Exhibit 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is dated effective as of April 22, 2008
(“Effective Date”) by and between Red Lion Hotels Corporation, a Washington
corporation (the “Company”), and Anupam Narayan (the “Executive”), and is
intended to replace and supersede that certain Executive Employment Agreement
between the Company and the Executive dated April 12, 2007.
The Company desires to employ the Executive in the capacity of President and
Chief Executive Officer, and the Executive desires to be so employed, on the
terms and subject to the conditions set forth in this agreement (the
“Agreement”).
Now, therefore, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the parties hereto hereby agree as
follows:
1. Employment; Term.
(a) The Company employs the Executive, and the Executive agrees to be employed
by the Company, upon the terms and subject to the conditions set forth herein,
for a term commencing on the Effective Date and terminating on December 31, 2008
unless terminated earlier in accordance with Section 5 of this Agreement;
provided, that, subject to earlier termination in accordance with Section 1(b)
or Section 5 of this Agreement, such term shall automatically be extended from
time to time for additional periods of one calendar year from the date on which
it would otherwise expire unless the Executive, on one hand, or the Company, on
the other, gives notice to the other party not less than 120 days prior to such
date that he or it elects to permit the term of this Agreement to expire without
extension on such date. The initial term of this Agreement as the same may be
extended in accordance with the terms of this Agreement is hereinafter referred
to as the “Term”.
(b) Notwithstanding anything to the contrary in this Agreement, the Agreement
shall automatically terminate and the Term shall expire on May 31, 2012 (the
“Expiration Date”), and no notice or action shall be required by the Company or
the Executive for such termination and expiration to be effective.
2. Positions; Conduct.
(a) During the Term, the Executive will hold the title and office of, and serve
in the position of, President and Chief Executive Officer of the Company. The
Executive shall report to the Company’s Board of Directors (the “Board”) and
shall perform such specific duties and services (including service as an
officer, director or equivalent position of any direct or indirect subsidiary
without additional compensation) as the Company shall reasonably request
consistent with the Executive’s position.
(b) During the Term, the Executive agrees to devote his full business time and
attention to the business and affairs of the Company and to faithfully and
diligently perform, to the best of his ability, all of his duties and
responsibilities hereunder. Nothing in this Agreement shall preclude the
Executive from devoting reasonable time and attention to the following (the
“Exempted Activities”): (i) serving as an officer, director, trustee or member
of any organization, (ii) engaging in charitable and community activities and
(iii) managing his personal investments and affairs. In no event shall the
Exempted Activities involve any material conflict of interest with the interests
of the Company or, individually or collectively, interfere materially with the
performance by the Executive of his duties and responsibilities under this
Agreement.

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(c) The Executive’s office and place of rendering his services under this
Agreement shall be in the principal executive offices of the Company. During the
Term, the Company shall provide the Executive with executive office space, and
administrative and secretarial assistance and other support services consistent
with his positions and with his duties and responsibilities hereunder.
3. Board of Directors; Committees.
It is understood that the right to elect directors of the Company is by law
vested in the stockholders and directors of the Company, and it is mutually
contemplated that service on the Board or the board of directors of any of the
Company’s subsidiaries, or on any committee of the Board or the board of
directors of any of the Company’s subsidiaries, is not a condition of this
Agreement.
4. Salary; Additional Compensation; Perquisites and Benefits.
(a) During the Term, the Company will pay the Executive a base salary at an
annual rate of not less than $360,000 per annum, subject to annual review by the
Compensation Committee of the Board (the “Committee”) and, in the discretion of
the Committee, to increase from time to time. Once increased, such base salary
may not be decreased. Such salary shall be paid in periodic installments in
accordance with the Company’s standard practice, but not less frequently than
semi-monthly.
(b) During the Term, Executive shall participate in the Company’s Executive
Officers Variable Pay Plan dated effective January 1, 2005 and any successor or
replacement bonus plans as may be adopted by the Committee from time to time for
senior executives of the Company (the “VPP”). If Executive achieves the target
performance goals determined under the VPP by the Committee for any calendar
year, he shall be entitled to a bonus for that year equal to at least 60% of his
base salary for that year (with any partial year pro rated).
(c) The Company hereby confirms its award to Executive on November 22, 2004 of
18,535 restricted stock units under the Company’s 1998 Stock Incentive Plan. The
restrictions on 14,828 of these restricted stock units have already lapsed and
the underlying shares of common stock of the Company have been issued to
Executive. The restrictions on the remaining 3,707 of these restricted stock
units shall lapse on November 22, 2008, and the underlying shares of common
stock of the Company shall be issued to Executive as soon as practicable
thereafter, provided that Executive remains employed by the Company at that
date.
(d) The Board or the Committee in its sole discretion may award any additional
or other amounts of cash, restricted stock or options or other equity based
awards in respect of any whole or partial year during the Term.
(e) The Company will reimburse the Executive, in accordance with its standard
policies from time to time in effect, for all out-of-pocket business expenses as
may be incurred by the Executive in the performance of his duties under this
Agreement.
(f) The Executive shall be entitled to vacation time to be credited and taken in
accordance with the Company’s policy from time to time in effect for senior
executives, which in any event shall not be less than a total of four weeks per
calendar year.
(g) The Company shall indemnify the Executive to the fullest extent permitted
under the law of the State of Washington.

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5. Termination
(a) The Term will terminate automatically on the Expiration Date or upon the
Executive’s death and, in the case of a determination of the Executive’s
Disability, will terminate upon notice by the Company or the Executive to the
other. As used herein the term “Disability” means the Executive’s inability to
perform his duties and responsibilities under this Agreement for a period of
more than 120 consecutive days, or for more than 180 days, whether or not
consecutive, during any 365-day period, due to physical or mental incapacity or
impairment. A determination of Disability will be made by a physician
satisfactory to both the Executive and the Company; provided that if they cannot
agree as to a physician, then each shall select a physician and these two
together shall select a third physician whose determination of Disability shall
be binding on the Executive and the Company. Should the Executive become
incapacitated, his employment shall continue and all base salary and other
compensation due the Executive hereunder shall continue to be paid through the
date upon which the Executive’s employment is terminated for Disability in
accordance with this section.
(b) The Term may be terminated by the Company upon notice to the Executive with
or without “Cause” as defined herein.
(c) The Term shall terminate automatically and without any further notice or
action upon the Executive’s resignation or retirement from the Company, with or
without Good Reason (as defined below), or if the Term is not extended pursuant
to the proviso to Section 1(a) as a result of the Executive or the Company
giving notice thereunder that it elects to permit the Term to expire without
extension.
6. Severance.
(a) If the Term terminates for any reason, the Company will pay to the Executive
an aggregate amount equal to the Executive’s accrued and unpaid base salary
through the date of such termination, additional salary payments in lieu of the
Executive’s accrued and unused vacation time, unreimbursed business expenses,
unreimbursed medical, dental and other employee benefit expenses in accordance
with the applicable plans, and any and all other benefits available to the
Executive or the Executive’s estate under then-existing Company benefit plans or
policies, including if applicable death or Disability benefits, (the “Standard
Termination Payments”). Except as expressly provided below, payment of the
Standard Termination Payments shall be the Company’s only obligation to
Executive, and the Company shall incur no further liability, in connection with
such termination.
(b) If the Term is terminated upon the Executive’s death or Disability, the
Company will pay to the Executive’s estate or the Executive, as the case may be
(i) the Standard Termination Payments, (ii) a lump sum payment, if applicable,
equal to the Executive’s earned but unpaid bonus under the VPP for the prior
fiscal year, and (iii) a lump sum payment equal to the Executive’s target bonus
under the VPP for the fiscal year in which the death or Disability occurs
prorated for the portion of the year elapsed at the time of the termination.
Such payments shall be the Company’s only obligations to Executive in such a
case. The Company shall incur no further liability for such a termination.
(c) If the Company terminates the Executive’s employment under this Agreement
without Cause other than by reason of his death or Disability, or if the Term is
not extended pursuant to the proviso to Section 1(a) as a result of the Company
giving notice thereunder that it elects to permit the Term to expire without
extension, or if the Executive terminates his employment hereunder within six
months of any event constituting Good Reason, the Company will (i) pay the
Executive the Standard Termination Payments, (ii) pay the Executive a lump sum
payment equal to the Executive’s earned but unpaid bonus under the VPP for the
prior fiscal year, (iii) pay the Executive a lump sum payment equal to the
Executive’s target bonus under the VPP for the fiscal year in which the
termination occurs prorated for the portion of the year elapsed at the time of
the termination, (iv) pay the Executive a lump sum payment equal to twice the
Executive’s total cash compensation for the previous fiscal year (but not less
than twice $360,000), and (v) continue in effect the Executive’s benefits with
respect to life, health and insurance plans or their equivalent for two years.
Such payments and the obligations set forth below in Section 6(d) shall be the

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Company’s only obligations to Executive in such a case. The Company shall incur
no further liability for such a termination.
(d) If the Company terminates the Executive’s employment under this Agreement
without Cause other than by reason of his Disability, or if the Term is not
extended pursuant to the proviso to Section 1(a) as a result of the Company
giving notice thereunder that it elects to permit the Term to expire without
extension, or if there is a Change of Control (as defined below), or if the
Executive terminates his employment hereunder within six months of any event
constituting Good Reason, then, except for those stock options that have a
strike price that is more than 10% greater than the closing price of the
Company’s common stock on the date of such termination, expiration or Change of
Control, all stock options granted to the Executive shall immediately vest and
be exercisable and any stock grant to the Executive shall immediately vest, all
Company imposed restrictions on restricted stock issued to the Executive shall
be terminated and all restricted stock awarded to Executive but not yet issued
shall be promptly issued to Executive.
(e) As used herein, the term “Cause” means: (i) the Executive’s willful and
intentional failure or refusal to perform or observe any of his material duties,
responsibilities or obligations set forth in this Agreement, if such breach is
not cured within 30 days after notice thereof to the Executive by the Company,
which notice shall state that such conduct shall, without cure, constitute Cause
and makes specific reference to this Section 6(e); (ii) any willful and
intentional act of the Executive involving fraud, theft, embezzlement or
dishonesty affecting the Company; or (iii) the Executive’s conviction of (or a
plea of nolo contendere to) an offense which is a felony in the jurisdiction
involved.
(f) As used herein, the term “Good Reason” means the occurrence of any of the
following, without the prior written consent of the Executive: (i) assignment to
the Executive of duties materially inconsistent with the Executive’s position
and responsibilities described in Section 2(a) hereof,; (ii) the removal of the
Executive from the position described in Section 2(a); (iii) any material breach
of this Agreement by the Company which is continuing; or (iv) a Change of
Control; provided that a Change of Control shall only constitute Good Reason if,
within 12 months after such Change of Control: (a) the Company changes its
headquarters office location to a location more than 40 miles from the city
limits of Spokane, Washington, (b) the Company changes Executive’s job title, or
(c) Executive experiences a significant diminution in his duties or
responsibilities or compensation compared to prior to the Change of Control,
other than in connection with the termination of the Executive’s employment by
the Company for Cause, by the Executive without Good Reason, or as a result of
the Executive’s death or Disability. Notwithstanding anything to the contrary in
this Section 6(f), the Executive shall not be deemed to have Good Reason unless
the Executive gives the Company written notice that the specified conduct or
event has occurred giving rise to Executive having Good Reason, and the Company
fails to cure such conduct or event within thirty (30) days after the receipt of
such notice.
(g) As used herein, the term “Change of Control” means the occurrence of any one
of the following events: (i) the majority of the Board consists of individuals
other than “Incumbent Directors”, which shall mean the members of the Board of
Directors on the Effective Date and any other persons becoming directors
subsequent to the Effective Date whose election or nomination for election was
supported by the Executive or a majority of the directors who then comprised the
Incumbent Directors; (ii) the Company adopts a plan of liquidation providing for
the distribution of all or substantially all of the assets of the Company on a
consolidated basis; (iii) the Company sells all or substantially all of its
assets on a consolidated basis in a single transaction or series of
transactions; or (iv) the Company ceases to act as the general partner of Red
Lion Hotels Limited Partnership, provided, however, the foregoing shall not
apply if substantially all of the assets of the partnership are transferred to
and owned by the Company or its Affiliates. As used herein, an “Affiliate” of a
person or other entity means a person or other entity that directly or
indirectly controls, is controlled by or is under common control with the person
or other entity specified (including without limitation any investment entity
managed by the person or other entity specified or a person or entity that
directly or indirectly controls, is controlled by or under common control with
the person or other entity specified).

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(h) The amounts required to be paid and the benefits required to be made
available to the Executive under this Section 6 are absolute. Under no
circumstances shall the Executive, upon the termination of his employment
hereunder, be required to seek alternative employment and, in the event that the
Executive does secure other employment, no compensation or other benefits
received in respect of such employment shall be set-off or in any other way
limit or reduce the obligations of the Company under this Section 6.
(i) The amounts required to be paid to the Executive under this Section 6,
together with any Gross-Up Payment required to be paid to the Executive under
Section 10(b), shall be paid to the Executive as soon as practicable following
the occurrence of the event that entitles the Executive to such payments;
provided, however, if the Executive at the time of his separation from service
with the Company is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”), then such amounts shall instead be paid, and any lapse of restrictions
on restricted stock awards or the issuance of common stock subject to restricted
stock under Section 6(d) shall occur, six months after his separation from
service to the extent necessary so that none of such amounts will be subject to
the additional income tax provided for in Section 409A(a)(1)(B)(i) of the Code.
7. Confidential Information.
(a) The Executive acknowledges that the Company and its Affiliates own and have
developed and compiled, and will in the future own, develop and compile certain
Confidential Information and that during the course of his rendering services to
the Company Confidential Information has and will be disclosed to the Executive
by the Company and its Affiliates. The Executive hereby agrees that, during the
Term (except as required to conduct the business of the Company) and thereafter,
he will not in any way use or disclose, furnish or make accessible to anyone,
directly or indirectly, any Confidential Information of the Company or its
Affiliates.
(b) As used herein, the term “Confidential Information” means any trade secrets,
confidential or proprietary information, or other knowledge, know-how,
information, documents or materials, owned, developed or possessed by the
Company or one of its Affiliates pertaining to its businesses the
confidentiality of which such company takes reasonable measures to protect,
including, but not limited to, trade secrets, techniques, know-how (including
designs, plans, procedures, processes and research records), software, computer
programs, innovations, discoveries, improvements, research, developments, test
results, reports, specifications, data, formats, marketing data and business
plans and strategies, business opportunities, guest lists, vendor terms,
agreements and other forms of documents, expansion plans, budgets, projections,
and salary, staffing and employment information. Notwithstanding the foregoing,
Confidential Information shall not in any event include information which
(i) was generally known or generally available to the public prior to its
disclosure to the Executive, (ii) becomes generally known or generally available
to the public subsequent to its disclosure to the Executive through no wrongful
act of the Executive, (iii) is or becomes available to the Executive from
sources other than the Company or its Affiliates which sources are not known to
the Executive to be under any duty of confidentiality with respect thereto or
(iv) the Executive is required to disclose by applicable law or regulation or by
order of any court or federal, state or local regulatory or administrative body
(provided that the Executive provides the Company with prior notice of the
contemplated disclosure and reasonably cooperates with the Company, at the
Company’s sole expense, in seeking a protective order or other appropriate
protection of such information).
8. Restrictive Covenants.
(a) The Executive agrees that during his employment hereunder and for a period
of twelve months thereafter the Executive will not, directly or indirectly,
engage or participate or make any financial investments in (other than ownership
of up to 5% of the aggregate of any class of securities of any corporation if
such securities are listed on a national stock exchange or registered under
section 12(g) of

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the Securities Exchange Act of 1934) or become employed by, or act as an agent
or principal of, or render advisory or other management services to or for, any
Competing Business. As used herein the term “Competing Business” means any
business which includes hotel ownership, hotel management, hotel services or
hotel franchising and has a headquarters in Washington, Oregon, Idaho, Montana,
Utah or Northern California, defined as the area from San Jose, California north
to California’s border with Oregon.
(b) The Executive agrees that during his employment hereunder and for a period
of twenty-four months thereafter he will not solicit, raid, entice or induce any
person that then is or at any time during the twelve-month period prior to the
end of the Term was an employee of the Company or any of its Affiliates (other
than a person whose employment with the Company or such Affiliate has been
terminated by the Company or such Affiliate), to become employed by any person,
firm or corporation.
9. Specific Performance.
(a) The Executive acknowledges that the services to be rendered by him hereunder
are of a special, unique, extraordinary and personal character and that the
Company would sustain irreparable harm in the event of a violation by the
Executive of Section 7 or 8 hereof. Therefore, in addition to any other remedies
available, the Company shall be entitled to specific enforcement and/or an
injunction from any court of competent jurisdiction restraining the Executive
from committing or continuing any such violation of this Agreement without
proving actual damages or posting a bond or other security. Nothing herein shall
be construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach, including the recovery of
damages.
(b) If any of the restrictions on activities of the Executive contained in
Sections 7 or 8 shall for any reason be held by a court of competent
jurisdiction to be excessively broad as to duration, geographical scope or
activity of subject, such restrictions shall be construed so as thereafter to be
limited or reduced to be enforceable to the maximum extent compatible with the
applicable law as it shall then appear; it being understood that by the
execution of this Agreement the parties hereto regard such restrictions as
reasonable and compatible with their respective rights.
(c) Notwithstanding anything in this Agreement to the contrary, in the event
that the Company fails to make any payment of any amounts or provide any of the
benefits to the Executive when due as called for under Section 6 of this
Agreement and such failure shall continue for twenty (20) days after notice
thereof from the Executive, all restrictions on the activities of the Executive
under Sections 7 and 8 shall be immediately and permanently terminated.
10. Withholding; Additional Payments.
(a) The parties agree that all payments to be made to the Executive by the
Company pursuant to the Agreement shall be subject to all applicable withholding
obligations.
(b) The parties intend that the severance payments and other compensation
provided for herein are reasonable compensation for Executive’s services to the
Company and shall not constitute “excess parachute payments” within the meaning
of Section 280G(b)(1) of the Code. In the event the parties determine that the
severance benefits or any other benefits or payments to which Executive is
entitled pursuant to this Agreement or otherwise (collectively, the “Total
Benefits”), will be subject to the excise tax imposed pursuant to Section 4999
of the Code (“Excise Tax”), the Company shall pay to Executive an additional
amount (the “Gross-Up Payment”) such that the net amount retained by Executive,
after deduction of any Excise Tax on the Total Benefits and any federal, state
and local income taxes, Excise Tax, and FICA and Medicare withholding taxes upon
the payment provided for by this Section, will be equal to the Total Benefits.

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For purposes of this Section, Executive will be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Excise Tax is (or would be) payable and state and local income
taxes at the highest marginal rate of taxation in the state and locality of
Executive’s residence on the date of termination of Executive’s employment with
the Company, net of the reduction in federal income taxes that could be obtained
from deduction of such state and local taxes (calculated by assuming that any
reduction under Section 68 of the Code in the amount of itemized deductions
allowable to Executive applies first to reduce the amount of such state and
local income taxes that would otherwise be deductible by Executive).
In the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of Executive’s
employment, Executive shall repay to the Company, at the time the amount of such
reduction in Excise Tax is fully determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax, federal, state and local income taxes and FICA
and Medicare withholding taxes imposed on the Gross-Up Payment being repaid by
Executive to the extent that such repayment results in a reduction in Excise
Tax, FICA and Medicare withholding taxes and/or a federal, state or local income
tax deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time of
the termination of Executive’s employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment to
Executive in respect of such excess (plus any interest, penalties or additions
payable by Executive with respect to such excess) at the time that the amount of
such excess is finally determined.
The parties’ obligations under this Section shall survive termination of this
Agreement.
11. Notices.
All notices required or permitted hereunder shall be in writing and shall be
deemed given and received when delivered personally, four days after being
mailed if sent by registered or certified mail, postage pre-paid, or by one day
after delivery if sent by air courier (for next-day delivery) with evidence of
receipt thereof or by facsimile with receipt confirmed by the addressee. Such
notices shall be addressed respectively:
If to the Executive, to:
Anupam Narayan
2124 South Rockwood Blvd.
Spokane, WA 99203
If to the Company, to:
Red Lion Hotels Corporation
201 W. North River Drive
Spokane, WA 99201
Attn: General Counsel
or to any other address of which such party may have given notice to the other
parties in the manner specified above.
12. Miscellaneous.
(a) This Agreement is a personal contract calling for the provision of unique
services by the Executive, and the Executive’s rights and obligations hereunder
may not be sold, transferred, assigned,

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pledged or hypothecated by the Executive. The rights and obligations of the
Company hereunder will be binding upon and run in favor of its successors and
assigns.
(b) This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Washington.
(c) Any controversy arising out of or relating to this Agreement or any breach
hereof shall be settled by arbitration in Spokane, Washington by a single
neutral arbitrator who shall be a retired federal or state court judge in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment upon any award rendered may be entered in any court
having jurisdiction thereof, except in the event of a controversy relating to
any alleged violation by the Executive of Section 7 or 8 hereof, the Company
shall be entitled to seek injunctive relief from a court of competent
jurisdiction without the requirement to seek arbitration. In addition to all
other relief, the substantially prevailing party in any arbitration or court
action shall be entitled to his or its reasonable attorney fees and costs
incurred by reason of the controversy (including any appellate review and
bankruptcy or enforcement proceedings).
(d) The headings of the various sections of this Agreement are for convenience
of reference only and shall not define or limit any of the terms or provisions
hereof.
(e) The provisions of this Agreement which by their terms call for performance
subsequent to the expiration or termination of the Term shall survive such
expiration or termination.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date first above written.

     
EXECUTIVE:
  COMPANY:
 
   
 
  RED LION HOTELS CORPORATION
 
   
                                         
  By                                                              
Anupam Narayan
        On behalf of the Board of Directors

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