Document:

ex1012.htm

Exhibit 10.12

 

API SUPPLY AND DEVELOPMENT AGREEMENT (TONIX)

This API Supply and Development Agreement (“Agreement”) is entered into as of April 7, 2011 (“Effective Date”) by JFC Technologies, Inc., with offices at 100 West Main Street, Bound Brook, New Jersey 08805 referred to (as “Supplier”) and Tonix Pharmaceuticals, Inc., a Delaware corporation with offices at 509 Madison Avenue, Suite 306, New York, New York 10022 (“Tonix”).

Supplier has the capabilities to develop and manufacture certain active pharmaceutical ingredients, and has expertise in manufacturing such materials on commercial scale.  Tonix has proprietary rights in pharmaceutical products containing the active pharmaceutical ingredient, isometheptene mucate (the “API”), and Tonix desires to retain Supplier to manufacture and supply the API for use by Tonix in connection with the manufacture, sale, and distribution of pharmaceutical products, including pharmaceutical products comprised of the API, caffeine and acetaminophen (“ICA”).

 

Supplier and Tonix hereby agree as follows:

 

1. Definitions.

 

The capitalized terms used in this Agreement have the following meanings:

 

“Affiliate” means any person or legal entity controlling, controlled by or under common control with a Party and shall include any corporation fifty percent (50%) or more of the voting power of which (or other comparable ownership interest for an entity other than a corporation) is owned, directly or indirectly, by a Party hereto or any corporation, person or entity that owns fifty percent (50%) or more of such voting power of a Party hereto.

 

“Agreement” has the meaning set forth in the first paragraph of this Agreement.

 

“Applicable Laws” means (a) any federal, state and local laws, rules, guidelines, regulations, approvals, and standards of the FDA and other applicable regulatory authorities that apply to the Manufacture of active pharmaceutical ingredient or the facilities at which such Manufacture is performed, including the U.S. Food, Drug and Cosmetic Act, as amended (the “Act”), and all regulations, rules and guidelines promulgated thereunder, and (b) applicable current good manufacturing practices (“cGMP”), in effect at the particular time, issued or required by the FDA and other applicable regulatory authorities.

 

“DMF” has the meaning set forth in Section 6(f) below.

 

“Effective Date” has the meaning in the first paragraph of this Agreement.

 

“Facility” shall mean the Supplier’s manufacturing facility located at Bound Brook, NJ.

 

“FDA” means the United States Food and Drug Administration and any successor agency.

 

“Intellectual Property Rights” means all patents, patent applications, trademarks, trade secrets and any other intellectual property rights.

 

 

 

  

1

  

 

“Know-How” means all inventions, discoveries, practices, methods, knowledge, know-how, trade secrets, processes, formulas, assays, skills, experience, techniques and results of experimentation and testing, copyrights, trademarks, designs, concepts, technical information and data, manuals, standard operating procedures, instructions, specifications, software and algorithms, marketing, pricing, distribution, costs and sales data (whether patentable or otherwise).

 

“Krele” means Krele, LLC, an Affiliate of Tonix.

 

“Krele Supply Agreement” means a Supply Agreement, dated the Effective Date, by and between Krele and Supplier for the supply of API for use in ICA other than NDA Approved ICA.

 

“Manufacture” and “Manufacturing” and other forms of such words refer to the manufacturing, processing, handling, packaging, storage, disposal and quality control testing (including in-process, release and stability testing) of the API and the raw materials and components used in connection therewith.

 

“NDA” means a new drug application for ICA filed with the FDA.

 

“NDA Approved ICA” means ICA that is subject to an approved NDA by the FDA.

 

“Net Sales” means the gross amounts invoiced and received by Tonix or its Affiliates for the sale of NDA Approved ICA incorporating API to Third Parties, less the following deductions: (a) reasonable trade, quantity, and cash discounts; (b) refunds, rebates, retroactive price adjustments, chargebacks and any other similar and customary allowances; (c) taxes, duties, tariffs custom charges and other governmental charges imposed on the sale, delivery or use of ICA; (d) fees or commissions paid or allowed to brokers, distributors, dealers, sales representatives and agents; and (e) freight, insurance, customs and other similar charges or fees related to the shipping or handling of ICA; provided, that Net Sales shall only be calculated on NDA Approved ICA that incorporates API that was purchased from Supplier or that was purchased from a Third Party that sublicenses Supplier’s Intellectual Property Rights pursuant to Section 2(b)(iii) below.

 

“Party” means Tonix or Supplier; and “Parties” means collectively, Tonix and Supplier.

 

“Purchase Order” has the meaning set forth in Section 3(b) below.

 

“Specifications” means the specifications contained in Appendix B and supplied by Tonix for API from time to time, including labeling and packaging specifications, minimum shelf life, and such additional specifications as may be indicated by Applicable Law.

 

“Supplier” has the meaning set forth in the first paragraph of this Agreement.

 

“Third Party” means any person other Supplier, Tonix or their Affiliates.

 

“Tonix” has the meaning set forth in the first paragraph of this Agreement.

 

2. Development; Intellectual Property Rights.

 

(a) Development Work.  In connection with the Manufacture of API, and the approval of an NDA for the ICA, Tonix may perform some development work with respect to the API, at Tonix’s discretion and expense, including polymorph and isomer analysis and such other work as Tonix shall determine in its sole discretion.  In connection with such development work, Supplier shall supply Tonix with at least 100 grams of API, at no cost.  All data resulting from the development work performed by Tonix shall be owned by Tonix; provided, that Tonix shall grant Supplier a royalty free license to use such data solely for the purpose of Manufacturing API for Tonix and its Affiliates and for third party companies that use the API for products that contain dichloralphenazone or dipyrone sodium.

 

 

  

2

  

 

(b) Intellectual Property.

 

(i) Each Party shall retain ownership rights in all Know-How and Intellectual Property Rights owned or controlled by it as of the Effective Date that relates to the API or ICA, in the case of Tonix.  Each Party shall retain ownership rights in all Know-How and Intellectual Property related to the API or ICA, in the case of Tonix, solely acquired or solely conceived, generated, reduced to practice or otherwise made by one or more employees of such Party (or their Affiliates or subcontractors) during the term of this Agreement, including any Know-How conceived or reduced to practice in the course of performing development work or the Manufacture of API hereunder.  Know-How that is first conceived, generated, reduced to practice or otherwise made jointly by one or more employees of each Party (or their Affiliates or subcontractors), and all Intellectual Property Rights that cover such joint Know-How shall be jointly owned by the Parties and each Party shall retain an undivided one-half interest therein.  Each Party shall exercise its ownership rights in and to such jointly-owned Know-How and Intellectual Property Rights for any use, including the right to license and sublicense or otherwise to exploit, transfer or encumber its ownership interest, without an accounting or obligation to, or consent required from, the other Party, but subject to the license grants and covenants hereunder, including any  exclusive rights hereunder.

 

(ii) During the term hereof, each Party grants the other Party and its Affiliates a non-exclusive, royalty-free license under its Know-How and Intellectual Property Rights that relate to API solely to perform the work and activities contemplated by this Agreement.

 

(iii)  In addition, in consideration of the royalty set forth in Section 5(b) below, Supplier hereby grants Tonix and its Affiliates an exclusive, royalty-bearing, perpetual license, with the right to sublicense, under all Know-How and Intellectual Property rights owned or controlled by Supplier or its Affiliates that relate to API to develop, make, have made, use, import, export, offer for sale and sell ICA, including NDA Approved ICA.

 

3. Commercial Supply.

 

(a) Manufacture and Purchase.

 

(i) Subject to the terms and conditions of this Agreement and the Krele Supply Agreement, Supplier shall Manufacture and supply the API exclusively to Tonix, Krele, their Affiliates and their contract manufacturers for use in ICA, and Tonix shall purchase the API for use in ICA exclusively from Supplier, in such quantities as Tonix may order from time to time.  Tonix shall use API exclusively in ICA or products that use API alone for use in headache treatment or pain management.

 

(ii) Supplier shall not provide API to any Third Party (other than a Third Party manufacturing pharmaceutical products on Tonix’s behalf as expressly instructed by Tonix) for use in ICA, and before supplying API to any Third Party, Supplier shall confirm in writing or in e-mail that the Third Party will not use the API in ICA.

 

(iii) Tonix shall be under no obligation to purchase API hereunder if Tonix does not receive, for any reason, an NDA or other desired regulatory approvals for ICA, nor shall Tonix be under any obligation to purchase any minimum quantity of API.

(iv)  Supplier shall Manufacture all API in accordance with all Applicable Laws.

(v) Unless otherwise agreed by Tonix in writing, Supplier shall Manufacture all API from the Facility.

(vi) Supplier warrants, covenants and agrees with Tonix that, at all times, Supplier will ensure that its manufacturing capacity shall be adequate to meet Tonix’s forecasts.  Supplier acknowledges that it is critical that Tonix and its Affiliates be ensured of a continuous supply of API.  Accordingly, nothing herein shall restrict Tonix from identifying, establishing and validating alternative second source manufacturers of API.  Notwithstanding anything to the contrary contained herein, if at any time Supplier is in breach of this Agreement or is unable to meet Tonix’s demand for API, Tonix may purchase API from one or more alternative sources.

(b) Delivery.  Supplier shall ship the API ex Works to Tonix (or Tonix’s Third Party manufacturer), in accordance with Incoterms 2000 and the shipping instructions on Tonix’s Purchase Order.  With each shipment, Supplier shall include:  (i) the API Safety Data Sheet for the API, (ii) the Certificate of Analysis (certifying conformity with the Specifications and that the API has passed the appropriate in-process, release and stability testing), (iii) a bill of lading, and (iv) if requested by Tonix, other records confirming that the API supplied were Manufactured in accordance with the Specifications and cGMPs, and meet all requirements for Manufacture, importation, sale and distribution under Applicable Laws.

 

 

 

  

3

  

 

(c) Shipments.                      Each Purchase Order shipped shall be filled with API from the same manufacturing lot (to the extent possible), and all paperwork and containers delivered and shipped by Supplier to Tonix shall specify the Purchase Order number, stock number and lot number. Upon delivery to Tonix (or Tonix’s Third Party manufacturer), API shall be free and clear of any liens or encumbrances.

 

(d) Allocation of Limited Resources.  Without excusing any of Supplier’s obligations or limiting any rights Tonix may have under this Agreement, if Supplier is unable to meet the demands of its customers for API and must allocate available resources for supply of API among its customers, Supplier shall allocate such resources proportional to the annual sales volumes.

 

4. Forecasts; Purchase Orders.

 

(a) Forecast.  Tonix will provide to Supplier by the end of each calendar quarter a non-binding written forecast of its estimated quarterly requirements for API for the following twelve months.

 

(b) Purchase Orders.  Tonix shall, from time to time, submit to Supplier firm purchase orders for API (each a “Purchase Order”). Each Purchase Order shall set forth the quantities of API to be purchased, the delivery dates and shipping instructions.  Supplier shall ship the full amount of each order within the shipment date(s) so requested.   Each Purchase Order shall allow at least 45 days for delivery unless otherwise agreed to by the Parties.  Each Purchase Order issued hereunder shall be governed by the terms of this Agreement, and none of the terms or conditions of Supplier’s or Tonix’s forms shall be applicable, except those specifying quantity ordered, delivery dates, special supply and packing instructions, and invoice information.

 

5. Price and Payment.

 

(a) API Price; Payment. The purchase price for the API shall be set forth in Appendix A.   Tonix shall pay Supplier the purchase price for the API with terms of net 30 days from the shipment of API to the facility specified by Tonix.  Supplier shall deliver an invoice to Tonix for each API shipment upon Supplier’s shipment of API

 

(b) Royalties. In consideration of Supplier’s license to Know-How and Intellectual Property Rights related to API, Tonix shall pay Supplier royalties on the Net Sales of ICA as provided on Appendix C.

 

                                     (c)     To the extent that USP establishes a monograph for the API that is based on the Specifications, Tonix shall pay a one time payment of $25,000.

6. Non-Conforming API. Tonix shall notify Supplier of any shortage, damage or non-conformity with the Specifications within forty five days after receipt of API, or if Tonix (or Tonix’s Third Party manufacturer) discovers shortage, damage, or non-conformity or other hidden defects not reasonably detectable at delivery by visual inspection, and informs Supplier promptly after discovery, Supplier shall, at Tonix’s election, either replace the API or credit or refund the amount billed and/or paid by Tonix for the API, including shipping costs.

 

7. Quality Control and Regulatory Matters.

 

(a) Facility Compliance, Permits, Licenses and Related Matters.  At all times during the term hereof, Supplier shall ensure that its facilities for the Manufacture of API are FDA approved and are in compliance with all Applicable Laws, including without limitation, cGMP, and with the provisions of this Agreement.  Supplier shall be responsible for, and bear the costs of, filing for all permits, establishment and facility licenses required by regulatory authorities, including the FDA.  Written evidence, satisfactory to Tonix, of inspection and approval of Supplier and its facilities by the FDA and other applicable regulatory authorities shall be a condition to Tonix’s obligations under this Agreement.  Supplier shall be responsible under this Agreement for all costs and expenses related to its compliance with Applicable Laws.

 

 

  

4

  

 

(b) Quality Control Program. Supplier shall maintain a quality control program consistent with Applicable Law as required by the relevant regulatory authorities, which program, as amended or supplemented, Supplier shall describe to Tonix in writing from time to time, and no more than once a year, except that Supplier shall describe any material changes to the program in advance of the change.  At Tonix’s request, the Parties shall negotiate and execute a quality agreement.

 

(c)  Approval for Manufacturing Changes.  Supplier shall ensure that no change is made to the materials, equipment or methods of production or testing used in the Manufacture of API to be supplied to Tonix (including changes therein that would require changes to any regulatory approvals), without Tonix’s prior written approval.

 

(d) Production Samples, Sample Retention and Stability Work.  Supplier shall properly store and retain appropriate and adequate samples (identified by batch number) of API and all critical raw materials in conditions and for times consistent with Applicable Law.  Supplier shall provide Tonix with such reasonable (as determined by standard commercial practice in the industry) quantities of production samples of API Manufactured by Supplier, as are required for the purposes of securing regulatory approvals and ensuring compliance with Applicable Law.

 

(e) Batch Failure.  Supplier agrees to notify Tonix as soon as reasonably possible, but in any event within seven (7) business days of discovery, of any batch failure that could result in Supplier’s inability to meet Tonix’s requested delivery dates, or of learning of any failure of any batch of API Manufactured for delivery to Tonix to meet standards set forth in the Specifications.

 

(f) Recordkeeping and Review.  Supplier shall retain complete records documenting performance under this Agreement, including batch records and other manufacturing reports necessary for the approval of Supplier as a supplier of API under any and all applicable regulatory requirements.  Supplier shall make all such information records, and reports, including the raw data, available at the Facility for review and audit by Tonix.  Tonix shall have the right to conduct reviews and audits, once each calendar year, or more frequently if reasonably necessary, of facilities and equipment used in the Manufacture of API at a reasonable agreed time.

 

(g) Inspections and Communications by Regulatory Authorities.  Within five (5) working days of receipt, Supplier shall deliver to Tonix all notices of violation or deficiency letters, reports, data, information and correspondence received by the Supplier or an Affiliate from the FDA and other regulatory authorities with respect to the API and any Manufacturing issues relating thereto, as well as any written response information, data or correspondence delivered by such person to the regulatory authorities with respect to the API.  Further, Supplier shall cooperate with Tonix in any response it may make to the regulatory authorities.

 

(h) Drug Master Files.  Supplier shall submit all necessary information relating to the Manufacture of the API (including, without limitation, container and closure descriptions and sampling plans) to the FDA and any other applicable regulatory authorities in drug master files (“DMF(s)”) prepared by Supplier.  In respect to such DMFs: (i) the contents and format shall comply with applicable FDA or other regulatory requirements, including 21 C.F.R. 314.420; (ii) Supplier shall maintain such DMFs in a current status at all times, and Tonix shall be informed of the making of any changes to the DMFs in accordance with Applicable Law; (iii) Supplier shall authorize Tonix and its Affiliates to cross reference any information contained in such DMFs in connection with Tonix’s submittal for regulatory approvals, including amendments or supplements thereto for use with ICA manufactured by Tonix or its Affiliates; and (iv) letters authorizing Tonix and its Affiliates to cross-reference the DMFs will be submitted to the FDA and any other applicable regulatory authorities on behalf of Tonix and its Affiliates by Supplier.  JFC shall execute the above actions related to the DMF for a fee of $40,000, payable upon the FDA’s acceptance and listing of the DMF.

 

8. Warranties.

 

(a) Product Warranty. Supplier warrants to Tonix that, at the time of delivery of each shipment of API, the API shall (i) have been Manufactured in accordance with Applicable Law, including cGMP, (ii) comply with the Specifications, (iii) not be adulterated or misbranded under the Act, (iv) be in good, useable and merchantable condition, and (v) not infringe any United States or foregoing patents or any other intellectual property rights.  Supplier also represents and warrants to Tonix for itself and its Affiliates and its and their employees, officers, directors, agents, representatives and owners (collectively, “Related Persons”) that Supplier and Related Persons shall at all times during the term of this Agreement remain properly qualified under and in compliance with all Applicable Laws.

 

(b) Mutual Representations and Warranties.  Each Party represents and warrants to the other that: (i) this Agreement has been duly authorized, executed and delivered by it and is a valid, binding, and legally enforceable obligation of it, subject to applicable bankruptcy, insolvency, moratorium and other laws now or hereafter in effect affecting the rights of creditors generally and subject (as to the enforcement of remedies) to equitable principles; (ii) it is not engaged in any litigation or arbitration, or in any dispute or controversy reasonably likely to lead to litigation, arbitration or other proceeding, which would materially affect the validity of this Agreement or such Party’s ability to fulfill its respective obligations under this Agreement; (iii) the execution, delivery and performance of this Agreement will not result in a breach or violation of, or constitute a default under, any statute, regulation or other law or agreement or instrument to which it is a party or by which it is bound, its corporate charter documents or any order, rule or regulation of any court or governmental agency or body having jurisdiction of it or any of its properties; and (iv) no consent, approval, authorization or order of any court or governmental agency or body is re­quired for the consummation by it of the transactions contemplated by this Agreement.

 

9. Indemnification; Insurance.

 

(a) Indemnification. Supplier shall indemnify, defend and hold Tonix and its Related Persons harmless from and against all claims, demands, actions, suits, liabilities, damages, losses and expenses (including reasonable attorneys’ fees and litigation costs) (“Claims”) brought against Tonix or its Related Persons arising out of: (i) Supplier’s performance of its activities hereunder, including any patent infringement or product liability claims; (ii) Supplier’s breach of this Agreement; or (iii) Supplier’s breach of any representations, warranties or covenants hereunder; in each case except to the extent that such Claims occur as a result of Tonix’s gross negligence or willful misconduct. Tonix shall notify Supplier within a reasonable time in writing of any action, claim or liability in respect of which it intends to make a claim, however, the failure to give timely notice will not release Supplier from liability, except to the extent it is actually prejudiced thereby.  Supplier shall have the right, at its cost, to assume the defense of any such Third Party action or claim with counsel reasonably satisfactory to Tonix.

 

 

 

  

5

  

 

(b) Insurance.  Supplier represents and warrants to Tonix that it is currently insured and covenants that at all times during the term of this Agreement it will maintain a commercial general liability insurance policy which: (a) is sufficient to adequately protect against the risks associated with its ongoing business, including the risks which might possibly arise in connection with the transactions contemplated by this Agreement, with limits of at least of $1,000,000 per occurrence and $5,000,000 in the aggregate; and (b) provides that it cannot be terminated or cancelled without giving Tonix 30 days written notice.  Supplier shall continue to maintain such insurance during the term of this Agreement and thereafter, until a commercially reasonable time after Tonix has ceased to market any Products.

 

10. Term; Termination.

 

(a)           Term.  This Agreement is effective as of the Effective Date and shall continue in effect for the longer of (i) ten years from the first commercial sale of NDA Approved ICA, and (ii) the last to expire patent owned or controlled by Supplier that covers the API, its composition, method of manufacture or use, and shall be automatically renewed for additional two year terms unless either Party provides the other Party with not less than one year’s prior written notice of its intent not to renew.  In addition, Tonix may terminate this Agreement at any time by providing Supplier with at least one year’s prior written notice; provided, that if Tonix terminates the Agreement without cause, Tonix shall continue to pay the royalty set forth in Section 5(b) until the earlier of: (A) seven years following termination, or (B) Supplier’s first sale of an isometheptene mucate product that does not contain dichloralphenazone to a Third Party.

 

(b) Termination for Default.  The material failure by one Party to comply with any of its respective obligations in this Agreement (“Default”), including without limitation, a failure by Supplier to meet forecasted demand with compliant API, and shall entitle the other Party to give the defaulting Party written notice and opportunity to cure the Default.  If such Default is not remedied within 60 days after receipt of such notice, the notifying Party shall be entitled, without prejudice to any other rights under this Agreement, to terminate this Agreement.  This termination right shall not be affected in any way by a Party’s waiver of or failure to take action with respect to any previous Default.  In the event of termination for any reason, Supplier nevertheless agrees to continue to supply API to Tonix at the price agreed upon under Section 5(a) above until Tonix gives Supplier written notice that it has qualified an alternative source of supply for the API or for a maximum of one year, which ever is less.

 

(c)           Survival. The Articles and Sections of this Agreement that by their nature would survive the expiration or termination of this Agreement will survive the expiration or termination of this Agreement, including, but not limited to Sections 2, 6, 7, 8, 9, 11 and 12. 

 

11. Confidentiality.

 

(a) General.  Each Party (the “Receiving Party”) acknowledges that it will receive Confidential Information (as defined below) from the other Party (the “Disclosing Party”).  All Confidential Information furnished prior to or during the term of this Agreement by or on behalf of a Disclosing Party to a Receiving Party shall be kept confidential by the Receiving Party.  The Receiving Party shall not make use of any such Confidential Information, nor disclose any Confidential Information to any Person, except for purposes authorized by this Agreement, unless previously authorized in writing by the Disclosing Party to do so.  However, the Receiving Party may disclose Confidential Information of the Disclosing Party to its officers, directors and employees who require the Confidential Information for the purposes contemplated by this Agreement, provided such officers, directors and employees are subject to the same obligations of confidentiality as are applicable to the Receiving Party with respect to such Confidential Information and provided further that the Receiving Party shall be fully responsible for the compliance with this Agreement by its officers, directors and employees and to regulatory authorities, including the FDA.  For the purposes hereof, “Confidential Information” shall mean information relating to the API or other proprietary or confidential information, whether in written, electronic, oral or other tangible, or of the Disclosing Party, intangible form, furnished to the Receiving Party.

 

(b) Permitted Disclosure.  The obligations of confidentiality and nonuse provided in Section 11(a) shall not apply to information which was in the Receiving Party’s lawful possession prior to disclosure hereunder, as shown by its written records, or which comes into the public domain without involvement or fault of the Receiving Party.  Information shall not be construed to be within this exception merely because it is referred to or generally included in disclosures of a broad nature, or because elements or components of confidential information fall within the exception.

 

12. Dispute Resolution; Arbitration. Any dispute arising from this Agreement shall be finally settled exclusively by arbitration conducted in New York, New York, under the Commercial Arbitration Rules for Large, Complex Disputes and otherwise in accordance with the then existing rules of the American Arbitration Association (“AAA”) by three arbitrators unaffiliated with the parties, using the Expedited Procedures of the Commercial Rules of the AAA, irrespective of the amount in dispute.  Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction in accordance with the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  Each Party expressly consents to jurisdiction and venue lying in New York, New York. All fees and expenses of the arbitration shall be borne equally by the parties, except that each Party shall bear the expense of its own counsel, experts, witnesses and preparation and presentation. This Section shall not be construed to limit or preclude either Party from bringing any action in any court of competent jurisdiction for injunctive or other provisional relief as necessary or appropriate.

 

13. Miscellaneous.

 

(a) Independent Contractors.  Supplier and Tonix are unrelated business entities and independent contractors under this Agreement.  Nothing in this Agreement shall be construed to place the parties in the relationship of employer and employee, partners, principal and agent, or joint ventures.  Neither Party shall have the power to bind or obligate the other Party.  Except as expressly stated in this Agreement, neither Party shall hold itself out as representing the other Party.

 

 

 

  

6

  

 

(b)           Assignment.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the respective parties hereto.  Except in connection with the sale of substantially all of a Party’s assets or stock or otherwise by operation of law in connection with a merger, consolidation or reorganization, neither Party shall assign this Agreement without the express written agreement of the other Party, said consent not being unreasonably withheld or delayed.

 

(c)           Amendment.  No amendment or modification of this Agreement shall be binding on either Party unless it is in writing and signed by an authorized representative of both parties.  The terms or conditions of any purchase order, order confirmation or other document to release or confirm orders shall not be applicable, except with respect to regular and ordinary order-specific terms, such as dates of delivery or quantities, and in the event of any conflict between any of them and this Agreement, the terms of this Agreement shall govern.

 

(d)           Notices.  Any notice to be given by either Party shall be in writing, sent by generally recognized overnight delivery courier service (such as DHL or Federal Express) that results in acceptance with a receipt to the attention of CEO in the case of Tonix and to the attention of James G. Schleck in the case of Supplier, at the address of each Party first set forth above or to such other address as a Party shall give notice to the other in like manner, and shall be deemed to have been given or made two (2) business days after so mailed or sent.

 

(f)           Governing Law; Jurisdiction. This Agreement shall be deemed to have been entered into and shall be governed by and construed under the laws of the State of New York, U.S.A., except that no conflict of laws provision shall be applied to make the laws of any other jurisdiction applicable to this Agreement.

 

(g)           Entire Agreement. This instrument states the entire agreement reached between the Parties hereto with respect to the transactions contemplated hereby.  Any and all previous agreements and understandings between the Parties regarding the subject matter hereof, whether written or oral, are superseded by this Agreement.

 

(h)           Severability.  The provisions of this Agreement shall be deemed severable.  In the event any provision of this Agreement is found in any jurisdiction to be in violation of public policy or illegal or unenforceable in law or equity, such finding shall in no event invalidate any other provision of this Agreement in that jurisdiction, and this Agreement shall be deemed amended to the minimum extent required to comply with the law of such jurisdiction.

 

(i)           No Waiver.  The failure of either Party hereto to enforce at any time, or for any period of time, any provision of this Agreement shall not be construed as a waiver of either such provision or the right of such Party thereafter to enforce each and every provision of this Agreement.

(j)           Counterparts and Fax Signatures.  This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, and all of which shall together constitute one and the same instrument. This Agreement may be executed and delivered by facsimile signatures.

IN WITNESS WHEREOF, Tonix and Supplier have executed this Agreement as of the date first set forth above.

Tonix Pharmaceuticals, Inc.

By: /s/ SETH LEDERMAN

Name: Seth Lederman

Title: President

JFC Technologies LLC

By: /s/ JAMES G. SCHLECK

Name: James G. Schlek

Title: President

  

7

  

APPENDIX A

	
 

 

API

	
 

 

Price

	
 

Isometheptene Mucate

	
 

$450/kilogram for annual volume of 0 to 499 kilograms

 

$400/kilogram for annual volume of  500 to 2,000 kilograms

The prices above can be adjusted to reflect higher raw material costs if the magnitude of the raw material costs increases by a minimum of ten (10) percent.

  

8

  

APPENDIX B

Specifications

Isometheptene Mucate USP

	
Property

	 	
Specifications

	  	 	  
	  	 	  
	
Description

	 	
White Crystalline powder

	  	 	  
	
Identification, I.R.

	 	
Agrees with the reference spectrum

	  	 	  
	
Residue on Ignition

	 	
0.1% Maximum

	  	 	  
	
pH of 5% Solution

	 	
6.0 to 7.5

	  	 	  
	
Loss on Drying

	 	
1.0% Maximum

	  	 	  
	
Residual Solvents:

	 	  
	
   Isopropyl Alcohol

	 	
0.5% Maximum

	  	 	  
	
Assay

	 	
99.0 to 103.0%

	  	 	  
	
Impurities:

	 	  
	
   Total Impurities

	 	
< 0.5%

	
   6-Methyl-5-hepten-2-one (or Methyl Heptenone)

	 	
< 0.2%

	
   6-Mwthyl-5-hepten-2-ol

	 	
< 0.2%

	
   Unknown single impurity

	 	
< 0.1%

	  	 	  
	
Tap Density

	 	
0.3 to 0.6 g/ml

Retest Date:    Two years from the date of manufacture

 

 

  

9

  

 

APPENDIX C

Royalties

Royalties:

For Net Sales greater than $5,000,000 in the aggregate, Tonix shall pay Supplier a royalty equal to 4% of Tonix’s Net Sales for Net Sales up to $100,000,000, 3% of Tonix’s Net Sales for Net Sales of  $100,000,000 up to $200,000,000, and 2% of Tonix’s Net Sales for Net Sales equal to or greater than $200.000,000 ; provided, that if the API is covered by one or more United States’ patents owned or controlled by Supplier as listed in the Orange Book, the royalty shall increase to 5% of Tonix’s Net Sales for Net Sales up to $100,000,000, 4% of Tonix’s Net Sales for Net Sales of $100,000,000 up to $200,000,000, 3% of Tonix’s Net Sales for Net Sales of $200,000,000 up to $300,000,000, and 2% of Tonix’s Net Sales for Net Sales of equal to or greater than $300,000,000.

Sublicense Fees:                                                        

If Tonix licenses its rights in ICA to a Third Party together with a sublicense to Supplier’s Know-How and Intellectual Property Rights related to the manufacture, use or sale of API, Tonix shall pay Supplier 8% of all revenues Tonix receives for those rights (or 10% of such revenues received if the API is covered by one or more United States’ patents owned or controlled by Supplier listed in the Orange Book), including royalty payments, license fees and milestone payments, but excluding research and development funding, marketing and promotional funding and any consideration received for an equity interest in, extension of credit to or other investment in Tonix or its Affiliates.

 

Reports; Payment Terms:

Within 60 days of each quarter end of each year following the first commercial sale of ICA, Tonix shall submit to Supplier a written report with respect to the preceding calendar quarter (the “Payment Report”) stating: (i) any Sublicense Fees received from Third Parties during such quarter (as designated above); (ii) the gross sales and Net Sales of ICA sold by Tonix during such quarter; (iii) the currency exchange rates used in determining royalties; and (iv) a calculation of the amounts due to Supplier, if any, specifying the amount of each deduction taken in accordance with the definition of Net Sales.

Simultaneously with the submission of each Payment Report, Tonix shall make payments to Supplier in the amounts due for the calendar quarter covered, if any.

For purposes of computing the royalty payment on sales outside the United States, Net Sales shall be converted to United States dollars in a manner consistent with Tonix’s accounting practices for its own financial reporting purposes, which are in conformity with US Generally Accepted Accounting Principles, provided that such practices use a widely accepted source of published exchange rates.

Tonix shall maintain full and accurate books of accounts and other records in sufficient detail so that License Fees can be properly ascertained and verified.  Such books and records shall be maintained by Tonix for at least three (3) years following the year to which they pertain.  Upon prior written notice, such records shall be open and available for review, during ordinary business hours and not more than once during a year, by Supplier or an independent certified public accountant retained by Supplier and acceptable to Tonix, for the purpose of ascertaining the correctness of payments hereunder and compliance with this Agreement.  Any such inspection or audit shall be at the expense of Supplier; provided, if an inspection reveals a discrepancy is more than five percent (5%) of the amount actually due, Tonix shall reimburse Supplier for the costs of the inspection.

 

 

 

 

 

10ex1013.htm

Exhibit 10.13

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of April 1, 2011, between Tonix Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Rhonda Rosen (the “Executive”).

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Employment.

The Company has employed the Executive, and the Executive has accepted employment with the Company, upon the terms and subject to the conditions set forth in this Agreement for the period beginning on April 1, 2011 (the “Agreement Effective Date”) and ending as provided in Section 4 (the “Employment Period”).

SECTION 2. Position and Duties.

(a)           During the Employment Period, the Executive shall serve as the Chief Financial Officer and Chief Administrative Officer of the Company. The Executive shall have such duties and responsibilities as may be assigned to her from time to time by the Chief Executive Office and/or the Board of Directors of the Company (the “Board”).

(b)           The Executive shall report to the President of the Company and shall devote her best efforts and substantially all of her active business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) on a full-time basis to the business and affairs of the Company and its affiliates, as those duties may be assigned by the President and/or the Board. The Executive shall perform her duties and responsibilities to the best of her abilities in a diligent and professional manner. The Executive shall perform her duties on Mondays, Tuesdays and Thursdays at the Company’s headquarters in New York City and shall perform her duties on Wednesdays and Fridays at her residence in New Jersey, or as otherwise reasonably requested by the President or Board of Directors.  If the Company maintains an office in the State of New Jersey in the future, Executive shall be required to perform her duties on Wednesdays and Fridays at such New Jersey office.  Notwithstanding the foregoing, the Executive may request one (1) change to this schedule each week upon not less than forty-eight (48) hours notice to the Company’s President via email, which request will not be unreasonably denied.  During the Employment Period, the Executive shall not engage in any outside business activity without the prior written approval of the Board, whether or not such activity is pursued for gain, profit or other pecuniary advantage.

(c)           The foregoing restrictions shall not limit or prohibit the Executive from engaging in passive investment, and community, charitable and social activities not interfering with the Executive’s performance and obligations hereunder.

SECTION 3. Base Salary and Benefits.

(a) From the Agreement Effective Date to the date on which the Company consummates the sale of at least Five Hundred Thousand Dollars ($500,000) in additional equity securities (the “Financing”), the Executive shall be employed on an at-will basis at a salary equal to the minimum wage for employees in the State of New York ($7.25, as of the date hereof) for each hour worked up to 40 hours per week and equal to time and one-half ($10.88, as of the date hereof) for each hour worked in excess of 40 hours per week (the “Pre-Financing Salary”).

(b) In the event, and upon the consummation, of the Financing, the Executive’s base salary shall be increased to Two Hundred Fifty Thousand Dollars ($250,000) per annum, or such other rate as the Board may designate from time to time (the “Pre-Public Salary”), and, if she remains employed until the date of such Financing, the Executive shall receive a lump sum payment in the amount of Fifty Thousand Dollars ($50,000) (the “Lump Sum Payment”).  The Lump Sum Payment shall be paid at the same time that the Executive’s first regular Pre-Public Salary installment would be paid, net of applicable withholding and payroll taxes.

 

 

  

1

  

 

(c) In the event, and upon the consummation, of the earlier of (i) the closing of the sale of shares of the common stock of the Company to the public in an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least Ten Million Dollars ($10,000,000) of proceeds, net of the underwriting discount and commissions, to the Company or (ii) the merger of the Company with, or acquisition of the Company by, a company that is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, or with or by such company’s wholly-owned subsidiary accompanied by the Company’s consummation of the sale of additional equity or debt securities resulting in at least Ten Million Dollars ($10,000,000) of proceeds, net of the underwriting discount and commissions (a “Fundamental Transaction”), the Executive’s base salary shall be increased to Three Hundred Twenty Thousand Dollars ($320,000) per annum, or such other rate as the Board may designate from time to time (the “Base Salary”), and, if she remains employed until the date of such Fundamental Transaction, the Executive shall thereupon be compensated for the difference between the Base Salary and the Pre-Public Salary, such difference to be calculated based on One Hundred Ninety-One Dollars and Seventy-Eight Cents ($191.78) per calendar day, multiplied by the number of calendar days elapsing from the Financing through the consummation of the Fundamental Transaction, subject to a maximum aggregate payment of One Hundred Seventy Thousand Dollars ($170,000).  The difference between the Pre-Public Salary payable to the Executive prior to the consummation of the Fundamental Transaction and the Base Salary shall be paid in a single lump sum at the same time that the Executive’s first regular Base Salary installment would be paid, net of applicable withholding and payroll taxes.

(d) The Executive may be eligible to earn annual bonuses as shall be determined by the Board in its sole discretion.  The Board shall determine the amount of each such annual bonus, if any, promptly following the close of the calendar year and shall pay such bonus by no later than March 15th of the year immediately following the year in which the bonus was earned.

(e) In addition, during the Employment Period, the Executive shall be entitled to participate in all employee benefit programs and plans for which executive employees of the Company are generally eligible from time to time.

(f) The Company shall, in accordance with policies then in effect with respect to payments of business expenses, pay or reimburse the Executive for all reasonable out-of-pocket business expenses actually incurred by the Executive during the Employment Period in performing services hereunder (including commuting expenses from the Company’s New Jersey office to Company headquarters and expenses for living accommodations and meals while the Executive is working at the Company’s headquarter offices); provided, however that to the extent required to comply with the provisions of Section 409A (“Code Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), (1) no reimbursement of expenses incurred by the Executive during any taxable year shall be made after the last day of the following taxable year of the Executive, (2) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a taxable year of the Executive shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, to the Executive in any other taxable year, and (3) the right to reimbursement of such expenses shall not be subject to liquidation or exchange for another benefit. All expenses shall be accounted for in such reasonable detail as the Company may require.

(g) During the Employment Period, the Executive shall be entitled to twenty (20) vacation days per year, as well as holidays, sick days and personal days in accordance with the Company’s policies, as such policies may be amended from time to time. The Executive may not carry forward any unused vacation, holiday, sick or personal days into subsequent years.

SECTION 4. Term and Termination.

(a) General.  The Employment Period shall commence on the Agreement Effective Date and shall end on the second anniversary of the Agreement Effective Date (the “Initial Term”), and shall be renewed annually thereafter for one (1) year terms, unless and until either party provides ninety (90) days’ advance written notice prior to the end of the then-current Employment Period that such party declines to so extend the Employment Period; provided, however, that the Employment Period shall terminate prior to such date upon the occurrence of any of the events set forth in clauses (b), (c) or (d) below.  The Executive’s Termination Date shall mean the date of her Separation from Service as determined under Code Section 409A and Treasury Regulation Section 1.409A- 1(h).

(b) Notwithstanding anything else set forth herein, prior to the consummation of the Financing the Employment Period may be terminated by the Company with or without Cause without obligation other than the payment of the Accrued Obligations (as defined below).

(c) Termination by the Company; Resignation by the Executive.  The Employment Period may be terminated by the Company at any time for Cause (as defined below), or by the Executive’s resignation without Good Reason (as defined below). The Executive may resign for Good Reason in accordance with the last paragraph of Section 5(c). The Employment Period may be terminated by the Company at any time other than for Cause.

(d) Termination due to Death or Disability.  The Employment Period shall be terminated upon the Executive’s death or Separation from Service (as defined below) due to Disability (as defined below).

 

 

  

2

  

 

(e) Definition of Cause.

 

For purposes of this Agreement, “Cause” means:

(A)           the failure by the Executive to perform such duties as are within the scope of this Agreement and as are reasonably requested in good faith by the President or the Board in the course of the Executive’s performance of her duties hereunder;

(B)           gross negligence, recklessness or willful misconduct by the Executive in the performance of her duties;

(C)           a conviction of or a plea of guilty or nolo contendere by the Executive to a crime involving fraud, embezzlement, theft, other financial dishonesty or moral turpitude;

(D)           the material breach by the Executive of this Agreement or of any other agreement or contract with the Company, or any of its affiliates; or

(E)           the Board’s reasonable determination that the Executive has engaged in a violation of state or federal law relating to the workplace environment (including, without limitation, laws relating to sexual harassment or age, sex or other prohibited discrimination).

The Company shall not be entitled to terminate for Cause unless the Company provides to the Executive written notice documenting in reasonable detail the basis for termination and an opportunity of at least thirty (30) days in duration (such duration to be determined in good faith by the Company), to cure, unless (i) the Company reasonably determines that providing such opportunity to cure to the Executive is reasonably likely to have a material adverse effect on its business, financial condition, results of operations, prospects or assets, or (ii) the facts and circumstances underlying such termination are not able to be cured, in which case the Company may terminate without providing an opportunity to cure.

SECTION 5. Payments Upon Termination.

(a) Termination for Cause.  Termination by the Executive without Good Reason; Natural Expiration of the Employment Period.  If the Employment Period is terminated after the consummation of the Financing (i) by the Company for Cause, (ii) by the Executive without Good Reason and not on account of death or Disability, or (iii) upon the natural expiration of the Employment Period pursuant to Section 4(a) above, then the Executive shall be entitled to receive her Base Salary and other remuneration and benefits only to the extent that such amount has accrued through the Termination Date (the “Accrued Obligations”). For the avoidance of doubt, the Accrued Obligations shall be paid promptly upon the termination of the Employment Period, in accordance with applicable law, and shall not include any bonus that remains unpaid as of the Termination Date or that is accruing in the year of termination.

(b) Termination due to death or Disability.  If the Employment Period is terminated after the consummation of the Financing due to the Executive’s death or Disability, then the Executive (or her legal representative) shall be entitled to the Accrued Obligations, plus, if the Executive (or, if applicable, her legal representative) executes and does not revoke a general release of claims in a form reasonably satisfactory to the Company by the 53rd day following the Executive’s Separation from Service due to death or Disability, then, subject to Section 10, the Executive (or, if appropriate, her estate) shall be entitled to receive a lump sum cash payment equal to two (2) months of Base Salary paid on the 60th day following her death or Separation from Service due to Disability, subject to applicable tax withholding requirements.

For purposes of this Agreement, Disability shall have the meaning accorded the term under Treasury Regulation Section 1.409A-3(i)(4).

(c) Termination by the Company other than for Cause, or by the Executive for Good Reason.  If the Employment Period is terminated by the Company other than for Cause, or the Executive terminates employment for Good Reason, and such termination constitutes an Involuntary Separation from Service within the meaning of Treasury Regulation Sections 1.409A-l(n) and (h), then the Executive shall be entitled to the Accrued Obligations and, if the Executive executes and does not revoke a general release of claims in a form reasonably satisfactory to the Company by the 53rd day following her Separation from Service, then, subject to Section 10, the Executive (or, if appropriate, her estate) shall also be entitled to receive a lump sum cash payment equal to six (6) months of Base Salary (nine (9) months of Base Salary if the termination is in connection with, or following, a Fundamental Transaction) (the “Severance”) paid on the 60th day following her Separation from Service, subject to applicable tax withholding requirements.

For purposes of this Agreement, “Good Reason” shall mean the Executive’s Separation from Service within ninety (90) days after the initial occurrence of (i) a material diminution in the Executive’s authority, duties or responsibilities; (ii) a material reduction in the Executive’s Base Salary (as adjusted); or (iii) the relocation of the Executive’s primary work location to a location that is more than fifty (50) miles from the Executive’s immediately prior work location; provided that the Executive shall not have Good Reason to separate from service unless the Executive provides written notice to the Company of the condition constituting Good Reason to terminate within thirty (30) days of the initial occurrence thereof, and the Company has a period of at least thirty (30) days after receipt of such notice to remedy said condition(s).

(d) No Other Benefits.  Except as otherwise required by law (e.g., COBRA) or as specifically provided herein, all of the Executive’s rights to salary, severance, fringe benefits and bonuses hereunder (if any) accruing after the Termination Date shall cease upon the Termination Date. Except as specifically provided herein, the Executive shall not be entitled to any severance payments or benefits under any severance policy or practice maintained by the Company or its affiliates.

 

 

 

  

3

  

 

(e) Compliance With Code Section 409A. Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and shall operate so that the payments and benefits set forth herein either shall be exempt from the requirements of Code Section 409A or shall comply with the requirements of such provision; provided, however, that in no event shall the Company be liable to the Executive for or with respect to any taxes, penalties or interest which may be imposed upon the Executive pursuant to Code Section 409A. For purposes of this Agreement, the terms “termination,” “termination of employment” and variations thereof shall mean a “separation from service” as defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”). To the extent that any Severance payment constitutes a “deferral of compensation” subject to Code Section 409A (a “409A Payment”), then, (A) in the event that a termination of Executive’s employment does not constitute a Separation From Service, such 409A Payment shall begin at such time as the Executive has otherwise experienced such a Separation from Service, and the date of such Separation from Service shall be deemed to be her Termination Date for purposes of Section 4(a) hereof, and (B) if on the date of the Executive’s Separation from Service, the Executive is a “specified employee” of a public company, as such term is defined in Treasury Regulation Section 1.409A-l(i), as determined from time to time by the Company, then such 409A Payment shall not be made to the Executive until the earlier of (i) six (6) months and one day after the Executive’s Separation from Service; or (ii) the date of her death, and shall be paid without adjustment for the delay in payment. The Executive hereby acknowledges that she has been advised to seek and has sought the advice of a tax advisor with respect to the tax consequences to the Executive of all payments pursuant to this Agreement, including any adverse tax consequences or penalty taxes under Code Section 409A and applicable state tax law. The Executive hereby agrees to bear the entire risk of any such adverse federal and state tax consequences and penalty taxes in the event any payment pursuant to this Agreement is deemed to be subject to Code Section 409A, and that no representations have been made to the Executive relating to the tax treatment of any payment pursuant to this Agreement under Code Section 409A and the corresponding provisions of any applicable state income tax laws.

 

SECTION 6. Nondisclosure and Nonuse of Confidential Information.

(a) The Executive shall not disclose or use at any time without the written consent of the Company, either during the Employment Period or thereafter, any Confidential Information (as defined below) of which the Executive is or becomes aware, whether or not such information is developed by her, except to the extent that such disclosure or use is directly related to and required by the Executive’s performance in good faith of duties assigned to the Executive by the Company or is required to be disclosed by law, court order, or similar compulsion; provided, however, that such disclosure shall be limited to the extent so required or compelled; and provided, further, that the Executive shall give the Company notice of such disclosure and cooperate with the Company in seeking suitable protection. The Executive acknowledges that the Company’s Confidential Information has been generated at great effort and expense by the Company and its predecessors and affiliates and has been maintained in a confidential manner by the Company, its predecessors and affiliates. The Executive does not claim any rights to or lien on any Confidential Information. The Executive will immediately notify the Company of any unauthorized possession, use, disclosure, copying, removal or destruction, or attempt thereof, of any Confidential Information by anyone of which the Executive becomes aware and of all details thereof. The Executive shall take all reasonably appropriate steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. The Executive shall deliver to the Company on the Termination Date, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof regardless of the form thereof (including electronic and optical copies)) relating to the Confidential Information or the Work Product (as defined below) of the Company or any of its affiliates which the Executive may then possess or have under her control.

(b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by the Company or any affiliate in connection with its business, including, but not limited to, information, observations and data obtained by the Executive while employed by the Company or any predecessors thereof (including those obtained prior to the date hereof) concerning (i) the business or affairs of the Company (or such predecessors), (ii) technologies, products or services, (iii) data, test results, designs, methods, formulae, production methods, know-how, show-how, techniques, systems, processes, specifications, drawings, reports, software programs, works of authorship, research and development, (iv) inventions, new developments and trade secrets, whether patentable or unpatentable and whether or not reduced to practice, (v) existing and prospective licensees, partners, customers, clients and suppliers, (vi) agreements with licensees, partners, customers, clients, suppliers and other entities or individuals, (vii) projects, plans and proposals, (vii) fees, costs and pricing structures, (viii) accounting and business methods, (ix) business strategies, acquisition plans and candidates, financial or other performance data and personnel lists and data, and (x) all similar and related information in whatever form, unless the information is or becomes publicly known through lawful means.

SECTION 7. Inventions and Patents.

The Executive agrees that all inventions, ideas, innovations, improvements, modifications, data, test results, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) which relate to the Company’s or any of its affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Executive (whether or not during usual business hours or on the premises of the Company or any affiliate and whether or not alone or in conjunction with any other person) while employed by the Company (including those conceived, developed or made prior to the date of this Agreement) together with all patent applications, letters patent, trademark, tradename and service mark applications or registrations, copyrights, reissues thereof and any other legal protection thereon that may be granted for or upon any of the foregoing (collectively referred to herein as the “Work Product”), belong in all instances to the Company or such affiliate. The Executive shall promptly disclose such Work Product to the President and perform all actions reasonably requested by the President (whether during or after the Employment Period) to establish and confirm the Company’s ownership of such Work Product (including, without limitation, the execution and delivery of assignments, consents, powers of attorney and other instruments) and provide reasonable assistance to the Company or any of its affiliates in connection with (a) the prosecution of any applications for patents, trademarks, trade names, service marks, reissues thereof or other legal protection thereon, (b) the maintenance, enforcement and renewal of any rights that may be obtained, granted or vest therein, and (c) the prosecution and defense of any actions, proceedings, oppositions or interferences relating thereto. If the Company is unable, after reasonable effort, to secure the signature of the Executive on any such papers, any executive officer of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Executive, and the Executive hereby irrevocably designates and appoints each executive officer of the Company as his or her agent and attorney-in-fact to execute any such papers on his or her behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Work Product, under the conditions described in this sentence.

 

 

 

  

4

  

 

SECTION 8. Non-Compete; Non-Solicitation; Non-Disparagement.

(a) The Executive acknowledges that, in the course of employment with the Company and/or its affiliates, she has and will become familiar with the Company’s and its predecessors and affiliates’ trade secrets and with other confidential information concerning the Company and its predecessors and affiliates and that her services have been and will be of special, unique and extraordinary value to the Company and its affiliates. Therefore, in order to protect the Company’s interest in its Confidential Information, the Executive agrees that during the Employment Period and for one (1) year thereafter (collectively, the “Non-Compete Period,” subject to automatic extension during the period of any violation of this Section 8), she shall not directly or indirectly own, manage, control, participate in, consult with, render services for, or in any manner engage in or represent any business competing with the development, marketing, and/or sale of drugs intended for use in the treatment of attention deficit disorder, attention deficit and hyperactivity disorder, headaches, primary insomnia disorder, fibromyalgia, post-traumatic stress disorder or any other products and/or services of the Company or its affiliates that exist or are in the process of being formed or acquired as of the Termination Date (the “Business”), within any Restricted Territory. As used in this Agreement, the term “Restricted Territory” means (i) the United States and (ii) any other country or territory in which the Company has engaged in, or is engaging in, the Business as of the Termination Date.  Nothing herein shall be construed to prevent the Executive from participating in and completing all necessary activities required to maintain the Executive’s professional standards.

Nothing herein shall prohibit the Executive from being a passive owner of not more than one percent (1%) of the outstanding stock of any class of a corporation which is publicly traded that is engaged in the Business, so long as the Executive has no active participation in the business of such corporation.

(b) During the Non-Compete Period, the Executive shall not directly or indirectly through another person or entity:

(i) induce or attempt to induce any employee of the Company or any affiliate to leave the employ of the Company or such affiliate, or in any way interfere with the relationship between the Company or any such affiliate, on the one hand, and any employee thereof, on the other hand;

(ii) solicit for hire or hire any person who was an employee of the Company or any affiliate until six (6) months after such individual’s employment relationship with the Company or any affiliate has been terminated, provided that the Executive may hire any such person (so long as such person is not a supervisor, manager or executive officer of the Company or any affiliate) who responds to a general advertisement offering employment;

(iii) solicit, induce or attempt to solicit or induce any customer (it being understood that the term “customer” as used throughout this Agreement includes any Person (x) that is purchasing goods or receiving services from the Company and/or any affiliates or (y) that is directly or indirectly providing or referring customers to, or otherwise providing or referring business for, the Company or any affiliates), supplier, licensee, subcontractor or other business relation of the Company or any affiliate to cease or reduce doing business with the Company or such affiliate, or in any way interfere or attempt to interfere with the relationship between any such customer, supplier, licensee, subcontractor or business relation, on the one hand, and the Company or any such affiliate, on the other hand; or

(iv) induce or attempt to induce any customer, supplier, licensee, subcontractor or other business relation of the Company or affiliate to purchase services or goods similar to those sold as part of the Business.

(c) The Executive understands that the foregoing restrictions may limit her ability to earn a livelihood in a business similar to the Business, but she nevertheless believes that she has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given her education, skills and ability), the Executive does not believe would prevent her from otherwise earning a living. The Executive further understands that (i) the parties would not enter into this Agreement but for the covenants contained in this Section 8, and (ii) the provisions of Sections 6 through 8 are reasonable and necessary to preserve the legitimate business interests of the Company and affiliates.

(d) The Executive shall inform any prospective or future employer of any and all restrictions contained in this Agreement and provide such employer with a copy of such restrictions (but no other terms of this Agreement), prior to the commencement of that employment.

(e) The Executive agrees that the restrictions are reasonable and necessary, are valid and enforceable under New York law, and do not impose a greater restraint than necessary to protect the Company’s legitimate business interests. If, at the time of enforcement of Sections 6 through 8, a court holds that the restrictions stated herein are unreasonable under the circumstances then existing, the Executive and the Company agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area so as to protect the Company to the greatest extent possible under applicable law.

(f) In order to protect the goodwill of the Company and its affiliates, to the fullest extent permitted by law, the Executive, both during and after the Employment Period, agrees not to publicly criticize, denigrate, or otherwise disparage any of the Company, its affiliates, and each such entity’s employees, officers, directors, licensees, partners, consultants, other service providers, products, processes, policies, practices, standards of business conduct, or areas or techniques of research, development, manufacturing, or marketing. Nothing in this Section 8(f) shall prevent the Executive or the Company from cooperating in any governmental proceeding or from providing truthful testimony pursuant to a legally-issued subpoena. The Executive promises to provide the Company with written notice of any request to so cooperate or provide testimony within one (1) day of being requested to do so, along with a copy of any such request.

 

 

  

5

  

 

SECTION 9. Enforcement.

Because the Executive’s services are unique and because the Executive has access to Confidential Information and Work Product, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement by the Executive, the Company and any of its affiliates or their successors or assigns may, in addition to other rights and remedies existing in their favor at law or in equity, seek specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security) and may apply to any court of competent jurisdiction to require the Executive to account for and pay over to the Company all compensation, profits, moneys, accruals, increments or other benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement. The Executive agrees not to claim that the Company or any of its affiliates has adequate remedies at law for a breach of any of Sections 6 through 8, as a defense against any attempt by the Company or any of its affiliates to obtain the equitable relief described in this Section 9.

SECTION 10. Severance Payments.

In addition to the foregoing, and not in any way in limitation thereof, or in limitation of any right or remedy otherwise available to the Company, if the Executive violates any provision of the foregoing Sections 6 through 8, any Severance payments then or thereafter due from the Company to the Executive pursuant to Section 5(c) shall be terminated forthwith and the Company’s obligation to pay and the Executive’s right to receive such Severance payments shall terminate and be of no further force or effect, if and when determined by a court of competent jurisdiction, in each case without limiting or affecting the Executive’s obligations (or terminating the Non-Compete Period) under such Sections 6 through 8, or the Company’s other rights and remedies available at law or equity.

SECTION 11. Representations, Warranties and Additional Covenants of the Executive.

The Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the Executive does not and shall not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, (b) the Executive is not a party to or bound by any employment agreement, (c) the Executive is not a party to or bound by any consulting agreement, non-compete agreement, confidentiality agreement or similar agreement with any other person or entity that would affect the Company or the obligations of the Executive hereunder and (d) upon the execution and delivery of this Agreement by the Company and the Executive, this Agreement will be a valid and binding obligation of the Executive, enforceable in accordance with its terms. The Executive further represents and warrants that she has not disclosed, revealed or transferred to any third party any of the Confidential Information that she may have previously obtained and that she has safeguarded and maintained the secrecy of the Confidentiality Information to which she has had access or of which she has knowledge. In addition, the Executive represents and warrants that she has no ownership in nor any right to nor title in any of the Confidential Information and the Work Product.

SECTION 12.   Notices.

All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given when delivered personally to the recipient, telecopied to the intended recipient at the telecopy number set forth therefor below, or one (1) business day after deposit with a nationally recognized overnight delivery service, in each case as follows:

If to the Company, to:

Tonix Pharmaceuticals, Inc.

509 Madison Avenue, Suite 306

New York, New York 10022

Attention: President

If to the Executive, to the address set forth on the signature page hereto;

or such other address as the recipient party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such communication shall deemed to have been delivered and received (a) when delivered, if personally delivered, sent by telecopier or sent by overnight courier, and (b) on the fifth business day following the date posted, if sent by mail. Instructions, notices or requests may be sent by email to the Executive.

SECTION 13.  General Provisions.

(a) Severability.  It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing and except to the extent otherwise provided in Section 8(e) (with respect to a breach of the provisions of Section 8), if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Complete Agreement.  This Agreement and those documents expressly referred to herein (including, but not limited to, the exhibit attached hereto) constitute the entire agreement among the parties and supersede any prior correspondence or documents evidencing negotiations between the parties, whether written or oral, and any and all understandings, agreements or representations by or among the parties, whether written or oral, that may have related in any way to the subject matter of this Agreement.

 

 

 

  

6

  

 

(c) Force Majeure.  Neither party shall be deemed to be in default of its obligations hereunder if and so long as it is prevented from performing such obligations as a result of events beyond its reasonable control, including, without limitation, fire, power failures, any act of war, riot, strikes, civil insurrection, earthquake, hurricane, tornado or other catastrophic natural events or acts of God.

(d) Successors and Assigns.  Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Executive and the Company and their respective successors, assigns, heirs, representatives and estate; provided, however, that the rights and obligations of the Executive under this Agreement shall not be assigned without the prior written consent of the Company in its sole discretion. The Company may (i) assign any or all of its respective rights and interests hereunder to one or more of its affiliates, (ii) designate one or more of its affiliates to perform its respective obligations hereunder (in any or all of which cases the Company nonetheless shall remain responsible for the performance of all of their obligations hereunder), (iii) collaterally assign any or all of its respective rights and interests hereunder to one or more lenders of the Company or its affiliates, (iv) assign its respective rights hereunder in connection with the sale of all or substantially all of its business or assets (whether by merger, sale of stock or assets, recapitalization or otherwise) and (v) merge any of affiliates with or into the Company (or vice versa). The rights of the Company hereunder are enforceable by its affiliates, who are the intended third party beneficiaries hereof.

(e) Governing Law.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION), THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED.

(f) Jurisdiction and Venue.

(i) The Company and the Executive hereby irrevocably and unconditionally submit, for themselves and their property, to the non-exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in the State 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 the 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 the 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. The Executive agrees not to commence a claim or proceeding hereunder in a court other than a New York State court or federal court located in the State of New York, except if the Executive has first brought such claim or proceeding in such New York State court or federal court located in the State of New York, and such court or courts have denied jurisdiction over such claim or proceeding.

(ii) The Company and the 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 State of New York and any appellate court from any thereof.

(iii) Notwithstanding clauses (i)-(ii), the parties intend to and hereby confer jurisdiction to enforce the covenants contained in Sections 6 through 8 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 such covenants wholly or partially invalid or unenforceable by reason of the breadth of such scope or otherwise, it is the intention of the parties that such determination not bar or in any way affect the Company’s right 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.

(iv) 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.

(g) Amendment and Waiver.  The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and the Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(h) Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(i) Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

(j) WAIVER OF JURY TRIAL. NO PARTY TO THIS AGREEMENT OR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF A PARTY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER AGREEMENTS OR THE DEALINGS OR THE RELATIONSHIP BETWEEN THE PARTIES. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO THE OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

*  *  *  *

[Signature Page Follows]

  

7

  

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

	  	
TONIX PHARMACEUTICALS, INC.

 

 

By /s/ SETH LEDERMAN

     Seth Lederman, M.D.

     President and Chairman

 

 

 

EXECUTIVE:

 

/s/ RHONDA ROSEN

Rhonda Rosen

 

Address:

43 Dickinson Road

Basking Ridge, NJ 07920

 

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}]]