Document:

Exhibit

 
April 11, 2016
Re: Employment Offer
Dear David:
This employment offer supersedes and amends the employment offer provided to you on November 15, 2015.  On behalf of Red Lion Hotels Corporation (RLHC), we are delighted to offer you the position of Interim Chief Financial Officer effective April 11, 2016. The following outlines the employment package for your position.  If these terms are satisfactory, please accept this letter as indicated below on or before April 12, 2016. 
ASSUMPTION OF DUTIES:  You will assume these duties as of April 11, 2016 until the appointment of a Chief Financial Officer for RLHC.  At that time, you will resume your position as VP of Accounting, Tax and External Reporting.  You will report to the CEO as interim CFO, and your work location will be the RLHC Spokane Corporate Office.
COMPENSATION:  Your annual salary will be $180,000, subject to normal withholdings and payroll taxes.  As a result of your interim appointment to CFO, the Company will pay you a bonus equal to a $20,000 annual increase in salary prorated on an annual basis for the period of your interim service.  This bonus will be paid in a lump sum at the end of your interim appointment.  Our company’s pay periods run on a biweekly basis.  Your position is a salaried overtime exempt position.  This means that you are paid a guaranteed salary to perform the duties of your position, and are not eligible for overtime.  
BONUS: In addition to your annual salary, you may be eligible to earn a bonus if you are continuously and actively employed throughout the applicable bonus period, and if you meet the other requirements outlined in the bonus plan, as may be amended from time to time. Bonus target for Vice Presidents of the Company have typically been set at 30% of a base salary.   
EQUITY GRANT: At the sole discretion of the Company’s Compensation Committee, you may receive an annual grant of equity under the Company’s 2015 Stock Incentive Plan (or such successor plan as may be then in effect).  Such equity grants have in recent years been valued at a percentage of salary based upon position held and performance, and have been in the form of restricted stock units (“RSUs”) that vest 25% on each of the first four anniversaries of the grant date.
PERFORMANCE MANAGEMENT: Red Lion will assess your performance against defined Company, Department and Individual Goals on a regular basis. Red Lion may increase your salary and title based upon evaluation tools and other factors. It is very important to the Company that associates receive regular feedback on their work performance.
INITIAL BONUS: You received a starting bonus of $20,000 in cash, which was paid with your first paycheck. The bonus will be subject to normal withholdings and payroll taxes. In the event you voluntarily terminate your employment with RLHC prior to the expiration of 18 months following your start date, you will be required to reimburse the company the $20,000 starting bonus.  You authorize the company to deduct the entire amount form your final paycheck or form any other funds the company owes to you or is holding on our behalf. Should the amount exceed your final paycheck, you agree to promptly reimburse the company any remaining balance at that time. In addition, you received a grant of 5,000 RSUs upon your hire that will vest over four years in equal installments of 25% each year annually beginning on your one year anniversary. Furthermore, at your one year anniversary, you will receive an additional grant 2,500 RSUs that will thereafter vest over four years in equal installments of 25% each year annually.
BENEFITS: A benefit book was provided to you upon the commencement of your employment, describing RLHC’s benefits and eligibility requirements in detail. You also received a copy of RLHC’s Field Guide with information regarding the Company’s policies and procedures. You are eligible to participate in all standard employee benefit programs, as they may be modified from time to time, including:
		
	◦
	Medical and Dental insurance eligible the first of the month following your hire date

		
	◦
	Employee Assistance Program (EAP)

		
	◦
	Long Term Disability insurance coverage starting the first of the month following your hire date (Employer Paid)

		
	◦
	Flexible Spending Account – Section 125 Medical Reimbursement and Dependent Care accounts eligible within 30 days of your hire date for the following 1st of the month effective date

		
	◦
	AFLAC – Voluntary Cancer Protection, Short Term Disability, Personal Recovery and Accident / Injury Protection Plans available following date of hire and also during open enrollment periods

		
	◦
	Unconditional Time Off.   Paid time off to rest and for personal reasons.

		
	◦
	Conditional Time Off.  Up to 30 days per calendar year due to a condition such as an illness, injury or need for bereavement leave.

		
	◦
	Participation in the RLHC 401(k) Retirement Savings Plan

		
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	Direct Deposit

		
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	Option to purchase shares of RLHC stock at a 15% discount through payroll deduction (ESPP)

		
	◦
	Voluntary Term Life and AD&D Insurance coverage eligible the first of the month following your hire date

		
	◦
	Discounted Red Lion Family of Hotels accommodations for you and your family  

PROOF OF ELIGIBILITY TO WORK IN U.S.: Our offer is contingent upon your submission of satisfactory proof of your identity and your legal authorization to work in the United States. If you fail to submit the required documentation, federal law prohibits us from hiring you.
LOYALTY, NONDISCLOSURE OF CONFIDENTIAL INFORMATION: By accepting this offer, you agree that you will act at all times in the best interest of RLHC. You also agree that, except as required for performance of your work, you will not use, disclose or publish any Confidential Information of RLHC either during or after your employment, or remove any such information from the Company’s premises. Confidential Information includes, but is not limited to, lists of actual and prospective customers and clients, financial information, projections, operating procedures, budgets, reports, business or marketing plans, compilations of data created by RLHC or by third parties for the benefit of RLHC.
COMPLAINT RESOLUTION: By accepting this offer with RLHC, you also agree to continue to familiarize yourself with its policies, including its policies on equal opportunity and anti-harassment, and to promptly report to the appropriate RLHC supervisors or officers any matters which require their attention.
NATURE OF EMPLOYMENT: As explained to you on the application for employment you submitted, RLHC is an at-will employer. This means that your employment is not for a set amount of time; either you or the Company may terminate the employment relationship at any time, with or without cause.
BACKGROUND AND REFERENCE CHECK: RLHC has a vital interest in maintaining safe, healthy and efficient working conditions for its employees. With this in mind, employment at RLHC is contingent on your satisfactory completion of a background and reference check. (State of Montana candidates exempt.)
This letter, along with Red Lion Hotels Corporation’s Confidentiality and Proprietary Rights Agreement, contain all of the terms of your employment with RLHC, and supersedes any prior understandings or agreements, whether oral or in writing.  Red Lion Hotels Corporation reserves the right, subject to limitations and provisions of applicable law and regulations, to change, interpret, withdraw, or add to any of its policies, benefits, or terms and conditions of employment at its sole discretion, and without prior notice or consideration to any associate. The Company’s policies, benefits or terms and conditions of employment do not create a contract or make any promises of specific treatment.
David, we look forward to your continued expertise and leadership.  Please indicate your acceptance of this offer below.

Sincerely,
 	
	
	/s/ Gregory T. Mount

	Gregory T. Mount

	Chief Executive Officer

 
I accept the offer as stated above and will begin my interim appointment on April 11, 2016.
/s/ David Wright                                                   April 11, 2016                                                      
Signature:                                                              Date:Exhibit

RLHC Corporate Office Bonus Plan

Purpose
RLHC is committed to compensating associates through comprehensive and competitive pay packages that include base salary, bonus programs, incentive plans, competitive benefits plans, and reward and recognition programs.  These programs are designed to motivate associates to exceed performance expectations in support of the Company’s business objectives.

This bonus plan provides the opportunity for annual bonus payments to the contributors who drive the successful attainment of Company goals.  The success of the Company relies on many factors.  EBITDA is the main driver behind this Plan; however, our success depends on each associate accomplishing their Individual Goals.  

Effective Date
Plan Period – January 1, 2016 to December 31, 2016

Eligible Salaried Associates Bonus Targets and Maximums**

	
			
	Eligible Associates
	Bonus Target
	Bonus Maximum

	Grade 53
	10% of Annual Base Salary
	20% of Annual Base Salary

	Grade 54
	12.5% of Annual Base Salary
	25% of Annual Base Salary

	Grade 55
	15% of Annual Base Salary
	30% of Annual Base Salary

	Grade 56
	20% of Annual Base Salary
	40% of Annual Base Salary

	Grade 57
	30% of Annual Base Salary
	60% of Annual Base Salary

	Grade 58
	40% of Annual Base Salary
	80% of Annual Base Salary

	Grade 59
	50% of Annual Base Salary
	100% of Annual Base Salary

**Associates who are covered by a separate individual bonus plan are generally excluded from this Corporate Office Bonus Plan (i.e. Sales).   Participants must be full-time employees; Part time, On Call and Temporary associates are not eligible to participate in the plan.

Components of the Plan
The Corporate Office Bonus Plan has two components: (1) Achievement of greater than 90% of budgeted and approved Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the Plan Year, and (2) Achievement of Individual Goals.  

 
Baseline Criteria 
In order for the plan to fund, greater than 90% of the budgeted and approved Adjusted EBITDA must be achieved by the Company.  

Additionally, the individual’s department expenses must be within their Approved Budgeted Expenses for the calendar year.  Approved Budgeted Expenses are defined as the expenses budgeted for the Eligible Associate’s department, accounting for any adjustments to the original approved budget as agreed to by both the CEO and CFO.  Approved Budgeted Expenses only include operating expenses and do not include capital expenditures or related depreciation or amortization for purpose of this Plan and bonus potential.  Associates who do not have responsibility for a budget will be subject to the budget performance of their supervisor.  Any department that exceeds its Approved Budget Expenses for the calendar year will not participate in the bonus program. 

Confidential © 2016. This document is proprietary and may not be disclosed without written consent     Page 1

Weighting of Components
EBITDA accounts for 80% of the plan opportunity per Eligible Associate
Individual Goals account for 20% of the plan opportunity per Eligible Associate

As set forth above, there is no bonus payout to the participants if RLHC does not exceed 90% of EBITDA or the Eligible Associate’s actual departmental expenses are in excess of their Approved Budgeted Expenses for the calendar year.

Bonus Calculation  
The actual EBITDA dollars for the 2016 plan period will be compared to the Goal EBITDA dollars for the same period.  Goal EBITDA could be adjusted for acquisitions, dispositions, major transactions, or other items as approved. 
All Individual Goals will be approved by the Eligible Associate’s supervisor during the formal goal setting process at the end of Q4/Beginning of Q1, or within the first 60 days of employment for new hires.  
EBITDA Achievement
The EBITDA component of the bonus plan has two achievement thresholds.  The magnitude of payout increases once the second EBITDA threshold is reached (see table below).

 
Individual Goal Achievement
If EBITDA is met, and the Approved Budget Expense for the department is met, achievement of Individual Goals will be assessed to calculate total bonus payout for eligible associates.  Achievement of Individual Goals will be assessed at the end of the year/beginning of the following year.  Managers will assess achievement and make recommendations to the Senior Leadership Council for final review and calibration of awards.  When established, the Individual Goals will be weighted so that the total value of the goals for the plan year equals 100%.  Managers will assess achievement/completion of each goal independent of the other goals. The completion percent for each goal will be multiplied by the weight value of the goal.  These will be added together to determine the multiplier for the Individual Goal component of the bonus plan. The percent of the participant’s bonus is designed to be proportionate to the quantitative and qualitative achievement of the participant’s collective goals for the year.  Managers will assess collective achievement and make recommendations to SLC for final review and calibration of awards.   

Confidential © 2016. This document is proprietary and may not be disclosed without written consent     Page 2

Bonus Calculation Example:  This is only an example; the number and weighting of goals will vary per participant. 

	
										
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Approved Department Expense Budget Met
	 
	YES
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Individual Goal Achievement Calculation
	 

	 
	 
	Weight %
	 
	Goal Achievement %
	 
	Total Achievement %
	 
	 
	 

	Goal 1
	 
	50%
	*
	90.0%
	=
	45.0%
	 
	 
	 

	Goal 2
	 
	30%
	*
	100.0%
	=
	30.0%
	 
	 
	 

	Goal 3
	 
	20%
	*
	75.0%
	=
	15.0%
	 
	 
	 

	Totals
	 
	100%
	 
	 
	 
	90%
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Company Adjusted EBITDA Achievement
	 

	 
	 
	 
	 
	 
	 
	Achievement
	 
	 
	 

	Adjusted EBITDA Achievement
	 
	 
	 
	112.60%
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Bonus Component Calculation
	 

	 
	 
	 
	 
	Weight of Plan Component
	 
	Achievement Percent
	 
	Weighted Avg
	 

	Individual Goals
	 
	 
	20%
	*
	90.0%
	=
	18.0%
	 

	Company Adj. EBITDA
	 
	80%
	*
	112.6%
	=
	90.1%
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Total Weighted Achievement
	 
	 
	 
	 
	 
	108.1%
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Bonus Pay Calculation
	 

	Base Salary
	 
	At Target
	 
	Total Wgt Ach.
	 
	Bonus Payout
	 
	 
	 

	$100,000
	*
	15%
	*
	108.1%
	=
	$16,215
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

The following table illustrates bonus calculation percentage at the different thresholds of EBITDA.  The table is based on 100% Individual Goal achievement and achievement of Approved Department Expense Budget.  

Confidential © 2016. This document is proprietary and may not be disclosed without written consent     Page 3

	
										
	 
	Company 
EBITDA 
	Adjusted EBITA  
Achievement
	

Grade 53

	

Grade 54

	

Grade 55

	

Grade 56

	

Grade 57

	

Grade 58

	

Grade 59

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	MAX
	200%
	200%
	20%
	25%
	30%
	40%
	60%
	80%
	100%

	 
	180%
	180%
	18.0%
	22.5%
	27%
	36%
	54%
	72%
	90%

	 
	160%
	160%
	16.0%
	20.0%
	24%
	32%
	48%
	64%
	80%

	 
	140%
	140%
	14.0%
	17.5%
	21%
	28%
	42%
	56%
	70%

	 
	120%
	120%
	12.0%
	15.0%
	18%
	24%
	36%
	48%
	60%

	Target
	100%
	100%
	10%
	12.5%
	15%
	20%
	30%
	40%
	50%

	 
	99%
	85%
	8.5%
	10.63%
	12.75%
	17.0%
	25.5%
	34%
	42.5%

	 
	98%
	70%
	7.0%
	8.75%
	10.5%
	14.0%
	21%
	28%
	35%

	 
	97%
	55%
	5.5%
	6.88%
	8.25%
	11.0%
	16.5%
	22%
	27.5%

	 
	96%
	40%
	4.0%
	5.0%
	6%
	8.0%
	12%
	16%
	20%

	Threshold 2
	95%
	25%
	2.5%
	3.125%
	3.75%
	5.0%
	7.5%
	10%
	12.5%

	 
	94%
	20%
	2.0%
	2.5%
	3.0%
	4.0%
	6%
	8%
	10%

	 
	93%
	15%
	1.5%
	1.875%
	2.25%
	3.0%
	4.5%
	6%
	7.5%

	 
	92%
	10%
	1.0%
	1.25%
	1.5%
	2.0%
	3%
	4%
	5%

	 
	91%
	5%
	0.5%
	0.625%
	.75%
	1.0 %
	1.5%
	2%
	2.5%

	Threshold 1
	90%
	0%
	0%
	0%
	0%
	0%
	0%
	0%
	0%

RLHC retains the discretion to adjust the associate’s calculated bonus amount up (by up to 200% but not to exceed the stated maximum) or down (as far as zero) based on the associate’s individual performance.
Administration
The Director of Compensation and Benefits, EVP Human Resources, and CFO will review and administer the Corporate Bonus Plan.  

Approval  
CEO and CFO have final approval of the Corporate Bonus Plan.  

Calculation, Approval and Payment
At the end of the Plan Year, the Director of Compensation and Benefits and VP, Accounting will complete the preliminary bonus calculations and submit to the Department Executives for review to determine any discretionary adjustments based upon individual contributions and performance.  The Director of Compensation and Benefits and VP, Accounting will incorporate any discretionary adjustments made by the Department Executives and forward the final draft bonus calculation to the SVP, Human Resources and CFO for review and approval.  Once finalized, the CFO will submit the payouts to the CEO for final review and approval.  The Director of Compensation and Benefits and VP, Accounting will submit the approved payout calculations to the payroll office for payments.  Payments will be made to associates as soon as administratively possible following the end of the Plan Period.  Payments are generally approved following the February Board meeting and paid as soon as reasonably practical thereafter.  Payments may be made in either cash or stock at the Company’s sole discretion.  
Effect of Change in Employment Status/Termination
New Hires:  Associates must be hired before October 1 of the Plan Year to be eligible for a bonus for that year under the Plan.  Earned bonuses will be prorated based upon length of service during the Plan year. 

Transfers:  Transfers to an ineligible position that occurs after the Plan Year will not affect any bonus earned during the Plan Period.  Position transfers that occur during the Plan Year may result in a pro-rated bonus amount for each position based upon achievement of the bonus criteria for each position.  

Confidential © 2016. This document is proprietary and may not be disclosed without written consent     Page 4

Leaves of Absences:  To the extent an associate qualifies for an approved leave of absence, that associate’s bonus will not be forfeited, but rather will be prorated.  If the leave involves accrued paid leave, the bonus will be unaffected.  If the leave involves unpaid leave, the bonus will be prorated based upon the actual number of days worked plus any paid leave as a proportion of the full bonus calculation period. 

Terminations:  Bonuses for this Plan are not earned or vested until they are paid.  Bonuses are generally calculated and paid on or before March 31st, for the previous Plan Year.  To encourage continued employment with RLHC, Eligible Associates must be employed with RLHC as of the date the bonus is paid to be considered to have earned the bonus. Therefore, any associate whose employment terminates for any reason prior to the date of payout will not earn, vest in, or receive a bonus.

General Provisions
There is an overriding discretionary analysis of each participant’s eligibility to receive a bonus under this Plan.  Even though a participant might achieve the bonus criteria established within this Plan, a bonus can be adjusted downward or denied and not paid entirely at the full discretion of the Company.  By way of example only, the Company may exercise its discretion to adjust or deny a bonus due to failure to meet the performance expectations of RLHC, failure to follow company policy and procedures, actions or behavior that exposes the company to legal liability or is inappropriate.  Other disqualifiers may include unacceptable performance against established performance objectives, unacceptable scores on internal audit processes (i.e.: HR, Accounting, Risk Management, Internal Audit, Quality Assurance), poor performance on associate satisfaction scores, poor performance on customer satisfaction scores or inadequate follow-through on critical incidents.  

Notwithstanding anything to the contrary in this Plan, individual or company-wide bonus payments may be deferred, partially paid or withheld in their entirety at the sole discretion of RLHC in consideration of the overall best interests of the Company.  RLHC reserves the right to cancel, change, modify or interpret any and all provisions of the Plan at any time without notice.  Participation in or eligibility for the Plan does not create any entitlement to employment or continued employment for a specified term and does not alter the at-will status of associates.  

This Plan will be governed and construed in accordance with the laws of the state of Washington.

This Plan supersedes all previous plans in existence and past written or verbal communication to any associate regarding the terms of any incentive or bonus plan.

Confidential © 2016. This document is proprietary and may not be disclosed without written consent     Page 5

Authorization
Plans are not considered final and effective until they have been signed and authorized below and sent to the VP, Accounting and Director of Compensation and Benefits for filing.  

Reviewed/Created by (print name): 

 
Authorized and Signed / Jennifer Beckett                     6-14-16
Signature                                    Date

EVP and General Counsel (print name): 

Authorized and Signed / Tom McKiernan                     6-14-16
Signature                                    Date

Confidential © 2016. This document is proprietary and may not be disclosed without written consent     Page 6

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