EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE
EMPLOYMENT AGREEMENT is dated effective as of June 5, 2008
(“Effective Date”) by and between Red Lion Hotels
Corporation, a Washington corporation (the “Company”),
and John M. Taffin (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 Executive Vice
President, Acquisitions and Development, 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:
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 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”.
(a) During
the Term, the Executive will hold the title and office of, and
serve in the position of, Executive Vice President, Acquisitions
and Development of the Company. The Executive shall report to the
Chief Executive Officer of the Company 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
from time to time 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. The Company and Executive specifically agree
that Executive’s oversight of the operations and management
of the Yogo Inn in Lewistown, Montana (the “Yogo Inn”)
shall constitute an Exempted Activity so long as such oversight
does not interfere with Executive’s duties and
responsibilities hereunder.
John Taffin Executive Employment
Agreement Page 1
(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 of directors
of the Company (the “Board”) or 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 $220,500 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 30% of his base salary for
that year (with any partial year pro rated).
(c) 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.
(d) 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.
(e) 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.
Notwithstanding anything to the contrary in this Agreement,
Executive’s years of service shall be deemed for all purposes
except for eligibility for a sabbatical to include all full
calendar years of employment with the Company plus all full
calendar years of employment with Red Lion Hotels, Inc., its
predecessors or any of their respective direct or indirect
subsidiaries. For sabbatical eligibility, Executive’s years
of service shall be deemed to include only all full calendar years
of employment with the Company.
(f) The
Company shall indemnify the Executive to the fullest extent
permitted under the law of the State of Washington.
(a) The
Term will terminate automatically 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
John Taffin Executive Employment
Agreement Page 2
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
as a result of the Executive or the Company giving notice
thereunder that it elects to permit the Term to expire without
extension.
(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
Executive’s estate under then-existing Company benefit plans
or policies, including if applicable death or Disability benefits,
provided for (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 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 $220,500), 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 Company’s only obligations to Executive in such a
case. The Company shall incur no further liability for such a
termination.
John Taffin Executive Employment
Agreement Page 3
(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 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 all stock op
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