Exhibit 10.20
E MPLOYMENT A GREEMENT
T HIS A GREEMENT is
by and between S PHERIC T ECHNOLOGIES , I NC . , a
Nevada corporation (the “Company”), and Joseph
Hines (the “Executive”) and is effective as of
October 1, 2008 (the “Effective Date”).
B ACKGROUND
The Board of Directors of the
Company (the “Board”) has determined that it is in the
best interests of the Company and its shareholders to assure that
the Company will have the continued employment and dedication of
the Executive.
The Board has further determined
that it is desirable to provide the Executive with compensation and
benefits terms which adequately compensate the Executive for the
services he renders to the Company, and, to ensure that such
compensation and benefits are consistent with those of like
executives of other companies.
A GREEMENT
Now, therefore, it is hereby agreed
as follows:
1. Employment Period .
The Company hereby agrees to continue the Executive in its employ,
and the Executive hereby agrees to remain in the employ of the
Company, subject to the terms and conditions of this Agreement, for
the period commencing on the Effective Date and ending on
September 30, 2011 ( the “Employment Period”).
This Agreement shall be automatically renewed, under the same terms
and conditions, for successive one-year terms unless one party
provides a written notice of non-renewal to the other party thirty
(30) days prior to the last day of the Employment
Period.
2. Terms of Employment
.
2.1 Position and
Duties .
2.1.1 Position .
During the Employment Period, the Executive shall be employed in
executive capacities in the position(s) of President &
Chief Executive Officer of the Company at its headquarters in
the Phoenix, Arizona metropolitan area.
2.1.2 Duties
.
2.1.2.1 During the Employment
Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive will devote his full
attention and time to the business and affairs of the Company as
its President & Chief Executive Officer. The Executive
will supervise the business and affairs of the Company and the
performance by all of its other officers of their respective
duties, subject to the control of the Board. The Executive will
report to the Board. The Executive will use his best efforts to
perform faithfully and efficiently such duties and
responsibilities.
2.1.2.2 While employed hereunder,
the Executive agrees to devote all of his business time, attention,
skill and efforts to the faithful and efficient performance of his
duties under this Agreement; provided , however ,
that the Executive may engage in the following activities so
long as they are approved in advance by the Board and do not
interfere in any material respect with the performance of
Executive’s duties and responsibilities hereunder:
(i) serve on corporate, civic or charitable boards or
committees, and (ii) deliver lectures, fulfill speaking
engagements or teach on a part-time basis at educational
institutions.
2.2 Compensation
.
2.2.1 Base Salary .
The Executive shall receive an annual base salary of Ninety-six
thousand dollars ($96,000) from the Effective Date through
September 30, 2011. Commencing on the first anniversary of the
Effective Date, the Executive shall receive an annual base salary
of Ninety-six thousand dollars ($96,000). Thereafter, the Board or
the Compensation Committee of the Board (the “Compensation
Committee”), as the case may be, will review the
Executive’s salary and total cash compensation within one
hundred twenty (120) days of the end of each of the
Company’s fiscal years during the Employment Period to
determine what, if any, increases shall be made thereto. The base
salary payable to the Executive in any given year is hereafter
referred to as the “Annual Base Salary.” Any increase
in the Annual Base Salary shall not serve to limit or reduce any
other obligation to the Executive under this Agreement. The Annual
Base Salary shall not be reduced after any increase and the term
“Annual Base Salary,” as used in this Agreement, shall
refer to the Annual Base Salary as increased. The Annual Base
Salary shall in all instances be payable in twenty-six
(26) equal bi-weekly installments.
2.2.2 Annual Bonus and Option
Plans . The Executive shall also be eligible to participate
in any applicable Company bonus plan or program, stock option,
restricted stock or other plan or program in effect immediately
prior to the Effective Date, or put into effect by the Board at any
time after the Effective Date.
2.2.3 Expenses .
During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred
by the Executive in the conduct of Company business.
2.2.4 Vacation .
During the Employment Period, the Executive shall be entitled to
paid vacation of three (3) weeks annually and otherwise be in
accordance with the plans, policies, programs and practices of the
Company in all respects as in effect for the Executive during the
one hundred twenty (120) day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time after the Effective Date with respect to
other executives of the Company.
2.2.5 Automobile
Allowance . The Company shall also pay the Executive an
automobile allowance of $500.00 per month, or as otherwise
increased by the Board or Committee.
2.2.6 No Director Fees
. In no event shall the Executive be entitled to receive any
additional compensation for serving as a director, member and/or
manager of the Company or any affiliate of the Company.
3. Termination of
Employment .
3.1 Termination by the Company
for Disability . If the Company determines in good
faith that any Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 10.2, of its intention to terminate
the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Executive (the “Disability Effective
Date”), provided that , within the thirty
(30) days after such receipt, the Executive shall not have
returned to full-time performance of the Executive’s duties.
For purposes of this Agreement, the term “Disability”
shall mean the absence of the Executive from the Executive’s
duties with the Company on a full-time basis for one hundred eighty
(180) consecutive business days as a result of incapacity due
to mental or physical illness certified by a physician selected by
the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.
3.2 Termination by the Company
for Cause . The Company may terminate the
Executive’s employment during the Employment Period for
Cause. For purposes of this Agreement, the term “Cause”
shall mean: (i) the willful and continued failure of the
Executive to perform substantially the Executive’s duties
with the Company as set forth in Section 2.1.2,
“Duties,” (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Executive by
the Board, accompanied by a resolution adopted by the vote of
two-thirds (2/3) of the entire Board, excluding the Executive,
at a meeting of the Board held for such purpose, which resolution
specifically identifies the manner in
which the Board believes that the Executive has
not substantially performed the Executive’s duties and
Executive has not cured any such failure to perform within ten
(10) business days of such demand; (ii) material
violation of any of the Company’s policies; (iii) breach
by the Executive of his obligations under this Agreement; or
(iv) if the Executive is charged with illegal conduct by a
governmental body or regulatory authority, or has engaged in gross
misconduct that is materially injurious to the Company as
determined by a resolution adopted by the vote of two-thirds
(2/3) of the entire Board, excluding the Executive, at a
meeting of the Board held for such purpose, which resolution
specifically identifies the alleged illegal conduct or gross
misconduct. For purposes of this provision, no act or failure to
act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith. The vote of the Board on the
resolutions contemplated in (i) and (iv) of this
Section 3.2 will not be taken until after written notice of
not less than five (5) business days to the Executive of the
meeting and an opportunity for Executive to be heard before the
Board at such meeting.
3.3 Termination by the Company
Other than for Cause, death or Disability . The Company may
terminate the Executive’s employment during the Employment
Period for any reason other than for Cause, death or Disability by
providing the Executive with written notice in accordance with
Section 10.2 of its intention to terminate the
Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the
Executive.
3.4 Termination by the
Executive for Good Reason . The Executive may
terminate his employment for Good Reason at any time within ninety
(90) days after the Executive first has actual knowledge of
the occurrence of such Good Reason. For purposes of this Agreement,
the term “Good Reason” shall mean:
3.4.1 the assignment to the
Executive of any duties that are not consistent with the duties set
forth in Section 2.1.2, “Duties,” or any other
action by the Company that results in a material diminution in any
of the Executive’s positions as set forth in
Section 2.1.1, “Position,” or in the
Executive’s authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
3.4.2 any failure by the Company to
comply with any of the provisions of Section 2.2,
“Compensation,” other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
3.4.3 the Company’s requiring
the Executive, without the Executive’s consent and full
agreement, to be based at any office other than in the Phoenix,
Arizona metropolitan area or a position other than as provided in
Section 2.1.1;
3.4.4 any purported termination by
the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement;
3.4.5 any action taken by the
Company or its Board of Directors in connection with a
“Change in Control,” as defined in Section 4.5,
“Change in Control,” that results in the Executive
being removed from Executive’s position as described in
Section 2.1.1; or
3.4.6 any failure by the Company to
comply with and satisfy Section 9.3.
3.5 Notice of
Termination . Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with
Section 10.2 of this Agreement. For purposes of this
Agreement, the term “Notice of Termination” means a
written notice that:
3.5.1 indicates the specific
termination provision in this Agreement relied upon;
3.5.2 to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated; and
3.5.3 specifies the Date of
Termination (as defined below).
The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the rights of the Executive or the Company under this
Agreement.
3.6 Date of
Termination . The term “Date of
Termination” means:
3.6.1 if the Executive’s
employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may
be;
3.6.2 if the Executive’s
employment is terminated by the Company other than for Cause, death
or Disability, the thirtieth (30th) day after the Executive
receives notice of such termination; and
3.6.3 if the Executive’s
employment is terminated by reason of death or Disability, the date
of death of the Executive or the Disability Effective Date, as the
case may be.
4. Obligations of the Company
upon Termination .
4.1 Termination by the
Company, Other Than for Cause, Death or Disability; and Termination
by the Executive for Good Reason . If, during the
Employment Period, the Company shall terminate the
Executive’s employment other than for Cause, death or
Disability, or the Executive shall terminate employment for Good
Reason, the Company shall pay to the Executive within thirty
(30) days after the Date of Termination the aggregate of the
amounts set forth in Section 4.1.2 through Section 4.1.4
in a lump sum in cash and shall pay the amounts due under
Section 4.1.1 as provided in that Section:
4.1.1 the amount of Annual Base
Salary compensation that would be payable to the Executive over the
balance of the Employment Period had the termination not occurred,
provided that the Company will pay such amount to the
Executive over the period that the compensation would have been due
had the termination not occurred;
4.1.2 any declared and accrued, but
as of then unpaid, bonus or stock options grant (whether or not
vested) to which the Executive would have received but for such
termination. Additionally, any stock options owned or granted shall
be deemed immediately vested, not forfeitable, and shall be the
property of Executive, exercisable according to their terms for the
balance of the term of years of the options;
4.1.3 any accrued vacation pay;
and
4.1.4 any other amounts or benefits
required to be paid or provided or which the Executive is eligible
to receive under any plan, program, policy or practice or contract
or agreement of the Company (such other amounts and benefits shall
be referred to as the “Other Benefits”), to the extent
unpaid.
4.2 Death . If
the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other
than for the timely payment or provision to the Executive’s
legal representatives of (i) any death benefit compensation
under other contracts; (ii) amounts due under the term life
insurance policy; (iii) full vesting and non-forfeiture of
stock options granted to the Executive; and (iv) Other
Benefits to the extent unpaid.
4.3 Disability
. If the Executive’s employment is terminated by
reason of the Executive’s Disability under Section 3.1,
“Termination by the Company for Disability,” during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for the timely payment or
provision of (i) Annual Base Salary through the Termination
Date; (ii) accrued bonus through the Termination Date; iii)
full vesting and non-forfeiture of stock options;
(iv) pension, 401(k) and other disability benefits; and
(v) fully-paid welfare benefit plans.
4.4 Termination by the Company
for Cause; and Termination by the Executive Other than for Good
Reason . If the Executive’s employment shall
be terminated for C
