Exhibit
10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") executed on June
28, 2004 to be effective as of July 1, 2004 (the "Effective Date"),
by and between THE CASTLE GROUP, INC., a Utah corporation (the
"Company"), and RICK S. WALL ("Executive"), as Chairman and Chief
Executive Officer 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 Chief Executive Officer 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 five years from the date hereof, 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 $180,000 per year
commencing with the Effective Date. 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. Bonuses. In addition to his base
salary, Executive shall be entitled to participate fully in any
bonus or annual incentive plan which may be hereafter authorized
by the Board of Directors and provided to other members of
senior management of the Company.
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 members of
management 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.
(e) Vehicle and Parking. Executive shall
be provided with a leased vehicle at Company expense at the CEO
level in accordance with the Company's leased vehicle policy.
Executive shall be provided with a parking stall at the
Company's office.
(f) Club Memberships. The Company shall
pay all monthly dues for Executive's membership at Oahu Country
Club.
(h) 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.
(i) 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.
(j) 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 (60)
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 (60) 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 CEO; 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
non-discriminatory 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
Teimination" shall mean (i) if Executive's employment is
terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Employee shall not have
returned to the performance of his duties on a full-time basis
during such thirty (30) day period; (ii) if Executive's
employment is terminated due to his death, the date of death; or
(iii) if Executive's employment is terminated pursuant to
Paragraph 6(a) or 6(d), the date specified in the Notice of
Termination.
8. Payments on Termination.
(a) Termination by the Company for Cause.
If Executive's employment is terminated by the Company for Cause
pursuant to Paragraph 6(a), or if Executive terminates his
employment other than for Good Reason pursuant to Paragraph
6(d), the Company shall pay Executive's base salary through the
Date of Termination at the rate then in effect at the time the
Notice of Termination is given, (ii) the Company shall pay all
accrued paid vacation days to which Executive is entitled
hereunder, (iii) the Company shall reimburse Executive for any
expenses for which he is entitled to reimbursement hereunder as
of the Date of Termination, and (iv) Executive shall forfeit all
unaccrued compensation and employment benefits as of the Date of
Termination as well as all rights to severance payments. Such
termination shall not affect any of Executive's retirement
rights or other benefits to the extent such rights or benefits
are legally vested at the time of termination under applicable
law and the terms of the relev
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