EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of the 1st day
of January 2011, is entered into by and between Dr. Xxxxxx Xxxxx (the
"Executive") and TOMI Environmental Solutions, a Florida corporation (the
"Company").
The Company desires to establish its right to the continued services
of the Executive, in the capacity described below, on the terms and conditions
and subject to the rights of termination hereinafter set forth, and the
Executive is willing to accept such employment on such terms and
conditions.
In consideration of the mutual agreements hereinafter set forth, the
Executive and the Company have agreed and do hereby agree as follows:
1. Employment. The Company does hereby employ the Executive
as President, Chairman of the Board and Chief Executive Officer of the
Company, and the Executive does hereby accept and agree to such
employment. The Executive's duties as President, Chairman of the Board
and Chief Executive Officer shall be such executive and managerial duties
as the Board of Directors of the Company shall from time to time prescribe
and as provided in the Bylaws of the Company. The Executive shall devote
such time, energy and skill to the performance of his duties for the
Company and for the benefit of the Company as may be necessary or
required for the effective conduct and operation of the Company's business.
Furthermore, the Executive shall exercise due diligence and care in the
performance of his duties for the Company under this Agreement.
2. Term of Agreement. The term ("Term") of this Agreement shall
commence as of the date hereof and shall continue through December 31,
2015, unless sooner terminated as provided herein or renewed pursuant to
the terms of Section 7 hereof.
3. Appointment to Board of Directors. During the Executive's
employment by the Company, the Executive shall serve as a member of the
Board of Directors of the Company.
4. Compensation.
(a) Base Salary. The Company shall pay the Executive a base salary of
Twenty Thousand Dollars ($20,000) per year, subject to annual increases as
set forth in the next sentence (the "Base Salary"). The Company shall
review the Base Salary annually and shall increase (but not decrease) the
Base Salary each calendar year beginning January 1, 2011, by the greater of
(i) the percentage increase, if any, in the cost of living index by reference to
the Consumer Price Index in the Los Angeles Metropolitan Area, as
provided for the last day of such annual period by the Bureau of Labor
Statistics of the United States Department of Labor, or (ii) a greater
percentage increase than that set forth in subsection (i) above, as determined
by the Company's Board of Directors. The Base Salary shall be payable in
equal installments twice monthly consistent with the Company's regular
business practice.
(b) Incentive Compensation. The Executive shall each year receive an
incentive performance bonus equal to 12% of the GAAP earnings of the
Company during each of the calendar years ending on December 31, 2011
through December 31, 2015. Such Incentive Compensation shall be paid as
soon as is practical after the completion of the Company's filing of form 10-K
with the Securities and Exchange Commission. The cumulative amounts
payable under this formula for the years ending December 31, 2011 through
December 31, 2015 shall be $2,000,000.
(c) Discretionary Bonus. The Executive shall be eligible to receive an
additional incentive performance bonus based upon a percentage of his Base
Salary. Any such bonus awarded to the Executive shall be payable in the
amount, in the manner, and at the time determined by the Company's Board
of Directors in its sole and absolute discretion.
(d) Expense Reimbursement. The Company shall reimburse the Executive
for reasonable and necessary business and entertainment expenses incurred
by him in connection with the performance of his duties hereunder,
including, but not limited to, expenses for business development, travel,
meals and accommodations and related expenditures. The Company shall
reimburse the Executive for all such expenses upon presentation by the
Executive, from time to time, of an itemized written accounting of such
expenditures.
(d) Benefits. The Company shall provide the Executive with the following
benefits during the Term and any renewals thereof:
(i) Participation in Benefit Plans and Policies. The
Executive shall be entitled to participate in any benefit plans relating to
stock options, stock purchases, awards, pension, thrift, profit sharing, life
insurance, medical coverage, education, or other retirement or employee
benefits available to other executive employees of the Company, subject to
any restrictions (including waiting periods) specified in such plans. The
Company shall make commercially reasonable efforts to obtain medical and
disability insurance, and such other forms of insurance as the Board of
Directors shall from time to time determine, for its employees.
(ii) Vacation. The Executive shall be entitled to
(i) four (4) weeks of paid vacation per calendar year for the first two years
of service to the Company following the execution of this Agreement, and
(ii) five (5) weeks of paid vacation per calendar year for the next two years
of service to the Company, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. After four (4)
years of service to the Company following execution of this Agreement, the
Executive shall be entitled to such number of weeks of paid vacation per
calendar year as determined by the Board of Directors of the Company after
review of industry standards, but shall in no event be entitled to fewer than
five (5) weeks of paid vacation per calendar year.
5. Termination of Employment.
(a) Termination Events. The Executive's employment shall
terminate prior to the expiration of the Term (and any renewals thereof)
upon the happening of any of the following events:
(i) Voluntary. Voluntary termination by the Executive
at any time during the Term upon written notice to the Company not less
than ninety (90) days in advance of such termination;
(ii) Death. The death of the Executive;
(iii) For Cause. For "cause" by the Company, defined
as any of the following:
(a) The Executive is convicted of, or pleads nolo
contendere to, a felony involving fraud, embezzlement or misappropriation;
(b) The Executive materially breaches the terms
of this Agreement by failing to substantially perform the reasonable and
lawful duties of his employment, which breach continues for a period of
sixty (60) days following written notice thereof from the Company,
specifying in detail the Executive's breach hereunder;
(c) The Executive has committed an act of
recklessness or willful misconduct against the Company resulting in a
substantial economic or financial harm to the Company.
Any determination of "cause" as used in this Section
5(a)(iii) shall be made only in good faith by an affirmative majority vote of
the Board of Directors (not counting the Executive) of the Company.
(iv) Disability. The Executive has become so
physically or mentally incapacitated or disabled as to be absent from the
full-time performance of his duties hereunder for a period of one hundred
eighty (180) consecutive calendar days and, within thirty (30) days after
written notice is provided to him by the Company, he shall not have
returned to the full-time performance of his duties. During any period prior
to such termination during which the Executive is absent from the full-time
performance of his duties with the Company due to disability, the Company
shall continue to pay the Executive his Base Salary at the rate in effect at the
commencement of such period of disability.
(v) Without Cause. Without cause by the Company at
any time during the Term upon written notice to the Executive not less than
thirty (30) days in advance of such termination; or
(vi) By The Executive For Good Reason. The
Executive may terminate this Agreement pursuant to this subsection (vi) at
any time upon written notice to the Company for "good reason" upon the
occurrence of any of the following events without the express written
consent of the Executive:
(a) the Company's material breach of any of the
provisions of this Agreement;
(b) The relocation of the Company's headquarters
to a location more than one hundred (100) miles from the Company's current
headquarters in Santa Monica, California;
(c) A reduction in the Executive's compensation
(including without limitation, Base Salary or the benefits set forth above);
(d) The assignment to the Executive of a lower
position in the organization in terms of his title, responsibility, authority or
status, or the level of management to which the Executive reports, unless
agreed to in writing by the Executive.
(b) Obligations After Voluntary Termination; Death;
Disability; For Cause Termination. Except as set forth in this Section 5(b),
in the event that the Executive's employment is terminated pursuant to
Sections 5.1(a)(i), 5.1(a)(ii), 5.1(a)(iii) or 5.1(a)(iv) herein, neither the
Company nor the Executive shall have any remaining duties or obligations
hereunder, except that on the date of termination of employment
("Termination Date"), the Company shall pay to the Executive or his
representatives:
(i) all Base Salary compensation as is due pursuant to
Section 4(a) herein, prorated through the Termination Date;
(ii) all discretionary bonus compensation as is due
pursuant to Section 4(b) herein;
(iii) all expense reimbursements due and owing the
Executive through the Termination Date under Section 4(c) herein,
including reimbursements for reasonable and necessary business expenses
incurred prior to the Termination Date, as long as the Executive submits a
written accounting of such expenses in accordance with Section 4(c) herein
within forty-five (45) days of the Termination Date; and
(iv) all benefits due the Executive, including
benefits under insurance, group health and retirement benefit plans pursuant to
Section 4(d) hereof, and vacation cash-out, if any, in accordance with the
Company's standard policy, through the Termination Date.
(c) Obligations After Termination Without Cause or
Termination by The Executive For Good Reason; Non-Renewal. Except as
set forth in Section 6 and as set forth in this Section 5(c), in the event that
the Executive's employment is terminated pursuant to Section 5(a)(v) or
5(a)(vi) herein or this Agreement is not renewed pursuant to the provisions
of Section 7 herein, neither the Company nor the Executive shall have any
remaining duties or obligations hereunder, except that on the Termination
Date, the Company shall pay to the Executive or his representatives:
(i) all Base Salary compensation as is due pursuant to
Section 4(a) herein, prorated through the Termination Date;
(ii) all discretionary bonus as is due pursuant to
Section 4(b) herein;
(iii) a lump sum payment of an amount equal to three
(3) years of the Executive's then-current Base Salary;
(iv) payment of COBRA medical insurance coverage
for the Executive and his immediate family for eighteen (18) months
following the Termination Date;
(v) immediate vesting of all pension benefits;
(vi) all expense reimbursements due and owing the
Executive through the Termination Date under Section 4(c) herein,
including reimbursements for reasonable and necessary business expenses
incurred prior to the Termination Date, as long as the Executive submits a
written accounting of such expenses in accordance with Section 4(c) herein
within forty-five (45) days of the Termination Date; and
(vii) all benefits due the Executive, including
benefits under insurance, group health and retirement benefit plans pursuant to
Section 4(d) hereof, and vacation cash-out, if any, in accordance with the
Company's standard policy, through the Termination Date.
(d) No Mitigation; No Offset. The parties hereto agree that
the Executive shall not be required to mitigate damages in respect of any
termination benefit or payment due under this Agreement or in respect of
any damage award as a result of the Company's breach of this Agreement,
nor shall any such benefit or award be offset by any future compensation or
income received by the Executive from any other source. The Company
shall not have the right to offset against its obligations hereunder or against
any such damage award any amounts payable by the Executive to Company
for any reason.
(e) Provision of Benefits. Should the continuation of any
benefits to be provided to the Executive following the termination of the
Executive's employment hereunder be unavailable under the Company's
benefit plans for any reason, the Company shall pay for the Executive to
receive such benefits under substantially similar plans from similar third-
party providers.
6. Dispute Relating To The Executive's Termination Of
Employment For Good Reason. If the Executive resigns his employment
with the Company alleging in good faith as the basis for such resignation
any of the "Good Reasons" specified in Section 5(a)(vi), and if the Company
disputes the Executive's right to the payment under Section 5(c), the
Company shall continue to pay the Executive compensation (including, but
not limited to, his Base Salary) in effect at the date the Executive provided
notice of such resignation, and the Company shall continue the Executive as
a participant in all compensation, benefit and insurance plans in which the
Executive was then a participant, until the earlier of (i) the date that all
payments due and owing under this Agreement have been paid, or (ii) the
date the dispute is finally resolved, either by mutual written agreement of
the parties or by arbitration in accordance with Section 8. For the purposes
of this Section, the Company shall bear the burden of proving that the
grounds for the Executive's resignation do not fall within the scope of
Section 5(a)(vi), and there shall be a rebuttable presumption that the
Executive alleged such grounds in good faith.
7. Renewal. If this Agreement has not terminated pursuant to the
provisions of Section 5, the Term shall be automatically renewed for
successive one-year periods commencing on each anniversary date of the
original Term, unless either party provides the other with written notice of
its intent to terminate the Agreement given not less than six (6) months
prior to the end of the Term, or any renewals thereof as provided for herein.
In the event of non-renewal of this Agreement by the Company, the
Company shall pay the Executive the amounts set forth under Section 5(c)
herein as if this Agreement had been terminated by the Company without
cause.
8. Arbitration. The Company and the Executive agree that any
controversy, dispute, or claim between them relating to or arising under this
Agreement or relating to or arising from the Executive's hiring,
employment, or termination with the Company (including, without
limitation, any claims for harassment, discrimination, or retaliation under
Title VII of the United States Code, 29 U.S.C. 2002e, et. seq., the
Americans With Disabilities Act, the Age Discrimination in Employment
Act, or the California Fair Employment and Housing Act, or any equivalent
provision of the statutory or common law of any state), shall be submitted to
final and binding arbitration, to be held in the County of Los Angeles in
accordance with and pursuant to the rules of the American Arbitration
Association ("AAA") then in force or any successor rules except as set forth
below. The award of the arbitrator shall be final and binding upon the
parties and may be entered as a judgment in any California court of
competent jurisdiction, and the parties hereby consent to the jurisdiction of
the courts of the State of California. The prevailing party in any arbitration
hereunder shall be entitled to an award of all reasonable fees and costs of
counsel incurred by such party in connection with such arbitration.
9. Assignment. This Agreement is personal in nature and neither
of the parties hereto shall, without the written consent of the other, assign or
otherwise transfer this Agreement or its obligations, duties and rights under
this Agreement; provided, however, that in the event of the merger,
consolidation, transfer or sale of all or substantially all of the assets of the
Company, this Agreement shall, subject to the provisions hereof, be binding
upon and inure to the benefit of such successor and such successor shall
discharge and perform all of the promises, covenants, duties and obligations
of the Company hereunder.
10. Miscellaneous.
a. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California.
b. Notices. All notices and other communications under this Agreement
shall be in writing and mailed, telecopied, or delivered by hand or by a
nationally recognized courier service guaranteeing overnight delivery to a
party, at the following address (or to such other address as such party may
have specified by notice given to the other party pursuant to this provision):
If to the Executive, to:
Dr. Xxxxxx Xxxxx
00000 Xxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx, 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to:
TOMI Environmental Solutions, Inc.
Attention Legal Department
9454 Wilshire Blvd, Ph./G-1
Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All such notices and communications shall, when mailed, telecopied, or
delivered, be effective three days after deposit in the United States mail,
telecopied with confirmation of receipt, or delivered by hand to the
addressee or one day after delivery to the courier service.
c. Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original, and all such
counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Employment Agreement is
executed as of the day and year first above written.
Executive TOMI Environmental Solutions
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxx Xxxx
----------------------------------- -------------------------------------
Name: Xxxxxx Xxxx, Esq
Title: Chairman of Compensation Committee
TOMI ENVIRONMENTAL SOLUTION
