Exhibit 10.16
RED LION HOTELS
CORPORATION
January 29, 2010
Anupam Narayan
2124 S. Rockwood Blvd.
Spokane, Washington 99203
Dear Mr. Narayan:
As you requested, this letter will confirm that Red Lion Hotels Corporation has
agreed to the arrangement set out in the email message from Bruce Bjerke to Lara
Hemingway on January 28, 2010, a copy of which is attached. As part of those
terms, the company has agreed that the exercise date for the 80,000 vested
options that were granted to you on November 22, 2004, at an exercise price of
$5.10, will be extended to July 30, 2010. We have also agreed that your $720,000
severance payment, together with the $7,693.15 prorated bonus, will be paid to
you July 14, 2010.
Regards,
/s/ Anthony F. Dombrowik
Anthony F. Dombrowik
Senior Vice President, Chief Financial Officer
Agreed:

     
/s/ Anupam Narayan
  January 29, 2010      
Anupam Narayan
   

BLH Building · 201 W. North River Drive · Spokane, WA 99201 · 509-459-6100 · Fax
509-325-7324 · redlion.com

 

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From: Bjerke, Bruce
Sent: Thursday, January 28, 2010 3:06 PM
To: ‘Lara L Hemingway’
Cc: Andrew J. Schultheis; Michael F Nienstedt
Subject: RE: Narayan
Lara, Andrew and Mike
We are in agreement. Red Lion has accepted the proposal described in my message
to you below, with Lara’s corrections, also noted below. I have attached an
updated and corrected spreadsheet with the revised calculations.
Red Lion calculates the value of the restricted stock at $407,806.56 based on
the $4.83 per share closing price on 1/13/10, and calculates the tax on that as
follows: $113,671.24 made up of FIT of $101,951.64; SS of $5,806.40; and
Medicare of $5,913.
We will proceed to implement these arrangements tomorrow on this basis.
I’m glad we were able to work through this. Thank you for your curtesy and
cooperation.
Bruce
Bruce Bjerke | Davis Wright Tremaine LLP
Partner
1201 Third Avenue, Suite 2200 | Seattle, WA 98101
Tel: (206) 757-8071 | Fax: (206) 757-7071
Email: brucebjerke@dwt.com | Website: www.dwt.com
Anchorage | Bellevue | Los Angeles | New York | Portland | San Francisco |
Seattle | Shanghai | Washington, D.C.
From: Lara L Hemingway [mailto:LLH@witherspoonkelley.com]
Sent: Thursday, January 28, 2010 10:01 AM
To: Bjerke, Bruce
Cc: Andrew J. Schultheis; Michael F Nienstedt
Subject: Re: Narayan
Bruce,
Thank you for your summary.
We verified with Anupam the details you review in your 6 points and have a
couple of comments. With respect to #5, it should reflect a payment date of
7/14/10, to push the payment out 6 months and one day from the date of
termination (this is the date that is reflected on the spreadsheet of payment
calculations). Also with respect to #3, we would like to verify that pursuant to
the language in the employment agreement providing for immediate vesting of
restricted stock upon a without cause

 

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termination, that the vesting date of 1/13/10 will be used for calculating the
income inclusion on the payment date of 1/29/10, as provided in 1.83-1(a)(1).
Additionally, Anupma would like to pay the withholding on the restricted stock
in cash and will submit payment to the Company tomorrow as soon as they inform
him of the proper amount.
Please let us know if there are further questions or comments with respect to
this email or any other aspect of the proposed terms you have outlined.
Best Regards,
Lara L. Hemingway, J.D., LL.M.
Witherspoon, Kelley, Davenport & Toole, P.S.
422 W. Riverside Avenue, Suite 1100
Spokane, Washington 99201
(509) 624-5265
llh@wkdtlaw.com
fax: 509-458-2728

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by
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communication (including any attachments) is not intended or written to be used
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(i) avoiding penalties under the Internal Revenue Code, or (ii) promoting,
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and delete the original message and all copies from your system.
Thank you.
— “Bjerke, Bruce” <BruceBjerke@dwt.com> wrote: —
To: <ajs@witherspoonkelley.com>, <llh@witherspoonkelley.com>,
<mfn@witherspoonkelley.com>
From: “Bjerke, Bruce” <BruceBjerke@dwt.com>
Date: 01/27/2010 02:57PM
Subject: Narayan
Andrew, Mike and Lara
I will be speaking with RL first thing in the morning, and want to confirm that
i have details right when i review the proposal with them.
Here is my understanding of what you have proposed:
1. the spreasheet tony prepared will be corrected to reflect the $360k pre
reduction pay rate for the 13 days of pay and vacation accrual—
     i understand that lara will be sending me her calculations of the amounts
later today
2. the spreadsheet will also be corrected to reflect the restricted stock value
as the trading price on january 13, rather than january 20,
     which is the date used for the estimate

 

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3. the payments (as adjusted for 1 and 2 above) reflected on the spreadsheet as
being paid on 1/29 will be paid that date
4. RL will agree to extend the option exercise date for the 80,000 vested
options that are in the money, to a new date of
     july 30, 2010
5. AN will agree that he will be paid the $720,000 in severance payments on
July 12, 2010, thereby removing the 409A issue
6. AN will resign from the board on 1/29/10
please let me know if i have missed or misunderstood anything here
bruce
Bruce Bjerke | Davis Wright Tremaine LLP
Partner
1201 Third Avenue, Suite 2200 | Seattle, WA 98101
Tel: (206) 757-8071 | Fax: (206) 757-7071
Email: brucebjerke@dwt.com | Website: www.dwt.com
Anchorage | Bellevue | Los Angeles | New York | Portland | San Francisco |
Seattle | Shanghai | Washington, D.C.

 

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          Red Lion Hotels Corporation       Separation Costs Recap

                                                                               
                Employment                                             Standard
    Agreement     Negotiated                               Normal    
Termination     Related     Separation                               Course    
Related     Severance     Related       Total   Anupam Narayan                  
Payments     Payments     Payments     Payments       Payments  
Current Salary
                                                         
Base Salary
  $ 360,000                                                    
Reduced Salary
  $ 342,857                                                    
 
                                                         
Salary to 1/1/10 (Portion Already Paid on 1/15/10)
                          $ 395.61                       $ 395.61  
Salary 1/1/10 to 1/13/10 (24 hours) Paid 1/29/10
                          $ 4,153.63                         4,153.63  
 
                                                         
Medical Through End of January
                          RLH PAY                             Unpaid Expense
Reimbursement                           Paid Normal Course of Business          
       
 
                                                         
Unpaid Vacation
                                                         
Earned 1/1/10 4 Weeks or 160 Hours
  $ 20,768                       20,768.15                         20,768.15  
$360,000 / 2080 = $173.0679 per Hour
                                                         
Assumed 40 Hours Taken so 120 left
                                                         
Paid 1/29/10
                                                         
 
                                                         
2009 Bonus
                          NONE                         —  
 
                                                         
Separation Payments
                                                         
Bonus Target 60%
  $ 216,000                                                    
 
                                                         
Pro Rate Bonus
                                                         
Assumed Separation Date
    1/13/2010                                                    
Total Days
    13                                                    
Total in Year
    365                                                    
 
                                                       
Pro Rate
    0.04                                                    
 
                                                       
Pro Rate Bonus
  $ 7,693                               7,693.15                 7,693.15  
 
                                                         
Severance Pay Calculation
                                                         
Base Salary
  $ 360,000                                                    
2008 Bonus Paid in 2009
    —                                                    
2008 401(k) match pd in 09
    —                                                    
 
                                                       
Total
  $ 360,000                                                    
Multiple
    2                                                    
 
                                                       
 
  $ 720,000                               720,000.00                 720,000.00
 
 
                                                       
 
                                                         
Cost of Medical and Dental
  $ 858   Per mo w/COBRA.                                          
2 Years: Cobra 24 Months
    24   months                                          
 
                                                       
EE and ER portion
  $ 20,592                             RLH PAY                    
 
                                                         
ESPP Pay-out 2010
  $ 1,055                       1,054.94                         1,054.94  
Legal Expense
  $ —   Max by Agreement                           $ —         —  
ESPP 2009 Over Contributed
  $ 3,744                       3,743.68                         3,743.68  
 
                                                         
ESPP January 2010 Shares Purchased in Normal Course of Business
                                                         
 
                                                         
Options Accelerating Vesting
                                  NONE                 —  
 
                                                          RSU Accelerated
Vesting (84,432 Unvested RSU x $4.83 price estimate)                    
407,806.56                 407,806.56  
Based on 1/13/10 Close Price
                                                         
 
                                                                               
     
Total
                  $ —     $ 30,116.01     $ 1,135,499.71     $ —        
1,165,615.72                                  
 
                                                          Amount Deferred under
409(a) to be Paid 7/14/10 in Cash                                      
727,693.15  
 
                                                         
 
                                                       
Amount Recognized / Paid 1/29/10
                                                    $ 437,922.57  
 
                                                       
 
                                                                               
      Recognized in RSU’s 1/13/10             $ 407,806.56                      
        Recognized in Cash 1/29/10               30,116                        
      Recognized in Cash 7/14/10               727,693  
 
                                                       
 
                                                    $ 1,165,615.72