Exhibit 10.3
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement " )
executed on to __________ be effective as of January 1,
2006 (the "Effective Date"),
by and between CASTLE RESORTS & HOTELS, INC., a Hawaii
corporation, (the "Company " ), and ALAN MATTSON
("Executive " ), as President of Company. The Company
desires to employ the services of Executive on the terms and
subject to the conditions of this Agreement, and Executive desires
to accept such employment.
In consideration of the terms and mutual covenants
contained in this Agreement, the Company and Executive agree as
follows:
1. Employment. The Company hereby engages
the services of Executive as its President to perform all duties
consistent with such offices, and Executive hereby accepts such
employment. During the term of this Agreement, Executive shall
perform such additional duties and accept appointment to such
additional positions of the Company, or its subsidiaries and/or
its parent company as may be specified by the Board of Directors
of the Company. Executive shall perform his obligations to the
Company pursuant to this Agreement under the direction of the
Board of Directors of the Company and Executive shall devote his
full time and efforts to such performance.
2. Term. This Agreement shall continue in
full force and effect for a term beginning on the Effective Date
and ending on December 31, 2010, unless sooner terminated
pursuant to this Agreement.
3. Compensation. As compensation for his
services rendered pursuant to this Agreement, Executive shall
receive from the Company a base salary of $160,000 per year
commencing with the Effective Date, increased to $170,000 per
year on January 1, 2007,
to $180,000 on January 1,
2008, to $190,000 effective January 1, 2009 and to $200,000 on January 1, 2010. All base salary shall be
payable in equal installments at least monthly on the last day
of each month or at more frequent intervals in accordance with
the company's customary pay schedule.
4. Bonus Plan. Executive shall receive a
"Budget Achievement Bonus" and a "Stock Incentive Bonus Award"
for each of the years ending on December 31, 2006, 2007, 2008, 2009 and 2010 in
which he is employed by the Company on the last day of said year
and in which the Company's net income exceeds the net income in
the approved budget for that year, calculated according to the
terms and conditions set forth in Exhibit "A."
5. Employment Benefits. In addition to
his base salary and bonuses, Executive shall be entitled to
participate in and receive benefits from all of the Company's
compensation, pension, retirement, life insurance, health,
accident, disability and other employee benefits plans,
arrangements and programs (the "Company's benefit programs"),
if
and to the extent such benefits are provided to
similarly situated executive officers of the Company, and shall
be eligible to participate in all other plans now or hereafter
maintained by the Company for which senior executive officers of
the Company are eligible. Unless otherwise provided therein, the
Company's benefits programs may change from time to time or be
discontinued as determined by the Company to be appropriate to
changing business situations. Without limiting the foregoing,
Executive shall also receive the following benefits:
(a)
Medical, Dental, Drug and Vision Insurance. Medical, dental,
drug and vision insurance shall be provided to Executive and any
eligible dependents at the Company ' s expense to the
extent provided to senior executive officers of the Company in
accordance with the Company's health insurance benefit
contracts.
(b) Vacation. Executive shall accrue twenty (20)
days of paid vacation per annum, prorated from the Effective Date
of this Agreement for the remainder of the first year of this
agreement. In addition, Executive shall be entitled to all holidays
extended to Company employees. Vacation not used in any year may be
carried over to the next year but no more than ten (10) vacation
days may be accumulated. In the event of termination of Executive's
employment under this Agreement, Executive shall be paid for all
unused, accumulated vacation days he may have as of the date of
termination.
(c) Group Benefit and Group Insurance Plans.
Executive shall participate in group benefit and insurance plans,
with benefits and coverage equal to, or greater than, those offered
to other members of senior management of the Company if and to the
extent that the Company now or hereafter provides such plans. The
Company retains the right to modify such plans but shall provide
Executive with thirty (30) days advance notice of such
modifications. The Company shall pay all premiums on any such group
insurance policies during the term hereof.
(d) Vehicle and Parking. Executive shall be
provided with car allowance of a $250 per semi-monthly pay period.
Executive shall be provided with a parking stall at the Company's
office.
(e) Business Expenses. The Company shall reimburse
Executive for all reasonable out-of-pocket business expenses he
incurs in fulfilling his duties hereunder, in accordance with the
general policies of the Company in effect from time to time,
provided that Executive furnishes to the Company with adequate
records and other documentary evidence required by all federal and
state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of such business expenses as a
deduction on the federal or state tax returns of the Company.
(f) Directors and Officers Liability Insurance.
The Company shall indemnify Executive against any claims,
liabilities, costs and expenses which may be incurred or asserted
against Executive in connection with or relating to his employment
by the Company, to the fullest extent permitted by law.
(g) Compliance with Laws. The Company shall exercise
diligent efforts to come into compliance with its reporting
obligations under the Securities and Exchange
Act of 1934, and other applicable securities and corporate
governance statutes applicable to publicly held companies.
6.
Termination.
(a) Termination by the Company for Cause. The Company may
terminate Executive ' s employment hereunder at any time
for Cause. For purposes of this Agreement, "Cause" shall mean (i)
conviction of a felony or other crime bearing a rational
relationship to Executive's duties to the Company hereunder; (ii)
commission of any act involving dishonesty, disloyalty, or fraud
with respect to the Company; (iii) willful and continued failure to
substantially perform his duties to the Company hereunder (other
than any such failure resulting from his incapacity due to physical
or mental illness) which is not cured or remedied within sixty (6o)
days after written notice thereof to Executive; (iv) any other
material breach of this Agreement or any other agreement to which
Executive and the Company are parties which is not cured or
remedied within sixty (6o) days after written notice thereof to the
Executive or (v) any willful misconduct by Employee which
materially and adversely interferes with the Company ' s
ability to increase the number of units under its management.
For purposes of determining whether Cause exists
hereunder, no act, or failure to act, on Executive's part, shall
be considered "willful" unless done, or omitted to be done, by
Executive without good faith and without reasonable belief that
Executive's action or omission was in the best interests of the
Company.
Termination for Cause shall cause Executive to
forfeit all employment benefits and all compensation not yet due
as of the effective date of such termination for Cause.
Termination for Cause under this subparagraph shall also cause
Executive to forfeit all severance payments otherwise payable
pursuant to Paragraph 8 below.
(b) Termination in the Event of Executive's
Disability. The Company may terminate Executive's employment
hereunder if he becomes Disabled (as defined herein). For
purposes of this Agreement, Executive shall be "Disabled" if:
(i) Executive has substantially failed to perform the essential
functions of his duties hereunder for a period or periods
totaling twelve (12) full
calendar months (notwithstanding reasonable accommodation by the
Company) because of a medically determinable disease, injury or
other mental or physical disability and Executive has been
declared by the insurer to be "totally disabled" and qualified
for benefits under any disability income insurance policy
maintained by the Company, or (ii) if an independent physician
selected in good faith by the Company examines Executive (and
Executive hereby agrees to permit such examination at the
Company ' s expense) and advises the Company that
because of a medically determinable disease, injury or other
mental or physical disability, Executive will not be able to
perform the essential functions of his duties hereunder,
notwithstanding reasonable accommodations by the Company, and
that such disability is determined or reasonably expected to
last at least twelve (12)
calendar months. The physician shall be board-certified in the
specialty most closely related to the nature of the disability
alleged to exist.
If the Company terminates Executive's employment
because he is Disabled, Executive shall receive the compensation
due under Paragraph 3, bonuses due under Paragraph 4 and
benefits due under Paragraph 5 of this Agreement through the
Date of Termination, and twelve monthly installments in the
amount of the base salary (calculated on a monthly basis) which
he is earning at the time of termination.
Notwithstanding anything else in this Paragraph 6 to the
contrary, Executive does not waive any rights, nor does the Company
consider that he has waived any rights he may have under the Family
and Medical Leave Act, the Americans with Disabilities Act, or any
similar applicable state law.
(c) Termination Upon Death. In the event of
Executive's death, his employment hereunder shall terminate.
Executive's estate shall receive compensation, reimbursement of
expenses, bonuses and benefits due to Executive under Paragraphs 3,
4 and 5 through the date of death.
(d) Termination by Executive for Good Reason.
Notwithstanding any other provision of this Agreement, Executive
shall be entitled to terminate his employment for Good Reason. For
the purposes of this Agreement, "Good Reason" shall mean, without
Executive's express prior written consent, any of the
following:
(i) The assignment to Executive of any duties
inconsistent with Executive's position and duties with the
Company as President; the failure to provide Executive with a
suitable office; or an adverse change in Executive's titles or
offices as in effect on the date hereof, or any removal of
Executive from or any failure to reappoint Executive to any
of such positions;
(ii) A reduction by the Company in Executive's
base salary except as part of a comparable percentage deferment
of the payment of the salaries of other members of senior
management of the Company applied to Executive in a
nondiscriminatory manner;
(iii) The Company's requiring Executive to be
based anywhere other than the Honolulu, Hawaii metropolitan area
in which Executive's office is located on the date of this
Agreement, except for required travel on the Company's business
to an extent substantially consistent with Executive's present
business travel obligations;
(iv) The failure by the Company to provide
through the term hereof (to the extent required by Paragraph 5)
any compensation, benefit, pension, profit sharing or retirement
plan (including a deferred compensation plan), life insurance
plan, medical insurance plan, health-and-accident plan or other
employee benefit or executive benefit plan or program in which
Executive is entitled to participate (or plans providing
Executive with substantially similar benefits in the aggregate),
or the taking of any action by the Company which would adversely
affect Executive's participation in or materially reduce
Executive's benefits under any of such plans or program or
deprive Executive of any material fringe benefit enjoyed by
Executive or to which Executive is entitled on the date hereof,
unless the discontinuance of any of such plans or a reduction in
benefits thereunder is nondiscriminatory as to Executive and is
applied to
senior management of the Company, its
subsidiaries and affiliates, and any parent or successor of the
Company; or the failure by the Company to provide Executive with
the number of paid vacation days to which Executive is entitled
on the basis of years of service with the Company in accordance
with the Company's normal vacation policy or special arrangement
with Executive;
(v) A material breach of this Agreement by the Company;
or
(vi) Any purported termination of Executive's
employment by the Company which is not effected pursuant to a
Notice of Termination satisfying the requirements of Paragraph 7
below (and, if applicable, Paragraph 6(b) above); and for
purposes of this Agreement, no such purported termination shall
be effective.
Executive's right to terminate his employment pursuant to
this Paragraph 6(d) shall not be affected by Executive's incapacity
due to physical or mental illness. Notwithstanding any other term
or condition of this Agreement, Executive shall not be entitled to
terminate his employment for Good Reason, unless he has provided
the Company with written notice of the action or omission which
Executive contends entitles Executive to terminate his employment
for Good Reason and such action or omission is not cured or
remedied within sixty (60) days after written notice thereof to the
Company; provided that any nonpayment of Executive's base salary
must be cured within ten (10) days, and the 60-day cure period
shall not apply to (i) the matters set forth in Section 6(d)(ii),
Section 6(d)(iii), and Section 6(d)(vi).
7. Notice and Date of Termination. Any
termination of Executive's employment under this Agreement, either
by the Company for Cause or by the Employee for Good Reason, shall
be communicated by a written Notice of Termination (the "Notice
" ) to the other party hereto. The Notice shall specify
the particular termination provision in this Agreement relied upon
by the terminating party, recite the facts and circumstances
claimed to provide the basis for such termination, and specify the
Date of Termination. Any such Notice to Executive shall be
delivered personally to Executive or delivered to his residence
address listed in the Company's personnel records. For purposes of
this Agreement, "Date of Termination " shall mean (i) if
Executive's employment
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