EXHIBIT 20.1
NOTICE OF GRANT OF STOCK OPTIONS AND OPTION AGREEMENT
RED LION HOTELS CORPORATION
201 W. NORTH RIVER DRIVE
SPOKANE, WA 99201
_______________________ ID: ___________________
_______________________
_______________________
Effective _________, (the "Effective Date"), you have been granted a
Non-Qualified Stock Option to buy __________ shares of Red Lion Hotels
Corporation (the "Company" or "RLH") at $______ per share. Your grant has been
made under the Company's 2006 Stock Incentive Plan (incorporated herein by
reference and hereinafter referred to as the "Plan"), which, together with the
terms contained herein, sets forth the terms and conditions of your grant. A
copy of the Plan is available on file at the Company corporate office. Please
carefully review these documents.
Exercise Price: $_____ per share. The total exercise price of the shares granted
is $____________.
Vesting: Your option shares vest 25% on each of the first, second, third and
fourth anniversaries of the Effective Date.
Expiration Date: Your right to exercise your option with respect to vested
shares will expire on the tenth (10th) anniversary of the Effective Date, or
earlier in connection with the termination of your employment as described more
fully in Exhibit A, "Additional Terms and Conditions."
Exercise: You may exercise this option from time to time, in whole or in part,
to purchase a whole number of vested shares, by following the exercise
procedures implemented by the Company from time to time. All exercises must take
place before the Expiration Date, or such earlier date as set forth in Exhibit A
following your retirement, permanent and total disability, death or your
separation from employment. The number of shares you may purchase as of any date
cannot exceed the total number of shares vested by that date, less any shares
you have previously acquired by exercising this Option. You will be responsible
for any taxes or any applicable brokerage or administrative fees due when you
exercise your option. You will also be responsible for any applicable taxes,
brokerage fees and administrative fees due when you sell or transfer any shares
you receive upon exercise of your option.
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Plan as amended by this Notice of Grant of Stock Options and Option
Agreement.
RED LION HOTELS CORPORATION
By:
---------------------------------
Arthur M. Coffey
President and CEO
ASSOCIATE:
- -------------------------------------
EXHIBIT A
ADDITIONAL TERMS AND CONDITIONS
This option is a valuable part of your total compensation at RLH. You are an
important part of our strategy for success, and you have been granted an option
to purchase a significant number of shares of RLH. This option enables you to
become an owner of the Company or increase your ownership of the Company, and to
benefit financially from our success.
This option is your opportunity to buy, within ten years of the option's grant,
a specific number of shares of RLH stock. You can buy these shares at the price
set at the time you are granted the option - no matter how high the market value
of the stock at the time.
THE FUTURE VALUE OF YOUR STOCK OPTIONS
While no one can predict the future of RLH's stock performance, your option can
become very valuable. Your potential gain is the difference between the exercise
price of your option and the market value of the option shares at the time you
exercise your option. Obviously, if the market price is less than the exercise
price, your option would have no value.
For example, if the exercise price of your vested option is $_______, and the
market price is $________, your potential gain would be $5 per share if you
exercised your option at that time.
Stock performance is affected by many factors, including the company's ability
to meet financial performance expectations, growth in net income and market
perception of the company's growth potential.
EXERCISING YOUR STOCK OPTION
When you exercise your option, you are buying shares of RLH stock at the fixed
exercise price. You may exercise your option as to some or all of the vested
shares at any time before the ten-year expiration date, subject to earlier
termination as outlined below in connection with earlier separation from the
Company. You become vested as follows:
First anniversary of the Effective Date - 25% of your option shares vest;
Second anniversary of the Effective Date - 25% of your option shares vest;
Third anniversary of the Effective Date - 25% of your option shares vest; and
Fourth anniversary of the Effective Date - 25% of your options shares vest
Once you exercise your option, you own RLH stock. You may choose to hold your
stock in hopes of future appreciation. As a shareholder, your potential gain
depends on how well the company's stock performs over time.
EXERCISING YOUR OPTIONS WITH CASH
When you exercise your options and purchase RLH stock, you pay the option price
times the number of shares you wish to purchase. For example, if the option
price is $_____, and you want to buy 1,000 shares of stock, you would pay
$___________ regardless of the current market value of the 1,000 shares. Since
the excess of the market value of the purchased shares over the option price
constitutes compensation to you, it is subject to withholding by the company.
The required tax withholding amount must be paid by you to the company with the
option price at the time of the exercise.
EXERCISING YOUR OPTIONS WITHOUT CASH
If you want to exercise your options and plan to immediately sell the shares
(versus waiting to sell them), you may conduct a cashless exercise, subject to
such policies as the Company may implement from time to time with respect to
cashless exercises. In such a case, sale of your option shares would be arranged
through a stock broker and you would be paid the difference between the option
price and the market value of the stock at the time you exercise, less
applicable tax withholding, brokerage fees and administrative fees.
CASHLESS EXERCISE EXAMPLE
1) ASSUME THAT THE MARKET PRICE OF RLH STOCK WHEN YOU EXERCISE YOUR OPTIONS
IS...
$_______ PER SHARE
2. YOU EXERCISE YOUR VESTED OPTION TO PURCHASE 1,000 SHARES FOR $______ PER
SHARE...
1,000 X $______ = $_______
3. YOU RECEIVE THE DIFFERENCE BETWEEN THE MARKET PRICE AND THE EXERCISE PRICE OF
YOUR SHARES, LESS TAX WITHHOLDING...
MARKET PRICE: 1,000 X $_______ = $___________
EXERCISE PRICE: 1,000 X $_______ = $__________
AMOUNT PAYABLE TO YOU...
$5,000*
* Less applicable tax withholding, brokerage fees and administrative fees
SUMMARY OF OTHER ISSUES (PLEASE SEE THE MORE SPECIFIC TERMS AND CONDITIONS SET
FORTH IN THE PLAN):
- - IN THE EVENT OF SEPARATION FROM EMPLOYMENT...
If the nature of your separation of employment with RLH is other than
retirement, disability or death, then you will have until the earlier of the
Expiration Date or the date which is three months after your employment ceases
or is suspended to exercise your vested options (assuming you are not terminated
by the Company for "Cause" as defined in the Plan). If you are not vested, or if
you are terminated for Cause, you will not be able to exercise your options.
- - IN THE EVENT OF RETIREMENT OR PERMANENT AND TOTAL DISABILITY...
If you are vested, you will have until the earlier of the Expiration Date or 12
months from your last day of employment to exercise such vested options. If you
are not vested, you will not be able to exercise your options.
- - IN THE EVENT OF DEATH DURING EMPLOYMENT...
As long as you are vested at the time of your death, your surviving beneficiary
will have until the earlier of the Expiration Date or 12 months from your death
to exercise your vested options. If you are not vested, your survivors will not
be able to exercise your options.
FOR ADDITIONAL INFORMATION PLEASE CONTACT RLH INVESTOR RELATIONS...
Please send your questions to:
201 W. North River Drive
Spokane, WA 99201
or e-mail your questions to:
investorrelations@redlion.com