TOMI ENVIRONMENTAL SOLUTIONS, INC.
|
|
(Exact name of registrant as specified in its charter)
|
|
Florida
|
59-1947988
|
(State or other jurisdiction of
|
(IRS Employer Identification No.)
|
incorporation or organization)
|
|
9454 Wilshire Blvd., Penthouse, Beverly Hills, CA 90212
|
|
(Address of principal executive offices) (Zip Code)
|
|
(800) 525-1698
|
|
(Registrant’s telephone number, including area code)
|
|
Not Applicable
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
|
Smaller reporting company [X]
|
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2016
|
||
TABLE OF CONTENTS
|
||
Page
|
||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
||
PART I -
|
FINANCIAL INFORMATION
|
|
3
|
||
Item 1
|
Financial Statements.
|
|
Item 2
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
24
|
Item 3
|
Quantitative and Qualitative Disclosures About Market Risk.
|
34
|
Item 4
|
Controls and Procedures.
|
34
|
PART II -
|
OTHER INFORMATION
|
|
Item 1
|
Legal Proceedings.
|
35
|
Item 1A
|
Risk Factors.
|
35
|
Item 2
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
35
|
Item 3
|
Defaults Upon Senior Securities.
|
35
|
Item 4
|
Mine Safety Disclosures.
|
36
|
Item 5
|
Other Information.
|
36
|
Item 6
|
Exhibits.
|
39
|
SIGNATURES
|
40
|
|
EXHIBIT INDEX
|
41
|
ASSETS
|
||||||||
Current Assets:
|
||||||||
March 31, 2016
(Unaudited)
|
December 31, 2015
|
|||||||
Cash and Cash Equivalents
|
$ | 4,623,543 | $ | 5,916,068 | ||||
Accounts Receivable - net
|
1,617,462 | 1,414,576 | ||||||
Inventories (Note 3)
|
3,156,521 | 1,395,175 | ||||||
Deposits on Merchandise (Note 11)
|
237,345 | 442,358 | ||||||
Prepaid Expenses
|
114,292 | 76,730 | ||||||
Other Assets
|
36,613 | 36,613 | ||||||
Total Current Assets
|
9,785,777 | 9,281,519 | ||||||
Property and Equipment – net (Note 4)
|
506,523 | 250,264 | ||||||
Other Assets:
|
||||||||
Intangible Assets – net (Note 5)
|
2,195,171 | 2,287,548 | ||||||
Security Deposits
|
4,700 | 4,700 | ||||||
Total Other Assets
|
2,199,871 | 2,292,248 | ||||||
Total Assets
|
$ | 12,492,171 | $ | 11,824,031 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts Payable and Accrued Expenses
|
$ | 2,232,152 | $ | 1,087,978 | ||||
Accrued Officers Compensation (Note 9)
|
36,542 | - | ||||||
Common Stock and Warrants to be Issued (Note 12)
|
178,737 | 52,721 | ||||||
Customer Deposits
|
33,473 | 35,111 | ||||||
Deferred Rent
|
13,194 | 14,745 | ||||||
Advances on Grant (Note 11)
|
186,720 | 210,503 | ||||||
Total Current Liabilities
|
2,680,819 | 1,401,057 | ||||||
Total Liabilities
|
2,680,819 | 1,401,057 | ||||||
Commitments and Contingencies
|
||||||||
Stockholders’ Equity:
|
||||||||
Cumulative Convertible Series A Preferred Stock;
|
||||||||
par value $0.01, 1,000,000 shares authorized; 510,000 shares issued
|
||||||||
and outstanding at March 31, 2016 and December 31, 2015
|
5,100 | 5,100 | ||||||
Cumulative Convertible Series B Preferred Stock; $1,000 stated value;
|
||||||||
7.5% Cumulative dividend; 4,000 shares authorized; none issued
|
||||||||
and outstanding at March 31, 2016 and December 31, 2015
|
- | - | ||||||
Common stock; par value $0.01, 200,000,000 shares authorized;
|
||||||||
120,338,596 and 120,063,180 shares issued and outstanding
|
||||||||
at March 31, 2016 and December 31, 2015, respectively.
|
1,203,386 | 1,200,632 | ||||||
Additional Paid-In Capital
|
40,815,284 | 40,391,216 | ||||||
Accumulated Deficit
|
(32,212,418 | ) | (31,173,973 | ) | ||||
Total Stockholders’ Equity
|
9,811,352 | 10,422,974 | ||||||
Total Liabilities and Stockholders’ Equity
|
$ | 12,492,171 | $ | 11,824,031 |
For The Three Months Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
Sales, net
|
$ | 1,706,976 | $ | 676,386 | ||||
Cost of Sales
|
747,812 | 278,476 | ||||||
Gross profit
|
959,164 | 397,910 | ||||||
Operating Expenses:
|
||||||||
Professional Fees
|
177,660 | 107,032 | ||||||
Depreciation and Amortization
|
133,267 | 125,253 | ||||||
Selling Expenses
|
352,177 | 94,735 | ||||||
Research and Development
|
8,781 | 22,190 | ||||||
Consulting fees
|
129,626 | 76,309 | ||||||
Equity Compensation Expense (Note 8)
|
338,629 | 125,087 | ||||||
General and Administrative
|
857,468 | 271,314 | ||||||
Total Operating Expenses
|
1,997,608 | 821,919 | ||||||
Loss from Operations
|
(1,038,444 | ) | (424,009 | ) | ||||
Other Income (Expense):
|
||||||||
Amortization of Deferred Financing Costs
|
- | (84,450 | ) | |||||
Amortization of Debt Discounts
|
- | (963,348 | ) | |||||
Fair Value Adjustment of Derivative Liability
|
- | (2,673,148 | ) | |||||
Interest Expense
|
- | (126,850 | ) | |||||
Total Other Income (Expense)
|
- | (3,847,796 | ) | |||||
Net Loss
|
$ | (1,038,444 | ) | $ | (4,271,805 | ) | ||
Loss Per Common Share
|
||||||||
Basic and Diluted
|
$ | (0.01 | ) | $ | (0.05 | ) | ||
Basic and Diluted Weighted Average Common Shares Outstanding
|
120,177,335 | 84,043,034 |
Series A Preferred
|
Common Stock
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid
|
Accumulated
|
Total Stockholders’
|
||||||||||||||||||||||
in Capital
|
Deficit
|
Equity
|
||||||||||||||||||||||||||
Balance at December 31, 2015
|
510,000 | $ | 5,100 | 120,063,180 | $ | 1,200,632 | $ | 40,391,215 | $ | (31,173,974 | ) | $ | 10,422,973 | |||||||||||||||
Equity based compensation
|
281,628 | 281,628 | ||||||||||||||||||||||||||
Common stock issued for services provided
|
275,416 | 2,754 | 142,441 | 145,195 | ||||||||||||||||||||||||
Net Loss for the three months ended March 31, 2016
|
(1,038,444 | ) | (1,038,444 | ) | ||||||||||||||||||||||||
Balance at March 31, 2016
|
510,000 | $ | 5,100 | 120,338,596 | $ | 1,203,386 | $ | 40,815,284 | $ | (32,212,418 | ) | $ | 9,811,352 |
For The
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash Flow From Operating Activities:
|
||||||||
Net Loss
|
$ | (1,038,444 | ) | $ | (4,271,805 | ) | ||
Adjustments to Reconcile Net loss to
|
||||||||
Net Cash Used In Operating Activities:
|
||||||||
Depreciation and Amortization
|
133,267 | 125,253 | ||||||
Amortization of Deferred Financing Costs
|
- | 84,450 | ||||||
Amortization of Debt Discount
|
- | 963,348 | ||||||
Fair Value Adjustment of Derivative Liability
|
- | 2,673,148 | ||||||
Equity Based Compensation
|
281,628 | 97,301 | ||||||
Value of Equity Issued for Services
|
145,194 | 31,001 | ||||||
Reserve for Bad Debts
|
30,000 | 482 | ||||||
Changes in Operating Assets and Liabilities:
|
||||||||
Decrease (Increase) in:
|
||||||||
Accounts Receivable
|
(232,887 | ) | (171,166 | ) | ||||
Inventory
|
(1,761,346 | ) | (139,072 | ) | ||||
Prepaid Expenses
|
(37,563 | ) | (5,650 | ) | ||||
Deposits on Merchandise
|
205,012 | - | ||||||
Other Assets
|
- | 31 | ||||||
Deposits
|
- | 1,853 | ||||||
Increase (Decrease) in:
|
||||||||
Accounts Payable and Accrued Expenses
|
1,144,174 | 157,552 | ||||||
Accrued Interest
|
- | (126,850 | ) | |||||
Accrued Officers Compensation
|
36,542 | 9,000 | ||||||
Common Stock to be Issued
|
126,017 | 27,151 | ||||||
Deferred Rent
|
(1,551 | ) | 3,027 | |||||
Advances on Grant
|
(23,783 | ) | - | |||||
Customer Deposits
|
(1,637 | ) | (97 | ) | ||||
Net Cash Used in Operating Activities
|
(995,376 | ) | (541,043 | ) | ||||
Cash Flow From Investing Activities:
|
||||||||
Purchase of Property and Equipment
|
(297,149 | ) | (9,793 | ) | ||||
Net Cash Used in Investing Activities
|
(297,149 | ) | (9,793 | ) |
For The
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash Flow From Financing Activities:
|
||||||||
Proceeds From Issuance of Common Stock and Warrants
|
- | 510,213 | ||||||
Decrease in Bond Sinking Fund
|
- | 105,060 | ||||||
Payment of Finder's Fee
|
- | (51,000 | ) | |||||
Net Cash Provided by Financing Activities
|
- | 564,273 | ||||||
Increase (Decrease) In Cash and Cash Equivalents
|
(1,292,525 | ) | 13,437 | |||||
Cash and Cash Equivalents - Beginning
|
5,916,068 | 160,560 | ||||||
Cash and Cash Equivalents – Ending
|
$ | 4,623,543 | $ | 173,997 | ||||
Supplemental Cash Flow Information:
|
||||||||
Cash Paid For Interest
|
$ | - | $ | 253,700 | ||||
Cash Paid for Income Taxes
|
$ | 800 | $ | 800 | ||||
Non-Cash Investing and Financing Activities
|
||||||||
Common Stock Finder's Fee Accrual
|
$ | - | $ | 15,312 |
Level 1:
|
Quoted prices in active markets for identical assets or liabilities.
|
|
Level 2:
|
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities.
|
|
Level 3:
|
Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities.
|
For the Three Months Ended March 31,
|
||||||||
2016 | 2015 | |||||||
|
Net revenues
|
Net revenues
|
||||||
(unaudited)
|
||||||||
Domestic
|
$ | 978,678 | $ | 573,844 | ||||
International
|
728,298 | 102,542 | ||||||
Total
|
$ | 1,706,976 | $ | 676,386 |
Inventories consist of the following:
|
||||||
March 31,
|
|
|||||
2016
(Unaudited)
|
December 31,
2015
|
|||||
Raw materials
|
$
|
7,365
|
$
|
13,024
|
||
Finished goods
|
3,149,156
|
1,382,151
|
||||
$
|
3,156,521
|
$
|
1,395,175
|
March 31, | ||||||||
2016
(Unaudited)
|
December 31,
2015
|
|||||||
Furniture and fixtures
|
$ | 79,743 | $ | 79,743 | ||||
Equipment
|
718,592 | 421,442 | ||||||
Vehicles
|
44,344
|
44,344
|
||||||
Software
|
34,999
|
34,999
|
||||||
Leasehold Improvements
|
15,554
|
15,554
|
||||||
893,232 | 596,082 | |||||||
Less: Accumulated depreciation
|
386,708 | 345,818 | ||||||
$ | 506,523 | $ | 250,264 |
March 31,
2016
(Unaudited)
|
December 31,
2015
|
|||||||
Intellectual Property and Patents
|
$ | 2,848,300 | $ | 2,848,300 | ||||
Less: Accumulated Amortization
|
1,093,129 | 1,000,752 | ||||||
Intangible Assets, net
|
$ | 1,755,171 | $ | 1,847,548 |
Trademarks
|
$ | 440,000 | $ | 440,000 |
Total Intangible Assets, net
|
$ | 2,195,171 | $ | 2,287,548 |
Twelve Month Period Ending March 31, | Amount | |||
2017 | $ | 370,000 | ||
2018 | 370,000 | |||
2019 | 370,000 | |||
2020 | 370,000 | |||
2021 | 275,000 | |||
$ | 1,755,000 |
June 30,
|
||||||||
2015
|
Inception
|
|||||||
Closing stock price
|
$ | 0.55-.64 | $ | 0.13-0.55 | ||||
Conversion price
|
$ | 0.29 | $ | 0.29 | ||||
Expected volatility
|
125 | % | 185%-190 | % | ||||
Remaining term (years)
|
0.09 - 0.11 | 2.30-2.07 | ||||||
Risk-free rate
|
0.00 | % | .25%-.43 | % | ||||
Expected dividend yield
|
0 | % | 0 | % |
Inception
|
||||
Closing stock price
|
$ | 0.13-0.55 | ||
Conversion price
|
$ | 0.30 | ||
Expected volatility
|
250 | % | ||
Remaining term (years)
|
5.30-5.09 | |||
Risk-free rate
|
.76% -(1.61 | )% | ||
Expected dividend yield
|
0 | % |
March 31,
2016 (Unaudited)
|
December 31,
2015
|
|||||||
Beginning Balance
|
$ | - | $ | 1,728,883 | ||||
Change in fair value
|
- | 3,810,955 | ||||||
Reclassification to additional paid in capital due to retirement of convertible notes
|
- | (5,539,838 | ) | |||||
Ending Balance
|
$ | - | $ | - |
March 31, 2016 (Unaudited) | December 31, 2015 | |||||||||||||||
Number of Options
|
Weighted Average Exercise Price
|
Number of Options
|
Weighted Average Exercise Price
|
|||||||||||||
Outstanding, beginning of period
|
100,000 | $ | 0.96 | 60,000 | $ | 1.42 | ||||||||||
Granted
|
100,000 | 0.55 | 40,000 | 0.27 | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Outstanding, end of period
|
200,000 | $ | 0.76 | 100,000 | $ | 0.96 |
Outstanding Options
|
Average
Weighted
|
Exercisable Options
|
||||||||||||||||
Range
|
Number
|
Remaining
Contractual
Life in Years
|
Number
|
Weighted
Average
Exercise Price
|
||||||||||||||
$
|
2.10
|
40,000
|
3.76
|
40,000
|
$
|
2.10
|
||||||||||||
$
|
0.05
|
20,000
|
4.77
|
20,000
|
$
|
0.05
|
||||||||||||
$
|
0.27
|
40,000
|
8.77
|
40,000
|
$
|
0.27
|
||||||||||||
$
|
0.55
|
100,000
|
9.85
|
100,000
|
$
|
0.55
|
||||||||||||
200,000
|
200,000
|
March 31, 2016 (Unaudited) | December 31, 2015 | |||||||||||||||
Number of Warrants
|
Weighted Average Exercise Price
|
Number of Warrants
|
Weighted Average Exercise Price
|
|||||||||||||
Outstanding, beginning of period
|
35,676,413 | $ | 0.30 | 28,051,408 | $ | 0.23 | ||||||||||
Granted
|
350,000 | 0.51 | 7,625,005 | 0.58 | ||||||||||||
Outstanding, end of period
|
36,026,413 | $ | 0.31 | 35,676,413 | $ | 0.30 |
Outstanding Warrants
|
Exercisable Warrants
|
|||||||||||||||||
Range
|
Number
|
Average
Weighted
Remaining
Contractual
Life in Years
|
Number
|
Weighted
Average
Exercise Price
|
||||||||||||||
$ | 0.01 | 1,575,000 | 1.28 | 1,575,000 | $ | 0.01 | ||||||||||||
$ | 0.05 | 975,000 | 1.37 | 975,000 | $ | 0.05 | ||||||||||||
$ | 0.15 | 7,750,000 | 1.55 | 7,750,000 | $ | 0.15 | ||||||||||||
$ | 0.26 | 100,000 | 2.24 | 100,000 | $ | 0.26 | ||||||||||||
$ | 0.29 | 10,125,613 | 4.56 | 10,125,613 | $ | 0.29 | ||||||||||||
$ | 0.30 | 11,925,800 | 2.50 | 11,825,800 | $ | 0.30 | ||||||||||||
$ | 0.33 | 75,000 | 2.50 | 75,000 | $ | 0.33 | ||||||||||||
$ | 0.50 | 325,000 | 4.32 | 325,000 | $ | 0.50 | ||||||||||||
$ | 0.55 | 100,000 | 4.83 | 100,000 | $ | 0.55 | ||||||||||||
$ | 0.62 | 75,000 | 2.30 | 75,000 | $ | 0.62 | ||||||||||||
$ | 1.00 | 3,000,000 | 4.09 | 3,000,000 | $ | 1.00 | ||||||||||||
36,026,413 | 35,926,413 |
Unvested Warrants
|
||||||||||
Weighted
Average
Exercise Price
|
Number
|
Average
Weighted
Remaining
Contractual
Life in Years
|
||||||||
$ | 0.30 | 100,000 | 5.00 |
Twelve Month Period Ending March 31, | Amount | |||
2017 | $ | 52,000 | ||
2018 | 45,000 | |||
$ | 97,000 |
Level 1: |
Quoted prices in active markets for identical assets or liabilities.
|
|
Level 2:
|
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities.
|
|
Level 3:
|
Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities.
|
As of
|
||||||||
March 31,
2016
(Unaudited)
|
As of
December 31,
2015
|
|||||||
Total stockholders’ equity
|
$ | 9,811,352 | $ | 10,422,974 | ||||
Cash and cash equivalents
|
$ | 4,623,543 | $ | 5,916,068 | ||||
Accounts receivable
|
$ | 1,617,462 | $ | 1,414,576 | ||||
Inventories
|
$ | 3,156,521 | $ | 1,395,175 | ||||
Deposits on Merchandise
|
$ | 237,345 | $ | 442,358 | ||||
Current Liabilities
|
$ | 2,680,819 | $ | 1,401,057 | ||||
Working capital
|
$ | 7,104,958 | $ | 7,880,462 |
●
|
Net cash used in operations of approximately $995,000;
|
●
|
Acquisition of property plant and equipment of $297,000;
|
●
|
Increase in revenue of approximately $1,031,000 and the overall gross profit of approximately $561,000;
|
●
|
Reduced amortization of deferred financing costs of approximately $84,000 as a result of the convertible notes retired in June of 2015;
|
●
|
Reduced amortization of debt discounts of approximately $963,000 as a result of the convertible notes retired in June of 2015;
|
●
|
Changes in the fair value of the embedded conversion feature of the convertible notes of $2,673,000 incurred in the first quarter of 2015 with no such charge in the first quarter of 2016 as a result of the convertible notes retired in 2015;
|
●
|
Reduced interest expense of approximately $127,000 in connection with the retirement of the convertible notes in June of 2015; offset by; and
|
●
|
Increased operating expenses of approximately $1,176,000.
|
For the
|
For the
|
|||||||
three months ended
|
three months ended
|
|||||||
March 31, 2016
|
March 31, 2015
|
|||||||
Revenues
|
$ | 1,707,000 | $ | 676,000 | ||||
Gross Profit
|
$ | 959,000 | $ | 398,000 | ||||
Total Operating Expenses
(1)
|
$ | 1,998,000 | $ | 822,000 | ||||
Loss from Operations
|
$ | (1,038,000 | ) | $ | (424,000 | ) | ||
Total Other Income (Expense)
(2)
|
$ | - | $ | (3,848,000 | ) | |||
Net Loss
|
$ | (1,038,000 | ) | $ | (4,272,000 | ) | ||
Basic loss per share
|
$ | (0.01 | ) | $ | (0.05 | ) | ||
Diluted loss per share
|
$ | (0.01 | ) | $ | (0.05 | ) |
(1)
|
Includes approximately $339,000 and $125,000 in non-cash equity compensation expense for the three months ended March 31, 2016 and 2015, respectively.
|
(2)
|
Includes fair value adjustment loss on derivative liability of approximately $2,673,000 for the three months ended March 31, 2015, and amortization of debt discount of approximately $963,000 for the three months ended March 31, 2015.
|
For the
|
For the
|
|||||||
Three months ended
|
Three months ended
|
|||||||
March 31,
2016
|
March 31,
2015
|
|||||||
Revenues:
|
||||||||
International
|
$ | 979,000 | $ | 574,000 | ||||
United States
|
728,000 | 102,000 | ||||||
Total Revenues
|
$ | 1,707,000 | $ | 676,000 |
●
|
Expanding our label with the EPA to include the bacteria’s C. diff and MRSA and the virus H1N1 in the EPA stamped registration. In February 2016, the Company achieved the amended registration and feels it could allow TOMI to change the way our product is marketed in the United States Hospital-Healthcare verticals that could lead to further market penetration for the Company.
|
●
|
Expansion of our internal salesforce and manufacturer representatives. In February 2016, the Company hired a Vice President of Sales and an Internal Sales Director in an effort to drive domestic revenue in all Hospital-Healthcare verticals.
|
●
|
Expansion of international distributors. In February 2016, the Company announced the distributor agreement with TOMI Asia to facilitate growth in the Asian region, specifically Mainland China and Indo-China excluding South Korea and Australia/New Zealand.
|
●
|
Continued growth of the TSN. In January 2016, the Company hired a President and Director of Network Recruitment for TSN in order to increase TSN’s internal salesforce which therefore increased membership. TSN currently has a total of 45 members and 21 members have been added year to date.
|
Payments Due by Period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 Year
|
1 – 3
Years
|
3 – 5
Years
|
More than
5 Years
|
|||||||||||||||
Operating leases
(1)
|
97 | 52 | 45 | - | - | |||||||||||||||
$ | 97 | $ | 52 | $ | 45 | $ | - | $ | - |
Plan category
|
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
(b) Weighted-average exercise price of outstanding options, warrants and rights
|
(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (3)
|
|||||||||
Equity compensation plans approved by security holders
|
100,000 | (1) | $ | 0.96 | - | |||||||
Equity compensation plans not approved by security holders
|
14,375,000 | (2) | $ | 0.36 | - | |||||||
Total
|
14,475,000 | $ | 0.37 | - |
Exhibit
|
Incorporated by Reference
|
Filed
Herewith
|
||||||||||
Number
|
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
|||||||
3.2
|
Bylaws, as amended.
|
X
|
||||||||||
10.1+
|
Employment Agreement by and between the Company and Halden S. Shane, dated January 15, 2016.
|
X
|
||||||||||
10.2+
|
Employment Agreement by and between the Company and Robert Wotczak, dated February 8, 2016.
|
X
|
||||||||||
10.3+
|
Employment Agreement by and between the Company and Nick Jennings, dated September 2, 2015.
|
X
|
||||||||||
10.4+
|
Employment Agreement by and between the Company and Norris Gearhart, dated September 2, 2015.
|
X
|
||||||||||
10.5+
|
Form of Director Agreements.
|
X
|
||||||||||
10.6+
|
TOMI Environmental Solutions, Inc. 2016 Equity Compensation Plan.
|
X
|
||||||||||
31.1
|
|
Certification of Halden S. Shane, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
X
|
||||
31.2
|
|
Certification of Nick Jennings, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
X
|
||||
32.1#
|
|
Certification of Halden S. Shane, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
X
|
||||
32.2#
|
|
Certification of Nick Jennings, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
X
|
||||
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
X
|
||||
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
X
|
||||
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
X
|
||||
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
X
|
||||
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
|
X
|
||||
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
X
|
●
|
Set strategy and direction for TOMI and TOMI Service Network (“TSN”);
|
●
|
Model and establish TOMI’s culture and mission to “Innovate for a Safer World”;
|
●
|
Build, supervise, and direct the C-suite and Senior Executive Team (“Executives”);
|
●
|
Devote full time and energy to the business and affairs of TOMI and shall use best efforts to promote the interests of TOMI; and
|
●
|
Allocate capital to TOMI’s priorities.
|
●
|
Provide day-to-day leadership and management to TOMI and TSN’s corporate and service organization that mirrors the adopted mission and core values of each respectively.
|
●
|
Responsible for driving TOMI and TSN to achieve and surpass sales, profitability, cash flow, business goals and objectives.
|
●
|
Spearhead the development, communication and implementation of effective growth strategies and processes including but not limited to the advancement of TOMI’s SteraMist TM BITTM technology.
|
●
|
Provide, approve, supervise and direct the methods of keeping the records of TOMI, statistical or otherwise, and shall manage the preparation of all reports as are required by law or regulation, including but not limited to, statements and reports to the Board, and shall, from time to time, and at any time upon request from the Board concerning the affairs and financial condition of TOMI, and such other matters as the Board may direct.
|
●
|
Authority is given to hire, compensate, and terminate TOMI’s staff and executives within budgetary limitations. CEO will advise the Board annually regarding the compensation for each executive team member. Such information will include current compensation, the change in compensation, and the new compensation for each individual.
|
●
|
Authority is given to implement any plausible strategic plan for tracking and reporting the success of TOMI.
|
●
|
Collaborate with executives to develop and implement plans for the operational infrastructure of systems, processes, and personnel designed to accommodate the rapid growth objectives of TOMI.
|
●
|
Supervise TOMI’s daily investment activities in accordance with the policies, procedures, and goals established.
|
●
|
Raise additional capital at appropriate valuations to enable TOMI to meet sales, growth and market share objectives.
|
●
|
Represent TOMI in a positive way with clients, investors and business partners.
|
●
|
Provide effective and inspiring leadership by being actively involved in all marketing, TOMI services, and the development of TOMI and TSN training programs.
|
●
|
Review and monitor annual department operational budgets and police the effective management of these budgets.
|
●
|
Manage and cultivate existing relationships with investors, Wall Street, and federal, state, and international regulatory agencies.
|
●
|
Publicly represent TOMI within the media and external constituency groups including community, governmental and private organizations, domestically and internationally to build excitement for TOMI’s mission and core values.
|
●
|
Options. Annual grants of up to 250,000 Stock Options at market price from the Company’s Stock Option Plan.
|
Ø
|
Assist in formulating TOMI’s future direction and supporting tactical initiatives.
|
Ø
|
Monitor and direct the implementation of strategic business plans.
|
Ø
|
Develop financial and tax strategies.
|
Ø
|
Manage the budgeting processes.
|
Ø
|
Develop performance measures that support TOMI’s strategic direction.
|
Ø
|
Participate in key decisions as a member of the executive management team.
|
Ø
|
Maintain in-depth relations with all members of the senior management team.
|
Ø
|
Oversee the financial operations of foreign operations. Oversee the financial operations of TOMI Service Network (TSN).
|
Ø
|
Manage any third parties to which functions have been outsourced.
|
Ø
|
Oversee TOMI’s transaction processing systems and upgrade to SAGE 100 along with intergreting to ZOHO.
|
Ø
|
Establish and write policy for AP, AR and inventory.
|
Ø
|
Assist with a QA policy.
|
Ø
|
Change accounting to SAGE 100 as soon as feasible to not effect current operations.
|
Ø
|
Implement operational best practices.
|
Ø
|
Supervise acquisition due diligence and negotiate acquisitions.
|
Ø
|
Beginning with 3Q 2014, personally review, approve and execute all Form 8-K, 10-K, and 10-Q TOMI filings with the Securities and Exchange Commission.
|
Ø
|
Oversee the issuance of financial information.
|
Ø
|
Report financial results to the board of directors.
|
Ø
|
Understand and mitigate key elements of TOMI’s risk profile.
|
Ø
|
Monitor all open legal issues involving TOMI.
|
Ø
|
Construct and monitor reliable internal control systems.
|
Ø
|
Maintain appropriate insurance coverage.
|
Ø
|
Ensure that TOMI complies with all applicable legal and regulatory requirements as it relates to accounting and other financial issues.
|
Ø
|
Ensure that accounting record keeping meets the requirements of auditors and government agencies.
|
Ø
|
Report risk issues to the audit committee of the board of directors.
|
Ø
|
Maintain relations with external auditors and investigate their findings and recommendations.
|
Ø
|
Monitor cash balances and cash forecasts.
|
Ø
|
Arrange for debt and equity financing.
|
Ø
|
Assist TSN members in financing options.
|
Ø
|
Invest funds.
|
Ø
|
Participate in conference calls with the investment community.
|
Ø
|
Participate in quarterly earnings calls and investor up-date calls.
|
Ø
|
Represent TOMI with investment bankers as well as with investors in TOMI.
|
Ø
|
Work with TOMI’s IR company in all capacities.
|
Ø
|
Maintain and monitor improved D & B ratings.
|
Ø
|
Effective October 1
st
, 2015, TOMI will issue a grant to Mr. Jennings of 100,000 stock warrants at a strike price of $0.50. The said warrants shall vest on that day.
|
●
|
Annual grants of 100,000 Stock Options at a strike price of $.50 from the Company’s Stock Option Plan will be issued on every October 1
st
anniversary; next anniversary is October 1
st
, 2016.
|
●
|
Stock Grants – additional shares of TOMI stock may be granted on an annual basis at TOMI’s discretion based on level of overachievement of performance objectives.
|
I.
|
As the chief operating officer of TOMI and TSN he will provide leadership to TOMI’s and TSN’s strategic planning process and will implement new programmatic strategic initiatives. In addition, the COO will: provide coordination for TOMI’s and TSN senior management team; serve as liaison to All of TOMI and TSN’s partners; and work with TOMI’s CEO and its Board of Directors to keep them abreast of programmatic strategies and challenges.
|
II
.
|
The COO will partner with the chief financial officer (CFO), and all other director’s and will be responsible for developing,
|
III.
|
Finally, the COO will cultivate existing relationship with public and private funders.
|
Ø
|
Provide day-to-day leadership and management to TOMI’s and TSN corporate and service organization that mirrors the adopted mission and core values of the TOMI. Bottom line: Build a beautiful company.
|
Ø
|
Responsible for driving the company to achieve and surpass sales, profitability, cash flow and business goals and objectives.
|
Ø
|
Responsible for working with TOMI’s manufacturers, partners and divisions.
|
Ø
|
Responsible for the measurement and effectiveness of all processes internal and external. Provides timely, accurate and complete reports on the operating condition of the company.
|
Ø
|
Spearhead the development, communication and implementation of effective growth strategies and processes including the advancement of TOMI’s technology.
|
Ø
|
Be the master of the technician’s and develop methods for your core values to be simulated by the technicians and trainers.
|
Ø
|
Collaborate with the management team to develop and implement plans for the operational infrastructure of systems, processes, and personnel designed to accommodate the rapid growth objectives of our organization.
|
Ø
|
Motivate and lead a high performance management team; attract, recruit and retain required members of the executive team not currently in place; provide mentoring as a cornerstone to the management career development program.
|
Ø
|
Act as lead “client-care officer” through direct contact with every client and partner.
|
Ø
|
Assist, as required, in raising additional capital at appropriate valuations to enable the Company to meet sales, growth, and market share objectives.
|
Ø
|
Foster a success-oriented, accountable environment within the company.
|
Ø
|
Represent TOMI in a positive way with clients, investors, and business partners.
|
Ø
|
Provide effective and inspiring leadership by being actively involved in all programs and services, developing a broad and deep knowledge of all programs.
|
Ø
|
Identify opportunities for XYZ Nonprofit to leverage cross-program strengths to take advantage of new opportunities and/or to address organizational challenges.
|
Ø
|
Lead, coach, develop, train and retain TOMI’s high-performance senior management team with an emphasis on developing capacity in strategic analysis and planning and program budgeting.
|
Ø
|
Develop and implement training programs and retreats to expand the capacity of all staff.
|
Ø
|
Prepare and submit an annual operational budget, manage effectively within this budget, and report accurately on progress made and challenges encountered.
|
Ø
|
Ensure the continued financial viability of TOMI’s technology and service/operational units through sound fiscal management.
|
Ø
|
Manage and cultivate existing relationships with funders to secure and expand recurring revenue streams.
|
Ø
|
Publicly represent TOMI with the media and external constituency groups including community, governmental, and private organizations and build excitement for TOMI’s mission.
|
Ø
|
Provide programmatic leadership and input for all strategic plan implementation processes with the CFO and staff.
|
Ø
|
Coach program directors as they implement the strategic plan and transition program operations.
|
Ø
|
Develop and implement a system for tracking and reporting on the progress of the strategic plan implement.
|
●
|
Warrants. Annual grants of up to 250,000 Stock Options, at a strike price at a strike price equal to a Vwap of the five-day period prior to the close of the year.
|
●
|
Stock Grants – additional shares of TOMI stock may be granted on an annual basis at TOMI’s discretion based on level of overachievement of performance objectives.
|
|
TOMI Environmental Solutions, Inc.
|
|
1.
|
Constructively challenge and help develop proposals on strategy;
|
|
2.
|
Participate on committees of the Board;
|
|
3.
|
Attend Board meetings of the Company and give advice to the Board as is
consistent with certain duties as a director of the Company;
|
|
4.
|
Accept responsibility, publicly and where necessary in writing, when required
to do so under any act, regulation or code of conduct;
|
|
5.
|
Scrutinize the performance of management in meeting pre agreed goals and
objectives and monitor the reporting of performance;
|
|
6.
|
Set the Company’s strategic aims, ensuring that the necessary resources are in
place for the Company to meet its objectives;
|
|
7.
|
Satisfy yourself on the integrity of financial information and that financial
controls and systems of risk management are robust and defensible;
|
|
8.
|
Devote time to developing and refreshing your knowledge on the Company’s
technology, products, and mission in “Innovating for a Safer World”;
|
|
9.
|
Uphold high standards of integrity and probity and extend your support in
instilling the appropriate culture, values and behaviors in the boardroom, for
the Company, and beyond;
|
|
10.
|
Take into account the views of shareholders and other stakeholders where
appropriate.
|
1.
|
Upon either party deciding to prematurely conclude the existing term of appointment,
the party deciding to so conclude the existing term of appointment would serve a
reasonable written notice on the other.
|
2.
|
The Company may terminate your appointment subject to approval by a majority vote from the Board and/or the shareholders, if you:
|
a.
|
Commit a material breach of your obligation under this letter;
|
b.
|
Commit any serious or repeated breach or non-observance of your obligation
to the Company (which include an obligation not to breach your duties to the
Company, whether statutory, fiduciary or common-law); and
|
c.
|
Are guilty of any fraud or dishonesty or acted in a manner which, in the
opinion of the Company, brings or is likely to bring you or the Company into
disrepute or is materially opposing to the interests of the Company.
|
I.
|
ESTABLISHMENT, OBJECTIVES AND DURATION
|
2
|
II.
|
DEFINITIONS
|
2
|
III.
|
ADMINISTRATION
|
7
|
IV.
|
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
|
8
|
V.
|
ELIGIBILITY AND PARTICIPATION
|
10
|
VI.
|
STOCK OPTIONS
|
10
|
VII.
|
STOCK APPRECIATION RIGHTS
|
12
|
VIII.
|
RESTRICTED STOCK
|
13
|
IX.
|
RESTRICTED STOCK UNITS
|
17
|
X.
|
PERFORMANCE UNITS AND PERFORMANCE SHARES
|
17
|
XI.
|
PERFORMANCE MEASURES
|
19
|
XII.
|
BENEFICIARY DESIGNATION
|
20
|
XIII.
|
DEFERRALS
|
20
|
XIV.
|
RIGHTS OF PARTICIPANTS
|
20
|
XV.
|
AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS
|
20
|
XVI.
|
PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON
|
21
|
XVII.
|
CHANGE IN CONTROL
|
22
|
XVIII.
|
TAX PROVISIONS
|
22
|
XIX.
|
INDEMNIFICATION
|
23
|
XX.
|
SUCCESSORS
|
23
|
XXI.
|
LEGAL CONSTRUCTION
|
23
|
I.
|
ESTABLISHMENT, OBJECTIVES AND DURATION
|
II.
|
DEFINITIONS
|
1.
|
the “Beneficial Ownership” of securities as defined in Rule 13d-3 under the Exchange Act representing more than fifty percent (50%) of the combined voting power of the Company is acquired by any “person” as defined in Section 3(a)(9) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company); or
|
2.
|
the consummation of a definitive agreement to merge or consolidate the Company with or into another corporation or to sell or otherwise dispose of all or substantially all of its assets, or adopt a plan of liquidation other than for the sole purpose of changing the company’s domicile or a recapitalization or reorganization and that results in more than 50% change in stock ownership.
|
3.
|
Change in Ownership
: A change in ownership of the Company occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, excluding the acquisition of additional stock by a person or more than one person acting as a group who is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company.
|
4.
|
Change in Effective Control
: A change in effective control of the Company occurs only on either of the following dates:
|
a.
|
The date any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending in the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 50% or more of the total voting power of the stock of the Company; or
|
b.
|
The date a majority of the members of the Board is replaced during any (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors before the date of the appointment or election; provided that this paragraph (b) shall apply only to the company for which no other corporation is a majority shareholder.
|
5.
|
Change in Ownership of Substantial Assets
: A change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
|
1.
|
if such Shares then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Shares are listed or admitted to trading as reported in
The Wall Street Journal
;
|
2.
|
if such Shares are publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported by The Wall Street Journal (or, if not so reported, as otherwise reported by any newspaper or other source as the Committee may determine); or
|
3.
|
if none of the foregoing is applicable to the valuation in question, by the Committee in good faith.
|
III.
|
ADMINISTRATION
|
IV.
|
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
|
1.
|
STOCK OPTIONS: The maximum aggregate number of Shares that may be subject to Stock Options granted in any one fiscal year to any one Participant shall be two hundred fifty thousand (250,000).
|
2.
|
SARs: The maximum aggregate number of Shares that may be granted in the form of SARs granted in any one fiscal year to any one Participant shall be two hundred fifty thousand (250,000).
|
3.
|
RESTRICTED STOCK: The maximum aggregate grant with respect to Awards of Restricted Stock which are granted in any one fiscal year to any one Participant shall be two hundred fifty thousand (250,000) Shares.
|
4.
|
RESTRICTED STOCK UNITS: The maximum aggregate payment (determined as of the date of grant) with respect to Awards of RSUs granted in any one fiscal year to any one Participant shall be equal to the Fair Market Value of two hundred fifty thousand (250,000) Shares; provided, however, that the maximum aggregate grant of Restricted Stock and RSUs for any one fiscal year shall be coordinated so that in no event shall any one Participant be awarded more than the Fair Market Value of two hundred fifty thousand (250,000) Shares taking into account all such grants.
|
5.
|
PERFORMANCE SHARES: The maximum aggregate payout (determined as of the event of the applicable performance period) with respect to Awards of Performance Shares which are granted in any one fiscal year to any one Participant shall be equal to the Fair Market Value of two hundred fifty thousand (250,000) Shares.
|
6.
|
PERFORMANCE UNITS: The maximum aggregate payout (determined as of the end of the applicable performance period) with respect to Awards of Performance Units which are granted in any one fiscal year to any one Participant shall be equal to one million five hundred thousand dollars ($1,500,000).
|
1.
|
An Award of an Option;
|
2.
|
An Award of a SAR;
|
3.
|
An Award of Restricted Stock;
|
4.
|
A payout of a Performance Share Award in Shares; and
|
5.
|
A payout of a Performance Units Award in Shares.
|
2.
|
A cancellation, termination, expiration, forfeiture or lapse for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Options, or the termination of a related Option upon exercise of the corresponding Tandem SAR) of any Award payable in Shares;
|
3.
|
Shares tendered in payment of the exercise price of an Option;
|
4.
|
Shares withheld for payment of federal, state or local taxes;
|
5.
|
Shares repurchased by the Company with proceeds collected in connection with the exercise of outstanding Options; and
|
6.
|
The net Shares issued in connection with the exercise of SARs (as opposed to the full number of Shares underlying the exercised portion of the SAR).
|
V.
|
ELIGIBILITY AND PARTICIPATION
|
VI.
|
STOCK OPTIONS
|
1.
|
INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or the Participant’s legal representative (to the extent permitted under Code Section 422).
|
2.
|
NONQUALIFIED STOCK OPTIONS. No NQSO granted under this Article VI may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement, all NQSOs granted to a Participant under this Article VI shall be exercisable during his or her lifetime only by such Participant or the Participant’s legal representative.
|
VII.
|
STOCK APPRECIATION RIGHTS
|
1.
|
the difference between the Fair Market Value of a Share on the date of exercise over the grant price; by
|
2.
|
the number of Shares with respect to which the SAR is exercised.
|
VIII.
|
RESTRICTED STOCK
|
H.
|
ADDITIONAL PROVISIONS RELATED TO RESTRICTED STOCK AWARDS TO NON-EMPLOYEE DIRECTORS.
|
1.
|
AWARD DATES. Effective as of the date specified by the Committee in its sole discretion, each Non-Employee Director will be awarded such number of Shares of Restricted Stock as determined by the Board, after consideration of the recommendation of the Committee. Non-Employee Directors may, but need not, be awarded the same number of Shares of Restricted Stock. A Non-Employee Director who is first elected to the Board on a date subsequent to the date specified by the Committee in its sole discretion will be awarded such number of Shares of Restricted Stock as of such date of election as determined by the Board, after consideration of the recommendation of the Committee.
|
2.
|
DIVIDEND RIGHTS OF HOLDERS OF RESTRICTED STOCK. Notwithstanding Section VIII.F., upon issuance of a Restricted Stock Agreement, the Non-Employee Director in whose name the Restricted Stock Agreement is registered will, subject to the provisions of the Plan have the right to receive cash dividends and other cash distributions thereon.
|
3.
|
PERIOD OF RESTRICTION. Restricted Stock will be subject to the restrictions set forth in Section VIII.H.4. and the other provisions of the Plan during the Period of Restriction commencing on the date as of which the Restricted Stock is awarded (the “Award Date”) and ending on the earliest of the first to occur of the following:
|
a.
|
the retirement of the Non-Employee Director from the Board in compliance with the Board’s retirement policy as then in effect;
|
b.
|
the termination of the Non-Employee Director’s service on the Board as a result of the Non-Employee Director’s not being nominated for reelection by the Board;
|
c.
|
the termination of the Non-Employee Director’s service on the Board because of the Non-Employee Director’s resignation or failure to stand for reelection with the consent of the Company’s Board (which means approval by at least 80% of the Directors voting, with the affected Non-Employee Director abstaining);
|
d.
|
the termination of the Non-Employee Director’s service on the Board because the Non-Employee Director, although nominated for reelection by the Board, is not reelected by the stockholders;
|
e.
|
the termination of the Non-Employee Director’s service on the Board because of (i) the Non-Employee’s Director’s resignation at the request of the Board or the Nominating and Governance Committee of the Board (or successor committee), (ii) the Non-Employee Director’s removal by action of the stockholders or by the Board, or (iii) a Change in Control of the Company;
|
f.
|
the termination of the Non-Employee Director’s service on the Board because of Disability or death; or
|
g.
|
the vesting of the Restricted Stock.
|
4.
|
FORFEITURE OF RESTRICTED STOCK. As of the date (“Termination Date”) a Non-Employee Director ceases to be a member of the Board for any reason, including but not limited to removal or resignation for Cause, the Non-Employee Director shall forfeit to the Company all Restricted Stock awarded to the Non-Employee Director for which the Period of Restriction has not ended pursuant to Section VIII.H.3. as of or prior to the Termination Date.
|
IX.
|
RESTRICTED STOCK UNITS
|
X.
|
PERFORMANCE UNITS AND PERFORMANCE SHARES
|
XI.
|
PERFORMANCE MEASURES
|
XII.
|
BENEFICIARY DESIGNATION
|
XIII.
|
DEFERRALS
|
XIV.
|
RIGHTS OF EMPLOYEES
|
XV.
|
AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS
|
XVI.
|
PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON
|
XVII.
|
CHANGE IN CONTROL
|
1.
|
any and all Options and SARs granted hereunder shall become fully-vested and immediately exercisable;
|
2.
|
any Periods of Restriction and restrictions imposed on Restricted Stock or RSUs which are not intended to qualify for the Performance-Based Exception shall lapse; and
|
3.
|
any Award intended to qualify for the Performance-Based Exception shall be earned in accordance with the applicable Award Agreement.
|
XVIII.
|
TAX PROVISIONS
|
XIX.
|
INDEMNIFICATION
|
XX.
|
SUCCESSORS
|
XXI.
|
LEGAL CONSTRUCTION
|
1.
|
Distribution to Specified Employees Upon Separation from Service
. To the extent that payment under an Award which is subject to Code Section 409A is due to a Specified Employee on account of the Specified Employee’s Separation from Service from the Company or its Affiliate or Subsidiary, such payment shall be delayed until the first day of the seventh (7
th
) month following such Separation from Service (or as soon as practicable thereafter). The Committee, in its discretion, may provide in the Award document for the payment of interest at a rate set by the Committee for such six-month period. In the event that a payment under an Award is exempt from Code Section 409A, payment shall be made to a Specified Employee without any such six-month delay.
|
2.
|
No Acceleration of Payment
. To the extent that an Award is subject to Code Section 409A, payment under such Award shall not be accelerated from the date(s) specified in the Award documents as of the date of grant.
|
3.
|
Subsequent Delay in Payment
. To the extent that an Award is subject to Code Section 409A, payment under such Award shall not be deferred beyond the dates specified in the Award document as of the date of grant, unless the Committee or Participant, as the case may be, makes the decision to delay payment at least one year prior to the scheduled payment date, and payment is delayed at least five (5) years.
|
/s/ HALDEN S. SHANE
|
Halden S. Shane
Chief Executive Officer
(Principal Executive Officer)
|
/s/ Nick Jennings
|
Nick Jennings,
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
/s/ HALDEN S. SHANE
|
Halden S. Shane
Chief Executive Officer
(Principal Executive Officer)
|
/s/ Nick Jennings
|
Nick Jennings
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|