with this transaction by the Company, including but not limited to the exhibits to the PPM (collectively, the “Offering
Documents”), and has been furnished by the Company during the course of this transaction with all information regarding
the Company which the Subscriber has requested or desires to know; and the Subscriber has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and
conditions of the Offering, and any additional information which the Subscriber has requested. The Subscriber has not relied on
any statements made or information provided by any placement agent retained by the Company in connection with this Offering.

1.6          The
Subscriber acknowledges that the purchase of the Units may involve tax consequences to the Subscriber and that the contents of
the Offering Documents do not contain tax advice. The Subscriber acknowledges that the Subscriber must retain his, her or its
own professional advisors to evaluate the tax and other consequences to the Subscriber of an investment in the Units. The Subscriber
acknowledges that it is the responsibility of the Subscriber to determine the appropriateness and the merits of a corporate entity
to own the Subscriber’s Units and the corporate structure of such entity.

    	2

    	 

    
 

 

1.7          The
Subscriber acknowledges that this Offering has not been reviewed by the Securities and Exchange Commission (the “SEC”)
or any state securities commission, and that no federal or state agency has made any finding or determination regarding the fairness
or merits of the Offering. The Subscriber represents that the Units are being purchased for his, her or its own account, for investment
only, and not with a view toward distribution or resale to others. The Subscriber agrees that he, she or it will not sell or otherwise
transfer the Units unless they are registered under the Act or unless an exemption from such registration is available.

1.8          Except
as set forth in the Registration Rights Agreement (as defined in the PPM), the Subscriber understands that they will not be able
to resell the Units, the Common Stock, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants (the
“Warrant Shares”) until all of the conditions under Rule 144 have been satisfied however there can be no assurance
that the conditions necessary to permit such sales under Rule 144 will ever be satisfied. The Subscriber understands that the
Company is under no obligation to comply with the conditions of Rule 144 or take any other action necessary in order to make available
any exemption from registration for the sale of the Units or the Common Stock and Warrants comprising the Units or the Warrant
Shares.

1.9          The
Subscriber understands that the Units have not been registered under the Act by reason of a claimed exemption under the provisions
of the Act which depends, in part, upon his, her or its investment intention. In this connection, the Subscriber understands that
it is the position of the SEC that the statutory basis for such exemption would not be present if his, her or its representation
merely meant that his, her or its present intention was to hold such securities for a short period, such as the capital gains
period of tax statutes, for a deferred sale, for a market rise, assuming that a market develops, or for any other fixed period.
The Subscriber realizes that, in the view of the SEC, a purchase now with an intent to resell would represent a purchase with
an intent inconsistent with his, her or its representation to the Company and the SEC might regard such a sale or disposition
as a deferred sale, for which such exemption is not available.

1.10        The
Subscriber consents to the placement of a legend on any certificate or other document evidencing the Common Stock or the Warrants
stating that such securities have not been registered under the Act and setting forth or referring to the restrictions on transferability
and sale thereof.

1.11        The
Subscriber understands that the Company will review and rely on this Subscription Agreement without making any independent investigation;
and it is agreed that the Company reserves the unrestricted right to reject or limit any subscription and to withdraw the Offering
at any time.

1.12        The
Subscriber hereby represents that the address of the Subscriber furnished at the end of this Subscription Agreement is the undersigned’s
principal residence, if the Subscriber is an individual, or its principal business address if it is a corporation or other entity.

1.13        The
Subscriber acknowledges that if the Subscriber is a Registered Representative of a Financial Industry Regulatory Authority, Inc.
(“FINRA”) member firm, the Subscriber must give such firm the notice required by the FINRA’s Conduct
Rules, receipt of which must be acknowledged by such firm on the signature page hereof.

 

    	3

    	 

    
 

1.14        The
Subscriber understands that, pursuant to the terms of the Offering as set forth in the PPM, the Company must receive subscriptions
for 160 Units for an aggregate purchase price of $4,000,000 in order to close on the sale of any Units (and that the exchange
of Debentures will count towards such Minimum Offering) and that persons affiliated with the Company or its consultants, advisors,
or placement agents may subscribe for Units, in which case the Company may accept subscriptions from such affiliated parties in
order to reach the Minimum Offering; and that, accordingly, no investor should conclude that achieving the Minimum Offering is
the result of any independent assessment of the merits or advantages of the Offering or the Company made by Subscribers in the
Minimum Offering.

1.15        The
Subscriber hereby represents that, except as expressly set forth in the Offering Documents, no representations or warranties have
been made to the Subscriber by the Company or any agent, employee or affiliate of the Company and, in entering into this transaction,
the Subscriber is not relying on any information other than that contained in the Offering Documents and the results of independent
investigation by the Subscriber.

1.16        The
Subscriber hereby represents that all information provided by the Subscriber in the Investor Questionnaire attached as Exhibit
E to the PPM is true and accurate in all respects, and the Subscriber acknowledges that the Company will be relying on such
information to its possible detriment in deciding whether the Company can sell these securities to the Subscriber without giving
rise to the loss of the exemption from registration under applicable securities laws.

1.17        The
Subscriber hereby acknowledges and agrees that once the Minimum Offering amount is received by the Company, no further approval
will be required for the Company to consummate a closing.

1.18        The
Subscriber represents that (i) the Subscriber was contacted regarding the sale of the Units by the Company (or an authorized agent
or representative thereof) with whom the Subscriber had a prior substantial pre-existing relationship and (ii) no Units were offered
or sold to it by means of any form of general solicitation or general advertising, and in connection therewith, the Subscriber
did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or
similar media or broadcast over television or radio, whether closed circuit, or generally available; or (B) attend any seminar
meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

 

1.19        Each
Subscriber who is exchanging Debentures in this Offering represents and warrants to the Company, with the intent that the Company
will rely thereon in accepting this Subscription, that Subscriber owns and holds, beneficially and of record, the entire right,
title, and interest in and to the Debentures (including, without limitation, accrued and unpaid interest thereon) set forth on
the Signature Page attached hereto, free and clear of all rights and Encumbrances (as defined below).  Subscriber has full
power and authority to transfer and dispose of the Debenture (including, without limitation, accrued and unpaid interest thereon)
set forth on the Signature Page attached hereto, free and clear of any right or Encumbrance other than restrictions under the
Securities Act and applicable state securities laws.  Other than the transactions contemplated by this Subscription, there
is no outstanding vote, plan, pending proposal, or other right of any person to acquire all or any of the Debenture set forth
on the Signature Page attached hereto. “Encumbrances” shall mean any security or other property interest or right,
claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement,
interest or other right or claim of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation
of law, and including any agreement (other than this Subscription) to grant or submit to any of the foregoing in the future.

 

    	4

    	 

    
 

	 	II.	REPRESENTATIONS BY THE COMPANY

 

(a)          The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has
the corporate power to conduct the business which it conducts and proposes to conduct.

(b)          The
execution, delivery and performance of this Subscription Agreement by the Company have been duly authorized by the Company and
all other corporate action required to authorize and consummate the offer and sale of the Units has been duly taken and approved.

(c)          The
Units and the Warrants have been duly and validly authorized and will be duly and validly issued at closing of the Offering, and
constitute legal, valid and binding obligations of the Company. The Common Stock and the Warrants Shares have been duly and validly
authorized and, when issued at the closing or upon exercise of and in accordance with the Warrants, will be validly issued, fully
paid and non-assessable.

(d)          The
Company has obtained, all licenses, permits and other governmental authorizations necessary for the conduct of its business, except
where the failure to so obtain such licenses, permits and authorizations would not have a material adverse effect on the Company.
Such licenses, permits and other governmental authorizations which have been obtained are in full force and effect, except where
the failure to be so would not have a material adverse effect on the Company, and the Company is in all material respects complying
therewith.

(e)          The
Company knows of no pending or threatened legal or governmental proceedings to which the Company is a party which would materially
adversely affect the business, financial condition or operations of the Company.

(f)          The
Company is not in violation of or default under, nor will the execution and delivery of this Subscription Agreement or the issuance
of the Units, Common Stock, Warrants and Warrant Shares, or the consummation of the transactions herein contemplated, result in
a violation of, or constitute a default under, the Company’s Certificate of Incorporation or By-laws, any material obligations,
agreements, covenants or conditions contained in any bond, debenture, note or other evidence of indebtedness or in any material
contract, indenture, mortgage, loan agreement, lease, joint venture or other agreement or instrument to which the Company is a
party or by which it or any of its properties may be bound or any material order, rule, regulation, writ, injunction, or decree
of any government, governmental instrumentality or court, domestic or foreign. 

    	5

    	 

    
 

(g)          The
Company owns, is licensed or otherwise has adequate rights to use Company technology (including but not limited to patented, patentable
and unpatented inventions and unpatentable proprietary or confidential information, systems or procedures), designs, processes,
trademarks, trade secrets, know how, copyrights and other works of authorship, computer programs and technical data and information
that are or could reasonably be expected to be material to its business as currently conducted or proposed to be conducted or
to the development, manufacture, operation and sale of any products and services sold or proposed to be sold by any of the Company
(collectively, the “Intellectual Property”). The Company has not received any threat of or notice of infringement
of or conflict with asserted rights of others with respect to any Intellectual Property. Except as set forth in the Offering Documents,
the Company is not obligated or under any liability whatsoever to make any material payment by way of royalties, fees or otherwise
to any owner or licensee of, or other claimant to, any Intellectual Property, with respect to the use thereof or in connection
with the conduct of its businesses or otherwise. The Company has taken reasonable security measures to protect the secrecy, confidentiality
and value of the Intellectual Property in all material aspects, including, but not limited to complying with all duty of disclosure
requirements before the U.S. Patent and Trademark Office and any other non-U.S. Patent Offices as appropriate, and has no reason
to believe that such Intellectual Property is not or, if not yet patented or registered, would not be, valid and enforceable against
an unauthorized user.

(h)          No
consent, approval, authorization or order of, or any filing or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery of the Common Stock by the Company, in connection with
the execution, delivery and performance of this Agreement by the Company.

(i)          The
Offering Documents and each of the Company’s reports and filings filed with the Securities and Exchange Commission are true
and correct in all material respects and do not contain any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which
they were made. No statement, representation, warranty or covenant made by the Company in this Agreement or made in any certificate
or document required by this Agreement was or will be, when made, inaccurate, untrue or incorrect. All statistical or market-related
data included in the Offering Documents are based on or derived from sources that the Company believes to be reliable and accurate,
and the Company has obtained the written consent to the use of such data from such sources to the extent required.

	 	III.	COVENANTS BY THE COMPANY

 

3.1          Until
the earlier of (i) twelve (12) months following the Closing Date (as defined in the PPM) or (ii) such date that there is an effective
registration statement on file with the SEC covering the resale of all of the shares of Common Stock issued in the Offering and
all shares of Common Stock issuable upon exercise of the Warrants issued in the Offering, in the event that the Company issues
or sells any shares of Common Stock or any Common Stock Equivalents (as defined below) pursuant to which shares of Common Stock
may be acquired at a price less than $1.00 per share, then the Company shall promptly issue additional shares of Common Stock
to the Subscriber in an amount sufficient that the subscription price paid hereunder, when divided by the total number of shares
issued will result in an actual price paid per share of Common Stock hereunder equal to such lower price (this is intended to
be a “full ratchet” adjustment). Such adjustment shall be made successively whenever such an issuance is made. Notwithstanding
the foregoing, this Section 3.1 shall not apply in respect of an Exempt Issuance (as defined below). 

    	6

    	 

    
 

3.2          For
purposes of this Agreement, (i) “Common Stock Equivalents” means any securities of the Company or any of its
subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock and (ii) “Exempt Issuance” means the
issuance of (a) shares of Common Stock or options to employees, officers, directors, or consultants of the Company in compliance
with Section 3.3 below and pursuant to any stock or option plan duly adopted for such purpose by a majority of the non-employee
members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established,
(b) securities upon the exercise or exchange of or conversion of any securities issued hereunder and/or other securities exercisable
or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities; and (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only
be to a person which is either an owner of, or an entity that is, itself or through its subsidiaries, an operating company in
a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.

3.3          Absent
a prior determination by a majority of the non-employee directors of the Company that it is in the Company’s best
interest or pursuant to any obligation in existence on the date of this Agreement (provided that such obligations have not been
amended since the date of this Agreement) , for a period of 12 months following the closing of the Offering, the Company shall
not (i) issue or grant more than an aggregate of 4,000,000 options, warrants or shares of common stock (subject to appropriate
adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction) to any employees,
officers, directors, or consultants of the Company or (ii) issue any options having an exercise price that is less than $1.00
per share (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar
transaction).

	 	IV.	TERMS OF SUBSCRIPTION

 

4.1          Subject
to Section 4.2 hereof, the subscription period will begin as of the date of the PPM and will terminate at 11:59 PM Eastern Time,
on the earlier of the date on which the Maximum Offering is sold or the Offering is terminated by the Company (the “Termination
Date”). The minimum subscription amount is $25,000, although the Company may, in its discretion, accept subscriptions
for less than $25,000. 

    	7

    	 

    

4.2          The
Subscriber shall effect a wire transfer in the full amount of the purchase price for the Units to the Company’s escrow account
in accordance with the wire instructions attached as Exhibit G to the PPM or shall deliver a check in payment of the purchase
price for the Units.

4.3          Pending
the sale of the Units, all funds (or Debentures) paid hereunder shall be deposited by the Company in escrow with the Company’s
escrow agent, which funds (or Debentures) shall be held and distributed pursuant to an Escrow Agreement, the form of which is
attached as Exhibit F to the PPM. If the Company shall not have obtained subscriptions (including this subscription) for
the Minimum Offering on or before the Termination Date (as such date may be extended by the Company and Placement Agent), then
this subscription shall be void and all funds (or Debentures) paid hereunder by the Subscriber shall be promptly returned without
interest to the Subscriber, to the same account from which the funds were drawn (or address from which Debentures were received).
If subscriptions are received and accepted and payment tendered for the Minimum Offering on or prior to the Termination Date,
then all subscription proceeds (less fees and expenses) shall be paid over to the Company within ten (10) days thereafter or such
earlier date that is one business day after the amount of good funds in escrow equals or exceeds $4,000,000. In such event, sales
of the Units may continue thereafter until the earlier of the date on which the Maximum Offering is sold and the Termination Date,
with subsequent releases of funds from time to time at the discretion of the Company.

4.4          The
Subscriber hereby authorizes and directs the Company and its escrow agent to deliver any certificates or other written instruments
representing the Units, and/or its underlying securities to be issued to such Subscriber pursuant to this Subscription Agreement
to the address indicated on the signature page hereof.

4.5          The
Subscriber hereby authorizes and directs the Company and its escrow agent to return (i) any funds, without interest, for unaccepted
subscriptions to the same account from which the funds were drawn or (ii) any Debentures, for unaccepted subscriptions to the
address from which the Debentures were received.

4.6          If
the Subscriber is not a United States person, such Subscriber shall immediately notify the Company and the Subscriber hereby represents
that the Subscriber is satisfied as to the full observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Units or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction
for the purchase of the Units, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Units. Such Subscriber’s subscription and payment for, and continued
beneficial ownership of, the Units will not violate any applicable securities or other laws of the Subscriber’s jurisdiction. 

    	8

    	 

    

	 	V.	MISCELLANEOUS

 

5.1          Any
notice or other communication given hereunder shall be deemed sufficient if in writing and sent by reputable overnight courier,
facsimile (with receipt of confirmation) or registered or certified mail, return receipt requested, addressed to the Company,
at Tonix Pharmaceuticals Holding Corp., 509 Madison Avenue, Suite 306, New York, New York 10022, Attention: Seth Lederman, facsimile:
(212) 923-5700, and to the Subscriber at the address or facsimile number indicated on the signature page hereof. Notices shall
be deemed to have been given on the date when mailed or sent by facsimile transmission or overnight courier, except notices of
change of address, which shall be deemed to have been given when received.

5.2          This
Subscription Agreement shall not be changed, modified or amended except by a writing signed by both (a) the Company and (b) subscribers
in the Offering holding a majority of the Units issued in the Offering.

5.3          This
Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth the entire agreement and understanding between
the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of
any and every nature among them.

5.4          Notwithstanding
the place where this Subscription Agreement may be executed by any of the parties hereto, the parties expressly agree that all
the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of New York. The parties
hereby agree that any dispute which may arise between them arising out of or in connection with this Subscription Agreement shall
be adjudicated only before a Federal court located in New York, New York and they hereby submit to the exclusive jurisdiction
of the federal courts located in New York, New York with respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in
such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Subscription
Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in
any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address
set forth below or such other address as the undersigned shall furnish in writing to the other.

5.5          This
Subscription Agreement may be executed in counterparts. Upon the execution and delivery of this Subscription Agreement by the
Subscriber, this Subscription Agreement shall become a binding obligation of the Subscriber with respect to the purchase of Units
as herein provided; subject, however, to the right hereby reserved by the Company to (i) enter into the same agreements with other
subscribers, (ii) add and/or delete other persons as subscribers and (iii) reduce the amount of or reject any subscription.

5.6          The
holding of any provision of this Subscription Agreement to be invalid or unenforceable by a court of competent jurisdiction shall
not affect any other provision of this Subscription Agreement, which shall remain in full force and effect. 

    	9

    	 

    

5.7          It
is agreed that a waiver by either party of a breach of any provision of this Subscription Agreement shall not operate or be construed
as a waiver of any subsequent breach by that same party.

5.8          The
parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further actions
as may be necessary or appropriate to carry out the purposes and intent of this Subscription Agreement. 

[Signature
Pages Follow] 

    	10

    	 

    
 

IN
WITNESS WHEREOF, the parties have executed this Subscription Agreement as of the day and year first written above. 

	__________________________	X
    $25,000 for each Unit	= $_____________________.
	Number of Units subscribed
    for	 	Aggregate Purchase
    Price

 

Payment for Units shall be by
(Please Check All that Apply):

 

	1.	___	Wire
                                                                     Transfer or Check

	 	 	 
	2.	___	Exchange
    of Debenture on a dollar-for-dollar basis of, in the principal face amount of $_____________

 

Manner in which Title is
to be held (Please Check One):

 

	1.	___	Individual	7.	___	Trust/Estate/Pension
                           or Profit Sharing Plan

        Date Opened:______________

	2.	___	Joint Tenants with Right of Survivorship	8.	___	As a Custodian for

        ________________________________

        Under the Uniform Gift to
        Minors Act of the State of

        ________________________________

	 	 	 	 	 	 
	3.	___	Community Property	9.	___	Married with Separate Property
	 	 	 	 	 	 
	4.	___	Tenants in Common	10.	___	Keogh
	 	 	 	 	 	 
	5.	___	Corporation/Partnership/ Limited Liability Company	11.	___	Tenants by the Entirety
	 	 	 	 	 	 
	6.	___	IRA	12.	___	Foundation described in Section 501(c)(3) of the Internal Revenue
    Code of 1986, as amended.

 

IF
MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN:

•INDIVIDUAL
SUBSCRIBERS MUST COMPLETE PAGE A-10

•SUBSCRIBERS
WHICH ARE ENTITIES MUST COMPLETE PAGE A-11 

    	11

    	 

    
 

EXECUTION
BY NATURAL PERSONS

	 
	Exact Name in Which Title is to be Held

 

	 	 	 
	Name (Please Print)	 	Name of Additional Subscriber
	 	 	 
	 	 	 
	Residence: Number and Street	 	Address of Additional Subscriber
	 	 	 
	 	 	 
	City, State and Zip Code	 	City, State and Zip Code
	 	 	 
	 	 	 
	Social Security Number	 	Social Security Number
	 	 	 
	 	 	 
	Telephone Number	 	Telephone Number
	 	 	 
	 	 	 
	Fax Number (if available)	 	Fax Number (if available)
	 	 	 
	 	 	 
	E-Mail (if available)	 	E-Mail (if available)
	 	 	 
	 	 	 
	(Signature)	 	(Signature of Additional Subscriber)

 

	 	ACCEPTED this ___ day of _________ 201_, on behalf
    of Tonix Pharmaceuticals Holding Corp.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	12

    	 

    

 

EXECUTION
BY SUBSCRIBER WHICH IS AN ENTITY

(Corporation, Partnership,
Trust, Etc.)

 

	 
	Name of Entity (Please Print)
	Date of Incorporation or Organization:
	 
	State of Principal Office:

 

	Federal Taxpayer Identification Number:	 

 

	 	 
	Office Address	 
	 	 
	City, State and Zip Code	 
	 	 
	Telephone Number	 
	 	 
	Fax Number (if available)	 
	 	 
	E-Mail (if available)	 

 

	[seal]	 	 	By:	 
	 	 	 	 	Name:
	Attest:	 	 	 	Title:
	(If Entity is a Corporation)	 	 	 

 

	*If Subscriber is a Registered
    Representative with a FINRA member firm, have the following acknowledgement signed by the appropriate party:	 
	 	 
	The undersigned FINRA member firm acknowledges receipt of the
    notice required by Rule 3050 of the FINRA Conduct Rules	 

 

	 	 	ACCEPTED this ____ day of __________ 201_, on behalf
	Name of FINRA Firm	 	of Tonix Pharmaceuticals Holding Corp.
		 	 

 

	By:	 	 	By:	 
	 	Name:	 	 	Name:
	 	Title:	 	 	Title:

 

    	13

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