NOTE

– STOCK-BASED COMPENSATION

2017,

the Company’s compensation committee approved an employee incentive plan which authorizes awarding restricted stock units (“RSUs”) and performance share units (“PSUs”) to key employees under the Company’s

2015

Long-Term Incentive Plan.

The Company's stock-based compensation program is a long-term retention program that provides for the grant of options, restricted stock, restricted stock units and performance-based restricted shares or units in order to attract, retain and provide incentives for directors, officers and employees. The maximum number of shares reserved for the grant of awards under the plan is

2.5

million, with approximately

2.2

million shares available as of

December 31, 2018.

The Company typically settles stock-based awards with newly issued shares.

Time-based awards generally vest ratably over a

three

-year period following the date of grant, and performance-based awards generally vest

three

years following the date of grant based on the attainment of performance- or market-based goals, all of which are subject to a service condition.

2018

Long-Term Incentive Compensation

During the year ended

December 31, 2018,

the Company granted under the

2015

Long-Term Incentive Plan

178,648

RSUs with a weighted average grant price of

$10.73,

88,851

of targeted PSUs with a weighted average grant price of

$10.27,

and

38,555

restricted shares with a weighted average grant price of

$12.97,

which vest over

one

year from grant date. The RSUs will primarily vest in equal installments on each of the

first

three

anniversaries of the grant date, subject to the recipient’s continued employment or service with the Company or its subsidiaries on the applicable vesting date.

The PSUs are performance-vesting equity incentive awards that will be earned based on the Company's performance against metrics relating to annual Adjusted EBITDA and annual revenue. Awards will vest after a

three

-year performance period and

may

be earned at a level ranging from

200%

of the number of PSUs granted, depending on performance. The number of PSUs determined was based upon the closing price of our common stock on the award date. The Company assessed the applicable metrics related to the PSU grants, determined the blended probability of achieving the performance metrics and valued the awards based on the fair value at the date of grant with the amount of stock compensation expense determined based on the number of PSU’s expected to vest.

2017

Long-Term Incentive Compensation

March 2017,

the Company’s compensation committee (or a subcommittee thereof) approved awards of RSUs and PSUs to key employees under the Company’s

2015

Long-Term Incentive Plan. The Company granted

171,388

RSUs on

April 3, 2017

at a grant price of

$8.98.

The RSU’s will vest in equal installments on each of the

first

three

anniversaries of the grant date, subject to the recipient’s continued employment or service with us or our subsidiaries on the applicable vesting date.

The PSUs are performance-vesting equity incentive awards that will be earned based on our performance against metrics relating to annual Adjusted EBITDA, annual revenue, and guest satisfaction. Awards will vest after a

three

-year performance period and

may

be earned at a level ranging from

200%

of the number of PSUs granted, depending on performance. On

April 3, 2017,

the Company awarded

126,953

of targeted PSUs with the number of shares determined based upon the closing price of our common stock on

March 31, 2017

$8.96.

Based on the financial statements as of

December 31, 2017,

the Company assessed the applicable metrics related to the PSU grants, determined the blended probability of achieving the performance metrics and valued the awards based on the fair value at the date of grant with the amount of stock compensation expense determined based on the number of PSU’s expected to vest.

2016

CEO Share Allocation Plan

April 2016,

the Company’s Board of Directors adopted the

2016

CEO Share Allocation Plan (the

“2016

Plan”) and in

June 2016,

the Company’s shareholders approved the

2016

CEO Share Allocation Plan, pursuant to which the Company will grant awards covering up to

1,000,000

shares of the Company’s common stock in the form of restricted stock, restricted stock units, and/or other stock- or cash-based awards to eligible employees and other service providers of the Company. The

2016

CEO Share Allocation Plan was adopted in connection with a contribution agreement that the Company entered into with Sven-Olof Lindblad, Chief Executive Officer and President of the Company, pursuant to which Mr. Lindblad will transfer up to

1,000,000

shares from his holdings of the Company’s common stock (i.e., an equivalent number of shares as is reserved for issuance under the

2016

CEO Share Allocation Plan) (the “Contribution Shares”) to the Company as a contribution to the capital of the Company. Mr. Lindblad will

not

receive any consideration in exchange for the Contribution Shares. However, as a condition to the contribution of any Contribution Shares, the Company must grant awards under the

2016

CEO Share Allocation Plan, such that the number of Contribution Shares that Mr. Lindblad actually contributes to the Company will equal the number of shares corresponding to awards granted under the plan. The contribution of the Contribution Shares by Mr. Lindblad to the Company will effectively reduce the number of shares of the Company’s common stock that are outstanding by the same number of shares that would be issued under the

2016

CEO Share Allocation Plan (or a lesser number in the event awards are settled in cash). Such contributions will be effective as of the date the Company grants corresponding awards under the

2016

CEO Share Allocation Plan. The administrator

may

amend, suspend or terminate the

2016

CEO Share Allocation Plan at any time.

January 10, 2017,

Mr. Lindblad contributed to the Company and the Company thereafter granted,

716,550

restricted shares at a grant price of

$9.65.

The grants vest in

three

equal installments on

January 10, 2017,

January 10, 2018

and

January 10, 2019.

Performance Share Units

Performance shares are shares of stock granted to an employee, non-employee director or other service providers for which sale is prohibited for a specified period of time. PSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain vesting conditions are met. The Company does

not

deliver the shares associated with the PSUs to the employee, non-employee director or other service providers until the vesting conditions are met.

The following table is a summary of PSU activity:

	Number of Shares			Weighted Average Grant Date Fair Value
Balance, January 1, 2017		-		$	-
Granted		126,953			8.98
Vested and released		-			-
Forfeited		(39,161	)		8.98
Balance, December 31, 2017		87,792			8.98
Granted		88,851			10.27
Vested and released		-			-
Forfeited		(13,863	)		8.98
Balance, December 31, 2018		162,780			9.63

Restricted Shares and Restricted Share Units

Restricted shares are shares of stock granted to an employee, non-employee director or other service providers for which sale is prohibited for a specified period of time. RSUs represent a promise to deliver shares to the employee, non-employee director or other service providers at a future date if certain vesting conditions are met. The Company does

not

deliver the shares associated with the RSUs to the employee, non-employee director or other service providers until the vesting conditions are met.

The following table is a summary of restricted stock and RSU activity:

	Number of Shares			Weighted Average Grant Date Fair Value
Balance, January 1, 2016		-		$	-
Granted		213,812			9.97
Vested and released		(11,791	)		11.20
Forfeited		-			-
Balance, December 31, 2016		202,021			9.90
Granted		940,147			9.56
Vested and released		(299,951	)		9.72
Forfeited		(63,945	)		9.41
Balance, December 31, 2017		778,272			9.60
Granted		217,203			11.12
Vested and released		(352,116	)		9.67
Forfeited		(23,633	)		9.60
Balance, December 31, 2018		619,726			10.16

Stock Options

Stock compensation expense related to options are recorded based on the fair value of stock option grants, amortized on a straight-line basis over the employee’s required service period. The Company estimated the fair value of employee stock options using the Black-Scholes option pricing model. The fair values of employee stock options granted under the Company's incentive plans were estimated using the following assumptions:

	2016 Grants
Stock price	$	9.63
Exercise price	$	9.63
Dividend yield		0.00	%
Expected volatility		60.00	%
Risk-free interest rate		1.18	%
Expected term in years		5.11

The following table is a summary of stock option activity:

	Number of Options			Weighted Average Exercise Price		Weighted Average Contractual Live (Years)		Aggregate Intrinsic Value
Options outstanding as of January 1, 2016		2,849,071		$	2.69		3.7	$	23,992,814
Granted		220,000			9.63
Exercised		(638,223	)		1.76
Forfeited		(300,000	)		10.58
Options outstanding as of December 31, 2016		2,130,848			2.57		2.8		146,542,221
Granted		-			-
Exercised		(955,424	)		1.76
Forfeited		-			-
Options outstanding as of December 31, 2017		1,175,424			3.23		2.4		7,707,255
Granted		-			-
Exercised		(955,424	)		1.76
Forfeited		-			-
Options outstanding as of December 31, 2018		220,000			9.63		7.6		842,000

	As of December 31, 2018
	Number of Options		Weighted Average Exercise Price		Weighted Average Contractual Live (Years)		Aggregate Intrinsic Value
Options vested and/or expected to vest		220,000	$	9.63		7.6	$	842,000
Options exercisable		113,333		9.68		7.6		428,333

During the year ended

December 31, 2018,

955,424

stock options, net were exercised at a weighted average exercise price of

$1.76

per share in cashless transactions, resulting in the issuance of

442,820

shares of common stock.

Stock-based Compensation Expense

Stock-based compensation expense for

2018,

2017

and

2016

was

$4.4

million,

$10.6

million and

$5.4

million, respectively, and is included in general and administrative expenses. The total income tax benefit

recognized for stock-based compensation plans for the years ended

December 31,

2018,

2017

and

2016

was $

0.2

million,

$0.1

million and

$0.1

million, respectively. As of

December 31, 2018,

unrecognized stock-based compensation expense was

$4.4

million. This amount is expected to be recognized over a weighted average period of approximately

1.8

years.